View from Chair – Nov 2017

What does 2018 hold for Engineering Construction. Is shareholder value likely to improve and will we be making more efficient use of capital? Probably not in 2018 but can 2018 be the year when we embark upon a revolution to fundamentally change the way we do business in Engineering Construction?

We are all investors in the industry – owners, contractors, supply network and service providers – but do we expect to enjoy the returns on our investments we believe to be commensurate with the resources, expertise and endeavours deployed and the risk taken?

For owners how certain are you that your new plant investments will be completed by the date, for the price and to the standard that justified the business case for the investment? Contractors how certain are you that you will complete your projects without incurring unbudgeted costs, be exposed to delay or performance liquidated damages or having dissatisfied clients? Vendors, suppliers, subcontractors will you be expected to deliver exceptional performance under difficult conditions for “break-even” prices?

The questions we must all address are:

Is this an industry in which we can thrive and prosper?

To do so what can and must we do differently as an industry?

What is to be learned from other industries that have undergone significant change eg, shipbuilding, aerospace, automotive etc ?

While research into and development of improved work practises have been taking place for some time, the focus has been on improving the accepted project delivery processes and practices model without considering whether that model is fit for purpose.

If we are to significantly improve shareholder value and capital utilisation so that the plants that the world requires are affordable for all stakeholders then we need a different project delivery model.

The Construction Industry Institute (CII) has embarked upon research into and development of a radically different delivery model – Operating System 2.0 (OS2). ECI/CE has the opportunity to work with CII on this venture.

As a first step ECI / CE and CII are holding a joint event in Amsterdam on 21 February 2018 that is being hosted by Fluor. While the programme detail is currently being developed the objective of the event is to bring together European Engineering Construction stakeholders – owners, contractors, supply network members and service providers – to consider the challenges confronting industry, explore the merits of OS2 and decide how to move forward.

Let’s not miss an opportunity in Europe to be part of an initiative that already has a great deal of support in the USA and growing interest around the world. So save the date, come and join the discussion – and invite your industry colleagues. The event is open to ECI members and their guests and is free of charge. We will be publishing programme details in the New Year.