2023 Q4 Economic Indicator
The follow excerpt it taken from the FMI 2024 North American Engineering and Construction Industry Overview, First Quarter Edition.
“Best case assumptions for our forecast is for a recession in 2024, likely sometime during the first half of the year. These expectations are based on a range of predictive economic indicators, but especially the inverted yield curve. The duration of the economic contraction will depend on the U.S. policy response, but as with historical cycles, the impact on the construction industry will likely be longer lasting.”
All the lead indicators presented in our Q4 2023 Economic Indicator continue to reflect a downward trend and support the statement made by FMI above. Additionally, what we are experiencing in the market only supports this story further.
- We have watched private bidding opportunities almost completely dry-up. We attribute this to current interest rates, owners’ fear of a recession, and the sheer number of vacant office spaces available.
- With less private bidding opportunities we have had to jump into the public bid market which makes up just over 90% of our total bid opportunities. For the first two months of 2024, in both Columbus and Charlotte, we have seen an average of 6-8 general contractors per bid list, when a year ago at this time there were only 2-3 bidders per list.
- Our teams have also seen a wider geographic area of subcontractors bidding on projects. Previously our subcontract bidders were contained to the Columbus market. Now we are receiving bids from subcontractors we have never received bids from before, including out of state firms from West Virginia, Michigan, Indiana, and Illinois.
- Additionally, the sheer number of bids that we are receiving per subcontractor trade has more than doubled. Previously, we would receive 2-3 bids per trade category, and now we are receiving 6-7, the only exception being mechanical, electrical and plumbing. We are still only receiving 2-3 subcontractor bids in these skilled trade categories, and we assume that is because of a shortage in skilled labor in Columbus driven by the number of large, technical projects.
Blueprints and Beyond: Industrial Construction That Shapes the Nation
For over 46 years, we have been building excellence with construction projects of all sizes in a variety of industries. Throughout that time, some of our most memorable projects have been in the industrial sector.
Industrial construction involves building highly specialized structures and facilities for manufacturing, warehousing and fulfillment operations. At Miles-McClellan Construction, we regularly do work for clients in the industrial sector that includes food processing facilities, pharmaceutical facilities, automotive and aerospace manufacturing facilities, chemical and material input facilities, as well as warehouse and distribution center construction, research and development laboratories and more. These types of industrial projects are the backbone of American industry, and foster innovation, create employment opportunities and drive technological advancement.
Our experience in the industrial construction sector has taught us one important lesson – working in industrial environments is very unique for a variety of reasons. It often involves being surrounded by heavy machinery and equipment, and safety precautions are the top priority. Also, the construction team and the client must have open, transparent communication at all times to meet important deadlines and schedule demands. And usually, industrial construction projects are done in occupied facilities, which adds another level of complexity to these projects.
As the construction company with over 46 years of experience building excellence and exceeding client expectations, we are experts at overcoming construction obstacles and challenges. In the words of Matt Recchiuti, Miles-McClellan Construction Vice President, “There is usually always a way if you’re willing to look at alternative solutions and find a new way of doing something that is outside of the norm.” Let’s take a look at some of our most memorable industrial construction projects.
American Honda Midwest Consolidation Center: Troy, OH
- Project included work on a 500,000 SF domestic parts supplier distribution hub, an 80,000 SF mezzanine within the warehouse and 49,000 SF procurement operations support office.
- We were able to incorporate many sustainable elements into this project, including a stormwater runoff that is redirected to a permanent pond that also serves as the sole water source for landscape irrigation, extensive use of light-colored concrete pavement and highly reflective roofing material to reduce heat island effect. Project achieved LEED Gold certification.
- Project was completed a month ahead of schedule and on budget.
- Received an ABC Excellence in Construction Award.
Honda Aircraft Co. World Headquarters and Research & Development Facility: Greensboro, NC
- The campus has 2 buildings. The first building houses over 150 employees, boasts a flight operations room, and an opulent VIP/Lounge specifically designed for current and future customer arrivals. This building also received LEED Gold certification.
- The second building is a 170,000 SF research and development facility. While this building is not part of the LEED Certification, we diverted 85% of waste from landfill on this portion of the project.
Do you have an industrial construction project coming up? Then contact our team and let’s discuss how working with Miles-McClellan Construction is the best way to make your project a success and build excellence!
We Change the Spaces That Change Lives
As defined by Merriam-Webster, renovation is the act of restoring life, vigor or activity.
As the smarter construction company on a mission to build excellence, we are proud of our renovation projects that restore and bring fresh energy into the communities where we live, work and play. Steered by our skilled leaders and a talented IMMPact team, we have witnessed firsthand how exceptional renovation construction can transform communities and change lives.
