FMI releases 2011 U.S. Markets Construction Overview
17 Feb, 2011 LDB SolutionsLooking beyond the down cycle.
FMI, a provider of management consulting and investment banking to the engineering and construction industry, announces the release of its 2011 U.S. Markets Construction Overview, offering insight into some of the engineering and construction industry’s most complex business challenges.
This year’s Overview includes a compilation of trends in the current environment as well as important issues facing nine client groups served by FMI.
Highlights include:
- Nonresidential building construction has experienced a steep decline, which will extend well into 2011.
- Many trade contractors will shift to new market sectors to bolster weak backlogs.
- More competition for fewer private jobs is increasing bidders on public projects.
- Sustainable or green construction will drive demand for LEED-certified buildings.
- Labor-intensive contractors hired heavily during the boom are now experiencing painful downsizing.
- Industry consolidation will create attractive acquisition opportunities.
In addition to the annual report, FMI's latest research study “Win-Win: Project Delivery in a Recession and Beyond” found that the recession has at least temporarily changed the momentum of the trend toward greater use of collaborative delivery methods in favor or low-bid or design/bid/build.
Contractors especially warn that this changing trend may have repercussions in raising the “cost of conflict.” With more contractors chasing fewer projects, owners find themselves in a buyers’ market for construction services. Under pressure to get the lowest price for their project, owners are looking for the lowest bid, and often that means a greater use of the traditional design/bid/build delivery method.
One conclusion of this study is that a solitary focus on low-bid doesn’t always mean lowest overall project cost. According to both owners and contractors, recessionary pressures could be a setback for greater collaboration and cause greater conflict pitting owners against contractors in the bidding game.
For contractors, it is still an uphill climb to reduce the perception that low price is the most important factor in construction procurement.
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