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Commercial Construction Contractors

Industry Overview

The commercial construction industry in the US includes about 80,000 firms with combined annual revenue of $450 billion. Large companies include Bechtel, Fluor, and Turner Construction. The industry is highly fragmented, with many small companies working as subcontractors on larger projects.

Commercial construction includes apartments, office and retail buildings, hotels, schools, public buildings, industrial and manufacturing buildings, highways and bridges, sewers, pipelines, power lines, power plants, and other civil engineering projects.

Competitive Landscape

Demand depends heavily on the health of the US economy, including corporate profits and local government budgets. Large companies may be involved in many types of construction. Smaller companies typically lack sufficient expertise to participate in a broad range of projects and therefore specialize in only a few, or just one type. Of about 37,000 firms involved in the construction of commercial buildings, for example, 75 percent get the majority of their business in a specialty area. Small construction companies typically work in a limited geographical area and often function as subcontractors on larger projects.

Products, Operations & Technology

All construction companies need to manage equipment, labor, and construction materials. Larger companies may own much of their equipment and retain full-time construction crews, while smaller ones typically lease equipment for a particular project and hire much of their labor force on a project basis.

Larger companies typically negotiate an overall contract with a project owner and function as general contractor, acquiring equipment and materials, managing the construction schedule, and hiring specialist subcontractors for much of the actual construction work. Any one project can have from a dozen to hundreds of subcontractors who specialize in "ground up" work (foundation, floors, walls, roof) or in more profitable "finish out" work (interior walls, electrical, painting, plumbing, HVAC). General contractors need special management skills to deal with the project owner, designer (architect/engineer), consultants, suppliers, accountants, the government, attorneys, insurance carriers, and unions.

Because of the increasing complexity of construction projects, many project owners prefer to award the construction phase of a project to the same firm that produces the design (and therefore knows best how to execute it). The growing popularity of design-build contracts has encouraged many construction companies to acquire or develop a design capability.

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