Increased construction activity will fuel stronger demand and price growth for construction project management services.
Los Angeles, CA (PRWEB) April 05, 2014
On a scale of one to five, with a higher number indicating better negotiating conditions for buyers, construction project management services has a buyer power score of 3.0. This score indicates that neither buyers nor suppliers command an overwhelming amount of leverage when it comes to negotiating construction management and related services. Because each construction project is unique and presents unique challenges, construction project management is a service requiring a significant degree of specialization. According to IBISWorld procurement analyst Sean Windle, “suppliers must not only have experience performing design, contracting and management work in the buyer’s area of development, but must also be familiar with applicable local, state and federal regulations”.
Furthermore, suppliers must be able to use their experience and knowledge to best meet the individual budget and time constraints of the buyer. These factors constrain buyer power. High switching costs also diminish buyer power. Once a project is off the ground, the cost of switching suppliers can be incredibly expensive, as any new vendor will have to go through the same extensive vetting process, and be brought up to speed with the standing of the project. “Increasing demand following the recession has also caused price growth to accelerate in recent years, which has diminished buyer power,” says Windle. For example, after falling by double digits in 2010 and growing lethargically in 2011, nonresidential construction activity picked up dramatically in 2012.
Factors that boost buyer power include a moderate degree of market share concentration, which despite the significant level of specialization inherent within construction management, gives buyers a broad range of suppliers from which to choose. Also boosting buyer power is the fact that a major source of demand and revenue for suppliers, the federal government, is defined by steady and reliable funding. The four largest vendors in the market are Turner Construction Company, Bechtel Corporation, Structure Tone Inc., and Skanska USA.
For more information, visit IBISWorld’s Construction Project Management Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of construction project management services. Duties may include feasibility reviews, cost analysis, estimating, troubled-project turnaround and value management. Construction project management can be divided into two broad roles: agency construction management and at-risk construction management. Agency construction management limits the role of the supplier to that of an independent advisor, while at-risk construction management expands this role to include architectural and contracting duties. Suppliers include integrated contracting and engineering firms, as well as consulting groups.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
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.