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2018 PROFILE OF THE ELECTRICAL CONTRACTOR

2018 Profileof theElectrical Contractor

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By Chuck Ross

TWENTY-FIVE is the most significant

number in the 2018 Profile of the Electri-

cal Contractor research study findings. It

means you’re wearing many more and different

hats than ever before. In the 2004 study, tradi-

tional electrical power/distribution made up 69

percent of the EC’s revenue. Today, after decreas-

ing over the subsequent 14 years, that number is

only 25 percent, which indicates ECs are taking

on a wide variety of disciplines and markets.

Almost 1,600 readers responded online and by mail to this year’s Profile of the Electrical Contractor survey, which covers work performed in 2017.

The previous Profile of the Electrical Contractor in 2016 demonstrated economic recovery had taken hold, and the good news is the construction economy has solidified further since then. Most firms report employment stayed steady or grew, and a majority of respondents report con-fidence in the economy’s growth over the next few years. Of course, the skilled labor shortage still looms.

As for the hands already on the front lines, standard wiring and maintenance jobs remain the bread and butter of electrical contractors’ business, but this year’s survey finds the growing importance of lighting to ECs’ bottom lines, perhaps a result of the rapid growth in LEDs and related control systems. In addition, as indicated in the 2016 Profile’s responses, firms are looking outside tra-ditional electrical boundaries. For instance, a significant number of companies work on heating, ventilating and air conditioning (HVAC).

These are just the highest level findings. Dive into the details and see how ECs’ businesses are faring. Because there is just too much data to cover in a single article, we will continue the 2018 Profile next month. Additionally, you can check out the full report online, at profile.ecmag.com, where we also offer an archive of past results for easier over-time comparisons.

of theElectrical Contractor

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Average age still on the riseBasic demographic information regarding individual contractors presents some the most significant statistics for the future of electrical contracting. Critically, as Figure 1 shows, the average age of electrical contrac-tors continued to rise to 58.2, which is up from 57.3 in the 2016 study. Wrapped up in this average (not shown) are two even more noteworthy statistics: 69 percent of respon-dents are over the age of 55, and the 65-plus age bracket has jumped 8 percentage points in just two years and now totals 32 percent of respondents, versus 24 percent in 2016.

The aging of the electrical contracting labor force is not news. We have noted the trend for more than a decade. The average reported age in our 2008 profile was 51.2, and that figure has steadily risen across firms of all sizes. Another constant over this decade is the relationship between firm size and respondent age. This year, respondents working for firms with 1–4 employees were an average of 60.6 years old (a jump from 58.7 in 2016), while respondents working for firms with 10 or more employees have an average age of 53.8.

In a new question this year, we asked how long respondents had worked in the electrical contracting field, and we learned ECs are a very experienced bunch with an average of 32.6 years in the field. An impressive 5 per-cent of respondents have been in the field more than 50 years. This exceptional tenure is more likely to be found in firms with 5–9 employees.

With age comes responsibil ity, apparently, as 77 percent of the study’s respondents are company owners and top management, and only 10 percent have the title of master electrician or its equivalent. This is consistent with 2016’s responses, as is an interesting geographical variation: Western ECs are more likely to describe their responsibility as “owner/top management” (82 percent, compared to 77 percent of the total), and less likely to fall into the category of “master electrician or equivalent” (5 per-cent, versus 10 percent of the total).

FIGURE 1 Comparison of Age Composition Over Time45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

■ 2018 (n=1,597)■ 2016 (n=2,419)■ 2014 (n=2,722)■ 2012 (n=1,024)■ 2010 (n=1,077)■ 2008 (n=1,157)■ 2006 (n=1,144)

18–24 25–34 35–44 45–54 55–64 65+

FIGURE 2 Company Size Trended 2018 Profile vs. 2016 Profile(Reporting from previous year)

70%

60%

50%

40%

30%

20%

10%

0%

■ 2018 total sample■ 2016 total sample

1–4 5–9 10–19 20–99 100+ <$250K $250K–<$1 Mil

$1 Mil– <$2.5 Mil

$2.5 Mil– <$10 Mil

$10 Mil+

FIGURE 3 Change in Number of Employees Among Total Sample80%

70%

60%

50%

40%

30%

20%

10%

0%

■ 2018■ 2016■ 2014■ 2012■ 2010

Increased Stayed the same Decreased Less than one year old

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Size of firms remain steadyWhat about the firm size? ECs are primar-ily smaller companies. Of all respondents, 71 percent work for organizations with 1–9 employees, and 68 percent work for firms with annual revenues of less than $1 million. These figures are statistically unchanged compared to our 2016 survey. At 43 percent, the largest single income segment consists of firms with revenues under $250,000. As

Figure 2 illustrates, the decline in the per-centage of smaller firms seen between the 2014 and 2016 studies has not continued.

In terms of employee rosters, two-thirds of respondents said their company had stayed the same size in the last 12–18 months, represented in Figures 3 and 4. However, of the remainder, the percentage of compa-nies that added employees (22 percent) is more than twice the percentage of those

that lost employees (9 percent). As a further indicator of economic health, that latter fig-ure represents a statistically significant drop from 2016, when 13 percent of firms had lost employees, and an even bigger difference from 2014, when 18 percent had lost staff.

The shifts in employee counts become more distinct as company size increases. Figure 4 shows the largest firms are respon-sible for the biggest share. Over the last 12–18

FIGURE 4 Change in Company Size During the Past 12–18 MonthsTotal 1–9 Employees 10+ Employees

2018 2016 2014 2012 2010 2018 2016 2014 2012 2010 2018 2016 2014 2012 2010

Increased 22% 21% 20%> 12%> 7% 10% 11% 12%> 6%= 5% 53%> 47%> 42%> 27%> 15%

Stayed the same 67% 65%> 61%= 63%> 55% 80%> 75%> 70%> 72%> 67% 36%= 38% 35%= 37%> 23%

Decreased 9% <13% <18% <24% <36% 9% <12% <17% <20% <26% 10% <15% <23% <35% <61%

Bolded numbers > and < indicate statistically significant differences in the direction of the arrow.

