Miles-McClellan Helps North Carolina Town Navigate Rapid Growth Enhancing Peace of Mind and Recreational Opportunities

Mooresville, NC

The Town of Mooresville, NC has more than doubled over the last 20 years. The population has grown from 32,711 in 2010 to 50,193 in the last decade alone, according to the 2020 U.S. Census. With this rapid growth, the city had to expand its services protect and improve the lives of its citizens.

After being granted $46.5 million in limited obligation bonds from The Local Government Commission to improve public safety and services, the Town of Mooresville contracted Miles-McClellan to design and build a new $3.5 million fire station and training center. Fire Station No. 6 is 13,000 square feet and will feature two engine bays, locker rooms, sleep quarters, administrative offices, a full kitchen, conference space and an outdoor patio.

Although the project is progressing nicely today (check out the progress on our live webcam), it did not come without challenges. The fire station was scheduled to be presented to the Board in March of 2020, but the North Carolina government locked down due to COVID-19, and Mooresville halted spending on all new projects. The Fire House 6 project was delayed until February 2021. During the delay, many material shortages and price increases occurred in the construction industry, but with the collective hard work of Miles-McClellan, the design team and the Town of Mooresville, Miles-McClellan was able to deliver the same product at a similar price and construction continues to move forward.

In addition to Fire Station No. 6, Miles-McClellan has worked with the town to enhance cultural and recreational opportunities for all the citizens of Mooresville. The company was awarded the $3 million Selma Burke Center Renovation, which was a high priority project for Mooresville’s Parks and Recreation Department. The renovation consisted of some “tricky elements,” according to Chris Wyckoff, Mooresville’s facilities and construction manager, like combining existing structures into one elemental structure. Miles-McClellan also managed the site work (landscape, furnishings and signage), renovations to the existing gymnasium with new basketball courts, a new playground and picnic shelter and a new 8,000 square foot, prefabricated multi-purpose building with classrooms.

“Their ability to work with our needs and sub-contractors, as well as control a project through difficult weather was spot-on,” says Wyckoff.

Miles-McClellan also managed the town’s Art Depot renovation, a historic building dating back to the 1970s, bringing the facility up to ADA standards and allowing the Art Guild to utilize their warehouse areas, featuring open beams and heavy barn doors, in a way previously not possible.

Miles-McClellan projects don’t just enhance the lives of the two-legged residents of Mooresville, they also help some 4-legged residents with the development of The Officer Jordan H. Sheldon Memorial Dog Park in Cornelius Park. The dog park is dedicated to a fallen K-9 officer who was killed in the line of duty. Wyckoff says the work on the dog park “led to a great moment of healing and happiness for the town, the family and the police department.”

“Working with Miles-McClellan on Fire Station No. 6 has been a great team experience all the way through design and now well into construction. They have demonstrated their ability to perform on previous projects and have continued to deliver. It is great working with a contractor who you can trust also wants to be a steward of tax-payer dollars and do right for all stake-holders.”
Christopher Wyckoff
Facilities & Construction Director
The Town of Mooresville

Miles-McClellan Turns Buildings into Art for Franklin Park Conservatory

If you’ve been to Franklin Park Conservatory in Columbus, Ohio, you have seen firsthand how nature meets art through their displays of beautiful flowers, plants and organic landscapes, enhanced with real pieces of art. But did you notice how the buildings themselves fit into those landscapes and how, through lighting and innovative architectural design, they have become an art exhibit of their own?

With the Conservatory’s vision to restore the vitality, grandeur and beauty of Franklin Park while retaining its original charm and character, Miles-McClellan Construction has managed a variety of projects for The Conservatory, including the expansion of the John F. Wolfe Palm House, a registered Historical Place. As part of a four-phase, two-year expansion campaign, Miles-McClellan completed the expansion of The Palm House by building two 5,000 square foot additions that flank the building’s existing corridor, one designed for special events and the other for administrative offices. The versatility and creativity of the design added 10,000 square feet of flexible space for open air gardens, water features and elegant gatherings, while conquering the roadblocks that come with historical renovations.

