E-news for the Construction Division January 11, 2012

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Economic Uncertainty Draws Attention to Marketing Strategies

Mixed reviews of U.S. construction employment near the end of 2011 are not likely to garner much economic optimism for the near future, at least not for some sectors of the construction community.

In December, the Associated General Contractors of America released its analysis of federal employment data showing that construction employment declined in 146 out of 337 metropolitan areas between October 2010 and October 2011, increased in 140 metro areas, and stayed level in 51 others. A little brighter November report had overall construction unemployment dropping to 13.1% from the 18.8% logged a year earlier.

AGC cites declining federal investment in infrastructure projects as part of the reason for the lagging job figures and contends that construction employment could benefit from increased funding for transportation projects and other pro-growth measures designed to spur private sector demand. Ken Simonson, AGC’s chief economist, notes, “If it were not for a slight increase in private sector demand, construction employment would be down in even more communities.”

Indeed, private residential construction has recently fared a little better financially than other building sectors. In its monthly housing markets index released late last year, the National Association of Home Builders noted that the number of improving housing markets continued to expand for a fourth consecutive month, rising from 30 metropolitan areas in November to 41 metro areas in December.

In its December economic forecast, the Institute for Supply Management indicated that capital expenditures, a major driver in the U.S. economy, will show only a modest increase in the manufacturing sector, while investment in the nonmanufacturing sector, including construction, will remain somewhat flat.

An economic outlook survey conducted by the American Institute of Certified Public Accountants (AICPA) in the fourth quarter of last year pointed to some improvement in economic optimism, but broad pessimism about the rate of recovery still lingers. On a regional basis, the survey findings show a brighter view of business prospects this year than during the last quarter of 2011, with one exception—the Northeast; the Midwest has the sunniest outlook.

“We saw improvements in every category of the index, including sentiment about prospects for the U.S. economy,” says Carol Scott, AICPA vice president for business, industry, and government. “However, serious concerns about the business climate remain, reflected by continued reticence for new investment and hiring.”

Finally, McGraw-Hill Construction’s Dodge 2012 Construction Outlook reports that new construction starts are expected to reach $412 billion in 2012, barely higher from the 2011 total. The forecast is for total construction to continue along at 2011 levels, rather than noticeably boosting a long-awaited recovery.

Amid these fluctuating economic forecasts, the more pertinent challenge ahead for construction organizations is how to market services in an uncertain economy. 

Hinge Marketing, which specializes in marketing and branding for professional services worldwide, suggests that architectural, engineering, and construction organizations should “try to think of today’s downturn as an opportunity to test your self-discipline and refocus on marketing fundamentals. That way, your firm is likely to come out of the downturn stronger and better positioned than ever.”

The key to marketing during a recession is to focus first on existing clients, Hinge points out. “It’s far cheaper and easier to get more work from businesses that already trust you than to build new relationships from scratch,” the company notes. “Talk to your clients and honestly assess their needs. Your best clients want to work with you and are likely to appreciate your pro-activism.”

When seeking new clients, the Reston, Virginia-based firm advises businesses to identify and target the types of organizations that best suit “your skills and fee levels. You are more likely to close this type of business than if you cast your net too wide and sacrifice positioning for short-term business.”

Planning for a longer sales cycle is also wise, Hinge adds, primarily because most businesses move at a slower pace in making decisions during economic downturns. Construction organizations need to stay ahead of potential client decisions by slowing down their own spending allocations accordingly.

Finally, although it may be tempting for struggling businesses to lower their fees for services, Hinge says to avoid that mindset if at all possible. Pricing is a positioning tool, the company explains, and potential clients could equate low prices with lower quality. “Instead, focus on attracting the kinds of clients that appreciate—and are willing to pay for—your expertise,” Hinge emphasizes. “If you have to make compromises to stay competitive, try to adjust your offerings or reduce your scope of work before cutting your fees.”

An economic slowdown also provides the opportunity for construction organizations to re-evaluate their marketing and sales efforts. In addition to honing their online presence through Web sites and blogs, businesses should consider fine-tuning their localized marketing approaches by contributing articles for publication, volunteering for public speaking engagements, and mentoring at all levels of education and business practice.

