Design Billings Increasing Entering Height of Construction Season

After beginning the year with a marginal decline, the Architecture Billings Index (ABI) has posted three consecutive months of growth in design revenue at architecture firms. As a leading economic indicator of construction activity, the ABI reflects the approximate nine- to 12-month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the April ABI score was 50.9, down from a score of 54.3 in the previous month. This score still reflects an increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 60.2, up from a reading of 59.8 the previous month, while the new design contracts index increased from 52.3 to 53.2.

“Probably even better news for the construction outlook is that new project work coming into architecture firms has seen exceptionally strong growth so far this year,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “In fact, new project activity has pushed up project backlogs at architecture firm to their highest level since the design
 market began its recovery earlier this decade.”  

Key April ABI highlights include:

  • Regional averages: South (55.3), Midwest (53.3), West (50.9), Northeast (50.7)
  • Sector index breakdown: institutional (54.0), mixed practice (53.4), commercial/industrial (52.4), multi-family residential (49.9)
  • Project inquiries index: 60.2
  • Design contracts index: 53.2
  •  
    The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.
     

     

    AIA Releases 2017 Edition of Contract Documents

    The American Institute of Architects (AIA) has announced, at AIA ’17 Conference on Architecture, the release of the 2017 edition of the A201 family of contract documents. This release includes updated versions of the AIA’s flagship documents, developed for the design-bid-build delivery model. Working with architects, contractors, subcontractors and owners, the AIA Documents Committee updates this core set of documents every 10 years. This helps ensure that the AIA legal form and agreements reflect changes and trends in the industry, and that the AIA Contract Documents remain the Industry Standard.

    “It is important that industry professionals learn about the 2017 revisions,” says Kenneth Cobleigh, Esq., managing director and counsel of AIA Contract Documents. “The changes impact the roles and responsibilities of each of the parties directly, and understanding the changes will help everyone to review and finalize project contracts. We hope that all industry participants take advantage of the written resources and education programming opportunities available to learn about, and understand, the 2017 revisions and the full portfolio of AIA Contract Documents.”

    Some of the owner/architect changes:

    • Single Sustainable Projects Exhibit that can be used on any project and added to most AIA contracts to address the risks and responsibilities associated with sustainable design and construction services.
    • Agreements contain a fill point to prompt the parties to discuss and insert an appropriate Termination Fee for terminations for the owner’s convenience.
    • Architect is no longer required to re-design for no additional compensation if he or she could not have reasonably anticipated the market conditions that caused the bids or proposals to exceed the owner’s budget.
    • Services beyond Basic Services and identified at the time of agreement are now categorized as Supplemental Services, to avoid confusing them with Additional Services that arise during the course of the project.
    • Agreements clarify how the Architect’s progress payments will be calculated if compensation is based on a percentage of the owner’s budget for the work.

    Some of the major owner/contractor changes are:

    • New exhibit with comprehensive insurance and bonds provisions that can be attached to many of the AIA owner/contractor agreements.
    • Provisions relating to direct communications between the owner and contractor.
    • Revised provisions pertaining to the owner’s obligation to provide proof that it has made financial arrangements to pay for the project.
    • Simplified provisions for the contractor to apply for, and receive, payments.
    • Sustainable Projects Exhibit, as noted above under the owner/architect changes

    The documents included in this April release are:

    • “A101–2017, Standard Form of Agreement Between Owner and Contractor where the basis of payment is a Stipulated Sum”
    • “A102–2017, Standard Form of Agreement Between Owner and Contractor where the basis of payment is the Cost of the Work Plus a Fee with a Guaranteed Maximum Price”
    • “A103–2017, Standard Form of Agreement Between Owner and Contractor where the basis of payment is the Cost of the Work Plus a Fee without a Guaranteed Maximum Price”
    • “A104–2017(formerly A107-2007), Standard Abbreviated Form of Agreement Between Owner and Contractor”
    • “A105–2017, Standard Short Form of Agreement Between Owner and Contractor”
    • “A201–2017, General Conditions of the Contract for Construction”
    • “A401–2017, Standard Form of Agreement Between Contractor and Subcontractor”
    • “B101–2017, Standard Form of Agreement Between Owner and Architect”
    • “B102–2017, Standard Form of Agreement Between Owner and Architect without a Predefined Scope of Architect’s Services”
    • “B103–2017, Standard Form of Agreement Between Owner and Architect for a Complex Project”
    • “B104–2017, Standard Abbreviated Form of Agreement Between Owner and Architect”
    • “B105–2017, Standard Short Form of Agreement Between Owner and Architect”
    • “C401–2017, Standard Form of Agreement Between Architect and Consultant”
    • “E204–2017, Sustainable Projects Exhibit”

