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 46,000 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.


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 22 workers and generates just over $5 million in annual revenue.

    • The engineering services industry consists of about 46,000 companies that employ over 1 million workers and generate $241 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
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Mar 21, 2023 - Financial System Jitters Could Impact Project Funding
                                  • Some industry insiders are bracing for the possibility that uncertainty in the banking industry could hinder some project funding, according to Construction Dive. As executives gathered in Las Vegas in mid-March for the Associated General Contractors of America (AGC) national convention, some were concerned about how the collapses of Silicon Valley Bank and Signature Bank could impact the industry. While AGC’s chief economist noted the bank closures had any direct impact on contractors nor their projects, a managing partner of accounting firm Grant Thornton said the small and mid-size banks that serve the construction industry are likely to tighten their lending standards. However, Associated Builders and Contractors (ABC) chief economist noted that contractors serving the infrastructure, industrial, and healthcare markets should remain busy while other markets may experience a slowdown.
                                  • Nonresidential construction firms’ backlogs increased in February, according to the Associated Builders and Contractors (ABC). The ABC’s Construction Backlog Indicator rose to 9.2 months in February, up from 9 months in January. Backlogs were also up year over year compared to February 2022’s 8.0 months. February’s backlog gains were led by the heavy industrial segment, which saw its backlog rise to 10.4 months from 8.4 in January. The infrastructure segment’s backlog grew from 8.6 months in January to 10 months in February. The commercial and industrial backlog rose from 9.2 months to 9.4 months over the same period. Amid more robust backlog growth, ABC’s Construction Confidence Index for sales climbed to 61.2 in February over January’s reading of 60.7. A Confidence Index sales reading of 50 or more indicates that most contractors are optimistic about sales.
                                  • The Dodge Momentum Index (DMI) increased 1.9% in February 2023 to 203.0 (2000=100), up from the revised January reading of 199.3. 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. On a monthly basis, the commercial planning component rose by 1.4%, and institutional increased by 2.9%. Commercial planning got a boost from an almost 20% rise in office planning and stronger data center project planning. In the institutional sector, education and healthcare planning saw gains, with research laboratories being a noted bright spot. Dodge’s associate director of forecasting said, “The continued elevation in the DMI should provide hope that construction activity will grow in 2024. Owners and developers tend to put projects into planning until well after economic conditions weaken. During the Great Recession, for example, the DMI did not substantially decline until 2009. Therefore, the anticipated mild economic growth in 2023 could cause the DMI to moderate over the year, but it is unlikely to fall below historical norms.”
                                  • After two years of steady growth, the US manufacturing sector is showing signs of slowing down, according to The Wall Street Journal. February marked the second monthly drop in new orders for manufactured goods, according to the Institute for Supply Management (ISM). Federal Reserve data shows that on a three-month moving average, US manufacturing activity has fallen 1.7% from its post-pandemic high in May 2022. The Federal Reserve’s efforts to tame inflation with interest rate hikes have made it more expensive for businesses and consumers to purchase big-ticket items, and some are pulling back on spending. However, some economists and financial sector insiders suggest the Fed may slow down its rate-increase strategy to avoid putting further strain on the troubled banking industry.
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