The latest issue of IPA’s EPC Market Forecast is now available. Global and regional price trends affecting capital projects, based on public and IPA data, are presented in the newsletter. Three major themes define current EPC market sentiment. First, the global economy is recovering faster than expected. Second, there is much discussion about the rally in commodity prices and whether the inflation will be transitory or will last longer. Strong demand from China and rising global demand are mainly driving prices higher, but many other factors are behind the surge in commodity prices, including increases in consumer spending, higher iron ore, steel, and oil prices, and supply chain constraints. Third, the future of investment projects and capital spending is now increasingly shaped by the green transition. “This translates into an increase of capital expenditures on clean energy projects,” the newsletter says. Citing a recent International Energy Agency (IEA) report: “global investment in energy is set to recover by nearly 10 percent in 2021 to US$1.9 trillion, reversing most of last year’s drop caused by the pandemic.”
Given business interest in getting projects rolling forward with many global markets getting hotter, project teams are looking to produce more accurate conceptual estimates for projects before decision makers approve more capital spend on their development. But project teams have historically struggled with creating accurate cost and schedule estimates at the end of Front-End Loading (FEL) 1. New IPA research highlighting this issue looks at the project characteristics and conditions shown to drive cost and schedule growth higher from FEL 1 through completion.
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