construction survey results

8/3/2019 Construction Survey Results

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8712 West Dodge Road, Ste 200 • Omaha, Nebraska 68114 • p 402.397.8822 • f 402.397.8649 • www.BlandCPA.com

Thank you or your participation in the 2010 Construction Industry Survey, sponsored by Bland & Associates,P.C. As promised, we have enclosed the results o the surveys received rom construction proessionals inthe Greater Omaha area and have made a donation to each o the ollowing scholarship unds: NationalAssociation o Women in Construction (NAWIC) Omaha Chapter 16, Construction Financial ManagementAssociation (CFMA) Nebraska Chapter and the Associated General Contractors o America (AGC) NebraskaChapter.

In its sixth year, the survey respondents again included a diverse group o contractors. Commercial, residentialand government construction services were all represented with annual revenues ranging rom $1 million to$150 million. We trust this inormation will be useul to you in making strategic business decisions or yourcompany.

In an eort to present the inormation in a manner that can be easily interpreted and utilized, we haveenclosed the ollowing:

1. Description o the survey respondents including contractor size and type.2. A summary o data or areas including operations and nancial management; human resources and risk

management; benets; compensation; and technology.3. Graphic representations o each question posed within the original survey.

We hope you nd this inormation valuable and we appreciate your participation in our survey. I you haveany questions regarding the inormation presented, please eel ree to contact me directly at (402) 397-8822or [email protected].

BLAND & ASSOCIATES, P.C.

Jeremy Vokt

Shareholder



Today’s U.S. commercial construction industry accounts or approximately 80,000 rms and $550 billion in annual revenueaccording to national reports. The residential construction industry is comprised o 170,000 entities with $260 billion inannual revenue, compared to $465 billion last year. Government contractors, meanwhile, generate an estimated $300 billionannually on capital projects such as highways, bridges and public buildings. This gure has doubled rom $150 billion las

year.

The images below illustrate the 2010 survey respondent demographics. Similar to last year’s responses, the dominant companyprole in 2010 includes contractors operating in 2 – 5 states with annual revenues between $11 million and $50 million.In addition, over 41% o survey respondents reported they primarily provide general contracting services, an increase rom23.8% in 2009. Employee recruitment is currently the biggest challenge or just 4.2% o respondents, a signicant decreaserom 42.9% in 2009. The biggest challenge this year, according to respondents, is business development (41.7%).

Description o Survey Respondents

2

What is the biggest challengecurrently facing your business?

In how many states do you currently operate?

What does your company primarily provide? Annual sales

1 state

2 – 5 states

6 – 15 states

More than 15 states

No response

12.5%

62.5%0 2 4 6 8 10

No response

Other

State regulatory and tax climate

Seasonal work flow

Expanding foreign workforceEmployee retention

Employee recruitment

Business development

Bonding and insurance requirements

8.3%

4.2%

20.8%

4.2%

$1 – 10 million

$11 – 50 million

$51 – 150 million

Over $150 million

No response

8.3%

50.0%

41.7%

25.0%

In what categories do you classify your business?

0 5 10 15 20 25

No response

Government

Residential

Commerical 87.5%

79.2%

4.2%

0 2 4 6 8 10

No response

Other

Subcontracting

General contracting

Specialty trade service

0.0%

41.7%

4.2%

4.2%

0.0%0.0%

41.7%

20.8%

25.0%

29.1%

66.7%



As previously indicated in national reports, and in our survey, cost controls and changing project needs oten make leasingequipment a much more cost eective solution, especially or smaller companies. Among this year’s survey respondents,however, 75% reported they own more than 75% o their equipment.

Receivables can be high or construction companies today, making cash fow management especially dicult. Industry reportreveal revenue is oten collected through periodic payments and is based on the completion o dierent project milestones,

which can be delayed by weather, supply issues and project problems. Some construction contracts also require retainageallowing clients to withhold payments until ater projects are complete. Less than 55% o the 2010 survey respondents reportedtheir receivables are out longer than 45 days, a drop rom 66.7% last year.

Operations and Financial Management

3

What is the average age of your receivables? What percentage of equipment

do you own versus lease?

