Insights and Trends: The 2018 CLA Civil Construction Benchmark Report
Civil contractors face many complex and unique challenges that are driving change throughout the industry. Those who recognize the impact these changes will have on their businesses and proactively plan for them will be better positioned to create opportunities in the future.
Catalysts in civil construction
The 2018 Civil Construction Benchmark Report summarizes data from 158 civil contractors and categorizes them for comparison. This report offers key financial and non-financial information to assist civil contractors in comparing themselves to their peers. It also notes several catalysts currently at work in the industry.
- Civil contractors have made substantial investments in technology, but many are not yet realizing the full potential of that technology or seeing significant improvements in productivity. In most cases, additional training is needed, along with a defined timeline and plan for implementation.
- The recent tax reform legislation presents opportunities for contractors to re-evaluate their entity and ownership structure, capitalize on incentives for re-investment in their business, and make updates to their employee incentive programs.
- Civil contractors are facing two significant accounting changes that will impact their financial reporting and metrics: revenue recognition (effective for years beginning after December 15, 2018,) and lease accounting (effective for years beginning after December 15, 2019). Contractors should understand the impact these changes will have on their financial statements and have proactive conversations with their surety and financing partners.
- The civil construction industry continues to experience labor shortages, which have been an impediment to growth for many organizations. Further complicating the situation is the number of key employees who are nearing retirement age. As companies plan for the future, training and mentoring will be crucial for the effective transfer of knowledge to the next generation.
- On its own, the aging infrastructure in the United States should create significant opportunities and demand for civil contractors in the future. However, political differences and disagreements on how to fund infrastructure projects at both the state and federal levels continue to be a roadblock in securing the necessary investments in this area.
Monitoring financial and operational indicators
This report discusses key indicators that are important to understanding today’s trends in the construction industry. Analyzing key indicators can help contractors assess their financial health, operating efficiency, and profitability. A critical element in the review of a contractor’s financial well-being is exploring the variance of its results compared to similar organizations, and then investigating the reasons for the variance. Ultimately, understanding the cause of variances is the first step toward creating efficiencies and improving profitability.
How we can help
CLA offers this publication as a resource for professionals in the construction industry. It is intended to assist management by providing comparable data, industry trends, and other information to help them make strong financial decisions.Download the 2018 CLA Civil Construction Benchmark Report.