Mega and Large-Scale Construction Projects.
The Infrastructure Investment and Jobs Act is a bipartisan infrastructure law, congress, and the administration have invested $62 billion in the Department of Energy (DOE). IIJA launches 60 programs and expands 12 existing programs, tripling DOE’s annual funding. Hydropower is essential to a clean energy grid and provides power to about 30 million (7%) of U.S. electricity generation and 40 percent of U.S. renewable power generation. The new infrastructure law helps the power sector address clean energy and high-capacity transmission line needs to help facilitate the transition to clean energy.
These mega projects cost millions or even billions of dollars and can take years to design, develop and construct. In contrast to smaller projects that conform to pre-existing designs, megaprojects are fundamentally different in terms of their duration, material, lead times, complexity, and risks. These large-scale projects are common for water and energy, data innovation, rail, air terminals, seaports, motorways, medical clinics, dams, wind ranches, offshore wind, solar and the list goes on.
One thing all these projects have in common is the challenges they face in managing material to the job site. Global supply chains are facing unprecedented disruptions and things are not getting better any time soon. Today, 2/3 of all companies are planning major restructuring initiatives of their supply chains and are working to reshore much of what they buy over the next few years. Before Russia invaded Ukraine, only 24% of companies considered geopolitical risks in building a supply chain and that number has increased to 56% since the war began. All this to say, the supply chain and continuous and predictable flow of materials to a project site cannot be taken for granted and needs to be constantly monitored and adjusted to account for changing conditions.
Unlike their manufacturing counterparts, construction project materials are often ordered and managed differently than other materials elevating the need for diligence, expediting, tracking, material movement, and inventory management. There are additional considerations around the schedule, permitting, scheduling, and workflow that raise the stakes of having late material. Consider some of these statistics.
• 63% of time crews spent waiting on materials
• 49% of time tradesmen spend on material handling and other non-productive tasks
• 98% of large-scale projects face cost overruns
• 80% of projects facing cost increase over the original value
• 100% increase in material lead-time due to bottlenecks and unavailability of materials
The last couple of years have been a wake-up call for project owners and have highlighted the importance of a well-managed supply chain to project success. The risks associated with material management can be shifted or shared between partners, however, regardless of who bears the risk, the challenge of getting material to the job site when it is needed remains, and mitigations must be employed to ensure project success.