global construction survey 2012

7/31/2019 Global Construction Survey 2012

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KPMG INTERNATIONAL

The great globalinrastructureopportunity

Global Construction Survey 2012

kpmg.com/building


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b | The great global inrastructure opportunity

2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.


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A brave new direction orengineering and construction?The last three years have been ull o uncertainty or many in the engineering

and construction industry. However, one constant is the insatiable demand or

inrastructure in all orms, which is causing a undamental shit in ocus or nearly all

players in the sector. The old imperatives o commercial, residential and industrial

building projects have taken second place in many geographies to energy, natural

resources, transportation, communication and technology, and other vital

civil and social inrastructure projects.

Much o this change is driven by the

pressing challenge o urban growth;with the proportion o the worldspopulation living in cities set to rise tomore than 70 percent by 20501, thereis immense pressure to provide aneective and reliable support network tothe teeming millions.

And while the continuing economicinstability is impacting many parts othe industry, inrastructure is so vitalto growth that even the most cash-strapped governments will inevitablygive it a higher priority or ace adrastic change in liestyles or theirpeople. Worldwide the expectedcost or inrastructure over the nextorty years is approximatelyUS$70 trillion.2

Engineering and construction companiesare changing to meet the growingdemands o inrastructure, withthe traditional general engineeringproviders and contractors giving way

to larger, more diversied businesseswith specialized skills. Winning newcontracts is increasingly about havingthe right expertise, so the battle orskilled resources is likely to intensiyeven urther, with a possible rise in

acquisitions to buy that expertise. New

inrastructure projects are expected to beon a huge scale, particularly in emergingmarkets such as India, China and Brazil,so size and global reach will also matter.

With scale comes complexity as theglobal industry players navigate atough political, commercial, regulatoryand governance environment whichwill test their risk management abilityto the maximum extent. Marginson mega-projects can be severelyimpacted by unoreseen scheduledelays, sometimes customer driven andsometimes sel-inficted. Although thesector has invested considerably in riskmanagement in recent years, a numbero high prole project ailures in the pasttwelve months raises question marksover the eectiveness o some o thisinvestment.

The shape o the industry is changing asthe main players seek to optimize costs,ocus on tax eciencies, streamline

supply chains, improve inormationtechnology systems (IT), capitalize onemerging markets, and grow throughmergers and acquisitions. But willthese eorts be enough to succeed?As the world rises to meet the great

inrastructure challenge o the next

decade, what role will engineering andconstruction companies play?

With these questions in mind, the latestKPMG Global Construction Surveycomes at an opportune moment,gauging the views o many o the seniorexecutives o leading engineering andconstruction companies rom aroundthe world. I would like to thank allthose who gave their valuable timeto contribute to this vital and ongoingassessment o the uture o the sector.

Geno Armstrong

International Sector Leader,

Engineering & Construction,

KPMG in the US

1. United Nations, Department o Economic and Social Aairs, Population Division (2011). World Population

Prospects: The 2010 Revision

2. Booz Allen Hamilton, Global Inrastructure Partners, World Energy Outlook, Organisation or Economic

Co-operation and Development (OECD), Boeing, Drewry Shipping Consultants, U.S. Department o

Transportation



4/48 2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.


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Executive summary 02

Opportunities and threats 05The great energy and inrastructure opportunity

Perormance and uture expectations 13

Optimism in the midst o uncertainty

Efciency 19

Building better practices

Risk management 29

Coping with risk in a changing world

Looking orward 36

The engineering and construction company o the uture

About the survey 38

Contents



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Demand for power and energy ischanging the direction of construction

Power and energy offer the best opportunities for

revenue growth

Public-Private Partnerships (PPPs) most likely to be

focused on energy and transportation projects

Procurement and supply chain playa critical role in future success

59 percent of respondents say this area offers the

greatest opportunity to improve efficiency

Overly-complex systems and processes are hindering

progress

37 percent of firms from the Americas have not

reviewed their procurement and supply chain

processes for at least five years

Existing infrastructure is seen asinadequate to support growingurbanization, population growth andchanging demographics

53 percent feel government policies will fail to have a

positive influence on infrastructure investment

80 percent believe government is showing a lack of

leadership over infrastructure development

IT needs to step up a level

50 percent say that IT transformation is too costly and

takes too long

Surprisingly, 71 percent say they have formally

reviewed their IT systems within the previous 12

months

Cost reduction remains on theagenda

Organizational culture is the biggest barrier to

greater cost efficiency

21 percent of respondents have not made

significant cost reductions rising to 29 percent

in Europe, Middle East and Africa

Forces shapingthe industry

Drive for greaterefficiency

Executive summary

2 | The great global inrastructure opportunity



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The great global inrastructure opportunity | 3

Optimism over future prospectsdespite economic uncertainty

49 percent forecast an increase in backlog over the

next 12 months, with Asia Pacific companies the mostconfident

75 percent believe margins on new bids will be equal

to or more than existing backlog

Revenue recognition concerns easing

Many construction contracts now likely to be considered as

single pieces of work in the proposed accounting standard

Revenue/profits for most contracts to be recognized continu-

ously as work progresses, meaning less earnings volatility

than previously feared

Companies still face retrospective implementation challenges

Despite considerable investment, riskmanagement remains in question

46 percent of respondents say few projects exceed the

original bid margin; in Europe, Middle East and Africa this

figure rises to 56 percent

54 percent failed to identify upfront the issues that later

caused margin erosion

Only 36 percent feel their project review processes are

very efficient

Investment in emerging markets still amajor challenge

Access to skilled resources the single biggest concern

A need for morecertainty in avolatile world

A brighterfuture or

continued pain?

In 2011, KPMG interviewed executives rom 161 engineering

and construction companies around the world. The

respondents annual revenue varied in size rom US$250 million

to more than US$5 billion, and served a range o markets

including energy, power, industrial, healthcare/pharmaceutical,manuacturing, mining, education and government.



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4 | The great global inrastructure opportunity4 | The great global inrastructure opportunity



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Opportunities and threats

The energy and inrastructureopportunityEnergy is the sector with the greatest short-term potential

or engineering and construction companies, according to

the 2012 Global Construction Survey. However, respondents

are questioning governments commitment to much needed

inrastructure investment.

Energy is the sectorwhere respondentsare most confdento increasingrevenue, ollowedby roads/bridges,rail and mining.

2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member frms o the KPMG network o independent frms are afliated with KPMG International. KPMG International provides no client services. All rights reserved.

When asked which sectors would most impact their uture revenue in the next

twelve months, energy was the number one response, suggesting a strong

demand or specialized engineering and construction services rom customers

in this segment. Four o the top fve industries selected by respondents ft

into the category o inrastructure with traditional areas such as commercial,

industrial, retail and education considered ar less attractive.

