Properties Magazine January 2013 : Page 31

Testing the Temperature Among Northeast Ohio Construction Pros Skoda Minotti’s 2012 survey reveals respondents’ opinions on range of topics By Roger T. Gingerich, CPA/ABV, CVA Skoda Minotti A s you may remember, in the August 2012 issue of Properties , we took a brief look at the results of Skoda Minotti’s annual Northeast Ohio Real Estate and Construction Industry Survey. In that issue, we focused on the outlook for construction opportunities in this region and also took a look at respondents’ feelings on Ohio Construction Reform. This month, we’ll be delv-ing a little deeper into the survey results on topics such as banking, bidding envi-ronment, bonding, Green Construction and Building Information Modeling (BIM). If you would like the complete survey results and analysis, you can download Skoda Minotti’s entire 23-page report for free at Biggest threat to your business over the next 12 months: Average size job that you bid on increased: Figure A Figure B Banking As we discussed in the August article, although opportunities for work are on the rise, construction professionals now seem to be focused on financing that work. “Tightened credit” was cited as the second big-gest threat (up from third in 2011) to our respondents businesses with 24% choosing that option. That was up from only 8% in 2009. However, it is important to remember that 81% of our respondents chose “lack of work” as their biggest threat in 2009, so obtaining credit was not a top priority at that time. (See figure A.) While credit certainly is a major issue for our respondents, the situation does seem to be slowly improving. We have seen a steady improvement to the question, “Do you feel that over the past year, the ability to obtain financing has increased, stayed the same, decreased slightly or decreased significantly?” Starting in 2009, the percent of respondents choosing either “decreased slightly” or “decreased sig-nificantly” has declined each year, from 78% of respondents in 2009 down to only 34% of respondents this year. Also, 15% of respondents said that their ability to obtain financing actually increased in 2012, a high mark since we began the survey. Bidding environment We’ve tracked the construction bidding environment since 2009 and this year’s results were the most favorable. In terms of size of jobs being bid, 41% said that the size of jobs they’ve bid over the last 12 months had “increased.” This is the highest percent since we started tracking this data. Only 24% said that the average size of the jobs that they bid had decreased which repre-sents the lowest percentage since we started asking the question in 2009. (See figure B.) In terms of competition, the bidding environment seems to be less com-petitive than over the past few years. Nearly half (49%) of respondents were only competing with one to four other bidders on their average job this year. That percentage had never been higher than 29% in the past. While it is still a competitive envi-ronment, we are no longer seeing a situation, like in 2010, where 37% of respondents saw 10 or more bidders on their average job. Bonding Over the last five years, we’ve seen an interesting trend in terms of bonding required by our respondents. In 2008, 73% of our respondents said that less than 40% of their work required bond-ing. That number dropped to 71% in 2009 and all the way down to 59% in 2010. It then rebounded to 64% in 2011 and back up to 70% this year. One reason for this drop in bonding requirements and subsequent rise could be related to some increased demand for private work rather than government work, which does not typically require bonding. It could also be somewhat related to the recent “mega-projects” in town such as the Horseshoe Casino and Medical Mart. In some cases on these larger projects, the general contractors 31 Graphics courtesy of Skoda Minotti

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