2005-2006 CAM Biennial Construction Business and Owners Survey

2006 cam survey.qxp 2/17/2006 4:41 PM

We are pleased to present you with the results of our Biennial Business and Owner Surveys, whichexamined activity in 2005 and the outlook for 2006. These two surveys represent CAM’s contin-ued commitment to provide accurate and timely business information. For your convenience, wehave combined the results of both surveys into one single publication. This allows you to quicklycompare the answers of construction industry professionals with those of their clientele.

The responses tell a great deal about our region, economy, and, most specifically, the Michiganconstruction industry. Results indicate that construction work opportunities are holding steady,client satisfaction is up, and new construction continues to lead work opportunities.

However, those surveyed continue to express concerns shared with many other industries: Willthere be an adequate labor supply to meet the needs of the marketplace? Will there be new busi-ness ventures in Michigan that will generate new construction work? Are our leaders working tohelp the construction industry by attracting more people to our state, and providing training toensure that we have a skilled work force to meet our needs today and tomorrow? Who will suc-ceed when competition for work in our market is tighter than ever before?

I urge you to take time to thoroughly review this important compilation of answers from thosewho work directly in the Michigan construction industry.

If you have questions, or would like additional copies, please contact CAM’s Office of IndustryRelations at 248.972.1000.

Thank you,

Frank Nutt, Jr.Chairman, Construction Association of MichiganPresident, North Electric Co.

Dear Construction Associate,

BIENNIAL BUSINESS SURVEY 2005 1

2006 cam survey.qxp 2/17/2006 4:42 PM Page 3

About the ConstructionAssociation of Michigan

The mission of the Construction Association of Michigan (CAM) is to provide its members with theprograms and services they need to be successful in the very competitive construction industry. CAMserves more than 3,700 members representing subcontractors; equipment and material suppliers; gen-eral contractors; construction managers; and providers of legal, design, and financial services.Founded in 1885, it is the oldest and largest construction association in North America.

The association is an essential information network for the Michigan construction industry. It pub-lishes Construction Project News, a daily report containing complete details on Michigan projects outfor bid. Construction Pre-View, a weekly newsletter, keeps CAM members “in the know” with newsof proposed projects. With advanced software, members can access entire plans and news at theiroffice via CAM-Online.

The Construction Buyers Guide, published annually, is the premier directory of Michigan construction.It lists all relevant information on thousands of construction-related companies. The ConstructionBuyers Guide can also be accessed online at CAM’s website, www.cam-online.com. CAM Magazine,“The Voice of the Construction Industry,” is recognized as the leading monthly industry magazine covering construction news, business trends, and construction technology in Michigan.

CAM’s Training and Education Center (CAMTEC) offers industry-specific classes and seminars onconstruction project management, marketing, and other timely issues. These courses can even betaught on site. CAMSAFETY provides all the training and documentation assistance needed by con-tractors today. Companies can use CAM’s Certified Safety Consultant to ensure that their workers andtheir job sites are in complete compliance with current safety regulations.

CAM produces the Design & Construction Expo, the largest annual construction trade show in theMidwest. This show displays the latest construction products and services as well as hosting semi-nars, demonstrations, and advancement courses.

The CAM Labor Relations Program provides quality labor relations assistance and information at noadditional cost to union contractors employing carpenters, cement masons, laborers, or operatingengineers in southeast Michigan. CAM Administrative Services offers health insurance, CAM-COMP,which serves the need for workers’ compensation insurance. Construction Federal Credit Unionprovides CAM members superior banking service.

For more information about these or any other CAM services, please contact the CAM MarketingDepartment at 248.972.1000.

Serving the needs of the construction industry for more than 80 years, Plante & Moran isMichigan’s largest certified public accounting and management consulting firm with officesthroughout the Great Lakes Region. Plante & Moran provides the experience and personal atten-tion the construction industry demands, offering a full range of services including audit andaccounting; federal, state, and local tax planning; information technology and telecommunica-tions consulting; family business succession planning; merger and acquisition assistance; costsegregation studies; and strategic planning.

For more information about Plante & Moran’s construction team, please contact Tom Doyle at248.223.3402 or [email protected].

Co-Sponsor:Plante & Moran, PLLC

2 BIENNIAL BUSINESS SURVEY 2005


Produced by the Construction Association of Michigan (CAM) and the accounting firm Plante &Moran, PLLC, the Biennial Business Survey has been conducted for more than 14 years. Thesurvey measures contractor opinion in three categories: construction outlook, financial health,and industry perception.

