Market Challenges And Opportunities

EPC (engineering, procurement, and construction) Consulting Market Drivers

Increasing investments in energy infrastructure projects: Increasing number of large-scale energy infrastructure projects across the globe is a major driver for the EPC (engineering, procurement, and construction) consulting market. Governments and private players are investing heavily in renewable energy projects, oil and gas exploration, power transmission networks, mining facilities, and other energy-related infrastructure. According to the International Energy Agency, the global investment in energy supply infrastructure is projected to reach US$1.9 trillion annually by 2030. This will create significant demand for EPC (engineering, procurement, and construction) consulting services to ensure timely and successful execution of these complex capital projects while optimizing budgets and mitigating risks by 2030.
Focus on improving energy efficiency and sustainability: With rising environmental concerns and stringent regulations, companies across the energy value chain are focused on deploying solutions to improve energy efficiency, lower emissions, and advance sustainability. EPC consultants play a vital role in helping organizations design and implement strategies to reduce their carbon footprint and meet ESG (Environmental, Social, and Governance) goals. According to the International Energy Agency, global investment in energy efficiency is projected to increase by over 15% annually until 2023, led by growth in industries, buildings and transportation sectors.
Consolidation and expansion of leading EPC firms: The EPC (engineering, procurement, and construction) consulting domain has witnessed significant consolidation over the past decade with leading players acquiring niche firms to expand their services portfolio and geographic presence. Large firms like Worley, an Australian engineering professional services company which provides project delivery and consulting services to the resources and energy sectors, and complex process industries, Jacobs, an American international technical professional services firm which provides engineering, technical, professional and construction services, as well as scientific and specialty consulting for a broad range of clients globally, including companies, organizations, and government agencies, Fluor, an American multinational engineering and construction firm that provides services through its subsidiaries in the following areas: oil and gas, industrial and infrastructure, government and power, have made strategic acquisitions to gain competitive advantage. According to data from the World Bank, public-private partnership (PPP) infrastructure investment commitments witnessed a 17% jump from US$91 Bn in 2020 to US$106 Bn in 2021 across developing countries.
Adoption of digital technologies in construction: Construction is one of the least digitized industries but this is changing with various new technologies being deployed to improve productivity, efficiency, and safety. EPC consultants are adopting digital solutions like building information modeling, virtual reality, predictive analytics, drones, and artificial intelligence (AI) to enable data-driven decision making during design and construction. According to a report by the World Economic Forum, in 2021, the adoption of digital technologies in construction could reduce carbon emissions by up to 20% through more efficient processes and materials usage.

EPC (engineering, procurement, and construction) Consulting Market Opportunities

Leveraging Big Data Analytics: The exponential growth in big data presents an opportunity for EPC consultants to leverage analytics and gather actionable insights across the project lifecycle. Data analytics can be applied to optimize plant performance, predict maintenance needs, improve supply chain planning, monitor safety parameters, and support strategic decisions. EPC firms can offer their domain expertise in deploying advanced analytics solutions to clients. As per UNIDO's World Construction Outlook for 2022-23, the global construction industry is projected to witness 2% growth annually until 2030, led by investments in sustainability and digital infrastructure.
Modular and offsite construction: Modular construction techniques involve prefabricating building sections in a controlled facility which is then assembled onsite. This innovative approach is faster, delivers higher quality, and is more sustainable than traditional construction. EPC consultants can leverage their engineering expertise to design modular plants and advise clients on adopting modularization. A report by Global Market Insights, predicts the modular construction market to value at US$180 billion by 2027 due to increasing construction of sustainable and energy-efficient buildings.
Growth in emerging markets: Rapid urbanization and industrialization in emerging economies is driving infrastructure development and energy demand. Markets like India, Brazil, and Southeast Asia are undertaking various power, oil and gas, mining, and infrastructure projects where EPC (engineering, procurement, and construction) consulting expertise can be leveraged. Established firms are expanding their presence in high-potential emerging markets both organically and inorganically. According to data published by the World Bank in 2022, India's national government had allotted over US$110 Bn for its infrastructure development budget for the fiscal year 2022-23, a 26% increase from the previous year.
Solutions for decarbonization: With countries announcing net zero commitments, there is increasing focus on Decarbonization strategies across industries. EPC consultants can leverage their engineering experience to help clients reduce their carbon footprint by integrating renewable energy, deploying low-carbon technologies like green hydrogen and Carbon Capture, Usage and Storage (CCUS), utilizing negative emission solutions like BECCS, and designing sustainable practices. According to the European Commission's estimates, European Union member states will require investments worth US$260 billion annually until 2030, just to deploy sufficient renewable energy capacity for the bloc to achieve its 2030 climate goals. Similarly, the U.S. Department of Energy calculates that modernizing America's power grid alone may cost between US$300 Bn to US$500 Bn by 2030.

