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Achema Trend Report Plant Engineering

Worldwide Plant Engineering: A Growing Market – With Growing Challenges

| Editor: Manja Wühr

Restrictive financing conditions and a reluctance to offer alternative financing services are often cited as reasons why German companies fail to acquire EPC projects. A current study by the consultant company PWC reveals just how important this factor can be: Customers ask for project financing in one out of every four requests for quotation.

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Despite increased capital spending in the chemical industry, the trend towards larger-scale plants reduces the number of medium-scale projects. As a result, EPCs are looking not only for ways to differentiate themselves, but also for new business models.

For example, the engineering companies want to attract customers with their technology and by adding operational services to their portfolios. They are doing this in response to growing market demand. The engineering and services company Bilfinger estimates that by 2020 there will be more than 11,000 chemical and pharmaceutical plants in Europe, North America and the Middle East that are more than ten years old and will require modernization.

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The service business provides an opportunity to increase turnover, and that is one factor which makes it attractive to EPCs. In addition, the presence of a local service organization provides an operating base which can be used by a local sales team to acquire new projects and for other activities in the regions.

There is an ongoing trend towards increased local content in construction projects. This includes equipment procurement, often based on a best cost country sourcing strategy, as well as local recruitment for project work such as installation and project management. Local content is often a requirement imposed by customers. This is frequently the case in Asia and the Middle East where companies are state-owned, and it is used as a means for stimulating the local economy.

Digitalization: Differentiator and Driving New Business Models

Besides services, EPCs have identified digitalization as a possible differentiator to help ward off the competition. In a current study on opportunities for Industry 4.0 in the EPC market, the VDMA reports that 72 % of EPCs see digital products and services as a means for generating additional turnover. Seamless, standardized interfaces in the trans-disciplinary engineering process are also seen as a way to improve efficiency.

The lack of seamless data architectures remains a problem in chemical plant engineering. The IT landscape is heavily diversified, and interface management requires an enormous amount of effort. Process flows also very significantly from company to company. This makes collaboration more difficult, and it is harder to create the standards which are essential for effective digitalization.

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