In addition to these factors a number of respondents from larger organizations are focused on optimizing their IT systems and rationalizing legal entities, both of which can help to reduce the complexity inherent in businesses of scale and diversity.
Simplifying supply chain management
Attempts to establish consistent best practices in procurement and supply chain are faltering due to over-complex systems and processes, according to KPMG’s Global Construction Survey 2012. Engineering and construction businesses in Asia Pacific say they’re suffering from a lack of robust data, while the larger multinational players from all regions are finding that their sheer size and spread makes it hard for personnel to follow a common standard.
Having invested heavily in IT in the late 1990s in preparation for the Year 2000 bug, the industry has fallen behind somewhat in the quality of its systems, with an excess of manual procedures that push up costs and slow down reporting. However, there is a question mark over companies commitment to upgrading or replacing systems, as respondents’ greatest IT optimization challenge is the time and cost of transformation. And a third (33 percent) think there are not enough construction-specific ERP packages, which makes implementation even more difficult. A number of executives from companies in Europe, Middle East and Africa feel that their organizations cannot demonstrate the value of IT spend.
Managing tax effectively
In an increasingly global, interconnected marketplace, tax is gaining in importance as companies seek to be compliant and optimize their structures and reporting. This includes issues such as: income/expense recognition for long-term contracts; simplified cost-to-cost percentage completion method; accounting for fixed assets and inventories; and R&D credits. Encouragingly, 62 percent of those taking part in the survey say they have reviewed their tax accounting methods in the past 12 months, suggesting that most businesses are seeking to improve their procedures.