Commercial Building Contractors

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 130,600 commercial building contractors in the US coordinate resources and manage the building process for industrial, commercial, and institutional projects. About 71% of contractors are sole proprietors or entities without workers on payroll. Most commercial building contractors rely heavily on subcontractors.

Dependence on Subcontractors

Commercial building contractors are dependent on subcontractors for specialized activities, such as electrical, plumbing, or mechanical work.

Competitive Pricing Environment

Most commercial construction jobs are competitive bidding situations, and price is a major deciding factor in which commercial contractor obtains the job.

Industry size & Structure

A typical commercial building contractor employs about 22-23 workers and generates $13 million annually.

    • The commercial building contracting industry consists of 130,600 companies that employ 806,900 workers and generate $471 billion annually.
    • About 71% of contractors are sole proprietors or entities without workers on payroll.
    • Most commercial building contractors rely heavily on subcontractors.
    • Large companies include Turner Corporation, Tutor Perini, Jacobs Engineering, and Gilbane Building Company.
                              Industry Forecast
                              Commercial Building Contractors Industry Growth
                              Source: Vertical IQ and Inforum

                              Coronavirus Update

                              May 9, 2022 - Ukraine War, China COVID-19 Restrictions Slow Supply Chains
                              • • The pandemic led to supply chain disruptions and rising prices for construction inputs, and Russia’s invasion of Ukraine further complicates global supply chains, pushing commodity prices higher. China’s zero-tolerance approach to the pandemic, including widespread lockdowns and factory disruptions, has disrupted construction material shipments and slowed project completions, according to the Associated General Contractors of America (AGC).
                              • • Demand for building design services is strong, according to an April report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) was 58 in March, up from 51.3 in February. Any reading above 50 indicates growth in architectural billings. The rise in billings is likely due to an effort to lock in interest rates ahead of continued rate hikes in the coming months. The ABI reading for commercial/industrial projects was 55.3 in March. The South registered the strongest March ABI score with 57.2, followed by the Midwest (56.2), the West (54), and the Northeast (46.3).
                              • • The Dodge Momentum Index increased 6% in April 2022 to 164.8 (2000=100), up from the revised March reading of 155. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. The commercial planning component increased 9%, and institutional planning rose 2%. The commercial planning pipeline was robust due to data center, warehouse, and hotel projects. While the backlog of nonresidential building projects is strong and should remain solid in the coming months, rising interest rates and higher materials costs could have a moderating effect on construction activity through the end of 2022.
                              • • Supply-chain delays related to COVID-19 and record-high costs of multiple key building materials will continue to pressure project completion time and profitability. Rising raw material costs are squeezing already slim margins. Accurate bidding is more challenging due to high inflation, project delays, and labor uncertainties. To manage these headwinds, contractors initiate project procurement earlier, research potential alternative materials, and work more closely with subcontractors to keep projects on time and on budget.
                              • • Total commercial construction spending increased 1.9% in value month over month on an adjusted basis and rose 13.9% in value year over year on an unadjusted basis in March 2022.
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