Engineering and construction industry outlook — an insider’s take
The engineering and construction industry experienced five percent growth during 2018, with significant mergers and acquisitions playing key roles, reports Michelle Meisels, who leads the engineering and construction practice for Deloitte Consulting Technology. In Deloitte’s 2019 Engineering and Construction Industry Outlook, she predicts growth will accelerate this year.
Digital to drive growth
“Driving this activity are the proliferation of mega projects infused with advanced technologies, a focus on smart cities, and the promises of a data-driven world,” Meisels writes. Yet in the United States, even basic infrastructure like bridges, transportation, and water delivery systems need critical upgrades. New structures must be part of a new digital strategy involving IoT and AI to effectively manage increasing complexity and connect people with their vehicles, homes, and workplaces.
Mergers and acquisitions will likely continue as well. Meisels points out that leaders are recognizing that the more complete the solution a company brings to a large project, the more positive the outcomes will be. In 2019 alone, she says, “We expect to see design, engineering, and construction firms further augment their portfolios with digital and connected technology assets in an effort to capture a larger share of this market.”
Public or private funding?
Larger, more complex projects have heftier price tags. Questions arise about who will pay for them. Will U.S. federal funding be allocated for infrastructure in 2019? At the local level, says Meisels, “private funding in cooperation with government entities is one avenue to fund these major projects.”
3 industry priorities from Deloitte’s engineering and construction industry outlook
Meisels foresees three priorities that will impact the ability of engineering and construction companies to adapt to the changing landscape.
Operations transformed by technology
Robotics and other innovations are enabling companies to increase safety, decrease costs, and offer more innovative solutions to customers. Meisels gives the example of the newest building information modeling software moving beyond 3D; 5D adds the dimensions of time and budget, and 7D will add energy efficiency and facility management. The impact of changing one data point, to every element of the project as it pertains to both the customer and the provider, will be immediately visible.
Decisions driven by analytics and data
More predictive, strategic decisions lead to more growth, productivity, and efficiency. As projects become larger and more complex, more data will need to be captured and analyzed in order to manage them well. To keep-up and remain competitive, engineering and construction businesses will need to plan and continue to invest in processes to collect and analyze data and deliver insights to the right people at the right times.
Talent shortages addressed strategically
In the past five years, job openings in the engineering and construction industry have increased 100 percent. Yet new hires have not kept pace, increasing by only 14 percent. The shortage of workers is real. Without talent with the right skills, companies will have to pass-up opportunities in an accelerating market. Meisels counsels companies to implement several strategies to attract, recruit, and retain team members:
- Recognize and leverage the existing resource of experienced retirement-aged staff
- Design in-house training and apprentice programs
- Create a positive brand that will attract new employees and build loyalty in existing ones
- Develop and promote sustainable practices and community involvement, both of which are important especially to younger workers
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The entire Deloitte 2019 Engineering and Construction Industry Outlook is available online.