2007-2008 cam biennial survey

bbiieennnniiaallBBuussiinneessss SSuurrvveeyyss

OOuuttllooookk2200007722000088

cam FINAL.qxp 12/21/2007 3:59 PM Page 2

RRaannddyy LL.. BBrrooookkssCAM Chairman of the BoardExecutive Vice President, Temperature Engineering Corporation

Dear Construction Associate,

BIENNIAL BUSINESS SURVEY 2007 01

We are pleased to present you with the results of our Biennial Business and Owner Surveys, which examined activityin 2007 and the outlook for the next 18 months. These two surveys were conducted through the joint efforts of theConstruction Association of Michigan (CAM) and Plante & Moran, PLLC, and their continued commitment to provide accurate and timely business information.

This year’s survey questions were determined by the collaboration of a Survey Committee made up of a cross-section of Michigan construction professionals. As a member of this committee, I would like to acknowledgethe other members here and personally thank them for their efforts:Kevin Koehler and Amanda Tackett from CAM;Tom Doyle from Plante & Moran; Steve Dailey from The Dailey Company; Scott Wortman from Redico Company; and Carl Evans from the Mechanical Contractors Association.

We have combined the results of both surveys into one single publication. The responses contained herein tell agreat deal about our region, economy, and most specifically, the Michigan construction industry. Results are indicative of the many challenges currently facing our state, and the various ways that contractors and owners arecoping with this reality. The future construction climate is also forecasted by those who are directly involved in theMichigan construction industry on a daily basis.

According to this year’s results, there is a current trend towards smaller projects, with projects under $100,000 comprising more than half of all construction opportunities. Forty percent of those surveyed said that they were finding work outside the state of Michigan. How long will it take for an economic recovery in Michigan? Twenty-nine percent of contractors and 52 percent of the owners surveyed think an economic recovery is at least four years away.

As we negotiate this difficult economy, you have CAM’s pledge that we will continue to work hard both legislativelyand in the media to improve the climate and perception of Michigan’s construction industry. We are Standing StrongTogether and Ready to Keep Michigan Building.


The mission of the Construction Association of Michigan (CAM) is to provide its members with the programs and services they need to be

successful in the very competitive construction industry. CAM serves more than 3,500 members representing subcontractors; equipment

and material suppliers; general contractors; construction managers; and providers of legal, design, and financial services. Founded in

1885, it is the oldest and largest construction association in North America.

The association is an essential information network for the Michigan construction industry. It publishes Construction Project

News, a daily report containing complete details on Michigan projects out for bid. Construction Pre-View, a weekly newsletter,

keeps CAM members “in the know” with news of proposed projects. With advanced software, members can access entire plans

and news at their office via CAM-Online.

The Construction Buyers Guide, published annually, is the premier directory of Michigan construction. It lists all relevant information on

thousands of construction-related companies. The Construction Buyers Guide can also be accessed online at CAM’s website,

www.cam-online.com. CAM Magazine, “The Voice of the Construction Industry,” is recognized as the leading monthly industry magazine

covering construction news, business trends, and construction technology in Michigan.

CAM’s Training and Education Center (CAMTEC) offers industry-specific classes and seminars on construction project management,

marketing, and other timely issues. These courses can even be taught on site. CAMSAFETY provides all the training and documentation

assistance needed by contractors today. Companies can use CAM’s Certified Safety Consultant to ensure that their workers and their job

sites are in complete compliance with current safety regulations.

CAM produces the Design & Construction Expo, the largest annual construction trade show in the Midwest. This show displays the latest

construction products and services as well as hosting seminars, demonstrations, and advancement courses.

The CAM Labor Relations Program provides quality labor relations assistance and information at no additional cost to union contractors

employing carpenters, cement masons, laborers, or operating engineers in southeast Michigan. CAM Administrative Services offers

health insurance, CAM-COMP, which serves the need for workers’ compensation insurance. Construction Federal

Credit Union provides CAM members superior banking service.

For more information about these or any other CAM services, please contact the CAM Marketing Department

at 248.972.1000.

02 BIENNIAL BUSINESS SURVEY 2007

AAbboouuttThe Construction Association of Michigan


Produced by the Construction Association of Michigan (CAM) and the accounting firm

Plante & Moran, PLLC, the Biennial Business Survey has been conducted for more than 14 years.

The survey measures contractor opinion in several key categories.

This survey examines the construction industry from the clients’ perspective.

The two-part questionnaire asks owners and construction clients about plans for

upcoming work and their perceptions of Michigan’s construction industry

and its practices.

More than 3,000 survey participants were selected at random from CAM’s Daily

Construction Project News division, which monitors construction activity throughout

the state. The survey received an impressive response, the majority of which were

gleaned from both public and private entities.

OOwwnneerr BBuussiinneessss SSuurrvveeyy

Serving the needs of the construction industry for more than 80 years, Plante & Moran is Michigan’s largest certified public accounting

and management consulting firm with offices throughout the Great Lakes Region. Plante & Moran provides the experience and personal

attention the construction industry demands, offering a full range of services including audit and accounting; federal, state, and local tax

planning; information technology and telecommunications consulting; family business succession planning; merger and acquisition

assistance; cost segregation studies; and strategic planning.

For more information about Plante & Moran’s construction team, please contact Tom Doyle at 248.223.3402 or

[email protected].

