Architecture, Engineering, and Related Services [NAICS 5413]

Architecture,
Engineering, and
Related Services
[NAICS 5413]
AN INDUSTRY
REPORT FOR
CORELYTICS AND
THE SYRACUSE
UNIVERSITY
SCHOOL OF
INFORMATION
STUDIES
The following report was prepared by Sam Disston, Stephanie Santoso and
Gwyneth Frey for the purposes of fulfilling a final project requirement for
IST755 at Syracuse University. In addition, this report was created to assist
Frank Coker and Corelytics in their attempt to gather data and information
about the Architectural and Engineering Services industry as identified by
the North American Industry Classification System (NAICS) code 5413. The
report consists of self-contained sections that correspond to sub-industries
within 5413.

NAICS 541310 - ARCHITECTURAL SERVICES
NAICS Description:
“This industry comprises establishments primarily engaged in planning and designing residential,
institutional, leisure, commercial, and industrial buildings and structures by applying knowledge of
design, construction procedures, zoning regulations, building codes, and building materials.”
From the US Census
SMALL BUSINESS MARKETPLACE
The industry as a whole is fairly fragmented. The majority of businesses are smaller entities, which
include consultants, sole proprietors and partnerships (IBIS, 2012). In fact, enterprises with 0-4
employees account for 64.7% of the players in the architectural services industry (IBIS, 2012).
Companies with 5-9 employees account for 18.6% of enterprises. The largest firms, with 500+
employees only make up .2% of the players in the industry. While the 2012 U.S. industry report
produced by IBIS indicates that larger players in the industry do not generate a substantial amount of
industry-wide revenue, a survey conducted by the AIA in 2009 found that firms with 100+ employees
accounted for 30% of all employment and over 30% of all revenue (Overview, 2009). In contrast, IBIS
reported that firms with 100+ employees account for only 1.1% of all employment in the industry. It
is unclear why there such a substantial statistical discrepancy between these reports, however the
AIA survey used a substantially smaller sample size.
The architectural services industry is currently recuperating from the economic downturn of the past
several years. The economic health of the industry is closely tied to the health of the overall economy.
Thus, funding for design and construction projects decreases along with organizational budget cuts.
Construction was the sector most severely affected by the recession and is the slowest to recover.
The Architecture Billing Index (ABI) of February 2012 indicates that billings for the industry overall
are on the rise, with strong growth in the Midwest and modest growth in the Northeast and South.
Firms located in the West are still experiencing revenue declines (Baker, 2012). The most growth has
taken place in the commercial/industrial sector, while firms focusing on the residential sector are
also seeing some increase in business. The institutional sector of the industry, which includes
healthcare and educational projects, is normally the slowest to recover during an economic
downturn. Despite a recent increase in billings, the recession took a substantial toll on the industry
during which architects across the country experienced salary freezes or reductions or worked fewer
hours. Compensation is still relatively stagnant, but higher in larger firms compared to small and
medium-sized firms (AIA Compensation Survey, 2011).
INDUSTRY OUTLOOK
In recent years there has been some consolidation, with several large mergers and acquisitions
taking place in a partial attempt to deal with the economic downturn. In some cases, these mergers
are international ones, such as when UK-based RMJM merged with US-based Hillier in June 2007
(Lynch, 2012). Others are domestic, such as the case of the merger of OWP/P, previously one of
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Chicago’s largest architectural and engineering firms with Upstate New York-based Cannon Design
(Lynch, 2009). At the time of the merger, the combined revenues of the two firms would have made it
the 14th largest architectural firm in the U.S. The majority of mergers and acquisitions taking place in
this environment are motivated by the quest to increase financial, operational and geographical
opportunities. Those transactions that are driven by growth rather than financial rescue are more
likely to thrive moving forward.
Another strategy that firms have taken to deal with the loss of business in recent years and increased
competition for existing projects is to create strategic alliances (Beck, 2012). Strategic alliances are
partnerships established between firms that do not involve money. Each firm maintains a separate
identity and its autonomy, but the strategic alliance provides the organizations involved with the
opportunity to leverage each other’s resources to generate new business ideas and take advantage of
opportunities in a more integrated manner. This has been a popular alternative to the merger &
acquisitions approach in dealing with the economic downturn. Some strategic alliances involve the
creation of a completely new legal entity to facilitate cohesiveness and build credibility with clients.
SIGNIFICANT TRENDS & CHALLENGES
There are several current developments in the industry that will continue to have a significant
impact on the state of the industry moving forward.
• Sustainable energy and design is necessary and expected. It is no longer a question of whether
a building should be designed sustainably, but rather how sustainability can be integrated
into the design, construction and long-term maintenance of a building. The National
Architectural Accrediting Board has begun to include mandates which require architecture
schools to include sustainable design within their curriculum, meaning the next generation
of architects and designers will be taught to consider sustainability in every aspect of their
projects (NAAB, 2011).
• Increased globalization will prompt greater collaboration between firms. Larger architecture
firms may have branch offices in various countries and a substantial amount of clients and
projects abroad. Yet many international architects who wish to design projects within the
U.S. will continue to partner with U.S. based firms. Because licensing requirements in the U.S.
are significantly different than those in other countries, a U.S. based firm may serve as
“architect of record” for a project, which means the name of this firm will be listed on the
building permit and assumes the responsibility and liability “of a project including the
design, the production of construction documents and construction observation” (AIA Code
of Ethics, 2004).
• Technical knowledge about Building Information Modeling (BIM) becomes a requirement for
architects as projects become increasing data driven. The buildingSMARTalliance, the nonprofit,
non-governmental council which is developing national standards for BIM defines
Business Information Modeling (BIM) as “a digital representation of physical and functional
characteristics of a facility. A BIM is a shared knowledge resource for information about a
facility forming a reliable basis for decisions during its life-cycle; defined as existing from
earliest conception to demolition.” BIM is increasingly becoming the way that stakeholders
such as architects, engineers and contractors manage a building throughout its lifecycle. The
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ole of BIM within the industry is discussed in further detail within the information systems
analysis section below.
INFORMATION SYSTEMS ANALYSIS
Building Information Modeling (BIM) is a technology and data-driven approach to managing a
building project that is becoming an increasingly important part of the business. “A basic premise of
BIM is collaboration by different stakeholders at different phases of the life cycle of a facility to insert,
extract, update or modify information in the BIM to support and reflect the roles of that stakeholder”
(buildlingSMARTalliance, 2012).
