How Hard Will Recession Hit Construction Management Firms?

By Bill Scott, Division President, Linbeck | September 28, 2010

Amidst the nail biting and angst of some industry sectors, the commercial construction marketplace is poised to do better. Over the next 12 months, I firmly believe we'll see the Texas commercial construction market increase moderately in education and healthcare markets. I do not think it is unreasonable to assume an increase in commercial construction activity within major Texas cities. With the flow of funding from lendors, there are several projects poised to move forward.

Yet, wise leaders will manage their businesses with an eye on the recessionary characteristics of the American economy. If, for example, your firm has a market sector expertise, then by all means, focus on that strength.

The marketplace will always ebb and flow. In spite of market conditions, there are certain attributes that keep a quality company viable, on its feet, and prospering. These attributes revolve around value, reputation, and the quality of your product or service. Value plays a role from several angles. You must manage your company well so that you have the capital to attract a quality workforce. Value is also related to the amount of attention you give to keeping your business fiscally strong so that your reputation is not influenced by business decisions that weaken your position.

Follow the lead of successful firms. Focus on consolidating and strengthening your position in the marketplace. For example, if your firm is a leader in the construction of retail strip centers, then now is the time to speak to the developers and find out where their next projects will be, and how you can help them to be at the forefront when the economy readjusts.

I believe that recessionary times are the best times to strengthen supply chain relationships. If you can help one glass company, one HVAC distributor, one steel manufacturer, you are adopting a philosophy of interconnection. You are helping others who will in turn help you.

Watch for Changes

Tough times make a good time to foster partnership relationships, acquire niche firms, and look for opportunities to help firms with fewer options than yours.

Another concern is that the falling value of the U.S. dollar is making it much more attractive for foreign investment in American companies and projects. The influx of international participation may influence market share for U.S. firms and should be watched carefully.

Do Your Best

Reputation is an attribute that cannot be emphasized enough. To me the recommendation of peers is the single most important attribute that I focus on when our firm is choosing vendors and subconsultants. No project experience, company metrics, or employee resumes compare in importance to the opinion of someone whom we trust as a member of the team.