Economics | |||||||||||||
Business Conditions Moderate
in April Owner changes in scope leading source of change orders |
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Work-on-the-Boards Survey |
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Business conditions during April provide continued evidence that the recession for U.S. architecture firms has ended. They also offer evidence that the recovery is likely to be slow in unfolding. After a strong gain in March, billings at architecture firms remained stable in April. Inquiries for new projects, which had shown strong gains through the first three months of the year, rose at a somewhat slower pace in April. Regionally, business patterns at firms remained largely unchanged. Firms in the Northeast continue to report strong improvement in business conditions, firms in the Midwest and South report modest gains, while those in the West still report a modest slowdown. Residential firms (those with over 50% of their billings in the residential sector) reported a sharp increase in billings and an even sharper rise in inquiries for new projects. Commercial/industrial firms report stable billings and a modest increase in inquiries. Institutional firms reported a rare dip in billings in April, and no increase in inquiries. The economy performed surprisingly well in the first quarter according to a recently released report on GDP, which showed the economy growing by 5.8% when annualized. However, the second quarter seems to be moving at a somewhat slower pace. The employment report for April showed national unemployment jumping to 6.0% from 5.7% in March. Business payrolls grew slowly in April, while payrolls for construction companies took a sharp decline. Consumer confidence also dipped in bit in April, after strong gains in March. Hopefully this decline in confidence won't hurt the housing sector. Housing continues to be a bright spot in the economy, averaging 1.72 million starts for the first quarter (annualized), 5% above the level of the first quarter of 2001. The rest of the construction industry isn't doing quite so well. F.W. Dodge reported that contracts for nonresidential building declined 11% in March from February levels. For the first quarter, however, nonresidential construction contracts were up slightly over first quarter 2001 levels. Owners generate most
change orders Many panelists noted that there can be tremendous variation in these shares depending on the type, scope, and size of the project. Some also commented that there can be a difference in competitive bid projects compared to negotiated projects. Also, many observed that for renovation projects, a higher share of change orders is for unknown or unforeseen conditions in the existing structure. Copyright 2002 The American Institute of Architects. All rights reserved. |
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