While 2011 didn't offer too much progress in an economic turnaround, it seems that many people in the architecture, engineering, planning (A/E/P) and environmental consulting industries are adjusting to challenges. For 2012, increased stability is expected, although large changes don't seem likely.

Small improvements in the unemployment rate are countered by trepidation caused by fluctuating energy costs, uncertainty over the election outcome, a high number of stalled projects, and the end of many federal government programs and stimuli.

According to the U.S. Bureau of Labor Statistics, the unemployment rate is showing very small decreases, falling just 0.4 percent to 8.6 percent in November. For the previous six months, the unemployment rate held in a narrow range from 9.0 to 9.2 percent.

Housing markets continue to stagnate and employment numbers remain low. According to the Associated General Contractors (AGC) of America, construction industry employment declined by 20,000 in October 2011 and by an additional 12,000 in November. "Although the construction unemployment rate fell to 13.1 percent in November from 18.8 percent a year earlier, the lack of industry job growth means former construction workers are finding work elsewhere or leaving the workforce altogether," said AGC Chief Economist Ken Simonson. "That's ominous for future construction hiring."

Discussing Census Bureau construction spending data for October 2011 (the latest data available at press time), Simonson noted that several private nonresidential segments have recorded double-digit year-over-year gains, led by power construction (power plants, renewable energy, transmission lines, and oil and gas projects), which climbed 5.8 percent in October and 18 percent over 12 months. The two largest public categories – highways and educational construction – had each fallen about 6 percent between the first 10 months of 2010 and the same period in 2011. In addition, public spending on sewage and waste disposal was down 13 percent year-to-date and water supply was down 8 percent.

Members of the A/E/P and environmental consulting industry have persevered through creativity. New technology such as building information modeling (BIM) and 3D modeling is increasing efficiency. Firms that have adopted and embraced more innovative methods generally are reaping the benefits. This development also has led to increased cooperation among firms. Expect a partnering trend to continue into 2012. Mergers and acquisitions also are expected to be a continuing trend throughout 2012.

While federal funding for many projects doesn't look likely in 2012, an increase in the availability of financing for the general public could get many projects underway and cause a big improvement in the amount of work for the industry.

According to the U.S. Bureau of Labor Statistics, the unemployment rate is showing very small decreases

Four firm perspectives
Degrees of recovery will vary regionally as well as among market sectors. Four civil engineering or multi-discipline firm leaders from both large and small firms in varying locations across the United States offered the following opinions and expectations for 2012:

Nicholas M. DeNichilo, president and CEO of Hatch Mott MacDonald, a 2,100-employee firm based in Milburn, N.J., said: "We are hopeful of a gradual improvement in the public sector markets in 2012, fueled by latent demand and (hopefully) increasing tax revenues. Competition among firms has been particularly intense, but the ‘shake out' of recent years may begin to eliminate some firms from the competitive arena, moving the industry in the direction of a more traditional supply/demand equilibrium.

"The private sector will invest significantly in facilities which are part of a successful business model. The elections in 2012 will likely have a significant impact on the private sector and on potential investment in private infrastructure. However, the impact of the election will not be felt until 2013, unless the outcome becomes predictable as 2012 progresses.

"With funding for infrastructure projects being tight, particularly in the public sector, we look for ‘trends' that improve efficiency and productivity in the project cycle. In that sense, we see further movement toward design-build project delivery, and the use of public-private partnerships. To complement these trends, we will focus on our program management, construction management, and asset management service offerings."

Donald A. Benvie, P.E., president of Tectonic Engineering & Surveying Consultants P.C., a multi-discipline firm with 400 employees based in Mountainville, N.Y., said: "For 2012, we expect our business to be up approximately 10 percent. We anticipate the increase to come from the transportation segment based on new work we've recently booked, wireless telecommunications infrastructure work related to 4G rollout by the major carriers, federal agency work, and continued expansion of exploration activity in the Marcellus Shale region.

"The power and energy market sectors will continue to grow, along with environmental services and some segments of mass transit including the ongoing work in New York City. If the federal government can pass the long-expired transportation bill, there should be some benefit from that.

"In general, we should see slow, steady growth overall if recent trends in the economy that we've seen continue into 2012. Unlike the third quarter downturn we saw when Congress had difficulty with increasing the debt ceiling and the Eurozone was in a state of crisis, there seems to be some stabilization occurring in the overall economy, and if it continues into 2012 we should see a modest gain in activity on the engineering and construction side of the economy."

James Hudson, MBA, chief financial officer of ERRG, a 200-employee engineering, remediation, and construction firm based in Martinez, Calif., said: "The overall outlook for 2012 can be characterized as uncertain and unsettled. The federal government is the biggest contributor for the uncertainty in ERRG's mix of business. Although our backlog going into 2012 remains strong, the amount of work in the pipeline for the two- to three-year timeframe remains a subject of conjecture as to where, and how, the federal budget issues will be resolved. Throw into the mix a presidential election and it makes for a tough environment in which to get a handle on what will happen in the future. For 2012, however, ERRG anticipates growth to be relatively modest but with a large upside potential as several major proposals are awarded."

Terry Lutz, P.E., president of McClure Engineering Co., a nearly 60-employee firm based in Fort Dodge, Iowa, said that the business "will be up at least 10 percent top line," and he expects a 50-percent increase in the bottom line in 2012 compared with 2011. He attributes this to steady public infrastructure work. "Hot [markets] will be water and wastewater public work along with transportation," Lutz said. "We are also heavy in [agriculture]-related drainage work that will remain very strong. Land development is picking up slightly but will remain cool. I see pick up in limited industrial growth, slight pickup in residential land development, virtually no commercial land development, [and] steady public infrastructure growth."

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