Want to see all of the data behind this article? Read the Topline Report for the 2024 Profile of the Electrical Contractor.

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In Part 1 of the 2024 Profile of the Electrical Contractor, we described how electrical contractors’ businesses expanded over the last two years since 2022’s findings, with more electrical workers at larger firms earning higher revenue. In Part 2, we look at some of the particulars of how electrical contractors do their work, including team structures, partnerships and product specification. Read on for the details.

 

Bidding efforts

In our biennial survey, we always ask you about your work over the previous year and how projects are bid. This is the third survey to include the categories of time and materials and maintenance, service and repair. Other choices in this year’s survey included traditional bid-build, design-build (D-B) or design-assist (D-A), “on a collaborative basis” and the catchall “other.” 

Yet again, the two newest options of how projects are bid led the pack. As Figure 1 shows, these remain statistically unchanged, with time and materials at 76% and maintenance, service and repair (MSR) at 75%.

Almost all categories held steady compared to what ECs reported for 2021, except for “on a collaborative basis,” which posted significant gains—as it did in our 2022 survey. Though from a low starting point, D-B, which showed a gain over results in 2022, remained statistically unchanged this year. In addition, the percentage performing any D-B or D-A work also remained unchanged at 62%. Though traditional bid-build shifted slightly upward, to 65% from 63% two years ago, that change is not statistically significant.

As Figure 2 shows, these broad figures don’t accurately reflect the importance of each type of work to a firm’s bottom line, and that factor—as we’ve seen in previous surveys—varies greatly by company size. 

For example, while “time and materials” accounted for about 23% of projects across our entire sample, it accounted for more than 35% for companies with 1–4 employees. MSR showed a similar pattern, at 19.6% for the entire sample, versus 27.8% for the smallest firms. 

For larger organizations, however, traditional bid-build, D-B or D-A approaches were most important. “On a collaborative basis” also has a small but significant impact at 5.5% with companies having more than 100 employees.

These findings underscore a shift we first noted in 2020, when we first included time and materials and MSR as categories for this question. In the 2018 survey, the last to not include these options, D-B and D-A were significantly higher for the smallest firms. Since they were added—thanks to the large number of write-in responses from participants—these two categories have taken the top two spots for companies with 1–4 and 1–9 employees.

Building information modeling (BIM) has been a part of our survey since 2012. This year, as in the past, we asked ECs to estimate how much they or someone in their firm use the technology. Since 2020, the answer of “any” use has risen sharply, steadily and significantly, hitting 35.8% of all responses this year. Also, “average” use rose significantly between 2022 and this year’s responses, jumping to 12.1% from 9.2%. 

Unsurprisingly for a technology that requires capital investment and training, BIM usage increases with company size. The “any” use category is 16.7% for companies with 1–4 employees and climbs to 81% for firms with more than 100 employees. These differences in “any” use remained stable from 2022 to 2024, with none of the individual employee-size subgroups posting significant gains. In contrast, though, “average” use rose significantly among firms with 1–4 and 1–9 employees between the two surveys.

Where purchases are made

As Figure 3 shows, the average percentage of purchases made at electrical distributors significantly dropped from 65% to 48%. The decline in spending at distributors was mostly among electrical contracting firms that are not members of the National Electrical Contractors Association (NECA). The average percentage of purchases declined to 42% this year from 62% in 2022. Only 10% of these firms plan to increase their spending at distributors, which is a decrease from the 26% we saw two years go.

NECA member firms’ spending stayed statistically unchanged, and 33% plan to increase it, up from 13% in 2022. Also, a broadened category encompassing big box and local hardware stores declined from 19% to 10% in 2024. This may have been because respondents differentiated between brick-and-mortar stores and those explicitly identified as online, all of which had significant increases. 

The category “retailers” was called “big-box stores” in 2022, so the results are not strictly comparable as “retailers” now also includes local hardware stores.

Also, the percentage of money spent directly with manufacturers is up dramatically, from 5.5% in 2022 to 21.1% in 2024, which is statistically significant.

Teaming up

In 2016, we began asking whether electrical contractors worked with engineers. If they did, we asked who they worked with: a staff engineer, one who is in another division or someone not on staff through a consulting relationship. The questions on these relationships are asked separately, in case firms use in-house and outside engineering services. 

Across the total sample in the 2024 survey, 59% of firms have a professional relationship with an engineer, statistically unchanged from 2022’s findings. As Figure 4 shows, consulting relationships continue to be more prevalent, at a statistically unchanged 55%, and 25% report having an engineer on staff or in a separate engineering division, which is also similar to what we found two years ago. Just over 20% use both consulting and in-house engineers.

