Engineering and construction (E&C) companies are at a crossroads despite a positive market outlook. We help organizations navigate an increasingly dynamic environment driven by globalization, greater project complexity, and a rising call from customers for faster and more cost-efficient performance.
The McKinsey Global Institute estimates $49 trillion in infrastructure investments will be required by 2030 just to keep up with the global economy. For E&C companies, that translates into a steady 4 percent annual growth rate. However, the sector is struggling with stagnating productivity and low profit margins in many markets.
We are working with our E&C clients to institute effective changes that will help overcome both internal and external challenges to their productivity and profitability.
What we do
Since 2008, McKinsey has worked with more than 100 of the world’s largest E&C companies. In addition to our work with the industry, we have global experience working on all major asset classes—from residential single-family homes to national power plants, and from regional roads to transcontinental railways.
Our teams bring a unique combination of strategic advisors, researchers, senior industry professionals with decades of hands-on experience, and functional experts with backgrounds in areas such as lean organization and risk.
We often work with companies on end-to-end transformations. Combining our experience in operational transformation and restructuring, our deep understanding of the E&C industry, and insights and inspirations from other industries, we help companies make significant improvements to their operations.
We support E&C companies with targeted initiatives, including:
- Due diligence. Provide in-depth due diligence of potential targets to drive successful inorganic expansion strategies.
- Strategy development and execution. Advise on portfolio management, growth strategy, commercial excellence, mergers and acquisitions, emerging-market entry, and carbon-abatement opportunities along the construction value chain.
- Procurement. Drive value through a rigorous process that includes capability building, supplier development, pricing, and demand management.
- Cost and productivity improvement. Help deliver complex projects on time and within budget using value-driven, end-to-end project management, design-to-value, and lean construction principles.
- Organization, governance, and talent management. Build governance models that balance cohesion with entrepreneurship and manage portfolio risk. We also support project-manager training, performance management, and the development of incentive systems to drive continuous improvement.
- Restructuring. Improve profitability margins across entire portfolios or in specific projects through a rigorous process of assessment, validation, and implementation of our proprietary tracking methodology.
Examples of our work
- Conducted due diligence for a US firm, helping it confirm that it should proceed with a major acquisition.
- Helped a global European E&C client achieve 15 percent savings through productivity and purchasing optimization in residential construction.
- Conducted an overall capital-expenditure diagnostic that helped the largest real-estate company in India achieve a 25 percent cost savings in large-scale office projects.
- Worked with a client to reduce costs and improve the timeline of a $1 billion flagship project in the Middle East.
- Helped a North American firm double its earnings before interest, taxes, depreciation, and amortization in a 2-year period.
- Advised a Chinese E&C company on the development of a strategy that resulted in domestic and international growth.