    The 2017 documents are available through an unlimited license or as a single customizable document on ACD5, the online platform. The documents are also available as single, non-editable documents on AIA Documents on Demand and as paper version through some AIA Chapters. Visit here for more information. Comparative versions showing the differences between the 2017 and 2007 editions are also available.

    Architecture Billings Index Moves Into Negative Territory

    The Architecture Billings Index (ABI) dipped slightly into negative territory in January, after a strong showing in December. As an economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the January ABI score was 49.5, down from a score of 55.6 in the previous month. This score reflects a minor decrease in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 60, up from a reading of 57.6 the previous month.

    “This decrease in activity, taking into consideration strong readings in project inquiries and new design contracts, isn’t exactly a cause for concern,” says AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “The fundamentals of a sound nonresidential design and construction market persist.”

    Key January ABI highlights:

    • Regional averages: South (54.2), Northeast (53), Midwest (52.4), West (48.8)
    • Sector index breakdown: institutional (54.6), commercial / industrial (53.4), mixed practice (48.1), multi-family residential (48.1)
    • Project inquiries index: 60
    • Design contracts index: 52.1

    MCA Recognizes Eight Building Projects at Awards Show

    Selected by a panel of professional architects, eight building projects from across the country have been recognized by the Metal Construction Association (MCA) at the 2017 Chairman’s Awards show.

    Announced at the MCA’s winter meeting held in Weston, Fla., the Chairman’s Awards are given to the year’s most exceptional building projects involving MCA member companies. Awards are based on overall appearance, significance of metal in the project, innovative use of metal, and the role of metal in achieving project objectives.

    The MCA Chairman’s Awards were given in eight categories: overall excellence; residential; metal roofing; education, primary and secondary schools; education, colleges and universities; institutional; municipal; and commercial/industrial.

    The 2016 Chairman’s Award winners in each category were:

    Recipients for these awards are selected each year from projects submitted by MCA members to “Metal Architecture Magazine’s” annual Design Awards Program. The honorees were chosen by a panel of professional architects, which included Mark Dewalt, AIA, principal, Valerio Dewalt Train Associates, Chicago; Mark Horton, FAIA, principal, Mark Horton/Architecture, San Francisco; Brent Schipper, AIA, LEED AP, principal, ASK Studio, Des Moines, Iowa.

    Architecture Billings Index Concludes Year With Positive Growth

    The Architecture Billings Index (ABI) concluded the year in positive terrain, with the December reading capping off three straight months of growth in design billings. As an economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the December ABI score was 55.9, up sharply from 50.6 in the previous month. This score reflects the largest increase in design services in 2016 (any score above 50 indicates an increase in billings). The new projects inquiry index was 57.2, down from a reading of 59.5 the previous month.

    “The sharp upturn in design activity as we wind down the year is certainly encouraging. This bodes well for the design and construction sector as we enter the new year”,” says AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “However, December is an atypical month for interpreting trends, so the coming months will tell us a lot more about conditions that the industry is likely to see in 2017.”
     
    Key December ABI highlights:

    • Regional averages: Midwest (54.4), Northeast (54.0), South (53.8), West (48.8)
    • Sector index breakdown: commercial / industrial (54.3), institutional (53.3), mixed practice (51.9), multi-family residential (50.6)
    • Project inquiries index: 57.2
    • Design contracts index: 51.2

     
    The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.

