Construction Today 2018 - Volume 16, Issue 3 - 19
on reducing capital and operating costs,
particularly those associated with maintaining or enhancing distribution networks.
The traditional economic model for funding
these distribution network improvements is
collecting tariffs from users, and banking on
these long-term future cash-flows to finance
construction. As a result, having a financing
mechanism in place is essential for the civil
engineering construction vertical to play in
On the other end, improved technology
offers promising solutions at the point of
use and creates opportunities in residential
and industrial construction. For example,
not all water must be of drinking quality,
and self-sustainable building, encompassing re-use of grey water and/or rain water
for lawn irrigation, production processes,
toilets or showers, is a less expensive and
easier to implement solution that has been
Finally, real-time monitoring/smart management is becoming a critical element of innovation. Smart metering and data analytics
foster more detailed and accurate metrics to
identify weaknesses and highlight opportunities for improving water and wastewater
operational cycles. Construction companies
targeting water-related projects must incorporate these technologies into their plans for
greenfield and brownfield developments.
Water projects, like all major construction undertakings, are dependent on the
developer's ability to predict future cash
flows and profitability. The accuracy of these
projections is a challenging exercise, and
the reality sometimes differs significantly,
due to delays, poor estimation processes and
failed risk management.
As the industry seeks to address challenges, limit costs and attract
capital, it will benefit from alternative procurement methods, also
known as public-private-partnerships (P3). This alternative procurement process, which allocates risks to different stakeholders based
on their ability to manage them, results in on-time and on-budget
project delivery, and thus reduces construction companies' risks.
This model has proven important to successful infrastructure
plans in a number of developed countries.
Companies looking to seize opportunities in water-related projects should build teams of experts who understand the water sector,
can educate the construction company team, and can facilitate
connections with P3 players.
USA and Mazars Group
initiative in the water
sector and oversees the
firm's relationships with
a major water utility, a
water investment fund,
and other clients in the
infrastructure sector. He
was the founder and
As underscored in the above-referenced Outlook, financing is readily
available for infrastructure projects. The administration's proposed
tax incentives and infrastructure bills suggest that even more capital
can be expected for the sector in the coming years. However, the
water segment is hampered by its small size relative to projects
in transportation, roads and bridges, ports and airports. Thus, the
water industry must ensure its voice is heard and is part of the suite
of ideas for the administration and Congress, in order to attract its
share of the infrastructure capital pool.
As education around the importance of water continues, infrastructure financing will inevitably come through municipal bonds
for state programs, public utilities or listed investor-owned utilities.
One barrier to greater infrastructure investments, resulting in additional construction spending, might be wider customer acceptance.
In today's model, rate payers end up funding these investments,
which is particularly troubling in jurisdictions with aging infrastructure where rates have increased to a point of becoming an excessive
burden to water users.
Construction companies can take advantage of alliances and programs such as the Water Resources Development Act, which seeks
to better manage the country's water resources, to ultimately bring
down financing costs.
With the right mix of factors, it is likely that water-related construction and development in the United States will continue to
grow. Those companies that can work with municipalities, utilities
and other stakeholders to address local water infrastructure challenges and secure available financing will be positioning themselves
well for that growth.
leader of the Infrastructure and Project Finance
in the Americas, which
is now part of Mazars
VOLUME 16, ISSUE 3 CONSTRUCTION-TODAY.COM
'Financing is readily available for