Grant Thornton LLP

Critical Issues

The lack of access to credit markets by project owners will reverberate through the commercial building sector in the upcoming months, resulting in delayed or cancelled projects. Contractors will need to address this by taking immediate steps to right-size their workforce and equipment as well as paying close attention to receivables and cash.

Current Trends

Contractors have always been cost-conscious and will become only more so over the next few years. Advisors to the construction industry will need to be able to continually prove that they are adding value, whether it is streamlining their own business practices or coming up with money-saving ideas for their clients.

Looking Forward

Grant Thornton is continuing to refine our market focus for construction companies to ensure that we are bringing the right team and skill sets to our clients. We foresee opportunities in 2009 due to contractors looking to move to service providers that fully understand the construction industry and provide additional value or reduced fees through more efficient processes.

Government Compliance

We have only felt this additional compliance burden through our clients and our value-add in this area is to assist our clients by sharing industry best practices.

Additional Insights

We look for additional consolidation in the construction industry in 2009 as marginal contractors fail, lose their bonding capacity or are forced to sell to or merge with their competitors.  Ultimately, we see this resulting in a healthier bidding environment.

Best Practices

Successful owners are aggressively managing and cutting costs.  Industry leaders are way ahead of the curve in their ability to identify potential cost overruns and commit resources to stop the bleeding.  They are looking at every aspect of their overhead costs for immediate savings.

In addition, the most successful contractors do an excellent job of reporting to and managing credit sources, such as banks or bonding companies.  They understand that full and open communication is completely necessary.

Tags: 2009 January Issue , Executive Insights , Professional Services Executive Insights , State of the industry