BBiieennnniiaall BBuussiinneessss SSuurrvveeyy

CCoo--ssppoonnssoorrPlante & Moran, PLLC



Business Survey

Page 3399 Business Survey Written Comments

Page 4411 Owners Survey

Page 5588 Owners Survey Written Comments


TTaabbllee ooff CCoonntteennttss


business Survey

Please note: Percentages in the survey may not add up to 100 percent due to rounding. BIENNIAL BUSINESS SURVEY 2007 05


busin

ess S

urvey



0%

10%

20%

30%

40%

GeneralContractor

Subcontractor Equipment/Material Supplier

Architect/Engineer

Manufacturerof Equipmentor Materials

Other

18%

47%

18%

4% 4%

10%

50%

Which of the following designations best describes your primary business?

Construction OutlookContractors, Suppliers, Architects and Engineers




0%

10%

20%

30%

40%

50%

60%

31%

40%

13%

3%6%

5% 2%

$100

,000

or le

ss

$100

,000

to $5

00,00

0

Over

$10 M

illion

$ 5 M

illion

to $1

0 Milli

on

$500

,000 t

o$1

Milli

on

$1 M

illion

to

$2 M

illion

$2 M

illion

to

$5 M

illion

0%

10%

20%

30%

40%

50%

60%

52%

20%

8%

3%6%

5%2%

$100

,000

or le

ss

$100

,000

to $5

00,00

0

Over

$10 M

illion

$ 5 M

illion

to $1

0 Milli

on

$500

,000 t

o$1

Milli

on

$1 M

illion

to

$2 M

illion

$2 M

illion

to

$5 M

illion

In terms of project cost, what category of work is providing your company with the mostopportunities? (Average)

2007 2005

Projects under $100,000 comprise more than half of current construction opportunities, which indicates a trend towards smaller projects.b

usin

ess S

urvey

0%

10%

20%

30%

40%

50%

60%

NewConstruction

Renovation Maintenance Addition

54%

31%

7%

4%

Retrofit

3%

In terms of construction, what category of work is providing your company with the most opportunities?


Contractors, S

upplie

rs, A

rchit

ects a

nd E

ngin

eers

Constructio

n O

utlook


In terms of type of structure, what category of work is presently providing your company with the mostopportunities for work?

0%

5%

10%

15%

20%

21%

17%

12%11%

10% 10%

5%4% 3% 3%

2% 2%

25%

Offic

e Buil

dings

Enter

tainm

ent

Facil

ities

No A

nswe

r

Educ

ation

/Cult

ural

Scien

tific B

uildin

gs

Inter

iors/T

enan

t Im

prov

emen

ts

Publi

c Wor

ks

Proje

cts

Healt

h/Welf

are

Hosp

ital B

uildin

gs

Infra

struc

ture

Resid

entia

l

Hotel

s/Mote

ls

Tran

spor

tation

/Ind

ustria

l Buil

dings

Relig

ious B

uildin

gs

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Offic

e Buil

dings

Educ

ation

/Cult

ural

Scien

tific B

uildin

gs

Healt

h/Welf

are/

Hosp

ital B

uildin

gs

Enter

tainm

ent

Facil

ities

Tran

spor

tation

/Ind

ustria

l Buil

dings

Inter

iors/T

enan

tIm

prov

emen

ts

Publi

c Wor

ksPr

ojects

Resid

entia

l

Infra

struc

ture

Hotel

s/Mote

ls

Relig

ious B

uildin

gs

No A

nswe

r

18% 18%

15%

9% 9%

11%

7%

4%

2% 2% 2%3%

What category do you anticipate providing your company with the most opportunities for work in thenext 12–18 months?



0%

4%

8%

12%

16%13%

Up 5%

or le

ss

17%

Up be

twee

n5%

and 1

0%

8%

Up be

twee

n10

% an

d 20%

13%

Up m

ore

than 2

0%

7%

Down

5%or

less

10%

Down

betw

een

5% an

d 10%

8%

Down

betw

een

10%

and 2

0%

11%

Down

mor

etha

n 20%

12%

Abou

t the

same

20%

2005

In 2005, 51 percent of the respondents indicated an increase in volume, while in 2007 only 33 percent indicated an increase.

0%

4%

8%

12%

16%

8%

Up 5%

or le

ss

11%

Up be

twee

n5%

and 1

0%

7%

Up be

twee

n10

% an

d 20%

19%

Up m

ore

than 2

0%

7%Do

wn 5%

or le

ss

10%

Down

betw

een

5% an

d 10%

10%

Down

betw

een

10%

and 2

0%

19%

Down

mor

etha

n 20%

7%

Abou

t the

same

20%

2007

How has the volume of work for which you have contracted changed over the past 12 months?

busin

ess S

urvey


0%

5%

10%

15%

9%

32%

27%

20%

9%

20%

25%

30%

35%

One year Two years Three years Four years Five yearsor more

Interestingly enough, more than 90 percent of contractors, suppliers, architects and engineers responding to the surveyanticipate Michigan’s current economic trends to continue for at least two more years. However, they remain more optimisticthan owners. More than half of the owners surveyed indicated an economic upturn is at least four years away.

Contractors, S

upplie

rs, A

rchit

ects a

nd E

ngin

eers

Constructio

n O

utlook


0%

5%

10%

15%

2%

23%22%

37%

15%

20%

25%

30%

35%


Contractors, Suppliers, Architects and Engineers Owners

0%

10%

20%

9%

Up 5%

or le

ss

11%

Up be

twee

n5%

and 1

0%

6%

Up be

twee

n10

% an

d 20%

33%

Up m

ore

than 2

0%

12%

Down

5%or

less

10%

Down

betw

een

5% an

d 10%

5%

Down

betw

een

10%

and 2

0%

8%

Down

mor

etha

n 20%

3%Ab

out th

esa

me

30%

40%

How do you anticipate the volume of work changing over the next 12–18 months?