Previously, architects would design buildings and other structures in drafting and modeling
programs such as CAD. Blueprints would be created from these designs and then shared with other
project stakeholders, such as engineers, contractors and the building owners. However, when
structural changes were made to the building after the design process or construction process was
complete, this information would not necessarily be updated across various project files, resulting in
outdated data. This was a particular problem when renovations or significant maintenance was made
to the building years down the lines. Siloed information and lack of communication was also a
problem. Various stakeholders often re-collected the same data not knowing that another
stakeholder on the project might have the information they needed. BIM seeks to address these
issues by creating a “living” digital profile of a particular facility throughout the course of its lifefrom
the schematic, design and build phases through to maintenance, once the building is fully up
and running. So while CAD is still used by architects to automate the process of drafting and
modeling, BIM technology is used to actually change the business processes in a way that facilitates
information sharing and management.
Key Issues Addressed by BIM as outlined by the OPEN BIM initiative (OPEN BIM Program, 2012):
• Lack of real coordination workflow
• Lost information during data conversion
• Interpretation issues of data from other party
• Limited utilization of building data created by others
• Missing follow-up of design changes between the trades
• Lack of detailed model for construction
While the exact date that BIM originated is difficult to pin down, many industry practitioners believe
that the practice of BIM began in the 1980s, but only in recent years has building information
modeling been adopted on a greater scale by architects. Successful implementations of BIM require
coordination, collaboration and communication between architects, consultants, engineers and
contractors working on a particular project.
Some of the most frequently used BIM solutions include Revit by Autodesk (also the makers of
drafting and design software AutoCAD) Autodesk and Microstation by Bentley. Other BIM products
include Graphisoft’s BIMx and ONUMA’s ONUMA System. In an effort to build an active community
around BIM and develop continuous dialogue around this technique, Graphisoft has even partnered
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up with the buildingSMARTalliance to create the Open BIM initiative which attempts to more clearly
define BIM for the industry using the buildingSMART Data Model and establish a BIM certification
process (Open BIM Program, 2012).
Benefits of BIM:
• Seamless communication between design and construction teams
• Up to date, reliable data about a building’s design construction
• Reduction in data collection redundancies (data can be re-used by many stakeholders)
• Design issues can be identified and addressed earlier in the process
• Building performance can be predicted prior to construction and closely monitored after
construction
• Information gathered through BIM can be shared with facility managers who then use this
information to make informed decisions about building maintenance moving forward
One sign that BIM will be extremely instrumental in the way that architecture firms will manage
projects and processes in the future is the current development of National BIM Standards here in
the U.S. These standards are being developed by the National Building Information Model Standard
Project Committee - United States, is a project committee of the buildingSMART alliance which is a
council of the National Institute for Building Sciences (NIBS) (National BIM Standard-United States,
2012). The development of these standards is still very much in the nascent stages. The first version
of these standards was released in December 2007 and the second version is scheduled to be
released in May 2012 (D.Smith, personal communication, April 26, 2012). Developing BIM standards
is a significant challenge because BIM has the potential to “involve all aspects of the facilities
industry, including architects, engineers, contractors, insurers, unions, manufacturers, lawyers,
homebuilders, vendors, owners, consumers, local, state and federal governments, codes and
standards developers, and testing representatives” (buildingSMART alliance, 2010). Ultimately, the
goal is to create a set of standards whose core tenets can be used in other countries, perhaps with
some localization (National BIM Standard-United States, 2012).
CONCLUSION
Architectural services is characterized by strong economic fluctuations- strong business conditions
result in large upturns while a weaker economy results in large downturns. The industry is highly
competitive. Sustainable design and building will become an even more important aspect of the
business moving forward, particularly with regards to LEED certifications. While an architectural
services is already a globalized industry, increased collaborations between international firms will
continue to grow. Technical knowledge, particularly with regards to Building Information Modeling
(BIM) will become an increasingly necessary skill for architects.
REFERENCES:
AIA Code of Ethics & Bylaws (2004). Available from:
http://www.aia.org/about/ethicsandbylaws/AIAS077624
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AIA Compensation Survey (2011). AIA. Available from: http://www.aia.org/practicing/AIAB090533
Baker, K. (2012). Another Month of Revenue Growth at Architecture Firms. Available from:
http://www.aia.org/practicing/AIAB093732
Beck, E. (2012, February 2). Soft Mergers. ARCHITECT. Available from:
http://www.architectmagazine.com/business/soft-mergers.aspx
buildlingSMARTalliance (2012). Frequently Asked Questions About the National BIM Standards USA.
Available from: http://www.buildingsmartalliance.org/index.php/nbims/faq/#faq1
buildingSMARTalliance (2010). buildingSMART alliance Seeks Industry Input on National BIM
Standard. Available from:
http://www.buildingsmartalliance.org/index.php/newsevents/news/Entry/bsaseeksindustryindust
ryinputonnbims
Lynch, M. (2009, June 23). M&A Transactions to Continue Momentum. Architect. Available from:
http://archinect.com/features/article/89876/m-a-transactions-to-continue-momentum
NAAB (2011). National Architectural Accrediting Board 2011 Procedures. Available from:
http://www.naab.org/accreditation/2011Procedures.aspx
National BIM Standard-United States (2012). Available from:
http://www.buildingsmartalliance.org/index.php/nbims/
OPEN BIM Program (2012). Graphisoft. Available from:
http://www.graphisoft.com/openbim/index.html
Overview of the 2009 AIA Firm Survey (2009). AIA. Available from:
http://info.aia.org/aiarchitect/thisweek09/1009/1009b.cfm
NAICS 541330- ENGINEERING SERVICES
NAICS Description:
“This industry comprises establishments primarily engaged in applying physical laws and principles
of engineering in the design, development, and utilization of machines, materials, instruments,
structures, processes, and systems. The assignments undertaken by these establishments may
involve any of the following activities: provision of advice, preparation of feasibility studies,
preparation of preliminary and final plans and designs, provision of technical services during the
construction or installation phase, inspection and evaluation of engineering projects, and related
services.”
