Q3 2022 Economic Indicators

Q3 2022 Economic Indicators Both our Q1 and Q2 2022 Economic Indicator reports emphasized the effect inflation is having on our industry. It continues to be my goal to share both published trends and commentary as well as local Miles-McClellan experiences.

ENR’s Economics Report on future material and labor price trends, “2022 Third Quarterly Cost Report” was just released and I’m including some information from that report here.

To kick off the report, Richard Branch, chief economist at Dodge Construction Network, is quoted as saying, “The construction sector has turned into a tale of two worlds. First, the nonresidential sector has been a solid performer as manufacturing, public works and data center construction have flourished. Conversely, single-family construction continued to trend sharply lower as rising mortgage rates have led to worsening affordability. The question, though, is how the entire construction sector will react to still higher interest rates over the coming quarters as the Federal Reserve continues its inflation battle with aggressive rate hikes.”

The report goes on to focus on both materials and labor.  It details 15 different construction inputs and notes that prices vary, year-to-date, from -6.0% (copper), to +22.6% (asphalt paving). Of the 15 areas tracked, 12 were higher since January 2022 and all 12 categories were up by double digits through August 2022. The article does go on to explain why ENR anticipates soft lumber and steel to start moving downward in 2023, but acknowledges the trends really depend on how increasing interest rates affect demand.

Labor rates also continue to rise, however, now at a much faster pace. Both union and non-union wages had been averaging between 2-3% annual increases, however, the numbers jumped to 4-5% average increases in 2022. According to Ken Simonson, chief economist of the Associated General Contractors of America, “I believe we’re in a prolonged period of 5% wage increases or even more for craftworkers.”

At M-M, we will continue to work very hard for our clients to control unwanted price increases and schedule delays. Our strategy has been to maintain strong relationships with constant communications with our subcontractors and suppliers so that we have the most up-to-date information to share on each of our projects.

Building Community Excellence, One Structure at a Time

Miles McClellan is involved in a number of community events and projects
At Miles-McClellan, we recently celebrated Construction Inclusion Week, an annual event that harnesses the collective power of general contractors, specialty contractors, subcontractors and suppliers to build awareness and improve diversity and inclusion in the construction industry across the nation.

The celebration which took place between October 17–21 centered around five daily themes, including commitment & accountability, belonging, supplier diversity, workplace culture and community engagement. As we participated in these daily themes, we were reminded of why we do what we do.

We are not only Building Excellence in our structures, but we are building excellent communities — inclusive communities in which our team is proud to live, work, participate and give back.

We Build Communities We Are Proud To Live In

What makes someone proud to live in their community? Though the answer is not particularly clear and is not the same for every community, three factors stand out — safety, security and access to health care. Miles-McClellan has built safter communities through projects like the Charlotte-Mecklenburg Police Department and the Mooresville Fire Station 6 in North Carolina

It is our commitment to not only make it easier to protect communities, but also to be a part of the construction of facilities that make it easier for our community heroes to do their jobs and take care of themselves by offering gyms, kitchens, rest areas and recreation.

We have improved access to great healthcare for everyone in Columbus by being a part of projects at Nationwide Children’s Hospital, OhioHealth and Whitehall Heart of Ohio Family Health Center.

Some other important factors in community pride are arts, culture and beauty. We couldn’t be prouder of the work we have done to enhance these community assets, including projects with Franklin Park Conservatory and the Pizzuti Collection Art Gallery in Columbus, Ohio, and the Chatham County Agriculture & Civic Center in Pittsboro, NC.

We Build Communities We Are Proud To Work In

Connection, collaboration, accessibility are assets of great working communities. By building structures that make it easier to commute, park and build strong partnerships, Miles-McClellan is building community pride.

Community pride requires a thriving workforce with access to education and training. Miles-McClellan has led construction projects for all levels of education, from Isaac Dickson Elementary in Asheville, North Carolina to Marietta College’s Harrison Hall in Ohio. And we build offices and facilities anyone would be proud to work in, like the Honda Aircraft Co. World Headquarters and Research Development facility in Greensboro, North Carolina, projects for Scotts Miracle-Gro in Ohio and Proctor & Gamble production facilities in both North and South Carolina. 

