Nonresidential Construction Index for Q4

FMI, a provider of management consulting and investment banking to the engineering and construction industry, released its Nonresidential Construction Index report for the fourth quarter of 2011.

The Nonresidential Construction Index (NRCI) slipped from 52.4 to a barely positive 50.3 this quarter. While the stock market continues its gyrations from news surrounding the future of the Euro countries, the NRCI has managed glacial growth, chugging along just above average for the last two years, average being little to no growth. The NRCI dropping to 50.3 this quarter is less a downward trend than a continuation of moderate growth.

Moderate growth does not mean there are not changes going on in nonresidential construction. In past issues, panelists’ expressed views on the increasing use of new methods and technologies like BIM, prefabrication, modularization, integrated project delivery, sustainable construction, as well as improved productivity and business development. Most contractors are better prepared to deal with these challenges than with abrupt changes in the economy.

Current Issues

Overwhelmingly, NRCI panelists do not expect the American Jobs Act (AJA) and the related National Infrastructure Bank bill to pass as now proposed. Even with public construction as part of the AJA, few panelists expected that it would significantly increase their backlogs if passed.

This report also looks into a not-so-new problem, how to pay for rising health care insurance costs. The issue is resurfacing due to the introduction of the Patient Protection and Affordable Care Act, aka Obama Care. Although the majority of NRCI panelists recognize they will have to share the skyrocketing costs of health care with employees, a few say they intend to drop their policies, pay the penalties and let employees fend for themselves. Twenty percent of panelists have yet to fully examine their options.

Bottom line, little to moderate growth for now. However, this doesn’t mean there won’t be significant changes in how the nonresidential construction industry conducts business over the coming months.