May Registers a Quick Rebound in Design Activity
A return from last month’s billings setback is clouded by a few concerning signs
By Kermit Baker, Hon. AIA, AIA Chief Economist (published in late June 2013)
Following an unexpected dip in design activity in April, the AIA’s Architecture Billings Index (ABI) moved back into growth territory in May, with a reading of 52.9. Since any score above 50 signifies an increase in design billings nationally, architecture firms have reported growth in nine of the past 10 months. Inquiries for new design projects also pointed to a modest acceleration for the month, suggesting that future workloads will continue to expand.
Even with the resumption of growth in the overall index, there were some worrisome signs in the May figures. The first is that firms in the Midwest did not participate in the upturn, as the ABI reading for firms in this region fell to 47.5, its second straight monthly decline. Until recently, firms in all four major census regions had been reporting growth. Secondly, billings at firms concentrating in the commercial/industrial sector reported an unexpected decline in activity, with a reading of 47.5. Generally, any sustained upturn in nonresidential building activity is led by improvement in private sector commercial and industrial facilities.
However, the concern over private sector activity is tempered by the acceleration in billings activity by firms concentrating in the institutional sector. Institutional firms have reported 10 straight months of billings growth, but until recently this growth has been extremely weak. However, the May ABI reading for institutional firms was more than 52, the strongest growth in billings activity in this sector since mid-2008, just as the recession began to impact institutional firms.
Uneven economic growth continues
Even though stock market indices have recently surpassed record levels, this strength has not been matched by the broader economy. The economy grew by 2.4 percent in the first quarter of the year (when annualized, seasonally adjusted, and adjusted for inflation), barely up from the 2.2 percent pace of growth in 2012, or 1.8 percent in 2011. Employment growth has been equally unimpressive, as 175,000 payroll positions were added in May, somewhat below the 193,000 average monthly gain during the first four months of the year, and just under the 183,000 added per month on average in 2012.
Construction employment also has suffered. Just 7,000 payroll positions were added in May, down from the 22,000 added per month on average through the first four months of the year, and even below the 8,000 added per month on average in 2012. In spite of this disappointing growth, the unemployment rate for construction workers continued to improve, and stood at 10.8 percent in May. While well above the national average of 7.6 percent across all industries, the rate for construction workers has fallen by almost 10 percentage points since 2010. Since the unemployment rate has fallen so much faster than payroll levels have increased, the implication is that the construction labor force has shrunk, with many undoubtedly moving on to other industries. The concern is that the labor force may not come back to the construction industry as activity levels begin to pick up.
Another concern is rising interest rates. The Federal Reserve Board has aggressively worked to keep both short- and long-terms rates low. As talk mounts that they may begin to ease off of these initiatives, interest rates have begun to drift up. Higher rates would slow the home building recovery, and impact nonresidential construction activity, since higher financing costs could adversely affect the feasibility of some projects.
At mid-year, architecture firms on track with predictions
When asked at the end of 2012, architecture firms were expecting the coming year to be good – but not great – from a business perspective. Nearing the halfway mark, firms generally feel that this year is meeting these expectations. Almost 40 percent of firms feel that business conditions at their firm are above expectations at this point, while almost as many – 34 percent -- feel that they are below expectations. The remaining share responded that 2013 is basically shaping up according to their predictions.
It’s hardly been the breakout year many had hoped for, and firms offer many reasons for why project workloads are increasing only modestly. The principal reason that design activity hasn’t increased more quickly is that the generally weak U.S. economy is creating less need for new facilities, according to almost 43 percent of respondents. Other reasons selected by firms for the subpar growth are: difficulties in obtaining construction financing for projects (16 percent); federal government budget uncertainties and cutbacks, such as sequestration and the debt ceiling debate (15 percent); and the fiscal condition of state and local governments (14 percent). Other reasons mentioned less frequently were construction labor shortages, the rising prices of building materials, land constraints or restrictions, weak business and consumer confidence, and uncertainties surrounding the implementation of the Affordable Health Care Act.
This month, Work-on-the-Boards participants are saying:
• There is greater upside, but the uncertainty still remains. In two weeks, we could either be doubling our staff or thinking about lay-offs. —10-person firm in the West, mixed specialization
• Activity has increased, but margins are still tight. Activity in Illinois is depressed due to the state’s poor financial condition. —95-person firm in the Midwest, institutional specialization
• Additions and renovations are at pre-recession levels. New construction is still almost nonexistent. — 1-person firm in the South, residential specialization
• Lots of proposals. Lots of activity. [It] still takes a long time to get anything off the ground by clients once proposals are in hand. Clients expect pricing structures to remain intact once they are ready to move. —1-person firm in the Northeast, commercial/industrial specialization
Sunday, June 30, 2013
On June 19, 2013, the AIA issued a Press Release to reveal the AIA ABI Index reading for May 2013. As is normally the case, the AIA subsequently released a more in-depth commentary on the most recent ABI Index reading. Here’s that follow-up commentary, authored by Kermit Baker, the AIA’s Chief Economist…..