In addition to the expansion of The Palm House, Miles-McClellan oversaw the construction of the Bride’s Garden, community gardens with education pavilion, and LIGHT RAMIENT II, an inspiring light display which illuminates The Palm House and was designed by internationally renowned, award-winning artist James Turrell.

Franklin Park Conservatory before and after

In 2015, as classes, programs and community outreach increased for the Conservatory, a new space was needed, so the organization relocated an historic barn’s timber frame, which was set to be dismantled, from northern Ohio to its campus. Miles-McClellan took on the transformation of the Wells Barn, which is not only a piece of history, but a construction marvel filled with engineering innovation, including a basement with classroom space, an elevator, a large event space, a commercial kitchen, and a bar.

“The project was completed on time and on budget, which is critical for a non-profit organization, in large part due to Miles-McClellan’s commitment to problem solving, open communication and outstanding project planning and budgeting.”

Garry Clarke, Vice President of Planning
Franklin Park Conservatory and Botanical Gardens

Building Excellence takes teamwork and Miles-McClellan would like to thank its architecture, engineering and landscape partners, and the Franklin Park Conservatory, for helping to create these amazing spaces.

Q3 2021 Economic Indicators

Q3 2021 Economic Indicators It’s always interesting to watch the trends of construction’s big four leading economic indicators while comparing those results to our conversations with our designer and contractor peers. Overwhelmingly, the discussions focus on inflation – both in material and labor inputs. Yet, the amount of work in the system continues to expand.

  • The AIA Billing Index rose nominally from 55.6 to 56.6, indicating that architects billed more in September than in August 2021. More importantly, backlogs of architects across the country reached a new all-time high since the AIA started collecting the data quarterly in late 2010, now averaging 6.6 months.
  • One additional note worth mentioning from the AIA September survey is that the Project Inquiries Index jumped above 60 to 62.0, which tells us there are plenty of opportunities in the market to pursue.
  • 17 new projects, each $100 million and greater, entered the Dodge tracking system.
  • The Dodge Momentum Index jumped from 148.0 in August to 164.9 in September 2021. This is the single strongest predictor of our market over the upcoming 12 months.
  • While the ABC Backlog Indicator fell nominally from 7.7 to 7.6 months, Miles-McClellan’s backlog, as well as those backlogs of our contemporaries here in Ohio and North Carolina, all remain strong.

All the signs outlined suggest that owners and developers are looking past the current pricing concerns, the continued spread of COVID-19 variants, and the political climate are moving forward with projects to meet demand.

Relationship Lessons Learned – How to Develop Lifelong Clients in the Construction Industry

With over 43 years of experience in the construction industry, Miles-McClellan Construction has learned valuable lessons about building lasting relationships with partners and clients. Our focusing on building strong relationships has resulted in many positive outcomes:

  • 85% repeat clients by volume
  • $71 million average annual sales volume
  • 10-year average employee tenure
  • Long-lasting success, even through difficult times

Our success in building trust with those we work with is no accident. It’s part of who we are and who we have always intended to be. So, what exactly do we do to cultivate trusting relationships?

How Miles-McClellan Cultivates Trusting Client Relationships

Focus on Positivity When Working With Clients and Partners

Negativity often seems to dominate the news headlines, social media chatter, and public discourse. Many people experience negativity seeping into their workplace, family life or social life. Negativity is pervasive – so why not stand out by being a source of positivity?

By focusing on the good, it’s far easier to stand out to your clients and partners. That’s not to say that negative things never happen or that they should be swept under the rug. Being candid and open is important but staying stuck on the negative is counterproductive. By actively focusing on genuine and positive interactions, we notice that we build better and more productive relationships.

