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The Infrastructure Investment and Job Act (IIJA)—worth $1.2 trillion, paired with the $550 billion of new federal spending over the next five years—is providing a once-in-a-generation infrastructure investment opportunity in the United States. This year, infrastructure spending is set to overtake residential construction for the first time in years. According to the latest annual forecasts for global construction volumes by Global Construction Perspectives, 2022 will see infrastructure work usurping housing as the predominant revenue stream for contractors. Many investors from government, construction and engineering contractors, as well as taxpayers, are looking to capitalize on the expected growth in the North American market.

Historically, infrastructure has been considerably underfunded, with research from the American Society of Civil Engineers suggesting the infrastructure investment gap has reached $2.59 trillion over a 10-year period. In contrast to the relatively new infrastructure seen in Asia, countries such as the United States and the United Kingdom are now lagging behind, often “making do” with older infrastructure, an increasing proportion of which is no longer fit for purpose or approaching end of life. This “make do” way is costing citizens a great deal, with estimates stating by the year 2039, this continued underinvestment could cost the average U.S. household $3,300 a year.

But with infrastructure being underfunded for so long, why is infrastructure construction growing now, in 2022?

The pandemic has been a key factor behind this recent increase in activity. Infrastructure projects are a classic way to kick-start the economy after a recession, much like the New Deal during the Great Depression. Large-scale projects create jobs and boost productivity in the long run by improving business operations. Considerable ESG goals are also a leading motive in the surge in infrastructure funding. With COP26 last year, new net-zero targets will be difficult to meet if we do not make our infrastructure more sustainable. Not to forget, of course, the stimulus created by the recent IIJA.

Is it worth the price we pay?

Of course, any infrastructure project will come with a cost, but the government is understandably keen to optimize value from their infrastructure stimulus investment. With such opportunities only coming around once in a generation, every penny counts. The implementation of digital technologies and new construction approaches will be essential to ensure vital infrastructure projects are delivered in a timely and cost-effective manner and to improve Public-Private Partnerships (PPP) so that taxpayers will get the most out of their tax dollars.

MMC and BIM are driving construction standardization.

First out of the infrastructure investment gate is Modern Methods of Construction (MMC). This increases construction project efficiency through modular, offsite or prefab construction. Assembly of pre-manufactured modules reduces the risk of delays by manufacturing large portions of the build in a controlled environment and reducing the complexity of on-site construction. Modular or prefabricated construction also enables the standardization of builds to improve efficiency from design to construction. A recent IFS study suggests that within five years, 50% of all construction projects will use modular manufacturing and/or 3D printing, with prefabricated modules accounting for up to 25% of the construction.

Instrumental in the deployment of MMC is BIM. BIM 3D modeling enables large-scale construction projects to be designed for modularization. BIM seamlessly integrates different data sets into a 3D model, where layers of data can be added or removed, to allow precise design and planning in the assembly of pre-manufactured modules.

While in the United Kingdom, BIM compliance has become part of the selection criteria for contractors, this practice is yet to reach widespread adoption in the United States However, its adoption improves efficiency and enables contractors to become more competitive for PPP contracts. Governments would also benefit from prioritizing these digital technologies to ensure the highest ROI for infrastructure projects.

Measure and monitor 

Augmented reality (AR) technology has a key role to play. While this technology can be implemented in various ways throughout the construction industry, one crucial benefit AR has for project management is in automated measurements. An AR device can automatically perform measurement scans of construction sites at precisely the same point as the previous scan by using AR mapping capabilities to plot the exact location. This provides accurate updates of construction project progress, to allow irregularities and errors to be spotted faster, reducing costly delays.

"Internet of Things" (IoT) sensors can similarly monitor and relay real-time data into a digital system creating a virtual overview of project activity. IoT sensors in construction equipment can help project managers organize efficient use of equipment and resources for optimal operation. IoT sensors can also be used to monitor conditions within construction sites, such as temperature and humidity, as these factors can cause delays and even damage to construction. Access to accurate, real-time data heightens project managers’ responsiveness to crises so the right action can be taken at the right time to avoid incurring unexpected costs and delays.

Servitization

The adoption of these transformative digital technologies such as predictive maintenance and IoT can be implemented as part of a contractor’s digital strategy. The need for companies to simplify their business system landscape is becoming a must-have. This means having more integrated business processes, a data-driven approach and less dependency on tools like Excel.

Contractors need to be ready to transition into total asset lifecycle service providers, where they can offer the client the service to design, construct, operate and maintain the asset.

One way to achieve this is to view ERP as much more than a back-office finance system but as an integrated business system that manages all the processes executed across the whole asset lifecycle. This will allow a business to transition to a true digital asset lifecycle model, operate with one version of the truth and give the client value for money.

In addition, this data-driven approach will allow construction organizations to foresee where repairs, retrofits and servicing will need to take place and schedule these ahead of time before it is urgently needed over the course of an asset’s lifecycle, keeping citizens safe and businesses running.

Infrastructure projects have incredibly high sunk costs and need to stand the test of time, as well as the rigorous demand of a fully functioning economy. Therefore, high-quality maintenance through a servitization model is essential and results in greater ROI for infrastructure projects.

Building WITH BIG BUCKS 

As contracting for outcomes becomes increasingly common, construction firms will need to manage complex, but potentially lucrative, performance-based contracts and model complex whole-life costs to seize this infrastructure opportunity. Contractors will need to improve their project delivery and productivity by adopting key digital technologies.

Governments should also seek to optimize infrastructure investments by awarding PPP contracts to contractors that can secure the lowest cost, the optimum quality, the most efficient delivery, and the lowest maintenance and operational expense throughout an asset’s lifetime. This can only be achieved through the use of digital technologies. Contractors that ignore modern methods of construction and digital processes will simply not be able to compete at times of huge opportunity.

Transformative technologies will improve construction project delivery performance and ensure that vital investments in infrastructure are optimized—giving construction and engineering contractors, the government and taxpayers a bigger bang for their buck.

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