Beautifying the Community Through Renovation
One of Miles-McClellan Construction’s most noteworthy renovation projects was our work on Wells Barn at the Franklin Park Conservatory in Columbus, Ohio. Wells Barn is an existing heavy timber barn frame from the late 1800s that was renovated into a new education, community outreach and events facility on Franklin Park Conservatory’s campus. One of the most complex construction considerations faced during this renovation project was finding a way to incorporate the original timber from the barn into the modernized version that met current building codes and was structurally sound. Ultimately, our structural engineer was able to design new studs that could be fastened to the existing timber, and C-channel beams provided an additional layer of support. The updated Wells Barn has been a great addition to Franklin Park Conservatory, and now holds a variety of events that benefit the community, such as cooking demonstrations, do-it-yourself cooking classes and tastings within the kitchen space, children and youth classes, adult classes, summer camps, lectures and conferences/symposia.
Family-Friendly Renovation
It doesn’t get much more memorable than having stingrays as a client! Well, not exactly, but we loved partnering with the Columbus Zoo for numerous renovation projects that included the Freshwater Mussel Conservation & Research Center, Nocturnal Building and Aviary upgrades to create a habitat/exhibit space for the Weedy Seadragon and renovation of an existing stingray touch experience. Due to weather issues, Miles-McClellan Construction had to find resourceful ways to complete the project, including repurposing soil used in other areas of the zoo undergoing renovation and using it to cover up miles of pipework.
Renovation That Improves Safety at Schools
Some of our most important renovations have nothing to do with aesthetics, but improving critical components of a space. For our work with Columbus City Schools, we led several HVAC renovations that would make schools safer for students and staff. Under the supervision of Brad Bloomberg, Vice President, HVAC renovations at Valleyview Elementary School, Westgate Elementary School and West Broad Elementary School included replacement of the HVAC systems, new electrical service and both structural and architectural elements to support the new systems. Working strategically, these projects were completed on-time and without issues.
Changing Spaces, Changing Communities, Changing Lives
Our renovation projects transform and improve the lives of residents. With every renovation project, we are doing our part to help our clients breathe new life into spaces that are vital to the community.
We believe in renovation that makes an impact. Contact us and let’s make a difference through excellent renovation!
2023 Q3 Economic Indicator
The forecast briefing headline included in this month’s Construction Executive magazine was short and simple, “The National Economy is Weakening.”
While speaking on the magazine’s 2023 Q3 “Economic Update and Forecast” webinar, Anirban Basu, The Associated Builders and Contractors’ Chief Economist, said, “the economy has been much stronger than I would have anticipated.” But while job growth, low unemployment and increased spending on construction are positive signs, Basu remains wary of the longer-term outlook, pointing to red flags such as skyrocketing credit-card debt and other industry economic indicators. “My view,” Basu told his online audience, “is the national economy is weakening, increasingly under pressure from higher interest rates, strikes, worker shortages and loss of production; borrowing costs are higher; and excess inflation persists.”
Our attached report, is one quick and easy way to see the trends behind the headline. The AIA Billing Index is on a four month negative trend, including the last two months below 50. The ABC and FMI backlog indicators are both on negative trends and neither has returned to pre-pandemic levels.
Quick summary: Contractor backlogs are lower right now and there will be less opportunities to pursue throughout 2024. For owners, this could ultimately result in increased competition and more competitive pricing.
A couple of examples from Q3 Miles-McClellan bidding and budgeting efforts:
- Craig Richards, Vice President, “Our division originally bid a sizeable renovation project to a large, international CM firm. During Q3, 2021, the wall protection package was worth $6.7M and was removed from the scope of work due to being over budget. The package was rebid during Q2 of 2023 at $7.6M. This was a 13% increase in 18 months.”
- Kevin Joseph, Project Executive, “My team is continuing to feel the effects of bad owner budgets. We recently were low bidder on a City of Columbus job that is 45% over budget. The job is unawardable and the City is now trying to figure out what they can do to value engineer the job. I’m not confident that value engineering will be able to make up such a large disconnect between the budget and the reality of local construction costs. We were also recently low bidder on a public job in Mifflin Township that is unawardable due to a blown budget.”
- Matt Recchiuti, Vice President, “Much like Kevin, really the only trend I am seeing is that Architects are woefully underestimating public budgets to owners, and almost all of the Public Work bids are having to re-bid to due a shortage of requested funds. We are still seeing delays in HVAC equipment and Electrical gear, most of the time up to a year.”
