Inflation may be starting to show some signs of cooling, but the Fed isn’t backing down anytime soon and the impact is becoming more noticeable in the architecture, engineering, and construction (A/E/C) space. The overall A/E/C outlook continues a downward trend and this is driven largely by the freefall happening in key private-sector markets.
PSMJ’s latest Quarterly Market Forecast survey of 115 A/E/C executives (collected between December 28, 2022 and January 10, 2023) revealed an overall proposal activity Net Plus/Minus Index (NPMI) value of just 8.0. Any NPMI value above zero indicates that more respondents are seeing an increase in proposal activity compared to the prior quarter (+100 indicates all respondents are seeing an increase in proposal activity, -100 indicates all respondents are seeing a decrease in proposal activity). Since proposal activity is a leading indicator for backlog, revenue, and — ultimately — cash flow, the latest NPMI values provide a valuable glimpse into cash flow over the next 12 to 24 months.
While still barely clinging on to positive territory, this latest index value marks a continued decline from the record-setting 2022 Q1 value of 60.2 and a significant slide from the previous quarter value of 25.0. According to PSMJ President Gregory Hart, A/E/C firms’ marketing horsepower will be tested in the months ahead. “Huge streams of funding to support infrastructure projects are keeping the public-sector markets in pretty good shape,” states Hart. “But, if you have significant exposure to the private land development markets in your revenue mix, now is the time to act to avoid significant trouble ahead.”
Any index value greater than 20 generally indicates a healthy market. Three of the 12 client markets are now below that threshold and the two commercial markets have entered negative territory.
The Top 5 Markets for the 4th Quarter of 2022 are:
- Transportation: 62.9
- Heavy Industry: 57.9
- Water/Wastewater: 57.1
- Energy/Utilities: 55.2
- Environmental: 46.2
The following chart compares the NPMI values in each client to the same period last year:
Related Stories
| Nov 27, 2013
Wonder walls: 13 choices for the building envelope
BD+C editors present a roundup of the latest technologies and applications in exterior wall systems, from a tapered metal wall installation in Oklahoma to a textured precast concrete solution in North Carolina.
| Nov 27, 2013
University reconstruction projects: The 5 keys to success
This AIA CES Discovery course discusses the environmental, economic, and market pressures affecting facility planning for universities and colleges, and outlines current approaches to renovations for critical academic spaces.
| Nov 26, 2013
7 ways to make your firm more successful
Like all professional services businesses, AEC firms are challenged to effectively manage people. And even though people can be rather unpredictable, a firm’s success doesn’t have to be. Here are seven ways to make your firm more successful in the face of market variability and uncertainty.
| Nov 26, 2013
Design-build downsized: Applying the design-build method in an era of smaller projects
Any project can benefit from the collaborative spirit and cooperative relationships embodied by design-build. But is there a point of diminishing return where the design-build project delivery model just doesn't make sense for small projects? Design-build expert Lisa Cooley debates the issue.
| Nov 25, 2013
Electronic plan review: Coming soon to a city near you?
With all the effort AEC professionals put into leveraging technology to communicate digitally on projects, it is a shame that there is often one major road block that becomes the paper in their otherwise “paperless” project: the local city planning and permitting department.
| Nov 22, 2013
Kieran Timberlake, PE International develop BIM tool for green building life cycle assessment
Kieran Timberlake and PE International have developed Tally, an analysis tool to help BIM users keep better score of their projects’ complete environmental footprints.
| Nov 20, 2013
Architecture Billings Index slows in October; project inquiries stay strong
Following three months of accelerating demand for design services, the Architecture Billings Index reflected a somewhat slower pace of growth in October. The October ABI score was 51.6, down from a mark of 54.3 in September.
| Nov 19, 2013
Pediatric design in an adult hospital setting
Freestanding pediatric facilities have operational and physical characteristics that differ from those of adult facilities.
| Nov 18, 2013
6 checkpoints when designing a pediatric healthcare unit
As more time and money is devoted to neonatal and pediatric research, evidence-based design is playing an increasingly crucial role in the development of healthcare facilities for children. Here are six important factors AEC firms should consider when designing pediatric healthcare facilities.
| Nov 18, 2013
Lord Aeck Sargent opens metro D.C. office, updates brand
Architecture, design, and planning firm unveils its sixth office, plus a new visual identity system and website
