The Boston Consulting Group: Value in Creation ECS 2013 – Growing and Thriving in Challenging Times

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Executive Summary:

Six years after financial crisis rocked the global economy, the engineering, construction, and services (ECS) industry is operating in a world of tightening margins, intensifying competition, and continuing pressure from the capital markets to create value. The next five years, however, look brighter. The ECS industry can expect to see growth, especially in mature markets that have encountered strong headwinds since 2008. At the same time, some high-growth sectors and regions are already experiencing a regression to the mean after ten years of heady growth. In this respect, the slowing pace of infrastructure construction in China— where in 2014 the economic growth slipped to 7 percent from a ten-year compound annual rate of 16 percent—will have a major impact on ECS companies. Meanwhile, growth in the Middle East and Africa, South America, the UK, and the U.S., will accelerate.

Today’s environment is far different from that of the middle years of this century’s first decade, when “if you build it, they will come” was an article of faith. The companies that benefit the most from reaccelerating growth— and those most rewarded by shareholders—will be those with the right cost and capital structures, the best processes, and a balanced portfolio that en- ables them to apply the right management focus, investments, and discipline to the businesses in which they can truly win.

This is The Boston Consulting Group’s second annual report on the ECS industry as seen through the lens of shareholders. In this year’s report, we present a company sample expanded to 60 in order to better reflect the full scope of global companies participating in the ECS space. Furthermore, we have narrowed the period of evaluation from ten to five years. This report is a companion piece to the sixteenth annual report in BCG’s Value Creators series. (See the 2014 value creators report: turnaround; trans- forming value creation, BCG report, July 2014.) The series provides de- tailed empirical rankings of the world’s top value creators and distills managerial lessons from their success. It also highlights significant trends in the global economy and world capital markets and describes how those trends are likely to shape future priorities for value creation. Finally, the series provides details on BCG’s latest analytical tools and client experiences in order to help companies improve their management of value creation.