For many small and medium-sized firms, 2010 might be remembered as a long reality show similar to TV’s “Survivor.” Faced with the possibility of elimination amid a fragile economy as construction unemployment hovered around 18%, many companies rethought market plans and business approaches. Almost everyone’s top line shrank, but that was fine if it meant staying in business and minimizing layoffs.

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Bigger companies found opportunities in the downturn to plot new strategies.

Consolidation didn’t rest. AECOM Technology Corp. and URS Corp. led the industry in big acquisitions. In June, URS Corp. outlasted CH2M-Hill in a bidding war for the Scott Wilson Group. Final price, $337 million. The next month, AECOM snapped up Tishman Construction for $245 million.

Caterpillar Inc., another industry power, made the biggest acquisition with its purchase of mining-equipment manufacturer Bucyrus International Inc., South Milwaukee, Wis., for $8.6 billion.

Scandals stung some big companies. Schiavone Construction Co. agreed on Nov. 29 to a $22.4-million settlement of a federal probe into its use of phony MBE companies on New York City projects. And the Louis Berger Group ended a long U.S. Dept. of Justice investigation with a $69-million settlement announced Nov. 5.

Perhaps no other hotel project stood more empty this year than the centerpiece of MGM Resorts’ big City Center in Las Vegas, the Harmon Hotel. The 27-story structure may never be occupied.

But amid all the worries in the industry this year—including counterfeit materials and equipment—one story stood out: the dominant role of the federal government. As a source of funds for public works and a stimulus that didn't stimulate enough, the government dominated the news. The headlines speak for themselves: “ ‘TIGER’ Fever Rises as DOT Gets $19B in Grant Requests; Sens. Boxer, Inhofe Back DOT’s TIFIA Loan Program, Small-Business Aid Bill Signed; GOP’s Gains May Mean Thinner Spending Bills.”

That’s not good, if past is prologue. In a piece published during the Great Depression in 1935, McGraw-Hill Cos. founder James H. McGraw warned that in severe downturns business people “pay too much attention to politics and ascribe too much wisdom to politicians” and that while awaiting “magic prescriptions from government, they neglect their own enterprise.”

Wresting the headlines from the feds won’t be easy. But there are some stories with potential. The biggest business decision of 2010 may belong to Gov. Christopher Christie (R) of New Jersey. Saying “we don’t have the money,” he turned down hundreds of millions of dollars in federal funding and stopped the Hudson rail tunnel project to Manhattan. State and municipal finance woe may turn out to be the big story of 2011.