Click here to close now.

SYS-CON MEDIA Authors: Harry Trott, Roger Strukhoff, Pat Romanski, Elizabeth White, XebiaLabs Blog

News Feed Item

The Construction Industry's 2014 Challenge: To Reignite Growth

After Five Bleak Years, Prospects for the Global Engineering, Construction, and Services Industry Are Brightening; Focusing on Margins, Efficiency, Cost Control, and Synergies Will Be Critical, Says a New Report From BCG

LOS ANGELES, CA -- (Marketwired) -- 08/21/14 -- Six years after financial crisis rocked the global economy, the engineering, construction, and services (ECS) industry is operating in a world of tightening margins, intensifying competition, and continuing pressure from the capital markets to create value. The next five years, however, look brighter, according to a new report by The Boston Consulting Group (BCG). The report, Value Creation in ECS 2013: Growing and Thriving in Challenging Times, is being released today.

According to BCG's analysis of value creation by 60 global ECS companies, the industry can expect to see growth in the coming years, especially in mature markets that have encountered strong headwinds since 2008. The companies that benefit the most from reaccelerating growth -- and those most rewarded by shareholders -- will be those that can maintain healthy profit margins, especially in the developing world. To succeed, companies will require careful management of costs and capital, superior processes, and balanced portfolios that enable them to apply the right management focus, investments, and discipline to the businesses in which they can truly win.

"In the coming years, companies will have to focus on execution excellence and bottom-line margins," said Jeff Hill, a BCG partner and a coauthor of the report. "The ECS leaders will be strategic about procurement, highly effective in their operations, and extremely productive, streamlining and right-sizing their organizations to achieve maximum effectiveness with minimal waste."

The Six Imperatives of Top Performance

The new report identifies six imperatives ECS companies must follow if they aspire to deliver outstanding returns to shareholders.


  • Focus on execution excellence and bottom-line margins. Healthy profits aren't simply a matter of being in the right place at the right time. For leading ECS companies, excellence in bidding and pricing is a high priority. These companies are highly productive, streamlining and right-sizing their organizations to achieve maximum effectiveness with minimal waste.

  • Build resilience to withstand increasing global competition. Facing rising competition from the developing world, established companies in mature markets need to develop the requisite capabilities and cost structures. They need to focus on accentuating their more extensive and polished skill sets, talent rosters, intellectual property, and superior processes. Similarly, companies from developing markets will have to develop cost structures and delivery models that will enable them to hold their own in competitive markets.

  • Achieve scale -- but not at any price. In mature markets, at least, size still matters. Big projects continue to get bigger, and only large-scale companies are credible bidders for such ambitious undertakings. Companies shouldn't sacrifice margins for scale, however.

  • Focus on high-growth regions and sectors. After a prolonged stretch of negative growth, growth rates in mature markets will likely accelerate to the low single digits during the next five years. ECS companies that in the past five years prioritized investment in developing markets should regard this shift as a spur to refocus on mature markets.

  • Be prepared to win through M&A. M&A enables ECS companies to gain scale, which, in turn, helps them compete for the largest contracts. M&A is also an important lever for acquiring talent -- especially in high-growth regions such as North America -- and controlling costs.

  • Maintain a disciplined approach to dividends and the balance sheet. Fortunes in the ECS industry can reverse virtually overnight. The best protection against unforeseen market shocks is a solid balance sheet with modest debt levels and a strong credit rating. High debt ratios and weak balance sheets are the mark of the lowest-performing and most vulnerable ECS companies.

A copy of the report can be downloaded at www.bcgperspectives.com.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or [email protected].

About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries. For more information, please visit bcg.com.

