Good afternoon. Welcome to PCI's webinar series. Today's presentation is FMI Study, PCI Market Research Summary. The research in this webinar was conducted under PCI Marketing Council and the Market Research and Metrics Committee that our presenter chairs. My name is Nicole Clough, Marketing Coordinator at PCI, and I will be your moderator for this session. Before I turn the controls over to your presenter for today, I have a few introductory items to note. The handout for this presentation will be emailed after the end of this webinar. If you do not receive an email with the handout, please email PCI Marketing at marketing at pci.org. Please note that all attending lines are muted. The GoToWebinar toolbox has an area for you to raise your hand. If you raise your hand, you will receive a private chat message from me. If you have a question, please type it into the questions pane, where I will be keeping track of them and will read the questions to the presenter during the Q&A period. Also, a pop-up survey will appear after the webinar ends. Today's presentation will be recorded and uploaded to the PCI eLearning Center. Questions related to specific products or publications will be addressed at the end of the presentation. PCI is a registered provider of AIA-CS, but today's presentation does not contain content that has been endorsed by AIA. Today's presentation is non-CEU. Our presenter for today is Brian Miller, Director of North America for Precast and Manufactured Concrete at GCP Applied Technologies. I will now hand the controls over so we can begin our presentation. Good afternoon, everyone. Thank you for joining us today. It's great to have a chance to talk to you a little bit more about this FM&A study. I'll provide a little bit more detail and information for you. As Nicole mentioned, and I'm sure many of you out there are aware of, PCI conducted this study last year with a group, FMI. They specialize in a lot of market research for us. The whole idea was to, can we get a better understanding of what all the various stakeholders in our industry that impact us, what are their drivers, what do they value most, and what are their perceptions about precast concrete as well as other materials that we compete against. This is changing, especially over the past few years. Prioritization of these things have changed a lot over time. This is actually a follow-up study to one that was conducted in 2016 and structured very much the same way. The intent is to go forward every several years, probably about five years apart, to chart this as they change and really inform all of us what is the dynamic, what matters most to stakeholders, which stakeholders are more influential in making certain decisions and things of that nature. So we'll start off with this kind of a look at what questions did we seek to answer in our discussions and in all the research. The first one really is, who has the most influence on material selection? This is something we always are interested in. As everyone knows, our design teams are made up, or should I say, our entire project teams are made up of a whole host of different folks with different interests, backgrounds, et cetera, and everybody has an influence level. The question is, who is the most influential and who ultimately makes the decision on material selection for the various products and systems that we're obviously interested in? So we always want to understand that. We also want to really truly understand what drives their decisions. There's a lot of factors out there, and I always say you can think personally about yourself when you're trying to relate to why do you do what you do? Why do you buy things that you buy? Why did you buy the car or the house or anything? Because when we think personally, it's sometimes easier to connect at what drives a decision process. And so we're going to explore that here, as well as what attributes do the various stakeholders associate with precast and the competing materials? Again, there's a whole host of things out there. So what are they really connected to? What have we done a good job of making them both aware of it, but also that they actually relate to, that they buy into, believe, and understand is really important in how we strategically position ourselves, the products, our company, et cetera. We also need to identify if there's any challenges out there. Of course, there are. In reality, there's challenges with every material or system. But from the different stakeholders' viewpoint, what are those challenges? Some of those we may be able to address very easily. It might be just a miscommunication, a misunderstanding that we could resolve with information, education, et cetera. In other cases, it may require us to take a more innovative approach to our systems. We need to do something different. We need to think of something new. In any case, we have to understand what those are. And then, of course, perception of value. And this is really critical because it's very hard to compare different materials and systems directly like a line item. They have different prices. They all have different value propositions. So we took a look at value in terms of the material or system, as well as by stakeholder in this study. Now, this is a pretty extensive study. We will cover everything that I've just listed here, including even some information around the potential for conversion. But there's some other pieces in here that, due to time constraints today, we won't cover in the webinar, but are included in the report. And some of those are preference of materials by market segment, looking at carbon impact, ultra-high performance concrete. They've even done some additional market studies to understand which markets they believe are growing, which markets we have a strong presence in. Of course, we have all that data already, for the most part, and update that on a regular basis to all of our forecasts, et cetera. So we'll focus more on these other components today in our discussions. Now, in terms of market segments, these match up with what was done in 2016. And there were really six segments. They're all above ground. So we looked at the commercial area, institutional, K through 12, for example, parking and manufacturing are broke out separately, multifamily for residential, and then stadiums and arenas. And again, we want to match up to what was 2016, because it's important to see how things change from data point to data point or point to data point or collection point to collection point. And as you'll see, as we go through some of this, there's been some significant changes. From a stakeholder standpoint, this is a pretty extensive study. We viewed six groups of stakeholders from architects all the way down to building an envelope or enclosure consultants, which are a little bit newer to our arena, relatively speaking. But it gives us a full breadth of pretty much everybody that's involved at some level with most of the projects that we deal with. We also took a look at it in terms of two basic systems. So it's divided into the enclosure system of structure building, and then the structural system of the building. And again, that's how our, well, our stakeholders usually are thinking of this, are in terms of more of, it's a system. It all has to work together and achieve its desired results or goals. Now, from a data collection standpoint, we did both surveys and interviews in this one, which SFMI did