What is your net income beforeowner's compensation?

What level of assurance is requiredfor your financial statements?

75.0%

4.2%

16.6%0 – 25%

26 – 50%

51 – 75%

76 – 100%

No response

30 – 45 days

46 – 60 days

61 – 90 days

More than 90 days

No response

How many months of revenueare typically in your backlog?

0 3 6 9 12 15

No response

N/A

Review

Compilation

Audit

0 – 2 months

3 – 6 months

7 – 12 months

More than 12 months

No response

20.8%25.0%

54.2%

4.2%

16.7%

58.2%

4.2%

12.5%

0 2 4 6 8 10 12

No response

More than 15%

11 – 15%

6 – 10%

0 – 5% 33.3%

0.0%

4.2%

41.7%

33.3%

20.8%

50.0%

16.7%

4.2%

4.2%



According to national reports, a key challenge or construction companies today is hiring enough skilled workers who canaccurately estimate job costs. This is especially important as construction projects become more complex and or jobs withguaranteed maximum price contracts. The majority o 2010 survey respondents (50%) reported their estimates are within 1– 2% o actual job costs. More than 37% o respondents, however, said they overestimate projects by 3 – 5% on average, ajump rom just 19% in 2009.

Operations and Financial Management (cont.)

4

What percentage of gross revenues aregenerated using the following methods?

Not including change orders, on average, howclose are your estimates to actual job costs?

What percentage of your corporate grossrevenue is attributable to bonded projects?

What percentage of your corporate grossrevenue is attributable to change orders?

0

2

4

6

8

10 Overestimated

Underestimated

1 – 2%3 – 5%More than 5%

0 – 25%

26 – 50%

51 – 75%

76 – 100%

No response

0 – 5%

6 – 10%

11 – 20%

More than 20%

No response

4.2% 4.2%

29.2%

20.8%

12.5%

45.8%

41.7%

12.5%

37.5%

33.3%

16.7%

37.5%

4.2%

High Low Average

Not-to-exceed price 60.0% 5.0% 15.0%Fixed price 100.0% 10.0% 65.4%

Cost plus ee 90.0% 0.0% 28.2%

Times and materials 50.0% 2.0% 18.9%



The majority o this year’s survey respondents reported their gross prot percentage is 20% or lower, with only 8.3% enjoyinggross prots o 31 – 40%. By comparison, 9.6% o the 2009 survey respondents reported a gross prot percentage o morethan 40%. More than 58% o this year’s respondents also indicated they have experienced decreasing prots over the pasve years.

According to the U.S. Census Bureau, commercial construction spending ell 15% in 2009 and is expected to drop another 3%

this year. The Bureau does project the industry to rebound steadily in the coming years, however, predicting a 4% spendinggrowth in 2011, 10% in 2012 and 12% in 2013. The 2010 survey revealed the top three new markets respondents areexpected to pursue include healthcare acilities (38.1%), educational acilities (33.3%) and oces (23.8%).

Customers and Marketing

5

What percentage of bids do you win?

What is your marketing budgetas a percentage of gross revenue?

What new markets will you bepursuing in the next five years?

What percentages of jobs are exposedto completion penalties or bonuses?

0 – 20%

21 – 40%

41 – 60%

More than 60%

No response

0 2 4 6 8 10

No response

Other

Transportation

Residential

Offices

Multi-family housing

Healthcare

Educational facilities

0 – 1%

2 – 5%

6 – 8%

More than 8%

No response

12.5%

16.7%

58.2%

16.7%

16.7%

25.0%

4.2%

20.8%

41.7%

4.2%

12.5%

45.8%

41.7%

What has been your gross profittrend for the past 5 years?

20.8%

20.8%

37.5%

4.2%

16.7%

0

5

10

15

20

25

Bonuses

Penalties

Noresponse

Morethan 60%

41 – 60%21 – 40%0 – 20%

62.5%

8.3%

100.0%

25.0%

0.0%0.0%

What is your actual gross profit percentage?