From the US Census
SMALL BUSINESS MARKETPLACE
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The majority of the industry is made up of small to medium sized businesses. In fact, 59.9% of firms
have 0 to 4 employees. Enterprises with 500+ individuals only make up 1.1% of the players in the
industry (IBIS, 2012). Further, the four largest firms account for just 14% of industry revenue (IBIS,
2012). This large concentration of smaller entities means that most firms focus on pursuing projects
in specific regional markets or specialize in certain types of services.
The engineering services industry is in the process of recovering from the decline in business
experienced during the recession. Long-term contracts executed by firms helped to maintain
industry growth until about 2008, but budget cuts which caused projects to be delayed or scrapped
altogether caused growth to slow significantly in 2009 and 2010 (IBIS, 2012). Other reasons for the
decrease in projects resulted from tighter credit policies, conservative business strategies and less
need for office expansion. From 2007 until the end of 2011, annual revenue of the industry has
actually fallen 1% each year. This led to a decrease in profits, causing firms to reduce its workforce.
The employment rate has decreased .8% over a five year period from 2007-2012. However, revenue
in 2012 is projected to increase by 1.7%, suggesting that the industry it taking a more positive turn
(IBIS, 2012). The largest percentage (17%) of engineering projects is currently in the industrial and
manufacturing plant and process sector. This is followed by commercial, public and institutional
projects, which accounts for 13.5% of business.
Demand for engineering services is expected to increase in both of these areas moving forward. The
outsourcing of engineering services and technological developments has also stimulated an increase
in demand for engineering consulting services (IBIS, 2012).
INDUSTRY ANALYSIS
Larger engineering firms, which have more robust offering of services, have fared significantly better
in the economic recession than sole proprietors. Players have engaged in several different growth
strategies, the first of which are mergers & acquisitions. This is an approach particularly favored by
the larger firms looking to gain a presence outside of the U.S. Other firms simply seek to secure
projects in a variety of geographic locations in effort to expand their business reach. Some companies
are opting to enter into strategic alliances or joint ventures with firms for specific projects. These
firms might in other contexts be considered competitors, but collaborating on a specific project may
allow the organizations involved to take advantage of the strengths and resources of each party
involved.
For years the U.S. was considered an epicenter for the design and engineering of products, while the
products themselves would be manufactured in countries such as China and India. However, this
trend is changing. Asian countries are producing larger numbers of engineers each year, creating a
changing workforce in a global marketplace that yields additional competition for U.S. engineers
(QFinance, 2012).
SIGNIFICANT TRENDS & CHALLENGES
There are several current developments in the industry that will continue to have a significant
impact on the state of the industry moving forward.
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• Increasingly globalized workforce. U.S. engineers and U.S. engineering firms will have to
continue to compete with an increasing number of engineers from Asian countries, who
either enroll in programs within native countries or come to the U.S. to pursue their
engineering education. In order to stay competitive, trade and professional associations as
well as firms themselves are participating in K-12 STEM outreach initiatives designed to call
attention to the importance of teaching high-quality science, technology, engineering and
mathematics curriculum in U.S. schools (STEM Education Coalition, 2012). In addition, firms
should develop a strong understanding of the types of specialized jobs and services that
businesses need and continue to innovate, since some engineering services will be
outsourced to non-U.S. firms who can afford to complete jobs more cost efficiently.
• Continued evolution of sustainable engineering guidelines. While sustainability is already
considered a priority for engineers embarking on new projects, LEED certification for
engineers and buildings will continue to play a significant role in driving measurable
building sustainability. Although LEED certification was developed by the U.S. Green
Building Council, it is now used in over 30 countries. The LEED rating system currently in
place will need to evolve as additional issues arise that are not currently addressed by the
current guidelines. These changes may have significant impacts on the design, engineering
and construction activities of markets around the world.
• Greater focus on engineering for development. While engineering has been recognized as a
field essential to the progress of humankind and modern society, large scale issues
involving, energy, transportation, climate change, management of natural resources and
provision of clean drinking water in developing countries has caused industry players to pay
greater attention to how engineering as a discipline can help address these challenges
moving forward. In 2010, UNESCO released its first ever report on engineering and
development globally (UNESCO, 2010). Increasingly, firms are engaging in projects that seek
to create better infrastructures for underserved communities, reduce poverty and improve
quality of life. Professional societies such as the American Society for Mechanical Engineers
are collaborating with organizations such as Engineering for Change and Engineers Without
Borders to bring together practitioners in the industry around such initiatives (ASME, 2012).
INFORMATION SYSTEMS ANALYSIS
This field has a high degree of technological change, making it important for engineers to keep up to
date with the tools, software and the additional technical skills that are required to meet the needs of
their clients. Technology is used as a source of differentiation and can be a competitive advantage for
firms that invest in information systems that have significantly superior capabilities than those of
other players. For those firms looking to expand beyond their existing markets, technological
investments may help these organizations secure international contracts by offering a greater variety
of services (IBIS, 2012). While the industry is labor and service driven and generally not capital
intensive, a substantial portion of capital expenditures can be attributed to IT investments in
hardware and software (IBIS 2012).
Like the architectural services industry, BIM is an increasingly important approach to overseeing
engineering projects. (Please see architectural services information systems analysis for more details
on BIM) Engineering firms may source their BIM tools and services from similar vendors as
architecture firms, however, the products themselves and the way that engineers approach BIM is
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different than architects. For engineers, the BIM solutions provide a way to connect the drafting,
design, analysis and documentation processes in order to have a greater impact on project
performance. For example, adopting the BIM approach could allow a civil engineer to more efficiently
design what-if scenarios and create projections around factors such as performance and cost for road
and highway design (Strafaci, 2008). BIM solution vendors such as AutoDesk and Graphisoft also
produce products designed specifically for engineers. AutoDesk’s Revit line has three separate
products for architectural design, MEP engineering (mechanical, electrical and plumbing) and
structural engineering.
Engineers and contractors have actually been earlier adopters of BIM-enabled technologies, taking
leveraging the benefits provided in the areas of scheduling, cost engineering and fabrication. The lag
in adoption by architects has caused some challenges in aligning BIM activities between these
groups. Vendors however, have responded to such issues by developing applications that are easily
compatible. For example, civil engineers can use Autodesk’s Civil 3D software to define the
topography for a site, which can then be imported into Autodesk’s Revit Architecture program, so
that architects can create their designs using as accurate a representation of the building site as
possible (MasterGraphics 2008).
