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Strategic Insight
WORLD ECONOMIC FORUM LAUNCHES SCENARIOS FOR THE ENGINEERING & CONSTRUCTION INDUSTRY
Geneva, Switzerland – The World Economic Forum, through its Engineering & Construction Community and Centre for Strategic Insight, has launched Engineering & Construction: Scenarios to 2020. This publication marks a new phase in an initiative that is based on the need for a long-term, multistakeholder, industry-wide approach to deepen insights into the future of the E&C industry.
Engineering & Construction: Scenarios to 2020 paints four very different pictures of the business environment for E&C in 2020. These scenarios do not attempt to predict the future, but sketch the boundaries of the plausible: they aim to enable stakeholders to tease out underlying forces of change, to make better strategic decisions and to proactively shape the industry’s future.
The scenarios are the result of a year-long, multistakeholder process. They emerged from discussions and workshops in London, Jordan, Singapore, Paris and China involving over 100 leading stakeholders – industry leaders, clients, academics and government representatives – from Asia, the Middle East, Europe, Latin America and North America. Throughout 2008, the Forum will work with its communities to bring these scenarios back to today’s environment and consider their implications.
Roger Van der Marel, Senior Community Manager for Basic Industries at the Forum, said: “The engineering & construction industry is historically not a shaper, but responds to the needs of its customers. However, by taking a holistic view and better understanding the uncertainties that could have a high impact on the industry, it can become better prepared and more proactive in shaping the future of capital projects development.”
“Scenarios help to make sense of complexity, develop a common vision and initiate action to shape a better future,” added Kristel Van der Elst, Associate Director of the Scenario Planning team and Global Leadership Fellow at the World Economic Forum. “As an independent international organization with great leader-convening power, the World Economic Forum is ideally placed to develop robust and relevant multistakeholder scenarios.”
The four scenarios emerged from two key questions identified by project participants:
Will the corporate environment become more global, or will it evolve towards a multitude of local markets?
Will the demand – and E&C’s relations with its clients – be transactional or value-based?
Described in greater detail in the publication, the worlds they envisage for 2020 are:
The Race: While the global economy continues to integrate and grow, security concerns and lack of trust afflict relationships between nations and businesses. With companies from the BRIC countries establishing a strong global presence and investors in capital projects having a speculative and short-term mindset, the E&C market is in a fiercely competitive race.
The Collaborative Leap: Globalization gathers pace amid geopolitical stability and international collaboration; regulatory harmonization and environmental awareness enable a collaborative leap in E&C. State agencies, research institutes and shifting coalitions of specialist companies combine to tackle novel and ambitious projects for clients who value sustainability, spurring multiple innovations and systems-level thinking.
The Zero-sum Game: Wars, shortages and recession fuel a worldwide upsurge in nationalism, with mounting security worries and the politics of fear locking countries and business environments into a zero-sum game. Slumping demand, cost-conscious clients and the increasing difficulty of working internationally spell tough times for E&C companies.
Aspirational Communities: Amid international tensions and economic difficulties, globalization stalls. As societies look inwards, visionary leaders emerge at the head of aspirational communities who see E&C as strategically important for local socio-economic development. They catalyse collaboration between businesses and academia to find innovative solutions to local infrastructure needs caused by environmental and social change.
Industry leaders involved in the initiative added:
"This E&C 2020 scenario planning process offers those of us who lead E&C companies a unique opportunity to make our strategic planning processes more effective, and allows us to respond more quickly and confidently to future changes in our dynamic industry. This is a rare opportunity to thoughtfully consider the longer-term aspects of our business environment and our client relationships – aspects that are difficult to tackle within our normal business and strategic planning horizons. We live in a world that is full of uncertainty, and the E&C 2020 process lets us tackle that uncertainty head-on in a systematic way that will help us make our resource allocation decisions – and our response to unfolding events – more robust and effective." Ralph R. Peterson, Chairman and Chief Executive Officer, CH2M HILL Companies, USA
"The Forum's E&C 2020 scenarios project has helped us to identify critical issues and uncertainties that have the greatest potential to impact our company and our industry over the next decade. It has also highlighted the merits of industry collaboration – providing all of us in the project with a forum and framework for shaping, rather than simply responding to, our future." Stephen G. Hanks, President and Chief Executive Officer, Washington Group International, USA
“The demand for new infrastructure in the emerging economies and for renewal of infrastructure in the developed economies is practically insatiable and so is the demand for energy and communication. Concern for the environment has created a whole new ‘environmental’ market with endless opportunities. This presents E&C companies with unprecedented opportunities for growth in the traditional way and by way of privatization of infrastructure. Yet, so great are the economic, social and political uncertainties that traditional planning is proving to be woefully inadequate. E&C 2020 asks and studies what is most likely to happen and what has already happened that can create the future. It is a wonderful tool that can enable businesses to make their future.” Ajit Gulabchand, Chairman and Managing Director, Hindustan Construction Company, India
“Work accomplished through E&C 2020 should provide considerable substance to the strategic planning activities of individual companies. The E&C 2020 process helps fill a significant gap as it provides a thoughtful, informed and analytical view of the longer-term future, a perspective that has not typically been a part of our industry-wide thinking.” Alan L. Boeckmann, Chairman and Chief Executive Officer, Fluor Corporation, USA
The World Economic Forum’s World Scenario Series also includes previously published scenarios on India, China, Russia, the Gulf Cooperation Council (GCC) countries, the Kingdom of Bahrain, the Kingdom of Saudi Arabia, United Arab Emirates, the Digital Ecosystem, and Technology and Innovation in Financial Services.
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