2009-2010 cam biennial business survey
DESCRIPTION
0 0 The Construction Association of Michigan (CAM), in conjunction with Plante Moran, has released the results of its 2009 – 2010 Biennial Business and Owners Survey.TRANSCRIPT
biennial business survey outlook
ConstruCtion AssoCiAtion of MiChigAn
celebrating 125 years of serving michigan’s constructionindustry
2
Dear Construction Associate,
We are pleased to present you with the results of our Biennial Business and Owner Surveys, which examine activity in 2009 and the outlook for the next 18 months. These two surveys were conducted through the joint efforts of the Construction Association of Michigan (CAM) and Plante & Moran, PLLC, and their continued commitment to provide accurate and timely business information to the construction industry.
For the first time, the survey was issued online to everyone for whom we had an e-mail address. This enabled a greater response due to the ease of completing and returning the questions. The responses are online as well, but for those who would like an additional printed results booklet, please contact either CAM or Plante & Moran. The survey information was compiled from the confidential survey responses by an independent survey company and developed as part of collaborative effort by CAM and Plante & Moran, PLLC.
We have combined the results of both surveys into one single publication. The responses contained herein tell a great deal about our region, economy, and most specifically, the Michigan construction industry. Results are indicative of the many challenges currently facing our state, and the various ways that contractors and owners are coping with this reality. The future construction climate is also forecasted by those who are directly involved in the Michigan construction industry on a daily basis.
As we negotiate this difficult economy, you have CAM’s pledge that we will continue to work hard both legislatively and in the media to improve the climate and perception of Michigan’s construction industry.
Sincerely,
Robert J. Michielutti, Jr.CAM Chairman of the BoardPresident and Owner, Michielutti Brothers, Inc.
The mission of the Construction Association of Michigan (CAM) is to provide its members with the programs and services they need to be successful in the competitive construction industry. CAM serves more than 3,200 member companies representing subcontractors; general contractors; construction managers; equipment and material suppliers; and providers of legal, financial, and design services. Founded in 1885, CAM is the oldest and largest regional construction association in North America. CAM will celebrate 125 years as an association in 2010.
The association is an essential information network for the Michigan construction industry. It publishes Construction Project News, a daily report containing complete details on Michigan projects out for bid. Construction Pre-View, a weekly publication, keeps CAM members “in the know” with news of proposed projects. With advanced software, members can access entire plans and news at their office via CAM-Online. The Construction Buyers Guide, published annually, is the premier directory of Michigan construction. It lists all relevant information on thousands of construction-related companies. The Buyers Guide can also be accessed online at CAM’s website, www.cam-online.com. CAM Magazine, “The Voice of the Construction Industry,” is recognized as the leading monthly industry magazine covering construction news, business trends, current projects, and construction technology in Michigan. CAM Magazine is also now online at www.cammagazineonline.com and has readers worldwide.
CAMTEC, the training and education division of CAM, offers industry-specific classes and seminars on relevant topics within today’s construction industry, along with the latest technology and trends. These courses can even be taught on site. CAMSafety provides all the training and documentation assistance needed by contractors today. Companies can use CAM’s certified safety consultant to ensure that their workers and their jobsites are in complete compliance with current safety regulations.
CAM Expo, CAM’s exposition for products and services offered by the construction industry, is held annually. The show displays many exhibitors and hosts seminars, demonstrations, and advancement courses.
The CAM Labor Relations Program provides quality labor relations assistance and information, at no additional cost, to union contractors employing carpenters, cement masons, laborers, or operating engineers in southeast Michigan.
CAM Administrative Services offers health insurance; CAM Comp serves the need for workers’ compensation insurance; and the Construction Federal Credit Union (CFCU) provides CAM members superior banking service.
For more information about any of these CAM services, please contact the CAM Marketing Department at 248.972.1000.
Serving the needs of the construction industry for more than 80 years, Plante & Moran is Michigan’s largest certified public accounting and management consulting firm. Plante & Moran provides the experience and personal attention the construction industry demands, offering a full range of services including audit and accounting; federal, state, and local tax planning; information technology and telecommunications consulting; family business succession planning; merger and acquisition assistance; cost segregation studies; and strategic planning.
For more information about Plante & Moran’s construction team, please contact Tom Doyle at 248.223.3402 or [email protected] or go to plantemoran.com.
About the construction association of michigan
Co-sponsor plante & moran
3
Produced by the Construction Association of Michigan (CAM) and the accounting firm Plante & Moran, PLLC, the Biennial Business Survey has been conducted for more than 16 years. The survey measures contractor opinion in several key categories.
business survey
This survey examines the construction industry from the clients’ perspective. The two-part questionnaire asks owners and construction clients about plans for upcoming work and their perceptions of Michigan’s construction industry and its practices.
Survey participants were selected at random from CAM’s Daily Construction Project News division, which monitors construction activity throughout the state. The majority of respondents were gleaned from both public and private entities.
Survey participation is critical to the success of the survey. If you would like to participate in future surveys, click here.
owner survey
pb 4
PAGE 6 business survey
PAGE 30 business survey written comments
PAGE 32 owner survey
PAGE 47 owner survey written comments
TABLE of contents
5
business SURVEy
pb 6
7
1 whiCh of the following designAtions best desCribes your priMAry business?
2 whAt type of work is presently providing your CoMpAny with the Most opportunities?
2a whAt CAtegory do you AntiCipAte providing your CoMpAny with the Most opportunities for work in the next 12–18 Months?