Biennial Business Survey

Owner Business Survey

This survey examines the construction industry from the clients’ perspective. The two-part ques-tionnaire asks owners and construction clients about plans for upcoming work and their percep-tions of Michigan’s construction industry and its practices.

More than 2,500 survey participants were selected at random from CAM’s Daily ConstructionProject News division, which monitors construction activity throughout the state. The surveyreceived an impressive response, the majority of which were gleaned from public entities includ-ing municipalities, county agencies, and state contracting offices.



. Business Survey

Page 17. Business Survey Written Comments

Page 19. Owner Survey

Page 28. Owner Survey Written Comments

Table of Contents


Please note: Percentages in the survey may not add up to 100% due to rounding.


BusinessSurvey


According to respondents, new constructionslightly outpaces renovation as the leading sourceof current work opportunities. Retrofit, addition,and maintenance projects are providing virtuallythe same level of work as in the 2003 survey.

Business Outlook Contractors, Suppliers, Architects, and Engineers

In terms of construction type, please rank the top five categories that are presently providing your company with the most opportunities for work?

Office construction again accounts for the largest percentage of building opportunities, after losing that leading status in the prior survey.Educational facilities remain a solid source of work, and, despite hard economic times, retail projects showed a substantial increase.

2001 Ranking (Overall)1. Office Buildings2. Transportation/Industrial3. Education/Cultural/Scientific

Buildings4. Health/Welfare/Hospitals5. Residential/Multi-Family6. Public Works Projects7. Retail Stores/Outlets8. Religious Buildings9. Residential/Single-Family

10. Infrastructure11. Entertainment/Recreation12. Hotels/Motels

2005 Ranking (Overall)1. Office Buildings2. Educational/Cultural/

Scientific3. Retail Stores/Outlets4. Transportation/Industrial5. Health/Welfare/Hospitals6. Public Works Projects7. Religious Buildings8. Residential/Single-Family9. Hotels/Motels

10. Residential/Multi-Family11. Entertainment Facilities12. Infrastructure


In terms of type of structure, what category of work is presently providing your company with the most opportunities for work?

0%

10%

20%

30%

New Construction Renovation Retrofit Additions Maintenance

23% 21%18% 19% 18%

2005

2003 Ranking (Overall)1. Education/Cultural/Scientific

Buildings2. Residential/Single-Family3. Office Buildings4. Transportation/Industrial5. Health/Welfare/Hospitals6. Public Works Projects7. Residential/Multi-Family8. Retail Stores/Outlets9. Infrastructure

10. Religious Buildings11. Hotels/Motels12. Entertainment/Recreation

0%

10%

20%

30%

40%

50%

$100

,000

or le

ss

$100

,001 -

$500

,000

$500

,000 -

$1 m

illion

$1.1

millio

n -$2

milli

on

$2.1

millio

n -$5

milli

on

$5.1

millio

n --$

10 m

illion

$10.1

milli

on -

and o

ver

31%

40%

13%

6%4%

2%3%

In terms of project cost, what category of work is providing your company with the most opportunities? (Average)

The average number of high-end construction projects remains mostly unchanged. However, perhaps due to rising costs, projects inthe $100,000 to $500,000 range were up significantly over those in the $100,000 or less category, which the majority of contractorsreported in the previous survey as being their largest source of new work.


Almost 40 percent of all respondents reported their volume of work increased by five percent or more from previous levels.Approximately 30 percent reported a decrease of five percent or more.

Project values increased significantly due to the rising cost of construction materials. The largest boost was recorded in projects cost-ing between $100,000 to $500,000. Information gathered by CAM has indicated record costs for steel and asphalt, which could be acontributing factor.

2001 Ranking (overall)1. Less than $50,0002. $250,000–$500,0003. $50,000–$100,0004. $1 million–$2 million5. $2 million–$5 million6. $150,000–$250,0007. $100,000–$150,0008. $750,000–$1 million9. $500,000–$750,000

10. $5 million–$10 million11. $10 million–$20 million12. More than $20 million

1999 Ranking (overall)1. Less than $50,0002. $250,000–$500,0003. $50,000–$100,0004. $150,000–$250,0005. $1 million–$2 million6. $500,000–$750,0007. $2 million–$5 million8. $750,000–$1 million9. $100,000–$150,000


2005 Ranking (overall)1. Less than $50,0002. $50,000–$ 100,0003. $250,000–$500,0004. $100,000–150,0005. $150,000–$250,0006. $500,000–$750,0007. $750,000–$ 1 million8. $1 million–$2 million9. $2 million–$5 million


0%

4%

8%

12%

16%

13%

Up 5%

or le

ss

17%

Up be

twee

n5%

and 1

0%

8%

Up be

twee

n10

% an

d 20%

13%

Up m

ore

than 2

0%

7%

Down

5%or

less

10%

Down

betw

een

5% an

d 10%

8%

Down

betw

een

10%

and 2

0%

11%

Down

mor

etha

n 20%

12%

Abou

t the

same

17%

How has the volume of work for which you have contracted changed over the past 12 months?


