It would be much easier if I had a crystal ball. Reading through reports about the current economy makes you wonder what really is “just around the corner.” Depending on which economist you chose to read, we are standing still, headed for a recession or on the verge of staggering inflation.
The world of finance is having issues; the housing industry continues to soften; consumer confidence wanes; and the overall construction marketplace has a feel of uneasiness, yet many construction executives indicate that work is still very strong.
So where did I put that crystal ball again?
Some indicators support a softening of the markets. Ken Simonson of the Associated General Contractors of America notes that growth is slowing and will not continue at the same pace as the last few years, reporting that construction spending dropped in February, the fifth straight monthly decline. Yet another economist went as far as to say that “the more stringent rules for commercial real estate will dampen business outlays for new construction, which has been a key driver of capital spending in 2007.” McGraw Hill Construction echoed that warning.
Interesting predictions for sure, but how will they impact you? What does this mean to those of us in the construction industry? Some think the economic peaks and valleys of the construction industry lag as much as a year behind the overall national economy. If that is true, the dark cloud of doom is right on top of us. While some may argue that the residential market continues to influence these numbers, it appears that things aren’t like they used to be.
During the explosive markets of the past few years the predominant theme was “choices.” Architects, contractors, engineers and suppliers all could pick and choose among a wide range of projects, industries and owners. Some projects might attract numerous prospective teams, while other jobs would have difficulty finding one. In a less robust market those choices go away. Owners look to trusted, qualified teams to create and build their facilities; others are left outside looking in. Companies that have differentiated themselves will get the work.
That is why Warren Buffett’s quote above fits. When the world of abundance pulls away, those unprepared are easily recognized for the skills they lack. Additionally, tough market conditions cause us to face the root issues that have long been discussed throughout our industry — workforce shortage, resource availability, capital needs, project selection, competency and the proper allocation of risk and reward. Whether in good times or bad, basic fundamentals of business apply to construction projects just as they do any other enterprise.
Without exception, every project team must face these issues or face the inevitable loss of margin, reputation, personnel or even their very existence. Those who understand and deal with these issues will reap the rewards in both the down market and the market that rises from the valley and races to a new peak.
Sound business fundamentals are what design-build is all about. In raging hot markets or in times of economic slowdown, the principles of design-build remain the same: collaborative, competent, high-performance teams focused on providing value to the projects they build, unified by a common objective — to meet the owner’s needs.
Traditional project delivery methods do not allow the “team” to make decisions that give the customer everything — quality, schedule, cost and an enjoyable experience. They do not engage an integrated team that includes all stakeholders, owners, architects, contractors, specialty trades and suppliers. In the end, it is this integrated environment that has rapidly expanded design-build acceptance.
No other delivery method provides the framework that allows the most qualified to lead. No other method harmonizes so well with LEED®, LEAN construction and building information modeling to deliver projects better, safer, faster and more economically. How things work, how things fit, how things flow can only be maximized when all team members work together.
Every industry goes through cycles, and the construction industry is no exception. Design-build will not eliminate these cycles, but its fundamentals provide the most value for the dollar. If this is a downturn in our industry, it isn’t the first and it won’t be the last. High-performance teams deliver consistent customer service through every economic cycle. That consistency gives our customers confidence in the present and will be the catalyst for the future.
At DBIA we teach HOW.
Tom Sorley is president and CEO of Rosendin Electric Inc. and is DBIA chairman of the board.