BUSINESS SURVEy
business outlook
17%
0%General
contractorSubcontractor Equipment/
material supplier
Architect/Engineer
OtherManufacturerof equipmentor materials
20%
40%
60%
18%
4% 3%9%
49%
0%
4%
8%
12%
24%
15%
10%12% 13%
11%8%
5%
1% <1% <1%
16%
20%
24%
Offi
ce b
uild
ings
Inte
riors
/Ten
ant
impr
ovem
ents
Educ
atio
n/
Cul
tura
l sci
entif
ic
build
ings
Tran
spor
t/ In
dust
rial
build
ings
Hea
lth/W
elfa
re
build
ings
/ H
ospi
tals
Publ
ic w
orks
pr
ojec
ts
Rel
igio
us
build
ings
Res
iden
tial
Hot
els/
Mot
els
Ente
rtain
men
t fa
cilit
ies
Infra
stru
ctur
e
0%
4%
8%
12%
16%
20%
24%
12%
Offi
ce b
uild
ings
7%
Inte
riors
/Ten
ant
impr
ovem
ents
23%
Educ
atio
n/
Cul
tura
l sci
entif
ic
build
ings
11%
Tran
spor
t/ In
dust
rial
build
ings
12%
Hea
lth/W
elfa
re
build
ings
/ H
ospi
tals
16%
Publ
ic w
orks
pr
ojec
ts
<1%
Rel
igio
us
build
ings
12%
Res
iden
tial
<1%
Hot
els/
Mot
els
1%
Ente
rtain
men
t fa
cilit
ies
5%
Infra
stru
ctur
e
8 pb
2b in terMs of projeCt Cost, whAt CAtegory of work is providing your CoMpAny with the Most opportunities? (AverAge)
Projects under $100,000 continue to compromise more and more of construction opportunities, which indicates
a continued trend toward smaller projects.
2c in terMs of ConstruCtion, whAt CAtegory of work is providing your CoMpAny with the Most opportunities?
New construction opportunities have dipped dramatically since the last survey.
business outlook
52%
20%
8%6% 5%
3% 2%
10%
0%
20%
30%
40%
50%
60%
Less
than
$10
0K
$100
K–$
500K
$1M
–$2M
$500
K–$
1M
$2M
–$5M
$5–$
10M
Mor
e th
an $
10M
2007
31%
40%
13%
6%5%
3% 2%
10%
0%
20%
30%
40%
50%
60%
Less
than
$10
0K
$100
K–$
500K
$1M
–$2M
$500
K–$
1M
$2M
–$5M
$5M
–$10
M
Mor
e th
an $
10M
200559%
18%
9%
5%3% 2%
4%
10%
0%
20%
30%
40%
50%
60%
Less
than
$10
0K
$100
K–$
500K
$1M
–$2M
$500
K–$
1M
$2M
–$5M
$5M
–$10
M
Mor
e th
an $
10M
2009
New
C
onst
ruct
ion
Ren
ovat
ion
Ret
rofit
Addi
tion
Mai
nten
ance
32%40%
7% 9% 12%
0%
10%
20%
30%
40%
2009
50%
60%
New
C
onst
ruct
ion
Ren
ovat
ion
Ret
rofit
Addi
tion
Mai
nten
ance
2007
0%
10%
20%
30%
40%
54%
31%
7% 4% 3%
50%
60%
9 pb
3 how hAs the voluMe of work for whiCh you hAve ContrACted ChAnged over the pAst 12 Months?
In 2005, 51 percent of respondents indicated an increase in volume, while in 2009, 79 percent of respondents indicated a decrease in volume.
business outlook
Up
less
th
an 1
0%
Up
betw
een
10–2
0%
Up
mor
e th
an 2
0%
Abo
ut th
e sa
me
Dow
n 10
%
or le
ss
Dow
n be
twee
n 10
– 20
%
Dow
n m
ore
than
20%
19%
0%
10%
20%
30%
40%
50%
7%
19%17%
10%
19%
7%
Up
less
th
an 1
0%
Up
betw
een
10–2
0%
Up
mor
e th
an 2
0%
Abo
ut th
e sa
me
Dow
n 10
%
or le
ss
Dow
n be
twee
n 10
–20%
Dow
n m
ore
than
20%
30%
0%
10%
20%
30%
40%
50%
13% 12%
17%
8%11%
8%
2007 2005
Up
less
th
an 1
0%
Up
betw
een
10–2
0%
Up
mor
e th
an 2
0%
Abo
ut th
e sa
me
Dow
n 10
%
or le
ss
Dow
n be
twee
n 10
–20%
Dow
n m
ore
than
20%
3%
0%
10%
20%
30%
40%
50%
3%
8% 9%
22%
48%
6%
2009
10 pb
3a how do you AntiCipAte the voluMe of work ChAnging over the next 12–18 Months?
3b in light of the Current eConoMiC downturn, how long do you AntiCipAte this trend to Continue in MiChigAn?
As in prior surveys, contractors, suppliers, architects, and engineers are more optimistic than the owners. Twice as many
owners believe the economic recovery is at least three years away.
business outlook
Up less than 10%
Up between 10–20%
Up more than 20%
About the same
Down 10%
or less
Down between 10–20%
Down more than 20%
11%
0%
10%
20%
30%
40%
50%
4%
41%
10%12% 11%11%
1 year 2 years 3 years 4 years 5 or More years
17%
0%
10%
20%
30%
40%
50%
17%
6%
15%
45%
ContraCtors, suppliers, arChiteCts
1 year 2 years 3 years 4 years 5 or More years
6%
0%
10%
20%
30%
40%
50%
37%
10%
30%
17%
owners
11 pb
4 whAt AreA in the stAte of MiChigAn do you AntiCipAte hAving the greAtest nuMber of ConstruCtion opportunities in the next two yeArs?
Southeastern Michigan 65% Southwestern Michigan 28% Northeastern Michigan 3% Northwestern Michigan 3% Upper Peninsula 1%
5 Are you Currently doing work outside the stAte of MiChigAn?
yes 43% No 57%
5a if you Answered yes, whAt perCentAge of your totAl voluMe of work is perforMed outside the stAte of MiChigAn?
Less than 10% 34% 10–20% 21% 20–50% 21% 50% or more 24%
5b do you AntiCipAte thAt perCentAge inCreAsing or deCreAsing in the next 12–18 Months?
Increasing 84% Decreasing 16%
5c in whiCh of the following AreAs outside the stAte of MiChigAn is the work being perforMed?
Midwest United States 49% Southeastern United States 22% Northeastern United States 10% Southwestern United States 7% Other 6% Northwestern United States 2% Canada 2% Mexico 2%
business outlook
12 pb
business outlook
6 if you Are not Currently working outside the stAte of MiChigAn, do you AntiCipAte doing so in the next 12–18 Months?
yes 30% No 70%
6a if you Answered yes, in whiCh of the following AreAs outside the stAte of MiChigAn do you AntiCipAte perforMing work?