2003 Ranking (overall)1. Less than $50,0002. $50,000–$100,0003. $250,000–$500,0004. $750,000–$1 million5. $1 million–$2 million6. $100,000–$150,0007. $150,000–$250,0008. $500,000–$750,0009. $2 million–$5 million

10. $5 million–$10 million12. More than $20 million11. $10 million–$20 million

In terms of project cost, what category of work is providing your company with the most opportunities? (Average)


Results indicate that backlogged projects remainconsistent with levels reported in the previoussurvey, with none of the categories varying bymore than 3 percent from the 2003–2004 edition.

Securing Work Contractors, Suppliers, Architects, and Engineers

0%

8%

16%

24%

32%

40%

Less thanone month

2 to 3 months 4 to 5 months 6 -12 months More than12 months

41%

29%

16%

10%

2%

0%

5%

10%

15%

20%

25%

30%

35%

41%

2%

Competitivebidding (open

bidding)

14%

Competitivebidding (invitation

only)

5%

In-housedevelopment

staff

15%

Negotiate directly with

owner

21%

Referral Other

40%

Competitive bidding is still the leadingmethod, and, in fact, 62 percent of contrac-tors reported using a form of competitivebidding as their primary method forobtaining new work. Contractors now listnegotiating directly with an owner asfourth in importance rather than its thirdplace ranking two years ago. Securingwork with an in-house development staffremained the same as in the last survey at5 percent.

How much new work do you currently have backlogged?

What is your primary method for securing new construction work?

0%

10%

20%

30%

40%

50% 46%45%

6%

Less than 5 5 to 10 10 to 15 15 or more

2%

Nearly 55 percent of contractors reported that fewer than five other contractors are competing against them during the bidding process.Only 46 percent reported the same in 2003.

If you are bidding competitive work, what is the average number of bidders who have been biddingagainst you on each project?


0%

10%

20%

30%

40%

50%

55%

39%

5%

Less than 5 5 to 10 10 to 15 15 or more

1 %

55%

20032005


0%

10%

20%

30%

40%

50%

60%

23%

Add full-timeemployees

5%

Add part-timeemployees

54%

No change innumber ofemployees

13%

Lay off full-timeemployees

3%

Lay off part-timeemployees

More than half (54 percent) of respondents indicated thatthey do not plan any change in the staff levels. The mostsignificant change, since the previous survey, is related torespondents who plan to layoff full-time employees. Thiscategory went from 7 to 13 percent.

What plans do you have for your work force over the next six months?

Compared with 23 percent in 2003,28 percent of respondents expect anincrease in labor shortages.

Work Force Plans Contractors, Suppliers, Architects, and Engineers

2005 2003 2001

Stay the same 50% 52% 35%

Increase slightly 22% 19% 14%

Increase significantly 6% 4% 3%

Decrease slightly 14% 18% 35%

Decrease significantly 3% 3% 11%

No answer 5% 4% 2%


Over the next two years, you anticipate labor shortages to:

2005 2003 2001

Yes 41% 44% 64%

No 56% 54% 34%

No answer 2% 2% 1%

Is your company experiencing difficulty finding skilled workers?

Difficulty in finding skilled workers is not as large a con-cern as it was just four years ago. Again, based upon theinformation that CAM monitors, this could be attributed toa drop in demand for workers as building has slowed, cou-pled with an increase in trained workers as a result of thetraining drive initiated in early 2000.


What plans do you have for your work force over the next six months? (SECTOR BREAKDOWN)

0%

10%

20%

30%

40%

50%

60%54%

20%

3%

Add full-time

4%

Addpart-time

Stay thesame

Lay offpart-time

17%

Lay offfull-time

70%

80%

7%

Lay offpart-time

0%

Lay offfull-time

0%

Addpart-time

0%

10%

20%

30%

40%

50%

60%

73%

20%

Add full-time

Stay thesame

70%

80%

6%

Addpart-time

6%

Lay offfull-time

0%

10%

20%

30%

40%

50%

60%

65%

21%

0%

Add full-time

Stay thesame

Lay offpart-time

70%

80%

0%

10%

20%

30%

40%

50%

25%

Add full-time

17%

Lay offfull-time

47%

Stay thesame

6%

Lay offpart-time

6%

Addpart-time

General Contractors Subcontractors

Suppliers Architects, Engineers, Real Estate Developers

More contractors plan on laying off workers. Most businesses anticipate little variance in staffing levels with changes mirroringthose in the previous CAM survey.



