Institutional Construction Outlook and Key Trends · ENR Top Lists: Rankings of the largest...
Transcript of Institutional Construction Outlook and Key Trends · ENR Top Lists: Rankings of the largest...
1 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
August 8, 2013 VMA Market Outlook Workshop Presentation
Institutional Construction Outlook and Key Trends
Harvey M. Bernstein, F.ASCE, LEED AP Vice President, Industry Insights and Alliances McGraw Hill Construction
McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
2 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Agenda
McGraw Hill Construction Introduction
U.S. Construction Outlook—National and by Building Type
Global Trends
Key Industry Trends Impacting Your Business • Product Trends • Building Information Modeling (BIM) • Prefabrication/ Modular Construction
Future Building Trends
3 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
MCGRAW HILL FINANCIAL
McGraw Hill Financial is a leading provider of information and analytics to global financial markets.
$6.2 billion in sales (2011)
17,000 employees
27 countries
Leader in every market we serve
Financial Services
Commodities & Commercial Markets
As part of McGraw Hill Financial, McGraw Hill Construction is aligned with the resources that back S&P, the trusted leader in financial benchmarks and indices. Turning data into market intelligence in order to provide insight for better business decisions is our core competency and the reason why business leaders throughout the world turn to McGraw Hill.
McGraw Hill Financial: Essential Information & Insight
4 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Dodge Project Database: 500,000 projects in the U.S. from pre-planning to start; historical data back to 1967; $4 trillion in global projects
Dodge Construction Outlook and Forecasting Service: Forecasting 22 major building categories at a national, regional, state and county level
SmartMarket Reports and New Market Research: Drawing from Dodge and other proprietary sample sources on key industry trends
ENR Top Lists: Rankings of the largest construction and design firms
Dodge SpecShare: Trends in product specification in over 50,000 projects
Industry Association Network: Providing access to over 500,000 professionals worldwide
Where Does Our Industry Trend Data Come From?
5 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
U.S. Construction Outlook—National and by Building Type
6 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Total U.S. Construction Starts
Billions of Dollars 2007 2011 2012 2013 2014
Total Construction 640.9 -7%
442.2 +2%
471.7 +7%
507.1 +8%
599.4 +18%
Education 53.2 +7%
42.7 -10%
37.2 -13%
36.5 -2%
40.5 +11%
Healthcare 24.4 +1%
23.4 -5%
22.1 -6%
22.1 +0%
24.6 +11%
Office 32.6 +7%
17.4 +3%
16.9 -3%
18.8 +12%
22.3 +18%
Public Buildings 12.4 +51%
9.4 -11%
8.2 -13%
7.7 -6%
8.0 +4%
Manufacturing 20.8 +51%
17.2 +81%
12.2 -29%
13.2 +8%
15.0 +14%
Multifamily Housing 60.3 -13%
29.2 +35%
38.8 +33%
47.6 +23%
55.8 +17%
History Forecast
Source: McGraw Hill Construction, Dodge Construction Forecast as of June, 2013
7 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
U.S. Capital Expenditures on Construction
Source: U.S. Dept. of Commerce, Bureau of Economic Analysis, Annual Capital Expenditures Survey (2005-2011);
200
300
400
500
600
2005 2006 2007 2008 2009 2010 2011
3.2%
3.1%
3.2%
$ B
illio
ns
3.4% of GDP
4.0%
3.9%
3.9%
► Expenditures on structures/ construction on the rise after sharp decline during the recession
► Share of GDP was notably higher as nonresidential construction spending was increasing (2006–2008)
8 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
8
2005 2008 2010 2016
= Nonresidential Market
$172 billion
$3 billion 2% of
market
$61B 41%
$212B = Green Market
$154B
$238 billion
$25B 12%
$142B
$48B 31%
2011 2013
$63B 44%
$67B–$71.5B 45%-48%
$114B– $131B 48%-55% of market
$149B $148B
2012
Source: Green Market Size: McGraw Hill Construction, 2012; base value of construction market from McGraw Hill Construction Dodge Market Forecasting Service, as of April 23, 2013
Green Building is Now a Significant Part of U.S. Nonresidential Starts
9 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
-2% +11%
History and Forecast (By Millions of Dollars)
$17 billion
45%
Education Construction Outlook
Dodge Projects with Both Ball and Butterfly Valves Specified
