the newsletter of tbd consultants - 1st qtr 2016
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Net Zero Energy
The Paris Climate Change Conference shows how seriously the nations are starting to take global warming and climate change, but the construction industry has been doing its part, and continues to do so. Here we look at some of the means and methods used to provide buildings that consume Net Zero Energy
Safety on a construction site is always an issue, and here we look at one of the more recent directives from OSHA, specifically related to work in confined spaces.
The economy is improving, but there are still headwinds to push against, especially from abroad. Europe is always teetering on the edge of recession, and Japan is back in it again. Economic growth in China has dropped, although there are no reliable figures to really say how well they are doing. And the drop in oil prices is hitting the OPEC countries and causing disputes among the member states.
While other nations are reducing their interest rates and their central banks are providing additional infusions of capital to boost their economies, here in the US the Fed has been signaling its happiness with the way things are going by doing the opposite. Quantitative easing was phased out in October 2014, and (writing at the end of November) we expect that December 2015 will see the first increase by the Fed in interest rates since June 2006. The strong dollar has been affecting exporters, and there is a concern that rising interest rates will only strengthen the dollar further, but the effect on exports should be small.
The US construction market, with the exception of single-family housing, has been picking up nicely again as the economy has been improving. Multifamily housing has been doing well, as has the commercial and retail sector. The institutional market, including healthcare and government work, has not picked up as fast, but there are signs that these areas are starting to catch up. More money is flowing into government coffers from taxes, and healthcare is facing a less uncertain future following High Court rulings on so-called Obamacare, so we are starting to see more investment from these sources.
The Architectural Billings Index, which is a guide to the work coming over the following year or so, has been on a continuing, if erratic, upward trend for the past year or so. That is a good indication that the volume of construction projects will continue rising for the next year at least.
The bad news is that there may not be the staff, in the design offices and on the construction site, to meet the demand. Contractors have been complaining about the lack of available craftsmen for some time, and it is not as though there are people unemployed who can fill the posts.
Unemployment rates are down to traditional norms, and it seems that a lot of the construction workers who got laid off during the recession have found work elsewhere, and are not too eager to return to this notoriously cyclical sector. In order to attract staff, contractors are having to offer increased salaries and other benefits, which is pushing bid prices up despite the fact that material prices overall have been dropping.
So for 2016 we can expect to see a continuing, if slower than we’d like, increase in the construction market, with escalation of bid prices remaining ahead of general inflation.
Geoff Canham, Editor
Design consultant: Katie Levine of Vallance, Inc.