In Part 1 of “The 2020 Profile of the Electrical Contractor,” we noted that, immediately prior to the COVID 19-related shutdowns, electrical contractors were feeling confident about the economy. Confidence remained strong, even as the shutdowns began. In part 2, we focus on the work of today’s ECs: how they are building organized teams, who they work with and how they choose their products. Read on to learn more.
Project delivery options
We’ve asked about project-delivery methods for decades in our biennial surveys, which cover work done in the previous year. For the first time in this questionnaire, we added time and materials, along with maintenance, service and repair to options that originally included traditional bid-build, design-build or design-assist, on a collaborative basis, and the catchall category “other.” Those two new categories—which topped the list of write-in choices in 2018—were the most frequently selected in this year’s survey. “Time and materials” is the new leader, at 79%, with “maintenance, service, repair” a close second at 74%.
The two new chart-toppers seem to have cut into the figures for all the other categories, compared to 2018. As shown in Figure 1, Design Specification—Any Projects Bid This Way in 2019, traditional bid-build projects fell to 64%, versus 74% in 2018, and design-build (D-B) or design-assist (D-A) dropped to 58% from 69%. Even the less-chosen “collaborative basis” (7% in this year’s survey, versus 12% in 2018) and “other basis” (3% versus 13%) groupings are notably lower.
These changes aside, team-based D-B and D-A projects remain important for firms of all sizes. As has been the case traditionally, though, they are more frequent for larger firms, and that divide only grew deeper over the last two years. Describing their 2019 work, 47% of ECs from firms with 1–9 employees said they had done D-B and/or D-A jobs during the year. This is a significant drop from the 65% reporting such work during 2017. For larger firms, the figure has remained steady at about 80%.
We also regularly ask ECs about the share of revenue they receive from each of the project types. Here, too, incorporating two new project types has affected responses, as shown in Figure 2, Design Specification—Average Percentage of Revenue from Projects Bid This Way in 2019. Overall, ECs reported an average of 28% of their firms’ revenue comes from either time and materials or traditional bid-build approaches—this represents a significant drop from the 46% of revenue reported for traditional bid-build in 2018. The new maintenance, service, repair and D-B/D-A (which came in at 41% of 2017 revenue) are now nearly tied, at 19% and 22%, respectively.
The additional categories have also changed when looking at revenues by firm size, especially among smaller firms. In the 2018 Profile, D-B/D-A projects totaled over 40% of 2017 revenue for companies with 1-9 employees. That figure dropped to 18% in ECs’ reporting of 2019 revenue, with the new choices of time and materials and maintenance, service, repair reaching almost 60% of revenue for these smaller companies.
We have asked about ECs’ use of building information modeling (BIM) systems since 2012. This is the first year we have seen a significant uptick in both “any” use and “average” use. Approximately 27% of ECs reported any use of BIM in their firm, up from 22% in 2018. And the average percentage of time they or someone in their firm uses the technology rose to 8.2% from 6.5% two years ago.
BIM continues its move into smaller firms, as noted in 2018 and 2016. Use of the design systems remains low in the 1-4 employee firms, but it grows quickly in larger companies—even those with as few as 5-9 employees. And, compared to 2018, both “any” and “average” use grew dramatically in firms with 10-plus and 20-plus employees.
In a series of questions we started asking in 2016, a little more than half of ECs reported their firm had an ongoing relationship with an engineer. As Figure 3, Professional Working Relationship With Engineer(s), illustrates, the response rate remains statistically unchanged at 53% from the 47% result we received in 2018. Some shifts can be seen, though, in the kinds of relationships EC firms engage in with engineers. Our questions covered three possible arrangements:
- Through a consulting relationship
- Having an engineer on staff
- With in-house engineering division
Consulting relationships grew significantly in 2020, at 51% versus 42% in 2018. Additionally, the percentage reporting their firms worked with both in-house and consulting engineers nearly doubled—to 15% from 8%—over the last two years. However, the 17% figure for those reporting having an engineer on staff or a separate engineering division remains statistically unchanged from our 2018 survey.
Not surprisingly, working with an engineer becomes more common as firm size increases—after all, jobs requiring an engineer are usually more complicated, and those tend to be awarded more frequently to larger EC firms. However, it is notable that 30% of respondents working for companies with only 1–4 employees still report professional relationships with engineers. In firms with 10-plus employees, such arrangements have grown significantly, across the board. Eighty-five percent of reporting companies noted having any of the three types of engineering relationships, up from 73% in 2018, with similarly significant increases in the three subcategories.
