Ie Global Construction Survey PDF

Make it, or
break it
Reimagining governance,
people and technology in the
construction industry
Global Construction Survey 2017
KPMG Ireland
kpmg.ie/infrastructure
Foreword
The moment of truth
How can the engineering and construction industry overcome fragmentation,
external competition and inconsistent performance by reimagining its approach
to governance, people and technology?
Taking back control over projects

Achieving change in a hesitant industry
Over the past decades, owners and that pales against the achievements in significantly impacted their company —
contractors have made considerable other sectors. rising to nearly 60 percent for
strides in improving the delivery of contractors. Additionally, just a quarter
KPMG’s 2017 Global Construction
capital projects. We’ve seen a host believe the industry as a whole
Survey — which reports the views
of advances in the form of new has reached an acceptable level of
of engineering and construction
construction techniques, project performance in delivering capital
companies and project owners —
delivery strategies, and enhanced projects on time and within budget.
reflects this apparent contradiction.
processes and controls for safety,
More than 80 percent of respondents Which begs the question: Can we
risk management, budget, scope
report confidence in their organization’s make the kind of step change needed
and schedule.
ability to deliver projects on time to bring performance in line with
But the industry’s overall performance and within budget. An even bigger stakeholder expectations? With the
during this period continues to tell a proportion (92 percent) say their industry under threat from the inevitable
discouragingly different story, replete systems produce timely and accurate disruption caused by innovative and
with a continued inability to increase project and portfolio reporting. agile outsiders, it’s imperative to swiftly
productivity, raise performance levels address this issue.
Yet half admit that, in the past 3 years,
and reduce project failures — a record
adverse project performance
Missing links in the transformation story

To achieve a step change in Only by investigating and addressing In the following pages, we discuss
performance, engineering and these missing links can we attain the how, by assessing, rationalizing and
construction companies and owners kind of improvements that other sectors rethinking governance, focusing more
alike need to reimagine governance, have achieved. Standardization and on developing exceptional people,
people and technology. Currently, optimization are worthy goals, but they and creating a truly integrated digital
despite significant investment, the are unlikely on their own to produce strategy, we can start to make the kinds
industry is not integrating these three transformational progress. In the future, of changes that have thus far eluded us.
performance drivers sufficiently. It’s not successful owners and contractors are
We would like to thank all survey
enough to address these components likely to be those with a strategic vision
participants who gave their valuable
independently — we have to find new that can expediently innovate and adapt,
time and insights to our latest annual
ways to make them work together in an and cultivate a workforce and culture
Global Construction Survey.
integrated fashion. Our survey delves that embraces new technology while
deeply into each of these critical areas respecting the proven effectiveness of
to take a more holistic view of their sound project management.
impact upon project performance.
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
About the authors To achieve a
step change in
Geno Armstrong
performance,
Global Sector Leader, engineering and
Engineering and Construction
KPMG International construction
E: garmstrong@kpmg.com
companies need
Geno is a Partner responsible for KPMG’s Global Engineering and
Construction practice. He is passionate about construction and has invested to reimagine
almost 30 years into studying major projects and organizations — cataloging
what executives do well, and applying ‘reverse engineering’ to failed or governance, people
struggling initiatives. His experience encompasses hundreds of the largest,
most complex projects and organizations globally, across virtually every and technology.
industry. Geno leads a team of trusted professionals focused on guiding
companies through stormy seas, and doing everything humanly and digitally
It’s not enough
possible to ensure successful projects. A strong advocate of insightful
research and thought leadership, he has been personally involved in each
to address these
of KPMG’s 11 Global Construction Surveys since 2005. Geno lives in San components
Francisco, California, US.
independently —
we have to find new
Clay Gilge ways to make them
Major Projects Advisory
Practice Lead work together in an
KPMG in the US
E: cgilge@kpmg.com integrated fashion.
Clay leads the Major Projects Advisory practice for KPMG in the US and
has over 20 years of practical experience and research, giving him a deep
understanding of what makes projects and organizations successful. He
has been at the forefront of efforts to advance industry-leading methods
and tools to objectively benchmark project controls. Additionally, Clay is
also on the cutting edge of applying advanced data and analytics to improve
transparency, and make better use of the vast data sets associated with
major construction projects. A recognized industry thought leader, Clay has
published papers on topics ranging from project controls, compliance, data
and analytics, mega-project management to so-called ‘black swans’.
Contributors
In addition to the efforts of Geno, Clay and other experts attributed throughout
this document, we want to recognize the contributions from countless KPMG
professionals in our global network of member firms, who have played a vital role
in helping us conduct our research by participating in face-to-face interviews. We
thank each of you for your time, energy and dedication.
KPMG in Ireland
Michele Connolly
Head of Corporate Finance
T: +353 1 410 1546

E: michele.connolly@kpmg.ie
Survey at a glance
02 10
Reimagining governance, Maintaining the human touch
people and technology With several generations of people
How do the main performance drivers under one roof, how can owners and
interact? contractors attract and motivate a
diverse range of individuals for their
project teams — and ensure these
people have the capabilities and
the supporting structure to achieve
04 high-performing projects?
Rationalizing governance — Forty percent of employees

are Gen X and 37 percent are
What’s working and what isn’t? Should
Millennials, but 24 percent of
you be shredding those ancient manuals
respondents say Millennials do not
and rationalizing your governance, risk
understand the fundamentals of
and controls?
project delivery.
— Only 8 percent of respondents have
what they call “push one button,
real-time, full PMIS reporting”, and
just 31 percent have integrated
systems for project reporting.
18
Waiting for the technology
breakthrough
Placing the right bets — and seeing the
benefits from your investments.
— Ninety-five percent of respondents
think technology/innovation will
significantly change their business,
but a mere 5 percent view their
organizations as “cutting edge”
when it comes to technology.
26
In conversation: from the
Stone Age to the digital age
Bent Flyvbjerg, Professor of Major
Programme Management at
Oxford University’s Saïd Business
School, discusses the future with
Geno Armstrong, KPMG International.
28 34
Three steps to closing the About the
performance gap survey
Pulling our thoughts together to address the key Everything you
challenges raised in this year’s survey: The key is need to know about
integrating performance drivers through effective the 201 survey
change management. participants.
38 39
KPMG’s Bookshelf
Global E&C Take a look at the KPMG
practice network’s extensive range
Showcasing of thought leadership in
our extensive infrastructure, engineering
experience and and construction.
know-how.
40
Contacts
Who to get in touch with
to talk more about your
pressing project issues.
Reimagining
governance,
people and
technology
When these three critical performance drivers work in harmony,
the sum can truly be greater than the parts.
For the past couple of decades, the main path method scheduling tools have For example, highly rigid controls
engineering and construction players have expanded to include other, more manuals may not cut it with Millennials,
focused heavily on governance, risk and holistic solutions. We’ve tracked this who merely want some ‘guard rails’ that
controls to ensure that projects meet progress through industry research and give them a freer hand. Equally, a shiny
deadlines and budget, and to improve discussion since the inception of our new piece of technology or software
quality and safety. We believe it’s now Global Construction Survey in 2005. only adds value if you have the means
time for a reassessment of this approach, to analyze the data, interpret the results
In our 2016 Global Construction Survey,
to evaluate what’s working and what isn’t. and take action on the insights.
the respondents gave a number of
Through our observations, and our reasons for lack of effectiveness in project Much of what we discuss in this year’s
discussions with industry experts, it’s controls, namely: 1) overconfidence, survey could come under the broad
apparent that project management 2) lack of consistency and 3) the heading of change management. And,
still lacks transparency and has too ‘human factor’, covering issues such as in an industry regarded as relatively
many gaps in policies, procedures insufficient soft controls and inadequate conservative, making change happen
and controls, enabling small spokes talent management. What this year’s effectively is one of the toughest
in the wheel to become big barriers survey has brought up, in addition to challenges. We believe that the
to progress. What’s needed is a more these points, is the need to take a more approaches recommended throughout
reliable way to accurately assess and critical examination of the three main this document represent practical tips
predict project performance, and send drivers of performance: governance, from people that have been on the
out early warnings, so that project people and technology. And it’s not front line of construction for the past
teams can intervene swiftly when enough to simply evaluate how these 20–30 years.
things aren’t going according to plan. drivers are working independently — it’s
equally important to understand how they
Over the years, earned-value
are interacting.
management systems and critical
2 Global Construction Survey 2017
Global Construction Survey 2017 3
Rationalizing
governance
By aligning controls more closely with business
strategy, and being brutal about rationalizing
the number and degree of controls, owners and
contractors can refocus on the key issues that
make or break projects.
It’s no exaggeration to say that And we know these controls are
governance and controls are the very being widely used. Of this year’s Sixty percent of
lifeblood of projects, and which, for survey respondents, 70 percent track
a large part, guide engineering and project performance based on original respondents say
construction companies towards their approved baseline project schedule and
objectives. These systems are the budget (Figure 1). A healthy 60 percent their organizations
foundation for planning and monitoring
progress towards a high-quality, on-time,
hold routine project review meetings
with management, which trigger
hold routine project
on-budget project or program. additional reviews — and if necessary,
intervention — for any issues that could
review meetings
impair project performance (Figure 2). with management,
Figure 1: Against which benchmark does your organization track project
which trigger
benchmarks for tracking performance? (check all that apply) additional
70%
70% reviews — and
60% 57% if necessary,
50% intervention.
40%
30% 26%
20%
10%
0%
Total (n = 199)
Original business case (baseline estimate)
Original approved baseline project schedule and budget
Current approved project schedule and budget
Multiple responses allowed
Source: Make it, or break it, 2017 Global Construction Survey, KPMG International.
Figure 2: What triggers/KPIs are used to initiate project recovery or

