Engineering Services
Description
Companies in this industry apply engineering principles to design and develop structures, systems, and processes. Major companies include AECOM, Bechtel, and Jacobs (all based in the US), along with Babcock and Wood (both based in the UK), AtkinsRéalis (Canada), and Worley (Australia).
Construction spending, particularly in emerging markets, drives global demand for engineering services. Global spending on engineering services is expected to reach about $1.6 billion by 2034 at a growth rate of 3.4%, according to the Business Research Company.
The US engineering services industry includes about 62,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $240 billion.
COMPETITIVE LANDSCAPE
Success in the engineering services industry requires efficient bidding and cost controls. Reduced government and commercial spending on infrastructure and construction projects during times of economic or political discord can diminish bidding opportunities.
Small firms, which can effectively compete with larger ones by having expertise in a particular field or region, are often hired as consultants on larger projects if they have applicable expertise. Large firms are advantaged in designing and managing large projects, but may face challenges on smaller projects in fields where they lack specialization. Consolidation among smaller players is common under flat market conditions. The US industry is fragmented: the 50 largest firms account for about 40% of revenue. Large global players have tended to originate in the US and Europe, but engineering and construction firms in China, India, and Korea are working to establish an international presence.
Competitive Advantages:
Efficient Cost Management -- Under fixed-cost contracts, companies bear the burden of cost overruns if estimates are inaccurate. Engineering firms must direct resources toward improved estimation and procurement processes.
Adopting New Technologies -- Emerging design and data tools are allowing companies to increase process efficiencies. The increased use of mobile technology and cloud computing allow large amounts of data to be shared, stored, and accessed from more places.
Identifying Specialization Opportunities -- The ability to successfully win contracts in highly competitive and lucrative market sectors is essential. Companies must target the most profitable market sectors and avoid less cost-effective areas of operation. Specializing in growing fields such as environmental, telecom, or infrastructure engineering can gain companies competitive advantages in winning bids.
Companies to Watch:
AECOM specializes in commercial facilities such as sports centers but also designs for energy, transportation, government, and water projects. The company provides a range of engineering, construction, and management services.
Bechtel Group has offices in about 25 countries around the globe. The company focuses on large energy and mining projects.
Wood Group provides design, consulting, and project management for oil and gas, clean energy, mining, and environmental sectors.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major engineering services include construction design and management, industrial process design, systems engineering, and maintenance and operations. Transportation projects account for about 20% while consulting services account for about 15% of the industry's revenue. Followed by commercial, public, and institutional building projects which accounts for about 15%, including new establishments. Other services include highway and roadway projects.
Engineering projects require skills in analysis, planning, design, development, project management, and operations. Most firms specialize in a particular field of engineering; companies that provide engineering services to the construction industry tend to be among the biggest in terms of revenue. Larger firms serve a range of industries and may also provide architectural, construction, and maintenance services. Most engineering work is per project, such as designing and constructing a highway or formulating an environmental plan for a wetlands area.
Engineering firms sell the knowledge and skills of their employees, so attracting and retaining qualified engineers is an ongoing concern. Due to the complexity of many jobs, engineering firms often hire subcontractors and consultants to perform specialized work. Material inputs are provided by subcontractors.
Construction spending, particularly in emerging markets, drives global demand for engineering services. Global spending on engineering services is expected to reach about $1.6 billion by 2034 at a growth rate of 3.4%, according to the Business Research Company.
The US engineering services industry includes about 62,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $240 billion.
COMPETITIVE LANDSCAPE
Success in the engineering services industry requires efficient bidding and cost controls. Reduced government and commercial spending on infrastructure and construction projects during times of economic or political discord can diminish bidding opportunities.
Small firms, which can effectively compete with larger ones by having expertise in a particular field or region, are often hired as consultants on larger projects if they have applicable expertise. Large firms are advantaged in designing and managing large projects, but may face challenges on smaller projects in fields where they lack specialization. Consolidation among smaller players is common under flat market conditions. The US industry is fragmented: the 50 largest firms account for about 40% of revenue. Large global players have tended to originate in the US and Europe, but engineering and construction firms in China, India, and Korea are working to establish an international presence.
Competitive Advantages:
Efficient Cost Management -- Under fixed-cost contracts, companies bear the burden of cost overruns if estimates are inaccurate. Engineering firms must direct resources toward improved estimation and procurement processes.
Adopting New Technologies -- Emerging design and data tools are allowing companies to increase process efficiencies. The increased use of mobile technology and cloud computing allow large amounts of data to be shared, stored, and accessed from more places.
Identifying Specialization Opportunities -- The ability to successfully win contracts in highly competitive and lucrative market sectors is essential. Companies must target the most profitable market sectors and avoid less cost-effective areas of operation. Specializing in growing fields such as environmental, telecom, or infrastructure engineering can gain companies competitive advantages in winning bids.
Companies to Watch:
AECOM specializes in commercial facilities such as sports centers but also designs for energy, transportation, government, and water projects. The company provides a range of engineering, construction, and management services.
Bechtel Group has offices in about 25 countries around the globe. The company focuses on large energy and mining projects.
Wood Group provides design, consulting, and project management for oil and gas, clean energy, mining, and environmental sectors.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major engineering services include construction design and management, industrial process design, systems engineering, and maintenance and operations. Transportation projects account for about 20% while consulting services account for about 15% of the industry's revenue. Followed by commercial, public, and institutional building projects which accounts for about 15%, including new establishments. Other services include highway and roadway projects.
Engineering projects require skills in analysis, planning, design, development, project management, and operations. Most firms specialize in a particular field of engineering; companies that provide engineering services to the construction industry tend to be among the biggest in terms of revenue. Larger firms serve a range of industries and may also provide architectural, construction, and maintenance services. Most engineering work is per project, such as designing and constructing a highway or formulating an environmental plan for a wetlands area.
Engineering firms sell the knowledge and skills of their employees, so attracting and retaining qualified engineers is an ongoing concern. Due to the complexity of many jobs, engineering firms often hire subcontractors and consultants to perform specialized work. Material inputs are provided by subcontractors.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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