Southwestern United States
Northwestern United States
Canada Mexico Northeastern United States
8%
0%
10%
20%
30%
40%
50%
Southeastern United States
15%
2% 2%0% 0%
Midwest United States
73%
60%
70%
80%
Other
0%
13 pb
7 do you Currently hAve A CoMpAny brAnCh or sAtellite loCAtion in Another stAte?
yes 15% No 85%
7a if yes, in whiCh stAte or stAtes Are you Currently loCAted?
business outlook
Company Branch/Satellite Locations
14 pb
7b if Currently no, do you plAn on it in the future?
yes 15% No 85%
7c if yes, whiCh stAtes would you Consider opening in?
business outlook
States in Consideration
15
1 how MuCh new work do you Currently hAve bACklogged?
As expected the amount of work backlogged is trending downward.
2 whAt is your priMAry Method for seCuring new ConstruCtion work?
BUSINESS SURVEy
securing work
69%
0%
1–3 Months
4–6 Months
7 –12 Months
More Thana year
10%
20%
30%
40%
50%
7%
3%
21%
60%
70%
29%
0%
Open competitive bidding –
Public work
Competitive bidding – Invitation
only
Referral OtherNegotiate directly with
owner
10%
20%
30%
40%
17%
3%
38%
13%
16 pb
2a whAt priMAry Method do you AntiCipAte using for seCuring work in the next two yeArs?
3 if you Are bidding CoMpetitive work, whAt is the AverAge nuMber of
bidders who hAve been bidding AgAinst you on eACh projeCt?
In 2005, 55 percent of projects had fewer than five bidders; in 2009, only 25 percent had fewer than five. In 2005,
6 percent of projects had 10 or more bidders; in 2009, 33 percent had 10 or more bidders.
securing work
10%
0%
20%
30%
40%
50%
Less
than
5
5–10
bid
ders
15 o
r mor
e
10–1
5 bi
dder
s
2005
55%
39%
5%
1%
60%
10%
0%
20%
30%
40%
50%
Less
than
5
5–10
bid
ders
15 o
r mor
e
10–1
5 bi
dder
s
2007
48%
40%
9%
3%
60%
10%
0%
20%
30%
40%
50%
Less
than
5
5–10
bid
ders
15 o
r mor
e
10–1
5 bi
dder
s
2009
25%
42%
23%
10%
60%
32%
0%
10%
20%
30%
40%
16%
3%
35%
14%
Open competitive bidding –
Public work
Competitive bidding – Invitation
only
Referral OtherNegotiate directly with
owner
17 pb
3a do you AntiCipAte the nuMber of bidders, bidding AgAinst you, inCreAsing or deCreAsing in the next 12–18 Months?
Increasing 65% Decreasing 35%
3b hAve your profit MArgins or MArk-ups inCreAsed or deCreAsed in your
bids subMitted?
Increased 7% Decreased 93%
3c if deCreAsed, by how MAny perCentAge points?
5% or more 59% 2–4% 37% 1% or less 4%
3d do you AntiCipAte AdditionAl profit MArgins or MArk-up pressure on your bids in the next 12–18 Months?
Yes 68% No 32%
4 hAve you seen An inCreAse in ConstruCtion opportunities froM federAl stiMulus dollArs?
yes 21% No 79%
4a in your trAde, do you AntiCipAte An inCreAse in ConstruCtion opportunities As A result of the federAl stiMulus dollArs?
No Additional Increase 48% Slight Increase 48% Significant Increase 4%
securing work
18 pb
1 whAt plAns do you hAve for your work forCe over the next 12-18 Months?
(seCtor breAkdown)
BUSINESS SURVEy work force plans
8%
0%
20%
40%
60%60%
23%
3%6%
Add
full-
time
empl
oyee
s
Add
part-
time
empl
oyee
s
No
chan
ge in
nu
mbe
r of
empl
oyee
s
Lay
off
part-
time
empl
oyee
s
Lay
off
full-
time
empl
oyee
s
Add
full-
time
empl
oyee
s
Add
part-
time
empl
oyee
s
No
chan
ge in
nu
mbe
r of
empl
oyee
s
Lay
off
part-
time
empl
oyee
s
Lay
off
full-
time
empl
oyee
s
9%
0%
20%
40%
60%62%
24%
0%4%
General ContraCtorsAd
d fu
ll-tim
e em
ploy
ees
Add
part-
time
empl
oyee
s
No
chan
ge in
nu
mbe
r of
empl
oyee
s
Lay
off
part-
time
empl
oyee
s
Lay
off
full-
time
empl
oyee
s
5%
0%
20%
40%
60%59%
29%
2%4%
subContraCtors
7%
0%
Add
full-
time
empl
oyee
s
Add
part-
time
empl
oyee
s
No
chan
ge in
nu
mbe
r of
empl
oyee
s
Lay
off
part-
time
empl
oyee
s
Lay
off
full-
time
empl
oyee
s
20%
40%
60%63%
20%
2%7%
suppliers
Add
full-
time
empl
oyee
s
Add
part-
time
empl
oyee
s
No
chan
ge in
nu
mbe
r of
empl
oyee
s
Lay
off
part-
time
empl
oyee
s
Lay
off
full-
time
empl
oyee
s
0%0%
20%
40%
60% 56%
22%
11%11%
arChiteCts & enGineers
18
19
1 seleCt the 3 strAtegies your CoMpAny hAs undertAken to iMprove profitAbility.
As expected the trend continues toward company right-sizing.
2 do you Currently hAve A business suCCession plAn in plACe or in proCess?
yes 44% No 56%
The current business environment may force more companies to step up to this issue.
Cut Administrative Costs 32% Staff Reduction/Right-Sizing 25% Improving Process/Products 17% Enhanced Marketing 10% Geographic Expansion 9% Design/Build Projects 4% Safety/Risk Management 2% Enhanced Training 1%
Cut Administrative Costs 21%Improving Process/Products 18% Staff Reduction/Right-Sizing 17%Enhanced Marketing 14% Geographic Expansion 11%Design/Build Projects 7% Safety/Risk Management 6%Enhanced Training 5%
Cut Administrative Costs 25% Improving Process/Products 20% Enhanced Marketing 15% Design/Build Projects 10% Staff Reduction/Right-Sizing 10% Geographic Expansion 9% Enhanced Training 6% Safety/Risk Management 4%
Cut Administrative Costs 31%Improving Process/Products 22%Enhanced Marketing 14%Design/Build Projects 12% Geographic Expansion 8%Staff Reduction/Right-Sizing 7%Enhanced Training 3%Safety/Risk Management 2%
BUSINESS SURVEy
financial health
2009
2005
2007
2003
20 pb
2a if yes, whiCh of the following is the key eleMent of your strAtegy?
