2022 Profile of the Electrical Contractor, Part 2

In Part 1 of the “2022 Profile of the Electrical Contractor,” we described how the rollercoaster of the last two years have forced electrical contractors’ confidence downward, even as most have reported maintaining their staffs at 2020 levels. In Part 2, we focus on different aspects of ECs’ work: how they build their teams, who they work with and how they choose their products. Read on to learn more.

How projects are bid

We regularly ask about how projects are bid in our biennial surveys, which cover work completed in the previous year. In 2020, we added two new categories to the list of options: time and materials, and maintenance, service and repair. Other choices included traditional bid-build, design-build or design-assist, on a collaborative basis and the general catchall “other.” As Figure 1 shows, the two newest categories have again taken the top spot in ECs’ work in 2021. They remain statistically unchanged, with “time and materials” at 78% and “maintenance, service and repair” at 74%.

However, a couple other categories did show some notable shifts. First, collaborative approaches and the “other” category posted significant increases, though from a low starting point. Second, a significantly higher percentage of ECs performed any work on a design-assist (D-A) basis in 2021: 33% versus 27% in 2019 (not shown). The percentage who reported performing any design-build (D-B) work held steady at about 54%, as did the figure for those working on a traditional bid/build basis at just over 60%.

These high-level numbers only tell part of the story when it comes to the types of work companies do on a regular basis, because firm size can play an important role. For example, organizations with 1–4 employees get significantly more work on average from time and materials projects (35.6%) and maintenance, service and repair jobs (25.4%) than firms with 10 or more workers (15.4% and 14.5%, respectively). D-B and D-A work, however, is more important to larger firms (about 30%) than for their smaller counterparts (16%) (not shown).

Of course, what’s really important for company profitability is the revenue received from each bidding method (see Figure 2). These figures tend to track with those for the types of work done during the year. Overall, traditional bid-build, at almost 28% of revenue, and time and materials, at just over 25%, top the list for our total sample.

As expected, there are big differences in these proportions when looking at varying firm sizes. Smaller companies get significantly more of their average revenue from time and materials or from maintenance, service and repair than bigger companies. In contrast, larger operations earn significantly more traditional bid-build projects and D-B and D-A work on a combined basis. These findings continue a shift noted in 2020, when time and materials and maintenance, service and repair were first added as project categories. In the 2018 survey, the last to not include those options, D-B and D-A on a combined basis was significantly higher among the smallest firms.

We’ve also been tracking the use of building information modeling (BIM) in our surveys since 2012, and we asked ECs to estimate the percentage of time they or someone else in their firm spends using BIM software. The main takeaway is that looking at BIM usage in total obscures the larger finding. While BIM usage is low among firms with 1—4 employees (15.2%), it increases as firm size increases. It goes from 24.3% among 5–9 employee firms to 33% for 10–19 employees, to 39% in 20–99 employee firms (39%); the number dramatically increases to 73.3% use among firms with 100+ employees.

The respondent’s reports on the average percentage of time spent in 2021 using the technology remained statistically unchanged at 9.2% compared to 8.2% in 2019. However, the percentage of ECs reporting any use of BIM in their firms rose significantly, to 31%
from 27.2%.

Building a team

Since 2016, we’ve been asking ECs about their ongoing working relationships with engineers. These arrangements could take one of three forms: a consulting relationship, having an engineer on staff or having a separate engineering division or both.

This year’s finding that 60% of firms have a professional relationship with an engineer is statistically unchanged from 2020. And, as shown in Figure 3, that relationship is most often on a consulting basis. Additionally, 20% reported having an engineer on staff and/or having a separate division, and 15% have a consulting relationship and/or an engineer on staff or a separate division. These results are all statistically unchanged from our last survey.

Working with engineers is much more common for larger firms, with the highest prevalence among firms with 100-plus employees, where the level rises to 90% (not shown). One area where we’ve found a difference, however, is among smaller firms at the 1–9 employee level. More of these companies now have an engineer on staff or a separate division or have in-house engineering and a consulting relationship with an engineer, compared to two years ago.