FIGURE 5 Number of Employees by Firm RevenueTotal 1–4 5–9 1–9 10+ 10–19 20–99 100+

<$1 million 68% 94% 76% 90% 12% 24% 9% 0%

<$250K 43% 72% 13% 60% 3% 6% 2% 0%

$250K – <$1 million 24% 22% 62% 30% 9% 18% 7% 0%

$1 Million+ 27% 0% 22% 5% 80% 67% 86% 89%

$1 million – <$2.5 million 10% 0% 20% 5% 21% 48% 10% 5%

$2.5 million – <$10 million 9% 0% 2% 0% 30% 19% 57% 6%

$10 million – <$25 million 3.5% 0% 0% 0% 12% 0.7% 17% 19%

$25 million+ 5% 0% 0% 0% 17% 0% 1.5% 59%

Don’t know/no answer 5% 6% 2% 4% 8% 9% 5% 11%

FIGURE 6 Confidence in Growth of the Economy Over the Next Few Years

All Companies 1–4 employees 5–9 employees

More employees in the past 18

monthsSame number of

employees

Fewer employees in the past 18 months

Extremely/very 52% 46% <71% 65%> 50% 41%

Extremely 16% 11% 24%> 13%>

Very 36% 51%

Somewhat 36%

Not very/not at all 9% 4% <10% 22%

Not very 6% 10%

Not at all 3%

Not sure/no answer 3%

Empty cells are not significantly different from the total sample.

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months, 22 percent of all companies report more employees; however, while 10 percent

of firms with 1–9 employees added staff during that period, 53 percent of firms with

10 or more employees report an increase in staff size. This number represents a sig-nificant increase over the 47 percent figure reported by those companies in 2016.

Illustrating how far we’ve come since the last downturn, 36 percent of all firms in 2010 (and a whopping 61 percent of those with 10 or more employees) reported staff reductions.

Income distribution, by firm size, remains unchanged in the 2018 survey, compared to 2016’s results. However, Figure 5 breaks those revenues down by company size and illustrates the breadth of today’s electrical contracting industry. Of those working for the smallest firms (1–4 employees), 72 percent reported annual company revenues of less than $250,000, while 59 percent of those at firms with 100 or more on staff reported company revenues at $25 million-plus.

While these earnings figures remained virtually flat compared to the 2016 study, ECs are confident the larger economy will continue to grow over the next few years. This positive outlook, which Figure 6 details, is especially high among respondents work-ing for companies with 5–9 employees. In this group, 71 percent of respondents are “extremely/very confident.” Of respondents whose companies have added staff, 65 percent report a similar outlook. Overall, 52 percent are in the “extremely/very confi-dent” category. Additionally, 36 percent of respondents reported being “somewhat” confident in continued growth. That makes a total of 88 percent with a positive outlook.

Markets and sources of revenueConfidence in continued economic growth may be high, but survey respondents still haven’t seen new construction return to its prerecession highs. In this study, only 33 percent of their firms’ revenues, on average, came from new construction. This is down from 43 percent in the 2008 Profile. As firm size grows, however, new construction becomes more important, pushing toward 40 percent for firms with 10–19 employ-ees and close to 50 percent for companies with 20 employees or more. Figure 7 shows the biggest revenue line for smaller firms remains maintenance, service and repair on

FIGURE 7 Average Revenue from Types of Work Performed in Previous Year by Sector

70%

60%

50%

40%

30%

20%

10%

0%Total 1–9

Number of employees10–19 20–99 100+

■ New construction (including additions)■ Modernization/retrofit

Maintenance/service/repair (on a combined basis)■ Repair■ Maintenance not done under contract■ Maintenance service contracts

50%

FIGURE 8 Sources of Revenue—Trended (2018 vs. 2016)Lighting: ballasts, controls,

fixtures, lamps +

Electric power transmission and distribution –

Industrial systems (motors, controls, etc.)

Backup power

Communications/ data systems +

Fire systems

Building automation control systems* +

Security systems

Building systems integration +

Alternative power generating systems

Sound and video (home theater)

Life safety (not including fire) +

Energy management/ power quality

Sound and video (commercial)

■ 2018■ 2016

0% 10% 20% 30% 40% 50%

The symbols + and – indicate significant changes at the 90 percent level of confidence versus the 2016 Profile study.

* indicates wording change versus 2016 Profile study.

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a combined basis.An interesting piece of business growth

for firms with 1–9 employees over the past two years has been work performed under maintenance/service contracts. This work now makes up 8.3 percent of smaller firms’ revenues, compared with 6.5 percent reported in 2016.

The proportion of company revenue contributed by various types of electrical work has shifted dramatically. As Figure 8 shows, electric power transmission and dis-tribution is no longer the most important money-earning category for electrical con-tracting firms. In terms of related revenue, it dropped from 43 percent in 2016 to 25.4 percent. Looking back to the 2004 Profile, it was 69 percent. The nearly 18-point dif-ference in the last two years has spread across several other categories, and lighting grabbed the top spot, accounting for almost 30 percent of revenue, which is an 8-point climb for the category.

Other categories showing growth include communications/data systems, building automation and control systems, and build-ing systems integration. Each of these areas ticked up 2 percentage points over 2016’s results. Life safety also posted a small but significant increase.

