From subcontractor issues to new ways projects are financed, top construction company execs sounded off on key challenges facing the industry at our 3rd Annual Atlanta Construction & Development Summit yesterday.
More than 250 braved the threat of ice on the roads to join us at the St. Regis for our opening panel, which included DLA Piper’s Brian Fielden, JE Dunn’s Stuart Bruening, New South Construction’s Doug Davidson, Balfour Beatty’s Mike Macon, Partner Engineering and Science’s Joey Bonin and tvsdesign’s Dave Brown. Here are the things we learned:
1. THE GREAT RECESSION HAS CHANGED CONSTRUCTION
Mike (here with Doug) says construction costs are factored into projects more closely, and Stuart says scheduling of projects in conjunction with subcontractor availability is a science. “We’re historically a very, very wasteful industry,” he says. But scheduling has GC’s delivering projects faster and at lower costs than before.
2. THE SUBURBS AREN’T ACTUALLY DEAD
Despite the race by tenants to the city, Dave says there are still many projects taking place in suburbia. But they have to be done like Avalon to attract Millennials, he says. “I think that nowadays, you’ve got to somehow figure out and tap into what the urban context has,” Dave says. Gone, he says, are the days of the insular office campus sitting in the middle of a field.
3. LABOR AT A PREMIUM
Mike says labor is certainly at a premium, while commodity costs are flat overall. And that has to do with the number of subcontractors and laborers left in the marketplace following the recession. In fact, some subcontractors are actually turning down new work. “That was unheard of two years ago,” he says.
4. PRIVATIZATION OF PUBLIC PROJECTS IS ADDING BILLIONS TO PIPELINE
What started with the privatization of military base housing has now led to on-campus student housing, especially with the Board of Regents here in Georgia. Stuart (here) says it’s about efficiency. “It’s a model that’s really come out of Europe and Canada,” Mike says. “And it looks like the Board of Regents later this year is planning to have another tranche of projects come out.”
5. GENERAL CONTRACTORS PUTTING SKIN IN THE GAME
Doug says some developers are actually looking to general contractors to be equity partners in projects. “It all comes back to being part of a team,” he says. “But that’s a risk factor we’re not used to.”