Construction companies forecast rising backlogs in 2011

The global engineering and construction industry is broadly upbeat on next year's prospects, according to KPMG's annual Global Construction Survey.

Just under half (48%) of the 140 global engineering and construction companies questioned in the survey forecast rising backlogs next year, while 38% reported growing order books in 2010.

Respondents in the Asia Pacific were most confident, with 21% in the region forecasting their organisation's backlog would increase "significantly" in the coming year.

About a third of all companies questioned by KPMG said they are planning to take on more direct labour in 2011.

This positive outlook is particularly prevalent amongst the mid-sized companies, according to the survey.

But despite these apparently bullish responses, KPMG said the confidence exhibited by its respondents was "hopeful", and pointed out that global competition is increasingly brutal.

The survey also revealed that 31% of the engineering and construction companies questioned reported that they are bidding for new business with lower margins - even in the more robust Asia Pacific markets.

Survey respondents also reported that financing continues to be a challenge for clients. Half of those surveyed by KPMG said it was a struggle for project owners to get funding even for low-risk projects.

The largest companies - those which reported an annual turnover of over US$ 5 billion ­- fared the worst during 2010, according to the survey.

KPMG said this was because many are focused on the power and energy sectors, and having worked off much of the backlog during the past year, many proposed projects in these markets have either been cancelled or deferred.