Energy/Power Projects to Change the Direction of the Construction Industry in 2012
KPMG’s sixth annual Global Construction Survey finds that 41% of the top global engineering and construction leaders expect the energy/power industry to offer the biggest opportunities for revenue growth in the next 12 months and as a result, this could change the direction and even the landscape of the construction industry.
Richard Threlfall, UK head of KPMG’s infrastructure, building & construction practice, said: “This year could see the construction industry in the UK and around the globe start to change direction significantly as the energy sector grows as a source of income for the industry. As a result, the demand for firms and individuals with energy sector-specific engineering and construction skills will rise as power projects proliferate.”
The survey shows that economic uncertainty is still seen as the greatest systemic threat to the construction industry but optimism remains widespread amongst the global engineering and construction leaders as almost half (49%) expect to increase their backlog orders in the next 12 months.
In the Americas and Europe, Middle East and Africa (EMEA) regions the second greatest concern over business conditions is the ongoing issue of government deficits – over half (52%) of construction executives in the Americas fear this may constrain any economic recovery; over a third (34%) are worried about this in the EMEA region.
Richard said: “While the continuing economic instability deepens in many parts of the globe, the construction industry is not in retreat. 2011 was a solid year for engineering and construction companies as they saw backlog orders increase compared to 2010.
“The outlook for the construction sector is largely sanguine in the short-term and in the coming decades the demand for power and infrastructure projects around the world is only going to grow, which means the construction industry should be adapting to respond to the opportunity.”
The survey finds that 40% of equity investors in the infrastructure sector from EMEA see energy/power followed by transport projects (30%) as the most attractive investment opportunity in the next 12 months.
However, an overwhelming 80% cite that they are very concerned about governments’ ability to drive infrastructure spending and see lack of leadership as a barrier to investment. Moreover, two-thirds of engineering and construction leaders believe that the private sector is not showing enough initiative.
Richard said: “Amidst a global ‘energy crunch’ significant investments are needed in energy infrastructure to provide energy security at current levels and to allow for a low-carbon transition of our energy systems.* Given the push for infrastructure, there will be intense competition for resources and skills, so the UK needs to work hard to attract the best private sector talent and investment.
“With austerity policies in many countries constraining the scope for public sector spending, it is vital to create an environment that encourages private sector investment. As governments around the world seek to create 21st century infrastructure, they need to create an environment that encourages private sector investment. This means addressing regulatory and legislative barriers and showing long-term commitment.”