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[Music] hello everyone welcome to today's webinar cfma's winter 2020 confindex report today's presenters are stewart binstock ceo of cfma and jason myers bkd partner and incoming national industry partner stewart binstock has been president and ceo of cfma since 2011. since 2011 cfma has went from 6400 to 9000 members in 84 to 98 chapters he has extensive experience in management issues including strategic planning government affairs educational programming and delivery financial management membership development non-dues revenue growth program development and process improvements he's an experienced moderator of panels at national and regional conferences stewart is also a frequent speaker and has been interviewed on television and in pr jason myers is incoming national industry partner for bkd's construction and real estate group he has extensive experience providing assurance accounting and consulting services to both public and private companies he's a member of the american institute of cpas indiana cpa society and construction financial management association his writing has been published in cfma building profits magazine and he is a past chair of the cfma publications advisory group jason currently serves on the cfma executive committee he's a member of asphalt pavement association of indiana and the associated general contractors of america and serves on the agc program and membership committee thanks again for joining us at this time i'll hand it over to stuart thank you jerry nice to be with you all i i forgot that actually next week is my 10th anniversary at uh cfma so you know i don't know jason if you have a cake planned or anything like that but you know just in case you know if you do i'll i will be prepared to blow it out of the candles um it's in the mail oh yeah it'll be a little messy but i understand great to be with all of you uh we have done a few of these over the years um when we put out our confidence report every quarter um the title of this um uh presentation is the near to term outlook is uh not upbeat but hope springs eternal that is the uh title that our economic adviser anabambasu gave to this quarter's reports so i think that'll become uh quite evident uh why anabang titled uh this quarter that way after you see some of the numbers and some of the statistics we'll present over the next uh uh 50 minutes i uh by the way jason i should mention i did risk life and limb to uh participate in this webinar since it snowed about a foot uh in princeton last night so um you know i'll do anything for bkd and this proves it so i just want you to to know that we all appreciate it there you go all right now that i got everybody's sympathy uh uh what is confidence confident x is cfma's propriety index survey of leaders in construction financial management in the commercial construction sector it's the only survey asking the level of confidence from important decision makers in critical industry of the u.s economy so that is something we've done now for gosh i think 10 to 10 to 11 years we've been doing the conf index so it's compiled from four sub-indices that measure critical components of the financial health of the commercial construction company its business conditions its financial conditions its current conditions and then a year ahead outlook and i always find the year ahead outlook to be one of the more interesting parts of this because cfos tend to be a as you all probably on this call tend to be a rather conservative lot but i think hope springs eternal and that's why anubhan titled this because sometimes they do look forward more optimistically than they see in the current mirror so we ask eight questions to come up with the confident next numbers we ask about your current business conditions uh your future one year ahead business conditions your current bank credit availability looking ahead one year on your bank credibility your bonding credit uh your line of credit status your current backlog and your future backlog and based on that we come up with some scoring the survey is sent to cfma's general members with titles such as cfo controller and vp we generally get somewhere between 200 and 300 um respondents i i should mention i was going to mention it later on in the survey but i might as well mention it here that uh we timed this perfectly because we got about ha and i'm saying that sarcastically because we got about half of the surveys before the election and half afterwards so in some respects uh the election uh we didn't uh calculate that into um when we sent out the survey and so that may skew some of our results uh because some people wrote before and then some people wrote afterwards so the conf index number indicates what we call a net confidence scoring uh measures the degree to which there's more positive or negative outlook based on the previous quarter we go back a year as well so the neutral point is set at 100 less than 100 indicates pessimism while reading more than 100 indicates a fair degree of optimism so we'll you can only guess where we all stand uh uh on this quarter uh december these numbers are from our december uh 2020 survey results so here is a historical look back the last i believe this is the last nine quarters i'm not sure you will be surprised at all that in march uh and i believe we did it just before the pandemic came so things were pretty rosy at around 1 20. uh it fell off the cliff in june not surprising continued in september and then you'll see um this quarter things have bumped up a little bit uh not anywhere near where they were but i guess that once again reaffirms why we've titled this hope springs eternal because there's a slight degree of optimism i think to some extent we all think there's some light at the end of the tunnel we're not through the tunnel but there's some light at the end of the tunnel so here's a here's the first question we're going to ask you folks uh and and so we're going to compare