Feb 2013: Brooklyn, NY; NYC College of Technology Klitgord Academic Bldg.; $252M (start stage)
Nov 2012: Philadelphia, PA; Science, Education & Research Center; $110M (start stage)
Source: McGraw Hill Construction, Dodge Construction Forecast as of June, 2013
$9 billion 15%
Green Share 2008 2012
History Forecast
10 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
History and Forecast (By Millions of Dollars)
+11% +0%
Healthcare Construction Outlook
Dodge Projects with Ball/Butterfly Valves Specified
July 2013: Washington, DC; Sibley Memorial Hospital Center; $200M (start stage) with Ball Valves Specified
May 2013: Farmington, CT; Inpatient Tower—UConn Health Center; $100M–$150M (start stage) with BOTH Ball and Butterfly Valves Specified
Source: McGraw Hill Construction, Dodge Construction Forecast as of June, 2013
History Forecast
Green Share 2008 2012 $4 billion $10 billion
13% 44%
11 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Office Building Construction Outlook
Dodge Projects with Butterfly Valves Specified
July 2013: Austin, TX; Domain 7 Office Building/Parking Garage; $28M (bidding stage)
June 2013: Fairmont, WV; New WV State Office Building; $18M–$20M (bidding stage)
Source: McGraw Hill Construction, Dodge Construction Forecast as of June, 2013
+18% +12%
History and Forecast (By Millions of Dollars)
History Forecast
Green Share 2008 2012 $8 billion $9 billion
30% 54%
12 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Office (continued): Mission Critical Data Center Construction Activity Trends
Dodge Mission Critical Projects with Ball/Butterfly Valves Specified
July 2013: Wheaton, IL; JTK Administration Building—IT Dept. Data Center; $100M–$200M (bidding stage) with Ball Valves Specified
July 2013: Antigo, WI: Integrys Data Center; $300M–$400M (bidding stage) with Butterfly Valves Specified
Sources: 1. Mortenson Construction, February 2012; 2. Gartner, 2011; 3. Cisco, 2012. Projects: McGraw Hill Construction Dodge
Growth is expected due to growing need and reliance on digital information: • 89% of data center and facilities
professionals believe data center construction will increase by 2014
1
• Volume of data storage is growing 40%–60% each year
2
• By 2015, data center space devoted to cloud computing will be 12 times higher than in 2010
3
13 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
History and Forecast (By Millions of Dollars)
History Forecast
+4% -6%
Public Building Construction Outlook
Dodge Projects with Ball/Butterfly Valves Specified
June 2013: Garland, AR; Garland County Adult Detention Center; $42M (bidding stage) with Butterfly Valves Specified
July 2013: Yuba City, CA; Yuba City Courthouse; $53M (bidding stage) with BOTH Ball and Butterfly Valves Specified
Source: McGraw Hill Construction, Dodge Construction Forecast as of June, 2013
14 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
History and Forecast (By Millions of Dollars)
History Forecast
+14% +8%
Manufacturing Building Construction Outlook
Major Dodge Projects with Gate Valves Specified
June 2013: Santa Monica, CA; Exposition Metro Line Phase 2 Construction of Maintenance & Operations Facility; $100M (start stage)
July 2013: Laurens, SC; Alupress Aluminum Foundry Building; $3M–$5M (pre-start stage)
Source: McGraw Hill Construction, Dodge Construction Forecast as of June, 2013
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+23%
+17%
Multifamily Residential Construction Outlook
Dodge Projects with BOTH Ball and Butterfly Valves Specified
March 2013; Bethesda, MD; 8300 Wisconsin Avenue Bethesda Apartments/Retail; $90M (start stage)
Jan 2013: Chicago, IL; 850 Lake Shore Drive Rental Apartments; $100M (start stage)
Source: McGraw Hill Construction, Dodge Construction Forecast as of June, 2013
History and Forecast (By Millions of Dollars)
History Forecast
Foreclosures, baby boomer retirement, and job relocation led to dramatic increase in rental units and condominiums
16 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Construction Market Long Term Is Positive in Institutional Building, Slower in Commercial
• Education: Back strong in 2015 and beyond due to improving local economies, improved public-finance credit ratings and high enrollments causing pent-up demand
• Healthcare: Turnaround in 2014 to be sustained due to needed facility upgrades and increased capacity demand from seniors, returning soldiers, etc.