In the Americas the picture is even more pronounced, with 59 percent citing

energy as the most promising sector. Larger US contractors are expressing

genuine optimism over prospects or oil, gas and alternative energy projects,

and expect signifcant amounts o activity in this area over the next fve years.

Respondents rom Asia Pacifc and Europe, Middle East and Arica consider

rail and mining to be areas o promise (see chart on page 6).

In China, where the latest Five-Year Plan has a strong domestic ocus,

there is an emphasis on resource-related inrastructure such as coal

mining, high-speed rail, roads and waterways. Meanwhile, in Hong Kong,

a number o important inrastructure projects will be carried out over the

next 56 years including underground train lines, bridges, and express

links to mainland China.


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Educational

Retail

Industrial

Office

Water-related

Healthcare

Mining

Rail

Roads/Bridges

Residential

Power/Energy

Overall

n=160

41% 11%

24% 23%

24% 24%

23% 4%

21% 4%

19% 9%

18% 8%

18% 20%

17% 20%

16% 27%

9% 27%

Americas

n=27*

ASPAC

n=49

EMEA

n=84

Sectors most impacting revenue in the next twelve months

Increase Decrease

*Low base findings are directional in nature

Respondents chose top two sectors for both increase and decrease.

Source: KPMG International, 2011

11%59%

7% 22%

15%

11%

33%

7%

19% 0% 2%

19% 4%

11% 11%

7% 22%

26% 15%

7% 19%

4% 22%

10%35%

33% 14%

22%

18%

24%

4%

29% 8%

24% 12%

20% 12%

12% 20%

12% 18%

18% 29%

12% 39%

12%39%

25% 27%

27%

30%

20%

2%

17%

1 5% 8 %

19% 5%

24% 19%

17% 23%

17% 29%

10% 21%

View Point

The power market surges ahead

According to the International EnergyAgency latest estimates, released inNovember 2011, the global energy sectorrequires US$38 trillion o investment inexisting and new capacity by 2035 tomeet the demands o population growth.US$17 trillion o this will need to owinto power generation, distribution andtransmission, 60 percent o which willserve emerging markets.3

Given the proper regulatory rameworkand government support, the undsshould be there to support thisdevelopment; but the big question

3. International Energy Agency (IEA), October 2011.

Peter Kiss

Global Head o Power& UtilitiesKPMG in HungaryE: [email protected]

mark is the availability o skilled labor.The long development cycles 12 yearsor a nuclear plant and six years or gasor coal-fred plants puts incrediblepressure on a manpower base that isalready stretched.

The demand or frms and individualswith sector-specifc engineering andconstruction skills will rise as projectsprolierate around the world. This should

push up the margins or specializedplayers and prove a major source oincome or the industry as a whole.



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Less than halo respondentsbelieve governmentpolicies will havea positive impacton inrastructureinvestment.

Lack o commitment to inrastructure

With austerity policies in manycountries constraining the scope orpublic sector spending, it is vital tocreate an environment that encouragesprivate sector investment. It isthereore o some concern that only47 percent o respondents consider

their governments policies are havinga positive impact, a response that is

airly consistent across all regions.Interestingly, executives rom thebigger organizations involved in thesurvey are the least optimistic thatpublic sector policies are helping perhaps an indication that governmentsare ocusing on smaller-to-medium

sized enterprises and assuming largerbusinesses need less help.

Impact of government policies on infrastructure investment

Region Size

Significant positive impact

Fairly negative impact

No impactFairly positive impact

Dont knowSignificant negative impact


Percentages might not add up to 100 due to rounding offSource: KPMG International, 2011

More than

USD 5 billion

(n=24*)

USD1-5 billion

(n=58)

Less than

USD1 billion

(n=79)

EMEA

(n=85)

ASPAC

(n=49)

Americas

(n=27*)

Overall

(n=161)

8%

8%

16%

23%

24%

18%

15%

7%

15%

19%

22%

8%

20%

22%

27%

19%

18%

8%

8%

14%

25%

22%

18%

3%

10%

16%

26%

19%

21%

8%

17%

25%

25%

8%

13%

11%

4%

14%

20%

32%

18%

4%



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PPPs commitment to energy

Energy tops the list o attractive

projects to be delivered under

public-private partnership (PPPs),

closely ollowed by transportation.

Respondents rom the Americas are

particularly interested in the transport

market, where the US is keen to

improve its rail, road, air and shipping

network to cope with 21st century

demands.

OthersTele-

communications

EducationHousingWasteWaterHealthTransportationEnergy

12%

7%

4%

18%

12%

0%4%

20%

0%

9%

4%

14%

4%4%4% 4%

7%

4%

12%

5%

21%24%

19%19%

34%31%

40%

19%

26%

12%

16% 16%

33%

56%

30%

24%

Sectors offering the most attractive potential for public-private partnerships (PPPs)

Overall (n=160) Americas (n=27*) ASPAC (n=49) EMEA (n=84)

Figures do not add up to 100% because multiple responses were allowed


Respondents had ability to select more than one sector.



Respondents are also very concerned

about governments ability to drive

inrastructure spending, with anoverwhelming 80 percent citing lack o

leadership as a major barrier. It is not

just the politicians who appear to be

holding back development, as two-thirds

eel the private sector is not showing

enough initiative either, though public

tendering rules oten make it hard or

a private sector business to capitalize

on a good idea without it being opened

to competition (see chart on opposite

page). Despite the potential rewards

rom inrastructure projects in certain

regions, a number o US businessesremain reluctant to take the risks

associated with equity positions in

such initiatives.


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Overall Americas ASPAC EMEA

Most significant barriers to infrastructure investment

Most important risk


Respondents ranked the top two barriers to investment


Others

Lack of investment

by the private sector

Cost of debt

Debt market liquidity

constraints

Regulatory

burden/red tape

Planning system

Lack of investment

by government

Lack of private

sector initiative

Lack of leadership

by government80

9*

70

25*

42

27*

13*

13*

19*

17*

1*

15*

3*

9*

3*

0*

3*

1*

30

2*

16*

8*

10*

8*

4*

3*

9*

33

6*

39

14*

23*

16*

9*

7*

9*

80% 71%

100%

60%

33%

67% 13%

33%

83%

50%

56%

38%

40%

31%

82%

67%

46%

57%

52%

33%

67%

51%

48%

38%

30%

23% 33%

15%

11% 11% 11%

Base Base Base Base

View Point

Nick ChismGlobal Head oInrastructure

KPMG in the UKE: [email protected]

Waking up to the inrastructure opportunity

As governments around the world seekto create 21st century inrastructure,they need to take a strong lead tocreate an environment that encouragesprivate sector investment. This meansaddressing regulatory and legislativebarriers and showing the kind o long-term will that transcends immediatepolitical popularity.