Don’t Forget to Show Gratitude.
One important aspect of positivity we try to practice is showing gratitude, which can easily be taken for granted when busy. This includes gratitude to our clients and our colleagues and can be accomplished with small and simple ways of saying thanks, like emails, hand-written notes, small gifts or favors, highlighting the individual or organization’s accomplishments, or by sharing time over lunch.

Always Act with High Integrity
Integrity is one of our core values—and it contributes greatly to our ability to provide excellent customer service. When we communicate proactively, tell the truth, keep our word, act fairly and take responsibility for our actions, our clients see those behaviors as representing integrity. Practicing integrity isn’t always easy, but it always pays off in the long run.

The most important reason integrity is so critical to building long-lasting relationships is that it forms the foundation of trust. By showing clients and partners that we act with integrity through our day-to-day actions, we cultivate the type of trust needed to build repeat, long-lasting client relationships.

At Miles-McClellan, we practice integrity by focusing on:

  • Being true to our word — always
  • Being intensely loyal to our colleagues, clients and partners
  • Being honest and straightforward
  • Taking personal responsibility for the successes of our projects
  • Not taking shortcuts when it comes to problem solving
  • Taking pride in the quality of our work

Focus on Long-Term Sustainability Instead of Shortsighted Goals
So many organizations these days focus heavily on short-term goals. A lot of being long-term focused comes down to not forgetting about the bigger things that matter amidst day-to-day work. By not being exclusively short-term focused, we can once again stand out from other organizations while laying the groundwork that ensures our success down the road.

By taking a step back and focusing on the longer term, we allow ourselves to cultivate relationships, develop new capabilities and strengths and be proactive in managing risks, both on the job site and in the office. Our long-term approach allows us to:

  • Be actively involved in our community Invest in our own workforce and cultivate a culture of taking care of each other
  • Stay up to date on trends and new opportunities to proactively stay ahead of our peers
  • Actively build relationships with everyone we work with, even if there is no immediate reward or benefit
  • Focus on integrity, quality and service at all times

These strategies improve the quality of our work and relationships and help to ensure high continuity within our workforce. This leads to less client turnover, less disruption and higher overall satisfaction.

Focus on Beating Expectations in Client Service
Finally, beating client expectations in service is one of our founding principles. Our founders walked away from large international construction companies because they believed there was a better way to deliver construction services. There was a key component missing in the construction industry – customer service.

By building Miles-McClellan from the ground up with customer service at our core, we’ve separated ourselves from most other construction companies in the best way possible. This not only enables better relationships with our customers, but by aligning our model around our IMMPact Approach, we reduce bureaucracy, decrease miscommunication and improve the overall quality of the work we provide our long-term clients.

By building long-term relationships we are building excellence. Contact us today to learn more about our capabilities.

Construction Momentum and Development Remains Hot Going Into the 4th Quarter of 2021

Every economic indicator for construction tracked by Miles-McClellan indicates strong growth in the most recent quarter, and a strong likelihood of continued growth heading into the 4th quarter of 2021.

To get a read on commercial and industrial construction, Miles-McClellan looks at:

  • ABC Construction Backlog: Amount of commercial construction to be performed in coming months.
  • AIA Architectural Billing Index: The Architecture Billings Index is an economic indicator for nonresidential construction activity, with a lead time of approximately 9–12 months.
  • FMI Non-Residential Construction Index: This index is an indicator that provides a leading look into construction projects.
  • Dodge Momentum Index: A unique 12-month leading indicator of construction spending for nonresidential building.

Accelerating Growth and Demand in Construction
From the above publications, not only are all the indicators quite far into “growth” territory, they have all been accelerating on a quarterly basis. The Architectural Billing Index and Dodge Momentum Index decreased slightly in June but are still very far into growth territory.

Construction Outlook for Q4 2021 Going into 2022
Based on the reports, we believe that barring any unforeseen shock to the economy, construction demand will remain very strong in the coming quarters. Lowered costs of financing have allowed many projects that were previously delayed to get started, and many of the COVID-19 oriented constraints have started to ease.