Selling/Transferring to Family 48% Selling to Key Management Personnel 27% Merging with Another Company 8% Selling to a Strategic Buyer 6% Establishing an ESOP 6% Winding Down/Liquidating 5%
3 how does your present CAsh flow situAtion CoMpAre to lAst yeAr?
(seCtor breAkdown)
Cash flow challenges continue to be more significant.
financial health
58%
0%
Wor
se th
anla
st y
ear
Sam
e as
last
yea
r
Bet
ter t
han
last
yea
r
20%
40%
60%
10%
32%
2009
80%
41%
0%
Wor
se th
anla
st y
ear
Sam
e as
last
yea
r
Bet
ter t
han
last
yea
r
20%
40%
60%
21%
37%
200780%
57%
0%
Wor
se th
anla
st y
ear
Sam
e as
last
yea
r
Bet
ter t
han
last
yea
r
20%
40%
60%
7%
36%
General ContraCtors
80%
60%
0%
Wor
se th
anla
st y
ear
Sam
e as
last
yea
r
Bet
ter t
han
last
yea
r
20%
40%
60%
7%
33%
subContraCtors
80%
57%
0%
Wor
se th
anla
st y
ear
Sam
e as
last
yea
r
Bet
ter t
han
last
yea
r
20%
40%
60%
11%
32%
suppliers
80% 75%
0%
Wor
se th
anla
st y
ear
Sam
e as
last
yea
r
Bet
ter t
han
last
yea
r
20%
40%
60%
13%13%
arChiteCts & enGineers
80%
21 pb
3a in the next 12-18 Months, how do you AntiCipAte your CAsh flow being?
4 whAt is the AverAge length of tiMe it tAkes your CoMpAny to reCeive finAl pAyMent for work perforMed or MAteriAls provided?
30 Days 15% 60 Days 52% More than 90 Days 32%
4a do you AntiCipAte the AverAge tiMe it tAkes to be pAid iMproving or getting worse in the next 12–18 Months? Improving 28%
Getting Worse 72%
5 whAt perCentAge of your totAl sAles do you MAintAin in equity? Less than 5% 35% 5–10% 32% 10–20% 21% More than 20% 11%
5a is your equity position suffiCient to MAnAge your CAsh flow needs?
Yes 71% No 29%
financial health
35%
0%
Worse About the same
Better
20%
40%
60%
13%
51%
22 pb
5b do you hAve ACCess to A line of Credit?
Yes 78% No 20%
5c if no, hAve you hAd ACCess to A Credit line previously in the pAst?
Yes 51% No 49%
5d whAt do you AntiCipAte hAppening with the Credit MArkets in the next six Months?
Improving 17% Staying the same 43% Not improving 38%
5e if you don’t AntiCipAte the Credit MArkets iMproving in the next six Months, then when? 6–12 months 10%
More than 12 months 90%
6 hAve you filed A ClAiM of lien in the pAst 12 Months?
The percentage of responses shows that half of respondents have not filed Claims of Lien. It is worth noting that the last three surveys have shown that many companies do not file Claims of Lien.
50% or more 14%
financial health
54%
0%
No Claims 1–5 5–10 More than 10
20%
40%
60%
4% 3%
39%
23 pb
7 whAt perCentAge of the work you perforM is bonded?
No bonded work 37% 10% 28% 20–40% 22% 41% or more 13%
7a is your CoMpAny hAving More diffiCulty seCuring suffiCient bonding CApACity?
yes 21% yes 16% No 79% No 84%
8 how hAve MAteriAl priCes for your business ChAnged in the pAst 12 Months? Increase in prices 43% Increase in prices 83% Increase in prices 94% Decrease in prices 16% Decrease in prices 2% Decrease in prices 2% Stayed about the same 40% Stayed about the same 13% Stayed about the same 3%
9 hAve you been Able to obtAin esCAlAtion ClAuses in your ContrACts?
yes 11% No 45% Haven’t tried 44%
9a do you AntiCipAte MAteriAl priCes ChAnging in the next 12–18 Months?
Anticipate increase in prices 54% Stay the same 43% Anticipate decrease in prices 3%
financial health
2009
2009
2007
2007 2005
24 pb
10 CoMpAred to prior yeAr sAles, your CoMpAny’s AnnuAl sAles for the CoMing yeAr will:
61 percent of respondents say their sales will decrease in the coming year.
11 CoMpAred to the prior yeAr, your CoMpAny’s profitAbility for the CoMing yeAr will:
55 percent of respondents say their profitability will decrease in the coming year.
financial health
9%
0%
10%
20%
30%
40%
20%
40%
10%
21%
Increase1–10 %
Increase more than
10%
Stay about
the same
Decrease more
than 10%
Decrease 0 –10%
Increase1–10 %
Increase more than
10%
Stay about
the same
Decrease more
than 10%
Decrease 0 –10%
10%
0%
10%
20%
30% 28%26%
6%
29%
25
1 whiCh of these online teChnologies is being utilized by your CoMpAny?
Online job bidding users increased 20 percentage points from 2007.
Currently, 56 percent of respondents have implemented, plan to implement, or are considering implementation of an online project management system.
There continues to be an increase in the use of online plans and specifications. In 2003, 31 percent were using this tech-nology, and in the 2009 survey, 73 percent were using this technology.
62%
0%Currently
usingPlanning to implement
Consideringimplementing
No interest
20%
40%
60%
14%20%
4%
60%
2009 online plans and speCifiCations
2007 online plans and speCifiCations
73%
0%Currently
usingPlanning to implement
Consideringimplementing
No interest
20%
40%
60%
10% 10%7%
80%
BUSINESS SURVEy
technology/sustainability
61%
18% 18%3%
online job biddinG2009
41%
18%
36%
4%
2007 online job biddinG
0%Currently
usingPlanning to implement
Consideringimplementing
No interest
20%
40%
60%
80%
0%Currently
usingPlanning to implement
Consideringimplementing
No interest
20%
40%
60%
80%
26%23%
44%
7%
2009 online projeCt manaGement
2007 online projeCt manaGement
21% 21%
53%
4%
0%Currently
usingPlanning to implement
Consideringimplementing
No interest
20%
40%
60%
80%
0%Currently
usingPlanning to implement
Consideringimplementing
No interest
20%
40%
60%
80%
26 pb
2 whAt perCentAge of your CoMpAny is Currently leed Certified?
