State and local AEC forecasting, 2016
Forecasts for the architecture, engineering and construction (AEC) industry typically offer general insight for the years ahead without delving into one specific area. Construction is often the focus of government and industry reports since general construction spending is easier to pin down. The GovWin IQ database covers the AEC industry as a whole, but in an effort to see what could be in store 2016, let’s take a look back at 2015 activity.
In January 2016, GovWin IQ provided a detailed bid analysis of the AEC industry, which offers insight into solicitations issued in 2015. GovWin IQ captured more than 250,000 bids, of which more than 28 percent were AEC-related. The data shows AEC projects predominately come from the state and city level, at 31.3 percent and 30.9 percent, respectively.
This data shows a clear picture of the sectors of government that did the most work in 2015, but another area to consider is the type of work that will take place in the future. According to a number of reports, including one by the Associated Builders and Contractors and data from the American Society of Civil Engineers (ASCE), there will likely be a continued rise in civil engineering across the country. From ASCE data, the time period from September 2014 through September 2015 saw a 12.4 percent increase in nonresidential construction, which includes a number of areas including “water, transportation and education projects.”
Since the Great Recession, there has been a slow rise in the AEC industry, specifically engineering. Many state governments continued to procure services for engineering, as we can see from the data, but many of these projects were part of existing infrastructure initiatives and not completely new projects.
Looking at projects taking shape in early 2016 (through mid-March), we already see numerous initiatives that will require engineering and related support. One example of this is the gateway program that will include a new tunnel under the Hudson River that will serve Manhattan and Penn Station. The overall project could reach $14 billion and require numerous contractors for the moving parts related to the initiative.
While massive projects are worth keeping an eye on, there are numerous upcoming projects that can also be found in the GovWin IQ database. Agencies such as the Sacramento Regional Transit District are seeking general engineering support for various projects over the next few fiscal years. While ongoing support projects may seem standard practice, many agencies are adding vendors to their engineering lists in order to be prepared for possible influxes of AEC-related projects in 2016 and beyond.
As we look ahead to the rest of 2016, there will continue to be a need for more engineering firms to pick up the slack and provide support to government agencies that may have been holding off on major civil engineering plans such as bridge repair/replacement and new buildings. Vendors who focus on water and environmental engineering should also be aware of increased activity with bids increasing year over year. Deltek will continue to monitor these trends in future AEC monthly recaps and beyond.
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