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Industry Overview
Major services in the construction industry include heavy and civil engineering projects as well as non-residential buildings, such as those for industrial, commercial and institutional use. The demand for construction depends heavily upon the health of the economy, which includes corporate profits and local government budgets. This industry is highly competitive with companies that range from small private firms to multi-billion dollar companies. Profitability of companies depends on project bids and efficiency of operations. As such, the larger companies have an advantage in their ability to become involved in multiple projects simultaneously and in different types of construction. Likewise, smaller construction companies can compete through specializing, or subcontracting on larger projects. Typical customers of the industry are comprised of property developers, corporations, institutions and government bodies. Additionally, contracts with business leaders, architects, engineers, developers and other construction firms are very important sources for leads and projects. On the promotional front, major marketing initiatives include customer visits, magazine advertising, trade publications and participation at industry tradeshows.
Business Challenges
High Insurance Costs: For the most part, construction contractors pay high premiums for various types of insurance. This includes worker compensation, general liability and surety. Major insurance issues involve a variety of concerns, such as construction delays or defects, accidents by inexperience or overworked employees, and even poor bookkeeping. Safety Liability: Unfortunately, the construction industry has a considerably large share of fatalities. In effect, contractors carry liability insurance to protect against lawsuits brought forth by injuries to employees or to job site visitors. Uneven Revenue and Expenses: While contractors incur a steady stream of expenses, customer payments are periodic including payments retained even after a project is complete. Poor weather can significantly delay construction schedules and create an uneven cash flow. Additionally, prices or availability of major raw material like lumber, steel or concrete can change quickly. On larger scale projects, prime contractors may even handle more complicated cash flows, like progress payments to subcontractors.
Industry Opportunities
Computer, Construction Technology: Advancements in computer technology and building techniques allow companies to enhance on project implementation. Computer technology, for instance, has reduced costs and mistakes, which is vital to an industry that relies heavily on scheduling, coordination and technical specifications. New, innovative building methods can also drastically simplify commercial projects and reduce costs and timeto-completion.
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Green Construction: The demand is rising for environmentally-friendly construction, materials, practices and certifications. An increased use of steel has helped qualify structures as green, by way of its recycled content. Steel products (as opposed to wood) last longer and command a more uniformed quality in addition to significantly reducing waste. Additionally, new cool metal roofing is much more energy efficient than traditional building materials. Buildings for High-Growth Population Segments: Growth in population segments presents great opportunities for the commercial construction industry. For example, as the baby-boomer population segment rises in the next decade, there will be a higher need for retirement, assisted living and hospital facilities.
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Construction Companies Using LinkedIn
The construction industry is among the top 10 industries worldwide using LinkedIn as of March 2011. According to eMarketer, construction companies are ranked in 9th place among the top 10 industries. With 3.2 million LinkedIn users around the world, construction companies have more of a presence on LinkedIn than those within the government industry. Other sectors that have a strong presence on LinkedIn include: recreational companies, consumer goods, educational companies, medical professionals, manufacturers, financial institutions and high tech companies.
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