2a if none of your eMployees Are Currently leed Certified, do you hAve plAns for theM to pursue leed CertifiCAtion in the future? yes 36% No 64%
Since this survey was taken, CAM has noted a recent increase in the interest of LEED Accredited Professionals.
2b does your CoMpAny Currently regulArly engAge in “green” or “sustAinAble” building prACtiCes? Yes 57% No 43%
technology/sustainability
Below10%
10–25% 26–50% 51–75% More than 75%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
27 pb
2c if no, do you hAve plAns to beCoMe More ACtively involved in “green” or “sustAinAble” building prACtiCes?
yes 46% No 54%
3 does your CoMpAny Currently utilize biM (building inforMAtion Modeling) in its projeCts?
yes 12% No 88%
(seCtor breAkdown)
yES NO
General Contractors 13% 87%
Subcontractors 13% 87%
Suppliers 6% 94%
Architects and Engineers 38% 62%
3a if no, do you hAve plAns to utilize biM in future projeCts?
yes 14% No 86%
(seCtor breAkdown)
yES NO
General Contractors 6% 94%
Subcontractors 15% 85%
Suppliers 10% 90%
Architects and Engineers 40% 60%
In the owners survey on pg. 46, results show that owners are utilizing contractors that are adopting these technologies.
technology/sustainablility
1 do you hAve plAns to enhAnCe Any of the following poliCies And proCedures?
yES NO
Job Safety Procedures 73% 27%
Staff Development/Training 66% 34%
Substance Abuse Testing 40% 60%
Employee Benefit Programs 36% 64%
Minority Employment 33% 67%
Employee Theft Policies 28% 72%
Handicapped Employment 19% 81%
2 whAt perCentAge of your ConstruCtion work is designed by MiChigAn-bAsed ArChiteCturAl or engineering firMs?
Less than 10% 10% 10–30% 9% 30–50% 14% 50–70% 20% 70–90% 27% More than 90% 20%
As in previous surveys, respondents plan to enhance job safety procedures.
BUSINESS SURVEy
policies and procedures
28
29 pb
generAlly speAking, do you Consider yourself to be: Republican 48%Democrat 12%Independent 21%No preference 18%
whAt is your personAl net worth? Less than $100,000 13%$100,000–$499,999 34%$500,000–$1 million 24%$1 million–$2 million 29%
whAt is the lAst grAde of sChool you CoMpleted? High school 11%Vocational/Technical school 7%Some college 32%College degree 37%Post-graduate degree 12%
is A woMAn A MAjority owner (51 perCent or More) of this business? yes 17%No 83%
is this A Minority-owned (exCluding feMAle-owned) business? yes 6%No 95%
where Are you loCAted in the stAte of MiChigAn? Oakland County 34% Wayne County 22%Macomb County 15% Other 14% Mid-Michigan 13%Balance of Detroit 2%
ApproxiMAtely how long hAs your CoMpAny been in business? 5 years or less 5%5–15 years 22%15–30 years 34%More than 30 years 39%
whAt is your title? President 55%Chief Executive Officer 7%Chief Financial Officer 5%Other 34%
whAt is your ApproxiMAte Age? 21–34 4%35–44 17%45–54 41%55–64 32%65–Over 6%
BUSINESS SURVEy
demographics and written comments
30 pb
1 At the present tiMe, whAt is your biggest ConCern About the ConstruCtion industry?
• Lack of job/bid opportunities, lack of confidence in payment/credit/funding, tightened bond underwriting, less access to credit.
• Unskilled competition underbidding projects.
• Lack of good planning on the part of engineering and the need for three bids to satisfy local projects.
• Retainage issues, prevailing wage, government interference and regulation, over taxation.
• Competition with non-union subcontractors. We are constantly being underbid and losing jobs that would have never been bid by the non-union companies in the past, but due to the lack of residential work, the non-union is getting into the commercial/industrial big time.
• New releases do not appear to be consistently trending up. Shorter lead times, expedited schedules and cut rates are making for a bad mix.
• Lack of private projects.
• The loss of ethics in the face of survival by many in the industry from top to bottom.
• Due to state taxation laws and policies, and union presence, we will not see any substantial growth in this area until it becomes a more “business friendly” state.
• The increase in paperwork required to comply with federal regulations.
• Financial institutions tightening credit even though the American taxpayer bailed them out due to their collective greed. Lack of monetary policy controls to maintain our monetary system.
• Lack of good workers.
• Michigan economy and union pension liabilities.
• The lack of projects and the extremely low bidders on projects.
• Too many vacant, existing, industrial buildings in the marketplace.
• Whether the lending institutions will ever get their act together and provide necessary financing to create jobs and allow for modernization of industry.
• The stagnant economy.
• Lack of credit funding to clients.
• Lack of opportunity, unfair competition, unscrupulous practices by many owners and their agents.
• Lowest bid is not the best bid for the owner.
• Lack of concern about quality and overemphasis being put on price and “green.” Losing personal contact. Only contact the customer wants now is if something is wrong. Customers have no financial responsibility anymore.
• Banks are not releasing money to allow projects to proceed. We can not seem to get paid once we secure the work.
• Concerned regarding turnabout of economy and lack of trust.
• Lack of financing for new construction and prompt pay.
• Lack of money for projects in lower Michigan.
• No work! We have customers that have been in business over 50 years — now defunct or barely hanging on. The stimulus is a complete waste of money! The money needed to go to infrastructure big time.
demographics and written comments
• The government should not be imposing additional costs (healthcare) or taxes on small business at this time.
• Return to our fundamental principles and regain self-respect and pride in ourselves as a people and a country.
• Ultimately, most problems flow to the poor economy which, in my opinion, requires business diversification, more emphasis on technical/knowledge-based jobs, and a shift to non-auto-motive manufacturing.