Getting into more specific types of work performed in the previous year, we queried ECs on a list of up to 42 different kinds of projects they had worked on in both res-idential and commercial/institutional/industrial (CII) settings. Figure 9 shows, across both residential and CII, 93 percent of firms worked on traditional power and lighting; however, again illustrating lighting’s increased importance, that combined cat-egory can be broken down into 91 percent working on lighting and 86 percent working on traditional power.

When looking beyond these top-tier categories, we see continuing evidence of ECs stretching into new territory. Across residential and CII assignments, almost three-quarters of respondents worked on various “Other” aspects, which include pre-assembly/prefabrication of electri-cal components, HVAC mechanical, water utilities/waste water treatment plants and

electrical maintenance/service/repair. Furthermore, 72 percent of the study’s respondents work on some aspect of auto-mation and controls, including 51 percent in CII settings and, underscoring how smart our homes are becoming, 46 percent in residential projects.

While some of the more sophisticated types of work (e.g., structured wiring) are more prevalent in CII settings, some green

building categories, such as energy storage and geothermal, are relatively evenly dis-tributed across CII and residential projects.

Across the totality of the work in res-idential and CII projects, there are some interesting changes from the 2016 results:

■■ LED lighting and ballasts/LED drivers posted significant increases, while lamps and lighting controls declined. One pos-sible explanation is LED technology has

FIGURE 9 Types of Work Performed by Company in 2017

Communications systems/connectivity

Any Res CII51– 28– 38–

Structured wiring/cabling/connectivity* 44 24 32

Networking (VOIP/wireless/broadband, etc.

24– 10– 20–

Data centers 20+ 5+ 18+

Fiber optics (communications and security)

17– 4 15–

Green, sustainable building/alternative energyfn

Any Res CII

59 35 41

Energy-efficiency projects/upgrades (non-LEED)

37 17 29

Electric vehicle charging equipment* 23+ 15+ 11+

LEED projects 20 7 16Solar/photovoltaics 16 9 11Energy audits (including thermal imaging) 12 2 11

Smart or net metering 10 4 8Cogeneration 7– 3 5–

Energy storage 6 3 4Geothermal 5– 3– 2Wind generation 4 2 3Smart grid technology 3 1 2Microgrids 2 1 2Fuel cells 2 0.5 2

Power qualityAny Res CII63– 37– 46–

Backup power/UPS 47 22– 33Troubleshooting/maintenance of low- voltage systems

40– 23– 30–

TVSS/lighting surge suppression 33 15 25

Energy management/power quality 20 5 17

Traditional power/lighting

Any Res CII93 70 72

Lighting 91 67 68LED lighting (including lamps, fixtures and controls)

87+ 62+ 63

Lighting fixtures 84 60 61Ballasts or LED drivers 75+ 46 57+

Lamps 70– 47 52Lighting controls 69– 43– 48–

Daylight/shading systems 22 8– 18

[NEW] Any other lighting not included above

22 11 17

Power Δ 86 64 62Power 80– 58– 57–

Wire and cable 80– 59 58–

Automation/control systems

Any Res CII72 46 51

Fire/life safety (including alarms/detectors)

47 28 32

HVAC controls 34– 20 25Security (CCTV/access/motion, etc.) 34 18 25

Industrial controls (including PLCS and VFDS and Switchgear)*

31 N/A 31

Home automation/smart home/connectivity 21 21 N/A

Home theater/sound or VDV 16 16 N/A

Building automation systems/facilities connectivity*

18 N/A 18

Sound and video or VDV 15 N/A 15Programming and commissioning 15 4 14

OtherAny Res CII74 51 59

[NEW] (Any electrical) maintenance/service/repair

70 49 55

HVAC (mechanical) 22 13 15Pre-assembly/pre-fabrication of electrical components

18 6 16

Water utilities or waste water treatment plants 13 N/A 13

*indicates slightly different wording in the 2018 Profile study.

The symbols + and – indicate significant changes at the 90 percent level of confidence versus the 2016 Profile study.Δ Power was not reported as a separate net in 2016.

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become the standard option for new and replacement lighting installations, so a greater percentage of all lighting work may be reported in the LED categories.

■■ In the case of automation/control systems, HVAC controls declined.

■■ In the sustainability categories, EV charging increased, while cogeneration and geothermal posted small but signif-icant declines.

■■ Under communications systems/connec-tivity, data centers increased, while fewer ECs reported working on fiber optics or networking. In fact, of all the project types we covered, networking showed the steepest decline compared with 2016’s results, dropping to 24 percent from 35 percent two years ago. Under power quality, troubleshooting/mainte-nance of low-voltage systems declined. In the traditional power/lighting section, power, and wire and cable also declined. This all may indicate ECs are getting bet-ter at following market trends.Analyzing the types of work performed

by company size, Figure 10 reveals a find-ing seen in our previous two surveys has continued: when it comes to the range of work, firms with 5–9 employees look more like larger firms than firms with 1–4 employ-ees. For example, they are more likely than smaller firms to work in a number of catego-ries, including power quality, sustainability and communication systems/connectivity.

However, for residential contractors, this year’s survey finds the smallest firms are

FIGURE 10 Types of Work Performed in Previous Year by Company Size (CII and residential on a combined basis)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%Traditional

power/lightingLighting Power Power quality Sustainability Communications

systems/connectivity

CII automation/

controls

Residential automation/

controls

Other

■ Total■ 1–4

5–9 10–19 20–99 100+

FIGURE 12 Firm’s Active Engagement in Systems Integration or Data/Telecom Centers

80%

70%

60%

50%

40%

30%

20%

10%

0%

■ 2018■ 2016

Any Low-voltage systems

integration

Design or specification

of low-voltage systems

Installation of data/telecomm

centers

Commissioning and

programming

Design or specification of data centers/

telecomm centers

FIGURE 11 Number of States in Which Electrical Contracting Firms Perform Work

1 state68%

2 states15%

3 states8%

4 states3%

5+ states7%

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getting into a broader range of project types. In these settings, firms with 1–4 employees are much more like companies with 5–9 employees. There are two exceptions, how-ever. The larger companies are more likely to work on geothermal and cogeneration projects, and the smallest companies are more likely to work on HVAC mechanical and electrical maintenance, service and repair projects.

