ECI’s 23rd Annual Conference 2012

The European Construction Industry

- Facing the Global Challenges

26 & 27 April 2012 Hilton Hotel, Dusseldorf

Global Challenges Facing the US Construction Industry

Glenn F. Doran ConocoPhillips, General Manager Asia Pacific - Project Development Chair, Construction Industry Institute

3

The Challenge

Organization Readiness Vs.

Project Environment

4

Organization Readiness

Only if you are ready to address: Changing workforce demographics Increasing project complexity and risk Industry Image

Will your organization be ready to successfully execute construction

projects in the future?

5

Workforce

From 2010 to 2020 theUS 65+ Population Will Grow Rapidly

14

6.5

-1

1.6

3.3

-3.9

-10 -5 0 5 10 15 20

16-24

24-34

35-44

45-54

55-64

65+

Age

Grou

p

Millions of People

• Average age of workers is changing • Smaller, less educated, incoming labor pool • National mobility decreasing • Increase in employer changes by individuals • Since 2008 many experienced workers have left the industry

Source: CII presentation Nov 2011, “Preparing for the New Normal” by Dr. Thomas Stinson, Lead Economist, State of Minnesota

6

Industry Image

• Fewer people are entering the construction industry • Fewer professionals choosing construction management path • Re-create construction as a career path for younger generations

Construction sectors need to improve communication

of opportunity and importance

7

Project Execution • Economies are picking up in the US and around the world • Capital spend is forecast to increase worldwide creating opportunities across many industries • New projects are increasingly more complex • Project risk has increased

US Construction Spending 12 Month % Change by Industry44%

14% 12%

4% 2% 2% -10%-6%-3%-2%-1%-1%

Man

ufac

turin

g

Com

mer

cial

Pow

er (O

il &

Gas

Pip

elin

es)

Non

resi

dent

ial

Educ

atio

nal

Hig

hway

and

stre

et

Hea

lth c

are

Off

ice

Com

mun

icat

ion

Recr

eatio

n

Was

te d

ispo

sal

Tran

spor

tatio

n

Data Source: AGC of America, December 2011

8

Project Complexity • Challenged to build bigger than

ever before • Accomplish what hasn’t been done

before • More technologically advanced

facilities • New Location issues – availability

of infrastructure • Global projects with international

partnerships • Financing issues • Local and Global Labor markets

impact • Layers of supplier quality

Political Stability

Larger Scale Scope

Supplier Quality

Changing Labor

Markets

Stakeholder Management

Global Locations

Financing

New Technology

Construction Project

9

Opportunity through Productivity Construction Industry Fact:

“Value of construction work done per employee in Heavy and civil

engineering construction subsector increased 64% between 2002 and 2007.” Source: US Census

Increasing Productivity Has Two Parts

QUALITY INNOVATION

Source: CII presentation Nov 2011, “Preparing for the New Normal” by Dr. Thomas Stinson, Lead Economist, State of Minnesota

10

Opportunity through People

• Companies that can leverage their staff can be successful • Recruiting, Training and Re-creating experienced teams • Recruiting has changed

Source: CII presentation Nov 2011, “Preparing for the New Normal” by Dr. Thomas Stinson, Lead Economist, State of Minnesota

Retention Recruitment Retraining

11

Application at ConocoPhillips

TALENT MANAGEMENT TEAMS

Retention

Recruitment

Retraining

12

Meeting the Challenge

Knowledge Creation • Research to define best practices, breakthroughs, and industry norms

• Research, Academic and Breakthrough Strategy committees

Knowledge Dissemination • Research publications, implementation guides, educational materials, workshops and conferences

• Implementation Strategy and Professional Development committees

Knowledge Assessment • The impact of CII practices through benchmarking and metrics

• Benchmarking & Metrics committee

Knowledge Management • Organization and assessment of the relevance of the 500-plus CII documents and publications

• Knowledge Management committee

European Construction Institute

www.europeanconstruction.eu