• Lower labor costs.
• Go out of state.
• A new business/government program that would allow for pre-selection of equipment. It would be more efficient and cause less problems after the project is built.
• More power for the contractor and supplier to collect instead of for the builder and GC to evade payment.
• Crack down on companies ignoring prevailing wage statute, and companies using 1099s instead of payroll.
• Tax incentives for more businesses to choose to make Michigan as their headquarters.
• Remove the banking, insurance, oil, and medical lobbyists completely from the system. We have systemic corruption that will not be resolved until our country is insolvent.
• Have architectural firms take the lead roles directly with the owners.
suggested solutions
(Continued on next pAge)
31 pb31 pb
2 would you still Choose to MAke your living in the ConstruCtion industry if you were beginning your CAreer todAy?
31 pb31
demographics and written comments
37%
0%
yes No Unsure
10%
20%
30%
40%
32%31%
39%
0%
yes No Unsure
10%
20%
30%
40%
30%30%
2009 2007
1 Continued
• Increase federal funding for construction projects and federal funding for businesses in Michigan so they can hire employees.
• I really don’t have one. Our company has structured itself to survive through these times with minimal layoffs and we have not reduced our margins to secure work.
• Energy incentives.
• Let the weak contractors go out of business. The strong will survive. I hope that the outsourcing of the majority of our jobs here in Michigan will stop, that might help things out.
• Cut small business taxes in an effort to increase small business growth.
• Stimulus money that builds new projects (not stimulus money to pay state of Michigan bills).
• We need a higher income tax so everyone shares the burden.
• Continue to try to build relationships.
2a of those who Answered “no,” the following Are soMe of their reAsons:
• I would choose a different state in which to do business.• I do not believe a new subcontractor would be afforded the
necessary opportunities at this time. There are too many good, experienced contractors looking for work at cost or below cost prices.
• It is not profitable enough to make it worth the while.• Too unstable to the economy and consumer buying
practices. Very media-driven. Too many emotional decisions made, rather than based, on sound business practice. Too easy for contractor to bankrupt company and start over with clean slate. No accountability in our bankruptcy laws.
• Lack of marketing by the construction industry has created a void whereby there is no incentive for a younger person to get into this business.
• Profit margins aren’t there anymore. Labor is going cheaper and cheaper. Construction managers are making it impossible for subcontractors to make any money on projects. They are controlling all the chips.
• I would base the business on new green technology.• Nobody wants to pay for a fair price. Construction is not a
favorable industry. We are looked at as crooks but have to fight for every penny we make.
• Too expensive to do business in Michigan! We supply to surveyors, engineers, and construction. There is no work and many of these firms are small businesses in smaller communi-ties. They are all almost out of business. The large firms have laid off almost all of their crews. It is very bad! In 2004 and 2005 we had sales of $2-3 million. We won’t see $500k this year.
1 suggested solutions (Continued)
32 pb
owner SURVEy
33 pb
1 when doing ConstruCtion plAnning, whoM do you Consult first About your projeCt?
2 whiCh of the following would best suMMArize your generAl experienCe with
the professionAlisM of ConstruCtion personnel during the building proCess?
97 percent of respondents were satisfied in 2009, compared to 90 percent in 2007. There has been a 9 percentage point
increase in the satisfaction level of those that were pleased/satisfied during the building process.
OWNER SURVEy
client perspective
0%
66%
ArchitectContractor Accountant
20%
40%
60%
80%
Financial institution
4%6%
18%
Attorney
6%
67%
0%Pleased/ Satisfied
Adequate Disappointed
20%
40%
60%
3%
30%
80%
58%
0%Pleased/ Satisfied
Adequate Disappointed
20%
40%
60%
10%
32%
80%
2009 2007
34 pb
2a if you Answered AdequAte or disAppointed, whAt AreAs were you less thAn pleAsed with?
• Timely completion of projects • Estimations, working operation versus design, lack of substantive detail • Representing the owners • Communications • Contractors’ lack of code knowledge • Their willingness to accept medium quality work. Lack of concern over maintaining a schedule. • We often have to deal with construction personnel who are inadequately trained for their level of responsibility, who
seek to game the system in order to make an “extra” at the cost of the entire project, or who fail to pay their subs and suppliers even when under a performance/payment bond.
• Our last experience with the construction crew was very disappointing. We are going about it different this time.
3 whAt wAs the overAll quAlity of the ConstruCtion in your Most reCent projeCt?
91 percent of respondents in 2009 feel overall quality was good or excellent, compared to 77 percent in 2007.
3a if you Answered sAtisfACtory or poor, where wAs the quAlity less thAn expeCted?
• Lack of attention to details • General workmanship • Site drainage problems, roof leaks, HVAC problems project-wide
client perspective
Good
48%
0%
10%
20%
30%
40%
50%
Satisfactory
9%
Poor
0%
Excellent
43%
2009
Good
45%
0%
10%
20%
30%
40%
50%
Satisfactory
25%
Poor
2%
Excellent
27%
2007
35 pb
4 whiCh of the following would best suMMArize your generAl experienCe with the overAll ConstruCtion proCess?
Smoother than expected 12% Smoother than expected 10% Proceeded as expected 80% Proceeded as expected 64% More conflicts than expected 8% More conflicts than expected 24%
In 2009, 92 percent of respondents said their general experience proceeded as expected or was smoother than expected, compared to 74 percent in 2007.
4a if you Answered More ConfliCts thAn expeCted, pleAse desCribe the ConfliCts.
• Quality issues • People not wanting to follow specs • Union protests • There were many punch items that were overlooked. The materials used and the workmanship were substandard in
many cases.
5 whiCh of the following would best suMMArize your generAl experienCe with projeCt Costs?
Greater than expected 18% Greater than expected 35% Equal to expectations 71% Equal to expectations 59% Below expectations 11% Below expectations 6%
82 percent of respondents indicated project costs were equal to or below expectations, compared to 65 percent in 2007.
5a if you Answered greAter thAn expeCted, whAt AreAs CAused the exCess Costs?