Along with what types of work ECs are doing, survey respondents also were asked where they do it. About one-third of firms perform work in multiple states, as Figure 11 shows. As noted in the past, this suggests there may be licensing and certification issues. The proportion of firms working in two or more states is unchanged over the past three profile studies. Not surprisingly, 55 percent of firms with 10-plus employees are working in multiple states, compared with less than 35 percent of ECs with 1—9 employees.

High involvement in low-voltageLow-voltage work is still exceedingly common across companies of all sizes. A vast majority (95 percent) of respondents reported their firms performed low-voltage work. As in our 2016 Profile, 10 percent of firms reported having a separate low-volt-age division, and as was true in the previous two Profile studies, firms with 10 or more employees are more likely than their smaller counterparts to have separate low-voltage divisions. Larger companies also are more likely to be planning to add one (8 percent, versus 5 percent for the total sample).

However, while Figure 12 appears to show a slight decline in integration work from two years ago, none of the differences are sta-tistically significant. In this study, about 40 percent of firms reported working in these areas. Also, 34 percent of firms reported

participation in low-voltage systems inte-gration, but it is the most frequent project type cited in this category, followed by low-voltage systems design or specification, at 25 percent. Additional data points include the following:

■■ Almost 20 percent of firms said they installed data or telecom centers in 2017.

■■ 15 percent of firms performed commission-ing and programming.

■■ 14 percent were involved in data center design or specification.

For integrated systems, it’s not surprising that lighting is the most prominent category for ECs with 63 percent reporting they both specify and install lighting systems (see Fig-ure 13). This is more than twice the number that only install such equipment.

Slicing up the revenue pieAs noted above, while 2016’s survey showed an uptick in the role of new construction in electrical contractors’ revenue, that fig-ure remained the same at 33 percent. Also

FIGURE 13 Roles Played by Firm in Integrated Systems

Specify only

Install only

Specify and

install

Don’t work in this

categoryNo

answer

Security 1% 27% 19% 44% 8%

Fire/life safety 2% 30% 30% 31% 7%

Lighting (including controls) 2% 25% 63% 6% 5%

Communications (VDV, etc.) 3% 24% 25% 39% 10%

Building controls (including HVAC) 2% 32% 17% 40% 9%

HVAC (not including controls) 3% 22% 11% 56% 9%

FIGURE 15 Average Revenue in Previous Year from Specific CategoriesTotal 1–9 10+ 10–19 20–99 100+

2018 2016 2018 2016 2018 20016 2018 2016 2018 2016 2018 2016

CII 48.9% <51% 39.6% <42.8% 71.7% 72.2% 67.2% 69% 75.4% 74.4% 72.1% 72.5%

Residential 44.4%> 42.2% 55.4%> 52.3% 17.2% 16.3% 26% 24.9% 14.9% 15.4% 9.8% 7%

Nonbuilding 6.7% 6.8% 5% 4.9% 11.1% 11.5% 6.8% 6% 9.7% 10.2% 18% 20.6%

FIGURE 14 Average Percent of Sales/Revenue from Specific Sectors70%

60%

50%

40%

30%

20%

10%

0%New

constructionModernization/

RetrofitMaintenance/service/repair

(on a combined basis)

Repair Maintenance not done under

contract

Maintenance service

contracts

■ 2018■ 2016

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statistically unchanged is the 41 percent of revenue from maintenance/service or repair. The remaining 27 percent comes from mod-ernization/retrofit projects (Figure 14). New construction plays a proportionally larger roll for firms with 10-plus employees, while the combination of maintenance, service and repair is significantly more important to the bottom lines of smaller companies. The only significant difference from 2016 is the increasing role of maintenance service contracts in the work of companies with 1–9 employees. Though still relatively small, these contracts now generate 8.3 percent of revenue for these companies, versus 6.5 percent two years ago.

The biggest change in revenue sources across the total sample is lighting’s move into the top money-making spot, climbing to an average of almost 30 percent of com-pany revenue, which is up from 21 percent in 2016. Taking an equally significant hit, electric power transmission and distribution (previously titled “electrical/power distribu-tion”) dropped to 25.4 percent, down from 43 percent two years ago, continuing a trend that began in 2004.

Looking at revenue derived from each of the three major building categories—residential, CII and nonbuilding, including transportation/lighting and utility—CII con-tinues to contribute most to contractors’ bottom lines at 49 percent.

However, as Figure 15 details, this is a drop from the 51 percent reported two years

ago, while residential projects’ share rose to 44 percent, from 42 percent in 2016. This change may be due to the residential market finally rebounding.

Interestingly, these 2-point shifts averaged across the total sample were largely driven by more significant movement in companies with 1–9 employees. In those firms, CII’s share dropped to 39.6 percent, from 42.8 percent in 2016, while residential rose to 55.4 percent, from 2016’s 52.3 percent.

When the residential and CII categories are broken into their respective subsets, single-family homes are the largest single source of revenue at 38.4 percent (see Fig-ure 16). Also, within the broad CII category, commercial construction is the top money maker at 26.7 percent of revenue, versus 13.6 percent for industrial projects and 8.6 percent for institutional work.