New investment models have tomeet the interests o both the publicand private sectors, with a better

understanding o risk allocation, greatertransparency and more accuratemeasures o cost and perormance.Government should ensure it buildsmutual trust and cultural understanding

o its commercial partners, and showsstrong leadership to push projectsthrough multiple departments andcompeting interest groups. The publicsector also has to improve its technicalskills in procurement, planning andproject management.

Funding will be a urther challenge,so governments should be willingto pursue existing and new sourceswhether it is higher tax, increasedenergy bills, or pay-per-use resources

such as road tolls. And given the globalpush or inrastructure, there will beintense competition or resources andskills, so every state must work toattract the best private sector talent.



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71%say economicuncertainty is thebiggest businessconcern in their

home region.

Economic conditions ront o mind

Continued worries over the state othe global economy are refected in thesurvey ndings. Not surprisingly, whencommenting about current businessconditions in their home regions, alarge majority (71 percent) say thateconomic uncertainty is the biggest

concern. Given the ongoing crisis overthe Euro, it is no real surprise that rmsrom EMEA are the most nervous, withone European executive quoted assaying: Even the traditional optimistsare nding it less cheerul.

Respondents rom Asia Pacic arerelatively less pessimistic abouteconomic prospects and instead pointto skills shortages and infation as acontinuing worry, with Hong Kong andChina suering rom a lack o basicconstruction resources and some

commodity prices rising at a double-digit rate. In the Americas, the growingUS government decit is proving amatter o some concern to constructionexecutives, who ear this may constrainany economic recovery.

Greatest concerns over business conditions in your principal region

Overall (n=161) Americas (n=27*)

ASPAC (n=49) EMEA (n=85)

20%

71% 70%

82%

51%

31%

26%

45%

25%

Economicuncertainty

Skillshortage

Governmentdeficits/debt

Others Newcompetition

Inflation Dealingwith regulatory

changes

Unemployment

30%

52%

12%

34%

20%

15%18%

15%

37%

13%

22%

13%

7%

27%

7%11% 11%

8%12%

4% 4% 2%5%

Yes percentages represented


Respondents chose top two greatest concerns




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Perormance and uture expectations

Optimism in the midsto uncertaintyIn spite o the troubles aficting sovereign debt and even more

worrisome, the crisis impacting the Euro zone, engineering and

construction industry executives remain positive about the uture.

Hal expect backlogs to increase in the next year and the majority

eel margins will either rise or stay at current levels.

2011 appears to have been a solid yearor the sector, with 56 percent reportingan increase in backlog and only 18percent experiencing a decline. Thebest perorming region was Asia Pacic,where almost two-thirds (64 percent)say their backlog has gone up, dueto intense activity in Hong Kong andChina. The economic woes in Europeare mirrored by the survey responses

or this region, with only 21 percentreporting a signicant increase. In the

UK, or example, some o the biggestplayers are nding their order booksdeclining and are preparing or aprolonged recession.

Perormance among the biggercompanies was noticeably poorer thantheir smaller counterparts. A number olarge organizations may have workedthrough their backlog, and are nowaected by a lack o major public and

private projects many o which remainon hold.

Change in backlog from 2010 to 2011

Region Size

Increased 5-15%Increased more than 15%

Decreased 5-15%

Mostly unchanged (+/-5%)

Decreased more than 15%

Percentages might not add up to 100 due to rounding off


More than

USD 5 billion(n=23*)

USD1-5 billion

(n=58)

Less than

USD1 billion(n=79)

EMEA

(n=85)

ASPAC

(n=49)

Americas

(n=27*)

Overall

(n=160)

14%

24%

28%

28%

4%

15%

22%

26%

33%

20%

29%

35%

10%

4% 2%

26%

27%

21%

15%

6%14%

21%

34%

26%

2%

13%

43%

22%

22%

14%

20%

24%

30%

8%

64%o respondentsrom Asia Pacifcsay their backloghas gone up in 2011.



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Compared to KPMGs previous GlobalConstruction Survey, backlog marginsappear to have improved signicantly,with more than twice as many companiesenjoying an increase in 2011. Theproportion experiencing declining marginshas also dropped a ew points. The worstperorming region is the Americas, where41 percent o respondents report a dropin margins. This may be due in part to a

shit in the balance o power in avor ocustomers, who are negotiating lower

margins on uture projects, and becauseo new oreign entrants who are causingan increase in competition.

Despite reporting the lowest backloggrowth, the larger companies involved inthe survey have still managed to maintaintheir margins, with 44 percent reportingan increase. These organizations havemanaged to take a lot o cost out o their

businesses in recent years and many arenow running lean, ecient operations.

Change in backlog margin from 2010 to 2011

Region Size

Increased more than 5%

Decreased 2-5%

Mostly unchanged (+/- 2%)Increased 2-5%




More than

USD 5 billion

(n=23*)

USD1-5 billion

(n=58)

Less than

USD1 billion

(n=79)

EMEA

(n=84)

ASPAC

(n=49)

Americas

(n=27*)

Overall

(n=160)

16%

48%

13%

13%

7%

30%

37%

15%

7%

44%

16%

12%

19%

11% 4%

55%

12%

12%

10%

7%

21%

59%

9%

3%

7%

13%

4%

39%

9%

35%

14%

44%

16%

13%

8%



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Positive uture expectations

Looking ahead to the next 12 months,the engineering and constructionindustry appears to be airly optimisticabout backlog even in the troubledEurope, Middle East and Arica region,which is a surprising response given theuncertainty over the state o the Euro.

Only a small proportion o respondentsorecast a decline in backlog andhal expect an increase. Asia Pacicrespondents are the most condent ocontinued improvement, again uelledby the ongoing construction boom inChina and Hong Kong, ocused primarilyon inrastructure.

Interestingly, the smaller-to-mediumsized companies involved in the surveyexpect to see a substantial rise inbacklog, probably because any wins theyhave enjoyed will have a bigger impactproportionately on their smaller portolio.With many major inrastructure projects

on hold, modest repair and maintenancecontracts are the order o the day, whichare more likely to be picked up by thesmaller, locally-ocused contractors.Backlog orecasts or bigger rms aresteadier with a majority (61 percent)anticipating no change, which refectstheir greater diversity.

11%Only 11 percent ofrms anticipate a

decline in backlogin 2012.

