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POWER & INTEGRATED BUILDING SYSTEMS ELECTRICAL CONTRACTOR 2020 PROFILE OF THE ELECTRICAL CONTRACTOR

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Page 1: ELECTRICAL - ecmag.com€¦ · 2020 PROFILE OF THE ELECTRICAL CONTRACTOR Aging slowdown Perhaps the most interesting data point when it comes to EC demographics is how little things

P O W E R & I N T E G R AT E D B U I L D I N G S Y S T E M S

ELECTRICALCONTRACTO

R2020 PROFILE OF THE ELECTRICAL

CONTRACTOR

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of the 2020 Profile

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Those positive attitudes were based on real data points gathered from more than 1,600 readers who responded online and by mail to this year’s survey. Twice as many firms added employees as lost them in 2019. There are signs that the steady aging in the industry could be leveling off. Also, firms continue to move beyond traditional electric power/distribution into new areas, including higher percentages of ECs expanding into installations such as lighting controls, building automation and the growing electric vehicle charging industry.

Upbeat predictions could seem overly optimistic in at least the near term, given the impact massive stay-at-home orders have had on economists’ out-looks, but ELECTRICAL CONTRACTOR sees reason for hope in your responses. Notably, ECs’ confidence in the growth of the economy over the next few years persisted during the course of our survey process, even as economic conditions began shifting dramatically. Those completing the questionnaire from the second half of March into early April were every bit as positive about future business as those who responded before any coronavirus-related lockdowns began.

There’s much more to learn about your views on the state of electrical con-truction in 2019. Read on for the details. In addition, you can check out the full report online, at profile.ecmag.com and ecmag.com/market-research, where we also provide an archive of past results for easy, over-time comparisons.

Electrical Contractor

UR PROFILE OF THE ELECTRICAL CONTRACTOR happens every two years. In 2020, it overlaps with the

presidential election, the U.S. Census and the coronavirus pandemic. Of course, we didn’t

expect that last one. Our survey asks you to take a look back at your previous year’s business. As such, our 2020 report provides a unique

snapshot of the year before COVID-19 hit. For many ECs, 2019 was a good year, expanding on growth seen in our 2018 report. Many

firms grew in size and revenue, and a number also expanded into more lines of work. A majority of ECs expressed strong

confidence in continued economic strength over the next few years. 2020 Profile By Chuck Ross

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2020 PROFILE OF THE ELECTRICAL CONTRACTOR

Aging slowdownPerhaps the most interesting data point when it comes to EC demographics is how little things have changed. This is the first EC profile in at least a decade in which the average age remained virtually flat from the previous edi-tion—in this case, 57.9, versus 58.2 in 2018, a statistically insignificant difference. Addition-ally, Figure 1, Comparison of Age Composition Over Time, illustrates the age brackets of 55-64 (37%) and 65-plus (31%) also remain essentially flat, compared to 2018 results. In fact, the combined 35–54 age ranges were the only ones to show growth, up to 29% from 26% in 2018, a statistically significant increase. This is the first time in many years that we’ve seen growth in an age group younger than 65.

Also, as has been the case in the recent past, those working in smaller companies are older than those working in larger oper-ations, though there has been some leveling off. Average ages didn’t rise in firms with 1–4 employees (59.9) and declined among those with 1-9 employees (59.3). It did rise, though, in companies with 10-plus employees, to 55.2 from 53.8.

As in 2016 and 2018, 3% of the elec-trical contractors who participated in this survey are female. Women are more preva-lent in larger firms (5% in firms with 10-plus employees versus 3% among firms with 1–9).

In 2018, we asked about years of expe-rience in electrical contracting for the first time. This year’s responses mirrored those of two years ago, remaining statistically unchanged, at 32.4 years, on average (ver-sus 32.6 years, previously). We found 5% of you have been in the industry more than 50 years—not surprisingly, 92% with that much experience are older than 65.

What has changed, however, is our respondents’ level of responsibility. Company owners and managers make up 69% of the total respondents this year, down from 77% in 2018. And a higher percentage now say their title is master electrician (14%), project manager (6%) or other (6%). In another shift from 2018, the national percentage of own-ers/top managers doesn’t vary by region; in the previous two surveys, Western ECs were

FIGURE 1 Comparison of Age Composition Over Time45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

■ 2020 (n=1,635)■ 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=1,114)

18–24 25–34 35–44 45–54 55–64 65+

FIGURE 2 Company Size Trended 2020 Profile vs. 2018 Profile(Reporting from previous year)

70%

60%

50%

40%

30%

20%

10%

0%

■ 2020 total sample■ 2018 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%

■ 2020 ■ 2018■ 2016■ 2014■ 2012■ 2010

Increased Stayed the same Decreased Less than one year old

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more likely to be owners/top managers.This year for the first time, we asked com-

panies with three or more employees about the breakdown of the workforce between what they considered on-site electrical work-ers compared to those considered primarily business/office workers. The answer was a consistent 80% on-site and 20% office.

Firm size trending largerWhile the majority of EC firms continue to be smaller companies, that percentage has declined significantly since 2018, as seen in Figure 2, Company Size Trended 2020 Profile vs. 2018 Profile. While 56% worked in firms of 1–4 employees two years ago, that figure has dropped to 53% in this year’s survey. Sim-ilarly, 43% were in companies with annual revenues under $250,000 in 2018, compared to 40% in 2020. However, the proportion of the largest firms has grown over the last two years, with 12% reporting organizations with 100-plus employees, versus 8% in 2018.

And 11% reported annual company revenues of $10 million or more, versus 8% two years ago. A similar pattern was seen between our

2014 and 2016 reports, but 2018’s figures remained stable.

