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 | Feb 2, 2018
How workplace design can position financial services companies for success
HOK report examines forces reshaping industry.
Codes and Standards | Jan 31, 2018
California is the first state to phase out incandescent light bulbs
In two years, the rest of the U.S. will follow suit.
Codes and Standards | Jan 31, 2018
Automated tool assists in design of force transfer around openings
Engineered Wood Assn. offers free calculator and technical note.
Codes and Standards | Jan 31, 2018
First large-scale use of perovskite solar cells in office building slated for Poland this year
Skanska will integrate the technology into building facades.
Codes and Standards | Jan 29, 2018
Advanced Energy Design Guide for K-12 Schools to achieve zero energy
Publication is joint effort by ASHRAE, AIA, IES, and USGBC.
Codes and Standards | Jan 26, 2018
Flying drones while inebriated now illegal in New Jersey
Violators could be sentenced to six months in jail.
Codes and Standards | Jan 25, 2018
OSHA penalties for violations increase
Fines adjusted for inflation in the New Year.
Codes and Standards | Jan 23, 2018
Disaster mitigation strategies that exceed code could save billions
Four dollars saved for every dollar spent, says NIBS report.
Codes and Standards | Jan 19, 2018
U.S. construction fatalities rose 6% in 2016
Falls accounted for 39% of deadly accidents.
Codes and Standards | Jan 18, 2018
Record storm surge in Boston prompts renewed calls for flood mitigation infrastructure
Newer buildings constructed in flood zone fared well.