As a result, overall growth remains strong, and the previous issues of bottlenecks have become less of a burden to the construction industry. The largest constraint to the construction industry continues to be labor shortages and escalated pricing.

Are We at Peak Construction Growth?
One question some may be asking is whether we have hit peak construction growth. Many of the indicators tracked within this report have hit highs not seen since before the 2008 financial crisis. Keep in mind, peak growth does not mean that a decline in the growth rate entails contraction, just that the rate of growth is not accelerating beyond the current pace.

Questions over peak growth stem from lingering COVID-19 bottlenecks, reduction in consumer confidence due to many of the consumer stimulus programs winding down, and anticipation of rising interest rates in the future as the economy recovers and government / central bank policies become less accommodative.

While we don’t know whether we’ve hit peak growth yet, the indicators we watch have a long lead time, and provide a lot of confidence that the environment should be in “growth” mode for some time to come. With that said, we may see growth level off or moderate a bit, which may not be a bad thing as we work through labor and material bottlenecks.

2021 Q2 Economic Indicators

2021 Q2 Economic Indicators As 2021 second-quarter numbers get reported, all the news feeds are full of inflation talk – is it a transitory or dangerous trend? As we release our Q2 Economic Indicator Report, the Producer Price Index (PPI) numbers were also released, and they are “hotter” than expected. For reference, the PPI index measures price changes from the purchaser’s perspective.

About PPI:

  • The PPI is different from the CPI (Consumer Price Index) in that it measures costs from the viewpoint of industries that make the products, whereas the CPI measures prices from the perspective of consumers.
  • The BLS (Bureau of Labor Statistics) separates PPI data into three main areas of classification: industry, commodity, and commodity-based final and intermediate demand (FD-ID).
  • The PPI is considered an objective tool for adjusting prices in long-term purchasing agreements.

(Majaski, 2021)

The Producer Price Index for final demand rose 1% in July as reported by the Bureau of Labor Statistics. On an adjusted basis, the final demand index moved up 7.8% for the 12 months ended July 2021. This is the largest advance since 12-month data were first calculated in November 2010.

Nearly three-fourths of the July increase in the final demand index can be traced to a 1.1% advance in prices for final demand services. The index for final demand goods rose .6%.

This makes sense – as I poll our project teams, the single consistent theme is the cost and lack of labor.

Interpreting the Trends

  • The Architect’s Billing Index remained elevated at a score of 57.1. The regional ABI reported for the Midwest was at 62, an incredibly high number. As a reminder, any score above 50 indicates an increase in architect’s billings and is highly correlated with the number of market opportunities we see in the 8-12 month range. These reports continue to signify a hot construction market in 2022.
  • The Dodge Momentum Index indicator, as reported last quarter, had a record-breaking jump from 139.1 in January to 148.8 in March (the most significant single jump in the index’s history), increasing again to 151.4 in April. This trend continued with the index moving to 163.2 in April, 175.1 in May, and 165.8 in June. This continues to signal an ever-increasing number of total projects entering the planning process and an increasing number of large projects in the pipeline. This index tells me that we will have plenty of opportunities available during spring-summer bidding 2022.
  • The last indicator that I want to emphasize is the ABC Backlog Indicator, which has now moved above 8 months. This is not surprising given its lagging nature, and you should expect to see this measurement continue to follow the rise in both the AIA Billing Index and the Dodge Momentum Index as we move through fall 2021.

In summary, we are experiencing “hotter” price increases (inflation) than initially anticipated as the economy first started to recover. Labor costs are notably higher, and the market for skilled trades continues to be THE hurdle for the construction industry. While the temporary shortage of some building materials can be managed, the continued tightening of the labor market will continue to affect the schedule. The construction market is continuing to experience increases in construction costs across all types of construction. The lead indicators point toward more of the same as we move through the back half of 2021 and into 2022.

Advanced planning is the single best way to control your budget – so if you have a project in your future – work closely with your architect and construction partners now and start the planning process a little earlier than you typically would to save money.