We Build Communities We Are Proud To Give Back To

We have witnessed how communities have been strengthened through infrastructure, but it is our goal to strengthen them even further through corporate giving, volunteerism and meaningful partnerships.

As a company we support 58 non-profit organizations, provide paid internships and donate to causes important to our employees and clients.

Over the years, we have built a variety schools, hospitals, health centers, libraries, fire and police stations, churches, museums, restaurants, hotels and more. With each project, we have left more than a building; we have left a legacy for every hand, head and heart who helped build these structures and every man, women and child who use them.

Making an IMMPact in the communities we serve is at the core of all our projects, and our commitment to our people, our clients and our communities is unwavering. Contact Miles-McClellan for more information about our projects, our team or our community support.

Q2 2022 Economic Indicators

In continuing our theme from our 1st Quarter 2022 EI Report, inflation is every owner’s primary concern. As we continue to study trends, we came across an excellent report published by CBRE titled, 2022 US Construction Cost Trends. The newsletter offered several interesting observations and predictions:

  • The CBRE new Construction Cost Index predicts a 14.1% year-over-year increase in construction costs by year-end 2022 as labor and material continue to rise in cost.
  • Inflation in materials is expected to start to cool toward the end of 2022 and normalize between 2-4% during 2023-24. However, specific supply chain issues and other geo-political risks will continue to cause spikes in some products.
  • Labor will continue to be a challenge as we have four significant trends colliding: a dramatically smaller talent pool resulting from the great recession, an aging industry workforce with 20% of our workers being 55+, the lowest national labor force participation rate ever experienced in the US, and a rise in competition for people from other growing industries such as logistics.

This information shared by CBRE fits precisely with what Miles-McClellan is experiencing as we continue bid projects. Below are three specific examples supporting the above analysis, where we bid either an entire project or a particular product 2 separate times in a short timeframe:

  • During the first quarter of 2022, we had the opportunity to bid on a school HVAC renovation project twice. The owner experienced a 9% increase in total project cost over that short 90-day period.
  • Between the fourth quarter of 2021 and the second quarter of 2022, we bid on an office building renovation/addition project two times, experiencing a 6% increase in total construction costs over 7 months.
  • Lastly, we bid on an operable wall package twice during a 5-month window between December 2021 and April 2022. This owner experienced a 90% spike in price without any change to the scope or material of work.

Our goal is to inform you, our clients, of current construction trends. We will continue to monitor information being predicted industrywide and share specific cost data that Miles-McClellan experiences as we navigate our changing economy.

 

The IMMPortance of Having an IMMPact Team

Having an IMMPact

For over four decades, Miles-McClellan Construction has been setting the bar high for client relationships and earning client trust. We believe the people and processes of a company matter in delivering great results and that there is great IMMportance to being flexible and responsive to the needs of our customers. Every Miles-McClellan project benefits from our IMMPact Team’s passion for construction and the pride we have for our trade.

An IMMPact Team is a cross-functional team of experienced, industry-specific construction professionals formed with one IMMpressive mission — to collectively hold each other accountable for delivering building excellence and client satisfaction for each project. IMMPact Teams consist of highly qualified, intuitive problem solvers with insights and expertise based on hands-on experience and training.

The Meaning Behind Our IMMPact Teams

IMM stands for integrated management methodology and is our united management approach. The typical construction approach is departmentalized. There are many departments handling different aspects of the project like selling, estimating, project management and accounting. This approach can lead to miscommunications or mistakes that delay or negatively impact the project.

With our cohesive IMMPact approach, you will have a dedicated team, including one of our project executives, working together with you throughout the entire process — from preconstruction to ribbon-cutting — allowing us to be more flexible and responsive to your IMMediate needs.

Pact, of course stands for an agreement. It is the promise we make to each other and to our clients. That’s the Miles-McClellan IMMPact!

We strive for clear and consistent client communication throughout the life of a project. We work to hold each other accountable by having discussions centered around project goals, expectations, budgets and how to reduce risks and achieve the client’s satisfaction by keeping the same team members involved and maintaining excellence.

When both of our founders, Terry McClellan and Lonnie Miles, left a large, international construction company, it was because they IMMagined there had to be a better way to do business — one that put customer service at the center. That’s why our promise is so IMMportant and that is why our team assembles to ensure we can meet a client’s needs by discussing strategy, building trust and ensuring we develop confidence in our ability to perform through purpose-filled collaboration.