intervention activities?
70%
60%
60%
50%
40%
31%
30%
20%
10% 7%
3%
0%
Total (n = 199)
We have KPI thresholds for budget, scope, schedule, quality and safety that trigger
project review activities and intervention from management.
We have routine/scheduled project review meetings with management that will trigger
additional reviews/intervention based on project performance/issues.
Management may call ad hoc meetings to discuss project issues and trends, which may
result in additional recovery or intervention activities.
Project recovery or intervention activities are ad hoc and at the discretion of management.
Percentages might not add up to 100% due to rounding
These findings mirror KPMG’s own failure seems not to have changed
Just 8 percent experience in the marketplace, in over 30 years. Other than building
where over the years we have information modeling, value seems
of executives evaluated the design and elusive. We must give greater attention
surveyed say their effectiveness of controls for close
to 1,000 projects and organizations.
to process, measurement and how we
use data to make better decisions.”
organization’s Additionally, our involvement with
industry-leading organizations like the
A closer look at how owners and
contractors approach governance, risk
have “push one Engineering Construction Risk Institute
(www.ecrionline.org) indicates that
and controls reveals some potential
areas for improvement.
button, real-time, many owners and contractors have
made advances in the way they control Just under half (47 percent) of the
full PMIS, capable projects. respondents say their organizations
have separate systems for project
So why do projects continue to
of project and underperform? When asked this
reporting, yet a mere 8 percent have
what they call “push one button,
question, the executives taking part in
portfolio dashboard this year’s global survey had a variety
real-time, full project management
information system (PMIS), capable
reporting”. of responses, pointing to factors like
“Wrong estimations and forecasts in
of project and portfolio dashboard
reporting” (Figure 3). It seems that the
planning and scheduling processes”,
days of instant project reporting are still
“bad contract management and
some way away for most of the sector.
acceptance of too much risk” and
“incomplete scope definition, scope And only 31 percent of survey
creep and quantity growth, along with participants report that their companies
insufficient change management rigor”. do have integrated systems for project
reporting, which means that most
Another respondent summed up his
project managers lack the capability to
concerns by saying that “The rate of
control all elements of the work.
Figure 3: Which statement best describes your organization’s

project reporting?
50% 47%
40%
31%
30%
20%
15%
10% 8%
0%
Total (n = 200)
Push one button: real-time, full PMIS, capable of project and portfolio dashboard
reporting
Integrated systems: multiple integrated tools, systems capable of project and
portfolio reporting
Separate systems: separate systems requiring manual reconciliation and updates
Spreadsheets: spreadsheets and other manual documents or programs
Cracking the code for project controls
The incredible complexity of many of customized to meet the needs of
today’s projects is simply outpacing our the vast majority of contractors
ability to control them given our current and/or owners.
governance, process transformation,
An alternative is to try to enhance
and technology models and tools. They
existing systems, or continue to
are typically larger and more integrated,
bring in smaller, more control-specific
with faster schedules and creative
IT solutions that may be very hard to
financing mechanisms that lead to
integrate.
tighter budgets. And in our desire to
be thorough and systematic, we have But there is another way, in the
underestimated the human element. form of new data and analytics and
Hard experience tells us rules and visualization software, which costs
procedures are only as good as the less and is faster to implement than
people administering them. And finally, a huge PMIS system — and provides
as we highlight in the last section of real-time, customized reporting. Such
this report Three steps to closing the an approach can only succeed if the
performance gap (on page 28), few organization diagnoses its technology
companies have truly exploited the new and data to understand current system
technology available to integrate each and data capabilities, and then creates
element of the controls environment. a technology strategy and ‘road map’
that aligns technology investment and
Most owners and contractors have
time line with processes, governance
numerous systems for managing
and change management.
projects throughout the project life
cycle — something highlighted in By linking existing disparate data
KPMG’s 2016 Global Construction and analytics software systems, it’s
Survey.1 In the search for end-to-end possible to gain some quick wins to
solutions, one option is to go for produce reporting that can aid project
a comprehensive PMIS. However, managers’ decision-making and
these are affordable only for the build the business case for broader
biggest companies and are not really investments.
Three steps to simpler and more effective controls

1. Make the controls flexible and aligned with broader business strategy, so
that they reflect the key project priorities.
2. Rationalize all controls on an ongoing basis to ensure they are as simple and
relevant as possible.
3. Balance ‘soft’ versus ‘hard’ controls (discussed further on page 13).
1
Building a technology advantage, Global Construction Survey 2016, KPMG International.
Contracts and
performance
Although performance targets are
an important tool for ensuring strong
contractor efficiency, not all the
respondents set such goals. Only
30 percent claim to incorporate
performance targets into all of their
contracts, with a further 52 percent
including targets on “some” of their
contracts (Figure 4).
Schedule is ranked as the number
one performance measure, followed
by cost/cost sharing. Contract
performance measures for output/
production, safety, subcontracting and
schedule ranked considerably lower
(Figure 5).
In an attempt to align all the interested
parties on construction projects, a
number of contractors and owners
are adopting new delivery strategies
such as integrated project delivery.
But, interestingly, there has been
little research into the impact of
contract performance incentives on
performance. The challenge is to
come up with the kind of incentives
that mutually benefit — and therefore
motivate — all the stakeholders.
Figure 4: Do you incorporate performance targets into your contracts?
18%
30%
Total Yes, on all our contracts

