Financial Data
Updated 19 Sep 2019


What the future holds for engineering and construction businesses

Encourage and embrace the changes and advancements in your industry for business success as the construction sector evolves.


21 March 2018  Share  0 comments  Print


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While 2017 wasn’t a high-growth year for the construction sector – with large construction companies’ share price value declining by more than 50%, – the future may see a swift turnaround in the industry’s fortunes.


“Given the boom-and-bust history of this sector, new avenues for growth, no matter how challenging, may be more likely to create sustainable success than what companies in the industry have gotten used to.”– PwC


Acquiring higher levels of risk and rethinking approaches that have worked until recently isn’t easy in a hostile environment, but this isn’t a problem with viable solutions:

How to respond to challenges in the engineering and construction sector

These steps can help your business navigate the construction and engineering environment and the obstacles that may lie ahead:

1. Successfully navigate the new market dynamic

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Lump Sum Turn Key (LSTK) contractual agreements are set to continue to maintain agreements whereby a fixed price is agreed upon prior to the execution of a project. Upon completion of the final development, a ready-to-operate asset is handed over to the client.

This is because businesses need to build stronger estimation, cost controls, and procurement capabilities, instead of just tracking and delivering costs to clients. Proactivity in identifying inflated costs and decreasing them is a necessity.

“Similarly, in marketing and sales functions, firms need to adapt to changes in how their clients handle requests for proposal,” says PwC. “This may seem like a difficult challenge, but firms that change their internal processes and become more flexible in how they deal with clients will give themselves an edge.”

2. Build scale by clearly identifying opportunities

Before you can recognise and seize prospects for scaling and growth, ensure your management team understand their position in the market. More importantly, they should establish if their current scale is enough to maintain costs while remaining competitive.

Related: Significant trends affecting construction for the next three decades

“For those that need to make deals, sensing the market is critical,” advised PwC. “The oil and gas sector is likely to be dynamic over the next few years, and the most promising segments in construction will shift as well.”

Accurate and swift assessment the value of potential targets not only keeps you ahead of the competition, but stabilises your revenue.

3. Revisit your cost structuring methods

During times of concern, it’s vital to keep scrutinising your costs as a strategic priority. Big legacy construction firms continue to struggle with the importance cost, due to their experience and comfort in old ways, say experts.

The antidote is encouraging and embracing the evolution of technology and its effect on the design, procurement, and construction of projects to make processes more efficient and less expensive.

Related: Join the construction sector revolution by investing in these new technologies

“Similarly, it may be hard for some leadership teams to assess the very real threat from new competition,” says PwC. “Be it from Asian players or nimble firms in developed markets that are adept at navigating today’s more challenging bidding procedures and risk-sharing arrangements.”

The sooner you as an engineering and construction engineering and construction leader realise that the industry is undergoing a radical transformation, the better equipped your company will be to respond to the changes through corresponding actions within the business.

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