About bcgperspectives.com
Bcgperspectives.com features the latest thinking from BCG experts as well as from CEOs, academics, and other leaders. It covers issues at the top of senior management's agenda. It also provides unprecedented access to BCG's extensive archive of thought leadership stretching back 50 years to the days of Bruce Henderson, the firm's founder and one of the architects of modern management consulting. All of our content -- including videos, podcasts, commentaries, and reports -- can be accessed by PC, mobile, iPad, Facebook, Twitter and LinkedIn.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Containers Expo Blog covers the world of containers, as this lightweight alternative to virtual machines enables developers to work with identical dev environments and stacks. Containers Expo Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. Bookmark Containers Expo Blog ▸ Here Follow new article posts on Twitter at @ContainersExpo
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover ...
In their general session at 16th Cloud Expo, Michael Piccininni, Global Account Manager – Cloud SP at EMC Corporation, and Mike Dietze, Regional Director at Windstream Hosted Solutions, will review next generation cloud services, including the Windstream-EMC Tier Storage solutions, and discuss how to increase efficiencies, improve service delivery and enhance corporate cloud solution development. Speaker Bios Michael Piccininni is Global Account Manager – Cloud SP at EMC Corporation. He has b...
SYS-CON Events announced today that O'Reilly Media has been named “Media Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York City, NY. O'Reilly Media spreads the knowledge of innovators through its books, online services, magazines, and conferences. Since 1978, O'Reilly Media has been a chronicler and catalyst of cutting-edge development, homing in on the technology trends that really matter and spurring their adoption...
In a recent research, analyst firm IDC found that the average cost of a critical application failure is $500,000 to $1 million per hour and the average total cost of unplanned application downtime is $1.25 billion to $2.5 billion per year for Fortune 1000 companies. In addition to the findings on the cost of the downtime, the research also highlighted best practices for development, testing, application support, infrastructure, and operations teams.
SYS-CON Events announced today that BMC will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. BMC delivers software solutions that help IT transform digital enterprises for the ultimate competitive business advantage. BMC has worked with thousands of leading companies to create and deliver powerful IT management services. From mainframe to cloud to mobile, BMC pairs high-speed digital innovation with robust...
The OpenStack cloud operating system includes Trove, a database abstraction layer. Rather than applications connecting directly to a specific type of database, they connect to Trove, which in turn connects to one or more specific databases. One target database is Postgres Plus Cloud Database, which includes its own RESTful API. Trove was originally developed around MySQL, whose interfaces are significantly less complicated than those of the Postgres cloud database. In his session at 16th Cloud...
The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development cycles that produce software that is obsolete at launch. DevOps may be disruptive, but it is essential. The DevOps Summit at Cloud Expo – to be held June 3-5, 2015, at the Javits Center in New York City – will expand the DevOps community, enable a wide...
EMC Corporation on Tuesday announced it has entered into a definitive agreement to acquire privately held Virtustream. When the transaction closes, Virtustream will form EMC’s new managed cloud services business. The acquisition represents a transformational element of EMC’s strategy to help customers move all applications to cloud-based IT environments. With the addition of Virtustream, EMC completes the industry’s most comprehensive hybrid cloud portfolio to support all applications, all workl...
In her General Session at 15th Cloud Expo, Anne Plese, Senior Consultant, Cloud Product Marketing, at Verizon Enterprise, focused on finding the right mix of renting vs. buying Oracle capacity to scale to meet business demands, and offer validated Oracle database TCO models for Oracle development and testing environments. Anne Plese is a marketing and technology enthusiast/realist with over 19+ years in high tech. At Verizon Enterprise, she focuses on driving growth for the Verizon Cloud platfo...
SYS-CON Events announced today that MetraTech, now part of Ericsson, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Ericsson is the driving force behind the Networked Society- a world leader in communications infrastructure, software and services. Some 40% of the world’s mobile traffic runs through networks Ericsson has supplied, serving more than 2.5 billion subscribers.
How does one bridge the gap between traditional enterprise storage infrastructures and the private, hybrid, and public cloud? In his session at 15th Cloud Expo, Dan Pollack, Chief Architect of Storage Operations at AOL Inc., examed the workload differences and required changes to reuse existing knowledge and components when building and using a cloud infrastructure. He also looked into the operational considerations, tool requirements, and behavioral changes required for private cloud storage s...
Software is eating the world. Companies that were not previously in the technology space now find themselves competing with Google and Amazon on speed of innovation. As the innovation cycle accelerates, companies must embrace rapid and constant change to both applications and their infrastructure, and find a way to deliver speed and agility of development without sacrificing reliability or efficiency of operations. In her Day 2 Keynote DevOps Summit, Victoria Livschitz, CEO of Qubell, discussed...
The speed of product development has increased massively in the past 10 years. At the same time our formal secure development and SDL methodologies have fallen behind. This forces product developers to choose between rapid release times and security. In his session at DevOps Summit, Michael Murray, Director of Cyber Security Consulting and Assessment at GE Healthcare, examined the problems and presented some solutions for moving security into the DevOps lifecycle to ensure that we get fast AND ...
The 5th International DevOps Summit, co-located with 17th International Cloud Expo – being held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the...