(n = 199) Yes, on some of our contracts
No, we do not use performance
targets in our contracts
52%
Figure 5: What are the top three performance measures used in your
contracts?
90%
80%
80%
69%
70%
60%
52%
50% 48%
40%
30%
20% 19%
9% 7%
10%
5% 4% 2%
0%
Total (n = 198)
Schedule Not applicable
Cost/cost sharing Other
Safety Change orders
Quality Contracting/subcontracting
Output/availability/production Permitting/right-of-way (ROW)/environmental remediation
Maintaining the
human touch
To cope with the changing workforce demographics, engineering
and construction companies need to adapt controls to reflect
new ways of working, and balance ‘soft’ versus ‘hard’ controls.
Given that more and more elements of
projects are dependent upon sought-
global survey, just 23 percent of their
workforces are comprised of Baby
According to
after graduates working in white collar
roles, it’s perhaps little surprise that
Boomers (born 1945–1964), 40 percent
of Generation X (born 1965–1979)
respondents,
86 percent of respondents say that
the “human element” significantly
and 37 percent of Millennials (born
1980–1994) (Figure 6).
40 percent of
influences project delivery. But what
are engineering and construction firms
What are the implications of this employees are
generational shift — especially for
and project owners actually doing to
optimize this precious resource?
Millennials who’ve grown up in the Gen X and
digital age and, additionally, don’t
As Baby Boomers approach retirement, always have the nurturing hand of Baby 37 percent are
new generations of workers are Boomers around their shoulders to help
taking their place. According to the them learn the tricks of the trade? Millennials.
professionals participating in our
Figure 6: Which generations make up your workforce?
60%
50%
40%
40% 37%
30%
23% Baby Boomers
Generation X
20%
Millennials
10%
0%
Total (n = 194)
Figure 7: Does the Millennial generation understand project

delivery fundamentals?
59%
60%
50%
40%
30% Yes
24% No
20% 18% Uncertain
10%
0%
Total (n = 200)
Just 40 percent of When it comes to understanding
the fundamentals of project delivery,
manner — is one of the most important
tasks facing the sector. It’s also broadly
the organizations more than four in ten respondents are
concerned that Millennials are not fully up
the case that the younger the worker,
the greater their digital skills and
in the survey to speed with skills like scheduling, cost-
control, risk management, procurement
confidence. Millennials are attracted
by technology, and engineering and
have formalized strategies and earned value management
(Figure 7). The challenge is even more
construction companies should
recognize that investing in a digital
soft controls acute for project owners, with more
than half uncertain about Millennials’
workplace could increase their ability to
attract and enthuse this demographic.
as part of their knowledge in these critical areas. If they don’t take these steps, then, as
we argue on page 32, in our section
Giving younger employees the skills,
project delivery experience and confidence to manage
Optimize human performance, the
brightest young engineering talent is
framework. major projects — and managing and
motivating them in an appropriate
likely to opt for careers in more ‘shiny’
sectors that embrace technology.
‘Hard’ versus ‘soft’ controls

In this year’s survey, we’ve talked at to encourage the right behavior, their
length about ‘technical’ project controls. workforces are unlikely to have the
But what some refer to as ‘soft’ awareness, the confidence or the
controls — ensuring that all staff are clear motivation to apply the harder, technical
about their roles, feel free to raise issues controls consistently and accurately.
or concerns, are confident that they will
Some of the executives involved in
be listened to, and, ultimately, embody
the survey spoke of younger workers
the right values — are, arguably, equally
feeling constrained by too many rules
important to project success.
and regulations, which suggests that the
According to the executives involved traditional focus on hard, technical controls
in this year’s survey, just four in ten may be inappropriate for Millennials.
organizations have formalized soft Again, this relates closely to our findings
controls as part of their project delivery in the previous section on controls, where
framework (Figure 8). Contractors we discuss rationalizing the number
are more likely to operate such and degree of controls, to have a more
controls than owners (45 percent manageable system that users of all
versus 34 percent). If companies fail generations are likely to use effectively.
Figure 8: Are formalized soft controls part of your project delivery

framework?
28%
40% Yes
Total No
(n = 199) Not currently, but we are
planning them in the future
33%

Viewpoint: Balancing hard and soft
Viewpoint controls
Historically, when projects have gone
off track, the automatic response has
They also lack a common view of what
constitutes a soft control, and of how best
been to add layers of hard controls — to use soft controls to strengthen the
like additional authorizations, expense overall project control environment.
approvals, reduced delegations or project
Before investing in further hard controls,
performance reviews — in an effort to
owners and contractors should carefully
make one or more persons accountable.
consider how human behavior impacts
We believe this is too much stick and not projects, and evaluate how soft controls
enough carrot, and does not necessarily can address any weaknesses and
lead to better outcomes. A better encourage positive behavior.
balance is to combine traditional hard
To introduce greater objectivity to this
controls — such as segregation of duties,
process, we have developed a model
system restrictions and authorizations or
that integrates soft controls into project
approvals — within tangible soft controls
delivery frameworks and the project
that promote desired behavior.
control environment. The model is based
Professor Muel Despite acknowledging the importance on extensive scientific research and
of the human factor in projects, the has been widely used by a number of
Kaptein respondents in this year’s survey have yet global organizations, who have benefited
Partner to establish a systematic way to leverage from greater clarity of roles and greater
KPMG in the Netherlands soft controls in managing projects. commitment to enforcing controls.
The fundamentals of organizational culture: eight soft controls
Enforcement Clarity
e
ns
o
sp
Role modeling
Re
Call someone
to account
Prevention
Behavior
Discussability
De
Commitment
ct
te
io
n
Transparency Achievability
Source: KPMG’s Soft Controls Methodology developed by Professor Muel Kaptein, Partner,
KPMG in the Netherlands.
Only 33 percent Charting a career path
of respondents When compared with options like from financial services and retail have
entrepreneurial technology start-ups, the least degree of standardization,
report that their engineering and construction may not while industries like natural
always appear to be the most exciting resources and chemicals, industrial
organization’s career for today’s graduates. This manufacturing, and power and utilities
employee makes it more important than ever
to find effective ways to recruit and
are most likely to offer a standard
career path. These latter sectors
promotion retain the right talent. When it comes
to building a career in the sector, our
typically employ far greater numbers of
people on capital projects — possibly
process is “very survey suggests that many companies
have some way to go.
more than 10,000 globally — and,
arguably, have a bigger need for a
standardized”. Twenty-eight percent of survey
common approach.
respondents admit that there is no The survey also indicates that owners
common approach at all to their from Asia — especially China and
employee promotion process and India — are the most likely by some
promotions are generally considered way to offer clear promotion paths,
on a case-by-case basis (Figure 9). The which is in stark contrast to other
responses suggest that project owners regions of the world (Figure 11).
Figure 9: Is your employee promotion process standardized?
Yes, very standardized

28% (defined objectives and
33%
requirements for promotion)
Total Yes, somewhat standardized

(n = 200) (informal objectives and
requirements for promotion)
No, not standardized at all
(promotion is generally
considered on a case-by-case
basis)
39%

Figure 10: Do you offer performance-based project bonuses, variable
compensation or incentive mechanisms?
24%
Yes
Total 50% Sometimes
(n = 199)
8% Only for special projects
No
18%