Backlog forecast for the next 12 months

Region Size

Increased more than 15%

Decreased 5-15%

Mostly unchanged (+/-5%)Increased 5-15%




More than

USD 5 billion

(n=23*)

USD1-5 billion

(n=58)

Less than

USD1 billion

(n=79)

EMEA

(n=84)

ASPAC

(n=49)

Americas

(n=27*)

Overall

(n=160)

9%

37%

28%

21%

2%

11%

41%

19%

22%

35%

29%

24%

6%

7% 2%

37%

30%

20%

11%

2%

10%

40%

31%

16%

3% 4%

61%

26%

9%

10%

28%

27%

29%

4%



20/48


The majority o respondents believethat uture margins will be largelyunchanged even in Asia Pacicwhere, as mentioned, markets such asHong Kong are undergoing very highinfation that could push up the price omaterials. However in the Americas, athird say that margins are going down,which in an industry that is already low-margin could lead to urther stress on

the business.

The larger rms are extremely condentthat they can maintain current levels oprotability. These companies havelonger term backlogs, giving greatercertainty over uture revenues, costs andmargins. They also tend to have older and

deeper client relationships so they knowmore about customers capital spendingplans, enabling better targeting andconversion o opportunities.

In contrast, smaller rms are lessdiverse and can quickly suer i aparticular sector is underperorming, soit is o some concern that 25 percento smaller-to-medium-sized businesses

are expected to endure even lowermargins, which again could createurther distress or some companies.Many such rms are anticipating acontinuingly competitive market andmay be willing to take on work at lowmargins just to maintain cashfow andretain workers.

Margin forecast on current bids versus margin in current backlog

Region Size

Margins on new projects are more than 2 percentage points higher than existing backlog

Margins on new projects are mostly unchanged (+/-2 percentage points) versus existing backlog

Margins on new projects are more than 2 percentage points lower than existing backlog

Unsure



More than

USD 5 billion

(n=23*)

USD1-5 billion

(n=57)

Less than

USD1 billion

(n=79)

EMEA

(n=84)

ASPAC

(n=48)

Americas

(n=27*)

Overall

(n=159)

21%

62%

13%

2%

33%

15%

52%

69%

13%

17%

62%

13%

19%

6%

4% 1%

21%

65%

12%

4%

83%

13%

25%

54%

14%

6%

75%believe that marginson current bids willbe either the sameor higher than or

existing projects.



21/48


Paving a smooth road to acquisition

With a number o businesses either

stressed or distressed, and others

shedding non-core elements to

raise cash, merger and acquisition

(M&A) opportunities abound or

those engineering and constructioncompanies looking to add new

capabilities or improve on existing

ones.

However the road to acquisition is

strewn with obstacles, so buyers have

to ensure they have a strong M&A

team and robust processes to help

uncover risks in the targets business,

including quality o earnings, quality o

assets, customer and supplier matters,

cultural t, retention o key personal

and specialist skills, achievement osynergies, nancial reporting, tax and

accounting structuring, projections,

and integration risk assessment.

Historical operating results may be

distorted by the recent economic

downturn which requires even urther

in-depth analysis o prior operating

results, current backlog and projected

uture earnings.

The acquirer should be able to

rapidly mobilize a global M&A team

with knowledge o the targets

business (through its own strong

industry experience), as well as an

understanding o the broader risksand challenges associated with

transactions. The team should also

have the skills and the willingness to

challenge nancial projections, assets

strength and customer and supplier

relationships, and understand potential

tax exposures that could aect the

deal, as well as urther risks inherent in

integrating the new entity. Also, local

country expertise is critical in assessing

the risk o illegal and questionable acts

or payments, currency restrictions and

other relevant risks related to operating

in oreign jurisdictions.

In carrying out the right due diligence,

potential purchasers should identiy

the signicant risks existing within the

target, to uncover any deal-breaking

issues that could aect the sale

price or even scuttle the deal, such

as purchasing behavior o targets,

major customers, supplier activity,

distribution channels and competition.

It is also important to carry a

detailed analysis o the key nancial

inormation necessary to evaluate

synergies and value creation, includingthe drivers o sustainable prots and

uture cash fows. Access to key data

is vital, and calls or a sizable team to

gather and analyze inormation.

KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.

View Point

Tony Bohnert

Transaction Services Partner,

KPMG in the US

E: [email protected]

2012 KPMG International Cooperative (


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23/48


Efciency

Building better practicesAs they seek greater eciency, engineering and construction rms

are trying to overcome a range o complexities in procurement and

supply chain processes. And, while acknowledging the need to

replace oten outmoded IT systems, theyre also concerned with the

cost and eort required.

The executives taking part in the surveyeel that two areas o the businesshave the biggest potential or improvingeciency: procurement/supply chainmanagement and business processes.Procurement/supply chain is a hugelycritical component o the overallservices delivered, and those with themost ecient and competitive supplychains are likely to win more work,

especially in emerging markets such asBrazil, Russia, India and China.

In addition to these actors, a number orespondents rom larger organizationsare ocused on optimizing their ITsystems and rationalizing legal entities,both o which can help to reduce thecomplexity inherent in businesses oscale and diversity.

Top functional areas with opportunities to improve efficiency



16%

59%

48%

62%

59%

53% 52% 51%

55%

21%19%

29%

18%

15%

11%

16%

19%

10%

19%

15% 14%

19% 18%

11%

9%11%

6%

9%

4%

15%

2% 2%

Procurement/

supply chain

management

Refining

business

processes

IT systems

optimization

Knowledge

management

HR

management

Shared services/

Outsourcing

Legal entity

rationalization

Tax expense

efficiencies



Respondents chose top two functional areas.


59%o respondents eelthey can gain greaterefciency out otheir procurement

and supply chainactivities.



24/48


Creating a low-cost culture

In the continued dicult economicconditions, cost reduction remains highon the agenda or most companies.According to the respondents, the singlebiggest challenge to cutting costs isorganizational culture, particularly in theAmericas, where 78 percent cite this

actor, suggesting old habits are provingdicult to break. Larger companiesare concerned that they cannot easilyidentiy where excesses exist withintheir organization, which once again

highlights the need or better businessprocesses to manage the complexities omultinational businesses.

Surprisingly, 17 percent say that costreduction has simply not been a priority.These executives may representcompanies that have already trimmed

costs extensively during the recessionand now have very lean operations, withlittle or no scope or urther reductions.

Challenges in reducing costs



Changing the

culture

Reluctance to cut direct

labor force in light of the

projected market

rebound

Not enough processes

are automated, driving

the need for increased

indirect labor

Uncertainty over

where the excesses

exist in the organization

It has not been

priority to reduce

costs

Others



Respondents chose top two greatest challenges.


28%

61%

78%

57%59%

29%

37%

18%

32%

29% 30% 29% 29%

17%

7%

16%

19%

31%29%

20%

37%

30%

47%

33%

78%o engineeringand constructioncompanies romthe Americas say

organizationalculture is a barrierto cutting cost.



