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
| Nov 19, 2014
Must see: Arup, Damian Rogers propose urban surf park in Melbourne
The surfing pool would offer 98-foot-wide waves that would run the length of the 500-foot-long enclave.
| Nov 18, 2014
Grimshaw releases newest designs for world’s largest airport
The airport is expected to serve 90 million passengers a year on the opening of the first phase, and more than 150 million annually after project completion in 2018.
| Nov 17, 2014
Developments in 3D printing can assist architecture in the smallest details
Researchers at the Department of Energy’s Oak Ridge National Laboratory (ORNL) have developed a way for 3D printed metals to be produced with an unprecedented degree of precision.
| Nov 14, 2014
Bjarke Ingels unveils master plan for Smithsonian's south mall campus
The centerpiece of the proposed plan is the revitalization of the iconic Smithsonian castle.
| Nov 12, 2014
Designs by three finalists for new Beethoven concert hall unveiled
David Chipperfield and Valentiny are among the finalists for a new concert hall being built to commemorate Beethoven’s 250th birthday in his hometown of Bonn, Germany.
| Nov 11, 2014
Renzo Piano's third building at London Bridge Quarter approved, will be built adjacent to the Shard
Renzo Piano Building Workshop has been granted planning approval for its residential building at London Bridge Quarter—a 26-story apartment tower dubbed Feilden House.
| Nov 10, 2014
Herzog & De Meuron unveils plan for National Library of Israel
The library’s new home will be a completely new building in Jerusalem, and will combine the functions of a central research center, a venue for indoor and outdoor cultural and educational activities, and a place for digital experience.
| Nov 7, 2014
World's best new skyscraper: Sydney's vegetated One Central Park honored by CTBUH
The Jean Nouvel-designed tower tops the list of 88 entries in the 13th annual Council on Tall Buildings and Urban Habitat Awards.
| Nov 7, 2014
Tampa International Airport to Receive a Makeover
The extensive expansion project will cost $2.5 billion, with the first-phase being completed in three years.
| Nov 7, 2014
NORD Architects releases renderings for Marine Education Center in Sweden
The education center will be set in a landscape that includes small ponds and plantings intended to mimic an assortment of marine ecologies and create “an engaging learning landscape” for visitors to experience nature hands-on.
