Constructing and justifying the cost of physical assets such as a manufacturing plant is much more difficult than it was decades ago, according to a report by Steffen Fuchs, senior partner with McKinsey & Company.
Inflation, rigorous sustainability requirements, and rapid changes in technology and regulations all complicate investment in new construction projects, the report says. “Adding to the complexity, the next generation of assets needs to be “set and forget”: the high cost of building them must be offset by lower operating costs,” Fuchs writes.
Improvements in construction processes and project delivery are especially necessary given that a new wave of “once-in-a-lifetime” capital spending on physical assets will take place between now and 2027. Roughly $130 trillion will pour into projects to decarbonize and renew critical infrastructure, Fuchs writes.
Project leaders typically rely on practices that aim to optimize individual investments, such as a nuclear power plant, an oil refinery, or a pipeline. Cost overruns are typical and costly using this approach. New decarbonization and sustainability investments where groups of similar projects (such as wind farms and solar parks) are delivered repeatedly over a long period of time require much better performance, Fuchs says.
Related Stories
| Aug 11, 2010
NASA plans federal government's greenest building
NASA is set to break ground on what the agency expects will become the highest performing building in the federal government. Named Sustainability Base, the new building at Ames Research Center in Sunnyvale, Calif., will be a showplace for sustainable technologies, featuring "NASA Inside" through the incorporation of some of the agency’s most advanced recycling and intelligent controls technologies originally developed to support NASA’s human and robotic space exploration missions.
| Aug 11, 2010
Harvard Law School Wood-Framed Houses
Cambridge, Mass.
A century ago, majestic Victorian homes lined Massachusetts Avenue in Boston, but few of these grande dames still survive. Harvard Law School owned three such beauties, which they used for office and research space. Unfortunately, the houses occupied prime real estate on which the school planned to build a new academic center. Rather than raze the historic wood-frame homes, the law school made it a priority to repurpose them.
| Aug 11, 2010
Rice concrete can cut greenhouse emissions
Rajan Vempati of ChK Group, Inc. in Plano, Texas, and a team of researchers found a way to make nearly carbon-free rice husk ash for concrete, which can lead to a boom in green construction.
| Aug 11, 2010
iSqFt acquires technology and key assets of Plan Express Inc.
Today iSqFt, the nation’s leading online preconstruction network, announced it has purchased the technology and key assets of Plan Express, Inc., a partner document-sharing network.
| Aug 11, 2010
ZweigWhite Announces 2009 Best Firms to Work For
Management consulting and research firm ZweigWhite has identified the best civil engineering, structural engineering, multidiscipline A/E services, environmental services, and architecture firms to work for in its annual ranking of top industry firms. These outstanding employers were selected based on their commitment to provide a positive work environment and challenging and interesting work opportunities for their employees.