Thursday, 31 July 2008

Highway Trust Fund 'fix' blocked

The Associated Press reports that another attempt to add more revenue to the Highway Trust Fund was blocked in the Senate yesterday. An $8-billion infusion for the trust fund is part of a bill to extend various expiring tax breaks, including some for renewable energy sources. The measure fell nine votes short of the 60 needed to close off debate on the bill.

Senate Finance Committee Chairman Max Baucus (D-Mont.) introduced the "extenders" bill that includes the trust fund "fix." Construction industry and state officials have been seeking a way to add revenue to the trust fund to address a projected $3.1-billion deficit in the fund's highway account in fiscal 2009.

The Associated General Contractors of America (AGC) backed the provision that would prevent the Highway Trust Fund from going into the red.The anticipated shortfall next year could stop new infrastructure projects and result in the loss of hundreds of thousands of jobs. The House on July 23 approved a stand-alone bill that would shift $8 billion to the trust fund from the general fund, but the plan hasn't made it through the Senate.

Advocates of renewable energy sources also were also disappointed by the vote. It leaves in limbo such provisions as a solar energy tax credit, which is scheduled to expire at the end of December. Baucus' bill would have extended the solar credit for eight years.

"Failure to pass the Baucus/Grassley fix will reduce highway funding to states by 32 percent. The Baucus/Grassley provision will ensure that the Highway Trust Fund does not go into deficit next year," said AGC's chief executive officer Stephen E. Sandherr.

Wednesday, 30 July 2008

Green schools groundswell


Carrboro High School has earned top marks in environmental design, becoming North Carolina's first Leadership in Energy and Environmental Design, or LEED, certified high school. The new school is North Carolina's second K-12 facility to earn LEED certification. The first was Third Creek Elementary School in the Iredell-Statesville Schools. Both LEED schools were designed by Moseley Architects of Raleigh.

Underlying the groundswell for Green schools is a combination of enormous stakeholder advocacy for the program, a growing concern about rising energy bills at the school district level, and development of the tools and information that allow for economical and standardized green school construction, according to a recent Green Technology Magazine interview with U.S. Green Building Council Education Sector Manager Rachel Gutter.

Over a year ago, when USGBC launched the LEED for Schools rating system, it was happy to see a few hundred registered school projects in the U.S. Now there are almost a thousand projects certified or in the pipeline.

The LEED certification process begins when a project team completes documentation attesting to the green attributes of the school, each of which are assigned points. The documentation is submitted to USGBC for a third-party evaluation that ensures the project has met the prerequisites and minimum points needed for certification.

A school can become certified at four different levels, ranging from Certified to Silver, Gold and, finally, Platinum. Early in the process, project teams register their intent to go through the LEED certification process, which gives them access to USGBC’s online resources.

What is sparking all the interest? The program is talked up at the local level by advocates for green schools at USGBC’s almost 70 local chapters. But even more significantly, a lot more advocacy being done by parents, school decision makers like principals or superintendents, school boards, even students in a lot of cases.

On December 18, 2007 the Mecklenberg County (NC) Board of Commissioners approved an amendment to the County Fee Ordinance to include the Green Building Rebate Program, offering permit fee rebates to projects with proof of LEED certification. Rebates increase proportionate to the level of certification achieved: 10% reductions for LEED Certified, 15% for LEED Silver, 20% for LEED Gold and 25% for LEED Platinum. Projects with proof of other nationally-recognized green building rating systems are also eligible.

Another big part of “tipping the scale” is increased interest in green schools at the federal level. HR3021, The 21st Century Green High-Performing Public School Facilities Act which was passed by the House of Representatives by a vote of 250–154 recently, called for $20 billion over a several-year period for green school improvements.

The biggest concern about initiating a green schools program in a community is still the cost, says Gutter. A study, Greening America’s Schools Costs and Benefits, shows that while green schools cost about $3 per square foot more to build, they provide financial benefits that are 20 times as large due to factors such as energy savings and teacher retention.

There is also a perception that LEED certification, itself, is expensive, but Gutter says that the average cost to go through the third-party verification process for certification costs an average of $5,500, or less than a tenth of one percent of the total construction budget. “It will take awhile to get that across,” she says.

View the entire Green Technology article at http://www.green-technology.org/green_technology_magazine/leed_for_schools.htm

Tuesday, 29 July 2008

$13.78M airpark project lures contractors

The Daily Advance reports growing interest in bidding for construction work at the new $13.78 million Elizabeth City aviation research and commerce park.

During a recent pre-bid conference at the Elizabeth City-Pasquotank Regional Airport, 26 contractors and vendors attended — which far exceeded expectations, according to city manager Rich Olson. Contractors will be bidding for two parts of the project — the $5.3 million taxiway ramp across Consolidated Road and the $4.1 million aviation park construction.