It is interesting to notethat “sources of futurework” was listed as achallenge by 17 percentof respondents, comparedwith 13 percent in theprevious CAM survey.

Financial Health Contractors, Suppliers, Architects, and Engineers

0%

10%

20%

30%

40%

Sour

ces o

ffut

ure w

ork

Econ

omic

decli

ne

Comp

etitio

n

Shor

tage/

traini

ng of

labor

Insur

ance

cost

esca

lation

Grow

th ma

nage

ment

Inter

est r

ateflu

ctuati

ons

Shor

tage/

Train

ing of

mana

geme

nt

Litiga

tion

Gove

rnme

ntSp

endin

g

Infor

matio

ntec

hnolo

gy

21%

26%

17%

12%

5%4%

3% 3%1%

4%1%

Rank the most challenging areas facing the construction industry within the next two years.


Rank the three strategies your company has undertaken to improve profitability.

2005 2003 2001

Cut operating costs 25% 31% 25%Improving process/products 20% 22% 25%Enhanced marketing 15% 14% 13%Design/Build projects 10% 12% 15%Staff reduction 10% 7% 5%Geographic expansion 9% 8% 8%Enhanced training 6% 3% 10%Safety/Risk management 4% 2% 3%Reduced training 0% 0% 0%

As has happened in so many industries, it appears that the current trend in profitability enhancement has been to cut staff where possi-ble and train those who remain.


What is the average length of time it takes your companyto receive final payment for work performed or materialsprovided?

2005 2003 200130 days 14% 13% 25%60 days 29% 30% 44%More than 90 days 55% 57% 30%No answer 1% 0% 1%

More than half of respondents reported that they still, onaverage, have to wait more than 90 days to receive final pay-ment. Subcontractors are experiencing the longest wait of allconstruction professionals.

What percentage of your total sales do you maintain inequity?

2005 2003 2001Less than 5% of total sales 30% 31% 33%5–10% 27% 26% 25%10–20% 13% 16% 13%More than 20% 12% 11% 10%No answer 17% 16% 19%

0%

10%

20%

30%

40%

50%

Better thanlast year

About the sameas last year

Wose thanlast year

31%

37%

31 %

A higher number of contractors reported their cash flow position has improvedcompared to the same time period in 2003, when only 21 percent marked “bet-ter.” Also a significantly lower number of contractors reported that cash flowhad worsened from previous levels.

How does your present cash flow situation compare to last year?

0%

10%

20%

30%

40%

50%

60%

No answer Developing asuccession plan

Joint venture Selling yourbusiness

Purchasing/Mergingwith another company

54%

18%

13%

7% 7%

Are you considering any of the following in the next 18 months?

The point of concern in this area is that 27 percent ofrespondents do not want to “go it alone” any more.They would prefer to either sell their business or joinwith another company. Interestingly, 54 percent did notanswer this question. From the CAM perspective we’recurious about direct correlations: Was the exact answernot available? Were respondents reluctant to respond?CAM will address this outside of the survey.


Equity as a percentage of total sales has remained constantduring the first half of this decade.


0%

10%

20%

30%

40%

50%

60%

No claims Less than 3 3 to 5 5 to 10 More than10

54%

28%

9%

3% 3% 3%

No answer

The percentage of responses shows that more than halfof respondents have not filed Claims of Lien. It is worthnoting that the last three CAM surveys have shown thatmany companies do not file Claims of Lien. This surveyindicates 54 percent, which is consistent with previoussurveys.

Have you filed a Claim of Lien in the past six months?

Decrease0% to 10%

12%

Increase1% to 5%

27%

Decreasemore than

11%

8%

Stay aboutthe same

12%

Increase6% to 14%

20%

Increase more than

15%

13%

No answer

7%

0%

5%

10%

15%

20%

25%

30%

How have material prices for your business changed in the past six months?

Almost everyone surveyed reported price increases. Many published reports have indicated the increased demandin commodities has affected pricing worldwide and in the U.S.

2005 2003 2001Increase in prices 94% 68% 74%Decrease in prices 2% 7% 6%Stayed about the same 4% 25% 20%

Compared to 2004 sales, your company’s annual sales for 2005 will:

While only 43 percent experienced an increase in salesin the 2003 survey, 60 percent of respondents’ salesincreased in 2005.




