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
Building Team | Nov 1, 2022
Nonresidential construction spending increases slightly in September, says ABC
National nonresidential construction spending was up by 0.5% in September, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau.
40 Under 40 | Nov 1, 2022
40 Under 40 class of 2022 winners: Meet the architects
Of the up-and-coming AEC professionals to be named 40 Under 40 class of 2022 winners by the editors of Building Design+Construction, 22 make their living in the architecture profession.
K-12 Schools | Nov 1, 2022
Safety is the abiding design priority for K-12 schools
With some exceptions, architecture, engineering, and construction firms say renovations and adaptive reuse make up the bulk of their work in the K-12 schools sector.
| Nov 1, 2022
Updated Florida building codes helped newer homes withstand Hurricane Ian
Newer homes seemed to fare much better than older structures during Hurricane Ian, suggesting that updated Florida building codes made a difference.
Wood | Nov 1, 2022
A European manufacturer says its engineered wood products can store carbon for decades
Metsä Wood, a Finland-based manufacturer of engineered wood products, says its sustainable, material-efficient products can store carbon for decades, helping to combat climate change.
Data Centers | Oct 31, 2022
Data center construction facing record-breaking inflation, delays
Data center construction projects face record-breaking inflation amid delays to materials deliveries and competition for skilled labor, according to research from global professional services company Turner & Townsend.
School Construction | Oct 31, 2022
Claremont McKenna College science center will foster integrated disciplinary research
The design of the Robert Day Sciences Center at Claremont McKenna College will support “a powerful, multi-disciplinary, computational approach to the grand socio-scientific challenges and opportunities of our time—gene, brain, and climate,” says Hiram E. Chodosh, college president.
Energy Efficient Roofing | Oct 28, 2022
Rooftop mini turbines can pair with solar panels
A new type of wind turbine can pair well on roofs with solar panels, offering a double source of green energy generation for buildings.
Building Team | Oct 27, 2022
Who are you? Four archetypes shaping workspaces
The new lifestyle of work requires new thinking about the locations where people work, what their workflow looks like, and how they are performing their best work.
Codes and Standards | Oct 27, 2022
Florida’s Surfside-inspired safety law puts pressure on condo associations
A Florida law intended to prevent tragedies like the Surfside condominium collapse will place a huge financial burden on condo associations and strain architecture and engineering resources in the state.