Rebranding or building a reputation in new fields is a viable way to gain market share, too.
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Happenings on the Hill

After a five-year battle, NSPE helped overturn an onerous tax-withholding mandate that would have placed significant financial and administrative burdens on engineering firms and other businesses that contract with the government. H.R. 674, which was signed into law on November 21, 2011, repeals a requirement that federal, state, and certain local governments withhold as tax 3% of all payments made to government contractors. The tax would have taken effect on January 1, 2013.

The tax would have provided an interest-free loan to the government while causing cash flow problems for engineering firms and other businesses, costing them the vital funds they needed to conduct day-to-day business. Rather than pay taxes at the end of the year, the government would have withheld 3% of contract fees up front, forcing firms to attempt to recoup their expenses at the end of the year.

Since the withholding requirement’s passage in 2006, NSPE has been working with the Government Withholding Relief Coalition and the U.S. Chamber of Commerce to repeal the mandate. NSPE also sent a letter to House Ways and Means Committee Chairman Dave Camp (R-MI-4) in support of the repeal. In addition to NSPE’s advocacy of H.R. 674, NSPE members responded to an NSPE Legislative Action Center alert asking them to contact their senators in support of the bill, helping to build a critical mass of opinion that ensured the bill passed.

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NSPE signed on to a joint letter with the American Institute of Architects, American Council of Engineering Companies, Associated General Contractors of America, American Subcontractors Association, and other industry organizations asking Congress and the president to enact legislation that would help create jobs in the design and construction industry. The industry accounts for 5.7% of the gross domestic product and employs more than seven million Americans who design, construct, and maintain the infrastructure on which the U.S. economy depends. Reviving demand for construction, particularly in the private sector, is essential to sustaining broader economic growth.

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NSPE sent a letter with members of the High-Performance Building Congressional Caucus Coalition to targeted Senate appropriations leaders urging them to support FY12 funding for the Department of Energy’s Office of Energy Efficiency and Renewable Energy as well as the U.S. Energy Information Administration through the Energy and Water Development and Related Agencies Appropriations Act (H.R. 2354). Both EERE and EIA support and promote high-performance building.

NSPE is a member of the HPBCCC, a coalition of more than 100 associations and corporations that seeks to heighten awareness and inform policymakers about high-performance building issues, including new building technologies, enhanced U.S. economic competitiveness, and increased energy efficiency. The coalition provides guidance and support to the congressional High-Performance Buildings Caucus.

For more information about NSPE's advocacy work, please visit http://www.nspe.org/IssuesandAdvocacy/index.html

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$3,000 PEC Hightower Fellowship

The George B. Hightower, P.E., Fellowship is awarded annually to a current student or a diplomate of an ABET-accredited graduate engineering program. NSPE’s Professional Engineers in Construction established the fellowship in recognition of the contributions that Hightower made to the construction engineering profession. Hightower’s dedication to professionalism, ethics, and construction engineering resulted in him serving as a founding member and the first national chairman of PEC.

Visit the NSPE Web site for an application.

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New Contract Documents Released

The new contract, EJCDC® E-562, Agreement Between Engineer and Engineer’s Subcontractor, is intended to be used by engineering firms to subcontract a broad spectrum of general services, such as laboratory work, data management, site support, drafting/CAD technical services, incidental fabrication and construction, cost reviews, and record keeping. Engineers may also use EJCDC® E-562 as a stand-alone contract for retaining assistance with such tasks in situations where the scope of work is not associated with a specific prime agreement. The new E-562 document complements the existing EJCDC subagreements that engineers should continue to use to delegate professional services:  EJCDC® E-570 (Agreement Between Engineer and Consultant for Professional Services), and its companion subagreements E-560 (Engineer­–Land Surveyor), E-564 (Engineer–Geotechnical Engineer), and E-568 (Engineer–Architect).

EJCDC E-562 addresses the key issues in subcontracting, including payment, insurance, schedule, warranty, safety, flow-down of prime agreement terms, and termination. Although suitable for incidental construction (for example, construction of access stairs and ramps in connection with providing a job trailer for the engineer’s staff at the site), EJCDC recommends that standard construction or design-build contract documents be used for more substantial construction projects. See EJCDC’s Construction Series and Design-Build Series standard documents.