More than two thirds of the respondents anticipate their volume of work to stay the same or decrease over the next 12–18 months. 29 percent of the respondents anticipate their volume of work to increase over the next 12–18 months.

Michigan’s economy is currently one of the worst in the nation. How long do you anticipate this trend to continue?


If you answered yes, what percentage of your total volume of work is performed outside the stateof Michigan?

Less than 10% 44%

10%–20% 24%

20%–30% 8%

30%–40% 9%

40%–50% 3%

50% or more 13%

Increasing 83%

Decreasing 17%

What area in the state of Michigan do you anticipate having the greatest number of constructionopportunities in the next two years?

Are you currently doing work outside the state of Michigan?

Southeastern Michigan 63%

Southwestern Michigan 25%

Northeastern Michigan 2%

Northwestern Michigan 3%

No answer 7%

Yes 40%

No 58%

No Answer 3%

In which of the following areas outside the state of Michigan is the work being performed?

Northeastern United States 22%

Midwest United States 62%

Southeastern United States 34%

Southwestern United States 14%

Northwestern United States 7%

Canada 4%

Mexico 2%

Other 3%

busin

ess S

urvey


Do you anticipate that percentage increasing or decreasing in the next 12–18 months?


0%

10%

20%

30%

40%

50%

60%

18%

55%

38%

North

easte

rn

Unite

d Stat

es

Midw

est

Unite

d Stat

es

South

easte

rnUn

ited S

tates

South

weste

rn

Unite

d Stat

es

North

weste

rn

Unite

d Stat

es

Cana

da

Mexic

o

Othe

r

21%

9%3%

1%4%

The answers to the previous questions clearly indicate a growing trend to look for work outside the state of Michigan.

Contractors, S

upplie

rs, A

rchit

ects a

nd E

ngin

eers

Constructio

nO

utlook

If you answered yes, in which of the following areas outside the state of Michigan do you anticipate to perform work?

If you are not currently working outside the state of Michigan, do you anticipate doing so in the next 12–18 months?


Yes 23%

No 40%

No Answer 37%


busin

ess s

urvey



0%

10%

20%

30%

40%

50%

60%

1 to 3 months 4 to 6 months 7 to 12 months More than a year

55%

20%

12%

4%

The survey indicates that firms that have been in business for more than 20 years tend to have more work backlogged.

How much new work do you currently have backlogged?

Securing Work


Contractors, Suppliers, Architects and Engineers


busin

ess s

urvey

0%

5%

10%

15%

20%

25%

30%

35%

27%

Competitivebidding

(open bidding)

Competitivebidding

(invitation only)

1%

Other

16%

Negotiate directly

with owner

38%

14%

Referral

40%

2007

What is your primary method for securing new construction work?

Competitive bidding is still the leading method and, in fact, 65 percent of contractors reported using a form of competitivebidding as their primary method for obtaining new work. However, most competitive bidding procedures are invitation only.Just two years ago, open public bidding was the more common practice. Contractors now list negotiating directly with anowner as third in importance.

0%

5%

10%

15%

20%

25%

30%

35%

41%

Competitivebidding

(open bidding)

14%

Competitivebidding

(invitation only)

7%

15%

Negotiate directly

with owner

21%

Referral Other

40%

2005




Contractors, S

upplie

rs, A

rchit

ects a

nd E

ngin

eers

Securin

g W

ork

If you are bidding competitive work, what is the average number of bidders who have been biddingagainst you on each project?

0%

10%

20%

30%

40%

50%

60%

48%

40%

9%

Less than 5 5 to 10 10 to 15 15 or more

3 %

2007

Increase 68%

Decrease 32%

Do you anticipate the number of bidders, bidding against you, to increase or decrease in thenext 12–18 months?

0%

10%

20%

30%

40%

50%

55%

39%

5%

Less than 5 5 to 10 10 to 15 15 or more

1 %

60%

2005

0%

5%

10%

15%

20%

25%

30%

35%

26%

Competitivebidding

(open bidding)

Competitivebidding

(invitation only)

2%

Other

19%

Negotiate directly

with owner

38%

13%

Referral

40%

What primary method do you anticipate using for securing new construction work in the next two years?


busin

ess s

urvey


What primary method do you anticipate using for securing new construction work in the next two years(SECTOR BREAKDOWN)?

0%

5%

10%

15%

20%

25%

30%

35%

23%

Competitivebidding

(open bidding)

Competitivebidding

(invitation only)

2%

Other

37%

Negotiate directly

with owner

30%

9%

Referral

40%

0%

5%

10%

15%

20%

25%

30%

35%

17%

Competitivebidding

(open bidding)

Competitivebidding

(invitation only)

8%

Other

17%

Negotiate directly

with owner

25%

33%

Referral

40%

0%

5%

10%

15%

20%

25%

30%

35%

27%

Competitivebidding

(open bidding)

Competitivebidding

(invitation only)

1%

Other

10%

Negotiate directly

with owner

49%

13%

Referral

40%

0%

5%

10%

15%

20%

25%

30%

35%30%

Competitivebidding

(open bidding)

Competitivebidding

(invitation only)

9%

Other

15%

Negotiate directly

with owner

33%

13%

Referral

40%

General Contractors Subcontractors

Architects and EngineersSuppliers


Contractors, S

upplie

rs, A

rchit

ects a

nd E

ngin

eers

Securin

g W

ork




busin

ess s

urvey


Is your company experiencing difficulty finding salaried/office workers?

