Engineering Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 45,200 engineering services firms in the US provide evaluation, investigation, planning, design, and development services related to utilities, structures, buildings, machines, equipment, processes, or systems. Specialty areas include civil, mechanical, industrial, electrical, electronics, computer hardware, aerospace, environmental, chemical, health and safety, materials, petroleum, nuclear, and biomedical engineering. Firms work on specific projects for clients and must be adept at project planning and management.
Dependence on Highly Skilled Personnel
Engineering service firms rely on a highly-educated, professional workforce.
Liability
Work site hazards and the complexity and scale of engineering projects expose engineering services firms to liability.
Industry size & Structure
A typical engineering services firm operates out of a single location, employs 25 workers and generates just over $6 million in annual revenue.
- The engineering services industry consists of about 45,200 companies that employ over 1 million workers and generate $275 billion annually.
- Customer industries include general building, transportation, petroleum, power, hazardous waste, water, sewer/waste, industrial, and manufacturing.
- The engineering services industry is fragmented: The 50 largest firms account for only about 35% of industry revenue.
- Large companies include Fluor, Bechtel, and AECOM.
Industry Forecast
Engineering Services Industry Growth
Recent Developments
Apr 26, 2024 - Industry Growth Moderates
- The engineering services industry’s sales are expected to soften over the next several years. The industry’s year-over-year sales rose 14.3% in 2022 before moderating to 5.8% growth in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales are projected to rise a modest 2.6% in 2024 and 3.9% in 2025, then see average annual growth of about 4.3% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
- North American construction and engineering spending in 2024 is expected to grow by about 5%, according to FMI’s second-quarter 2024 North American Engineering and Construction Outlook. Slower spending for residential and commercial construction segments will limit overall construction and engineering spending. Construction subsectors that are expected to see double-digit growth in 2024 include manufacturing (up 19% in 2024 over 2023), lodging (+14%), public safety (+12%), highway and street (+12%), sewage and waste disposal (+10%), and transportation (+10%). Other pockets of steady growth include conservation and development, power, education, water supply, and healthcare. High interest rates continue to put downward pressure on residential and commercial projects. Single-family construction spending is forecast to be flat in 2024, while multifamily is expected to decline 8% after projects in development peaked at 1 million units in mid-2023. Commercial is the only nonresidential construction segment that is projected to post negative growth in 2024, down 2% compared to 2023.
- In late March, a containership struck a support pier of Baltimore’s Francis Scott Key Bridge, causing the entire bridge to collapse into the Patapsco River. According to Construction Dive, civil engineering experts said that while concrete bollards protected the bridge’s piers, the barriers were not designed to withstand an impact of that size. Such barriers are intended to protect against small fishing vessels or pleasure boats; the Dali containership weighs 95,000 tons unloaded. While industry experts suggested it’s economically infeasible to design bridges to withstand containership impacts, the Key Bridge disaster serves as a lesson, and it will affect how future bridges are designed and built, as standards are updated regularly.
- The boom in artificial intelligence (AI) - and the data centers needed to power it - are expected to drive a significant increase in electricity demand, according to The Wall Street Journal. Power industry experts suggest renewables won’t be able to come online fast enough to support the appetite for electricity created by the coming wave of data centers to support AI. Electricity demand has grown slowly for years, but consulting firm Grid Strategies recently doubled its five-year electricity demand outlook from what it was projecting just last year. Hunger for electricity to power data centers is global. The International Energy Agency estimates worldwide electricity consumption from AI, data centers, and cryptocurrency could double by 2026.
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