Value Creation in ECS

Major players in the engineering, construction, and services (ECS)¹ 1 Engineering, construction, and services (ECS) is our preferred term for what is commonly referred to as the engineering, procurement, and construction (EPC) industry. We believe that the EPC framework does not adequately capture the full spread of industry activities and business models, which run the gamut from original equipment manufacturers at one end of the value chain to operators at the other. Between those poles fall the industry’s core business models: process EPCs, design and engineering, infrastructure construction, and concessionaires. Those four models are the focus of our analysis, which is based on empirical data and BCG’s methodology for assessing TSR and its key drivers. Notes: 1 Engineering, construction, and services (ECS) is our preferred term for what is commonly referred to as the engineering, procurement, and construction (EPC) industry. We believe that the EPC framework does not adequately capture the full spread of industry activities and business models, which run the gamut from original equipment manufacturers at one end of the value chain to operators at the other. Between those poles fall the industry’s core business models: process EPCs, design and engineering, infrastructure construction, and concessionaires. Those four models are the focus of our analysis, which is based on empirical data and BCG’s methodology for assessing TSR and its key drivers. industry have experienced massive swings in performance over the past ten years and delivered shareholder value with widely varying degrees of success. We have studied their performance and found clear patterns that they can use to better navigate the changing landscape and improve their chances of delivering superior returns to shareholders in the coming years.

Value Creation in ECS: Seizing Control of the Cycle examines the total shareholder returns (TSRs) of 42 ECS companies over the past ten years. The report is based on The Boston Consulting Group’s fourteenth annual report in the Value Creators series, Improving the Odds: Strategies for Superior Value Creation. The series provides detailed empirical rankings of the world’s top value creators and distills managerial lessons from their success. It also highlights key trends in the global economy and world capital markets and describes how those trends are likely to shape future priorities for value creation. Finally, the series shares BCG’s latest analytical tools and client experiences to help companies better manage value creation.

In the wake of the worst financial crisis since the 1930s—a crisis that played a huge role in ECS performance and influenced many industry changes—ECS leaders must come to understand the forces at play and how different companies have successfully (or unsuccessfully) responded and adapted to those forces. In this report, we offer lessons to help those leaders improve their business, financial, and investor strategies, and we raise 15 key questions that should be on the mind of every ECS executive today.