both. In the original 2016 study, surveys were the only component conducted, and that's usually the first step. You gather the most data that way, etc. But to follow up with interviews, which is much more labor intensive, really can dig into, we would say is the why. You know, what are you thinking? What motivated this response? It provides clarity for us, or should I say at least more clarity, to what is really behind the kind of answers and responses that we're receiving. So they did both here in the 2021 project, which I think you'll see provides a little bit more information for us. Now, this was organized geographically around the PCI regions, okay, with a few exceptions basically. So for example, the PCI West, they added in the Washington, Oregon, Hawaii, Alaska, and Arizona. Made it a little bit bigger, you could say. But for, say, gathering data, that makes more sense. Some of those areas aren't as populated as we know as, let's say, California is. Midwest also added the Illinois-Wisconsin area, and the Southeast, or Georgia-Carolina, has added Florida into it. The rest of these mimic pretty much what we see in our normal PCI regional breakdown and analysis. Now, the other question is, what about the response rate? Is the data we're looking at representative? Well, first off, response rate is actually pretty good. 245 surveys is about three times the number that we got in 2016, and they didn't even do interviews in 2016. So, you know, getting any additional, let's call it digging down in, right, kind of information, right, is really extraordinary. So we put them together. It's actually a pretty positive response rate for this type of study, and this is a pretty extensive study. Same thing when you slice it and look at in terms of, do we talk to contractors, you know, architects? We got a response from all the groups, especially the key four, contractor, architect, owner, engineer. From a national perspective, yes, the results are representative. It meets any kind of criteria you want to look at. And really, what we're trying to get to when you cut through everything is, if you went out and collected 10 data points more, 100 data points more, whatever, would you discover something totally new? Would it no longer converge? Would you add a new element in? And the whole idea of my research is you want to get to the point where you'd say, no, I could add more data and even maybe refine a few things, but nothing material is being introduced. No directional change would be incredibly, you know, something all of a sudden when you look at it. So from a national standpoint, this holds up. It's representative. It definitely holds in those categories. From a regional perspective, it's fair to say that, you know, we know there's some regional changes. The data I present today is from a national perspective for the most part. But as you look at regional, yes, some further work could be done to make sure that there is convergence, that there's not dramatic regional differences as we go through there. Now, having said all that, I just will point out that FMI is going back, as we speak actually, and conducting more research in the areas, for example, of engineers, where it's a little bit lighter. It did meet the requirement, but still a little bit lighter. So we're going to bolster that up. And some of the other regional areas, for the idea that I just said, we want to make sure we have a convergence that nothing new is being introduced. And that work's ongoing. I'm told that probably by next month sometime, we should be able to see those results, and we'll publish an updated version, notify if there's any material change to what we've seen and what we've learned here today. Okay. How do you use this information? That's kind of a really important piece, because you're going to see there is a lot of information here. And the question really comes down, what do you do with it? Just like when we talk about market forecasts and stuff. So here's some recommendations for you to think about. Look, in terms of dealing with forecasting, and we talked about this usually at our regional meetings and PCI meetings, we've got a lot of data there that tells us how you can calculate your market share, identify where opportunities are by states, regions, segments, etc. And that's an important piece to have. This is the other big piece. This data helps us really talk more about value, our value proposition, which stakeholders to align it with, what matters to them most, so you know who to focus on, what to say to them, how to say it, because we really just don't have an exhaustive source of resources to focus on. We don't have an endless supply of money and people and time to just say everything in the world. So you really want to dial it in to what matters most and get a critical message across to them. So I mean, for example, what you're going to see here is that most stakeholders really identify and connect with the historical performance of precast. So in essence, we've been around a long time, we've got a proven track record. While people might not be fully aware of what we can do, it doesn't mean they haven't got a comfort level. Yep, I agree, it's been around for decades, there's a lot of buildings, we know it's durable, you know, basic things like that. So that's out there. And this particular area just happens to be strongest with engineers. And you're going to see that it's actually their number one concern, period. So this is a good opportunity to align with what we're communicating to engineers and how we're talking to them about things for precast. Another thing to consider is really identifying opportunities for improvement. So one of the things that'll become very apparent to you is that the concept of design flexibility and adaptive reuse, or really the idea of change, quick change, is something very important to stakeholders today, we're not rated that well. That'll be an area we need to work on, we need to identify more with it's an opportunity, we might need clarification with certain stakeholders or provide that they might need to do some actual changes in how we think about our systems or what we could do with our systems to further improve it and address that particular issue. So we'll see. So today, what we'll do is we're going to take a look at this both in terms of enclosures, and in terms of structural systems, we're going to start off with the enclosures first, and talk kind of through all of our findings to there. So question number one was key decision makers, who's really calling the shots. And so these are ranked in order of influence, it's a big surprise. Architects are number one. That's what we've seen actually throughout the years. Now again, not that everyone doesn't have a say, and in certain projects, I'm sure you're going to find a really strong owner or developer that says I'm calling all the shots, I don't care what the architect says. But across the country in general, architects are still the trusted source that are the decision makers around what an enclosure system is going to be look like, what materials are going to use, etc. Owners and developers provide the money. So they're right up there with them, they're not that far away. And then you kind of follow down suit, notice contractors are towards the end. That doesn't mean a contractor doesn't try to adjust some things, but they aren't making the design decisions related to it. So this is pretty consistent