One of the areas where FMI has seen increased market activity is the industry’s acceptance and application of green construction practices. The majority of contractors are continuing to see robust demand for green construction in their backlogs, even if those backlogs are down. While some predict green construction practices and mandates will lead to tighter margins and higher costs overall, others believe that green equates with affordability, thrift and reuse of older structures.

FMI predicts that total U.S. green construction put in place will increase from $19.7 billion in 2009 to $22.7 billion in 2013. While the whole pie of construction is getting smaller, green construction is taking a bigger piec...continued

In recent years, new technologies and a growing focus on sustainability have contributed to the revolution of the design and construction industry, fundamentally changing the way business is conducted. Building Information Modeling (BIM) has and continues to play a key role in this transformation, advancing better design and project delivery methods. Today, cross-functional project teams are able to collaborate on a building’s design, construction and life cycle management using shared, model-based technologies such as BIM as a platform. BIM provides a collaborative interchange in which ideas, procedures, costs and challenges can be evaluated early in the project lifecycle, ultimately resulting in enhanced organizationa...continued

One of the side effects of the Great Recession is that E&C firms have put their transition plans on hold. Given the urgent need to secure work, the painful process of downsizing and the bleak prospects in many construction sectors, succession planning is taking a backseat to concerns that are more prosaic. Nonetheless, ignoring succession planning is a mistake that will fester with time.

The following are significant issues that suggest companies should address this issue sooner rather than later:

1. Demographics are important. Many sociologists have mused that the baby-boom population has been akin to an egg passing through a snake in terms of its impact on the economy and culture. Therecontinued

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Ronald David Laing, the great Scottish thinker and psychiatrist, once poignantly remarked, “We live in a moment in history where change is so speeded up that we begin to see the present only when it is already disappearing.” As you ponder that quote, see if you can name this country: Richest in the world Largest military Center of world business and finance Strongest educational system Currency used as the standard of valueacross the world Highest standard of living

If your answer was England at the turn of the 20th century, then you know that change does happen. The A/E/C industry has witnessed this level of fundamental, accelerated change firsthand over the...continued

Managing through a downturn when credit is tight and access to capital markets is limited is nothing new for today’s E&C executive. However, unlike the previous four recessions of 1980, 1981, 1990 and 2001, a rapid return to a normal credit environment and open capital markets for the construction industry is far from certain.

While the federal government reports the economy to be technically out of recession, the near-term outlook for the construction industry is bleak, credit remains tight and large infusions of equity capital from primary and secondary offerings remains unlikely. Why? There is significant risk of a double-dip recession, and the outlook for the construction industry appears weak in...continued

Discussions about the economy and declining backlogs dominated much of the conversation in 2010. The vast majority of U.S. construction organizations continued to see a fraction of the volume they did only four or five years ago. The corollary discussion that coupled the desire to get more work was the firm’s ability to execute the work more efficiently. Costs, particularly labor expenditures, increased as
firms relied heavily on more experienced and talented resources. Most firms recognize the need to be more efficient, but the compelling question is, How many firms have used these slower economic times to hone their internal processes and effectively plan projects from beginning to end?

Best-in...continued

Our people are the reason we can do work and we have to offer and provide for them as best we can while recognizing that we are still a business.” – Steve Hoech, Zachry Holdings.

In recent years, the job market provided an environment in which employers had to fight to keep talented, happy employees. However, the current economic climate has changed this. With more and more cuts to employee benefits and workers being asked to do more with less, employees may begin to feel the company cares less about them and more about profit. An unappreciated employee will be more likely to go in search of something better once the economy rebounds.  

Companies have started to realize how imp...continued

Typically, when contractors consider improving their organization’s compensation plans, they focus on incentive compensation. Incentive plans are an important aspect of a firm’s compensation offering and often represent a large financial investment on the part of the company.

In many cases, bonus plans do not encompass the entire employee population and are not the largest compensation expense for the company. That honor lies with base pay. Almost every employee has a base salary and companies are at risk for losing employees if base pay levels fall below those of their competitors.