Posted by Joel Salus at 7:39 AM
Very interesting web-site devoted to the world of 3D printers and 3D printing:
3D Printer and 3D Printing News
3D Printing Applications
I spent a few minutes exploring their web-site, including the “Forum” section.
That’s where I noticed a post by a fellow who is at work developing a “large-format” 3D printer ….. with a “project build area” of 5’ x 10’ x 3’ !!!
Saturday, June 29, 2013
Just to let you know, Reprographics 101 has just launched, on a limited (test) basis for now, a Survey for General Contractors, RE: “Reprographics”.
It is difficult (like “pulling teeth”, would be the most appropriate expression) to get Reprographers to participate in surveys, so I won’t be at all surprised if very few General Contractors participate in the survey we’ve released to their community.
Our test of this survey consisted of publishing an announcement about the survey (and a link to the Survey) in the LinkedIn Group of the “Gulf Coast Chapter” of Associated Builders & Contractors (ABC). (ABC Gulf Coast Chapter includes the Tampa Bay Area of FL and metro areas immediately surrounding that area.) If we get even a few participants from that area, we will do our best to find other methods of getting the word out to other GC communities around the U.S. (Joel’s note: I might also directly contact several GC’s that I used to do business with, simply to encourage them to participate in the Survey.)
Posted by Joel Salus at 8:24 AM
From a post in the SGIA LinkedIn Group:
“SGIA’s 2013 Market Trends and Product Specialties Survey needs your input to compile aggregate industry data.
The survey should take less than 5 minutes and asks questions about: • Sales growth • Markets served • Product areas • Production services
Once the data is compiled, we'll send you a link to download the results. Your participation is very much appreciated and will help our industry benchmark important trending data. Thanks in advance, Sondra.”
Link to SGIA Survey:
The article below comes from the Blog of a firm called Digital Time Capture. Digital Time Capture offers Timesheet Management Software to construction companies. Here’s what Digital Time Capture says about its software: “No longer do you need to use separate timesheet and payroll software solutions for construction payroll. DTC's easy to use interface allows construction companies to capture payroll data while automating payroll calculations and seamlessly integrating the data with any payroll system.”
Personally, I think articles like this one should say here’s “how to USE LESS paper” rather than say here’s “how to GO PAPERLESS”.
From a Reprographer’s perspective, the term “Go Paperless” is an anathema.
One bullet point that appears to be missing is “adopting the electronic take-off process” (such as the process promoted by PlanSwift, the company now owned by Textura.) Also, why bother to scan hard-copy plans when digital files of those documents are likely available directly from the A&E firms who created those documents?
“Going Paperless in the Construction Industry”
Thursday, June 20, 2013
Being able to access your documents from any location may have you thinking that your construction company would benefit from going paperless. Though it may not be practical for the industrial construction industry to do this completely, read the suggestions below for tips on ways you can cut down on the amount of paper being stored at the office.
You must first sort through your files into piles, ones for recycling, shredding and scanning before you can begin reducing the amount of paper.
This is a no brainer. If you have ever heard of the show Hoarders (http://www.aetv.com/hoarders/) you have probably considered that there are mounds of paper at your office that you have forgotten about and do not need. It takes a little work but it is simple, recycle any paper documents that are no longer relevant to your company. You may be surprised what you find once you begin looking. After you have scanned other important documents (see below) recycle these copies as well.
By scanning documents, you are creating an electronic copy that can be stored in the cloud, your company’s network, whatever works best for your company. Storing the documents on the cloud will make your company information more secure, away from any disaster that might happen to your office location. As mentioned, keeping the paper copy will no longer be necessary and it can be recycled. This will not only save you space but help keep your documents from getting lost.
Reduce incoming paper
Once you have sorted, recycled, and scanned your company’s paper you need to find ways to keep the mounds of paper from accumulating. Making it a company-wide adoption to store only electronic versions of documents is absolutely necessary to making sure paper does not accumulate.
Here are some more tips to help make this happen.
If your company is mailing your bills to vendors and receiving payment by mail you may want to explore your paperless billing options. Electronic billing makes payments easier to keep track of while delivering features that help payments to go out on time.
Get Rid of Post-its
If you like the physical appearance of a post-it and are a Windows user, Windows 7’s Sticky Notes application allows you to write notes that appear on your desktop. Write as many as you would like and place them anywhere on your desktop and they will automatically save once you exit the application. Or check out many of the other post-it type application available for your tablet or smartphone.
To collect signatures, you can avoid printing then re-scanning documents again by securely sending documents electronically and having them signed in applications like DocuSign (http://www.docusign.com/).
Utilize Your Tablet or Smartphone
Often you can also sign documents directly on your tablet or smartphone screen. Given a paper document but you are not near your scanner? Apps such as Scanner Pro (https://itunes.apple.com/us/app/scanner-pro-by-readdle/id333710667?mt=8&ign- mpt=uo%3D4), allow you to take high resolution photos of your signed pdfs.
Document Management system
If you are still overwhelmed by the amount of documents you have electronically stored, consider using a document management system. It will capture, track, and store your electronic documents.
Posted by Joel Salus at 6:30 AM