By Shelby O. Mitchell
Respondents to this year's survey of spending trends vis-a-vis architecture, engineering, and construction (AEC) firms reveal a cautious optimism about their partnerships.
On the bright side, the number of projects for which cities, counties, townships, special districts, and states hired outside expertise — and the amount they invested in consulting services — last year remained about the same as in 2009. Nearly 90% of respondents reported hiring an AEC firm over the past year. Of those, 69% expect to hire firms for as many or more projects in the coming year.
However, most seem tentative about their budgets. While slightly more than one-third (36%) expect to spend the same amount, another third (30%) expects to spend less, and only 19% anticipate spending more.
Based on the types of services the firms are providing, infrastructure managers are preparing for the future.
* New question in 2011
More of you than at any time over the last three years are hiring consultants for long-term planning. Responses to our annual survey of AEC hiring trends include:
Source: PUBLIC WORKS
While design is still the clear leader, accounting for 92% of respondents' recent work, there's been a significant surge in planning compared to building (see chart below). The shift began last year as public works departments felt the impact of the housing crash and resulting decline in tax revenues. Though public works departments are not alone in experiencing shortfalls, it appears some projects that were shelved are now back on the table.
The Nonresidential Construction Index (NRCI) Report has tracked the same trend. The quarterly survey of construction industry executives is published by FMI, a management consulting and investment banking firm. Last fall, the report predicted spending on public construction projects would slow because of “sharp declines in state and municipal budgets [in 2011].”
The second quarter 2011 report was more optimistic, with panelists starting to see more bids coming in and projects on the boards. Their biggest concern with public projects is funding, as politicians continue to debate infrastructure spending levels. This report may indicate even more conservative times are to come. Although their livelihoods depend on it, 87% of panelists believe in paying down the federal deficit even if it means cutting infrastructure spending.
While they await approval of construction budgets, managers can tap federal financing for planning efforts.
“These are tight times for many communities, and public agencies may feel pressured to put aside planning efforts in addition to building,” says Mike Matichich, global technology leader, Financial Services for the engineering firm CH2M Hill. Programs like the Department of Housing and Urban Development's Sustainable Communities Regional Planning Grants (which we'll cover in depth in our September issue) and the U.S. Economic Development Administration's Planning and Local Technical Assistance Programs, provide vital seed money for long-term improvements.