Yes 12%

No 84%

No Answer 4%

Workforce Plans


Is your company experiencing difficulty finding skilled workers?

2007 2005 2003 2001

Yes 28%

No 69%

No answer 3%

Yes 41%

No 56%

No answer 2%

Yes 44%

No 54%

No answer 2%

Yes 64%

No 34%

No answer 1%

Difficulty in finding skilled workers is not nearly the concern it was six years ago. Again, based upon the information that CAM monitors, this could be attributed to a drop in demand for workers as building has slowed, coupled with an increase in trained workers as a result of the training drive initiated in early 2000.



busin

ess s

urvey

0%

10%

20%

30%

40%

50%

60%

30%

Add full-timeemployees

6%

Add part-timeemployees

50%

No change innumber ofemployees

12%

Lay off full-timeemployees

4%

Lay off part-timeemployees

Stay the same 38%

Increase slightly 29%

Increase significantly 10%

Decrease slightly 15%

Decrease significantly 3%

No answer 2%

Over the next two years, you anticipate labor availability to:

What plans do you have for your workforce over the next 12–18 months?


Half of respondents indicated that they do not plan any change in staff levels. The most significant change, since the previous survey, is related to adding full-time employees. This category went from 23 percent to 30 percent.


Contractors, S

upplie

rs, A

rchit

ects a

nd E

ngin

eers

Workforce p

lans


0%

10%

20%

30%

40%

50%

60%

31%


8%


52%


8%


3%


What plans do you have for your workforce over the next 12–18 months (SECTOR BREAKDOWN)?

0%

10%

20%

30%

40%

50%

60%

46%


0%


46%


0%


6%


0%

10%

20%

30%

40%

50%

60%

32%


4%


49%


14%


4%


0%

10%

20%

30%

40%

50%

60%

29%


6%


46%


16%


5%






busin

ess s

urvey


0%

20%

40%

60%

80%

100%

Econ

omic

decli

ne

55%

Gettin

g paid

80%

Sour

ces o

ffut

ure w

ork

49%

Shor

tage/

Train

ing of

labo

r

9%

Comp

etitio

n

39%

Mater

ial co

sts

26%

Insur

ance

cost

esca

lation

20%

Litiga

tion

6%

Gove

rnme

ntsp

endin

g

5%

Select three of the most challenging areas facing the construction industry within the next two years.

It is interesting to note that the top three responses related directly or indirectly to the economy.

Financial Health




Rank the three strategies your company has undertaken to improve profitability.

2005

2001

Cut Administrative Costs 21%Improving Process/Products 18%Enhanced Marketing 14%Design/Build Projects 7%Staff Reduction/Right-Sizing 17%Geographic Expansion 11%Enhanced Training 5%Safety/Risk Management 6%




Two trends to note are the reduction in design/build efforts and the continued focus on company right-sizing.

Do you currently have a business succession plan in place or in process?

Yes 43%

No 54%

No Answer 3%

If you answered yes, which of the following is the key element of your strategy?

Selling/Transferring to family 52%

Selling to key management personnel 29%

Selling to a strategic buyer 6%

Establishing an ESOP 3%

Merging with another company 2%

Winding down/Liquidating 7%

2003

2007

busin

ess s

urvey



How does your present cash-flow situation compare to last year?

0%

10%

20%

30%

40%

50%

Better thanlast year

About the sameas last year

Worse thanlast year

33%

40%

26%

0%

10%

20%

30%

40%

50%



Worse thanlast year

48%

36%

16%


It appears that Subcontractors are having the most significant challenges with cash-flow.

Contractors, S

upplie

rs, A

rchit

ects a

nd E

ngin

eers

Fin

ancia

l H

ealt

h

0%

10%

20%

30%

40%

50%



Worse thanlast year

30%

48%

22%

0%

10%

20%

30%

40%

50%



Worse thanlast year

40%

20%

40%


How does your present cash-flow situation compare to last year (SECTOR BREAKDOWN)?


0%

10%

20%

30%

40%

50%



Worse thanlast year

41%

37%

21%

0%

10%

20%

30%

40%

50%



Worse thanlast year

31%

37%

31 %

20052007


It is interesting to note that older firms retain a greater percentage of sales in equity than younger firms, which is consistentwith expectations.

What is the average length of time it takes your company to receive final payment for work performedor materials provided?

30 days 12%

60 days 47%

More than 90 days 40%

No answer 2%

Do you anticipate the average time it takes to be paid improving or getting worse in the next12–18 months?

Improving 21%

Getting Worse 69%

No Answer 9%

What percentage of your total sales do you maintain in equity?

2005

Less than 5% of total sales 31%

5–10% 35%

10–20% 13%

More than 20% 11%

No answer 10%


5–10% 27%

10–20% 13%

More than 20% 12%

No answer 17%

2007 2003


5–10% 26%

10–20% 16%

More than 20% 11%

No answer 16%

Is your equity position sufficient to manage your cash-flow needs?

Yes 62%

No 28%

No Answer 9%


busin

ess s

urvey

In the next 12–18 months, how do you anticipate your cash flow being?

