Those darn architects

When unemployment rears its ugly, stinking face, you end up doing things that one who is gainfully employed may not normally do. Some of this you may share with others, and some of this you may not. I'm not talking about eating Ramen noodles three times a day or going on a shopping spree at Goodwill. Rather, I'm talking about looking at the industry in which you work in a way that you otherwise may not when you are in the day-to-day grind of details, deadlines, and workload.

One example of this slightly abnormal behavior came about because I was curious about the economic state of the construction industry and I decided to look on the AIA (American Institute of Architects) website for any clues about where and when the industry may be moving. This in and of itself wouldn't be consider abnormal, but plotting the non-residential percentages for 2009 and 2010 in an Excel spreadsheet could be (see above). I wouldn't say the results were encouraging other than the fact that construction spending will decrease at a slower rate in 2010 than 2009 (according to the AIA). And in the amusement sector of the construction industry, spending is projected to increase 1% in 2010. Woo-hoo! I guess high unemployment creates a need for more roller coasters and wave pools.

The AIA, in my opinion, does a fantastic job of tracking the economics of construction. They provide independent research that I have found to be far superior to the Association of General Contractors. It seems to me that the architects tend to have their you know what together a bit more than contractors. I'm sure there are some that will disagree with me, but from my experience, I can safely say that it has been the case.

I found myself left with three question after my little trip down the road of self-proclaimed economic analysis:

1. Is the non-residential construction spending projected by the AIA good news or bad?

2. Do architects ride the intellectural high-horse when compared to contractors?

3. If the answer to question 2 is yes, why?

Perhaps we can leave this an an open ended discussion for the illustrious Constructonomics readership to hash out. I'm sure we can come to some consensus on this one.

Those darn architects

Some Construction Humor

Some Construction Humor

When the hell will this thing be over?

I answered an unknown number today because I thought it may be from one of the companies to whom I sent a resume that decided immediately upon reading my credentials that not only should I be hired and paid a six figure salary, but I should be inserted as CEO and given full reign of their construction operation. Well, it didn't work out exactly as I had hoped, but at least it wasn't the IRS calling (not that there would be anything wrong with that).

It was actually who I thought was a recruiter and the conversation went kind of like this:

"Hi, my name is so-and-so from so-and-so and I wanted to follow up with you to see if you needed any help with your job search."

"Uh, yeah. A little help wouldn't be bad."

I felt like telling her that if she wanted to help she could tell me when we're going to be out of this
God-for-saken mess and unemployment rates in the AEC industry would start dipping lower instead of quickly approaching levels not seen since the Great Depression. However, I remained cool and calm (as always) and continued the conversation.

"I'm seeing 12 open construction management positions in your area and for the small fee of $49.95 per month we will contact these companies directly and move your resume to the top of the pack."

I'm sorry, but I don't think I'm going to pay $49.95 to do something I can do myself, especially when I'm unemployed. So I declined the offer politely.

I started to think however, of what would happen if the construction industry starts coming back at about the same rate it fell. As quickly as heads rolled, companies will be hiring every man, woman, and child that can write his or her name and knows what street they live on. Recruiters will have a bluetooth in each ear (separate clients) while writing an email, instant messaging and hand shaking their last meeting. I suppose that's the feast or famine nature of the AEC industry.

But once things improve and we're all sitting around laughing about how nervous we were back '09 when nobody had a job, let's make a little thought toward prevention. Perhaps we can somehow avoid such a dramatic drop off a cliff that would even give Wile E. Coyote a few beads of sweat.

When the hell will this thing be over?

You know it's bad when...

You know it's bad when...

Empire State Building taking the LEED

I saw a headline on the ENR website today that caught my attention for one reason and one reason only - because it mentioned the Empire State Building. Growing up on the east coast I was fortunate enough to make fairly regular trips to New York City for school field trips or to see a Broadway show, and I remember the day I first saw the Empire State Building. My back was arched backward as I stood on the sidewalk trying to see the spire from the street (it's not easy). We took the elevator up and looked out on the chaos of New York City from the observation deck. I remember wondering how all these people could function in such a densely populated area and how any type of order was maintatained (I still do actually). Of course, I'm from the farmland of Pennsylvania.

As a kid, the Empire State Building is like, the coolest thing ever. We would tell stories about how you can drop a penny off the top and it would drive itself four inches into the concrete. (This is actually not true. It will bounce harmlessly off the concrete as long as air resistance is around) And the movies made the EPS out to be a glamourous icon of New York City and America. After all, it was the talled building in the world for almost forty years and still stands as the tallest building in New York.

While being a very functional office building, the ESB is a symbol of America, and consequently, a leader. With the proposed $20 million in green upgrades the building will save an expected $4.4 million annually and create quite a buzz (not that is really needs it) about green building not only in the New York and the US, but around the World.

So $4.4 million in savings per year on a $20 million project...let's see, 2o divided by 4.4, carry the one, that's a pay-back of roughly four and a half years. And that's just back of the envelope calcs without considering tax or financing advantages. All this while putting people to work and not to mention contributing to a healthy, more sustainable environment. I'm no genius, but that sounds like a good deal to me.

I think that this particular renovation will be of great significance because of the profile of the building being renovated. Everybody from northern California to southern Taiwan have heard of the Empire State Building and with it's LEED certification (Leadership in Energy and Environmental Design) it would truly be taking the lead in the "greening" of existing buildings.

