Construction

Engineering & Construction Services

The Engineering & Construction Services industry provides engineering, construction, design, consulting, contracting, and other related services that support various building and infrastructure projects. The industry is primarily made up of four major segments: engineering services, infrastructure construction, non-residential building construction, and building sub-contractors and construction-related professional services. The infrastructure construction segment includes companies that design and/or build infrastructure projects such as power plants, dams, oil and gas pipelines, refineries, highways, bridges, tunnels, railways, ports, airports, waste treatment plants, water networks, and stadiums. The non-residential building construction segment includes companies that design and/or build industrial and commercial facilities such as factories, warehouses, data centers, offices, hotels, hospitals, universities, and retail spaces like malls. The engineering services segment includes companies that provide specialized architectural and engineering services such as design and development of feasibility studies for many of the project types listed above. Finally, the building sub-contractors and other construction-related professional services segment includes smaller companies that provide ancillary services such as carpentry, electrical, plumbing, painting, waterproofing, landscaping, interior design, and building inspection. The industry’s customers include infrastructure owners and developers in the public and private sectors. Large companies in this industry operate and generate revenue globally and typically specialize in multiple segments.

Home Builders

The Home Builders industry is comprised of companies that develop new homes and residential communities. Development efforts generally include the acquisition of land, site preparation, the construction of homes, and home sales. The majority of industry activity is focused on the development and sale of single-family homes, which are typically part of company-designed residential communities. A smaller segment is centered on townhomes, condominiums, multi-family housing, and mixed-use development. Many companies in the industry offer financing services to individual homebuyers. The industry is fragmented, as there is a large number of developers of all sizes, which vary in company structure and geographic focus. Listed companies tend to be significantly larger, and more integrated than the numerous privately held home builders.

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Source: SASB

The construction industry faces significant challenges, including high levels of energy consumption, waste generation, and greenhouse gas emissions. However, many governments and corporations are implementing strategies to reduce emissions and waste, including smart technologies, green construction, and resource efficiency. The sector is becoming more sustainable, with companies recognizing the need to develop structures that are scalable, greener, healthier, and more technologically advanced. Additionally, new regulations are pushing the industry to look for more circular and sustainable solutions. Numerous initiatives are creating more sustainable outcomes and investment opportunities. These initiatives include considered planning and usage to reduce waste, modular and off-site construction to reduce energy consumption, sourcing renewable and recycled materials, and implementing water-saving devices to maintain sustainability. Overall, the construction sector has made significant strides towards sustainability, but there is still much work to be done to address the challenges of the industry.

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Industry Characteristics

• Sustainable construction means building with renewable and recyclable resources and materials. During construction projects, care must be taken to reduce waste and energy consumption where possible and protect the natural environment around the site. The end result of a sustainable construction project must be an environmentally friendly building or environment. Source: GoConstruct
• The World Green Building Council’s 2018 report shows that although cost remains a concern, owners of green buildings report that money is saved through reduced operating costs thanks to the sustainable materials used. Source: GoConstruct
• The trend towards sustainable construction is overall positive but the sector still needs to evolve in how it addresses global warming, biodiversity loss and ecosystem collapse and water scarcity. Source: WEF

Sustainability Impact

• The construction industry is a massive consumer of raw materials and natural resources, and it generates an estimated 39% of the world’s carbon emissions according to the World Green Building Council. Source: Forbes
• The construction sector is responsible for 37% of total global energy-related CO2 emissions, 69% of those emissions come from operating and using existing buildings. Source: WEF
• When it comes to sustainable sourcing of required raw materials, just over half (55%) of engineering and construction companies have significant or complete visibility into their own processes, and only 16% have the same visibility into their suppliers’ processes. Source: Forbes
• When it comes to the ethical sourcing of necessary labor, only 50% have significant or complete visibility into their own processes, and just 17% have the same level of visibility into their suppliers’ labor-related processes. Source: Forbes

Sustainability Investments to watch

• The materials used on a construction project are the perfect opportunity to implement more sustainable practices. Considered planning and usage will help reduce the amount of waste on a project, as there will be fewer materials ordered at the beginning stages. Having limited materials on-site will influence the way they are used, maximising efficient use and reducing the chance of reckless waste. Source: CHAS
• The industry has also seen a move to more modular and off-site construction with elements arriving on site in a ‘finished’ form. This significantly reduces waste from the approach to manufacturing in controlled environments. This can still produce material that leads to waste on site, notably through protective packaging such as plastics. So while off-site construction can help reduce waste we still need to be aware of the need to find ways to capture, recover, reuse and recycle. Source: CHAS‍
• By sourcing locally, the social aspect of sustainable construction could be being met by helping to support local jobs and creating a positive financial impact for the community. Source: CHAS‍
• Energy consumption in the built environment is an opportunity to reduce impacts by making buildings more thermally efficient meaning they take less energy to heat or cool. They can also be designed to allow better use of more natural light, again reducing energy consumption. Source: CHAS
• (1) Create a long-term strategy that considers sustainability in every process from start to finish; (2) Source materials ethically and ensure labor standards and fair humanitarian practices are in place with all subcontractors and suppliers; (3) Implement sustainable design, engineering, and construction practices powered by relevant data to track, measure, and reduce emissions and waste throughout the project lifecycle; (4) Use logistics processes that optimize deliveries to reduce mileage, emissions, and carbon footprint; (5) Operate assets and equipment in an energy-efficient manner that is safe for the environment and for the workforce. Source: Forbes
• Improvements will be driven by research and development, adapting cost allocation and practices in the sector and enshrining regulatory changes. Source: WEF
• There are many practices construction companies can implement and accelerate to reduce their impact on biodiversity loss. These include the creation of new habitats, buffer areas and landscapes, which help prevent biodiversity loss in the areas they operate. Source: WEF
• The sector can be a part of the solution for water scarcity by developing new water infrastructure. A rapid increase in the production of large-scale water storage and recycling systems, flood control structures, desalination plants and improved sewage systems could make the most of our dwindling water resources, which is a monumental challenge. Additional investment needed for developing water infrastructure is thought to be around $6.7 trillion by 2030 and $22.6 trillion by 2050. Source: WEF

• Construction of new buildings
• Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings)
• Installation, maintenance and repair of energy efficiency equipment
• Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings
• Installation, maintenance and repair of renewable energy technologies
• Manufacture of cement
• Manufacture of equipment for the production and use of hydrogen
• Professional services related to energy performance of buildings