The Department of Economic and Social Affairs of the United Nations Secretariat is a vital interface between global policies in the economic, social and environmental spheres and national action. The Department works in three main interlinked areas: (i) it compiles, generates and analyses a wide range of economic, social and environmental data and information on which States Members of the United Nations draw to review common problems and take stock of policy options; (ii) it facilitates the negotiations of Member States in many intergovernmental bodies on joint courses of action to address ongoing or emerging global challenges; and (iii) it advises interested Governments on the ways and means of translating policy frameworks developed in United Nations conferences and summits into programmes at the country level and, through technical assistance, helps build national capacities.
Globally, more people live in urban areas than in rural areas, with 55 % of the world’s population residing in urban areas in 2018. In 1950, 30 % of the world’s population was urban, and by 2050, 68 % of the world’s population is projected to be urban.
The world is changing faster than ever before. Consider just one of the global megatrends shaking up the construction industry: the population of the world’s urban areas is increasing by 200,000 people per day, all of whom need affordable housing as well as social, transportation and utility infrastructure. In the face of such challenges, the industry is almost under a moral obligation to transform. Its transformation will have transformative effects elsewhere: on the wider society, by reducing construction costs; on the environment, by improving the use of scarce materials or by making buildings more eco-efficient over time; and on the economy, by narrowing the global infrastructure gap and boosting economic development in general.
The engineering and construction (E&C) industry experienced robust activity in 2019. The year ahead promises continued dynamism as E&C firms are positioned to be active participants in building the smart, connected future. Much of this activity will be focused on the increasing urban global footprint, where smart city mega-projects are on the rise. Closer to home, the US transportation and infrastructure upgrade initiative promises to infuse the country’s failing bridges and roadways with investments for E&C companies to participate. However, there are some challenges that face E&C firms moving forward as well. These include continued cost pressure and labor shortages that could complicate the productivity of the industry and constrict revenue. The adoption of digital technology and artificial intelligence could alleviate some of these issues, but there is the additional challenge of efficiently and effectively implementing the technology.
Growth prospects for engineering and construction firms remain upbeat
The engineering and construction (E&C) industry has had a robust year, and E&C firms have been positioned as active participants in building the smart, connected future. Overall market growth is expected to continue through 2019 as construction spending follows the overall GDP growth rate. While firm revenues are steadily rising, the bottom lines are still under considerable pressure. Among the challenges the industry faces are sustained cost pressures, ongoing labor shortages that affect productivity, and trends toward fixed-bid projects that often demand a level of pricing and operations precision that is difficult to obtain with traditional systems. While the industry still trails broader digital adoption maturity,1 the continued adoption of digital technologies could alleviate some of these issues. It can also present additional hurdles in terms of successful implementations and upskilling the workforce to absorb the technologies.
The global market for second homes has changed since the Global Financial Crisis (GFC). Buyers are prioritising income returns in a low interest rate environment.
Looking at E&C market conditions in the U.S. and Canada right now—and barring any unforeseen events—both are about as good as we can expect them to be. In both countries, the demand for investment in all types of infrastructure is very strong and pervasive. Broadly speaking and looking across the breadth of the built environment as a whole, and based on industry backlogs that are (on average) booked through 2018, the next 12 months should be as good as—or even better than—2017.
Through 2019, FMI expects E&C spending to continue to grow at an anticipated 3% annual rate, with mostly positive, albeit moderately decelerating, growth rates across the residential, nonresidential buildings and nonresidential structures market sectors.