References
Majaski, C. (2021, July 26). Producer Price Index (PPI). Retrieved from investopedia.com: https://www.investopedia.com/terms/p/ppi.asp

Q1 2021 Economic Indicators

As 2021 Q1 numbers get reported, it has been commonly agreed that the post-pandemic surge is underway. The first-quarter real GDP growth is +6.4%, following the surprising Q4 2020 report of +4.3%.  While many economists believe this will be primarily consumer-driven given a combination of pent-up demand and recently distributed stimulus checks, the lead indicators we follow all also suggest a surging construction industry.

Interpreting the Trends

  • The Architect’s Billing Index strengthened to a score not seen since pre-great recession and continues the trend of rising billings and reported scores greater than 50. According to AIA Chief Economist Kermit Baker, “The activity that architecture firms are seeing is a positive bellwether not only for the construction outlook but also for the larger economy.” The ABI tends to be tied to the amount of market opportunities we see in the 8-12 month range, signifying industry growth in 2022.
  • The Dodge Momentum Index indicator followed its record-breaking jump from 139.1 in January to 148.8 in March (the most significant single jump in the history of the index), increasing again to 151.4. This continues to signal an increasing number of total projects entering the planning process and an increasing number of large projects in the pipeline. This index is very heavily correlated to the opportunities available in the industry during spring bidding 2022.
  • The last indicator to look at is the ABC Backlog Indicator, which is below 8 months. This is not surprising given its lagging nature, and you should expect to see this follow the rise in both the AIA Billing Index and the Dodge Momentum Index as we move through summer and fall 2021.

In summary, we are experiencing a quicker rebound in the construction industry than expected as of our Q4 2020 review. This has led to a tightening labor market and shortage of building products (for too many reasons to cover quickly). Our clients are now experiencing increases in construction costs across all types of construction. The lead indicators point toward more of the same as we move through 2021 and into 2022. Advanced planning will always help your budget – so if you have a project in your future – start the planning process a little earlier than you typically would to save money.

Q4 2020 Economic Indicators

My last write-up ended, “To conclude our Q3 analysis, our backlog remains strong, and our clients remain optimistic. Many of our industrial clients are scheduling renovation work to meet current and future demand, and many of our healthcare clients are actively looking at their backfill-renovation needs for 2021. I still expect overall industry volume to remain lower in 2021 than it was pre-COVID, and as a result, pricing will remain more competitive for our clients.”

The Congressional Budget Office currently projects Real GDP growth of 3.7% for 2021. This is a strong growth rate and relies heavily upon the economic surge expected as the vaccines start to reach mass saturation.

FMI Corp’s “2021 Annual Engineering and Construction Industry Overview,” available via download from www.fminet.com. The report projects total engineering and construction spending for the US ending up 1% in 2020 compared to ending up 2% in 2019. Looking ahead to 2021, FMI forecasts a 6% decline in engineering and construction spending levels when compared to 2020. The economic growth will be consumer-driven (the reopening) and not construction-driven.

Interpreting the trends from our two lead indicators, we can reach a similar conclusion:
The Architect’s Billing Index took a turn downward from 46.3 to 42.6. Anything above 50 is growth in billings, and while the indicator has been below 50 since March 2020, this month’s drop reversed a 6-7 month positive trend. This indicator serves as a strong 9-12 month lead indicator for our industry, and if there is less work being billed, there will be less work to build – we expect fewer opportunities throughout 2021.
The Dodge Momentum Index indicator took a jump forward from 123.3 to 134.6. This is a sizable jump for the indexed calculation and should imply that we will see a growth in opportunities beginning 12 months from now – spring 2022.

In summary, we are experiencing exactly what is being described above. Our backlog is currently strong but slightly down from 2020 levels. We see opportunities, but not quite the numbers from early 2020 (pre-Covid temporary freeze). The number of bidders pursuing these opportunities seems to be more significant, and as a result, we see a tightening of margins. In general, our clients should continue to see an increase in price competitiveness during 2021.