your results to the results we got from our survey how many years will it take for your company to return to its pre-crisis level of profitability jason take it away you bet so several options here are you already there within a year between one and three years between three and five years in more than five years we'll give everyone a chance to kind of click on what your thought is here and then we will see the results and just a note throughout while we're tabulating the numbers here we'll have multiple polling questions to some of them are for cpe components and others of them are for us to gauge uh how the audience here compares with the confindex results as well so we will have a fair amount of polling just for warning everyone and there we go so uh there you go stuart between one and three years looks like almost uh half all right 28 are already there uh more than five years four percent let's see what our uh survey said the survey said all right so actually i think you all said 28 you're right right there with the rest of our group so this compares september uh of 20 to december of 20. um you'll see in september people said about 25 26 percent said they were already there that bumped up to 31 um and that's really the biggest uh difference if you look at the comparison between september 20 and december 20 is about a six percent bump that they're already there so i guess that is one way of reinforcing the optimism we see you'll see between one and three years which is i believe also the largest segment in in your group um is stayed almost exactly the same between september and december and the within one year went down uh from september because those some of the same people said were already there they bumped up to already there so um and between three to five years the real pessimist in the crowd uh 7.2 in september that went down to 4.5 and i believe the number we just saw from you folks was about three to four years so let me um let me bring in an issue here that i think we'll also try and compare some of our information with this as well so we have a something called peer groups within cfma if you are a cfma member you may be familiar with this if you're not a cfma member you should become a cfma member but that's a whole other presentation um but if you are a cfma member we we have about close to 260 people who have signed up to be part of a peer group and we've worked very closely with bkd and bkd facilitates most of these peer groups so i will be calling on jason periodically throughout this session to talk about what are the peer group experiences because jason and his peers at bkd really are on the ground level with our members uh getting some you know very clear vision from them as to what's bothering them what's working well what's not uh if you are interested in signing up you first of all you need to be a general member so we only accept folks who work for construction companies and we have actually it was closed the member the application but we extended it to this friday because we knew we'd be doing this call so if you are a cfma member i believe samantha lake our head of marketing is going to post in the chat the application uh that you can uh complete if you're so interested having said all of that so jason what do you get from the peer group members as to what they think about this question you know this question right here pretty much aligns with a lot of the discussions being had you know talking about backlog and i think we'll see it in some of the numbers coming up so i don't want to give too much information away but that backlog was so strong here over the last year that a lot of contractors have really been working through that backlog and feel pretty comfortable at the moment it's more that forward-looking activity uh hoping that they can replenish that backlog and and have great work lined up for 2022 and 2023. yeah and we will get to that issue of backlog and that is and you know you all know better than i do how important that uh that is to your business uh if you're a cpa firm you know how uh in cpa you know how important it is to your companies that you work for their business as well all right let's move it along here so next question is did you apply for a ppp loan jason here we go so uh our favorite three letters of of 2020 is ppp uh so did you apply for a pp loan uh yes or no uh we'll let this tabulate uh here just a minute and we'll see how this compares to uh our our other results and then we'll talk about a few things here yeah i can mention while we're while we're waiting so um we created a ppp task force and we said what do you think we need to do for our members um well we we have a covid resource center that we created that has been very popular uh and i know during the pandemic and the right at the beginning was really relied on by a lot of our members and actually a lot of members because i think we opened it up and made it accessible to non-members uh yes 53 no 47 that's interesting um because you'll see in a second the cfma conf index numbers which are 84 of the people who filled out the uh survey this year so a much larger group uh in our group filled out than than you folks um i'm very proud of what uh cfma has done in this area we uh this ppp task force put together a series of webinars we have our month free monthly webinars and we've turned over much of the webinar series this last year to uh explaining the nuances of the ppp program we've had eight webinars uh over the last year related to this subject and we've had 9 300 attendees so we've had averaged over a thousand and i will tell you a typical cfma um webinar probably gets between 500 and 600 maybe peaks up to 750 but this is averaging over a thousand so obviously this is the subject of great concern uh great interest uh to our members and of course uh to you all as well uh i think 53 percent of you said you applied for a ppp loan um jason what were your observations um in the peer groups on on this subject yeah this