0%

20%

40%

60%

80%

Better About the sameas last year

Worse

23%

61%

15%


Do you have an available line of credit?

Yes 87%No 10%No Answer 3%

Have you filed a Claim of Lien in the past 12 months?

0%

10%

20%

30%

40%

50%

60%

No claims 1 to 5 5 to 10 More than 10

50%

38%

4% 5%

The percentage of responses shows that half of respondents have not filed Claims of Lien. It is worth noting that the last threeCAM surveys have shown that many companies do not file Claims of Lien. The 2007 survey indicates 50 percent, which is consistent with previous surveys.

What percentage of the work you perform is bonded?

No bonded work 41%10% 24%20% 9%30% 6%40% 4%50% or more 14%

Is your organization having more difficulty securing sufficient bonding capacity?

Yes 13%No 68%No Answer 18%

Contractors, S

upplie

rs, A

rchit

ects a

nd E

ngin

eers

Fin

ancia

l H

ealt

h


How have material prices for your business changed in the past 12 months?

Increase in prices 83%Decrease in prices 2%Stayed about the same 13%



20052007 2003


Decrease0% to 10%

12%

Increase1% to 5%

27%

Decreasemore than

11%

8%

Stay aboutthe same

12%

Increase6% to 14%

20%

Increase more than

15%

13%

No answer

7%

0%

8%

16%

24%

32%

Have you been able to obtain escalation clauses in your contracts?

Do you anticipate material prices changing in the next 12–18 months?

Yes 15%No 48%Haven’t tried 33%

Anticipate increase in prices 83%Stay the same 14%Anticipate decrease in prices 2%

Decrease0% to 10%

19%

Increase1% to 5%

16%

Decreasemore than

11%

16%

Stay aboutthe same

25%

Increase6% to 14%

14%

Increase more than

15%

8%

No answer

1%

0%

8%

16%

24%

32%

Compared to prior year sales, your company’s annual sales for the coming year will:

2005

60 percent of the respondents indicate that sales will decrease or stay the same, whereas only 32 percent gave that response in 2005.

Decrease0% to 10%

21%

Increase1% to 5%

21%

Decreasemore than

11%

12%

Stay aboutthe same

29%

Increase6% to 14%

9%

Increase more than

15%

7%

No answer

1%0%

10%

20%

30%

Compared to the prior year, your company’s profitability for the coming year will:

2007


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Contractors, S

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Fin

ancia

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ealt

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busin

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urvey


Online job bidding users increased by 11 percentage points from 2005.

Which of the following online technologies is being utilized by your company?

Currentlyusing

0%

10%

20%

30%

40%

Consideringimplementing

No interest inthis technology

No answerPlanning toimplement

50%

60%

38%

17%

33%

9%4%

Technology


Online job bidding



Currentlyusing

0%

10%

20%

30%

40%



No answerPlanning toimplement

50%

60% 56%

13%18%

9%4%

Currentlyusing

0%

10%

20%

30%

40%

19%


19%


47%

No answer

12%

Planning toimplement

4%

50%

60%

Online Project Management

Currently, 42 percent of respondents have implemented, plan to implement, or are considering implementation of an online projectmanagement system.

Online Plans and Specifications

Which of the following online technologies is being utilized by your company? (continued)

There has been a steady interest in this technology since the 2003 survey. That year 31 percent used the technology. In thisyear’s survey, 56 percent of respondents are utilizing online plans and specifications.


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Technology




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Do you have plans to enhance any of the following policies and procedures?

Job Safety Procedures 63% 33% 4%

Staff Development/Training 57% 36% 7%

Substance Abuse Testing 31% 58% 10%

Employee Benefit Programs 34% 56% 11%

Minority Employment 27% 61% 12%

Employee Theft Policies 23% 66% 11%

Handicapped Employment 12% 75% 13%

YYeess NNooDDoonn’’tt KKnnooww

As in previous surveys, respondents plan to enhance job safety procedures.

Less than 10 percent 11% 10–30 percent 8%30–50 percent 8% 50–70 percent 21% 70–90 percent 23% More than 90 percent 21% No answer 8%

Less than 10 percent 11%10–30 percent 7%30–50 percent 10%50–70 percent 17%70–90 percent 21%More than 90 percent 22%No answer 10%

Less than 10 percent 14%10–30 percent 7%30–50 percent 6%50–70 percent 14%70–90 percent 25%More than 90 percent 25%No answer 8%

2007 2005 2003

What percentage of your construction work does a Michigan-based architectual or engineeringfirm design?

Policies & Procedures




Respond

ent D

em

ographic

s

Approximately how long has your company been in business?

5 years or less 6%5–10 years 11%10–15 years 12%15–20 years 9%20–30 years 16%More than 30 years 44%No answer 1%

What is your title?

President 59%Chief Executive Officer 5%Chief Financial Officer 5%Other 28%No answer 2%

What is your approximate age?

21–34 4%35–44 19%45–54 38%55–64 26%65–Over 10%No answer 3%

Is this a minority-owned (excluding female-owned)business?

Yes 5%No 91%No answer 4%

In which county are you located in the state of Michigan?

Wayne County 25%Oakland County 40%Macomb County 17%Balance of Detroit SMSA 6%Mid-Michigan 5%West Michigan 1%Tri-City/Thumb Area 2%North Lower Michigan 0%Upper Peninsula 0%No answer 2%

Generally speaking, do you consider yourself to be:

Republican 57%Democrat 9% Independent 14%No preference 15%No answer 5%

What is your personal net worth?

