Thursday, 29 April 2010

Effort to eliminate retainage fee pays off

Architectural Record reports federal contracting officers will no longer be required to withhold 10 percent of fees for architectural and engineering services, following a four-year effort spearheaded by the American Institute of Architect (AIA).

The new rule change—published in March by the Federal Acquisition Regulation Council (FAR), which is made of up the DOD, GSA, and NASA—classifies retainage as discretionary. If contracting officers choose to require retainage, it can be set at a rate below 10 percent.

The new rule also clarifies that “any amounts retained should not be held over beyond the satisfactory completion of the instant contract.” Previously, retainage could be held until construction completion.

Paul Mendelsohn, vice president of government and community relations at AIA, says that A/E firms had been unfairly singled out under the previous rules, as 10 percent retainage was not required of contractors.

“This is a big win at a time when there is a lot of federal government work coming out, especially for smaller firms that can’t afford to have money held back for months or years,” he says.

AIA was alerted to the issue by Paul Renker, principal of Renker Eich Parks Architects in St. Petersburg, Florida. Renker, a former president of the Tampa Bay Chapter of AIA, learned about the retainage rule in 2006, when his firm was selected to design a new, 166,000-square-foot, $30.5 million Job Corps Center in St. Petersburg for the U.S. Department of Labor.

The firm received its first payment for services 220 days from the start of fee negotiations; however, retainage was held until approximately 500 days after contract notice to proceed.

“In over three decades of practice, I had never seen that,” Renker recalls. “It shocked me to the point where I couldn’t let it go unchallenged.”

Renker says that as a small business, the withheld fees were particularly onerous, as the firm had borrowed money to help pay for project-related expenses. “I had to borrow money, yet the federal government held my fee interest-free,” he adds. His firm has 12 employees at the time and is now down to nine.

Renker brought the retainage issue to AIA staff, who in turn caught the attention of the Small Business Administration (SBA), an independent agency of the federal government. In 2008, the SBA identified the rule as one of its top 10 regulations for suggested reform.

Renker testified before the House Small Business Committee in 2008 that the retainage rule was a “strong deterrent for small firms,” arguing that it was counter to the Brooks Act, which establishes qualification-based selection process for A/E firms. “There are common methods of determining whether performance of A/E services has been satisfactory long before payment for services or completion of construction,” he testified.

The American Council of Engineering Companies and the National Society of Professional Engineers also backed the AIA initiative to change the rule.

Congress did not need to act on the rule change; rather, the SBA worked directly with FAR. A proposed rule was posted on May 5, 2009, with a two-month comment period. The final version was published March 19, 2010, and took effect April 19. Mendelsohn said that the process of getting the rule changed was “lightning fast” by Washington standards.

Click Here to view the new rule change. See the Architectural Record article Here.

Wednesday, 28 April 2010

OSHA will increase inspections and penalties under severe violator program

US Secretary of Labor Hilda Solis announced a new Occupational Safety and Health Administration (OSHA) initiative that will focus enforcement efforts on repeat offenders and increase civil penalty amounts for violations.

The Severe Violator Enforcement Program, scheduled to become effective by June 5, will increase the number of OSHA inspections on jobsites where OSHA deems there are “recalcitrant employers who endanger workers by demonstrating their indifference to their responsibilities under the law.” In addition, it will include mandatory follow-up inspections on these jobsites and inspections on worksites run by the same employer where similar hazards might exist.

OSHA defines “recalcitrant employers” as those who have violations that qualify as willful, repeated or failure to abate and that result in a fatality, expose employees to highly hazardous chemicals, or that involve “high-emphasis” hazards. Examples of high-emphasis hazards are fall hazards in construction and other industries; amputation hazards; lead hazards and excavation hazards, among others.

In addition to targeting severe violators with increased inspections, OSHA is making changes to its penalty calculations systems. Under the new penalty system, the average fine for a serious violation would increase from $1,000 to between $3,000 and $4,000. In addition, the time frame for considering an employer’s history of violations in the cost of the fine will grow from 3 years to 5 years. The penalty increases will take place over the next several months.

For more information, view OSHA’s news release Here.

Tuesday, 27 April 2010

AGC says increased police presence best way to cut work zone fatalities

NC Governor Beverly Perdue is working with law enforcement to keep construction workers and drivers safe in work zones. She declared April “Work Zone Safety Awareness Month”.

Across the U.S., more than half of work zone crashes are because of speeding or distracted drivers. On average, there are more than 200 work zones across the state every day. All month, the state highway patrol is cracking down on bad driving in work zones.

Increasing the police presence at highway and transit construction sites nationwide is the best way to cut the hundreds of work zone fatalities that take place every year, according to the Associated General Contractors of America (AGC). The group used the national Work Zone Awareness safety campaign to call on state and local transportation officials to commit to beefed up presence this construction season.

