Gear up, Train up, Tool up for Engineering Growth

Gear Up: Diversification of Engineering Services Provides Robust Business Strength
The end product quality and optimised financial performance on a project is of paramount importance to owner-operators. Those E&C companies that are developing rapidly by means of either mergers and acquisitions or operational investment will meet demand and capitalise on growth opportunities. The ability to diversify, execute and complete projects on time is vital to win contracts in the short-term, but crucially to be able to move with market requirements and adapt for long-term growth. A recent PwC Global Construction Report “predicts that the volume of construction output will grow by more than 70% to $15 trillion worldwide by 2025.”

Billions of dollars are being invested in gas infrastructure in North America and petroleum downstream projects in the Middle East. Asia is also embarking on expansion plans. Most owner-operators primarily have limited in-house resources to undertake major engineering of these projects. Nevertheless, they will continue to pressurise external engineering companies to support feasibility studies to help determine simulation and design modelling, capital cost estimations and eventual construction.

The engineering game is changing. The larger, well-established E&Cs are aligning their businesses to face this increasingly dynamic environment driven by greater project complexity and an escalating demand for faster and less costly engineering and construction performance. Essentially, the trend today is to strive for greater capability across a range of markets to provide technical expertise and added value – from the earliest phases of a project through to final production. By diversifying their interests beyond traditional construction projects, E&Cs are moving into areas, such as off-shore and on-shore exploration, sub-sea systems, projects to monetise reserves of LNG / natural gas, executing refining projects, chemicals and pharmaceuticals, operating power plants and industrial facilities through to the development of minerals and mining assets. This strategy is helping to mitigate competition and support organisational structure to better manage portfolio risk for long-term sustainability.

Train up: Nurturing Skills and Talent Development
The talent pool in the industry is running dry. Engineering companies and owner-operators have been swimming against the tide of retiring talent. Saving the ‘lost’ generation is critical to the process industries in general. The construction industry, in particular, shrank by 30% or more since the high point back in 2007. With the downturn in the economy, thousands of skilled workers lost their jobs and many younger, up and coming graduate engineers have found entering the profession to be a challenge.

Many E&Cs now recognise that nurturing new talent will help to fulfil the upturn in mega-projects that are entering the market. This strategy will build the next generation of leaders, future-proof their businesses and re-address the old values of short-termism that have previously stifled industry. Many engineering companies are embarking on major recruitment and training programmes to help meet the uplift in business demand. Greater capabilities come in the form of cost estimators and engineers able to model for projects. This initiative of succession planning is considered by many industry exponents to be as equally an important aspect of business planning as operational performance and financial stability.

Leading E&Cs, including Foster Wheeler, WorleyParsons and many others are also adopting this strategy to fulfil their long-term business goals. Subsequently, diversification means that E&Cs are also deploying appropriate skills across the globe in order to manage contracts and assign people, such as cost estimators, to ensure optimum balance between cost, quality and scheduling requirements. A truly global approach to managing projects, therefore, requires a truly well-trained and flexible workforce.

Tool up: Investing in Technology
With diversification and recruitment comes the need to utilise technology to collaborate and to simplify processes in order to deliver projects on time. The most significant trend in the construction industry is the increased use of state-of-the-art software to raise the efficiency level of engineering and the designing of the construction industry. Equipping engineers with integrated best-in-class software tools creates a powerful and collaborative environment across an organisation. Dedicated engineering applications are specifically designed to improve profitability, increase capacity, reduce operating costs and optimise energy efficiency. In ARC’s “Process Engineering Tools Worldwide Outlook”, the report estimated that “by the year 2015, the Process Engineering Tools market will generate revenues in excess of $3.6 billion, representing an overall Compound Annual Growth Rate of over 13 percent.”

Many leading engineering companies have adopted engineering software with leading products focused on process engineering and optimisation. Process modelling analysis and design tools are integrated and accessible through process simulators. Companies can optimise process designs for energy use, capital and operating costs and product yield through the use of activated energy, economics and equipment design during the modelling process. The ability to determine a design’s capital and operating cost within reasonable accuracy at an early stage of design provides the engineer with the ability to discuss both technical alternatives and economic feasibility early in the project when there is still flexibility to make changes. Also, giving the engineer software tools to quickly handle sudden changes in the client’s business and design criteria is enormously beneficial.
E&C organisations that use innovative process modelling and licensing arrangements are achieving tangible results in terms of fast project cycle times (i.e. up to 30% time savings, better use of capital within tight project deadlines, providing alternatives that can save 10 – 20% capital investment).

Build for Sustainable Success
Engineering and Construction companies are broadening their portfolio of services with expanded skills to reach new markets and mitigate risk. With increasing customer expectations, mounting competition and the intense scrutiny of regulation, there is a need for more robust business processes and technology solutions to improve project performance, both operationally and financially.

Those engineering contractors that build up in-house capabilities and innovate across the enterprise will thrive in this emerging environment. Owners of mega-projects who gain assurance from their E&C partners that they have the necessary expertise will profit through collaboration and see significant bottom-line benefits. The construction industry is expanding both vertically and horizontally to meet increasing social, commercial and industrial needs. Growth necessitates diversity, which is facilitated by skills that require easy to use leading-edge software. For E&Cs today, it is time to gear up, train up and tool up for a market that is rapidly changing.