Bid opening for the ramp — or taxiway — project will be at 11 a.m. Wednesday, Aug. 6, followed by a 1 p.m. Aug. 6 bid opening for the aviation park, Olson said. The city council will then award the contracts, followed by a construction start by late September.

"To date, 18 sets of plans have been purchased for the taxiway project, while over 10 sets of plans have been secured for the rest of the park project," Olson said.

Interest in the project is high, in part, because the economic slowdown in the past two years has resulted in fewer projects to bid on, according to Olson. He observed that “there is more competition, and bids sometimes come in lower than expected, unlike three and four years ago when contractors were harder to attract and bids came in higher than estimates,” The 187-acre project is expected to create up to 500 new jobs and pump millions of dollars into the local economy over the next five years, airport officials have said.

The first phase will be built on 63 acres, followed by a 60-acre expansion in phase 2 and 64 more acres in phase 3. DRS Technologies, which operates an aircraft maintenance facility next to the airport, will be among the first tenants of the park. Highlighting the research part of the park will be Elizabeth City State University, which will build an aviation science education building on 20 acres.

Olson said the total coast of the project is $13.78 million, which includes $9.4 million for the taxiway and airpark construction, and the remainder for land purchase, environmental studies and unforeseen expenses.

Monday, 28 July 2008

Wasting money on fuel due to excessive idling


With diesel fuel over $4.00 per gallon, letting a piece of construction equipment or a vehicle idle for an hour a day is just like burning a $10 bill. “Excessive idling is an expensive and wide spread problem, but there are things you can do about it,” says Larry Baker, vice president-sales of Earthwave Technologies.

“Our Fleetwatcher product is really amazing. It was created over the past 8+ years with primary input from our customers. We didn’t know anything about the construction industry when we started,” Baker told NC Construction News. “Our company went on a mission to help heavy equipment contractors manage their businesses better and more profitably. There are a dozen or more customers in the Carolinas that can tell you how Fleetwatcher has helped them.”

Baker suggests contractors can do their own calculations into how much idling is costing their companies, using the online Idle Reduction Calculator at http://www.earthwavetech.com/.

Look for the September/October issues of Charlotte Construction News and Triangle/Triad Construction News that will feature this and other technology innovations that North Carolina construction companies are using to increases efficiency, productivity and profits.

Sunday, 27 July 2008

Bills pile up for subcontractors’ work

Jack Hagel, staff writer for the News & Observer, reported yesterday that investors backing some of the Triangle’s most ambitious residential developments have almost $12 million in unpaid bills -- the latest sign of how a credit crunch is hampering the regional construction industry.

Real estate companies owned by Virginia Beach, Va.-based L.M. Sandler & Sons, whose companies have planned thousands of homes at communities such as 12 Oaks in Holly Springs, Amberly in Cary and Renaissance Park in Raleigh, owe contractors for grading, engineering and other work, Hagel wrote.

The accounting is detailed in almost a dozen liens filed in Wake County. He noted the biggest local claim against Sandler's companies comes from Fowler Contracting in Cary. The company is owed at least $5.2 million for grading work at three Triangle communities, court records show.

“Developers -- particularly those with residential projects -- are in a tight spot these days,” Hagel said in the article. “As home sales have slowed, lenders have become more cautious, which has slowed land sales and made it harder for many developers to pay bills quickly. That, plus the building slowdown, is putting contractors in a more defensive position.”

Lien filings are up nationwide. A lien is a monetary claim against a property. Contractors file them to secure payment for completed work. They have 120 days after they finish work to file the lien, which must be settled before or when a property is sold.

A few years ago, contractors were less likely to file liens because the hot construction market gave them confidence that they would be paid. Contractors also were reluctant to sour relationships for fear of losing future business. So they waited it out amid the building boom, letting other projects cover expenses.

Knowledge of lien law rights and obligations is critical these days. Fortunately this information can be found 24/7 with a subscription to LIEN LAW ONLINE. The subscription service, launched by a Mount Airy publisher six years ago, has 73 attorneys as contributing authors. LIEN LAW ONLINE is a comprehensive online resource covering mechanics lien laws in all 50 states and the District of Columbia, written by leading construction law practitioners in each jurisdiction.

For details contact: Construction Publications, Inc., 140 Essex Lane, Mount Airy, NC 27030 or visit the website http://www.lienlaw.com/.

Saturday, 26 July 2008

Resist price cutting pressure from developers

In his July MARKUP AND PROFIT blog, Michael Stone discusses price cutting pressures from developers. In California last year, developers who tried to force specialty contractors to lower their prices were hit with major lawsuits.

Says Mike, “I don’t know if those suits were resolved or not, but the subs and specialty contractors banding together to fight this was a smart move.”

