According to Associated Builders and Contractors (ABC), the Construction Backlog Indicator (CBI) for the fourth quarter of 2014 declined 0.1 months, or 1%. Despite the quarter-over-quarter decline, backlog ended the year at 8.7 months, which is still 4.4% higher than one year ago.
"Inconsistent growth in the volume of public work continues to suppress the pace of nonresidential construction; however, private construction momentum continues to build," said ABC Chief Economist Anirban Basu. "With hotel occupancy rising, office vacancy falling and demand for data climbing exponentially, a number of key private segments are positioned for rapid growth in construction spending this year.
"There are a number of factors that are likely to be beneficial to nonresidential contractors in 2015," said Basu. "First, although interest rates were expected to rise after the Federal Reserve ended its third round of quantitative easing, they have actually been trending lower—due to factors such as falling interest rates abroad and a strengthening U.S. dollar—which helps contractors with construction volume and borrowing costs. Second, materials prices have continued to fall—particularly inputs related to the price of oil, iron ore and copper. This also makes it more likely that construction projects will move forward and helps boost profit margins."
Regional Highlights
• Average backlog in the South is back above 9 months for the first time since the first quarter of 2014.
• Though backlog in the West fell sharply during 2014's final quarter, average backlog remains comparable to where it was a year ago.
• Both the Northeast and the Middle States registered levels of average backlog unseen during the history of the CBI survey.
Industry Highlights
• Average backlog in the commercial and institutional category is virtually unchanged over the past year, suggesting the pace of recovery will remain moderate overall.
• Infrastructure-related spending is likely to be brisk going forward primarily due to improved state and local government fiscal conditions.
• Heavy industrial average backlog remains in the vicinity of multi-year highs, but these readings do not fully reflect the impact of a stronger U.S. dollar, which may result in a slowdown in export growth and an associated softening in industrial investment.
Highlights by Company Size
• During the fourth quarter, backlog expanded for mid-sized companies with annual revenue ranging between $30 million-$100 million. These firms enjoyed approximately half a month expansion in their respective average backlogs during the fourth quarter.
• On the other hand, backlog for small firms (annual revenue less than $30 million) and very large firms (annual revenue greater than $100 million) declined 0.2 months and 0.5 months, respectively.
• Large firms appear to have been impacted by a slowdown in large project infrastructure spending in certain parts of the country, while smaller firms have been impacted by greater observed difficulty in obtaining bonding for projects in the context of accelerating small firm failure.
• Average backlog has increased by nearly three months or by more than three months for all firm size categories since the fourth quarter of 2009.
Related Stories
| Nov 27, 2013
Exclusive survey: Revenues increased at nearly half of AEC firms in 2013
Forty-six percent of the respondents to an exclusive BD+C survey of AEC professionals reported that revenues had increased this year compared to 2012, with another 24.2% saying cash flow had stayed the same.
| 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
Insider tips on how to get picked a BD+C 40 Under 40 winner
We just posted the Entry Form for our 9th Annual BD+C "40 Under 40" competition. Frankly, the Entry Form is just the basic data. The real meat of your entry is your Personal Statement.
| 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.