An overview of AEC (or EC) market drivers, associated business issues and impacts, and enabling technology solutions. Additional insights on advanced tech and that for sustainability processes.

1. Engineering & Construction (E&C) Industry Review
For Discussion Purposes Only
January 2009
Scott Boutwell
C – Level Strategies
© 2006 C – Level Search LLC All rights reserved.

2. Overview
E&C Industry Background
•
Global E&C Profile
•
Market Drivers
•
Strategies
•
Solution Mapping
•
Key Business Issues
•
Key IT Challenges
•
E&C Market Segments
•
Contact Info
•
© 1999 - 2009 C – Level Search LLC - All rights reserved. 1

3. Global E&C Profile
E&C Community
•
Trusted advisors to Fortune 500 and national governments for capital programs
•
Tight community: Know other firms very well, at all levels
•
Global: large, distributed workforces following the sun
•
24/7 work teams; multiple engineering centers worldwide
•
Diversified: all segments/disciplines/stages of lifecycle
•
Risk-averse
•
Operate on relatively low margins
•
Executive management by engineers / geologists; limited operational experience outside
•
industry
Operating efficiency focuses on direct labor utilization; consulting model
•
Technology
•
They are not interested in earning a profit on reselling product; important to remain impartial
•
on technology decisions with clients
Attempt to drive technology costs into projects or to clients
•
Multiple & disparate systems and toolsets
•
Emerging trend to partner with strategic vendors
•
Emerging trend to partner with leading R&D and academia for advanced technologies
•
© 1999 - 2009 C – Level Search LLC - All rights reserved. 2

4. E&C Market Drivers
External
Global (new construction, envt) and
Driver US (security, upgrades, hazwaste).
(Example: 7.5% compound annual growth
rate on infrastructure spending from 2005 to
Abundance 2013)
Lack of qualified technical
personnel: Aging workforce and
Scarcity
fewer engineering graduates
Fortune 100 and national
governments are increasingly
Outsourcing relying on relationship-based E&C
firms
Successful mergers require
compatible corporate cultures,
Consolidation repeatable processes, and integrated
multi-discipline toolsets
Potential impacts on profits, brand,
and resources:
Risk • Health & Safety
• Regulatory Compliance
Management
• Bonding & Insurance
© 1999 - 2009 C – Level Search LLC - All rights reserved. 3

5. E&C Strategies
Business Business E&C
Issue Impact Strategies
External
Driver Create a
Ability to provide Corporate
Abundance Knowledge
services Impact
Organization
Shareholder
value Innovative
Revenue Impact
Scarcity Resource Mgt.
Competitive
position
Shareholder Technology
Outsourcing Impact Standardization
Service quality
Employee Customer
Consolidation
Impact Loyalty &
Employee
Retention
satisfaction
Risk
Customer Operational Organic / M&A
Management Growth Strategy
satisfaction Impact
© 1999 - 2009 C – Level Search LLC - All rights reserved. 4

6. Technology Solution Mapping
Business E&C Technology
Issue Strategies Solutions
Create a Multi Discipline
Ability to provide
Abundance Knowledge & Targeted
services
Organization Tools
Global Work
Shareholder
Sharing &
value Innovative
Scarcity Collaboration
Resource Mgt.
Enterprise
Competitive Licensing
position
Technology
Outsourcing
Advanced
Standardization
Technology (3D
Service quality Prototyping)
Customer
Loyalty &
Consolidation
Account Mgt /
Retention
Employee
CRM
satisfaction
Risk
Information
Organic / M&A
Management Customer Lifecycle Mgt.
Growth Strategy
satisfaction
© 1999 - 2009 C – Level Search LLC - All rights reserved. 5

7. Key Business Issues for E&Cs
How do we increase & maintain operating efficiencies in an industry where margins are typically
•
low? How can we manage SGA costs?
How do we identify, share, and leverage best delivery practices when the company has grown via
•
acquisitions?
What customer segments should we focus on, relative to: risk management, profitability, and core
•
skill sets / resources?
What growth strategies should be followed: incremental (‘organic’) or acquisitions (‘inorganic’)?
•
How can we execute globally with distributed engineering teams?
•
What business processes must we excel at?
•
Given the limited resources available, how do we align our organization to learn, innovate, and
•
leverage technology?
© 1999 - 2009 C – Level Search LLC - All rights reserved. 6

