US market: professional opportunities
20 December 2019
The demand for quantity surveying as a profession is growing in the USA as more companies and clients recognise the value of the role, writes Simon Saliger
In New York, construction spending reached a record high of $61.8bn in 2018, the 5th year of what the New York Building Congress is calling a ‘building boom’.
Construction output on the US west coast is also booming: Hathaway Dinwiddie Construction Company reports that California has seen more mega projects over the past 2 years than any time in its recent history. The areas around Seattle and San Francisco are particular hotbeds for construction.
According to Tony Rango, the chief operating officer and executive vice-president of Webcor Project and Construction Management Group, the increase in activity in San Francisco is due to the technology boom in Silicon Valley. Technology is driving private developers to build office buildings for companies – such as Facebook – that create jobs and drive residential construction and infrastructure.
To meet this increased demand in construction, the presence of firms that provide professional quantity surveying services in the US market has grown substantially. Global companies, including Mace – which entered the market in North America in 2011 – AECOM, Gardiner & Theobald, Gleeds and Faithful+Gould, are all competing for new business. Turner & Townsend began work in the USA in 2000. Yet the New York office – previously Ferzan Robbins – was only acquired in 2011, and the name of the office was changed to Turner & Townsend in 2015, aligning with the New York boom.
Whether you call it quantity surveying or cost management, the practice is spreading across the USA and the increase in construction activity means surveyor opportunities can only continue to grow.
Higher demand for surveying services means that salaries are competitive as firms compete for the best talent, but the main stumbling block to hiring quality professionals is the US visa application process. The main options are an H1-B visa, or an L-1 company transfer visa, but these are often difficult to obtain and costly. The US government caps the number of H1-B visas it approves every year and the L-1 visa allows intra-company transfers, but you must be employed by a firm for a minimum of 12 months in your home country before transferring.
Understandably, the US market is seeking to protect its own personnel through the visa system, yet the problem is that US professionals are not trained to perform what those in the UK would call a traditional quantity surveying role: those in analyst or project executive roles control cost and carry out other quantity surveying work, without being specifically trained to do so. A gap in the market is definitely emerging for quantity surveying training through RICS-accredited degree courses and, as RICS’ presence and recognition increases in the USA, it is likely that RICS membership will increase accordingly from the more than 3,000 professionals accredited at present.
Surveying challenges in the USA
With opportunity, however, comes challenge. The challenge to the quantity surveyor working in the USA is knowing how best to demonstrate their value, especially as they are often working with parties that don’t completely understand what the quantity surveyor role involves. Some think of quantity surveyors as invoice clerks or project executives and mistake their tasks as, for example, paying vendors or approving change orders – known as contract variations in the UK.
The biggest issues on US construction projects seem to arise when a client budget does not include allowances for items such as provisional sums. This needs to change. Construction value engineering, constant cost monitoring and general contractor management – a term used more regularly in the USA – are essential for a project to make financial sense. Allowing a quantity surveyor to begin work on the project at an early stage and incorporating more provisional sums means that the budget is more accurate and the project has a better chance of making savings and completing on schedule.
The fact that many UK firms with quantity surveying expertise are opening offices in the USA is, however, encouraging recognition of the quantity surveying role in the country: many bidding packages now include allowances – or provisional sums – for a quantity surveyor, citing that this is the ‘way it is done internationally’. These allowances cover the key tasks of a quantity surveyor, including setting up a project, identifying the client budget, selecting procurement and contract strategies, identifying cost control measures and closing the final account.
Firms that operate internationally and require property to do so are also well placed to contribute to the growth of the profession in the USA. For example, Dutch hotelier citizenM recently opened branches in the USA and currently has 2 hotels in Manhattan, New York, 1 of which was constructed using a special pod design system, where the parts were made in Poland and assembled by a specialist crane on site in New York.
With opportunity comes challenge: the challenge to the quantity surveyor working in the USA is knowing how best to demonstrate their value
As citizenM had just completed a similar project in London, it recognised the value of quantity surveying services. My employer at the time was awarded this role and we were able to perform a full scope of services, including determining the budget with the client, advising on costs and the local market, and appointing the general contractor. We oversaw all monthly valuations, change orders or variations and the chosen contract – a guaranteed maximum price contract – worked well. We were also a key part of determining the answer to a key pre-construction question relevant only to the USA: would the project operate to a union or non-union structure?
