Tag Archives: contractors

Mid-year economic outlook for nonresidential construction: Expansion continues, but vulnerabilities pile up

Emerging weakness in business investment has been hinting at softening outlays.

AUGUST 12, 2019 |

Courtesy Pixabay

More than 10 years after the end of the most severe financial crisis since the Great Depression, the U.S. economy is again making history by continuing its longest-ever expansion. Nevertheless, emerging weakness in business investment has been hinting at softening outlays, giving commercial and industrial construction contractors cause for concern, according to a mid-year economic outlook by Anirban Basu, chief economist of Associated Builders and Contractors.

“Given that every expansion in U.S. history has ended in recession, leaders of construction firms are rightly wondering when the record-setting expansion will end,” said Basu. “Looking at conditions on the ground, it likely won’t be in 2019, but 2020 could be problematic for the broader economy and 2021 for a significant number of contractors.”

Basu cites numerous vulnerabilities that could trigger a recession in 2020, including:

— Trade wars

— Softening corporate earnings

— Slowing job growth

— Elevated levels of household, corporate and government debt

— Election 2020

But there are plenty of reasons to remain optimistic. “For the most part, the economy has held up better than anticipated,” said Basu. “During the first quarter of 2019, gross domestic product expanded at a smart 3.1% annualized rate. The U.S. Bureau of Economic Analysis’ initial estimate suggests that the economy slowed to 2.1% growth during the second quarter, but that neatly beat economists’ expectation that that growth had fallen below 2%.”

“The economy could continue to prove resilient,” says Basu. “To date, the economy has navigated ongoing trade disputes and associated tariffs with aplomb. It has also withstood serial interest rate hikes, the longest federal government shutdown in history, extreme weather, shifting immigration policy, ongoing labor market shortages and a lengthy investigation regarding foreign influence in U.S. elections.”

To read the full economic outlook story, visit ConstructionExec.com.

Continue reading Mid-year economic outlook for nonresidential construction: Expansion continues, but vulnerabilities pile up

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Nonresidential construction spending slips modestly in May

Among the 16 nonresidential construction spending categories tracked by the Census Bureau, five experienced increases in monthly spending.

JULY 01, 2019 |

According to an Associated Builders and Contractors analysis of U.S. Census Bureau data published today, national nonresidential construction spending declined 0.9% in May, totaling $788.5 billion on a seasonally adjusted annualized basis and a 4.4% increase compared to the same time last year. While total public and private nonresidential spending declined 0.9% since April, public spending was up 11.2% and private spending was down 0.1% year over year.

Among the 16 nonresidential construction spending categories tracked by the Census Bureau, five experienced increases in monthly spending, including transportation (4%), communication (1.3%) and public safety (1.2%). Religious (-5.5%), commercial (-3.3%) and highway and street (-3.4%) experienced the largest monthly decreases, although highway and street spending remained up 17.1% compared to May 2018. Total construction spending is down 2.3% compared to the same time last year, and residential spending is down sharply.

“Private construction spending has been slipping for several months,” said ABC Chief Economist Anirban Basu. “Commercial construction spending decreased nearly 14% during the past year, which represents a stark reversal from previous trends when America’s consumer-spending-led expansion produced substantial demand for commercial construction. That said, commercial spending is up 102% compared to May 2010. Other private construction categories such as office and lodging have also been weak as rising construction and capital costs render pro formas more problematic. There are also growing concerns regarding overbuilding in certain segments/markets.

“What was different about today’s release was the decline in public construction spending,” said Basu. “While the drop was reasonably small on a monthly basis, it stands in stark contrast to the preexisting trend. With the economic expansion entering its record 11th year, state and local government finances are generally in good shape, leaving more money to spend on infrastructure. Based on broad economic dynamics and fiscal considerations, there is little reason to believe that the dip in May portends a slowdown in infrastructure spending during the months ahead.”

