• Service: Advisory, Risk Consulting, Forensic
  • Type: Survey report
  • Date: 10/8/2013

Conclusion: catching the perfect wave 

Survey Conclusion
KPMG’s 2013 Global Construction Survey shows an industry in better shape now than 4 or 5 years ago, with rising backlogs and largely healthy margins. The recovery in the global economy is driving infrastructure, power and energy projects, while cheaper gas prices are leading to manufacturing growth.

Nevertheless, contractors have to balance the longer term need for capital projects with more immediate pressures on owners’ funding sources. Invest too much, too soon, and the demand may not arrive in time, leaving companies with idle resources. Invest too little, too late, and they may miss the wave altogether.

While issues such as government funding and capital markets movements are beyond their control, engineering and construction leaders can take steps to position themselves for the future. The respondents to this year’s survey made the following recommendations:


1. Invest in people


As they move into sometimes unfamiliar areas, it is essential to have sufficient skills and sector knowledge. For example, one respondent from a UK company says that his company’s priority is: “Recruitment of key personnel with industry experience of the rail and energy sectors.”


2. Enhance management of mega-projects


The scale of infrastructure projects is increasing, and companies have to step up accordingly, as a US executive notes: “We must have the right people in the right location to participate in mega-projects that result from new opportunities, as energy costs decreases. This includes transportation and construction of power plants, and large-scale manufacturing. The key to success is how these projects are obtained and managed. We will have to acquire companies that already have the people and experience in key markets.”


3. Create a true risk management culture


Many of the controls appear to be in place. Now it is time for contractors to make sure that people are fully aware of and observing these procedures, and that management has an enterprise-wide view of risk. One executive from a US firm summed this up by stating: “We need to get more people to follow the process. We have invested heavily in risk management for more than a decade now in a formal way. Our emphasis continues to be to intensify training and communication about risk.” Another respondent from the Asia Pacific region agrees that it is all about people: “We must ensure people think of risk management as a fundamental part of the construction process and have it top of mind at every stage of work.”


4. Standardize


In a sector that has grown rapidly through mergers and acquisitions, standardization has been an important goal that contributes to project and risk management. According to a senior executive from a South African contractor “This (standardization) process is ongoing, and is a difficult challenge as every project is different. Whenever new people start on a project, they bring with them different processes.” To spread good practices, contractors can increase their use of project management software and step up training. As a respondent from India emphasizes, the goal is to: “Build efficiency and controls, consolidate project delivery, and tighten all leakages as much as possible.”


5. Become a strategic partner to clients’ businesses


By working more closely with clients from all sectors, engineering and construction companies have the opportunity to gain more control over future projects, and help find innovative ways to reduce costs. This should bring more reliability to forecasting and ensure that they have the proper human and physical resources available to cope with mega-projects.


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Global Construction Survey