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
Codes and Standards | Nov 14, 2019
Resistance to Toronto’s ‘smart city’ reveals pitfalls of such ambitious projects
Concerns over data privacy, governance, feasibility prompt criticism.
Codes and Standards | Nov 13, 2019
Heat pumps, strategic energy management could be next major focuses for efficiency
After lighting, efficiency experts look to new opportunities to boost energy efficiency.
Codes and Standards | Nov 12, 2019
National Infrastructure Performance Council to address ‘national security crisis’
Coalition wants to double annual level of infrastructure investment.
Codes and Standards | Nov 11, 2019
Major cities are adopting new building performance standards
Initiatives can include multiple standards.
Codes and Standards | Nov 11, 2019
U.S. hotel construction pipeline continues its year-over-year growth
In its eighth consecutive quarter of growth, projects currently under construction stand at 1,729 projects/235,278 rooms.
Codes and Standards | Nov 11, 2019
New retrofit design guide for metal roofing published
Metal Construction Association document provides best practices for re-roofing with metal.
Codes and Standards | Nov 8, 2019
New York City among the top hotel construction pipelines in the United States
Hotels presently under construction are at 102 projects/17,504 rooms.
Codes and Standards | Nov 7, 2019
Group focused on using AI for construction safety gains key members
Major contractors join partnership to share data to predict hazards, incidents.
Codes and Standards | Nov 6, 2019
Undisclosed ICC agreement with NAHB alleged to thwart more stringent efficiency codes
Homebuilders’ seats on ICC made it easier to block new provisions, report alleges.
Codes and Standards | Nov 4, 2019
ASHRAE releases new version of energy efficiency standard for buildings
Standard 90.1 includes revisions of envelope, lighting, HVAC provisions.