conversation probably like for many dominated the conversations for many many months and to be honest it still is dominating the discussion now because you have the original ppp loan and and necessity needs uh and kind of letting that play out over the course of the year as the rules and regulations continue to change i'll tell you the dialogue and the peer groups were really good about how are you documenting what are you documenting how are you getting to the necessity component and now as we sit here today i think the flow of loan forgiveness has definitely intensified and i'll call it under two million dollars because that was one of the key category or criteria uh we have seen a an extreme number of loans that have been forgiven under that two million dollar range i can tell you loans over two million dollars have not been at that pace of forgiveness uh i am aware at this moment in time of two cases contractors that have gotten a two million over a two million dollar loan that has been approved and fully forgiven um other than that it has uh been pretty slow uh i know a lot of the 3509 forms have been pushed out that is the necessity form that if you're over 2 million and asking for forgiveness you know how you're going to document your necessity um and there's a lot of discussion around kind of ea announced 90 days that they would get back there's many cases where it's gone past the 90-day window from the time that it was submitted and still have not gotten an sba response on forgiveness or not so that's another really hot topic and now you know in 2021 now we got ppp2 and so we get to talk about it all over again i will tell you the early indications are though given some of the parameters that were put in for applicability a lot of contractors are not going to be eligible and or are not going to be applying for ppp too so just some fun facts there i guess that i'll share that's great and i should just mention because i really kind of glossed over the peer group program so we have uh this program about 260 members we split them into about 10 i think is our goal eight to ten in each group and uh geographically diverse not competitors uh which is very very important uh if you're going to have a peer group and have an open and honest conversation so um uh there's there's a we find them the folks who have participated have said this is one of the most valuable things cfma's ever done it's about four or five years old i think uh when we started this so just wanted to give you a little bit more information about that so moving along so this is how as i talked about this is how we uh measure uh the conf index the overall confidence index in september was 87 it's jumped up to 93 that's a 7 increase um but the overall that's also um and i think we might show that in the next slide um it's a 24 decrease uh which i just gave away the answer to the question that was really bad because we have a polling question and you didn't hear anything i just said so uh let's take it away jason and see what people think about this you've been on mute stuart don't worry here we go quick bolt um this is uh one for cpe here so make sure you uh vote how do you think the december 2020 overall confined confidence index compared to the december 2019 overall confidence index higher in december 2020 lower in december 2020 no change from december of 2019 or not sure and we'll give everyone here a moment to respond to this question and probably one thing i also failed to mention when we were talking about ppp one of the other factors playing into the forgiveness under the new um stimulus act is the employee retention credits i know that we just posted a a link on the chat that you might want to go out and take a look at because if you qualify for it and the and the parameters for qualifying have have uh been loosened up under some of the new stimulus package items it's definitely something that you want to click on and read and explore and and think about because it could potentially have a really nice impact for your organization so there we go lower in december 20 20 69 you are the winners uh it is um it's actually 24 lower than a year ago um i you know that's a startling number but given what we've gone through in the last year that doesn't surprise me uh in the least um so on t ose of you who said higher in december 2020 it's good to know that you were clearly not paying attention to anything i was saying so that's good which is the case i get most of the time when i talk so uh you know why should this be different there you go december 2020 93 and in 19 it was 123. so as i said that i believe we calculated that to be a 24 uh difference the business conditions index they are closely tied to estimates of current future backlog they went up from september to december from 71 to 80. we'll talk a little bit more about that later but we just want to kind of give you a brief outline of all the indices so the financial index represents bank credit bonding credit work working capital line of credit went from 100 in september to 102 in uh december any of these numbers um surprise you jason from what you hear from our folks you know um some of you might think that the financial conditions you know might have gone down but no it makes sense that it's really kind of holding you think about we we just talked about 86 percent uh applied and got ppp money there you know there's been a lot of good backlog out there so um contractors have been uh pretty good other than if you had uh certain parts of the country certain types of construction having little hiccups here and there and and shutdowns uh on certain jobs yeah we'll talk about that obviously if you're in the uh office building market you probably want to create another niche in your business uh and i think you've probably already figured that out before i said that so um and the current confidence index uh this so this reflects all the current conditions kind of a combination of all of them uh went from 79 to 83 