1. E&C firms strive to balance sustainability and efficiency
Sustainability continues to be a business imperative for the construction industry. E&C companies face a multidimensional challenge on this front as they adapt to evolving market trends and environmental regulations and meet customer demands for greener buildings, while also preventing construction costs from accelerating too rapidly.
According to the International Energy Agency, buildings account for 30% of global energy consumption and 26% of global energy-related emissions.5 With the growing adoption of efficient building materials and sustainable construction practices, the industry is expected to be better positioned to accelerate changes and align with the International Energy Agency’s Net Zero Emissions by 2050 Scenario, which requires all new buildings and 20% of existing structures to be zero-carbon-ready by 2030.6 According to the US Green Building Council’s 2023 report, sustainability is a top priority for most surveyed E&C firms, as it aligns with their organizational mission and business strategies.7 Strategies such as reducing the embodied carbon of key construction materials, passive design principles, and the use of energy-efficient equipment can accelerate decarbonization by minimizing the overall carbon dioxide emissions associated with both the construction and operation of a building.8
The US government is also prioritizing sustainable construction through the Federal Buy Clean Initiative. For instance, the initiative has led to the specification of more than US$2 billion for the procurement of lower-carbon construction materials like asphalt, concrete, and steel for federal procurement and their use in federally funded projects. It also resulted in the allocation of US$100 million to support state, local government, and public utility purchases of building products derived from converted carbon emissions.9
The IRA incentivizes businesses for energy-efficient improvements such as insulation, lighting, and heating, ventilation, and air conditioning systems through funding of more than US$1.7 billion on top of additional tax credits.10 Efficiency—that is, delivering structures that minimize resource usage while optimizing operational performance—is likely to become key to sustainable construction. The upfront costs associated with sustainable construction can be offset by reduced long-term life cycle costs. Such reductions in costs may be derived from the usage of high-performance facades and energy-efficient systems.11
Furthermore, firms can experiment with an array of passive design techniques to bolster building efficiencies and reduce energy demand. These techniques may include orienting structures (buildings) to avoid or capture solar heat, designing green roofs to reduce heat absorption and provide insulation, incorporating energy-efficient fixtures and daylight-responsive lighting controls to reduce energy consumption, and designing building envelopes for effective insulation and moisture control to stabilize indoor temperatures.12 Delivering sustainable structures in a cost-effective manner is paramount for E&C firms in differentiating themselves in the market and satisfying customer priorities. E&C companies are likely to continue exploring innovative and technology-enabled strategies to balance sustainability and efficiency in 2024.
In addition to balancing sustainability with efficiency, the increasing occurrences of severe weather events such as hurricanes, floods, and wildfires have raised the focus on resilient design. As highlighted by the US Green Building Council, building owners and customers are showing greater interest in green building approaches that address a range of resilience demands.13 With such new demands on both sustainability and resilience, the industry is poised to take advantage of an increase in the development of advanced and emerging materials such as self-healing or high-performance eco-friendly concrete, electrical steel, graphene, and carbon fiber composites. These new purpose-driven materials are engineered to surpass the capabilities of naturally occurring materials and offer benefits such as durability, flexibility, circularity, stability, and efficacy.14 Sustainable materials such as treated wood, low-carbon bricks, and silica fumes15 may also see an uptick as E&C firms work to reduce the carbon footprint of new buildings.
Regardless of the method for achieving sustainability, E&C companies are expected to begin prioritizing sustainable design tactics and structural performance during the conceptual phase. Such early planning can result in substantial reductions in carbon emissions.16 E&C companies can also incorporate circular economy principles early within the design and construction process. Based on these principles, companies may engage in reusing materials, designing structures for disassembly, and reducing waste to address environmental concerns and support business growth.
Utilizing technologies and techniques such as optioneering powered by generative design, simulations, and building information modeling (BIM) can allow companies to model a building’s performance and carbon footprint, and estimate both cost and schedule prior to construction, thereby enabling seamless project delivery. These technologies can also improve efficiency, increase delivery confidence, and hone resource allocation, ultimately lowering project expenses and risks. Furthermore, applications of BIM, IoT sensors, data analytics, and energy optimization techniques can contribute to reducing emissions.
2. E&C firms to unlock new value by leveraging digitalization and adopting generative AI
In recent years, the E&C industry has gradually adopted digital technologies to help improve processes and efficiencies. However, with the rise of generative AI and other disruptive technologies, the sector is now seemingly poised to realize improvements in project design, schedule optimization, cost controls, site inspection, safety, compliance, and quality assurance.
The Deloitte AI Institute defines generative AI as “a subset of artificial intelligence in which machines create new content in the form of text, code, voice, images, videos, processes…”17
Industry leaders continue to prioritize technology investments, aiming for efficiency improvements in order to mitigate ongoing workforce, cost, and supply chain challenges.18 The rise of generative AI could mark a pivotal moment in the industry’s digital transformation, building on the momentum gained during the pandemic. Both E&C firms and construction technology companies are actively exploring generative AI’s potential for enhancing efficiencies and are working on solutions to harness this technology to suit their business needs.19
In a recent Deloitte survey, 55% of chief operating officers indicated that the main barrier to creating business value with artificial intelligence was identifying the right use cases.20 Additionally, top of mind for E&C firms are concerns around cyber risk, data security, and lack of trust.21 Developing comprehensive risk mitigation strategies can help address concerns as companies explore generative AI applications.
Figure 1 presents some use cases that E&C companies could consider leveraging in 2024 and beyond.22 These scenarios illustrate the diverse applications of generative AI across various construction stages that can help companies achieve benefits such as cost reduction, enhanced building performance and safety, and greater sustainability.