"All too often, it takes flashing blue lights to keep drivers from reading their blackberry while speeding through a work zone," said Stephen E. Sandherr, the association's chief executive officer. "Sadly, warning signs and safety vests offer workers little protection from distracted drivers."

Sandherr said that while police officers are sometimes posted at construction sites, states currently don't require their presence as frequently as they should. Meanwhile, over 750 people were killed in accidents in highway work zones in 2008, according to the most recent data. While an estimated 20 percent of the people killed were construction workers, more often than not, drivers and passengers are the ones killed in highway crashes, Sandherr noted.

The head of the trade group noted that association officials were meeting with the U.S. Department of Transportation and members of Congress to ensure that the next highway bill includes measures designed to improve the safety of the nation's highway and transit work zones. In addition, Sandherr said the national trade group has developed a comprehensive highway worker safety program with Zurich Services Corporation, to instruct employees on the best ways to protect themselves while working on road improvements.

Click Here to view the AGC press release.

Monday, 26 April 2010

Construction materials prices increase 1.3% in March

Reed Construction Data reports the surge in construction materials prices resumed in March with the price index up 1.3% from February.

Another short term rise in energy prices was a major contributor with diesel prices 8.9% higher, reversing the drop in February. Diesel highway pump prices are up another $0.15 since the March survey week. Apart from energy, prices for metals and lumber rose significantly in March with higher prices for these commodities beginning to creep in to the prices of wood and metal manufactured items.

The price indexes for assembled equipment (construction equipment and tools as well as building systems) continue to trend flat to slightly down. This reflects overall inflation in the economy which remains barely above zero. The March 0.7% increase in the Producer Price Index reflects the impact of recent short term increases in both food and energy prices. Excluding food and energy, the price index rose only 0.1%.

The price surge has not yet reached concrete products and is unlikely to until late in 2010 at the earliest. Periodic price surges for cement are primarily driven by the need to import cement when US production capacity is exhausted. However, there was a 0.5% rise in usually stable brick prices to 0.1% above the previous March. This may be due to rising residential demand that brickyards were slow to adjust to. Brick raw material costs are steady and the cost of natural gas for the kilns is declining.

Paint (-3.4%) and aluminum (-2.7%) were the only two significant price declines in March. The March metal price increases included steel scrap (12.3%), nonferrous scrap 9.6%, nonferrous pipe (8.2%) and steel pipe (2.9%). The March lumber price increases included softwood plywood (4.5%), engineered wood products (3.5%) and softwood lumber (2.4%). The March rises exaggerate lumber price trends for the rest of 2010. Spot prices have risen well above both contract prices and futures prices as mills are slow to a small rise in buyer demand.

The overall construction materials price index is 4.7% above a year ago but prices have increased at twice that pace in the last three months. The outlook is for the price index to finish 2010 at about 7% above the end of 2009 level. By contrast, overall prices in the economy will only be 1-2% higher by yearend.

See the Reed Construction Data detailed report on the US Construction-Related Price Indexes Here.

Where is North Carolina in the U.S. economic recovery?

N.C. State University economist Michael L. Walden says in a News & Observer: editorial, "We appear to be ahead of the nation."

"The housing market has been a key part of this recession. Price declines have limited new construction and reduced household wealth. Federal housing data show home prices actually edged higher in North Carolina in the fourth quarter of 2009, while still dropping in the nation. Also, since last spring, wage and salary payments to workers in North Carolina have averaged quarterly gains, even though they declined at the national level."

Walden says North Carolina has achieved its earliest lead is in the job market. "The broad-based household survey of jobs shows statewide employment up for four consecutive months (December to March) and increasing at an average monthly rate almost twice as fast as in the nation," he reports. "The narrower payroll survey shows nonfarm jobs at North Carolina's businesses up 0.5 percent since September, while still falling in the country."

"It's true the state's unemployment rate hasn't improved, but this is due to 'discouraged workers' - people who have dropped out of the labor force - returning to look for work when hiring prospects improve. To be counted as unemployed, Walden says, a person has to be actively looking for work. So it's normal to see jobs and the unemployment rate both increase at the beginning of an economic recovery.

Walden expects North Carolina will continue to outperform the nation in this comeback of our economy. "During the economic expansion of 2002-2007 (between the recessions of 2001 and 2007-2009), GDP here grew faster than GDP in the nation. Our state actually increased its share of national production during that period in several key manufacturing sectors, such as computer and electronic products, vehicle parts and fabricated metals products. We also attracted households from other states, a trend that has continued during the recession."

Significant economic challenges remain for our state, according to Walden. "Like the nation, unemployment will remain elevated for several years. The shift of jobs from the manufacturing sector to the service sector will continue. The fastest-growing jobs with the best pay will increasingly require a college degree, although over a third of the new jobs created will require minimal training - hence, income disparities between households may widen," he writes. "We'll also face stiff competition for jobs with other states and other countries."

