After prolonged economic uncertainty, a majority of executives in the global engineering and construction sector have fresh confidence in the growth prospects for the industry, according to KPMG International's 2013 Global Construction Survey.
A general increase in backlogs and margins is giving cause for optimism across the industry, with further growth anticipated. Just over 50 percent of 165 C-level executives from the Americas; Europe, Middle East and Africa (EMEA); and Asia-Pacific (AsPac) regions said their companies experienced an increase in backlogs of at least 5 percent from 2012 to 2013. Moreover, though margins are not rising at the same rate as backlogs, 80 percent said their margins will either remain stable or increase more than 2 percent in the same period.
The Americas region had the highest confidence for growth with 90 percent forecasting margins as stable or increasing by more than 2 percent. By contrast, 28 percent of companies in the AsPac region see margins decreasing by fewer than 2 percent.
"Our 2013 survey shows the overall outlook in the industry is directionally positive," said Geno Armstrong, global leader of KPMG's Engineering and Construction practice. "A higher level of confidence in the Americas, demonstrated by large margin growth, is an indication of greater efficiency and cost management."
Looking at growth forecasts for 2013, optimism pervades with 64 percent expecting growth up to 25 percent. The highest growth is expected in Central and South America, and Africa. KPMG's Armstrong attributes the growth to "favorable trading conditions in the regions, as well as good prospects for mining, oil and natural gas." And, overall, companies with revenues greater than US$5 billion see the greatest potential for growth.
Drivers and Barriers to Growth
Government infrastructure plans (66 percent) were most frequently cited as the leading driver for growth, followed by global economic growth (42 percent) and population growth (38 percent).
In the Americas, privatization efforts via public-private partnerships (48 percent) and access to new energy sources such as natural gas or renewables (42 percent) ranked as the leading drivers for growth behind government infrastructure plans (58 percent).
Even with resurging optimism, many companies maintain a balanced view on what the likely obstacles to growth might be, with budget deficits and public funding shortages being the overwhelming factor, according to 72 percent of executives. Private-sector financing (43 percent) ranked second among respondents.
As companies ramp up for growth, a near consensus (93 percent) said that their risk management programs have improved project performance. Yet, more than three-quarters of respondents said the underlying causes of underperforming projects were project delays, poor estimating practices and failed risk management processes.
Expansion Plans -- New Geographies and Sectors
In anticipation of continued growth, 47 percent of respondents said their companies are making plans for international expansion into new regions. Africa (35 percent), U.S./Canada (28 percent), and the Middle East (22 percent) are the leading regional targets for expansion. Entering new sub-sectors of the industry is also in the works for 44 percent of respondents, with the power sector (54 percent), water-related activities (28 percent), and mining (27 percent) the leading areas for planned investment.
"The power sector is, without question, presently attracting the most interest," said Armstrong. "With the increase in economic activity and the hyper-focus on energy security, it stands to reason that many players will see opportunity in this area. Power, as well as water, mining, and other resources will increasingly become a critical priority of the business agenda in this industry."
About the KPMG Survey
The survey was conducted in early 2013 through face-to-face interviews with 165 senior leaders -- many of them Chief Executive Officers -- from leading engineering and construction companies in 29 countries worldwide. Respondent representation was spread across the Americas (20 percent), EMEA (52 percent), and AsPac (28 percent).
About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative ("KPMG International"). KPMG International's member firms have 152,000 professionals, including more than 8,600 partners, in 156 countries.
Related Stories
K-12 Schools | Feb 13, 2024
K-12 school design trends for 2024: health, wellness, net zero energy
K-12 school sector experts are seeing “healthiness” for schools expand beyond air quality or the ease of cleaning interior surfaces. In this post-Covid era, “healthy” and “wellness” are intersecting expectations that, for many school districts, encompass the physical and mental wellbeing of students and teachers, greater access to outdoor spaces for play and learning, and the school’s connection to its community as a hub and resource.
Office Buildings | Feb 13, 2024
Creating thoughtful tech workplace design
It’s important for office design to be inspiring, but there are some practical principles that can be incorporated into the design of real-world tech workplaces to ensure they convey an exciting, sophisticated allure that accommodates progressive thinking and inventiveness.
Airports | Feb 13, 2024
New airport terminal by KPF aims to slash curb-to-gate walking time for passengers
The new Terminal A at Zayed International Airport in the United Arab Emirates features an efficient X-shape design with an average curb-to-gate walking time of just 12 minutes. The airport terminal was designed by Kohn Pedersen Fox (KPF), with Arup and Naco as engineering leads.
Higher Education | Feb 9, 2024
Disability and architecture: ADA and universal design at college campuses
To help people with disabilities feel part of the campus community, higher education institutions and architects must strive to create settings that not only adhere to but also exceed ADA guidelines.
Codes | Feb 9, 2024
Illinois releases stretch energy code for building construction
Illinois is the latest jurisdiction to release a stretch energy code that provides standards for communities to mandate more efficient building construction. St. Louis, Mo., and a few states, including California, Colorado, and Massachusetts, currently have stretch codes in place.
Giants 400 | Feb 8, 2024
Top 10 Telecommunications Building Architecture Firms for 2023
Arcadis North America, CSArch, Interior Architects, and TETER top BD+C's ranking of the nation's largest telecommunications building architecture and architecture/engineering (AE) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Giants 400 | Feb 8, 2024
Top 50 Public Library Architecture Firms for 2023
Quinn Evans, McMillan Pazdan Smith, PGAL, Skidmore, Owings & Merrill, and Gensler top BD+C's ranking of the nation's largest public library architecture and architecture/engineering (AE) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Giants 400 | Feb 8, 2024
Top 60 Performing Arts Center and Concert Venue Architecture Firms for 2023
Populous, DLR Group, Gensler, HGA, and Perkins Eastman top BD+C's ranking of the nation's largest performing arts center and concert venue architecture and architecture/engineering (AE) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Giants 400 | Feb 8, 2024
Top 70 Museum Architecture Firms for 2023
SmithGroup, Gensler, Ayers Saint Gross, Quinn Evans, HGA, and Cooper Robertson head BD+C's ranking of the nation's largest museum and gallery architecture and architecture/engineering (AE) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Architects | Feb 8, 2024
LPA President Dan Heinfeld announced retirement
LPA Design Studios announced the upcoming retirement of longtime president Dan Heinfeld, who led the firm’s growth from a small, commercial development-focused architecture studio into a nation-leading integrated design practice setting new standards for performance and design excellence.