Engineering Market Trend 2

[connectegr]

Our company is proudly approaching our 20th anniversary next week. But, as I reviewed my contact list it is disheartening to see the number of firms and clients that have significantly downsized or closed entirely. I am confident that our small firm has survived our recent construction market. But, have we seen the worst? As practicing engineers, do you find the market improving?

http://www.FerrellEngineering.com

 

[Ron]

connectegr....I'm an optimistic person and I think things are improving. I just learned that one of my clients that has done little work in the last 3 years, just closed on 50 acres for a subdivision....and that's not the only example I've seen of a rebound. Seeing the residential market start to turn around is a good sign.

Commercially, I'm seeing more activity in general. It has been tough for a few years, but I think we're slowly coming out of it.

 

[graybeach]

With all the spending cut talk in the US, government money for infrastructure looks to be more scarce in the near term. However, unless total social anarchy ensues, engineers will soon be very busy. Just a matter of time til all that stuff built in the '50s and '60s starts collapsing from lack of needed repairs.

 

[msquared48]

Residential is poo poo

Commercial/retail is vaguely hopeful at this point, depending on the banks, who are poo poo with loans.

Mike McCann
MMC Engineering

 

[JedClampett]

I lived through way too many of these downturns. Here are Jed's rules:
1) Business always comes back.
2) The initial turn-around is doggone near imperceptible. We might already be in it and not realize it.
3) The survivors (individuals and organizations) are stronger and tougher for it.

 

[IRstuff]

Residential is spotty. High-end residential is doing quite well in certain areas.

>> The local Toll Brothers development broke ground on 13 units late May; they usually only start 4 houses at time.
>> Another development just started grading and laying sewer/water lines

The biggest limitation on housing is difficulty in getting financing. Bank still haven't gotten fully back in the saddle yet, and the underwriting guys are asking for silly things like proof of citizenship, because they are really uncertain about what makes someone a good credit risk.

TTFN

FAQ731-376
Chinese prisoner wins Nobel Peace Prize

 

[SteelPE]

I do a bunch of work with contractors. I have seen the amount of work increase but I have no idea if it is seasonal yet or not. I have had a bunch of "we need drawings in 3 days" work to which we are beginning to raise our rates on these projects to cover the hassle and deter this from happening on a regular basis.

Haven't been in the business long enough to realize the trends.

Who knows what's going to happen, if I could predict the economy I would be one of the "crooks" on Wall Street stealing your money

 

[connectegr]

Thanks for the feedback.

I have been through a few of these cycles. But, this one has certainly lasted the longest. I am still not seeing much private money or companies investing in large expansions or office space. At our beach house in Florida, there are miles of nearly empty or partially completed retail centers. Although our market is not residential or these small retail complexes, I did expect to see the trend starting there. It takes less confidence to finish a foreclosed property or finish on a previous investment. My fear is that, although I completely support shrinking our government, pulling back on government aided projects will stall this small area of work.

Any super wealthy forum participants want to built a performing arts center, domed stadium, or high-rise with their name in lights?

http://www.FerrellEngineering.com

 

[a2mfk]

I hope that all of you optimists, especially Ron since I live in Florida, are right. But then again, being in forensics too, Ron and I don't need new construction to stay busy. I have seen some pretty good examples of poor construction lately that was from the last 10-15 years of the construction boom. People were in such a hurry I think a lot of corners were cut, not necessarily structurally but in the form of the envelope, roofing details, flashing, waterproofing, etc. I hate to say it, but if you are in forensics, the construction boom and aging infrastructure is likely to ensure pretty steady work for a long time.

As to the original question, I think this is a very localized market because of the way the real estate market has unraveled. Those markets not as dependent on the bubble for construction work have likely not been hit as hard. Florida as a state, and then in specific areas, have been hit VERY hard. Unemployment in the A and E industry from what I understand and know first hand is pretty high. Personally, my business partner and I both took full time jobs and I relocated. State and county budgetary constraints are going to limit spending for some time to come, meaning new government buildings and schools (a huge market) will and have decreased dramatically. Our housing market has such a glut I am not sure it won't be many years until some of these properties are taken off the market. So states such as Florida, Arizona, and California, who had very large real estate bubble bursts, may lag behind the rest of the US economy that was not so dependent on real estate and construction to fuel their economic growth.

Not to mention Congress's ineptitude, debt ceiling and budget deficits, high unemployment, and a myriad of other macro-economic factors us individuals have no control over! It is very frustrating to say the least to see our elected officials squabble along party lines and then see our country's credit rating being downgraded, whether we deserved it or not. It seems a few powerful people in this country are just toying with all of our futures.... Sorry, off soap box.

Just my two pennies. Now I will throw them in a fountain for good luck to the US and world economies, and maybe get some politicians with a clue!

