KPMG Familiar Challenges New Solutions

Familiar
challenges—
new approaches
2023 Global Construction Survey
Foreword
The 2023 Global Construction Survey finds the pressure to reduce embodied and operational
industry in a cautiously optimistic mood, as carbon footprint, waste and pollution—at pace—
the combination of widespread government that could be costly and presents significant and
infrastructure stimuli, the renewable energy multi-dimensional obstacles. 01
revolution, increasing capital investment in
The technology dilemma persists, as both
strategically important sectors, and a post-
project owners and, particularly, E&C companies
COVID-19 pipeline create excellent opportunities
for engineering and construction (E&C)
ponder where to invest and how to find the
substantial sums needed to become digital
02
companies.
leaders. Some of the key breakthroughs—like
At the same time, the industry faces a modular/offsite manufacturing—are still relatively
continuing volatile environment, with continued low-tech and, if not widespread, are definitely
Geno Armstrong
03
supply chain disruption, rising inflation of energy, gaining momentum. According to our survey
materials and wages, labor shortages and a respondents, the proportion of projects using 50 Global Lead and Principal, Infrastructure,
Capital Projects, and Climate Advisory
possible recession, which could have a major
impact on certain subsectors.
percent or more modular/offsite manufacturing is
set to rise from 14 percent to 28 percent in the KPMG in the US 04
next five years (see Exhibit 19).
Meanwhile, the perennial challenges of poor Clay Gilge
project performance, low productivity, and costly And the looming specter of big tech casts a National Lead and Principal, Infrastructure,
major project failures—and high-profile industry
bankruptcies—continue to dog the sector.
perpetual shadow over an industry ripe for
disruption, as traditional players face the threat
Capital Projects, and Climate Advisory 05
KPMG in the US
of convergence, and losing market share to
Environmental, Social, and Governance (ESG)
more digital-savvy interlopers. Kevin Max
presents both opportunities and risks. On
the positive side, the shift to a low-carbon, This is KPMG’s 14th Global Construction Survey,
Principal, Infrastructure, Capital 06
Projects, and Climate Advisory
biodiverse, circular world can drive infrastructure and the biggest to date, containing the insights
KPMG in the US
and construction spend and bring competitive of nearly 300 E&C firms from around the globe.
advantage, improved ROI for forward-thinking, Thank you to all those who took the time to uneel Vora
S
diverse, and purposeful businesses, who should participate in the ongoing debate about how to Partner, Business Consulting – Capital
be top of the queue for both capital and new advance an industry that plays a huge part in all Projects and Industry 4.0
talent. However, ESG also brings rising scrutiny our lives and can be an incredible force for good. KPMG in India
and compliance requirements, as well as
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KPMG International entities provide no services to clients. All rights reserved.
Contents
Survey at a glance Profitable, View from the
sustainable industry:
growth–or boom
and bust?
Building supply 01
chain resilience
02
View from the The rising View from the
industry: influence of ESG industry:
Driving continuous Reducing wildfire 03

improvement risk in California
04
View from the The great View from the
industry: innovation industry:
At the forefront
race
Embracing
05
of sustainable modularization and
construction digital technologies
06
Key About the survey The KPMG Global
takeaways Engineering &
Construction
practice

Survey at a glance
Addressing industry • Two-thirds (66 percent) of respondents are optimistic about the direction of the construction market, and 78
percent feel infrastructure stimuli will have a positive impact.
performance
challenges
• Yet project performance remains in the spotlight, with only half of owners saying their projects are completing
on time and 87 percent stating that projects are coming under greater scrutiny.
01
• To address ongoing volatility, the biggest priority is improving estimating accuracy, transferring risk, and
increasing innovation.
02
Rising influence of • ESG has climbed construction leaders’ agendas, with 54 percent “fully envisioning” the benefits of ESG and
ESG
aggressively pursuing maturity. Survey respondents say the key benefits of ESG are reputational improvement
and competitive advantage—as well as a necessity to enhance access to project capital
03
• Diversity, equity, and inclusion (DEI) is the third most important factor determining future success, as the sector
shifts away from its hard-hat image toward greater use of technology and more remote working.
• Owners are relatively more concerned with reducing greenhouse gases (GHG) while E&C companies place the
04
highest priority on DEI. Embodied carbon (carbon released during the construction process) is a growing concern
and is likely to be the subject of future regulations.
05
The great • The construction industry is starting to embrace the power of technology to transform performance—with 81
percent of E&C firms adopting mobile platforms, 43 percent using robotics process automation (RPA) and 40
innovation race percent adopting artificial intelligence (AI)—although many are in the early stages. 06
• When it comes to improving ROI on capability projects, project management information systems (PMIS),
building information modeling (BIM), and advanced data analytics are considered to have the greatest potential;
digital twins, modular/offsite manufacturing, AI, and BIM are driving the greatest gains in project performance.
• A vast majority of respondents say prefabrication is an important solution for capability projects, although just
one-quarter of E&C companies use modular manufacturing across all projects.
• There’s growing recognition of the power of technology to improve safety, notably from use of D&A and modular
manufacturing—the latter reduces dangerous, onsite work.

Chapter 1
Profitable, 01
sustainable growth— 02
or boom and bust? 03
04
05
06

Profitable, sustainable
growth—or boom and bust?
01
On the surface, the global engineering and construction (E&C) industry appears
to be benefiting from positive momentum.
With a significant post-COVID-19 pipeline, Exhibit 1: Which of the following statements best describes the direction of the construction
02
government infrastructure funding in the market?
U.S. and beyond, and ESG demands driving
renewable energy and circular economy Total 28% 38% 25% 6% 6%
3%
N=
267 03
projects, it’s perhaps little surprise that many of
the respondents to the 2023 Global Construction Engineering/construction firm 16% 37% 36% 6% 5% 121
Survey are in a positive frame of mind.

Two-thirds of this year’s respondents (66
Project or infrastructure
owner organization 38% 38% 16% 6% 6%
1% 146 04
0% 20% 40% 60% 80% 100%
percent) say they are optimistic about the
direction of the construction market and 38 Very optimistic Somewhat optimistic Neutral Somewhat pessimistic Very pessimistic
percent of project owners are “very optimistic” 05
(see Exhibit 1) compared to just 18 percent in Four out of 10 E&C respondents expect revenue pessimism about the future state of the
2021. And the proportion of owners anticipating growth in the next 12 months to be greater than market—the corresponding figure for 2021 was
greater than 20 percent capital program growth
has more than tripled from 10 percent in 2021 to
10 percent, with just 18 percent predicting zero
or negative growth (see Exhibit 2). E&C firms
29 percent (see Exhibit 1). With contractors in
the middle of supply chain disruptions and with
06
36 percent in 2023 (see Exhibit 1), the highest remain more cautious than project owners, limited visibility into owners’ robust capital plans,
figure in the 20-year history of the survey. but only a small proportion (7 percent) express such differences are to be expected.

