During uncertain times, what can E&C firms count on?

May 16, 2017

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By Mike Sobolewski and Al Kent

The Engineering and Construction (E&C) industry has weathered its share of storms over the past several years. While analysts predict 2017 will bring renewed growth to the industry, industry stakeholders can count on one thing: uncertainty from 2016 will carry forward into 2017. The new administration has created excitement over future E&C investments, but clear plans of when and where have not surfaced.

While analyzing the industry landscape, PwC found key trends that all E&C players can count on, even in ambiguous times:

Contracting will get more difficult.

  • LSTK contracts are here to stay. Cost-savvy clients are benefitting from greater market competition and can demand these contracts.
  • Clients are breaking up projects, challenging E&C firms’ traditional pricing models and putting the burden of managing multifaceted projects back on themselves.
  • Private-public partnerships will continue to gain popularity. Big firms can get excited as they assume greater risk, but also gain new opportunities. Small firms may need to make changes or position themselves for acquisition.

Market consolidation will continue.

  • The downturn hurt smaller firms, and new capital could be slow to materialize even if investment activity increases. This situation further underpins the need for small firms to consider positioning themselves for acquisition.
  • Big firms are feeling the pressure from shareholders, which means leadership will look to new geographies and service offerings for potential deals.

Competition will come from overseas.

  • Major players from China, Korea and India are ready to turn their attention away from home markets and look toward buying assets and building up capabilities in established markets.

How can E&C firms use trends to shape strategy? PwC shares key insights and area to focus.

 

©2017 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.  This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

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