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Insights into Engineering and Construction Industry Trends and Opportunities

Explore the skills, role, and products of the E&C industry, along with a focus on market statistics, top countries, firm types, and key participants in the field. Learn about project life cycles, global perspectives, and the market structure within the industry.

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Insights into Engineering and Construction Industry Trends and Opportunities

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  1. Courtesy of Charles Helliwell. Used with permission. THE ENGINEERING AND CONSTRUCTION INDUSTRY • Charles H. Helliwell, Jr. Lecturer

  2. AGENDA • Monday, October 6 @ 8:45AM • – E&C Industry Overview • Wednesday, October 6 @ 8:45AM • – Strategy Management Issues • – Assignment: Profile a Company • Monday, October 20 @ 8:30AM • – Student Presentations • – Summary

  3. SKILLS OF AN EFFECTIVE ENGINEER • Skills • – Technical • – Human • – Conceptual • Levels • – Industry • – Company • – Project • – Task/Assignment

  4. ROLE OF THE E&C INDUSTRY • Through planning, design, construction, operation, and maintenance activities, the E&C industry transforms resources of labor, capital (money, materials, & equipment), and knowledge into the physical facilities required to meet a broad range of social and economic needs.

  5. PRODUCTS OF THE E&C INDUSTRY • Buildings • Industrial Plants • Infrastructure Systems • Environmental Restoration & Remediation • Projects

  6. FACILITY PROJECT LIFE CYCLE* • CONCEPTUAL PLANNING & FEASIBILITY STUDIES • MARKET DEMANDS • OR • PERCEIVED NEEDS • DESIGN • & ENGINEERING • PROCUREMENT • & • CONSTRUCTION • RENOVATION CONVERSION OR DEMOLITION • OPERATION • & • MAINTENANCE STARTUP FOR OCCUPANCY * “Project Management for Construction”; Chris Hendrickson & Tung Au Prentice Hall; 1989

  7. GLOBAL PERSPECTIVE Year 2000 • WORLD TOTAL $3.41 Trillion • – ASIA $1,113 Billion • – EUROPE $1,017 Billion • – NORTH AMERICA $ 885 Billion • – LATIN AMERICA $ 241 Billion • – MIDDLE EAST $ 101 Billion • – AFRICA $ 56 Billion

  8. TOP COUNTRIES • UNITED STATES (1) $819 B 8.2% • JAPAN(2) $618 B 13.9% • GERMANY(3) $253 B 11.4% • CHINA(4) $181 B 17.0% • UNITED KINGDOM(5) $109 B 7.7% • BRAZIL(6) $109 B 13.8% • FRANCE(7) $107 B 7.0%

  9. TOP COUNTRIES (Cont’d) • ITALY(8) $96 B 8.1% • SPAIN(9) $86 B 14.8% • KOREA,Rep(10) $68 B 15.4% • CANADA(11) $65 B 10.2% • INDIA(12) $60 B 12.3% • MEXICO(13) $45 B 9.0% • RUSSIAN FED(14) $43 B 10.8%

  10. TOP COUNTRIES (Cont’d) • ITALY(8) $96 B 8.1% • SPAIN(9) $86 B 14.8% • KOREA,Rep(10) $68 B 15.4% • CANADA(11) $65 B 10.2% • INDIA(12) $60 B 12.3% • MEXICO(13) $45 B 9.0% • RUSSIAN FED(14) $43 B 10.8%

  11. NATURE OF USA DEMAND • PRIVATE 73% • – Residential Building 45% • – Nonresidential Building 21% • – Utilities 7% • PUBLIC 27% • – Public Building 11% • – Highways & Streets 8% • – Other 8%

  12. PARTICIPANTS • Clients/Owners • Designers (Architects, Engineers) • Contractors & Subcontractors • Labor Organizations • Suppliers (Materials, Equipment) • Finance, Legal, Insurance, etc. Firms • Regulators

  13. ENR TOP XYZ LISTS • 500 Design Firms (April) • 400 Contractors ( May) • 100 Design-Build, CM for Fee, CM at Risk • (June) • 200 International Design Firms (July) • 200 Environmental Firms (July) • 225 International/Global Contractors (Aug) • 600 Specialty Contractors (October) • Top Owners (November)

  14. TOP 500 DESIGN FIRMS • Billings: $ 50.1 Billion • – Domestic: $ 41 Billion • – Internat’l: $ 9.1 Billion • Profitability: • – Domestic: 6.7%, 447 Profit, 20 Loss • – Internat’l: 4.5%, 129 Profit, 34 Loss • Professional Staff: • – 197 Increase, 144 Same, 149 Decrease

  15. MARKET STRUCTURE • Building $ 10.24 Billion 20.4% • Transportation $ 9.85 “ 19.7% • Petroleum $ 6.19 “ 12.4% • Hazardous Waste $ 5.06 “ 10.1% • Power $ 4.94 “ 9.9%

