Contractors in Cyclical Economic Environments

Abstract

This study investigated how the performance of construction firms during different extremes in the business cycle was impacted by a variety of the firms' characteristics. A performance index for a firm's relative market performance was devised and used with a step‐wise regression technique to model the relationships between operational variables and the performance index. Ten interviews wifh senior construction executives were conducted to guide the development of the model. The results show that a firm's relative market performance can be influenced by: Efforts in planning and control; control at firm level; effectiveness of project planning and control; efforts in marketing; effectiveness of marketing; subcontracting; long‐range planning; safety; geographic diversification; technological competence; and union/open‐shop construction. Significance varied with cycle point and size. Recommendations are made on how to improve a contractor's performance in cyclical business environments.