We also survey ECs about their current level of collaboration with those in the mechanical, HVAC, plumbing and system integrator trades, and this year’s responses are in line with our 2020 results. You can see the findings in Figure 4. More ECs responded that they worked with mechanical, HVAC and systems integrator trades than with plumbers. Interestingly, 2020’s jump in work with systems integrators from other trades remained steady this year.

ECs’ influence on product choice

So, just how much sway do ECs have over product choices in these other trades? We asked that question for the first time this year, and you can see the result in Figure 5. With mechanical, HVAC and systems integrators from different trades, ECs said they have either a high or medium level of product influence about one-third of the time—but that level of influence is medium rather than high almost all of the time. With the plumbing trade, however, ECs reported they are only able to influence product purchases 20% of the time.

In most cases, this influence doesn’t vary by company size. The one standout, however, is with smaller companies dealing with plumbing trades. In this case, EC firms of 1–9 employees reported a statistically higher level of product influence than larger companies, at 7%, versus 2% for those with 10 or more employees. However, overall, ECs said they only exert a high degree of plumbing product influence 5% of the time.

Potentially a result of the pandemic, incomplete and incorrect plans and specifications have become even more of a problem over the last two years. Almost 8 out of 10 ECs reported they had received any incomplete plans and specifications in 2021, with a statistically significant jump to 79% from 71% two years ago. However, the proportion of plans and specifications that were incomplete was a statistically unchanged 37%.

Similarly, 78% reported receiving incorrect plans and specifications throughout 2021, also up significantly from 70% in 2020’s survey. On average, 31% of plans and specifications that respondents got in 2021 were incorrect, which also was statistically unchanged from our last report.

As we’ve noted before, these figures vary by building type, and you can see the impact in the case of incomplete plans and specifications in Figure 6. Compared with two years ago, significantly more electrical contractors reported receiving incomplete plans and specs overall. Any incomplete plans and specs also rose significantly in the case of commercial and single-family housing among those who get business from these categories. The average percentage of incomplete plans and specs posted a significant increase in the case of commercial and industrial construction among those who get business from those categories.

Making decisions

Regardless of accuracy, we also wanted to know what kind of specifications ECs typically receive, so we asked respondents to list percentages for each of four specification categories: single brand or proprietary, multiple brand, “or equal to” and performance-­specified. On average, we found that a single brand is only specified about 25% of the time. However, this figure rose to 33% for firms with 1–9 employees, versus only 19% for larger firms. There are no statistically significant differences between firms of different sizes in the other three specification types.

ECs have considerable sway over what brands are selected. Overall, respondents told us they are able to make brand decisions about 60% of the time. This varied a bit by firm size, from 64% for firms with 1–9 employees, down to 60% in firms with 10 or more people on staff.

Figure 7 shows results for the top three reasons for original brand selection and for brand substitution in 2022. Regardless of whether the context is original brand selection or brand substitution, availability and price receive substantially more mentions than any of the other attributes as a top-three reason for originally selecting a brand and for brand substitution. Compatibility with existing systems, which was first introduced in 2014, emerges in third place for original brand selection and in the case of brand substitution.

The top three reasons for brand substitution mirror those for original brand selection, with availability and price in the top two spots, with availability completely overshadowing other options. While this has been the case since our 2016 survey, it climbed in importance in this year’s round. Availability is the only attribute that had more mentions in 2022 than in 2020, possibly indicating the frustration contractors across all trades have faced in finding their preferred products, thanks to widespread pandemic-related supply-chain problems. Compatibility with existing systems now appears on both lists in the third top-three spot.

Wrapping up

Our biennial surveys are snapshots of a point in time—in this case, the unique period bookended by the onset of a worldwide pandemic and the beginning of a period of greater inflation than we’ve seen since the 1970s. These factors, and the turmoil they have caused for supply chains and markets, have shaken the confidence of many in the electrical contracting industry, as our findings have shown, even as business remained fairly stable over the previous year.

So, as we wrap up coverage of this year’s survey, we are again in a period of uncertainty. For example, no one can forecast how significant inflation will become and how long supply-chain difficulties will remain in place. Check back with us in this space in two years, and perhaps our 2024 Profile of the Electrical Contractor will provide some answers.