The 2023 Engineering New Record (ENR) list of Top Contractors has dropped! Along with the latest rankings of contractor and subcontractor organizations, they’ve provided insights from the best and brightest of the industry. In this blog, we’ve summarized these thoughts and trends.
Impact of Increasing Loan Interest Rate
“Work was plentiful when interest rates were low,” explains Joel Phelps, Chief Operating Officer at subcontractor Reflection Window + Wall. “Coming out of the pandemic, there was a lot of pent-up demand; consequently, we experienced massive growth, which presents its own challenges and perils."
Even though subcontractors have seen a strong comeback in business since the pandemic put a halt on projects, the looming prospect of higher loan interest rates has got contractors rolling up their sleeves and getting ready for tougher times. Delayed awards due to supply chain difficulties can make things even more complicated. It's all about finding that sweet spot between holding onto what's valuable and keeping the competition at bay in this ever-shifting market. It's a game of smart choices and the ability to adapt, and it's what keeps these builders going strong in the ever-changing construction game.
Bigger Contracts, Better Opportunities
As reported by ENR, the median new contract total has risen in 2023 by 14.8% to $101 million, from $88 million last year. In 2022, the construction industry witnessed a significant upswing with new contract awards surging by 22.5% to reach a total of $173.31 billion. Out of the 522 companies that disclosed their financial performance, a remarkable 94.4% reported being profitable during the year.
Only 19.4% of surveyed companies report that revenue fell in 2022. There are more opportunities than ever in the current landscape. This prevailing resilience and the reported uptick in revenue for the majority of surveyed companies highlight the notion that there are now more opportunities available than ever in the current business landscape.
This presents an encouraging outlook for entrepreneurs and professionals seeking to harness the dynamism of the market, explore new ventures, and leverage the transformative potential of emerging trends and technologies. It's a landscape ripe with possibilities, awaiting those who are willing to embrace change and new technologies to seize the available opportunities.
How to Scale
Managing this growth and scaling to meet demands isn’t an easy task. Finding skilled construction and subcontracting labor has long been a struggle across the industry, and now it is more competitive than ever.
In response to the skilled labor shortages faced by BMWC in the Midwest, the company has taken proactive measures to address the issue. They've significantly expanded their prefabrication capabilities, going as far as doubling their capacity by introducing two new facilities into their operational network. According to President and CEO Chris Buckman, these facilities have been strategically placed in regions that tap into distinct labor sources. This strategic placement enables BMWC to utilize labor from one area to not only facilitate fabrication but also conserve the labor capacity within the specific project region for efficient installation.
Systems Group Director of Engineering Kyle Morgan gives another solution to this issue of a higher demand for services paired with a lack of available skilled labor. “Both of these problems have led to successes in new in-house training programs for welding and pipefitting,” he says, “along with new processes for Bill of Material takeoffs to start pre-buying material and equipment long before we set foot on a jobsite.”
Kyle Morgan, the Director of Engineering for the Systems Group, offers another solution to the challenge of heightened service demand coupled with a scarcity of skilled labor. He suggests that these challenges have paved the way for the implementation of effective in-house training programs, particularly focused on welding and pipefitting. Morgan says, “along with new processes for Bill of Material takeoffs to start pre-buying material and equipment long before we set foot on a jobsite.” These forward-thinking approaches not only address the labor shortage issue but also streamline project preparation and execution.
As we wrap up our exploration of the 2023 Engineering News Record (ENR) list of Top Contractors and the invaluable insights from industry leaders, we hope you've gained a deeper understanding of the trends and developments shaping the construction landscape.
The construction industry is ever evolving, and staying informed about the top players and emerging trends is crucial for both professionals and enthusiasts. We encourage you to continue exploring and innovating in this dynamic field.