The overall economy, as well as the economy in which they do business, might be down, but contractor panelists who provided these insights still see nonresidential construction on the upswing, according to FMI’s Second Quarter Nonresidential Construction Index (NRCI) Report.
Raleigh, N.C.-based FMI provides management consulting, investment banking, and people development services. Its quarterly index is based on voluntary responses from panelists to a 10-minute survey. The respondents represent a fairly wide cross-section of trades, company sizes, and markets. About 15% of the respondents are national contractors, 56% are Commercial General Building Contractors, and 39% operate businesses that generate between $51 million and $200 million in annual revenue. FMI declined to provide the number of panelists surveyed.
Chart: FMI
The NRCI for the second quarter was 64.9, virtually unchanged from the first quarter but improved from the 62.8 Index in the second quarter of 2014. FMI states that scores above 50 indicate expansion.
The panelists’ business outlook for specific nonresidential sectors is more ambivalent, however. Indices for healthcare and office construction are up, compared to a year ago, but down (albeit still on the growth side) for education, lodging, and manufacturing.
These scores might reflect the panelists’ perceptions of a still-volatile overall economy, whose second-quarter Index of 76.9 is down from the 78.8 Index in the first quarter. The panelists report that their own markets’ economies are off, too.
On the other hand, the panelists report improving productivity and steady backlogs. Half of the panelists said that their second-quarter backlogs grew faster than the previous quarter.
The indices for costs of materials and labor are down from the previous quarterly and yearly measurements, meaning those costs are rising. The NRCI Index for Construction Materials stood at 21.4, and 58.1% of the panelists said their materials costs increased from the first quarter. The Labor Cost Index was at 12.5, with 75% of the panelists reporting that their labor costs were higher in the second quarter than the first.
Chart: FMI
The survey also found that:
• Green construction made up only 28.6 percent of the panelists’ second-quarter backlogs, on average. FMI concludes from this finding that contractors no longer see green as anything special because it has become engrained into the mainstream of their businesses.
• The expediency of certain delivery methods during the recession is slowly yielding to more collaborative approaches among Building Teams and owners. “CM at-Risk is now allowed by most states, but those building CM at-Risk projects won’t quickly move to IPD [integrated project delivery].” FMI writes. “Design-build and IPD are expected to be growth areas for delivery methods; but IPD in particular, even though it offers many benefits to all parties, is not for everyone at this time. IPD, and even what has been called IPDish, requires more sophisticated owners, designers and contractors in order to realize the full benefits of this delivery approach.”
• Based on the panelists’ responses, FMI notes that other trends in construction—such as prefabrication, modularization, use of robotics, and 3D printing—are also likely to take a longer time to become mainstream like green construction has. “But the ongoing shortages of skilled labor will certainly hasten their coming.”
Related Stories
| Aug 10, 2016
UNIVERSITY GIANTS: Facing money woes, the nation's colleges double down on innovative ideas
Budget constraints are compelling some public institutions to pursue alternative methods of financing their major building projects.
| Aug 9, 2016
Top 100 University Construction Firms
Turner Construction Co., The Whiting-Turner Contracting Co, and Skanska USA top Building Design+Construction’s annual ranking of the nation’s largest university sector construction and construction management firms, as reported in the 2016 Giants 300 Report.
Building Team | Aug 4, 2016
Thought leaders from architecture, engineering and construction to meet at 2016 Bluebeam eXtreme Conference
Bluebeam users inspire technological change through shared insights and training at three-day event.
| Aug 4, 2016
MULTIFAMILY BUILDING GIANTS: Rental complexes focus on affordability, accessibility, and specialty amenities
To address the affordability problem and attract tenants, owners and developers are experimenting with smaller and smaller units, amenity-rich environments, and “co-living” concepts.
| Aug 4, 2016
Top 80 Multifamily Construction Firms
Lendlease, Suffolk Construction Co., and Clark Group top Building Design+Construction’s annual ranking of the nation’s largest multifamily building sector construction and construction management firms, as reported in the 2016 Giants 300 Report.
| Aug 3, 2016
GREEN BUILDING GIANTS: Sustainability leaders turn to wellness and technology to get an edge
AEC leaders in green building are stepping up to a higher level of innovation and to be a green leader today, you have to dig deeper into data.
| Aug 3, 2016
Top 90 Green Building Construction Firms
Turner Construction Co., Clark Group, and Hensel Phelps top Building Design+Construction’s annual ranking of the nation’s largest green building sector construction and construction management firms, as reported in the 2016 Giants 300 Report.
| Aug 1, 2016
K-12 SCHOOL GIANTS: In a new era of K-12 education, flexibility is crucial to design
Space flexibility is critical to classroom design. Spaces have to be adaptable, even allowing for drastic changes such as a doubling of classroom size.
| Aug 1, 2016
Top 80 K-12 School Construction Firms
Gilbane, Balfour Beatty, and Core Construction head Building Design+Construction’s annual ranking of the nation’s largest K-12 school sector construction and construction management firms, as reported in the 2016 Giants 300 Report.
| Jul 29, 2016
AIRPORT FACILITIES GIANTS: Airports binge on construction during busy year for travel
Terminal construction will grow by nearly $1 billion this year, and it will keep increasing. Airports are expanding and modernizing their facilities to keep passengers moving.