• Site work (subsurface soil conditions) • Owner-initiated change of orders • High cost of construction • Value engineered to save costs but caused operation issues • “Surprises” not planned in the architectural process • Overall cost greater than estimated • Unanticipated engineering problems • They didn’t figure enough material • Bids coming in over what was expected, and unexpected expenses • They had to do extra things when they got into the original building
client perspective
2009 2007
2009 2007
36 pb
6 whiCh of the following would best suMMArize your generAl experienCe with projeCt CoMpletion tiMes?
Here, the survey indicates a much greater satisfaction rate with completion time for 2009 versus 2007.
7 whiCh of the following generAlly CAuses the Most delAys in projeCt CoMpletion or Closeout?
client perspective
2009
10%
0%
20%
30%
40%
50%
60%
On
time
57%D
elay
ed –
C
ontra
ctor
’s fa
ult
14%
Del
ayed
–
No
faul
t
19%
Del
ayed
–
Ow
ner’s
faul
t
0%
Ahea
d of
sc
hedu
le
1%
Oth
er
9%
2007
10%
0%
20%
30%
40%
50%
60%
On
time
35%
Del
ayed
–
Con
tract
or’s
faul
t
30%
Del
ayed
–
No
faul
t
25%
Ahea
d of
sc
hedu
le
3%
Oth
er
4%
Del
ayed
–
Ow
ner’s
faul
t
1%
0%
64%
Unforeseen problems
20%
40%
60%
Communications with
project manager
3%
Communications with owners
1%
Communications with
subcontractors
14%
80%
Quality of labor
7%
Other
11%
37 pb
8 in your opinion, whoM should you ContACt first to Address probleMs with your projeCt?
9 whAt perCentAge of the fees ChArged for ConstruCtion serviCes do you believe represents profit for generAl ContrACtors?
Less than 5% 14% Less than 5% 13% 5–10% 59% 5–10% 38% 10–20% 18% 10–20% 36% More than 20% 9% More than 20% 10%
10 whAt perCentAge of the fees ChArged for ConstruCtion serviCes do you believe represents profit for speCiAlty ContrACtors?
Less than 5% 15% Less than 5% 13% 5–10% 40% 5–10% 37% 10–20% 32% 10–20% 29% 20–30% 10% 20–30% 17% More than 30% 3% More than 30% 4%
client perspective
72%
0%General
contractor/Construction
manager
Engineers Architects Other
20%
40%
60%
8%4%
16%
80%
2009 2007
2009 2007
38 pb
11 whAt is your perCeption of fees eArned by the following ConstruCtion personnel?
TOO HIGH TOO LOW FAIR Architects 40% 4% 56% Engineers 21% 3% 76% General Contractors 13% 3% 84% Tradespeople 14% 3% 82% Specialty Contractors 26% 0% 74%
Owners believe contractors are making more profits than they actually are. Owners’ views regarding contractors’
profits seemed more realistic in 2009 versus 2007.
INDUSTRY FACT:
National Surveys taken in 2008 indicate the average general contractor’s gross profit was approximately six percent of sales, and the average specialty contractor’s gross profit was approximately 17 percent of sales. In addition, the before tax net income of general contractors averaged about two percent of sales and the before tax net income for specialty contractors averages about 6 percent of sales. Based on the business trends and economic conditions, it is suspected that these gross profit and net income numbers will be much lower in 2009.
client perspective
39 pb
1 CoMpAred to prior yeAr sAles, your CoMpAny’s AnnuAl sAles for the CoMing yeAr will:
2 CoMpAred to the prior yeAr, your CoMpAny’s profitAbility for the CoMing yeAr will:
OWNER SURVEy
financial health & outlook
12%
0%Increase1–10 %
Increase more than
10%
Stay about the same
Decrease more than
10%
Decrease 0–10%
10%
20%
30%
40% 39%
16%
6%
27%
8%
0%Increase1–10 %
Increase more than
10%
Stay about the same
Decrease more than
10%
Decrease 0–10%
10%
20%
30%
40%
43%
18%
4%
27%
40 pb
3 over the next 12–18 Months, your AntiCipAted ConstruCtion spending will:
43 percent of owners anticipate a drop in spending in the next 12–18 months.
4 other thAn the eConoMy, rAnk the three Most ChAllenging AreAs fACing your business in the next two yeArs:
financial health & outlook
8%
0%Increase1–10 %
Increase more than
10%
Stay about the same
Decrease more than
10%
Decrease 0–10%
10%
20%
30%
40%35%
25%
14%
18%
71%
0%
Governmentfunding
Insurancecosts
Competition Interestrates
10%
20%
30%
40%
50%
8%
1%
8%
60%
70%
Material/ Construction
costs
3%
Information technology
1%
Other
8%
41 pb
5 generAlly, how hAs your business perforMed over the lAst 12 Months? Better than expected 21%
As expected 18% Worse than expected 61%
5a whAt do you feel the overAll outlook is for your business seCtor in the next 12–18 Months? Better than expected 9%
As expected 60% Worse than expected 31%
6 in light of the Current eConoMiC downturn, how long do you AntiCipAte this trend to Continue in MiChigAn?
As in prior surveys, contractors, suppliers, architects, and engineers are more optimistic than the owners. Twice as many owners believe the economic recovery is at least three years away.
financial health & outlook
1 year 2 years 3 years 4 years 5 or More years
17%
0%
10%
20%
30%
40%
50%
17%
6%
15%
45%
ContraCtors, suppliers, arChiteCts
1 year 2 years 3 years 4 years 5 or More years
6%
0%
10%
20%
30%
40%
50%
37%
10%
30%
17%
owners
1 how MAny non-residentiAl projeCts hAs your orgAnizAtion been involved in plAnning And/or ConstruCting within the pAst yeAr?
1a do you AntiCipAte An inCreAse or deCreAse in the nuMber of non-residentiAl projeCts your CoMpAny is plAnning And/or ConstruCting in the next 12–18 Months?
Increase 12% Decrease 42% Stay about the same 46%
2 whAt type of work wAs done on the MAjority of your projeCts?
New Construction 27% New Construction 49% Renovation/Retrofit 52% Renovation/Retrofit 40% Addition/Expansion 8% Addition/Expansion 8% Maintenance 13% Maintenance 4%
New construction activities seem to be replaced by owners maintaining or renovating existing structures.
2a whAt type of work will be done on the MAjority of your projeCts over the next 12–18 Months?