When asked about changes in their com-

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

2020 2018 2016 2014 2012 2010 2020 2018 2016 2014 2012 2010 2020 2018 2016 2014 2012 2010

Increased 24%= 22% 21% 20%> 12%> 7% 10% 10% 11% 12%> 6%= 5% 49%= 53%> 47%> 42%> 27%> 15%

Stayed the same 64%= 67% 65%> 61%= 63%> 55% 78% 80%> 75%> 70%> 72%> 67% 38%= 36%= 38% 35%= 37%> 23%

Decreased 11%= 9% <13% <18% <24% <36% 10% 9% <12% <17% <20% <26% 13%> 10% <15% <23% <35% <61%

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

FIGURE 5 Confidence in Growth of the Economy Over the Next Few Years(Only company sizes and regions that showed differences are displayed.)

All Companies50+

employees North Central South Increased Same Decreased

Extremely/very 53% 63% 64% 63%> 50% 40%

Extremely 25% 33% 33%> 23% 17%

Very 28% 19%

Somewhat 36% 24% 29%

Not very/not at all 9% 16%

Not very 8% 13%

Not at all 1%

Not sure/no answer 2%

Empty cells are not significantly different from the total sample. Bolded numbers indicate statistically significant differences from the total sample.

FIGURE 6 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

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pany, more than twice as many ECs said their firm had added employees (24%) rather than decreased in size (11%) (see Figure 3, Change in Number of Employees Among Total Sample).

The remaining 64% said company size had remained stable. This is statistically unchanged from 2018. However, there was a small shift, specifically for firms with 10-plus employees. Figure 4, Change in Company Size During Past 12–18 Months, shows these companies were slightly more likely to have decreased in size in the past 12–18 months, versus 2018’s results. The percentage is 13% this year, compared to 10% two years ago.

With reported company growth came the unsurprising fact that 65% of electrical contracting firms said they had difficulty finding trained workers and 29% had trou-ble retaining them.

The overall trend toward growth carried over into company revenues. Compared to two years ago, more firms now fall into the $1 million or more revenue category, at 31% this year, versus 27% in 2018. Similar increases

were seen in the period between 2014 and 2016, but numbers remained stable in the 2018 survey.

Breaking down revenues by firm size illustrates just how broad the electrical con-tracting field can be. At the smallest end of the spectrum, 71% of firms with 1–4 employ-ees had revenues of less than $250,000. At the largest end, for 53% of companies with 100-plus employees, that figure was more than $25 million.

New this yearEvery Profile year, we add new lines of ques-tioning. This year, in one version of the survey, we asked respondents about employee benefits. Overall, 71% of companies offer at least one benefit. Benefits may include paid vacation, health and life insurance, tool reim-bursement, paid time off for training, and a pension plan, plus several others.

Also for the first time, we asked about project bid requirements. Fewer than half (44%) of the total firms say they must have a prequalified standards and safety program

to bid on a project. Of course, small firms (1–4 employees) are far less likely to have such requirements placed on them. Approximately 55% of firms with 5–9 or 10–19 employees encounter this requirement compared with 24% of firms with 1–4 employees. In con-trast, three-quarters of firms with 20-plus employees encounter these requirements.

Across the total sample, about one in five (19%) answered that they must have man-hour requirements for women/minorities or veterans in order to bid on a project. Only 13% of firms qualify as or claim those designations. This requirement generally applies to larger firms and increases significantly and steadily from 9% among firms with 1–4 employees to about 40% for firms with 20-plus employees.

Nevertheless, almost six in 10 firms (59%) say that they already have a certified safety program or they plan to institute one in 2020; the likelihood of having a certified safety plan increases steadily with company size.

Projecting confidenceWe regularly poll ECs on their confidence in the growth of the overall economy over the next few years, and their answers have remained as positive in 2020 as they were in 2018. Figure 5, Confidence in Growth of the Economy Over the Next Few Years, breaks these answers down, showing that more than half of respondents (53%) described themselves as either “extremely” or “very” confident of economic growth over the next few years, which is virtually unchanged from 2018’s figure. What is particularly interest-ing, though, is the relatively small (and not statistically significant) drop in confidence between those who completed the survey before the COVID-19 pandemic began hav-ing a real economic impact compared to those who completed it once stay-at-home orders went into effect. Of those who com-pleted the survey before March 12, 57% fell into the extremely or very confident cate-gories. That figure fell to 50% among those completing the survey between March 13, when President Donald Trump declared a national emergency, and April 7. Addition-ally, those saying they were not very or not at all confident of growth remained steady, at 9%, between the two groups. This may reflect the good years leading up to when the question was asked.

FIGURE 7 Sources of Revenue—TrendedLighting: 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)

■ 2020 (n=538)■ 2018 (n=241)■ 2016 (n=341)

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

The symbols + and – indicate significant changes at the 90% level of confidence vs. 2018 study.

2020 PROFILE OF THE ELECTRICAL CONTRACTOR

Continued from page 4

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2018’s economic shifts continueOne EC income source that has yet to recover from the 2008 financial crisis is new con-struction, which accounted for 33% of revenue, on average, in 2019, compared to 43% of 2007 revenue, as reported in our 2008 profile. However, it is important to note that ECs’ average revenue from new con-struction grows significantly with firm size, as Figure 6, Average Revenue From Types of Work Performed in Previous Years by Sector, shows. Though it accounts for only an average of 27.9% of revenue for the smallest firms with 1–9 employees, it moves up to an average of 46.3% when employee numbers top 100.

Maintenance done on service contracts also is a somewhat bigger slice of business for those largest firms. For firms with 1–9 employees, however, maintenance, service and repair, on a combined basis, remains the most significant revenue contributor (see Fig-ures 6 and 14).

Our 2020 results show a continuation of a shift we first noted in the 2018 Profile, specifically in the proportion of revenue related to various types of electrical work. Electric power transmission and distribution fell dramatically in 2018’s survey, to an aver-age of 25.4% of revenue, from 43% in 2016, as shown in Figure 7, Sources of Revenue—Trended. That result remains statistically unchanged, at 24.8%, indicating a possibly lasting move.