Understanding the culture and the ways of working in a location is vital to any construction project. In this regard, the biggest difference between the UK and the USA is the union and non-union structure. A union structure means that the trade union agrees a contract with the employer in setting out wages, benefits and the rules of employment, and then makes sure that the contract is carried out. Non-union, however, means the employer sets the wage rates and makes all the decisions on matters such as hours of work.
For those seeking construction work, a union structure is the most beneficial: those employed under a union structure are typically paid more, have more control over the terms of their work and better training packages. A non-union structure, though not always preferable, is less hierarchical and there are usually more jobs available under this structure.
The decision is usually made just before the general contractor is identified. The citizenM project chose to take the non-union route, which meant labour cost savings of about 15 per cent.
Geographical locations can affect the union or non-union decision: Boston, for example, is very much led by the union structure. New York city has traditionally been very union-led but now non-union firms are taking on more projects. Though the unions protest, the market is changing: New York building permits show that about 80 per cent of private construction work is carried out by non-union workers.
Despite firm pre-construction agreements between employer and unions, however, conflicts can arise: The Hudson Yards project in New York is a key case illustrating ongoing friction between the workers’ union and the project’s employer.
Scope of the role
In 2015, a data centre was constructed in Orangeburg, New York, for Bloomberg LP to house vital computer systems. Orangeburg, rather than Manhattan, was chosen as the location. The hamlet, which is located about 25 miles (40km) north-east of Manhattan, was chosen because of the lower real-estate costs, the tax incentives and, most critically, in case of disaster recovery – Orangeburg does not border the Hudson River and is therefore less susceptible to flooding.
The work was carried out by Turner & Townsend, which deployed me on the project as cost manager. Originally, I was processing invoices for fees and attending weekly client meetings to ensure the project’s process was followed without any cost issues. The focus of the role was on contract conditions, completing orders with the general contractor, clarifying the scope of work, controlling payments and closing final accounts. I ensured that capital allowances – if submitted – were genuine, then made sure the general contractor considered them fair. The process was very similar to that in the UK, and my experience as a quantity surveyor in the UK therefore proved very helpful.
Commercial management seems to be more popular in the USA than it is in the UK. Banks such as the Bank of New York Mellon and JPMorgan Chase & Co have enlisted the quantity surveying services of CBRE for this role. A well-trained quantity surveyor working in a commercial management role can use their construction and estimating experience and knowledge to establish procedures for better practice, streamlining construction processes and creating portfolio management.
In terms of portfolio management, quantity surveyors are sometimes employed in the USA to use their data expertise to create client-specific tools, such as creating databases and spreadsheets that can empower a client to budget effectively. For example, an internal tool for capital requests that allows checks to be put in place so the most accurate budgets are derived, ensuring a client’s capital is bringing maximum wealth returns. Another example could be a benchmarking tool that checks market data against internal data to improve procurement networks.
As RICS’ presence and recognition grows in the USA, it is likely that membership will increase from the 3,000 accredited at present
Quantity surveyors also have opportunities to use their data management skills in the USA. For example, a quantity surveyor was employed to help facility managers from a finance company with a capital planning programme for 2020. The quantity surveyor managed a team of 20–30 field engineers, determined the relevant data to collect and created surveys for the data collection. The data collected was used to estimate the capital required for improvements to bank branches in 2020.
To prioritise work, points were scored against the following criteria:
- the condition of non-critical elements of the asset – for example, the flooring;
- the condition of critical elements of the asset – for example, air conditioning units;
- client asset ranking – ranking each bank in order of importance to the client; and
- visual importance of the bank to the customer.
The US construction market is increasing, particularly on the east and west coasts. Massive projects, such as the 18,000-seat music and entertainment venue MSG Sphere in Las Vegas, are continuing to bring with them a huge demand for construction labour – and strengthening the case for quantity surveying input. And the more the value of quantity surveyors is proven and employed, the more RICS qualifications and standards will become recognised as having a positive impact across the US construction industry.
Simon Saliger is an associate director at CBRE North America