3. Contents
1. Executive Summary
4
2. Introduction
6
3. Results and findings
8
4. Conclusions
5. Appendix
22
6. About Deltek
Trends and needs in
engineering 2013
20
23
Know more.
Do more.
deltek.com
4. 4
Trends and needs in engineering 2013
1. Executive Summary
After years of economic turbulence and limited
The role of technology
expectations of growth, the outlook amongst
Without a doubt, technology will continue to play
European engineering firms is beginning to
a heavy role in the investments of engineering
become more optimistic. In fact, overall, the
firms for 2013. Firms will continue to look to
European engineering sectors predict that their
technology to increase efficiency, optimise
market growth will increase by 4% in 2013—a
internal processes and deliver more profitable
significant forecast considering the continued
projects to their customers.
uncertainty of today’s global economic climate.
When asked “In which areas of technology
But why now? Amidst today’s challenges and
do you expect to invest in over the next 18
market pressures, how are European engineering
months?” respondents submitted a variety of
firms able to finally visualise a little hope for
answers that all boiled down to one category:
success in 2013?
business management systems. Everything from
This report, based on a survey carried
collaborative tools, to CRM platforms, to business
out by Ipsos Synovate and commissioned by
applications for projects, finance and planning
Deltek, aims to get to the heart of this question.
made the list of top technological priorities
Each finding has been developed from survey
in 2013. These responses were unsurprising,
responses, in which decision makers and senior
as they coincided closely with the companies
employees of engineering firms were asked about
that identified winning new business, improving
the trends, challenges and opportunities facing
customer relationships and having a better view
their own companies and the industries they
of projects as their main business issues at stake.
operate in. Through this summarisation of the top
30% of respondents plan to invest in
industry drivers and overarching market outlook,
Computer Aided Design (CAD) systems, 28% in
engineering firms gain the valuable insight needed
document management systems, and mobile
to align their business priorities for 2013.
tools were the expected investment in 2013 for
Expect increase in growth
26% of the surveyed firms. This demonstrates
Overwhelmingly, responses to the survey
indicated that individual firms are in a position
for growth. Specifically, 66% of the individuals
interviewed predict that their companies will grow
that European engineering firms are renewing
their concentration on delivering quality
projects to clients, while keeping up with today’s
increasingly mobile workforce.
and expand in 2013 (4% points higher than last
Business issues
year’s survey respondents). What we can take
Whether the “financial crisis” is over or not,
away from this is that optimism and intentions
European engineering firms still have challenges
of growth are slowly, yet steadily, increasing year
that they must overcome in order to succeed
after year.
in both 2013 and the long-term. Identifying and
In particular, Scandinavian firms are the most
understanding these issues are paramount to
optimistic - Norway for instance tops the tables
future growth. Besides allowing engineering firms
with 8% expected growth in 2013. Belgium and
to compare their challenges to their competitive
Germany give more cautious predictions, voicing
counterparts, acknowledging today’s top issues
a more conservative expected growth of 4%
can help firms proactively strategise solutions
and 3%, respectively. However, firms within the
that ensure profitability within their organisation.
Netherlands expect their businesses to contract
as much as 2%.
5. Trends and needs in engineering 2013
5
With this in mind, we asked what the respondents
Regional overview
saw as the top four business issues:
To get a full scope of the European engineering
1. Project profitability
Project profitability is the number one challenge
experienced by engineering companies. Firms
want to ensure that the projects they work on are
worth it. To do that, today’s firms recognise that
they need better visibility of project and resource
planning in addition to visibility of profitability per
project.
sector, Ipsos Synovate conducted the survey
across six different European countries: Belgium,
Germany, Norway, Sweden, Denmark and the
Netherlands. The results demonstrated more
similarities than differences when it came to the
potential opportunities and business issues faced
by each country.
For instance, the top four most important
business issues (project profitability, customer
2. Customer satisfaction
satisfaction, winning new projects and billable
As the second largest challenge identified,
utilisation rates) was the same across all
customer satisfaction comes as no surprise.
countries. Moreover, 45% of respondents across
Rather than just a ‘pat on the back’ for good work,
the board replied that the biggest threat to
engineering firms are looking to improve their
company cash flow in 2013 is clients not paying
strategies when it comes to building long-term
their invoices on time.
relationships with clients. After all, long-term
relationships breed long-term work opportunities.
