Too many contractors taking on too much low-bid work just to stay alive may soon result in a market shake-out, according to a report by FMI, a leading provider of management consulting and investment banking to the engineering and construction industry.
FMI’s third-quarter nonresidential construction report index has dropped 5 points, putting it back at second-quarter 2010 levels. On the rise is the number of contractors participating in self-funded projects as a financing partner with owner/developers, the report said.
“Eighty-five percent of our work is being funded through self-funding or in some case, equity investors,” said one construction industry executive who serves as panelists for FMI’s quarterly surveys. The survey found fewer bank loans for construction and more government backed loans and grants.
The rising material and labor costs, combined with l