Exhibit 2: What is the planned revenue growth for your organization over the next 12 months?
30%
27% 27%
20%
14% 15%
10% 13%
1% 2% 2%
0%
Increase by Increase by Increase by Increase by No growth Decrease by Decrease by Decrease by
0%
Decrease by 01
more than 20% 11-20% 6-10% 1-5% expected (0%) 1-5% 6-10% 11-20% more than 20%
Note: Applicable only for engineering and construction firm (N=121)
02
There’s also plenty of excitement about the in other countries. According to global research
prospect of government funding, investment and from Oxford Economics, civil engineering is
stimuli for large-scale infrastructure programs, set to be the fastest-growing sector in the
such as Creating Helpful Incentives to Produce construction market.1 More than one-third of 03
Semiconductors (CHIPS) and Science Act, survey participants (35 percent) feel this
Inflation Reduction Act (IRA), and Infrastructure funding will have a significant impact and a
Investment and Jobs Act (IIJA) in the U.S.,
India’s Production Linked Incentives (PLI) and
further 43 percent expect a moderate impact
(see Exhibit 3).
04
Make in India campaigns, and similar programs
Exhibit 3: What impact will the government’s funding, investment and/or stimulus of
large-scale construction programs (e.g., CHIPS and IRA in the U.S., other programs in the
05
jurisdictions where you operate) have on your organization in the next 12 months?
Total 35% 43% 22%

N=
267
06
Engineering/construction firm 34% 49% 18% 121
owner organization 35% 39% 26% 146
0% 20% 40% 60% 80% 100%
Significant impact Moderate impact No impact
1
Nicholas Fearnley, “Key Construction Themes 2023—Infrastructure to drive growth,” Oxford Economics, December 14, 2022

Project performance in the spotlight
Despite the confidence expressed by Exhibit 4: What percentage of your projects have experienced a schedule delay or cost impact
respondents, the industry continues to face a attributable to COVID-19?
number of challenges, in the form of continued
N=
supply chain disruption, high energy and Total 3% 13% 12% 16% 45% 11% 267
materials prices, and labor shortages that are
Engineering/construction firm 2% 17% 13% 17% 40% 11% 121
further pushing up costs and holding up projects.
Project or infrastructure 01
The after-effects of COVID-19 are still apparent, owner organization 3% 9% 12% 16% 49% 11% 146
with 45 percent of respondents saying they have 0% 20% 40% 60% 80% 100%
experienced a pandemic-related schedule delay
or cost impact of more than 20 percent (see 0% 1–5% 6–10% 11–20% More than 20% Don’t know/not sure 02
Exhibit 4).
And the sector continues to struggle with
poor project performance, with 37 percent of
respondents reporting that they’ve missed
Exhibit 5: Over the past 12 months, have any of your capital projects significantly missed 03
budget and/or schedule performance targets (20 percent or more) due to lack of effective risk
budget and/or schedule performance targets management?
over the past year due to lack of effective risk
management—this is up from 32 percent in Total 37% 44% 19%
N=
267 04
the corresponding 2021 survey (see Exhibit 5).
Engineering/construction firm 40% 44% 16% 121
In fact, only half of owners’ projects are being
completed on time. Project or infrastructure
owner organization 35% 44% 21% 146 05
0% 20% 40% 60% 80% 100%
Yes No Don’t know/not sure
06

Consequently, owners are seeing increased Exhibit 6: Which statement best reflects your perspective of the economics of large capital
interest in the economics of large capital projects and the scrutiny surrounding their actual measured benefits and return on capital
projects, with 87 percent stating that they’re post project completion?
coming under greater scrutiny (see Exhibit 6).
N=
Indeed, 28 percent of project owners say they’re Total 24% 63% 4% 9% 267
facing “greatly increased” focus and scrutiny.
Engineering/construction firm 19% 64% 10% 7% 121
Volatility has fueled market challenges, but so
have the continued stagnant productivity and
lack of innovation in E&C. Much of this is due
owner organization
0%
28%
20% 40%
61%
60% 80%
0% 11%
100%
146
01
to a highly fragmented structure where many
players have neither the size nor the incentive Greatly increasing focus and scrutiny Increasing focus and scrutiny Decreasing focus and scrutiny No change
to invest in new technology or methodologies,

especially when contractors take on paper-thin
02
margins that leave little room for error. Between
1997 and 2021, construction productivity actually
fell by 7 percent, whereas in the manufacturing
How is the industry responding to high volatility 03
sector it rose by 126 percent.
Inadequate risk management has hardly helped,
and poor performance?
with insufficient linkage between project risk
management and enterprise risk management
According to U.S. Bureau of Labor Statistics
in March 2023, construction costs rose 17.3
better contractual protection—which is about
transferring risk—is another key imperative for
04
that prevents owners and contractors from percent year-on-year.2 Add to this the war in both owners and contractors. However, such
accurately aggregating all their risks to fully Ukraine, the West potentially de-coupling its an approach can damage owner/contractor
understand their corporate risk profile. With a
multitude of players, a dearth of data sharing and
economy from China, resource constraints,
and ongoing supply chain disruption, and it’s
relationships at a time when the two parties
should work together more closely to enable
05
interoperability, and a siloed value chain, visibility evident that E&C firms and project owners face owners to better manage their own risks.
across individual and multiple projects is often continuous volatility. With both owners and contractors attempting
lacking. Project managers are often unable to
In response, 83 percent of survey participants
to transfer risk, there is likely to be an impasse, 06
identify and address poor performing projects, although continued tightness in the market
say their single biggest priority is improving the
sites, or individuals. should favor contractors, who are in high
estimating accuracy of materials and equipment,
demand.
which accounts for a significant proportion
of project costs (see Exhibit 7). Achieving
2
US Bureau of Labor Statistics, New Manufacturing and Industrial Building Construction PPI, March 2023

Exhibit 7: How important are each of the following regarding your organization’s response to
supply chain disruption, cost escalation, resource constraints, deglobalization, COVID-19 and
other disruptive events?
We are seeing a dramatic shift by

Extending the duration of planning
contractors away from fixed-price and
activities to increase confidence around 71% 21% 7%
project scope, schedule, quantities, etc guaranteed maximum-price contracts
for major projects. Whether this is the
Incorporating contractual protections for
supply chain disruptions
78% 17% 5%
result of learning from past mistakes,
acknowledging that systems and tools 01
are still not where they need to be, or
Increasing the use of commodity hedging simply driven by boards, bankers or risk
strategies to offset increasing material
prices
47% 30% 23% officers, one thing is clear: we cannot
expect business as usual. Contractors
02
are no longer willing to assume primary
Improving the estimating accuracy of responsibility for performance risk and,
materials and equipment 83% 14% 3%
as contractors transition to more open-
ended, cost-plus and time-and-materials
03
Implementing or updating the models for
contracts, owners will need to adjust
46% 31% 22% how they control projects and programs.”
remote working and job site travel
Exploring new and innovative approaches

Colin Cagney, Director, Infrastructure,
04
for project execution, including modular Capital Projects and Climate Advisory,
construction, design for manufacture and 72% 15% 13% KPMG in the US
assembly (DFMA) and 3D printing
0% 20% 40% 60% 80% 100%
05
4–5 More important 3 Neutral 1–2 Less important Total (N=257)
06

Further potential options include longer planning Exhibit 8: Please rate the following attributes that influence your organization’s success or
periods to better manage project scope, failure in dealing with disruptive events.
schedule and quantities, which, regrettably, is
Industry focus 72% 19% 8%
not always an option in commercial and mission-
critical projects. Maturity of business continuity programs 71% 20% 9%
Regions of operations 57% 26% 16%
When it comes to dealing with disruptive
events, respondents are placing a greater Size and scale (revenue) 69% 26% 5%
focus on innovation (up to 74 percent from 60
percent) and workplace demographics (up to 49
Focus on innovation
Adoption of technology
74%
78%
22%
18%
4%
4%
01
percent from 42 percent) than in the previous
Workplace demographics 49% 35% 15%
2021 Global Construction Survey (see Exhibit
Company leadership
8). Effective risk management processes and
resilience planning are also on the “to-do” list to Ownership (public or private) 54%
94%
29%
4% 1%
17% 02
help build resilience. Effective risk management 84% 14% 2%
processes and resilience planning
0% 20% 40% 60% 80% 100%
03
04
05
06