As in 2018, lighting remains the top rev-enue category, statistically unchanged from 2018. Industrial systems/controls took a step up, though, to an average of 9.7%, from 6.8% in 2018. This move upward doesn’t seem to have significantly taken away from any other specific project type, indicating an overall broadening of work types.

Digging deeper into more specific work categories for 2019, we asked ECs about their involvement in each of a list of up to 43 different project types, in residential and commercial/institutional/industrial (CII) settings. You can see the results in Figure 8, Types of Work Performed by Company in 2019. Power and lighting jobs remain the most important across all job settings and are essentially tied.

Beyond the biggest categories, we see possibly unexpected project types spanning the residential and CII categories. These

include several sustainability- related jobs. For example, solar projects come in at a close 10% for residential and 13% for CII. Also, 21% of firms report working with EV charging equipment in residential settings, versus 17% for CII clients. And underscoring the cross-over potential of HVAC/mechanical projects for ECs, perhaps as controls become more important, 13% reported working on these jobs in residential settings, with 15% noting involvement in CII job sites.

Combining residential and CII projects,

19 of the up to 43 work types shifted signifi-cantly compared to two years ago. This year’s changes were all on the plus side, however, unlike the mix of losses and gains in 2018’s results. Compared with two years ago, more companies worked on:

 ■ Traditional power and lighting, with LED lighting, lighting controls and daylighting posting significant increases, along with wire and cable

 ■ Automation/control systems, specifically security, industrial controls, home and

FIGURE 8 Types of Work Performed by Company in 2019 Communications systems/connectivity

Any Res CII52 26 42+

Structured wiring/cabling/connectivity 45 22 36+

Networking (VoIP/wireless/broadband, etc.

29+ 12+ 25+

Data centers 23+ 5 20+Fiber optics (communications and security)

19 3– 18+

SustainabilityAny Res CII64+ 37 48+

Energy-efficiency projects/upgrades (non-LEED)

38 16 32+

Electric vehicle charging equipment 31+ 21+ 17+

LEED projects 24+ 8+ 20+Solar/photovoltaics 20+ 10 13+Energy audits (including thermal imaging) 16+ 4+ 14+

Smart or net metering 14+ 6+ 11+Cogeneration 9 3 7+Energy storage 9+ 4 6+Geothermal 5 4 2Wind generation 4 1 3Smart grid technology 4+ 1 3Microgrids 3 0.4 2Fuel cells 3+ 0.6 3+

Power qualityAny Res CII65 37 50+

Backup power/UPS 49 21 38+Troubleshooting/maintenance of low-voltage systems

41 22 31

TVSS/lighting surge suppression 34 17 27

Energy management/power quality 20 5 18

Low voltage 96+ 68 78+

Traditional power/lighting

Any Res CII95+ 69 76+

Lighting 92 66 73+LED lighting (including lamps, fixtures and controls)

89+ 63 68+

Lighting fixtures 82 57 63Ballasts or LED drivers 74 46 60

Lamps 71 48 53Lighting controls 73+ 44 54+Daylight/shading systems 25+ 9 21+

Any other lighting not included above 24 13 19+

Power 90+ 65 68+Power 81 58 60+Wire and cable 84+ 59 62+

Automation/control systems

Any Res CII76+ 48 57+

Fire/life safety (including alarms/detectors)

49 28 36+

HVAC controls 36 20 26Security (CCTV/access/motion, etc.) 40+ 21+ 30+

Industrial controls (including PLCs and VFDs and switchgear)

34+ N/A 34+

Home automation/smart home/connectivity 26+ 26+ N/A

Home theater/sound or VDV 17 17 N/A

Building automation systems/facilities connectivity

22+ N/A 22+

Sound and video or VDV 18+ N/A 18+Programming and commissioning 18+ 6+ 17+

OtherAny Res CII74 49 61

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

70 47 57

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

17 5 15

Water utilities or wastewater treatment plants

13 N/A 13

The symbols + and – indicate significant changes at the 90% level of confidence vs. the 2018 profile (each reporting on the previous year).

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FIGURE 9 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 10 Number of States in Which Electrical Contracting Firms Perform Work

1 state64%

2 states15%

3 states9%

4 states3%

5+ states10%

FIGURE 11 Firm’s Active Engagement in Systems Integration or Data/Telecom Centers

80%

70%

60%

50%

40%

30%

20%

10%

0%

■ 2020■ 2018

Any Low-voltage systems

integration

Design or specification

of low-voltage systems

Installation of data/telecom

centers

Commissioning and

programming

Design or specification of data centers/

telecom centers

building automation, sound and video, and programming and commissioning

 ■ Sustainability, notably EV charging equip-ment, energy-efficiency LEED projects, solar/photovoltaics, energy audits, smart or net metering, energy-storage systems, smart-grid technology and fuel cells

 ■ Low-voltage work, as a broad category (This area overlaps with many of the other listed project types, especially controls and sound and video installation and maintenance.)Looking only at residential construction,

there were changes in nine of the up to 39 work types listed for the sector, compared to 2018’s results:

 ■ Growth in networking (which includes voice-over-internet, wireless/broadband and other such efforts), along with several sustainability subcategories and home automation

 ■ Decline in fiber optic work, which seems to contradict the positive trends in network-ing, controls and communications (Growing adoption of wireless solutions could be one explanation for this data point.)In CII construction, 25 of the up to 41

listed work types showed increases, com-pared against 2018, including the following broad categories:

 ■ Communications systems/connectivity ■ Sustainability ■ Traditional power/lighting ■ Automation/control systems ■ Low-voltage

We noted an interesting development, considering types of work by firm size, out-lined in Figure 9, Types of Work Performed in

2020 PROFILE OF THE ELECTRICAL CONTRACTOR

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Previous Year by Company Size. In a change from recent Profiles, firms with 5–9 employ-ees, rather than the largest firms, are more likely than average to participate in more of the major project-type categories, reporting work in seven of the nine categories. In past surveys, larger firms—especially those with more than 100 employees and also those with 20–99 employees—were more likely to participate in a broader range of work.