And only half of the executives suitable financial motivation, owners

participating in our survey say their and contractors could be reducing the
business routinely offers performance- opportunity to meet critical time and
based project bonuses, variable budget targets.
compensation or incentive mechanisms
Interestingly, our survey results suggest
(Figure 10). Indeed, 24 percent offer
that financial services and media are the
no incentives at all — a figure that
two industries with the highest incidence
rises to 31 percent for project owners,
of performance-based pay, which could
reflecting the fact that capital projects
reflect a wider, incentive-based culture in
are often not seen as core to the
these two sectors (Figure 12).
business. But, if they fail to provide
Figure 11: Is your employee promotion process standardized? (regional perspectives)
80%
70%
61%
60% 55%
50%
50% 43% 43%
41% 42% 42%
38% 36%
40% 34% 33% 35% 33% 34%32%34%
30% 28% 29%
30% 27% 25% 25% 25%
23% 23% 22%
20% 21%
20% 17%
10%
0%
UK Middle North India Rest of Rest of Africa Central/ China Australia
(n = 44) East America (n = 75) Asia Europe (n = 48) South (n = 23) (n = 41)
(n = 56) (n = 82) (n = 48) (n = 64) America
(n = 40)
Yes, very standardized (defined objectives and requirements for promotion)
Yes, somewhat standardized (informal objectives and requirements for promotion)
No, not standardized at all (promotion is generally considered on a case-by-case basis)
Figure 12: Do you offer performance-based project bonuses, variable compensation or incentive mechanisms?
(industry perspectives)
Healthcare/Life sciences 50% 24% 8% 18%

(n = 38)
3%
Technology 65% 26% 6%
(n = 31)
Retail/Consumer products 61% 22% 6% 11%

(n = 18)
0%
Financial services/ 73% 18% 9%
Insurance (n = 11)
Natural resources/ 52% 24% 7% 17%

Chemicals (n = 42)
Government/Education 47% 20% 8% 25%

(n = 64)
2%
Industrial manufacturing 57% 20% 22%
(n = 46)
0%
Media/Telecoms 82% 9% 9%
(n = 11)
Power/Utilities 56% 23% 8% 13%

(n = 78)
Real estate/Hospitality 54% 29% 9% 9%

(n = 69)
Other 40% 20% 15% 25%

(n = 20)
Yes Sometimes Only for special projects No

Creating a truly diverse industry
One of the keys to the future talent fewer assess employees along lines
challenge is to improve diversity in the of race, disability or sexual orientation.
engineering and construction sector. And 30 percent do not track or measure
While a large majority of respondents say diversity in any way (Figure 13).
their organizations track gender diversity,
Figure 13: What categories of diversity targets does your organization

track? (check all that apply)
100%
89%
90%
80%
70%
60% 57% 56%
50%
40% 36%
34%
30%
20% 17% 17%
10%
0%
Total (n = 140)
Gender Indigenous participation

Race Sexual orientation
Disabilities Other
Military veteran
Waiting for the
technology
breakthrough
It’s not just about investing in technology; it’s about knowing
which specific technologies can improve performance — and then
aligning digital and business strategies.
With exciting innovations like robotics,
automation and drones, and powerful
for disruption (Figure 14), 95 percent think
technology/innovation will significantly
Seventy-two
data analytics to improve design and
project management, engineering
change their business and three-quarters
(74 percent) believe such a change will
percent of
and construction would seem to be
a perfect stage for showcasing the
happen in less than 5 years.
respondents feel
And 72 percent of respondents say that
technological revolution.
technology innovation or use of data that technology,
This year’s respondents are certainly plays a prominent role in their strategic
bullish about the potential of technology. plan or vision (Figure 15). innovation or use
Fifty-five percent feel the industry is ripe
of data plays a
prominent role in
Figure 14: Is the industry ripe for disruption? their strategic plan
or vision.
16%
Yes
Total No
(n = 200) Unsure — I don’t know
55%
29%
Figure 15: Is technology, innovation or data prominent in your strategic

plan or vision?
80%
72%
70%
60%
50% Yes
No
40%
Not yet, but it will in
30% the future
22% Unsure — I don’t know
20%
10% 6%
2%
0%
Total (n = 200)
Just 20 percent Figure 16: Have you developed a data/technology strategy or road map?
of respondents’
organizations have
implemented PMIS 30%
across all projects. Yes
No
Total Not currently, but we are
(n = 201) 48%
planning to do so
22%

A separate global 2017 KPMG survey Fewer than half of the respondents
of CIOs (conducted in conjunction with to this year’s survey (48 percent) say
Harvey Nash) also showed enthusiasm their company has developed a data/
for all things digital, with 63 percent technology strategy or road map
of respondents from engineering (Figure 16). Of all the technologies,
and construction companies seeing PMIS is considered to have the
technological disruption as more of an greatest potential to deliver value,
opportunity than a threat.2 yet just one-fifth (20 percent) have
implemented PMIS across all projects,
Yet, as last year’s 2016 Global Construction
and a mere 8 percent say they have a
Survey Building a technology advantage
real-time, full PMIS, capable of project
demonstrated, the industry is yet to
and portfolio reporting.
fully harness the power of technology.3
2
Navigating uncertainty — the Harvey Nash/KPMG CIO Survey 2017.
3
Building a technology advantage, 2016 Global Construction Survey, KPMG International.
Who’s ahead of the digital game?
Which regions and industries are Respondents from Australia report the
pioneering the adoption of technology? highest uptake of 3-D printing.
Our survey responses reveal some
Looking at specific industries: media
fascinating findings. For example, China
and telecommunications executives
appears to be leading the pack when it
say their sector is the fastest adopter of
comes to advanced data and analytics
integrated PMIS and, along with financial
and building information modeling,
services, is at the forefront of advanced
and shares top place with the UK for
data and analytics usage. Healthcare
use of mobile platforms. Owners and
leads the field in building information
contractors from the UK, meanwhile,
modeling and virtual reality, with financial
are the most likely to be employing
services ahead in mobile platforms and
drones and virtual reality.
drones. Finally, respondents from natural
India and Central America are at the resources are the most likely to say their
forefront of integrated PMIS, while companies use smart sensors for remote
Europe (excluding the UK) has assumed monitoring, quality verification and
the lead in digital labor and robotics. construction status.
In which country is your organization’s headquarters located?
China
UK
Europe
Central America
India
China — Advanced data and analytics and building information modeling

UK — Drones and virtual reality
India and Central America — Integrated PMIS
Europe (not including UK) — Digital labor and robotics
China and UK — Use of mobile platforms
When asked about Cutting edge or behind the curve?
their organization’s In KPMG International’s 2016 Global is only the third most important
4
Construction Survey, we assessed the technology priority.
technological rate at which owners and contractors
Data analytics and statistical models can
were adopting technology, and found
maturity, a mere that just 5 percent were “cutting-edge
help identify patterns and outliers, predict
trends and make more accurate forecasts
5 percent consider visionaries” , with 69 percent either
“followers” or “behind the curve”.
of completion estimates. Meanwhile, 3-D
building information models have a big
themselves Despite a small improvement over role to play in construction time-and-cost
the past 12 months, 57 percent of monitoring, operational preparedness,
“cutting edge”. respondents to this year’s survey still asset commissioning, maintenance
consider themselves to be “followers” planning and asset management. Drones
or “behind the curve”, and the proportion can perform flybys at construction sites
that view their organizations as “cutting feeding the management teams with
edge” remains at 5 percent (Figure 17). a better view of construction progress.
And advances like augmented reality
Those that choose to invest in the
(AR) and virtual reality (VR) can be used in
right disruptive technologies have the
design engineering for large construction
opportunity to gain a step change in
projects and also in identifying the most
performance, but the industry’s innate
suited execution/construction delivery
conservatism appears to hold back
methods.
its efforts to tackle the complexity of
today’s projects. In the Harvey Nash/ Yet a look at the responses to this
KPMG CIO Survey 2017, for example, year’s survey shows that only a
respondents from the engineering very small proportion of owners and
and construction sector feel that contractors are using any of these
“improving operational efficiencies” technologies routinely.
Figure 17: Where would you rank your organization with regards to
technological maturity?
45%
40% 39%
35%
35%
30%
25%
20% 18%
15%
10%
5% 4%
5%
0%
Total (n = 200)
Cutting edge Industry leader Industry following