Unsurprisingly, though, revenue shares shift when we study them by company size. Firms with 1–9 employees earn almost half their revenue from single-family projects, while commercial projects take the lead for those with 10–99 employees. The largest firms with 100-plus employees get a dispro-portionate share of revenue from industrial and institutional projects and utility/non-building work.

Green building and EV chargingWe also looked into how many ECs had worked on green/sustainable building and renewable energy projects in 2017. Across the

sample, a substantial 59 percent of respon-dents reported participating in such efforts. Non-LEED-related efficiency projects and upgrades topped the list, with 37 percent reporting working on these jobs. As with almost all the project types in this category, it was more common in CII settings (at 29 percent) than residential (at 17 percent).

There was one notable exception, where sustainability-related work was more preva-lent for residential customers than CII clients. More contractors reported installing EV charging equipment in residential settings (15 percent) than CII environments (11 percent), perhaps a sign that more homeowners are leaving fossil fuels behind.

Training prioritiesWith numerous new technologies rising in importance and electrical codes updating every three years, electrical contracting is certainly an evolving field. To keep up with all of the changes, more than seven in 10 ECs say they or someone in their firm has taken a training course in the past 12 months or plans to do so in the next 12 months. This level of interest remains the same as reported in 2016.

However, when queried about specific topics of courses they have taken or will take, interest in specific courses has declined since our last survey, which, as Figure 17 shows, is a continuing trend. For example, National Electrical Code (NEC) changes, though still the biggest draw for contractor training, dropped

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FIGURE 16 Average Percent of Business in Previous Year from Specific Categories50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%Total Sample 1–9 10–19 20–99 100+

■ Single-family■ Multifamily

(1–5 stories)■ Multifamily

(6+ stories)■ Commercial■ Industrial■ Institutional■ Utility—power

generating plants/substations

■ Transportation lighting and communications

■ Line work■ Smart grid (+)■ Distributed

generation/alternative energy

■ Electric vehicle charging stations (+)

■ Energy storage

The + symbol indicates a significantly higher percentage than the 2016 Profile.

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to 54 percent from 71 percent in spite of the fact 2017 was an update year.

Other notable training topics and the change in their level of interest include the following:

■■ Lighting: including lamp technology, con-trols, drivers and ballasts and lighting design—46 percent, down from 58 percent

■■ Safety: 37 percent (It climbed into third place, above grounding and bonding, since 2016)

■■ Grounding/bonding: 32 percent, down from 49 percent

■■ Automation/controls: 32 percent, down from 43 percent

■■ Electrical testing and maintenance: 27 percent, down from 34 percent

■■ Green/sustainable: 23 percent, down from 40 percentIt is possible that ECs have less time

available for formal training because they are busier with paid work. Or, they might be focusing more in-depth on fewer single subjects.

The bottom lineOne thing is clear based on this year’s find-ings: the most successful ECs today wear many hats. It is a trend ECs have increasingly faced for the past couple of decades, but now, with traditional electrical power/distribution declining from 69 percent in the 2004 study to 25 percent of the EC’s revenue, the trend is a reality for many contractors.

Overall, things are looking good and pros-perous. ECs are confident in the economy and future growth. The majority of larger contractors are increasing their workforce, and small con-tractors are holding their numbers. However, a continually rising average age and a skilled labor shortage loom as stymieing factors. Fur-thermore, survey respondents still haven’t seen new construction return to its prerecession highs. Residential reclaimed some of its mar-ket share, suggesting housing has finally made a comeback. In the split between CII and res-idential work, the market divide between the smallest and biggest ECs is still very much alive.

Across the spectrum, lighting supplanted electric power transmission and distribution as the greatest revenue earner. Though mileage

may vary by region, locale and business size, ECs shouldn’t be surprised or feel ashamed if lighting work now brings in the most money. If it doesn’t, perhaps there’s more opportunity out there for it.

More than ever, this Profile of the Elec-trical Contractor is a testament to a theme of diversification. It’s true the industry is growing as a whole, but the contractors who venture into new markets are growing the most.

More to comeWe couldn’t fit all we learned about electri-cal contractors and their work into a single article, so we have a part two planned for next month. It will dive deeper into the busi-ness side of operations, including project arrangements, such as design/build as well as more traditional bidding formats. We’ll also analyze the role electrical contractors play in specifying and substituting the prod-ucts they install.

