Engineering services for large-scale projects: contractor selection

The modern market for engineering services is full of various marketing tricks, in which even experienced managers can easily get lost.

This applies to many areas, including industrial engineering, the energy sector, mining, residential construction and other areas.

Practice shows that the wrong choice of an engineering and procurement contractor for a large project often leads to huge financial losses, missed deadlines and irreparable harm to the business reputation of project participants.

That is why it is extremely important to give preference to companies with a strong technical base, as well as highly qualified personnel capable of competently conducting professional activities in full compliance with international standards and customer expectations.

Link Bridge Financial LTDA LBFL, together with reputable international partners, offers a full range of services for large businesses, including investment project financing, engineering, project management and much more.

We provide first-class services in areas such as project planning and financial modeling, pre-investment studies and project financing, feasibility studies, detailed design, construction, modernization and much more. Large companies from all over the world turn to us for advisory services.

Our corporate customers confirm the high level of services provided by positive feedback and renegotiation of contracts. In particular, we support investment projects in Spain, Germany, France, UAE, Mexico, Vietnam and a number of other countries.

Basic principles of engineering services

One of the most common services in international markets is engineering, which refers mainly to the construction and modernization of industrial, energy, infrastructure and other facilities.

These services may cover pre-project planning, feasibility studies, design and testing of equipment and technologies, development of detailed project documentation, technological support, consulting during project implementation, etc.

Engineering can be called one of the oldest human activities, the first successes of which can be seen in the contours of the grandiose Egyptian pyramids and the Athenian acropolis. Engineering as a professional activity was formed around the 18th century, when the first professional associations and schools of engineering appeared. Outstanding success in the commercialization of the results of the work of engineers served as a further impetus for the development of engineering services.

Engineering received significant development after the Second World War, when large-scale investment projects for restoration / modernization of European industry began to be implemented, and later the industrialization of developing countries began. During this period, there was an urgent need for engineering services and turnkey projects, and, in particular, the need not only to build an industrial facility, but also to help the customer in mastering the transferred technologies and training local personnel.

As a result, services in the field of engineering have become more and more diverse, and prerequisites have arisen for the formation and development of national and international markets for engineering services.

With the further development of engineering, it was necessary to systematize its types and unify services at the international level. In 1981, the American Society of Civil Engineers (ASCE) released their famous guide, which describes the practice of engineering consulting, the procedure for selecting an engineer, and the characteristics of services.

It includes the following groups:

• Preliminary feasibility studies and project comparisons. These services may precede project approval and include a parameter analysis and comparison of several options, including the project's environmental impact, operating costs, financial considerations, and expected revenue as a basis for expert conclusions and recommendations.

• Planning, which means the development of master plans for long-term programs for the economic development of regions and cities.

• Study of the external environment for the implementation of the investment project.

• Client support in financial matters, including advice on attracting funding sources.

• Construction management, including the application of advanced methods and techniques of management and decision-making at different stages of construction.

• Inspection and testing of equipment and materials at manufacturing plants, as well as testing of materials supplied by contractors at the construction site.

• Training of the customer's personnel according to his requirements.

Engineering always aims to solve a specific problem or a set of problems, being a creative process of analysis, synthesis, modeling of various ideas and concepts in order to create a new optimal solution. Although the problems solved by engineering vary in scope and complexity, the same systematic approach is applied to them.

The main task of engineering services is to obtain the best result from the capital investment by the customers.

This can be achieved through the following measures:

1. A comprehensive and systematic approach to the implementation of investment projects.

2. Diversification of technical, engineering and economic solutions, their comprehensive evaluation and selection of the best option for the customer.

3. Development of projects taking into account the possibility of using advanced construction and production technologies, equipment, structures and materials from various alternative sources that best meet the specific conditions and special requirements of customers.

4. Use of effective innovative methods of organizing and managing all stages of projects.

The market of engineering services, being a component of the market of international services for big business, has a pronounced tendency to dynamic changes and expansion. This is evidenced not only by the statistical data of recent years, but also by the growing demand for engineering services.

They have the following benefits:

• Flexibility of the organizational structure of projects.

• Reduction of terms of performance of construction works.

• Reduction and optimization of capital costs.

• Easy adaptation of the structure and technologies to the problem being solved.

• Attractiveness for customers to consolidate the necessary set of services related to the implementation of project management.

• Ample opportunities to attract qualified specialists on a contractual basis.

• The emergence of real prerequisites for the transition to effective professional management in connection with the concentration of technical and financial information about the project in the hands of an engineering company.

• Reducing investment and other risks for a company using an engineering system.

• Increasing competitiveness as a result of the recognition by the business world of the effectiveness of the use of engineering.

If we compare the market for engineering services in the Western world and developing countries, it becomes obvious that young market economies have a much narrower choice of quality engineering packages in various industries.

Link Bridge Financial LTDA LBFL, a company with an international presence, is ready to offer you comprehensive professional services for the financing and implementation of large projects on a high-tech basis.