Walden predicts that after almost two years of the steepest economic decline since the 1930s, we can say the bottom has been reached and a new climb has begun. "It will likely be a slippery and rocky climb, and everyone won't move up at the same pace. Indeed, some won't make the climb at all for some time. Still, improvement and progress seem to finally be here."

Click Here to view the complete News & Observer article.

Economist Michael L. Walden is a William Neal Reynolds distinguished professor at N.C. State University and the author of "North Carolina in the Connected Age."

Friday, 23 April 2010

Charlotte area construction sector taking a pounding in recession

Most of the resumes that rolled into Carmel Contractors a few years ago, at the peak of the real estate boom, came from "hoppers" - workers who'd spend a year at a firm before moving on, workers company officials hesitated to hire.

Things have changed, reports the Charlotte Observer.

"I have seen bunches and bunches of resumes from excellent candidates," said company President Scott Tuttle, whose southwest Charlotte business builds mixed-use developments, offices and other commercial projects. "We can't wait to hire. It just takes work. It takes projects."

Construction-sector jobs, once among the most readily available in the Charlotte region, have melted away by the thousands since the real estate bubble burst, home values plunged and foreclosures surged.

Even as the market has begun to recover, and even as other sectors have begun to add jobs, the construction field, which includes everything from builders to electricians to flooring specialists, continues to bleed. Experts say new local unemployment figures, released today, probably will show a similar pattern - and that it could take years for construction jobs to return.

"We built a lot of space" throughout the Carolinas during the boom, said Don Schunk, a research economist at Coastal Carolina University near Myrtle Beach. "This recession has shown us very clearly that in many cases, we built way too much space."

And for companies who ramped up staff in the mid-2000s to keep up with the rush, faltering demand has meant significant cutbacks.

About 35,200 construction-sector workers were employed in the Charlotte area in March, down 21 percent from the year before, data from the N.C. Employment Security Commission show. Over the last three years, the sector has lost almost 24,000 jobs - a drop of 40 percent.

To be sure, construction isn't the only sector suffering. The overall unemployment rate for the Charlotte area in February was 12.8 percent, and economists say it could take years before it returns to pre-recession levels of 5 percent or lower.

Yet the construction field has steadily posted some of the biggest losses in the region. In the year ending in February, for instance, the sector lost 23 percent of its work force, compared to a 0.2 percent gain for the broader region, the latest available data show.

In North Carolina, 10 percent of February's initial unemployment insurance claims - which track the pace of layoffs - came from special-trade contractors, ESC data show. That was the most of any industry.

"I think (construction employment) will lag, because that's an uncertain sector," said N.C. State University economist Mike Walden.

In recent months, positive signs have emerged across the economy. The Charlotte region added 1,500 jobs in February, with notable gains in the health care, government and professional-services sectors.

The real estate market has begun to recover, too, though that hasn't yet translated to job growth. Last week, the government reported that applications for building permits, an indicator of future activity, rose 7.5 percent nationally to the highest level since fall 2008.

In Mecklenburg County,data show the commercial real estate market may be stabilizing. And home sales in the Charlotte area jumped 14 percent in March over the year before, statistics from the Charlotte Regional Realtor Association show.

Still, sales remain well below their peak, foreclosures remain elevated and consumer confidence remains shaky, all hindering progress.

Local companies say they have few plans to hire anytime soon.

At commercial contractor R.T. Meacham Drywall Co., work slowed from 10 to 12 projects at a time, a few years ago, to two now, vice president Pamela Hampton said.

The Charlotte firm cut staff from about 15 to 11, including three recent hires, brought on for a specific project, she said.

Hampton expects things to begin looking up by early 2011 - but "we're not seeing a whole lot of evidence yet," she said.

Residential remodeling and custom-home company Palmer Custom Builders also has seen a continuing slowdown. It pared its staff to three from five employees and has been reaching out to customers in new ways, including an updated website and Facebook page.

Company officials are optimistic, though, as they've noticed an uptick in interest, calls and project quotes.

"The momentum is building," general contractor Gary Palmer said. "We're almost there."

At Carmel Contractors, the commercial builder, Tuttle slashed his staff from the mid-20s to around 15 in January 2009, cutting superintendents, project managers and administrative workers.

Last summer and fall, the company didn't have a single active project. Since then, work has picked up, but things remain tough, he said.

Recently, the company was hired to build a day care, and brought on a superintendent as a result, Tuttle said. Shortly after, the project fell through.

Tuttle expects construction-sector employment to depend largely on the residential market, saying it could take 18 months to two years to bounce back.

