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Firms 'opting for new systems to fight risk'

Manama, January 19, 2011

The lingering economic downturn and associated constraints have generated a growing movement among global engineering and construction companies to create stronger, more resilient business models that can weather change and manage risk, a survey revealed.

Seventy-seven per cent of respondents in the KPMG 2010 Global Construction Survey, Adapting to an Uncertain Environment, said they now have sophisticated systems to effectively manage risk.

Many also said they are creating new integrated service offerings or expanding overseas to increase market opportunities.

The willingness of contractors to move into new markets, and possibly to evolve their value proposition, could be the difference between thriving and merely surviving.

With margins unlikely to rise for traditional business, such a repositioning could be vital.

Close to half of respondents have forecast rising backlogs in 2011 that would come from pent-up demand, expansion into new services, such as power or moving into additional geographies, such as the Middle East, Asia, Australia, Africa and India.

Asia Pacific demonstrated the most promising outlook in backlogs in 2011 with 21 per cent of respondents confident of a significant increase. Other findings include indications that few companies expect to lay off workers in 2011, while 31 per cent said they will likely hire more direct labour in that period.

'Engineering and construction companies that are making major improvements to their businesses will provide a strong foundation for future growth,' said KPMG partner and head of building, construction and real estate, Middle East and South Asia, Ernst Weber.-TradeArabia News Service

Tags: Construction | KPMG | engineering | finance | Risk management | economic downturn | business models |

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