The prolonged downturn and increased cost of materials made this round of negotiations particularly intense, says one NYC contractor. “There definitely were more demands put on labor unions from management to bring us to be more competitive with the open shop and nonunion markets,” he says. “If the economy were better, this would not have been so intense.”

Many firms are working at or below profit margins in hope of staying afloat, executives say. Concerns include underestimating both the cost and time to complete a job, as well as outright business failures for those that are consistently failing to do both.

“In 2010 it wouldn't have been unusual to see a project come in at 10 percent to 15 percent under budget, [because] everyone's discounting and being optimistic about how they can run the job,” Gilbane says. “I think it's going to moderate itself in 2011 because the pricing experiences of 2010 are going to be reflected in the budgets of 2011 and 2012.”

That might not happen in time to stop some firms from folding, however. Concerned about defaults, owners are asking for more due diligence for the prequalification and selection of contractors and subcontractors, Kalakowski says.

There have been some mostly small- and midsize firms forced to file for bankruptcy, Coletti says. “I've talked with several contractors who, just to keep their doors open, had to pledge their personal assets,” he says.

Many large contractors are diversifying their offerings to stay on top of market fluctuations. A.P. Construction is currently eyeing more work in the private sector than the public market because of the sheer number of bidders who show up for the latter, says Nick Everett, a senior vice president of the Stamford, Conn.-based firm. “Public bidding has gone from levels of six to seven firms to 27,” a situation that is likely to continue until the economy turns around, he says. A.P. expects to complete work soon on a $29-million renovation of a town hall and adjacent police station and garage in Hamden, Conn.

Meanwhile, some have begun to rehire, although they say they are not up to their prerecession levels.

There have also been a few restarts, including the $2.4-billion Atlantic City, N.J., Revel Hotel and Casino, which was delayed until Revel secured all of the $1.15 billion in financing. Tishman is serving as construction manager for the project, which is set for completion next summer.

Even so, many projects remain on hold. That has spurred the American Institute of Architecture to plan the creation of a database of stalled projects that “make economic sense” but lack financing. The database, which will be launched in coming months, will be available to potential investors.

Despite the challenges, some firms believe the market is emerging from an economic trough. “There is a different sense of optimism” as many believe the industry hit bottom in 2010 and that several factors are emerging that bode well for contractors, McKenna says. These include a decrease in office and commercial vacancy rates from last year; an increase in commercial office rents; and an increase in hotel average daily room and occupancy rates. These may not signal that industry's difficulties are over, he says, but they are likely to place it in a more favorable position than last year.