What Is The Size And Revenue Of Civil Engineering Contractors?

The construction industry is composed of about 710,000 businesses, mostly small companies, 91 percent of which have fewer than 20 employees. While the largest U.S.-based contractor had revenues of $22 billion in 2007, the overwhelming majority of builders had an annual volume of less than $10 million.

To provide a snapshot of the construction industry, it can be categorized as one in which building contractors range in size from a small family-owned business operating in a narrow geographic area to giant multinational firms.Finding the right one for your project is sometimes a confusing task but can be made somewhat easier by understanding how the industry works.

This is a business of high risk and relatively low profi t margins. The Construction Financial Management Association (CFMA) of Princeton, New Jersey, is a nonprofit organization serving the construction financial community; every year it surveys the 7,000 members in chapters across the country to obtain financial data and the major concerns of the industry.

The members include residential, nonresidential, industrial highway, and specialty contractors. The 2007 financial survey presented the following national overview as reported by the respondents:

■ The year’s hot topic was fi eld personnel recruitment and the ability to retain qualified workers, a concern that will continue for the immediate future. (This can impact owners, who may see a decrease in quality levels of workers.)

■ Construction jobs are good jobs, with the seasonally adjusted hourly rate of $21.08 per hour as of September 2007, a rate that reflects a 4.5 percent increase over the previous year for the same period. (Owners may find that labor increases in the construction industry exceed the overall inflation figures reported in the media.)

■ Material costs are a major problem. From December 2003 to September 2007, construction material producer prices indices increased 30 percent, more than double the 13 percent rise in the Consumer Price Index (CPI). Steel, cement, diesel fuel, and other petroleum-based products were at the top of the price
increase column.

The construction slowdown in 2008 in the United States has had a dampening effect on price increases of some materials, while worldwide demand has increased the prices of others. The projected building cost index for 2009, as reported by McGraw-Hill in December of 2008, refl ected a decrease of 0.5 percent, as opposed to an increase of 5.5 percent for the year 2007 – 2008.

■ In 2006, shipments of construction materials exceeded $500 billion, approximately 11 percent of the total shipments by U.S. manufacturers, and shipments of construction machinery topped $36 billion, 11 percent of all U.S. machinery manufacturers.

Due to the value of the dollar in relation to other world currencies, heavy equipment manufacturers like Caterpillar saw export sales rise during that period.

■ The typical construction establishment is a small company with an average employment of fewer than nine individuals.

■ Internal Revenue Service fi gures for 2004 show that the 700,000 corporations in construction had a net income of $47 billion, or 3.7 percent of total receipts of $1.3 trillion, considerably below the all-industry average margin of 4.9 percent.

■ Construction is a high-turnover industry. The Small Business Administration (SBA) showed that in 2004, 77,000 companies closed shop.

CFMA reviews the member responses and prepares a Best-in-Class composite for nonresidential and industrial building contractors.

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