Andrew Spellman
Audit Partner, Florham Park, NJ, USA
What are the three biggest issues facing the Construction industry?
The variability of the global economy has dampened demand in many important sectors. This has included major impact from the Asian fiscal crisis, terrorism and regional conflicts and the bursting of the dot.com bubble. Intense competition from the many global Construction companies continues to put pressure not only on margins, but also on other facets of contracts such as timetables and guarantees. Attracting and retaining top performing professionals also continues to be a major challenge in the industry.
What keeps your client CEOs awake at night?
Developing and delivering on a strategic vision that differentiates their company in the marketplace is what CEO's are passionate about. Through all the clutter of communications about industry trends and economic impacts, they must steer their company, contract by contract, to new levels of achievement. Building an organisation that is involved in the strategy from the bottom up as well as the top down is a major challenge.
How has E-business affected the Construction industry and how will it further affect it?
Companies are trying to take advantage of electronic commerce in the critical elements of their contract cycle, including the bidding and estimating process, procurement and monitoring of projects. The sourcing of talent should become more flexible, as geographic boundaries can be overcome by electronic exchange of work product.
Which new business models and contract types do you see evolving in the Construction industry?
After a significant swing toward lump sum turnkey projects (fixed price projects with financing included) in the 1990's, there appears to be a greater trend in risk sharing between the contractor and the customer. This can take the form of sharing cost savings on a maximum price or other means of providing a balance of risk and reward.
How will the Construction industry look in the future?
There remains significant fragmentation in the Construction industry, with relatively few dominant players in most sectors, whether by industry or geographic orientation. This situation will continue to slowly evolve, with a handful of very large firms and a predominance of small and medium sized players serving niche markets as well as a broader base of business.