As we’ve noted in previous Profiles, firms with 5–9 employees operate much more like larger firms than smaller companies in the range of projects they undertake. However, when it comes to residential construction, the smallest firms are, themselves, pretty diverse in the many aspects of traditional power and lighting projects they work on. These compa-nies also engage with some aspects of power quality, HVAC controls and mechanical work, along with electrical maintenance, service and repair and low-voltage jobs.

When it comes to where ECs are doing their work, about 36% of respondents say their firms have projects in two or more states (Figure 10, Number of States in Which Electrical Contracting Firms Performs Work), a significant tick upward from 33% in 2018. This shift could correspond to the move upward in firm size. Additionally, the numbers working in 3-plus, 4-plus and 5-plus states also all rose signifi-cantly, compared to 2018’s figures.

Wired on low-voltageLow-voltage projects continue to be common engagements for this year’s respondents, with 96% of the entire sam-ple saying their firm performs low-voltage work. However, these projects seem to be becoming more important to ECs’ bottom lines, with 22% now reporting their firms have a separate low-voltage division—twice the percentage reported in 2018. As was the case in 2018 and 2016, firms with 10 or more employees are more likely to have such a division than their smaller counterparts. And the growth in low-voltage divisions has been especially significant among this group, with 40% of firms reporting their adoption, up from 25% just two years ago.

Of course, systems integration and data centers are two big opportunities for low-voltage business, and almost half of ECs are actively involved in either or both of these types of projects. While it might appear from Figure 11, Firm’s Active Engagement in

Systems Integration or Data/Telecom Cen-ters, that such projects have increased since 2018, those differences are not statistically significant. Low-voltage systems integration makes up the biggest part of this business, at

36%, followed by design or specification of low-voltage systems, at 30%. Other related project types include:

 ■ Data/telecom centers installation, at 21% ■ Commissioning and programming, at 18%

FIGURE 12 Roles Played by Firm in Integrated Systems

Specify only

Install only

Specify and

install

Don’t work in this

categoryNo

answer

Security 2% 21% 20% 55% 2%

Fire/life safety 6% 26% 24% 42% 2%

Lighting (including controls) 3% 28% 60% 7% 2%

Communications (VDV, etc.) 3% 31% 21% 43% 2%

Building controls (including HVAC) 1% 31% 17% 49% 2%

HVAC (not including controls) 4% 23% 10% 60% 2%

FIGURE 13 Average Percentage 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

■ 2020■ 2018

FIGURE 14 Average Percentage of Sales/Revenue from Specific Sectors by Company Size

Total 1–9 employees 10+ employees

2020 2018 2020 2018 2020 2018

New construction 32.9% 32.6% 27.9% 28.2% 42.4% 43.6%

Modernization/retrofit 28.2%> 26.6% 28.3%> 25.7% 27.9% 28.9%

Maintenance/service/repair 39.0% <40.7% 43.8% <46.1% 29.6% 27.5%

Repair 18.8% <20.1% 23.2% 24.2% 10.1% 10.4%

Maintenance service contracts 8.6% 8.5% 7.2% 8.3% 11.4%> 8.9%

Maintenance not done under contract 11.6% 12.1% 13.4% 13.6% 8.1% 8.2%

Bolded numbers > and < indicate that the percentage is significantly higher or lower at the 90% level of confidence.

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 ■ Design or specification of data/telecom centers, at 13%In integrated systems work, 60% of ECs

say they both specify and install lighting systems, including controls, which isn’t sur-prising, given lighting’s overall prominence. As Figure 12, Roles Played by Firm in Inte-grated Systems, shows, about 20% to 25% specify and install other types of integrated systems, except for HVAC (not including controls), where the number falls to 10%.

Where’s the money?As Figure 13, Average Percentage of Sales/Revenue From Specific Sectors, shows, 39% of electrical contractors’ 2019 revenue on aver-age came from maintenance/service or repair, which is a small, yet statistically significant drop from the average of 40.7% reported two years ago. New construction, as noted above, accounted for an average of 33% of revenue, statistically unchanged from two years ago. Third in importance, on average, is modern-ization and retrofit, which posted a slight, but statistically significant, bump up to an average of 28.2%, from 26.6% in 2018’s Profile.

This revenue order varies a bit when considered by firm size. New construction is more important for firms with more than 10 employees than it is to smaller firms. However, maintenance, service and repair, on a combined basis, accounted for a pro-portionally larger share of 2019 revenue for

smaller firms. Maintenance service con-tracts, though, play a larger role for firms with more than 20 employees.

We found three new significant differ-ences between firms of varying sizes, outlined in Figure 14, Average Percentage of Sales/Rev-enue From Specific Sectors by Company Size. On average, revenue from modernization and retrofit increased compared to two years ago, driven by increases among firms with 1–9 employees, while repair revenue declined. Maintenance/service/repair on a combined basis also decreased, driven by declines among firms with 1–9 employees. Although there wasn’t a significant change across the total, revenue from maintenance service con-tracts increased among firms with more than 10 employees.

Looking at revenue by building cat-egory—residential, CII and nonbuilding (which includes transportation/lighting and utility)—CII continues to be ECs’ top revenue category, at 50.9%, on average. Residential projects come in at an average of 41.8%, a drop from 44.4% in 2018, while nonbuilding projects account for about 7% of EC revenue.

There were no statistically significant changes in average revenue derived from the broad CII and nonbuilding categories. How-ever, average revenue from institutional work increased across the total sample, while rev-enue from single-family housing decreased across the total sample, and revenue from

multifamily housing of six or more stories rose significantly.

