The Architecture Billings Index (ABI) is an economic indicator for construction (nonresidential) activity that business leaders can use to predict and track the market. The ABI is derived from a survey performed by AIA regarding billings. ABI can be used by architecture firms for strategic planning for hiring and anticipating fluctuations, determining business cycles shifts, and timing in a changing economy according to AIA’s website.1
When the trends of the Architecture Billings Index and general market trends predict an upcoming recession, architecture firms need to be ready. The AIA featured an article by Kermit Baker, HON, AIA called Planning for the Next Recession were he writes about these principles.2 Here’s what I understood the article to say: The key is to be prepared and anticipate economic conditions. It is important to develop a strategy to minimize the impact a downturn could instigate. Typically, recessions indicate a fundamental imbalance in the economy. That begin said, the correcting or re-balancing of the economy is not without casualties. Business leaders are conscious of impending crisis, and respond by being more conservative with spending. This is where the impact of the economy is felt by design firms.
2019 ended on a positive note according to the press release from Jan. 22, 2020. December saw an increase with a ABI of 52.5. A score above 50 shows an increase in billings.
- Regional average for Midwest was 51.9
- Sector: commercial/industrial (54.0); multi-family residential (51.0); mixed practice (50.8); Institutional (50.8)
- Project inquiries index: 58.7
- Design Contracts index 53.4
It’s a good idea to keep an eye on the market and predictions. Prepare for each possible scenario and react according to how things play out. Check out this month’s billing index from December 20193 to plan for the coming months. Architects, business leaders, public officials, and general public should all stay current on the economic condition. The ABI is an index that everyone should take a look at to stay informed.
Sign up at the website referenced below to receive monthly emails of the ABI and find examples of how to apply the ABI to your professional practice.
Since graduating from Kansas State in 2012, Liz has gained experience from a variety of fields within the building industry. From drafting at a metal building manufacturer to working at architecture firms to assisting a real estate broker/developer, she has always had a passion for influencing the built environment. As an architect-in-training at MSH Architects, Liz enjoys learning new things and refining her skills with help from other licensed professionals. She is pursuing an architectural license and hopes to continue to shape the spaces and places around her in a positive way.