Prices for electrical contracting services are expected to continue increasing over the three years to 2016 as input costs and demand rises.
Los Angeles, California (PRWEB) February 20, 2014
Electrical systems construction and installation has a buyer score of 3.0 out of 5.0. This score reflects future pricing trends that will limit the buyer's ability to negotiate from historically high labor rates. Other factors that negatively affect buyer power are high volatility in demand for construction, an absence of substitutes, and the risks involved with switching providers. However, according to IBISWorld procurement analyst Erick Delgado, “low market share concentration, low price volatility and low vendor financial risk positively affect buying power.”
While there is high degree of demand volatility from the construction sector, price growth will remain stable during the three years to 2016. This is a result of constant demand for maintenance and repair services on existing electrical systems, which account for a significant share of industry revenue. “Low price volatility promotes a stable purchasing environment for buyers by allowing them to accurately budget and evaluate prices over time,” says Delgado. Moreover, a steady demand for electrical repairs contributes to a low risk of bankruptcy among contractors, which allows buyers of electrical systems construction and installation to feel more secure in negotiating long-term contracts.
This highly fragmented market also encourages price-based competition among suppliers, which benefits buyer negotiating power. However, as the economy continues to recover, demand from key downstream markets like residential construction will increase, which will give contractors more flexibility to increase prices. Rising material prices and a shortage of skilled labor will continue to pressure electrical contractor's profitability in the three years to 2016. As a result, prices will likely increase during this period and weaken buyer power.
Because electrical work is labor intensive, and safety is important, there are no viable substitutes for a licensed electrical contractor. Additionally, buyers that switch contractors mid-job will face high switching costs due to delays in project completion and new start-up costs. These factors negatively affect a buyer's ability to negotiate. Major vendors in this market include EMCOR Group Inc., Rosendin Electric and Tutor Perini Corporation.
For more information, visit IBISWorld’s Electrical Systems Construction & Installation procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of electrical systems installation and repair services. Contractors provide on-site installation, alteration, design, maintenance and repair of electrical systems and equipment for commercial, institutional and residential buildings. Services include indoor and outdoor lighting and power, photovoltaic systems, emergency power, switchgear, sub-panels, generators, on-site transformers and related devices. It also includes low-voltage work such as climate controls, fire alarm and security systems, fiber-optics, data and telecom cable installation. This report excludes high-voltage electrical work such as the construction of transmission lines, cogeneration plants, substation facilities, utility-scale solar projects and other utility infrastructure.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.