View from the industry
Building supply chain resilience
S. N. Subrahmanyan, CEO & MD, Larsen & Toubro Limited

01
To address the pandemic and wider geopolitical disruptions, And, in response to sometimes unreliable supply chains,
we enhanced our supply chain with alternate sourcing we’ve adopted indigenization, to gain greater independence.
channels, multiple local vendors and strategic tie-ups.
We devised deeper hedging strategies, adopted just-in-
In one instance we manufactured complex launching
equipment for India’s high speed railways. In another, during
02
time sourcing, and proactively engaged with our clients the pandemic, we assembled and operated the country’s
to address price variations/contractual indexation of raw largest tunnel boring machine, creating a world record for
material input costs. the highest monthly tunnelling rate of 456 meters on the 03
iconic Mumbai Coastal Road project.
04
05
06

Finally, given the risks inherent in the market in general, and in large and mega-projects in particular,
E&C companies and capital project owners are seeking ways to improve portfolio-wide risk
management. Their number one aim is to achieve clearly defined and standardized risk management
processes and controls. There is a greater emphasis upon accurate risk reporting (up to 36 percent
from 25 percent) and establishing a dedicated risk management department (up to 20 percent from
17 percent) compared to the previous 2021 survey (see Exhibit 9).
Exhibit 9: Which of the following elements are you focusing on to achieve successful portfolio-wide risk management?
01
53%
02
36%
31% 32% 54%
03
23% 22%
26% 39% 20%
35%
15%
15%
26%
9% 37%
52%
34%
19% 21%
0%
04
21% 27% 9% 21% 23%
15% 4%
9% 5%
Formal risk
management
training
Board-level risk
management
committee
Clearly
defined risk
culture
Common risk
taxonomy and
risk tolerances
Integration
between
enterprise,
Clearly
defined and
standardized
Accurate risk
reporting
Dedicated risk
management
department
Quantitative
risk analysis
tools
Don't
know/not
sure
05
portfolio and project risk
project risks management
functions processes
and controls 06
Total (N=267) Engineering/construction firm (N=121) Project or infrastructure owner organization (N=146)

Cracking the
productivity and
performance code
How can the E&C industry break the vicious
cycle of poor performance, low productivity, and
01
major project failures?
From a risk management perspective, the ability
to aggregate risk at an enterprise level can bring
02
a clearer view of portfolio risk, to avoid taking
on projects that could break the company, as
well as identifying emerging risks earlier to
enable preventative action. Better transparency,
03
allied with D&A, opens up understanding of earlier, enabling procurement teams to seek In a fragmented sector, E&C companies have
risk interdependence, both within and across alternative sources. an opportunity to form construction ecosystems
projects. It’s also important to drive capital efficiency and
where data and insights flow between
contractors, suppliers, and owners to introduce
04
There are a number of ways to improve effectiveness in a transparent and integrated
a common understanding of project delivery
productivity, including the use of IoT sensors and manner. The first step is a robust capital planning
objectives that’s aided by greater supply chain
data analytics to detect and assess problems
like damage—this enables rapid response times
and portfolio management process that is well
integrated into project governance and PMO
transparency. 05
that help minimize delays and cost overruns. activities through strong processes. Dashboards And finally, by paying careful attention to asset
Benchmarks for team performance can be and KPIs show the status and performance of owners’ customer experience, it’s possible to
easily created through shared data. Predictive
maintenance—which can increase the likelihood
projects and portfolios, and also provide insights
into updated business cases linked to operations
create more society-friendly projects that reduce
negative impact, whether it’s reducing noise and
06
of heavy equipment staying operational and as well as customer and supply chain plans and pollution, or avoiding transport closures.
minimizes shutdowns. Access to suppliers’ data models. (To learn more, read our recent paper,
helps anticipate supply chain delays or shortages CapEx decisions in a downturn3.)
3
Capex decisions in a downturn, April 2023, KPMG

Driving continuous improvement
John Murphy, CEO, J. Murphy & Sons Limited

01
One of our main core values is to continually improve. Our want to get swamped in data that overwhelms us and
other core values are to always deliver on time, on budget, ceases to be useful.
and to a high level of quality. I feel our family ownership
helps us to achieve these goals, enabling a longer-term view
We generate a lot of data from our projects, so we have to 02
think about how we can utilize the data, get it into the right
on how to realize sustainable growth five-to-ten years from
hands at the right time to drive better decision-making, and
now and to think differently about how we invest in the
business.
make more accurate predictions. Sharing data and insights
from project to project prevents us from reinventing the
03
We apply innovation from the very start of a project during wheel and helps us to work smarter across the business
engineering and design, so we can deliver the project safely, and learn from our successes, as well as our failures. Our
efficiently, with timeliness better cost control, and ultimately,
with better quality. By investing in engineering capabilities
application of technology and intellectual property also
benefits our clients through improved project outcomes.
04
and tools, we can drive efficient, practical solutions and find
As our business grows, we want to be evolutionary rather
even more efficient ways to deliver projects year-on-year.
In an increasingly digital age, data is critical for measuring
than revolutionary. We are continuously investing to keep
up with the pace of technological change—constantly
05
our productivity, determining how we deploy our resources progressing. I believe that’s how we’ll be able to maintain
more efficiently, and reducing the carbon impact of our growth and improve our performance in the future and
projects, which is especially relevant to our work in the
transport and energy sectors. At the same time, we don’t
continue to deliver high-quality projects for our clients. 06

Chapter 2
The rising 01
influence of ESG 02
03
04
05
06

The rising influence of ESG
Our recent paper, Construction in 20304, notes how the industry is regarded as high-carbon, high-waste, and high-
polluting, with significant use of scarce resources like water and minerals, moderate usage of renewable energy, and
limited progress with diversity in what remains a male-dominated sector. At the same time, E&C companies face 01
growing regulatory pressure for sustainability in both its construction methods and the buildings and infrastructure it
produces. Failure to meet such demands could impact access to—and push up the cost of—capital.
02
Looking back to our Global Construction Exhibit 10: Changing trends of an organization’s internal views on ESG
Survey from 15 years ago, the top drivers for
sustainability among E&C companies (see
Exhibit 10) was to position themselves as 2008 2023 03
innovative or environmentally aware (cited by
56% 6% 6%
56 percent of respondents), and to increase
business opportunities and competitiveness
(29 percent).
Skeptical regarding ESG
and consider it to be
similar to previous
Not in alignment with ESG and
only pursuing as required 04
sustainability trends.
However, in the 2023 survey, we see a strong (Wait and see approach)
commitment from the respondents. Nearly
54 percent fully envision the benefits of ESG
29% 54%
Fully envision the 05
benefits of ESG and
and are aggressively pursuing maturity and are aggressively
improvement, whereas, nearly 37 percent see 37% pursuing maturity
some benefit in ESG and are using targeted
approach (Exhibit 10). In addition, nearly 50 Positioned in Opportunity to
See some benefit
in ESG and are using
and improvement
06
targeted approach
percent of E&C firms view implementing the industry as partner with
ESG into capital projects and programs as a innovative and/or additional types
environmentally of clients
competitive advantage (Exhibit 11).
aware company
4
Construction in 2030, February 2023, KPMG