EPC (engineering, procurement, and construction) Consulting Market Restraints

Cyber security risks: Increasing digitalization and connectivity has also exposed the critical infrastructure projects to heightened cyber risks. EPC consultants handle sensitive client data across the asset lifecycle while also integrating various technology systems. Lack of cyber security safeguards can lead to vulnerabilities causing project delays and cost overruns. Firms face challenges in implementing robust cyber security practices and ensuring security across supply chains. Addressing cyber risks across diverse projects requires significant investments which restraints market growth.

Counterbalance: The key market players should be allocated required amount of investment to address cyber security risk in diverse projects

Shortage of skilled workforce: The EPC (engineering, procurement, and construction) consulting domain demands specialized skillsets and extensive industry experience to manage large and complex projects successfully. However, the industry is facing an acute talent shortage as workforces with critical technical skills are retiring while new talent acquisition has slowed down. Shortage of qualified engineers, designers, project managers who can handle large scales programs affects the ability of EPC firms to bid for and deliver major capital projects. Availability of skilled talent continues to restrain growth opportunities.
Geopolitical risks and trade protectionism: Geopolitical conflicts, trade wars, and sanctions are key risks for EPC (engineering, procurement, and construction) consulting firms as they handle projects across different regions and verticals. Issues like supply chain disruptions, inflation, and restrictions on technology access can adversely impact execution and cause delays. EPC consultants also face challenges in talent mobility and relocation due to unstable geopolitical dynamics. Geopolitical uncertainties remain a crucial factor restraining market growth for global EPC (engineering, procurement, and construction) consulting firms.

Recent Developments

New product launches

In November 2022, Worley and AVEVA launched an integrated engineering and operations solution for the energy and process industries. The solution aims to improve capital project delivery and handover to operations through digital workflows.
In June 2021, Fluor Corporation, an American multinational engineering and construction firm that provides services through its subsidiaries in the following areas: oil and gas, industrial and infrastructure, government and power, launched NuScale Power's small modular reactor design, the first to receive design approval from the U.S. Nuclear Regulatory Commission. The launch strengthens Fluor Corporation's position in providing nuclear power solutions.
In January 2020, Aecom, infrastructure consulting firm, delivering professional services throughout the project lifecycle – from planning, design and engineering to program and construction management introduced a proprietary solution for integrating renewable energy sources into micro grid systems for resilient and sustainable energy infrastructure. The solution optimizes project lifecycle costs and energy usage.

Acquisition and partnerships

In August 2021, Jacobs acquired BlackLynx, a leading provider of infrastructure asset management in Australia. The acquisition expands Jacobs’ digital capabilities in asset performance modeling.
In November 2020, Fluor Corporation, provides services through its subsidiaries in the following areas: oil and gas, industrial and infrastructure, government and power, formed a strategic partnership with IHI (Ishikawajima-Harima Heavy Industries Co., Ltd.) Corporation, a Japanese engineering corporation that produces and offers ships, space launch vehicles, aircraft engines, marinediesel engines, gas turbines, gas engines, railway systems, turbochargers for automobiles, plant engineering, industrial machinery, power station boilers and other facilities, suspension bridges and other structures, under which the companies will jointly provide services to liquefied natural gas projects worldwide. The partnership enables both companies to leverage each other's expertise.