Larger firms are more likely to engage with engineers. Those with 10 or more employees are significantly more likely than smaller companies to work with engineers in any capacity. The relationship continues to grow with firm size, climbing up to 92% for those with more than 100 employees (not shown). This question was not directed to the entire pool of respondents, but based on this smaller sample, this conclusion can be viewed as suggestive of ECs’ relationships with engineers. 

Making choices

Electrical contractors continue to make solid contributions to their projects’ overall plans, with almost 8 in 10 reporting they have a “high” or “medium” ability to influence overall electrical designs or specifications with building owners or design team members. 

As Figure 5 illustrates, this includes 42% who chose the “high” description and 35% selecting “medium.” These figures are statistically unchanged from those seen in our 2022 survey, both among the total sample and in firms with 1–9 or more than 10 employees (not shown in table).

This level of influence is especially important given the challenges ECs can face with incomplete and incorrect plans and specifications. The jump in frequency we noted in our 2022 survey, which we posited might have related to issues raised by the pandemic, has continued, with percentages remaining statistically unchanged. 

Looking at work completed during 2023:

Across the total sample, 79% said they had received some incomplete plans and specifications. On average, 38% of plans and specifications received were incomplete.

83% said they had received some incorrect plans and specifications, with 35% of those received being incorrect.

In both cases, these numbers can shift when looking at projects involving different building types, as shown in Figure 6, which looks at the issue of incomplete plans and specifications. There’s a 10% difference between the prevalence of any incomplete plans or specifications in commercial, industrial and institutional construction (54%) compared to single-family projects (44%), with multifamily construction falling right in the middle (49%). 

When looking at how big a share of plans and specifications are incomplete, it’s 24% noted for single-family buildings and 11% found for multifamily.

In terms of shifts from 2022’s report, significantly fewer contractors reported receiving any incomplete plans and specifications for commercial and single-family housing work, according to respondents working in those categories. However, there were no statistically significant differences in institutional, industrial and multifamily plans and specifications. About 8 in 10 firms say they receive incomplete or incorrect plans and specs, which also affords the electrical contractor the opportunity to influence the project and its specifications.

What specs look like

Whether they’re incomplete or not, specifications typically fall into one of several categories, and we asked respondents to tell us what percentage of each they typically receive. The categories include single brand or proprietary, multiple brands, “or equal to” and performance-specified. 

On average, participants told us single or proprietary brand, multiple brands and “or equal to” each received about 30%, while performance-specified accounted for 12% of received specifications. In a couple of cases, however, the figures varied by company size:

Smaller firms (1–9 employees) more often specify a single or proprietary brand (37%) compared to 19% for larger companies.

Larger companies said multiple brands more often (36%), versus 27% for those with 1-9 employees.

Respondents told us they continue to have a good amount of discretion in deciding what brands are selected. Overall, they said they can specify brands 65% of the time. There was some variation based on firm size, with that number rising to 69% in the case of firms with 1–9 employees and falling to 61% for larger companies. These figures are similar to what we found in 2022.

Figure 7 illustrates how electrical contractors chose products. Regardless of whether they’re making the original brand selection or need a substitute product, availability and price are respondents’ No. 1 and 2 reasons, as they were in 2022. (Availability has been No. 1 in terms of original selection since 2014 and brand substitution since 2016.) Compatibility with existing systems takes third place for original selection and substitution as in 2022.

Looking just at original brand selection, results generally mirror those from 2022. However, two options down the list shifted. Energy efficiency more than tripled to a still-modest 7%, perhaps indicating a growing interest in meeting larger building performance targets. And Made in America dropped by almost three-quarters, down to 5% from 18% in 2022. This might have been a more critical characteristic for those looking at their work in 2021, given the supply chain issues that arose during the pandemic.

Looking at brand substitution, compatibility with existing systems finished third, at 46% of respondents’ top three list. This might be a knock-on effect of the growing smart-­building market, which has increased the need for various building systems to communicate with each other. This option rose noticeably among companies of 1–9 employees, the firms most likely to be working with single-family homes. The need for consumers in Apple and Android camps to ensure devices will work as expected also could be playing a role. Additionally, Made in America dropped in this category, to 13% from 23%.

Back on track

Our surveys track specific points in time. Here, we’ve checked in with ECs as pandemic-­era supply chain stress has moved into the rear-view mirror and inflation is slowly cooling, though interest rates remain high.

With this survey coverage wrapped up, we’ll be watching to see if these positive trends continue over the next two years. Will interest rates start coming down again, which could spur construction, especially in the struggling residential sector? And what impact might this year’s presidential election have on future growth? We’ll be back in a couple years with the 2026 Profile of the Electrical Contractor to let you know the answers we’ve found.

stock.adobe.com / 22_monkeyzzz/ Elnur / bonotom studio, Inc.