The construction industry is very competitive and today’s market provides greater challenges to contractors than ever before. Demand for construction depends highly on the overall economy. Private construction is reliant on corporate profits for expansion and new buildings. Public construction is reliant on government budgets and funding to support new schools, highways, bridges and public buildings. The profitability of a contractor begins with the bid process and goes throughout the life of a project greatly dependent on efficient operations. We work with our construction contractor clients to review the numbers throughout the life of a job. We will prepare a gainfade analysis and review with our clients what happened from the price the job was bid at until the close of the job. We ask the critical questions, such as: did the profit grow; did the profit fade; more importantly, why?
We have worked with the small local, specialty contractors as well as the very large heavy highway contractors and all sizes in between, and we are proud to provide the same high level of service to all clients. We understand the construction industry and the importance for a contractor to align with an accounting firm that understands where they have been as well as the challenges of where they are going.
We have noticed these current trends, new opportunities and challenges in construction:
- A tight financing environment
- Construction work is very cyclical and dependent on the local economy
- Prices of materials such as lumber, structural steel and concrete can be volatile
- Labor costs continue to grow, federal hiring requirement on public projects is a challenge
- Cash flow challenges are faced by contractors as their volume of work decreases and they experience uneven revenue and expenses
- High costs of insurance
- Safety concerns and compliance with government regulations
- More contractors have entered “Joint ventures” with other contractors to share the risk on larger more complex projects
- Solar projects as well as “green construction” are new opportunities
- Improved technology has allowed information to more timely and effectively be communicated from jobsites to construction management