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Construction Market Predicted to Rise in 2014

FMI, a provider of management consulting and investment banking to the engineering and construction industry, released its 2013 U.S. Markets Construction Overview. With construction-put-in-place (CPIP) at the end of 2012 expected to be between $826-$884 billion, researchers at FMI predict CPIP growth rates to be slightly ahead of GDP in 2013 and 2014. This would place the CPIP at more than $1 trillion by the end of 2014, nearly six percent of GDP.

Other predictions include:

  • Power CPIP of nearly $100 billion, as well as environmental remediation and conservation work of nearly $7 billion are already at all-time highs.
  • Residential CPIP will be back to double-digit growth in 2013.
  • Transportation and healthcare CPIP will reach record levels by 2013.
  • Education CPIP will continue to rise achieving 2008 numbers by 2016.
  • However, in 2013 commercial buildings, offices, manufacturing facilities, communications systems and lodging CPIP are expected to continue to underperform at an average of 60 percent of 2008 levels, off by more than $115 billion. By 2016 these sectors are predicted to only reach 70 percent of 2008 CPIP. In addition, excitement over the double-digit growth in residential construction is also balanced with the disappointment that by 2016 residential CPIP will still only be at 65 percent ($200 billion behind) the record high in 2006.

This year the overview includes a synopsis of the key trends and discussions of important issues facing nine of the non-residential construction sectors. Highlights include:

  • The uncertainty stemming from the two diverse approaches to economic recovery presented by the U.S. presidential candidates.
  • How information technology is driving innovation in the energy services market.
  • The challenge of recruiting, managing and retaining talent.
  • Concerns over succession planning as industry leaders look toward retirement.
  • The increasingly vital role of modularization and prefabrication.
  • Private equity investors increased attraction to smaller deals. Half of all deals in 2012 are valued at less than $50 million and approximately 95 percent of deals are less than $500 million.