CONCLUSION
Engineering services is an industry sensitive to the upswings and downturns of the economy. Since a
substantial number of practitioners are small businesses, these entities will need to find cost efficient
ways to differentiate themselves moving forward. Substantial investments in technology may not
always be as feasible for smaller and medium sized businesses, but they are crucial to staying
competitive in a quickly changing environment. Firms should try to uniquely position themselves by
offering a variety of services which cater to their clients- a balance of diversity and specificity is key.
REFERENCES:
ASME (2012). About ASME. American Society of Mechanical Engineers. Available from:
http://www.asme.org/about-asme
IBIS (2012). IBISWorld Industry Report 54133 Engineering Services in the U.S.
MasterGraphics (2008). Revit and Civil 3D Interoperability. Available from:
http://www.mastergraphics.com/wordpress/wp-content/uploads/2008/05/microsoft-word-revitarchitecture-and-civil-3d-interoperability-_2009_.pdf
QFINANCE (2012). Engineering Industry. Sector Profiles. Available from:
http://www.qfinance.com/sector-profiles/engineering
STEM Education Coalition (2012). Available from: http://www.stemedcoalition.org/
Strafaci, A. (2008). What does BIM mean for civil engineers Available from:
http://images.autodesk.com/adsk/files/what_does_bim_mean_for_civil_engineers_ce_news_1008.pdf
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UNESCO (2010). Engineering: Issues, Challenges and Opportunities for Development. Available from:
http://unesdoc.unesco.org/images/0018/001897/189753e.pdf
NAICS 541360 – GEOPHYSICAL SURVEYING AND MAPPING
NAICS Description:
“This industry comprises establishments primarily engaged in gathering, interpreting, and mapping
geophysical data. Establishments in this industry often specialize in locating and measuring the
extent of subsurface resources, such as oil, gas, and minerals, but they may also conduct surveys for
engineering purposes. Establishments in this industry use a variety of surveying techniques
depending on the purpose of the survey, including magnetic surveys, gravity surveys, seismic
surveys, or electrical and electromagnetic surveys.”
From the US Commercial Census
SMALL BUSINESS MARKETPLACE
Firms in the Geospatial Surveying and Mapping Industry face a variety of factors that make this
industry volatile. The industry is highly competitive, subject to the demand of down-stream
industries, is deeply affected by changes in technology, and is subject to strict regulatory
requirements. These factors contribute to high barriers for entry into the market and increasing
levels of consolidation in the coming years.
COMPETITION
This industry is characterized by many small establishments that are often in territorial competition
with each other. A 2011 report estimates that the four largest firms in this industry generate 51% of
the total industry revenue (IBISWORLD), but 67% of firms operating in this space have fewer than 5
employees. A different report from 2011 analyzed a population of approximately 5000 firms, 4,700
of which are classified as small businesses, or under 25 employees (BizMiner).
The larger firms and smaller firms have very different strategy models, where often the larger firms
establish contracts with the companies they survey for that allow for them to keep the data after
commissioned. The smaller firms must usually enter into agreements that give the client exclusive
rights to the data of the territory in question. Thus, while larger firms can leverage their special
contract and create data packaging services, smaller firms must differentiate themselves through
professional reputation and technical sophistication, and operate at a territorial service level
(IBISWORLD).
Firms in the Geophysical Surveying and Mapping industry must also face competition from outside of
the industry. Many energy and mining companies have their own internal teams who perform the
same function as independent contractors, and this is projected to increase by 2016.
DOWNSTREAM VOLATILITY
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The large reliance on the Oil and Gas industry (66% of revenues are generated via Oil and Gas
contracts (IBISWorld)) means unstable demand for the geophysical surveying and mapping industry.
Firms that serve this industry must establish good relationships with their customers in order to
weather the crude oil market volatility. Other sectors for revenue include the mining industry (which
remains fairly steady), government contracting (also steady), and construction engineering, which
due to the housing crisis, took a bit of a dive in recent years (IBISWorld).
The overabundance of small firms and their dependency on volatile downstream markets for
revenue keeps pricing competitive, and has led to consolidation in the last few years.
ENABLING TECHNOLOGIES
Firms in this industry are often selected (or turned away) based on their technical sophistication
(IBISWorld). Those that cannot offer the latest computerized surveying methodology lose contracts
to those that can. This can be a big challenge for smaller firms, as these technical solutions require a
great deal of capital investment. The transformation that Information Systems have spurred in this
industry is will be discussed later in this paper.
REGULATORY CONSTRAINTS
In order for geophysical surveying firms to be successful and avoid penalties, they must keep close
track of a complex regulatory environment. Most regulations are centered on rules of the locality,
safety regulations, and ethical standards.
Due to the location-specific nature of this industry, firms must keep track of a variety of regulations
specific to the jurisdiction in which they operate. Regulations are in place at the municipal, state,
regional, national, and international levels. Many firms who operate in multiple jurisdictions must
know the intricacies of all localities at all levels, and are subject to license revocations and fines if
they fail to comply (ACSM, 2012).
Many of the environments where work is conducted are dangerous sites that require extensive
training and insurance. Safety regulations vary from location, type of work being conducted, and the
type of equipment being operated. Firms must comply to the safety regulations of their insurance
providers, industry associations, and governmental regulations.
There are also ethical regulations and standards in place at the government and association level
with regards to processes and procedures for data collection and intellectual property issues.
It is likely that this industry will see more regulation requirements in the coming years as a result of
increases in offshore drilling, and the safety and environmental concerns that operations of that
nature imply (IBISWorld). Firms will continue to need to navigate a complex and changing regulatory
environment.
INFORMATION SYSTEMS
Despite these challenges, IBISWorld predicted that the industry will grow in the next five years as a
result of an increase in exploratory oil drilling. It seems, however, that the advancement of more data
integration technologies in combination with the downstream market volatility will continue to raise
barriers for small contractors.
