Global Capital Projects Outlook: The Future of European Construction
October 05, 2023
The InEight Global Capital Projects Outlook (GCPO) report is out and has been providing myriad insights for the global construction industry. The company’s third such report to date, the Outlook is based on a survey of 300 large-enterprise and construction professionals and consists of 26 questions designed to gauge general confidence and optimism levels across the industry, and assess track records, plans and attitudes towards digital transformation. Globally, 67% of respondents are project owners, and 33% are contractors.
Of the 300 respondents, 100 participants are drawn each year from three regions, including Europe. Though the report is rich with global information, we felt it was also important to shine a more personal light on what is happening in the region, not only in relation to the Outlook findings this year, but to gain a greater understanding of the future of European construction.
To arrive at a healthy cross section of impressions, we decided to consult with three of our European integration partners. We sat down with Mario Sanvitale, Business Development Principle at Locana, a UK InEight partner with expertise in implementing and supporting project controls installations with major clients in rail, defense and other tier-one contractors.
We also brought in Jan Geerinckx, Construction Industry Lead for Belgian Proove, who focus on project controls with the ultimate vision of removing project failure from our industry. And finally, we checked in with Mats Nyland, Partner at Norwegian-based Baseline, a specialist company that supplies strategic advice and operational resources for the planning of national and international complex infrastructure projects. Let’s dig in!
First off, was there anything about Europe in the GCPO that surprised you?
Mats Nyland, Baseline: “Certainly, the GCPO report contained several insightful observations about the state of technology adoption in projects across different continents, particularly Europe. Yet I was surprised over the gap between continents in application of technology in projects. Prior to reading the report, I held the assumption that technological advancements were more evenly distributed globally in 2023 and that other continents might be on par with or even closer to Europe in terms of technology integration in projects.”
Jan Geerinckx, Proove: “Well, it’s not news that cost and time are inherently correlated in project management, which the GCPO reflected. However, we still see the construction actors laying their main efforts on cost control during both planning and execution phases. Our own experience with customers in the construction industry shows there is still plenty of room for improvement on time management. Hopefully, we also see this becoming more and more a concern for contractors and owners.
“For example, there is the typical situation of the long risk register with cost contingency next to the deterministic schedule which doesn’t take those risks into account. This is something that must evolve the right way (using more probabilistic project controls techniques), with owners demanding more robust and reliable schedules which should help to limit cost and time overruns.”
Mario Sanvitale, Locana: “The GCPO is unsurprising to us in that the benefits of fully integrated systems are recognized. However, what is notable is that economic barriers to implementing still exist. We are still seeing issues with the impact of the UK withdrawing from the European Union. Higher interest rates are starting to affect the execution of some new projects, and an uncertain political arena does not help. Some major UK projects, particularly in the transportation field, continue to be under some pressure as the costs rise and the predictive benefits are less easily realized.
“One of the side effects of COVID-19 has been a preponderance of remote work. An impact from this has been to lessen demand for public transportation to outside workplaces, and some major projects in this field may be at risk as the need is seen as reduced. Utility projects, however, still seem to be unaffected, and these are progressing with new contracts awarded or proposed.”
Do you agree with the patterns of development for Europe mentioned in the report, or do you see a different outcome on the horizon?
Proove: “We largely agree about the optimism in the report, yet our experience with customers in the construction industry shows there is still plenty of room for improvement on data collection. Strengthening data collection methods and analytics could lead to better decision-making, partially mitigating impacts of the other challenges. This aligns strongly with our strategy to drive the market towards data-driven project management. We, as Proove, are professionals in project controls which is exactly about data collection, analytics, and insights to bring more efficient decision-making to construction companies. For us, this is not a threat since it’s the current state of the market for most clients but more of an opportunity to improve efficiency and gain competitive advantage.”
Baseline: “The report’s mention of the shift in the Scandinavian market towards integrated project delivery (IPD) and engineering, procurement, and construction (EPC) contracts reflects an exciting and forward-looking evolution in the construction and project management landscape. I feel this transition signifies a proactive response to the changing dynamics of the industry, paving the way for more collaborative, efficient and successful project outcomes.
“IPD is a testament to the industry’s commitment to fostering cooperation among various stakeholders. By promoting a unified approach to project planning, design and execution, IPD enables seamless communication and resource sharing. This collaborative model is poised to enhance efficiency, reduce conflicts, and streamline decision-making, ultimately leading to higher-quality projects that are completed within specified timeframes and budgets.”
Do you feel that success in adopting progressive PDMs will be critical to resolve industry resilience concerns?
Locana: “We feel that organizations recognize that if a consistent flow of ‘on-time, under-budget’ projects emerge because of more progressive models, this will increase confidence, encourage greater infrastructure spending, and reduce cost and schedule overrun concerns. Again, working with established solution providers and recognized implementation and support experts is understood to minimize this.”
Baseline: “By adopting more progressive project delivery models, organizations can harness the power of cutting-edge technologies, streamlined processes, and cross-functional cooperation. These models offer the promise of optimized resource allocation, reduced project timelines, and enhanced risk management.