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Take the 2012 Milton F. Lunch Ethics Contest Challenge

All current NSPE individual members are invited to participate in the Milton F. Lunch Ethics Contest through their state societies and local chapters (including student chapters). Here’s your opportunity to match your wits with experienced PEs and engineering students throughout the country!

This year, contestants are encouraged to analyze the facts of a real situation involving the ethical obligation of an engineer who works for a company that is experiencing financial problems.

Contestants must develop discussion and conclusions about the ethics of the engineer in the case using the format of the NSPE Board of Ethical Review.  Entries must be 750 words or less and must be received at NSPE headquarters by Friday, April 13, 2012.

The winning entry will receive a certificate, recognition in
PE magazine, and an award of $1,000 ($500 to the state society or local chapter and $500 divided among the authors) provided by NSPE and the NSPE Educational Foundation. Special recognition may also be offered to the authors of superior essays written by current student members.

Judges will decide the winner based on quality of the entry in form and presentation; demonstration of understanding of the implications concerning ethical or unethical behavior; and comprehensive analysis of the case and arguments supporting your conclusions.


Please visit the "
Ethics" section of the NSPE Web site for additional information or to download a contest flyer in PDF format.

The contest is named for NSPE’s former general counsel, who played a key role in the founding of the NSPE Board of Ethical Review. [ return to top ]


NSPE Continuing Education on Sale!

Celebrate the New Year with big savings on your next on-demand course purchase. NSPE is offering an almost 30% discount on all of our on-demand courses. Choose from a variety of topics available 24/7.

Also, don't miss NSPE's live webinars slated for Spring 2012... 

Communicating Clearly
This session presents tips for developing a concise and clear voice in written and verbal communications. During the session, participants will receive suggestions for making their presentations, e-mails, spoken, and written communications more compelling. Throughout, examples drawn from the presenter’s varied military experience will be shared.

February 23, 12:30–1:30 p.m. (E.S.T.)

Engineering Ethics: A Conversation About Conflicts of Interest Issues
Join NSPE Deputy Executive Director and General Counsel Arthur Schwarz and a panel of engineering ethics experts for a discussion covering payments of engineers' travel expenses by vendors, serving as a manufacturing expert, design and construction of a house in a flood area, reviewing work of another engineer and thereafter performing engineering services for that client. Polling questions and a Q&A will allow opportunities for audience interaction. 1 PDH

March 14, 12:30–1:30 p.m. (E.S.T.) 

Engineering Ethics: A Conversation About Expert Witness and Engineering Review Issues
Join NSPE Deputy Executive Director and General Counsel Arthur Schwarz and a panel of engineering ethics experts for a discussion on the obligation to reimburse a payment advance, limiting the scope of an engineering review, working for a law firm client involved in litigation with a former law firm client, and a forensic study dependent upon work of engineer in dispute with a client. Polling questions and a Q&A will allow opportunities for audience interaction. 1 PDH

April 18, 12:30–1:30 p.m. (E.S.T.) 

Engineering Ethics: A Conversation About Business, Employment, and Licensure Issues
Join NSPE Deputy Executive Director and General Counsel Arthur Schwarz and a panel of engineering ethics experts for a discussion on the signing and sealing of a subcontractor’s calculations, a Canadian firm’s noncompliance with engineering licensure laws, obtaining professional references, and an employee’s awareness of his employer’s financial improprieties. Polling questions and a Q&A will allow opportunities for audience interaction. 1 PDH

May 16, 12:30–1:30 p.m. (E.S.T.)

Visit the NSPE Web site to register today.


 

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2011-12 PEC Executive Board

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IMMEDIATE PAST CHAIRMAN

CHAIRMAN ELECT

SECRETARY

NORTHEAST REGION

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WESTERN & PACIFIC REGION

PEC Young Engineer Representatives




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If you would like to sponsor the next edition of PEC Reporter, contact the Professional Engineers in Construction for more information.

 

For more information on how to become a PEC Sustaining Firm click here. 

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HAKS

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