88% of Contractors Are at Their Lowest Backlog Since Lockdown. The Other 12% Have Never Been Busier.
This week's briefing covers three things that landed in the same fortnight and point in the same direction.
First, a closed room in central London. The CTO of DPR Construction, a 14 billion dollar US contractor, sat around a table with tier one contractors, engineers, investors and founders. The consensus was uncomfortable. The biggest clients on the planet are telling their supply chains to price on outcomes instead of hours, and to expect that price to fall every year. Nobody in the room, client side included, had a working answer for what replaces the hours model. The near term AI pressure lands in the back office first, not on site. The people best placed to rethink how this industry works are the exact ones pinned to the most lucrative projects, with no time to look up.
Then the numbers. The Associated Builders and Contractors survey puts the average US contractor backlog at eight months flat, the lowest since January, down across every region, every sector and every company size. The 12% of contractors holding data centre work are sitting on 11.4 months of runway. The other 88% are at 7.5. That gap went from two and a half months in June to 3.9 months in July. Fluor, one of the biggest engineering and construction firms on earth, saw its shares jump 17.4% in a single day for saying the better money sits one layer below the boom, in power, on contracts where someone else carries the risk.
Then open weight AI. Meta and Nvidia both released open weight models this week. The cost of running these models has fallen from 30 dollars per million tokens in 2023 to fractions of a cent today. Gartner projects costs fall another 90% by 2030. The firms selling AI tools built on top of someone else's model are about to get squeezed out. The construction firms that win are the ones that take their own project data, the one asset the big labs cannot get anywhere else, and train on top of it. Not your weights, not your product.
Drop your answers to this week's questions in the comments of the LinkedIn post.
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