Midsize Construction Firms Expecting More Growth and Business in Coming Year

The outlook for midsize construction firms in 2015 is optimistic, with almost half believing that the construction sector will expand in the coming year.

construction firm worker In a survey conducted by GE Capital, 47 percent of survey respondents reported that business will be brighter for midsize construction firms in 2015, with growth expected throughout the year.

The survey questioned a total of 59 firms with an average number of 662 employees. Revenue of the firms surveyed averaged nearly $144 million.

The construction firms surveyed expressed high confidence in the growth of the U.S. and local markets, but they weren’t as certain of increases in the global market.

Some 70 percent of the construction companies in the survey indicated that their overall financial picture had improved as of September 2014. This number represents a positive change from March 2014, when 60 percent of the firms had seen better financial results.

In addition to improved revenue, 50 percent of the firms responding to the survey reported they were hiring more people to meet demand.

Survey respondents noted that growth is expected in several specific categories, including the energy sector and office and residential construction. Spending on public works projects, including both new construction and renovation, was seen as the greatest potential area of appreciable growth for midsize construction firms.

Capital expenditures were up for 41 percent of the respondents. They also reported significant areas that could affect growth and profitability in the next year, including:

  • Healthcare costs: Rising costs of healthcare and insurance could significantly cut into many midsize companies’ profits.
  • Uncertainty in government spending: The constant fiscal battles in government will make it difficult to forecast revenue or anticipate government contracts.

The most recent and reliable information on building permits and construction industry trends can be found in Construction Monitor‘s weekly insightful reports, including helpful info for midsize construction firms.

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Growth in Institutional Construction Detected for the First Time in 6 Years

For the first time since 2008, the institutional construction sector is showing signs of growth. Institutional construction increased a modest 4 percent in 2014, in contrast to several years of either stagnation or declines, beginning in 2009.

institutional construction The uptick in the institutional sector was reported in the 2015 Dodge Construction Outlook, produced by Dodge Data & Analytics.

Growth in this sector is expected to continue into 2015, with a 9 percent increase expected in construction starts for institutional projects, including educational facilities.

The institutional construction sector includes schools, universities, healthcare centers, and other facilities that serve the public.

The previous lowered performance of this area of construction was caused by dependence on public funding for projects. During the eight-year period since 2008, such funding had been limited.

The Dodge Construction Outlook report indicates that increases are occurring in the construction of K-12 schools, fueled by the recent passage of several school construction bond measures.

Construction on university campuses is also set to increase as returns on investment by college endowments improve.

Healthcare facility construction has been stalled over the past few years due to volatility in the industry caused by healthcare reform. However, as the population ages and needs more long-term care, and as existing healthcare facilities deteriorate and require replacement, growth in healthcare construction is expected to increase.

For example, the Dodge report noted an anticipated healthcare construction growth rate of 6 percent in 2015.

The report also foresees considerable growth in entertainment and recreational facilities, possibly reaching a high of 10 percent.

Construction industry managers, contractors and business owners can rely on Construction Monitor for the most recent and accurate information on industry developments and trends, including institutional construction.

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Multifamily Construction Halted in South Carolina’s Rock Hill Due to Strained City Resources

A recent boom in multifamily construction in the South Carolina city of Rock Hill has had the unexpected result of straining the city’s resources beyond their limit. In response, the city has ceased most multifamily construction projects until late 2015.

construction safetyThe moratorium on South Carolina construction is expected to last until September 2015. It applies to new construction starts on apartments, condominiums and townhomes.

Some exclusions apply to the moratorium. For example, the halt does not affect projects designated as senior housing. Buildings in the Rock Hill downtown area and projects that already have approved plants will also not be affected.

Douglas reported that 624 residential units are currently under construction in Rock Hill. Another 608 units are projected based on recent city approvals.

A year-long period of increased apartment construction has made it more difficult for the city’s public services to cope with the large number of new multifamily dwellings, according to Construction Dive. Rock Hill city infrastructure is also being strained by the influx of new residents in these apartments and condominiums.