Contact us for details.

Choosing an engineering contractor for a large project

Currently, the global engineering services market exceeds $2 trillion.

More than 510 thousand firms serve millions of corporate clients, but engineering services for large projects represent a specific market niche, accessible only to the most reputable companies.

The undisputed leaders in providing these services are the USA, China, Japan, Great Britain, EU countries (such as Germany, France, Sweden, the Netherlands, Finland) and other industrialized countries.

Table: Main categories of engineering companies.

Engineering contractors
Specialized engineering firms whose main activity is to provide engineering and technical services.		Industrial firms that combine engineering services with industrial activities, including equipment manufacturing.
Classification based on the type of service provided:	Classification based on the nature of economic relations:	Alternative classification based on the type of engineering services provided:
Engineering and consulting companies	Independent engineering companies	Engineering firms specializing in design, supervision and consulting customer support
Engineering and construction companies	Companies associated with industrial customers	Engineering firms specializing in the production of equipment for various fields such as power generation, industry, mining and more.

Specialized engineering companies, depending on the type of services provided, can be divided into engineering consulting firms and engineering and construction firms.

The former provide technical services in the form of consultations, without being directly involved either in the production of equipment or in the construction of facilities. The scope of activity of specialized engineering firms is wide enough, including civil construction (ports, airfields, highways, mines, urban construction), power plants and industrial facilities using specific technological processes.

Engineering and construction firms usually provide a full range of engineering and technical services, including design, supply of equipment, installation and commissioning of equipment. These companies often assume the functions of a general contractor (EPC-contract), involving both machine-building and construction companies as subcontractors.

In addition to the design of civil facilities, engineering and construction firms specialize in the development of industrial facilities, primarily based on the use of complex and expensive technological processes.

Specialized engineering companies, depending on the nature of economic relations, are divided into independent and associated with industrial companies.

Independent firms do not have close relations with industrial companies and are considered economically independent.

But in practice, most of them are closely associated with one or more large industrial companies, their branches or agents, acting in their interests. Some engineering firms also exist in the form of subsidiaries of large general contractors with engineering as their main activity.

Specialized engineering companies are usually involved in the following investment project participants:

• By customers and investors at an early stage of the project to develop the concept of the project and conduct feasibility studies.

• By customers as a general contractor, who is able to develop tender documents, select subcontractors, and carry out overall project management.

• By customers, project engineers and contractors to perform specific types of engineering work (for example, detailed engineering).

• By customers, project engineers, contractors to organize procurement logistics (deliveries of process equipment and materials).

• By customers, investors, financial institutions and contractors as independent experts or unbiased technical auditors.

Industrial companies belong to the second group of businesses that provide comprehensive engineering services.

They are usually divided into design companies and equipment manufacturers for certain industries. The former perform engineering design services to expand or create new production based on their own patents and know-how, and contractors are involved in other engineering and consulting services and control over these works. For manufacturers of industrial equipment, engineering serves as a kind of tool to increase sales of core products.

Table: Criteria for selecting an engineering company in the 20th century and today.

Criteria for choosing an engineering contractor
Criteria used by industrial customers in the middle of the twentieth century:	Modern criteria that have acquired particular importance for large businesses today:
• Project quality	• Business culture and reputation
• Service cost	• Portfolio of completed projects
• Terms of payment	• Company participation in financing
• Firm reliability	• Ensuring project security
• Geopolitical criteria	• Environmental protection

A good engineering company must guarantee its customers a high quality of service, which is usually supported by many years of experience, as well as the use of modern equipment and working methods.

An effective quality management system plays an important role in the success of projects today, as we will discuss in more detail below.

When choosing a contractor for engineering, procurement and construction, attention should be paid to an individual approach to the client and the exact following of his needs.



This factor is of decisive importance for the subsequent development of a large project, when the correct choice of the general direction and specific engineering solutions will largely determine the effectiveness of investments, as well as overall costs and adherence to the construction schedule.

So, the choice of a contractor should take into account positive customer reviews, professional experience, well-developed infrastructure, and compliance of the services offered with legal standards. Only in this case, the customer can expect competent assistance and support in such a difficult issue as engineering, construction and technical supervision.

Quality management system for engineering services

In the conditions of market globalization, the main goal of managing any enterprise, including an engineering firm, is to ensure the proper quality of products and services, since only their high quality makes it competitive.

Tough competition forces the management of engineering companies to look for new approaches to provide services of the highest quality.

Effective quality management is becoming the most important prerequisite for success, and achieving competitive advantages both in foreign and domestic markets is impossible without the introduction of international quality standards of the ISO series.

The International Organization for Standardization was founded in 1947 to develop and adopt international standards. ISO enjoys prestige as an impartial and highly professional organization. The technical activities of the organization employ tens of thousands of experts from different countries and industries. In addition to standardization, ISO is involved in solving certification issues.