so there is some optimism and then the next one the year ahead uh that talks about anticipated future business conditions future bank credit bonding and uh backlog that also went up a fair amount so here you go uh so we're comparing uh now from a year ago uh the current business conditions in december of 19 i i kind of lump things into two categories so slightly significantly better and slightly better business conditions so that was 44 it's 9 in december of 20. i don't think that's going to surprise any of you uh slightly worse in uh december of 19 it was 20 and this year it's 53 percent how how are folks reacting jason in the um uh in the peer groups uh to to these kinds of issues yeah you know office complexity you know folks that um you know how to deal with covid protocols uh trying to keep that company culture in place while a lot of folks maybe that are in the office are more remote now but yet still having your field folks out and about on job sites you definitely heard about amendments to contracts and and construction contracts and and so just it's just gotten more difficult and um you know like we talked about the backlog is still good uh but all the other ancillary things that go along with it uh definitely more challenging great thanks jason all right let's go move along here so profit margins that's kind of an important element and doing business significantly better and slightly better was 46 and now it's 21 percent i'm not sure there's any visual that uh better explains our current circumstances than this one then obviously the other one i always look at is the slightly worse significantly worse that's 27 percent and uh in 19 and now at 50 in uh 20 i'm not sure there's a better visual to explain the state of the industry and the state of uh but i mean you know the irony or maybe irony is the wrong word but the interesting thing is construction's fared a lot better than a lot of other industries that's for sure and i know jason you guys have a practice uh that is far and wide i assume that's reinforced in some of what you see with some of your other clients compared to construction yeah i would agree um the the level of activity and um you know again talking about that backlog that backlog is so critical for a construction company and so in those times of uncertainty that backlog was already there and and if that and and a lot of construction was essential work so that was a huge opportunity for construction companies to be able to still get out and and perform on the work and i think what you're seeing here is hey it's just it was a little more costly to do some of that work but at the end of the day we were still able to go out and do that work yeah um yeah there's there's no question uh about that so um okay let's uh let's move that along i was gonna say i know when i talked to our uh our members i was just kind of shocked uh early on and and really throughout the summer a lot of them said you know it's business as usual for us we really haven't changed at all that's difficult for me to observe because on the east coast i know where i live and things kind of fell off the cliff and it just seems like there are other parts of the country where that wasn't so a lot of this is also regionalized in some respects so that's a big big impact very much so and stuart i would even play off that comment and and the fact that yes very regionalized and i would tell you that the a lot of the conversation lately has been you know i i knew someone that knew someone that had uh covet or that it impacted and now you know i'll tell you there's not a time we don't get on these peer group calls in various markets across the entire country could be in really small communities but the cfo themselves has coveted right while we're on the video call and so it is definitely hitting home right now during all of all of this activity going on so i would definitely echo your comment there yep all right so material prices on december 19 significantly better slightly by three percent pretty similar there the slightly worse and significantly worse is where you see the difference here 46 in 19 versus 66 percent um i think i've read uh lumber in particular is is kind of going through the roof is that is that what you're hearing as well jason it is going through the roof and it definitely has had some big swings and and not in the good way uh for this year and there's been uh listen to mechanical electricals trying to deal with some of their uh material pricing's been a little bit all over the board and and then the thing that this really um doesn't measure because we're talking about price right now the supply chain disruption and and that has just been a huge topic for discussion and trying to manage through uh that supply chain and what impact it has on the jobs and the schedule yep yep very good very good point all right oh here we go jason take it away here we go polling question two do you think the bank credit availability will go up or down in 2021 so you have uh it will go up it will go down it will stay the same or i don't know and i'm i'm very curious to see the response here from our group and how it uh correlates to our information that we already have especially after coming off all this uh ppp discussion as well and what's interesting about uh polling today versus polling with our members we had we get between two and three hundred members uh who fill out the survey and i think that's about the number we have on this call of somewhere between two and three hundred so let's see what we got wow there's a interesting cross-section there you go 28 go up 30 to go down it'll stay the same that is what i call a lack of consensus that's right there's a definite difference of opinion there so let's see what our folks said uh in december of 19 about 34 thought things were going to be better and now only 12 percent uh the biggest number uh the big change there is same 52 71 and then slightly worse or significantly worse was three percent and now