Breaking these three major categories into their respective subcategories, we see the importance of single-family housing. CII, as a broad category might make up the greatest portion of EC revenue, on average, but single-family housing is the single largest revenue source, at 35.2% in this year’s profile. (See Figure 15, Average Percentage of Business in Previous Year from Specific Categories.)

These broad figures shift proportionally when they’re broken down by company size. For example, firms with 1–9 employees earned almost half their 2019 revenue from single-family projects. Also of note:

 ■ EC firms with 10–99 employees earned the largest share of their revenue from com-mercial projects.

 ■ Firms with 20 or more employees earned a disproportionate percentage from indus-trial work.

 ■ Firms with 100 or more employees earned a disproportionate percentage from insti-tutional and utility/nonbuilding work.

Continuing educationECs remain interested in improving their skills and gaining new knowledge regarding emerging technologies, according to 2020 Profile responses. About 80% of ECs said they or someone in their firm has taken train-ing in the past 12 months, or plan to do so in

2020 PROFILE OF THE ELECTRICAL CONTRACTOR

FIGURE 15 Average Percentage 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/alt. energy (+)

■ EV charging equip. (+)■ Energy storage (+)

The symbols + and – indicate significant changes at the 90% level of confidence vs. the 2018 profile (each reporting on the previous year) among the total sample.

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the next 12 months. These percentages are similar to those reported in 2018. However, as Figure 16, Courses Taken or Will Take, indicates, interest in a number of specific topic areas has increased since our last Profile, including:

 ■ Safety tops the chart at 53%, up from 37%. ■ Grounding/bonding: 43%, up from 32% ■ Green/sustainable: 32%, up from 23% (notably, interest in EV charging stations is up to 18%, from 10%)

 ■ Estimating/financial management: 26%, up from 13%In 2018, we considered that the drop in

training interest might have been due to a particularly busy work schedule. However, this explanation doesn’t ring true, given that the past year’s increase was paired with an even busier work environment. Now, we’re hypothesizing that this profile’s training boost could relate to areas ECs see as par-ticularly promising, with new subjects to be mastered.

The payoffIn many ways, this year’s findings show a solidification of trends we saw in 2018. Notably, the top-tier importance of lighting to ECs’ work and revenue, the slow return of new construction from its prerecession highs, and the steady rise of solar, storage and EV charging equipment across all building sec-tors. There’s also no doubt the economic environment has shifted dramatically in 2020, from the 2019 trends we asked you about for this year’s survey. But we feel the resulting Profile provides a unique benchmark, for both near- and far-term comparisons.

Stay tunedWe couldn’t fit all we learned about electri-cal contractors and their work into a single article, so we have a second part planned for next month. It will dive deeper into the business side of operations, including project arrangements, such as design/build and more traditional bidding formats. We’ll also analyze the role electrical contrac-tors play in specifying and substituting the products they install.

FIGURE 16 Courses Taken or Will Take2020 2018 2016 2014

Have taken training in past 12 months 79% 74% 70% 76%

Will take training in next 12 months 80% 77% 78% 74%

Courses taken or will take

Base 195 189 282 414

Mentioned any 96% 97% 98% 97%

NEC changes 50% 54%< 71% 67%

Lighting (net) 40% 46%< 58% 58%

Lamp technology, incl. LED 21%< 33% 39% 33%

Controls/systems 27% 33%< 44% 50%

Drivers/ballasts 18% 23%< 30% 35%

Lighting design 17% 18%< 26% 31%

Safety (Electrical/personal/on-site/job site)

53%> 37% 42% 47%

Grounding/bonding 43%> 32%< 49% 50%

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

Fire/life safety systems 18% 20% 23% 30%<

Building automation systems 15% 15% 17% 25%<

Security systems 14% 13% 13% 20%<

Home automation systems 12% 9%< 23% 20%

Electrical testing and maintenance 28% 27%< 34% N/A

Green/sustainable (net) 32%> 23%< 40% 39%

Alternative energy systems 15% 11%< 22% 24%

Electric vehicle charging stations 18%> 10% 14% 13%

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

LEED certification 6% 6%< 12% 12%

Energy use regulations 8% 6%< 11% 12%

Community solar N/A 6% 10% N/A

Energy storage 13%> 6% 9% 8%

Cabling (net) 14%< 23%< 33% 37%

Data and telecom (cable, conduit, etc.) 7%< 15% 19% 23%

Power 8%< 14%< 24% 24%

Data and telecom (testing) 5%< 13% 16% 18%

2020 2018 2016 2014

Estimating/financial management 26%> 13%< 19% 21%

Estimating 24% N/A N/A N/A

Financial management 9% N/A N/A N/A

Power quality 15% 14% 19% 21%

Design/build 12% 11%< 25%> 19%

How to use new software 12% 9%< 15% N/A

Developing new business opportunities 12% 8%< 21% 17%

Increasing productivity 11% 9%< 17% 20%

Electrical system design or BIM 10% 9%< 22% 18%

Systems integration 9% 9% 11% 21%<

Internet of things 7% 7% N/A N/A

HVAC 6% 10% N/A N/A

Sound and video/VDV (residential) 6% 7% 11% 12%

Sound and video/VDV (commercial) 6% 5%< 11% 13%

Prefab/off-site building 5% 3%< 10% N/A

Renovation/MACS/maintenance 5% 3%< 9% 17%<

Collaborative building (including IPD) 4% 2%< 5% N/A

Line work 3% 4%< 8% 8%

Drones 2% 2% N/A N/A

New in 2020

Code compliance (non-OSHA) 37% N/A N/A N/A

OSHA code compliance 35% N/A N/A N/A

Personnel/leadership 24% N/A N/A N/A

Project management training 15% N/A N/A N/A

Foreman development 10% N/A N/A N/A

Executive leadership 7% N/A N/A N/A

Lean, Agile, Six Sigma 4% N/A N/A N/A

Mentioned 1 19% 24%> 9% 12%

Mentioned 2 8% 15%> 11%> 7%

Mentioned 3 or more 69%> 58%< 78% 78%

Mentioned 6 or more 42% 35%< 50% 49%

Bolded numbers > and < indicate that the percentage is higher or lower at the 90% level of confidence.