We strive to build a legacy through relationships and structures, whether it be with our incredible team members or clients. Contact Miles-McClellan Construction to learn how our teams can help you make a lasting IMMPact.

Q1 2022 Economic Indicators

Q1 2022 Economic Indicators In our last issue of the Economic Indicator Report, I cited several issues that will dramatically impact the economy in 2022. Specifically, 4 issues were noted by Anirban Basu, Chief Economist for the Associated Builders and Contractors Association:

  1. less growth in federal spending,
  2. ongoing global supply chain disruptions,
  3. rampant worker shortages, and
  4. an increasing cost of capital.

Implied but missing from the list above is inflation. Because our clients will face inflation challenges, we plan to present specific job cost data throughout 2022 and 2023. Every chance we get to reprice a project, we will share our findings.

This quarter’s case study today is a hotel – the same hotel brand; basically, the same building – built between March 2019 and March 2020 and then repriced in May 2022 (2 years apart). The costs exclude all site work costs to keep the percentage increases as close to apples-to-apples as possible. Over those two years, we experienced and shared with our repeat client a 38% increase in total project cost

Here are few key components of that increase:

I started by looking at structural elements:

  • Concrete +95%
  • Masonry +74%
  • Structural steel +49%
  • Carpentry and Framing +117%

Then I immediately jumped to the MEP trades:

  • Fire Protection +140%
  • Plumbing +19%
  • Electrical +4% (we eliminated the structured cabling)
  • Mechanical +75%

We have achieved an overall increase of 38% by finding other ways to reduce scope and find additional efficiencies. It is important to note that this is the same hotel brand; however, design changes were made with the final budget in mind. I am afraid that a true building to building comparison would have resulted in some factor much greater than 38%.

In preparation for our next EI issue, we will rebid a set of drawings for a project that we bid and built 1 year ago. I look forward to learning and sharing these results.

Miles-McClellan General Superintendent, Steve Johnson, Shares Advice for Owners as They Start a Construction Project

Building Excellence requires communication, collaboration and connection. As part of your IMMPact team, it’s my job and my commitment to you to set the right expectations and gain your trust as you approach your construction project. You can have the confidence in knowing that the success of your project is as important to us as it is to you. We take pride in the final product, and if my name is behind the building, you can be assured I will do everything possible to make sure the work is done right and on time and budget.

Your best money and time spent is during the pre-construction. Everyone has their own opinions about how to get projects done, so creating a shared vision and plan is a great starting point. This can be accomplished by walking the property early in the process, as well as after drawings are completed, to make adjustments and to get on the same page prior to project approval and permit submissions. Once construction begins, it’s very difficult to stop or change, so let me share some tips on creating the vision and expectations for your project before construction begins.

Have a Blueprint for Construction Success

Nothing slows down construction progress more than change orders and revisions. Therefore, it is important to have your drawings complete prior to starting construction. Avoid changing the plan if possible. Finalize the details of your project early on to ensure it is “buildable” and to provide more inclusive plans to sub-contractors, so they can provide their most accurate bids.

One thing to consider before starting construction is that unforeseen circumstances are bound to happen. They always do. So, trusting your construction team and making sure there is enough contingency in the budget can help to avoid uncomfortable conversations and surprises throughout the process.

Be Realistic About Your Involvement in the Construction Process

Construction is time-consuming. Be realistic in assessing how much time you can devote to the project and be sure to choose a contractor you trust so you can give the right amount of attention to your project and to your company’s operations and overall well-being.

Don’t Judge a Bid by Its Cover Price

My mother always told me, “If it seems too good to be true, it probably is.” Seemingly minor details can significantly affect the price you pay in the end. For example, a low bid may look attractive on the surface, but it may not include things like materials and installation costs. Make sure to ask questions about what is included in the pricing and where the project team costs can be found. You will need to be able to put each bid into perspective to accurately assess whether you are getting a fair price per square foot. Working with a construction company you trust can avoid costly surprises.

Ask Questions About Your Project — Lots of Questions!