  16. MARKET STRUCTURE • Sewer/Wastewater $ 3.67 Billion 7.3% • Industrial $ 3.07 “ 6.1% • Water $ 2.97 “ 5.9% • Manufacturing $ 1.27 “ 2.5% • Telecom $ .93 “ 1.9%

  17. TYPES OF FIRMS • E = Engineer 183 • EA = Engineer-Architect 101 • EC = Engineer-Contractor 55 • AE = Architect-Engineer 72 • A = Architect 51 • ENV = Environmental 11 • GE = Soils or Geotech Eng 12 • P = Planner 0

  18. TYPES OF FIRMS • AP 3 • AEC 3 • AEP 6 • CEP 1 • EAP 1 • ECA 1

  19. FIRM INFORMATION • Rank (2002 & 2003) • Headquarters Location • Type of Firm • Billings (Total:$2.9 B-$16 M, & Int’l ) • Market Distribution of Billings • Top Designers in Market Sectors • Subsidiaries • International Operations

  20. TOP 400 CONTRACTORS • Revenues: $ 194 Billion • – Domestic: $ 175 Billion • – Internat’l: $ 19.6 Billion • Profitability: • – Domestic: 4.1%, 358 Profit, 16 Loss • – Internat’l: 6.1%, 51 Profit, 21 Loss • Professional Staff: • – 137 Increase, 172 Same, 73 Decrease

  21. MARKET STRUCTURE • Building $ 98.3 Billion 50.6% • Transportation $ 25.8 “ 13.3% • Power $ 18.8 “ 9.7% • Petroleum $ 15.9 “ 8.2% • Industrial $ 10.1 “ 5.2% • Manufacturing $ 6.2 “ 3.2%

  22. MARKET STRUCTURE • Hazardous Waste $ 6.3 Billion 3.2% • Sewer/Wastewater $ 3.4 “ 1.7% • Water $ 3.0 “ 1.6% • Telecom $ 2.7 “ 1.4% • Other $ 3.8 “ 2.0%

  23. COMPANY INFORMATION • Rank (2002 & 2003) • Headquarters Location • Total Revenues($9.7 Billion-$98 Million) • International Revenues • New Contract Awards • Market Distribution (% of Revenues) • Construction Management Revenues

  24. COMPANY INFO (Cont’d) • Subsidiaries • Locations of Overseas Operations • Top 20 in Major Market Sectors • Narrative & Strategic Issues • – General Building • – Heavy Construction • – International Market

  25. VIEW FROM October 2000 • General economic environment • – Industry 10 years without recession • – Economic predictions universally optimistic • – Continued growth in 2001 but at slower pace • Annual growth rate down from 10% to 3% • Tighter labor & materials markets • Increasing pressure on inflation • – Large increases in Federal construction

  26. VIEW FROM October • 2000(Cont’d) • – Strong office building construction • – Continued strong demand from bio-tech, dot- • coms, semiconductor manufacturers • Need for innovation to meet demand • – design-build • – innovative financing • – streamlining regulations • – Application of IT to project delivery method

  27. VIEW FROM October 2000 • (Cont’d) • Nature of Projects • – High-profile high-rise • – Signature-architect buildings • – telecom hotels and towers • – Innovative water resources facilities • ground water replenishment systems • microfiltration • reverse osmosis • ultraviolet disinfection

  28. VIEW FROM October 2000 • (Cont’d) • Information-rich project tools • – Information Age to the Knowledge Age • – Turning data into knowledge • – Knowledge based on experience • Realistic assessment of past performance & • capabilities of individuals on a team • Assessment of organizational structure that is • formed to accomplish a complex task • – Mining searchable data

  29. VIEW FROM OCTOBER • 2003 • General Economic Environment • – Second year of overall market contraction • – “Sound Bites” • Design: Age of Anxiety • Construction: Struggle for Survival • – Manufacturing and telecommunications down • significantly; lesser declines in building, • industrial, power, petroleum • – Increases in water, sewer/waste, haz waste, • transportation

  30. VIEW FROM OCTOBER 2003 • Industry Trends • – Continuing diversification to supplement • existing business • Geographic • Market specialties (healthcare, security, research facilities • • New services • – Information technology (hardware, software, management, etc.) • – Medical waste to energy processes • – Shrinking backlogs, staff cuts

  31. VIEW FROM OCTOBER • 2003 • Industry Trends (cont’d) • – Insurance Issues • High premiums • Availability of surety bonds • – Financial health & stability of subs • – Technology less of a novelty and selling point, • more of a requirement • – Increasing Emphasis on safety

  32. VIEW FROM OCTOBER 2003 • Client Trends • – Continued Growth of Design/Build • – Increased Interest in Sustainable Design & • Security Design • – Long Term Alliances • Increasing Competition, More Analytic • Clients = Increasing Pressure to • Differentiate

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