3. Winning new projects:
While customer satisfaction is required to retain
current clients for the long-term, firms still need
to successfully position themselves for untapped,
profitable business opportunities. This means
In summary, challenges and opportunities
faced in each region are consistent for the
engineering industry as a whole. Knowing this,
firms can prepare for the potential threats of
2013, while deploying the best practices needed
to stay successful and take advantage of today’s
slowly improving economy.
finding answers to questions such as:
The outlook
•
What is the most profitable type of work?
Is the level of optimism for 2013 justified?
•
What are the most profitable customers to
engage?
2013’ study shows a trend of increasing
What market segments should we look into?”
confidence and firm growth. When comparing this
•
4. Billable utilisation rates:
Just like project profitability, this comes down
to having a better view and stronger alignment
of project and resource planning. What’s more,
engineering firms identified that anticipated
billable utilisation rate was a top priority; firms
need this to ensure that even projects in their
pipeline can and will be completed with the
necessary resources on task.
Overall, the ‘Trends and Needs in Engineering
study to last year’s industry outlook, the results
are clear: with an average projected growth of
4% across the majority of European countries,
engineering businesses are finally seeing the light
at the end of the tunnel. This means that firms
are looking for long-term solutions that put heavy
focus on optimising internal resources.
6. 6
Trends and needs in engineering 2013
2. Introduction
Deltek commissioned Ipsos Synovate to conduct interviews with key decision makers and senior
managers of engineering firms in Belgium, Germany, Denmark, Norway, Sweden and the Netherlands.
The research delineated from this survey reveals the trends and challenges facing the engineering
sector in 2013 and beyond.
In order to get an in-depth picture of today’s
European markets, we interviewed some
of the most acknowledged experts in the
engineering industry regarding the results
of the survey. Primarily focusing on key
representatives of the Dutch and German
industries, below we’ve included a few of
their most critical takeaways on 2013’s
economic trends.
Question:
In the Netherlands, the engineering firms
expect a market decline of 2 percent for
2013, while the surrounding, other surveyed
countries (Germany, Belgium, Denmark,
Sweden, Norway) expect an average growth
of 4 percent. Based on the contracts your
company has seen with the engineering firms in
The Netherlands, does NLingenieurs think this
representation of the market is accurate?
Question:
According to the survey results, German
engineering companies consider increasing a
business’ efficiency, customer satisfaction and
innovation as the greatest opportunities for a
positive market development. Where does your
company, VBI, see the greatest opportunities
for the industry?
Answer:
Answer:
Paul Oortwijn, Director of NLingenieurs
“I would share that assessment. Innovation
has always been the key to the success of
German engineering. Our customers expect us
to develop great ideas to overcome technical
and economic challenges. When that is coupled
with high quality service, we can achieve
customer satisfaction. However, in addition to
finding technical and economic solutions, the
industry’s slower growth has made it necessary
for companies to review their actual internal
business issues. Even now, there are certainly
more opportunities and solutions that can
make our business even more efficient and
optimize our processes.”
Jörg Thiele, VP of VBI (Germany)
“Among the companies that we are in contact
with, we do see that the 2013 market has still
not generally improved. More than half of the
companies expect their revenue to be lower
this year than it was in 2012. This is because the
order book is still shrinking and the value of and
margins on contracts are declining.”
(The Netherlands)
7. Trends and needs in engineering 2013
7
Question:
Answer:
How does NLingenieurs react to the findings
that the neighboring countries of The
Netherlands have higher growth expectations?
Are there lessons to learn from this?
“It’s always been important to win new
projects. At this time, however, firms in certain
sectors are experiencing that ‘business’, i.e.
the contracts and projects, are not coming
automatically like they did in the past. We see
very different ways of dealing with this situation
in the engineering firms. Due to the shrinking
order size in the public sector, some firms are
moving their attention to the private sector.