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2020 Profile

IN PART 1 OF “THE 2020 PROFILE OF THE ELECTRICAL CONTRACTOR,” we noted that, immediately prior to the COVID 19-related shutdowns, electrical contractors were feeling confident

about the economy. Confidence remained strong, even as the shutdowns began. In part 2, we focus on the work of today’s ECs: how they are building organized teams, who they work with and how they choose their products. Read on to learn more.

Part 2: How the Work Gets Doneof the Electrical Contractor

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Project delivery optionsWe’ve asked about project-delivery methods for decades in our biennial surveys, which cover work done in the previous year. For the first time in this questionnaire, we added time and materials, along with maintenance, service and repair to options that originally included traditional bid-build, design-build or design-assist, on a collaborative basis, and the catchall category “other.” Those two new categories—which topped the list of write-in choices in 2018—were the most frequently selected in this year’s survey. “Time and materials” is the new leader, at 79%, with “maintenance, service, repair” a close second at 74%.

The two new chart-toppers seem to have cut into the figures for all the other catego-ries, compared to 2018. As shown in Figure 1, Design Specification—Any Projects Bid This Way in 2019, traditional bid-build projects fell to 64%, versus 74% in 2018, and design-build (D-B) or design-assist (D-A) dropped to 58% from 69%. Even the less-chosen “collaborative basis” (7% in this year’s survey, versus 12% in 2018) and “other basis” (3% versus 13%) groupings are notably lower.

These changes aside, team-based D-B and D-A projects remain important for firms of all sizes. As has been the case tra-ditionally, though, they are more frequent for larger firms, and that divide only grew deeper over the last two years. Describing

their 2019 work, 47% of ECs from firms with 1–9 employees said they had done D-B and/or D-A jobs during the year. This is a signifi-cant drop from the 65% reporting such work during 2017. For larger firms, the figure has remained steady at about 80%.

We also regularly ask ECs about the share of revenue they receive from each of the project types. Here, too, incorporating two new project types has affected responses, as shown in Figure 2, Design Specification—Average Percentage of Revenue from Projects Bid This Way in 2019. Overall, ECs reported an average of 28% of their firms’ revenue comes from either time and materials or traditional bid-build approaches—this rep-resents a significant drop from the 46% of revenue reported for traditional bid-build in 2018. The new maintenance, service, repair and D-B/D-A (which came in at 41% of 2017 revenue) are now nearly tied, at 19% and 22%, respectively.

The additional categories have also changed when looking at revenues by firm size, especially among smaller firms. In the 2018 Profile, D-B/D-A projects totaled over 40% of 2017 revenue for companies with 1-9 employees. That figure dropped to 18% in ECs’ reporting of 2019 revenue, with the new choices of time and materials and mainte-nance, service, repair reaching almost 60% of revenue for these smaller companies.

We have asked about ECs’ use of build-

ing information modeling (BIM) systems since 2012. This is the first year we have seen a sig-nificant uptick in both “any” use and “average” use. Approximately 27% of ECs reported any use of BIM in their firm, up from 22% in 2018. And the average percentage of time they or someone in their firm uses the technology rose to 8.2% from 6.5% two years ago.

BIM continues its move into smaller firms, as noted in 2018 and 2016. Use of the design systems remains low in the 1-4 employee firms, but it grows quickly in larger companies—even those with as few as 5-9 employees. And, compared to 2018, both “any” and “average” use grew dramatically in firms with 10-plus and 20-plus employees.

Team playersIn a series of questions we started asking in 2016, a little more than half of ECs reported their firm had an ongoing relationship with an engineer. As Figure 3, Professional Work-ing Relationship With Engineer(s), illustrates, the response rate remains statistically unchanged at 53% from the 47% result we received in 2018. Some shifts can be seen, though, in the kinds of relationships EC firms engage in with engineers. Our questions cov-ered three possible arrangements:

 ■ Through a consulting relationship ■ Having an engineer on staff ■ With in-house engineering division

Consulting relationships grew signifi-

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cantly in 2020, at 51% versus 42% in 2018. Additionally, the percentage reporting their firms worked with both in-house and con-sulting engineers nearly doubled—to 15% from 8%—over the last two years. However, the 17% figure for those reporting having an engineer on staff or a separate engineering division remains statistically unchanged from our 2018 survey.

Not surprisingly, working with an engi-neer becomes more common as firm size increases—after all, jobs requiring an engi-neer are usually more complicated, and those tend to be awarded more frequently to larger EC firms. However, it is notable that 30% of respondents working for companies with only 1–4 employees still report profes-sional relationships with engineers. In firms with 10-plus employees, such arrangements have grown significantly, across the board. Eighty-five percent of reporting companies noted having any of the three types of engi-neering relationships, up from 73% in 2018, with similarly significant increases in the three subcategories.

But engineers aren’t the only other building team members with whom ECs col-laborate. We also asked respondents about how frequently they work with mechanical, HVAC, plumbing and systems integrators from other trades. As we noted two years ago, project collaboration is higher with mechanical and HVAC trades. However, a larger number of ECs now categorize their involvement with mechanical contractors as “high” than in 2018. Involvement with systems integrators also has risen, with more ECs reporting a “medium” level of col-laboration with these professionals. These trends, outlined in Figure 4, Current Level of Project Collaboration, were noticed among firms of all sizes, with no notable differ-ences found based on a company’s number of employees.

EC as influencerECs continue to have significant sway over a project’s overall electrical design and speci-fications, with 72% reporting either a high or medium level of influence, with no meaning-ful difference by company size. However, in larger firms, the significance of that influence has grown over the last two years. Respon-dents from firms with 10-plus employees

were more likely to classify their influence as high (43% in 2020, versus 27% in 2018), and less likely to report it as medium (30% in 2020, versus 50% in 2018).