Experts predict modest improvement throughout 2010, with the construction sector gaining strength next year.Many of the projects, for now at least, will focus on stimulus-funded work and small jobs, such as renovations.

Schunk, the research economist, said it will take several years for job growth to return - and said that while employment might reach the level of boom years, it won't likely see those sky-high growth rates again.

"It will eventually claw its way back," he said. "Construction is always there. It can get out of balance in the short term ... but once it gets back into balance, and it will, it will grow."

Click Here to view the Charlotte Observer article.

Wednesday, 21 April 2010

Architectural Billings Index trends upward

Happy Earth Day. On the heels of a more than two point gain in February, the Architecture Billings Index (ABI) was up again in March. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending.

The American Institute of Architects (AIA) reported the March ABI rating was 46.1, up from a reading of 44.8 the previous month. Though this score reflects a continued decline in demand for design services (any score above 50 indicates an increase in billings), it is the highest score since August 2008. The new projects inquiry index was 58.5.

“This is certainly an encouraging sign that we could be moving closer to a recovery phase, even though we continue to hear about mixed conditions across the country,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Firms are still reporting an unusual amount of variation in the level of demand for design services, from improving to poor to virtually non-existent. This increasing volatility is often a sign that overall business conditions may begin to change in the coming months.”

Click Here to view the AIA press release

New lead-based paint regulations in effect

A new US Environmental Protection Agency (EPA) rule effective April 22, 2010 requires the use of lead-safe work practices and other actions to prevent lead poisoning when lead-based paint is disturbed during renovation and remodeling work. Exposure to lead can be harmful to both children and adults.

Lead-contaminated dust, particularly from old paint, is the most significant source of lead exposure for children. Common renovation activities like sanding, cutting and demolition can create hazardous lead dust and chips by disturbing lead-based paint. Lead-based paint was used in more than 38 million U.S. homes until it was banned for residential use in 1978.

In late January, the State of North Carolina was authorized to administer and enforce a Lead Renovation, Repair and Painting (RRP) Program. The North Carolina program, to be administered by the state Division of Public Health, has been certified to be at least as protective as the Environmental Protection Agency’s RRP program and to provide adequate enforcement.

The NC RRP program, like the EPA’s, mandates that contractors, property managers and other paid workers doing renovations, construction or repairs in homes and child-occupied facilities built before 1978, must be trained and certified, and must use lead-safe work practices. They are also required to provide the lead pamphlet “Renovate Right; Important Lead Hazard Information for Families, Child Care Providers and Schools” to owners and occupants before starting renovation work in those buildings.

The Carolinas AGC warns that general contractors and specialty trade contractors such as painters, carenters, plumbers and electricans) who aren't generally considered "renovators," are considered renovators under this program and therefore must follow the rule's requirements. Contractors who fail to comply could face penalties of up to $37,500 per day per violation. To get a list of EPA-accredited training providers in NC, visit, click Safety & Health, then Guidelines/News.

Contractors can also get information about applying for certification or locating training by visiting the state Web site at or contact the North Carolina Lead Program at (919) 707-5950. The Web site also has a list of certified contractors, painters and renovators.

Tuesday, 20 April 2010

NC unemployment rate in March down slightly from previous month

North Carolina’s unemployment rate decreased to 11.1 percent in March from 11.2 percent in February, according to statistics released by the state’s Employment Security Commission.

The Greensboro News-Record reports the rate remains up from the March 2009 figure of 10.3 percent.

“North Carolina gained 3,300 jobs in March,” Employment Security Commission Chairman Lynn Holmes said in a news release. “Manufacturing and construction both had small gains in the month. But we need to see a more consistent pattern of growth in our job sectors in the coming months before we can be sure this is a sign of sustained growth.”

The largest over-the-month increases occurred in leisure and hospitality (+2,200) and manufacturing (+2,100). The largest decrease was in professional and business services (-2,400). Since March 2009, nonfarm employment has decreased by 61,600 jobs.

Click Here to view the article.

Monday, 19 April 2010

Building supply production and retail sales jump in March

Reed Construction Data Chief Economist Jim Haughey reports building supply production and retail sales increased in March compared to a year ago. Retail sales at building supply centers are still slightly below winter 2009 and 20% below the peak level in March 2006. The March sales gain is consistent with net hiring by retailers in March. The sales trend is expected to be gradually up for the rest of this year and rise more strongly next year. But a return to the March 2006 peak sales level is still several years away, Haughery writes.

Construction materials production is still 2% lower than winter 2009 and 26% below the early 2006 peak. The 26% drop is an exaggeration because the formula for calculating the construction materials production index can not accurately separate demand changes between construction and manufacturing. The production trend for 2010 will be up but at a more modest pace than in March with more rapid growth in 2011.

Click Here to view the Reed Construction Data report.

