Construction (NAICS 23)
Under this topic you will find the North American Industry Classification
System definition of the
Construction (NAICS 23) sector. You can use this
definition to properly identify the segment of the industry you wish to study
further in other sections of Canadian Industry Statistics.
Definition of the Sector
This sector comprises establishments primarily engaged in constructing, repairing and renovating buildings and engineering works, and in subdividing and developing land. These establishments may operate on their own account or under contract to other establishments or property owners. They may produce complete projects or just parts of projects. Establishments often subcontract some or all of the work involved in a project, or work together in joint ventures. Establishments may produce new construction, or undertake repairs and renovations to existing structures.
A construction establishment may be the only establishment of an enterprise, or one of several establishments of an integrated real estate enterprise engaged in the land assembly, development, financing, building and sale of large projects.
There are substantial differences in the types of equipment, work force skills, and other inputs required by establishments in this sector. To highlight these differences and variations in the underlying production functions, this sector is divided into three subsectors. Establishments are distinguished initially between those that undertake projects that require several different construction activities (known as trades) to be performed, and establishments that specialize in one trade.
The former are classified in Subsectors 236, Construction of Buildings and 237, Heavy and Civil Engineering Construction, depending upon whether they are primarily engaged in the construction of buildings or in heavy construction and civil engineering projects. Establishments in these subsectors complete projects using their own labour force, by subcontracting, usually to trade contractors, or a combination of own account and subcontracting activities. Establishments classified in these subsectors are known by a variety of designations, such as general contractor, design-builder, speculative builder, operative builder and construction manager. The designation depends on the scope of the projects they undertake, the degree of responsibility and risk that they assume, the type of structure that they produce, and whether they work on contract for an owner or on their own account.
General contractors typically work under contract to a client (the owner of the land and the building or structure to be constructed), and undertake projects that require several specialized construction activities to be performed. Often the general contractor will subcontract some of the specialized tasks to other establishments.
Design-builders are similar to general contractors. However, in a design-build project a single contract is signed with the owner that makes the contractor responsible for providing the architectural and engineering designs. The design-builder therefore is responsible for the design of the project as well as its construction.
Construction establishments that build on their own account, for sale to others, are known as speculative builders, operative builders or merchant builders. They are most often engaged in the construction of residential buildings.
Construction managers provide oversight and scheduling services to the owner, for the most part during the actual construction process. This type of service is sometimes referred to as agency construction management, to distinguish it from a type of general contracting known as at-risk construction management. On the other hand, project management, which is a turnkey-type service involving the entire project, including feasibility studies, the arranging of financing, and the management of the contract bidding and selection process, is classified in 54133, Engineering Services when it is the primary activity of an establishment.
Establishments that specialize in one particular construction activity, or trade, are generally classified in Subsector 238, Specialty Trade Contractors. However, in order to conform to the generally accepted distinctions made by construction businesses themselves, some types of specialized establishments involved in road building and civil engineering are classified in Subsector 237, Heavy and Civil Engineering Construction.
Subsector 238, Specialty Trade Contractors, comprises establishments engaged in trade activities generally needed in the construction of buildings and structures, such as masonry, painting, or electrical work. Specialty trade contractors usually work under contract to another construction establishment but, especially in renovation and repair construction, they may contract directly with the owner of the property.
A significant amount of construction work is performed by enterprises that are primarily engaged in some business other than construction, for these enterprises’ own use, using employees and equipment of the enterprise. This activity is not included in the construction sector unless the construction work performed is the primary activity of a separate establishment of the enterprise. However, if separate establishments do exist, they are classified in the construction sector.
Establishments primarily engaged in:
- manufacturing and installing building equipment, such as power boilers; manufacturing pre-fabricated buildings (31-33, Manufacturing)
- operating highways, streets and bridges (48-49, Transportation and Warehousing)
- project management services, when it is a primary activity (54133, Engineering Services)
- maintenance of rights of way for power, communication and pipe lines; and cleaning building exteriors, after construction (56, Administrative and Support, Waste Management and Remediation Services)