Large firms also are now more likely to get involved at earlier project stages, as shown in Figure 5, Building Stage in Which EC Firm Gets Involved in Project Collabora-tion. We started asking questions around this topic in 2016, and in our 2018 survey,

we found no statistical differences, by firm size, in ECs’ involvement timelines. This year, however, significantly more respon-dents from firms with 10-plus employees say their companies get involved during project design (23%, versus 7% for smaller firms) or procurement phases (8%, versus 2% for smaller firms). The timing for smaller firms, however, is more likely to rest on project-dependent factors, with 34% of

FIGURE 2 Design Specification—Average Percentage of Projects Bid This Way in 2019

Total 1–4 5–9 1–9 10+ 10–19 20–99 100+Time and Materials 28.3% 37.1% 35.2%> 15.3% 21.6% 13.2% 12.2%Traditional Bid/Build 28.1% 20.9% <31.9% 23.1% <37.5% 35.4% 41.2% 35.3%

Design-Build or Design-Assist 22.1% 17.2% 17.7% <30.5% 28.1% 29.2% 33.9%

Maintenance, Service and Repair 19.3% 22.7% 22.1%> 14% 13.5% 13.6% 14.8%

Collaborative Basis 0.9% 0.05% 0.02% 0.04% <2% 0.05% 1.8% 3.3%

Bold percentages are significantly higher than italicized percentages.

FIGURE 1 Design Specification—Any Projects Bid This Way in 201990%

80%

70%

60%

50%

40%

30%

20%

10%

0%

■ Total Sample 2020 (n=1,635)■ Total Sample 2018 (n=1,597)

Maintenance, Service, Repair

Time and Materials

Traditional Bid-Build Basis (–)

Design-Build or -Assist (–)

Collaborative Basis (–)

Other Basis (–)

The symbol (–) indicates a statistically significant difference versus 2018.

FIGURE 3 Professional Working Relationship With Engineer(s)

Number of Employees2020 Profile Study 2018

Total 1–9 10+ 10+Any Professional Relationship 53% 36% <85% >73%

Consulting 51% 34% <82% >63%

On Staff/Separate Division 17% 6% <38%

Both 15% 4% <35% >20%

Bold percentages are significantly higher than italicized percentages.

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ECs from these companies reporting “it depends” when describing the stage their project involvement is likely to begin.

For several Profile studies, we have asked ECs about the average percentage of incomplete plans and specifications they received in the previous year, once their project involvement began. This year, we also asked about the percentage of incor-rect plans and specifications. Interestingly, ECs said they had received nearly equal

numbers of both, with 71% noting they had received any incomplete plans or specifica-tions the previous year, and 70% saying that any of their plans and specifications had been incorrect. While 2020’s incomplete average percentage dropped from 42% to 33% in 2018, this could the result of having the new “incorrect” option.

As Figure 6, How Often Firm Receives Incomplete Plans and Specs, shows, these percentages vary by building type. Com-

mercial and industrial projects lead the list for incomplete plans and specifications, with about half of firms reporting such problems in these categories.

Decisions, decisionsWe also asked ECs about what kinds of product specifications they’re given, with the choices of single brand or proprietary, multiple brand, “or equal to,” and perfor-mance specified. On average, single brand or proprietary specifications make up 22.6% of the total, though this figure is a bit higher (25%) for firms with 1-9 employees. There is no statistical difference between these firms and their larger counterparts in terms of the frequency of other specification types.

There are a couple interesting differ-ences between this year’s responses to this question and those we received two years ago. Performance-specified specifications, which rose sharply, to an average of 21%, between 2016 and 2018, fell back to 12% in firms with 10-plus employees. In contrast, multiple brand specifications rose to an average of 36% among larger firms, from 26% in 2018.

ECs have a great deal of influence in the actual brands chosen, though, regardless of the type of specifications they receive. When asked how much discretion they have in making a brand substitution, the average response was about 70% of the time—74% for firms with 1-9 employees and 61% for larger companies.

Looking at reasons why a brand was chosen—either originally, or as a substi-tution—availability, price and compatibility with existing systems remain the top three reasons, in that order, as they were in 2018 (see Figure 7, Top 3 Reasons for Orig-inally Selecting a Brand Versus Making a Substitution). However, a number of other possible specification drivers did post significant declines over the previous two years, including Made in America, durability, energy- efficiency, real-time technical sup-port and word of mouth.

Stay tunedThis year’s version of our biennial survey provides a unique view of the electrical

2020 PROFILE OF THE ELECTRICAL CONTRACTOR

FIGURE 4 Current Level of Project CollaborationBuilding Owner/

Other Design Team

Members Mechanical HVAC Plumbing

Systems Integrator

From Other Trades

High or Medium 72% 56% 53% 40% 47%High 42% 22% 19% 14% 15%Medium 30% 34% 34% 27% 32%Low 11% 21% 23% 26% 19%Not Applicable 17% 23% 23% 33% 33%Don’t Know/ No Answer 0.5% 0.5% 0.9% 0.5% 1%

indicates a statistically significant increase versus 2018 (not shown).

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

2020 2018

TotalNumber of Employees

Total1–9 10+Project Design 12% 7% <23% 10%Preconstruction 21% 20%Procurement 4% 2 <8 1Construction 32% 34%It Depends 30% 34%> 23% 32%Don’t Know/No Answer 1% 3%

Bold percentages are significantly higher than italicized percentages indicates a statistically significant increase versus 2018.