For example, there is more work available in
the industrial sector, where engineering firms
can clearly provide added value. We also see
that engineering firms are starting to focus
on product differentiation. In these cases,
companies are looking at the needs of their
clients and considering carefully which of the
services from their service portfolio they could
offer to their clients in the future. We also see
companies creating their own work. Not by
waiting for a request from a client, but often by
working with others to develop a product and
get it financed. By working together with other
firms, the current, tight financial situation that
often prevents an individual contractor from
getting projects financed can be circumvented.
Many strategies are possible, but for all of them
it is important to analyze your own business,
know the potential of your own staff and fully
understand your market needs.”
Answer:
“For years, up until about 2009, the Dutch
engineering sector was doing very well. In those
years, the Dutch industry often performed
better than many other European countries.
That the Dutch market now appears to be
recovering more slowly than their neighboring
countries has partly to do with the impact of
the Dutch government policy. Currently, many
projects in The Netherlands are delayed (or
adjusted) due to uncertainty about spending
budgets, e.g. in the municipalities.”
Paul Oortwijn, Director of NLingenieurs
(The Netherlands)
Question:
In 2013, winning new projects is expected to be
the biggest challenge in The Netherlands. What
are examples of successful strategies that
engineering firms can use to deal with
this crisis?
Paul Oortwijn, Director of NLingenieurs (
The Netherlands)
8. 8
Trends and needs in engineering 2013
3. Results and findings
3.1 Expectations for 2013
Fundamental to the research is finding out
the general level of market outlook within the
engineering sector. So how do those interviewed
3.1.1 Market Development in 2013
Across all of the countries included in the study,
the expected average market development figure
is 4%. Scandinavian countries voice the most
optimism, with Denmark returning 8% average
market development and Norway returning 6%.
A small fall in the Netherlands is revealed at -2%,
but it is worthy to note that this expectancy in the
market has decreased further since last year (the
market prediction for 2012 was -1%).
see the market development for their company
in 2013?
The level of optimism shown by the
respondents generally coincided with the average
market development rates of the country of
residence. For the countries expected to grow
by larger margins (Denmark and Norway), more
respondents returned optimistic responses.
Likewise, for the country markets predicted at
marginally lower growth rates, a slightly lower
number of responses reflected optimism for their
Table 1: Average market development by country.
corresponding country.
For instance, a tremendous 94% of Danish
respondents expect to see growth within
Average market development
their businesses along with 90% of Norwegian
Total
4%
Denmark
8%
Norway
6%
German markets. On the other hand, pessimism
Sweden
4%
over the market also holds true to the expected
Belgium
4%
development rate for the Netherlands; close
Germany
3%
to half of the Dutch respondents believe their
Netherlands
-2 %
development will fall in 2013, making the average
engineering firms. Similarly, more than half of
the respondents saw growth in the Swedish and
market development figure a realistic portrayal of
the sector.
Table 2: How do you see the market development for your company in 2013?
fall
stagnation
18%
growth
66%
Expected Average
Market Development
Total (n=177)
16%
Denmark (n=16)*
6%
94%
8%
Norway (n=20)*
10%
90%
6%
Sweden (n=20)*
4%
4%
9%
20%
69%
Germany (n=46)
9%
28%
63%
3%
Belgium (n=25)
16%
40%
44%
4%
Netherlands (n=50)
46%
20%
34%
-2%
Base: all decision makers within (mid-size and large) engineering companies. *Results indicative due to small base.
9. Trends and needs in engineering 2013
3.1.2 Opportunities for the coming years
Expected opportunities for 2013 and beyond
haven’t changed much from the previous year’s
findings. However, contrary to the “been there,
analysed that” perspective, the repetition in
upcoming opportunities shows that a focus on
these trends has already worked when it comes to
driving steady growth across the industry. Firms
are now re-energising their concentration on
these factors to continue success in 2013 and for
the long-term.