Project owners taking part in our global survey Exhibit 11: What benefits could your organization realize by implementing ESG into your
show substantially greater maturity in their capital projects and programs?
approach to ESG compared to E&C companies. 4%
Fight green washing 2%
In the U.S. in particular, they face increasingly 6%
32%
stringent legislation, procurement requirements, Operationalize ESG commitments 31%
32%
and building code improvements, and any
32%
laggards will have to play a fast game of catch-up. Enhance project success 35%
29%
28%
When asked about the key benefits of embedding
ESG into capital projects and programs,
Explore viable sustainability options 27%
29%
28%
01
Increased reliability 31%
the top two responses were reputational 26%
improvement and competitive advantage. Half Improved resiliency 17%
21%
of E&C companies see opportunities to gain a

competitive edge through ESG, suggesting that More inclusive and safe job sites
25%
34%
39%
45%
02
they’re beginning to grasp the value of more fully 23%
Enhanced ESG reporting 22%
embracing ESG (see Exhibit 11). Respondents 23%
from E&C also consider safe, inclusive sites as

a benefit, reflecting a desire to attract a wider
Reputational improvement
48%
47%
50% 03
33%
range of workers. Optimized resource consumption 35%
32%
04
30%
And 32 percent of owners recognize the need to Enhanced capital access 26%
32%
integrate ESG in order to enhance their access 42%
Competitive advantage 50%
to capital to fund projects (see Exhibit 11)—an 35%
12%
acknowledgment of the importance of strong Enhanced productivity or occupants 11%
sustainability credentials to satisfy investors.
Enhanced circular economy
14%
24%
23%
05
Interestingly, project owners and E&C firms 25%
24%
differ in their views over the most crucial ESG Enhanced ROI based on lifecycle approach 18%
28%
trends. The former feel that reducing GHG output
and developing renewable facilities are most
0% 10% 20% 30% 40% 50% 06
important, while contractors are more concerned Total (N=267) Engineering/construction firm (N=121) Project or infrastructure owner organization (N=146)
with social considerations, such as DEI, and

meeting government requirements.
As the three forces of ‘Environmental,’ ‘Social,’ and ‘Governance’ converge, E&C companies and
project owners are set to accelerate their investment in ESG.”
Geno Armstrong, Global Lead and Principal, Infrastructure, Capital Projects, and Climate Advisory

This discrepancy is understandable as owners
are currently being measured by Scope 1 and
Scope 2 emissions of their facilities, whereas
service providers gain market advantage by
The built environment generates around 40 percent of global greenhouse gas emissions improving their DEI performance and adhering to
(GHGs) and uses approximately 40 percent of global energy resources. It is, therefore, no requirements. As increasing Scope 3 regulations
surprise that ESG regulatory and stakeholder pressure is on the increase. The industry has come into effect globally, owners are likely to
also shifted its thinking since our 2008 Global Construction Survey—where sustainability was ask service providers to disclose embodied as
well as operational carbon, which in turn will
thought of primarily as a profit vehicle—to 2023, where a higher proportion of leaders see ESG
as a core element of business strategy. The next step is to operationalize ESG principles into direct the industry’s focus to total lifetime GHG 01
capital projects to increase efficiency and sustainability, reduce waste, avoid greenwashing, emissions.
mitigate risks, and enhance long-term value for all stakeholders.” Decarbonization has become a central part of
Firuzan Speroni, Ph.D., Director, Infrastructure, Capital Projects and Climate Advisory, any construction project, and respondents listed
the three most important practices as energy
02
KPMG in the US
efficiency, reducing construction waste, and
more efficient use of materials.
03
Exhibit 12: Which of the following ESG trends are the most important for the success of your organization?
47% 04
35% 37%
35%
32% 31% 31%
23% 21%
28% 26% 26% 26% 28%
23%
30%
29%
05
25% 21%
19% 21% 18% 23% 18% 19%
21% 16% 15%
16% 16%
15% 16%
06
14% 10% 14%
7%
Construction Uptick in Sustainable Green Modular/ Embodied Reducing Development Social Investor and Pressure for Governmental
of ESG/ adoption of construction procurement off-site carbon total green- of renewable considerations consumer contractors requirements
Green-certi- sustainable codes and initiatives construction measurement house gas energy – diversity, pressures for to align ESG
fied buildings materials and specifications (GHG) output facilities equity & green goals with
technology inclusion financing clients
(DE&I)
Total (N=267) Engineering/construction firm (N=121) Project or infrastructure owner organization (N=146)

Embodied carbon: The missing half of GHG emissions
Up to half of all carbon emissions are emitted before the building is operational, as a result of 01
embodied carbon: the amount of the GHG emitted during the manufacturing, transportation,
installation, maintenance, and disposal of building materials.
To date, facilities, real estate, and construction functions have ignored this half of their carbon
emissions and it’s not just them; current standards, guidelines, codes, and measurements
02
mostly focus on operational carbon (from heating, air conditioning, and operating the facility)
emissions. This presents a huge opportunity for many teams to further their commitments
to decarbonization. For more on this vital topic, read our recent report, Embodied carbon: the 03
missing half of GHG emissions.
Firuzan Speroni, Ph.D., Director, Infrastructure, Capital Projects and Climate Advisory,
KPMG in the US 04
05
06

Undergrounding to reduce wildfire risk and improve resilience in California
Jamie Martin, Vice President, Undergrounding, Pacific Gas and Electric Company (PG&E)
01
Over the past decade California has experienced collection programs include wildfire cameras need help from our customers, communities,
an unprecedented increase in catastrophic and inspections to give valuable insights into and other stakeholders. Through our outreach
wildfires, with over half of PG&E’s 70,000
square mile service area designated as high-fire
changing environmental hazards around our
assets. Enhanced Powerline Safety Settings
approach, we share a comprehensive vision for
wildfire risk reduction, including how we plan
02
risk areas. By putting power lines underground, (EPSS) automatically turn off power within one- to utilize undergrounding, communicating early
we can reduce the risk of wildfires by 99 tenth of a second if the system detects a fault and often with customers and stakeholders to
percent along the undergrounded circuit – that could cause an ignition—like a tree branch keep them informed and answer questions and 03
and improve reliability and resiliency at the striking the power line. Downed Conductor concerns. For our local, state, federal and tribal
same time. At PG&E, we’ve committed to Detection (DCD) technology can improve the partners, we communicate through regular
underground 10,000 miles (16,000 km) of
overhead electric distribution lines in high
ability to detect and isolate high impedance
faults before an ignition. We are also managing
meetings, permitting discussions, and updates
of planned work locations.
04
wildfire risk areas. the environment around the electric grid, such
Through collaboration and breakthrough
as trimming back vegetation.
Undergrounding is just one part of our thinking, we are working together to mitigate
integrated strategy to reduce ignition risk. We know that we cannot complete this wildfire risk and make our hometowns safer and 05
Our comprehensive monitoring and data important wildfire safety work alone and will more reliable for generations to come.
06

