11/25/2019 by George M. Nicholos, Esq.
Navigating mixed signals in the construction industry; the AIA’s Architecture Billings Index through September 2019 indicates generally flat but encouraging business conditions. Dated – No. Important – Yes. Why?
The Architecture Billings Index (ABI) is a composite index derived from monthly report surveys from member firms located throughout the country reporting on activity of “work-on-the-boards.” The data is compiled by the American Institute of Architects Economics & Research Group. Using a first-hand survey index from architectural firms, the ABI serves as a leading economic indicator of nonresidential construction activity and provides a glimpse of nonresidential construction activity approximately 9-12 months into the future or the typical time frame for a project to mature from design development through to construction. The ABI has a reputation as being an even-handed barometer of expected construction and economic activity within that forward-looking time frame.
ABI scores are centered near 50, with scores above 50 indicating an aggregate increase in billings and scores below 50 indicating a decline in billings. While the September ABI score remained below 50 at 47.9, that score is 2.5 points higher than the prior month indicating that fewer firms saw declining billings in September. In September, the Design Contract Index robustly increased up to 54.4, an increase from 47.9 the prior month indicating that firms experienced an increase in the number of clients signing contracts for new projects.
The ABI also evaluates the impact of stalled and cancelled projects at architectural, engineering, and contracting firms as a predictive element of economic downturn. The ABI found that since the beginning of the year 52% of firms had seen projects significantly delayed, placed on hold, significantly scaled back or cancelled while 46% reported no such impact.
Overall, data from the ABI combined with recent data reported by the U.S. Dept. of Commerce announcing that construction spending rose by 0.5% in September 2019, in part, because of a combination of new governmental and private residential projects, indicates positive, but tempered, growth.
About the Author:
George focuses his practice on construction law, architectural and construction issues, public contracts, and community associations. George’s 21 years of experience as a licensed architect includes a full-range of traditional architectural professional services including project management, fee preparation, fee negotiation, field data collection, direction of consultant engineers and coordination, project design, construction estimating, preparation of construction documents, specification writing, shop drawing review and construction administration for both commercial and residential project types. For more information, please contact George at firstname.lastname@example.org.