Engineering & Consulting Market Update (Baird)

Summary

• Baird's proprietary regression analysis evaluates over 45 E&C transactions completed between 2018 and 2026.p.12
• U.S. electric utilities face a ~$1.3T supercycle alongside a ~16% projected growth in data center size from 2026 to 2030.p.9
• An estimated ~$3T of investment is required to deliver 100 GW of new electrical supply by 2030.p.9
• Federal IIJA spending grew from $52B in 2022 to $76B in 2025, with $161B in funds still pending deployment.p.10
• Over 30% of the U.S. water workforce is over 55 years old, contributing to a requirement of ~349K net new construction workers in 2026.p.11
• AI adoption among Engineering & Consulting firms is projected to increase from ~38% in 2024 to ~70% in 2026.p.11

Key insights

1. The surge in AI demand is driving a trillion-dollar infrastructure supercycle spanning power generation, civil engineering, and water utilities.p.9
2. Global data center capacity is projected to grow at a ~14% CAGR, reaching 200 GW by 2030.p.9
3. Public policy and federal mandates are fueling multi-year demand, with $161B in IIJA funds still awaiting deployment.p.10
4. The Dodge Momentum Index reached 275.5, demonstrating a growing pipeline of preconstruction projects.p.10
5. Severe labor shortages are pressing firms to implement AI tools, with ~349K net new construction workers needed in 2026.p.11
6. Demand for civil engineers has driven 2025 average base salaries to ~$150K, with job changers realizing a +20% median pay increase.p.11
7. Sophisticated buyers pay premium valuation multiples of up to 23x EV/LTM EBITDA for E&C platforms exhibiting high technical specialization and strong recurring revenues.p.12