0 2 4 6 8 10

No response

More than 50%

41 – 50%

31 – 40%

21 – 30%

11 – 20%

0 – 10%

0 2 4 6 8 10

No response

Increase

Slight increase

Same

Slight decrease

Decrease

12.5%

41.7%

26.5%

0.0%

0.0%

0.0%

4.2%4.2%

8.3%

0.0%

4.2%8.3%

0.0% 0.0% 0.0%4.2%



Industry reports reveal most contractors within the construction industry pay higher premiums or insurance, worker’scompensation and general liability. In addition, major issues currently acing contractors include construction delays anddeects, accidents by inexperienced or overworked employees, and poor bookkeeping. In this year’s survey, hal o therespondents reported a decrease o 1 – 10% in general liability costs. In 2009, however, the majority o respondents reportedan increase o 1 – 10%. The 2010 survey respondents also reported their biggest risk management challenges are currentlyworksite saety and contractual agreements.

Risk Management

6

How has your general liabilitycost changed in the past year?

What is your biggest risk management challenge?How much of an umbrella

excess liability do you carry?

How has your worker's compensationcost changed in the past year?

0 2 4 6 8 10

No response

Other

Contractural agreements

Cost of workman'scompensation limits

Worksite safety

0 2 4 6 8 10

No response

Increase more than 10%

Increase 1% – 10%

No change

Decrease 1% – 10%

Decrease more than 10%

0 2 4 6 8 10 12

No response

Increase more than 10%

Increase 1% – 10%

No change

Decrease 1% – 10%

Decrease more than 10%

0.0%

16.7%

8.3%

25.0%

16.7%

8.3%

0.0%

8.3%

12.5%

0.0%

16.7%

25.0%

0 2 4 6 8 10

No response

More than $10 million

$6 – 10 million

$3 – 5 million

$0 – 2 million

8.3%

16.7%

33.3%

0.0%

0.0%

41.7%

50.0%

37.5%

37.5%

37.5%



According to the Bureau o Labor Statistics, employment growth in the commercial construction sector decreased 12% in2009, the rst drop since 2004. Residential contractors experienced an even larger decline o 23% in 2009, ater losing 12%o their workers in 2008 and 6% in 2007. Consistent with these reports, 41.7% o the 2010 survey respondents revealed theykeep more than 50 ull-time employees on sta, a decrease rom 57.1% last year. Survey respondents did note, however, thajobs are being subcontracted at a lower rate. More specically, more than 70% o this year’s respondents subcontract 20%or less o their projects, while only 47.6% subcontracted the same amount in 2009.

Human Resources

7

On average, how many full-timeemployees do you keep on staff?

What percentage of your full-time workforce is union or minority?

0

5

10

15

20

Minority

Union

Noresponse

Morethan 60%

41 – 60%21 – 40%0 – 20%

0 – 5

6 – 10

11 – 20

21 – 50

More than 50

No response

20.8%

79.2%

0.0%

75.0%

25.0%

41.6%

4.2%

12.5%

12.5%

What percentage of jobs are subcontracted?

0 – 20%

21 – 40%

41 – 60%

More than 60%

No response

16.7%

70.8%

12.5%

What percentage of your workforce will becomprised of minority workers in 3 to 5 years?

0 – 20%

21 – 40%

41 – 60%

More than 60%

No response

12.5%

66.7%

20.8%

0.0%0.0% 0.0%

29.2%

0.0%0.0%



Benets

8

Due to the cyclical nature o demand or contractors, many construction companies keep only a core group o ull-timeemployees and hire additional workers on a project basis. As a result, there are no long-term ringe benets or those requiredemployees. Only 8.3% o the 2010 survey respondents oer benets to part-time employees, a decrease rom 14.3% last yearAmong the respondents who do oer benets to part-time employees, none o them oer disability or lie insurance coverage

The majority o survey respondents (87.5%) oer health insurance coverage to their ull-time sta, while just over hal o those

companies pay between 50% and 75% o their employees’ premiums. Only 23.5% o respondents pay the ull premiums oindividual coverage, a slight decrease rom 25% in 2009.

What benefits do you offer your part-time employees?

Pension plans offeredDo you combine vacation and sick days

into a "Paid Time Off" (PTO) system?