Like in 2012’s findings, the European
engineering firms see the greatest opportunities
stemming from improving efficiency (51%),
9
But, beyond, “continuing what works”, why
priority? To get to the core of these opportunities,
3.1.3
What the respondents
say on opportunities
firms realise they need to beat out their
“Because the
exactly is improving efficiency today’s top
competitors by constantly improving on the
government has
services they provide and their ability to deliver
announced further
projects to key clients. For instance, if firms
development in
have found themselves not making enough on
road and railway
projects, they now understand that there is only
infrastructure and the
one way out: by getting better at what they do
water supply sector.”
and subsequently raising their operational profit
(South Africa)
margins. In a nutshell, this translates back to
improving organisational efficiency for greater
I am basing this growth
profit.
in the oil and gas sector.
innovation (41%) and customer satisfaction
(41%). This makes sense: mirroring the themes of
improving internal processes for better project
profitability and long-term client relationships,
these three factors continue to top the charts as
key success drivers across the European markets.
I am looking at expected
growth, world-wide,
in the subsea sector.”
(Norway)
“We rent out specialists
on an hourly basis,
which I see as the
Table 3: Where do you see the greatest opportunities for the next few years? (%)
Improving efficiency
51%
Innovation
41%
future.” (Denmark)
“Specialised clusters
can be used to bring
Improving customer satisfaction
41%
Specialization in market sectors and customer types
40%
in projects for export.
(International) growth
38%
Improving quality
38%
Collaborating means
Specialisation in types of work
34%
you can realize more
Creating joint ventures*
23%
complete projects
Improving delivery times
16%
Mergers
10%
with the help of these
Other
10%
Total all countries 2013 (n=177)
Base: all decision makers within (mid-size and large) engineering companies
* In the Scandinavian and German companies, they are talking about joint ventures whereas The Netherlands and Belgium are talking about cooperation
between firms.
complementary
projects.” (Belgium)
“The poor state of the
public finances will
mean we receive fewer
orders from the public
sector. However, orders
from the commercial
sector are increasing.”
(Germany)
10. 10
Trends and needs in engineering 2013
3.1.4 Predominant business threats
pressure on prices and stirring the competition
3.1.5
What the respondents
say on threats
When asked about perceived business threats for
across all European engineering industries.
“The way the trade
outlook looks as it did in
January and February;
the coming years, the responses were illuminating:
Cost cutting also concerns the engineering
staffing, competition and cost-cutting continued
sector – from public authorities as well as industry
to be the biggest causes for concern amidst an
in general, returning 46% of the votes and 26%
uncertain global economy.
respectively. However, the risk of not retaining
Above all, finding and retaining talented staff
enough contract orders and the price of labour
the expected debit will
was identified as the biggest challenge, with 55%
came in as a close fourth and fifth business issue,
be difficult to reach.”
of decision makers seeing this as the greatest
demonstrating that general idea of ‘cost’ across
(Sweden)
threat to business over the next few years.
the board will continue to cause some anxiety
Undoubtedly, this stems from heightened clients
over the coming years.
“I believe in our sector,
expectations, wherein customers are looking
people are unaware how
for firms that can deliver specialised knowledge
in the responses from the previous year. In 2012,
much potential vacant
in their projects. For firms, this then translates
interviewees considered international firms to
space there is—vacant
back to building key resources up to that level of
be the biggest threat (36%) with competition
space that will not
experience and becoming an attractive employer
from low-wage countries second (26%) and
be released onto the
to potential market ‘veterans’.
from contractors last (21%). However, this year’s
market if leases are not
extended.” (Netherlands)
Reiterating the impact of market expectations,
Competition-wise, the survey saw a large shift
findings demonstrated that now competition
price competition came in as the second most
from contractors had moved to the top threat at
prevalent threat to future business. With 52% of
25%, with competition from large, international
“In our market
respondents categorising this as a top threat,
firms and competition from low-wage countries at
of international
it’s clear that customers are putting increased
23% and 20%, respectively.
companies, there
is a shortage of
engineers and issues
with outsourcing.”
Table 4: Where do you see the greatest threats for the next few years? (%)
Finding and retaining good staff
55%
Price competition
52%
Cost-cutting by public authorities
38%
Not enough orders
36%
Labour costs
34%
Loss-making projects
27%
public sector orders.”