with what we've seen before. Now in terms of systems that were evaluated in the study, we looked at six core systems, coarse architectural precast. We also looked at glass fiber reinforced concrete separately, as a separate component for them to evaluate. Glass cladding systems, masonry in terms of brick veneer, or like an architectural block. Of course stucco or exterior insulated finishing systems, very probably a lot of low-rise construction. And then metal panel systems. So these were the six that were evaluated throughout the enclosure system study as we talked about here. Now these are the attributes that were presented to them. So this wasn't just open-ended, it gave the ability to connect with certain attributes that were defined. I want to talk through these real quick because it's really important you understand what these mean or intended to mean. It doesn't mean that there's not some confusion out there when you get out into the marketplace, but in general this is what was communicated to the people and how we want to think about it in terms of our discussion. So aesthetics, fairly straightforward, right? It's the final finish. How does something look in actuality when it's all put on the building? Separated out is the breadth of application, meaning what options do I have with the material? What colors does it come in? What textures does it come in? What shapes does it come in? The whole color form and texture kind of approach. Obviously precast is pretty versatile here. We can do a lot of things. Obviously we can embed brick and do stones and granites on top of sandblasts. So this usually is in our favor. Design flexibility and adaptive reuse. This is a challenging one only because these are combined and they really refer to two separate pieces. Design flexibility, as the name suggests, has a lot more to do with when we're designing the structure. Am I locked into certain sizes? Can I extend something longer? Can I move a connection plate or a control piece? How are my load paths going to work? How much flexibility do I have to make the structure come together versus adaptive reuse, which is more about, okay, I've got a building and I need to change its functional use. Is that going to be easy or hard? And you might imagine that a lot of people today are thinking that way, thanks to COVID, about, okay, I've got this $60 million building, now what am I going to do with it? Material cost, I'm going to go back to in a minute, we'll cover that. We have material cost volatility. There's a lot of volatility in market right now, so you might imagine this is pretty top of mind in general. But how much can I count on prices? Are they going to change all the time? Are they going to change every day? Again, this is a concern, usually always, but more so recently. Material availability, I'll address too in a minute. Install cost. And this is actually the amount to install a particular material. Not everything comes as a package deal. Some materials, obviously, you buy a material and then you have it installed. And there are two separate costs. So they try to isolate that. It can be a little confusing, but they try to isolate it here. We've got installation time, which we call speed of construction, when something arrives to the job site, how fast can it be put in place and completed, versus delivery time, which is more about, okay, let's go, let's do this, and you place an order, and then how long do you have to wait before the material is available to be installed on site? For us, that's our backlogs, right? We could be looking at delivery time of six months, eight months, 10 months, maybe longer in some cases. Historical performance is kind of like it suggests. This is the idea of, is this a brand new material or has it been around? Are there records, case studies, and proof? Do we really know the performance? If you say it's been the last 50 years, does it? Has it survived an earthquake? All those things come under that context. Then you have delivered quality. So quality is always important, but the alignment of what you sold me versus what I get, that's an important piece. And you'll see this kind of rise up a lot in these areas here as we talk through the different components. Then we got the sustainability side, looking at embodied carbon, and really the carbon footprint that was isolated as a separate piece to try and understand. You have general sustainability, of course, and everything that affects the environment from, you know, just looking at recycled materials, all the things we talked about under traditional sustainability. You have life cycle costing, maintenance costs, things that impact operations, etc. And you have safety of course. Not just in how we build something, but of course how it provides safety to people. So they didn't specifically call out resiliency, but resiliency can flavor into, as you might have guessed, into some of these from a safety perspective. If my structure can withstand a hurricane, that's safer, right? That's going to be pretty important. It's a resiliency aspect in reality, but it's still pretty important to the safety of the occupants of the building. Then we have site impact or site restrictions. Usually refer to the construction process. How big of a site? Do we need to lay down the area? Do we need to go to get around the building? Do we need scaffolding? How long is it going to be there? All those things. Risk minimization ties more into, do I understand the material? Is it complex material? How much risk is it for me as a designer? Am I comfortable? Do I know it? Is there guidance available like from PCI? All the things that amount to taking on risk as a designer, as an owner, etc. Certification of course. Not everybody offers certification, so this is a whole third party programs like PCI has to be able to go out there and say, look, you have an industry expert group that's actually looking at the material, increasing probability of success. And then code and jurisdictional requirements as well. Is it in the codes? Is it well defined? Is it something brand new? Those were the different attributes that were looked at throughout the study and were asked to be ranked and discussed. Now I want to talk about these two real quick. Cost was asked. However, in reality, everybody pretty much knows this answer. There's like no reason to evaluate cost. Everybody's going to say, sure, cost matters. It does. And if you make me rank it, it's probably going to be ranked at the top. The problem is, is it doesn't really tell us anything. So what we really want to evaluate is value. And as I talked about earlier, that is something we took a look at, is what is the actual value which links cost and performance, which is truly something that we are more interested in. The other one we didn't take into account in the analysis is going to be around material availability. Again, this is really a no-brainer. You can't build with it if it's not available. It's kind of straightforward. So both of these really shouldn't always be included because they're known. Nobody builds with things that aren't available. And cost is always a factor. You got to dig past that and get to value and some of the true drivers behind it. So those are not a part of this analysis. Okay, let's start with decision drivers. This is broken up by group. And as I said before, this is what makes the decision. Like what are you looking at? So from an architect standpoint, architects