 

[epitome1170]

a2mfk -

Out of curiousity are you a member of IENGA then since you do forensics?

 

[a2mfk]

No, I will have to look into that organization.

 

[epitome1170]

How do you get your clients then... if you don't mind me asking?

 

[a2mfk]

Workin' for the man! So I don't have to worry as much about that, though I am going to try and get into some marketing because there are areas I would like to get into. You have asked the million dollar question of any engineering business owner...

 

[Ron]

I'll jump in here with A2mfk...

Our work is usually by referral. Attorneys are not usually swayed by glitzy brochures and sales pitches (there are exceptions of course). About 90 percent of my work is by referral or repeat engagements from clients.

About 75% of my work (sometimes more) is forensic. The remainder is general consulting.

When times are bad, the only effect on my business is cash flow....the failures are there, the remediation is necessary...just have to wait to get paid sometimes.

Less than 5% of my work is for insurance companies (adjusters), yet all of my defendant work is ultimately through insurance companies. I do about 50 to 60 percent plaintiff work, the rest is defense. I have no problem doing either, since engineering is not as "black and white" as we would like and there are dissenting opinions between competent engineers. Further, I don't care who pays the bill....the answer is the same.

IENGA is an organization heavy on insurance defense. That's fine, but I prefer a more neutral organization such as the National Academy of Forensic Engineers (NAFE), a subset of the National Society of Professional Engineers.

Now...as for the market trend. Residential sucks...still, but is slowly coming back in my area (SE USA). Small commercial is picking up (good sign!). Large commercial not headed back anytime soon.

 

[connectegr]

Most of our expert work is related to construction costs and time. I expected this to increase in this economy. Especially with less qualified fabricators and contractors bidding outside their comfort zone. But, I am seeing the opposite. I don't think the parties can afford long legal battles or to wait for payment at the end of the rainbow. They are settling early to maintain their cash flow. Maybe more of this work will appear as the market improves.

I agree that the large commercial work is lagging behind. We have several large industrial projects, and I welcome the work.

Thanks for all the feedback.

http://www.FerrellEngineering.com

 

[epitome1170]

Thanks, Ron!

That is EXACTLY the kind of answer I was wanting.

I was approached by IENGA for some work in the Kansas City area (that is where I am located), but was skeptical about what they did and how that whole organization worked.

Currently, most (95%) of our work is consulting and design for commerical, industrial and government projects (all architectural lead). My thought was that I wanted to try to get into a new niche as a hedge bet, so forensics/investigative engineering was the thought.

I think you have told me what I need to know (and not what I was being sold on) in that investigative services are just like any other service in that the clients are built through good work and client relations.

 

[a2mfk]

epitome- Let me say this about building forensics, it is BUILDING forensics, not structural engineering only forensics. Since we SEs are so smart and rarely make mistakes, and the buildings are built exactly per the drawings, there is not much work in the STRUCTURAL only area

There is some truth in that though, so be prepared to broaden your horizons into things you may have never given much thought about, dirty word, architectural details. You know, the "SEE ARCH" parts of your drawings? You will now have to look at those areas now in great detail, and you may not want to do that. So there is definitely an education process to be had there for most traditional SEs, and I am sure Ron can expound on this as I believe he deals a lot with issued due to roofing, waterproofing, flashing, cladding and fenestrations, interior finish distress, etc. There are some good books out there that can serve as a guide, but nothing beats experience, especially in this field.

Most structural forensics that I have dealt with is residential, so structurally speaking, it is not that complicated. But those other issues can get very complicated, especially dealing with roof leaks and moisture/vapor intrusion. Make contacts in other fields if you haven't already so you can pick the brain of architects and other types of engineers.

Your potential clients may be some of your existing clients, as architects and contractors are often asked questions about building problems since the average person doesn't know engineers are that involved in building design or forensics. Let them know you are seeking this type of work.

If you have friends/contacts in the law and insurance fields, this is usually a forensic engineer's bread and butter, they flip the bills for the investigations (as noted by Ron). My suggestion would be to try and get in with attorneys who do a lot of property work, as well as insurance companies in the form of claims adjusters. There is usually a "vender list" and you have to get on them, and this can be a hassle and time consuming, and can be a bit of a political process, that is if you can manage it. Once you are on one of those lists, most companies will cycle through their favorites as they need them. You could end up getting very steady work.

Finally, as Ron said, work both sides of the fence. This looks good to attorneys because it shows you are not biased. I have been asked that question exactly in depositions. So do some work for your neighbors and friends even at a very low cost just so you have the experience, and so you can say you have done jobs directly for homeowners.

Its a long road, and those who like it, usually REALLY like it. It is a lot like detective work, but there are no bells and whistles like on CSI It is usually far from text book structural engineering. One of the reasons I like it is that exactly...