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EPC Outlook Procurement Executives Group

EPC Outlook Procurement Executives Group. ............The Path Forward. ............ Climate of Concern. John F Mika Senior Vice President of Procurement CH2M HILL . Discussion Topics. Procurement Executives Group (PEG) Global Economic Environment Supply Market Landscape

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EPC Outlook Procurement Executives Group

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  1. EPC OutlookProcurement Executives Group ............The Path Forward ............ Climate of Concern John F Mika Senior Vice President of Procurement CH2M HILL

  2. Discussion Topics • Procurement Executives Group (PEG) • Global Economic Environment • Supply Market Landscape • EPC Industry Landscape • Concerns and Threats • Questions and answers

  3. Procurement Executives Group

  4. 2011 Membership Profile ENR Rankings • Top Contractors • 6 of top 10 are PEG • 10 of top 25 are PEG • 12 of top 50 are PEG • Top Design Firms • 7 of top 10 are PEG • 13 of top 25 are PEG • 15 of top 50 are PEG • Top International Contractors • 15 of top 225 are PEG

  5. Charter Core Values • Ethics and Integrity • Safety • Quality • Diversity • Sustainability • Collaboration • Leadership in Procurement Excellence The Procurement Executives Group (PEG) serves as a forum for the executive leadership of procurement and supply management in the engineering and construction industry. We seek to represent, promote, and improve the contributions of our profession to the industry we serve. In fulfilling this mission, PEG and our member company representatives are committed to a set of Core Values…. For more information, visit http://peg-eci.org/

  6. Headlines • Concern around a double dip recession • US and European expansion anemic • Consumer and business confidence • Sovereign worries • Fiscal tightening • Gridlocked US government • Emerging markets fairing better • Best growth • Best pricing potential, selling or buying • Projects • “Giga Projects” is the new landscape

  7. Global Recovery: Diminished Expectations Real GDP Growth Source: IHS Global Insight

  8. U.S. Economic Growth by Sector (Percent change unless otherwise noted) Source: Global Insight

  9. Purchasing Managers’ Indexes: Manufacturing Slowing Down Source: Global Insight

  10. Pressures in Supply Chains are Beginning to Abate United States China Brazil Eurozone Source: Global Insight

  11. Supply Base Risks and Influences • Supplier performance • Shop capacity restraints • Global dispersion of supply chain, continues • Regulation changes and compliance • Financial condition and access • Commodity volatility • Energy cost and availability • Counterfeit, fraud, and suspect items

  12. Market Capital Expenditures (Capex) • Power • Oil, Gas, and Chemical (OG&C) • Civil • Mining

  13. 400 350 300 250 200 150 100 50 0 1965 1975 1985 1995 2005 2015 2025 2035 Global Energy Demand Forecast 50% Growth Renewables Nuclear MMBOED Coal Natural Gas Liquids Fossil fuels projected to meet 80% of energy demand in 2035 Source: U.S. Department of Energy, International Energy Outlook & BP Statistical Review.

  14. Power Global Capex Oil, Gas & Chemicals Global Capex Mining Global Capex Civil Global Capex Source: IHS Global Insight

  15. Total Global Capex (Power, Oil, Gas & Chemical, Civil, Mining Source: IHS Global Insight

  16. Regional Global Capex Source: Global Insight

  17. EPC Industry Landscape • Strong capital expenditures 2012 – 2015 • Significant growth in EPC Spend ahead, some bow wave happening • Global project challenges • Attracting and retaining staff • Local labor shortages • Lack of infrastructure • Remote and challenging locations • Complex scope and size • Global sourcing • Opportunities and challenges

  18. EPC ‘Crystal Ball’ - Spend Forecast Spend Forecast - Revisited

  19. ‘Crystal Ball’ – Part II - Revisited

  20. …….Climate of Concern • 40% chance for double dip • Can Washington work again in collaboration • Can the European debt crisis stabilize • From Arab Spring to Arab Fall • Can we continue to be ready for impending expansion Logistics is even more critical to EPC success!

  21. Questions & Answers

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