The Rock Hill City Council imposed the construction slowdown so construction rules and standards could be reviewed and revised as necessary. The moratorium also gives developers, citizens and other concerned individuals the chance to comment on the city’s multifamily housing boom and on any proposed changes to multifamily construction regulations.

Some developers have expressed concern that the construction slowdown will put Rock Hill in the position of not being able to meet near-future housing demand.

The moratorium will expire automatically at the end of a 270-day period unless the City Council acts to extend it by three months.

Construction industry managers, owners and developers who need the most recent information on housing starts, building permits and industry developments can count on Construction Monitor for reliable, up-to-date data. Contact us today for more information on South Carolina construction.

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Unemployment in Construction Lowest in Years, Though Qualified Labor Is Still Hard to Find

After a lengthy period of limited opportunity and uncertainty, unemployment in construction is at its lowest point since 2006. Despite the positive upturn in construction employment, however, some industries and geographical areas are still experiencing unemployment in construction.

construction employmentQualified construction workers are still in short supply in areas where oil drilling and petroleum production have been popular, according to Building Design & Construction.

A survey of some 1,100 members of the Associated General Contractors of America revealed that more than 80 percent of respondents were having difficult finding qualified craft workers for their construction projects. Another 61 percent of respondents indicated trouble filling other types of professional positions.

This shortage of qualified, skilled construction laborers comes at the same time that overall construction employment is up. The U.S. Bureau of Labor Statistics indicated an increase of 12,000 jobs in October 2014, bringing construction industry unemployment to 6.4 percent, the lowest rate since October 2006.

The construction industry added 231,000 jobs between October 2013 and October 2014, resulting in employment at its highest level since May 2009.

Most of the gains have been seen in residential construction, with more than 130,000 residential and specialty contractor jobs added within the same one-year period. Professional jobs in civil and heavy engineering increased by nearly 100,000.

The labor shortage is most acute in southern states such as Louisiana, where oil production and refining, pipeline construction and petroleum industry projects are more common.

Labor costs and productivity limitations are having the effect of increasing the costs of projects within the petroleum industry, which could eventually have effects on the prices of products such as methanol.

Need the latest information on housing starts and building permits? Construction Monitor can provide you with the most up-to-date data available to help you plan your company’s business development. Contact us today for more information on the decreases in unemployment in construction and what it means for your company and the industry as a whole.

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Denver Condo Construction May Increase if Challenge to Defects Law Passes

A strict Colorado law has restricted construction of condominiums in Denver for the past several years, but recent challenges to that law could result in a more favorable environment for builders and an increase in Denver construction.

Construction Industry Employment BoomsThe Colorado construction defects law of 2005 protects consumers from defects and shortcomings in construction projects. However, the law has created an environment in which litigation has become the preferred method of settling defects complaints, resulting in a reluctance on the part of builders and developers to create condominiums and townhouses in Denver.

Demographics in Denver reveal a large population of potential condominium buyers whose housing requirements aren’t being met. The city contains a growing population of millennials and first-time homebuyers. Older couples who are looking to downsize are also prime candidates for buying a condo or townhouse.

Currently, the law allows a homeowner’s association board, upon approval of a majority of members, to initiate litigation against a builder. Homeowners themselves do not have to approve or even agree with the litigation.

Attempts by state lawmakers to change the law or ease its reliance on litigation have been unsuccessful, in large part due to fears of reducing consumer protections. However, some cities, such as Lakewood, have passed local ordinances that soften the harshness of the law.

For example, the Lakewood ordinance gives contractors the opportunity to correct defects before any suits are filed, and homeowners associations must get approval from a majority of homeowners before litigation.

Similar action in Denver could serve to ease the stress of the building defects law and increase construction of condominiums and residential units there.

Construction industry professionals who need the latest and most accurate information on industry developments can turn to Construction Monitor for data on building permits, housing starts and important trends. Contact us today for more information on Denver construction and how the challenges to the Colorado construction defects law can improve the market for condominiums in that city.

