1. Richard Wetzel reflected on the rebirth of the design sector, with spinoffs from larger companies. | 2. Contract work, said Mike Callahan, was beginning to overtake dispute resolution, a sign of emerging growth in the industry. | 3. Jim Schnefke saw geopolitical fundamentals as an obstacle in the way of a broader recovery. | 4. Phil Thomas said that even with construction’s boom-or-bust history, the pendulum had swung too far with the most recent downturn.

“I’ve heard the same thing,” said Richard Wetzel. “Not just with Gould, but from other firms. I know 360 is a lot busier than they have been. The other thing that’s been interesting is a lot of new firms started up in the design world because of those layoffs and a lot of those firms are two to three to four years old, and they’re starting to gain traction and bump up against some of the bigger competitors.” That, he said, had allowed some fresh new companies to emerge.

Firms entering that realm also have benefited from the smaller project sizes that have come to dominate the market, Wetzel said: “Maybe they’re taking a project that the bigger firms weren’t willing to. It’s been interesting, it’s like there’s this whole shift and clients now know these new firms.”

For the first time in a long time, said Dirk Schafer, those firms are actually hiring. “They’ve taken CAD-track people and made them full-time or are just hiring new employees. As a benchmark, we track something called the ABI Architects Billing Index, which is a good indication of what they’re doing. The news and the ABI seem fairly positive for four or five out of the last six or seven months.”

Returning to Normal

Tom Whittaker wondered what would be needed to restore the correct risk-reward balance in the sector.

“Ten years ago it was easy to be a contractor, and in some cases easy to be a subcontractor. You could start a company and get work. You’d bid on something, there would be three guys bidding against you. Competition wasn’t as fierce and fees were still decent.” That’s no longer the case, he said. “Hopefully, this weeds out some of those people that shouldn’t be in this business.”

Competing against a J.E. Dunn or McCownGordon, Paul Neidlein said, was beneficial: “We know they’re not going to do anything silly. There were other people for a while that were, potentially, doing something a little silly.”

He noted that hard-bidding on projects had led some contractors desperate for work to underbid their work—to no avail for themselves, and certainly not to the benefit of the contracting community.

But, as Richard Wetzel notes, “Some clients have said to me that ‘for the last 10 years, general contractors have been taking money out of my pocket. Now I’m going to go and get it back.’” But Centric Projects, he said, wasn’t seeing a lot of hard-bid prospects.

Construction, said Phil Thomas, has always been boom or bust, but in this case, “the pendulum may have swung too far. With the lack of financing and hopefully when the market corrects itself, construction will still be an industry that you can make a good living out of.”


Capital Considerations

Don Greenwell asked how the changing availability of capital had impacted various organizations, something Darin Heyen said Pearce Construction had seen with its non-profit clients. “The banks are having to compete against each other,” he said.