Construction management company CEO: Recession ‘feels like a self-fulfilling prophecy’
Founded just five years ago, Arc Building Partners has already worked on some of the most prestigious projects in the Northeastern United States.
The 60-employee construction management company headquartered in Western New York, with another headquarters in Morristown, NJ, relies on technology to help solve project management challenges and reduce the costs of its projects, according to President and CEO Frank Ciminelli.
Some of these techniques include virtual design, lean construction and reality capture to maximize efficiency and avoid issues that could increase costs for customers, Ciminelli said.
Recently completed projects include:
- Renovations to Buffalo Bills’ Highmark Stadium in Orchard Park, New York.
- New Era Sports Performance & Science Addition in Orchard Park, New York.
- 201 Ellicott Street Residences & Braymiller Market in Buffalo, New York.
- The James Luxury Apartments in Park Ridge, New Jersey.
- The Southland Casino & Hotel Complex in West Memphis, Arkansas.
Here, Construction Dive chats with Ciminelli about his company’s journey through the pandemic, a potential recession, and other challenges in the construction industry.
Editor’s Note: This interview has been edited for brevity and clarity.
CONSTRUCTION DIVE: You started your business a few years before the COVID-19 pandemic hit. How has this affected your business?
FRANCK CIMINELLI: We entered 2020 with an order backlog more than 250% larger than our first two years, due to our company’s entry into the New York and New Jersey metro market, and strong wins in both Western New York and in our gaming industry vertical. As of April 2020, more than half of this has been suspended or canceled.
The negative economic impact was even greater in 2021, when we felt the brunt of the cumulative effects of declining labor productivity, labor shortages, supply chain disruptions, long-term projects and rising business costs.
Our business was already 100% cloud-based, so transitioning to remote work wasn’t a huge barrier, but our work is still on site. I must say that our team has been incredibly resilient despite all the uncertainties.
Now that we are approaching 2023, our company’s workforce has once again increased rapidly and we continue to deliver new projects and efficient deliveries for existing customers.
How were you able to win so many important and varied projects in such a short time?
We like to believe that there is an equation that defines our continued positive momentum, and it can be summed up as: “wins = people + relationship = track record = trust”.
We do not offer work, because the game of chance is too adversarial.
Delivering what you promise on time and on budget also remains the hallmark of our business and the reason the work keeps coming.
What are the biggest challenges for entrepreneurs in your part of the country?
Labor shortages, an aging workforce and lots of registrations. The registration network in relation to entry into the trades is a nationwide problem and is expected to get worse. The pandemic has accelerated enrollment and slowed entry, so the gap is growing faster and faster.
The trades may not have been as proactive in recruiting and selling the profession as a career path as it should be. And I hope to see them reach many more minority and underserved communities in the future.
Modest regional economic growth in upstate New York is also hampering recruiting as demand is not as high, so there is complacency in recruiting and training.
What do you think of the possibility of a recession on the horizon?
At this point, a recession almost feels like a self-fulfilling prophecy.
We are already seeing price stabilization in many sectors; However, current interest rate hikes are keeping many homeowners on the sidelines. Nothing kills a project like time.
What other important trends do you think?
I think it is worth mentioning how all of the above factors drive the need for the construction industry to fully embrace technology and innovation.
Despite a decades-long lag, the industry is facing a much-needed and long-awaited digital revolution. Our entire industry, from bounties to submarines, must embrace this change. Digitization is transforming the way we understand and approach the built environment. As an industry, we have the power and responsibility to better harness data, explore dynamic visualization tools, and implement lean and industrial production processes to be more powerful, efficient, and innovative.
It is not a tool or a concept that will bring about the necessary change. Rather, innovation will come from merging all of these things into a whole new delivery model based on performance and results.