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International, National

Construction Industry Sees Renewed Optimism

Posted on December 4, 2013

The majority of companies in the global engineering and construction sectors have fresh optimism and anticipate further growth across the industry, according to KPMG’s Global Construction Survey. After prolonged economic uncertainty, companies are experiencing a general increase in backlogs and margins, showing an overall positive outlook in the industry.

“Canadian respondents see stability, leading to cautious optimism,” said Augusto Patmore, a partner with KPMG in Toronto. “The survey results suggest that growth is going to be slow, but there are a number of factors that will support steady activity, including demand for new infrastructure projects in the mining and energy sectors, government funding for public transit, and population growth.

“In the next few years, companies will be tested on their ability to diversify, manage labour cost escalation, and deploy human talent in remote areas,” he added.

In Canada, the majority of respondents cite:

  • A reported backlog increase of more than 10 per cent in 2012, as compared to the end of 2011;
  • Stable profit margins at the end of 2012 (compared to 2011);
  • Stability in volume of orders in 2013 (compared to 2012); and
  • Anticipated/proposed margin rate when bidding in current tenders in 2012.

While the survey shows optimism across the industry, there are still barriers to growth. The industry is heavily reliant on national governments’ infrastructure plans for future growth, with two-thirds of respondents citing this as the single most important market driver.

Heavy investments in risk management over the past decade are paying off with the majority of respondents saying their risk management programs have improved project performance. However, 77 per cent claim the existence of underperforming projects are due to project delays, poor estimating practices, and failed risk-management processes.

 

 

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