    AIA Supports Legislation for Energy Efficiency Tax Incentive

    The American Institute of Architects (AIA) has voiced its support of bipartisan legislation that makes designers of hospitals, schools, tribal community facilities and other non-profits eligible for an energy efficiency tax incentive that is already saving tax-payers money across the country.

    H.R. 6376, introduced by Rep. Dave Reichert (R-WA) and co-sponsored by Rep. Tom Reed (R-NY), Rep. Earl Blumenauer (D-OR), and Rep. Chris Van Hollen (D-MD), also modifies Section 179D of the tax code, the Energy-Efficient Commercial Building Deduction, to make small to midsized architect firms organized as subchapter S corporations eligible for the deduction.

    “H.R. 6376 gives non-profits the ability to allocate this energy savings tax incentive to designers,” said AIA President Russell Davidson, FAIA. “It also provides an opportunity for schools and hospitals to save money when architects deploy technologies that make buildings more energy efficient.” 

    The section 179D tax deduction was originally passed by Congress as part of the Energy Policy Act of 2005 in direct response to broader energy usage and independence concerns. According to data released by the U.S. Department of Energy, buildings are responsible for 73 percent of all electricity consumption in the U.S., with about half of that coming from commercial buildings.

    In an effort to curb this trend and encourage broader energy efficiency, section 179D allows qualifying building owners and businesses to receive an up to $1.80 per square foot tax deduction for their energy efficient buildings placed into service during all open tax years.

    Architects can also qualify for 179D under a special rule for public property, if they’ve enhanced the energy efficiency of a new government-owned building or made energy-saving renovations and retrofits to existing government-owned buildings. As government entities do not traditionally pay tax, the owners of these buildings can allocate the accrued tax savings to architects who have designed the energy-saving improvements.

    AIA Survey Findings About American Attitudes Toward Public Buildings

    A survey by the American Institute of Architects (AIA) finds that a majority of Americans (83 percent) consider public buildings—schools, libraries, community centers, and parks—part of their community’s infrastructure. And, 94 percent of those surveyed say that having well-maintained public buildings are important to the future of their community.

    In a key finding for policy makers, 83 percent of survey respondents agreed that investment in these public buildings is just as important as investment in roads and bridges. The survey also found that seven in 10 Americans want their public buildings renovated, and almost three-quarters of Americans consider public schools in good condition a “must have” in the communities in which they live.

    These are some of the main findings of the first AIA survey of American attitudes toward essential community buildings. The survey results, conducted by The Harris Poll, were made public at the AIA Build America Summit.

    “The survey findings are a clarion call to policy makers at all levels of government that Americans not only want safe roads and bridges, but also desire a serious financial commitment to public buildings that mirror and contribute to the communities in which they live,” says AIA President Russell Davidson, FAIA.

    “The purpose of the Build America Summit is to expand the infrastructure discussion to include funding to repair, restore, and adapt the essential public buildings that give communities character,” states Davidson, who conceived the Summit. Nearly 40 speakers and 350 attendees from design and construction, real-estate, education, development, and government will develop recommendations that will be shared with the incoming Presidential Administration and made available to state and local governments and community leaders.

    Survey findings:

    More than three in four Americans (78 percent) think their local government should take some financial responsibility for supporting the investment in their public buildings. Just under two-thirds (61 percent) think state government should take some financial responsibility. A majority (53 percent) think that community members should support it, and almost half (46 percent) believe private entities should also invest.

    A majority of Americans believe that the condition of community buildings can lead to notable benefits, particularly higher property values (60 percent) and improved quality of education (62 percent).
    Sixty-nine percent of Americans believe schools are one of the most important buildings to receive a consistent level of public funding.

    On average, Americans feel about one third (34 percent) of public funds budgeted for community features should be allocated to public buildings and/or spaces. Of the remaining, they would allocate 37 percent to transportation and 29 percent to public housing.

    Gender differences exist in attitudes toward public buildings and spaces. For example, women are more inclined than men (44 percent to 34 percent) to consider public housing options a “must have.” Conversely, older men (44 percent) place the most emphasis on funding transportation.