it's uh 10 this time around how's that compared to what you're hearing jason yeah pretty much everyone's holding tight on where they're at right now you know if if you're a strong contractor with a strong balance sheet and and have some nice history you're probably going to do better uh in an uncertain market is a lot of the types of discussions obviously that are going on i would tell you though that the discussion though lately has shifted to what other types of construction can we do or how can we grow our business or keep our backlog level at the way that we've had it here for this past year which then you know naturally pushes contractors to either find new geographic locations expand the type of construction and that's where the banks typically want to understand more and and really make sure they're making some good assessments on on management and the plan but again this whole discussion doesn't even factor in the ppp discussion so will contractors even need additional uh financing at this moment in time just given the fact that you know loan forgiveness they probably had some infusion of money from the ppp side and and how all that interplays um with the credit availability so it'll be an interesting year to see that play out yeah i mean um yeah that that's that that is there's some interesting factors going on there no question about it all right let's move along ah this is what we keep referring to the old backlog issue december 19 higher than 57 and that's down to 22 percent now uh lower than in 19 it was 26 and it's doubled to 54 i think what's interesting is that when i think about the kind of backlog issue and i think about you know talking about somebody who's in the office business and and moving to another you know just thinking out loud here the problem is if you're in you know kind of the wrong part of the market where do you go for the right part of the market and is everyone else following into the that market and so it's just gonna it's going to exacerbate even even more the circumstances are people talking about that absolutely and then if you get more folks jumping into a particular market what does that do in a competitive bid arrangement it drives down the profit margin and so uh you know th this this slide right here to me is probably the most telling of tales between december of 19 and and 20 and kind of what looks what it looks like going forward i had many conversations at the end of last year december 19 time frame where man we're good for 2020 we're good for 2021 we're already starting or trying to book 2022. you can see that change here um in this uh chart for 2020 and really 2021 is probably still good because it was already booked um in the system so now what's that next year going to look like yeah i mean i think that's what i kept hearing from our members is is when when the pandemic started they were really in pretty good shape 2020 and as you said they had uh booked a bunch of stuff in 21 the real question was 22. i think that continues to be the question as we move along that i think they'll still kind of uh some may limp along some may do just fine in 21 but 22 once again i think is the big question mark so let's keep that vaccine going that's right availability of bonding credit in 19 uh significantly better slightly better 31 it's down to 12 uh this uh past december um uh slightly worse or significant it was three percent it's eight percent now so those just i think confirm all of what we were just talking about right jason yeah absolutely and type of construction geographic location quality of the contractor are now going to probably grow in intensity very much like the uh bank availability so i i would agree all right let's move on another question go ahead uh jason let's here we go yield this one so we have a handful of pulling questions here uh that will come through so this one is choose the industry challenge that is of most concern to you demand for construction availability of financing for projects public policy regarding construction skills shortages and the challenge is not listed i think uh stuart you and i could probably uh put quite a bit of money on what this response would have been last year at the at the survey result but i'm curious to see uh how it plays out here today uh indeed that is true uh since we have done this uh conf index survey and and pulled our members there's one item on this list that has always been uh the most concern and that unfortunately has been uh overtaken uh by events in the last year so we'll see whether that uh proves to be the case uh with the folks that are uh responding today so there you go demand for construction 31 availability of financing 16 public policy 11 skill shortage 31 a challenge not listed so what i was referring to and you'll probably see this and some of the material we're going to show you the skill shortage has always been uh in the cfma conf index survey the number one concern most of the time that 31 over the last few years has been in the 70 to 80 percentile range and i think the reason why um it's uh not with you folks and i think this will be consistent what you'll see from our survey as well is because looking at demand for construction is kind of the new number one uh concern so let's let's uh let's follow up a little bit on some of this you bet so let's go in here and rank your level of concern for demand for construction for the upcoming year not concerned watching with some concerned or very or highly concerned or not applicable and uh based on the last polling comment uh or survey 30 i think it was 31 stuart were concerned about demand for construction so i'm gonna guess this should be uh pretty uh pretty much a big concern for the group you don't give away the results now uh jason i was foreshadowing [Laughter] that's too big a word for me jason all right here we go yep not concerned okay very highly concerned interesting so watching with some concern 61 that these numbers may be less than what we saw because