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2013 Construction Estimating Outlook: The Survey Says...

May 2, 2013
As published in Transportation Builder - May 2013

It’s not news to anyone in the construction industry that margins are tighter and competition is fiercer. But how are these trends affecting you compared to other construction companies.  

Construction software developer HCSS set out to see which of these trends were most affecting their heavy/highway customers. They worked with several members of their advisory board to develop an 18-question survey, and emailed it to the lead estimator at companies using HeavyBid for estimating heavy/highway construction jobs.  The anonymous survey was sent to only one contact per company to ensure that each would only be represented once in the data, regardless of size and number of locations.

 “The survey is particularly valuable because of the wide range of HCSS’s contacts and their ability to draw on the experience of North American estimators engaged in all major aspects of construction,” said Michael Rae, President of International Construction Services in Canada.

HCSS received survey responses from 442 companies across North America with respondents listing 47 different states, the District of Columbia and Canadian provinces as their primary state for operations.  No state represented more than 8% of the respondents.

New Normal—More Bidders, More Competitionhcss estimating software survey
The survey results verified that a new normal is emerging across the industry: more bidders per job and more competition. 40 percent of respondents stated they saw an increase in the number of bidders on jobs in 2012 vs. 2011.

The increasing number of bidders per job doesn’t tell the whole story about the change in competition.  The bidders remaining aren’t just ordinary companies.  These are companies that have survived the economic downturn working efficiently while running leaner operations. These are the best of the best competing for what work is available.   

“What is left standing in our industry are A teams in the A league,” said Jeff Roginsky, Division VP/IT at C.W. Matthews Contracting Co., Inc., in Marietta, Ga.

Adapt to Survive
Unfortunately, there have been companies that didn’t make it through the tough times.  60 percent of survey respondents said they knew of 5 or more companies that have gone out of business since 2008.  Those companies remaining are having to adapt to stay in business.  One way companies are surviving is by expanding their scope outside of their normal specialties or bidding jobs outside of their normal geographic range. 53 percent of respondents reported having to bid on work outside of their normal geography or specialty area.

“Before the downturn, our business was about 80 percent public work,” said Nick Jones, Vice President at Ford Construction Company in Lodi, California. “We are now about 80 percent private work, where more of our work is based on relationships and value rather than just lowest price. We’ve also had to move into new markets like wind energy and hydroelectric,” he said.

2013 Looks Fair
Despite the downturn over the past few years, companies in general are optimistic for 2013. Only 3 percent of respondents said it will be difficult to stay in business in 2013, and 69 percent expect to make a small profit or even have a fairly good year. In February 29,000 jobs were created in the non-residential construction industry (building, specialty trade, and heavy and civil engineering construction), and according to an analysis of new government data by the Associated General Contractors of America, more people are working in construction than at any point in the last three and a half years.

“As far as our customers go, HCSS has not seen a significant drop in customers on annual software maintenance,” said HCSS President Mike Rydin. “Although the survey was only of HCSS customers, it’s reassuring to see that only a few of those responding to the survey expect to have a hard time staying in business given the current economy.”Although there are some positive signs in the industry, some companies continue to play it safe.

“Construction optimism is still low from our perspective,” said Casey Dillon, Chief Executive Officer at Atlas Excavating, Inc, in Lafayette, IN. “We hear of positive things, but until we see funding we will remain lean and mean.” 

Download a Free Copy of the Survey
Companies that previewed the survey results found the information valuable.  “It was very enlightening to see that our company was running very similarly to others in our industry with competition, available work on which to bid, success rates, competition, etc..” said Roy Huemer of Earle Asphalt.

To view more survey data such as DOT and private bid volume or to see where your company compares to others in the industry when it comes to estimator and field employee raises, download the complete 2013 HCSS State of Heavy Civil/Infrastructure Estimating Survey findings.

 

Click here to read the full issue of ARTBA Transportation Builder Magazine. 

 

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