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Few silver linings for construction in 2012

Few silver linings for construction in 2012

On the brighter side, nearly half of respondents (49.7%) said their firms were in at least “good” financial health, and four-fifths (80.2%) said their companies would at least hold steady in revenue in 2012.


By By BD+C Staff | December 21, 2011
BD+C 2012 forecast
Looking toward 2012, nearly half of respondents (46.8%) said they thought their companies would be beefing up PR and marketing i
This article first appeared in the December 2011 issue of BD+C.

The recession is weighing heavily on architects, engineers, and contractors, if the results of an exclusive BD+C survey of 504 AEC professionals are any measure of the commercial construction industry’s outlook on business prospects for 2012.

More than three-fourths of respondents (78.4%) rated “general economic conditions (i.e., recession)” as the most important concern their firms will face in the next year, followed by competition from other firms (40.1%) and lack of capital funding for their projects (34.5%).

Nearly three in four (74.8%) described the current business situation for their firms as “very” to “intensely” competitive—a strong verification of the dog-eat-dog climate that many in the AEC industry have reported anecdotally in the last couple of years.

On the brighter side, nearly half of respondents (49.7%) said their firms were in at least “good” financial health, and four-fifths (80.2%) said their companies would at least hold steady in revenue in 2012.

Layoffs over the last two years were reported by 44.8% of respondents, with another 37.3% saying that hours had been reduced, while more than half (51.0%) said their firms had eliminated or cut back on bonuses.

Looking toward 2012, nearly half of respondents (46.8%) said they thought their companies would be beefing up PR and marketing initiatives to revive their businesses.

More than a third (35.7%) said their firms would be pumping dollars into technology. However, more than one in five (20.6%) said their firms were not using building information modeling; of those who said BIM was used in their shops, a clear majority (58.4%) said BIM figured in less than 25% of projects, while only slightly more than one-fourth (26.8%) said BIM was being used most of the time (i.e., 50% or more of projects, based on dollar value).

Healthcare remains strongest sector
Respondents were asked to rate their firms’ prospects in specific construction sectors on a five-point scale from “excellent” to “very weak.” (Respondents who checked “Not applicable/No opinion/Don’t know” are not counted here.) Among the findings:

  • Healthcare was the most highly rated sector, with a strong majority of respondents (54.6%) giving it a “good” to “excellent” rating.
  • Data centers and mission-critical facilities were also given good marks, with 45.2% of respondents in the good/excellent category.
  • Government and military work was rated good to excellent by more than two-fifths of respondents (41.1%).
  • Senior and assisted-living facilities drew a fairly strong 37.8% of respondents in the good to excellent category.
  • University/college facilities were rated good to excellent by nearly a third of respondents (32.3%).

Other sectors had much less optimistic support from respondents. Only one in nine (11.1%) said they thought retail commercial construction would have a good to excellent year. Less than 1% thought cultural/performing arts centers had a chance to have even a good year, and only 1.5% were sanguine about industrial and warehouse facilities.

The prospects for office buildings were bleak as well, with only 9.4% saying that market would be good to excellent—and nearly two-thirds (67.3%) predicting office buildings would be “weak” or “very weak.” However, office interiors and fitouts fared better, with 28.0% saying that sector would be good to excellent.

“Good to excellent” prospects for other sectors were mixed: 23.2% for K-12 schools and 24.0% for multifamily projects (condos and apartments, but most likely the latter).

In sum, hardly the cheeriest of prognostications for the 2012 commercial design and construction industry, according to respondents to our exclusive survey.

Note: Of the 494 who gave their professional description, 41.3% are architects; 19.0%, engineers; 18.8%, contractors; 10.7% building owners, developers, or facility/property managers; and 10.2%, consultants or “other.”

For more information visit www.BDCnetwork.com/forecast/2012. BD+C

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