Canada's Condominium Magazine

Infrastructure, power projects driving resurgence in global construction industry

Optimism prevails in the global construction industry, which finds itself in better shape today than it was four or five years ago, when the world entered a period of economic uncertainty. Based on rising backlogs and healthy margins, a majority of the world’s construction companies say they have seen an upward trend since 2010. However, market conditions have not completely recovered to where they were six to eight years ago. The survey from which these views emerged was done by the international consultancy KPMG, titled, optimistically, “Ready for the next big wave?” Each of the 165 participants was personally interviewed “face to face” by a KPMG consultant, a fact that makes the survey unique, the company says.

subway-TTC-Downsview-construction-infrastructure-government-transit-urbanization-densification-Toronto-Condo.ca
Government-backed infrastructure projects like subway construction are the biggest driver of the global construction industry today, according to survey by KPMG.

And what is powering the “next big wave”? Government-driven infrastructure projects are the single biggest driver, according to the majority (66 per cent) of the companies interviewed, which range in annual revenue from $250 million to more than $5 billion. Next to that come more generalized economic growth, and increasing urbanization and population growth, which fuel construction of residential housing.

More new infrastructure, power, and mining projects are emerging, the KPMG report states, as public funding becomes increasingly available. The dependence of engineering and construction companies on government infrastructure projects, however, is also cause for the greatest concern. Even more of the companies (72 per cent) said that budget deficits and uncertain public funding are the biggest barrier to their growth. With government debt so high in many countries, there is little “flexibility” to provide further stimulus to the economy. Without that stimulus spending, which usually includes infrastructure projects, some construction companies would founder. Cancellation of big projects by governments can be devastating for companies.

Canadian respondents see stability, leading to cautious optimism. The survey results suggest that growth is going to be slow but there are a number of factors that will support steady activity, including demand for new infrastructure projects in the mining and energy sectors, government funding for public transit, and population growth. In the next few years, companies will be tested on their ability to diversify, manage labour cost escalation, and deploy human talent in remote areas.

KPMG in Canada

By sector, the most “popular” among the world’s construction companies is power and energy. Power is “undisputedly the dominant new sector,” with power stations being built around the world, the report states. More than half (57 per cent) of the companies surveyed rated power as their highest priority. The surge in power plant construction is consistent with the global quest for energy security. The increasing diversification of the power mix in many countries, as renewables such as wind and solar, as well as unconventional oil and gas, become more important, also contributes to the interest in the power sector.

The report says that the global industry needs to standardize its practices more, concentrate on better management for mega-projects, and develop a culture of risk management.

Other Popular Stories

Living happily ever after in a condo: Top 5 “Happiness Factors” to consider before buying a condo; it’s not what you think

Living happily ever after in a condo: Top 5 “Happiness Factors” to consider before buying a condo; it’s not what you think

The condominium market is increasingly the go-to choice for urban dwellers, with the price of detached houses now out of reach for many. Condo living have distinct advantages in this hot market. It also has its own unique issues, starting with how to find a reputable builder/developer management company — and the 4 other “Happiness…

Social housing crisis — With a wait list of 181,000, what help is in sight for the proposed shut down of 1000 TCHC units?

Social housing crisis — With a wait list of 181,000, what help is in sight for the proposed shut down of 1000 TCHC units?

The pending Rental Fairness Act attempts to protect the 1.2 million rental householders in Ontario. But there are 181,000 people on the social housing waiting lists in Toronto alone that apparently have no relief in sight — with Toronto’s plan to shut down another 1000 units. The Ontario government may not be directly responsible for…

Rental Fairness Act: Act of kindness, or barrier to affordable housing? Either way, it will change everything for renters.

Rental Fairness Act: Act of kindness, or barrier to affordable housing? Either way, it will change everything for renters.

With 1.2 million rental households in Ontario, frequently rented from condo-owners, the stakes are high for Ontario residents in a “fairness” rental act. Ontario is following through on their announcements of rent control reform. A news release from Ontario’s Ministry of Housing makes it clear The Rental Fairness Act, 2017, is a coming reality. It’s safe…

SHARE WITH US

Subscribe to condo.ca

@ 2017 condo.ca  |  Designed by Persona Corp