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As stated above, many companies who previously employed these small firms have developed their
own, in-house competencies for the same service. This is detrimental for two reasons. First, it puts
independent firms in direct competition with their would-be customers. Second, the companies that
are developing these in-house capabilities have a great deal more capital to invest in new
technologies, making smaller firms increasingly less relevant as technology continues to improve
(IBISWorld, 2012)
Technology disruptors have had an enormous impact on geophysical services in the last 20 years,
especially after the proliferation of 3-D seismic surveying technology (ACSM, 2012). Data capturing
technologies continue to get more accurate, efficient, and abundant, and many firms find difficulty in
staying abreast of hardware and software changes. This is an area of financial stress, as stated above,
and it is likely that with the expansion of cloud computing and transmitting sensor technology, these
changes will only accelerate. Cloud computing will be central to this industry because many of the
data collection methodologies require that data from multiple, distributed sources be aggregated into
a central repository that can be manipulated by the client in real time. Many companies are already
positioning themselves in the cloud-based GIS data market, a trend that will continue to grow. One
high-profile example of this is the solution created by ESRI, a company that specializes in GIS
services, which created a GIS solution for understanding clean-up efforts after the BP oil spill
(http://www.gulfofmexicoresponsemap.com/dwhi/). This is one of many examples that leverage the
flexible, scalable, accessible properties of cloud computing for geophysical data.
Data management is a core competency of every successful geophysical services firm, as they are in
the business of collecting and processing data. The emerging data management and integration
solutions are already drawing the line between firms that are relevant and firms that are not, and it is
likely that we will continue to see a shift in revenue in favor of firms that can develop innovative
enterprise data solutions designed specifically for geographic information. While the physical
collection of geospatial data is still very important and requires in-depth experience and training, the
importance of solutions to manage the data will become inextricable from firm successes (Sumner,
2012).
In the future, it is likely that firms that are able to leverage information technology solutions to make
geospatial data more useful to customers are the firms that will sustain success. In a technologyenabled,
volatile industry, information system innovation becomes an essential part of sustaining
competitive advantage, and it is our prediction that this will be the case in the next 10 years for the
geophysical surveying and mapping community.
REFERENCES
ACSM (American Congress on Surveying and Mapping). 2012. Website. Retrieved April 2012 from:
http://www.acsm.net/.
BizMiner. 2012. US Industry Market Report: NAICS 541360. Web report. Retrieved April 2012 from:
http://reports.bizminer.com/temp/pdf/1647256385_0503132043.pdf.
BizMiner. 2012. Industry Financial Profile: NAICS 541360. Web report. Retrieved April 2012 from:
http://reports.bizminer.com/temp/pdf/853919651_0503132459.pdf.
Gale Group. 2012. Database, Industry Search: NAICS 541370. Retrieved April 2012 from:
http://galenet.galegroup.com
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IBISWorld. 2012. Industry and Market Research Database. Web page. Retrieved April 2012 from:
http://clients.ibisworld.com/industry/homeOD.aspxparatype=2
Sumner, Curtis. Interview. 24 April 2012. Executive Director of the American Congress on Surveying
and Mapping (ACSM), the National Society for Professional Surveyors (NSPS) with Gwyneth Frey.
NAICS 541370 – SURVEYING AND MAPPING (EXCEPT GEOPHYSICAL)
NAICS Description:
This industry comprises establishments primarily engaged in performing surveying and mapping
services of the surface of the earth, including the sea floor. These services may include surveying and
mapping of areas above or below the surface of the earth, such as the creation of view easements or
segregating rights in parcels of land by creating underground utility easements.
From the US Commercial Census:
SMALL BUSINESS MARKETPLACE
This industry includes all surveying and mapping activities that are not geophysical in nature. Like
the geophysical industry, firms in this industry collect geospatial data. However, the application of
general geospatial data is much broader, as is the makeup of their customers, and therefore the
market is much different.
Industry experts cite two major influencing factors in the development and growth of the commercial
surveying and mapping industry: workforce issues and technology changes. These will form the
shape and dynamics of the industry going forward, but experts predict an increase in the growth of
this industry despite challenges with these factors.
WORKFORCE ISSUES
Some of the key challenges that all firms in this industry encounter have to do with challenges with
the workforce. The end use for surveying and mapping services contributes to all varieties of human
activity, including building, agriculture, transportation, mining, and more. The success of a firm often
depends on its’ ability to take on business that will supply several types of downstream customers,
which requires excellent asset management and a talent pool of skilled professionals with the
appropriate licenses for given projects.
The issues regarding the workforce are 3-fold:
1. Licensing requirements vary from state to state in the US, fracturing the workforce
2. There are too few professionals obtaining 4-year degrees in this increasing specialized field
3. Frequent technical innovations demand that even seasoned professionals must continue
with their education in order for their skills to be relevant.
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Licensing requirements is an issue that will continue to influence the market in different states
around the country. While many educational institutions are working across states to develop
educational programs that will better standardize the skills needed for surveying on a national scale,
the fact remains that there are different levels of expertise needed to practice surveying in different
areas of the country. This factor will continue to limit the scope of small businesses in the surveying
industry, requiring that they specialize their workforce by location (ACSM, 2012).
Industry experts around the country are recognizing that there are not enough people entering the
workforce with 4-years degrees to serve the demand. As mentioned above, there are many initiatives
and partnerships between educational institutions to attempt to stimulate the supply of geospatial
professionals, but it continues to be a shaping factor for firms in the industry (Sumner, 2012).
Finally, the technical landscape for this industry has undergone a major change in the last decade,
and for that reason, it is essential for surveying and mapping professionals to engage in continuing
education activities in order for their skills to be relevant to current industry operational standards
and client expectations. In response to this issue, many professional associations are focused on
propagating tools, resources, and dialog to support industry professionals (NSPS, 2012).
The issues with the workforce feed directly in the necessity for firms in this industry to respond with
agility to market demands. The most successful firms are those with the resources and structures in
place that are flexible between types of contracts, location specialization, and technical adaptability.
INFORMATION SYSTEMS
With the proliferation of GPS technologies and the widespread use of services like Google Earth, the
consumption of geospatial data has become commonplace. While surveying and mapping
professionals do not view these technologies as a direct threat to their business, there are some
unique challenges that these changes bring up. Those challenges are: the common misuse of
geospatial data, the incompatibility of GPS technologies with established information systems, and
the inaccessibility of the most cutting-edge technologies to the private sector.