Currentlyusing

0%

10%

20%

30%

40%

27%

Consideringimplementing

20%

No interest inthis technology

32%

No answer

15%

Planning toimplement inthe next year

6%

50%Online job bidding

There was a slight increase compared with the 2003 sur-vey in which 22 percent of respondents said they werecurrently using this technology.

Currentlyusing




No answer0%

10%

20%

30%

40%

51%

10%14% 14% 12%

50%

Company website

Currently, 61 percent of respondents have or plan to havea company website within the next year. This is up com-pared to the previous survey (56 percent).

There has been a steady and noticeable leapin interest in this technology since the 2003survey. That year only 40 percent had used orplanned to use the technology within the nextyear. In this year’s survey, 56 percent ofrespondents have used or plan to use onlineblueprint technology within the next year.

Currentlyusing

0%

10%

20%

30%

40%

44%


22%


10%

No answer

13%


12%

50%Online blueprints

Technology Contractors, Suppliers, Architects, and Engineers

What is the likelihood that your company will take advantage of the following technologies?

0%

10%

20%

30%

40%

50%

60%

No investment Yes, a smallinvestment

Yes, significantinvestment

49%

39%

9%

4%

No answer

Are you planning a technology investment in the next year?

0%

10%

20%

30%

40%

50%

60%

No investment Yes, a smallinvestment

Yes, significantinvestment

52%

39%

5%3%

No answer

20032005



Policies & Procedures Contractors, Suppliers, Architects, and Engineers

What plans, if any, do you have for the following policies and procedures?

Job safety procedures 72% 1% 5% 6% 3% 12%Staff development/training 46% 2% 11% 12% 11% 18%Substance abuse testing 41% 2% 6% 21% 12% 17%Employee benefit programs 30% 19% 4% 13% 13% 22%Minority employment 29% 2% 6% 17% 25% 21%Employee theft policies 29% 1% 9% 20% 21% 20%Handicapped employment 13% 0% 5% 27% 33% 22%

Enhancecurrent

Reducecurrent

Plan toimplement

Don’t plan toimplement

Don’tknow

2005 2003 2001 1999Less than 10 percent 11% 14% 12% 15%10 to 30 percent 7% 7% 5% 8%30 to 50 percent 10% 6% 8% 8%50 to 70 percent 17% 14% 13% 11%70 to 90 percent 21% 25% 23% 24%More than 90 percent 22% 25% 25% 21%No answer 10% 8% 14% 13%

0

100

200

300

400

500

600

700

Jan-

04

Feb-

04

Mar-0

4

Apr-0

4

May-0

4

Jun-

04

Jul-0

4

Aug-

04

Sep-

04

Oct-0

4

Nov-0

4

Dec-0

4

Jan-

05

Feb-

05

Mar-0

5

Apr-0

5

May-0

5

Jun-

05

Jul-0

5

Aug-

05

Sep-

05

281

423457 472 489

454 460

360 346

294

214 214

318

400

493 477

534503

411

511

408

Aug-

05

Sep-

05

349

293

Bidding Cycle (provided by CAM Construction Project News Group)

Noanswer

Nearly three quarters of respondents plan to enhance job safety procedures in the near term; likewise, respondents indicated theirintention to increase substance abuse testing and staff development efforts in the short term.

What percentage of your construction work does a Michigan-based architectural or engineering firm design?

A major change occurred in this category since the last CAM survey. In 2003, half of the respondents stated that 70 percent or more oftheir work was designed by a Michigan-based architectural or engineering firm. In this survey, only 43 percent gave that response.



Respondent Demographics Contractors, Suppliers, Architects, and Engineers

In which county are you located in the state ofMichigan?

Wayne County 28%Oakland County 32%Macomb County 14%Balance of Detroit SMSA 11%Mid-Michigan 2%West Michigan 2%Tri-City/Thumb Area 6%North Lower Michigan 1%Upper Peninsula 0%No answer 3%

Approximately how long has your company beenin business?

5 years or less 7%5 to 10 years 12%10 to 15 years 12%15 to 20 years 10%20 to 30 years 22%More than 30 years 36%No answer 1%

What is your title?

President 66%Chief Executive Officer 7%Chief Financial Officer 3%Chief Operating Officer 3%Other 16%No answer 4%

Generally speaking, do you consider yourself to be:

Republican 65%Democrat 10%Independent 9%No preference 8%No answer 8%

What is your personal net worth?

Less than $50,000 2%$50,000–$99,999 2%$100,000–$499,999 21%$500,000–$1 million 22%$1 million–$2 million 13%More than $2 million 20%No answer 21%

What is your approximate age?