Continuing efforts to improve worker safety
The construction sector has made impressive their safety records through digitalization and construction companies going the extra mile by
advances in worker safety in the past decades, automation. providing employees with innovative new PPE
and the responses to our global survey suggest items that not only help keep them safe, but also
Mental health is becoming destigmatized in
that companies continue to prioritize this vital enable them to do their jobs more comfortably—
the industry, with many companies taking
area. For both project owners and E&C firms, such as 3D printed masks and safety footwear
tangible steps to support workers, including
the single most crucial factor is the tried-and-
trusted behavioral, leadership and cultural
risk assessments that cover both physical and
that helps revitalize blood flow through the legs
and feet and gives the wearer greater energy.6
01
mental health, sharing resources around mental
change, to create a climate with zero-tolerance
wellbeing, and offering practical help like trained As one would expect, safety is a crucial pillar of
towards accidents. Respondents—especially
owners—are keen to increase safety monitoring
peer support.
Post-COVID-19, the use of PPE and worker
ESG-led performance and part of all ESG ratings
assessments.
02
and onsite health and wellness testing of
workers, to reduce the risk of incidents. wellbeing has become high-priority, with some
Technology also plays more of a role to create

safer working spaces, with respondents making
03
greater use of data and analytics (D&A) to
predict and prevent, as well as modular/offsite
fabrication to reduce potentially dangerous
Safety training and information exchange are increasingly benefiting from technology and
04
onsite tasks. Our survey results suggest that
other innovations are at an earlier stage, with software that engages staff and empowers workers to communicate risks. Smart devices
less frequent use, such as smart sensors and like connected wristbands and helmets enable workers to be more proactive in their safety
monitors, drones, remote-operated machines, processes, share information about hazards and potential incidents in real-time, all while
fostering a positive safety culture.”
05
and robotics. The low take-up of such potentially
advantageous technology could be a wake- Clare Lunn, Partner, ESG, Advisory, KPMG in the US
up call for progressive players to improve
06
6
Grant Prior, “Anti-fatigue safety footwear boosts energy,” Construction Enquirer, October 3, 2019

Adapting to the needs of a future, diverse workforce
The E&C industry is undergoing rapid change
in its working practices, with a shift away from
traditional, hard-hat, onsite positions towards
technology-related capabilities that are often
performed remotely. At the same time, both
E&C firms and project owners are competing
for scarce talent with companies from virtually
01
every other sector.
Respondents to the 2023 global survey rank DEI
as the third most important factor determining
02
future success. An increasing proportion (50
percent, compared to 42 percent in 2021)
cite the importance of diversified workplace
demographics to help address disruption—
03
the diversity helps introduce new skills to
tackle longstanding project cost and schedule
challenges. 04
05
06

And almost half (46 percent) acknowledge that Exhibit 14: How important are each of the following regarding your organization’s response to
implementing or updating models for remote supply chain disruption, cost escalation, resource constraints, deglobalization, COVID-19 and
working and job site travel can play a part in other disruptive events?
making construction projects more resilient
and able to thrive during volatile times (see Extending the duration of planning
Exhibit 14). activities to increase confidence around 71% 21% 7%
project scope, schedule, quantities, etc
But it will be tough to make these breakthroughs
without the right people, which means doubling
down on efforts to build a more diverse
Incorporating contractual protections for
supply chain disruptions
78% 17% 5% 01
workforce.
Increasing the use of commodity hedging
strategies to offset increasing material
prices
47% 30% 23% 02
Improving the estimating accuracy of
materials and equipment 83% 14% 3%
03
Implementing or updating the models for
46% 31% 22%
remote working and job site travel
04
Exploring new and innovative approaches
for project execution, including modular
construction, design for manufacture and 72% 15% 13%
assembly (DFMA) and 3D printing
0% 20% 40% 60% 80% 100%
05
06

Creating an industry employer. Almost half—45 percent—don’t
feel they have adequate, diverse career path
of choice for the best

opportunities into lateral and upward roles.
Another KPMG paper, “Navigating the tech We need to think differently about the
talent hiring freeze9,” argues for a greater focus

on workforce planning to determine an
people that we attract into the industry,
so that businesses become far more
organization’s talent needs and identify how to diverse and far more reflective of society.”
Attracting the best graduates and school leavers
means offering fulfilling careers on the cutting
satisfy these demands by training and upskilling.
And by building a compelling digital workplace
John Murphy, CEO, J. Murphy & Sons
Limited
01
experience, E&C companies can enthuse
edge of innovation, in purposeful, sustainable
existing workers and attract future stars.
organizations, offering varied development paths,
flexible working conditions and greater work-life Respondents to this year’s Global Construction 02
balance. More and more employees are looking Survey rank the development of improved and
for companies that prioritize DEI, employee innovative training programs as the number one
health and wellbeing, community building, and
strong governance—while minimizing their
strategy to attract next-generation talent into the
sector. The metaverse offers particularly exciting 03
environmental impact. opportunities to onboard, train, and interact. In
“Want to win in the metaverse? Think internal
As we discuss in Construction in 20307, the
sector has a golden opportunity to shed its male-
first10,” KPMG surveyed companies from the
technology, media and telecommunications
04
dominated, “hard-hat, manual labor” image by
industry and found the top uses of the
becoming more technology- and sustainability-
metaverse were for internal activities such
oriented. This shift should help persuade
graduates that this is an exciting industry to join.
as employee training and onboarding, and
employee collaboration.
05
In a 2022 KPMG survey of U.S. workers,
Given the continued digitalization of E&C,
“Looking for more: Employee expectations
are on the rise8,” an overwhelming 90 percent
of respondents said work-life balance is an
investment in the metaverse could be a catalyst
for improving the employee experience.
06
important factor when looking for a new
7
”Construction in 2030,” February 2023, KPMG,
8
“Looking for more: Employee expectations are on the rise,” August 2022, KPMG
9
“Navigating the tech hiring freeze,” January 2023, KPMG
10
“Want to win in the metaverse? Think internal first,” KPMG

At the forefront of sustainable construction
David Paterson, Managing Director, Construction, Lendlease

01
Sustainability underpins everything we do the Materials & Embodied Carbon Leaders grants, and a phase-out of financial support for
As a company we’re absolutely committed to Alliance—Responsible Steel, and the University fossil fuels.
climate action, with an intentionally bold goal
of “absolute zero carbon” by 2040. To achieve
of Queensland.
All state governments have carbon emission 02
No single party can fix the environment—it reduction targets, and governments can align
this, we must eliminate all emissions from
needs to be a team effort across the value their procurement policies with decarbonization
construction sites, without the use of carbon
offsets. And we’ve set ambitious targets:
chain. We need clients to request zero- and
low-carbon options, for contractors to assess
targets for construction activities, to help reduce
emissions on infrastructure projects.
03
• Phase out fossil fuel diesel and gas across their supply chain, suppliers to innovate, while
No time to lose
our operations designers need to trust the options and be
• Use 100 percent renewable electricity before
2030
willing to test new things. Governments need to
set supportive policies, and industry advocacy
Don’t delay—there are solutions available today
that can be deployed at scale. Understand 04
your data, your emissions profile and the risks
• Collaborate with supply chain partners to set groups need to champion fossil fuel-free
and opportunities to your business strategy.
construction.
pathways to absolute zero by 2040
Good data is essential to a credible plan, not A key role for governments
Learn about climate change, carbon emissions,
scope boundaries and accounting and educate
05
just to report performance, but also to forecast Here in Australia, the government, state your employees, clients, and customers. The
our emissions to stay on track. governments and the finance industry can G20’s Taskforce on Climate-related Financial
We must pull together to tackle climate

support a domestic renewable diesel industry
with investment into refineries or financial
Disclosure framework (TCFD) is a powerful way
to explore the impact of climate change. Lastly,
06
change
support for the use of renewable diesel. align to 1.5 degrees, this is the change the world
We’re fortunate to be working with some
Mechanisms include tax relief, subsidies and needs us to make.
amazing partners to accelerate our net
rebates, green low interest loans and finance,
zero ambitions. These include MECLA—

