Insight

Engineering and Construction Services Sector Update

Engineering & Construction Overview

Global engineering and construction industry participants include providers of engineering, construction, and construction management services catering to infrastructure, civil, utility and other end-markets. Key public industry players are categorized by sub-sectors as follows:

Sub-Sector	Public Revenue / EBITDA Multiple⁽¹⁾	Description	Key Select Industry Leadership
Construction Contractors	0.27x / 7.9x	Providers of construction and general contracting services	Actividades de Construcción y Servicios, S.A. Aecon Group	Skanska AB Tutor Perini Corporation
Diversified Engineering and Construction	1.00x / 15.5x	Professional services firms offering a range of engineering, construction, and construction management services	AECOM Arcadis Bouygues SA HOCHTIEF Aktiengesellschaft Jacobs Engineering KBR	Obayashi Corporation Shikun& Binui SNC-Lavalin Group Stantec VINCI Webuild
Infrastructure Services	0.65x / 14.1x	Civil, infrastructure construction and engineering services	Balfour Beatty Construction Partners	Granite Construction Sterling Construction
Specialty Engineering and Construction	1.10x / 12.2x	Electrical, mechanical, industrial, and environment engineering and construction services	APiGroup Bilfinger SE Clean Harbors Comfort Systems USA	Dycom Industries EMCOR Group John Wood Group Tetra Tech
Utility Services	0.82x / 10.9x	Electric power, energy, and utility engineering and construction services	MasTec MYR Group	Primoris Services Quanta Services

Sector Perspectives: Key Demand Drivers of Continued Infrastructure Investment

In Q3 2022, the Associated Builders and Contractors announced a construction backlog indicator at 9.0 months, slightly higher than previous quarter
- Despite the continued shortage of skilled workforce, increased materials prices, rising interest rates and volatile public markets back drop, the industry is anticipated to experience stronger demand in Q3-2022

Notable trends

The industry has responded very well throughout the pandemic, as construction spending is approximately 12% higher than 2019 levels
Pandemic-induced supply shortages have persisted, affecting the cost of key construction materials such as lumber, paint and coatings, aluminum, steel, and cement – these sourcing challenges will continue to disrupt project delivery and margins
The industry is expected to benefit mainly from an increased focus on additional infrastructure investment:
- Signing of the Bipartisan Infrastructure Law will allocate $1.2 trillion in total funding to infrastructure projects over the next ten years, including $550 billion in the upcoming five years,
- It is expected there will be an infrastructure spending gap of ~$2.6 trillion by 2029, representing a 24% increase over the 2010-2019 period (Funded Investment: $3,350 billion, Total Investment Needs: $5,938 billion)
Residential construction activity is expected to be supported by continued demand for single- and multi-family homes

Total Gross Investment in U.S. Infrastructure (2016 – 2020) ( $ in Billions)

The gross investment in U.S. total Infrastructure grew at a CAGR of 3.8% between 2016 – 2020

We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below.