Nearly 900 construction industry professionals convened in Orlando, Florida, last month for the Construction Financial Management Association’s (CFMA) 2012 Annual Conference & Exhibition. While there was a sense of optimism throughout the conference, much uncertainty remains. The most frequent question of attendees was, “Where is the economy headed?”
Anirban Basu, CFMA's economic advisor and chairman and CEO of Sage Policy Group, Inc., addressed a full audience at one of the general sessions. Basu’s message was simple: While optimism has increased this past year and there have been signs of improvement, an overall lack of confidence in the economy remains. The construction industry continues to face several challenges, including funding reductions, tighter margins and increased numbers of bidders. Basu also said ongoing global economic concerns and the coming presidential election contribute to the overall lack of confidence.
More than 60 speakers presented at this year’s conference; what follows are some of the key takeaways and advice.
Communication – Have frequent and open discussions with your bonding company, bankers, accountants and other key advisors. Involve them in the process and listen to their advice. Timely communication can help strengthen those relationships, contribute to the success of your company and, most importantly, potentially avoid surprises.
Increase Cash Flow – Be sure to monitor and manage your cash flow on a daily basis. Also, consider monitoring cash flow on a project basis. A project may appear positive on a work in progress schedule but may cause negative cash flow.
Stay Current with Proposed Financial Reporting Changes – There are proposed changes on the horizon with regard to revenue recognition, leases and multiemployer plan disclosures. However, some of these proposed changes may not be effective for three or four years. Implementing these changes may require significant effort based on the size and complexity of your company, so it is important to understand how these changes will affect your company and prepare for them.
Technology – Consider how technology can improve your business. Companies have reaped many benefits from the use of technology, including improved overall job management, reduced risk and less manpower. Such benefits can improve productivity and job performance and help you gain a competitive advantage.
Reconsider Your Business Mix – Recent economic times have caused many firms to look outside their normal geographic markets for new work, while others are turning to different types of work not typically done in the past. Regardless of where your company falls, be sure to consistently analyze your business mix and geographic footprint. Address the associated risks and avoid jumping at more work just to generate top-line revenue. Also, remain cognizant of what your competition is doing, as it could have a direct effect on your operations.
During the conference, several industry professionals offered their insights exclusively to BKD:
Companies that remain proactive and continuously respond to change will best prepare themselves for the future. Remember why your company has been successful, but consider changing to adapt to changing economic times.
For more information on upcoming financial reporting changes, tax or any other matters, contact your BKD advisor.