New Building, Infrastructure & Construction

Historically driven by a voice of regulations (and not a voice of customers), the construction of Building & Infrastructure will change deeply in the long run by looking at the end-use expectations of their systems: affordable wellbeing, precision turnkey, carbon neutrality, total cost of ownership, inter-connected modularity, risk prevention, experience-based interaction.

The building & infrastructure industry is in the early stage of massive transformation that may take a few decades to fully play out. For the construction alone, six key sector dynamics have been identified with various levels of intensities across the value chain.

1. Changing basis of competition - De-commoditization, servitization, internationalization (new entrants) and consolidation (up to backward/forward integration to some extent).

2. Ecosystem & value shifts – Differentiated market growth with alliances in emerging ecosystems around digitalization, circular transition and solutions (client, data, value split).

3. Resource & margin squeeze – Rising costs of energy/materials with PPI to monitor linked to sustainability /resource scarcity plus supply chain disruptions adding delivery delays.

4. Climate change imperative – Net-zero ambition pressured by aware consumers and regulations, carbon price modifying economic trade-offs in terms of production or use.

5. Tech & digital equity story - Players started to embrace digital and technologies such as IoT and AI but most of them are slow to scale, leaving great sources of savings on the table.

6. Future of work - Growing shortage of skilled workforce in the industry reinforced by aging populations in some regions, which asks for rethinking talent & skill management.

The economic environment is a catalyst for players to manage their portfolio actively (value chain transparency, merger & acquisition, carve-out, etc.), rethink value propositions (green offerings & value selling, product value management/redesign-to-cost, etc.), transform targeted processes (customer experience, market analytics, pricing, low carbon sourcing, etc.) without forgetting to streamline operations including G&A leveraging digitalization at maximum.