Nonresidential Building Construction
Companies in this industry construct nonresidential buildings, including industrial plants and commercial and institutional facilities. Major companies include Clark Construction Group, Turner Construction, and Whiting-Turner Contracting (all based in the US), as well as Balfour Beatty (UK), China State Construction (China), HOCHTIEF (Germany), and Skanska (Sweden).
Global construction output in 2020 was about $20 trillion and is expected to reach about $15 trillion by 2030, according to Oxford Economics. China, India, and the US are expected to account for about 60% of all global growth, according to PwC.
The US nonresidential building construction industry includes about 42,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $460 billion.
Competitive Landscape
Nonresidential construction activity depends heavily on corporate and government spending. 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 engage in many types of construction. 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, with the top 50 largest companies counting for more than 20% of the industry revenue, although competition for the largest projects is typically limited to major companies with extensive capabilities and resources. Because the industry struggles with labor shortages, the ability to attract and retain adequate numbers of skilled workers (as well as engineers and managers) can be a crucial competitive differentiator, particularly when bidding on projects in remote locations.
Competitive Advantages:
Advanced IT - Construction companies are increasingly looking to technology to increase their productivity. Companies utilize 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.
Reputation/Track Record - Although builders typically bear much of the responsibility for cost overruns on a project, limiting risk is still a primary concern for clients investing in major construction. Companies with a record of completing projects on schedule and within budget hold a major competitive advantage when bidding for jobs; establishing such a reputation can be a major challenge.
Service Diversity - Nonresidential construction companies operate in a number of markets where demand is cyclical. The ability to serve customers in a wide range of sectors can be crucial to surviving downturns in volatile markets.
Companies to Watch:
China State Construction Engineering Corporation (CSCEC) ranks among the largest diversified construction companies in the world, doing business in more than 100 countries.
Skanska has been a leader in adoption of advanced construction technologies, including robotics and 3D printing.
Turner Construction helped pioneer such areas as green building and the use of digital modeling to become one of the largest construction companies based in North America.
Products, Operations & Technology
Major services include educational building construction, office building construction, health care and institutional building construction, which all
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