Engineering and Design Services Market Intelligence

Industry Outlook & Drivers

Global Engineering and Design Industry Outlook

• The ED market is forecasted to grow at a CAGR of 4–5 percent to reach $1,209 billion by 2020, primarily being driven by growing investment in transport, industrial, and commercial infrastructure sectors in the emerging economies
• The majority of the firms in this industry operate in their national/regional markets due to:  − Expertise in specialized engineering services
   − Myriad regional regulations
• A trend of mergers and alliances of various global engineering firms has been seen over the past decade to increase foothold in a single market segment.Larger players in the market are more acquisitive and look to acquire smaller players

The industry is highly fragmented across all regions, with the top 30 firms accounting for around 12–14 percent of the market share in 2017. In the US, several firms are indulging in horizontal merger, due to the increasing demand for a ‘one-stop-shop' for ED solutions
Buyers from the process industry, especially biotechnology, chemical, and pharmaceuticals sectors, prefer engaging with service providers, who provide turnkey solutions in designing advanced technology facilities

Market Outlook 

• The global ED industry is projected to grow at a CAGR of 4–5 percent from 2018 to 2020. The demand for ED services is driven by infrastructure, residential and industrial sectors, seeking for process efficiency in the construction phase
• APAC has become an increasingly favourable destination for outsourcing ED services among players in the EU and the US, citing a low-cost talent poolL
• Large construction firms, especially with revenue more than $1 billion, increase their acquisition activities as a part of their strategy, in order to integrate design and construction together
• Global players are expanding their regional presence in especially in APAC with M&As. E.g., Tetra Tech's acquisition of Coffey and Aurecon's merger with AUP

Drivers and Constraints

Drivers

• Modular design: Buyers in mature markets demand quicker and less expensive construction, which in turn, stresses the need for modular designs
• Industry consolidation/M&A:The demand for intelligent design, and to solve complex construction, has resulted in the expansion of service portfolios by strategic M&As
• Sustainable design: Sustainable design is of high demand in the market, currently, leading to the rise of niche segments, such as lighting and energy design
• Urbanization: With levels of urbanization to reach 50 percent in APAC and Africa, by 2020 and 2035, respectively, there will be increased consumption of products and services, encouraging various industries to develop their facilities and offices in these economies
• Project Design Time: Increased design complexity and fast-paced projects lead to delays and cost escalations, thus encouraging the use of design tools and techniques

Constraints

• Project funding: Investment in infrastructure projects remains slow, due to political deadlocks, biased politics, and corruption, thereby delaying the projects as a whole
• Recruiting and retaining staff: Skilled workers have left the industry, due to economic downturn. There is an insufficient number of skilled younger workers
• Technology adoption: Poor adoption of BIM/VDC by suppliers and buyers has led to delays in advantageous time and cost estimation methods
• Project execution: In case of ED firm + GC, the GC may face difficulties in taking cost and time advantages in the construction phase