Optimistic Times Ahead for Maintenance Spending
BIS Shrapnel’s latest forecast expects activity level of maintenance spending to increase over 18 per cent – from 38 billion dollars in 2016 to almost 45 billion in 2021.
Adrian Hart, senior researcher at BIS Shrapnel explains current activity levels have been held back by a restrictive approach to expenditure, but sees them increasing soon – he states there are two main drivers for the maintenance work’s forthcoming recovery and boom.
“Firstly, critical maintenance cannot be deferred indefinitely, and our research suggests that a significant backlog in maintenance work may be building up in key sectors across transport, mining, utilities and non-residential building,” Mr Hart said.
“Secondly, the main trigger for the recovery will be rising revenues and profitability for asset owners, including governments who own assets across those sectors, which will provide the financial wherewithal to undertake the work,” he completed.
Mining, followed by transport and non-residential building will see the strongest growth, BIS Shrapnel forecasts. Growth in mining is due to pent up demand, as well as the need for companies to maintain their asset base. Growth in roads follows the many years of investment in construction, as well as the constant need to improve roads due to worsening traffic congestions. More modest growth in non-residential building include hotels, hospitals, and education facilities.
“At some stage, maintenance will need to rise to avoid critical asset failures or even more costly asset replacement,” concludes Adrian Hart.