FIGURE 17 Courses Taken or Will Take2018 2016 2014

Have taken training in past 12 months 74% 70% 76%

Will take training in next months 77% 78% 74%

Courses taken or will take

Base 189 282 414

Mentioned any 97% 98% 97%

NEC changes 54%< 71% 67%

Lighting (net) 46%< 58% 58%

Lamp technology, incl. LED 33% 39% 33%

Controls/systems 32%< 44% 50%

Drivers/ballasts 23%< 30% 35%

Lighting design 18%< 26% 31%

Safety (Electrical/personal/on-site/job site 37% 42% 47%

Grounding/bonding 32%< 49% 50%

Automation/controls (net) 32%< 43% <52%

Fire/life safety systems 20% 23% <30%

Building automation systems 15% 17% <25%

Security systems 12% 13% <20%

Home automation systems 9%< 23% 20%

Electrical testing and maintenance 27%< 34% N/A

Green/sustainable (net) 23%< 40% 39%

Alternative energy systems 11%< 22% 24%

Electric vehicle charging stations 10% 14% 13%

Green/sustainable building/energy audits 7% 8% 10%

LEED certification 6%< 12% 12%

Energy use regulations 6%< 11% 12%

Community solar 6% 10% N/A

Energy storage 6% 9% 8%

2018 2016 2014

Cabling (net) 23%< 33% 37%

Data and telecom (cable, conduit, etc.) 15% 19% 23%

Power 14%< 24% 24%

Data and telecom (testing) 13% 16% 18%

Power quality 14% 19% 21%

Estimating/financial management 13%< 19% 21%

Design/build 10%< 25%> 19%

HVAC 10% N/A N/A

Electrical system design or BIM 9%< 22% 18%

Increasing productivity 9%< 17% 20%

How to use new software 9%< 15% N/A

Systems integration 9% 11% <21%

Developing new business opportunities 8%< 21% 17%

Sound and video/VDV (residential) 7% 11% 12%

Internet of things 7% N/A N/A

Sound and video/VDV (commercial) 5%< 11% 13%

Line work 4%< 8% 8%

Prefab/off-site building 3%< 10% N/A

Renovation/MACS/maintenance 3%< 9% <17%

Collaborative building (including IPD) 2%< 5% N/A

Drones 2% N/A N/A

How to recruit a workforce 0% N/A N/A

Mentioned 1 24%> 9% 12%

Mentioned 2 15% 11%> 7%

Mentioned 3 or more 58%< 78% 78%

Mentioned 6 or more 35%< 50% 49%

11 WWW.ECMAG.COM

W E COVERED A LOT OF GROUND in the first installment of the 2018 Profile of the Electrical Contractor. We learned electrical contractors are getting older, primarily work for smaller companies and mostly saw their firms’ head counts

stay the same or grow over the course of 2017. This month, we look at how ECs get their work done. How are their teams structured? Who are they working with? What is their influence over specifications and product selection? These are just some of the questions we explore as we finish up this two-part series.

Join the teamTeamwork remains an important part of ECs’ work—across our total sample, 69 percent of respondents said they had performed design-build (DB) or design-assist (DA) work during 2017 (our survey asks about work done in the previous calendar year). This represents a drop from our 2016 survey, when 73 percent of respondents reported having worked under such arrangements the previous year. The dif-ference seems to be the result of a drop in the number of firms with 10 or more employees doing DB or DA work in 2017. These larger companies still participated in DB and DA work at a rate of 81 percent, but that’s down from an 86 percent figure in our last survey.

As another insight, we noted that DB was significantly more important than DA for firms with 1–9 employees, while DB and DA were nearly equal in related revenue for companies with 100-plus.

We use revenue as a metric for understanding just how much of each type of work ECs now are completing; on average, we found 41 percent of EC revenue came from projects handled on a DB or DA basis. DB takes the lead in this regard at 30 percent, versus 11 percent for DA project structures. Traditional bid-build projects dropped to 46 percent from 48 percent in 2015, a slight, though still statistically significant reduction. The category of “other delivery methods” was up sharply, to 9 percent from 6 percent two years ago. When asked to describe these methods, most respondents focused on either time and materials or some aspect of maintenance, service and repair. Participation in this category was three times as high in firms with 1-9 employees than in those with 10-plus on staff (see Figures 1 and 2).

We introduced the category of “collaborative building” in our last survey, describing a range of advanced project-delivery methods that includes integrated project delivery and virtual design and con-struction. These approaches require an investment in hardware and software that’s likely beyond the budgets of smaller firms. This year’s 3.2 percent average revenue across the total sample illustrates the importance of large firms in this market. While 12 percent of ECs say they’ve done any work in this category, that number goes up to 18 percent in firms with 10–19 employees and all the way up to about 38 percent in firms with 100-plus employees.

The growing importance of collaborative building for the biggest companies’ bottom lines is emphasized looking at related revenue. For the largest firms with 100-plus employees, collaborative building projects during 2017 totaled 9.3 percent of revenue, which is almost double the 5.9 percent figure from our 2016 survey.

We’ve also been tracking the use of building information model-ing (BIM) over the last three studies, and perhaps surprisingly, use of this technology has remained pretty flat since 2012. Across the total sample, use of BIM has stayed between 20 percent and 22 percent, while average use has been stuck in the 6 to 7 percent range. How-ever, as was the case in 2016, these figures mask some big variations when we look at use by firm size. While BIM use is low in firms with 1–4 employees, it builds in firms with 5–9 and 10–19 employees, and climbs yet again for those with 20–99 on staff. The largest firms also are those with the largest percentage of revenue related to BIM-driven work.

By Chuck Ross Part 2: Getting to Work

2018 Profileof the Electrical Contractor

12WWW.ECMAG.COM

Partnering upWith our previous survey, we began asking ECs about professional relationships their firms have with engineers, either as con-sultants or as in-house staff. We hoped to gain more insight into the complexity of the work being done by today’s ECs. In 2016 and 2018, we asked about both of these possibilities separately, recognizing that these might not be either/or options—i.e., firms might work with both consulting and in-house engineers.

As we found two years ago, engineers are, indeed, common members of an EC’s team. Almost half of surveyed firms (47 per-cent) have such a professional relationship. This figure is statistically unchanged from our 2016 finding. Consultants are more common, with 42 percent of firms reporting a consult-ing relationship and 13 percent reporting their employment of an in-house engineer or sep-arate engineering division (see Figure 3).

As one might expect, these percentages once again shift as we break our findings down by firm size. Only 31 percent of the companies with 1–4 employees have any relationship with an engineer. However, engineers quickly become more important as firms get larger; move up to a 10-plus employee company and the percentage more than doubles to 73 percent.

Another aspect of project complexity can be seen in how frequently ECs collaborate with other building trades, another area of questioning initiated with the 2016 survey. We polled our respondents on their collab-oration with building owners or other design team members, as well as with the following trades: mechanical; heating, ventilation and air conditioning (HVAC); plumbing; and sys-tems integrators from other trades.

