AVEVA Acquires 8over8: Investing to Reduce Project Cost and Overrun Risks

Yesterday, UK-based AVEVA, FTSE 250, world-leading engineering software provider to the plant, power and marine industries, announced its acquisition of rival Northern Ireland-based 8over8. 80ver8 provides contractual risk management solutions to Owner Operators of large capital projects in the oil & gas and mining sectors. It generated revenue of £10 million and profit before tax of £3.1 million for the year ending December 2013.

The 8over8 flagship platform, ProCon, connects Owner Operators and Engineering Procurement Construction companies throughout a project life cycle. It is proven to manage contract execution in multi-billion dollar capital projects globally, and is firmly established in the largest capital-intensive energy projects in the world. For organisations that design, build and operate high-value assets, ProCon provides them with better control of their strategic contracting relationships by enforcing discipline in commercial communications, connecting decision makers and engendering more predictable commercial outcomes.

With offices in Europe, North America, Australia and the Middle East, 8over8 has a global presence that will help AVEVA tackle a growing global need for “increased project control, capital discipline, minimising project overruns, and delivering improved efficiency in operations.” AVEVA CEO, Richard Longdon, said the £26.9 million (€34.4 million) acquisition makes ‘AVEVA uniquely placed to ensure both technical and contractual integrity changes are captured during the project life cycle and provides further proof of AVEVA’s ongoing strategy to grow its business both organically and through acquisition.”

‘Now more than ever before, our customers are seeking improved project control and reduced risk to their capital investment programmes. We are responding to the needs of all the industries we serve to help our OO customers maximise their return on capital investment, and our EPC customers to drive greater efficiency, enhancing their profitability and competitive differentiation while providing a well-established global platform to accelerate the rollout of ProCon.”

8over8 CEO Clare Colhoun announced “Delays and cost overruns are costing billions of dollars when the need for capital discipline has never been greater. We have enjoyed rapid expansion in the adoption of the ProCon platform and emerged as the leader in contractual risk management software. Joining AVEVA gives us the chance to take ProCon to an even wider global market …”

According to The Financial Times "the acquisition follows a difficult trading period for Aveva, which was spun out of Cambridge University in the 1960s. In November, AVEVA announced a sharp drop in profits after demand from clients in the energy sector softened."

Our US research analyst, Thomas Kase, commented: "Like few other verticals, the Oil & Gas industry relies heavily on consistent quality in services delivered in far flung regions across the globe: consistent performance levels is a huge challenge as about 70% or more is outsourced. Effective O&G procurement requires greater visibility into, and normalization of, supplier performance data than what is needed in most other companies.  Deploying the right solutions to support this effort is critical to O&G firms wanting to stay competitive in a market with softening oil prices."

As we haven't had any hard interaction with either of these firms, we can't bring any real insight. But it is clear that this is a pretty industry-specific player. The full press release "AVEVA invests to reduce the risk of project cost and schedule overruns" is available on both the AVEVA  and 8over8 websites.

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