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
Design Innovation Report | Apr 19, 2023
HDR uses artificial intelligence tools to help design a vital health clinic in India
Architects from HDR worked pro bono with iKure, a technology-centric healthcare provider, to build a healthcare clinic in rural India.
Design Innovation Report | Apr 19, 2023
Meet The Hithe: A demountable building for transient startups
The Hithe, near London, is designed to be demountable and reusable. The 2,153-sf building provides 12 units of business incubator workspace for startups.
Contractors | Apr 19, 2023
Rising labor, material prices cost subcontractors $97 billion in unplanned expenses
Subcontractors continue to bear the brunt of rising input costs for materials and labor, according to a survey of nearly 900 commercial construction professionals.
Airports | Apr 18, 2023
India's mammoth new airport terminal takes ‘back to nature’ seriously
On January 15, 2023, Phase 1 of the Kempegowda International Airport’s Terminal 2, in Bengaluru, India, began domestic operations. The 2.75 million-sf building, designed by Skidmore, Owings & Merrill (SOM), is projected to process 25 million passengers annually, while providing its travelers with a healthier environment, thanks to extensive indoor-outdoor landscaping that offers serenity to what is normally a frenzied experience.
Contractors | Apr 18, 2023
New York City construction fatalities, injuries rise in 2022 as activity booms
New York City’s construction fatalities rose from nine in 2021 to eleven in 2022, according to a report by the New York City Department of Buildings. Recorded injuries also rose to 554 last year after leveling off in 2020 and 2021.
Resiliency | Apr 18, 2023
AI-simulated hurricanes could aid in designing more resilient buildings
Researchers at the National Institute of Standards and Technology (NIST) have devised a new method of digitally simulating hurricanes in an effort to create more resilient buildings. A recent study asserts that the simulations can accurately represent the trajectory and wind speeds of a collection of actual storms.
Green | Apr 18, 2023
USGBC and IWBI unveil streamlined certification pathway for LEED and WELL green building programs
The U.S. Green Building Council, Green Business Certification Inc., and the International WELL Building Institute released a streamlined process for projects pursuing certifications for the LEED green building rating system and the WELL Building Standard. The new protocol simplifies documentation for projects that are pursuing both certifications at the same time or that have already earned one certification and are looking to add the other.
K-12 Schools | Apr 18, 2023
ASHRAE offers indoor air quality guide for schools
The American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) has released a guide for educators, administrators, and school districts on indoor air quality. The guide can be used as a tool to discuss options to improve indoor air quality based on existing HVAC equipment, regional objectives, and available funding.
Data Centers | Apr 14, 2023
JLL's data center outlook: Cloud computing, AI driving exponential growth for data center industry
According to JLL’s new Global Data Center Outlook, the mass adoption of cloud computing and artificial intelligence (AI) is driving exponential growth for the data center industry, with hyperscale and edge computing leading investor demand.
Healthcare Facilities | Apr 13, 2023
Healthcare construction costs for 2023
Data from Gordian breaks down the average cost per square foot for a three-story hospital across 10 U.S. cities.