PwC construction viewpoints - Edmond Verstraete

Edmond Verstraete
Partner and engineering & construction practice leader, Netherlands

What is your background in the construction industry?

I am chairman of the PwC Engineering & Construction group (x-los) in the Netherlands and in this role responsible for the consistency of quality of our services to E&C cllients. I am involved with the audit of the largest construction company in The Netherlands and have large experience in M&A work in the E&C industry. I have also carried out several surveys of the top players in construction business, dealing with their strategic challenges.

What are the three biggest issues facing the construction industry?

From a market perspective the biggest issue is the increasing size of projects in combination with the transformation from design and construction to overall solutions, delivering a fully integrated project. Another big issue is internationalisation, in part as a reaction to investors thinking in terms of European companies/industries. This goes hand in hand with consolidation of the industry (fewer but bigger companies in the E&C sector).

What keeps your client CEOs awake at night?

How to get the company focused on profits (instead of turnover, which is the traditional rationale), to stay profitable with an order book with fixed prices when costs are getting higher in an inflationary environment. Bridging the gap between demanding clients and under performing sub-contractors. Day-to-day crisis management on the key company projects.

How has e-business affected the construction industry and how will it further affect it?

E-business has not yet revolutionised the industry but is gaining more influence in the fields of procurement, capacity planning, logistics and EDI (electronic data interchange). It will alter the relationship with sub-contractors and be the key technique to facilitating partnering with sub-contractors and clients.

Which new business models and contract types do you see evolving in the construction industry?

We see the first steps to realising public private collaborations (PPC) and performance contracts as well as forward/backward integration of the supply chain (design, engineering, construction, construction related services, project development) within construction companies.

How will the construction industry look in the future?

We will have a small number of very big global players who offer the full range of services (including financing and operating real estate, infrastructure and industrial facilities) and a large number of small specialised construction companies whose clients are mainly the global players.