Nearly half of the respondents (46.1%) to an exclusive Building Design+Construction 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.
The majority (56.8%) of respondents—architects, engineers, contractors, building owners, and others in the commercial, industrial, multifamily, and institutional field—said their firms will bump up revenues next year, with 31.4% saying business will stay the same and only 11.8% predicting it will decline. A majority (55.5%) rated the health of their firms as good (35.6%) or very good (19.9%).
As has been the case in recent years, the overwhelming majority (71.2%) rated “general economic conditions (i.e., recession)” as the most important concern their firms will face in 2014.
Competition from other firms went up as a factor for the third year in a row, to 47.6% (44.9% in 2012, 40.1% in 2011). Nearly four in five respondents (79.3%) described the current business climate for their firms as “very” to “intensely” competitive; that’s up somewhat from 73.4% in 2012 and 74.8% in 2011. But “having insufficient capital funding for projects” declined slightly, to 24.1% of respondents, down from 29.7% in 2012 and 34.5% in 2011.
AEC respondents to this third annual survey of BD+C subscribers were still worried about the economy. On the other hand, “avoiding layoffs” (17.6%), “avoiding benefit reductions” (16.4%), and “keeping staff motivated” (14.6%) were of less concern.
DATA CENTERS CONTINUE THEIR SURGE INTO 2014
Asked to rate their firms’ prospects in specific construction sectors on a five-point scale from “excellent” to “very weak,” respondents gave data centers high marks. (Note: Respondents who checked “Not applicable/No opinion/Don’t know” are not counted here.) Among the findings:
• Data centers and mission-critical facilities continued to show strength, with the majority (56.0%) of respondents in the good/excellent category, compared to 52.1% last year and 45.2% the year before.
• Healthcare continued its leadership as the most highly desirable sector, with more than three in five respondents (62.5%) giving it a good to excellent rating, up from 58.8% last year.
• The apartment boom registered with AEC professionals, who gave multifamily housing a 56.1% good/excellent rating.
• Industrial/warehouse facilities keep moving up in the AEC psyche, registering a 33.0% interest level on the good/excellent scale, a significant climb from last year’s 25.5%.
• Retail commercial construction also showed vitality. Nearly a third of respondents (31.4%) came out on the good/excellent side for the coming year, well up from last year’s 19.9% rating.
• Nearly two-thirds of those surveyed (66.0%) said senior and assisted-living facilities look like good/excellent prospects for their firms, significantly up from last year’s healthy 50.5%. Hello, baby boomers!
• College and university facilities got the nod from 44.8% of respondents on the good to excellent scale, up from 37.8% last year.
As for government/military projects, the survey was taken before the full impact of the sequestration was known. The sector was rated good to excellent by 33.7% of respondents, much along the lines of last year’s 36.1% of respondents, down slightly from the previous year’s 41.1%.
While the construction of new office buildings drew tepid response (26.9%) in the good/excellent scale, that was still up significantly from last year’s 15.6% rating. However, a solid majority (52.1%) of respondents said office fitouts and interior renovations look good to excellent for 2014. That was likely a statistically significant leap from last year’s 35.7% who said office interiors would be a strong sector.
Respondents said their firms will likely use multiple strategies to stay ahead of the game in 2014. Only a small percentage (3.2%) said they think their companies will open a new office in the U.S. or Canada, while 4.5% said their firms might open an international office.
In fact, reconstruction, historic preservation, and renovations accounted for at least 25% of work for more than a third (38.5%) of respondents, up slightly from the 34.6% of respondents’ firms in 2012 and roughly the same as in 2011 (36.3%).
K-12 schools perked up a bit, with 30.9% saying the sector looks good to excellent for 2014, compared with 22.9% last year and 23.2% the year before.
TAKING ON THE DEMANDS OF BIM/VDC TECHNOLOGY
What about BIM? Is its promise holding true? Somewhat surprisingly, more than one in five respondents (22.7%) said their firms do not use building information modeling, about what was recorded over the previous two years.
Remarkably, precisely the same percentage of respondents (26.8%) said their firms used BIM in the majority of projects based on dollar value as in the last two annual surveys. Nearly two in five (39.8%) said their firms’ use of BIM will rise in the coming year; similarly, two-fifths (42.2%) of respondents said their companies will be investing more in technology in 2014.
As for social media, LinkedIn remained the top choice of respondents, at 53.1%, but that was a steep decline from last year’s 85.1% for LinkedIn. Facebook also took a hit, dropping to 32.5% in popularity, versus 49.5% last year, while Twitter dropped from 21.1% last year to 13.4%. Once again, a big chunk of respondents (31.3%) said they did not use social media channels.
Of the 400 who gave their professional description, 45.0% were architects; 8.0%, engineers; 28.8%, contractors; 9.8%, building owners, developers, or facility managers; and 8.6%, consultants or “other.” The margin of error was 4.8% at the 95% confidence level.
Respondents overwhelmingly said they expect prices of materials to rise in the coming year, with no respondents saying they expect such prices to fall.
More than two-thirds of respondents (68.6%) said they expect bid prices to go up next year. Survey results have a margin of error of 4.8%.
For more on AEC firms' financial performance, see BD+C's 2013 Giants 300 Report.
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