Greener Pastures? 40% of those surveyed indicated that they are currently doing work outside of the state of Michigan. Of those, 44% said that less
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1 The Construction Association of Michigan, in conjunction with Plante & Moran, PLLC, has released the results of its Biennial Business and Owners Survey. Conducted every other year, this survey reflects the current health of the commercial Michigan construction industry and, for the first time, will project the future of the industry over the next 12 to18 months. The official results are in accordance with professional contractors and owners who are involved in the construction industry on a daily basis. Contractors, suppliers, architects and engineers completed the Business portion of the survey. The following sets of results are highlights taken directly from this portion of the survey. Gauging Michigan s Economy - One of the survey s key questions was, Michigan s economy is currently one of the worst in the nation. How long do you anticipate this trend to continue? Interestingly enough, more than 90% of contractors, suppliers, architects and engineers responding to the survey anticipate Michigan s current economic trends to continue for at least two more years. However, they remain more optimistic than owners. More than half of the owners surveyed indicated that an economic upturn is at least four years away. Challenges According to survey results, the three most challenging areas facing the construction industry today are economic decline, getting paid, and sources of future work. When asked how their present cash-flow situation compares to last year, 41% of the respondents said that it was worse, as compared to 31% who gave that same answer in Profits - 60% of those surveyed indicated that their company s annual sales would decrease or stay the same, whereas only 32% gave that response in % of people felt that their company s profitability would stay the same for the coming year, while 37% were optimistic in expecting an increase in profits.
2 Greener Pastures? 40% of those surveyed indicated that they are currently doing work outside of the state of Michigan. Of those, 44% said that less than 10% of the total volume of their work is outside Michigan, and over the next months 83% expect that percentage to increase. 62% of the respondents said that their work outside Michigan is being performed in the Midwestern U.S. However, of those not currently working outside of Michigan, 40% anticipate that in the next months they will be, and most likely in the Midwest.
3 Workloads - Over two-thirds of those responding anticipate their volume of work to either stay the same or decrease over the next months. Only 29% anticipated their volume of work to increase over the next months. Getting Paid - The average length of time to receive final payment for work performed or materials provided is 60 days, according to 47% of those asked. However, they are not optimistic about that trend continuing; 69% see that situation as getting worse in the next months. When asked if they had filed a Claim of Lien in the past 12 months, exactly half of the respondents answered no. Material Evidence - Regarding the cost of material prices, 83% of those surveyed said that they had seen an increase in material costs over the last 12 months. This is compared to 94% in 2005 and 68% in % of respondents have not been able to obtain escalation clauses in their contracts. 83% do anticipate material prices to increase again over the next months. Construction When asked if they would still choose to make their living in the construction industry if they were beginning their career today, 35% said yes, while 54% either said no or was unsure. Construction owners, developers and construction clients completed the Owners portion of the survey. The following sets of results are highlights taken directly from this portion of the survey. Anticipated Spending - When asked about their anticipated construction spending over the next months, 71% of owners expect it to either stay the same or decrease. Respondents also said that the three most challenging areas facing their business in the next two years are the economy (76%), government funding (57%), and insurance costs (25%).
4 Call a Professional - Asked of their overall satisfaction with the professionalism of construction personnel during the building process, 58% of those surveyed said they were pleased/satisfied. 45% responded that the overall quality of their last construction project was good, while 27% said excellent. On Time or Delayed? On the issue of completion times, 35% responded that their projects were on time, while 52% responded that way in This reveals a 17% point drop in on-time completion since the last survey. Nearly half of the owners building ten or more projects experienced delays that they felt were the contractor s fault. 53% of owners cited unforeseen problems as the primary reason for delays. Wages - 38% of owners surveyed believed that 5-10% of the fees charged for construction services represented profit for general contractors; 35% felt that 5-10% of the fees represented profit for specialty contractors; and the majority of owners responded fair when asked their perception of fees earned by architects, engineers, general contractors, trades, and specialty contractors.
5 The Future of Sales - Only 24% of all respondents anticipated an increase in future sales, compared to 2005 when 48% of the owners anticipated an increase in sales for the coming year. 29% of those currently surveyed felt that their company s annual sales for the coming year would stay about the same. Business Outlook - 45% of respondents anticipate that the number of non-residential projects embarked upon in the next months to stay the same, while only 7% of respondents expect it to increase. Founded in 1885, the Construction Association of Michigan (CAM) is the oldest and largest regional construction association in the United States. It promotes and supports the construction industry through ongoing legislative relations, professional development and public awareness efforts. CAM provides leadership on key issues such as regulatory reform, economic development, workers compensation and unemployment compensation, continuing education, labor relations service, and complete safety training programs and consultation.
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