2024 Q1 Economic Indicator

mmcrebuildstg on June 11, 2024

2024 Q1 Economic Indicator
Contrary to earlier predictions of a recession in early 2024, the AIA and FMI now suggest a potential slowdown in the back half of 2024. While our indicators do point to a deceleration, our internal data and anecdotal evidence consistently demonstrate the robustness of the construction industry, which does not align with the notion of a significant downturn.

To summarize the AIA and FMI reports, they expect an increase in construction spending between 2-3% in 2024, followed by a rise of 1% in 2025. Accounting for the anticipated slowdown of construction over the next two years, the AIA points to three factors that, when combined, cause banks to tighten up lending, resulting in difficulty in getting projects started:

  1. Rising long-term interest rates.
  2. Higher construction input costs with input prices remaining 35% to 40% higher than pre-pandemic rates.
  3. Construction labor costs are continuing to rise at a 4% annual pace.

Despite the AIA Billing Index remaining below 50 for 9 consecutive months and the Dodge Momentum Index staying low for the past 10 months, the Charlotte and Columbus construction markets are still brimming with potential. Contractor backlogs, as measured by ABC and FMI, saw an increase at the end of Q1. This positive trend is mirrored at Miles-McClellan, where our backlog is higher today than it was at the end of Q1.

As you read the full report, you will learn more details about these numbers and trends.

Recent MM Bidding Experience

Immediately below is a summary from one recent bid effort, but it indicates what our teams are experiencing as they continue to price projects for our clients actively.

Sharing a recent bidding experience, Brad Bloomberg, MM Vice President, expressed, “Our most recent bid was for a local office remodel in downtown Columbus. The project primarily focuses on updating elevator lobbies, restrooms’ finishes, lighting, and ceilings. We had a prequalified list of limited subcontractors invited to the project. While the coverage was average on drywall and fire suppression, we received feedback from painters, electricians, and HVAC contractors that they were too busy with the existing backlog over the summer months to take on any new work.”

  • Painting: 2 bidders of the 7 invited.
  • Electrical: 2 bidders of the 10 invited.
  • HVAC: 1 bidder of the 10 invited.
  • Flooring: 2 bidders of the 6 invited.
  • Drywall & Demo: 4 bidders of the 5 invited.
  • Fire Suppression: 3 bidders of the 6 invited.

This level of bidding activity is typical for the summer months. We will monitor the trends and report on contractor backlogs in Q3.

Read the Report

Building Excellence from the Beginning: The Benefits of Construction Management at Risk

mmcrebuildstg on May 2, 2024

Construction Management at Risk

For over 46 years, our customers have trusted us to build excellence and find smarter solutions for all their construction needs to ensure the best possible outcome for any project. With comprehensive Construction Management at Risk (CMR) services, our strategic approach to crucial components of a construction project that include project and risk management, project cost estimate and budgeting and design and engineering services, we help our customers minimize risks, control costs and get projects completed on time and at the highest standard of excellence.

How Does Miles-McClellan Construction Approach Construction Management at Risk?

As with all of our projects, the process begins with one of our talented leaders serving as Project Executive and committing to delivering a construction project within a guaranteed maximum price (GMP). From there, the Project Executive takes on the role as consultant throughout the development and design phase, and does everything possible to ensure a project is prepared and ready to enter the next phase.

How Can Construction Management at Risk Benefit My Next Project?

In our experience, CMR with Miles-McClellan Construction provides several benefits that ensure a project is successful from beginning to end. These include:

  • Projects Completed on Time – When a construction manager is involved early in the process, they can optimize the construction schedule and plan for multiple aspects of a project, including delivery of materials, procuring labor and equipment, coordinating various timelines, etc. Ultimately, this allows for increased speed of project execution.
  • Construction Managers With Decades of Experience – Our construction managers have decades of experience, and are dedicated to client satisfaction and building excellence. They have worked with clients of all sizes in all industries, and found ways to overcome a variety of construction challenges. Learn more about their approach to construction and why they are the best in the business.
  • Enhanced Synergies Between Stakeholders- Talented construction managers have the ability to foster a culture of collaboration and transparency amongst stakeholders involved in a project, which allows stakeholders to identify areas for improvement and construction managers to adapt and plan for changing project requirements. This goes a long way in enhancing stakeholder satisfaction.
  • Cost and Pricing Transparency- As stated earlier, one of the hallmark features of CMR is the creation of a Guaranteed Maximum Price (GMP), which provides owners with cost certainty and transparency and ensures that projects remain within allocated budget constraints. This requires significant planning and cost monitoring from construction managers, and helps minimize the risk of budget overruns.

Ready for Project Success? Then Ask About Our Construction Management at Risk Services!

We believe in building excellence before construction ever begins and have the talent and expertise to provide a seamless and efficient design process that leads to exceptional results. Contact us to learn more about our CMR services and experience on time, on budget construction!