said, look, aesthetics is number one. Probably not a big surprise there. Of course, architects are responsible and charged with the responsibility of how something looks. Does it look good, shapes, all of those wonderful things. And does it perform, of course. Design and flexibility and adaptive reuse jumped up. Now we're talking about building enclosures from the moment. So probably I'm thinking they're talking about more design flexibility since the enclosure probably doesn't have a tremendous amount of impact on reuse of the structure. It can have some. You know, for example, if you shift from a one level of occupancy to a DOD structure, you might have a blast resistance component or a higher resiliency component to it. But I think in a general sense, there's maybe a little more flexibility there. And of course, that historical performance, which you're going to see come up again and again. From an owner standpoint, they rank aesthetics and historical performance on the same line. They're saying you're both equally important to them. So the score came back the same. Now you see these percents. The higher the percent, the more influential a specific attribute is to that stakeholder. So for example, aesthetics are important to both owners and architects. It was their number one. However, it's way more important, about a third more important to architects, more influential to architects, than it was to owners. So it's a heavier hit to the architectural community that is the owners. They both care about it. It's both their number one concern, but a lot more influence to the architects. That's how you can read the percents. Developers, again, aesthetics. Notice there's some other things playing in here. They're looking at the quality. They're looking at sustainability, which I found a little interesting. Adaptive reuse again, historical performance, of course. Again, now we go to engineers. Now we're thinking of enclosures. So it's kind of nice and impressive that they're taking aesthetics into account. It seems everybody has realized that how something looks matters to pretty much all of us in society and in the use of structures, etc. That plays a big important part of it. And then contractors even recognized it. But notice now as you look at contractors, you're starting to see some costs and cost volatility and things of that nature start to roll in here. Now the next section, we're going to look at what attributes they associate specifically with precast. We're going to look at all materials, but obviously I know we're very interested in precast. So how do they connect the two? So we'll start with architects. They were the most influential. So look, on the positive side, delivered quality, life cycle costing, right up there at the top, reducing risk and safety was number two, and certification was number three. Not bad. Those are all true statements. They're all powerful for us in the precast industry. We look at their concerns, which could be the challenge of the precast or the negatives we could say with precast. Design flexibility is the number one thing. They don't perceive precast as having any kind of design flexibility or adaptive reuse. Now again, we're talking about enclosures, so I'm personally taking a guess. It's probably leaning a little more towards design flexibility at this point. Site impact is quite interesting that it came up because I'm not really sure where they're thinking of that. In general, we pretty have minimal impact to the site. So that's one of the areas of PCI we've discussed in following up. And then install cost and aesthetics. So aesthetics is not a surprise except usually the aesthetics of precast are usually pretty versatile, pretty good. That would be the breadth of aesthetics. So is there some concerns here with some of the people that were interviewed and surveyed that they didn't like what they got? Or maybe they're too familiar with only gray precast or a certain type of precast and they don't fully comprehend all the beautiful things we can do a precast. Don't know. It's an area that's being identified here as a concern, something we need to look at and follow up. Now in respect to all materials, here you go. Here's the spectrum across. So these are architects in the top three, basically positives and top three concerns with all materials. And at the bottom again are the top three drivers that they're looking for. So it's kind of nice here is you can go across pretty quickly and match up and say, okay, what positives do we have that are really, you know, really important to the architect? And what negatives or concerns do we have that are also really important to the architect, right? So, you know, as you look at aesthetics here, unfortunately in precast for an enclosure, while we have a lot of good attributes here, they're not really lining up with the top three. And aesthetics was ranked actually as a concern, which is very concerning. It doesn't always, at least to me, make a lot of sense. The design flexibility, adaptive reuse, that's something that we know we got to work on. Again, that could be an education thing, but there's clearly a misalignment there with something that's very important to the design community. And then as you kind of go across, you can see what glass is pretty favored as an enclosure system. There's good alignment there. Unfortunately, GFRC is not. Masonry, again, pretty good alignment there on positives. So, would these materials be doing well right now? It would make sense that they'd be doing well. There's good alignment with the value they provide and are perceived from the architectural community. Now, if we shift to owners, you'll see some slight differences. Notice that the historical performance component now, you know, that jumps up a little higher. Well, that kind of makes sense. They own the building. They're stuck with it. So, you know, what does that alignment look like? Risk reduction, delivered quality, aesthetics are still important. Concerns of precast? Well, again, design flexibility out there. Install time. A little confusing to me. One of the fastest building systems, but still it's how they identify it. Install costs, volatilities come into there. We see the carbon component now get entered in with sustainability, suggesting that there's probably a gap between what owners are thinking and associating with precast versus what we really provide. So, it's an education opportunity. When we put it again across the spectrum here, you can see what they feel versus precast and other materials and how they associate the various attributes. Each time here, we'll kind of quickly highlight some. So, you know, it's a little different now in precast. We've got a couple pros, a couple negatives. You know, GFRC, there's a pro there on performance, but there's some negatives as well. Glass, kind of balanced out. Again, this is from the owner's perspective, and you can work your way across there. You know, Mason seems to have a little bit more pros in this area. Maybe there's a comfort level with Masonry, and Eves is still just not really in good shape. Switching over to engineers, thinking again a little bit differently now. So, again, historical performance, you'll notice jumps right up there at the top. Same thing, you know, safety, things that I guess you'd expect an engineer to be concerned about, they associate with precast. So, that's a positive, right? Certification, delivered quality, reducing