Clear communication is vital in any partnership, and we know you need a clear picture of what is happening with your investment. As construction professionals, we sometimes use industry jargon or explain techniques and processes using technical terms. It’s a second language to us, and we often forget that we are speaking a language not everyone knows. So, ask questions! Ask until you understand the answer! Ask until you have no more questions! Your construction team should guide you through the process and take the time to explain everything so everyone is on the same page and there aren’t any assumptions that can turn negative.

Remember, your project’s success is also a personal success to every construction professional who works on your facility. Your team at Miles-McClellan wants to make sure your project is set up for success from the very beginning. We are on your side. That’s why Miles-McClellan strives for Building Excellence through relationships with communication, collaboration and connection that results in exceeding client expectations.

Contact Miles-McClellan to learn more about how we strive to resolve issues before they become problems.

Miles-McClellan Construction Helps Charlotte-Mecklenburg Police Department Advance City’s Sustainability Goals with New LEED-Certified Station

CMPD University City Division facility

When the city of Charlotte, NC set out to replace its leased University City Division Police Department building with a permanent facility, they did so with a goal to enhance the quality of life for Charlotte residents and department employees and to meet the city’s ambitious sustainability goals.

Reducing environmental stress and improving employee safety and wellbeing were priorities for CMPD. The CMPD University City Division relied on the experts at Miles-McClellan Construction to deliver sustainable solutions that would help them earn LEED certification at their new space.

LEED certification is a globally recognized symbol of sustainability, achievement and leadership, and LEED-certified buildings save money, improve efficiency, lower carbon emissions and create healthier places for people. To achieve LEED certification, a project earns points by adhering to prerequisites and credits that address carbon, energy, water, waste, transportation, materials, health and indoor environmental quality.

Miles-McClellan got to work building the 16,000-square-foot, two-story police station implementing green construction processes and sustainable features including UV solar panels, underground rainwater management, high efficiency geothermal heating and cooling systems, advanced thermal and moisture protection on the building envelope, construction waste diversion from landfills and the use of recycled materials for construction.

In addition, the new police station encourages green initiatives with access to transit, bicycle facilities, green vehicle parking, electric vehicle charging stations, a green cleaning and integrated pest management policy, an optimized mechanical system for energy performance, low emitting materials, interior lighting controls and low-flow water fixtures.

The health and safety of CMPD employees was crucial in the design of the police station as well. Not only does the building provide enhanced indoor air quality and access to health and fitness, but reinforced concrete walls, insulating concrete forms, structural steel, steel joists and metal deck roof framing offer a solid, efficient and safe structure for the Charlotte-Mecklenburg Police Department. “The place is literally bulletproof,” said Steve Parsons, Miles-McClellan’s director of field operations.

The project received LEED Gold certification and is projected to have total energy cost savings that will be greater than 59%, resulting in an economic benefit to the city and a reduction in greenhouse gas emissions — and the Miles-McClellan Construction project came in on budget with zero safety violations.

“Our newly certified LEED facilities will accommodate the current and future needs of CMPD and further advance the city’s sustainability goals,” said Charlotte Mayor Vi Lyles. “These achievements mean we truly are setting the example for a low-carbon and resilient future while increasing the quality of life for all Charlotte residents.”

Miles-McClellan is proud of our work leading this environmentally friendly initiative. With every project, we are on a mission to improve communities and the lives of the residents that reside in them.

CMPD University City Division facility interior

“It’s critical for CMPD to be on the cutting edge when it comes to our facilities. Employee wellness is a CORE 4 strategic priority for the department. Our state-of-the-art LEED-certified facilities feature healthy and cost-saving green technology to make sure we’re providing the best possible workplaces for our employees.”

– CMPD Police Chief Johnny Jennings

How can we help you protect the environment and the residents in your community? Contact Miles-McClellan Construction to learn more about LEED-approved design features and let’s work together to build excellence on your next project!

We build success by Building Excellence!

Q4 2021 Economic Indicators

Q3 2021 Economic Indicators The following is an excellent summary of what 2022 will bring to our industry, as written by Anirban Basu, Chief Economist for Associated Builders and Contractors, in December 2021.

“After the dramatic pace of economic recovery that characterized 2020’s final eight months and the early months of 2021, economic growth is set to soften in 2022. While recession appears unlikely in the near-term, there are many factors suggesting that the year to come will not produce a further boom in activity.

