By: Arnie Silverman, president and chair, Silverman Construction Program Management, Inc.
It is clearly evident that these tough economic times have hurt many businesses across our country. However, one industry in particular has taken a significant hit and this is very apparent in the Atlanta region. Companies in the Construction Industry have struggled this past year and continue to struggle through these uncertain times. The construction of office buildings, retail spaces and multifamily residential development has far surpassed the demand in Atlanta and surrounding areas and could take several years to revive.
At Silverman Construction Program Management, Inc., we strongly believe that Atlanta is still a very viable and vibrant city. This belief and the current trends in our industry prompted a reevaluation of our traditional business model in an effort to strategically position our company in this difficult market. We are investing in market research and business development, expanding our geographic market reach and implementing innovative marketing strategies promoting SCPMs services to our existing and potential clients.
Public agencies face unprecedented challenges in completing large-scale public works projects while juggling diminishing budgets. The American Recovery and Reinvestment Act (ARRA), enacted February 17, 2009, will create some much needed relief; however, companies and public agencies will need to understand the challenges facing these projects in order to successfully leverage available stimulus funds. Understanding how federal funding will be allocated is the first step. We see the future, for at least next couple of years, focused on the horizontal- built environment as opposed to vertical construction buildings, with the exception of the higher education and some institutional facilities.
The significant need for improvements in our infrastructure including transportation, transit, sewer and water cannot be ignored anymore. ARRA dedicates roughly $40 billion to each state with the majority going to highway and bridge construction. Silverman CPM intends to grow by concentrating more of our efforts in these market segments. There is tremendous sign of relief that this funding will provide the economic boost and the potential for new jobs. However, to successfully navigate the complexities of construction projects, inherent challenges must be overcome. Many public agencies are already understaffed and those resources will be further strained by existing budget gaps. They face the challenges of controlling the large influx of projects and accelerated schedules with recurrent reduction in project management staff. The speed of execution is particularly important in these projects and the demand for accountability and reporting is greater than ever. States must allocate 50 percent of their funding within 120 days and the next 50 percent within a year or the State will lose its funding. Progress reports must be filed for projects after 90 days, 180 days, one year, two years and three years.
Some of the current trends in the construction industry offer additional obstacles. Over the past few years we’ve seen an increase in project complexity and regulatory requirements; a need for more design phase services and knowledge of green building requirements; and an overall rise in the risk of claims. The construction industry has also been slow to embrace many new technologies that could streamline the management process. Public agencies will have a difficult time responding to the additional requirements and compounding complexities on their own.
We believe that companies with the resources and capabilities to assist in program management and consulting services can help agencies and will be in high demand in the near future. At Silverman CPM we see this unusual and tumultuous economic period as an opportunity and a logical time to invest in our own firm and in our people. We are hiring new talent and investing in the necessary training and professional development necessary for their success. We are positioning ourselves in the market segments that we believe will have greater demand than those we have focused on in the past, while maintaining our presence in our more traditional markets. We are expanding our marketing efforts to generate demand for our services, create greater market visibility and ultimately develop long-lasting client relations.
These current economic times can create, for companies with the desire and flexibility for change, a great opportunity to rebuild and to become stronger and greater.