Cost-cutting by industry
26%
Competition from contractors
25%
(Germany)
Customer payment behaviour
23%
Competition from large international firms
23%
Competition from low-wage countries
20%
Unlimited or too high accountability
14%
Other
11%
(Netherlands)
“I expect to see some
declines due to the
receding number of
Total all countries 2013 (n=177)
Base: all decision makers within (mid-size and large) engineering companies
11. Trends and needs in engineering 2013
11
3.1.6 Threats to companies’ cash flow
if customers do not pay, then firms cannot
In today’s age of unpredictable project pipeline
pay their subcontractors, resulting in delayed
and revenues, ensuring steady cash flow within
projects. When analysed, this threat to cash flow
an organisation is critical to an engineering
represents a vicious cycle that can directly impact
firm’s success. Likewise, understanding where
firm-wide growth and project profitability.
engineering companies expect to find cash flow
After that, the risks became more internally-
challenges gives a clear sign to protective actions
focused: project managers being too slow
firms should begin to employ.
to invoice clients (16%) and employees not
By a large margin, firm decision makers
appropriately registering billable time (13%)
responded that the biggest threat to company
were the next highest response to cash flow
cash flow was clients not paying their invoices
vulnerabilities.
on time (45%). This fear is not understated;
Table 5 What is the biggest threat to your company’s cash flow?
Clients not paying their invoices on time
45%
Project managers too slow in invoicing clients
16%
Employees not registering their billable time
13%
Inefficient internal invoicing process
3%
Other
8%
Total all countries 2013 (n=177)
Base: all decision makers within engineering companies
12. 12
Trends and needs in engineering 2013
3.1.7 Top business issues for 2013
The second most important issue specified
The most important business issues faced by
by all European respondents was customer
engineering firms indicate the driving forces
satisfaction, followed by winning new business in
behind the day-to-day decisions made by
third place and then improving billable utilisation
senior professionals in industry. These decisions
rates in fourth.
inevitably answer questions such as: What do we
In every country, project profitability,
invest in for the future? How should we respond to
customer satisfaction, winning new projects
certain business trends? And, what are the areas
and billable utilisation rates were at the top of
of our business that require the most attention?
the list as the most important business issues.
Across the board, the top four most important
However, comparatively few are concerned with
business issues were the same in all countries.
more specific, process-related issues such as the
According to the survey, engineering professionals
quality of reporting (3%) or back-office efficiency
across Europe were most concerned with project
(1%). When it comes down to it, this means that
profitability. This is to be expected given the
firms are currently more focused on securing
enormous economic pressures and increased
revenues through ‘big picture’ project successes
competition that characterise today’s engineering
than they are on optimisation of back-office
industry.
operations.
Table 6 Key business issue for engineering firms is project profitability
Total all countries 2013
#1
Ranking
Project profitability
19%
2.4
Customer satisfaction
24%
2.5
Acquisition (winning new projects)
30%
2.6
Billable utilization rates
20%
2.8
Back-office efficiency
1%
4.5
Quality of reporting
3%
4.8
Social project management tools
n/a
n/a
14. 14
Trends and needs in engineering 2013
3.2 Insight into business issues
Farther down the line, decision makers
surveyed also said they desired better visibility
3.2.1 Project profitability
into their poorly performing projects (37%) and
For engineering companies globally, turning
better visibility of budgeted versus actuals per
a profit over the past few years had been
project (36%).
increasingly more difficult. Competition from
emerging markets is driving down costs and
squeezing margins to uncomfortable proportions.
At the same time, firms are unable to lower prices
When it comes to boosting profitability try:
• Creating a factual budget baseline – and
sticking to it!
beyond current levels.
In the survey, better visibility of project
and resource planning was identified as the
most important requirement in enhancing
project profitability, as 46% of respondents
acknowledged that this was an area they would
like to have a better view of. As a close second,
• Keep a watchful eye on sold, spent and
planned hours per project
• Automating systems and processes for a
streamlined, super efficient outfit
knowing the profitability per project was voted on
by 43% of respondents.