risks. We've done a pretty good job of delivering that message to the engineering community. Their concerns, well, again, adaptive reuse, design flexibility, somewhere on the volatility side, somewhere in the side impact, goes back to the clarity we need to look for in delivery time. So, delivery times right now for us as an industry are pretty out there. I mean, I think we're averaging about 10 months. So, and this goes back to 21, so it's only probably gotten worse since then, but that's a big impact. And from the engineering side, there's concerns. Now, when you overlay this again with all the materials, we have a lot of pros that align pretty well with what engineers are concerned about. So, in other words, precast is fairly well positioned as an enclosure system with the engineering community, just at a quick breath. And that's a positive thing. Engineers don't make the ultimate decision, but they're still influential in that. Remember, architects and owners and developers were more influential in that. So, we've got some work to do. And as you look across, you know, again, glass, okay, there's some positives there, maybe a little bit more alignment. Masonry seemed to have a little bit more alignment. Again, we're not getting talked about. Metal panel, there's some alignments, but you're going to get a quick drawing. Each one of these stakeholders, when you look at these, they're different. We're in a different position in the mindset of each one of these stakeholders. Hence, the communication messaging and work we have to do with each group is different. It's not a one size fits all kind of thing. And around this out, here's the contractor point of view, okay? So, again, historical performance, life cycle cost, those are all sold to the contractor. They actually have a connection to precast with these. Their concerns sounding similar after a while, right? They actually, you know, they're concerned about some things that, well, a few other folks are concerned about. Here's the alignment of the attributes again. You can see, again, a different mix of how the alignment between what they care about and what we are providing, what's associated with, I should say, are different with each stakeholder group. Okay, it's a lot of information. Those there are the individuals, because in any good plan, you have to identify who your audience is and then work towards them in a specific, strategic way. Overall, when you total this all up and weigh all of this together around enclosures, we've got aesthetics being number one as far as a driver, historical performance and quality are tied for second, design flexibilities in third place for enclosure. And these are how they lined up with precast. This is everybody rolled together now. So, pros and cons. We've got, you know, the number two concern or driver is our number one strength. We can leverage that. And their number one concern, or excuse me, number three concern is something we have to work on. It's our number one negative. This is how it all rolls up in the bigger picture. Now I'm going to shift over and talk a little bit about value permit, because as I described before, we're really not about costs. We really have to perceive value from someone. The idea here is to connect performance into cost, right? What are you getting for the money that you're spending basically? And you have to do this in some way that you can basically normalize it so you can actually make a comparison between different materials and systems. So, just as a simple example for me, let's say you could choose your next car and you're looking at either a Kia or a Mercedes. I think regardless of whatever you drive, most of us can agree these are two different ends of the spectrum basically, or at least they're perceived that way than most cars. And for just a minute, let's assume that both vehicles are, you know, about mid-size and they both have similar options and stuff. So, we're looking at the same car, just one's made by Kia, one's made by Mercedes, okay? The average selling price of that car for Kia right now is about $25,000. The average selling price for Mercedes is about $60,000. So, as a line item, you look at this and you go, well, that's almost two and a half times as expensive as the other one. Well, hell, I'm going to go buy the Kia. That's the problem with looking at a line item. That's the problem with looking at cost. We're not taking into account the value side of the equation and we're missing a lot. So, just for simplicity here as an example, let's take just one element of something you could evaluate for performance. Let's just say how long it's going to last, total miles driven, okay? Now, again, this is just a simple example to illustrate, but most people, Mercedes are fairly well built. They have a track record of actually going many hundreds of thousands of miles. Not that Kia isn't well built, I just don't know if they go hundreds of thousands of miles. So, the data I found suggested you can probably get 100,000 miles out of the Kia, you might get 300,000 miles out of Mercedes, okay? If you isolate this just to miles for the price of the car, miles is the performance, then you have the cost, and back calculate it, you'd be paying 25 cents a mile for the Kia, you'd be paying 20 cents a mile for the Mercedes. That's a difference of about 20 percent. So, if you tried to create some sort of value number just to relate these two together based on the context of what we're discussing, using Kia as a baseline, then your Mercedes is actually a value number of 1.2, because you're getting more performance out of it. There's a lot of other variables to look at, but this is the concept. So, we did this in the survey and said, you have to rate for us the overall performance based on those attributes of each system that we're looking at, masonry, glass, precast, etc., and then rate the cost relevance of it. So, when you put these two pieces together, all of a sudden, you have a perceived value relationship. It's perceived because it's the stakeholder's view. They're the ones making the decisions. So, it's not like it's an analytical test. It's from their experience, and it's their view. And when you put these onto a chart, you start to get a relative comparison of perceived value between the different enclosure materials and systems that are out there and available, okay? So, you have performance here, and as you go up in performance, and just looking at that, it's an absolute number. You go, okay, well, they're rating masonry at the top. And again, for me personally, that's a little weird. It's a cavity wall system, and we believe there's a lot of familiarity in the group that was tested with masonry, so maybe there's a very strong comfort level. Precast is number two from a performance standpoint, and then you kind of work your way down from performance all the way down to use, which is, you know, towards the bottom, let's say. And then you have your cost structure across your x-axis, which is, you know, again, glass is really expensive. That shows up pretty well. Precast, not too far off of masonry. East being the cheapest. The bi-sector here gives us a linear relationship that helps identify, as you increase cost, are you increasing value, or are you getting more value for a slight increase in costs? And what you notice is, when you actually do the math and take performance and divide it by cost, you start to get a ratio that identifies the gaps. How