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Engineering & Construction summary
2 11th Annual Global CEO Survey – Sector Summary
The survey divides into two main sections with special attention in each to the key enablers and barriers to success:
• Section 1 – The business environment: Business confidence, M&A, global risks, and climate change
• Section 2 – The impact on business models: People and change, collaborative business networks, and regulations
In addition to providing the analysis of the views of 1,150 CEOs, each section includes the personal views of individual
CEOs who provide their perspective on how their organisations are meeting the challenges and addressing the opportunities
of a connected world. In this Sector Summary, we look specifically at how Engineering & Construction CEOs view and are
addressing these challenges and how their views compare and contrast with CEOs across all industries.
Full findings of the PricewaterhouseCoopers 11th Annual Global CEO Survey are available at www.pwc.com/ceosurvey
The business environment E&C industry executives are looking The built environment in many
to expand their global footprint – 28% developed countries contributes
Executives in the industry report fairly
cite geographic expansion as the main substantially to carbon emissions,
high levels of confidence; overall 94%
opportunity to grow their business over often representing close to 50%
of E&C CEOs are somewhat or very
the next 12 months, compared to 19% of all emissions. The potential for
confident of achieving revenue growth
of executives across all industries. improvement is significant and will
over the next 12 months, while 56%
surely create many opportunities for
of E&C CEOs are very confident.
We are likely to see more cross-border the industry. E&C executives report
This trend reflects a continuing global
M&A in the sector; only 25% of E&C a noticeably more optimistic view of
boom in the construction industry.
executives report having completed climate change than peers in other
a cross-border merger or acquisition sectors. CEOs are less likely to be
However, CEOs did express concern
in the past 12 months, but 46% are concerned that climate change issues
about some threats to this potential
planning such a deal for the next 12 will negatively impact business
growth. More than half of executives
months. The preferred location for growth than executives across all
(54%) view the scarcity of natural
future M&A is North America (36%), industries. E&C CEOs are also much
resources as a potential threat,
followed closely by Eastern (32%) and more likely to see a positive side
compared to about 42% of CEOs
Western (32%) Europe. Fewer than a to climate change – more than half
across industries. Around the same
quarter (23%) of E&C executives are (53%) believe that climate change will
number (53%) also see the security
planning cross-border M&A in Asia, benefit their business economically,
of the supply chain as an area for
compared to 37% of CEOs across compared to only 28% of CEOs
concern. This undoubtedly reflects
all industries, continuing a trend across all industries.
skills shortages in the sector and
we noted in last year’s survey and
concern over the ability of specialist
reflecting tough contracting conditions
contractors to deliver.
and greater restrictions on overseas
players in markets like China.
Full findings of the PricewaterhouseCoopers 11th Annual Global CEO Survey are available at www.pwc.com/ceosurvey
PricewaterhouseCoopers 3
Across
E&C Industries
Business environment
Anticipate revenue growth over the next 12 months 94% 90%
Think that climate change will benefit their business economically 53% 28%
Think that climate change will benefit their business intangibly 43% 29%
Regulations: Public & Private
Disagree that their government has reduced the regulatory burden on corporations 71% 57%
Disagree that their government is creating a business-friendly environment 52% 40%
People and change: Strategy & Execution
Concerned that lack of availability of key skills could threaten future business growth 71% 61%
Believe that their ability to access and retain key talent is their main source of competitive advantage in achieving growth 29% 17%
Use the acquisition of other companies as a means of acquiring critical expertise/addressing talent shortages 52% 42%
Agree that management spends enough time on people issues during periods of strategic change 44% 60%
Full findings of the PricewaterhouseCoopers 11th Annual Global CEO Survey are available at www.pwc.com/ceosurvey
4 11th Annual Global CEO Survey – Sector Summary
Governments and government entities as an effective means of addressing Focusing on people issues is also a
are also key customers of the industry, talent shortages – more than half key factor for success in periods of
and government projects are often (52%) cite this strategy, compared to strategic change. E&C executives
subject to strict scrutiny. Furthermore, 42% of CEOs across all industries. believe that management needs to
the growing trend to build and maintain devote more time to ensuring these
infrastructure projects using public- Currently, only 37% of E&C CEOs factors are adequately addressed –
private partnerships means that the rate global experience as critical to less than half (44%) agree that
industry will be increasingly subject their organisations, compared to 55% management spends enough time
to a myriad of government regulation of executives across all industries. on people issues during periods of
and scrutiny. As companies expand their geographic strategic change, compared with
reach, they will face new challenges 60% of executives overall.
So perhaps it is not surprising that in terms of ensuring that they are
E&C respondents were more likely to able to get the right people in place Looking forward
respond in the negative when asked if on projects in diverse locations.
Construction companies are
their current government had reduced We anticipate that global experience
facing a period of major change.
the regulatory burden on corporations and managing international mobility
PricewaterhouseCoopers’ Global
– 71% disagreed or strongly will become increasingly important for
Engineering & Construction Leader
disagreed, compared to 57% of the industry. Executives who do rate
Jonathan Hook sums up the situation:
respondents across all industries. global experience as critical are not
‘The survey results reinforce what
And more than half (52%) also finding suitable candidates – 76%
we are seeing ourselves in practice.
disagreed that their government of these E&C respondents report
It is still a boom time for construction,
is creating a business-friendly experiencing difficulty recruiting
despite recent uncertainty in financial
environment, compared to 40% of people with global experience,
markets. There will be increasing
executives across all industries. compared to 65% of respondents
numbers of cross-border transactions
across all industries.
and smart contractors are focusing
People and change: on the real business opportunities
Strategy & Execution Construction work is often perceived
created by the sustainability agenda.’
as dirty and dangerous; some
Executives of E&C companies are contractors are addressing this issue
keenly aware of the importance of the Jonathan Hook
by looking to modernise processes on
people agenda to their future growth. Global Engineering &
site and to try and carry out more work
E&C companies are more likely to Construction Leader
off-site in a safer factory environment.
see their ability to access and retain PricewaterhouseCoopers LLP (UK)
The use of pre-fabricated components
key talent as the main source of +44 (20) 7804 4753
such as stairs and walls is also
competitive advantage in achieving jonathan.hook@uk.pwc.com
increasing. In time, the proportion
growth. More than 70% are concerned of construction work requiring hard
that the lack of availability of key skills Michael Cracknell
physical labour will probably decrease,
could threaten future business growth. Global Engineering &
and new skill sets will be required.
Construction Marketing Manager
Construction companies need to
E&C CEOs are ready to take action PricewaterhouseCoopers LLP (UK)
strategise how to take advantage of
to ensure that they have access +44 (20) 7213 1737
this changing environment to make
to employees with the right skills. michael.cracknell@uk.pwc.com
their workplaces safer and more
Respondents in this sector are desirable to skilled employees.
more likely to view acquiring other
companies to obtain critical expertise
This summary provides a sampling of some findings within the Engineering & Construction sector. Full findings
of the PricewaterhouseCoopers 11th Annual Global CEO Survey are available at www.pwc.com/ceosurvey
For additional information regarding PricewaterhouseCoopers’ Engineering & Construction sector practice,
please visit www.pwc.com/e&c
© 2008 PricewaterhouseCoopers. All rights reserved. ‘PricewaterhouseCoopers’ refers to the network of member firms of PricewaterhouseCoopers
International Limited, each of which is a separate and independent legal entity.
Designed by studioec4, London, United Kingdom. 18883 (01/08).