uh barrier highly concerned i think is higher uh in our group which means the all of the bkd clients are prospering uh jason i think that's the message that we're getting from this so yeah so let's see uh uh the comparison between 19 and 20. so demand for construction let's look at the very highly concerned eight percent were very highly concerned in 19 that shot up to 43 uh this this what was the number we just saw maybe like around 30 31 31 i think yeah yeah so our folks are a little more uh concerned uh about the demand for construction than you all but still uh look at the difference between 19 and 20 it shot up five times as much of a concern so not surprising i i think you know this is important though because you know we talked a little bit about geographic location there's some locations that are definitely hit harder than others right now different segments that are hit a little bit harder but what we just alluded to was construction companies will continue to grow their portfolio or types of construction or move outside their geographic location so does that you know then create more of a bidding issue on some of these hard bid projects so something to definitely uh keep our eye on well i i i'm just kind of i'm thinking out loud here jason so you're your practice of bkd's practice is is not nationwide um so i don't think you really get very much over on the west coast um is that is that correct yeah so we will have our clients will have projects on the east coast and on the west coast but it wouldn't be a high percentage of their uh core business so so yeah you're probably just missing out on some of those higher percentage projects that are focused only on the east and west coast right so i'm saying so i'm just thinking out loud is your folks are kind of right down the middle of the country in the middle middle of the country what what the statistics might show is things are better in the middle of the country than they are on the east of the west coast yeah i think that's probably a fair assessment okay all right so here's some comments uh that our members had to say about um about the demand for construction abi is the architectural billings index i always get a phone call when i'm doing a webinar and i um also uh usually have it on so that it's unmute but apparently my mute button's not working so apologies abi architectural billing index dropped off a cliff during march and april and still hasn't recovered so for those of you who don't know that is uh something that i believe the aia does um can we go back to he same um the american institute of architects does that they measure the architectural billing index every quarter like we measure contractor concerns they measure uh the level of business in the architectural which of course you all know is a precursor for what's to come uh in the construction industry because if they're not designing anything you're not building anything availability of new work will most definitely shrink backlogs are good now but general economy is hurting uh construction market will lag in 18 months this is very consistent what jason and i have been saying saying finding new work will be a challenge at the end of 2021 and into 2022 and projects have either been put on hold or abandoned uh and yeah i mean this is a big issue i i can say personally for us we were planning on doing some expansion at cfma we had uh some money in our lease that we were going to build out we put it on hold we're a small little organization of 30 people but i'm this is true around the country and i'm sure this has been reinforced jason by commentary you hear from the beer groups that's exactly right that's exactly right projects that were already ready to go kind of got put on hold or i think some of them actually went to full renegotiation re-bid in some cases which um is is pretty uh pretty tough for a contractor as well yep okay that's our demand for construction here let's go to the next question all right so we have uh rank your level of concern and i know the survey will pop here we go rank your level of concern for availability of financing for projects for the upcoming year so you either have not concerned watching with some concern very or highly concerned or not applicable so we'll uh tabulate these results here and and um give the answer let's we'll see how this compares uh to uh the the information and data that we have so jason well just while we're tabulating this is my conjecture that the middle of the country is doing you know reasonably better than the east and west is that do you find that to be an accurate statement um i would say that's probably for the most part accurate i would tell you that with you know probably the shutdowns and job by job impact job sites being shut down definitely less of an impact so yeah i would say in general that that's a a pretty fair statement but but you still have downtown office spaces that um you know are probably operating at 15 to 20 percent capacity right now even thinking about all of our offices across the footprint of the firm you know i sit actually here in indianapolis and and we're probably at 30 percent of our normal uh capacity in the office right now so here we go watching with some concern at 61 stuart um well that's a pretty high number isn't it that is and very interesting and then you got a very highly there i think we had it at 11 so let's see what we got here so our barrier highly concerned is uh actually only 24 but i mean look at the comparison between 19 and 20. uh two percent were very highly concerned uh about financing and it shot up to 24 and in your group uh it shot up uh even more so so um this is obviously a topic to be uh watched closely there has definitely been an uptick in bridging some financing gaps uh you know thinking about some of the stimulus type things some of the things that have been out there for a while i know opportunity zones have been huge new market tax credits historic tax credits a lot of those things have