It is true that, unlike incentive pay plans, companies do not typically change base pay rates across ...continued

Though economists may disagree on the exact status of recession or recovery, most of us agree that current economic conditions are still bleak. The housing market has plummeted; U.S. unemployment hit 10% in November of 2009, which was the highest in a decade. According to the Federal Reserve Board’s latest Beige Book summary, “Labor market conditions remained weak since the last report, with further layoffs, sluggish hiring and high levels of unemployment in most Districts.”1 The construction industry, though used to cyclical changes, has been hit particularly hard by the downturn in the economy. Since December 2007, employment in construction has fallen by 1.6 million.2 What does all this gloomy news m...continued

By giving key employees the chance to “buy low” you are investing in the future success of your company, and keeping a stable leadership group who will provide an even greater return over the long run.

As contractors continue to struggle with dwindling backlogs and diminishing margins, they are turning their attention to control. Line-item adjustments to budgetary items are simply not enough and despite valiant efforts to find an alternative, eventually most companies must address their compensation issues. 

Construction industry wages have historically failed to match the increase of the rate of inflation over the past 30 years. In fact, the construction industry’s failu...continued

In today’s work environment, where layoffs or restructurings have become commonplace, it is more important than ever that firms find ways increase communication with employees. One way to do this is through an effective performance management process. Performance management is about clearly communicating job functions and performance expectations to employees, and providing frequent feedback regarding their performance. Many contractors have employees spread out in multiple geographic locations, making regular and formal communications are even more important. 

An annual appraisal form does not constitute a performance management process. In many instances, the form is a stand-alone document with no...continued

Today’s economic downturn, now called the Great Recession by the media, has contractors focusing on survival. Against this backdrop, many contractors have or are considering ways to reduce labor expense, including layoffs, wage freezes or cuts, and reduced or eliminated incentive payouts. The last thing most employers are concerned about right now is employee retention.  

However, employee retention, at least for key employees, is always important. Regardless of current sentiment, this recession will end, and when it does, contractors will rely on their key employees to power the recovery. Several recent surveys have focused on employer actions during the recession and the impact these actions have ...continued

Maintaining a competitive total rewards package might not seem important in the current state of affairs, but it is central in having an engaged workforce. Engaged employees tend to align their values with the organization and show commitment and passion for their job and the company.

A total rewards package. Does your company have one? Does your company need one? Despite what many contractors might think, total rewards is more than compensation, it is about satisfying, exciting and keeping key employees. WorldatWork, a global human resources association focused on compensation, benefits and work/life balance, defines total rewards as “all of the tools available to the employer that may be used to attrac...continued

An effective incentive compensation plan is fair, truly rewards top performers and helps support the organization's strategic goals.

Today’s economy is difficult and unpredictable for the contractor. There are fewer jobs to bid, and those that are available are often being “bought” so that companies can keep their workforce busy. Unemployment in the construction industry has soared to 19.4% or 1.8 million construction workers.1 With this economic backdrop, short-term incentives have taken a backseat in many companies.  

Short-term incentive compensation plans, or annual bonus plans, are ideally designed to reward employees commensurate to their performance. These plan...continued

FMI, the nation’s leader in consulting and investment banking services for the construction industry, is pleased to present the 2011 U.S. Markets Construction Overview. This publication offers insights into some of the construction industry’s most complex business challenges.

FMI publishes the U.S. Markets Construction Overview annually. The Overview includes a comprehensive report on vital construction trends and forecasts the growth or decline in each market segment, noting both short-term and long-term considerations.

We hope this document will provide you with a thorough understanding of the economic issues affecting the industry and serve as a starting point for your company&rs...continued

The last 12 months for the construction industry have been challenging. Companies have collectively moved from concerns around finding enough projects to pursue, to chasing too many projects in order to capture one or two. While price pressures abound in many markets, not all have been as significantly impacted as construction. Depending on market segment, positioning and capability, many organizations have been affected negatively, while others have weathered the recessionary storm very well. A few have even grown and become stronger. This market has generated both winners and losers.

The bottom line for all firms is the need for new ideas from their get-work activities. The winners want to protect their mark...continued

How does one predict what will happen in a world that is changing at the speed of light? What are the big issues in construction for the upcoming year? FMI surveyed its consulting, research and investment banking staff and came up with the following 12 topics that will have an impact on the industry and how it goes about its work: Business development Sustainability and green building Productivity Ethics State of capital and credit markets Attracting people to the industry Embracing change New energy trends Succession planning Improvement and renovation market Adoption of BIM Globalization trends

Whether or not you completely agree wit...continued