The Philippines

1
The Philippines
A Strategic Business Location For Your
Construction Engineering and Design Services
December 2001
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Construction-Related Engineering Design

• D In-house or subcontracted computer-aided
  design services for
• transport, water/environmental,
  commercial/industrial,
• health/sports/educ, housing/institutional
  and other facilities.
• Tr Opening of China market for construction
  services
• V Good fundamentals - 75,000 licensed
  professionals 15-30 of cost vis US, Japan,
  Singapore
• M Top International Design Build Firms
  (America, Japan, Europe)
• Ta in the interim, target ENR Top
  international design firms to
• outsource low-end segment of engineering
  design services,
• i.e., CAD-translation/transcription of
  completed designs
• KSF CAD/3-D bridging programs, JV-partnerships
  with top
• international contractors and design
  build firms for international
• exposure/experience
• R Currently projects/market is identified by
  mother company need
• for added investment in training w/c
  increases cost

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DEFINITION/SCOPE OF INDUSTRY
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DEFINITION/SCOPE OF INDUSTRY
In-house or subcontracted computer-aided
design services for transport, water/environmental
, commercial/industrial, health/sports/educ,
housing/institutional and other facilities.

• WTO Sectoral Classification definition adopts
  the UN Central Product Classification Version 1.0
  (1997) of Architectural Engineering Services as
  advisory and pre-design, integrated engineering
  services design and construction management of
• Buildings (Residential non-residential -
  industrial, commercial or agricultural)
• Engineering Works (Highways, streets, roads,
  railways, airfield runways, bridges, elevated
  highways, tunnels and subways, harbours,
  waterways, dams, irrigation and other waterworks,
  long distance pipelines, communication and power
  cables, local pipelines and cables and related
  works, and indoor or outdoor sports and
  recreation facilities)
• Industrial Plant and Processes (Mining
  constructions, power plant constructions,
  chemical and related facilities, constructions
  for manufacturing, automation of industrial
  processes)
• Other Projects (Traffic control systems, geodetic
  engineering services, ground water engineering
  services, contamination quality management
  studies, corrosion engineering services, failure
  investigations)

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TRENDS
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TRENDS

• Increased Outsourcing Activity Worldwide
• (McKinsey Company Report Year 2000)
• Opening up of CHINA
• Membership in WTO
• Phenomenal and sustained growth has led to
  increasing construction activities such as
  residential and urban areas (city modernization),
  factories for increased manufacturing activities,
  et.al.
• Revenue potential for international design firms
  and contractors (EPC companies)

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GLOBAL MARKET TRENDS

• The McKinsey Co., an investment consultancy
  firm, projects a bigger demand for outsourcing
  services that will reach US 180 billion in 2010.
  It projects the following world demand for white
  collar services

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Our Value Proposition
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OUR VALUE PROPOSITION

• Good Fundamentals
• Good engineering curriculum produces graduates
  equipped with the basic skills/principles
• Over 30,000 graduates annually
• Labor Availability
• 75,000 licensed professionals (1995-2000)
• (About 3,800 OFWs - Skilled Const. Engrs.
  Technicians)
• 76 - Middle East 5 - Africa
  
• 11 - Asia 1.39 -
  Australasia
• 6 - Americas 1.37 -
  Europe
• Competitive Labor Costs
• 15 - 30 salaries vis US, Japan, Singapore
• Readily Available IT-enabled Office Space
• Among the cheapest in the Asian region for
  broadband-ready, grade A premium office space

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Labor Availability (Construction Related)
Source Professional Regulation Commission
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Competitive Labor Cost
Source Asiaweek-Year 2000 Salary Survey
(USD/month), includes other benefits
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Available IT-Enabled Office Space
One of the cheapest in the Region for Class
A/Prime Office Space (Broadband Ready)
Source Colliers Jardine, Global Office Real
Estate Highlights Report as of June 2001
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PRIORITY MARKET
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PRIORITY MARKET