Chapter 3
The great 01
innovation race 02
03
04
05
06

The great innovation race
What is the role of digital and other innovative technologies in the new construction landscape?
That’s a burning question facing the sector’s Exhibit 15: Please rate your level of adoption of each of the following technologies
leaders as they ponder how to overcome
continued poor project performance, adopt, safe,
E&C firms 01
Integrated project management
information systems (PMIS) 17% 37% 46%
sustainable construction methods, and improve
the quality, efficiency and carbon footprint of Use of basic data analytics 11% 45% 45%
buildings and infrastructure. Tech giants are Use of advanced data analytics 31% 47% 21% 02
both potential collaborators—bringing new and Mobile platforms 19% 47% 34%
exciting innovations—as well as competitors, Building information modeling 16% 45% 39%
as they use their data mastery to gain market
share, and also attract the best talent.
Radio frequency identification
Robotics process automation/digital labor
57%
57%
33%
36%
10%
7%
03
Our 2017 Global Construction Survey took a Cognitive machine learning 68% 28% 4%
deep dive into technology and found an industry
embracing building information modeling (BIM),
3D printing
Drones (remote monitoring, quantity
verification, construction status) 26%
60%
47%
32%
26%
8%
04
analytics and project management information Smart sensors (tracking 37% 49% 14%
systems (PIMS), just starting to adopt drones, people and productivity, security, etc.)
Virtual reality 44% 41% 15%
smart sensors and mobile, with a few bold
innovators exploring 3D printing, machine Augmentable reality 46% 41% 12% 05
learning (ML), virtual reality (VR) and robotic Artificial intelligence 60% 36% 4%
process automation (RPA). Machine engineering and design 44% 44% 12%
Fast forward to this year’s survey and Modular/off-site manufacturing 20% 60% 21% 06
81 percent of respondents from E&C firms say Digital twins 51% 37% 12%
their organizations have adopted, or are starting 0% 20% 40% 60% 80% 100%
to adopt, mobile platforms (up from 69 percent
Have not adopted Just started with a few projects Adopting across all projects (N=121)
in 2017, see Exhibit 15), while 43 percent are
either using or starting to use RPA compared to
just 10 percent in 2017. Meanwhile, take-up of
VR (either using or starting to use) has doubled
from 28 percent to 56 in the same time period.

Accelerating tech adoption
Innovation is a familiar buzzword in board rooms, corporate offices and construction sites, and
some companies have made impressive progress. We’ve seen robotic dogs that “sniff out”
unsafe incidents and practices onsite, capture ongoing construction in three dimensions for
close-to-real-time work measurement, and check design alignment vis-à-vis a 3D model.
01
Then there’s the project owner organization that ordered out all major packages in record
time, by collectively bargaining with its service providers, shaving precious months off the
implementation schedule. In another example, a prime contractor uses 5D BIM layered
02
with its custom workflows and internally developed Theory Of Constraints (TOC)-based lean
construction methodology, for a fully integrated concept-to-design-to-delivery approach.
Digital technologies serve as one of the largest levers for owners and E&C firms to implement 03
innovative ideas and solve project implementation problems. The key is to use a combination
of already available and tested technologies.
In the rush for instant results that yield a positive, short-term ROI, many potential digital
technology investments are overlooked. A 3–5 year horizon is realistic when assessing the
04
investment case. And don’t underestimate the importance of cultural barriers in both owner
and contractor organizations; a shift in culture is often necessary to drive innovation at
business unit, functional and individual levels, creating a virtuous cycle. 05
As our survey responses demonstrate, established industry players are deploying PMIS, BIM
and advanced data analytics, and are making inroads into the use of digital twins, AI, VR/AR,
3D printing, RPA. The successful adopters are championing innovation from the very top and
investing in educating their teams. In addition to encouraging digital technology use for project
06
implementation, management can also apply these technologies to conduct management
reviews and governance, sending a further signal that the organisation is shunning
conventional, manual methods and striving for digital leadership.”
Suneel Vora, (PMP), Partner, Business Consulting – Capital Projects and Industry 4.0,
KPMG in India

However, a far smaller proportion of Exhibit 16: Please rate your level of adoption of each of the following technologies
respondents’ companies are applying these Total
and other technologies across all projects—just Integrated project management
6 percent for RPA, 5 percent for 3D printing, information systems (PMIS) 21% 39% 40%
4 percent for ML and 8 percent for AR. With Use of basic data analytics 12% 47% 42%
a lack of consistent standards across the Use of advanced data analytics 36% 47% 17%
industry, the full benefits of such innovations Mobile platforms 27% 44% 29%
are some way off. Building information modeling
Another technology growing in popularity is Radio frequency identification
25%
58%
43%
31%
32%
10% 01
AI. Since the 2018 Global Construction Survey, Robotics process automation/digital labor 64% 30% 6%
use of AI—in the form of digital twins, smarter Cognitive machine learning 73% 22% 4%
construction equipment, data and document
management, and enhanced safety and
3D printing
Drones (remote monitoring, quantity
69% 27% 5% 02
verification, construction status) 28% 48% 25%
communication—has increased significantly.
Smart sensors (tracking 39% 44% 17%
In 2018, just 23 percent of respondents said people and productivity, security, etc.)
they were either adopting or just started to
adopt AI. That figure rose to 29 percent in
Virtual reality
Augmentable reality
53%
60%
34%
32%
13%
8%
03
2021, and climbed to 37 percent in 2023 (see Artificial intelligence 63% 33% 4%
Exhibit 16). As a measure of how far there is
to go, a mere 4 percent are applying AI across
Machine engineering and design
Modular/off-site manufacturing 24%
44%
54%
40% 16%
22%
04
every project, although 33 percent have
Digital twins 59% 32% 9%
started to use AI on a few projects.
0% 20% 40% 60% 80% 100%
Have not adopted Just started with a few projects Adopting across all projects Total (N=267)
05
06

Making the right technology investment bets
Which technologies have the potential to deliver technology implementations to ensure they office (PMO) dedicated to technology
the greatest overall return on investment (ROI) deliver on their approved business cases. This implementation and associated business
in capital projects? The picture has changed little often requires a structured project management processes.
since the same question was asked in our 2017
survey, with integrated project management Exhibit 17: Technologies with potential to deliver the greatest overall ROI
information systems (PMIS), BIM and advanced
data analytics as the top three responses. These 2018 (N=166) 2021(N=186) 2023 (N=267)
01
proven innovations are clearly making their mark, 3D printing 6% 3% 2%
but the survey findings suggest there is a lot of
untapped potential from newer, emerging tech
Artificial intelligence
Augmented reality 7%
17%
4%
16% 9%
2%
02
such as digital twins, AI, VR/AR, 3D printing,
RPA and—as we will discuss shortly, modular Building information modeling (BIM) 53% 42% 49%
manufacturing.
The industry’s mixed record of going over budget
Cognitive machine learning
Digital twins 0%
4%
0%
6% 4%
11%
03
and over schedule is something that everyone
Don’t know/not sure 0% 6% 3%
involved in construction has been striving to
overcome for decades. So it was fascinating to Drones 17% 23% 15%
04
hear how the various new technologies were Integrated PMIS 61% 45% 48%
contributing to cost and schedule performance Machine engineering and design 12% 13% 10%
improvement, or avoiding overruns.
The technologies that are gaining most
Mobile platforms 24% 21% 11% 05
Modular/off-site manufacturing 0% 0% 31%
traction are digital twins and modular/offsite
manufacturing, while, AI and RPA appear to be Radio frequency identification 1% 1% 1%
in early stages of adoption. These responses
suggest that, while some forward-looking
Robotics process automation/digital labor 14% 15% 9% 06
Smart sensors 21% 23% 12%
companies are gaining tangible benefits on
project performance metrics, others are failing Use of advanced data analytics 38% 31% 36%
to make the best use of technology. They could Use of basic data analytics 17% 14% 18%
benefit from team members with business Virtual reality 7% 4% 5%
process, technology and change management
Other 0% 1% 0%
experience, and individuals who can drive