Table 7 Which of the following aspects of project profitability would you like to have a better view of within your
organization? (%)
Visibility of project and resource planning
46%
Visibility of profitability per project
43%
Visibility of poorly performing projects
37%
Visibility of budgeted versus actual costs per project
36%
Visibility of the trend towards ‘fixed-price’ projects
31%
None of these
10%
Total all countries 2013 (n=123)
Base: all decision makers who see ‘project profitability’ as one of the three most important business issues
15. Trends and needs in engineering 2013
15
3.2.2 Customer satisfaction
According to the survey, the two biggest aspects of
customer satisfaction that firms planned to focus
on were building long-term relationships (61%)
and improving communication with customers
(54%). Improving the quality of services and
increasing the understanding of client needs
came right behind those answers at 49% and
47%, respectively. The least important objective,
by far, was in offering a wider range of services.
This tells us that firms are instead emphasising on
improving the services they already deliver to keep
customers happy for the long run.
With these statistics in mind, firms can glean
To boost customer satisfaction, aim to:
• Meet or go beyond customers’
expectations through careful time, budget
and resource planning
• Match the right talent in your business
for the right client or project, based on
that talent’s personal skills, talents and
experience.
• Collaborate and share customer
information across department, growing
knowledge throughout the entire
organization and building trust between
client and supplie
that a focused, long-term and customer-centric
approach to business is the sector’s chosen
method of retaining customer loyalty and
maintaining profits.
Table 8 Which aspects of customer satisfaction do you want to improve in your organisation? (%)
Building long-term relationships
61%
Communication with customers
54%
Quality of services
49%
Increase understanding of clients
47%
On-time delivery
46%
Try to think how clients are thinking
43%
Offering a wider range of services
26%
Other
3%
Total all countries 2013 (n=109)
Base: all decision makers who see ‘customer satisfaction’ as one of the three most important business issues
16. 16
Trends and needs in engineering 2013
3.2.3 Winning new projects
When it comes to winning new projects in
the European engineering sector, companies
identified a number of areas that they felt needed
improvement. More than half of the respondents
(57%) distinguished that knowing the most
profitable market segments would help grow
their customer base. This elevated focus can be
attributed to the growing competition throughout
Europe and emerging markets.
The second and third most important aspects
Guaranteed strategies for winning new
business include:
• Leveraging detailed, historical data from
your business to identify new opportunities
• Identifying and personifying your ‘ideal
customer’, making them easy to spot
• Accessing your employee’s hidden talents
and using them to strategically diversify
into new areas
of winning new business came in far behind
the top answer. Of these two, 38% of those
interviewed claimed that a view of the most
profitable customers would help them find more
business, while 33% noted that a view of the most
profitable types of work/specialisation was the
most critical.
Table 9: Which of the following aspects of winning new projects would you like to have a better
view of within your organization? (%)
Most profitable market segments
57%
Most profitable customers
38%
Most profitable types of work/specialism
33%
Up-to-date overview of the sales pipeline
27%
Sales costs per project
25%
Most successful marketing campaigns
15%
None of these
10%
Total all countries 2013 (n=119)
Base: all decision makers who see ‘acquisition’ as one of the three most important business issues
17. Trends and needs in engineering 2013
17
3.2.4 Staff utilization rates
For a productive workforce, the average utilisation
rate experienced across the entire engineering
Some practical steps to improving staff
utilisation include:
• Increasing productivity by thoroughly
tracking employee output
sector was 76%. To increase margins, a key
approach is to improve staff productivity with
billable hours.
According to the survey, there was no one
obvious tactic when it came to improving staff
utilisation rates: 46% of those surveyed desired an
alignment of project and resource planning, while
41% wanted an improved view of future utilisation
rates. As shown in the chart below, several
areas of focus are viewed as imperative for both
• Eliminating the ‘guesstimation’ when
it comes to availability—instead, plan
resources on the basis of real-time,
accurate data.
• Integrating resource management with
your sales pipeline for end-to-end data
flow and a guarantee of met customer
expectations
improving organisation-wide utilisation rates, and
subsequently securing a better return
Table 10 : Which of the following aspects of billable utilization rates would you like to have a better view of within your
organization? (%)
Alignment of project and resource planning
46%
Anticipated future billable utilization rate
41%
Visibility of planning needs for new projects in the coming period
38%
Possibility of transferring employees between departments
and/or offices
35%
Current billable utilization rate per employee of staff over time
31%
Visibility during project planning of the project hours still available
30%
None of these
7%
Average billable utilization rate* (All 2013= 76%)
Base: all decision makers who see ‘billable utilization rates’ as one of the three most important business issues
* % billable hours out of all hours for the organization for the staff
18. 18
Trends and needs in engineering 2013
3.2.5 Back office efficiency
Reporting not only supports the day-to-day
Integration of project and financial administration,
decision-making and functioning of an engineering
as well as the invoicing of time and materials and
firm, it also provides a level of transparency that
fixed-price projects was selected by respondents
helps with customer retention and loyalty. The
as important back-office process improvements.