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Massive Renovation Planned for Smithsonian on National Mall

A planned $2 billion renovation to the Smithsonian Institution in Washington, D.C. will renovate one of the National Mall’s most iconic buildings. In November 2014, the Smithsonian revealed plans for large-scale renovations to the institution’s administrative building, commonly known as the Castle because of its resemblance to a familiar medieval structure type.

smithsonianThe extensive renovation plan is considered the largest project for the National Mall in more than a century.

The proposed project includes the addition of two underground levels to the Castle, which will contain a cafe, retail store, auditorium and restrooms. The new floors would be connected to neighboring galleries and museums, including the Arthur M. Sackler Gallery, the National Museum of African Art and the S. Dillon Ripley Center.

These changes are expected to make these underground museums easier to find for Washington visitors.

The Smithsonian renovation would also create a unified space around the Castle, connecting the Freer Gallery of Art, the Hirshhorn Museum and Sculpture Garden, and the Arts and Industries Building.

Approval for the plan still needs to be granted by the National Capital Planning Commission and the Commission of Fine Arts. Construction would likely not commence for another five to seven years. Once underway, the renovation is expected to take up to 20 years to finish.

The National Mall is home to some of the most important structures and national monuments in the United States. The U.S. Capitol Building stands on Capitol Hill at the Mall’s eastern end, with the Lincoln Memorial on the other. In between, the White House shares space with the Washington Monument, the Vietnam Veterans Memorial, and the many buildings that comprise the Smithsonian Institution.

Construction Monitor serves the construction industry in the United States with weekly reports and up-to-date information developments in the construction industry, including building permit issuances and housing starts. Contact us today for more information on the Smithsonian renovation and how local builders and contractors may be able to benefit from this large-scale project.

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New Study Explores What Homebuyers Want in an Energy Efficient Home

Interest in residential energy efficiency continues to rise among potential homebuyers in the United States. A new study reveals what homeowners are looking for in an energy efficient home and how likely they are to invest in improved residential efficiency.

energy savingsThe 2014 Energy Pulse study, conducted and released by Shelton Group, contains in-depth information on consumer interest in energy efficiency and sustainability. Based on a representative sample of 2,009 American consumers, the study provides sustainability and energy efficiency professionals with actionable insight into what buyers of their products and services want and need.

The number of U.S. homebuyers interested in buying an energy efficient home within the next two years has remained consistent at about 15 percent each year since 2012, according to the study.

The Energy Pulse study also found that energy efficiency is a significant factor in choosing a home. When choosing between equivalent homes in price, size, location and major amenities, 80 percent of respondents reported that energy efficiency would have an impact on their decision. This percentage has remained relatively consistent from 2011 to 2014.

Water efficiency is also a significant factor for new-home purchasers to 78 percent of respondents.

The 2014 study asked those surveyed if they would be willing to pay more for an energy efficient home that exceeded Energy Star standards. More than 70 percent responded that they would be likely or very likely to pay more for such a home.

The Energy Pulse study covers energy efficiency topics and how consumers perceive and react to them. The Shelton Group is a marketing communications agency based in Knoxville, Tennessee, specializing in serving clients in the energy efficiency and sustainability sectors.

To stay informed with up-to-date reports on building permits, housing starts and important trends in the construction industry, contact Construction Monitor.

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Rental Apartment Construction Booming Across the U.S. at a 27-Year High

Rental apartment construction in the U.S. has increased to a level not seen since 1987, according to new industry numbers reported in the Wall Street Journal. Multifamily apartment construction is at its highest level in some 27 years, with 330,000 multifamily apartment units under construction as of October 2014.

rental constructionThis indicates a boom in apartment construction, and it came despite the multifamily sector saw a 15.5 percent overall drop in October 2014.

Construction of multifamily housing options containing five units or more is at its highest level since 1989. The number of those units being produced for rental is at the highest level since records were first kept on the issue in 1974.

More than 93 percent of units in buildings with at least two units will be rental units.