• Top International Design Build Firms/Top
  International Contractors
• American, Japanese European firms
  dominate ENR (Engineering News Record) Magazines
  listing of top 200 international design build
  firms and top 225 international contractors in
  terms of revenue earned outside of home country
  location
• Interim Outsource low-end segment of engineering
  design services
• CADD (Computer-aided design drafting)
  translation / transcription of completed designs
• (e.g. Eichleay Pacific Inc 50 CADD engrs
  exporting 100 to U.S. mother company, located in
  Eastwood City)
• Long-term, convince top international firms to
  outsource, locate/relocate regional design
  activities in the Philippines
• e.g. (Regional design office in RP)
• Fluor Daniel Inc Phils, JGC
  Philippines Inc. and
• Parsons International Ltd
• e.g. (Non-RP R.D.O. Branch/Rep. Office only)
• Foster Wheeler Inc., Bouygues
  Construction and Kellog,
• Brown Root

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TARGETS (Specific Companies in Top Countries)
ENR Figures (Year 2000 - 200 Top International
Design Firms)
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GLOBAL MARKET REVENUES
ENR Figures (Year 2000 - 225 Top International
Contractors)
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KEY SUCCESS FACTORS
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KEY SUCCESS FACTOR(s)

• CAD Skills Training
• Use of latest computer-aided design software in
  construction
• (e.g. STAAD Pro/STAAD III, Fabricad, Autocivil,
  CADPipe, etc.)
• 3-Dimensional CAD Training
• (Virtual structures - design simulation)
• JV-Partnerships with Top International Design
  Build firms, Top International Contractors
• Access to international markets
• (Not any Philippine firm is listed in
  ENRs top 200 intl design build firms)
• To gain international exposure experience
• (EEI Corp ranked 187th in year 2000 as
  a top international contractor only)
• Transfer of technology
• (PDS, PDMS, X-Steel, FWP, Autopipe,
  etc.)

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RISK(s)
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RISK(s)

• Competition from Pakistan, India
• Engineering graduates are equally as skilled and
  speaks English
• Dependence on mother company
• Projects are accepted and defined by head office
• Revenues are highly project dependent
• (e.g. Bechtel Phils hired around 1000
  contractuals doing CAD design. Upon project
  completion, maintains a staff complement of 15
  employees)
• Considerable investment
• Initial investment
• (e.g. JGC Phils Inc USD 18k to 20k per
  employee
• Fluor Daniel Inc USD 23k to
  25K per employee)
• Investment for training (IT equipment, software
  and man-hours)

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THANK YOU!
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ANNEXES
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ED Service Niches (Local Companies)
Source Internal Survey of BOI-registered
firms with ED activities, July 2001
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Philippine Advantage Labor Availability
OFWs (Engg Related Skills) Year 2001
Source Philippine Overseas Employment Agency
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GLOBAL MARKET REVENUES
ENR Figures (Year 2000 - 225 Top International
Contractors)
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INTERNATIONAL CONTRACTORS With Major Design
Office In RP
1 - Engg News Record Magazine Top 225
International Contractors (in 2000 Intl Revenue),
Aug-2001
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INTERNATIONAL Contractors/Firms With Design
Office In RP
1999 Intl Ranking D Design Firm Ranking
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Some INTERNATIONAL CONTRACTORS
With Representative/Branch Office In
RP
2MRT-4 Lead Contractor/Design Office in HK
3Design Office in Singapore 4Design Office in
Thailand
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Philippine Advantage OFW Labor Availability
Source Philippinme Overseas Employment Agency
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Philippine Advantage OFW Labor Availability
Source Philippinme Overseas Employment Agency
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Philippine Advantage Labor Availability
OFWs (Engg Related Skills) SALARY AVERAGES Year
2001
Source Philippine Overseas Employment Agency
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TESTIMONIALS
We picked the Philippines because of its
engineering talent. Theyre more cost-
effective and competitive globally Its
been a win-win situation for us.

ROBERT FLUOR President, Fluor Corp.
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TESTIMONIALS
CLINTON, New Jersey, USA - 21 June 1999 On
US 4.5 Billion Onshore Gas-to-Power Contract
with SHELL Philippines Exploration B.V. in
Batangas The array of qualified resources and
skills within the Philippines will be a
significant factor to enable the project, which
has a challenging schedule, to be completed on
time Exacting availability, quality, health,
safety and environmental standards will be
adopted to meet the key objectives of the
business. (First flow, scheduled October
2001)
IAN M. BILL Chairman CEO
Foster Wheeler Energy Limited
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TESTIMONIALS
availability of strongly motivated, effective
engineering talent the people of the
Philippines are the countrys greatest assets
the people, the supporting infrastructure, and
the economy have all come together in a very
positive way for us.
DWIGHT HUNT General Manager-Parsons
(Phils.)