25/48


Cost cuts seem to be spreadairly evenly across a number odierent departments, although riskmanagement has been impacted themost. Again, its remarkable that ath o all respondents say they havemade no signicant cost reductions a gure that increases to 29 percentin Europe, Middle East and Arica. Anumber o rms in this region contract-

in resources on a project basis andhave little direct labor. With ewer

xed costs, there is less need to cutback. Many had also been optimistico an economic recovery and elt theycould ride out the storm. In addition,the larger European businesses areprotected by their diversity so theycontinue to prosper in certain sectors(such as utility-related projects in theUK) despite the decline in constructionand civil engineering work.

Areas of your business where cost reductions will have the greatest impact

Others

Regulatorycompliance

Financial risk

management

Management of outsourcing/

extended supply chain

Employee talent pool and training

& leadership pipeline

We have not made significant

cost reductions

Risk management

Overall Americas ASPAC EMEA

21%

16%

13%

8%

1%

19%

n=160 n=27* n=49 n=84

30%

11%

22%

15%

7%

15% 24%

16%

18%

6%

6%

2%

27% 11%

7%

14%

15%

29%

24%23%






26/48


Simpliying supply chain management

Attempts to establish consistent bestpractices in procurement and supplychain are altering due to over-complexsystems and processes, accordingto KPMGs 2012 Global ConstructionSurvey. Engineering and constructionbusinesses in Asia Pacic say they are

suering rom a lack o robust data,while the larger multinational playersrom all regions are nding that theirsheer size and spread makes it hard

or personnel to ollow a commonstandard.

O course, none o this is helpedby the act that, in the Americas atleast, nearly our in 10 (37 percent)claim not to have reviewed theiroverall procurement and supply chain

processes or at least ve years andsome have never carried out such areview.

Greatest challenges in enhancing procurement/supply chain management



Disparate processes

and systems create

inconsistencies and

unnecessary

complexities

Too many manual

processes or

unnecessary

steps along the

supply chain

Lack of quality

information and

trend data

Geographic separation

of supply chain

personnel creates

complex handoffs

Our skills have not

kept pace with

advance in system

technology

Others Not relevant





25%

39%

48%

35%

41%

38%

22%

35%

45%

29%

15%

39%

28%

12%

19%

10%

33%

20%

25%

12%

20%

26%27%

15%

18%19%

14%

20%



27/48


View Point

Douglas GatesPrincipal, AdvisoryKPMG in the USE: [email protected]

In the supply chain, knowledge is power

The recession has exposed weaknessesin many engineering and constructioncompanies procurement and supplychains. In the good times, when marginswere relatively high, organizations were

more concerned about getting hold omaterials quickly than keeping costsdown. However, in todays competitivemarket conditions, a ew percentagepoints on purchase prices can make thedierence between a prot and a loss.Inventory costs have also surged, asstock levels have risen due to cancelledprojects and uncertainty over utureavailability.

In a number o regions, suppliershave either gone out o business or

downsized, orcing companies to lookoverseas or alternative sources, addinggreater complexity to the supply chain.Engineering and construction businessesare typically ragmented (partly a resulto having grown through mergersand acquisitions), with a high level olocal autonomy and series o disparateenterprise resource planning (ERP)

systems around the dierent businessunits, preventing leaders rom gaininga complete view o purchasing activityacross the business.

As the respondents in this years survey

acknowledge, investment in IT doesntcome cheap; a ully-integrated systemcan cost tens o millions o dollars andtake rom two to ve years to complete.Nevertheless, those brave enoughto und major IT enhancements arenow reaping the rewards o greatercentralization and transparency. Theycan reduce purchasing costs by takingadvantage o economies o scale. Theycan also take a high-level view acrosstheir supply chain to spot any weak

links, and hedge against price risesor alls by buying advance stock, orpossibly vertically integrate to saeguardsupplies o vital materials. Finally, theycan improve orecasting by workingclosely with suppliers at dierent pointsin the supply chain on orecasting, toensure adequate capacity and optimuminventory levels.



28/48


Getting value out o IT spendHaving invested heavily in IT in the late1990s in preparation or the Year 2000bug, the industry has allen behindsomewhat in the quality o its systems,with an excess o manual procedures thatpush up costs and slow down reporting.However, there is a question mark overcompanies commitment to upgradingor replacing systems, as respondents

greatest IT optimization challenge is thetime and cost o transormation. A third(33 percent) think there are not enoughconstruction-specic ERP packages,which makes implementation even moredicult. A number o executives romcompanies in Europe, Middle East andArica eel that their organizations cannotdemonstrate the value o IT spend.

Greatest Challenges in IT Optimization



An insufficient

number of ERP

packages has been

designed with the

E&C industry in mind

Change in IT

systems takes too

long and costs

too much

Excessive use of

workarounds

Disproportionate

amount of IT

spend it focused

on supporting

existing technology

Your company

is not able to

demonstrate

the value of IT

spending

Complaints that

legacy systems

were better

Others Not relevant

19%

50%

44%

51%51%

33%

30%

37%

32%

29%

33%31%

27%

14%

4%6%

30%

20%

14%

23%

11%

19%

10%8%

23%

19%

29%

20%

11% 11%

8%

12%




In trying tooptimize IT, the

greatest concernis the time and

cost o businesstransormation

programs.



29/48


62%have reviewed theirtax accountingmethods in the pasttwelve months.

Managing tax eectivelyIn an increasingly global, interconnectedmarketplace, tax is gaining in importanceas companies seek to be compliantand optimize their structures andreporting. This includes issues suchas: income/expense recognition orlong-term contracts; simplied cost-to-cost percentage completion method;accounting or xed assets andinventories; and R&D credits.

Encouragingly, 62 percent o thosetaking part in the survey say they havereviewed their tax accounting methodsin the past 12 months, suggestingthat most businesses are seeking toimprove their procedures. Given theglobal nature o their businesses, it issurprising that the larger organizationsare the least likely to have conducteda critical appraisal; indeed, one-sixth(17 percent) o all large companiesclaim to have never held such a review.

In optimizing tax, no single actorappears to be o most importance,although Americas respondents pointto a lack o processes or coordinatingtax managers with project managers,along with tax complexities associatedwith cross-border nancing.

Possibly the most extraordinaryrevelation is that almost hal

(45 percent) o all executives in thesurvey eel that tax optimization is notrelevant to their organization. Sucha mindset may be more prevalentamong companies that are lessglobal and thereore have eweropportunities or tax planning. It isalso possible that some executivesdo not appreciate the ull potential otax optimization, viewing tax as moreo a housekeeping unction.

