Ahead Of The Bell: Engineering And Construction

HARTFORD, Conn. (AP) — Big-ticket construction projects may soon be in the works as prices fall and competition spikes, providing new business for engineering and construction companies, an analyst said Tuesday.

Analyst Michael S. Dudas of Jefferies and Co. Inc. said he is "cautiously optimistic" about projects and opportunities to increase backlog in the second half of 2009.

"Capital cost estimates have declined during the past 12 months, allowing clients to revisit project decisions," he said in a client note.

Competition for engineering and construction projects is strong, with Japanese and Korean contractors showing particular interest, he said.

In addition, acquisitions "remain on each company's radar screen" and he expects cash balances to remain strong, he said.

Chicago Bridge & Iron, for example, could benefit from a refinery project in Colombia valued at between $1.5 billion and $2 billion, Dudas said.

However, Fluor Corp. does not expect any "elephant size contracts" for the next few quarters, with large awards of about $500 million for oil and gas projects, government services and other work, he said.