SNOW IN THE FORECAST

Precise 2003 forecast? Not!

By Dick Snow

Snow
Dick Snow

Anyone who claims to be able produce a 100 percent accurate construction volume forecast for 2003 is pulling your chain.

The problem, even in these days of faster and faster computers and numbers guys, is there is an infinite number of variables in attempting to develop a formula for the precise prediction.

Uncertain predictions

Bobbing and weaving through the computer-created methane, let's just cut to the chase.

Based on absolutely no scientific or mathematical evidence, total construction dollar volume in the state of Wisconsin for 2003 should drop by about 5 percent. It is duly noted that's coming on top of a similar percentage decrease in 2002 from 2001.

This is not bad news when you consider a free fall was possible from the $10 billion volumes of 2000 and 2001. It looks as if more than $9 billion will work for the next year.

Consequently, adding work in progress to new work expected, 2003 will be a relatively stable year. Yes, there will be some soft spots with a couple of contractors completing their run in the sun during the year, but the construction industry will not experience a holocaust.

Why and how come?

  • Inflation remains manageable and interest rates extremely low. That's not likely to change much during 2003. Consequently, the residential part of the industry will be able to continue to satisfy the demand for bigger and better homes.

  • It appears that the big and dramatic cutbacks in employment experienced during the past two years have abated, and the help wanted sections are beginning to bulk up.

  • Despite the potential war in Iraq and a continuing battle against international terrorism, the U.S. construction industry will be stable. And there will be little or no impact on the availability of oil and/or materials to continue to run construction machinery and keep hard hats working.

  • Hospital infrastructure will continue to expand at about the same rate as during the past few years despite cost concerns.

  • Wisconsin school districts will likely get some relief from the current caps on spending. Bond referendums for construction of new and remodeling of old classrooms will succeed at the same-old-same-old 50 percent rate.

  • While there will be something less than a groundswell of new retail construction, there will be enough makeover work for that construction activity to remain stable during the upcoming year.

  • Despite strenuous efforts to retain offices "downtown," the craving for new space in the "burbs" will continue to burgeon.

  • There are enough airport expansion and "fix-up" work projects in Wisconsin to hold that construction market in place.

  • While there may be a modest decrease in spending for roads, streets and highways, 2003 will not see a dramatic downturn for Wisconsin highway contractors.

  • Similarly, work on utility infrastructure -- gas, water and sewer lines, waterways and transmission lines -- will continue at a rate approximating that of 2002.

Mixed results

It must be pointed out that a sizeable number of contractors did record dollar volume during 2002, while some did not share that experience.

There were ample cautions issued, as far back as 2000, that it would be propitious for contractors to begin to mind their Ps and Qs because capacity type activity was not guaranteed, nor forever. In other words, it was time to button down.

There was also the prediction that bidding on projects was going to be more highly competitive. During 2002, larger numbers of contractors did, indeed, get down to competitive pricing.

Also, there were more projects negotiated, rather than publicly bid. The number of construction-managed and design/build projects definitely increased.

In 2003, the industry can expect and experience more of the same trends mentioned above.

Be prepared

Finally, when attempting your own forecasts, check with regular frequency the agate legal notices and lists of plans and specs for projects available from the many plan rooms in the state. Read the business pages daily and cut the ever-present, doom-and-gloom stories in half. Chum with engineering department personnel and participate in virtually any civic or fraternal organization.

And simply maintain your own radar, antenna extended.

If all else fails to satisfy your forecasting needs, read the Farmer's Almanac, wet your forefinger and see which way the wind is blowing, take a Sunday drive and see "where it's happening" or just flip a coin.

If you're paying attention, 2003 will be a relatively decent year for you. If not, we wish you good luck in your next endeavor!

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