Behind the curve Unsure — I don't know how we rank
4
Figure 18: Rate of technological adoption in your organization.
83%
Robotics process
automation/digital 12%
labor
3%
1%
Have not implemented Implementing across all projects

Just started Already implemented across all projects

Figure 19: When will the construction industry fully embrace the following
technologies?
6%
Robotics process
automation/digital 18%
labor
76%
Today 2 to 3 years More than 5 years

Robotic process automation and/or transformation, with a host of tasks

digital labor have a particularly exciting like payment processing, engineering
potential and are taking off in many calculations, and data and information
other industries, with machines and management that could be automated.
computers replacing humans. Once In an industry that is heavily resistant
again, engineering and construction lags to change, such advances may be
behind. The vast majority of respondents viewed with trepidation, along with the
(83 percent) say their organization has fear of losing jobs. Yet, as the KPMG
not yet implemented such technologies International paper on digital labor,
(Figure 18), with most expecting a wait Rise of the humans, argues, “Cognitive
of 5 years or more before they become technologies can spur a growth in
more common (Figure 19). And it’s a jobs and enhance human skills and
similar picture with cognitive machine expertise. Ultimately, they can make
learning, another technology that lends every employee an innovator and
itself to automation. transform the enterprise into an engine
of unconstrained innovation.”5
On the surface, engineering and
construction seems ripe for such
5
Rise of the humans, KPMG International, 2016.
Viewpoint Becomi n g a di g i tal
leader
The 2017 Global Construction Survey also across multiple disaggregated
finds the industry’s players long on systems, programs and databases.
enthusiasm for the digital revolution, With such a lack of visibility, it’s no
but short on action to help realize their wonder that the industry is struggling
digital potential. And these findings to move the needle on performance
are mirrored in the 2017 KPMG/Harvey and productivity. In such a fragmented
Nash CIO Survey, where engineering environment, companies rarely get
and construction respondents are far the benefit of their investment in
less likely to maintain an enterprise- technology, as the other links in
wide digital business strategy the supply chain are not matching
than other industries. Even those their efforts, due to lack of either
Clay Gilge organizations that do have a digital funds or appetite. A sophisticated
strategy report much lower levels data reporting solution won’t be
Head, Major Projects
of effectiveness than their peers in effective if most of the project data
Advisory
other sectors. is inaccessible. In this vicious circle,
KPMG in the US
it’s little wonder that businesses are
Indeed, the CIO survey reveals
hesitant to bet big on digital.
that engineering and construction
companies fall short of cross-industry Such structural inefficiencies will
effectiveness benchmarks in several not disappear overnight, so in
key IT capabilities, including executing the meantime, both owners and
projects, aligning IT and business contractors can follow a simple, three-
Engineering and strategy, developing the right culture,
and facilitating the use of data and
step approach to get more out of
technology:
construction analytics.
1. Today: Optimize current systems
companies fall short To better understand these somewhat
contradictory findings — and find a way
and leverage data and analytics and
visualization to create insightful
of cross-industry to get more out of technology — we reports and to make better decisions
need to look at the industry’s structure. that improve performance.
effectiveness Unlike many sectors, engineering
and construction has a supply chain 2. Tomorrow: Develop a technology
benchmarks in comprised of numerous vertical layers road map to identify those areas
several key IT of architecture and engineering firms,
contractors, subcontractors, suppliers
of technology and systems that
have delivered a proven return on
capabilities.6 to owners, consultants, sureties, banks investment.
and regulators. To compound this, each
of these layers is highly fragmented in 3. The future: Adopt a technology-
all but a few geographies. enabled business strategy that
aligns technology and business
This means that, for virtually every strategies — and start piloting
project, data is not only scattered
appropriate new technologies.
across numerous organizations but
6
Viewpoint Maki n g more of
disruptive technologies
The engineering and construction So how can we make the technology
industry is no stranger to disruption. leap to better performance? A
Over the last few decades we’ve good start is to continue to adopt
seen the introduction of numerous technologies that improve information
new technologies, from fax flow and decision-making. In fact, most
machines to PCs, cell phones to email, of these already exist and are appearing
and of course, internet to on some projects, like drones,
3-D computer-aided design. sensors, 4-D and 5-D modeling, mobile
platforms and cloud computing.
Yet, as we’ve discussed, none of
these has shifted the needle when it Owners and contractors should also
comes to construction productivity, accelerate the use of technologies that
John Herzog which has lagged frustratingly behind impact labor and material installation, to
Managing Director, other sectors. increase productivity among craft and
Major Projects Advisory labor workers. These include 3-D printers
KPMG in the US There are a number of reasons for
that can fabricate parts on-site in
this. Firstly, most of these innovations
remote places, rather than wait weeks
benefited the architects and the
for manufacture and delivery. And, as
engineers, but not the craftspeople like
technologies become more affordable,
welders, ironworkers or electricians —
we also need to embrace robotics in the
who are all critical to performance.
field in the form of bricklaying robots,
Secondly, the adoption of some of
welders or other automated processes,
these technologies has been slow
Owners and except in the very biggest firms, due to
which result in increased production and
fewer errors.
their expense in a sector characterized
contractors should by low margins, where leaders are Work package planning tools could
accelerate the use innately cautious about large outlays.
Contractors in particular are loath to
also have a big, positive impact, to
ensure that workers can be productive
of technologies invest in longer-term technologies when faster, as they have greater clarity over
their income stream doesn’t stretch their daily tasks. ‘Exoskeleton’ tools
that impact labor beyond the next project. may sound like science fiction, but
they’re already out in the market, and
and material And thirdly, the remote nature of many
helping those on-site perform tasks
construction sites has made it harder
installation, to implement more recent technologies
that used to require more heavy lifting
equipment.
like robots or modularization.
to increase And last but not least, everyone in the
On top of this, we’ve had a relatively
productivity among older set of leaders who’ve been
industry should be making better use
of the vast amounts of data collected
less technologically literate and
craft and labor more resistant to change in what is
on construction sites. The respondents
to this survey appear to have digital
workers. a conservative industry. The KPMG/
Harvey Nash 2017 CIO Survey reflected
strategies, but it seems that many still
need to further advance their digital/data
this risk-averse culture. It found that,
road maps.
when attempting to implement digital
strategies, engineering and construction I’m highly optimistic that, by following
companies are far more likely to face some or all of these recommendations,
resistance to change than firms in the industry can finally start to reap the
other sectors.7 huge benefits of the digital revolution.
7
In conversation:
Bent Flyvbjerg, Professor of Major Programme Management
at Oxford University’s Saïd Business School and one of the
world’s leading authorities on construction projects, talks with
KPMG’s Geno Armstrong about optimism, disruption and
burning those binders!
Geno we used to joke about needing a ‘Chief
Not for the first time we’ve highlighted Pessimism Officer’.
the engineering and construction Bent
industry’s inability to overcome That’s right, although I’d perhaps rename
productivity and performance barriers. the position as ‘Chief Realism Officer’
And yet we’re also seeing a lot of and suggest that people take turns in
optimism. What’s your take on this? this role, so no one gets stuck as the
Bent naysayer-in-residence. We do need
The industry is run by optimists! Which optimists with a ‘can-do’ attitude to get
is not a bad thing, so long as you mix it things done. However, project teams
with a degree of realism. Unfortunately, also need hardheaded realists who know
often unwarranted optimism runs the ‘physics’ of costs and schedules,
deep, for instance, the belief that initial and are good at diagnostics. Finally, we
problems can be solved later, rather than need a culture that actively identifies
addressing them early and head on. This and escalates unpleasant news and
is a recipe for delays, followed by cost leadership that knows how to act quickly
overruns. Plus, we don’t like passing on such news.
bad news to our superiors, so it gets Geno
suppressed until it finally surfaces in a In your experience, are there many
big way, and you get delays and failure. instances where we have more reason to
On the flip side, when executives create be optimistic?
a transparent culture where people are
actually encouraged to speak up about Bent
problems as soon as they surface, you We’ve been studying projects in 100+
tend to get better performance. countries and the most remarkable
result is how persistent problems
Geno
with underperformance are across
I agree. On the one hand, if we weren’t geographies — North to South and East
crazy optimists, we wouldn’t create such to West. In looking for geographies
amazing physical monuments. But on that may have better performance
the other hand, you want a balance on than others, we have found that The
your team. I have heard you speak about Netherlands and Hong Kong stand out
‘optimism bias’ — maintaining optimism in particular, being better than others
despite convincing evidence to the at delivering certain types of projects.
contrary — which is a term that resonates This gives players from other regions
with both high- and low-performing teams something to think about and, potentially,
we encounter. When I was in the field, learn from.
from the Stone Age
to the digital age
Geno Geno
Over the years our surveys It’s almost like engineering and
repeatedly throw up the contradiction construction is due its Uber moment.
of ever-increasing investment in Bent
controls that can’t seem to overcome
poor performance. What’s your view on It is due its Uber moment, and, like many
this dilemma? other industries, the disruptors may well
come from outside, which would not
Bent be pleasant for the current players. But,
Frankly, I want to blow up the entire as we all know, disruption occurs when
system and replace it with technology. industries are inefficient. My advice
Our industry is literally thousands of to the construction industry is, disrupt
years old but some of the techniques we yourselves before you get disrupted. If
use have barely changed in all that time. you’re a leader worth your salt, this is
Contrast this to the automotive industry, what you will do.
which is only a hundred years old, yet has Geno
embraced technology and innovation to
make vastly superior products. Put it this I’m sure you’re right. Perhaps the solution
way: I wouldn’t be confident in placing is less about making constant tweaks to
a house on wheels on a freeway and controls, systems, contracting, training,
running it at eighty miles per hour! material tracking, estimating, and so on,
and more about breaking the value chain,
Geno to make the leap out of the Stone Age.
So, burn the binders that contain all An Uber-type solution could cut through
the rules and dictate how we run our the entire structure of players in the
business! And swing to technology. value chain (owners, designers, project
Bent managers, contractors and vendors) and
put the owner directly in contact with
Absolutely. You need real innovation manufacturers, at a stroke removing the
to overcome the productivity gap. You layers of complexity you’ve talked about.
need to digitize, to get one data system
running an entire construction site. We’ve Bent
had building information modeling for a There’s every chance that may happen.
long time, but it hasn’t really taken off Right now, project owners may already
like people expected. Why? Because, be wary of going direct to contractors
as your colleague Clay Gilge points out, because they don’t have full confidence
the industry is so fragmented, both in them. So I can’t believe that it will be My advice to the
structurally and geographically. Going long before an Elon Musk-type figure is
digital can bring the economies of scale disrupting the industry. construction industry
and the systematic learning we’ve is, disrupt yourselves
been seeking for so long. Industries like
automotive and aerospace are doing just before you get
that, and we need to study and learn from
their approach and methods.
disrupted.
Bent Flyvbjerg
Three steps
to closing the
performance
gap
In this survey we have discussed a — Evolve by rationalizing governance
lot: from how owners and contractors and controls.
For most owners and
have made progress with governance
and controls to new and exciting — Innovate through investment in contractors, project
efforts to attract and retain talent as technology. governance, risk and
well as effectively deploy the latest — Integrate by optimizing human
technology. The next step is to ask performance.
controls remain static,
how an organization can take this
information and turn it into action to In the following pages we have also manual and paper-
outlined a three-step process for
achieve step-change performance
improvement. We have developed an developing a strategy around this
based activities that
integrated framework that reimagines integrated framework that balances the do not report events
governance and controls, people and need for results today with the more
technology around three key principles strategic goals of tomorrow. in real time.
that we believe will drive this elusive
step-change performance improvement:
Three steps to closing the performance gap:
Rationalize
governance
and controls
— Assess
— Rationalize
— Rebuild
Evolve
Improve
performance
t
es
Int
Optimize Innovate
Inv
e
with
gra
human
performance technology
te
— Change management — Technology diagnostic