much more valuable is something being perceived for the additional increase in cost? It's not linear. For example, the masonry is at the top. Notice that eaves and precast, while their performances are very different and their costs are very different, have a similar value. They're both greater, by the way. Anything in that upper level side there is providing more value than the cost, essentially, right? If it was all linear, everything would be aligned. And it's not, which isn't a bad thing. That's a positive thing for us. Notice, too, that glass is actually below the line. It's another way of saying, while we're paying a lot of money for this stuff, we're really not so sure we're getting our value out of it, in a performance perspective. And I bet you a lot of that has to do with sustainability and the amount of energy, because glass is not the most energy-efficient enclosure material out there. Now, the other thing, this was all stakeholders, so this is averaged together. Now, the other thing you can take a look at is, individually, the stakeholders and what's their perceived value, just looking at precast enclosures. So we did that as well. Same thing, performance, cost, and you can kind of see the outline here in the same map out there. Interestingly enough, the building enclosure consultant turns out to be a pretty good friend of ours. They're not influential, though, in the enclosure system selection. They're not, you know, they have some influence, but as you noticed before, they weren't ranked at the top. But still, there seems to be some chords that we've struck, that we've connected to a thing. Same thing with the owners. Owners seem to get some of this value, find more valuable, et cetera. Notice the architect's falling down a little bit. So, interesting to explore that and find out, you know, when we talked about aesthetics and some of the things that seem to outplace, what specifically is going on and what are those concerns? The other piece that we looked at here that I'll share with you for enclosures deals around conversion rates. And this was looked at by geographic region and segment. And the idea of, out of all the products you have in a particular area, what percent of them have been changed from the original bid spec? What percent has been converted to something else. So you can see there's quite a range, commercial being the lowest and stadiums being the highest, but 42 percent of enclosures of stadiums from the survey have been converted to some other material than what they started on. And from a geographic standpoint, you can see there's also a range of, in general, this is all projects, but the mid-Atlantic down to the central, between 21 and 37 percent of the projects in those regions get converted to something. And this, again, it's around enclosures. So central, there's a lot of conversion going on around enclosures, different types, right? And most likely stadiums in that area, manufacturing or parking in that area, those enclosures can see a high probability of conversion. I like to think that's us. That's mostly us converting from other materials to precast. It could go the other way, though. So to kind of try and wrap up this section here, from a driver's perspective, what we see clearly is there's some things that have changed from 2016. There's a lot of concern out there about actual performance and quality. Two things that, if you think about all the new materials out there and systems, everybody's selling the best thing in the world and nobody knows for sure if it's really going to be that way. And we can fit in that boat, too. We've got proof behind us. But if we're dealing with a new designer, that could be part of our challenge, right, is do they believe in it? At least we can go show them stuff. And there's a lot of uncertainty today. You just don't know if your $60 million office now needs to be a medical facility or a residential facility. So you think differently. But again, I personally think a lot of it from the enclosure side is around design flexibility issues more so than the adaptive reuse. That's something we're exploring a little bit deeper to try and understand. Aesthetics is ranked number one by all stakeholders. We are caring a little bit more about how things look. That was not the case in 2016. Sustainability has become rooted in a lot of these components, especially with owners, developers, and engineers. Notice it wasn't at the top in many cases, but it's something that clearly is playing into some of their decisions in the general sense, at least. And then finally, interestingly enough, from a cost standpoint, the volatility of cost standpoint, contractors are the only stakeholder that focused on this around enclosures. And it doesn't surprise me that contractors are thinking of money. It's just that that's where their brains were at around enclosure systems. From an attribute standpoint for pre-CASLA, historic performance, delivery quality, lifecycle cost, all in our favor. That's great. Design flexibility is not. Something we definitely have to go look at and explore a little bit more. Site impact is kind of weird, at least from my view. Why is that coming up as a negative? Is it the crane? Is there something else going on? Is there some other system that's perceived to be having less site impact that we should look at? Install costs, same thing. Usually we include it in the price. Are we breaking it out separate somewhere or is there something that they're not connecting the dots? Again, further investigation would be warranted. And then delivery times, like I said. And contractors and engineers are all concerned about these kind of things. Impact to the site, delivery times, etc. Backlogs or hurtings. It's clear that people can't wait 10 months for something for their enclosure basically. From the value side, like I said, pre-CASLA overall, this is going to sound crazy, but we're providing a lot more value, which typically means we've done a good job of communicating it. We still have work to do probably in quantifying some of the value we're providing. But the data suggests that most building materials are providing more value than, or at least perceived value, than what they're actually priced at. Except for glass. Those guys aren't in that case. They have the lowest performance and they're the most priced. And as I said earlier, the building enclosure people seem to be our friends. They're less influential, but that doesn't mean we couldn't leverage that. Folks really focusing on enclosure just might want to look into that and see if they can help us improve our positions with some of the architects. Okay, let's switch gears to the structural systems now for a minute and talk through some of the findings there. There are differences. Key decision makers, no big surprise. Engineers, number one. Architects are number two. Little surprise there, maybe not. Architects and engineers have to work together and the structural system building has an impact on what the enclosure looks like, right? So that kind of makes sense. We evaluated pre-cast concrete, of course, cast-in-place structural steel, the big three of structural systems. Today we also took a look at timber. I'm still looking at masonry in terms of more like concrete masonry units. Tilt-up was isolated and engineered metal. I just didn't put a picture up for this one for you. Here are the drivers today. So look, historical performance jumps up to number