0 5 10 15 20 25

No response

None

Defined benefit

SIMPLE

Profit-sharing

401(k)

0 5 10 15 20 25

No response

Life insurance

Pension plans

Dental insurance

Long-term disability

Short-term disability

Health insurance

Yes

No

No response

0.0%

45.8% 54.2%

91.7%

4.2%

4.2%

0.0%

8.3%

4.2%

4.2%

8.3%

87.5%

Number of days received

Do you offer benefits to part-time employees?

Yes

No

No response

8.3%

91.7%

4.2%

4.2%

25.0%

Type o Day Experience Range Average

Paid Time OFirst Year 0 – 8 1

Ater First Year 0 – 18 3

Ater Fith Year 0 – 24 4

Vacation

First Year 0 – 7 1



Sick Time

First Year 0 – 10 1





Benets (cont.)

9

Family percentagepaid by company

Individual percentagepaid by company

Family percentagepaid by company

Individual percentagepaid by company

Do you offer dental insurancecoverage to your employees?

0%

1 – 49%50 – 75%

76 – 99%

100%

0%

1 – 49%

50 – 75%

76 – 99%

100%

Yes

No

No response

0%

1 – 49%

50 – 75%

76 – 99%

100%

0%

1 – 49%

50 – 75%

76 – 99%

100%

54.2% 45.8%

52.9% 17.7%

12.5%

18.8%

37.4%

22.2%

66.7%

12.5%

62.5%

Long-term percentage

paid by company

Short-term percentage

paid by company

Percentage paidby company

Do you offer disability coverage

to your employees?

Do you offer life insurancecoverage to your employees?

Yes

No

No response

0%

1 – 49%

50 – 75%

76 – 99%

100%

0%

50%

100%

0%

100%

No response

0 5 10 15 20 25

No

Yes

Long-term

Short-term

37.5%

58.3%

62.5%

41.7%

45.8% 54.2%

13.3%

66.7%

70.0%

30.0%

45.5% 54.5%

Health plans offered

0 2 4 6 8 10

No response

Union provided

Traditional group health

Self-insured

High Deductible Health Plan (HDHP)

Health Savings Account (HSA)

Health Reimbursement Arrangement (HRA) 8.3%

12.5%

12.5%

41.7%

12.5%

37.5%

12.5%

5.9%

23.5%

18.8%

12.5%

25.0%

11.1%

20.0%



Compensation

10

Industry reports show that jobs in non-residential construction oten require special training or experience and are relativelyhigh-paid. According to the Bureau o Labor Statistics, the average hourly wages or commercial workers rose to $25.13 in

January 2010, more than a two-dollar increase rom the end o 2008. Residential construction workers, meanwhile, earnedan average o $20.13 in January 2010, up rom $19.47 in 2008.

Contrary to industry reports, the average wages among this year’s survey respondents decreased overall, even though

workers’ experience increased. For instance, survey participants in 2010 are paying their project managers an averagehourly wage o $33.11, compared to $39.15 last year. The average experience o this position, however, increased rom11.4 years in 2009 to 14 years in 2010.

What is the basis for salaryincreases for your employees?

