Top Three Trends in 2012 for the Engineering and Construction Industry

The U.S. engineering and construction industry has been battling through tough times over the past three years, as reflected in decreased spending on all projects, from residential construction to commercial construction. Through November of 2011, total construction in the United States was reported at US$390.5 billion, down two percent from the previous year. While spending on U.S. construction projects is generally down, China, India and the Middle East continue to increase construction spending, and have emerged as bright spots in the industry.

Technology professionals serving the engineering and construction industry should be aware of three major emerging trends in 2012.

Trend #1: Construction projects will continue to increase in complexity

From new, beautiful skyscrapers such as the 2,700-foot tall Burj Khalifa in Dubai, United Arab Emirates, to large infrastructure projects such as China’s South-North Water Diversion project, building has never been as complicated as it is today. And today, those complexities are mainly overseas, with only three out of the twenty most expensive infrastructure projects located in the U.S.

Complex projects put even more pressure on companies to perform. Most projects have return on investment (ROI) figures that range from two to five percent. Cost overruns, delays in schedule or materials, and mistakes in the design that cause changes and rework, all increase financial risk and reduce the ROI. A loss on one project can potentially wipe out gains from other projects for the entire year. Collaboration and communication is a key aspect of reducing errors and risk.

Trend #2: Economic pressures will continue to force companies to work globally, with increased competition for the same projects

Working globally is a requirement to staying competitive in today’s environment. Whether partnering with other companies to win business or submitting proposals on their own, estimating and bidding on projects is time-consuming, difficult and costly for companies. Understanding which projects to bid on and increasing win rates is essential to reducing risk and increasing profits.

In order to be successful, a better understanding of an owner’s requirements, vision and timetable, as well as the construction company’s own history of dealing with the potential client, could be a key to success. Tools to track bid history, client information, and previous estimates for similar work can be utilized to gain a greater understanding of how to proceed.

Trend #3: Owners are demanding a more efficient way of turning over all documents at the end of a project.

Environmental concerns and a focus on reducing operating costs for complete projects have many companies looking for a better way of maintaining their assets. Although building construction projects are costly, the majority of the cost comes in the operations and maintenance phase. With the lifespan of some projects estimated to be 50, 60 or even 100 years, maintenance costs will be far greater than the initial construction costs.

Owners are requiring better documentation at the end of a project — instead of paper drawings, blueprints and photos, they are demanding digital copies of as-built drawings, change orders, warranty information, operating procedures, contracts, and permit approvals. Digital handover of this information is now a requirement of most owners. Tracking the repair history, energy consumption, warranty information and projected replacement costs for equipment are helping owner operators reduce costs and extend the lifespan of their assets.

The construction industry continues to drive many economies worldwide, and creates beautiful marvels of engineering across the globe. As projects become more complex and challenging, and as winning profitable contracts become more competitive, companies will rely more and more on technology to help them be successful. Operating and maintaining these projects into the future is a key financial consideration for owner operators.

Scott L Bartlett is senior director of engineering and construction industry marketing at Oracle.