New Construction 24% Renovation/Retrofit 40% Addition/Expansion 8% Maintenance 4%
OWNER SURVEy
construction project activity
24%
0%
No projects 1 project 2–5 projects
More than 10 projects
6–10 projects
10%
20%
30%
40%40%
8%
22%
6%
20072009
42 pb
43 pb
construction project activity
3 whAt CAtegory of work is Currently providing your CoMpAny with the Most opportunities for work?
3a whAt CAtegory of work do you see providing your CoMpAny with the Most opportunities for work over the next 12–18 Months?
6%
0%
10%
20%
30%
40%
5%
32%
2%
8%
23%
13%11%
Offi
ce b
uild
ings
Inte
riors
/Ten
ant
impr
ovem
ents
Educ
atio
n/C
ultu
ral
scie
ntifi
c bu
ildin
gs
Indu
stria
l bui
ldin
gs
Hea
lth/W
elfa
re
build
ings
/ Hos
pita
ls
Publ
ic w
orks
pr
ojec
ts
Res
iden
tial
Infra
stru
ctur
e
5%
0%
10%
20%
30%
40%
5%
31%
2%
8%
26%
13%10%
Offi
ce b
uild
ings
Inte
riors
/Ten
ant
impr
ovem
ents
Educ
atio
n/C
ultu
ral
scie
ntifi
c bu
ildin
gs
Indu
stria
l bui
ldin
gs
Hea
lth/W
elfa
re
build
ings
/ Hos
pita
ls
Publ
ic w
orks
pr
ojec
ts
Res
iden
tial
Infra
stru
ctur
e
44 pb
4 whAt is the AverAge estiMAted priCe of your prior projeCts?
4a whAt is the AverAge estiMAted priCe of your future projeCts?
construction project activity
22%
0%
5%
10%
15%
20%
25%
29%
17%
8%
11%
8%
Less
than
$10
0K
$100
K–
$500
K
$1M
–$2M
$500
K–$
1M
$2M
–$5M
$5M
–$10
M
Mor
e th
an $
10M
5%
9%
0%
5%
10%
15%
20%
25% 24%
12%
15% 16%
11%
Less
than
$10
0K
$100
K–
$500
K
$1M
–$2M
$500
K–
$1M
$2M
–$5M
$5M
–$10
M
Mor
e th
an $
10M
13%
30%
30%
45 pb
1 does A ContrACtor’s Ability to utilize online/eleCtroniC teChnologies suCh As biM (building inforMAtion Modeling) influenCe your deCision to hire theM?
yes 23% No 77%
1a if yes, do you feel you AChieve Cost sAvings by doing so?
Yes 74% No 26%
2 when hiring A ContrACtor, do you look to see if they Are leed Certified?
yes 25% No 75%
3 whAt perCentAge of your projeCts Are Currently leed Certified?
0–20% 81% 20–50% 15% More than 50% 4% 3a do you AntiCipAte the nuMber of your leed projeCts to inCreAse in the
next 12–18 Months?
yes 40% No 60%
4 whAt is your opinion of the Current “green” And “sustAinAble” building trends?
Approve 52% Neutral 43% Disapprove 5%
OWNER SURVEy technology/sustainability
46 pb
4a if you Are building leed, “green” or “sustAinAble,” do you AntiCipAte A return on investMent over the life of the building?
Yes 60% No 40%
5 hAve you utilized biM teChnology (building inforMAtion Modeling) in Any of your Current projeCts?
yes 10% No 90%
5a if you Answered no, do you AntiCipAte using biM teChnology (building inforMAtion Modeling) in the next 12–18 Months?
yes 13% No 87%
technology/sustainability
1 whAt is your overAll perCeption of the ConstruCtion industry?
2 in your opinion, whAt is the single biggest probleM owners experienCe when
working with the ConstruCtion industry?
• Most, if not all, of my vendors are hurting for work, looking for projects outside of Michigan and taking jobs that are smaller compared to what they would have taken years ago.
• The downturn has forced contractors to deal with change or go without work; as in most downturns, industry has seemingly become more resourceful and innovative.
• We continue to try and anticipate the effect of market changes on use of design and construction services. The industry con-tinues to react to them, and that will continue to affect our deci-sions with regard to use of design and construction services.
• Too many “average” CMs and architects are spread too thin. Not enough time spent in development or oversight and project gets bogged down or operation is more costly due to designs or due to value engineering.
• We are a governmental agency (public works) and work is down, but the construction industry is well organized and there are a lot of good contractors.
• Some need the work so bad that they underbid and put themselves in a bad situation. Most of them perform the work as planned without issues.
• More competitive then ever!
• Engineers and architects think they should oversee the pro-cess. This is faulty thinking and old.
• Current quality is very good and pricing is very reasonable because there is limited work.
• The bigger/better firms have a lot on the ball. Unfortunately the industry as a whole hasn’t been able to deal with some of the poor performers that we often get since we are in a low-bid situation.
• There are some great individuals out there and then there are some very bad ones.
• Good contractors and bad contractors populate the industry.
• Making sure subs are paid and projects completed on time.
• All of our contracts are negotiated with general contractors rather than bid. General contractors are reluctant to accept bids from companies with which they are not familiar, this limits the bidding field, denies work to companies located near the project site and drives up prices. This in turn makes it more difficult for developers to gain local approvals. This reluctance is understandable as the general contractors have ultimate performance and financial responsibilities for each job, but it’s nonetheless a continuing problem.
• Very few professionals know how to design, given changes in design and building technology.
• Raising capital.
• Inflated trade costs in northeast, building permit and inspection delays.
• Bad contractor, low bid ramifications, and the slow economy mean increased competition, but lower overall experience/qualifications.
• Contractors appear to approve of a lower quality level for their employees.
• Managing the many potential voices on both the owner and contractor sides.
• I believe owners tend to deal with contractors performing more than one job at once making them scarce on the current project. The problem we are now facing is a delay due to the contractors not agreeing with most requirements. So the contractors will only talk with our engineers and the engineers are to talk with MDOT — project delayed.
• Owners oversimplify the construction process and have developed unrealistic time frames. They expect jobs completed quicker with quality and of less cost. Architects are paid less, so drawings are weaker and all items missed are pushed on the builder at no cost and without schedule extensions.
• They do not hire experienced owner reps, and they should.
• Communications.
OWNER SURVEy
written comments
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