This study is to suggest specialty contractors with countermeasures to construction orders falling off, one of the construction business indicators for the construction industry, by analyzing the impact of dwindling construction orders to business performance indicators of specialty contractors as well as identifying inter-relationships between those performance indicators.
To do this, a database was compiled for construction orders and business performance indicators of specialty contractors with KRW 7 bil. or more of assets of 1997 through 2010 and the causal relationship verification and actual proof-oriented analysis were performed for each type of specialty contractor categorized in this study as below:
First of all, for specialty contractors of architectural construction, it is analyzed that their turnover ratio of total liabilities and net worth is affecting obtention of construction orders, ultimately increasing the operating profits. Therefore, this type of specialty contractors are determined to be able to secure corporate stability by establishing a specific operation plan for the total assets.
For specialty contractors of civil construction, it is analyzed that their current ratio is significantly affecting obtention of construction orders, which in turn greatly affecting the ratio of owner''s equity. It seems that the amount of construction orders has a direct relationship with the corporate stability. Therefore, this type of specialty contractors are determined to be able to obtain more orders for construction by improving current ratio.
For specialty contractors that mainly provides labor oriented engineering service, the amount of construction orders imposes lasting impact to the turnover ratio of current assets supposedly because they are operating current assets to secure labor. In other words, this type of specialty contractors are focused on mobilization of labor not materials or equipment. So, it is determined that they will be able to increase revenue by operating current assets to address current liabilities and labor mobilization.
For specialty contractors that provide labor, materials and smaller sized equipment, the amount of construction orders affects profitability the most and therefore some sort of strategy needs to be established to respond to decrease in operating margin due to dwindling construction orders. In other words, it is determined that increase in the amount of construction orders enhances operation of gross assets as well as the operating margin, ultimately increasing the profitability.
For specialty contractors that provide and utilize heavy equipment, the amount of construction orders is imposing a lasting impact to the turnover ratio of current assets. Therefore, it is determined that a business strategy needs to be established in order to secure current assets to respond to decrease in construction orders.
For organized management oriented specialty contractors, the amount of construction orders is directly affecting the corporate stability and therefore decreasing orders can negatively affect the owner''s equity ratio. However, considering that the turnover ratio of total liabilities and net worth is affecting the owner''s equity, an asset management plan needs to be established in a way to increase sales to the owner''s equity secured with increase in construction orders.
For a single leader oriented specialty contractors, the owner''s equity ratio is also significantly affected by change in the amount of construction orders and some countermeasure is required. But, as liability ratio is affecting the amount of construction orders, some sort of countermeasures to decrease liability ratio is required.