The stage is set for modular
In their new book “How Big things Get Done11,” and E&C companies—say that prefabrication
Bent Flyvbjerg—chair of major programme is an important solution for capital projects,
management at Oxford University’s Saïd suggesting that all parts of the industry should
Business School—and co-author Dan Gardner work together to advance its use.
present a passionate argument for the benefits
Looking more closely at the use of modular
of modular manufacturing, taking construction
from the site to the factory floor, making use
manufacturing, a majority (69 percent) apply it 01
for less than one-fifth of projects (see Exhibit
of standardized designs to cut costs, improve
18). Interestingly, only 28 percent expect to
quality and safety, and speed up construction.
Accordingly, 2023 is the first year the Global
adopt this technology across more than half
of their projects within five years. Hopes are
02
Construction Survey has tracked the use of high for modular—almost one-third (31 percent)
modular/off-site manufacturing, with one- feel that it has potential to deliver the greatest
quarter of E&C respondents reporting that they
leverage such an approach across all projects,
ROI. It’s now time for this approach to go
mainstream, to achieve the kind of industry
03
and a further 61 percent starting to adopt disruption that other sectors have experienced,
on a few projects. More than eight out of 10 like automotive with electric vehicles (EVs).
(84 percent) of respondents—both owners 04
Technology and worker safety 05
Having worked tirelessly to create a safety-first Other advancements that improve safety
culture, E&C companies are turning to more include robotics (cited by 8 percent as driving
technical solutions to ensure that workers
don’t come to harm. The most widely used
better safety), remote operated machines (15
percent), drones for monitoring (18 percent) and
06
technologies in this respect are data and smart sensors for notifying high-risk activity or
analytics to predict and prevent incidents, and health concerns (24 percent). These relatively
modular manufacturing, to reduce the volume of modest figures indicate significant room for
onsite work. improvement in use of digital technologies to
meet critical safety KPIs.
11
Bent Flyvbjerg, Dan Gardner, “How Big Things Get Done,” Currency, February 7, 2023

Making modular To deliver on its full potential, modular
construction requires strong vertical integration
complete when it ships from the factory,
modular buildings need to be treated with
manufacturing work
across the project delivery lifecycle, to drive great care during delivery and commissioning.
standardization, enjoy economies of scale Therefore, manufacturers need onsite
and bulk purchasing, and reduce (and, ideally representatives, which add cost and limit
eliminate) inefficiencies and errors that occur the potential customer reach—unless
It may have been around for decades, but
at key interface points between design, delivery support is provided by a trusted and
modular construction’s moment has arrived as
procurement, construction, and commissioning. knowledgeable dealer or a general contractor
a way to address challenges like supply chain
disruption, labor shortages, and rising interest Delivery support. Unlike traditional
(GC) construction partner. 01
rates, as well as reducing carbon footprint, manufacturing, where the product is (largely)
improving environmental impact, and enhancing
worker safety. To fulfill modular’s potential and
drive the industry forward, we need to address Exhibit 18: What percentage of your projects currently leverage modular/off-site
02
several key challenges... manufacturing?
One of the factors limiting modular’s growth
is plant capacity. Although new modular 17%
14% 100%
03
manufacturing facilities are emerging, many of 27%
the more ambitious larger-scale projects cannot
be fulfilled directly from regional suppliers.
This means they either manufacture (with all 7%
35%
04
the added time and complexity) or revert to 0% 1-10% 11-20% 21-50% Over 50% Total
hybrid construction models. We expect a wave
of financing to expand manufacturing footprint
and increase production throughput, along with
05
creative collaborations to use excess capacity Exhibit 19: What percentage of your projects currently leverage modular/off-site
between projects. manufacturing in five years?
Financing is a key bottleneck limiting the Total 2% 16% 22% 32% 28% 6%267
N=
06
number and scale of modular projects. Unlike
traditional construction, where developers can Engineering/construction firm 3% 15% 21% 36% 25% 121
get financing for around 80 percent of project Project or infrastructure
costs, modular financing typically provides just owner organization 2% 17% 23% 28% 30% 146
40–50 percent, with a higher proportion paid out 0% 20% 40% 60% 80% 100%
up front.
0% 1-10% 11-20% 21-50% Over 50%

Benefits of modular
construction
Reduced Improved 01
schedule time safety product
02
Greater consistency
of delivery
03
Modular can
Lower labor Controlled be used on all types 04
costs costs of projects but is
particularly well suited to:
05
Urban midrise Low income Urban medical 06

multifamily multifamily centers
Commercial Labs Data centers

offices

Embracing modularization and digital technologies
S. N. Subrahmanyan, CEO & MD, Larsen & Toubro Limited

01
Our clients are becoming ever more demanding, development of designs and allow us to
which is why we employ multiple digital customize designs more closely to client needs.
construction technologies and continue to focus
on improved productivity. Greater pre-fabrication,
It’s not just about construction; digitalization 02
also enhances operations of our client’s assets
pre-casting, and modular manufacturing improves
to reduce operating costs and maintenance, by
quality, reduces the risk of error, and speeds
up construction, as does mechanization and
making them smarter. And 5G is set to bring
even higher speed and lower latency.
03
automation.
Underpinning much of this is our continued
By combining prefabricated, pre-finished
volumetric construction (PPVC), structural steel
construction, modular construction and 3D
investment in our IT and technology services
businesses, which we plan to grow multi 04
fold. We are building our capabilities in high-
printing, we’ve managed to reduce typical project
growth areas such as data centers, cloud, AI,
durations by an incredible 50 percent. In one
example, we successfully built 96 residential flats
cybersecurity, and blockchain, among others.
We have already launched two new digital
05
in just 96 days, and a seven-story building in less
e-commerce platforms: a B2B marketplace for
than 45 days. These kinds of timescales would
industrial goods (called L&T SuFin), and an online
have been unthinkable a few years ago.
And thanks to our digital tools and systems,
learning platform for upskilling and vocational
training (L&T Edutech).
06
we now get the benefit of real-time updates,
With these kinds of advances, we’re confident
predictive forecasting and better collaboration
that our business will be in a strong position to
between different teams—together they enable
compete in an increasingly digital world.
faster decision-making. Digital twins accelerate

Key takeaways
Address productivity as a matter of urgency
By taking an outside-in approach, the E&C industry can learn from the best practices from other
sectors—primarily manufacturing—to gain efficiencies from scale, standardization/ modularity,
and value chain ecosystems. In doing so, project owners and E&C companies can finally make 01
the kind of productivity gains that have eluded them for so long.
Master enterprise risk management

