With larger contractors bidding for smaller-scale and lower value work in order to maintain their pipelines, there is now intense competition with smaller, regional companies.
Those firms that have done well are all highly diversified and have large Facilities Management operations.
Companies with a particular focus on the utilities sector have also done comparatively well, as have smaller, regional companies with a particular focus on sectors such as housing.

Going forward, the outlook for non-residential construction output remains relatively positive into the short-medium term, with indications of a steady recovery for key sectors such as offices, industrial and retail, though balanced by more muted performance from key public sectors such as health and education.

Challenges

Uneven Cash-flow, Upfront Expenses
Contractors incur a steady stream of expenses, while payments from customers are periodic, including amounts retained until after a project is complete. Bad weather can significantly delay construction schedules, creating uneven cash flow. Prices of raw materials like lumber, structural steel, and concrete change rapidly.

Cost Overruns
Construction contractors have significant numbers of projects based on fixed price contracts, in which they bear the risk for cost overruns. The longer the term of the contract, the greater the potential deviation from original estimates. Sometimes they can pass higher labor and material prices to consumers; however, when prices rise quickly, some builders, especially smaller ones with less leverage, can get caught with the costs between the time they agree on a price for a project and the time they finish.

Dependence on Few Projects, Customers
Customer consolidation and concentration led to greater risk for many contractors, as they depend on fewer contracts. Customer concentration also increases risk, especially for small construction companies that depend on a few customers for the majority of revenue.

High Insurance Costs
Most construction contractors pay relatively high premiums for various types of insurance, including worker compensation, general liability, and surety. Construction delays and defects, accidents by inexperienced or overworked employees, and poor bookkeeping are major insurance issues.

Safety Liability
Contractors carry liability insurance to protect against lawsuits brought from injuries to employees or job site visitors.

Toxic materials
Numerous lawsuits are filed against contractors accused of using toxic materials or inefficient building techniques that contribute to mold litigation.

Excess Supply, Vacancies
Lead builders to cut construction to prevent holding unsold homes in inventory for extended periods.

Site Vandalising
Damage by and theft of construction equipment and raw materials are costly to replace, cutting into profits. Some builders are protecting jobsites by installing cameras and alarm systems, lighting them, building fences, scheduling just-in-time deliveries of supplies, or securing equipment and supplies in onsite containers. And those costs have to be absorbed by the tender of the project.

Regulatory requirements
Today’s construction industry must adopt new approaches to address regulatory requirements and financial risks – while meeting the challenges of expanding globally and achieving sustainable growth.

Sustainability / Green Construction
Sustainability continues to grow in importance organizations tend to incorporate it into new construction operations.

There is a growing awareness towards the benefits of using new and efficient technologies, such as, seismic isolation, base isolation techniques and seismic protection systems. Countries such as China, India and the U.S. are expected to occupy major share of the market.

Equipment manufacturers have developed innovative and efficient machines that take care of various functions in the construction industry. The main focus of manufacturers has been on maintaining fuel economy and to meet the global emission reduction directives. The latest trend being the implementation of a tracking and communication device to be informed about the functioning of the machine through messages forwarded on mobile phones.

In terms of construction equipment, the major categories include concrete mixers and pumps, articulating lift, winches, excavators and dozers, wheel loaders, graders, aerial work platforms, cranes and other ancillary equipment. US-based Caterpillar, Japan’s Komatsu and Sweden’s Volvo are the biggest players in the construction equipment business.

Building & Construction Materials

Strict environmental regulations and policies are pushing for the development of sustainable building and environmental friendly construction materials.
The most important building materials include gypsum and wallboard, cement and concrete, ferrous metals, wood, plastics, as well as stone and clay.

Civil engineering infrastructure-related construction projects - water and sewer, conservation and development, as well as power, communication and transportation infrastructure construction.

Civil engineering infrastructure-related construction is heavily influenced by direct and indirect investment from the public sector, and commitments to renew and expand national infrastructure are a driver for the future of the sector.

China’s CRCC, Spain’s ACS Group and France’s Vinci and Germany’s Hochtief are among the world’s leading companies in this field.

Facility management services, include the building fabric, air conditioning, plumbing & drainage, fire safety system and lift & escalator maintenance, but also services such as cleaning, security, handyman services and waste disposal.

The Fluor Corporation, rooted in the construction industry, is an example of a company providing facility management services. The French food services and facilities management company Sodexo and the American company Aramark are more examples of such companies.

Property is a main company asset and property management needs to be part of company strategy.

Facility managers today are expected to understand their company’s core business and contribute to the bottom line — not only by reducing facility costs, but also by improving the productivity, revenue generating capacity and image of their organizations.

The increasing quantity and complexity of data available to facility managers through new reporting protocols poses challenges. This calls for enhanced ability to convert raw data into usable and meaningful information that fosters informed decision making.

Facility management increasingly faces challenges posed by open work plan arrangements, differing hours of operation, and varying occupancy rates and densities — all of which impact power use and other considerations.

Facility managers play a critical role in business continuity after a disrupting event, not only by crafting and implementing the prepared response plan, but also by serving as role models for the organization in emergency preparedness and business continuity planning.