8. Key IT Challenges
Better understand IT Investment (inventory, utilization, future use)
•
Align technologies with BMPs, and share across numerous business practices, cultures, IT
systems
Reduce number of toolsets / vendors, but retain flexibility for range of clients and expertise
of internal teams
Obtain economies of scale and leverage purchasing power
Rationalize annual expenditures on core technologies
Establish predictable annual expenditures with strategic vendors
Enhance, leverage & communicate strategic partnership with strategic vendors
Invest sufficient time & research into emerging technologies (i.e.. 3D prototyping, SaaS)
Streamline licensing and deployment schemes
Provide integrated solutions around key workflows
© 1999 - 2009 C – Level Search LLC - All rights reserved. 7

9. ENR Top 20 Design – Build Firms
(US based firms only)
The Top 20 firms control much of the global engineering & construction market
© 1999 - 2009 C – Level Search LLC - All rights reserved. 8

10. ENR Top 20 Design-Build Firms
Revenue Segmentation
Communications
Manufacturing
2%
3%
Other (i.e. Iraq)
4% Industial / Petrochem
33%
Hazardous Waste
Key Takeaways:
12%
Industrial / Petrochem /
•
Energy = 45%
Wide range of toolsets
•
Water / Wastewater
required
5%
Integration / use of renewable
•
energy technologies
Infrastructure, Water /
•
Wastewater, Hazardous
Waste = 34%
Infrastructure
15%
More outsourcing of
•
operations
Energy
Design – Build – Operate
•
12%
Workflow solutions
Building
Manufacturing segment is
14% •
small (3%), but growing
rapidly
PLM / RoHS
•
© 1999 - 2009 C – Level Search LLC - All rights reserved. 9

11. Top Ten E&Cs by Market Segment
Key Takeaways:
• E&Cs have multiple business units that work somewhat independently;
varying level of control by corporate IT
• International – based firms (SNC, Fugro, WorleyParsons) are dominant
players in EMEA and APAC for local projects
© 1999 - 2009 C – Level Search LLC - All rights reserved. 10

12. Opportunities for E&C Vendors / Partners
Business Solutions
•
Business Process Development & Management
•
Account / Services Management Strategy
•
IT Strategy Development & Validation
•
Organizational Assessment & Design
•
HR Strategy, Assessment, Change Mgt
•
Innovation & Learning Strategy
•
Business Continuity Planning / Risk Management Strategy
•
Technology Solutions
•
Toolsets for project use: CAD, GIS, PLM, PDM, Data Mgt, Risk Mgt
•
Enterprise Architecture Design
•
CRM process solutions
•
Project Management process solutions
•
Collaboration / work sharing process solutions
•
Training & E-learning process solutions
•
IT, app development, & BP outsourcing
•
Shared Services Strategy & Design
•
IT - based and cleantech for specific sustainability processes: buildings, water, reporting, GHG control, SCM
•
Partnering with E&Cs
•
Influence both E&Cs and their clients on toolset selection, customization, and integrated workflows
•
Identify pilot projects and get buy-in from both client and selected E&C
•
Develop solution maps and co-marketing with E&Cs for select market segments
•
Foster E&C interest to customize technology with their business process expertise for their clients
•
Foster E&Cs interest to develop integrated workflows for their clients
•
© 1999 - 2009 C – Level Search LLC - All rights reserved. 11

13. Partnering with E&C Clients
“Sell With” as well as “Sell To”
Illustrative
Example
Highest Value
Partnership
Revenue
Opportunity
Direct Revenue Opportunity
© 1999 - 2009 C – Level Search LLC - All rights reserved. 12

14. Appendix
CLS Background
© 2006 C – Level Search LLC All rights reserved.

15. Scott Boutwell
Contact Information
16 Point Gallinas Rd
San Rafael CA 94903
scott@c-level.biz
www.c-level.biz
415-279-3730
AEC & Cleantech Trends Blog: www.scottboutwell.blogspot.com
LinkedIn profile: www.linkedin.com/in/scottboutwell
(has list of publications, work history, recent projects, and 11 recommendations)
© 1999 - 2009 C – Level Search LLC - All rights reserved. 14