• Office: Continued growth in mid-term, though changing trends (telecommuting, smaller office spaces, etc.) mean office will never return to 2007 peak
Green Building Will Change Heating and Cooling Systems and Increase the Demand for Graywater Recycling Systems—Creating Both Opportunities and Risks for Manufacturers
Future Construction Activity and Trends
17 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Global Trends
18 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Global Economic Trends
► Infrastructure Investments Leading to Economic Growth in Emerging Markets
• China: $167 billion/year in high speed rail, water supply, electricity, highways
• India: $125 billion/year in ports, roads, rail, water infrastructure, power plants
• Brazil: $225 billion/year including $19 billion high-speed rail from Rio de Janeiro to São Paulo, power plants, dams and ports
Source: International Monetary Fund, 2013
GDP Around the World FORECAST
WORLD Growth: • 3.25% in 2013 • 4% in 2014 70% of growth by 2025 will come from Emerging Markets
United States Growth: 2% in 2013 3% in 2014
European Union Decrease of 0.25% in 2013 Emerging Markets 36% of 2012 World GDP
São Paulo, Brazil
19 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Global Construction Market Shifts
China takes over as largest single world construction market
U.S. largest single world construction market
Sources: Global Construction 2020; U.S. Dept. of Commerce; Global Insights
Emerging markets will present more opportunities
Construction Spending (Billions of U.S. Dollars)
20 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
33%
6% 2%
30%
26%
10%
1% to 15% Green ProjectsExploring (None)
12%19% 17%
11%
21% 21%13%
28%
51%
More than 60% Green Projects31% to 60% Green Projects16% to 30% Green Projects
3 Years Ago (2009) Current (2012) In 3 Years (2015)
LOW INVOLVEMENT MODERATE TO HIGH INVOLVEMENT
Green Activity On the Rise Around the World
Source: World Green Building Trends SmartMarket Report, MHC, 2013
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68.5%
31.5%
ENR Top Firms 2012 Revenue from Domestic vs. International Markets
75.6%
24.4% DomesticMarket
InternationalMarket
$75.5 billion
Top 400 CONTRACTORS
TOTAL 2012 Revenues: $309.5 Billion
Top 500 DESIGN FIRMS
TOTAL 2012 Revenues: $90.3 Billion
$28.4 billion
Source: McGraw Hill Construction, Research & Analytics / ENR, Top 500 Design Firms (April 29, 2013), Top 400 Contractors (May 20, 2013)
2008 International Revenue: 16.8% 2008 International Revenue: 24.8%
22 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Where Top U.S. Firms Were Working Abroad in 2012
Source: McGraw Hill Construction, Research & Analytics / ENR, Top 500 Design Firms (April 29, 2013), Top 400 Contractors (May 20, 2013)
30.4% 27.7%
16.8%
11.0% 10.5%
3.5%
28.8% 27.4%
10.9%
19.4%
8.0% 5.5%
Asia and Australia Canada Middle East Europe Latin America/Caribbean
Africa
Top 400 Contractors Top 500 Design Firms
17% in 2008
► CONTRACTORS: Largest Increases in Asia and Latin America; Softening in Middle East and Europe from 2008 to 2012
