Utility System 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 17,660 utility system construction firms in the US are specialty contractors that develop buildings, structures, and distribution networks associated with water, sewer, petroleum, gas, power, and communication systems. Firms provide new construction, reconstruction, rehabilitation, and repair services. Companies may specialize in a utility sector or offer services across multiple utilities.
Difficult Work Site Conditions
Utility construction projects can involve complex site conditions, including difficult to reach terrain and underground locations.
Seasonality and the Weather
Seasonal demand for utility system construction services creates uneven cash flow.
Industry size & Structure
The average utility construction firm employs 36 workers and generates about $9 million in annual revenue; the average water and sewer line construction firm employs 15 workers and generates $4 million annually; the average oil and gas pipeline construction firm employs 103 workers and generates about $27 million annually; and the average power and communication line construction firm employs 44 workers and generates about $12-13 million annually.
- The utility system construction industry consists of about 17,500 companies that employ 543,700 workers and generate about $158 billion annually.
- The oil and gas pipeline segment and the power and communications segment are concentrated at the top with the 50 largest firms representing 64% and 59% of the segment's total revenue, respectively. The water and sewer segment is more fragmented with the 50 largest firms representing just 20% of the segment's total revenue.
- The utility system construction industry includes several large players with national to near-national scope, regional firms, and many small independent firms that often serve as subcontractors to larger firms and operate within a limited geographical market.
- Large companies include MasTec, Dycom Industries, and Layne. Some large firms have international operations.
Industry Forecast
Utility System Construction Industry Growth
Recent Developments
Nov 14, 2023 - Infrastructure Investments Drive Utility Construction
- Increased public funding of infrastructure projects is helping to boost utility system construction spending. By midyear 2023, year-over-year growth in construction spending for sewage and waste disposal projects increased significantly. Water supply and power project spending saw moderate growth over the same period, while communications spending growth was slightly better than flat. Utility system employment in Q3 2023 increased somewhat compared to year-earlier levels and was consistent with seasonal norms, as industry employment typically peaks in the fall. Utility system construction wages in Q3 2023 were sharply higher than at the same point in 2022.
- North American engineering and construction spending is forecast to rise by 5% in 2023 compared to the 12% growth seen in 2022, according to FMI’s fourth-quarter 2023 North American Engineering and Construction Outlook. Spending on sewage and waste disposal projects is expected to rise 18% in 2023 and 9% in 2024. Water supply construction spending is projected to increase by 16% in 2023 and grow another 7% in 2024. Driven by investments in renewable energy, microgrids, and distributed energy projects, spending for power construction is forecast to rise 5% in 2023 and 6% in 2024.
- The US Department of Energy (DOE) recently announced $1.3 billion in funding for constructing three interregional electricity transmission lines, which will add 3.5 gigawatts to US grid capacity. The projects include a 175-mile transmission line through New Mexico and Arizona, a 214-mile line through Nevada and Utah, and a bidirectional transmission line that will expand New England’s electric grid with additions in Vermont and New Hampshire. The DOE also released its National Transmission Needs Study that finds the US will need a twofold expansion of existing regional transmission capacity and a fivefold jump in interregional transmission capacity to reach the country’s clean energy goals.
- According to a study released by the Environmental Protection Agency (EPA) in September, the Inflation Reduction Act could reduce economy-wide carbon emissions by 35% to 43% by 2030. The study estimates that by 2030, the IRA could result in carbon emissions by the electric power sector falling 49% to 83% below 2005 levels. Produced by the EPA’s Office of Atmospheric Protection, the report is based on estimates “modeling results from recent peer-reviewed literature, government reports, and EPA-funded modeling and analysis.”
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