Leader Spotlight: The Impact of Building Community Success
“There is Always a Way.” – An Interview with Miles-McClellan Construction’s Vice President, Craig Richards
Not all heroes wear capes. Sometimes they wear badges and stethoscopes, and on our team, hard hats.
But often, everyday heroes are working hard behind the scenes, striving to make a difference in the community by creating spaces that provide a safe haven for those who need a voice, an advocate and support.
Miles-McClellan Construction is honored that we have been able to help these unsung heroes and their organizations build excellence by improving the spaces in their communities. In this interview with Craig Richards, an MM Vice President, he sheds light on his experience working with non-profit organizations throughout his career, how open communication is key to a successful collaboration and why working with non-profit organizations to build excellence is incredibly rewarding.
Q: What experience do you have working with non-profits?
A: Most recent non-profit clients include the Franklin Park Conservatory, Central Ohio Community Improvement Corp., Franklin County Landbank (COCIC), The American Society for Prevention of Cruelty to Animals (ASPCA) and the Upper Arlington Lutheran Church.
Q: Is there a certain type of non-profit client you work best with?
A: We always look for a client that is team oriented. The last few years have been tough on the construction industry with the pandemic, which then led to inflation, rising interest rates, material supply chain issues and labor shortages. Despite all of the negativity and rising construction costs, our non-profit clients continued to keep a positive attitude and never lost focus of their mission to improve communities. In lieu of pointing fingers when budgets and schedules were threatened, the teams worked together to find a way to achieve the goal. That is the type of client we look for, regardless of the client’s industry.
Q: Why do you like working with non-profits?
A: Non-profit client missions align with Miles-McClellan Construction’s. Miles-McClellan Construction’s mission is building leaders and long-term relationships, and non-profits missions are typically about building/improving communities. Building relationships and communities go hand in hand in my opinion, which makes Miles-McClellan Construction a good fit.
Q: What do you and your team bring to the table – why would non-profits want to work with you?
A: Miles-McClellan Construction is flexible, collaborative, and transparent which fosters an environment of trust. You will never hear Miles-McClellan Construction place blame on other team members or deflect responsibility. We want to be their partner, and strive to be the easy button.
Q: Do you have an example of “how you saved the day” for a non-profit?
A: Unfortunately, we are not superheroes, therefore I can’t say we have ever truly saved the day. However, we recently had a project where the HVAC equipment was delayed approximately six months and was going to prevent the client from occupying their new building ahead of their current lease expiring. The design and construction team were able to come up with a temporary heating and cooling system until the HAVC equipment finally arrived, and was able to get the client in their new building two weeks ahead of schedule with a temporary occupancy. This was definitely not an ideal situation, but we saved the day by providing a temporary solution.
Q: Is there any specific advice you have for non-profits?
A: Invite your construction manager into the process as early as possible, and challenge them to think outside the box when times get tough. There is always a way!
How can we help the non-profit heroes in your community? Under the supervision of leaders such as Craig and our hardworking team, Miles-McClellan Construction has helped improve communities and make them a safer space for residents. If you are a non-profit with a building project, contact us today and let’s work together to make an impact.
Second Quarter Economic Indicator – A look back
As we quickly pass Q2 and move into Q3, we are starting to understand better how the year will shape up. I recently had a chance to review The Conference Board’s (TCB) website for a description of what they see ahead. TCB’s mission is to be a “member-driven think tank that delivers Trusted Insights for What’s Ahead to help our members improve performance and better serve society.” In a bullet point summary, TCB’s most recent update included:
- Real GDP rose by 2.4% in Q2 ahead of the expected 1.8% forecasted. This resulted from a weakening demand in consumer consumption being more than offset by business investment.
- Consumer consumption growth of both goods and services cooled in Q2. This trend is expected to continue for the remainder of 2023 due to three factors:
- real disposable income is down;
- pandemic excess savings are gone, and consumers are carrying historic debt levels;
- mandatory student loan repayments are set to resume.
- Business investment did more than offset the decrease in consumer spending in Q2, showing sizable spends in transportation equipment, facility structures and intellectual property products. However, this information came with a warning: TCB expects weakening consumer demand throughout the remainder of 2023, combined with high interest rates to reverse business spending trends.
A couple of examples from Q2 Miles-McClellan bidding and budgeting efforts:
Craig Richards, Vice President, “Our division originally bid a sizeable renovation project to a large, international CM firm. During Q3, 2021, the wall protection package was worth $6.7M and was removed from the scope of work due to being over budget. The package was rebid during Q2 of 2023 at $7.6M. This was a 13% increase in 18 months.”
