Go to mobile


10:38 23-05-2017
Steven Seagal to receive free land in Russia via TV show
09:58 23-05-2017
Volume of housing construction in Russia dropped by 15% this year
17:44 22-05-2017
Volkswagen and Chinese JAC Motor set up joint e-vehicles plant
17:17 22-05-2017
Nobody wants to build sea terminal for $15m in Kaliningrad region
16:58 22-05-2017
Modern Olympic Center to be erected in Russian North Caucasus
16:40 22-05-2017
First wind farm to be built in Kaliningrad region
16:24 22-05-2017
Russian Defense Ministry plans large-scale construction in Crimea
15:57 22-05-2017
Agreement establishing Russian-Turkish Investment Fund to be signed
15:45 22-05-2017
Primorye to provide guarantees for completion of Hyatt hotel
15:31 22-05-2017
6-hectare plot of land in Yekaterinburg put on auction
15:15 22-05-2017
Wonderful 17th-century stone bridge discovered in Moscow
14:58 22-05-2017
$2-million four-lane road needs to be constructed in Volgograd
14:39 22-05-2017
30-hectare low-rise micro-district to be built in Moscow region
14:20 22-05-2017
Third of new houses in Russia to be built from wood
13:48 22-05-2017
Sika building company’s CEO becomes head of LafargeHolcim
12:57 22-05-2017
Chinese CRIG to build fourth metro line in Kyiv
12:00 22-05-2017
Modern hotel for guests of New Jerusalem to be erected in Moscow region
11:45 22-05-2017
Italian Pizzarotti to build two health care facilities in Russia
10:47 22-05-2017
Swiss citizens vote against construction of new NPPs
09:51 22-05-2017
Saudi Arabia, UAE invest $100m in Ivanka Trump’s Fund
17:54 19-05-2017
Spanish Bustren to develop documents for Second Metro Ring in Moscow
17:38 19-05-2017
Radisson Blue hotel in Olympic Sochi put up for sale
17:19 19-05-2017
Italians set to invest in Russia’s cheese cluster worth $52 million
16:55 19-05-2017
Gas hydrate extraction in China not to affect Power of Siberia – Gazprom
16:35 19-05-2017
$12m allocated to build airport terminal in Russian city of Saransk
16:23 19-05-2017
Project for Russian industrial zone in Egypt likely to fail, expert says
15:59 19-05-2017
Construction of integrated tractor plant launched in Russia
15:48 19-05-2017
Builders install 500kg bench overlooking Kerch Bridge construction site
15:23 19-05-2017
Construction Minister attends opening of new waste sorting plant
14:49 19-05-2017
Russian Foreign Economic Affairs Bank opens offices in Abu Dhabi and Bahrain
All news


«    May 2017    »

Project works market: not wishing or not being able?

logo russianconstruction.com
Project works market: not wishing or not being able?

The results of the Russian design and project works market investigation make one put on the thinking cap.

In 2016 the fall of the Russian design and project works market for industrial and civil construction will reach 8.1% when compared with 2015, and the volume of the market will decrease to 143.9 bln roubles ($2.35 bln). Is there any light at the end of the tunnel?

The project and design works market for industrial and civil construction was one of the first to react towards the crisis tendencies of the economy. In 2013 the volume of orders decreased, and the drop point was in 2014. The main cause for these difficulties is the reduction of the industrial enterprises and developers’ investment programs.

As a reminder, the Russian project and design works market is distinguished for its high level of rivalry. More than 9,000 companies work in this niche market. It constantly makes the market participants actively adjust their competitive strategy and, indeed, the strategies regarding positioning and price forming. 

If before 2013 the growth strategy of the majority of the companies working in this sphere had included widening the range of their services and spreading their geographical presence, then after 2013 many companies focused on improvement of the work quality and price minimization for customers.

Project works market: not wishing or not being able?

However, the growth strategies claimed before 2013 could be realized only at the expense of the other market participants’ share reduction. Occupying new market and geographical niches competes with companies working there due to their price. 

Additionally, any expansion demands investments. And project and design organizations presently hardly have any free money. Of course, those companies whose market was threatened by “strangers” answered by lowering their prices.

It turned out that in the hard conditions presented by external factors’ pressure on the prices of design and project organizations (transparent calculation of expenses, customers’ expenses reduction programs, trade channels consolidation, rivalry growth) the majority of the market players have agreed to work at the edge of profitability.

Presently, the average sales profitability on the project works market is from –2.3% to +1.0%, and the net profit margin is still lower, respectively.

Of course, to a great extent this is determined by external factors, particularly as many believe that price formation may be managed. Prices are thought to be established by the market itself; either due to a customer or an unreasonable competitor. 

 In actual fact, however, the price decrease can hardly compensate for any additional sales volume sufficient for the indemnification of the price decrease and received benefits.

Despite the complexity of the deals on the design and project market and the fact that professional buyers practice them, there is an important factor related to the subjective perception of the price in this sphere.      

Investigation of the market by the Simple Analytics agency showed that only 20% of design and project organizations establish their prices correctly, from the standpoint of the interrelation between the price and advantages for each market segment they work with. 

Few organizations are aware of how the price perception is influenced by how information is got from a customer, how the price is structured and how payments are distributed in time.

Design and project organizations are not active enough in development and carrying out marketing events (advertising campaigns, PR and GR programs) to enlarge the order portfolio. They prefer to use morally obsolete “marketing strategies” as they are sceptical about anything new.

By the end of 2016, only 4 of 10 companies working on the design and engineering market have efficiently built their marketing and advertising companies. The other 6 companies either do not pay attention to marketing promotion, or do it inefficiently (at least as far as resource expenses are concerned). And only a third of the design and project organizations really try to tune away from their competitors (fig. 2).

The main mistakes in the “tuning away” marketing strategies (advertising and PR campaigns) on the design and engineering market are connected with the excessive focusing on the quality of the work carried out and the use of abstract advertising slogans.

Project works market: not wishing or not being able?

The problem is that such marketing strategies do not present why a customer should address the given company. A company should be distinct about the advantages for a customer and its difference from its competitors. All marketing should be centred on a company’s position against its competitors.

Notions of quality and responsibility are clearly determined in the customer-contractor agreement clauses and are expected by default.  Another idea should be chosen to tune away from the competitors.

The key mistakes of design and project organizations in developing their advertising campaigns are as follows:

— the adverts do not differ from the competitors’ PR-campaigns and advertising,

— the adverts promote the industry, not the company's brand. 

The majority of design and project organizations cannot:

— digest the marketing information on the market’s condition, tendencies and challenges;

— evaluate the market’s attractiveness and the company’s competitiveness;

— determine the market positioning of the company;

— take a decision on the advertising and PR campaigns whilst leaving out competitors’ ideas;

— establish adequate planned figures of sales and gross income;

— draw a conclusion on the reasonability of M&A deals.

New approaches both in the operational sphere and in the spheres of innovation, investments and finance, HR policy, marketing and sales are necessary for companies working in the Russian market to achieve their targets.


The Simple Analytics agency’s marketing research materials were used for the article. 

Related publications