► DESIGN FIRMS: Relatively Stable from 2008 to 2012; Increases in Asia and Canada; Drop-off in Middle East
6.4% in 2008
23 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Key Industry Trends • Product Trends • Building Information Modeling (BIM) • Prefabrication/Modular Construction
24 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Specification Trends of Ball, Butterfly and Gate Valves
Source: McGraw Hill Construction, Dodge SpecShare, June 2013
Valve Specification Rates in Projects 2009-2012
PRODUCT TRENDS
10%
15%
20%
25%
30%
35%
2009 2010 2011 2012
Butterfly ValvesBall ValvesGate Valves
► Economic Factors Influence Specification Rates • Specifiers less
concerned with specifying a particular type of valve in down markets
• Gate valves are somewhat less affected by market fluctuations
25 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Valve Specification by Key Sectors for 2009–2012
EDUCATION Specification
Source: McGraw Hill Construction, Dodge SpecShare, June 2013
15%
25%
35%
45%
2009 2010 2011 2012
ButterflyValvesBall Valves
Gate Valves
15%
25%
35%
45%
2009 2010 2011 2012
15%
25%
35%
45%
2009 2010 2011 2012
15%
25%
35%
45%
2009 2010 2011 2012
HEALTHCARE Specification
DORMITORY Specification PUBLIC BUILDING Specification
26 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Ensuring What They See is What They Get
► Transparency in supply chain and product attributes ► Growth of Use of EPDs, HPDs and
Lifecycle Assessment ► Transparency in building performance
Future Product and Policy Trends Driving Industry Change in Manufacturer Expectations
Source: www.boredpanda.com
What Does This Mean to You? Demand for
product attributes and materials
Demand for material sourcing data
Need to connect your product to building performance
27 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
BIM Is a Major Trend Transforming the Construction Industry
Traditional CAD drawings and specs have no native intelligence, just lines and text
► Integrates directly with other digital tools
► Produces drawings and specs as needed
► Focus on assemblies and systems rather than discreet materials and products
Image: Mortenson
CAD Drawings and Specs BIM Models
BIM
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BIM BIM Allows Companies to Do Business More Effectively—Leading to Strong Growth in Its Use
BIM Benefits With Greatest Growth In Importance Over Time
Source: McGraw Hill Construction, Business Value of BIM in North America SmartMarket Report, 2012
Growth in BIM Adoption in North America (2007-2012)
29 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
BIM Allowing Use of Model Data for Digital Fabrication
Source: McGraw Hill Construction, Business Value of BIM in North America SmartMarket Report, 2012
Contractors’ Use of Models for Digital Fabrication
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HOW DO ARCHITECTS USE BIM OBJECTS?
Developing Specification
Conducting Analysis or Simulation Processes
Budgeting and Cost Estimating
WHAT’S IN A BIM OBJECT?
Geometric data, such as spatial coordination, etc.
Non-graphical data, such as material strength, etc.
