Systemic Innovation and the Role of Program Management as an Enabler in the Engineering & Construction Industry


By Bob Prieto 


Periodically it is necessary to step outside of one’s day-to-day frame of reference and question whether a current paradigm will suffice into the future. This paper is intended as one such look at a current paradigm, in this case the engineering and construction industry model. The purpose of this paper is to raise questions, challenge the current paradigm and leave the reader with more questions than he had at the outset of reading this paper.

It will not suggest silver bullets or chart a path to improvement but essentially foster the debate as to whether the engineering and construction (E&C) industry model is broken and whether we should attempt to improve it and whether large programs utilizing a program management approach offer one path to improvement.

Where possible I’ve tried to cite relevant academic work for the curious and interested to pursue further.

My own interest in this question has grown out of early involvement as a member of the then Civil Engineering Research Foundation’s (CERF) work in assessing E&C industry productivity (31, 34) and our apparent lagging in productivity growth when compared to other industries. It has been further stoked by looking at best practices and incremental innovations that I have seen in project partners over the years and recognizing what would be possible at an industry level if these innovations could be more easily systemically adopted across the entire industry. It was as a result of this consideration that my focus shifted from examining poor productivity growth (a symptom) to trying to understand the barriers to systemic innovation (a cure) which seems to be characteristic in higher productivity industries.

Is the Engineering & Construction Industry Model Broken?

The engineering & construction industry is the largest industry in the world. In the United States construction spending totals nearly 9% of Gross Domestic Product or GDP. And in many ways, today’s projects are larger and more complex than any we have faced before. They now include not only mega-programs but also even larger more complex versions that I have previously referred to as “giga” programs (43).

Yet as an industry, since about 1970, our productivity has at best been a laggard as compared to other industries. Cost overruns, unanticipated risks and schedule slippages are still too common. Why is this? And what can be done to change this situation?

Today’s engineering and construction industry model was in many ways established following World War II. It’s structure is “industrial” in nature and based on the “serial specialization” that existed in manufacturing at that time. But the 21st century is not like the late 20th century and experience in other industry sectors have shown that significant productivity gains coincide with industry models that facilitate systemic innovation.


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Editor’s note: Second Editions are previously published papers that have continued relevance in today’s project management world, or which were originally published in conference proceedings or in a language other than English.  This paper was originally published in the PM World Today eJournal, now discontinued, in February 2011.  Paper is republished here with permission of the author.  If you have a good paper that you would like to see republished in the PMWJ, contact [email protected].

About the Author 

bob prietoflag-usaBob Prieto

Senior Vice President


Bob Prieto is a senior vice president of Fluor, one of the largest, publicly traded engineering and construction companies in the world. He is responsible for strategy for the firm’s Industrial & Infrastructure group which focuses on the development and delivery of large, complex projects worldwide. The group encompasses three major business lines including Infrastructure, with an emphasis on Public Private Partnerships; Mining; and Manufacturing and Life Sciences. Bob consults with owner’s of large engineering & construction capital construction programs across all market sectors in the development of programmatic delivery strategies encompassing planning, engineering, procurement, construction and financing. He is author of “Strategic Program Management” and “The Giga Factor: Program Management in the Engineering and Construction Industry” published by the Construction Management Association of America (CMAA) and “Topics in Strategic Program Management” as well as over 400 other papers and presentations.

Bob is a member of the ASCE Industry Leaders Council, National Academy of Construction and a Fellow of the Construction Management Association of America. Bob served until 2006 as one of three U.S. presidential appointees to the Asia Pacific Economic Cooperation (APEC) Business Advisory Council (ABAC), working with U.S. and Asia-Pacific business leaders to shape the framework for trade and economic growth and had previously served as both as Chairman of the Engineering and Construction Governors of the World Economic Forum and co-chair of the infrastructure task force formed after September 11th by the New York City Chamber of Commerce.

Previously, he established a 20-year record of building and sustaining global revenue and earnings growth as Chairman at Parsons Brinckerhoff (PB), one of the world’s leading engineering companies.  Bob Prieto can be contacted at [email protected].