been playing out over the last several years but those conversations have intensified lately as folks are trying to you know bridge some of these gaps and and do some tax planning but yet kind of you know banks are able to get so far the developers able to get so far and there's still a little bit of a gap there i'm i'm really curious to see this play out uh over the next year here as as projects try to get done so here's some so what we do by the way just so you all understand this we we just pick out about four or five comments that we think uh reflect uh the uh at large commentary so these are just some four or five of the comments that we got back on this particular issue appraisals are impacting credit uh our business is largely dependent on state spending um and yeah i mean this is an interesting issue pressure on state budgets with lower tax collections that's just it's all connected you know it's all interrelated and that's that's a good example of how you know the economy not doing as well lower tax collections reducing state budget ultimately reducing construction spending uh we're going to experience some commercial residential mortgage failure uh while construction is considered essential in arizona it's been more difficult for owners to secure financing and expecting banks to have lending capacity which is kind of the flip side so some difference of opinion there all right all right question three here we go should get a pop up here so what was the level of concern for public policy regarding construction from december 2020 to december 2019. you got four options there not concerned some concern very or highly concerned or not sure so i guess we want you to answer what is your level of concern for public policy uh because we know what was in our survey results so we want you to answer this is now what is your level of concern for public policy and as i said uh at the outset we didn't time our survey very well because i believe half of our respondents were before the election and half were after so we have a probably a bit of a muddled uh response there in terms of uh accurately depicting how people feel now after the election so we might get a more accurate view of that from you folks and there we go okay some concern 54 not concerned 15 very or highly 24. interesting uh probably probably a little lower to be honest with you than i thought we might hear from some of you yeah let's see uh yep so here you go comparison between last year and this year so very highly concerned this year 34 i think you all were 24 um last year was 14 so obviously uh it's doubled the concerns uh regarding regarding public policy have you had uh um peer group meetings post uh election jason have you been having them we have yeah actually uh just had one yesterday believe it or not um this topic does come up but it's really at this point in time um really the onset of tax strategy tax planning what might get changed in 2021 how to think through that um and then really talking about infrastructure spending and you know how to um manage through some of those types of things so it's really all over the board right now but it's really more about just trying to be aware of many different things that might play out but obviously we don't have a hard and fast yet of here's what it is well i mean a really good point because i mean obviously if the current president proposed a trillion dollar or whatever you know budget for infrastructure would probably change people's outlook about the public policy regarding construction so i mean he is he has said that uh he has promised that and i think um to be honest my perspective because of his connection to labor i think he will very much try and do something like that so hopefully that will come to uh come to fruition and then you offset that with there's a lot of expectation that the tax rate is going to increase so you got more work but your tax rate might be a little higher so more discussions today about not deferring our tax obligation but paying it at today's rate to to get it done so again i think we're just dialoguing here on how many different things a construction owner and a cfo has to think about with all that's going on there's a lot of variations of little yin and yang there and perhaps with this administration related to construction so let's see what uh our folks had to say uh concerned that a change in the white house will be tightening regulations but on the other hand i expect washington want to stimulate the economy so there you go uh will the partisan gridlock and dysfunction okay well that's part of washington uh taxing of materials and capital assets waiting to see what the election brings could make some changes as we just discussed okay here we go our next question rank your level of concern for skill shortages for the upcoming year not concerned watching with some concern very or highly concerned and not applicable and as i said uh before this was always the biggest concern in our uh survey i mean to the extent that it was between 70 and 80 percent uh most of the time and the other largest concern would be very highly concerned would be 15 i mean it was until um until the pandemic this is the issue that uh far outweighed any other concern by by a multiple of five uh and i i don't think necessarily it's a good thing but it's no longer as much of a concern the reason it's no longer as much of a concern uh is because uh there's less work uh so this reinforce this is exactly reinforces what we've seen 13 are not concerned watching with some barrier highly concerned 37 like i said our number used to be in the 70 to 80 range let's see what um what that range is here uh in the see in the conf index survey let's see what the numbers show very highly concerned you folks 37 let's go to the next slide very highly concerned 47 so our group is slightly more concerned about this but as you as i said good it's nice every once in a while when the numbers reflect what i actually said 78 skill shortage