The engineering and construction (E&C) industry has had its fair share of challenges recently. In PwC’s most recent Global CEO Survey, 64% of E&C CEOs agreed that their companies face more threats now than they did three years ago. These threats include low oil and commodity prices, economic instability, and reduced capital spending.
On a positive note, U.S. non-residential construction starts are generally trending up.
Here are three things E&C firms need to do to stay competitive now and into the future.
Adopt new technologies
One of PwC’s conclusions was that the E&C industry’s approach to technology is puzzling.
On the one hand, 74% of the CEOs in the survey identified technological advances as one of the top global trends expected to impact their business in the next five years. On the other hand, PwC writes: “In general the engineering and construction industry has been slow to adopt new technologies; indeed, some firms are still using paper-based processes that can only be described as archaic.”
One of the technologies PwC highlights is software that automates much of the design process and allows workers in different departments to collaborate and share information. Benefits of these programs include being able to simulate projects and work out the kinks before construction begins, reducing rework, and improving safety.
To see a software like this in action, watch this short video about Engineering Base.
Retain your talent
A recent survey by Building Design + Construction found that architecture, engineering, and construction firms are feeling “stymied” by the current talent shortage. One in six said that they’d had to either delay or turn down a project because they couldn’t find the right people for the job.
Overall, the problem isn’t so much finding new hires. It’s keeping them long enough to build an experienced workforce. In particular, companies are having trouble finding people with at least six years of experience.
If this situation sounds familiar, explore these five tips from ConstructionDive on how to attract and retain great employees.
Focus on profitability, not utilization
This one comes from McKinsey&Company. In a recent analysis, McKinsey identified several reasons engineering and construction companies have low margins and low productivity — all of which boil down to the fact that they focus too much on utilization, and not enough on profitability. McKinsey writes:
“Clients are looking for higher-quality and more cost-efficient solutions grounded on more productive technologies and methods. Engineering and construction companies able to bring such value-enhancing solutions to clients will likely enjoy better margins.”
Here are McKinsey’s recommendations for how to do better (you’ll recognize a few of these from earlier in this article):
- Articulate a clear set of values and targets
- Build a development program for project managers (This will also help you retain your talent.)
- Create an integrated data system
- Encourage speedy risk mitigation and decision making
- Make project-delivery teams more accountable
- Standardize systems and practices
- Create an integrated and transparent performance-management plan
- Minimize the number of changes (Here are some articles to help you accomplish this one.)
These may sound like large undertakings, but the potential gains are more than worth it!
Do you have any stories or insight into how E&C companies can win in today’s global business climate? Share them in the comments!