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
Multifamily Housing | Jan 22, 2015
Sales of apartment buildings hit record high in 2014
Investors bet big time on demand for rental properties over homeownership in 2014, when sales of apartment buildings hit a record $110.1 billion, or nearly 15% higher than the previous year.
| Jan 21, 2015
From technician to rainmaker: Making the leap in your career
Many AEC firms focus on training for the hard skills of the profession, not so much for business prowess, writes BD+C's David Barista.
Modular Building | Jan 21, 2015
Chinese company 3D prints six-story multifamily building
The building components were prefabricated piece by piece using a printer that is 7 meters tall, 10 meters wide, and 40 meters long.
| Jan 21, 2015
Tesla Motors starts construction on $5 billion battery plant in Nevada
Tesla Motors’ “gigafactory,” a $5 billion project on 980 acres in Sparks, Nev., could annually produce enough power for 500,000 electric cars.
| Jan 20, 2015
Daring hotel design scheme takes the shape of cut amethyst stone
The Dutch practice NL Architects designed a proposal for a chain of hotels shaped like a rock cut in half to reveal a gemstone inside.
| Jan 20, 2015
Avery Associates unveils plans for London's second-tallest tower
The 270-meter tower, dubbed the No. 1 Undershaft, will stand next to the city's "Cheesegrater" building.
| Jan 19, 2015
HAO unveils designs for a 3D movie museum in China
New York-based HAO has released designs for the proposed Bolong 3D Movie Museum & Mediatek in Tianjin.
| Jan 19, 2015
Gaudi’s first work outside Spain will be a chapel in Chile
Nearly 100 years after Antoni Gaudí’s death, Chile will begin constructing a chapel using his designs.
| Jan 19, 2015
Architecture for Humanity closes office, plans to file for bankruptcy
After more than 15 years of work, the nonprofit design group Architecture for Humanity has closed its San Francisco office and plans to file for Chapter 7 bankruptcy protection.
| Jan 17, 2015
When is a train station not a train station? When it’s a performance venue
You can catch a train at Minneapolis’s new Target Field Station. You can also share in an experience. That’s what ‘Open Transit’ is all about.