a year ago was very highly concerned it's down to 47 percent i i'm not sure that means there's not a skill shortage it just means it's been overtaken by other uh circumstances is that confirmed in your conversations with folks jason absolutely and again i'll highlight it again the discussion about geographic location uh if you're in florida and the amount of folks that want to be in florida right now to quarantine and isolate i guess people just like warm weather to isolate arizona's dealing with this a little bit as well you have a major labor shortage issue in those couple markets and i'm sure there's spots through other parts of the country as well but those are two specific locations that you know construction shortage and skill shortage is just extreme uh given the demands on those markets right now so you can see the commentary from our folks this is our on the one hand this is our biggest challenge on the other hand our business is downsizing employee levels so once again there's uh tremendous uh disparity between uh the groups all right we got now so this uh shows you uh a challenge not listed level of concern for industry challenges was very highly concerned 15 19 it was bumped up a little bit to 23 um and challenge is not listed companies came working from home environmental issues national debt uh pandemic impact on demand we've already talked about that with the democratic president i'm afraid of higher corporate tax rates so those are the challenges we saw we're going to ask you to tell us which one of those bothers you the most so here we go our challenge question and there's the pop-up of the challenges not listed previously choose one you see as your biggest challenge we got a handful of options here the impact of companies transitioning to work from home environmental issues national debt to gdp the pandemic itself or higher corporate taxes and we'll give everyone uh a moment here to click on and we'll tabulate uh tabulate the response i'm i'm very curious on this one because there's definitely several aspects that our peer groups talk about in each one of these so i'm i'm curious to see it and to be quite honest i'll even throw out another one that's not on here stuart while we're waiting for the results technology has always been a high uh item list but now given the remote work environment it has definitely climbed up that list and and you know all of our peer group members want to know what are some of the best technologies out there how can we uh be more efficient from working from that home environment or being more remote but yet still being productive and so that that's another one just as a sidebar to this great point great great point uh jason uh so uh let's see what we got here with as as i would have expected uh just you know pick your poison which one's the worst one and they're all in the 20s the transitioning to work from home the pandemic and higher corporate taxes that's uh and national debt 19 so environmental doesn't seem to be as much of a concern but all the others are ranked right across uh the map there so all right that's an interesting one and i guess this hopefully is probably our last question this is our last question uh polling question four uh how do you think the democratic-led house and senate will impact your company one uh the first option it will help my company it will hurt my company it will have no impact or i'm not sure and while we're uh giving everyone a chance here to respond you can go ahead and post the results when they're in you know stuart one of the items or questions that has come in while we were uh talking here is you know talking about some of the impact of the companies uh transitioning uh to work from home and trying to get their employees back to the office some and we talk about this in the peer groups too do you do you have a formal policy what is our work from home policy do you keep it more uh loose ended and try to handle each situation on a one-off scenario i'll tell you the other thing that has come up significantly over the last 30 days is i have an accounting department and i'm the contractor here we have an accounting department and let's say we're based out of of texas uh but i've got three of my accounting folks that want one wants to be in phoenix one wants to be in florida and one wants to be anywhere else and so how are you dealing with that how long are you going to let them stay in those remote locations and so really talking through the impact of that not only what tax implications does that have but what implications does that have on the organization the culture and the teamwork and connectivity and so that was one of the questions that that came up here from our group but i'll tell you you're not the only one having that that issue or concern and here we go that's a great point jason i would just mention we're going to wrap up in just a second so just hang with us for a couple more minutes but here you see uh it will hurt my company 52 so that's uh kind of the major uh conclusion there um and there you go look at that we were supposed to end at 12 o'clock it's 11 59. jason are we good or what i feel like we planned this stuart [Laughter] great work and i don't see any other questions uh in right now we've addressed uh the couple that were already here i think we addressed during the time period that we had so from my view i i think we're we're all good and uh stuart really appreciate you and cfma and glad we were able to uh do this report to the group always a pleasure jason uh bkb is a great supporter of bkd of cfma and we're a great supporter of you folks as well so um uh jory i think you're gonna wrap it up yeah thank you so much stuart and jason we uh very much appreciate it if you're not already signed up for bkd thoughtware you can receive notices about more webinars like this one along with articles white papers and live events specific to your industry sign up at bkd.com thanks again for attending our webinar and have a great day