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
| Oct 1, 2012
Tyco completes separation process, now largest pure-play fire protection and security business
Tyco Integrated Security focused on delivering security solutions to commercial businesses.
| Sep 28, 2012
Seattle is home to first LEED-certified modular radiation center
By using modular construction and strategic site design, RAD Medical Systems built the first radiation center to receive LEED certification.
| Sep 26, 2012
EDITORIAL OPPORTUNITY – BD+C Greenbuild 2012 Issue
Your firm is invited to contribute to this special issue, which will be distributed at Greenbuild San Francisco, Nov. 14-16, 2012.
| Sep 24, 2012
Reed Construction completes Lafarge headquarters in Chicago
Reed Construction was contracted to complete the full third floor build-out which included the construction of new open area work space, private offices, four conference rooms with videoconferencing capabilities and an executive conference boardroom.
| Sep 24, 2012
Chicago Lakeside shortlisted for the Sustainia Award
The “Lakeside Idea” is about bridging a brownfield industrial past to a green lifestyle future, from steel mill to innovation mill.
| Sep 24, 2012
$3.8-million athletic field and track opens in Glen Head, N.Y.
The complex also includes a new, one-story, multi-purpose building that serves as the main entry port to the athletic facilities.
| Sep 21, 2012
AAMA and WDMA release updated review and forecast that predicts industry trends
Significant volume is expected to return to the entry and interior door market as new construction demand is expected to grow at double-digit rates, outpacing remodeling and replacement activity as the housing market recovers.
| Sep 20, 2012
Mid-box retail study shows lack of available sites in Chicago
Existing supply is tight everywhere and almost non-existent in the most attractive zones.
| Sep 20, 2012
Forrester begins construction of freestanding cancer center in Montgomery County, Md.
The new 51,000-square-foot building will include two linear accelerator vaults for radiation equipment.
| Sep 19, 2012
Modular, LEED-Gold Certified Dormitory Accommodates Appalachian State University Growth
By using modular construction, the university was able to open a dorm a full year earlier than a similar dorm built at the same time with traditional construction.
