Updating the survey methodology.
The FIDIC-EFCA Consulting Engineering Industry Survey aims primarily to provide accurate forecasts of the demand for consulting engineering services.
It uses a top-down approach based on estimating the demand for services generated by investment throughout national economies.
In contrast with bottom-up surveys of economic activity, top-down approaches have the advantage that:
- they are able cover the many areas of economic activity which call upon consulting engineers;
- they allow forecasts of economic investment to be used to estimate the future demand for consulting engineering services.
A well-established measure of investment is Gross Fixed Capital Formation (GFCF) that represents (gross) changes in an economy’s capital stock.
The GFCF is at the very least a useful proxy for investment since more precise estimates of investment expenditure that include, for example, the purchase of second-hand equipment are rarely available.
For consulting engineering services, it is reasonable to use GFCF taken from national accounts to estimate demand because most of the industry’s services relate to investment in intellectual propoerty, in new-build construction, in plant and equipment, and in renovation and maintenance that prolong the capital life of built assets.
Several issues arise in using GFCF to estimate demand. The survey methodology needs to make suitable adjustments. Details are made available in the survey's wiki.
For example, in the case of the GFCF Construction (sub-divided into the GFCF for Dwellings and for Other Buildings and Structures), the GFCF taken from national accounts:
- includes land preparation and development costs associated with the development of infrastructure that make the land usable, such as new streets and electrical power, water and sewage systems. This investment needs to be removed when estimating the GFCF for Dwellings and for Other Buildings and Structures.that generates the demand for consulting engineering serices.
- does not include: a) investment in repair and maintenance; b) indirect investment, namely the investment in embodied services that are not recorded as a specific product; c) investment in own-account design.
The survey wiki discusses how each of these issues is addressed.
Repair and Maintenance
Allowing for the investment in R&M is the most important issue. Since the investment in R&M for Dwellings and Other Buildings is very different to the investment in R&M for Structures (mainly civil works infrastructure) it is necessary to separate the total GFCF for Construction into the GFCF for Dwellings and Other Buildings and the GFCF for Other Structures. The European Investment Bank (EIB) has developed a procedure for doing this.
Having established the investment in R&M for buildings (i..e., the GFCF for Dwellings and Other Buildings) and for infrastructure, it is then necessary to establish the investment in R&M as say a percentage of new-build investment. Surveys of the building and infrastructure construction sectors are undertaken to establish these percentages.
Public and private sectors
The consulting engineering industry is mainly intested in the market demand for its services. This demand has two components, namely the private sector and the public sector. Separating these sectors is by no means trivial.
Issues that are dealt with in the survey's wiki include:
- the original EIB approach to estimate the investment in infrastructure assumes that Construction GFCF by the government sector is the same as for r the private sector. The EIB demonstrated in 2021 how capital stocks can be used to estimate the government investment in infrastructure.
- state-owned operators are in some cases market suppliers that also carry out the consulting engineering services they need internally (i.e., on own-account) and do not call upon the market to supply the services. EFCA aims to draw attention to such practices.