In this report, the McKinsey Global Institute (MGI) and the McKinsey Capital Projects & Infrastructure Practice examine the root causes of poor productivity growth in the construction industry. They explore practical ways to improve the situation and discuss the beginnings of a shift in parts of the sector toward a system of mass production, standardisation, prefabrication, and modularisation – a production system that has the potential to boost productivity by five to ten times, depending on the sector.
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The world invests some $2.5 trillion a year in the transportation, power, water and telecom systems on which businesses and populations depend. Yet this amount continues to fall short of the world’s ever-expanding needs, which results in lower economic growth and deprives citizens of essential services.
Building on the report Infrastructure productivity: How to save $1 trillion a year, this report updates the previous estimates of the world’s infrastructure needs and projected investment shortfalls. It also offers refined recommendations for bridging those gaps.
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Based on McKinsey & Company’s work with governments and private-sector infrastructure players around the world, an extensive literature review and drawing on insights from more than 400 case examples, this report by the McKinsey Global Institute (MGI) advocates that if infrastructure owners around the world were to adopt proven best practice, they could increase the productivity of infrastructure investment and achieve savings of 40%.
Scaling up best practice could save an average of $1 trillion a year in infrastructure costs over the next 18 years. A productivity boost of this magnitude is achievable in many countries if they are willing to invest in a systematic approach to infrastructure that drives improvement across agencies and private-sector owners and contractors.
This report looks at the high-level challenges in infrastructure delivery and how these can potentially be addressed. Action topics include eliminating waste, improving the selection of projects and streamlining their delivery. It also includes best-practice examples from around the world, which would make a major difference if scaled up globally.
The report identifies three strategies that could help deliver savings:
- Optimise project portfolios.
- Streamline delivery.
- Make the most of existing infrastructure.
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Advances in digital technologies and data are transforming the way we live our lives. The built environment is becoming smarter, with the rise of intelligent infrastructure – enabled by the use of machine learning and artificial intelligence. Innovative technologies drive efficiencies, accelerate the transition to net zero and optimise the performance of national built assets.
Access to information (as data) of the right quality and at the right time, in a format that is trusted by all parties, is increasingly recognised as a critical enabler of the construction sector’s digital transformation. It has the potential to drive down costs in the construction and operation of built assets and improve quality. This report aims to answer two main questions, while highlighting the benefits of information management:
– How are construction and infrastructure organisations creating, managing and making use of quality and timely information?
– What value does this deliver for organisations, their customers and other stakeholders?
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In the past 10 years, the KPMG’s Global Infrastructure practice has been offering insights of emerging infrastructure trends.
In 2020, even the best laid plans were hijacked by COVID-19.
The 2021 report strives to go beyond identifying the trends to offer a global perspective on how they are creating new opportunities and challenges for infrastructure professionals. It explains how each trend will evolve, predicts how the infrastructure industry will respond and focuses on the wider impacts on society, including the opportunities these trends will unlock.
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The construction industry, one of the world’s top 10 employers, faces growing demand as urbanisation accelerates, especially in developing countries. The UN predicts that 68% of people will live in cities by 2050. And, across the globe, there is a growing need for new infrastructure. However, labour shortages threaten the industry, especially in Europe, and productivity has not increased for decades.
The industry has also been slow to adopt the technologies that are needed for higher productivity and to meet the demands of an increasingly digital world. Enterprises must tackle legacy issues, as well as plan for a digital future.
The construction industry faces ongoing issues around low productivity and margins, but digital disruption is challenging the status quo. In Q4 2017, EY (Ernst & Young) took on two significant initiatives to assess and benchmark how leading construction and engineering companies see the impact of technology in their sector. The first was a series of in-person interviews and workshops with over 80 top players in the industry. The second, running parallel to the series, was EY’s Global Construction & Engineering Survey, which analysed where the industry stands today and how the majority views the potential impact of technology in the future. This report presents the survey’s findings and relevant market trends.
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Since 2009, Dodge Data & Analytics has been conducting quantitative research studies about the use and value of design and construction technologies around the world. As adoption has steadily expanded, so have users’ capabilities, expectations and creativity at applying digital technologies in innovative ways to derive the most value from the underlying data being captured, created and shared across the project lifecycle.
The report also reflects data from a range of global markets including North America, UK/Ireland, France, Germany, Scandinavia, Japan and Australia/New Zealand. Meaningful comparisons between regions are shown in order to highlight leadership in BIM and digital transformation, and to better understand the global variability of how BIM is implemented and its benefit. The findings demonstrate the connection between more intensive use of BIM and its related activities, and the critical benefits that strengthen companies and improve project performance. It highlights the pivotal role that BIM plays in digital transformation. Gathering the experiences of contractors, architects, civil engineers, MEP and structural engineers, it covers:
- Where they are in their process of digital transformation.
- How BIM is contributing value.
- How they are deploying BIM and in what ways they are leveraging the data from models and processes to improve decision-making and power integrated digital workflows among project team members.
While BIM is rapidly expanding around the globe, there are significant differences between construction companies’ experience with and business benefits from BIM within various regions. This report reveals the value that contractors find in their use of BIM in nine of the largest global construction markets: Australia/New Zealand, Brazil, Canada, France, Germany, Japan, South Korea, U.S. and the U.K.
It offers insights, both overall and by market, into the profile of contractors using BIM, the benefits and ROI derived from BIM investments and the critical activities and practices where BIM is implemented. Snapshots of contractor responses by region also provide additional understanding of the current use and future potential of BIM globally.
In 2012, Dodge D&A published the first Business Value of BIM for Infrastructure “SmartMarket” Report. The conclusions of the report were twofold: BIM in infrastructure appeared to lag about three years behind the building sector, but there were many positive signs that its use was poised to become more widespread.
The findings of the 2017 update clearly demonstrate the fulfilment of that promise. It highlights the value BIM provides for owners, engineers and contractors in the infrastructure sector in the US, UK, France and Germany. It provides a comprehensive view of BIM for infrastructure through articles describing BIM use on specific road, airport and rail projects. This includes the use of BIM across and beyond the lifecycle of an asset, including creating models of existing assets for planning and using data from models for operations and asset management.
Data from the study of transportation infrastructure in the US, UK, France and Germany includes:
- The increasing rates of implementation among BIM users.
- The benefits of using BIM, the investments made to enhance those benefits and its perceived ROI.
- The perspective of non-users, including their attitudes toward BIM and factors that could drive adoption.
- Individual breakdowns of the top findings in the four countries featured.
With annual revenues of nearly $10 trillion, or about 6% of global GDP, the engineering and construction industry is the cornerstone of the world’s economy.
The industry is ripe for change: labour productivity in construction has been stagnating for decades and companies have been slow to adapt to new challenges and innovate. The whole industry is about to be transformed, however, by digital technologies, with BIM at their core.
Digital in Engineering and Construction: The Transformative Power of Building Information Modeling was produced to explain that individual companies that ignore digital transformation will struggle to survive. For the adopters, speed matters: there is only a narrow window of time during which a digital savvy outlook provides a significant competitive advantage over the average industry participant.
This report outlines the main technological advances that will soon transform the engineering and construction industry and highlights the crucial digital opportunities along the asset lifecycle. It assesses the overall impact of technological transformation through three case studies and explores the implications for stakeholders.
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