Not surprisingly, ECs work most fre-quently with owners or other design team members, with 74 percent reporting high or medium levels of project collaboration with this group. Almost half also reported similar levels of collaboration with mechanical (49 percent) and HVAC (48 percent) building trades. Work with plumbing and system inte-grators from other trades was less frequent, with 36 percent reporting high or medium levels of collaboration with these trades. These figures were consistent across firms of all sizes (see Figure 4).

FIGURE 3 Professional Working Relationship with EngineersNumber of Employees

Totaln=243

1–4136

5–935*

1–9171

10+70

Any professional relationship 47% 31% <54% 36% <73%

Consulting 42% 29% <49% 33% <63%

On staff/separate division 13% 4% <14% 6% <30%

Both 8% 2% <9% 4% <20%

FIGURE 4 Current Level of Project Collaboration/InfluenceBuilding

owner/other design team

member Mechanical HVAC Plumbing

Systems integrator from other

trades

High or medium 74% 49% 48% 36% 36%

High 36% 14% 16% 11% 13%

Medium 38% 35% 32% 25% 23%

Low 9% 24% 23% 26% 19%

Not applicable 13% 22% 25% 33% 38%

Don’t know/no answer 5% 5% 4% 5% 8%

FIGURE 2 Average Percentage of Revenue by Firm Size from Projects Involving Different Types of Project Delivery

Total 1–4 5–9 1–9 10+ 10–19 20–99 100+

70%

60%

50%

40%

30%

20%

10%

0%

■ Design-build or assist ■ Traditional bid-built basis ■ Collaborative basis ■ Other basis

FIGURE 1 Average Percentage of Revenue from Various Project Delivery Types

Design-build or assist

Traditional bid-build basis (–)

Other basis (+) Collaborative

60%

50%

40%

30%

20%

10%

0%

■ 2018■ 2016

* Caution: small sample size.

13 WWW.ECMAG.COM

Leading the packWithin the design teams described above, our respondents see themselves as having significant sway over electrical designs and specifications, with 74 percent reporting a high or medium level of influence. Inter-estingly, continuing a trend first spotted in 2012, perceived influence is higher for those working in smaller firms. Thirty-nine per-cent of those working in companies with 1–9 employees reported a high level of influence, versus 27 percent of those working for com-panies with 10-plus on staff.

A similarly consistent response across firm size was found in our questions regard-ing the building stage in which EC firms become involved in project collaboration, with only 10 percent joining the team during project design. Tied at about one-third each were the responses “Construction” and “It depends.” For 57 percent of respondents, the stage of initial involvement hasn’t changed compared to three to five years ago, while

20 percent say they now get involved earlier compared with three to five years ago. This is similar to the responses from when we first began asking these questions in 2016. Now, however, more ECs are getting involved at the construction phase (see Figure 5).

Regardless of when they get involved, ECs have come to expect incomplete spec-ifications, with 73 percent of firms reporting having received incomplete plans and specifications during 2017. On average, 42.1 percent of all plans or specifications our respondents received were incom-plete, which is statistically unchanged from our 2016 results. However, when we break these figures down by project type, some variations emerge. Single-family residential projects saw the highest averages for incom-plete plans and specifications. Commercial, industrial and multifamily residential proj-ects all have lower averages. Institutional projects have the lowest average levels of incompleteness (see Figure 6).

As our researchers note, this last find-ing isn’t unexpected: “Institutional work has a strong government component, and, therefore, perhaps a higher degree of explicit specification.”

How choices are madeSo, what do specifications look like when ECs do receive them? We gave survey participants four options (single brand or proprietary, multiple brand, “or equal to,” and performance-specified) and asked them what percentage of the specifications their company receives falls into each category. On average, a single brand is specified about one-quarter of the time. Firm size yielded no real statistical difference. However, per-formance-based specifications are more prevalent in firms with 10-plus employees and took a big jump upward in that category to 21.3 percent, from 13.9 percent in 2016.

However, these specs aren’t always the last word in what or which products get used on a project. Respondents said they are able to make brand substitutions about two-thirds of the time, on average. ECs working in 1–9 employee firms have discre-tion 74 percent of the time, a figure that falls to 58 percent for those in firms with 10-plus employees.

We also found that ECs have a range of reasons for original brand selections and substitutions. As has been the case since at least our 2014 study, availability was the runaway No. 1 reason, with price following not far behind. Compatibility with existing systems, durability, prior experience and ease of installation all showed up in about 30 percent of top-three lists.

Regardless of whether the context is original brand selection or brand substi-tution, availability and price emerge as substantially more important than any of the other attributes as the reason for originally selecting a brand and for brand substitution (see Figure 7 for current year information). Compatibility with existing systems, which was first introduced in 2014, is now higher than or comparable to ease of installa-tion, manufacturer reputation and made in America.

Prior experience and durability are the only two statistically significant differences between original specification and brand substitution.

2 0 1 8 P RO F I L E O F T H E E L EC T R I C A L CO N T RAC TO R

FIGURE 6 How Often Firm Receives Incomplete Plans and Specs

Across categories

Commercial Single-family residential

Industrial Institutional Multifamily residential

80%

70%

60%

50%

40%

30%

20%

10%

0%

■ Any incomplete plans and specs■ Average percentage that is incomplete

FIGURE 5 Building Stage in Which EC Firm Gets Involved in Project Collaboration

Project design Preconstruction Procurement Construction + It depends Don’t know/ No answer

40%

35%

30%

25%

20%

15%

10%

5%

0%

■ 2018■ 2016

* The + symbol indicates significant changes versus the 2016 Profile study.

14WWW.ECMAG.COM

Lessons learned, for nowEach of our biennial surveys gives us new insights into ECs’ work and business oper-ations. This year, you told us that your confidence in the economy is high, your businesses often are venturing into new territories and that the largest firms are

increasingly gaining experience in the most technologically driven project-delivery methods, including integrated design, virtual project design and collaborative building.

