MIT 1 463J - Globalization of E&C Industry (38 pages)

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Globalization of E&C Industry



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Globalization of E&C Industry

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Pages:
38
School:
Massachusetts Institute of Technology
Course:
1 463j - The Impact of Globalization on the Built Environment
Unformatted text preview:

1 463 Globalization of E C Industry Fred Moavenzadeh Session 2 Fall 2009 The engineering construction industry is currently in a transition state Forces from both the demand and the supply sides have made it necessary to re examine strategies for growth and competitiveness Fall 2009 Constructed Facilities Setting Demand Setting Constraints Establishing Limits to intrusion Need for protection Natural System Technological System Social System Establishing Policies Regulations Norms and Standards Enabling Supply Provision Providing Know how Management Organization Fall 2009 The Role and Importance of Construction in Economic Development Construction Sector Contribution to Gross Domestic Product GDP Construction Role in Gross Fixed Capital Formation Construction Sector Contribution to Employment Construction Industrialization and Economic Growth Backward Linkages Forward Linkages Other Contributions Fall 2009 Construction Construction is known as the engine of growth By any standards it is a giant Some have recently called it a sleeping giant All indications are that it is reawakening Fall 2009 Two Sets of Issues of Concern to the Engineering Construction Industry I How is demand for its output generated and affected by modern societies II How is the industry s supply system shaped to cope with changing demand Fall 2009 Era of constant growth comes crashing down Change annual 12 8 4 0 4 8 8 9 8 9 4 1993 1994 1995 1996 1997 12 12 10 6 5 2 1998 1999 2000 2001 2002 5 13 3 2007 2008 2009 2003 2004 2005 2006 7 8 12 12 Figure by MIT OpenCourseWare Fall 2009 Total Value of Construction Put In Place 1400 1200 1000 800 1023 49 1132 15 1194 94 1168 55 1070 25 873 09 921 4 958 04 600 400 200 0 2002 2003 2004 2005 2006 2007 Source US Department of Commerce Annual Value of Construction Put in Place in Current Dollars 2008 2009 Fall 2009 Private Construction in 2004 Total 999 76 Billion Residential 14 7 Lodging 25 82 Office Commercial 13 02 6 6 Health Care 8 57 Educational 8 08 12 88 Religious 25 95 Amusement Rec 61 21 Transportation Communication 32 18 11 74 544 32 Power Manufacturing Source Dept of Commerce Construction Put In Place Details May Not Add Total Since All Types of Construction are not Shown Separately Fall 2009 Construction Segments in 2009 Total 958 Billion Residential Lodging Office Commercial Health Care Educational 20 192 35 267 6 508 20 088 108 022 Religious 91 094 83 652 Amusement Rec 49 86 Transportation Communication 58 41 58 76 Power 24 06 254 02 Manufacturing Fall 2009 TOP 20 GLOBAL CONTRACTORS Rank Firm 07 Revenue Mil 2006 2007 2008 2009 Total 1 1 1 1 Vinci Rueil Malmaison France 41 715 6 14 684 7 2 2 2 3 Bouygues Paris France 32 062 0 12 090 0 3 3 3 2 China Railway Group Ltd Beijing China 27 018 4 867 2 4 6 4 4 China Railway Construction Corp Beijing China 24 298 4 416 4 5 4 5 5 Hochtief AG Essen Germany 23 861 0 21 313 4 6 5 6 8 Grupo ACS Madrid Spain 23 130 1 3 653 1 7 7 7 6 China State Construction Eng g Corp Beijing China 21 517 4 3 244 5 8 10 8 7 China Communications Const GRP Beijing China 20 004 6 4 177 9 9 17 9 11 FCC Fomento De Constr Y Contratas SA Madrid Spain 19 046 8 6 854 9 10 8 10 12 Skanska AB Solna Sweden 18 546 9 13 982 2 11 9 11 10 Bechtel San Francisco California USA 17 696 0 11 742 0 12 18 12 9 China Metallurgical Group Corp Beijing China 16 906 8 625 7 13 12 13 15 Kajima Corporation Tokyo Japan 16 413 2 3 006 5 14 16 14 17 Obayashi Corp Irving Tokyo Japan 15 877 0 3 013 0 15 14 15 13 Strabag SE Vienna Austria 15 797 0 12 689 2 16 11 16 21 Taisei Corp Tokyo Japan 15 149 0 2 144 0 17 23 17 20 Balfour Beatty PLC London UK 14 986 0 6 469 0 18 20 18 16 Fluor Corp Irving Texas USA 13 332 3 7 940 4 19 22 19 19 Bilfinger Berger AG Mannheim Germany 12 642 0 8 475 0 20 15 20 14 Shimizu Corp Tokyo Japan 12 603 3 1 342 8 18 Eiffage Asnieres sur Seine France N A N A Int l Fall 2009 A E C Firms Differentiation Four Thrust Areas 1 Technology of Assembly Design Construct 2 Management of Assembly on Site Project Management 3 Management of Organizations Specializing in Assembly 4 Interaction of Assembled Systems with Socio Economic Development and Environmental Protection Fall 2009 Product Design Process Design Management Design Fall 2009 Owners Arch Sub 1 Struct Sub 2 Geotech Elect Product Design Sub 3 Process Design Mech Supplier 1 Supplier 2 Etc Supplier 3 Management Design Finance Bonding Control Legal Bidding Contracting Fall 2009 Major Developments of the 1990 s Globalization and market economy World Trade Organization Financial markets and privatization Information technology and telecommunications World Wide Web and e commerce Environment and sustainability Science and technology capability as an instrument of economic competitiveness Fall 2009 Consequences Increased demand for movement of goods and information Increased demand for human resource development Need for increased transparency in government s regulatory systems Importance of a robust science and technology infrastructure Fall 2009 Change On Demand Side Client Markets On Supply Side Technology Organization Fall 2009 Changing Nature of Demand I TRADE II ECONOMIC BLOCS III FINANCE IV ENVIRONMENT V TYPE OF WORK Fall 2009 Changing Nature of Demand I TRADE International trade in services International trade in construction services and products International trade in construction labor TREND Is toward further relaxation of barriers to entry into large construction markets IMPLICATIONS Increasing need to remain competitive on global basis Fall 2009 Changing Nature of Demand II Economic Blocs 1 2 3 4 North American U S Canada Mexico European Economic Community Far East Centered in Japan Mercusor Trends 1 Potential Future Bloc s Latin America Middle East Indian Sub Continent 2 Realignment of Firms Within Each Bloc via Merger and Acquisition Joint venturing Strategic Alliances 3 Need to Expand Globally Implications Further Erosion of Control over Domestic Market Fall 2009 Changing Nature of Demand III Finance Financial market is fully global New financial packaging and instruments Increased risk due to fluctuation in exchange rate Trends Greater involvement by construction in financial packaging Greater equity participation Greater involvement in operation and management Implications A close relationship between financial firms and construction firms Financial engineering and financial packaging services Fall 2009 Changing Nature of Demand IV Environment Prevention of further damage to environment


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