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Job, Pay Trends Signal a New Normal

Thursday, October 16, 2014

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All boats are rising with the post-recession tide, but they are not rising equally—and the construction and engineering rock stars of tomorrow will be different from those of yesteryear, a new report says.

After being trampled by recession, "the future is bright for the construction and engineering industries," according to a new white paper by FMI, the multinational construction and engineering management consultant.

But continued success will require embracing trends that are fundamentally changing the industry, according to "Post-Recession Transformations."

bridge construction
©iStock / TommL

"The future is bright for the construction and engineering industries," FMI reports.

The good news: Employment numbers are rising, and professional pay indexes have increased more than 10 percent since 2008.

But the new organizational power will reside in the areas of sales, cost control and technology, with an emphasis on roles with more specialized knowledge, the report said.

The construction and engineering industries are "well on their way to recovery," but "job pay levels are changing and revealing underlying shifts in the industry," said report author Mike Rose, Ph.D., who analyzed more than 75,000 salary records from 2013.

The report is the latest in FMI's annual series of compensation surveys and covers about 280 positions.

Trending in Pay, Jobs

According to data from the Bureau of Labor Statistics, construction employment stands at 5,851,000—way off from its peak of 7,476,000 in spring 2006, but up from its low of 5,435,000 in January 2011.

In general, pay levels have been increasing since 2008. "Although employment levels may have receded, those with the most talent and who offer the most value have experienced pay increases," the report said.

The report noted "significant trends" among job families. For example, business development increased its presence in construction, with emphasis on new business acquisition.

construction pay growth
Images courtesy of FMI unless otherwise noted

Sharp growth in certain construction jobs shows "that with reduced revenue and profit margins, the industry is focusing on levers of growth and efficiency that were neglected in the past."

The report also recognized sharp growth in certain jobs, including business development, project superintendents, estimating/engineering, safety, business information modeling and project accounting. 

New Areas of Focus

These trends "show that with reduced revenue and profit margins, the industry is focusing on levers of growth and efficiency that were neglected in the past."

According to the report, the industry is now focused on:

  • Sales in an increasingly competitive environment;
  • Cost control through effective accounting, quality and accurate bidding to increase margins; and
  • Technology to increase efficiency and reduce the likelihood of having to redo work.

"Indeed, contractors are turning IT into a profit center through productivity tolls and project tracking software," with a near-30 percent increase since 2008 in the base pay of business information modeling professionals.

Reduced Project Demand

Meanwhile, jobs that used to see significant increases are now exhibiting slower growth. The jobs with the least growth were project controls, project management, project/field engineering, equipment manager and general foreman.

FMI pay indexes

In general, pay levels have been increasing since 2008. "Although employment levels may have receded, those with the most talent and who offer the most value have experienced pay increases," the report said.

The slowdown comes from reduced demand for construction projects, which has reduced the need for traditional positions, putting downward pressure on wages.

(The FMI forecast for construction put in place in 2013 was $909.6 billion, down 6 percent from 2012. The company expects growth to return to 7 percent in 2014 and reach $977.1 billion.)

"However, this is not a simple response to the business cycle; the construction industry is fundamentally changing," said the report.

It cited another FMI report that pointed out the rise of low-bid procurement approaches as well as diverse delivery methods (for example, design-bid-build and integrated project delivery).

"Commoditization of construction is forcing the construction industry to revise go-to-market strategies and channels for new business as well as the talent pool," the report stated.

Falling Bonus Levels

The report also found a "precipitous fall" in bonus levels as a percent of base salary since a peak in 2010, followed by a "subsequent turn toward recovery" for some in 2013. According to FMI, this is because 75 percent of companies pay discretionary bonuses.

engineering jobs
©iStock / lovro77

According to the report, the emphasis on smart buildings and environmentally friendly design is putting more value on positions such as environmental engineer.

Purchasing positions received the only bonus percent increase since 2009; quality assurance, safety engineering and project controls jobs saw the least decrease; and project superintendent job bonuses were flat. General foremen were hit the hardest in bonus reductions.

How Engineering Fared

Base pay in engineering has generally increased, with sharp rises noted for client acquisition, construction supervisor, project engineer and proposal manager positions. Field engineers have seen the highest base pay increase since 2009, topping over 20 percent. Base pay for positions in quality assurance and environmental engineering have also increased.

Meanwhile, purchaser, process engineer, estimator, project controller and design drafter jobs have experienced reduced base pay.

engineering pay growth

In the engineering industry, field engineers have seen the largest base pay change since 2009, while design drafters' base pay took the hardest hit.

The report noted several trends driving the engineering industry toward change:

  • An increase in at-risk work and industry consolidation is placing emphasis on positions with specialized expertise. "Field and project engineers are replacing general engineers because they are cheaper, more specialized and closer to the projects, and ensure smoother engineering to construction transitions."
     
  • The clients are changing to involve multiple stakeholders, making the marketing and sales processes more complex.
     
  • The emphasis on smart buildings and environmentally friendly design, putting more value on positions such as environmental engineer.

Unlike the construction industry, bonuses in engineering have remained flat since 2009. The position hit the hardest was client acquisition, primarily because those professionals earns bonuses based on sales, and "sales were not good."

Project managers received the largest bonuses as a percentage of base salary, but those also remained flat, the report said. However, bonuses for project and process engineers soared above prerecession levels.

   

Tagged categories: Construction; Economy; Engineers; FMI; Market forecasts; North America; Program/Project Management; Trends

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