one for the engineer. By the way, the 54% is the highest rating in any of all the athletes in the entire study, saying that this really, really matters to the engineering community. It doesn't surprise me a whole lot, given like timber, for example, as being a new structural system out there being pushed into code and stuff like that. We tend to be a little conservative. That's kind of scary. Design flexibility is still there. Delivered quality, even the aesthetics still shows up. From the architect side, again, this design flexibility, adaptive reuse, we're talking structural now, so I think that's a little bit more on the adaptive reuse side. Doesn't mean design flexibility doesn't have an influence there. But in install time, looking at the aesthetics and stuff, these are what's important to these stakeholders, the top things. Owner takes a closer look at historical performance now, adaptive reuse. Our developers are looking at the cost side of things. Again, not a dramatic surprise there. And contractors are looking at cost side. They all care about adaptive reuse and design flexibility. But you see that your contractor and developers, a little bit more in line from a structural perspective around costs and things that impact cost and volatility, right? Not a big surprise. Not the same view, though, as what we see from the engineer, for example, to some degree, the architect, and even the owner. There seems to be a difference between developer mindset and owner mindset. They both have money, short and long-term goals, right? Okay, running through these real quick so we can see the differences here in the engineering attributes with precast, so it's the structural side with precast. Historical performance at the top, that's great for us, actually. That was their number one concern. Safety, or should I say number one drivers. Safety, reduce risks, install time, aesthetics. So these are all positives with us. Now the structural. Concerns, design flexibility again, impact to the site. That keeps showing up as something where I need to look at. Sustainability, breadth of application. Remember, this is a structural standpoint now. We're a little bit limiting to that. If you overlay it, you get that kind of quick view of how an engineer looks. There's some good alignment, though, from us from a structural perspective on the historic. And even from an aesthetic standpoint, it sounds like engineers like the way we look structurally. Not the case in all of these. There's a lot of red painted down there. Timber not doing so well in the engineering community. Everybody gets the carbon side, but that doesn't mean it has the performance or flexibility. If we switch to architects for a moment, okay, lifecycle costs associated with us from a structural standpoint. Done a lot of work there. Reduce risks. Again, performance. Delivered quality seems to be on party. Concerns, aesthetics. Again, thinking in terms of structural. Design flexibility, adaptive reuse. So now jumping over here to the map again, where you can kind of see our charted out. We've got performance going for us in the architectural community. Gaston Place has nothing going for it that aligns with their top drivers. Timber. Not a big surprise. Why do we see timber? Architects seem to like it. They think that it can go up fast and they like the aesthetics of it. Those are things that matter to them, right? Look over here on some of the other ones. Structural steel. They like the aesthetics of it. We've seen a lot more buildings where the structural systems are exposed. So maybe that ties into this. From the owner's side, getting into time, historical performance, volatility. Again, these ones on the same line are all similar coding. In other words, they've ranked basically the same way because their scores came back the same. Concerns. Starting to see the same things. Some of these areas here that we have to look at. From a mapping standpoint. Precast again. Fares fairly well though. There's actually three positives there because sustainability and safety are two separate attributes. They just happen to be under one circle. So there's actually three versus the one negative. And then you go across and see cast in place. It does have a couple there. Again, this is with the owners. Masonry. Structural steel. Fairly positive. Interesting that they brought a concern with that around safety. And finally, our good friends, the contractors over there. What do they see? So volatility. Instantly enough, they felt that was positive with precast. I'm not sure if they feel the exact same way if we run it today. Remember this is 21. Things have become a little bit more volatile lately. Inflation is a lot higher. But performance is still there. They get the speed of construction. They get life cycle costing. Design influx is a concern. Contractors think the aesthetics are a concern. Again, site impact. Something we've got to look at. Delivery time. We've talked about that. Matching it up here on code or across the table here. About equal precast. Not much positives on the contractor side for cast in place. With timber right now, it seems like they would sort of be our advocate in terms of fighting timber. Masonry though, they still seem to have an affinity there. It seems positive. And then you kind of go across and see the others. So again, overall, I try to share the individual groups so you have an idea. But overall, in a sense, looking at this, when you combine them all together, what do we see? We see look. Historical performance, delivery quality, big driver. Design flexibility, big driver. And yes, time, cost, and volatility are big drivers. What are you associated with precast? Overall, from a structural perspective. Look, we got two in our favor. Historical performance is number one and we got it. Install time is number three as a driver and it's associated with a speed of construction. So those are positives. We still have that one negative. Interestingly enough, it's the first negative that we've had that appears in both. Both in the enclosure group and in the structural group. We have the same area to focus on. It's crazy, it sounds it's kind of nice actually because you're not focusing on 30 things. You've actually got one that's very clear that you need to address. How much lift we have to do, that we'll learn as we dig in a little bit deeper into it and so forth. But this whole historical performance has jumped up. It's a greater concern in the structural side of things than it was in the enclosure side of things. And again, I think you'll see that because of timber mostly. From a value perspective, explain how this works. Basically, we see structural steel at the top for performance, followed by cast in place and precast. A little surprising to me, I know I have a bias guys, but precast is, it obviously, you know, it has a better performance. You might be looking at this from, for example, if you're using parking, we have some maintenance issues or something along like that might have played into this. From a cost perspective, the alignment seems to be reasonable or logical, probably. When you calculate this out to get the value ratios, they're close. They're very close together. There's not as much of a difference there. Other than timber is, basically, you get what you pay for and it's pretty much on the linear line. Everything else is providing a little bit more value with precast down there. I guess I would say third