A PERSPECTIVE ON THE U.S. CONSTRUCTION

INDUSTRY

Luke M. SnellDirector, Concrete Industry Management

Del E Webb School of ConstructionArizona State University

Tempe, Arizona

U.S. CONSTRUCTION INDUSTRY

Estimated Value of Construction in Place (2004): $1,009 Billion

Private Sector $ 773 Billion Public Sector $ 236 Billion Total $1,009 Billion

Private Sector

Residential Construction $549 Billion Non-Residential Construction $224 Billion Total $773 Billion

CONSTRUCTION INDUSTRY

Construction Management/Design Build approaches have become popular in the

Private Sector Non-Residential Projects.

Public Sector has just started using these methods.

CONSTRUCTION INDUSTRY IS A MAJOR CONTRIBUTOR TO THE U.S. ECONOMY

Representing 8 % of the Gross Domestic Product (GDP)

Gross Domestic Product equals the Value of Goods and Services Produced in a Country.

GDP OF THE

LEADING COUNTRIES IN 2003

U.S. $11 Trillion China $6.5 Trillion Japan $3.6 Trillion India $3 Trillion Germany $2.3 Trillion

GDP PER CAPITA

OF THELEADING COUNTRIES

IN 2003

Luxembourg $55,100U.S. $37,800Norway $37,700 San Marino $34,600Denmark $31,200China $5,000 India $2,900

U.S. CONSTRUCTION INDUSTRY

Employees – 6 Million Workers equaling 5 percent of the workforce.

Construction Growth in the last 30 years has been poor.

Record Year was 1972 (11.2% of the GDP).

U.S. CONSTRUCTION INDUSTRY

6%

8%

10%

12%

1966 1970 1980 1990 2000

1966-2003 PERIOD

An

nu

al C

onst

ruct

ion

As

% o

f G

DP

67 68 69 71 72 73 74 76 77 78 79 81 82 83 84 86 87 88 89 91 92 93 94 96 97 98 99 01 02 03

Annual Construction as % Of Gross Domestic Product (GDP)(Source: U.S. Department of Commerce)

1975 1985 1995

10.9%

10.2%

9.4%9.8%

9.6%

8.2%

8.1%

8.4%

11.2%

7.9%

U.S. CONSTRUCTION INDUSTRY

REASONS FOR SLOW GROWTH

Quality ProblemsConstruction Accidents/InjuriesSchedule/Cost OverrunsLack of Research/InnovationsPoor ManagementExcessive RegulationIncreasing LitigationLack of Resources (Materials, Skilled Labor)

1

Southern Illinois University at Edwardsville: Bodapati/Kay

Year Market Share

1980 50%

1986 31%

1989 23%

1996 18%

2003 19%

U.S. Share in International Construction

DECLINING U.S. SHARE IN FOREIGN MARKETS

Reasons

High overhead (competing with Korea, China, Japan and others)

Lack of knowledge of how work in foreign countries is bid and executed.

Language problems

Unfamiliarity with Metric Measurement.

Reluctance on the part of the U.S. constructors to work abroad.

COST INCREASES

EXAMPLE PROJECT #1

Denver International Airport, Denver, Colorado

Cost Overrun: $3 BillionSchedule Delay: 18 months

EXAMPLE PROJECT #2

St. Louis Airport – East Terminal

Cost Estimate 1994 - $61 Million Cost Estimate 1997 - $97 Million Cost Estimate 1999 - $106 Million

CONSTRUCTION SAFETY

Construction Industry Employees 5% of the Workforce but Responsible for 20% of the Accidents.

Considered 4 Times More Hazardous than Other Industries

Fatalities in 2003: 1,060Cost per death: Average $1,000,000Cost to Construction Industry due to:

Fatalities $12 Billion Disabling Injuries $8 Billion Total $20 Billion

Construction Industry Fatalities 1984-2003

0

500

1000

1500

2000

2500

YEAR

FATA

LITI

ES

Fatalities

2,200

1,060

Construction Industry Disabling Injuries 1984-2003

0

100000

200000

300000

400000

500000

YEAR

DISA

BLIN

G IN

JURI

ES

Disabling Injuries

220,000390,000

Work-Related Deaths and Injuries in 2003

Industry Deaths Disabling Injuries

All Industries 4,500 3,400,000

Agriculture 710 110,000

Mining, Quarrying 120 20,000

Construction 1,060 390,000

Manufacturing 490 460,000

Transportation 770 320,000

Trade 380 710,000

Services 550 890,000

Government 420 500,000

Top 10 Violations: Construction

Description Number of Citations

1 Scaffolding 8,377

2 Fall Protection 5,403

3 Excavations 2,024

4 Ladders 1,736

5 Head Protection 1,594

6 Excavations, Requirements for Protective Systems 1,410

7 Electrical, Wiring Design & Protection 1,397

8 Electrical Wiring Methods, Components & Equipment

1,379

9 Construction, General Safety & Health Provision 1,215

10 Fall Protection Training Requirements 1,191

CONCLUSIONS

Construction Industry has to:Improve the project delivery process to:

Improve QualityManage Costs and ScheduleControl Construction Accidents/Injuries

Increase Research SpendingPromote Training of Construction SkillsEncourage Undergraduate/Graduate Education

in Construction