Construction Industr y Trends. Rocky Mountain Region Overview

Transcription

1 Construction Industr y Trends Rocky Mountain Region Overview

2 * 2018* 2019* 2020* 2021* Total construction spending (Billions) Total Construction Spending has consistently increased since the great recession. Total construction spending $700 Recession Residential Nonresidential Buildings Nonbuilding Structures $600 $500 $400 $300 $200 $100 $0 SOURCE: FMI, US Census Department 2

3 * 2018* 2019* 2020* 2021* Construction spending continues to grow as a percentage of GDP. Construction as a percentage of GDP 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% SOURCE: FMI, FRED, US Bureau of Economic Analysis 3

4 December 1858 June 1861 December 1867 December 1870 March 1879 May 1885 April 1888 May 1891 June 1894 June 1897 December 1900 August 1904 June 1908 January 1912 December 1914 March 1919 July 1921 July 1924 November 1927 March 1933 June 1938 October 1945 October 1949 May 1954 April 1958 February 1961 November 1970 March 1975 July 1980 November 1982 March 1991 November 2001 June 2009 Average Months from trough The average economic expansion in the US since 1858 has been a little more than three years. Duration of US economic expansions SOURCE: National Bureau of Economic Research 4

5 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-162 Mar-17 Since 2012, the Architectural Billing Index has consistently been above 50. National Architectural Billing Index (ABI) 60 Above 50 Below SOURCE: AIA 5

6 The West Architectural Billing Index was slightly below 50 for October. Regional Architectural Billing Index (ABI) SOURCE: AIA 6

7 Economic activity is becoming increasingly concentrated in a limited number of markets. US Megapolitans Cascadia Puget Sound Twin Cities New England Willamette Wasatch Range Mountain Twin Cities Michigan Corridor Steel Corridor Sierra Pacific Sierra Pacific Las Vegas Front Range Chicago Great Lakes Ohio Valley Chesapeake New York/ Philadelphia Megalopolis Southern California Sun Corridor Texas Triangle Dallas/ Fort Worth Atlanta Carolina Piedmont Southwest Central Texas Houston Central Florida Florida Atlantic Florida SOURCE: FMI, University of Utah s Metropolitan Research Center and Brookings Mountain West 7

8 Recent nonresidential projects continue to cluster in US megapolitans. Nonresidential project locations across US megapolitans Cascadia Projects completed, under construction or planned in past 12 months Twin Cities Great Lakes Mountain Sierra Pacific Texas Triangle Megalopolis Project Population Growth <-1.3% -1.3% to 0% 0% to 1.7% 1.7% to 4.4% >4.4% Southwest Florida Piedmont SOURCE: FMI, US Census Bureau, CMD REED, IIR, Dodge 8

9 Rocky Mountain Region

10 DBIA Rocky Mountain Region construction spending remains concentrated in Colorado and Utah. Construction spending across metropolitan areas DBIA Rocky Mountain Region SOURCE: FMI, IHS Global Insights 10

11 Economic growth across the Rocky Mountain Region has consistently varied across states. Rocky Mountain Region Economic Indicators Population Growth Gross Domestic Product Growth 3.5% 3.0% Colorado Share of Utah population, 2016 Montana Wyoming 10% 6% 25.0% 20.0% Colorado Utah Montana Wyoming Share of GDP, % 8% 15.0% 2.5% 54% 30% 10.0% 57% 27% 2.0% 5.0% 1.5% 0.0% 1.0% -5.0% -10.0% 0.5% -15.0% 0.0% -20.0% SOURCE: Woods and Poole 11

12 Total construction spending (Billions) Construction spending in the Rocky Mountain Region is anticipated to yield a 4.2% compound annual growth rate (CAGR) over the period. Rocky Mountain Region total construction spending $60 $58 $2.8 $0.34 $0.24 $57.8 $56 $54 $5.3 $52 $50 $48 $ CAGR: 4.2% $46 $44 $ Colorado Utah Montana Wyoming 2021 SOURCE: FMI, IHS Global Insights 12

13 Compound annual growth rate ( ) The power, highway/street and educational construction segments are anticipated to yield strong growth and spending. Rocky Mountain Region construction spending by segment (excluding single family) 7% Power 6% Public Safety Water Supply Office Highway and Street 5% Conservation and Development Transportation 4% Communication Educational Sewage and Waste Disposal 3% 2% Religious Amusement and Recreation Manufacturing Commercial Multifamily 1% Lodging Health Care 0% $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 Forecast segment construction spending; 2021 (Billions) Size of bubble represents spending over period SOURCE: FMI, IHS Global Insights 13

14 Design-Build Trends

15 Percentage of spending ( ) Forty-three states have full or widely permitted authorization to utilize designbuild for public agency projects. Design-build authorization and construction spending Forecast construction spending through 2021 is concentrated in states permitted to utilize design-build. Colorado is among the top-10 states with full or widely permitted design-build authorization by percentage of construction spending. 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 1 Top-10 states with full or widely permitted designbuild authorization by percentage of total construction spending Design-build is permitted by all agencies Design-build is widely permitted Design-build is a limited option Design-build is limited to one political subdivision, agency or project CA TX FL NC GA WA IL VA AZ CO UT MT WY SOURCE: FMI, IHS Global Insights, DBIA 15

16 Design-build is perceived to address the increasing size and complexity of projects compared to traditional delivery methods. Greatest Influences for employing design-build as a project delivery method Size and complexity of the project Available budget for the project Urgency of completing the project Capability and creativity of the contracting agency 17% 13% 13% 29% FMI s investigation of publicly available data and information revealed several sources that indicated size and complexity of the project as the primary influence on the decision to employ design-build as the project delivery method. Similarly, schedule acceleration ranks among the primary influences. Industry stakeholders interviewed by FMI also frequently referenced project size and/or complexity as their reason for employing design-build. Need for innovative thinking to drive down costs 11% New construction for design-build is more challenging and requires greater risk. They tend to be bigger cost projects. Legal and regulatory Sources of funding for the project Other 2% 6% 10% Design-build projects are typically larger and more complex, which requires risk management. Acceleration is one of the more governing factors for selecting design-build. We want to get the work out on the street fast and create jobs. 16

17 Factors of importance in selecting a design-build partner Five factors were identified as being important when assessing a design-build project partner. Key personnel Continuously stated by design-build market participants was the importance of key individuals and the availability of these individuals. Project experience Proven past experience successfully delivering design-build projects and understanding of the design-build process. Local knowledge Understanding and alignment with the local community and project stakeholders. Owner relationship Past experience and understanding of a particular owner can provide tremendous value. Prior partnership Participants prefer to team with partners they have a high level of comfort with and feel there is a symbiotic relationship that offers complimentary skills. SOURCE: FMI 17

18 Top-100 design-build firm revenue increased 33% from 2012 to ENR top-100 firm domestic design-build revenue 15% 2012 $54 billion 14% 2016 $72 billion 51% 49% 34% 37% Top-10 firm revenue Firms revenue Firms revenue SOURCE: ENR 18

19 To receive a copy of this presentation: Dustin Bass, Director dbass@fminet.com Paul Trombitas, Consultant ptrombitas@fminet.com 19