Now that GPS devices are readily available to the consumer, many projects that would hitherto have
required the services of surveyors or mappers are now being done by amateur map-makers,
employing web services and consumer devices for their geospatial needs (Sumner, 2012). While
plenty of business still exists that, by regulatory standards, demands the expertise of licensed
geospatial professionals, there is a concern that amateur map-makers are supplying their data
collection to the general public without the level of expertise and training required for accurate and
reliable data collection. As many in the business data collection know, the biggest source of error in
data integrity is user error, and the less educated the data collector, the more likely for errors to
occur. These error-ridden data sets are often made public on the web, and in so doing, are presented
as fact to public actors who may or may not have literacy to understand the source of the data.
Professional surveyors are concerned about this growing trend and hope to combat the growing pool
of inaccurate geospatial data with public education and advocacy efforts (Sumner, 2012).
Related to this issue of GPS data is the incompatibility between GPS data and the current public
system for maintaining property boundaries and other geospatial information. The current system is
based on landmarks, so if I were to take out the deed for my property from the county, I would see
that the property lines are drawn based on physical monuments (like rocks, trees, etc.) rather than
GPS coordinates. Surveyors collect both types of information, but it remains to be seen whether the
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public records will switch to GPS data, a change that would have major implications for the
geospatial workforce and equipment requirements.
Finally, while many GPS technologies are ubiquitous, the federal government does many of its own
surveying and mapping projects using Unmanned Aerial Vehicles (UAVs). However, the government
has prohibited the use of these by the private sector, putting commercial firms at a disadvantage in
government procurement bids and also in the sophistication of data collection technologies. MAPPS,
or the Management Association for Private Photogrammetric Surveyors is advocating that private
firms be allowed to use this transformational technology (Palatiello, 2012).
Another area of important development is the telecommunication technologies that allow surveyors
to transmit GIS data from the field to remote servers that aggregate and manage project data. These
technologies allow for faster communication that can be integrated with other web technologies to
provide digital products to clients.
Organizational management technologies will also play a key role in enabling firms to keep track of
documents and data for various projects. A single project may have a whole portfolio of documents
that accompany the information collected in the field. Bing able to manage these documents in an
effective way can make the difference in customer experience, and firms that are better able to do
this maintain the trust of their clients (IBISworld, 2012).
It is clear that information systems play a key role in various aspects of this industry, from data
collection, to data management, to people management and communication.
CONCLUSIONS
In the next ten years, it is likely that technology and workforce challenges will continue to shape the
nature of the Surveying and Mapping industry, but the industry will continue to be indispensable to a
variety of human activity. However, there are a number of obstacles that impede a better
understanding of the scope of these industries: the fracture of the markets, the lack of good data, and
the type of individuals who practice in this industry.
In searching for data regarding the financial details of the surveying and mapping industries (both
geospatial and non-geospatial) it was very difficult to unearth numbers that were up to date and
captured the breadth that these industries represent. While some reports claimed to have reliable
survey and financial disclosure data that gave a reasonable representation of firms operating in this
space (BizMiner, IBISWorld), industry experts assert that such data is rare and incomplete, and in
fact, this is a serious problem that these data-intensive industries face (Palatiello, 2012). The reason
for this is two-fold: first, the diversity of firms that practice geospatial data collection and mapping
services, the insufficient definition of projects and firms that fall into this category, and the nature of
the geospatial professionals.
As mentioned before, there is a wide range of firms that offer surveying and mapping services, and
they often offer those services in conjunction with design, architecture, or engineering services. A
surveying project might be classified as an engineering project; meanwhile an independent surveying
firm will classify all of its projects as surveying projects. Thus, when collecting data regarding the
market of firms providing surveying services, the classification systems often skew the data to
inaccurately reflect generated revenue.
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The more human side of the reasons for a lack of reliable industry data is the nature of the
individuals who practice in the industry. Surveyors take oaths when they take their licensing exams
to serve the public ethically, and most surveying associations place ethical practices above all else. As
industry experts describe it, those who go into the surveying profession usually do it to serve the
public good, rather than for monetary reasons. Thus, when it comes to managing their business, they
are much less interested in the details of accounts, profits, and competitive advantage (Sumner,
2012). A common joke in the surveying world reads as follows:
What did the surveyor who just won the lottery say when asked what he would do now “I dunno,
probably keep surveying.”
This is a very telling point about this industry: professional surveyors go into this industry for the
love of surveying, which often includes being outside and traveling to new places, and to serve the
public to the best of their abilities. Thus, the degree to which they are interested in business
management aspects of the trade is limited to keeping work coming in.
Another aspect of the individuals in this trade is the data-exclusivity mindset. Surveying and mapping
is a data-intensive trade, and the sole deliverables to clients are the collected data sets. This puts in
place a culture of secrecy when it comes to sharing any type of data, be it geospatial data from a
project, financial data from projects, or operational data (Sumner, 2012).
All of these obstacles provide ample reasoning why financial and market data on small businesses in
surveying and mapping is difficult to find and often incomplete. It also provides insight into the
mindset of small business owners in this space.
REFERENCES
ACSM (American Congress on Surveying and Mapping). 2012. Website. Retrieved April 2012 from:
http://www.acsm.net/.
BizMiner. 2012. US Industry Market Report: NAICS 541370. Web report. Retrieved April 2012 from:
http://reports.bizminer.com/temp/pdf/1647256385_0503132043.pdf.
BizMiner. 2012. Industry Financial Profile: NAICS 541370. Web report. Retrieved April 2012 from:
http://reports.bizminer.com/temp/pdf/853919651_0503132459.pdf.
Gale Group. 2012. Database, Industry Search: NAICS 541370. Retrieved April 2012 from:
http://galenet.galegroup.com
IBISWorld. 2012. Industry and Market Research Database. Web page. Retrieved April 2012 from:
http://clients.ibisworld.com/industry/homeOD.aspxparatype=2
MAPPS (Management Association for Private Photogrammetric Surveyors), 2012. Website. Retrieved
April 2012 from: www.mapps.org
Palatiello, John. Interview. 24 April 2012. Executive Director if the Management Association for
Private Photogrammetric Surveyors with Gwyneth Frey.
Sumner, Curtis. Interview. 24 April 2012. Executive Director of the American Congress on Surveying
and Mapping (ACSM), the National Society for Professional Surveyors (NSPS) with Gwyneth Frey.
