FMI | Construction & Engineering Industry Insight

  • Your Next-Generation Leaders: Are They Ready?

    Posted on February 8, 2016 by FMI Corporation

    People78524798Many construction leaders assume that leader development and succession issues have blown over since the recession put a swift end to the boom years’ war for talent. However, these issues have not gone away; on the contrary, they have become even more acute as a result of the Great Recession thanks to these four key developments:
    • The demographics bubble of retiring baby boomers followed by a much smaller Generation X.
    • The construction industry’s inability to present itself as a desirable industry for future generations.
    • The impact of long-term unemployment, which has driven many young workers out of the construction industry for good.
    • Owner and/or company capital bases, which have been reduced by the recession.

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    This post was posted in Center for Strategic Leadership and was tagged with construction industry, Ownership Transfer, Management Succession, FMI's Ownership Transfer and Management Succession 2013 Survey, Construction transition and succession plans, NRCI 2014 Q2, succession construction

  • 5 Reasons Why Strategy Fails

    Posted on January 28, 2016 by FMI Corporation

    Strategy_iStock_000068923527_SmallBusiness strategy is a key determiner of how you will invest the limited amount of time, talent and treasure available to align your company with market opportunities. There are countless books and articles written on the topic of “strategy,” and a simple “business strategy” search of Amazon’s book offerings yields a staggering array of results. With all of these resources and clever ways to learn about strategy, why do so many firms in the construction industry struggle with this concept? The problem is that few books or other resources specifically address the complexities of the construction market – a high-risk venture where risk is concentrated in specific markets and occurs over tight timeframes.

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    This post was posted in Center for Strategic Leadership and was tagged with Strategy, FMI Corporation, construction industry future, strategic thinking, construction profitability, FMI's Mergers & Acquisitions Advisor 2014 Q1, NRCI 2014 Q2, construction strategy

  • Interpreting the Future: The Value of Strategic Thinking

    Posted on January 21, 2016 by FMI Corporation

    People101716860While you had your nose in the numbers, your competitors were coming up with new ideas, creating targeted plans, and infusing fact-based market research into their annual business planning meetings. They’ve adjusted productivity practices, entered adjacent markets, and are meeting and exceeding their clients’ expectations – all while remaining laser-focused on developing their own talent (and poaching yours). The bad news is that your competitor’s market share is increasing while yours seems to have stagnated or even reduced. The good news is that there’s still time to get back into the groove and climb back up to the top. By developing leaders who can think strategically about the present and the future, companies can decrease the likelihood of being taken by surprise by industry disruptions and competitors.

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    This post was posted in Center for Strategic Leadership and was tagged with construction industry, strategic thinking, NRCI 2014 Q2, Business Valuations, construction strategy

  • Full Speed Ahead for 2016

    Posted on January 14, 2016 by FMI Corporation

    RoadiStock_000016761568LargeWith the Federal Reserve Board raising fund rates, fuel at historic lows, and consumer confidence up, the U.S. economy is on track to continue creating jobs and improve wages in the year ahead. This is good news for a construction market that’s been waiting patiently for the industry to “catch up” to the national economic recovery. According to FMI’s Fourth Quarter 2015 Construction Outlook, raising interest rates has historically signaled a need to tame inflation, but the current rate of inflation is near zero. Nonetheless, the Fed feels the economy is strong enough now that reducing the money supply will help add confidence for savers and reduce the potential for future jumps in inflation.

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    This post was posted in Consulting and was tagged with construction industry future, FMI's Construction Outlook, federal construction market, NRCI 2014 Q2, us economy, construction market

  • FMI's NRCI Executive Summary

    Posted on June 2, 2015 by FMI Corporation

    At 64.9 for the second quarter of 2015, the NRCI score was essentially unchanged from the previous reading of 64.8. However, this result is a case where comparing the bottom line from quarter to quarter can be deceiving. However, it is more instructive to look at the underlying changes in the components of the Index. There the reader will find that panelists didn’t just copy their responses from last quarter. We also discovered some change in the direction of construction projects in response to our current issues questions concerning green construction and construction delivery methods, both reflecting changing owner demands.

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    This post was posted in Research and was tagged with Economy, FMI Corporation, FMI's NRCI, NRCI 2014 Q2

  • M&A Trends in Oil and Gas

    Posted on May 26, 2015 by FMI Corporation

    Shale gasThe energy infrastructure market has gone through a period of unprecedented expansion over the past five years and many companies exhibited exponential growth over this period. Only six months ago, most companies were preparing strategies for talent acquisition/retention and geographic/service line expansion. With the price of oil falling by more than 50 percent, many firms are being forced to cut costs and reevaluate strategy. The decline in oil prices has forced many producers to cut 2015 drilling capex. As a result, demand for upstream services, in particular, will begin to slow and margins will compress. Midstream and downstream markets will also be affected, but likely not until later in the year or until production begins to decline in earnest.

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    This post was posted in Investment Banking, Research and was tagged with Scott Duncan, Inc.

  • Construction Materials

    Posted on May 19, 2015 by FMI Corporation

    ConstructionMaterials497268779Small, strategic, bolt-on acquisition and corporate divestitures dominated M&A activity in 2014 in the construction materials segment of aggregate, asphalt and ready-mixed concrete producers. These small, strategic transactions were successful because the strategic benefits of the deal resulted in pricing that satisfied both buyer and seller. These deals were often among competitors with all the typical benefits associated with eliminating local competition. Additionally, there were continued planned divestitures by some of the major players in the sector to continue balance sheet management to raise capital for targeted acquisitions. We also saw the return of growth acquisitions in new markets for select players.

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    This post was posted in Investment Banking and was tagged with Mergers and Acquisitions, NRCI 2014 Q2

  • FMI's M&A Trends: Engineering and Construction

    Posted on May 11, 2015 by FMI Corporation

    ConstructionSiteBuildings178633737Large, transformational deals defined M&A activity in the integrated engineering and construction (E&C) sector in 2014. The fallout from these acquisitions — some of which had been several years in the works — will spur continued activity into 2015. While we do not believe 2015 M&A activity will surpass that of 2014, we do believe integrated E&C firms (especially the largest firms) will continue to look to acquisitions as a conduit for growth and margin expansion.

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    This post was posted in Investment Banking

  • How to Capitalize on Market Information

    Posted on May 5, 2015 by FMI Corporation

    InvestmentBanking494507603Most successful companies in the oil and gas engineering and construction industry are constantly monitoring the market and staying abreast of the most recent trends. They try to best prepare for what the future will look like in the market and how the company will compete. One of the lessons FMI has learned is that market research must be placed in a proper strategic framework to guide your thinking and ultimately increase your ability to make the right decisions for your company’s future success. Without this framework, it is simply a collection of data points without a unified purpose. As seen in Exhibit 1, the strategic framework we suggest to our clients for implementation is the 4-C approach of climate, customers, competitors and company.

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    This post was posted in Investment Banking, Research and was tagged with Strategy, Oil and Gas Infrastructure Valuations

  • Data-Driven Estimating

    Posted on April 27, 2015 by FMI Corporation

    ConstructionBuilding179255070Create a fact-based filter for project selection and a data-driven mark-up policy that maximizes profitability. Construction is a competitive business. Especially in hard-bid markets, contractors compete fiercely for every project. The price the market will bear is sometimes determined by a few hundredths of a percent. Competition in the construction industry, however, should not be about winning projects; it’s about making a profit. In the construction industry, that profitable competition begins in estimating and pricing work.

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    This post was posted in Research and was tagged with Strategy, construction profitability

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