University Spending Remains Solid in 2006

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Researched by Industrial Info Resources (Sugar Land, Texas). Capital spending at universities has been on the rise for the last few years. In 2004, spending broached the $1 billion mark for the first time in recent memory and 2005 continued the upward trend with spending topping $2.6 billion. So far, 2006 has the makings of yet another year of large spending as well with projected spending anticipated to reach $2.8 billion.

As public institutions, relying on state, federal or private funding for their annual budgets, universities traditionally have a very low project dropout rate. In 2005, gap measurement shows that the project dropout was less then one half of a percent. This year’s anticipated project dropout is currently slightly higher, hovering around 5.4%, but that number should drop as the year progresses. The heaviest spending at universities usually falls into one of two categories: academic and infrastructure. Academic spending revolves around new research facilities, as well as new classrooms and support facilities, while infrastructure spending involves the chilled water, steam and power systems necessary to keep any university operational.

The academic projects tend to be more expensive by their very nature. Academic projects typically involve the construction of massive new buildings that end up costing the university tens of millions, if not hundreds of millions of dollars to complete. On the infrastructure side, the projects tend to be smaller in nature in terms of dollars spent, but just as, if not more, significant to the stability and growth of the university.

In 2006, the academic side of university spending is projected to be quite large with over $2 billion currently on the books for anticipated construction this year. However, this only represents around 40 projects. The infrastructure projects expected to begin construction this year are significantly less in terms of dollars, around $850 million, but there are a great deal more projects, over 110 total.

Click on the image at right to view a breakdown of university spending by market region

A perfect example of the disparity between academic and infrastructure project spending would be the projects expected to begin construction this year in Western Canada versus the Great Lakes region. In Western Canada, there are three projects that should begin construction during 2006 and worth over $730 million, all of which are large academic projects. On the opposite side of the coin, the Great Lakes region has the most projects for the year in North America, 35, but a significantly less total investment of $368 million, indicating a larger number of infrastructure projects planned for the year.

Whether they are academic or infrastructure-related expenditures, universities are spending a great deal of money each year. From new research buildings, to new classrooms, to chiller additions to steam loop projects, billions of dollars are being spent on an annual basis to improve and expand North American universities, a trend that will continue for years to come.

Industrial Info Resources (IIR) is a Marketing Information Service company that has been doing business for over 23 years. IIR is respected as the leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.