new study: cost pressures expected to challenge engineering and construction companies in 2020

Although signs are pointing to a generally robust 2020 for the nation's engineering and construction companies, the horizon is not entirely cloudless, says a report released by the Deloitte accounting firm, whose US offices are in New York.

The industry's traditionally low margins, combined with increasing project complexity, fierce competition from Asian companies and supply chain constraints, will likely continue to put extra pressure on US companies' profitability in 2020," says Deloitte's 2020 Engineering and Construction Industry Outlook.

The report also notes that "construction and input costs for key building materials, such as steel, are rising, largely driven by limited supply and tariff uncertainties."

Such challenges, the Deloitte publication continues, "make it important for contractors to be proactive in managing processes and operations that contribute to margins and profitability, adding efficiencies and optimization where possible."

Among the trends pointed to in the report that could positively impact the bottom line is a move in the industry towards modularization and the prefabrication of components.

That trend is becoming so pronounced, notes the report, that many companies have launched their own module assembly yards, described as "strategically located sites for fabrication and assembling building elements that can then be transferred to a building site for rapid assembly."

The report also predicts a greater use of the kind of smart project management that will see companies adopting a number of emerging digital technologies.

"Digital technology and real-time date enable schedulers to make better informed decisions around scheduling labor and materials for a particular project," notes the report.

"Project monitoring is moving beyond documenting cost overruns and construction delays to include more real-time and forward-looking insights."

Such technologies, recommends the Deloitee study, will also "eliminate the need for manual data entry and provide the date required to access project status and identify trends and areas that should be addressed."

By Garry Boulard

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