Heavy & Civil Engineering Construction
Companies in this industry construct highways, streets, and bridges; utility systems; and other heavy and civil engineering projects, including subdivisions of land. Major companies include Bechtel, Fluor, Granite Construction, Kiewit, and The Walsh Group (all based in the US), as well as ACS Group (Spain), China State Construction (China), Skanska (Sweden), and VINCI (France).
Global construction output of all types is expected to reach $15 trillion by 2030, according to Oxford Economics. North America, Western Europe, and the Asia Pacific market are some of the top markets in terms of construction output.
The US heavy and civil engineering construction industry includes about 40,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $320 billion.
Construction of nonresidential buildings, including industrial buildings such as manufacturing and food processing plants, as well as commercial structures such as office buildings and shopping malls, is covered in a separate industry profile.
Competitive Landscape
Heavy construction activity depends heavily on the health of the economy, including corporate profits and local government budgets. The profitability of individual companies depends on accurate project bids and efficient operations. Large companies have advantages in their ability to engage in multiple projects simultaneously and to provide wider ranges of services. Small companies can compete effectively by specializing, working in a limited geography, or serving as subcontractors on larger projects.
The US industry is highly fragmented, the 50 largest companies account for about 25% of revenue. The competition for the largest projects is typically limited to major companies with extensive capabilities and resources. In addition to construction, the largest providers offer services covering all phases of design and engineering requirements, project management, and procurement, as well as ancillary services such as impact and risk assessment, environmental consulting, and financing.
Competitive Advantages:
Advanced IT - Due to the scale and complexity of heavy engineering and construction projects, builders must integrate the latest technologies to remain competitive. Companies use software for managing processes from design and bidding to procurement and project management. Technologies such as robotics, Internet of Things (IoT), 3D printing, and autonomous vehicles are also emerging in the construction sector and will increasingly become a competitive advantage for early adopters.
Diversification - Heavy and civil engineering projects require extensive funding, and major customers such as government agencies and energy companies may experience lengthy periods of constricted spending. Industry specialization can help construction firms gain a foothold, but the ability to serve customers in a wide range of sectors can be crucial to surviving downturns in key markets.
Ample Working Capital - A healthy balance sheet is crucial in the heavy construction industry, where financial strength can be a prerequisite for civil construction bids. Strong cash positions and access to credit also allow companies to weather downturns and invest in equipment, and ample working capital enables firms to cover overruns when cost disputes arise with project owners.
Companies to Watch:
Bechtel, one of the largest US-based construction and civil engineering firms, has built groundbreaking structures ranging from the Hoover Dam, once the world's largest hydroelectricity facility, to Ivanpah Solar Power Facility, the world's largest solar thermal plant.
Among the largest diversified construction companies in the world, China State Construction Engineering Corporation (CSCEC) undertakes business in more than 100 countries and regions of the world. CSCEC has established a major presence in North America and now ranks as one of the top bridge and building contractors in the US.
Skanska has been a leader in adoption of advanced construction technologies, including robotics and 3D printing.
Products, Operations & Technology
Highway and street work construction accounts for more than 30% of the industry revenue. Other markets include construction of oil and gas pipelines (about
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