NEWTON, Mass.—Proposal activity for Education facilities reported by architecture, engineering and construction (A/E/C) firms was down for the second straight quarter, according to PSMJ Resources’ Quarterly Market Forecast (QMF) survey. Despite the pullback, proposal activity remained in positive territory in the third quarter of 2019 with a Net Plus/Minus Index of 34% for all Education facility types.

After reaching 46% in the first quarter of 2019, the Education NPMI slid to 37% in the second quarter and fell another 3% in the third quarter. PSMJ’s NPMI measures the difference between the percentage of firms reporting an increase in proposal activity and those reporting a decrease.

Among the more than 100 respondents working on Education facility projects, 43.7% said proposal activity increased from the second quarter, compared with 9.7% that said it fell. Proposal activity for the remaining 46.6% was relatively stable, quarter to quarter.

Among the Education submarkets tracked, K-12 Schools performed best with a 36% NPMI, rebounding from 25% in the second quarter. Higher Education and Support Facilities (e.g., gyms, libraries) tied for second among education submarkets with 28%, while Laboratories lagged at 8%.

Higher Ed’s disappointing result marked its lowest point since the second quarter of 2017, while the single-digit result for Labs was its worst showing since a flat 0% in the first quarter of 2013. Support Facilities ticked up 2% from its second quarter NPMI, but remained on the lower end of its performance measures over the last five years.

The upshot of the QMF’s third quarter results for Education is that the fourth quarter bears close watching to see if this was an anomaly or the start of a downward trend.

Education Facilities Proposal Activity – Net Plus/Minus Index (NPMI), 2007-3Q19

Of 12 major markets served by A/E/C firms measured in the QMF, Education finished 7th, which is an improvement from its 9th-place finish in the second quarter. While several other markets saw their NPMI tumble by double digits, Education was relatively stable. Transportation (NPMI of 49%) and Healthcare (46%) were tops among all markets.

PSMJ has been using the QMF as a predictor of the A/E/C industry’s health since 2003. The company chose proposal activity to gauge the industry’s long-term outlook because it is the earliest stage of the project lifecycle.

PSMJ Resources, Inc., based in Newton, Massachusetts, is a publishing, executive education, and advisory company dedicated to serving architecture, engineering and construction (A/E/C) organizations worldwide.

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NEWTON, Mass.—Proposal activity for Education facilities reported by architecture, engineering and construction (A/E/C) firms was down slightly in the second quarter of 2019, but remained in healthy territory, according to the Quarterly Market Forecast (QMF) from PSMJ Resources.

The Forecast’s Net Price/Minus Index (NPMI) across all Education markets was a respectable 37%, down from the 46% recorded in the first quarter. PSMJ’s NPMI measures the difference between the percentage of firms reporting an increase in proposal activity and those reporting a decrease. It has proven to be an exceptional predictor of short- and long-term development and construction industry health since it was initiated in 2009. The company uses proposal activity as a measure to gauge the industry’s long-term outlook because it is the earliest stage of the project lifecycle.

For all Education facilities, 48% of respondents said proposal activity increased compared with 11% that said it fell in the second quarter. Proposal activity for the remaining 41% was relatively stable, quarter to quarter.

Among the Education submarkets measured, Higher Education performed best with a 34% NPMI, followed by Support Facilities (e.g., gyms, libraries) at 26%, K-12 Schools at 25% and Laboratories at 17%. Approximately half of the 200-plus respondents reported proposal activity in Education facilities. (While it may seem odd that all of the submarkets carry NPMIs lower than the overall Education market, not all who reported activity in Education are active in all four submarkets, and variations in proposal strength by market can account for the discrepancy.)

Higher Education facilities have been remarkable consistent recently with an NPMI ranging from 30% to 37% for the last seven quarters. This submarket ticked up 2% quarter over quarter.

There may be cause for concern for firms in the K-12 Schools market after it dropped from the leading submarket in the first quarter (43%) to the second-lowest. Its second quarter NPMI of 25% matches its lowest since the third quarter of 2014, and following nine consecutive months with an NPMI over 30%, three of the last four quarters have seen K-12 with an NPMI under 30%.

Of 12 major markets served by A/E/C firms measured in the QMF, Education finished 9^th ahead of only Other Government Buildings (29%), Commercial Users (33%) and Light Industry (34%). Energy/Utilities topped the second quarter survey at 62%, followed by Housing (59%) and Healthcare (52%). Still, the positive results suggest that the market for A/E/C services in Education will remain solid through at least the rest of 2019.

About PSMJ

For more than 40 years, PSMJ Resources, Inc. has been recognized as the leading publishing, executive education, and advisory group devoted completely to improving the business performance of A/E/C organizations worldwide. PSMJ’s sought-after expertise covers a range of critical business areas such as project management, financial management, human resources, business development, transition planning, and mergers and acquisitions.

Jerry Guerra serves as a principal for PSMJ Resources.

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