by Jim Thompson
Last month we talked about demand outstripping capacity on capital projects. We are already seeing this in engineering, one of the first services to be procured when one sets about accomplishing a capital project.
As this shortage works through the system, be sure and query executives on the firmness of commitments they have for all the services and components necessary to execute their capital project plans. They may think they know the answers to such queries, because for many years they have been in the driver's seat.
But with the eruption of capital projects we've seen in the last few months, someone or some ones are going to be left unsatisfied--the services they think they can buy won't be there.
There is a clue to who will be left with a shortage of equipment and services. Those companies cut out of the procurement chain will be those who have no track record of doing projects or those with a track record of doing projects poorly.
The engineers, constructors and equipment providers can be guaranteed to act rationally. They will take care of those customers who have been taking care of them through the lean years. The Johnny-come-latelies to the capital project game will be left wanting.
For you as an analysts, it means budgets may be overrun, schedules may slip and production may be late to market.