— Talent management — Quick hits
— Soft controls — Road map and strategy
Source: Three steps to closing the performance gap, developed by Geno Armstrong, Global Sector Leader, Engineering
and Construction, KPMG International and Clay Gilge, Head of Major Projects Advisory, KPMG in the US.
Rationalize
1. Rationalize governance and controls
governance
and controls For most owners and contractors, Point 2: Rationalize
— Assess
— Rationalize project governance, risk and controls
— Rebuild
remain static, manual and paper-based Once the governance has been
Evolve
activities that do not report events in assessed, the organization should
Improve real time. And over time, these controls take a hard look at which controls are
performance
have become ever more complex and missing, which are inadequate, which
t
are ‘overbuilt’, and which are simply

es
Int
Optimize Innovate lengthy, to the extent that they bombard

Inv
e
with
gra
human
performance technology users with too much information ineffective. Newer generation workers
te
— Change management
— Talent management
— Technology diagnostic
— Quick hits and too many tasks, so that project are likely to have a fresh and critical
— Soft controls — Road map and strategy
managers struggle to make sense of perspective on what is needed to
the data to make meaningful decisions. create a strong and effective controls
The inflexible, rules-based approach environment, so it’s important to
can provide a straitjacket for users — consult and involve Gen X and Millennial
especially for younger generations. Our employees.
three-point response to this challenge is:
Point 3: Rebuild
Point 1: Assess Governance should be closely aligned
It’s time to take stock of all your with the organization’s business
governance, risk and control procedures objectives and strategy, and with
and assess each one carefully. This the overall project environment. Any
should help you objectively and investments in technology should be
methodically assess the design and evaluated to ensure they support your
effectiveness of your overall control strategy. And, of course, all controls
environment. should be designed with the end user
in mind.
Monitored: Controls have been

designed for standardized use across Cost and financial
the company. Some periodic testing management
is completed to report on
effectiveness of design and operation.
Optimized: Integrated controls have

