Growth in Education Proposal Activity Continues to Slide, Still Positive

Courtesy of PSMJ Resources

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.