Less than $50,000 2%$50,000–$99,999 4%$100,000–$499,999 23%$500,000–$1 million 21%$1 million–$2 million 18%More than $2 million 15%

What is the last grade of school you completed?

High school 12%Vocational/Technical school 7%Some college 25% College degree 41%Post-graduate degree 10%No answer 5%

Is a woman a majority owner (51 percent or more) ofthis business?

Yes 8%No 90%No answer 2%

Contractors,

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At the present time, what is your biggest concern about the construction industry?

GENERAL CONCERNS

Economy:• Slow residential building, and the economy is in trouble.• Continuous volume of work and market expansion is a big concern.• Devalued existing building less than replacement cost.• Lack of sizeable projects that are available, there are only small jobs.• The lack of work is forcing us to move part of the workforce out of state.• No work for small contractors.• Lack of credit availability for projects, the decline in home values and

the decline in the middle class.• Suppliers and clients are moving out of the state.• Revenue for the Michigan highway system.• Lack of investment/expansion in the private sector.

Competition:• Competition—not enough work for too many builders.• Profit margins too low.• Many jobs being done by non-formed so-called companies.• The construction industry is justifying cheap work to maintain

volume. I worry that over time, profitable work will disappear.• Underbidding/price cutting—the project owner gets squeezed by his

customers; he in turn squeezes the general contractor who squeezesthe subs.

• Lack of ethical behavior and integrity among the competition causes the rest of us to work harder and pay higher costs while trying to stay competitive.

• Bidding is too low to keep people working and the quality suffers.

Getting Paid:• Not paying bills in a timely manner.• Slow pay on projects.• Payment policies on all projects are becoming slower and slower

adding costs for carrying charges.• Cash flow is a problem; need to omit 10% retention.

Labor:• Union versus non-union is a big concern. • Lack of training and safety training. • Poor union attitude—not willing to help. • Apprentices do not produce enough for the wages they make upon

graduating. They should go to school for ten years, and then they willbe worth the wages they get.

• Non-union competition is awarded contracts.

Costs:• Rising healthcare costs.• Insurance costs are too high.• Rising costs are killing projects.

Legal:• Need new laws to protect subcontractors and more stringent

licensing procedures for all trade contractors.• Subs and GCs issuing purchase orders should not be allowed to

make contract clauses stating the supplier will not be paid unless thecontractor is fully paid, even though we have no influence if and whenthey may be paid under their contract.

• Attempted transfer of liability through contract language to the subcontractor.

• Right to work issues.• Too much litigation.• The ridiculous tax policies of this state.

SUGGESTED SOLUTIONS

• Business tax cut or some incentives to attract more business to Michigan.

• Stabilize the car companies.• Need to monitor non-formed companies.• Michigan has to move its dependency from the auto industry and

move into more stable, long-term growth industries.• Get employees to be more productive, politicians to do their job.• Global competition and off-shoring of CADD work.• Find niches and provide great customer service and

quick turnaround.• Creative and powerful marketing and advertising campaigns.• Union needs to realize wages are a problem.• Have on-line training for safety and more recruitment by

CAM/colleges for skilled trades.• Need to revise trade policies, re-educate American consumers,

repeal the top tier personal income tax, shift to job creation, and limit incentives for outsourcing.

• Need to reduce taxes; the state government needs to lead and bringnew business and enact a state right-to-work law.

• Need to move to another state to get more work.• Need to bring in more industrial companies.• Need more jobs to generate a tax base for improvements.• Need to lower taxes.• Need to find markets with competition that is profit-driven not

volume-driven.• Interest rates should be reasonably low for residential construction.• Need new laws for workers’ compensation.• Need to modify existing state and federal law to prohibit transfer

of liability by contractor.• Need tax incentives to keep the suppliers/clients in Michigan.• Need a new Governor.• People need to buy American cars.

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Would you still choose to make your living in the construction industry if you were beginning yourcareer today?

0%

25%

50%

100%

Yes No

35%

27% 27%

75%

Unsure No answer

11%

The responses to this question certainly underscore how construction today is a very challenging industry. Interestingly, in the 2003 CAM Survey, 75 percent responded “yes.” Those who responded “unsure” went from 1% in 2005 to 27% in this survey.

Of those who answered “No,” the following are some of their reasons:

• Would not make a living in the construction industry because there are too many contractors that do not take the time to figure out how much a jobcosts them to do.

• This is a very difficult profession to stay in. • Would not choose to continue to work in the industry due to decreasing profitability and lack of protection for subcontractors by the State of Michigan.• Would not make a living in the industry due to the competitiveness and cutthroat volatility.• The work is no longer fun to do and future is uncertain.• Constant threat of litigation.

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Owners Survey



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0%

10%

20%

30%

40%

50%

58%

32%

10%

Pleased/Satisfied

Adequate Disappointed

60%

Which of the following would best summarize your general experience with the professionalism of construction personnel during the building process?

0%

10%

20%

30%

40%

50% 45%

27% 25%

GoodExcellent Satisfactory

60%

2%

Poor

What was the overall quality of the construction in your most recent project?

Client Perspective


Owners, Developers and Construction Clients


Which of the following would best summarize your general experience with the overall construction process?

Which of the following would best summarize your general experience with project costs?

Which of the following would best summarize your general experience with project completion times?

A great change occurred concerning the issue of completion times since the last survey. A 17 percentage point drop in on-time completion was noted by owners since the last survey. Nearly half of the owners building ten or more projects experienced delays that they felt were the contractor’s fault.