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NAICS 541320-LANDSCAPE ARCHITECTURAL SERVICES
NAICS Description:
This industry comprises establishments primarily engaged in planning and designing the
development of land areas for projects, such as parks and other recreational areas; airports;
highways; hospitals; schools; land subdivisions; and commercial, industrial, and residential areas, by
applying knowledge of land characteristics, location of buildings and structures, use of land areas,
and design of landscape projects.
From the US Census
SMALL BUSINESS MARKETPLACE
The small business marketplace for the Landscape Architectural services industry is comprised of
more than 35,000 businesses and dominated by firms with 0-4 people as this represents 67% of the
marketplace (Culbert, 2011). Furthermore, 42.7% of the industry is made up of sole proprietorships
(ASLA, 2012). Both Culbert and the ASLA survey report that 16-20% of the industry is comprised of
firms with 5-9 people. The largest percent of contracts come from the West Coast region due to its
malleable landscapes and the population’s desire for outdoor recreational facilities. Landscape
design comprises half of the market while urban planning, park and recreation planning, site
planning and other services make up the other half of the market.
INDUSTRY OUTLOOK
The industry is highly dependent on downstream forces like construction as well as the general
economic well-being in the region of operation. The residential market took a large hit during the
recent recession but is due to grow at roughly 4.6% through 2016. The growth in Landscape
Architecture jobs during the 2010-2020 time frame is estimated to be average (Bureau of Labor
Statistics, 2012). As key drivers (residential construction, non-residential construction) grow in the
years following the recession and government funds more infrastructure projects the outlook of the
industry is expected to improve.
CHALLENGES
The market of Landscape Architecture can be divided into four client types: residential, commercial,
public and multidisciplinary. Residential and Multidisciplinary represent greater than half of the
market and provides insight as to why the Landscape Architecture industry is so dependent on
downstream housing market forces. During the housing bubble leading up to the recession the
industry was prospering, but following the housing market crash during the 2008 financial crisis the
industry has suffered greatly and growth has been negative (Culbert, 2011). It is clear that
government stimulus will drive growth in the public sphere, but residential and commercial growth
will be dependent on property value. As property value increases residents will be more likely to
invest in remodeling; therefore industry revenue will not likely return to its pre-recession levels until
2014.
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TRENDS
As stated above, government investment in infrastructure projects and public spaces is a driving
factor in industry growth and is a trend that will likely continue as the nation’s aging infrastructure is
updated (Culbert, 2011). In contrast to the accreditation and licensure of Landscape Architecture,
residential landscape design (a more informal sub-industry) is likely to grow as people begin to
appreciate the design of natural spaces that has been publicized by design programs on TV like those
of the Home and Garden TV network (Culbert, 2011; APLD, 2011).
Sustainability and green practices are the largest industry trends. As the world embraces
sustainability practices, Landscape Architecture logically follows suite because the industry’s core
competency is manipulating and enhancing public and private natural and artificial environments.
Sub-trends include:
Green Infrastructure: incorporating the natural environment into urban planning
Managing water resources: improving run-off and drainage, improving water use efficiency
Maximizing benefits of plants: using plants to enhance our environments
Low-impact materials: using new and improved materials and chemicals in construction.
Participatory design is another trend that is emerging in the Landscape Architecture industry.
Participatory design is a process by which multiple stakeholders, including citizens, designers,
constructors and others are critically involved in the design process (Juarez & Brown, 2008).
Lastly, offshore outsourcing is increasingly being used during the 3-D modeling stages of design.
Domestic architects will communicate their concepts to offshore resources who then engage in the
time-consuming process of creating 3-D CAD models (Personal communication with Margaret Bryant
(Professor at SUNY ESF), May 5 2012).
INFORMATION SYSTEMS
IS STRATEGY
Information systems use in Landscape Architecture industry remains in the Factory quadrant of
McFarlan’s strategic grid. This tells us that IS plays an important operational role but is not used as a
strategic differentiator.
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(McFarlan et al., 1983)
Since the 80’s, Geographic Information Systems or GIS have been used to help aggregate and
visualize environmental data by overlaying it against a map. Once a strategic resource available only
to large firms, this technology is now commonplace in the industry and is used by most Landscape
Architects who work on any projects larger than single-site design and even still, single-site
designers may find GIS useful (Personal communication with Margaret Bryant, May 5 2012). Typical
GIS applications have involved mapping environmental and physical conditions atop a map of an area
as a means of understanding the environment before trying to manipulate it. Increasingly, there is
potential in the industry to use GIS along with demographic and social data to grow the role of
Landscape Architecture to include community growth, public outreach and participatory design
(ASLA, Digital Technology, 2011).
A firm’s ability to visualize data and demonstrate plans to a community is an important strategy for
improving business as well as reputation and for this reason, although GIS is not a strategic
differentiator in and of itself, it certainly facilitates improving public relations by helping to visualize
data.
IS RECOMMENDATIONS
The author of this section recommends that the Landscape Architecture industry pay close attention
to the 3-D printing and holographic technology. Although these technologies are still years away
from perfection and mainstream adoption, this represents the ideal time to begin planning for such a
time when they are commercially available. Both 3-D printing and holographic technology have the
potential to help visualize data and design even more so than 3-D modeling does today. 3-D
modeling is no longer a strategic differentiator but there may come a time in the not so distant future
that 3-D printing and holograms may help differentiate cutting edge landscape architecture firms
from their competitors.
REFERENCES
American Society of Landscape Architects(ASLA). (2011). Digital Technology. Retrieved April 30,
2012, from http://www.asla.org/PPNIndividualHome.aspxid=1320
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American Society of Landscape Architects(ASLA). (2011). Using Technology to Create Better
Communities New Study Examines Geographic Information Systems. Retrieved April 30,
2012, from http://www.asla.org/NewsReleaseDetails.aspxid=8428
American Society of Landscape Architects(ASLA). (2012). ASLA Business Quarterly Survey, First
Quarter 2012. Unpublished raw data. Retrieved from
C:\Users\ssdissto\AppData\Local\Microsoft\Windows\Temporary Internet
Files\Content.Outlook\K1P5YIC1\Q1 2012 By firm size1.mht
Association of Professional Landscape Designers (APLD). (2011). Association of Professional
Landscape Designers. Retrieved May 1, 2012, from www.apld.com
Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2012-13
Edition, Landscape Architects,
on the Internet at http://www.bls.gov/ooh/architecture-and-engineering/landscapearchitects.htm
(visited MAY 01, 2012).
