East Design & Construction Round Table Situation Report

Summary as of May 27, 2020

Session Presenters o James Vermeulen, Vermeulens

Economic Summary, Vermeulens AIA Billings

o ABI (architecture billings index) is the lowest in history o only 30% of architecture firms are reporting an increase in billings, 70% are reporting decreased billings (was

around 50%-50% pre COVID-19) o based on the current ABI, the north-east is the heaviest hit region (only 23% of architects are reporting increased

billings) o only 28% of commercial and industrial firms are reporting increased billings (hardest hit), residential is 30.3% and

institutional (strongest sector) is 36.1% o COVID-19 has affected architectural firms differently, 38% have furloughed/eliminated some architectural staff

positions whereas 27% have hired new employees and/or increased hours. o 8 of 10 firms have applied for PPP loans, 74% have been awarded full amounts o Consumer Sentiment Index declined by 19.4%

Regional Construction Labor Data

o still recommend holding 3%-4% escalation, recommend using add alternates o as of May 14th, more than 40M have lost their jobs since Feb 15th o construction jobs have declined by 1M, still not as bad as the financial crisis (2.3M construction jobs lost) o weekly unemployment claims are declining, yet are still quite high (2M per week range) o every state is currently a contracting market

Other Cost Impact Considerations

o supply cost analysis indicates that imported materials are showing delays in lead times (consistent pricing) o some delays on domestic products o might want to specify the difference between imports and exports for procurement o domestic steel mills are hinting at a 5% increase in steel costs, not materialized yet in procurement o COVID-19 may result in increased claims and ultimately increased premiums

Open Forum Discussion discussed how the government limiting the capacity of steel fabrication plant has impacted the market shortening supply chains reduces the risk of getting materials for projects, recommend using local suppliers for more

control and efficiency

Future Agenda the future of higher education planning Turner Construction COVID cost checklist jobs and unemployment

B o s t o n N e w Y o r k T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

Since 1972

East Construction Round Table

®

James Vermeulen – Co-CEORichard Vermeulen – Co-CEO

Zach Bergeron – Associate

North America’s Construction Economistvermeulens.com

Service Beyond Estimation

®

Agenda

1. AIA Billings

2. Regional Construction Labor

3. Other Cost Impact Considerations

4. Open Forum Discussion

5. Covid 19 Cost Check List

Logistics

• Please mute mics except for those speaking

• Please keep camera function off

• Interim questions and comments via chat

• Weekly summary “Situation Reports”, slide deck, reminder

• Webcast audio available with reminder link

• Market Outlook “Special Report”

Previous Forum

• Duration of Pandemic will be key in the overall construction market impact• Development of Covid 19 Cost Impacts Table – Looking For Assistance• Commodity Prices Low• Bid Prices Holding on Larger Projects• Many Owners Moving Ahead• 3% to 4% Recommended Escalation Contingency

• Mechanical Perspective• Run HVAC on Full Capacity Over Night• Disassemble Demand Control Ventilation• Increase Outside Air• Consider Ultraviolet Air Treatment in Critical Spaces• Consider Once Through Air Systems

B o s t o n N e w Y o r k T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

Since 1972

AIA Billings

®

North America’s Construction Economistvermeulens.com

Service Beyond Estimation

®

AIA Billings

Architecture Billings Index (ABI)

The Architecture Billings Index is an economic indicator for nonresidential construction activity, with a lead time of approximately 9–12 months.

Investment groups like Wells Fargo, media outlets, firms of all sizes, and business leaders rely on this leading monthly economic indicator to assess business conditions and predict and track the market.

The index is derived from AIA’s Work-on-the-Boards survey, which has gathered data on shifts in billings from architectural firm leaders for over 20 years. This data is a trusted tool used by the design and construction industry and other firms to predict and track movements in the market

AIA Billings

AIA Billings

AIA Billings

April

March

February

AIA Billings

AIA Billings

AIA Billings

AIA Billings

• 8 of 10 firms have applied for PPP Loans (84% + 2%)• 74% awarded full amount of request• Consumer Sentiment Index Declined 19.4%

B o s t o n N e w Y o r k T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

Since 1972

Construction Labor Data

®

North America’s Construction Economistvermeulens.com

Service Beyond Estimation

®

Construction Jobs Data

3,800 Projects – $200 billion Total

Construction Jobs Data

2,000

4,000

8,000

16,00036.526 36.891 37.256 37.621 37.986 38.351 38.716 39.081 39.446 39.811 40.176 40.541 40.906 41.271 41.636 42.001 42.366 42.731 43.096 43.461 43.826 44.191

128,000130,000132,000134,000136,000138,000140,000142,000144,000146,000148,000150,000152,000154,000

NYSE

Wor

kers

(tho

usan

ds)

Employment NYSE Vermeulens

US Employment (In Thousands)

8.7 M Jobs

+22.8M Jobs-21.4M Jobs

Job Creation

US Employment (millions)

Jan-08 Feb-10 Feb-10 to Feb-20 Feb-20 Apr-20 Feb-20 to Apr-20

Total nonfarm 138.4 129.7 22.8 152.5 131.0 -21.5

Total private 116.0 107.3 22.5 129.8 109.3 -20.5

Goods-producing 21.9 17.6 3.6 21.2 18.8 -2.4

Mining & logging 0.7 0.7 0.0 0.7 0.7 0.0

Construction 7.5 5.5 2.1 7.6 6.6 -1.0

Manufacturing 13.7 11.5 1.4 12.9 11.5 -1.4

Private service-providing 94.1 89.6 18.9 108.5 90.6 -17.9

Trade, transportation, and utilities 26.7 24.5 3.3 27.8 24.7 -3.1

Business 29.3 27.0 6.3 33.3 30.5 -2.8

Education and health services 19.0 19.8 4.8 24.6 21.9 -2.7

Leisure and hospitality 13.5 12.9 4.0 16.9 8.7 -8.2

Other services 5.5 5.3 0.6 5.9 4.6 -1.3

Government 22.4 22.5 0.3 22.8 21.7 -1.1

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Unem

ploy

ed [i

n th

ousa

nsds

]