FIGURE 6 How Often Firm Receives Incomplete Plans and Specs(Among firms that work in that building category)

80%

70%

60%

50%

40%

30%

20%

10%

0%

■ Any incomplete plans and specs■ Average percentage that are incomplete (among firms that work in that category)

CommercialAcross Categories

Industrial Single-Family Residential

Institutional Multifamily Residential

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contracting market after a decade of eco-nomic expansion. It also provides a snapshot of where the market was, just as that expansion started moving in the opposite direction, as the upheaval caused by the COVID-19 pandemic began to take hold. However, your confidence in the economy’s future remained strong, even as the impacts of resulting business shutdowns began to be felt.

The pandemic will continue to pose physical and financial challenges for at least the short term. Expectations differ in what a fiscal recovery might look like—whether it will take the rapid, V-shaped route or a longer, U-shaped course. Regardless, we’ll be back in two years with an update in the 2022 Profile of the Electrical Contractor.

ROSS has covered building and energy

technologies and electric-utility business

issues for more than 25 years. Contact him

at [email protected]

FIGURE 7 Top 3 Reasons for Originally Selecting a Brand Versus Making a Substitution

Availability

Price

Compatibility with Existing Systems

Ease of Installation

Prior Experience

Durability (+)

Made in America

Manufacturer Reputation (+)

Specific Features

Energy Efficiency

Manufacturer Support and Training

Real-Time Technical Support

Word of Mouth

None/No Answer (+)

0 10 20 30 40 50 60 70 80

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

(+) indicates that reason is significantly higher than corresponding bar at the 90% level of confidence

Andrea E. [email protected]

Dominique M. MinorASSOCIATE [email protected]

Julie H. MazurMANAGING [email protected] Hannah FullmerSENIOR [email protected]

Holly SauerASSOCIATE [email protected]

Paul Philpott/BonoTom Studio Inc.CREATIVE SERVICES/ART [email protected] www.bonotom.com

Produced by

MethodologyThe survey was conducted by internet and postal mail among a random sam-ple of ELECTRICAL CONTRACTOR subscribers. In addition, in 2020 as in 2018, about 100 members of the ELECTRICAL CONTRACTOR Subscriber Research Panel also participated in the survey.

The field period for the survey began on Feb. 21, 2020, and ran through April 13, 2020, which was the deadline for the July 2020 article. A total of 1,635 completed the survey in that time period.

In 2020, we offered those in the mail sample a choice of either participat-ing in the survey online, though a link, or to continue to receive a paper survey by postal mail. A total of 144 completed the survey by mail and another 53 completed the survey online.

The data were not weighted for two reasons—since the proportion of the total attributable to the printed survey list was so low, weighting would dis-tort the total statistics. The other reason was that comparing the unweighted 2020 results with the 2018 weighted results showed very little difference among the total sample.

Each recipient of the internet survey was sent up to four follow-up emails. However, follow-up mailings were not made to nonresponders in the postal mail sample. An incentive was offered for participation in the survey. For each completed survey, ELECTRICAL CONTRACTOR would contribute $5 to charity, up to a total of $10,000. In addition, as was the case in 2018, the magazine also offered a sweepstakes drawing for one of five $150 Amazon e-gift cards.

The internet option was first introduced in 2004. As was the case since 2004, the survey was produced in different versions. Starting with the 2008 Profile study, there were four versions, which differed from each other on fewer than 10 questions. There were seven versions starting in 2016. The first three pages were common to all versions, while the differences 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 per-centage questions add to 100%.

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 1,635 is +/–2% for percentages around 50% (i.e., we are confident that a reported 50% will fall between 52% on the plus side and 48% on the minus side 90% of the time). Please note that different rules apply to testing of averages, which were also tested at the 90% level of confidence and are noted in the report.

A significant difference in the total sample between 2020 with a sample size of 1,635 and 2018, where the sample size was 1,597 is at least 1.5% at the 90% confidence level.

Media Group

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ELECTRICAL CONTRACTOR MEDIA GROUPMARKETING REPRESENTATIVES

ABOUT THE PROFILE

MIDWESTDonna HarbacekPHONE: 417.559.3207CELL: 630.292.3548EMAIL: [email protected]

WESTFrank DantonaPHONE: 805.520.2836FAX: 805.520.2837EMAIL: [email protected]

NORTHEASTDenis O’Malley PHONE: 203.356.9694, ext. 13FAX: 203.356.9695EMAIL: [email protected]

SOUTH/SOUTHEASTGary LindenbergerLori Gernand-KirtleyPHONE: 281.855.0470FAX: 281.855.4219EMAIL: [email protected] EMAIL: [email protected]

SOUTH/MID-ATLANTICDoug FixPHONE: 770.740.2078FAX: 678.405.3327EMAIL: [email protected]

PUBLISHERAndrea KleePHONE: 301.215.4516EMAIL: [email protected]

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.

ELECTRICALP O W E R & I N T E G R AT E D B U I L D I N G S Y S T E M S

CONTRACTOR

7 . 1 4

2014 PROFILE OF THE ELECTRICAL CONTRACTOR

ELECTRICALP O W E R & I N T E G R AT E D B U I L D I N G S Y S T E M S

CONTRACTOR

7 .1 6

2016 PROFILE OF THE ELECTRICAL CONTRACTOR

P O W E R & I N T E G R AT E D B U I L D I N G S Y S T E M S

7 .1 27 .1 2

2012 PROFILE OF THE ELECTRICAL CONTRACTOR2012 PROFILE OF THE ELECTRICAL CONTRACTORSPECIFY | INTEGRATE | SERVICE

ELECTRICALCONTRACTOR

ELECTRI- CONTRAC-

P O W E R & I N T E G R AT E D B U I L D I N G S Y S T E M S

SMART LIGHTING, CONTROLS AND LEDS

P O W E R & I N T E G R AT E D B U I L D I N G S Y S T E M SELECTRICALCO

NTRACTOR

2018 PROFILE OF THE ELECTRICAL CONTRACTOR

7 . 1 8

P O W E R & I N T E G R AT E D B U I L D I N G S Y S T E M S

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2020 PROFILE OF THE ELECTRICAL

CONTRACTOR

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