Friday, 16 April 2010

Southeast economy improved in March and April

Economic conditions in the South improved in March and April, according to the Federal Reserve’s Beige Book report released this week.

The Charlotte Business Journal reports merchants in the region told the Federal Reserve they saw improved traffic and sales in March. The outlook among Southeast retailers also improved with the majority expecting sales to increase over the next couple of months. Vehicle sales rose from a year ago, largely driven by an expansion in fleet sales deferred from last year.

Despite a stronger sales climate, retailers reported they continue to keep inventory levels lower than normal.

Tourism-related spending was described as stable in most parts of the region.

The Fed found home builders saw improved new-home sales. In addition, construction activity rose modestly from low levels. New-home inventories remained down sharply from a year earlier, and the majority of home builders continue to face price declines. Overall, the outlook for home sales and construction improved modestly from early this year.

Realtors saw a slight improvement in existing-home sales. Sales at the low end of the market continue to outpace those at higher price points. However, sales growth at the low end moderated from late-2009 levels, while mid- to high-end home sales stabilized.

The Charlotte market saw 1,397 existing-home sales in February, a 4 percent increase from February 2009, says the N.C. Association of Realtors. Statewide, home sales in February were flat at 4,643 from a year ago.

Commercial construction remains stalled across the Southeast. Most contractors described activity as flat and a few have additional erosion in demand. The backlog of work is lower than a year ago, and most commercial contractors expect little improvement for the rest of 2010.

Unemployment remained high across the region in February and March. The jobless rate in North Carolina rose to 11.2 percent in February from 11.1 percent in January. Unemployment was unchanged in South Carolina at 12.5 percent.

Click Here to view the Charlotte Business Journal article.

Thursday, 15 April 2010

Energy conservation in south could save billions, create jobs

Energy-efficiency measures in the southern U.S. could save consumers $41 billion on their energy bills, open 380,000 new jobs, and save 8.6 billion gallons of water by 2020, according to a new study from the Nicholas Institute for Environmental Policy Solutions at Duke University and the Georgia Institute of Technology. The study concludes that investing $200 billion in energy efficiency programs by 2030 could return $448 billion in savings.

The researchers modeled how implementation of nine policies across the residential, commercial and industrial sectors might play out over 20 years in the District of Columbia and 16 southern states.

"We looked at how these policies might interact, not just single programs," said Etan Gumerman of the Nicholas Institute and co-lead researcher of the study. "The interplay between policies compounds the savings. And it's all cost-effective. On average, each dollar invested in energy efficiency over the next 20 years will reap $2.25 in benefits."

Policies considered by the study, "Energy Efficiency in the South," include new appliance standards, incentives for retrofitting and weatherization, upgrades to utility plants and process improvements.

The South is rich terrain for efficiency improvements. Without them, the region might expect 15 percent growth in energy demand by 2030. Thirty-six percent of Americans live in the study region. The region consumes an outsized portion of American energy, 44 percent, but it also supplies 48 percent of the nation's power.

A combination of factors has left this disproportionate usage unexplored by policymakers keen on energy efficiency. The South historically has low electricity rates, which encourage consumption. Energy-efficient products have a lower market penetration than elsewhere in the U.S. And these states spend less per capita on efficiency programs than the national average.

The researchers generated a "business as usual" scenario, without any policies, and compared it with scenarios that included specific sets of energy-efficiency investments, to capture the cost savings.

The study concludes that aggressive energy efficiency initiatives would:

•Generate new jobs, cut utility bills and sustain economic growth. Overall utility bills would be reduced by $41 billion a year in 2020 and $71 billion in 2030; the average residential electricity bills would decline by $26 per month in 2020 and $50 per month in 2030; electricity rate increases would be moderated; and 380,000 new jobs would be created by 2020 (annual job growth increases to 520,000 new jobs in 2030). The region's economy is anticipated to grow by $1.23 billion in 2020 and $2.12 billion in 2030.

•Reduce the need for new power plants. Almost 25 gigawatts of older power plants could be retired and the construction of up to 50 gigawatts of new plants (equal to the amount of electricity produced by 100 power plants) could be avoided.

•Result in substantial water conservation. The reduction in power plant capacity would save southern regions of the North American Electrical Reliability Corporation 8.6 billion gallons of fresh water in 2020 and 20.1 billion gallons in 2030.

"An aggressive commitment to energy efficiency could be an economic windfall for the South," said Dr. Marilyn Brown of the Georgia Institute of Technology and co-lead researcher of the study. "Such a shift would lower energy bills for cash-strapped consumers and businesses and create more new jobs for Southern workers."

Profiles of the report's results for each state are available Here

Wednesday, 14 April 2010

New rule allows federal agencies to require use of Public Labor Agreements

Best Practices Construction Law reported the Obama administration issued final rules this week that allows federal agencies to require public contractors to use public labor agreements (PLA) on large public construction projects.

