COVER STORY, DECEMBER 2009

2010 TRENDS
An increased interest in government projects creates a new set of development and construction trends for 2010.
Amy Bigley

With the continued unpredictability of the market, developers and investors are seeking out new ways to increase business and stay afloat. As much private sector development has been halted, many companies are testing the waters with government, civic and healthcare projects. As with any new market, these industries present unique challenges to novice developers and investors. The influx in interest is creating a new set of popular trends that were historically limited to a specialized industry.

Increase in Government Projects

The new marketplace has created much interest in obtaining government projects as a source of revenue for struggling companies. Novice companies are in many ways complicating the bidding process, which is evident in the increase of project protests. Many of these projects have high standards and requirements that inexperienced private sector companies may not be able to handle.

“There are a lot of new players in the market,” says Dan Frisbee, CEO of Kansas City, Missouri-based Walton Construction. “Some companies don’t really understand the military or government work, and this is leading to the protest and possible re-bidding of projects, which delays the award and ultimately the project.”

Tougher Safety Standards

Now and in the coming year, the United States Army Corps of Engineers (USACE) and the U.S. General Services Administration (GSA) are set to begin implementing tougher standards for safety, environmental issues and small business utilization. These new standards are a result of the increased competition in the market. Although the requirements may initially raise costs, overall the effects will produce increased project efficiency and quality. Moving forward, companies that plan to contract with the government will need to be willing and able to incorporate these standards into business models and practices.

“To me those things go together; if you have a safe project then you have an efficient project — a job that’s on schedule, high quality and monetarily successful,” notes Frisbee, whose company is moving into a zero incident performance culture.

Stimulus Money = Transparency?

Many industry experts have rising concerns about the requirements for receiving federal stimulus money for funded projects. Although the details of the requirements have not been released, it is anticipated that there will be a call for financial transparency from involved companies. Private sector companies are looking forward to receiving public funding, but the companies also want to maintain a level of anonymity. As an executive of a privately held company, Frisbee explains that many companies are not afraid of increased transparency, but firm can go too far, which could be damaging for a company’s competitiveness in the future.

Cap in Trades & Healthcare Reform

As two of the most highly debated issues in the nation, companies are anxiously waiting to see the outcomes for Cap in Trade and healthcare reform. In order to prosper, companies always have to be flexible and willing to change to meet new standards and development climates. As for the healthcare industry, change seems inevitable, and that change will more than likely lead to increased opportunities in medical office and healthcare development. The results of Cap in Trade may prove a little trickier. If taxes or penalties are implemented for carbon emissions, companies will have take steps to change the way they conduct business. Companies will basically have to conduct a ground-up rework of business models, including infrastructures, facilities and electrical usages. Sustainable development will continue to be a large portion of the Cap in Trade issue. In order to stay competitive in the market, companies will need to take aggressive steps towards developing LEED-accredited teams and educating its workforce.

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