Newsletter - January 2011

2011 Will Present New Opportunities, Projects for Colleges

After another tough year in 2010, some key economic indicators are pointing to this year as the start of the recovery we’ve all been awaiting.

In late December, the American Institute of Architects reported that its Architecture Billing Index (ABI) reached its highest level since 2007. The ABI is a leading indicator of construction activity, and the December report hinted that construction activity could begin to rebound late this year.

This news, coupled with the continued steady demand of student housing, should be of particular interest to you as members of the Association of Business Administrators of Christian Colleges because it means more student housing and related projects will be coming to your campuses. And in your position, you’ll likely participate in the process of hiring of architects, program managers and general contractors.

Here’s some information that will help you in your searches.

The shake-up in the work force prompted by mass layoffs and downsizing has forced some individuals to hang up their shingle as sole practitioners or several associated firms to compete in their former market space and lines of expertise. And even the surviving large local firms are teaming with each other or with nationally known firms to create competitive advantages on specific project pursuits. Indeed there is an increased level of partnering ventures.

The old mainstays of a down economy — offering pro bono work to nonprofits, or gratis or equity at-risk services for private projects in hopes of vesting themselves with those clients — will continue to be pervasive this year. However, as we get into the back-half of 2011, these recessionary mainstays should begin to dissipate.

On the financing front, we are starting to see lenders begin to consider capital projects again. Access to private-sector capital has been choked and loan-to-value ratios have been slashed, requiring more funds for equity and less for preliminary design services. But, for qualified projects, some lenders are approving financing for preliminary design and early site development activities prior to loan closing. This may indicate they are increasingly confident in project feasibility reports and may more so indicate an overall positive desire by lenders to get capital flowing.

The most obvious financial trend is the eagerness and speed at which federal and local government agencies are expediting project approvals and letting their funds go to work.

Certainly, these are key industry indicators for architects and the real estate team to consider. However, there are three tsunami-force trends in the industry that have been positively reshaping the way projects have been delivered — sustainability, building information modeling (BIM), and Integrated Practice Delivery (IPD).

These are industry trends that existed prior to the financial meltdown but are still positive trends.

When selecting firms for future capital projects on your campuses, look for companies with values and principles that align with your college’s own and that have the talent and financial fortitude to see a project through to on-time and on-budget completion.

Beck has outperformed its peers during the recession by adhering to sustainable principles and utilizing the latest technology that enables it to ensure an efficient design-build process. Below are three examples.

1. Sustainability

So-called “green” building, or sustainability, has evolved from a feel-good movement into an ever-burgeoning opportunity for architects to meet the demand of the marketplace for sustainable building design, materials and services. Discerning private clients and jurisdictions are purchasing from this marketplace. Newly adopted purchasing policies and building codes are additional drivers for sustainable design, goods and services.

2. Building Information Modeling

Notwithstanding the economic slowdown, BIM has been and continues to be a driving trend in the industry. Our firm continues to reap the benefits of investments made in BIM more than 10 years ago. Having completed 1,000-plus building information models, we are seeing ever-increasing inquiries and billings to document and model existing structures, or prove out new projects in a parametric, intelligent building information model.

3. Integrated Practice Delivery

While BIM is the tool and language of integrating project delivery, Integrated Practice Delivery (IPD) is both the process and end result of a team structured to collaboratively and contractually streamline the design and build process for owners embarking on a building project.

For decades now, design-build was seen as the ultimate way to furnish a single source of contractual responsibility to an owner. However, even though there is one contractual structure, there are still two unrelated entities — the builder and architect — within a design-build contract.  These separate entities continue to want to protect their separate bottom lines, so they seldom share any financial risk or common investments in overhead, software platforms, or process.

An Integrated Enterprise is a single entity firm — not a temporary contractual structure — that delivers multiple disciplines, including architecture and construction. Since 1999, our firm has been engaged in Integrated Practice with more than 105 common architecture-construction projects. This deep rapport and experience across multiple projects ensures owners are not assembling a first-time team. There is no learning curve within the Integrated Enterprise on shared tools, processes and financial risk.

Some of the tangible benefits to the owner are speed to market, early guaranteed pricing and no team-generated change orders.
As a means of proving projects, ensuring due diligence, and freeing up the flow of capital, I see no better ways for architects to be a resource for the financial sector than BIM and IPD. By providing more accurate building information early in the process and by mitigating cost creep along the progression of the project, architects can ease lender concerns of risk.

By spreading project risks to a multi-part team, projects will become increasingly attractive to those implementing or approving funds.

About The Beck Group:

Founded in 1912, Beck is a full-service design and construction company with its’ Eastern Division headquarters being located in Atlanta since 1939. Beck is in the business of devising solutions for clients needs through the implementation of real estate for large public and private entities, specifically architecture and construction of buildings. In addition to greenfield developments, Beck has become a leader in complex renovation and building re-use projects.  Beck serves a wide range of industries in the private and public sectors, including higher education, arts, corporate, healthcare, entertainment, religious, retail, and hospitality. Beck has more than 500 employees, many of whom are LEED-accredited professionals, working from a network of offices in Atlanta, Austin, Dallas, Denver, Fort Worth, Houston, Mexico City, San Antonio and Tampa. For more information, go to www.beckgroup.com

For more information contact Thomas Hruby, Jr., Director, The Beck Group, 404 949 2300.