He continues, “My guess is that we are going to see more of this across the country. These developers, the ones that build several thousand homes a year, believe they are working in a market-based business. Not true. Construction is a cost based business. You can’t cut your prices and make it up by selling more homes.”

In his blog, Mike suggests, “If you are smart, you won’t get involved in this nonsense. If you are working for anyone that comes back and tells you to cut your price, tell them where your next cut will be. Stay focused on selling and promoting your company. Return your phone calls, make your appointments on time, do what you tell your customers you would do, operate like a professional. You will get through this and you won’t have to cut your prices to get there.”

Good advice. Click on http://www.markupandprofit.com/blog/?p=303 to read Mike Stone’s blog in it’s entirety.

Friday, 25 July 2008

Surging fuel, asphalt, steel costs ‘clobber’ NC construction budgets

"Surging prices for diesel fuel, asphalt, steel and other materials are clobbering construction budgets," Ken Simonson, chief economist for The Associated General Contractors of America (AGC), reports. Simonson was commenting on the producer price index (PPI) for June reported by the Bureau of Labor Statistics (BLS).

The producer price index (PPI) for inputs to construction industries - materials used in all types of construction plus items consumed by contractors, such as diesel fuel - surged 10.4 percent over the past 12 months. The index for highway and street construction leaped 18.9 percent.

"Bad as those figures sound, the increases in asphalt and steel costs have been even worse since these prices were collected in mid-June," Simonson asserted. "In the first two weeks of July, asphalt prices have jumped by 40 percent in several parts of the country. Prices for rebar-steel used to reinforce concrete in highways, bridges and buildings soared $200 per ton."

Regarding diesel fuel, the average price of highway diesel hit a new record in July. "Suppliers have been announcing price increases for many other products as well," Simonson added. "Two gypsum makers told contractors that wallboard prices would rise at double-digit rates in each of the next three months." Aluminum has been setting records, while natural gas has doubled in price from a year ago. That has triggered jumps in the cost of construction plastics - such as polyvinyl chloride pipe, insulation and flooring - that use natural gas as a feedstock

The NCDOT, caught between rising costs and lower revenues, may delay new projects as they struggle to maintain existing roadways. Other public agencies, as well as private owners, are adjusting their budgets to reflect the new price realities for construction.

How can NC contractors deal with volatile construction costs? Managing price increases isn’t easy, especially since it’s practically impossible to change materials prices locked in by an existing contract. The American Subcontractors Association of the Carolinas offers its members tools and training that make it possible to negotiate future contracts to account for price swings. Both the ASA Subcontractor Bid Proposal (2008) and the ASA Addendum to Subcontract (2008) include model language stating that “A change in the price of an item of material of more than 5% between the date of the subcontractor’s bid proposal and the date of installation shall warrant an equitable adjustment in the subcontract price.”

Some contractors are making advance buys of price-volatile materials such as copper wire and pipe. One contractor’s strategy for dealing with unpredictable steel prices is to separate the steel package from the rest of the job, get mill prices and upon winning the bid, convince the client to fast track the order. Additional management tools are available from the Carolinas AGC http://www.cagc.org/ and the ASA of the Carolinas at http://www.asacarolinas.com/.

Thursday, 24 July 2008

NC minimum wage rises to $6.55 today

The minimum wage, which has been $6.15 in North Carolina since the beginning of 2007, climbs to $6.55 today.

The youngest workers and the oldest, retirees who are supplementing their income, are most likely to make minimum wage, said N.C. State University economist Michael Walden in today’s News & Observer. The federal Bureau of Labor Statistics estimates that 46,000 workers in North Carolina were paid the federal minimum wage or less last year. Nationally, about 2 million workers will now make 12 percent more, up from $5.85 an hour.

But raising the minimum wage will have a much broader effect because it will indirectly push up the pay of other workers who make a little more than the minimum, said John Quinterno, research associate at the N.C. Budget and Tax Center, an advocacy group for working families. Studies show that "raising the minimum wage over time reduces employment among minimum-wage workers," Walden said.

Faced with higher labor costs, especially coming amid a slowing economy, some employers will invest more in automation and cut jobs, he said. Or they might decide to hire a higher-skilled, more productive worker -- at a higher salary -- to replace multiple low-skilled workers.

Quinterno, however, contends the latest studies indicate a modest increase in the minimum wage has "little or no impact" on employment. There aren't many local employers that are able to pay only minimum wage, because of the Triangle's relatively low jobless rate. "We'd get a different employee if we paid minimum wage," he said. "You'll get an employee who'll fill the shoes for a couple of days and won't come back."

A year from today, the minimum wage in North Carolina and across the country is scheduled to rise again -- to $7.25 an hour.