Moderate price gains will persist due to suppliers’ growing input costs and further increases in demand
Los Angeles, CA (PRWEB) December 06, 2014
HVAC system construction and maintenance services have a buyer power score of 3.0 out of 5, indicating a moderate level of negotiating power for buyers. Factors that detract from buyer power include historically high and rising service rates, limited substitute availability and the potential costs involved with switching providers. But according to IBISWorld research analyst Hayden Shipp, “Buyers benefit, from low market share concentration, low price volatility and low vendor risk.”
The high level of fragmentation among HVAC system construction and maintenance contractors encourages competition on the basis of price and service, which boosts buyer negotiating power. However, as the economy has expanded, demand from key downstream markets, like residential and nonresidential construction, has increased substantially, contributing to moderate price growth during the three years to 2014. Moderate price growth is expected to persist during the next three years as the construction sector expands further and investment from local and state governments returns to growth. In addition, Shipp says, “Vendors' rising purchase and overhead costs are passed on to buyers as a result of an increasingly favorable selling environment for vendors.” Current major vendors include Johnson Controls Inc., Emcor and Comfort Systems USA Inc.
Buyers benefit from the market's low price volatility, which is a result of steadily rising demand for retrofitting outdated HVAC systems and consistent demand for maintenance and repair services on existing facilities. Low price volatility promotes a stable purchasing environment for buyers by enabling them to more accurately budget for future expenditures. At the same time, there are no viable substitutes for a licensed contractor for this type of work because mechanical construction is labor intensive and the amount of training required for quality work is relatively high. Additionally, buyers have limited substitute options when it comes to maintenance and repair services. For more information, visit IBISWorld’s HVAC System Construction & Maintenance procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of heating, ventilation and air-conditioning (HVAC) construction and maintenance services, also referred to as mechanical services. Services include HVAC, refrigeration, building automation and other mechanical construction services such as process piping, fireplace, natural gas, ventilation and duct work services. Although many vendors act as MEP (mechanical, electrical, plumbing) contractors, this report excludes the procurement of electrical and plumbing services.
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
About IBISWorld Inc.
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.