“Among these factors are:

  1. Less growth in federal spending;
  2. Ongoing global supply chain disruptions; and
  3. Rampant worker shortages.

“While there may be some alleviation of the challenges produced by the latter two factors, the economy will continue to face substantial headwinds.

“With so much going on, it is simple to forget what really matters. More than anything else, economic activity is driven by flows of capital. That capital could become more expansive in 2022 as monetary policy shifts, producing likely increases in interest rates in the process. With so many economic actors so fully leveraged, even small increases in interest rates can produce substantial drag on the economy. A sudden surge in borrowing costs could be enough to throw the 2022 economy into reverse, though such a surge appears unlikely. Still, contractors and other construction industry stakeholders should be eyeing interest rates closely over the year(s) to come.”

Miles-McClellan is experiencing all three factors listed above. However, our backlog remains very strong. There continue to be more opportunities available than we can pursue because of our internal bottleneck of lacking team availability.

While it is challenging, we will continue to focus on our client’s needs and work hard to NOT over-promise and under-deliver!

Basu, A. (2021, December 1). 2022 Construction Economic Forecast – The Recovery Could Have Been So Much Better. Retrieved from constructionexec.com : https://constructionexec.com/article/2022-construction-economic-forecast

Miles-McClellan Is Building Excellence With People

Miles-McClellan Is Building Excellence With People

While technically speaking, all our construction projects start with building materials at a job site. Our projects really start with our incredible employees who come together to form experienced and reliable teams that plan, facilitate and complete dynamic projects that are customer-centric.

So how does Miles-McClellan Construction (MMC) stand above the rest?

With our hands – Our team uses our hands to build quality structures and each project has our unique MMC thumbprint on it. Our construction projects are a major part of our clients’ stories and our company’s story and legacy.

With our heads – We offer our employees opportunities for career and leadership development, which help them with planning and problem-solving in their positions.

With our heart – The positive impact our projects make for people in local communities means everything to us. Client satisfaction is of paramount importance; it guides our work and recruitment. We believe in hiring the best people who will bring their valuable experiences and skill set to every project. Combine this with a purpose-driven heart and you have the answer to why Miles-McClellan has been a leader in commercial construction for over four decades (and counting!).

We are proud of our relationships with our employees and our clients. Simply put, pride is why we do it!

Below are a few ways Miles-McClellan distinguishes itself from other commercial construction companies with how we approach our team, starting with recruitment. Building excellence starts with attracting and supporting excellent employees.

Recruit and Develop Leaders on Our Strong Foundation

One of the best ways to sustain and grow a business is from within. Successfully recruiting talented individuals to join our team is not just about filling a specific position in the present. When we recruit and interview applicants, we focus on their current skillset and experience and their future potential. By seeing the talent and potential of our employees, we provide opportunities for them to develop into leaders at Miles-McClellan, which translates to employees and senior management being on the same page. For example, we work with the Builders Exchange of Central Ohio to provide leadership classes for some of our employees called BXFlex (Field Excellence Leadership Series). Just like we envision the potential of our projects and our employees.

Provide Career Path Development

When a job feels static with little or no opportunity to grow in a company, that can negatively affect employees’ work production and morale. That’s why we pride ourselves on providing career path development. Employees who will feel their work is appreciated and that there are chances for promotions and increased responsibility positively impacts their work and the company. Investing in our people for the long-term is an investment we make in them, and we make to drive building excellence for our clients.

Personal Ownership of Projects

Miles-McClellan ensures our expectations and our clients’ expectations are always being met by taking personal ownership of projects. When people feel personally responsible for getting something done, large or small, it promotes a culture of excellence. Our IMMPact approach illustrates this point of personal ownership by emphasizing knowledge sharing, which allows our team members to trust one another and hold each other accountable throughout a project life cycle.

Client Reassurances

Investing in our people is an investment in our clients’ projects. This level of continued investment and support directly correlates to our more than four decades of building excellence in Ohio and North Carolina. There are many non-tangibles that go into constructing a facility and we make sure to account for these factors to ensure we are always doing things the right way.

We take a lot of pride in our work at Miles-McClellan; it’s why we do it! And our pride is visible in every level of our company and with our great employees throughout their career experiences and development. Miles-McClellan strives for building excellence for a better community, for you.

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