more insight managers have about their project
As engineering firms experience more turnovers
– as well as the day-to-day functioning of the
on their time and materials, they see the benefits
business – the better.
of fixed price contracts—where companies can
According to the survey, at the top of the
demonstrate their value to customers and retain
reporting wish-list for 42% of the respondents, was
higher profit margins.
to have ‘a better view of the financial status of all
Automated workflows are seen as necessary
live projects’. Once again, this is indicative of the
for 26% of respondents. Likewise, recording
industry’s number one desire to increase project
processes such as time, expenses, and purchases
profitability; by having stronger visibility into their
by project was selected by 25% of respondents.
financials, firms are able to better understand
3.2.6 Reporting
which projects are bringing in profit and which
Table 11: Which aspects of back-office efficiency do you want to improve in your organisation? (%)
Integration of project and financial administration
32%
Invoicing of time materials and fixed-price projects
28%
Automated workflows
26%
Time recording, expenses and purchases by project
25%
Time recording and approvals
7%
Other
8%
Total all countries 2013 (n=37)
Base: all decision makers who see ‘back-office efficiency’ as one of the three most important business issues
19. Trends and needs in engineering 2013
19
ones are stopping short. This also alludes to the
prices (12%) and lowering prices on services (6%).
need to make real-time decisions for a project as it
What does this mean for today’s engineering
develops, so the project manager can react quickly
firms? Optimism in the market, 4% overall growth,
and avoid any pitfalls.
business challenges, etc. All of these findings are
great insight into the path of 2013’s European
The second selection was a better view of
forecast turnover and costs per business unit,
engineering market, but can leave a lot for firms to
which supported the survey respondent’s long-
digest. European engineering firms need to be able
established theme of ‘improving efficiency’.
to apply all this information for an advantage in their
3.2.7 The effects of emerging countries
businesses. Below, Deltek has analysed the findings
The emergence of developing countries in the
of the ‘Trends and Needs in Engineering 2013’
European engineering market brought increased
report to provide a more comprehensive picture of
competition. In response, firms are taking the
today’s engineering business landscape.
‘increased value’ approach instead of cutting
4.1 So, is the financial crisis
truly over?
service costs and pricing.
When asked, ‘What do you consider the most
important effect on your business regarding
competition from developing countries?’ 36% of
respondents claimed that they delivered higher
While 66% of respondents predict sustained
growth in 2013, this optimism reflects a
stabilisation in the market from 2012 to
2013—not that the financial crisis is officially
quality services to clients. A significantly smaller
number selected reducing costs to handle lower
finished. However, it does mean that the
European engineering industries are beginning
Table 12: Which of the following aspects of reporting would you like to have a better view of within your
organization? (%)
Financial status of all live projects
42%
Forecast turnover and costs per business unit
39%
Profitability per segment, customers and/or type of work
30%
Financial status per business unit and type of work
27%
Status of all live projects, in terms of time spent and progress
20%
Status of all live projects, in terms of time spent and progress
19%
Utilization rate achieved
11%
None of these
16%
Total all countries 2013 (n=25)
Base: all decision makers who see ‘reporting’ as one of the three most important business issues
20. 20
Trends and needs in engineering 2013
4. Conclusions
to see a pattern of growth, which is a good sign.
budget or resource issues arise. Similarly, when
Unfortunately, due to the fact that the turbulence
survey respondents claimed they wanted better
of the global economy is still widely unpredictable,
views of reporting (i.e. the financial position of
firms are remaining cautious with their growth
their live projects), it reaffirmed that companies
strategies and focusing on improving efficiencies
now require the exact status of each project,
for long-term business success. An example of
including the project PL (profit loss), in order to
today’s unbalanced growth across Europe can
be profitable.
be seen in the Netherlands, which has predicted
Instead of a firm lowering its prices to the point
decreases in the market for the past two years
where there is little change for profitable turnover,
(and is expected to be -2% in 2013).