Greatest challenges in tax optimization



Others Not relevant

22%

18% 18%

12% 11% 11%

3%

14%

45%

33%

22%

30%

15%

11%

19%

0%

11%

30%

14%12% 12%

18%

8% 8%

4%

8%

57%

24%

20% 18%

7%

12%

9%

4%

19%

44%

Lack of processes

for timely

coordination of

tax, finance and

business unit

project managers

Lack of

understanding of

the proper or

available

tax treatments

Tax implications

of cross-border

financing is

complex and

not efficiently

managed

Tax

departments

lack of

strategic

leadership

Inconsistent

methodologies

used throughout

the company

Existing IT

systems do

not provide

adequate detail

or are not

adequately

leveraged by

the tax

department

IT systems are

changed

without proper

tax department

input







30/48


View Point

Michael MooreTax Market LeaderKPMG in the USE: [email protected]

Tax is an integral part o your business

As the industry becomes more global,engineering and construction rms areexposed to an ever wider range o taxregimes, any one o which can havea big impact upon earnings. Perhaps

the biggest challenge is determiningwhich countries will tax a project. I aproject based in a low-tax country losesmoney there is very little tax benet.Conversely or work based in high-taxnations, successul, high-margin workwill be taxed heavily.

Bidding teams should thereore look toinclude appropriate specialists at theearliest stages o the tender process, toassess potential tax risks and structurethe contract in a way that optimizes the

overall tax burden. A project tax plan isjust the start; systematic monitoring isneeded to ensure compliance, with acontrol approval committee or largermultinational projects where volatility ishigher.



31/48

The great global inrastructure opportunity | 27The great global inrastructure opportunity | 27



32/48




33/48


Risk management

Coping with risk in achanging worldWith signicant incidents o margin erosion, respondents

are understandably eager to continue to improve their risk

management, while just 36 percent believe their project

review processes to be very ecient.

The occasional incidence oailing projects (sometimes withcatastrophic consequences) conrmsthat engineering and constructioncompanies are never immune torisks across their range o activities.This years survey suggests thatthe industrys senior executivesare concerned about a range orisk management issues, with

quantication o risk at the top o thelist and risk identication the nextmost important.

Respondents rom the Americas areespecially keen to better understandthe link between strategy and risk,

while bigger construction rms see riskmitigation as their biggest challenge.Some companies may have had dicultyidentiying or even ranking all risks priorto executing strategic plans, especiallywhen entering a new market sectoror geographic location or pursuingaggressive growth. Others may haveheavily incented middle managementto grow, meaning that leaders struggle

to keep a ocus on risks, some o whichare out o a contractors control. Othersmay have tried to contractually mitigateevery risk, only or the customer/ownerto squeeze the prot margin during thenegotiation stage.

Greatest challenges of enterprise risk management



Quantifying risks Identification of risks Mitigation of risks Tracking and

reporting on risks

Understanding the

link between strategyand risk



Respondents chose two greatest challenges.


Others

45%

40%

36%34%

28%

10%

33%

52%

26%

19%

48%

15%

43%

31%

41%39%

24%

14%

49%

42%

36% 35%

24%

6%

Constructionexecutives areconcerned aboutseveral riskmanagement issues,with quantifcation

o risk frst andrisk identifcationsecond.



34/48


Identiying and addressing risksto margins

Almost hal o the respondents say thatewer than 25 percent o their projectsexceed the original bid margin, indicatingconsiderable room or improvementin dealing with project risks such asrising costs, supply chain interruptions,

nancing and resource shortages.

The situation appears more acute inEurope, Middle East and Arica, as wellas among the smaller companies in thesurvey. It is likely that big engineering andconstruction rms have better-developedprocesses or assessing and addressing

project risk.

Proportion of projects delivered above original bid margin

Region Size

Less than 25%

50.1% to 75%

100%

25.1% to 50%

75.1% to 100%


Percentages might not add up to 100 due to rounding


More than

USD5 billion

(n=23*)

USD1-5 billion

(n=58)

Less than

USD1 billion

(n=79)

EMEA

(n=84)

ASPAC

(n=49)

Americas

(n=27*)

Overall

(n=160)

15%

24%

46%

13%

2%

19%

37%

15%

30%

29%

35%

16%

20%

55%

14%

6%

20%

4%

10%

14%

33%

41%

2%

22%

4%

30%

13%

30%

9%

14%

22%

54%

1%



35/48


54%say that or

projects thatsignifcantly under-

perormed, they

ailed to identiythe ultimate causeo margin erosion

at the biddingstage.

When asked about projects that

signifcantly under-perormed, a majority

(54 percent) admit they ailed at bidding

stage to identiy the risk that ultimately

materialized and caused margin erosion.

This is a surprisingly high response,

suggesting a clear need to employ more

rigorous upront assessment o potential

project risks.

Margin erosion identified at bidding stage

Region Size

Yes

Not sure

No

Not Relevant




More than

USD5 billion

(n=23*)

USD1-5 billion

(n=58)

Less than

USD1 billion

(n=79)

EMEA

(n=84)

ASPAC

(n=49)

Americas

(n=27*)

Overall

(n=160)

24%

54%

10%

11%

30%

63%

7%

24%

57%

10%

8%

23%

50%

11%

17%

21%

62%

12%

5%

35%

48%

17%

24%

51%

6%

19%



36/48


Projects under scrutiny

Only 36 percent o the respondentsconsider their project review processesto be very ecient, and the gure orlarger rms is just 30 percent, whichis o some concern given the sizeand complexity o the projects theyundertake and could help explain the

margin erosion mentioned earlier. Thisnding suggests that just a minority

o engineering and constructioncompanies carry out a system-generatedassessment o nancial inormation,which in turn acilitates a qualitativeproject review. Robust, consistent andongoing project analysis is paramount toimproving project management practice

as well as overall project perormance.

Efficiency of project review process

Region Size

Very efficient i.e., largely a review of system-generated financial information

to facilitate qualitative review

Somewhat efficient

Not efficient i.e., information needs to be secured from multiple systems before

performing a qualitative review

Not relevant




More than

USD5 billion

(n=23*)

USD1-5 billion

(n=58)

Less than

USD1 billion

(n=79)

EMEA

(n=84)

ASPAC

(n=49)

Americas

(n=27*)

Overall

(n=160)

36%

48%

14%

3%

41%

4%

52%

4%

33%

53%

12%

2%

36%

43%

18%

4%

43%

47%

9%

2%

30%

52%

9%

9%

32%

47%

19%

3%



37/48


View Point

Clay GilgeManaging DirectorMajor Projects AdvisoryKPMG in the USE: [email protected]

Continuously improving risk management

In KPMGs rst Global ConstructionSurvey in 2005, risk management wasrated as the single biggest challengeacing engineering and constructioncompanies in their quest to deliver

projects on schedule and on budget.Since that time, the industry has madesubstantial progress including, theinception and growth o the EngineeringConstruction Risk Institute (ECRI), as wellas improved ratings or risk managementquality in subsequent KPMG surveys,suggesting that many organizations nowhave adequate systems and processes inplace to manage risk.

