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The future of the global engineering services industry

Gavin Christie

Gavin Christie
Jul 31, 2016 10:39

The global engineering services industry is huge and it is expected to continue growing. The industry was worth approximately $US782.8 billion in 2014 according to the IBIS World Industry Report (Global Engineering Services; April 2015). The industry is expected to continue growing beyond a trillion dollars in less than a decade. If the global industry were a country, it would rank in the top 20 in terms of GDP.

But how efficient is the industry in procuring engineering services?

In Australia alone, the total price impact of poor procurement practices is estimated at around 5.4 per cent of total revenue obtained by professional services firms in public infrastructure projects (Deloitte Access Economics. The Economic benefits of better procurement practices; 2015). And these inefficiencies aren’t solely confined to the public sector. Extrapolate these inefficiencies on a global scale and the annual cost to the global industry is huge.

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We’ve all seen these inefficiencies: the advertising of tenders, the process of writing bids, reviewing proposals, and the lengthy negotiation times. And that’s all before a contract is signed. Let’s not forget the time taken to negotiate contractual terms and conditions. It adds up to a massive burden and strain on companies, their business and the industry as a whole.

What options are available to improve efficiencies in procuring engineering services?

There are conventional means – companies look at specific elements of their current procurement processes and identify small efficiency gains. They may look at supplier prequalification, preferred supplier arrangements or standardized contractual terms and conditions. Or they lock suppliers into long-term contracts to avoid procurement. Some improvements work. But they don’t fix the system and they fail to observe the real inefficiencies.

The problem requires a complete rethink. We need to look outside the engineering services industry at procurement models other sectors have embraced. There is no better place to start than the web development, marketing and design sectors. Those sectors worked in much the same way engineering services are now procured. But that’s in the past. A new procurement approach is now embraced by the market.

Welcome to crowdsourcing. 

Crowdsourcing is now accepted as a viable procurement method that has penetrated sectors on a global scale. It has transformed the way people view, undertake and conceptualize procurement. Localized procurement of services is no longer the norm; it is becoming the exception. But how could crowdsourcing transform and benefit the global engineering services industry?

Take a look firstly at kkooee. The process for procuring a service is extraordinarily quick and simple. As a client seeking services, you register and post a project or job. Once posted, your project is available for freelancers and independent consultants to view. They submit you a proposal, you review them and select your preferred professional. You make an offer to your selected professional, they accept and then you enter into a contract through the website. It’s that simple; the process takes days, not weeks or months.

For crowdsourcing models to be accepted and embraced by participants in the global engineering services industry, a fundamental shift in the way procurement and service delivery is viewed is needed.

  • Most clients in the engineering services industry look locally first when contracting a consultant or consulting firm. Crowdsourcing disrupts this; you are opening up your job or project to countless engineers around the world. You’re no longer thinking local; you’re global.
  • Most clients will do away with conventional face-to-face meetings when applying crowdsourcing. Instead, you’ll be relying on technology and connectivity to engage, manage and communicate with your engineer or engineering team. You’ll no longer be concerned about where your engineer is from; you’ll be focused on what they can offer and at what price.
  • Your project team will be virtual and you will be a virtual manager. You, as a project manager, could be managing engineers and engineering teams from anywhere in the world. You’ll still be a project manager; but your team will be virtual.

For an engineer, crowdsourcing websites like kkooee offer freedom, personal job satisfaction and opportunity. You get the opportunity to market yourself on a global scale. You will also open yourself up to a world of possible projects. But, most importantly, these crowdsourcing websites tap into one of the deepest human desires: independence.

Crowdsourcing websites offer an extraordinary economic benefit for clients and engineers. In simple terms, the role of consulting firms diminishes as their pool of expertise is dispersed. In more complex terms, the benefits and cost efficiencies that globalization brings will be seized by clients. They will no longer look locally for services; instead, professionals from around the world will compete among each on price, experience, qualifications and capability. The financial benefits and savings to the global engineering services industry could be astronomical.

 

The current processes applied to source and procure engineering services are inefficient in many cases. Procurement is largely localized, ignoring the global engineering talent pool. Transforming engineering procurement through crowdsourcing websites kkooee are a real and impending positive change to the industry. There may be skepticism from those entrenched in and benefiting from current procurements methods. Over time, the benefits of more open procurement methods will far outweigh the inefficiencies and costs imposed by conventional approaches.  

Comments

Challenge accepted! Such a creative platform, yet such a simple concept. I'm amazed it hasn't been done before, at least on this scale. Was the hold-up partially waiting for the technology to make it feasible? Regardless of the reason, I deeply extend my gratitude to the developers, as well as to the company that sees the value of what is being offered. I can't wait to start this process!

Thanks for your comments Shawn. We really appreciate it. We've been surprised this hasn't been done before. It has in other industries but the engineering sector is very unique. The technology was not the limiting factor, rather everyone had just blindly accepted the way the industry worked for many years. Including its inefficiencies and the frustrations this caused to both clients and engineers. We think the time is right to shake things up a little and drive efficiencies into an industry we really love. Gavin