Environmental Engineering and Support Services: Prospects for Trade among Developing Countries

Article excerpt

Many developing countries offer opportunities for exporters of environmental engineering and support services.

The value of the world market for environmental goods and services reached an estimated US$ 448 billion in 1996. This market has widely varying outlooks in different regions. In 1992, the countries of the Organization for Economic Cooperation and Development (OECD) dominated about 90% of the total market; this share had fallen to about 80% by 1996. Among the OECD countries, the United States, Japan, Germany and the Netherlands are the most significant markets. However, since the United Nations Conference on Environment and Development (UNCED) was held in Rio de Janeiro in 1992, environmental protection has become an issue for the whole world.

Asia, Latin America, and Central and Eastern Europe are now giving the environment a much higher priority and have become attractive markets for international firms seeking new outlets and collaboration partners.

Further market expansion is expected in these regions in the next few years' as a consequence of economic growth, public pressure and political necessity.

Marketing environmental and support services is a complex but essential activity for any engineering firm or contractor wishing to export its services. Some of the steps involved are discussed below.

Types of services

Within the environmental sector in emerging markets, a large number of areas offer favourable business prospects for environmental engineers. The markets for pre-processing and processing of domestic and industrial wastes offer considerable growth opportunities. This is also true of water markets, where an increasing number of projects are underway because of droughts, floods, and required treatment of waste and drinking water.

Major contracts are increasingly based on the principles of design-and-construct and construct-and-operate. Under such contracts, the engineering firm or contractor can be asked to provide project financing and even to bid for the project on a turnkey basis.

Competition can be fierce for simple engineering projects because of the low entry barrier for these activities. The more complex projects have a much higher entry barrier and therefore offer less opportunities for competition.

Major environmental engineers and contractors often develop their own proprietary processes, either independently or in conjunction with others, which are then offered to potential clients. Alternatively, engineers can offer processes under license from specialized research and development institutes either on an exclusive or on a nonexclusive basis.

The setting up of consortiums of engineering firms, other engineers, contractors and utilities operators has been rising in popularity among clients. This type of operation has been in frequent use in Asia and is now starting to develop in Latin America. Consortiums are widely resorted to in emerging markets, where economic and industrial growth is putting the existing infrastructure under intense pressure. They have the advantages of not requiring separate negotiations between the government concerned, and operators, engineering firms and contractors. They also spread the financial risk over a number of parties, particularly if they come from several overseas countries. Individual consortiums may be controlled by an international engineering firm or operator and could include a number of local or regional firms.

Client requirements

Clients expect certain responses from engineering firms and system suppliers during the course of a project. The most important of these requirements are listed below.

At the inquiry stage:

* Timely responses to any inquiry and rapid answers to any technical queries and anomalies.

* Quotations delivered on time, defining exactly what is being offered.

* A skeleton critical path schedule, with a realistic estimation of completion date. …