Market recovery brings residential, commercial builders higher margins, expanded payrolls

Source: L.E.K. Consulting, Chicago

In its fifth annual Contractor Behavior Study, global management consultant L.E.K. confirms residential and commercial construction market momentum, vendor/supplier loyalty based on criteria other than price, and increasing adoption of mobile technology sales and management tools.

“Our latest analysis reveals increasing optimism for both residential and commercial contractors as the number of jobs is growing and revenue per job is expected to increase as well,” says Managing Director Robert Rourke, who heads the L.E.K. Building Products and Materials practice. “We are also seeing a clear trend of homeowner- and contractor-directed research occurring online. This has implications for the branded building products segment that include making mobile and web-content enhancements a priority, and providing valuable and new solutions such as marketing and client-facing tools.”

The Contractor Behavior Study finds: highest year-over-year increase in total jobs since L.E.K. launched the study in 2010; largest per-job revenue gain since the start of the recession; substantial drop in residential builders willing to shop at less expensive retailers for similar brands offered by professional dealers, 17 percent in 2014 vs. 45 percent in 2013; and, increasing tendency of respondents turning to big box retailers only because of job site proximity or for “fill-in” purchases.

L.E.K. cites expanded digital competency among survey respondents. Nine out of 10 use mobile devices for basic business functions and pricing, along with visualization apps, which allow customers to view materials and design schemes superimposed over existing properties or sites. Manufacturers have begun leveraging Building Information Modeling to allow builders and contractors to virtually sample different types of material and products.

Additional insights and results can be found in “Contractor Behavior Survey: Building Momentum,” which Rourke authored with fellow L.E.K. Managing Partners Thilo Henkes and Darren Perry. A pdf is available here.