Architects and engineers here mostly say a normally steadily flowing pipeline of projects has slowed markedly, as the recession takes its toll on private investment, and public entities hold off on some work while awaiting word on possible federal stimulus funds.
That can be bad news for the local economy, since the backlogs built up by such design firms often portend how well the construction industry will fare in future months. Still, it's also been good news for those who are going ahead with projects, because competition is getting intense, and as a result, bids are coming in lower than they would otherwise.
As commercial and residential projects continue to dwindle here, more companies are vying for the same jobs.
"Things are incredibly competitive," says Gerald Winkler, president of Spokane-based Integrus Architecture PS. "We are seeing competition from a long ways outside of our region."
The dearth of work also is forcing firms to seek projects outside of the specialties they've focused on during good times.
Roger Flint, vice president and area manager here for Denver-based CH2M Hill Inc., says that while most firms here have niches they tend to target, "When the mix gets jostled around and there's less of one type of work," it causes companies to expand their focus.
Taylor Engineering Inc. has spread its geographic reach and is seeking more public projects these days, says Ron Pace, one of the longtime Spokane-based company's principals.
He and other engineers here say they believe that while their current order books are sparse, there are a host of public projects that could end up in the engineering and architectural pipeline soon if some anticipated federal stimulus money starts coming this way.
"We still think there's money on the sidelines," says Richard "Dick" Stauffer, a principal at Miller Stauffer Architects PA, of Coeur d'Alene, which does primarily private commercial work. "People are still making inquiries, but everyone's moving more cautiously."
Flint cites a recent call for qualifications for architects and engineers by the city of Spokane to prequalify to design projects that could get federal stimulus funding.
"Quite honestly, I can't name 23 firms that are in town, but 23 applied," he says. The city narrowed it down to a list of 10 companies that could get such work, but only if it gets stimulus money for those projects.
Adds Stauffer, "I'd say we have about 60 percent of the workload that we had last year. Everything is down."
His partner, Monte Miller, adds, "We still have quite a bit of work, but we don't have the backlog where we wouldn't be able to take on (more) work," as the company has seen in past years.
Engineers and architects here all say retail and commercial projects are far off their usual pace.
"One of our major clients has been Home Depot. That's really dried up," says Mark Aronson, another principal at Taylor Engineering. "I think the commercial sector has pulled back to watch and see what happens."
Winkler says Integrus hasn't seen as much of a slowdown as perhaps other firms have because it does very little private-sector work, but has seen some of its public clients take a more conservative approach to pursuing bond-funded projects.
"We've had a number of cases where the public clients have said, 'We don't think we'll put anything on the ballots right now,'" though there hasn't appeared to be significant public opposition to bonds that have been proposed, such as Spokane Public Schools' proposed bond issue, Winkler says.
The upside of competition
The competitive environment stands to benefit public and private entities that decide to dip their toes in the water.
"One of the things we're finding out is this is a very, very good time to be building," says Gary Bernardo, a principal at Bernardo-Wills Architects PC, of Spokane. "Pricing on construction projects is very competitive, and projects bidding come in below estimates."
Municipal clients say they've already seen an increase in interest in and bids for projects, resulting in highly competitive pricing for projects.
"The good thing for us is, people are hungry," says Roger Saterfiel, director of Kootenai County's solid waste department, which recently awarded a construction contract for a half-million dollars less than what engineers had estimated the landfill expansion project would cost.
"You used to have to fight to get people involved," in such public works projects, Stauffer says.
Saterfiel says that usually his department is lucky to get two or three bids for its projects, but this time it had 36 people show up at a pre-bid conference for the Kootenai landfill expansion, with a resulting six bids for that project.
Similarly, a recent city of Spokane call for bids for a water transmission main project attracted 11 bids, and ultimately a savings of more than $1 million when the bid was awarded.
"The contracting end of it is slower; contractors who weren't eager to price things in the last couple of years now are eager to price," Stauffer says.
On the other hand, "The bad thing is, people are hungry," Saterfiel says, acknowledging that steeper competition can mean less work for local companies competing in such a climate.
The effect of stimulus
CH2M Hill's Flint says that anticipation of stimulus funding has been "terrible" for those in the industry, at least in the short term, as it has put many project owners into a holding pattern to see if their projects could get some federal funding.
Among projects on hold have been Idaho state transportation projects, Flint says.
"Transportation-wise, we are doing very little work right now," he says. "They aren't issuing new bonds right now, because they are waiting to see about stimulus money."
The stimulus concept seems to have everyone poised at the edges of their seats, Winkler says.
"We've had several clients call and ask us how quickly we could have projects shovel ready," he says.
Taylor Engineering principal Chris Mansfield says that although the city of Spokane hasn't done a lot of design work yet on a number of projects it had targeted for stimulus funding, he was pleased that it aggressively sought RFQs to be ready to jump on projects.
"They could have sat around and waited," he says.
The city of Spokane Valley, meanwhile, came out with a number of projects to get into design, some of which Taylor engineering was hired to do, Mansfield and his colleagues say.
"Spokane Valley decided to spread the wealth around," Mansfield says.
"That's in the spirit of stimulus," adds Pace.
Areas of strength remain
There is good news. More than $266 million in transportation projects are planned or under way in the Spokane area this year, and companies here say that school projects also remain strong.
Integrus has a good number of education projects, including a new music building at Spokane Falls Community College, Winkler says.
Aronson says that the Spokane Public School bond issue, which voters cast ballots on through March 10, could be as big of a stimulus as the federal program here. Similarly, there appears to be no slowdown in hospital projects, Aronson says.
"We stay reasonably busy with medical and dental work, primarily with owner-occupied buildings, as opposed to speculative buildings. We are continuing to do, oddly enough, banking workprimarily for community-based banks and credit unions," Bernardo says.
Some retailers, meanwhile, have looked to shift to more conservative projects.
"We continue to do retail remodel work for Safeway stores. They are remodeling their stores and reinvigorating them with new decor rather than building new stores," he says. "It's less of a capital infusion and maybe more bang for your buck."
Leaning on longevity
Companies that have a solid, long-term client list and a balance of public and private projects say they're reaping the benefits of those relationships.
"A lot of our clients are established clients," Bernardo says. "Our practice has been historically 40 percent private to 60 percent public. That might swap from year to year, but we have always had both. We continue to do military and community colleges' work, and we think with some stimulus at that level," the work will stay steady, Bernardo says.
"We continue to be cautiously optimistic; we don't anticipate restructuring or laying off," Bernardo says. "I think there are a lot of projects out there waiting to get going."
Stauffer, too, says that because Miller Stauffer is an established company, with a list of repeat customers, it's in a decent position during the downturn.
Flint says that because of its size and diversity, CH2M Hill expects to get through the downturn, but has experienced difficulty in certain work categories, and has had to shift some of its employees here to different geographical areas temporarily. Flint says as the stimulus package is done, he believes that will help break a logjam of potential projects.
Architects and engineers here all feel confident that the situation will improve, and say it's a matter of riding out the down cycle.
Pace says he thinks things will begin to turn later in the year.
"I think we'll see it still in '09," he says.