Matt Recchiuti, Vice President, “Our team recently rebid a steel package. Our original steel package was quoted at $53,500 in February 2023, and after the project rebid in August 2023, the final (unchanged) steel package was purchased for $58,000. This is almost a 17% annualized increase in steel pricing.”
Kevin Joseph, Project Executive, “One notable and frustrating reality that my team faces is the fact that more than half of the projects we bid this past quarter were so far over budget that the project could not proceed. It seems that across various industries and types of projects, owner’s budgets have not caught up with the price increases that exist in Central Ohio. Some owners mention that they plan to wait to rebid work once prices decrease, but we have not seen any indication that this is a realistic plan.”
While at times it may feel like we are spinning our wheels with all the budgets and rebidding, we would rather provide realistic, inclusive budgets and bids then submit low numbers with the hope of winning and not failing.
Using Our Construction Experience to Build Excellence
Building excellence and exceeding client expectations has been our core philosophy for over 45 years, and it is our exceptional team that allows us to accomplish this mission. Throughout the years, our team members have worked on a magnitude of different complex projects for clients of all sizes in all industries. This provides our clients with many advantages. Whatever your construction project or needs, we have the skills and expertise to ensure your satisfaction!
Let’s explore how we can make our construction experience work for you.
Diverse Expertise
From residential, commercial, healthcare, higher education, manufacturing, and hotels, we have done it all! Having this knowledge and experience allows us to handle different project complexities and requirements effectively. Wherever there is a construction challenge, we have a smarter construction solution.
We Know the Industry
Our range of experience means we know the intricacies of a variety of industries and their environments. Every industry has unique needs that must be met, best practices that must be observed and certain technology that is required to help operations run more smoothly. We have had years of experience working within these different guidelines depending on our client, which is why we are confident we are more than prepared to handle even the most complex details of your construction project.
We Build Lifelong Relationship
Being a top construction company since 1978, and having numerous team members with a vast array of broad construction experience, means we have built strong relationships with our clients, suppliers, subcontractors, architects, engineers and other industry partners. This also allows us to provide a variety of different services that other construction companies can’t offer. Whatever your dreams are for your next construction project, we know an expert that can turn that vision into a reality!
Efficient Project Management
Having broad construction experience means our project management systems and processes have been refined to be as efficient as possible. Every Miles-McClellan project is guided by some of the most respected and experienced construction professionals in the industry along with an IMMPact team that shares insights and knowledge with each other to achieve building excellence.
Client Satisfaction is Top Priority
Experienced construction firms recognize the significance of pleasing the client. This is why at Miles-McClellan Construction, we stress communication, transparency and collaboration throughout the life of a construction project. We want to know all of our clients’ needs, get their feedback and help them with tough decisions. This results in building lifelong relationships.
How can our broad construction experience make your next project a success? Contact us and let’s work together to find out!
Miles-McClellan Construction vice president Brad Bloomberg LEED AP Helps Improve Safety at Columbus City Schools With HVAC Renovation
When many think of construction projects, they immediately envision work that involves creating or updating the aesthetic aspects of a facility. At Miles-McClellan Construction, however, some of our most rewarding construction projects involve renovating critical components of a space that cannot necessarily be appreciated at first glance. When performing a design build of HVAC systems, it is crucial the various HVAC components and coordination of materials are timed correctly to ensure a successful installation. For our work with Columbus City Schools, under the direction of Miles-McClellan Construction vice president and project lead Brad Bloomberg LEED AP, improving HVAC systems has been an important part of building success and creating a safer space for students and the community.
In 2021, Miles-McClellan Construction was hired by Columbus City Schools to replace the HVAC systems and make electrical upgrades at Brookhaven High School and Dominion Middle School in an effort to improve the learning environment at both buildings. In addition to HVAC system upgrades, Miles-McClellan Construction was also given the task of making interior repairs, envelope repairs and site improvements in accordance with the design criteria. With the leadership of Brad and a strong IMMPact team, this project was completed on time and under the allocated budget.
In 2022, Columbus City Schools hired Miles-McClellan Construction to make HVAC and electrical upgrades at Valleyview Elementary School, Westgate Elementary School and West Broad Elementary School. Matt and his team realized that these projects required the replacement of the HVAC systems, new electrical service and both structural and architectural elements to support the new systems. All team members worked strategically to make sure all of the design, build and necessary components were in place, resulting in this project being completed on-time and without issues. These projects also minimized environmental hazards and supported student health. Projects such as this are not only fulfilling but continue our mission of building excellence in the community.
Strong leaders such as Brad and a talented, dedicated team make Miles-McClellan Construction the construction company that can do it all. From reviving the look of physical structures to improving the behind-the-scenes systems that keep the citizens of our community safe and healthy, we build success from start to finish.