The capability to assess organization-wide risks, across multiple projects, large and small, is
02
vital in bidding, pricing, and resourcing. A modern E&C company, with a good understanding of
risk interdependence, should have the confidence to say “no” to unprofitable projects and avoid
a race to the bottom, as well as spotting potentially damaging risks earlier and taking decisive
action to prevent project failure.
03
Truly embed ESG
Future leaders spanning the construction sector will likely lead purposeful organizations
04
that recognize the benefits of sustainable construction, infrastructure, and buildings, along
with sustainable supply chains, diverse workplaces, and strong community ties. A changing
regulatory environment, compounded by heightened expectations from investors, employees,
and customers, has made ESG a business imperative. Failure to prioritize ESG could result
05
in a negative sustainability profile, reducing access to capital and top talent, further limiting
companies’ ability to keep up with ESG leaders. Lip service to ESG is no longer enough.
06
Become data masters
Those companies that can capture data, analyze it, and produce practical insights will likely enjoy
lower costs, better project performance, greater efficiency, and safer workplaces. They are also
likely to attract a new breed of digital worker who sees exciting opportunities to create the smart,
sustainable buildings and infrastructure of the future.

About the survey
In this survey, you will find the perspectives of 267 people from engineering and construction HQ region 14%
ASPAC
companies and project owners from a variety of industries (121 represented E&C companies,146
represented project owners).
Many of the responses were gathered during face-to-face interviews in 2022 and 2023 with senior 01
leaders, with a large number of them serving as chief executive officers. The vast majority of
respondents are from organizations carrying out significant capital investment projects.
60%
EMEA
26%
Americas 02
Organization category Regions of operation (multiple selections allowed)
60%
45% 51% 03
45% 30%
Engineering/ 29%
construction 26%
15% 22% 22% 19%
55% 17% 11%
Project/
infrastructure
owner
0%
India North Europe Middle Central/ Rest Africa
16%
Australia
16%
UK China
5%
Other
04
America (excluding East South of Asia
UK) America
Industry sector Approximate entity revenue from operations Entity type (multiple selections allowed) 05
Healthcare/Life Sciences 11% in the last 12 months
Technology 11% Quoted
US$20 billion 27%
Retail/Consumer Products
Financial Services/Insurance 3%
5% or more 11% (public company)
Subsidiary of a
13%
06
<US$5 billion to quoted company
Resources/Chemicals 12% 15%
>US$20 billion
Government/Education 21% Private company 50%
Industrial manufacturing 21% <US$1 billion
to >US$5 billion 32% Government
Media/Telecom 4% company 10%
Power/Utilities 28%
>US$1 billion 42%
Other 7%
Real Estate/Hospitality 20%
Other 37%

The KPMG Global
Engineering & Construction
practice 01
When engineering and construction leaders turn to KPMG member firms for advice, they do so
02
because our professionals understand the industry at a local, national, and global level. For decades,
we have provided services tailored specifically to meet the needs of the industry. To do this, we
have created a diverse practice that includes strategists, financiers, certified public accountants,
professional engineers, architects, project managers, owner representatives, contract and
Get more information and access a selection
of other relevant KPMG reports and insights, 03
please visit:
procurement specialists, tax professionals, business valuation specialists, cost estimators, certified
fraud examiners and technology specialists. home.kpmg/infrastructure
KPMG’s Engineering & Construction professionals provide strategic insights and relevant guidance
04
wherever our clients operate. Services are delivered through the global network of KPMG member Access all past editions of the Global
firms by over 2,000 professionals in more than 40 countries worldwide. KPMG professionals Construction Survey
help clients identify and mitigate project risks throughout the project life cycle. Our capabilities
encompasses, “having the right strategy,” “doing the right project,” and “doing the project right.”
05
Engineering & Construction practice services include business model evolution, mergers and
acquisitions, ESG, site selection, technology selection and implementation, construction program
evaluations, project risk and controls assessments, contract compliance analyses, as well as project 06
support on complex and troubled projects. We provide industry knowledge, multidisciplinary teams,
and substantive experience in managing both the financial and technical aspects of major capital
projects and programs. By combining valuable global insight with hands-on local experience, we can
help you address challenges at any stage of the life cycle of infrastructure assets or programs.

Authors
Geno Armstrong Clay Gilge
Global Lead and Principal, Infrastructure, Capital Projects, National Lead and Principal, Infrastructure,
and Climate Advisory
KPMG in the US
Capital Projects, and Climate Advisory
KPMG in the US
01
E: [email protected] E: [email protected]
Geno has invested more than 30 years studying major projects and
organizations, cataloging what executives do well, and applying “reverse
Clay has more than 25 years of practical experience and research,
giving him a deep understanding of how organizations can improve the
02
engineering” to failed or struggling initiatives. His experience encompasses performance of their construction portfolios, programs, and projects by
hundreds of the largest, most complex projects and organizations globally, empowering their teams, enabling technology and rationalizing governance
across virtually every industry. and oversight. He has been at the forefront in advancing industry-leading
methods and tools to objectively benchmark project management controls
03
and overall project readiness.
Kevin Max Suneel Vora

04
Principal, Infrastructure, Capital Projects, Partner, Business Consulting – Capital Projects and
and Climate Advisory Industry 4.0
KPMG in the US KPMG in India 05
E: [email protected] E: [email protected]
Kevin is a professional engineer with extensive civil engineering and Suneel has more than 20 years of experience conceptualizing, planning,
construction management experience. Kevin advises clients on a wide and implementing capital portfolios, programs, and projects for the private, 06
variety of large public and private sector projects including infrastructure institutional and government sector clients in India and overseas. He
development and industrial manufacturing facilities. serves as a leader in supporting clients with technology enabled solutions.
We would like to thank our contributors:

Colin J. Cagney, Firuzan Speroni and Gaurav Mathur. We would also like to extend a special thanks to Clare E. Lunn and Brian Relle.

01
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Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.
05
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely
06
information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without
appropriate professional advice after a thorough examination of the particular situation.
© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.
KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity.
KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. For more detail about our structure please visit
home.kpmg/governance.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization.
Throughout this document, “we”, “KPMG”, “us” and “our” refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a
separate legal entity.
The views and opinions expressed herein are those of the interviewees and do not necessarily represent the views and opinions of KPMG.
Designed by DAS Design. DASD-2023-12491
Publication name: Familiar challenges—new solutions
Publication date: June 2023
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Familiar

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Driving continuous Reducing wildfire 03

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Survey are in a positive frame of mind.

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Note: Applicable only for engineering and construction firm (N=121)

Total 35% 43% 22%

0% 20% 40% 60% 80% 100%

Significant impact Moderate impact No impact

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Yes No Don’t know/not sure

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to invest in new technology or methodologies,

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We are seeing a dramatic shift by

Exploring new and innovative approaches

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S. N. Subrahmanyan, CEO & MD, Larsen & Toubro Limited

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John Murphy, CEO, J. Murphy & Sons Limited

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of E&C companies see opportunities to gain a

from E&C also consider safe, inclusive sites as

with social considerations, such as DEI, and

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Technology also plays more of a role to create

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of choice for the best

talent hiring freeze9,” argues for a greater focus

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David Paterson, Managing Director, Construction, Lendlease

We must pull together to tackle climate

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Urban midrise Low income Urban medical 06

Commercial Labs Data centers

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S. N. Subrahmanyan, CEO & MD, Larsen & Toubro Limited

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Master enterprise risk management