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Index: Architectural firms seeing more work, bigger backlog

architectsWASHINGTON — Business conditions continue to improve at architecture firms, as billings ticked upward again in September, according to the American Institute of Architects (AIA).

The AIA’s Architecture Billings Index (ABI) score rose to 55.2 for the month, one of the highest post-recession readings thus far (any score over 50 indicates growth). In addition, the value of new-signed design contracts increased again this month, indicating a good supply of work in the pipeline at firms, where backlogs currently average 5.3 months.

Architecture firm billings increased at firms in all regions of the country for the fourth consecutive month in September, with the strongest growth reported by firms located in the Midwest and South regions. Firms located in the West continue to indicate that they are seeing a moderate recovery as well, after a slight downturn earlier this year.

By practice sector, firms with a residential specialization continue to report the best business conditions, but the key story in recent months is firms with an institutional specialization. After experiencing a more protracted downturn than firms of other specializations, these firms have seen a strong recovery over the last four months. As government finances continue to improve, there should be an even higher demand for education and other institutional projects.

Conditions in the overall economy continued to improve in September as well, with nonfarm payroll employment growing by 248,000 positions, after relatively lackluster growth of just 180,000 positions in August. The architecture and engineering services sector increased by 6,000 positions this month, while the construction sector added 16,000 jobs. In another indicator of the ongoing growth in the residential sector, housing starts increased by 6.3 percent from August in September, and are up by nearly 18 percent from one year ago. Building permits also saw a modest uptick in September, increasing by 1.1 percent.

This month’s special practice question asked survey panelists about their firm’s work on projects with characteristics of resilient design, defined as “using a holistic approach that includes (but is not limited to) design that improves the project’s ability to prepare and plan for, absorb, recover from, and more successfully adapt to adverse events.” Just over one quarter of responding firms (25.7 percent) indicated that they have worked on projects with characteristics of resilient design over the past five years, although that share approached one third of firms (31.4 percent) for those with an institutional specialization.

Responding firms indicate that the client types most likely to have undertaken, or inquired about, projects with characteristics of resilient design were single-family residential, followed by K-12 education. Government/civic clients (e.g. post offices, federal office buildings), office, and healthcare clients were also cited frequently.

When asked to estimate the share of projects at their firm with characteristics of resilient design five years in the future, nearly one third of firms (32.1 percent) anticipated that they would account for less than 1 percent of firm projects, by dollar volume. Fewer than one in five firms (18.3 percent) expect that these projects will account for 25% or more of their firm’s projects in five years.


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