European engineering firms are instead trying to
Similarly, the European engineering
heighten the value of their business by improving
industry’s worries for hiring and retaining staff
internal operations and service delivery to clients.
are not unfounded. In general, firms are not only
By improving efficiency across an organisation,
experiencing more position openings due to
engineering companies become better at what
higher turnover rates, but they are also balancing
they do—increasing value instead of cutting
the need for highly specialised staff that can meet
prices.
client/project requirements.
Overall, there is a sense amongst engineering
firms that ‘things are starting to look up’. Yet,
pressures on staff and even competitive pricing
mean that firms are still going to have to focus on
efficiency, resource utilisation and knowledge of
profitable markets in order to continue that growth.
4.2 Why improve efficiency?
One simple answer: to raise the operational
profit. Despite slow growth, engineering firms
are struggling to make top-line profit on the
work and services that keep them in business.
This is a direct result of the competitive pricing
strategies seen throughout the European sectors.
Customers are also looking for services that offer
the highest value and lowest cost, which is why
engineering firms should focus on efficiency and
resource utilisation.
Another justification for an increased
focus on efficiency and resource utilisation is
that operational profit is directly impacted by
company turnover. Though turnover is getting
better as the market starts to slowly stabilise,
profits are not following that same pattern. The
fact is that companies are still earning less profit—
meaning it is critical that firms be able to closely
follow projects and proactively respond when
21. Trends and needs in engineering 2013
21
4.3 Understanding the threats:
What makes finding and retaining
staff and price competition issues
for 2013?
5.1 Survey background
The engineering sector is a highly specialised
Netherlands, Belgium, Germany, Denmark,
industry and customers are always looking
Norway and Sweden to discover what the trends
specifically for firms that can offer specialised
and needs are in engineering.
In February and March 2013, telephone research
was conducted across a base of 177 decision
makers in the engineering sector across the
experience. To meet these expectations ,
European engineering firms need to leverage
The research was carried out by Ipsos Synovate
people with 10 years or more experience in their
and was commissioned by Deltek.
area. However, these highly-skilled people have
been in the past—and remain today—a scarcity.
•
Telephone interviews of 15 minutes among
senior level employees in top engineering
firms with more than 50 employees.
•
The target group for this study is decision
makers at engineering companies.
•
The engineering firms interviewed provide a
representative sample of large and medium
European engineering firms.
This proves a challenge: without the right staff and
specialisation, clients will move on to competing
firms that can provide them with the high value
they desire.
The second biggest threat facing the
European engineering industry is price
competition. Today, it’s all about prices and
margin. And with today’s customers looking
for services that offer the highest value for the
lowest cost, price competition is fierce. Yet, it’s
worth noting that this price competition does not
originate from emerging markets (such as Brazil,
China and India). This is mainly because European
firms believe that their biggest competition
comes from other firms throughout Europe.
Although the battle for clients throughout
Europe is high, the true cause of this European
competition rests primarily in the fact that
customers are putting intense pressure on prices.
Because customers have also experienced the
revenue drops from the financial crisis, clients
are keeping low prices and margin as a top priority
when purchasing services.
22. 22
Trends and needs in engineering 2013
5. Appendix
5.2 Questionnaire
The questionnaire covers the following subjects:
•
Expectations for 2013
•
Critical business issues
•
Technology
•
Background questions
The companies that were interviewed are
active in the following countries and sectors,
with the below company sizes:
Country
Share
# of Employees Share
Sector
Share
Netherlands
28 %
50
28 %
Construction
43 %
Germany
26 %
51-100
19 %
29 %
Belgium
14 %
101-250
27 %
Infrastructure
Mobility
Norway
11 %
251-1000
17 %
Industry
26 %
Sweden
11 %
1000
8%
23 %
Denmark
9%
Town Planning
Environment
Water Supply
13 %
Sewage Waste
Treatment
17 %
Oil Offshore
13 %
Other
27 %
23. Trends and needs in engineering 2013
23
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