0 5 10 15 20

No response

Merit based

Cost of living

Automatic annual

7.1%

7.1%

14.3%

71.5%

Salary and Experience

Position Rate/Exp. Range Average 2009 Average

Project ManagerHourly rate $20.00 – $65.00 $33.11 $39.15

Years exp. 3 – 32 14.0 11.4

SuperintendentHourly rate $20.00 – $50.00 $31.78 $33.71

Years exp. 5 – 30 13.1 12.1

EstimatorHourly rate $18.24 – $67.00 $27.60 $35.58

Years exp. 3 – 30 10.8 8.9

ForemanHourly rate $15.00 – $35.00 $25.92 $27.05

Years exp. 3 – 22 11.7 9.9

Experienced

Laborer

Hourly rate $14.00 – $30.48 $19.06 $18.29

Years exp. 1 – 10 7.0 5.3

Entry-level LaborerHourly rate $8.00 – $18.00 $12.43 $11.60

Years exp. 0 – 4 1.3 1.3

Position Rate/Exp. Range Average 2009 Average

Ofce ManagerHourly rate $12.00 – $26.44 $21.31 $23.98

Years exp. 4 – 28 13.9 9.8

Sales StaHourly rate $15.00 – $60.10 $27.59 $30.92

Years exp. 3 – 25 9.0 11.3

ControllerHourly rate $15.00 – $50.28 $30.60 $37.98

Years exp. 5 – 30 13.8 15.4

BookkeeperHourly rate $12.00 – $27.00 $18.81 $16.68

Years exp. 5 – 20 11.0 8.5

Administrative StaHourly rate $9.00 – $24.04 $16.49 $18.53

Years exp. 0 – 20 6.0 5.5



Technology

According to national reports, contractors who don’t invest in technology or use it eectively are at a serious disadvantageto the competition. This is primarily because technology enables construction companies to improve project implementationand reduce costs and mistakes, all o which are especially critical in an industry that relies so heavily on correct schedulingcoordination and technical specications. New construction sotware also aids personnel by enabling them to send updatesview up-to-date project completion and view cost inormation rom the eld.

Among this year’s survey participants, most use technology sotware or estimating and project management, while alrespondents use sotware or their nancial management needs. Microsot Excel is the most commonly used estimating sotwareand Timberline is the most popular method or project and nancial management.

What do you use software for?

0 5 10 15 20 25

No

Yes

Financial Management

Project Management

Estimating

87.5%

What estimating softwaredo you use?

What project managementsoftware do you use?

What financial management/accounting software do you use?

70.8%

12.5%

29.2%

Other includes: QuickBooks, Quick Bid,

FabTrol, WinEst, Custom

Other includes: CPM Constructware, Microsoft Access,

BuilderTrend, CustomOther includes: Sage Master Builder, Intuit Master Builder,

MAS 90, Maxwell, Custom

0 1 2 3 4 5 6 7 8

Other

QuickBooks

ComputerEase/ BusinessWorks

Timberline

0 1 2 3 4 5

Other

ComputerEase

Excel

Timberline

0 1 2 3 4 5 6 7 8

Other

Estimation/ Accubid

Excel

Timberline

27.8%

13.3%

27.8%

22.2%

38.9%

11.1%

33.3% 44.4%

11.1%

16.7%

26.7%

26.7%

100.0%



Technology (cont.)

12

This year we asked survey respondents to rate various eatures o their sotware, including sophistication, ease o use, cost,stability and technical support. The tables below indicate the average ratings o respondents based on a scale o 1 to 10.Overall, the highest rated estimating sotware this year was Accubid, with a score o 8.0. Excel was the highest rated projecmanagement solution, while ComputerEase and QuickBooks tied or the highest rated nancial management sotware.

Top Estimating Software Used Top Project Management Software UsedRanked on a scale of 1 to 10 (10 being the highest) Ranked on a scale of 1 to 10 (10 being the highest)

Top Financial Management/Accounting Software UsedRanked on a scale of 1 to 10 (10 being the highest)

Timberline Excel Estimation Accubid

Sophistication 8.3 6.0 6.0 9.0

Ease o use 7.3 7.1 7.5 8.5

Cost 6.3 6.9 6.0 5.0

Stability 8.3 8.3 6.0 8.5

Technical support 7.5 6.3 3.5 9.0

Overall average 7.5 6.9 5.8 8.0

Timberline ComputerEase BusinessWorks QuickBooks

Sophistication 7.3 8.0 7.5 9.0

Ease o use 7.0 9.5 7.5 8.0

Cost 7.1 8.0 6.3 6.5

Stability 8.4 8.5 8.8 9.5

Technical support 7.6 8.5 7.5 9.5

Overall average 7.5 8.5 7.5 8.5

Timberline Excel ComputerEase

Sophistication 6.2 7.8 7.0

Ease o use 6.4 8.5 8.5

Cost 6.8 8.8 8.0

Stability 7.8 9.0 8.0

Technical support 7.0 8.5 8.5

Overall average 6.8 8.5 8.0



8712 West Dodge Road Ste 200 Omaha Nebraska 68114 p 402 397 8822 f 402 397 8649 BlandCPA com

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