MEP trends for 2020
Prakasan TP, chief operating officer - MEP business, Sterling and Wilson, reveals what lies in store for those in the MEP business
Trends and challenges:
• The slowdown in the real estate and auto & auto ancillary segments has impacted the demand and production forecasts. Consequently, the investor sentiment has been weak with regards to upcoming new projects. This trend may continue in 2020.
• Large projects in infrastructure segment (primarily the developers of airports, sea ports, Metro), have started looking at the general contractor concept that packages everything into a civil construction package. Thus, GCs have become major players in such projects. In our view, GCs not being from an MEP background, the techno-commercial advantage that could have been demonstrated by strong MEP players is lost. We are concerned about the MEP concept which gets diluted in such cases, though, at present, there are certain exceptions to it in the Metro segment.
• The concept of Design & Build type of MEP solutions has started picking up. In this case, MEP players are not mere contractors, rather they become partner with end users in delivering the expected performance of the project. MEP players take end-to-end responsibilities in executing MEP services.
MEP for residential and commercial developments and the intricacies in executing such contracts:
• In the residential segment, MEP execution is too much dependent on front availability. Due to large inventories, developers are slow in giving clearances till the inventories get utilised. This is impacting the overall project schedule and, thus, time and cost overruns are unmanageable. Additionally, the fund flow in this segment is not smooth. Due to these factors, MEP contractors are shifting away from the residential segment. With regards to the commercial segment, though the challenges remain concerning front availability, the magnitude is far less vis-à-vis to the residential segment.