The organization has established more than 21 thousand international standards that ensure the compatibility of production processes and technologies.

ISO standards today are a unified mechanism for assessing the quality of production and management in the global community. They are used virtually in all industries, ranging from agriculture and construction, to the most advanced areas of information technology.

The introduction of international standards in the quality management of engineering services allows companies to successfully enter international markets with products of reliable quality, thereby confirming their competitiveness and competence.

In particular, we are talking about the standard ISO 9001:2008 “Quality management systems. Requirements".

This standard establishes requirements for a quality management system for cases where an organization must demonstrate its ability to deliver products (services, works) that meet customer and regulatory requirements, and also seeks to improve customer satisfaction.

The main goal of modern quality management system (QMS) is to achieve long-term success by maximizing the satisfaction of the customer, employees, owners and society, as well as to ensure that the results of business processes meet the needs of the customer, organization and society.

The tasks of the QMS include the following:

• Continuous improvement of product and service quality.

• Reduce the cost of quality assurance through the use of the PDCA (Deming cycle) cycle, which eliminates the causes of nonconformity, and not just corrects the results.

• Strengthening consumer confidence in the absence of any product defects or inconsistencies through quality management system certification.

Table: Principles underlying the quality management of engineering services.

#	Principles	Brief description
1	Customer orientation	Since an engineering firm depends on its customers, it is necessary to find out their current and future needs, satisfy their requirements and strive to exceed their expectations.
2	Leadership	Managers set the direction of the company's activities and create conditions and an appropriate environment to interest employees in the realization of the organization's goals.
3	Engaged team	Employees, who are really interested in the achievement of goals, will use their knowledge and experience to provide engineering services of the highest quality.
4	Systematic approach	Identification, understanding and management of interrelated processes as a single system helps the company to achieve its goals more effectively. This approach will lead to the integration of processes with the aim of obtaining the desired results, concentration of efforts on key processes, as well as increasing the trust of stakeholders.
5	Cooperation with partners	The organization and its suppliers establish a mutually beneficial relationship that expands the opportunities of both parties in creating values. This principle should affect the flexibility of services and accelerate reactions to changes that will occur in the market environment, as well as contribute to the optimization of project costs.
6	Continuous improvement	The constant task of an engineering company should be the constant improvement of general indicators of its work and quality of services provided.

The approach to the development and implementation of the QMS includes several stages, as shown in the list below.

This approach is also used to maintain and improve the implemented quality management system for engineering services for large investment projects. According to the ISO 9001 standard, the activities of engineering firms consist of a number of interrelated processes, while the input data from one of these processes is considered as input data for the next stage.



Stages of development and implementation of QMS for engineering services:

1. Determining the needs and expectations of consumers, as well as other interested parties.
2. Development of policy and goals of the organization in the field of quality.
3. Defining the processes necessary to achieve general quality management goals.
4. Determination of necessary resources to ensure the high quality of engineering services.
5. Development of methods to measure the effectiveness and productivity of each stage.
6. Application of the results of the analysis to determine the effectiveness of each service.
7. Identifying the tools needed to prevent non-conformities and eliminate their causes.
8. Development and implementation of the best engineering process.

All quality management processes in engineering can be applied to a methodology known as "Plan-Do-Check-Act" (PDCA or the so-called Deming Cycle).

First, planning involves setting goals and searching for the processes necessary to achieve the goals, planning work to achieve the goals of the process and satisfying the consumer, planning the allocation and distribution of the necessary resources.

Secondly, it is the execution of planned work, such as engineering design, development of technical documentation, production and installation of equipment.

Thirdly, this is a deep check, including the collection of information and control of the result of services based on key performance indicators, the search and analysis of deviations, and the establishment of their causes.

Finally, PDCA involves effective management, including taking measures to eliminate potential causes of deviations from the planned result, changes in planning and resource allocation.

Some of the benefits of implementing QMS in engineering companies are listed below:

• Improving the quality of engineering services and increasing customer satisfaction.

• Expanding the range of potential customers and sales markets, opening up opportunities for cooperation with foreign partners.

• Increasing the efficiency of production, since the quality management system involves preventing rather than correcting defects at the final stage of production.

• An increase in the market value of an engineering company and a significant improvement in financial performance.

• A clear distribution of responsibility and authority both within the unit and within the entire engineering company.

• Strengthening the company's business reputation and increasing its competitiveness in the eyes of consumers, customers and investors.

• Obtaining an advantage in tenders, in attracting long-term loans and investments.

Well-coordinated quality policies and objectives are the benchmark for today's engineering firms.

They define the desired outcomes of activities and promote the most efficient use of resources to achieve those outcomes. Achievement of quality goals can have a positive impact on performance and financial performance and hence on the satisfaction and mutual trust of stakeholders.

If you are looking for a reliable engineering contractor and financial partner, contact LBFL.

We are ready to provide a full range of customized services for large businesses anywhere in the world.