Yet 2011 has still seen a ew well-publicized project ailures, which

indicates a breakdown in some rms

structured risk management. Many othis years respondents say they areunable to exceed their intended marginon projects, suggesting urther room orimproving the way they manage risk.

Businesses do not need more policies,procedures and controls; they needto integrate existing measures into asystem that gives real-time access toproject perormance. This will enablethem to identiy actual and potentialproblems (such as contract execution,change orders or scheduling), andimprove controls to reduce the chanceso a re-occurrence. Such continuouseedback loops can be appliedorganization-wide to raise standards and

benet projects wherever they occur.



38/48


Challenges in emerging markets

While emerging markets representa big opportunity or engineering andconstruction companies, these marketsrequently come with a high degree ouncertainty. The respondents consideraccess to appropriate skilled resourcesas their single biggest concern, ollowedby political risks and cultural dierences.

Interestingly, only 14 percent citevariability o the legal system as amajor risk actor; a number o rms havehad diculties with local legal issuesin emerging markets, so they shouldensure they ully understand how suchactors could impact their business.

Risk factors while doing business with emerging markets


ASPAC (n=49) EMEA (n=85)*Low base findings are directional in nature

Respondents chose top two most important risk factors.


41%

33%

25%

14%11%

9% 9%

6%

22%

37%

33%

30%

7%

15%

7%

4%

7%

30%

43%

24%

31%

14%

10%

18%

10%

2%

18%

41%

38%

20%

16%

9%

5%

11%

7%

22%

Access

to skilled

resources

Political risks Understanding/

adapting to

cultural

differences

Variability of

legal

system

Repatriation

of capital

and profits

Unstable

labor markets

Foreign

currency

uncertainty

Cross-border

financing

uncertainties

Not relevant



39/48


View Point

Steven GattAsia Pacic Sector LeadKPMG in AustraliaE: [email protected]

Fears ease over revenue recognition

The latest Exposure Drat (ED) onRevenue rom Contracts with Customers(issued in November 2011) goes someway to addressing the sectors concernsover accounting or long-term contracts.Many contractors now believe that thecriteria in the revised ED will allow them

to identiy the vast majority o contractsas a perormance obligation that can beaccounted or as one integrated pieceo work. And the criteria or determiningwhether control o goods or servicesare transerred continuously havebeen broadened, which should enablerevenue and prots or most contractsto be recognized progressively, leading

to less volatility in earnings. The revisedproposals will also allow recognition overtime based on input methods (e.g., cost)as well as output methods (e.g., surveyso work done).

On the fip side, the criteria or

recognizing claims and variationsare dierent rom those in currentaccounting standards, while the EDis still asking or extensive additionaldisclosure requirements. KPMG workedwith associations around the world tohelp lobby or changes to accountingboards, who have listened to industryinput.




40/48

Looking orward

The engineering and constructioncompany o the utureKPMGs Global Construction Survey

2012 shows engineering andconstruction executives to be largelyoptimistic about their short-termprospects globally. Over the comingdecades, demand or services shouldremain strong as nations struggle tomeet growing power and inrastructurerequirements. Irrespective o thesource o unding (public or private), thebottom line is: the world needs moreinrastructure, and engineering andconstruction companies are poised to

not only capitalize on this opportunity,

but to take a leadership role in shapinginrastructure or generations to come.

In preparing or an anticipated wave onew projects, the industry should seek toposition itsel appropriately, which meansbuilding eciencies through optimizingcosts, re-thinking tax structures,streamlining supply chains, enhancingIT systems, capitalizing on emergingmarkets and, where necessary, growingthrough mergers and acquisitions.

Embracing such ideas could change the

shape o the sector and o individualcompanies, so we asked the surveyparticipants how they envision theengineering and construction businesso the uture, and received some highlyinsightul responses (see oppositepage).




41/48

Scale: going global

As one respondent comments: Geographic expansionwill increase, mainly in emerging countries as domestic

and regional markets are perceived as mature.Scaleis necessary to compete globally and to tackle largeenergy and other major inrastructure projects, which inturn creates the diversity to cope with regional volatility.Further consolidation is expected, with an opening up othe M&A market. According to another survey participant,construction companies will become: diversifed andglobal, with more vertical integration. There will be no

middle class to speak o. Small local companies will

survive, but nearly all mid-sized companies will be slowly

acquired by the global leaders.

Range and depth o services: design, build,fnance and operate

In the words o one industry executive, Companieswill oer a wider range o services including ront-

end consultancy/engineering, construction and

maintenance or acilities managementas part o atotal procurement solution. Another comments that:

Large construction companies will have the capabilityto look ater assets over the ull lie cycle. They will have

a broader range o service and specialism.This is likelyto lead to a rise in direct labor, with an associated needor training and management development to builda highly mobile, global workorce, making the sectormore attractive to graduates and new entrants to theworkorce.

Stakeholder management: towards closerrelationships

A survey participant urges the industry to work moreclosely with the public sector on inrastructure andPPPs, emphasizing that: A company needs to be moregovernment-oriented.Reerring to the same issue,another executive eels that PPPs require companies tobe: ... more exible and innovative, exploring alternativeareas o procurement and building a dierent skill base

when involved in contract procurement. Engineering and

construction companies will also have to put equity into

projects.When discussing relationships on a broader

basis, one respondent saw room or improvement:Firms need to work better with the contractors and

become more o a business partner.

Sustainability: an evolving issue

The importance o a sustainable approach to the entireconstruction cycle is succinctly summed up by thisrespondent: Sustainability starts and ends with theconstruction industry. The materials used, the waste

produced and the fnal built environment and thereore

the sector must become leaders in sustainability.

However, regulatory change will also be a big driver obehavior, according to an industry executive, who arguesor engineering and construction companies to play an:active role, since clients mainly in Northern Europe

increasingly demand audited data on sustainability issues/

ratios; thereore companies should actively shape the

discussion.A number o those involved in the surveypoint to the increasing range o opportunities arising romsustainability, including the development o inrastructureor renewable energies and green buildings. However, oneindustry leader noted the need to be pragmatic and eelsthat: The business looks to work in a sustainable way, butit is customers that will drive the agenda and currently

they look at price not sustainability.




42/48


About the surveyAll survey responses were gatheredthrough ace-to-ace interviews in

2011 with 161 senior leaders many othem Chie Executive Ocers romleading engineering and constructioncompanies in 27 countries around theworld.

The interviews were carried out bysenior representatives rom KPMGmember rms specializing in theengineering and construction industry,with the questions refecting currentand ongoing concerns expressed byclients o KPMG member rms.

