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Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
Trends and Needs in Engineering 2013
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Trends and Needs in Engineering 2013

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  • 1. Trends and needs in engineering 2013 deltek.com
  • 2. 2 Trends and needs in engineering 2013
  • 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
  • 13. Trends and needs in engineering 2013 13
  • 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 6. About Deltek Deltek is the leading global provider of World Headquarters enterprise software and information solutions United States for professional services firms and government 2291 Wood Oak Drive contractors. For decades, we have delivered Herndon, VA 20171-2823 actionable insight that empowers our customers T 800.456.2009 to unlock their business potential. 16,000 organizations and more than 2 million users Worldwide Locations in over 80 countries around the world rely on Belgium Deltek to research and identify opportunities, win T +32 (0) 2 709 2191 new business, optimize resources, streamline operations, and deliver more profitable projects. Denmark T +45 35 27 79 00 Deltek - Know more. Do more.® deltek.com Germany Frankfurt am Main T +49 696 773 3106 The Netherlands T +31 (0)20 347 3080 Norway T +47 22 01 38 00 Sweden T +46 (0)8 587 077 00 United Kingdom London T +44 (0)20 7518 5010 www.deltek.com info@deltek.com
  • 24. Deltek is the leading global provider of enterprise software and information solutions for professional services firms and government contractors. For decades, we have delivered actionable insight that empowers our customers to unlock their business potential. 16,000 organizations and 2 million users in over 80 countries around the world rely on Deltek to research and identify opportunities, win new business, optimize resources, streamline operations, and deliver more profitable projects. Deltek – Know more. Do more.® deltek.com © 2013 Deltek, Inc. All rights reserved. All referenced trademarks are the property of their respective owners. 030313-v1 deltek.com info@deltek.com (+1) 800.456.2009

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