21–34 3%35–44 23%45–54 37%55–64 22%65–Over 11%No answer 4%

What is the last grade of school you completed?

High school 12%Vocational/Technical school 4%Some college 22%College degree 49%Post-graduate degree 9%No answer 5%

Is this a minority-owned (excluding female-owned) business?

Yes 4%No 95%No answer 1%

Is a woman a majority-owner (51 percent or more)of this business?

Yes 11%No 87%No answer 2%

Which of the following designations best describesyour primary business?

General Contractor 15%Subcontractor 48%Equipment/Material supplier 14%Equipment/Supplies manufacturer 5%Architect/Engineer 5%Real estate developer 2%



Written Comments Contractors, Suppliers, Architects, and Engineers

At the present time, what is your biggest concern about the construction industry?

Solution Suggestions:

• “No new sources of new construction.”• “Health care cost. Workers comp cost. Fuel cost. Illegal (no SS card) workers.”• “Competitors are pricing projects artificially low knowing they will not be profitable simply to secure work in a tight market.”• “Lack of funding for municipal growth and infrastructure revitalization.” • “Developers quit investing in new projects.”• “The economy in Michigan has to change in order for the construction industry to be competitive or even survive.”• “We must abolish Single Business Tax and encourage investment.”• “New apprentices seem to join for high hourly wage and benefits, not for the love of the trade. Their look, attitude, tardiness,

and work ethic show this.”• “Too many people unlicensed and doing under-the-table work that is not up to code.”• “As a supplier, we are last to see the $$$ and it seems to get worse each year.”

• “Mandate a minimum of Michigan-based companies for every large project.”• “Hold poor performing contractors responsible for shoddy work.”• “Create less costly health care programs for small businesses.”• “Send illegal workers back home or make them pay taxes.”• “Michigan must learn to be less dependent on auto industry.”• “The state’s governor and legislature need to stop bickering and attract businesses.”• “Promote an atmosphere of good ethical business practices.”• “Improve online license check system.”


Written Comments Contractors, Suppliers, Architects, and Engineers


Of those who answered “no,” the following are some of their reasons:

• “You have to front your work and hope to be paid after the project is complete.”

• “We seem to make less than we did fifteen years ago.”

• “Too many labor-restrictive rules in the field. Too many unscrupulous customers.”

• “Competitive bid margins are not enough to cover costs.”

• “I’m working way too hard to make this little.”

• “Stress, stress, stress.”

Would you still choose to make your living in the construction industry if you were beginning your career today?

0%

25%

50%

100%

Yes No

59%

33%

75%

Unsure No answer

1%7%

The responses to this question certainly under-score how construction today is a very challeng-ing industry. Interestingly, in the 2003 CAMSurvey, 75 percent responded “yes” and only 25percent responded “no.”

(Continued)


Owner Survey



0%

10%

20%

30%

40%

50%

55%

40%

4%

Pleased/Satisfied

Adequate Disappointed

60%

Which of the following would best summarize yourgeneral experience with the professionalism of con-struction personnel during the building process?

0%

10%

20%

30%

40%

50%

56%

23%

16%

Good Excellent Satisfactory

60%

5%

Poor

What was the overall quality of your last constructionproject?

Which of the following would best summarize your general experience with the overall construction process?

2005 2003 2001

Smoother than expected 10% 5% 8%Proceeded as expected 73% 78% 59%More conflicts than expected 16% 17% 25%

Client Perspective Owners, Developers, and Construction Clients

Which of the following would best summarize your general experience with project costs?

2005 2003Greater than expected 40% 39%Equal to expectations 56% 57%Below expectations 4% 4%



1%

Ahead ofschedule

52%

On time

22%

Delayed-contractor

at fault

2%

Delayed-ownersat fault

23%

Delayed-no fault

1%

Other0%

10%

20%

30%

40%

50%

60%

Which of the following would best summarize your general experience with project completion times?

A great change for the better occurredconcerning the issue of completiontimes since the last survey. More thanhalf of the reported projects came in onor ahead of schedule. A 10 percentagepoint drop was noted regarding delaysbeing cited as caused by contractors. Inthe last survey, 32 percent of ownerscited contractors as the cause of delaysas compared with just 22 percent inthis survey.

0%

10%

20%

30%

40%

25%28%

8%10%

12%

4%

1%

Unforeseenproblems

Communi-cations with

subcontractors

Other Quality oflabor

Communi-cations with

projectmanager

Communi-cations

with owners

Quality ofproducts

Owner delays

1%

Which of the following generally causes the most delays in project wrap-ups?