Blueprints and Beyond: Industrial Construction That Shapes the Nation

mmcrebuildstg on February 2, 2024

Industrial Construction That Shapes the Nation

“I have been able to build long-lasting relationships with our industrial clients built on trust, respect and confidence in Miles-McClellan Construction and our team.”

– Matt Recchiuti, Miles-McClellan Construction Vice President and Industrial Construction Director

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

    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

    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

mmcrebuildstg on November 22, 2023

Wells Barn at the Franklin Park Conservatory

“We thrive on challenges and are your go-to problem-solving partners.”

Kevin Joseph, Miles-McClellan Construction Project Executive

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!

Miles-McClellan Construction vice president Brad Bloomberg LEED AP Helps Improve Safety at Columbus City Schools With HVAC Renovation

mmcrebuildstg on June 30, 2023

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.

“I enjoy how the construction industry always brings new challenges and creates new opportunities with each project to bid and builds.”

– Brad Bloomberg LEED AP, Miles-McClellan Construction vice president

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.

We are up to the challenge of ensuring every construction project is a success! Contact us today and meet Brad and more faces behind the spaces that make an impact in the community!

First Quarter Economic Indicator – A look forward

mmcrebuildstg on May 10, 2023

First Quarter Economic Indicator Now wrapping up Q1 and moving into Q2, at Miles-McClellan Construction, we continue to see a confusing assortment of trends. Below is a quick summary of what we have been seeing over the last 30 days and what we expect more of in Q2:

  • The broad trend speaks to the continued rising interest rates but now with an added twist of uncertainty around the banking industry’s stability. As a result of recent bank collapses and the discussions around bank capitalization and the quality of the assets on the balance sheets, lending has started to tighten. At Miles-McClellan Construction, we are experiencing many projects that are either delayed or canceled due to financing issues.
  • The private construction market continues to slow down because of rising construction costs and interest rates. As a result, we continue to bid on the plethora of public projects available this spring. Two notable trends in this bidding arena are: 1) we are starting to see a longer list of GC bidders on each project, and 2) we are also starting to see more subcontract numbers come in under each trade category of each bid. This trend will eventually lead to lower pricing, as increased competition always does.

A couple of specific examples to share are:

Craig Richards, Vice President, “In the past few years, concrete pricing held pretty steadily while other materials were escalating. However, in the last year, concrete pricing has been on the rise. For example, we paid $135.50/CY on a mid-sized project in August of 2022. We are starting a similar project this May 2023, and concrete is now $155.50/CY – a 15% increase.”

Matt Recchiuti, Vice President, “I was recently talking to a client, and she had just found out that the 1,000,000 SF warehouse project she was going to manage was being canceled. The cancellation was because the lessee agreed to lose their deposit while backing out of the lease.” 

Brad Bloomberg, Vice President, “My team used to bid 1-2 public jobs a month, and now we are averaging 5-7 per month. That is a swing of 75% private bidding to 75% public bidding over the last quarter.”

Kevin Joseph, Project Executive, “We recently contacted a shower door supplier to revisit pricing we originally received in September 2022. As a result of our inquiry, the manufacturer lowered their shipping costs by 50%, giving the owner significant project savings.”

Between now and our next publication, we will closely monitor interest rate projections and construction costs as the competition increases. We will need this up-to-date information as we work to provide our clients with competitive and realistic project budgets.

Fourth Quarter Economic Indicator – Looking Ahead

mmcrebuildstg on March 7, 2023

2022 Q4 economic indicators
Going into the first quarter of any year, we expect the bid market to pick up with the expectation of spring projects that have been in design throughout the winter. What we are seeing is a mixed bag of trends, and we hope sharing these trends with you will help you plan your pending projects.

Below is a quick summary of what we have been seeing over the last 60 days:

  • The broad trend speaks to the rising interest rates and rising construction costs. The private market has slowed down. Our private clients request budgets, but only some projects are heading into construction. We have currently been bidding and working on more public projects. We don’t expect this to continue because the slowdown in demand will drive construction pricing lower, which will eventually offset the rising interest rates in proformas.
  • There has been an increased sense of urgency to get formal approval for change orders on our existing projects and across all types of projects we work on. Subcontractors are hesitant to hold their pricing for over a few weeks, so we are forced to push owners and construction managers to get signed approval to lock in pricing. We support our subcontractor team in this effort, but in return and to help protect our clients, we ask for secured manpower so that our clients receive the service on time.
  • Owner’s preconstruction budgets continue to underestimate the cost of future construction. This creates rebid situations for public and private projects, resulting in project delays and frustrated owners before the project starts. We recommend multiple looks at the budgets you are creating today: one by your architect and one by your contractor. Then lock the project leaders in a room until they agree on the budget.

As a recent example, we bid on a health clinic in early August 2022. It was a competitive bid and Miles-McClellan was not the lower bidder. Our bid was 94% over the owner’s budget, coming in at $1.4M. The owner and architect rebid the project after taking the time to redesign and go through value engineering. The revised budget was raised 55% over the original budget, and our revised bid in October 2023 was submitted just above the revised budget. We were awarded the project 14 months after the initial bid.

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.