    Almost half those surveyed (48 percent) believe public housing (defined as a combination of senior and affordable housing) is one of the most important community features to receive a consistent level of public funding.

    “It is clear from the survey that Americans consider investment in community buildings and spaces a priority,” says AIA CEO Robert Ivy, FAIA. “Not only do they believe that that investment would lead to improvements in property value, education, and public safety, but also serve to attract new businesses and enhance their overall quality of life.”

    A copy of the survey results can be found here

    ABI Reports Increase in Design Services Demand

    After seeing consecutive months of contracting demand for the first time in four years, the Architecture Billings Index (ABI) saw a modest increase demand for design services.  As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the October ABI score was 50.8, up from the mark of 48.4 in the previous month. This score reflects a slight increase in design services (any score above 50 indicates an increase in billings).  The new projects inquiry index was 55.4, down from a reading of 59.4 the previous month.

    “There was a collective sense of uncertainty throughout the design and construction industry leading up to the presidential election,” says AIA Chief Economist, Kermit Baker, Hon. AIA, PhD.  “Hopefully we’ll get a sense of what direction we will be headed once we get a clearer read on how the new administration’s policies might impact the overall economy as well as the construction industry.”

    October ABI highlights:

    • Regional averages: South (53.7), West (49.7), Northeast (47.3) Midwest (46.8)
    • Sector index breakdown:  multi-family residential (51.2) commercial/industrial (49.8), mixed practice (49.5), institutional (49.1)
    • Project inquiries index: 55.4
    • Design contracts index: 48.7

    The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.

    ATAS National Sales Manager Receives Award

    Mark Bus, national sales manager of ATAS International, received a Metal Construction Association Triumph Award at METALCON in Baltimore.  He was recognized as being someone who demonstrates excellence, creativity and initiative in his or her business or profession.
     
    Jim Bush, vice president of Sales and Marketing states, “I have had the pleasure of watching Mark mature over the years to a young and emerging professional; not only within ATAS but also in the industry.  He has earned the respect of the ATAS sales team, as well as peers and management, through hard work and a sound decision making process.  Mark is also aware of industry initiatives and association activities and brings those into daily communications with staff and customers.”
     
    An ATAS distributor, Allan Brock of Brock Associates, says, “During my forty year tenure in the commercial metal roofing and siding industry, I have rarely crossed paths with a young professional like Mark Bus.  I have seen Mark evolve from an inside technical sales person, to a regional product representative, to management.  At each level, he radiated professionalism along with product and technical knowledge.  It’s been a pleasure dealing with an individual as capable as Mark.”
     
    Robert J. Bailey, AIA, CSI, CCS, LEED AP, specifications and constructability specialist with IKM Inc., also recommended Mark Bus for this award.  “Mark makes it a point to understand the people who are specifying and purchasing ATAS products.  As a new product rep in western Pennsylvania, he became involved in various CSI (Construction Specifications Institute) chapters.  It was clear to me that Mark knew in order to be prepared for a leadership role in ATAS, he first needed to understand the industry itself and establish important contacts and relationships there.  Mark is an example for other young sales professionals.”

    AIA Issues 2016 Election Results Statement

    The American Institute of Architects (AIA) has issued the following statement on the election of Donald Trump as President of the United States, as well as the incoming 115th Congress.

    “The AIA and its 89,000 members are committed to working with President-elect Trump to address the issues our country faces, particularly strengthening the nation’s aging infrastructure. During the campaign, President-elect Trump called for committing at least $500 billion to infrastructure spending over five years. We stand ready to work with him and with the incoming 115th Congress to ensure that investments in schools, hospitals and other public infrastructure continue to be a priority,” states AIA Chief Executive Officer Robert Ivy, FAIA.

    “We also congratulate members of the new 115th Congress on their election. We urge both the incoming Trump administration and the new congress to work toward enhancing the design and construction sector’s role as a catalyst for job creation throughout the American economy.”

    Robert Ivy concludes, “This has been a contentious election process. It is now time for all of us to work together to advance policies that help our country move forward.”