PLAs are collective bargaining agreements that establish the terms and conditions of employment for a specific construction project. They have been used on private jobs, as well as state and local projects, including the construction of schools, hospitals, roads, bridges, power plants and airports.

The rule was first issued as Executive Order 13502 "Use of Project Labor Agreements for Federal Construction Projects." The final rule due out today implements the Executive Order.

What are the benefits of PLAs? According to Jared Bernstein, a White House economist, PLAs provide "structure and stability" to large construction projects. He writes PLAs help ensure compliance with laws and regulations governing workplace safety and health, equal employment opportunity and labor and employment standards. The White House beleives the coordination achieved through PLAs can significantly enhance the economy and efficiency of Federal Construction projects.

Bernstein reported that as of last summer, 21 out of 25 major Department of Energy construction projects were (or slated to be) covered by PLAs.

Many critics see this rule as bad news for the construction industry. Rep. John Kline (R-MN), the U.S. House Education and Labor Committee’s senior Republican member, warned that the new rule "will reduce competition and drive up costs for taxpayers." Kline pointed to the U.S. Department of Labor’s decision last year to cancel a Job Corps Center construction project in New Hampshire as evidence of the dangers PLAs pose to federal job creation and project efficiency. The New Hampshire project was canceled after a local contractor raised a legal challenge to the project's PLA requirement, arguing it was discriminatory and would disqualify most contractors in the state.

Other critics, such as the Workforce Fairness Institute, suggest that the rule forces small businesses "to adhere to costly and non-competitive schemes, [which] will only result in lost jobs." According to Katie Packer, executive director of WFI, “[e]nding fair and open bidding for federal contract work will disqualify employers from competing and increase the costs of projects just as our nation’s debt skyrockets."

The Associated General Contractors of America and Associated Builders & Contractors flatly oppose any government mandated labor agreement, primarily because they negatively impact small companies, non-union companies, and disadvantaged businesses who frequently become excluded from contracting opportunities by such agreements.

Stephen E. Sandherr, the AGC chief executive officer said, "We appreciate that the Administration accepted our counsel to avoid retroactively imposing government mandated labor agreements once contracts have already been awarded. However, we continue to strongly oppose any effort by government officials, who often have little or no experience in construction labor relations, to undermine existing relationships between contractors and construction workers by imposing project labor agreements. Any comprehensive review of existing construction worker benefits and current federal contracting guidelines will prove that government mandated labor agreements are as unnecessary as they are costly and counterproductive. That is why we will continue to encourage agency officials to exercise the broad latitude provided by these rules to avoid imposing these agreements."

Click Here to view the Best Practices posting.

Monday, 12 April 2010

Gov Perdue rolls out NC small business help plan

Gov. Bev Perdue released a $17 million proposal of small business initiatives she wants state lawmakers to pass, saying the package would help protect the backbone of the state's economy and hasten the recovery.

The News & Observer reports Gov Perdue wants legislators returning to work next month to approve or expand about a dozen tax incentives, grants and other provisions. She wants the state to guarantee a portion of federal small business loans and expand on her executive order giving favorable treatment to North Carolina firms seeking state contracts.

Small businesses are "a major driver in our economic recovery," Perdue said in a news release. "Supporting small businesses means supporting jobs for North Carolinians."

About $10 million of the package would be in the form of tax relief, Perdue spokeswoman Chrissy Pearson said.

The governor wants lawmakers to give favorable capital gains treatment for the founding interests on a company, revive a tax credit for small businesses that provide health insurance to lower-income workers, and offer a tax break for their equipment purchases.

The package also seeks:

Money to help companies win federal technology grants and direct assistance to small family farms.

Restoration of funding to community colleges for small business assistance.

More money to promote tourism and revitalize downtown districts in small towns.

The North Carolina chapter of the National Federation of Independent Business said Friday that it supports Perdue's ideas.

Click Here to view the News & Observer article.

Saturday, 10 April 2010

Toll roads provide reality-based funds in NC

North Carolina is moving closer to having the state's first toll road. It's a development that many thought we'd never see in the Tar Heel State, reports The Jacksonville Daily News.

Economics, rapid population growth and the cost of environmental regulations forced state lawmakers and transportation officials to take a hard look at new ways to come up with the money to build roads.

One solution they came up with was toll roads and bridges.

Toll roads have some advantages over other methods of paying for such roads. The major one is that it's a direct user fee -- people using those roads will foot the bill.

Another advantage is that charging a toll is better than most other solutions, which generally involve increasing old taxes or establishing new ones. That doesn't mean that our lawmakers in Raleigh won't find ways to increase those taxes; just that they'll have to come up with a better excuse than the money will be used to pay for highways and bridges.

Having toll projects also means that the selected highways and bridges will be built a lot sooner than they would have using traditional revenues -- up to two to three decades sooner.