Culbert, K. (2011, November). IBISWorld Industry Report 54132 Landscape Design in the US.
Retrieved from IBISWorld website:
ttp://clients.ibisworld.com/industryus/default.aspxindid=1402
Gardenvisit.com. (2008). Geographical Information Systems (GIS) for landscape architecture.
Retrieved April 30, 2012, from http://www.gardenvisit.com/landscape_architecture/
computers_design/gis_geographical_information_systems
Juarez, J. A., & Brown, K. D. (2008). Extracting or Empowering Landscape Journal, 27(2), 190-204.
McFarlan, F., McKenney, J., & Pyburn, P. (1983, January/February). The information
archipelago--plotting a course. Harvard Business Review, 61(1), 145-156. Retrieved from
http://www.ncbi.nlm.nih.gov/pubmed/10299000
Schroth, O., Hayek, U. W., Lange, E., Sheppard, S. R., & Schmid, W. A. (2011). Multiple-Case Study of
Landscape Visualizations as a Tool in Transdisciplinary Planning Workshops. Landscape
Journal, 30(1), 53-71. Retrieved from http://lj.uwpress.org/content/30/1.toc
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NAICS 541350-BUILDING INSPECTION SERVICES
NAICS Description:
This industry comprises establishments primarily engaged in providing building inspection services.
These establishments typically evaluate all aspects of the building structure and component systems
and prepare a report on the physical condition of the property, generally for buyers or others
involved in real estate transactions. Building inspection bureaus and establishments providing home
inspection services are included in this industry.
From the US Census
SMALL BUSINESS MARKETPLACE
The marketplace for Building Inspection Services can be bifurcated into commercial building
inspection (18%) and residential home inspection (48%) (Culbert, September 2011). Although these
two industries fall under Building Inspection Services they are very different and one should be
careful when speaking generally about Building Inspection Services (Personal communication with
Claude McGavic (Executive Director of National Association of Home Inspectors), April 23, 2012).
Housing inspection covers residential buildings up to 4 units and is often performed by individuals
who own their own business (sole proprietorships represent 70% of the industry (Culbert,
September 2011) or are part of a small firm. Many home inspectors are males between 45 and 65
and for many this is a second career. In many states there is little if any regulation of home
inspection and a home inspection report is not a pass/fail but instead a description of the dwelling
and its status (Personal communication with Claude McGavic, April 23, 2012).
Conversely, commercial building inspection covers larger buildings that are commercial in nature or
that house many persons. Commercial building inspection is often performed as a service by larger
architectural or engineering firms as well as municipalities or municipal contractors. State and local
regulations are stronger in the commercial space.
INDUSTRY OUTLOOK
As the national housing market begins to improve and liquidity returns to the market, new
construction and existing homes sales will help drive demand for building inspection services.
Overall, the Building Inspection Services marketplace is expected to grow at a rate of 5.5% through
2016. Job growth is expected to be 18%, which is average and total revenue in 2011 was $2.3 billion
(Bureau of Labor Statistics, 2012; Culbert, September 2011).
CHALLENGES
For the Home Inspection sub-industry the main challenges being faced are because of the industry’s
heavy dependence on the health of the housing market and the value of homes. Because housing
inspectors primarily inspect houses prior to sale, during the housing market crash and subsequent
recession, the industry has been very turbulent and this has increased competition thereby lowering
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profit margins (Culbert, September 2011). Another large segment of the housing inspection market
is for those who are investing in real estate who almost always require home inspection. Real estate
investments are expected to improve along with the economy.
Furthermore, when the housing market crashed there were many general contractors and
construction workers who were displaced and found themselves working as home inspectors, this
has increased the supply of home inspectors more than there is demand for home inspection; again,
increasing competition and lowering profit (Personal communication with Claude McGavic, April 23,
2012).
General challenges for the commercial inspection industry are tied to economic prosperity and
companies’ use of discretionary cash. As the economy improves this will allow companies to make
renovations or expand into new locations and the commercial inspection industry will see more
growth.
TRENDS
Although the industry remains fairly pure in terms of focusing on providing inspection services, as
profits are squeezed some firms are expanding their service offerings into related fields like pest
control, security and maintenance in an effort to recoup the last drops of consumer surplus.
Architecture firms who used to outsource building inspection services are increasingly insourcing
this service as a means to increase profit margins (Culbert, September 2011).
INFORMATION SYSTEMS
IS STRATEGY
Information systems do not play a significant role in the Building Inspection industry and this places
building inspection IS firmly in the support quadrant.
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(McFarlan et al., 1983)
Information systems in the Building Inspection Services industry are limited to basic office
productivity as well as paper-based filing systems. Laptops and tablets are being adopted for field
work and allow inspectors to use more advanced sensing equipment but this doesn’t provide any
strategic value.
IS RECOMMENDATIONS
The author of this section recommends that the Home Inspection industry begin to consider how
smart-homes will play a role in typical inspections. As newer and more advanced homes are
constructed they are likely to have certain built in sensory mechanisms that may even operate in
real-time (i.e. measuring the soundness of a foundation during and after an earthquake) or by logging
data for later analysis.
With regards to commercial building inspection, inspectors should begin to educate themselves on
Building Information Modeling. Building Information Modeling is described earlier in this report
therefore the reader is directed there.
REFERENCES
Bartash, J. (2012, April 17). Home building slows, but March permits up. The Wall Street Journal.
Retrieved from http://articles.marketwatch.com/2012-04-17/economy/
31353271_1_healthy-housing-industry-market-for-new-housing-yelena-shulyatyeva
Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2012-13
Edition, Construction and Building Inspectors,
on the Internet at http://www.bls.gov/ooh/Construction-and-Extraction/Construction-andbuilding-inspectors.htm
(visited MAY 01, 2012).
Culbert, K. (2011, November). IBISWorld Industry Report 54135 Building Inspection Services in the
US. Retrieved from IBISWorld website:
http://clients.ibisworld.com/industryus/default.aspxindid=1405
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