Respondent companies turnoverranged rom less than USD250 millionto more than USD5 billion, with a mix ooperations rom global through regionalto purely domestic.

Regional breakdown of participants

EMEA Americas Asia Pacific




More than 5 billion (n=24*)1-5 billion (n=58)

Less than 1 billion (n=79)Overall (n=161)

53%

17%

30%

62%

6%

32%

45%

28%

28%

42%

25%

33%




43/48


Less than US$250 million

US$250 million-US$1 billion

US$1-2 billion

US$2-5 billion

US$5 billion+




15%

16%

20%

12%

11%

20%

22%

26% 33%

11%

7%

27%

24%

36%

21%

29%

20%

20%

12%

16%

Turnover of participants (USD)

ASPAC (n=49)Americas (n=27*)

EMEA (n=85)Overall (n=161)




44/48


Americas (n=27*) ASPAC (n=49)EMEA (n=85)

1-5 billion (n=58) More than 5 billion (n=24*)Less than 1 billion (n=79)

Overall (n=161)

Scope of operations of participants




Region

58%27%

15%

63%

7%

30%

76%

8%

16%

78%

16%

5%

57%

21%

22%

33%

17%

50%

Size

Domestic (home country) market primarily Home region primarily Global

64%

18%

18%



45/48


BookshelA selection o relevant KPMG reports and insights. To access these publications,please visit: www.kpmg.com/building or email us at: [email protected]

Construction Risk in NewNuclear Power Projects Eyes Wide OpenThis report draws on the KPMGexperience, advising on new nuclearbuilds around the world. The report

ocuses on construction risks and sharesexamples o models in new nuclearpower projects. It also discusses othercritical considerations or investors.

Power Sector Developmentin Europe LendersPerspectives 2011A report highlighting the key ndingsrom a survey o top European banks onthe prospects or power inrastructurenancing in Europe.

Financing the growth oyour cityA look at alternative nancingmechanisms and structures or urbaninrastructure nancing. These nancingoptions, including Public PrivatePartnerships (PPP), could help citiesgear up to not only meet the challengeo rapid growth but also become global

cities with world class inrastructure.

Insight Issue 1:Inrastructure 2050In the inaugural issue o Insightmagazine, we looked at the uture oinrastructure and explored why theworld must come together to solve theglobal inrastructure challenge. From

project nancing in Indonesia to urbantransport projects in the UK, Insightprovides a broad scope o local, regionaland global perspectives.

Insight: Urbanization Second EditionThe second edition o Insight exploresthe inrastructure challenges currentlybeing aced by cities, and includes eatureinterviews with key city leaders andprivate sector executives rom around

the world to shed light on how they areresponding to the inrastructure challenge.

Inrastructure 100From KPMG and InrastructureJournal a look at 100 o the mostexciting inrastructure projectsunderway globally. A distinguishedgroup o judges selected thesegame changers rom hundreds osubmissions.

Project Delivery Strategy:Getting it RightWhat are the various project deliveryoptions available to owners? What arethe actors that might infuence theselection o one method over another?This paper explores the options.

Reaction Magazine:Fourth EditionA look at M&A trends rom both anemerging market and establishedmarket company perspective andexamines how M&A activity maychange the shape o the global chemicalindustry over the coming years. Weconsider current trends in the globalconstruction industry and see howtax eciency in the supply chain canprovide a competitive advantage.



46/48


Powering Ahead 2010:An Outlook or RenewableEnergy M&AA report providing an insight into theglobal M&A activity in renewableenergy. The ndings are based on asurvey o over 250 senior executivesactive in the renewable energy industryworldwide.

Success and Failure in UrbanTransport InrastructureThis joint report with University oLondon College explores the ndingso 19 case studies rom cities aroundthe world, including New York, London,Hong Kong, Singapore, Dublin, Bogota,Manila, Manchester, and Bangkok.

Rail at High Speed: Doinglarge deals in a challengingenvironmentMany countries are preparing and/orimplementing high-speed rail projects.This paper shares lessons learned romwork perormed by KPMG memberrms advising Portugals rst high speedrail project.

Delivering Water InrastructureUsing Private FinanceWe examine the risks and rewards ousing private nance to und waterinrastructure, including how municipalgovernments and potential investorscan benet.

Island economies and theirinrastructure: An outlook2010 and beyondA rst o its kind report on IslandEconomies, providing a comparativeanalysis o the state o the inrastructurechallenges currently being aced byisland economies.

The Roll-out o NextGeneration Networks:Investing or 21st CenturyConnectivityA spotlight report on approaches beingtaken by governments around the worldrelative to the roll-out o high speedbroadband networks.

Think BRIC! Key considerationso investors targeting thepower sectors o the worldslargest emerging economiesA series o publications highlightingmajor trends and challenges shapingthe evolution o the BRICs countriespower sectors over the course o thenext decade.

New on the Horizon: RevenueRecognition or Building &ConstructionThis publication addresses the revisedrevenue proposals, specic to entities inthe Building and Construction sector.



47/48


KPMGs Global Building & Construction practice

By keeping a constant pulse on the industry, KPMGs

Building & Construction proessionals deliverin-depth knowledge and valuable advice to help companiesadapt accordingly in challenging economic times andbeyond. We understand the complexity o the engineeringand construction industry and have a keen grasp o thebusiness issues and challenges that exist in dierent

market climates. In addition, you can count on our objective

perspective. Our proessionals across the global networkcan help your organization improve business processes,control costs, identiy and mitigate risks, increase visibilityand transparency, maintain regulatory compliance,and identiy growth opportunities through internationalexpansion, merger or acquisition, or joint venture.

2010 Global ConstructionSurvey Adapting to an

Uncertain EnvironmentThis survey highlights the cautiouslyoptimistic outlook o many E&Ccompanies about their immediateprospects and discusses key industryissues and the measures adopted toseize the new opportunities identied.

2008 Global ConstructionSurvey Embracing Change?This survey presents the views o

CEOs and other senior executives onareas impacting the industry, includingresource shortages, risk management,escalating costs, and sustainability.

KPMG INTERNATIONAL

Adapting toan uncertain

environmentGlobalConstructionSurvey2010

kpmg.com


Embracing change?

KPMG INTERNATIONAL

The Global Construction Survey series

This is the sixth year o the KPMG Global Construction Survey. Here are the latest three reports released prior to 2012.They provide a great illustration o how the industry has evolved over the years.

2009 Global ConstructionSurvey Navigating the

Storm Charting a path torecovery?More than 100 senior executives romthe engineering & construction industryresponded to this survey, which ocusedon how organizations were weatheringthe impact o the global nancial crisis.

KPMG INTERNATIONAL

Navigating the stormCharting a path to recovery?




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