The upsurge in apartment and rental unit construction continues a trend in urban residential construction that tends to concentrate more people into available spaces. The current trend outpaces the last notable housing boom in 2006. The notable difference today is that more units are being built as rentals.

Are you a construction industry professional looking for the latest information on construction trends, housing starts and building permit issuances? Construction Monitor provides comprehensive reports on these and other important industry topics. Contact us today for more information on recent developments in rental apartment construction and what they could mean for your company.

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Non-Residential Spending on the Rise Reflects Construction Recovery

New statistics covering non-residential construction spending show signs of continuing recovery in the construction industry. This area of construction spending increased 1 percent in October 2014, resulting in a 4.3 percent increase for the year to date, according to a December 2, 2014 report by the U.S. Department of Commerce.

highway constructionThe Commerce Department report further noted that October spending on non-residential construction was nearly $612 billion. Revisions to numbers for September showed that construction in that month totaled nearly $605 billion, up from the previously reported total of just over $596 billion.

The reported increases in non-residential construction confirm industry insider reports of increased business and mounting backlogs, noted Anirban Basu, chief economist for the industry organization Associated Builders and Contractors.

The Census Bureau report indicated expansion in 11 of 16 important non-residential construction categories in October. Some of these sub sectors include:

  • Highway and street construction, which was up 1.2 percent in October.
  • Public safety construction, which increased 11.6 percent over September.
  • Office construction, which increased 2 percent in October, reflecting a 16.3 percent increase over the same period in 2013.
  • Manufacturing construction, which increased 3.4 percent over September, representing a 22.2 percent annual increase.
  • Education-related construction, which was up 1.8 percent for October and 3.6 annually.
  • Health care construction, which increased 0.6 percent in October. The report indicated that even with this modest increase, health care construction spending was down 8.4 percent from the same period in 2013.
  • Lodging construction, which rose 3.3 percent from September to October, representing a nearly 16 percent increase over the year.

Basu also reported confidence that the non-residential construction expansion would continue to increase into 2015. This prediction is based on existing signs of industry recovery along with overall improvements in the American economy and boosts from low interest rates.

Construction industry professionals rely on the inside information on building permits, housing starts and industry trends provided by Construction Monitor. Contact us today for more information on increases in non-residential construction and what it means for the construction industry as a whole.

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Bidding on a Construction Project Goes Better When You Avoid These Pitfalls

Bidding on construction projects is a necessary but sometimes tedious and labor-intensive part of being a successful builder. Creating and submitting successful bids takes careful planning, a thorough understanding of the project being offered, and a comprehensive knowledge of what your company can accomplish.

Here are some of the pitfalls to avoid when bidding on a construction project.

  • construction biddingImprecise calculations: Successfully bidding on a construction project requires accurate figures and realistic accounting of costs, expenses and profits. Rule-of-thumb estimates may provide a good starting point, but the formal bid itself needs to contain detailed numbers and realistic financials. In most cases, it’s a good idea to use sophisticated financial software or bidding programs to handle the complex calculations. These programs will let you make changes and should automatically recalculate the bid. Be careful if you do make these types of changes; one small difference in a crucial area could throw off the numbers for the whole bid.
  • Inconsistent standards: Whether you’re doing all of your estimating and bidding in-house or you’re hiring other companies and estimators to help, you need to develop a consistent set of standards for developing and submitting bids. Multiple factors need to be taken into consideration, from the most basic services provided to specialized labor or equipment needed for the job. Bidding standards should also be formulated to allow close adherence to the requirements of the contract. This ensures that your bid completely meets the customer’s needs while ensuring you have the resources to do the job properly.
  • Impatience in bidding: If you’re too impatient when approaching bidding on a construction project, you could easily end up bidding too low or unnecessarily slashing your profits on the job. Give the estimating and bidding process the time it needs while also meeting all required deadlines for bid submission.

Construction Monitor helps construction industry managers, business owners and related professionals with the latest information on building permits, housing starts and industry trends. Contact us today for more information on bidding on a construction project and how to make your bids successful more often.

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