As most of these projects are quite expensive, building those roads with traditional revenues would have siphoned off funds designated for other roads.

One more good thing about toll roads: Once the bonds that were used to finance the toll road or bridge are paid off, the tolls come off.

Images that come into the minds of many are of long lines at toll booths, with motorists waiting to toss coins into a machine or get a toll ticket punched.

In North Carolina, toll roads aren't being designed that way. Modern technology will allow motorists to pay tolls without having to slow down. The N.C. Turnpike Authority will pay for high-speed cameras to photograph license plates as cars enter a toll road. Owners of the cars will then be sent monthly bills.

Motorists who travel toll roads and bridges frequently might decide to purchase a transponder (costing from $9 to $20) to place in their vehicle's windshield. That will send out a radio signal telling turnpike computers that you're on a toll road or bridge and to charge your account accordingly.

Finally, motorists who don't want to pay tolls can use alternate routes. For example, people from points west of Raleigh can still use Interstate 40 and U.S. 70 to travel to the eastern part of the state without traveling on the Triangle Expressway. Motorists in New Hanover County will still be able to use existing U.S. 17, U.S. 74 and U.S. 76 routes instead of paying a toll on the Cape Fear Skyway.

Major highway projects cost a lot of money. With toll roads and bridges, unlike many other government programs, those who use these roads and bridges will be paying for them.

Click Here to view The Jacksonville Daily News article.


Friday, 9 April 2010

Stimulus payroll dips 27% at NCDOT

North Carolina transportation workers worked fewer hours in February, reports the Triangle Business Journal. Stimulus payroll doled out to transportation workers in North Carolina slid 27 percent in February – the fourth consecutive month to see a drop.

A total of $1.6 million was paid to 2,917 workers in February, according to data collected by the North Carolina Department of Transportation. They worked a total of 121,003 hours on highway and road projects in the state.

In January, 2,594 employees worked 122,467 hours and earned $2.2 million in payroll on stimulus-funded transportation projects.

Transportation construction typically slows down in the winter due to inclement weather.

According to NCDOT, $25.2 million in payroll has been doled out since April of 2009, when the first transportation stimulus spending began.

Click Here to view the fTriangle Business Journal article.

Wednesday, 7 April 2010

Carolinas AGC Construction Barometer™ shows bright spots

The Carolinas AGC Construction Barometer™ for the fourth quarter showed some regional bright spots for NC contractors. The Barometer score was 2.81 representing little movement from the fourth quarter of 2008, when the Barometer stood at 2.85.

While hard data indicate the recession’s darkest days are behind us, and the economy seems to be moving slowly forward, construction improvement is lagging. However, closer analysis of specific regions reveals hopeful bright spots.

Overall Barometer Highlights:

Financing Availability indicators remained flat at year-end 2009, with record-low interest rates unchanged and contractors reporting little relief to the on-going credit drought. Credit for virtually every construction-related purpose remains difficult to get, difficult to renegotiate, and increasingly expensive. Contractors don’t expect these conditions to worsen substantially throughout 2010 but hold little hope for significant improvement.

Business & Economic numbers fell 5.7%-- there’s simply not much construction activity, and contractors reported little expectation that 2010 would bring significant changes. Consistent with widespread industry weakness, construction materials prices are falling, there’s weakening demand for heavy equipment purchases and fixed asset acquisitions, and little expectation for a near-term rise in commodity prices.

The most dramatic fall—the Barometer’s Employment & Labor Market indicators dropped 5.9% -- concerned planned hiring activity in 2010. Most areas of the Carolinas reported lower hiring plans, even though wages are expected to continue trending lower. Contractors projected increased hiring likely in 2011 and 2012.

Looking to the end of 2010 and into 2011, however, contractors expressed slightly stronger expectations that commodity prices would begin trending upward, particularly for petroleum-derivative products and fuels. In contrast, contractors expect stable equipment prices for the next year or two, even when business conditions begin improving in 2011.

Regional Economic Highlights

Heartland NC: Down 3.2%
Heartland contractors reported easier credit conditions for both short-term work capital facilities and long-term equipment financing, countering reports of industry credit deprivation elsewhere in the Carolinas. They also reported a modest tightening in available skilled labor, although few are hiring. Also reported were modestly rising materials costs and significantly stronger expectations that costs will escalate in 2011.

Western NC: Up 1.6%
Contractors highlighted reduced credit availability and rising risk-adjusted financing costs. The downturn in financial conditions in the West may be temporary, however, as contractors expect some improvement in both the availability and cost of equipment financing by mid-year.

Construction materials costs were running counter to the labor cost trend; with contractors reporting modest increases in selected building materials and petroleum products. And in spite of sluggish construction activity, Western contractors reported rising heavy equipment purchases.