“As a result, not only can we ensure healthy project spending, but we can also equip ourselves to better navigate unforeseen challenges with greater agility. It’s encouraging to see the recognition of the need for resilience alongside the drive for innovation. With the integration of these forward-thinking delivery models, projects can be designed and executed with a strategic focus on long-term sustainability and the ability to swiftly adapt to changing circumstances. This synergy between innovation and resilience will undoubtedly strengthen the foundation of many industries, ensuring they remain robust and adaptable in the face of various uncertainties.”
Proove: “While the terminology used in our market may vary from what’s presented in the report, we would expect comparable outcomes regarding a shift towards a more collaborative owner-contractor approach in Europe. Our clients face complex, large, and multidisciplinary projects for which such collaboration is the only way forward. While we still often see old behaviors — lack of transparency, blame culture, minimal communication, and limited collaboration in decision-making — in collaborative contracts today, progress has started to evolve, which is something we believe in.”
Can you relate your own organization to the findings in the report?
Proove: “One of the report findings that speaks to us is regarding recruitment challenges. This aligns with our own experiences in our market, where recruitment difficulties have proven to be a considerable hurdle for businesses like ours and our clients. This is not limited to the construction industry, as we see it at play in all industries we’re involved in — construction, pharmaceuticals, engineering, process and offshore. Another is the report’s reference to the importance of access to historical data.”
Baseline: “As a consultant of project control, we see ourselves as cutting edge and help owners and contractors to be in front of the market. That is why we have partnered up with InEight. Certainly, your organization’s role as a cutting-edge project control consultant aligns well with the findings in the report regarding the evolving landscape of technology adoption in the construction industry. Your focus on helping owners and contractors stay ahead of the market reflects a proactive approach to leveraging technology for enhanced project outcomes.
“The report’s observations about the transition towards more progressive project delivery models and the increased emphasis on data-driven decision-making resonate with your organization’s mission. By positioning yourselves as consultants who empower clients with advanced project control methodologies, you contribute to the ongoing shift towards innovation and efficiency within the industry.”
What changes have you seen in the thinking around tech spending in your area?
Baseline: “One of the most prominent changes is the recognition that technology is not just an ancillary component but a fundamental enabler of efficiency, accuracy and informed decision-making. Historically, technology spending in construction might have been viewed as an expense rather than an investment. However, the realization that data-driven insights can optimize processes, reduce risks, and improve project performance has reshaped this perspective.
“The emphasis on becoming data-driven is particularly noteworthy. Companies are recognizing that the vast amount of data generated throughout the project life cycle holds immense potential for analysis and strategic planning. This shift aligns with the broader trends seen across industries, where data has transformed into a valuable asset that can drive innovation and guide well-informed decisions.”
Locana: “As a business, Locana hasn’t needed to change much as we continue to deliver consistent quality in a growing market. However, the industry is just beginning to take advantage of the innovative solutions we have been supplying for some time — for example geographic information systems (GIS) to help visualize projects to a wider audience, integration of previously unconnected systems, and moving to the Cloud, either through the original supplier or by hosting.
“Regarding changes in spending and budget areas, we see more attention on building information modeling, and a greater potential to utilize spatial software to make visualization easier, plus better use of tech on site such as time recording, fault identification and rectification, access to CAD/GIS, and health and safety procedures. We are also starting to hear that the use of artificial intelligence (AI) has potential benefit, and while we haven’t really seen that yet, it may be a major feature of capital project delivery in the future.”
Proove: “Our opinion is that collecting historical data is becoming more and more important because of the strong current developments in AI. Collecting data now is important for the projects and software of the future. In our experience, the recognition of technology’s role in gaining insights into complex projects and events is growing, backing up the provided data in the GCPO graphs. However, the note on data integrity and quality at the end of the Europe chapter highlights a universal concern: Ensuring data quality and standardization are crucial for obtaining meaningful insights. As the report suggests, optimism exists for improvements in this area, which we recognize in our network.”
What are your final takeaways as you look to the future of European construction?
Proove: “We believe data-driven project management — techniques and software — plus increased collaboration between parties and on site are now and will be key factors that will drive the increase of efficiency in the construction industry. In the end, we are committed to realizing real-time project insights. The pursuit of better steering, increased automation, and improved access to project data are all equally crucial in our efforts.”
Baseline: “As projects become more complex and ambitious, the need for dynamic solutions that account for both environmental considerations and technological advancements becomes paramount. IPD and EPC contracts inherently encourage innovative thinking, promoting the integration of cutting-edge technologies and sustainable practices, resulting in projects that not only meet current standards but also future proof themselves against evolving industry demands.
“As companies realize the potential of technology to provide real-time insights, enable predictive analytics, and support agile project management, they are making deliberate investments in the necessary tools, systems, and skills to capitalize on these benefits.”
Locana: “From a project controls application standpoint, it is becoming recognized that timely, accurate information dissemination will play a significant part in assuaging concerns and encouraging project investment.
“In the end, clients are really looking for true partners that will be there in the long term because internal attrition and movement are leading to greater losses of tribal knowledge whereas a long-term external vendor can provide continuity. While many organizations are progressing on this journey, there will always remain concerns of the impact on ‘business as usual’ as new systems and integrations take time to be accepted.”
Ready to start exploring your own journey away from “business as usual” and into a more secure and predictable project future? Contact InEight today for a personalized, one-on-one consultation.