Wolgast Blog - Construction Trends, Tips and Information

As an update to this blog originally posted a few years ago, we have new information to add  from the June 2018 Design-Build Utilization Report funded by Design-Build Institute of America. Findings in this report determined that popularity continues to grow for this delivery method. The results showed, "Design-Build Construction spending in the assessed segments is anticipated to increase 18% from 2018 - 2021", and will likely represent 44% of construction spending by 2021. Researchers determined that the education of building owners on Design-Build benefits is gaining traction, and more owners are experiencing enjoying the benefits first hand.  Additionally, FMI Corporation, a management consulting and investment company, had released a report in March 2019 titled 2019 AGC/FMI Risk Management Survey, whereby they found that "38% of contractors were <planning> to increase their in-house design capabilities last year and 43% this year".  So there will be more collaboration, less risk, and more competition among design and construction moving forward.

Original blog article:

According to the May 2013, “Design-Build Project Delivery Market Share and Market Size Report” by Reed Construction Data and RS Means Intelligence, Design-Build construction delivery method has taken an additional 9% of the construction market since 2005 and General Construction has lost 10% of the market share in that same time.

I caught a rerun of Family Feud on GSN recently and the question was posed, “What profession has no room for errors?”  They featured seven possible answers.  I automatically thought of physicians, which was the top answer.  After that, it became a little tougher.  Police officer was up there, but neither pilot nor bus driver were.  So what else could it be that 100 American people thought?  I was on the edge of my seat to find out.  Then they said it, "Construction"!  Of course, being in the industry I know this, but I didn’t know that the majority of people on Family Feud would have thought of it.

Commercial Property Financing

As I found out recently by talking to Steve Canole, Vice President and Business Loan Officer  at 1^st State Bank, there aren’t as explicit criteria for securing a commercial construction loan as there are  for residential mortgage financing.  According to Steve, there are many more variables that lenders need to consider when reviewing a commercial property mortgage compared to a residential loan which is more stream lined.  Primarily, these variables include whether it’s an investment property versus owner-occupied, the size of the project, the varied ways commercial real estate can be purchased and held, the various types of operating entities and how the owner chooses to operate and file taxes, and finally the loan/cost ratio of the project.

Currently, many Michigan auto dealers are feeling varying degrees of pressure from auto manufacturers to modernize their stores, some of which have never been renovated since they were originally built 50 years ago.  While remodeling can be an expensive investment in your business, there are several benefits that go along with the improvements.

Obviously, planning a construction project doesn’t happen overnight.  In most cases, the client has a set occupancy date when construction has to be completed either to satisfy a contract they have acquired or to meet their seasonal market (to name two).  During that construction project time frame, planning through completed project, there are five main activities that need to take place, which include design, cost estimating, obtaining regulatory approval, acquiring materials and construction. 

Continually meet with patients throughout construction

Dentists sometimes put off improvements to their building space due to the anticipated disruption of their business.  Determining how to remodel their office or relocate to a new space when a practice can’t survive without an active patient load can feel like a big risk.  However, I’m here to tell you that it's possible to remodel, renovate or relocate a dental office with minimal impact to your practice when you use a professional contractor.

In a competitive bid situation, contractors can go to the extremes to lower their bids, especially when work opportunities are scarce.  In the end, a business owner may like the price, but may not like the final results.

We have had all kinds of business owners from varying professions ask us about using a pre-engineered metal building when they’re fact finding about new construction for their business.  We tell them a general rule of thumb to consider is that metal buildings are best for businesses that want an industrial look, or have a big enough budget to dress up a pre-engineered building with brick or EIFS (for example) to mask the industrial façade.

In your marketing plan you’ve probably included a budget for advertising, special events, direct mail, tradeshows, logoed goods, internet and social media to name a few, all in order to drive traffic to your business.  One thing you may not have considered is the role of your building and how it can drive traffic to (or away from) your business.