A PERSPECTIVE ON THE U.S. CONSTRUCTION INDUSTRY

1. A PERSPECTIVE ON THE U.S. CONSTRUCTION INDUSTRY Luke M. Snell Director, Concrete Industry Management Del E Webb School of Construction Arizona State University Tempe, Arizona

2. U.S. CONSTRUCTION INDUSTRYEstimated 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 BillionTotal $773 Billion

3. CONSTRUCTION INDUSTRYConstruction Management/Design Build approaches have become popular in the Private Sector Non-Residential Projects. Public Sector has just started using these methods.

4. 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.

5. GDP OF THE LEADING COUNTRIES IN 2003U.S. $11 Trillion China $6.5 Trillion Japan $3.6 Trillion India $3 Trillion Germany $2.3 Trillion

6. GDP PER CAPITA OF THE LEADING COUNTRIES IN 2003 Luxembourg $55,100U.S. $37,800Norway $37,700 San Marino $34,600Denmark $31,200China $5,000 India $2,900

7. 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).

8. 11.2% 10.9% 10.2% 9.6% 9.8% 9.4% 8.4% 8.2% 8.1% 7.9% 1975 1985 1995 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)

9. U.S. CONSTRUCTION INDUSTRY REASONS FOR SLOW GROWTH Quality Problems Construction Accidents/Injuries Schedule/Cost Overruns Lack of Research/Innovations Poor Management Excessive Regulation Increasing Litigation Lack of Resources (Materials, Skilled Labor)

10. U.S. Share in International Construction

11. 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.

12. COST INCREASES EXAMPLE PROJECT #1 Denver International Airport, Denver, Colorado • Cost Overrun: $3 Billion • Schedule Delay: 18 months

13. EXAMPLE PROJECT #2 St. Louis Airport – East Terminal • Cost Estimate 1994 - $61 Million • Cost Estimate 1997 - $97 Million • Cost Estimate 1999 - $106 Million

14. 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: 1,060 Cost per death: Average $1,000,000 Cost to Construction Industry due to: • Fatalities $12 Billion • Disabling Injuries $8 Billion • Total $20 Billion

15. Construction Industry Fatalities 1984-2003 2,200 1,060

16. Construction Industry Disabling Injuries 1984-2003 390,000 220,000

17. Work-Related Deaths and Injuries in 2003

18. Top 10 Violations: Construction

19. CONCLUSIONS Construction Industry has to: Improve the project delivery process to: • Improve Quality • Manage Costs and Schedule • Control Construction Accidents/Injuries Increase Research Spending Promote Training of Construction Skills Encourage Undergraduate/Graduate Education in Construction