In February of 2020, before the coronavirus (COVID-19) pandemic began to affect daily life in the United States, Barnes Dennig, Frost Brown Todd, North Side Bank & Trust and USI Insurance was fortunate to host Jay Bowman, Principal at FMI, to discuss what contractors can do to transform themselves at the top of the cycle.
Bowman’s presentation was broken down into three sections: The What, The So What, and The Now What. ‘The What’ deals specifically with what is going on outside of the four walls of your business, and how these changes impact the decisions that contractors make. What are the tangible trends, and how can you position yourself to benefit from these changes? “The So What” will help you form conclusions about those trends and identify the implications that your decisions will have on your business. ‘The Now What’ covers what contractors should do if these patterns and implications turn out to be true.
Some of the highlights from each of these sections in Jay’s presentation are below, and you can always request access to watch the recording of the full presentation here.
- Total construction spending in the Cincinnati metropolitan area is forecasted to increase less than the previous five years at 1% compound annual growth rate.
- The Cincinnati metropolitan area includes Ohio, Kentucky, and Indiana.
- Total construction includes residential, nonresidential, and non-building construction.
- Segment information included the following metrics:
- Performance during last recession period
- Spending and forecast growth
- Expanding markets are expected to be multi-family, healthcare, and educational.
- Data center construction will continue to rise at a fast pace.
- One million square foot type projects or larger is where growth is happening. Think companies like Apple, Amazon, Microsoft, etc.
- The enterprise type data center projects are stagnant, and even beginning to decline.
- Megaprojects (think Amazon here locally) are expected to increase 600%.
- In 2013, the billion dollar plus projects represented 3% of total Unites States starts. In 2018, that percentage increased to 33%.
- These projects are vacuums for labor and material.
- These projects tend to disrupt a market and for most part do not meet expectations or budget.
The So What?
- Succession planning – what is your plan?
- Only about one in five contractors have a succession plan in place.
- Owners need to start thinking about questions like: where will I be, what am I going to do, and who will buy this business from me in the future?
- Contractors need to have a defined career development program.
- It is critical to future success that a program is started if there is not one already in place. Get people involved in knowing the business.
- Use of technology – how can contractors optimize?
- There are so many choices to make when it comes to technology in the marketplace. The question being asked is “how does the contractor use technology to solve problems?”
- Rethink the management of project data and mobile collaboration.
The Now What?
- The most important thing to keep in mind moving forwards is how to perform more efficiently and reduce cost to deliver.
- Stay within the core competencies of your company.
- Find out what the company actually does well and push resources to expand that competency.
- Make the hard decisions now.
- What can a contractor do to make connections and relationships?
The full seminar was recorded for our guests. To request a copy of the slides, and access to the full seminar recording, please click here.
Barnes Dennig has a team of dedicated construction professionals that understand the needs and nuances of the construction industry. By providing them with customized training, they are able to see beyond the numbers and into the core operations of the construction industry. Contact us today, or call 513-241-8131 to speak with a professional if you have any questions about the industry.