A Guide to Regulatory Future-proofing for the Construction Industry

Regulations affect everyone involved in large capital projects: owners who need to determine the effects of a particular change to their assets, designers who need to assess how a change will impact design requirements, and contractors who need to assess potential effects on construction processes and schedules. In a survey of owners and contractors, 75% of respondents felt it has become harder to deal with regulations over the last 10 years. Respondents also estimated that about 20% to 40% of the total capital investment in their project portfolio faced uncertainties due to regulatory changes. Taking a more proactive approach to address a regulatory change, meaning starting as early as possible in the regulatory process, will enhance a company’s ability to minimize risks and capitalize on opportunities. This guide presents a regulatory future-proofing framework that outlines the key actions and good practices to proactively identify, evaluate, and respond to the potential impacts of a regulatory change on a large capital project no matter where it is in the project lifecycle. By providing a detailed process map, comprehensive set of key actions, and good practices for implementation, this guide serves as a reference for individuals and companies who wish to improve current practices.

Regulatory future-proofing is a process by which regulated entities can anticipate future regulatory actions and take proactive steps to minimize risks and maximize opportunities created by those regulatory changes, and in so doing capture value. This process involves gathering data, weeding out irrelevant information, routing critical details to the appropriate teams for analysis, determining the best course of action to avoid potential impacts or capitalize on opportunities, and mobilize the organization in a timely manner to implement that response. In practice, regulatory future-proofing delivers real-time accountability and transparency across an organizational structure to facilitate more effective information sharing, better decision making, and more nimble responses.

A company’s ability to minimize risk or maximize opportunity effectively in the face of a regulatory change can create value by avoiding unforeseen costs, allocating resources more efficiently, or gaining first mover advantages. Capturing this value, in turn, hinges on the people and processes that are in place. This guide aims to assist individuals or companies wishing to improve their ability to anticipate and adapt to regulatory changes by offering a framework against which current processes and practices can be compared. Effectively dealing with regulations requires a well-coordinated team effort and necessitates proactive participation by everyone either directly or indirectly affected by a regulatory change. By evaluating current practices and processes against those presented in this guide, companies will be able to pinpoint areas for improvement that will enable more proactive responses.