According to this survey, com-munication breakdown issuescomprise the main source of con-struction delays, accounting for44 percent of project delays. Addto that the 10 percent of respon-dents who cited quality of laboras a delay factor, and it appearsthat service issues comprise themain cause of constructiondelays. From the CAM perspec-tive, while unforeseen problemsappear to be a larger issue for theindustry to contend with, if moreplanning were involved we’d becurious to see if this numberwould adjust accordingly.



In your opinion, who should you contact first to address problems with your project?

0%

10%

20%

30%

40%

68%

12%15%

2% 1%

General contrators/construction managers

Architects Engineers Tradespersons Specialtycontractors

50%

60%

70%

0%

10%

20%

30%

40%

43%

20%

15%

7%4%

9%

Architect Contractor Other Financialinstitution

Accountant No answer

50%

2%

Attorney

When doing construction planning, which of the following do you firstconsult about your projects?

Every category, with the exception ofarchitects, showed a gain from the previ-ous survey. In 2003, 62 percent of ownerssurveyed said that they would first consultan architect when planning a new project.In this survey that response rate dropped to43 percent.

It is proof that owners believe contractors are making moreprofit than they actually are when one quarter of all theowners surveyed believe profit margins for contractors arebetween 20 to 30 percent.

What percentage of the money charged for constructionservices do you believe represents profit for contractors?

2005 2003Less than 5% 3% 6%5–10% 31% 32%10–20% 28% 32%20–30% 25% 21%30–40% 7% 5%40–50% 3% 1%More than 50% 1% 2%

Too high Too low Fair

Architects 49% 7% 39%Engineers 39% 3% 54%General contractors 22% 2% 72%Trades 20% 5% 71%Specialty contractors 37% 2% 54%

What is your perception of fees earned by the followingconstruction personnel?



Decrease0% to 10%

12%

Increase1% to 5%

26%

Decreasemore than

11%

5%

Stay aboutthe same

35%

Increase6% to 14%

18%

Increase more than

15%

4%

No answer

17%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Compared to your 2004 sales, you anticipate your company’s annual sales for 2005 will be:

Almost half of all respondents anticipate an increase in future sales for 2005, which is lower than the contractors’ outlook (48% ofowners versus 60% of contractors). However, more contractors (20%) than owners (17%) expect their 2005 sales to decline.

Owners

0%

10%

20%

30%

40%

Econ

omic

decli

ne

25%

Comp

etitio

n

6%

Sour

ces o

ffut

ure w

ork

4%

Gove

rnme

ntSp

endin

g

17%

Insur

ance

cost

esca

lation

17%

Shor

tage/

traini

ng of

labor

9%

Grow

th ma

nage

ment

4%

Othe

r

5%

Litiga

tion

3%

Infor

matio

ntec

hnolo

gy

3%

Shor

tage/

Train

ing of

mana

geme

nt

2%

Intre

st ra

teflu

ctuati

ons

6%

0%

10%

20%

30%

40%

Sour

ces o

ffut

ure w

ork

Econ

omic

decli

ne

Comp

etitio

n

Shor

tage/

traini

ng of

labor

Insur

ance

cost

esca

lation

Grow

th ma

nage

ment

Inter

est r

ateflu

ctuati

ons

Shor

tage/

Train

ing of

mana

geme

nt

Litiga

tion

Gove

rnme

ntSp

endin

g

Infor

matio

ntec

hnolo

gy

21%

26%

17%

12%

5%4%

3% 3%1%

4%1%

Rank the three most challenging areas facing your business within the next two years.

In 2003, the top three challenges facing business owners were, in this order: the economy, competition, and finding sources of futurework. In 2005, the top three concerns were the economy, government spending, and insurance costs. While concern about the econo-my and rising insurance costs are affecting everyone, the fact that many municipal agencies took part in this survey explains the highlevel of concern about government spending.

Financial Health and Outlook Owners, Developers, and Construction Clients

Decrease0% to 10%

12%

Increase1% to 5%

27%

Decreasemore than

11%

8%

Stay aboutthe same

12%

Increase6% to 14%

20%

Increase more than

15%

13%

No answer

7%

0%

5%

10%

15%

20%

25%

30%

Contractors

Owners Contractors



2005 2003 2001Better than expected 19% 25% 32%Approximately the same 54% 45% 53% Worse than expected 12% 24% 6% No answer 14% 5% 9%

Generally speaking how has your business fared over the last 12 months?

2005 2003 2001Expect it to be good 18% 34% 37%About the same 49% 45% 45%Worse than expected 19% 15% 8%No answer 14% 6% 10%

What do you feel the overall outlook is for your business sector in the next year?

