Economic Downturn Causes Universities To Trim New Construction Projects

The hard reality of the economic hardships we face have also hit universities and other none profit organizations that till now, had been considered, for better or worse, the most recession proof consumers of design and construction services. The American Institute of Architects' market data, the architecture billings index (ABI) reflects this apparent drop-off. The institutional sector's most recent ABI score, from November, was 40.8, down from 41.3 in October and 44.4 in September. A number above 50 indicates an increase in billing activity, and below 50, a decrease. Prior to August 2008, the last time the institutional score had dipped below 50 was in December 2004.

Harvard, the world's wealthiest university announced that for the month of December, its endowment had shrunk from $36.8 billion to $28.8 billion during the second half of the year. Due to this astounding drop in their funding, the school is seeking to scale back on the scope of the ambitious 1 million square foot, $1 billion science complex expansion plans by Behnisch Architekten already under construction and scheduled to top-out in 2011.

“As recently as several months ago it was looking like institutional was holding up pretty well and the sector might actually get through this downturn unscathed,” says Kermit Baker, the AIA’s chief economist. Yet the equities meltdown has hammered endowments, obliging universities to divert funds from capital projects to financial aid, faculty salaries, and other core needs, Baker notes. Institutions are also finding it difficult to line up loans, issue bonds, and attract donors.

Other top schools like Princeton and MIT have not escaped unscathered either. The former has trimmed $300 million, or 12 percent, of its capital plan budget and delayed by a year the mid-2009 start on neuroscience and psychology buildings designed by Raphael Moneo while MIT has called for construction spending cost of up to 15% for the next four years but all projects like the Ellenzweig’s David H. Koch Institute for Integrative Cancer Research are to proceed on schedule.

This should not be too much of a suprise here. University donors are also pinching back their money so schools are ultimately going to have less in their endowment piggy banks. Where this becomes a concern is when these institutions begin to offer fewer scholarships and less money in general financial aid so students with less than affluent means will find it harder to obtain funding to attend school regardless of their talent.