ABI May 2016: Business conditions continue to improve

ABI May 2016

Large firms more likely than small firms to use 3D printing technology for billable work

Architecture firm billings continued to improve in May, reaching the highest score in nearly a year. While billings have increased every month for the last four months, the May score of 53.1 indicates that even more firms are now experiencing improving conditions. Inquiries into new projects were also strong in May and the value of new design contracts continued to increase, although at a modestly slower pace than in April.

Business conditions improved at firms in all regions of the country in May, with the exception of a minute downtown for firms located in the Midwest. Billings continue to strengthen at firms in the Sunbelt regions of the South and West, while they continue to increase at a modest pace at firms located in the Northeast.

Architecture firm billings also increased at firms of all specializations in May, most notably at firms with residential and institutional specializations. Firms with an institutional specialization continue to recover from a modest downturn during the first quarter of 2016, while billings have held steady at a relatively slow pace of growth at firms with a commercial/industrial specialization.

The general economy continued to expand at a modest pace in May, although nonfarm payrolls added just 38,000 new positions after adding an average of 116,000 a month for the previous three months. Architectural services employment continued to increase, though, climbing to 181,400 in April (the most recent data available) for total growth of 10,000 new jobs in the sector in the last year. The latest edition of the Federal Reserve’s Beige Book, released on June 1, also indicated modest economic growth across the country, although the pace of growth slowed in the Chicago and Kansas City districts. However, construction and real estate activity expanded across much of the country, with commercial construction activity increasing in the Philadelphia, Richmond, and Minneapolis districts, and multifamily residential construction growing in the New York, St. Louis, and Dallas districts.

Have firms adopted 3D printing technology?

This month’s special practice questions asked responding firms about their use of 3D printing technology. Overall usage of this technology is not yet very widespread: just 13 percent of firms reported using 3D printing technology on billable projects. However, this number was much higher for large firms that have more money to invest in emerging technologies: 33 percent of large firms have used the technology, in contrast to just 4 percent of small firms. Firms with an institutional specialization were also more likely to report using 3D printing technology (16 percent of respondents) than firms with a residential specialization (11 percent) and firms with a commercial/industrial specialization (9 percent).

More than 80 percent of the firms that are currently using 3D printing technology indicated that they found it to be at least somewhat beneficial (with 7 percent finding it to be extremely beneficial). These firms are also by far most likely to report using it for design conceptualization/modeling (84 percent), followed distantly by marketing (41 percent) and even further by production of materials for building/construction (10 percent). The biggest benefit firms have realized from 3D printing technology is enhanced communication of architectural concepts to clients or other members of the design/construction team, while the biggest concerns are low client demand compared to the amount of dollars, time, and effort invested and lack of a revenue boost to counter the monetary investment in the technology.

Among the firms that have not yet used 3D printing technology for billable work, one quarter plan to begin using it within the next few years. The main deterrents at this time are lack of client demand to warrant the investment, high cost of the technology compared to the benefits, lack of sufficiently developed technology, and general lack of perceived benefits to the technology.

This month, Work-on-the-Boards participants are saying:

  • "Business conditions are very favorable in our area. Biggest concern is too much work for contractors, and construction prices continuing to go higher." —31-person firm in the South, institutional specialization
  • "Very strong in Seattle, as well as hotel development nationally." —18-person firm in the West, commercial/industrial specialization
  • "Things may have peaked in Mid-Atlantic region. Hiring is slowing, and new work inquiries are definitely slowing." —2-person firm in the Northeast, institutional specialization
  • "Summer is slow; we have several large projects that are waiting on voter approval of tax referendums in the fall." —11-person firm in the Midwest, institutional specialization

Download the ABI report for May 2016 (.pdf)

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ABI May 2016

ABI May 2016