Investment in infrastructure projects will be a key part of the global long-term economic recovery strategy and help drive growth in the construction sector. Governments worldwide are looking to increase infrastructure spending to jump start economies ravaged by the COVID-19 pandemic.
Exploring different infrastructure projects can reap significant economic dividends for construction companies. According to Boston Consulting Group, “government investment in infrastructure has an annual multiplier effect of 0.4 to 2.2 times GDP.” BCG also noted that “infrastructure can help create at least 10,000 total jobs for every $1 billion invested.” As infrastructure projects continue to ramp up to fuel economic continuity, growth in the construction sector will occur in tandem with increased investment. To drive post-pandemic and long-term construction growth, companies should look into exploring areas such as transportation projects, seawall construction and water infrastructure improvements, which are some of the industry’s major areas of opportunity right now.
Spending on transportation infrastructure projects continues to move forward. Some highway and road construction spending will be fueled by a U.S. Department of Transportation investment of $1 billion to fund 70 surface transportation infrastructure projects in 44 states. Announced in September, this funding, which is awarded through the Better Utilizing Investments to Leverage Development Transportation Discretionary Grants program, is aimed at supporting roads, bridges, transit, rail, ports and intermodal transportation projects.
Airport improvements present another area of growth opportunity for the construction industry. Almost every major airport in the United States has a multibillion capital improvement program underway and new projects will continue to be funded.
Rising sea levels are creating a heightened sense of urgency for the construction and repair of seawalls in coastal regions. As a result, the construction sector will see a lot of projects coming online in this area as the problem continues to be addressed across the globe.
A study conducted by the Center for Climate Integrity and engineering firm Resilient Analytics, projected that coastal communities will need to spend $400 billion over the next 20 years to protect their shores from rising sea levels. The report indicated that 50,000 miles of coastal barriers will have to be built by 2040 and Jacksonville, Fla.; New York City; Virginia Beach, Va.; and Galveston, Texas, will spend the most on seawall construction. U.S. communities are already bidding out these projects. San Francisco International Airport announced they are moving forward with a $587 million plan to build a major new seawall around the entire airport. Cities such as Miami and Charleston are also considering billion-dollar seawall projects. Earlier this year federal officials proposed a $1 billion dollar seawall around the lower Charleston peninsula. Cost estimates for the nine-mile, 12-feet-tall fortification project ranged from $1.75 to $2.2 billion. And the U.S. Army Corps of Engineers recently revealed an updated $26 billion storm barrier project to protect the Texas gulf from storms.
According to a recent ASCE status report on American infrastructure, problems with the nation’s water infrastructure are attributable to the many aging drinking water pipelines laid from 1900 to 1950, contributing to an estimated 240,000 water main breaks per year in the country, wasting more than two trillion gallons of treated drinking water. Additionally, “lead pipes and fixtures, which were commonly installed through the mid-20th century, are still in service in some cities,” according to the report.
Earlier this year, the U.S. EPA announced $6 billion in funding for water infrastructure projects. According to the EPA, “this year’s funding will provide up to $6 billion to support $12 billion in water infrastructure projects while creating more than 35,000 jobs and improving public health and environmental protection in communities across the country.” This round of funding prioritizes construction-ready projects in three areas: updating aging infrastructure, reducing exposure to lead and addressing emerging contaminants, and water reuse and recycling. Transportation, seawall and water infrastructure projects will continue to serve as key areas for growth that construction companies should think about exploring. These and other infrastructure projects are needed to upgrade failing infrastructure in the country. The ASCE’s 2017 Report Card gave the nation a D+ grade for infrastructure and estimated that by 2025 a total investment of $4.59 trillion will be required to improve the nation's infrastructure. As governments across the world continue to prioritize and implement infrastructure economic recovery plans, the construction sector will be executing on these plans, growing in tandem with the economy.
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