Why Does This Matter for Your Business? BIM Objects Will Become a Necessity for Product Specification and Selection
HOW DOES HAVING BIM OBJECTS HELP YOU INCREASE SPECIFICATION AND INSTALLATION? Increases in BIM use will make it an imperative:
• Use by nearly all A/E firms in the future
• Owners demanding BIM models, leading to lower use of paper drawings
Lowers chance of spec changes due to heavier BIM use by contractors
Gives specifiers confidence your product information is current and accurate
Ensures compatibility of your product information with changing software programs
31 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Today’s Trends Driving Increase in Use of Prefabrication/Modular Construction: • Easier onsite system assembly • Faster and cheaper project completion • Worker shortages—Do more with less staff
Looking out: • Prefabrication of MEP building systems,
wall units, etc. will become standard • Increased levels of waste reduction
Prefabrication and Modular Construction Will Increase and Change Distribution, Manufacturing and Sales Strategies
Source: Prefabrication and Modularization SmartMarket Report, McGraw-Hill Construction, 2011
Owners–90% used prefab or modular in 2009, 100% expected in 2013
PREFABRICATION/MODULAR
32 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Prefabrication / Modularization Current Uses by Types of Projects
Prefab/Modular Elements Used by Largest Percentage of Respondents:
• MEP Building Systems (48%)
• Exterior Walls (48%) • Building
Superstructure (44%)
Source: Prefabrication and Modularization SmartMarket Report, McGraw-Hill Construction, 2011
33 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Benefits of Prefab/Modular Construction
Project Schedule Project Budget
Source: Prefabrication and Modularization SmartMarket Report, McGraw-Hill Construction, 2011
35% experiencing decreases of 4 weeks or more
42% experiencing budget reduction by 6% or more
Amount of Construction Site Waste
Project Material Use
34 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
HOW WILL PREFABRICATION CHANGE CONSTRUCTION IN THE FUTURE
Jobsites will focus on component integration
Product manufacturers will compete on BIM model attributes not just price and quality
Distribution will be easier, to fewer delivery points
HOW WILL YOUR BUSINESS BE AFFECTED? More centralized procurement practices
New product transport logistics due to fewer locations for product deliveries—to prefabrication facilities versus a number of different jobsites
Increasingly model-driven, making BIM objects even more critical and catalog updates less important
Different warrantees necessary across multiple systems
More immediate marketing and communication strategies (for example, need to know immediately if there are dimensional changes in a ball valve that impact the model)
Why Does This Matter for Your Business? Prefabrication/Modularization Changing How Building Products Are Specified and Distributed
35 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Future Building Trends
36 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Biomimicry will be applied in designs, allowing for significant reductions in resource use and enhancing sustainable design: • “Skin cells” for buildings • Fabric finish based on the “lotus plant”
Example: Thermobimetals Breathable skins for buildings that respond to fluctuating heat and weather conditions • Inspired by human skin, thermobimetals
encase buildings and allow them to “breathe” • Metal strips bend to shade building or open
to release heat
• Implication: Future HVAC systems will need to take into account these new energy-efficient, passive methods of ventilation
Biomimicry—Mimicking Nature—Will Contribute to Innovative New Products and Materials, Making Buildings More Efficient and Adaptive
37 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
Future workforce will need to hone higher-level skills such as critical thinking, innovating and problem solving
Through telepresence, technology robots will be controlled remotely from the home or office and walk a construction site observing what is being done
Smart machines and robots will perform more low-skill tasks
Construction Workforce of the Future
38 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
The Building of the Future
Source: Arup
Renewable Energy Systems, like
Wind and Solar
Building Membranes Convert CO2 into Oxygen
Heat Recovery Windows with Natural Ventilation
Façade Reacts to Changing Climate
Conditions (e.g. breathable windows)
Structural Framing Uses Renewable Resources
Modular Building Components and
Structures Designed for Adaptability
Robotic Cleaning and Maintenance
Phase Change Materials: Interiors Act as Heat Recovery
Water Collection and Graywater System Combined with Urban Agriculture System—Linked from Water Collection on the Roof
Algae Bio-Fuels
39 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
U.S. Construction Market Is Improving with Dramatic Increases in the Longer Term
Continued Growth of Green Will Lead to Higher Use of Graywater Recycling Systems and Other System Changes
Digital Design and Prefabrication/Modularization Will Transform Product Sales, Marketing and Distribution Strategies for Valve Manufacturers
Innovations in Product Materials and Greater Emphasis on Building System Performance Will Change Expectations of Product Manufacturers
Concluding Thoughts
40 McGraw Hill Construction Confidential. All information presented © McGraw Hill Construction, 2013. All rights reserved.
MHC Resources
Dodge Project News Database construction.com/dodge
Market Research & SmartMarket Reports construction.com/market_research
Dodge Analytics construction.com/dodge/dodge-market-research.asp
Statistical Databases Dodge MarketShare—Market Opportunity and Forecasting Dodge SpecShare—Specification of products/brands in projects Dodge BuildShare—Industry player connections
Download reports for free: analyticsstore.construction.com/ market-trends/smartmarket-reports.html
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