The Future Is Now: Setting Yourself Up for Success
As I look around at the business environment right now, I’m reminded of a quote from science fiction author Wayne Gibson, who said, “The future is already here—it’s just not evenly distributed.”
We’re seeing this right now in E&C, where over the next few years, continued put-in-place growth will be similar to what we’ve seen over the last few years. With the continuing industry growth trends, labor and productivity challenges, and retiring boomers, addressing the opportunities and challenges of the “here and now” would be the easy choice. However, the risk in remaining solely focused on the short term is that the industry will likely look and operate very differently in 10 years than it does today. Firms that choose to ignore external trends—and then adapt their business models and approaches accordingly—may find themselves on the outside looking in.
For starters, we expect nearly 50% of construction to occur in just 20 metropolitan markets over the next three to five years, and just five of these metropolitan markets will make up one-fifth of total construction in the U.S. These include New York, Los Angeles, Dallas, Houston and Washington.
We’re also starting to see new entrants, new business models and a tremendous amount of venture capital coming into the industry—all designed to disrupt an industry that has long been accused of being stale and lacking in innovation. Technology is redefining both what the customer demands and who the customer is. Consider the health care segment, where systems are largely turning their attention away from the hospital and focusing on clinical and outpatient care. At the same time, CVS has announced its intention to buy Aetna, and Amazon, Berkshire and JP Morgan are combining forces to determine how technology can simplify the current health care system.
We’re seeing increasingly complex buildings and infrastructure. This complexity is not only what the asset represents, but also the expectations related to its delivery. For example, the average project value among state DOTs has increased by almost 20% in a little over 10 years, while the average schedule duration has shortened by almost the same amount.
With greater access to data and data analytics, industry leaders are beginning to incorporate these tools as a central aspect of their business and profiting from them. In most cases, profiting from data analytics means driving better results from more informed decision-making. But some firms are now employing characteristics of manufacturing and available technologies to improve project outcomes, both in the product itself and in the process. Moreover, some are finding ways to reduce costs or even create new profit streams from greater data insights.
In this edition of the “FMI Quarterly,” we explore the convergence of engineering, construction and manufacturing, and discuss the effects of technology innovation and how these trends are fundamentally changing the way firms do business. Our authors also tackle topics such as strategy in a time of industry disruption, show us how to address the workforce gaps and related risks for E&C, and discuss how the rise of solar photovoltaics is creating significant O&M opportunity for today’s engineering and construction firms.
Given the changes on the horizon, today’s leaders must have a truly strategic and transformative mindset and be open to exploring creative solutions anywhere they may show up. That’s what this issue of the Quarterly is all about, and we hope you enjoy it.