Notes from the Road

Sometimes a word crops up that seems apropos to all the surrounding circumstances. Right now, mine is “uncertain”. It seems, that in all the related fields I interact with, there are so many influences which may prevail to an unknown effect.

Here I sit in Connecticut, between Boston and New York. Right now, both of those cities are booming with construction activity, while around me things seem relatively flat. For the last few years, I have moderated a panel discussion by major construction company leaders. Here’s some of what I hear:

Connecticut, it is said, has few of these motivating factors in play; and we are emblematic of all the “in between” locations around the country.

But, all is not sunshine and lollipops in the active market areas. Available work forces in the big cities have been tapped out for many trades. Key subcontractors are in high demand. And lack of competition is driving up prices.

Last year, there was much legitimate and overdue discussion about the treatment of women in the workplace. Our related fields were not saved from these conversations.

Financial Viability

question We’re all different.

As a small business, sole-proprietor consultant, I’ve been known to joke about how hard it is to actually lose money.  It is very possible, however, to work at absurdly low hourly rates.  I just need to make enough to eventually cover the monthly bills.

Others are not so lucky.

For those with even one employee (not to mention hundreds), the stakes are immeasurably higher.

As references above, contractors in major markets seem OK for now.  But, for contractors outside those markets – maybe not so much.  Architects, Engineers, and other industry consultants have the ordinary challenges of landing work and watching fundamentals.  Many facility managers have to find ways to fund routine operations, while addressing years of accumulated maintenance backlog – hardly easy.

The one specialty group in my realm that is the most challenged are small private colleges and universities.  As reported by scores of financial analysts, many have fallen into an unsustainable business model. They contend with the double whammy of rising expenses and inadequate income from shrinking, discounted tuitions. In my work, I see the facilities operations and budget consequences of these forces, and we work to fight this very difficult trend.  Sadly, we do so while around us the most disadvantaged “small privates” have started to go through closures, mergers, and acquisitions.

Will these clients survive?  Uncertain.

The Bigger Picture

Here we are, about 10 years out from the “Great Recession”, and we are hearing some concerns about the current strength of our economy. There are signs for concern: flat home sales, a volatile stock market, rising consumer prices –just to name a few.

Here’s what a contributor to Forbes magazine had to say last October: “Don’t expect the economy to crash in 2019.  But, be prepared for a possible recession.” Just a few months later, in December, Newsweek reported “The chance of recession in the next year is the highest it has ever been during the Trump presidency, according to a new CNBC Fed Survey.”

Yikes!  Really? Well – Maybe, Maybe not.  We all know, however, that economy is variable.  What’s the word for 2019?  Um – Uncertain.

And Now What Do We Do?

question Even under the best of circumstances, Architecture, Engineering, Construction, and Facilities Management businesses require planning, execution, and oversight by skilled, thoughtful managers.  But, given the current influences, standard operating procedures may need some tweaking.  Some options:

Transfer risk
Lock in prices for goods and services
Consider subcontracting for elements of your operation with long-term performance-based agreements (perhaps a good topic for a stand-alone newsletter)
Be cautious about staffing up
Even so, be scrupulous in maintaining an equal opportunity workplace
Be cautious about incurring debt
Be cautious about expansion plans
Carefully project “booked” work and backlog
Keep your ear to the ground with participation in industry affiliated groups
Be prepared to shed marginal operations

It’s not as if this advice is immaterial during “boom” times – it's all a matter of degree.

Am I right about any of this? Uncertain.

Missed earlier newsletters? Find them here:

October 2018 “The Case for DIversity-Architect's Version”
June 2018 “A Capital Idea”
March 2018 “Me Too?”
January 2018 “R U Trending?”
October 2017 “Do You Measure Up?”
August 2017 “I'm an Architect and I'm Here to Help”
January 2017 “The Future of Higher Education”
November 2016 “The Owner as CM?”
August 2016 “Don't you just hate...”
June 2016 “Duck Testing”
April 2016 “Once Upon a Time...”
January 2016 “I want to take you higher”
November 2015 “Moderating in all Things?”
July 2015 “Alphabet City”
May 2015 “Acey Trey Trey Trey?”
January 2015 “Nature or Nurture?”
August 2014 “Acey Trey Trey?”
June 2014 “The Seven Deadly Sins”
March 2014 “Thar She Blows!”
November 2013 “Giving Thanks”
September 2013 “Back to School?”
June 2013 “What Time is It?”
March 2013 “Acey Deucey?”
January 2013 “A Swamp Full of Alligators”
October 2012 “Plan to Live Forever, Part Deux”
July 2012 “A Midsummer Dream”
May 2012 “Are you Virtually Working?”
March 2012 “Your Huddled Masses”
January 2012 “Observing Observations”
October 2011 “I Want What I Want”
August 2011 “A Beach Read”
May 2011 “NeoLuddite or Technophile?”
March 2011 “Do Your Silos Leak?”
January 2011 “Plan to Live Forever!”
November 2010 “May I Have A Plan, Master?”
September 2010 “How do we choose?”
July 2010 “Good People Behaving Badly”
May 2010 “LEED: LEADing or Dead Weight?”
March 2010 “Why does it cost so much?”
January 2010 “Design/Builders show us your softer side.”
November 2009 “What the Facilities?”
September 2009 “Why Do Architects Make Good Owner’s Reps?”

Today’s Word