Let’s Get Building!
Jennifer Nietz - Director of Operations
This month’s industry article is on the Construction market, specifically focused on Construction Management. Traditionally, in years past, we have seen a “slow down” in new projects during Q4. An interesting note, though, is that in Q4 of 2015—and even during the start of 2016—we did not see this “slow down” as we are talking to buyers in various markets. Our success with arranging meetings has always been there during the holidays, but I am talking about actual work that is taking place. This has appeared to remain steady.
So as I was doing some research into the Construction market I came across some very promising statistics. Over the previous five years—from 2010-2015—the revenue in the Construction Management industry has increased annually by 5% and is actually expected to continue at the same rate of 5% moving forward over the next five years. In fact, as we look at the next five years, 2016 is expected to have the largest revenue percentage increase of over 8%!
According to IBISWorld, over the next five years, operators in the Construction Project Management Services industry are expected to experience more consistently positive conditions as the economy continues to recover, partially driven by increased investment in construction. Stronger consumer conditions are forecasted to result in rising corporate profit, translating into new investment in nonresidential construction markets and fueling industry revenue. Rising demand for nonresidential construction will present the greatest growth opportunity for industry operators over the five-year period; however, strong demand for larger residential structures like apartment and condominium buildings will also present opportunities for firms.
Over the next five years, the most successful industry operators will likely be at-risk firms, which provide services throughout the entire construction process and thereby typically deliver better results. New private-public construction partnerships are also expected to become common in the future. Therefore, over the five years to 2020, industry revenue is expected to grow at an average annual rate of 5.2% to $207.1 billion.
What will firms need to do to stay competitive in this space?
IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:
Having contacts within key markets: Construction project management services firms must establish networks and a reputation among the key players in each market in order to be invited to tender.
Access to highly skilled workforce: It is important that construction project management services firms attract and retain a highly skilled workforce.
Fast adjustments made to changing regulations: Construction project management firms offer compliance management services and, as such, must be wary of a changing regulatory environment.
Ability to compete on tender: Successful firms are capable of winning contracts through tender while ensuring adequate cash flow without compromising long term profitability.
COACT is really looking forward to a successful 2016 for our clients and future clients. We look forward to our work together.
Questions or comments? Please contact Jennifer Nietz at jnietz@teamCOACT.com.