Capital expansion is down 30% among owners studied by research firm Independent Project Analysis Inc., with Phyllis Kulkarni, its North American director, telling ENR’s Oct. 11 Global Summit in New York City that projects “are under immense pressure to cut costs.” She noted weak growth in the next few years in most markets, although chemicals and consumer product sectors are “bright spots, particularly in the U.S.” Kulkarni said owners with cash-flow constraints are “putting the brakes” on project costs, with research indicating they are “more optimistic” than contractors about the benefits of solutions such as standardization (see charts). She also noted a “pretty significant slip” in the duration and quality of project engineering, with potential impact on field productivity. Only 60% of owners define an executive as the project “sponsor,” said Kulkarni, who encouraged managers to cut the number of project “interfaces” and to better manage them.   

From the Street

Public-sector infrastructure and power work “offers better relative prospects” for engineering and construction firms going forward “where low- to mid-single-digit growth appears likely,” says Andrew J. Wittmann, sector research director at investment firm Robert W. Baird, in an Oct. 20 investor report based on recent meetings with privately-held E&C firms.