The Construction Industry Analysis

Topic: Industry
Words: 707 Pages: 2

Introduction

The construction industry generally encompasses establishments that play a role in constructing buildings and such engineering projects as utility systems and highways. It also includes companies specialized in preparing sites for new construction, those which fundamentally partition land for sale as building areas. The nature of the building activities includes new work, alterations, additions, and maintenance or repairs. While most of the institutions in this field perform building works on multiple sites, they are usually managed in a fixed business area (United States Census Bureau, 1). Moreover, their production responsibilities are typically detailed in contracts, both prime and subcontracts.

Some of the major companies in this sector include the US-based Bechtel, Granite Construction, Fluor, and The Walsh Group, which construct highways and bridges. The majority of their revenues come from the construction of utility systems, including communications, water and sewage, and oil and gas. Other companies in this industry which prepare and subdivide the land for development include the Forest Group and The Related Companies (Dun & Bradstreet, 2). They sell such services as excavation to ready for installation of roads and utilities. They focus on apportioning real property into industrial or commercial tracts, preparing it to be sold to builders. These companies also develop apartment and condominium communities, especially in densely populated urban regions.

Sales in the Construction Sector

An important microeconomic variable discussed regarding the United States construction industry is sales. In the past years, the construction sector has recorded high sales. This trend may have only been interrupted by the economic downturn which resulted from the Coronavirus pandemic. With the ongoing developments in mixed-use projects, the demand for which continues to increase across crucial US states, sales are bound to rise further. Additionally, the high government expenditures on infrastructure development and maintenance and the positive trends in the housing market imply a promising improvement in sales.

US building and construction sheets market by application, 2014 - 2025 (USD Billion) (Grand View Research).
Figure 1. US building and construction sheets market by application, 2014 – 2025 (USD Billion) (Grand View Research).

However, the collapse of the oil price has negatively impacted the demand for engineering and construction works. A somewhat better commodity price weakened by the Coronavirus-induced low market position is likely to distort sales in this sector. Despite these drawbacks, the construction industry’s hope depends on the new government’s plans for robust infrastructural commitment. At the same time, there are improving trends in co-operate profits, which is likely to boost sales. More prominent companies such as Bechtel are better placed in the industry in terms of marketability due to their ability to participate in multiple projects simultaneously. They also have benefited from their widely diversified products and services.

The Impact of Government Regulations

Government meddling in the construction industry marks an essential component of the external environment. One way in which the government gets involved in this industry is through regulations. Control measures are imposed by the federal, state, and local governments and mostly relate to the formation, performance, and administration of government contracts. Such regulatory affairs as Federal Acquisition Regulation and environmental protection and health and safety aim to create a sustainable relationship with the community (Hadidi et al., 3). However, deviations from these requirements imply additional costs to the industry’s key players.

Failure to comply results in companies facing severe consequences, including contract terminations and sanctions. Furthermore, they can be subjected to harmed reputation, forfeiture of profits, and a loss of an establishment’s status as a government contractor. Such occurrence is likely to cause significant reductions in company income. Other regulatory measures, including strict waste management practices, are aimed at environmental protection and conservation (Hadidi et al., 3). However, the extensive nature of their specifications makes it challenging to establish new players in the market.

References

  1. United States Census Bureau. No date. North American Industry Classification System. Sector 23: Construction. Web.
  2. Dun & Bradstreet. No date. Heavy & Civil Engineering Construction: Industry Insight. Web.
  3. Grand View Research. Building & Construction Sheets Market Analysis by Product (Bitumen, Rubber, Metal, Polymer), By Application (Flooring, Ceiling, Windows, Doors, HVAC), By End-use, And Segment Forecasts, 2018 – 2025. Web.
  4. Laith Hadidi, Said Assaf & Adel Alkhiami, 2017, A Systematic Approach for ERP Implementation in the Construction Industry, Journal of Civil Engineering and Management Vol 23(5), 594-603, Web.
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