3%

Ahead ofschedule

35%

On time

30%

Delayed—contractor

at fault

1%

Delayed—ownersat fault

25%

Delayed—no fault

4%

Other0%

10%

20%

30%

40%

50%

60%

2007 2005

Smoother than expected 10%

Proceeded as expected 64%

More conflicts than expected 24%




Greater than expected 35%

Equal to expectations 59%

Below expectations 6%




1%

Ahead ofschedule

52%

On time

22%

Delayed—contractor

at fault

2%

Delayed—ownersat fault

23%

Delayed—no fault

1%

Other0%

10%

20%

30%

40%

50%

60%

2005

The number of problems with the construction process have increased from 2005 to 2007. In addition, the more projects theowners were involved with, the higher the conflict rate.

2007

20052007

Ow

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2003







2003



73%

70%

11%14%

1%

General Contractors/Construction Managers

Architects Engineers Other0%

10%

20%

30%

40%

50%

60%

Which of the following generally causes the most delays in project completion or closeout?

0%

10%

20%

30%

40%

53%

50%

60%

19%

12%

5%8%

2%1%

Unfor

esee

npr

oblem

s

Comm

unica

tions

wi

th su

bcon

tracto

rs

Othe

r

Quali

ty of

labor

Comm

unica

tions

wi

th pr

oject

mana

ger

Comm

unica

tions

with

owne

rs

No an

swer

According to this survey, communication issues caused fewer delays than in the prior survey while the quality of labor improved.However, unforeseen problems are becoming a larger issue for the industry. Unforeseen problems increased from 25 percent to53 percent since the last survey.

In your opinion, whom should you contact first to address problems with your project?

Owners, D

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0%

10%

20%

30%

40%

63%

21%

3% 5% 5%

Architect Contractor FinancialInstitution

Accountant No answer

50%

60%

70%

3%

Attorney

When doing construction planning, whom do you consult first about your projects?

What percentage of the fees charged for construction services do you believe represents profit for generalcontractors?

Owners believe contractors are making more profit than they actually are. Nearly half of the owners responding believe general contractors are making profits of more than 10 percent.

IInndduussttrryy FFaacctt:: National surveys indicate the average general contractor’s gross profit is approximately six percent of sales, and the averagespecialty contractor’s gross profit is approximately 15 percent of sales. In addition, the before tax net income of general contractors averages less than two percent of sales. For specialty contractors, net income before tax averages less than four percent of sales.

What is your perception of fees earned by the following construction personnel?

Less than 5% 13%5–10% 38%10–20% 36%20–30% 8%More than 30% 2%

Less than 5% 12%5–10% 35%10–20% 28%20–30% 16%More than 30% 4% No answer 6%

TToooo TToooo NNoohhiigghh llooww FFaaiirr aannsswweerr

Architects 40% 4% 50% 6%Engineers 33% 3% 58% 6%General Contractors 10% 1% 84% 5%Trades 18% 1% 76% 4%Specialty Contractors 29% 0% 63% 8%

What percentage of the fees charged for construction services do you believe represents profit forspecialty contractors?


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Decrease0% to 10%

14%

Increase1% to 5%

18%

Decreasemore than

11%

7%

Stay aboutthe same

29%

Increase6% to 14%

4%

Increase more than

15%

2%

No answer

26%

0%

5%

10%

15%

20%

25%

30%

Only 24 percent of all respondents anticipate an increase in future sales, compared to 2005, when 48 percent of the owners anticipated an increase in sales for the coming year.

Compared to prior year sales, your company’s annual sales for the coming year will:

Financial health & Outlook




Decrease0% to 10%

13%

Increase1% to 5%

14%

Decreasemore than

11%

4%

Stay aboutthe same

38%

Increase6% to 14%

2%

Increase more than

15%

1%

No answer

27%

0%

10%

40%

20%

30%

Compared to the prior year, your company’s profitability for the coming year will:

Over the next 12–18 months, your anticipated construction spending will:

Decrease0% to 10%

21%

Increase1% to 5%

4%

Decreasemore than

11%

20%

Stay aboutthe same

30%

Increase6% to 14%

8%

Increase more than

15%

14%

No answer

4%

0%

5%

10%

15%

20%

25%

30%

Generally, how has your business performed over the last 12 months?

22000077 22000055 22000033

Better than expected 14%

As expected 68%

Worse than expected 14%

No answer 4%


As expected 54%


No answer 14%


As expected 45%


No answer 5%


Ow

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urvey


0%

20%

40%

60%

80%Go

vern

ment

Fund

ing

57%

Econ

omy

76%

Insur

ance

Costs

25%

Infor

matio

nTe

chno

logy

15%

Comp

etitio

n

19%

Inter

est R

ates

15%

Mater

ial/

Cons

tructi

onCo

sts

34%

Othe

r

7%

No A

nswe

r

3%

Rank the three most challenging areas facing your business in the next two years.

What do you feel the overall outlook is for your business sector in the next 12–18 months?

Expected to be good 34%About the same 45%Worse 15%No answer 6%

0%

10%

20%

2%

23% 22%

37%

15%

30%

40%


Over one-half of owners expect Michigan’s economic trends to continue for at least four years. Contractors appear to be more optimistic.