While all the green building in the US is fantastic, when looking at the World in general, the US makes up a very small part of what needs to be done when it comes to sustainable development. One could argue that the US is so insignificant in population compared to India and China that any effort at environmental sustainability is effectively negligible. I disagree with this for two reasons. One, it's not negligible and every little bit helps. Two, the US is setting an example for the rest of the World to follow.

We can't take the risk of a kid not being able to gaze off the observation deck of the Empire State Building because the folks below were too busy to think about the future.

Empire State Building taking the LEED

Experience: Does it deserve the respect?

I doubt there is any other industry that values experience like construction. It just seems to be all about how many years you've got under your belt.

"How many years you been doin' this Bill?"
"28 Tommy, and I've grinded every bit of the way."
"Well, my 30 years trumps your 28, so I think I'll take charge here."

While this is probably an over-dramatization of actual conversations that take place on construction job-sites (and more subtly in boardrooms), experience trumps everything in construction, especially education. If you tried to play the, "but I've got a master's degree" card, your well-educated behind will be cured in concrete in the very near future.

But the question really is if this experience and perceived superiority in the business is in fact warranted. Has anyone really explored this or is it just a forgone conclusion that experienced personnel are better than inexperienced or less experienced? Well, the answer is maybe (to both questions). However this investigation in the construction industry is shallow at best.

While experience can certainly be advantageous, I'm often puzzled by the choices experienced people make. The folks that loaned money to people to buy a house when it was clear that they could not sustain the payments was certainly done by experienced people. Experienced people were behind the accounting scandals, and let's not forget that the now infamous Bernie Madoff was 65 years old before his crooked operation was put to bed, much to the disadvantage of his investors.

But it's not only in the national news that I find experienced people doing questionable and unethical things. In my experience on construction sites, I have seen millions of dollars thrown out the window by very experienced people. I don't think this is because of their lack of intelligence, but more attributable to the way in which their performance is measured. Or perhaps because that is that way they were taught, and therefore the way that is reinforced and rewarded by their organization.

There is an old saying that I learned growing up playing golf that I think applies across the board in life - "Practice does not necessarily make perfect; practice makes permanent. Perfect practice makes perfect."

In order for experience to be truly more valuable, the experience one holds must but be of high operational, managerial, and ethical standard. Else, experience is nothing more than a reinforcement of bad practice that is more difficult to undo.

If you are banking on resting on your well seasoned and perhaps unethical laurels to push you through to the end of your career, I'm afraid that you are sadly mistaken, and I mean this when I say it - you should get out now.

We cannot allow the "experienced" decision makers in our industry to continue down an unethical road (if they are of course). I know that I will have to evolve in my career as things change over the years and I will not be able to coast along upon reaching a certain number of years. Our business is in dire need of change and we can't wait another ten years for this to happen. Old dogs can certainly learn new tricks, if fact, they must.

Experience: Does it deserve the respect?

Construction Costs: In control?

I found myself very interested in the cost of construction work today, so I made a very ambitious choice of looking at the cost of construction vs. the cost of another industry. And what industry should that be? Automobiles? Good choice, we'll compare the cost of construction from 1967 to 2o09 between construction and automobiles in the United States.

For construction, I used the Turner Construction Cost Index, put out by none other than Turner Construction. The index has been tracking construction costs every quarter since 1967. In 1967 the benchmark of 100 was set and now the index sits at about 900. Our industry has brought us an increase of 900% since 1967. So that's a lot...I mean, not that much...I mean, what is that?

I whipped out the spreadsheet and buckled down for an intense 60 seconds of figuring out the yearly increase in construction costs that this index is suggesting, and as a result, I came to the conclusion that according to Turner Construction, costs have increased 5.5% since 1967. Ok, I guess that's not terrible since inflation typically sits around 3%.

Now on to our friends and colleagues, the automakers. I took a rather crude approach to estimating this appreciation by looking at the average price of a new car in 1967 compared to 2009. In 1967 the average price of a new car was $2,750 (must have been nice) and the price of a new car now is $27,958. And this works out to........a 5.8% yearly appreciation. Hmm, I was expecting construction costs to far exceed autos in that time period.

There are some very obvious flaws to this methodology, for example, while construction costs and auto costs have increased at about the same rate, the auto industry has made tremendous strides in costs cutting and productivity improvements since 1967 while construction has lagged miserably. Perhaps an eventual look at earnings or profit margins between construction and automobiles could present a better picture as to what is actually happening.

These numbers could also be thrown off by a supply and demand difference between 1967 and now. For example, people now surely buy more cars per person and probably spend more as a percentage of income than they did in 1967, while this phenomenon may or may not be true for construction. I can see why it is nearly impossible to come to any clear conclusions when comparing things that are very different. Try controlling for all the variables in construction that differ from manufacturing - in fact, be my guest.

Anyway, I think a look at profits and productivity could be a good indication of what may be going on between auto makers and builders (maybe next time), and what I think we'll find is that manufacturing is kicking our severely fragmented, uncontrollable, disorganized, finger pointing, and litigating rear end. Perhaps we can pull ourselves off the canvas at the count of nine and fight back in a battle that would improve costs, quality, safety, and even profits to the construction industry.

Construction Costs: In control?