But engineers aren’t the only other building team members with whom ECs collaborate. We also asked respondents about how frequently they work with mechanical, HVAC, plumbing and systems integrators from other trades. As we noted two years ago, project collaboration is higher with mechanical and HVAC trades. However, a larger number of ECs now categorize their involvement with mechanical contractors as “high” than in 2018. Involvement with systems integrators also has risen, with more ECs reporting a “medium” level of collaboration with these professionals. These trends, outlined in Figure 4, Current Level of Project Collaboration, were noticed among firms of all sizes, with no notable differences found based on a company’s number of employees.
EC as influencer
ECs continue to have significant sway over a project’s overall electrical design and specifications, with 72% reporting either a high or medium level of influence, with no meaningful difference by company size. However, in larger firms, the significance of that influence has grown over the last two years. Respondents from firms with 10-plus employees were more likely to classify their influence as high (43% in 2020, versus 27% in 2018), and less likely to report it as medium (30% in 2020, versus 50% in 2018).
Large firms also are now more likely to get involved at earlier project stages, as shown in Figure 5, Building Stage in Which EC Firm Gets Involved in Project Collaboration. We started asking questions around this topic in 2016, and in our 2018 survey, we found no statistical differences, by firm size, in ECs’ involvement timelines. This year, however, significantly more respondents from firms with 10-plus employees say their companies get involved during project design (23%, versus 7% for smaller firms) or procurement phases (8%, versus 2% for smaller firms). The timing for smaller firms, however, is more likely to rest on project-dependent factors, with 34% of ECs from these companies reporting “it depends” when describing the stage their project involvement is likely to begin.
For several Profile studies, we have asked ECs about the average percentage of incomplete plans and specifications they received in the previous year, once their project involvement began. This year, we also asked about the percentage of incorrect plans and specifications. Interestingly, ECs said they had received nearly equal numbers of both, with 71% noting they had received any incomplete plans or specifications the previous year, and 70% saying that any of their plans and specifications had been incorrect. While 2020’s incomplete average percentage dropped from 42% to 33% in 2018, this could the result of having the new “incorrect” option.
As Figure 6, How Often Firm Receives Incomplete Plans and Specs, shows, these percentages vary by building type. Commercial and industrial projects lead the list for incomplete plans and specifications, with about half of firms reporting such problems in these categories.
We also asked ECs about what kinds of product specifications they’re given, with the choices of single brand or proprietary, multiple brand, “or equal to,” and performance specified. On average, single brand or proprietary specifications make up 22.6% of the total, though this figure is a bit higher (25%) for firms with 1-9 employees. There is no statistical difference between these firms and their larger counterparts in terms of the frequency of other specification types.
There are a couple interesting differences between this year’s responses to this question and those we received two years ago. Performance-specified specifications, which rose sharply, to an average of 21%, between 2016 and 2018, fell back to 12% in firms with 10-plus employees. In contrast, multiple brand specifications rose to an average of 36% among larger firms, from 26% in 2018.
ECs have a great deal of influence in the actual brands chosen, though, regardless of the type of specifications they receive. When asked how much discretion they have in making a brand substitution, the average response was about 70% of the time—74% for firms with 1-9 employees and 61% for larger companies.
Looking at reasons why a brand was chosen—either originally, or as a substitution—availability, price and compatibility with existing systems remain the top three reasons, in that order, as they were in 2018 (see Figure 7, Top 3 Reasons for Originally Selecting a Brand Versus Making a Substitution). However, a number of other possible specification drivers did post significant declines over the previous two years, including Made in America, durability, energy-efficiency, real-time technical support and word of mouth.
This year’s version of our biennial survey provides a unique view of the electrical contracting market after a decade of economic expansion. It also provides a snapshot of where the market was, just as that expansion started moving in the opposite direction, as the upheaval caused by the COVID-19 pandemic began to take hold. However, your confidence in the economy’s future remained strong, even as the impacts of resulting business shutdowns began to be felt.
The pandemic will continue to pose physical and financial challenges for at least the short term. Expectations differ in what a fiscal recovery might look like—whether it will take the rapid, V-shaped route or a longer, U-shaped course. Regardless, we’ll be back in two years with an update in the 2022 Profile of the Electrical Contractor.
Note: See the July 2020 Profile of the Electrical Contractor for survey methodology.