As a CFO, I am often asked for predictions from my construction crystal ball. What is our five-year forecast? What will our payroll be for the coming year by state and trade? What will our revenue be for the coming year by type of materials installed? What do we think our bonding needs will be over the next couple of years? With some of that work not even bid yet, let me sit quietly with some candles burning and gaze into the future! Kidding aside, CFMA is a big part of the magic in my crystal ball.
For instance, to help me understand the trends and forecasts that impact the industry, I contribute to and monitor the results of CFMA’s CONFINDEX — a quarterly survey of construction CFOs about markets and business conditions.
The CONFINDEX is based on four separate financial and market components, each rated on a scale of 1-200. A score of 100 indicates a stable market, while higher ratings indicate market growth. September’s CONFINDEX was 119 and trending up, and December’s will be available soon. In CFMA’s Content Hub (cfma.org/content-hub), select “Key Industry Financial Indicators” under the “Explore More Topics” section. There you will find not only information on the CONFINDEX, but also the latest Architecture Billing Index, FMI Non-Residential Construction Index, Engineering News-Record Confidence Survey, and Associated Builders & Contractors’ Construction Backlog Indicator! The most recent reading is displayed with three previous index points to make trends easier to recognize. And links for each index take you to the details, including Anirban Basu’s thoughts on the latest CONFINDEX.
Strong forecast assumptions start with solid historical information, and the CFMA Financial Benchmarker (financialbenchmarker.com) lets me compare my company’s performance to others by company type, size, geography, and industry. It also helps me pressure test my assumptions.
The hard work of CFMA’s volunteers is part of the magic, too! They are tasked with identifying emerging issues that need to be covered in print and digital articles, webinars, and other education. For example, my company is a subcontractor, and the CFMA Specialty Trade Committee’s quarterly e-newsletter, Talking Trades, sheds light on trends specific to my business in every issue. In addition, Talking Heavy is an industry-specific e-newsletter for CFMA’s heavy/highway sector. Make sure you are signed up to receive these if they apply to you.
And, of course, CFMA’s community is a continuous source for updates to the assumptions I build into my forecasts. From topics and conversations at chapter meetings to Connection Café discussions, there is always something new to consider. My peer group is a source for trend information, too. In addition to our monthly calls, we exchange emails regularly to discuss new situations we encounter and share possible solutions.
This issue of our award-winning CFMA Building Profits magazine is dedicated to industry trends and tackles such problems as disruptions, material cost escalation, and prequalification.
Some events, like a global pandemic, escape even the most forward-thinking leaders, but I am certain that with CFMA “magic” in my crystal ball, I have a pretty good glimpse into the future.
Copyright © 2021 by the Construction Financial Management Association (CFMA). All rights reserved. This article first appeared in November/December 2021 CFMA Building Profits magazine.