Where We've Been, Where We're Going
Note the steady upward trend line following a moderate recession in 1991. Absent is the boom and bust pattern that had characterized the construction economy in past decades for as long as anyone can remember. Robert Murray, vice president/economic affairs for the McGraw-Hill Construction Information Group called it the “Energizer Bunny economy.”
Murray was addressing the annual meeting of the Construction Writers Association in Washington on April 30, the same day I completed my term in office as the group’s President for 1998-99. Residual strength in this economy has led Murray to push back to 2001 his prediction for a downturn, which his office had originally forecast for next year. He wouldn’t rule out that our good fortune could keep going and going even longer. CWA’s annual meeting offered plenty of stimulating sessions with leading construction industry authorities. Here are some of the more pertinent scribblings out of my notepad.
Quality resurrected? William Lawson of the General Services Administration told of his agency’s quest for “Construction Excellence,” and established a theme reiterated by several other speakers as well. That is, everyone is looking for alternatives to the low-bid mentality that has plagued the industry for the past couple of decades. Quality concerns have started to finally override the almighty buck in both design and construction services.
Lawson said that a GSA-sponsored symposium on construction excellence methodology determined that the number one factor likely to achieve their goal of “best value” construction was to build the design-construction team early. Whether or not the contract might be categorized as “design build,” it was important to “pick a contractor early in the design proces.”
Echoing this theme was Hoyt Lowder of the renowned FMI construction management consulting firm. “Single-source responsibility is the coming trend,” he asserted. “Many architects and engineering firms have struggled with the new market realities, although engineers seem to be responding better than architects in taking on risk in the design delivery process.”
- Green design. The American Council for Construction Education is an amalgam of A/E/C organizations that aims to steer construction management education to meet the needs of the 21st Century. Their representatives noted a weaning from initial cost to “sustainable construction” concerns. ACCE also sees a revolution coming in building design based in part upon “whole system designs for ‘green’ buildings.” They see renewable and recycled materials taking center stage in the years to come.
- Small world. FMI’s Hoyt Lowder stunned me and many of my CWA colleagues with his assertion that one out of nine workers worldwide is employed in some aspect of the broadly defined leisure/recreation/travel industry. He didn’t say where his numbers came from, but if accurate they speak volumes about our wondrous era of global mobility.
Lowder also took note of a current boom in retail store building, although in the longer run that market looks primed for a big hit as Internet shopping magnifies. Airport shops, he said, enjoy the largest sales per square foot in the retail business. Goes to show how harried and pressed for time is the modern American consumer.
- Globalization. During one conversation in Washington I heard of some grumbling in the engineering ranks about salaries held down by talented but cheap labor from foreign countries, particularly Pakistan and India. Lately some engineering firms have taken to subbing out design work overseas via computer without even the expense of putting foreign nationals on the payroll. This is happening now, and the trend is likely to accelerate.
- Sky is falling. Last year, the American Society of Civil Engineers came out with a report outlining $1.3 trillion in critical infrastructure needs. ASCE’s Casey Dinges had some kind words to say about last year’s passage of the Transportation Equity Act for the 21st Century (TEA-21), which will fund the roads portion of our nation’s infrastructure. Still, ASCE believes our nation has a long way to go in shoring up crumbling school buildings, airports, water delivery and wastewater treatment facilities.
As a construction industry citizen I listen to groups like ASCE carp and cheer them on out of pure self-interest. On the other hand, as a just plain taxpaying citizen of this country, I get annoyed listening to the screeching of interest groups trying to persuade the powers that be in Washington that the sky is falling on their corner of the world. Their bombastic rhetoric all sounds alike, and the amount of money said to be needed always comes across like a plaintiff’s ridiculous opening gambit in a personal injury lawsuit. I’ve beeen around long enough to understand how the game is played. It’s just that I keep yearning without much hope for a tiny measure of intellectual honesty in Washington.
- Surety woes. Mike Daugherty, executive vice president and chief marketing officer of CNA Surety, gave a candid but bleak assessment of his industry sector, which he claims has suffered a downward spiral in prices. “We are a mature industry with no growth pattern,” he said. “Market consolidation is inevitable.”
Bad news for them, but it’s been a good run for designers and constructors. The bonding/insurance business has been a buyer’s market for some time. If you haven’t priced out your insurance for awhile, get on the bandwagon before the cycle turns.