Total Unemployed Currently Looking For A Job Part Time for Economic Reasons

US Unemployment

Apr 18

Apr 11

Apr 25

Apr 4

Mar 28

Mar 14

Mar 21

May 02

Feb 15

May 09

May 14

US UnemploymentWeek Ending Claims

March 7th 211,000

March 14th 498,000

March 21st 3,307,000

March 28th 6,867,000

April 4th 6,615,000

April 11th 5,237,000

April 18th 4,442,000

April 25th 3,846,000

May 2nd 3,176,000

May 9th 2,687,000

May 14th 2,438,000

1

2

3

4

5

6

7

8

Unem

ploy

men

t Cla

ims [

in m

illio

ns]

Weekly Unemployment Claims

Year-Over-Year Construction Labor Growth

State Construction Labor 12-Month Average (Thousands)

High Growth

Above Average Growth

Average Growth

Below Average Growth

Contracting Market

Year-Over-Year Growth

Market ExpansionCalifornia

(+58%)Massachusetts

(+47%)Georgia(+43%)Texas

(+39%)National(+37%)

-4%-2%0%2%4%6%8%

10%12%

500

600

700

800

900

1000

California

-4%-2%0%2%4%6%8%

10%12%

406080100120140160180

Massachusetts

-4%-2%0%2%4%6%8%

10%12%

120140160180200220240

Georgia

-4%-2%0%2%4%6%8%

10%12%

400450500550600650700750800

Texas

State Construction Labor 12-Month Average (Thousands)

High Growth

Above Average Growth

Average Growth

Below Average Growth

Contracting Market

Year-Over-Year Growth

Market ExpansionNew York

(+28%)Illinois(+19%)

National(+37%)

-4%-2%0%2%4%6%8%

10%12%

150200250300350400450

New York

-4%-2%0%2%4%6%8%

10%12%

150

180

210

240

270

300

Illinois

State Construction Labor 12-Month Average (Thousands)

High Growth

Above Average Growth

Average Growth

Below Average Growth

Contracting Market

Year-Over-Year Growth

Market ExpansionBoston(+53%)

Los Angeles(+48%)Atlanta(+48%)Dallas(+44%)

National(+37%)

-4%-2%0%2%4%6%8%

10%12%

60708090100110120130

Boston

-4%-2%0%2%4%6%8%

10%12%

140160180200220240260280

Los Angeles

-4%-2%0%2%4%6%8%

10%12%

120140160180200220240

Dallas/Fort Worth

-4%-2%0%2%4%6%8%

10%12%

8090100110120130140150

Atlanta

State Construction Labor 12-Month Average (Thousands)

High Growth

Above Average Growth

Average Growth

Below Average Growth

Contracting Market

Year-Over-Year Growth

Market ExpansionNew York City

(+32%)Chicago(+23%)

National(+37%)

-4%-2%0%2%4%6%8%

10%12%

200

250

300

350

400

450

New York City2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

-4%-2%0%2%4%6%8%

10%12%

100120140160180200220

Chicago

US Construction Employment (Thousands)

Low to CurrentTotal

+22.8M (+18%)-21.4M (-14%)

Construction+2.1M (+37%)-1.0M (-13%)

0

50

100

150

200

250

300

350

400

450

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000Employees Vermeulens

B o s t o n N e w Y o r k T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

Since 1972

Other Considerations

®

North America’s Construction Economistvermeulens.com

Service Beyond Estimation

®

Supply Costs

Mechanical Insights

Domestic Steel Mills Hinting to 5% Increase – Auto Industry

No PVF Commodity Issues

Verifiable Evidence of Equipment Progress – Video/Photo

Insurance

Construction Drive

• Resurgence of Workers’ Compensation and General Liability

• Will Covid 19 be covered• Some States Yes, Others No

• California Will Require Coverage• Confirmation It was Contracted on the Job

• Increased Claims• Increase Cost to Defend• Increased Premiums

• What Can Be Done• Robust Safety Policies• Document Compliance• Review Policies for Coverage

Open Forum

Contractors Owners Architects Engineers Sub Contractors

• Bids• Work Volume• Construction Logistics• COVID-19 Costs• Design Impacts• Owner Issues

B o s t o n N e w Y o r k T o r o n t o S a n A n t o n i o D e n v e r L o s A n g e l e s

Since 1972

Covid 19 Construction Costs

®

North America’s Construction Economistvermeulens.com

Service Beyond Estimation

®

COVID Cost Checklist

COVID Cost Checklist

Portable Toiles ilo Trailer Toilets Increased Insurance Rates?

Handwashing Sinks Delay Change Orders?

Thermal Camera Shift Work

Additional Trailer for Temp Screening Productivity

Additional PPE 3rd Parties

Additional Cleaning Crews Contract Conditions

Additional Elevator Operators

Additonal Elevators

+/- 1%

Future Agenda

Tim Reynolds

Future Agenda

• The Future of Higher Education Planning

• Turner Construction

• Covid Cost Checklist

• Jobs and Unemployment

• Others?