Procurement
been designed and are adequately
management
documented, with real-time monitoring
being completed and continuous
improvement efforts implemented.
Standardized: Many controls have Schedule

management
been designed, but there are no
established monitoring activities
from which to test and improve the
control framework.
Project controls and
Unreliable/informal: Unpredictible risk management
environment where many controls are
not designed or in place, in which no
documentation exists, and therefore, no
monitoring or improvement activities are Strategy, organization
occurring. Some controls may have and administration
been designed but are not adequately
documented, monitored or refined.
2. Innovate with technology Rationalize
governance
Like most industries, technology lies taking a close look at systems and and controls
— Assess
at the heart of the future engineering interconnectivity, data and data quality, — Rationalize
— Rebuild
and construction company. It can help and the way technology is used to
Evolve
attract younger talent (who may be deliver, report and monitor projects.
excited by the prospects of transforming Improve
performance
project delivery) and add much-needed Point 2: Find quick wins
t
es
Int
transparency to project reporting. Optimize Innovate
Inv
e
A great way to build momentum is to with
gra
human
Robotics and automation should aid performance technology
te
find and highlight areas of the operation
efficiency, and data and analytics can — Change management
— Technology diagnostic
— Quick hits
where technology is visibly improving — Soft controls — Road map and strategy
help to better understand trends in
performance. This will prove the value of
project delivery. But if the main players
technology to skeptical Baby Boomers
don’t take up the mantle, they could find
and demonstrate to Millennials and
themselves disrupted and displaced by
Gen Xers that the organization is
newer entrants — as has happened in
forward-looking. Many organizations
so many other industries.
focus all their efforts on one or two large,
Engineering and construction are multi-year investments that not only
competitive, thin-margin businesses, fail to deliver their promises, but also
where companies have to fight hard to foster a wider negative sentiment and
win every new piece of work, and then resentment towards technology. One
deliver highly complex projects while obvious starting point for quick wins
keeping a close eye on the bottom line. is data analytics: finding cost-effective
In an industry that is both competitive ways to get the most out of the data you
and fragmented, different players already have (much of which sits in your
will require different strategies. For current systems and tools).
example, what makes sense for a large
global engineering and construction Point 3: Create a clear digital
firm is unlikely to be right for a regional strategy and road map
subcontractor. But, no matter what the
size or scale of the organization, there Equipped with a solid understanding
are some common and consistent steps of the current technology position, and
that should provide some order to the having gained momentum with quick
exciting yet chaotic developments in wins, the organization can now develop
technology. a digital strategy and road map. It’s
important to try to be both pragmatic
Point 1: Create a technology/ and visionary, to imagine innovative
uses like robot welders or 3-D printing
data diagnostic
of parts on-site. But a road map alone
It’s crucial to understand the current is not sufficient. Your technology/digital
state of your organization’s data, strategy cannot sit in isolation but
systems and overall technology, to should be integrated into your broader
evaluate where to invest to gain business strategy, to put you in the
the maximum benefit. This means driver’s seat.
Rationalize
3. Optimize human performance
governance
and controls
Susanne DiCocco process. Many bright young people
— Assess
— Rationalize
— Rebuild
Partner, Advisory Services want to work in ‘cool’ industries that
Evolve
KPMG in Canada embrace cutting-edge technology and
adopt an entrepreneurial spirit common
Improve Paul Krasilnick
performance to tech start-ups, which presents a
Director, Advisory Services
wonderful opportunity for companies to
t
KPMG in the US
es
Int
Innovate
Optimize
embrace technology, both as a route to
Inv
e
with
gra
human
technology
performance
Today’s engineering and construction innovation and efficiency, and a way to
te
— Change management — Technology diagnostic

— Soft controls
— Quick hits
— Road map and strategy
companies may employ as many as attract fresh talent.
four different generations of worker. In
the face of rapidly changing technology Point 2: Balance hard versus
and increasingly complex, large-scale soft controls
projects, how can they overcome
generational barriers to create a Soft controls relate to culture, leadership
high-performing workforce up to such and communication: the way that people
challenges? think and behave. Baby Boomers may
be more comfortable with a top-down,
Point 1: Create a culture that hierarchical organization, with traditional
values. But Gen X and Millennials, expect
works for everyone a more contemporary approach that
The classic Baby Boomer tends to be values sustainability and diversity, and
respectful of rules and procedures gives individuals more personal freedom.
but resistant to new technologies and
And it’s not just about managing people’s
processes. As we’ve discussed, newer
feelings and expectations. Shareholders,
Millennials are totally comfortable
customers and the wider public expect
with technology but more likely to
companies to practice the right values.
shun strict rules and regulations. The
Furthermore, employees devoted to
answer to this dilemma? Targeted
‘doing the right thing’ are arguably more
communications with different
likely to practice hard controls, on the
messages (and media) for different
grounds that it makes both ethical and
groups of employees, with more direct
business sense. We’re not suggesting
instructions for the older guard, and
that organizations throw out the rule
more collaborative approaches for the
books; but, as we’ve argued on page 4
younger members, to ensure they feel
of our section Rationalizing governance,
part of the solution.
regulations and procedures should at the
This goes right back to the recruitment very least be rationalized.
Point 3: Rethink talent
management
Owners and contractors need to
embrace technology to build what we
call ‘workforce intelligence’. By using
data and analytics, companies can
assess which skills they need for the
next few years as part of a strategic
workforce plan, identify attrition rates,
and build this into their recruitment
activity. For example: If a company is
investing heavily in automation, then
it may need fewer manual workers
but more analysts to manage the
ensuing data. On a shorter timescale,
a similar approach can ensure that the
right people are available for specific
projects.
Workforce optimization means utilizing
resources effectively, by understanding
the capabilities and potential of your
high performers, and giving them
the platform to build experience
and develop fulfilling careers, and
addressing issues that could cause
them to leave. And finally, workforce
analytics is all about improving
performance, by understanding how
workers collaborate and behave, and
spotting gaps.
About
the
survey
All survey responses were gathered same professionals also carried out
through face-to-face interviews in the interviews.
mid-2017 with 201 senior leaders —
Respondent organizations’ turnover/
many of them chief executive officers.
income ranged from less than
Ninety-seven respondents are from
US$1 billion to more than US$20 billion
organizations carrying out significant
(Figure 22), with a mix of operations
capital construction projects (owners);
from global through regional to purely
104 are from engineering and
domestic (Figure 23). The annual capital
construction companies (contractors)
expenditure budget varied from around
(Figure 20).
US$10 million to over US$5 billion.
The questions were compiled by a
Thirty-four percent of the project
steering team of senior representatives
owners are public bodies (Figure 21) —
specializing in the engineering and
typically government agencies —
construction industry from KPMG
and some of the main industries
member firms, and reflect current
represented include energy and
and ongoing concerns expressed by
natural resources, technology and
clients of KPMG member firms. These
healthcare (Figure 24).
Figure 20: Company category
48% Owner (n = 97)

52% Contractor (n = 104)
Figure 21: Type of entity
50%
44%
40%
34%
Private company
30% Quoted (public company)
Government agency
20% Subsidiary of a quoted
15% company
10% Other
7%
4%
0%
Total (n = 193)
Figure 22: Entity turnover (revenue from operations) in FY16
50%
43%
40%
32%
30% Less than US$1 billion
US$1–5 billion
US$6–20 billion
20% 16% US$20 billion+
10%
10%
0%
Total (n = 200)
Figure 23: Company sector
50%
40%
40% 35%
33%
30%
24%
22%
19%
20% 16%
11%
10% 9%
6% 6%
0%
Total (n = 196)
Healthcare/Life sciences Natural resources/Chemicals Power/Utilities

Technology Government/Education Real estate/Hospitality
Retail/Consumer products Industrial manufacturing Other
Financial services/Insurance Media/Telecoms
Figure 24: Subregions (n = 196)
24%
Rest of Asia (not
including China)
42% 12%
North America China
20%
Central/
South America
39%
India
22%
UK
21%
Australia
33%
Rest of Europe
29%
(not including
Middle East
the UK)
24%
Africa

