With Hoyman Dobson's team by our side, our Company has grown into a very successful small business. There are numerous times that they’ve responded with little or no notice, which has always allowed us to keep up and running. The bottom line is that over all these years, Hoyman Dobson team members went above and beyond what could ever be expected.
Ernest E. Walters, Jr.
Vice President, Aztec Construction
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During the last couple of years, the construction industry in Brevard County has gone through some substantial adjustments. According to the United States Department of Labor, Bureau of Labor Statistics:
- The average annual pay has dropped from the recent highs of $43,178 in 2006 to $38,240 in 2009.
- At the end of 2009 there were 9,463 people working in the construction industry. This number represents only 55% of the 2006 construction workforce.
Most of the employment losses took place in residential building. Other construction segments within Brevard County faired the economic downturn better.
The profitability of a commercial construction company depends on:
- Accurate project bids
- Efficient operations
If you are a larger construction company, most probably you own much of your equipment and have full-time construction crews.
If you are a smaller construction company, chances are you lease most of your equipment based upon the projects you are working on and most probably you hire on a project basis.
Three most common contracts:
- Guaranteed maximum price
- Cost plus fee price
The design-build contracts are growing in their popularity and many construction companies are either acquiring a design firm or are developing their own design department. Many contractors are using supply contracts as a way to manage building materials fluctuating prices, especially for steel, aluminum, copper, and PVC.
Industry specific software, such as Foundation, Timberline, MasterBuilder, American Contractor support project management, labor and material allocation, along with project monitoring and accounting.
Finance and Regulation
While the construction industry in Brevard County is not affected as much by seasonal fluctuations, many construction companies still have to deal with cash flow issues because:
- Payables and receivables can be high
- The periodic payments are tied to projects milestones
- Progress can be delayed by weather and supply issues.
To protect themselves against contract disputes, contractors should keep detailed records of expenses associated with the projects. As you well know, liability insurance is critical in this industry. If you are a major contractor probably you are carrying liability insurance to cover your subcontractors as well. In many cases construction companies are required to post surety bonds in the amounts sufficient to complete the project in case the original contractor cannot to do so.
The construction industry is primarily regulated by:
- Federal, state, and local building codes and regulations
- Safety and environmental regulations
- Immigration laws
- Slowdown in the commercial sector
- Uneven revenues and expenses
- Dependence on skilled personnel
- Dependence on few projects and customers
- Safety liability
- Billing for change orders
- High Insurance costs
- Toxic buildings
Trends and opportunities:
- Joint ventures
- Repeat business
- Guaranteed maximum price contracts
- Security in building design
- Infrastructure projects
- Green construction
Let us know what keeps you up at night?
- Minimizing risk on major contracts
- Obtaining surety bonding for the project
- How to best manage the cash flow
- Selecting and implementing best project management systems
- How to track and schedule capital equipment
- Obtain new business through prospecting and winning repeat business?
According to First Research, on a national level the commercial industry growth rating is low relative to other industries. However, First Research also projects a slow but strong recovery in the upcoming years.
National Construction Spending Growth Forecast
Year 2009 2010 2011 2012 2013 2014
% -15 -3 4 10 12 9
Source: First Research, August 2010
Let’s hope Brevard County commercial construction industry will be part of this trend.
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