Managing Risks In The Engineering And Construction Industry
Last month, PwC posted their ‘Fit for the future 17th Annual Global CEO Survey' - Key findings in the engineering and construction industry. While there is significant optimism expressed in these findings, there remain some concerns that ensure the industry remains conservative. It seems there are some concerns that are difficult to mitigate: over-regulation, bribery and corruption, and availability of skills. However, there are many things that can be done to gain tighter control of other risks such as exchange rate volatility, rising labour costs in high-growth markets, and increasing tax burdens.
Managing volatile exchange rates
The volatility of exchange rates is a concern for any firm with aspirations of entering growing global markets. To mitigate this risk, many firms within the wider Professional Services industry are negotiating with their clients for fixed exchange rates for the duration of projects. Where this is not possible, it becomes critical to have real-time information regarding your tax burden in order to maintain tighter control over your projects. Implementing an ERP system that links your project costs directly with updated tax rates is the best way to ensure you stay within budget on each of your projects.
Using the right skill sets to deliver projects
For those firms seeing an increase in new projects also comes the increased requirement for a skilled workforce. Particularly in areas such as Qatar, where growth is exponential, the demand for a skilled, professional workforce has driven the costs higher and caused a significant effect on the cost of delivering projects. Ensuring that your projects are supported by the correct skills, and only the correct skills, is one of the best ways to keep the costs on projects within increasingly tight budget constraints.
Understanding tax rates in international projects
It is extraordinarily difficult to have any influence on global tax rates. Firms in all market sectors are feeling the pain of tax increases as governments attempt to balance fiscal budgets. Although there is little that can be done in the short-term to mitigate the effect caused by tax increases, the most successful firms have been able to include live tax information into their reporting, even on the most complex international projects.
Making informed business decisions
The good news of growth in the engineering market space has brought with it concerns for variables that are difficult for engineering firms to control. Implementing systems that give you valuable insight into these variables will give you the information you need to make well informed business decisions.