KPMG’s Global
Engineering and
Construction practice
When engineering and construction leaders turn to KPMG member firms for advice, they do so
because KPMG professionals understand the industry on a local, national and global level. For
decades, we have provided services tailored specifically to meet the needs of the industry.
To do this, we have created a diverse practice that includes certified public accountants,
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procurement specialists, finance and tax professionals, business valuation specialists, cost
estimators and specialists, certified fraud examiners and forensic technology specialists.
KPMG’s Engineering and Construction professionals provide strategic insights and relevant
guidance wherever our clients operate. Services are delivered through the global network of
KPMG member firms by over 2,000 professionals in more than 40 countries worldwide.
KPMG professionals help clients identify and mitigate project risks throughout the project
life cycle. Our methodology encompasses both ‘doing the right project’ and ‘doing the
project right.’ Engineering and Construction practice services include construction program
evaluations, project risk and controls assessments, contract compliance analyses and cost
investigations, as well as project support on complex and troubled projects.
We provide industry knowledge, multidisciplinary teams, and substantive experience in
managing both the financial and technical aspects of major capital projects and programs. Our
Major Projects Advisory practice consists of professionals from diverse formal backgrounds.
By combining valuable global insight with hands-on local experience, we can help you address
challenges at any stage of the life cycle of infrastructure assets or programs — from planning,
strategy and construction through to operations and hand-back.
For further information, please visit us online at kpmg.com/infrastructure or contact:
Geno Armstrong
Global Sector Leader,
Engineering and Construction
KPMG International
E: garmstrong@kpmg.com
Bookshelf
A selection of relevant KPMG reports and insights. To access these publications,
please visit: kpmg.com/infrastructure
Building a Climbing the curve Ready for the next

technology GLOBAL CONSTRUCTION SURVEY 2015
GLOBAL CONSTRUCTION SURVEY 2013 big wave?
advantage Climbing The 2015 Global Ready for
the curve the next
2015 Global Construction
Construction Survey big wave?
The 2013 Global
Project Owner’s Survey
The 2016 Global kpmg.com/building
focuses on the
kpmg.com/building
Construction Survey
KPMG INTERNATIONAL KPMG INTERNATIONAL
Construction Survey challenges facing catches the industry

reviews how the owners as they seek in a more upbeat
industry can harness to climb the maturity mood focusing
the potential of curve. on trends and
technology to improve opportunities for
the performance of growth.
major projects.
Rise of the humans: Insight Magazine: Insight Magazine:

The integration of Globalization Globalization
Rise of the
humans
digital and human
labor INSIGHT
The global infrastructure magazine | Issue No. 9 | 2017
This issue of Insight INSIGHT This issue of Insight
The global infrastructure magazine | Issue No. 8 | 2016
The integration of digital

Globalization Magazine discusses Magazine discusses
Infrastructure Morality
Five key steps to Leading in a Global operators Investors ponder Delivering on the
UN’s SDGs
Brazil emerges
from the Car Wash
Catalyzing
development
the globalization of
disrupted world in an era of new markets
A roundtable with
Anahita Arora,
Khalid Koser and
Lord Hastings
uncertainty
A roundtable with
Javier Pérez
Fortea and
A roundtable with
Thierry Déau,
Enrique Fuentes
and Ana Corvalán
An interview with
Amir Dossal
Page 12
the globalization of
An interview with
Artur Coutinho
Page 14
An interview with
Syed Uddin
Page 16
understanding the
Page 12 Page 24
Page 18
the infrastructure and the infrastructure and

potential impacts
construction industry construction industry
that digital labor will
KPMG International including: taking including: how
kpmg.com
have on the shape,
#globalinfra global infrastructure to #inframorality Brazil’s construction
size and functions of
local markets, putting companies are
organizations.
stakeholders and communications at the heart emerging from scandal, how we can encourage
of major infrastructure projects and breaking the a culture of ethics and how we can diversify the
cycle of new construction. workforce.
HARVEY NASH / KPM GCI O SU RVEY2017

Harvey Nash/KPMG
CIO Survey
The 2017
Construction/
+
Engineering Sector
Findings provides
survey responses
from 119 industry
companies on some
of the key topics, and
highlights several areas where this sector’s
responses differed significantly from those
from across all industries.
Contacts
For further information, please visit us online at
kpmg.ie/infrastructure, or contact:
Michele Connolly
Head of Corporate Finance
T: +353 1 410 1546

E: michele.connolly@kpmg.ie
Robert Costello
Director
T: +353 1 700 4428

E: robert.costello@kpmg.ie
Ashleen Feeney
Director
T: +44 289 089 3759

E: ashleen.feeney@kpmg.ie
Ruth Likely
Associate Director
T: +353 1 700 4362

E: ruth.likely@kpmg.ie
Rachel Harrison
Associate Director
T: +44 289 089 3718

E: rachel.harrison@kpmg.ie
kpmg.ie
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information
without appropriate professional advice after a thorough examination of the particular situation.
© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent
firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to
obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such
authority to obligate or bind any member firm. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Designed by Evalueserve.
Publication name: Make it, or break it
Publication number: 134797-G
Publication date: October 2017

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Make it, or

Global Construction Survey 2017

Taking back control over projects

Missing links in the transformation story

T: +353 1 410 1546

Rationalizing governance — Forty percent of employees

2 Global Construction Survey 2017

4 Global Construction Survey 2017

Figure 2: What triggers/KPIs are used to initiate project recovery or

Global Construction Survey 2017 5

Figure 3: Which statement best describes your organization’s

6 Global Construction Survey 2017

Three steps to simpler and more effective controls

Global Construction Survey 2017 7

8 Global Construction Survey 2017

Total Yes, on all our contracts

Global Construction Survey 2017 9

10 Global Construction Survey 2017

Figure 6: Which generations make up your workforce?

Figure 7: Does the Millennial generation understand project

Global Construction Survey 2017 11

‘Hard’ versus ‘soft’ controls

Figure 8: Are formalized soft controls part of your project delivery

Percentages might not add up to 100% due to rounding

12 Global Construction Survey 2017

The fundamentals of organizational culture: eight soft controls

Global Construction Survey 2017 13

Figure 9: Is your employee promotion process standardized?

Yes, very standardized

Total Yes, somewhat standardized

Percentages might not add up to 100% due to rounding

14 Global Construction Survey 2017

Percentages might not add up to 100% due to rounding

And only half of the executives suitable ﬁnancial motivation, owners

Figure 11: Is your employee promotion process standardized? (regional perspectives)

Global Construction Survey 2017 15

Healthcare/Life sciences 50% 24% 8% 18%

Retail/Consumer products 61% 22% 6% 11%

Natural resources/ 52% 24% 7% 17%

Government/Education 47% 20% 8% 25%

Power/Utilities 56% 23% 8% 13%

Real estate/Hospitality 54% 29% 9% 9%

Other 40% 20% 15% 25%

Yes Sometimes Only for special projects No

Percentages might not add up to 100% due to rounding

16 Global Construction Survey 2017

Figure 13: What categories of diversity targets does your organization

60% 57% 56%

20% 17% 17%

Gender Indigenous participation

Global Construction Survey 2017 17

18 Global Construction Survey 2017

Figure 15: Is technology, innovation or data prominent in your strategic

Global Construction Survey 2017 19

Percentages might not add up to 100% due to rounding

20 Global Construction Survey 2017

In which country is your organization’s headquarters located?

China — Advanced data and analytics and building information modeling

Global Construction Survey 2017 21

Cutting edge Industry leader Industry following

22 Global Construction Survey 2017

Have not implemented Implementing across all projects

Percentages might not add up to 100% due to rounding