 

 

 

 

 

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Communication is a design skill

Design itself is a communication skill. We communicate our understanding of the client’s needs using drawings and specifications, which contractors and fabricators then turn into the space our clients requested we design.
So we’re using design to communicate. These are the skills that we learn in design school.
Communication is also a design skill. At a recent social gathering, an acquaintance asked me what I believed was the most important design skill to attain and develop to be successful in my business. She wondered if it was an understanding of color or light, an ability to imagine space in three dimensions, or something else.
She was a little surprised when I told her the most important skill is communication. And yet communication as a design skill is typically not taught in design school.
Successful designers are great communicators. That doesn’t just mean we have great ideas and communicate them well. Most importantly, it means that we listen. Once we’ve listened and understood, then we respond to confirm what we’ve heard and that we’ve heard.
The first step

Every design project begins with a program. Every failed project usually can be traced back to poor programming.
This is your first opportunity (after hiring) to practice actively listening to your client. Ask the right questions, listen to the answers, follow up with more questions until you truly understand your client’s goals. Then, write your understanding out and review it with your client.
This type of communication serves two purposes: You will gain the information you need to design the project, and your client will learn that not only are you an awesome designer, but you also hear them. They’re paying you a lot of money — they want to be heard.
Design as communicator

Once you understand your client’s needs and have created a design, first you will communicate the design to your client. You’ll need to know what format they understand. Do they need 3-D renderings to see the design? Do they need to see finishes in person? Are 2-D plans and elevations adequate for them to visualize your design?
Practice your presentation so you can explain the design in their terms and be open to hearing concerns and questions. Respond without defense. It’s their design, not yours.
Next, you must communicate the design to your client’s contractor. This is a two-step communication process:
You will write specifications and draw plans, elevations and sections. Then, you will package the whole lot together and send it off to the contractor.
He or she will review the plans and ask questions to fill in gaps or clarify. If your drawings are complete, there will be fewer questions. But there will be questions. Your job will be to listen to the questions, understand where the gaps are or clarity is lacking, and respond thoroughly.
Value engineering

Before construction begins, there will be vetting of the documents, then vetting of the cost. Budget was discussed during programming, but things come up, and sometimes costs overrun budget.
Value engineering is the process of bringing the project back in line with the budget. It can include eliminating scope, but more often it will require careful assessment of what was designed to find areas where costs can be trimmed.
This is an especially important time to communicate clearly with both client and contractor. Meeting the client’s needs is paramount, and clear communication at this juncture will allow the project to move forward without harsh feelings or angry conferences.
During construction

Issues invariably come up during construction that require construction changes to the original design documentation, especially during a remodel. Be prepared to review these issues and look for solutions.
There will sometimes be team members who look to point fingers and assign blame. Listen carefully to the issue, assess possible solutions, overlook blaming and offer positive solutions that align with client needs.
Communicating well

At every step of the project, clear communication is necessary. If you haven’t taken a communications class, or read books on communicating in business, perhaps it’s time. Our business is a service business. We have to be able to communicate to serve.
If you want to succeed as a designer, here are some of the qualities you’ll need to cultivate:
Ask questions: Lots of questions. This is your client’s business, not yours. You have a lot to learn. Then …
Listen actively: Be open to the ideas of others, hear what your client is after, repeat what you’ve heard without judgment. Are you really listening, or are you just waiting for your turn to speak?
Express yourself clearly and confidently: Think through the problem before offering a solution, even if it means saying, “I’ll get back to you on that.” Use language that team members understand, not industry jargon or acronyms. “If you can’t explain it simply, you don’t understand it well enough.” — Albert Einstein
Watch for nonverbal cues: If facial expressions don’t align with the conversation, ask for a break and make sure everyone is on board. Solutions won’t please everyone, but it is important that solutions are understood by everyone.
Check your ego: This isn’t about you, it’s about your client. It’s not your vision, it’s your client’s. And it is possible that someone has a better solution than you. Yes, you’d love to be able to publish the resulting project, but more importantly you want to do a good job for your client. The bonus is you have a much better chance at referrals this way as well.
Take a deep breath: Not every player will play fair. There may be team members who value blaming others over finding solutions. Take a breath; don’t take the bait. You won’t communicate well if you are angry and reactive.
Write it down: Keep meeting notes, track changes and share the information widely so everyone is on the same page. Be clear and thorough so there are no (or at least few) misunderstandings.
Manners matter: Courtesy is part of quality, effective communication. Be positive, be kind and say thank you.
Presume the best: One of my clients has a tag line on his emails: “Always assume positive intent.” It’s a good reminder in our business. Presume that something that sounds negative was perhaps carelessly worded and work to find clarity.
If these things don’t come naturally to you, practice them. Good relationships in business require work much like relationships at home. And since we don’t all learn these skills in school, we may need to work to polish them afterward.

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