With the hot summer weather and long daylight hours here in the Pacific Northwest, the livin’ is easy. For those with overhead under control, it’s a good time to enjoy some outdoor activities and vacation time with family and friends. Between the slumping economy and the enticing lure of summer, we took some time off in July. Just before heading back East for a 4th of July break, I attended the AACE conference in Seattle, whose membership is mostly engineering-industrial firms. Business in those sectors is down from last year, but stronger than what we’re seeing in commercial segments. Those firms were guardedly optimistic; plus they’re getting a discount on their projects due to depressed material and subcontractor pricing.
Not unexpectedly, there’s still plenty of bad news: ENR’s construction revenue data (updated through second quarter) show the commercial market still declining, especially in retail and office construction. While health care and education revenue is less dismal, it’s still following the same downward trend. For the first time this year however, there’s a small seed of optimism sprouting in the dirt. Power and fuel-industry construction rose last quarter, compared with 2008. And a surprising (shocking?) 11% uptick in housing starts last month is another glimmer of hope that we might have already experienced the worst.
Still, the cutthroat bid market persists. An Owner expecting 8 bidders received 40 proposals for a project in the Midwest. A Southwest Owner awarded a $2.8mm contract last month, when a similar project cost $4.2mm 18 months ago. I don’t think any of us expects anything better than a long, slow slog back toward better market conditions. One thing we’ve learned from our many years in construction, is that all you can do is produce fair bids for work that fits your company. You can’t beat stupidity, and most of us don’t need the practice, (apparently unlike some companies). With manageable overhead and efficient internal systems, we will live to bid and build another day.
August finds us headed down to Phoenix mid-month, to finish up an environmental contractor’s new Timberline estimating system. The following week we’ll be down in San Diego, assisting with some US Cost Success Estimator training for NAVFAC (Naval Facilities) engineering personnel. On the calendar for next month is Success Estimator advanced training for the SeaBees in Port Hueneme, California. We’re also planning to introduce Seedorff Masonry’s new estimating database in September or October in Iowa. A bright spot of the down economy is the number of proposal requests we’re seeing. While firms are being conservative with precious cash, many recognize it’s a good time to invest in the future.
