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Engineering Consulting – The new golden era?

 

STUDENT PAPER

Lucien Rock

SKEMA Business School

Lille, France

 



ABSTRACT

This paper is about the growing scene of engineering consultancy around the world and all the impacts related to contracts between the client and the consultants. To compare the impact of the different contracts, I have based my paper around the organizations who are creating standardized templates for engineering and ranked them upon determined criterion.

The conclusion clears the fact that no contract is perfect and that these organizations are providing a solid source upon which you can improve it taking care of the more specific clauses of the project studied.

In the case of mechanical engineering, the contracts from FIDIC seem to be the most appropriate ones.

Key words: Liability, Disputes, Delays, Responsibility, Intellectual property, Engineering Consulting

INTRODUCTION

The engineering services market generates today $711bn of revenue, employs 3.9 million people across more than 700 000 companies. This sector is booming regarding the new economic models of companies and their willingness to outsource. They realize that in most cases, it’s more profitable to outsource to specialists than hiring them.

This multiplication of interaction between companies has raised another concerned, the number of disputes.

These disputes are usually about the outputs created by the consultants towards the companies.  In fact, the issues and disputes raised are mainly because of the contract itself more than what the consultant has produced and result in cost escalation, damages, unpaid change orders, etc. The contracts are sometime written by technical people who are not experts in this field so mistakes can easily be done. The main areas of disputes are the liability, the delays, the responsibility and the intellectual property. To get rid of these common and recurrent mistakes, organizations like FIDIC (International Federation of consulting engineers), EJCDC (Engineers Joint Contract Documents Committee), etc. have created standardized contracts. By creating these contract, they aim to become ‘best tested and proven practices’ and to be used among entire industries. A lower chance of a successful claim, a fairness between the parties are the primary advantages of using these templates. As well as creating these templates, these organization are more and more involved in the creation of new standards such as ISO (International Standards Organization) thanks to the worldwide network of practitioner they constitute.

Another fact to point is the concentration of consultants into single companies. Altran is the European leading company in engineering consultancy with a turnover of €2,120bn and 29 106 employees. In the USA, we can point out Fluor with a turnover of $19.04bn and 61 551 employees. This trend isn’t going to slow down because the development of these firms overseas is done through takeover of local companies.

STEP 1: Objective Statement

In this paper, we will identify 2 sources of mechanical engineering consulting contracts and compare them to the standardized ones regarding the keywords stated at the beginning.

More…

To read entire paper, click here

 

Editor’s note: Student papers are authored by graduate or undergraduate students based on coursework at accredited universities or training programs.  This paper was prepared as a deliverable for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development.  http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director [email protected]



About the Author


Lucien Rock

Lille, France

 



Lucien ROCK
is a student from Lille, North of France. He spent most of his young life living in France, from primary school to high school. After graduating with honours, he took the opportunity to join a special engineering school named ITEEM in France. This formation is a great joint venture between the Ecole Centrale de Lille and Skema Business School to offer a unique double competence degree in 5 years. During his studies, he had the amazing opportunity to take an internship in India for 8 months and discover a whole new world.

Now in his last year of study, Lucien specialized in Advanced Mechanics on the engineering side and choose to do at the same time a MSc in Project and Program Management and Business Development at Skema Business School. He will graduate in April 2018 and is looking for new opportunity in a foreign country in the project management and engineering field. Lucien can be contacted at: [email protected].