The construction market is making progress toward recovery. However, many large contractors remain uncertain as to where the market is going. They see persistent softness in the U.S. market, and those working in the public sector are finding that funding shortfalls among clients are an obstacle to growth.

Related Links: The Complete 2013 Top 400 Contractors List

The modest turnaround in the construction market can be seen in this year's ENR Top 400 Contractors list. As a group, the Top 400 generated $309.45 billion in contracting revenue in 2012, an increase of 9.7% from 2011's $282.14 billion. The figure is still some 8.5% below the record $338.38 billion in 2008 contracting revenue reported in our 2009 Top 400.

Domestic contracting revenue for the Top 400 rose 6.1% in 2012, to $233.99 billion, while international contracting revenue jumped 22.4%, to $75.46 billion. While the domestic market clearly is beginning to make progress toward prosperity, it still has far to go to match the record $281.36 billion in domestic contracting revenue by the Top 400 in 2008.

There is a marked contrast between the domestic private-sector markets and those dominated by the public sector. Manufacturing, which rose 82.7% in 2011, again was the top gainer in 2012, this time by 22.9%, showing the strongest domestic turnaround. The industrial-process market came in a close second, rising 21.9%. The power market was up 15.3%, petroleum was up 13.1% and telecommunications climbed 10.4%.

The domestic infrastructure markets continued to struggle. Contracting revenue in the U.S. transportation market rose 3.9%, while hazardous-waste contracting was up only 0.8%. Water-supply work, on the other hand, was the big loser in the 2012 market: Contracting revenue from projects in the water-supply market fell 25.8%. The sewer-and-wastewater market also fell, with revenue down 0.7%, the fifth straight year for declining contracting revenue in the sector.

The largest domestic market is general building, which rose 3.6%, to $113.33 billion, in 2012 over 2011. However, this is a far cry from 2008, when contractors from the Top 400 generated $135.47 billion from the general-building market.

The largest contractors continue to win mega-projects. Bechtel won over $19 billion in new contracting work in 2012, on top of a record $47 billion in contracting sales in 2011. "We think 2013 will be another solid year—not a record-breaker, but solid," says Bill Dudley, Bechtel's president. Bechtel won the front-end engineering-design contract from Anadarko Moçambique Area 1 Ltd. on a new liquefied-natural-gas processing plant in Mozambique in January and a 758-MW natural-gas-fueled, combined-cycle powerplant in Temple, Texas, in April.

Fluor also is having a big year. On April 30, Fluor and its partners received a notice to proceed on the $3.14-billion Tappan Zee Bridge replacement project in New York, and on May 2, Fluor won an ethylene cracker project for Dow Chemical in Freeport, Texas. "New awards for the quarter were strong [at] $6.5 billion, including $3.1 billion in oil and gas and $2.2 billion in industrial and infrastructure," said Fluor CEO David Seaton at a May 2 earnings conference. The firm's consolidated backlog is $37.5 billion, he says, "which is down from a year ago primarily due to the downturn in the mining-and-metals market." But Seaton is encouraged by improving margins on Fluor's backlog.

Kiewit Corp. also has reason to celebrate, having won—with Macquarie Infrastructure & Real Assets, Weeks Marine and Massman Construction—the $1.5-billion Goethals Bridge replacement job in New Jersey, and, with partner Skanska Koch, a $743.3-million contract to raise the deck of the Bayonne Bridge. Both contracts were awarded in late April.