We’ll be checking in with you in another two years to see which of these trends have continued and what new trends are emerg-

ing. You’ll be able to read all about it in our 2020 Profile of the Electrical Contractor.

ROSS has covered building and energy technologies for a range of industry publications and websites for more than 25 years. He specializes in building and energy technologies, along with electric-utility business issues. Contact him at chuck@chuck-ross.com.

FIGURE 7 Top Three Reasons for Originally Selecting a Brand Versus Making a Substitution

Availability Price Compatibility with existing

systems

Ease of installation

Prior experience

+

Durability+

Manufacturer reputation

Made in America

Specific features

Manufacturer support and

training

Energy- efficiency

Real-time technical support

Word of mouth

None/ no answer

80%

70%

60%

50%

40%

30%

20%

10%

0%

■ Top 3 reasons original brand selection■ Top 3 reasons brand substitution

* The + symbol indicates significant changes versus the 2016 Profile study.

Andrea E. KleePUBLISHERandrea.klee@necanet.org

Julie H. MazurEDITOR—PRINTjulie.mazur@necanet.org

Timothy Johnson EDITOR—DIGITALtimothy.johnson@necanet.org

Matt KrausSENIOR ASSOCIATE EDITORmatthew.kraus@necanet.org

Hannah FullmerASSOCIATE EDITORhfullmer@necanet.org

Dominique M. MinorBUSINESS/PRODUCTION MANAGERdominique.minor@necanet.org

Astra J. Hudson/ Astra Benjamin-Hudson Consulting CIRCULATION MANAGERastra.hudson@necanet.org

Paul Philpott/BonoTom Studio Inc.CREATIVE SERVICES/ART DIRECTIONec@bonotom.com www.bonotom.com

MethodologyThe survey was conducted by postal mail and through the internet among a random sample of ELECTRICAL CONTRACTOR subscribers. The field period for the survey began on March 7, 2018, (for both the internet and postal mail versions), and ended on April 3, which was the deadline for the July 2018 article. A total of 1,597 interviews were completed—901 through the internet and 696 by postal mail. The data were weighted to equalize the influence of the two modes so that it was in line with the 50/50 split, which was the case in the most recent Profile studies.

Each respondent who received the survey through the internet was sent two follow-up emails. However, follow-up mailings were not made to nonresponders in the postal mail sam-ple. An incentive was offered for participation in the survey: For each completed survey, ELEC-TRICAL CONTRACTOR contributes $5 to charity, up to a total of $10,000. For the first time, the magazine also offered a sweepstakes drawing for one of five $150 Amazon e-gift cards.

The internet option was first introduced in 2004. In 2004 and 2006, the proportion of surveys completed using the internet versus postal mail was approximately 60/40. Since 2008, the proportion has been closer to 50/50. As noted above, in 2014, the data were weighted to equalize the proportion that participated by postal mail and through the internet.

As was the case since 2004, the survey was produced in different versions. Starting with the 2008 Profile study, there were four versions of the survey, which differed from each other on

fewer than 10 questions. The first three pages were common to all versions, while the dif-ferences among the versions occurred on the last page. The major difference was that in the internet portion, respondents were required in almost all cases to have percentage questions add to 100 percent.

In 2014, in order to accommodate a longer list of questions while at the same time lessen-ing the burden on the respondent, the survey was shortened from five print pages to four. In order to accommodate all of the questions, the survey was produced in eight versions (up from four). This required a much larger sample size so that each of the questions would be asked of a large enough sample to allow for analysis—par-ticularly by subgroups. In 2016, there were seven versions; the two versions that deal with training (past 12 months and next 12 months) were com-bined. In 2018, there were also seven versions.

This research was conducted by New York-based Renaissance Research & Consulting Inc. (www.renaiss.com), an independent marketing research firm that has, as one of its specialties, market research for the construction industry.

StatisticsThe margin of error on the total sample of 1597 is +/– 2.1 percent for percentages around 50 percent (i.e., we are confident that a reported 50 percent will fall between 52.1 percent on the plus side and 47.9 percent on the minus side 90 percent of the time.) Please note that different rules apply to testing of averages, which were also tested at the 90 percent level of confidence and are noted in the report.

Produced by

ELECTRICAL CONTRACTOR MEDIA GROUPMARKETING REPRESENTATIVES

ABOUT THE PROFILE

MIDWESTDonna HarbacekPHONE: 417.559.3207CELL: 630.292.3548EMAIL: donna@hbrmediasales

WESTFrank DantonaPHONE: 805.520.2836FAX: 805.520.2837EMAIL: fmdmedia@spacesales.com

NORTHEASTDenis O’Malley PHONE:: 203.356.9694, ext. 13FAX: 203.356.9695EMAIL: denis@nelsonmiller.com

SOUTH/SOUTHEASTGary LindenbergerLori Gernand-KirtleyPHONE: 281.855.0470FAX: 281.855.4219EMAIL: gl@lindenassoc.com EMAIL: lg@lindenassoc.com

SOUTH/MID-ATLANTICDoug FixPHONE: 770.740.2078FAX: 678.405.3327EMAIL: dfix@bellsouth.net

PUBLISHERAndrea KleePHONE: 301.215.4516EMAIL: andrea.klee@necanet.org

Every two years, Electrical Contractor magazine conducts a benchmark research study—the Profile of the Electrical Contractor—that takes the temperature of the electrical construction industry. The Profile offers insight to help you better understand just how pervasive the changes in the EC’s role in design/specification are to you, whether you’re an electrical contractor exploring new business avenues or an advertiser looking to learn more about our market. Check out recent studies at profile.ecmag.com and www.ecmag.com/market-research.

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