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Profitability of UK construction contractors

Akintoye, Akintola S. & Skitmore, Martin (1991) Profitability of UK construction contractors. Construction Management and Economics, 9(4), pp. 311-325.

Abstract

The paper describes three analyses to examine differences in construction company POT profitability between (1) different financial years, and (2) different sizes of companies. In the first analysis, the aggregated profitability of a sample of 80 UK general contractors was found not to differ significantly from 3.23 percent for each year of the period examined. The size (turnover) of companies however was significantly positive correlated with profitability.

The second analysis, of a sub-sample of 8 very large companies, showed that profitability enhancement was associated with diversification into housebuilding and other related activities.

The third analysis, of 110 speculative housebuilders, showed profit margins to be around four times those of general contractors but uncorrelated with company size. Systematic changes were found however over the period involved.

In all cases, the variability of profitability between companies was found to reduce with company size, implying a greater consistency in the financial performance of larger companies.

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ID Code: 4434
Item Type: Journal Article
Additional URLs:
Keywords: Profitability, company size, turnover growth, diversification, pricing policies
ISSN: 1466-433X
Subjects: Australian and New Zealand Standard Research Classification > BUILT ENVIRONMENT AND DESIGN (120000) > ARCHITECTURE (120100)
Australian and New Zealand Standard Research Classification > BUILT ENVIRONMENT AND DESIGN (120000)
Divisions: Past > QUT Faculties & Divisions > Faculty of Built Environment and Engineering
Copyright Owner: Copyright 1991 Taylor & Francis
Copyright Statement: First published in Construction Management and Economics 9(4):pp. 311-325.
Deposited On: 09 Jun 2006
Last Modified: 09 Jun 2010 22:32

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