State-of-Art and Development Prospects of E-Procurement in the Italian Engineering & Contracting Sector

Abstract

This paper examines the state-of-the-art and development prospects of using e-procurement for projects related to the engineering and contracting (E&C) sector in Italy, through the results of a study carried out during 2001–2002 in collaboration with ANIMP (Italian Association of Industrial Plant Engineering). The companies included in the sample account for 75% of the revenue generated in the sector, (valued at more than $17 billion). Given the globalized reference market and the internationalization of the E&C companies, the results of the study also provide a sound description of the sector's behavior worldwide. Although there are substantial differences between large and medium/small companies, it is evident that a strong information technology (IT) culture has developed at all corporate levels and integrated into working processes, albeit mainly with simpler applications (i.e., e-mail, Web sites, etc). Furthermore, little attention is paid to codesign and coengineering systems, meaning that present e-procurement solutions are limited to the purchase of project materials and systems with low engineering content. The potential savings in adopting e-procurement solutions are estimated to be worth a 7–10% reduction in overall project purchasing costs. This represents at least the 60% of the company annual revenue. Nevertheless, the study highlights ongoing and planned investments that are underfocused, pointing to unconsolidated e-business strategies. The advent of e-procurement is, therefore, likely to lead to profound restructuring of operational practice and the management of internal processes, generating challenges in company culture and personnel training.