Eastern NC - Down 3.5%
Eastern contractors reported significantly better financial conditions, with greater availability of both short- and long-term loan dollars, falling risk-adjusted financing costs, and the expectation that easier credit conditions would continue throughout remaining 2010.

Construction materials costs were running counter to the labor cost trend in the fourth quarter, however, with contractors reporting modest increases in selected building materials and petroleum products. Heavy equipment purchases declined in the East.

Click Here to view North Carolina vs. South Carolina trends.

Nobody's happy in NC road fund fight

The News & Observer reported speakers from across North Carolina found little to like yesterday in the "equity formula" used to distribute most state road-building money, but small-town advocates fretted that any change would make things worse for rural areas.

"There are a lot more losers than there are winners, but it isn't because of the equity formula," said Craig Hughes of the High Country Rural Planning Organization, which serves mountain counties in the state's northeast corner. "We all need more funding."

A House-Senate transportation oversight committee heard ideas from 16 civic and political leaders about possible changes to the formula. The committee was asked to consider improvements but is not expected to recommend big changes in the General Assembly this year.

The formula was adopted in 1989 as part of a compromise funding plan to pave rural dirt roads, surround big cities with freeway loops and link nearly every town in a web of four-lane highways.

Areas with more residents get more dollars, but big-city speakers complained that the formula ignores urban commuting patterns, air pollution and traffic jams. "The funding definitions were created 20 years ago, when our population looked dramatically different," Durham Mayor Bill Bell said.

Stephen Jackson of the left-leaning N.C. Budget and Tax Center said the state should funnel more money to reducing urban congestion. "We need to put the money where the traffic is," Jackson said. He also called for local governments to take over the burden of secondary roads. To pay for that, he said, local governments could be empowered to levy fuel and income taxes.

Joseph Coletti of the right-leaning John Locke Foundation warned that fuel taxes are higher in North Carolina than in neighboring states. But he floated the idea of boosting diesel fuel taxes for commercial vehicles.

Rural leaders sought to protect pet projects to improve local highways. But Leigh Woodall of Roxboro said Wake County has hogged Triangle funds, thwarting plans to widen U.S. 501 in Person County. "Because of the equity formula, not a single dollar has been spent in Person County for a highway construction project since 1987," Woodall said.

Durwood Stephenson, a Smithfield developer, doubted that legislators could find a better way to divide scarce funds. "The equity formula is equally unfair to us all," Stephenson said.

Click Here to view the News & Observer article.

Monday, 5 April 2010

Construction employment rises for first time since June 2007

Payroll employment in the construction industry in March rose by 15,000, seasonally adjusted, the first gain since June 2007, according to federal employment figures released last Friday. The Associated General Contractors of America hailed the increase but cautioned it may not be sustained.

"This upturn was shared among all three nonresidential categories-building construction, specialty trade contractors, and heavy and civil engineering construction," said Ken Simonson, the association's chief economist. "But both nonresidential and residential construction employment remain lower than in January, suggesting some of the pickup may have been a short-term rebound from exceptionally severe weather in February."

Simonson noted that the industry's unemployment rate, which is not seasonally adjusted, dropped slightly from 27.1 percent in February to 24.9 percent in March but remained more than double the all-industry level. "The persistence of depression-like unemployment in construction is ominous for an industry that already faced challenges retaining and attracting skilled crafts workers and supervisors."

Simonson pointed out that the industry continues to outpace the overall economy in wage rates. Hourly earnings for all workers in construction in March averaged $25.27, seasonally adjusted, 12.5 percent higher than the average for all nonfarm payroll workers. Craft workers averaged $23.18 or 23 percent more than all production and nonsupervisory workers.

Click Here to view the AGC press release.

Sunday, 4 April 2010

AIA complains of “bottleneck” in stimulus funding

The American Institute of Architects has reported a ‘modest rebound’ in architecture billings, saying that a bottleneck of stimulus funding is hampering recovery.

The AIA’s billings index, a monthly report that measure architectural billings and is seen as a thermometer for the health of the American construction industry, rose by two points to 44.8 in February.

However, the index still shows a month-on-month decline in the amount of money architectural practices are billing for, with any score below 50 indicating a decrease.

The index had tumbled by three points to 42.5 in January, dashing tentative hopes of a recovery for the architecture sector.

AIA chief economist Kermit Baker said: “We continue to hear that funding dedicated for construction projects in the stimulus package has not yet been awarded, resulting in a bottleneck of potential projects that could help jumpstart the economy.

“That, coupled with a persistently rigid credit market for private sector projects, is a key reason why the design and construction industry continue to suffer at near historic levels in terms of job losses.”

The AIA issued an open appeal to the American government urging bipartisan support for initiatives that would help the design and construction industries recover from the downturn. Click Here to view the AIA appeal.