FMI Nonresidential Construction Index for Q1

FMI, a provider of management consulting and investment banking to the engineering and construction industry, has released its Nonresidential Construction Index report for the first quarter of 2012.

The NRCI gained 7.8 points over last quarter, to 58.1 this quarter. This positive move to start the new year is not exactly the sign of a bull market for construction, but continuing confirmation that panelists believe that the construction activity is following the lead of the slowly improving economy. There are good signs in hiring plans for 2012, as well as construction-put-in-place predictions. However, panelists indicate that low project pricing and high competition are still driving the market place.

• Hiring: A 5 percentage points increase over this time last year, 42 percent of panelists indicated a 0 to 5 percent increase in full-time direct employees. Additionally, fewer panelists indicated a reduction in salaried employees.

• Construction Put In Place: Expectations for CPIP are positive but cautious, as 41.3 percent of panelists expect growth of 0.5 to 2.5 percent for 2012.

• Overall Economy: The component for the overall economy showed the strongest improvement of all index components with a jump from 43.6 last quarter to 68.7 in the first quarter, a 25 point gain. This score reflects the improvement in many economic indicators including the unemployment rate.

• Nonresidential Building Construction Market Where Panelists Do Business: At just 54.9, the local markets for nonresidential construction are inching ahead. However, panelist responses reflect a perception that their own business is performing a bit better than the overall nonresidential construction market. This indicates that local markets are still very competitive.

• Cost of Materials: Despite a slow economy, material costs continue to rise, with no panelists indicating material costs were lower than last quarter. The cost of materials component moved down nearly 5 points to 26.2. This factor is continuing drag on the overall index and is likely to raise the cost of projects while lowering profit margins for contractors.

• Cost of Labor: The cost of labor improved just slightly to 41.5, indicating little change over the score of 40.0 last quarter. However, no panelists indicated they were experiencing lower labor costs.

• Productivity: Contractors are continuing to make moderate gains in productivity. However, at 52.9, this component is still too weak to offset rising costs for labor and materials.

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MIT Research to Set Life-Cycle Assessment Standard

The Massachusetts Institute of Technology (MIT) has released preliminary research findings that will help set a new standard in life-cycle assessment (LCA) modeling. The studies, which are part of an ongoing research initiative at the MIT Concrete Sustainability Hub, will quantify the cradle-to-grave environmental costs of paving and building materials, and will ultimately result in the most comprehensive LCA model produced to-date.

According to MIT professor and research team leader John Ochsendorf, the expanded life-cycle window – 50 years for paving materials and 75 years for building materials – combined with the level of detailed analysis conducted on the use phase of structures and pavements will distinguish MIT’s latest research. Initial reports have shown the importance of including the use phase, with MIT researchers finding that more than 90 percent of residential building life-cycle carbon emissions and up to 85 percent of highway pavement emissions occur during this period.

MIT’s ongoing work on measuring the life-cycle carbon emissions of these materials is scheduled to be completed by August 2011. The environmental findings will then be supplemented by economic analyses in 2011 to provide the most accurate assessment of the economic and environmental impacts for buildings and pavements yet produced.