place since masonry and cast in place are really tight. Now, from a perceived value from the, you know, again, this is precast, but by the stakeholders, look, the owners are actually better in alignment with us than we realize from a structural standpoint. Sadly and concerningly, the engineers are a little bit lower down on the list. And that's something that we probably need to look at because they're the main driver of structural systems. Even though there's a lot of positives out there from a value standpoint, it's a little bit lower. Not incredibly lower, but still just a little bit lower to look at. It is also interesting to notice here you clearly see how the owner and developer from a structural standpoint are on basically the opposite ends of the ratio scale here. One thinking probably much more short term, one thinking longer. Okay. Something else we noticed when you look at conversions is that, well, everything's dropped down, right? All the percentages have decreased here relative to what we saw in enclosures, right? Now we're looking range from a commercial at 25 to manufacturing at 30.3 percent conversion. If you remember, the enclosure was as high as 42. We're looking at it geographically from, instead of 21, it drops down to 12 in the southwest. Now the southeast is the biggest region where we're seeing changes, and it's only at 30 percent. So people are less likely to convert structural. It's still happening, but it's less likely to convert structural than what we see in the enclosure system out there. Okay. Just summarizing, again, overall key findings. Not crazy, but with new materials out there and structural systems out there. And by the way, I want to stress the new systems in structural and the whole historic performance is about twice as important in the structural realm as what we saw in the enclosure realm. So this historical performance, remember I showed you engineers was the highest rank. This is a big deal. Delivered quality is a big deal and is clearly something that is positively associated in most cases with precast. We should leverage that as we're out there discussing and working with folks, especially, like I said, from the structural perspective. The design flexibility and adaptive reuse, this also is much more important from a structural standpoint. It too is about twice as important as what we saw in the enclosure side of things. Again, probably focusing more on adaptive reuse. Makes sense today. We're not really sure what the future holds. People are more concerned about what can I do with my investment? What would it take to change my investment into something that I can still rent or sell? Aesthetics has clearly moved up as something that we're thinking about in the structural system. Not everything's going to be hidden anymore. In fact, structural systems have become part of the aesthetic. They're left exposed. So wood has helped driving that probably because people like the look of wood in a general sense. I like it in my fireplace, but that's just me. So you can kind of see how it connects, and you can see this shift or trend right now happening out there. So can we make precast look good structurally? Can we fill bug holes? Can we paint? Can we even do exposures and aesthetics so when you're looking up at a big ceiling, it doesn't just look like a gray box? Yeah, we have options there. We could work with this. In time and cost, there are much greater concerns in the structural system, essentially, by all the stakeholders than they were in terms of what we saw in the enclosure system. Interestingly enough, owners did not highlight that as much. They were less concerned about that versus all the other stakeholders. So that's time and cost again. For precast, historic performance again, install time or speed of construction, LCC, life cycle costs. We own those things. That's great. Design and flexibility pop back out as one we need to work on. Site impact, we need to explore further because this should be an advantage for us. If there's a perception out there we need to correct, we need to learn something different. Delivery time, we should be aware of that right now. It's what's happening. From a value perspective, I said structural steel is being perceived as the highest value and highest performance right now. Cast in place and masonry are kind of timed. And then, of course, precast, it was basically right there. So it's a lot of data and information, but it's just as you glance across, you kind of go, we probably could focus on some engineers and some owners in the structural area and address the site impact issue, make sure that's not an issue, and figure out the adaptive reuse issue here. And it could open a lot of doors for us as an industry. We could see a lot more total precast being built that way, which would be good for us. Okay, the last thing I was going to share now, and of course you'll get copies of all this and you can even listen to the recording again, is the resources that are available for you from PCI. So look, the full report from FMI is out there on the website. It's like a hundred and some pages. It has all the raw data and it's pretty looking. And it's available, I encourage you to take a look at, we've tried to make things a little easier. There's a summary report, which I forget the exact number, but it's like 19 or 20 pages. The charts that we've discussed here, the analysis work, that's not into the summary report. More of the raw data sits in the full report. And there's even an executive summary, which is only a few pages. It just highlights some of the key things in a general sense. My recommendation would be is you take a look at the summary report. It links up all of the sections. So if you find something in there you want to dig into a little bit more, it tells you what pages to go to in the full report. So you can get the raw data and start to analyze it a little bit more for your situation. This is a national perspective and kind of a general overview. It does shift as we've discussed it, as you start looking into specifics based on what you make, where you're located, you know, things of that nature. Now, to get this information is not too bad. Look, you go to the members section of pci.org, you log in, go to marketing resources, nice and circled for you, click on market research, because that's what this is part of, and there you go. You'll be able to download the full report, the summary report, and the executive summary, including the old report from 2016, if you'd like. Hopefully, if you haven't, you'll have an opportunity to go there and find this information and take advantage of it. There's an awful lot here, you know, there's a lot of value here if you take a look at it and implement it into your strategy and into your businesses. So with that, Nicole, we'll turn it over and see if we have any questions. Thank you, Brian, for a great and informative presentation. Unfortunately, it does not look like we have enough time for questions today, but all questions will be forwarded to the presenter, along with your contact information. If you have any further questions about today's webinar, please email marketing at pci.org. Thank you again, have a great day, and stay safe.

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precast concrete

stakeholders

aesthetics

design flexibility

install cost

perceived value

communication strategies

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