Highway, Street & Bridge Construction

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 8,800 construction companies in the US build transportation-related infrastructure; including highways, roads, streets, airport runways, and bridges. Companies may also build driveways and parking areas. Industry revenue consists of new construction (59% of industry sales), additions, alterations, or reconstruction (22%), and maintenance and repair (19%).

Dependence On Government Spending

The majority of industry revenue comes from publically funded programs, mainly state and local government projects.

Variability In Costs

With low margins, variability in the cost of materials and labor can be a challenge, particularly for fixed unit price and lump sum contracts.

Industry size & Structure

A typical highway, street, or bridge construction company operates out of a single location, employs about 39 workers, and generates about $14 million annually.

    • The highway, street, and bridge construction industry consists of 8,800 companies that employ about 345,200 workers and generate $124 billion annually.
    • Government contracts account for about 73% of industry revenue, and the majority of government contracts are issued by state and local governments.
    • Large companies include Kiewit Corporation, Granite Construction, and US divisions of Skanska.
    • Most small to medium-sized companies operate within a limited geographical market.
                              Industry Forecast
                              Highway, Street & Bridge Construction Industry Growth
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Mar 15, 2023 - Federal Infrastructure Spending Boosts Road Building
                              • State and local government contracts for highway, street, and bridge building projects saw a significant increase in 2022, fueled by funding from the Infrastructure Investment and Jobs Act (IIJA). The total dollar value for all transportation project contracts increased by 25% in 2022 over 2021, and the number of contracts rose by 12.4%, according to the American Road & Transportation Builders Association (ARTBA). Of 39,500 transportation contracts awarded in 2022, 38,220 (more than 98%) were roadway related. The remainder was for transit and rail projects. The dollar value for highway, street, and bridge contracts in 2022 was more than $102 billion.
                              • The total value of US highway and street construction put in place declined by 1% in January 2022 compared to the prior month, according to the US Census Bureau. However, the value of US highway and street construction was up 16.3% compared to January 2022.
                              • Large construction firms are beginning to see funds from the Infrastructure Investment and Jobs Act (IIJA) flow to projects, according to Construction Dive. Sweden-based construction company Skanska recently reported that civil projects are a bright spot and that nonresidential construction is the only market where the outlook has improved compared to the previous quarter. In a recent earnings call, California-based Granite Construction noted that IIJA funds have reached the states, money for projects has been allocated, and bidding processes are underway. The CEO for US-based construction and engineering firm Jacobs recently remarked that the full impact of the IIJA, as well as the Chips and Science Act and Inflation Reduction Act, will kick in before the end of the year, boosting infrastructure, energy, and other growth sectors.
                              • Despite federal funding for the Infrastructure Investment and Jobs Act (IIJA) rolling out more slowly than expected and continued pressures from labor shortages and inflation, civil construction contractors are optimistic about the industry’s outlook, according to Dodge Construction Network’s Civil Quarterly 2023 Issue 1 report. Among civil contractors surveyed, 72% said they were having trouble hiring skilled employees, a percentage that has remained largely unchanged since Q2 2021. The gaps in required labor are slowing down project completions, and 58% of civil contractors report turning down projects due to labor shortfalls. Even with recession concerns looming, 26% of civil contractors say they believe their revenues will significantly increase in the next 12 months, and 14% expect a significant rise in profit margins over the same period.
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