Global Construction Race Heats Up
New competition, digitization and compliance issues are reshaping the $6.8-trillion global construction market, forcing engineers to learn quickly how to pick and deliver projects of ever-increasing complexity. Firms new to the global stage are finding they have little time to play catch-up.
"We are in a global race. We're in a race to the future," said Roger Flanagan, a professor at the University of Reading, England, who gave a keynote address at this year's ENR+Dodge Global Construction Summit.
The U.S. construction market, with a value of about $945 billion annually, is operating at a "comfortable" pace again, Flanagan said, but noted that even more work is available overseas. Design and construction firms working abroad are seeing bigger revenues but face new competitors every day.
"There are new kids on the block, and they are not hidebound by tradition," Flanagan said. He cited Chinese contractors and Spanish firms, which have seen international project portfolios growing despite economic uncertainty at home. However, he also warned that as competition heats up, firms must find new ways to distinguish themselves.
"There is this huge blur of similarity," Flanagan said, adding that professional services, such as design, engineering and program management, are a growing opportunity for global firms to make their mark.
If the industry is in a race to go global, emerging markets are waiting at the finish line. According to the World Economic Forum, markets in Eastern Europe, Asia, Turkey, the Middle East and Africa are expected to outpace the average rate of global economic growth. Africa's northern and sub-Saharan regions, for example, are seeing growing construction as countries there continue to develop the continent's infrastructure, but investors are looking for new models to fund these difficult and risky megaprojects.
"There, the challenge is, really, how are these projects going to be financed and how you can prove bankability to attract investors," said summit attendee Pedro Rodrigues de Almeida, a director with the World Economic Forum in Switzerland. Emerging markets currently represent roughly 40% of global annual increase in gross domestic product but are expected to contribute 70% in as little as 10 years, according to the forum's research.
Managing Human Assets
Panelists at the summit, held on May 13-14 in New York City, also shared strategies for managing a global workforce in today's more complex marketplace. Lia Belilos, global director of human resources at Netherlands-based ARCADIS, noted that a workforce with total global mobility is "a bit of an illusion," adding that "you also have to develop people locally."
Translating a corporate culture globally is critical. "You can have broad care values, but you have to learn from the local community how to make them work," said Renata Neeser, an international employment law specialist at Littler Mendelson PC, a New York City law firm. "There is no one-size-fits-all."
Added Belilos, a former human-resource top executive at Shell Oil, "I have worked in countries where there were clear corporate ethics guidelines, but because they were communicated in English, the firm was not getting the traction."
Neeser also noted that a lack of clear jobsite labor rules on global projects "is a major issue in the supply chain now." She said revelations of alleged abuses can be detrimental to firms and owners. "Your name will be in the papers if something goes wrong," Neeser said.