Owners, D

evelopers a

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Fin

ancia

l Hea

lth &

Outlo

ok

0%

10%

20%

9%

32%

27%

20%

9%

30%

40%


Owners Contractors, Suppliers, Architects and Engineers



2007 2005 2003


Although 65 percent of the respondents expect business to be the same, few respondents expect improvement.

Michigan’s economy is currently one of the worst in the nation. How long do you anticipatethis trend continuing?



Ow

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urvey


2–5projects

38%

11–50projects

10%

1 project

25%

No projects

13%

6–10projects

7%

More than50 projects

4%

No answer

3%

0%

10%

20%

30%

40%

How many non-residential projects has your organization been involved in planning and/or executingwithin the past year?

Do you anticipate an increase or decrease in the number of non-residential projects your companyis planning and/or executing in the next 12–18 months?

Increase 7%

Decrease 41%

Stay about the same 45%

No answer 7%

Construction Project Activity




What type of work was done on the majority of your projects?

$100,000–$500,000

26%

$2.1 million–$5 million

10%

$100,000or less

13%

$500,001–$1 million

15%


10%


5%

$10.1 millionand higher

19%

0%

10%

20%

30%

$100,000–$500,000

30%


3%

$100,000or less

21%

$500,001–$1 million

10%


13%


7%

$10.1 millionand higher

8%

0%

10%

20%

30%

Please select a range that represents the average estimated price of each of your future projects.

New Construction 49%

Renovation/Retrofit 40%

Addition/Expansion 8%

Maintenance 4%

Please select a range that represents the average estimated price of your projects.


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Ow

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BBIIMM

Eighty percent or more of “higher volume” owners either have utilized or plan to utilize BIM, LEED, and/or Green Buildingpractices on future projects.

Which of the following have you utilized or plan to utilize in future projects?

Have utilized 4% 13% 12%

Plan to utilize 8% 14% 29%

Never plan to utilize 7% 10% 15%

Not familiar with this technology 59% 43% 26%

No answer 22% 20% 18%

LLEEEEDDGGRREEEENN

BBUUIILLDDIINNGG

Technology




POSITIVE OR NEUTRAL REPONSES:• As a whole, the industry produces an excellent product with quality

workmanship. However, there are always exceptions.• Construction manager—excellent; architect—poor; subcontractors—

some poor and some OK.• Quality increases with more competition. Some contractors do not have

experienced employees.• The construction industry, in general, operates fine.• I admire anyone who subjects themselves to the discipline of

the marketplace.• My belief is that in Michigan the profit margin is thin for

general contractors. There is a great deal of competition for the jobsavailable.That fact helped us with low bids and a project that came inwell under budget.

NEGATIVE RESPONSES:• The industry is not held to as high of standards as others, such

as automotive.• Quality of workmanship has gone away.• As finances get tight the bidding gets more cutthroat, and when

construction begins every item is contested as an extra.• Bunch of liars and try to hide problems they created.• There is no integrity in the construction industry. Most cost-overruns

are illegitimate.• Union is simply not competitive; there is no advantage in quality,

technology, speed or technique over the non-environment.• Construction industry personnel are mostly disrespectful. Over the last

three projects I have had complaints about hard hats thrown at vehicles,cat calls, foul language, and trenches filled with waste material.

What is your overall perception of the construction industry?

In your opinion, what is the single biggest problem owners experience when working with theconstruction industry?

• As a school district, contracts are bid and awarded to the lowestresponsible bidder. At times, the lowest responsible bidder doesn't careabout the project as much as the district would hope. In addition, themeeting of construction timelines can be a problem.

• On a large building project like a school, you have too many subcontractors, and when something doesn’t go just right they blamethe other guys. Several things they said they couldn’t do or change,because the architect or engineer designed it that way. I told them wepaid the money for everything to be new and work properly and it wasn't my problem to fix, which is why we hired the company to makesure everything was done properly. Once they receive their pay, youmay as well forget it.

• Delays—and they do not understand our issues. Wish I didn’t have tostay on their case to get the job done. This industry doesn’t practicequality assurance/quality improvement as far as I can tell. They are notproactive but wait until it’s badly broken before fixing it.

• Communication and follow-up.• Lack of knowledge.• High costs for extras, prime contractors’ mark-up on subcontracts,

delays and cost overruns.• Government red tape.• Obtaining competitive pricing against competition against trades who

are not part of CAM.• Equipment delivery and materials are always late.

• I wonder about quality of work done by each individual trade and workethic of a full day’s work.

• Getting a well-crafted project. Some areas were not done well, such as carpentry and electrical. Mechanical seemed most qualified.

• Keeping contractors on the same page so the bids are apples to apples.

• Hiring an unlicensed contractor.• Plan reviews.• Contractors who do not pay their subcontractors.• Whose money to use first (owner, bank or builder).• Contractors who chase the low bid until it leads them to a price that

they cannot live with.• The mark-up on change orders is ridiculous.• Getting contractors to show up.• Most contractors and tradespeople do not know basic codes.• Local governments and building officials that have no stake in the

project, not knowing their own requirements or changing their minds onrequirements, and not understanding or caring how they affect thecosts or timing of a project.

• Not understanding the length of time it takes to complete a project.• Not enough follow-through and attention to detail.• Being overburdened with new codes, regulations that slow down

the progress.


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NO

TES


43636 Woodward • P.O. Box 3204 • Bloomfield Hills, MI 48302-3204www.cam-online.com

CCoonnssttrruuccttiioonn AAssssoocciiaattiioonn ooff MMiicchhiiggaann


2007-2008 cam biennial survey

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