FMI Releases Nonresidential Construction Index for the Fourth Quarter, 2010

FMI, the largest provider of management consulting, investment banking and research to the engineering and construction industry, reported that as of the 4th quarter, the Nonresidential Construction Index (or NRCI for short) has been in positive territory for three quarters in a row, but only slightly positive. Most of the major components are down, but expectations for markets are improving slightly.

As we begin the new year, nonresidential contractors will focus less on chasing stimulus projects and more on finding private work to fill their backlogs. When asked if the ARRA stimulus helped the construction industry, 44 percent of panelists said it had not. Panelists do not expect there to be another stimulus bill when the new Congress is seated. For 2011, we can expect a continued period of slow growth before any signs that the private sector is significantly growing again.

The long recession brought about many changes to the industry, and we asked about one trend that could help make the construction business leaner and more efficient, the growth of prefabrication and modular construction. Panelists expect this area to grow faster than the market in general due to a number of drivers including the growing use of BIM (Building Information Modeling), owners wanting projects faster and for lower cost, safety, quality and the shortage of skilled labor once markets return to more normal growth.

With any long recession, businesses make changes, first in order to survive, then to make companies more competitive and ready for the eventual upturn. For most panelists, the recession has brought about many good changes in their businesses. Some clearly could not see anything good about it, but most described their efforts to become leaner, more productive and efficient. They have been working on systems and processes, improving the quality of their people and reviewing their culture, markets and goals. They are anticipating the end of the slow down for construction, but not sure when that will happen, yet.