Design and Construction Market Outlook Summery and Slide Deck, Aug 6, 2021

Design and Construction Market Outlook Forum

Upcoming Design and Construction Market Outlook Forums
In upcoming sessions, we will be discussing:
Residential Construction
Office Construction
Infrastructure
Education
Science/Technology
and
The New Normal

To Join our sessions

SUMMERY  AND SLIDE DECK

Review / Download the slide deck here

 

Session Presenters

  • Richard Vermeulen, Principal, Vermeulens
  • Blair Tennant – Associate Principal, Vermeulens
  • Brent Bertrand – Sr. Vice President, Dynamic Systems Inc
  • Kevin Moses – Vice President, Big State Electrical
  • Daniel Doherty – Senior Director, Shawmut Design & Construction

Q2 Market Outlook Highlights, Vermeulens

  • Non-residential construction demand has decreased; construction employment experienced a pull-back in Q2
  • Non-residential and infrastructure construction volume is down 4.6% and 5.4% YOY respectively
  • Residential construction volume is up by 36%
  • Construction employment is down 38,000 jobs from last quarter unemployment rate is currently sitting at 7.5%.This is down from 8.6%, indicating a contraction in the labor force, possibly due to the resurgence of the pandemic
  • Recommending 0.5% escalation moving through the second half of 2021
  • Recommending 5% in bidding contingency for busy markets
  • Design Add Alternates in the magnitude of 10%

Market Insights, DSI, BSE, Shawmut

  • DSI: Labor is up dramatically since the beginning of the year, much of the increase has been in the high-tech sector
  • BSE: Mask requirements have returned to job sites and vaccination requirements are being discussed
  • BSE: Experiencing issues with delivery drivers, which is resulting in a 7-10% productivity loss
  • Shawmut: Anticipating material price moderation which will keep contractor and supplier margins competitive
  • There has been a skilled labor shortage due to overtime premium and incentives by large corporations
  • Material prices have skyrocketed in the past 2 years; however, prices seem to be leveling in Q2
  • Companies are currently exploring material substitutions, to combat supply costs
  • Tighter margins due to higher material costs and long lead times
  • Sourcing materials locally eliminates international shipping delays

The New Normal – Volatility vs Escalation vs Inflation, Vermeulens

  • For non-residential construction, inputs to construction have increased by 26.3% however bid prices have only increased by 3.4%
  • Unemployment is currently driven by the reopening of economic sectors as opposed to aggregate demand
  • We could see upward pressure on prices if spending rebounds quickly; these one-time increases in prices are likely to only have a transient effect on inflation
  • Fiscal stimulus has limited the damage done by the pandemic
  • A thorough analysis of the infrastructure deal (primary goals and cost-benefit analysis) 

Northeast Leads the Way, Bond Brothers

  • backlogs are up year over year, still down 1 month from 2020 peak
  • 80%+ of contractors are expecting increased sales volumes
  • some skilled labor shortages in some sectors

Next Session – September 3, 2021

  • Design-Build, Design Assist
  • Contractor Insight 

Reports and Slide Decks

expand each section for the agenda and access the pdf file

August

  • ▼Q2 Market Highlights & Insights on the Infrastructure Deal, August 6, 2021

    Agenda:

    ■ Blair Tennant: Q2 Market Outlook review

    ■ Richard Vermeulen: Are we dealing with escalation, inflation, or COVID-related issues?

    ■ Richard Vermeulen: A look into the current infrastructure bill and what It means for the market

    ■ Kevin Moses, Big State Electric: Market conditions from an electrical contractors perspective

    ■ Brent Bertrand, DSI: Market conditions from a mechanical contractors perspective

    ■ Dan Doherty, Shamut: Market Conditions from a general contractors perspective

    Link to PDF fileRead...

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