FMI launches the first 2019 edition of the FMI Quarterly, a collection of research and expert perspective articles covering the industry’s most important issues. This edition highlights key insights on how firms can plan and prepare for an inevitable economic downturn. While FMI is not calling for a recession in 2019, we do expect construction spending growth to slow down in the coming months.
Chris Daum, CEO of FMI, states, “For many years we’ve noticed that contractors and clients across the industry ignore the need for internal improvements and operational execution during healthy and robust markets. Given everything that we see going on in the market today—and what’s sure to come—we think now is a great time to do so. Don’t wait until it’s too late to make those strategic moves that will help your organization weather the storm.”
Key statistics referenced in this article collection include:
- Since “the bottom” of 2011, nonresidential construction put in place for markets has grown at 5% CAGR.
- During this broad expansionary cycle for engineering and construction (E&C) markets, operating profit margins of nonresidential construction firms analyzed by FMI grew at 17.3% CAGR (24.7% for general contractors, 5.9% for specialty trade contractors and 15.3% for heavy/civil contractors) between 2013 and 2017.
- In aggregate, operating profit margins have nearly doubled over the last four years.
- Looking ahead to 2019, FMI forecasts a 3% increase in spending levels over 2018.
- In 2016, only 8% of contractors listed economic slowdown as a risk―today that statistic has jumped up to 58%.
- Managing design risk: 43% of contractors plan on increasing in-house design capabilities. This is 5% more than in 2018.
- Nearly 50% of a board’s time is spent on financial results and matters of a historical nature, while just 25% is spent on organizational strategy. In reality, and to be most effective, boards should be spending at least 80% of their time on strategic topics.
Read more in this edition of the Quarterly: How to Recession-Proof Your Business.
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