More respondents in this survey expressed pessimism about the future as compared to their outlook in 2003.



What type of work was done on the majority of your projects?

0%

10%

20%

30%

40%

NewConstruction

Renovation Addition toExisting Facility

OngoingMaintenance

Retrofit Other No answer

35%

18% 18%

10%7%

5%7%

50%

Construction Project Activity Owners, Developers, and Construction Clients

How many non-residential projects have you personally been involved in planning and/or executing within the past 24 months?

2-5Projects

35%

11 - 50Projects

8%

1Project

19%

No Projects

23%

6-10Projects

9%

More than50 Projects

4%

No answer

2%

0%

10%

20%

30%

40%

Of the respondents, 63 percent stated that they are personally involved in planning and/or executing 10 projects or fewer. That is a 3percent rise from the previous survey. However, in the 2003 survey, nearly 20 percent stated they were involved in 10 to 50 projects,and in this survey that response rate dropped to 8 percent.

Do you plan to be involved in the planning and/or executingof any construction projects within the next 24 months?

Please specify what type of work will be done on themajority of your upcoming projects?

2005 2003Yes 66% 80%No 31% 17%No answer 3% 3%

2005 2003New construction 51% 51%Renovation 15% 21%Retrofit 13% 12%Ongoing maintenance 9% 7%Addition to existing facility 16% 11%

0%

10%

20%

30%

40%

NewConstruction

Renovation Addition toExisting Facility

OngoingMaintenance

Retrofit Other No answer

41%

20%17%

10%

5%3% 3%

50%20032005



Please select a range that represents the average estimated price of your projects.

$100,000 -$500,000

26%

$2.1 million-$5 million

11%

$100,000or less

22%

$500,001-$1 million

14%


12%


4%

$10.1 million-and higher

5%

0%

10%

20%

30%2005

$100,000 -$500,000

20%


17%

$100,000or less

15%

$500,001-$1 million

14%


13%


10%

$10.1 million-and higher

4%

0%

10%

20%

30%2003

$100,001 -$500,000

20%


8%

$100,000or less

24%


13%

$10 millionand higher

12%


4%

0%

10%

20%

30%

$500,001-$1 million

20%

2005

$100,001 -$500,000

22%


20%

$100,000or less

19%


10%

$10 millionand higher

6%


5%

0%

10%

20%

30%

$500,001-$1 million

17%

2003

Please select a range that represents the average estimated price of each of your upcoming projects.



What types of technology would you consider for future projects?

Have implemented 4% 27% 18% 42%Plan to implement 2% 16% 21% 17%Never plan to implement 5% 5% 10% 6%Not familiar with this technology 56% 24% 22% 8%No answer 34% 27% 29% 27%

Technology Owners, Developers, and Construction Clients

0%

10%

30%

40%

Too expensive Unsure of needs

Ability to expand to future

technology changes

No answerOther

36%

40%

16% 15%

10%

20%

38%

Lack ofoptions/

contractors

What challenges have you faced regarding the implementation of technology in new construction and renovation projects?

Note: Percentages exceed 100% due to multiple responses

BLEC(building local

exchange carriers)

Advancedvoice/data

cabling

Alternativetelecommunica-tions providers

Standardhigh-speed

internet access



What is your overall perception of the construction industry?

Positive responses:

• “I’ve heard horror stories, but, for the most part, I’ve been blessed to work with excellent construction contractors.”• “Most in the industry are good, hard working people.”• “Deal with reputable contractors and you will have no problems.”

Negative responses:

• “Lack of professionalism on the part of younger supervisors.”• “There is a continuing decline in quality workmanship and a general ignorance of regulations.”• “Some contractors cut corners.”• “Not doing what is promised when it is promised.”

In your opinion, what is the single biggest problem owners experience when working with the construction industry?

• “Lack of communication between all parties involved with the project.”• “Contractor’s failure to stay on schedule.”• “Seems to me the architect is never at fault, the buck is passed to the contractor and then to the owner to foot the bill.”• “Misunderstandings, confusion, misinterpretation, getting everyone on the same page is challenging.”• “Contractors sometimes have too many jobs going at the same time and can’t keep promises they make.”• “Costs for materials, fuel, and equipment change quickly.”

Written Comments Owners, Developers, and Construction Clients


Construction Association of Michigan43636 Woodward • P.O. Box 3204 • Bloomfield Hills, MI 48302-3204

www.cam-online.com


2005-2006 CAM Biennial Construction Business and Owners Survey

Documents

Transcript of 2005-2006 CAM Biennial Construction Business and Owners Survey