Friday, 28 May 2010

Revised AIA form removes sureties responsibility for timely dispute claims

The American Institute of Architects (AIA) new editions of its A312 Performance Bond and Payment Bond and A310 Bid Bond will be published in June. The A310 was last revised in 1984, and the A312, in 1984.

AIA's commentary on the old and new forms, available online, contains the text of the updated bond forms. Of particular note to ccontractors, section 7.1 of the A312 (2010) Payment Bond provides sureties with 15 more days to respond to, and identify disputed parts of, claims — 60 instead of 45 days.

Furthermore, section 7.3 of the revised payment bond form greatly reduces the potential consequences for sureties that fail to dispute claims by the claim response deadline. Failure to timely dispute claims "shall not be deemed to constitute a waiver of defenses" for a surety or contractor, the bond form now says.

AIA's commentary notes that this change was made because "some recent court decisions have held that a surety's failure to strictly comply with its reply obligations… would result in a waiver of the contractor's and surety's defenses under the bond." The revised payment bond form does, however, allow claimants to recover reasonable attorney fees and "recover any sums found to be due and owing to the Claimant."

"This change relieving sureties of their obligation to meet claim response deadlines is unfathomable given the many subcontractors that have completely lost bond claims because they missed a claim deadline by a single day," said American Subcontractors Association (ASA) Executive Vice President E. Colette Nelson.

Read AIA's commentary Here.

Thursday, 27 May 2010

Special webinar on The Art and Science of Publicity

On Tuesday, June 1, Mark Buckshon, group publisher for the Construction News and Reports Group is offering a special webinar on The Art and Science of Publicity. Mark will share with you practical and effective insights into how you can achieve positive media publicity (in both traditional and new media) for your business.

The investment for the upcoming Webinar (June 1 at 3:00 p.m.) is $79.00 but you can save $40.00 if you’ve purchased his new book Construction Marketing Ideas. This meanings that either the book or the Webinar are free, depending on your perspective. As well, Mark will provide a free 30 minute phone consultation and be available to review and respond to your media relations and publicity strategy requests without any additional fee.

You can register for this webinar Here.

Wednesday, 26 May 2010

Construction backlog up 4.5 percent in first quarter of 2010

The Associated Builders and Contractors (ABC) released its Construction Backlog Indicator (CBI) for the first quarter of 2010 showing a 4.5 percent increase in construction backlog orders to 6.07 months, up from 5.81 months in the fourth quarter of 2009. Over the two-month period from February to March of this year, CBI shot up 17 percent and now stands at 6.05 months.

While the CBI rose in all areas of the country except the West from February to March, the Northeastern United States is the only region to see a higher backlog when compared to March 2009. CBI is a forward-looking indicator that measures the amount of construction work under contract to be completed in the future.

"The fact that the CBI is on the rise illustrates that the improvements recently seen in various other indicators, including construction spending, will continue through much of the balance of 2010," said ABC Chief Economist Anirban Basu. "However, the overall impact of the recession may not be at an end or approaching an end. It remains too soon to tell whether the current momentum will continue through 2011.

"As an indicator, the nonresidential construction industry tends to lag the overall economy by 12 to 24 months. With the broader economy having been in recovery for the better part of a year, and with stimulus spending still having an impact, the expectation is that for now, backlog will remain stable or better in the months ahead," Basu said. "Still, there are many forces at work that suggest that the sector's recovery may not be sustained as stimulus monies are steadily drawn down and commercial construction remains weak due to high vacancy rates and tight credit," Basu said.


Regional Analysis

"Overall, the nation's nonresidential construction industry is in the early stages of a rebound, and this is apparent in CBI statistics for the Northeast, South and Middle States. However, it appears momentum has stalled in the West, which may be due in part to the prevalence of serious state and local fiscal issues, as well as weak housing market performance," said Basu.

Industry Highlights

Backlog has been roughly flat for several months in the infrastructure category, posting at 9.33 months in March 2010. Backlog in both the heavy industrial and commercial/institutional categories have been on the rise, coming in respectively at 6.61 months and 6.31 months in March 2010.
Industry Analysis

"Construction backlog is no longer falling, and in fact, was rising during the first quarter of 2010 – a sign that nonresidential construction's rebound is spreading beyond government-financed projects and is increasingly private-sector motivated. It is important to note that the relative flatness of construction backlog in the infrastructure category shows that much of the money associated with the stimulus package has been obligated and is already reflected in backlog," Basu said.

Visit www.abc.org for additional details on construction backlog.

Tuesday, 25 May 2010

Perdue says new NC highway projects fund needed

Mayors joined Gov. Beverly Perdue on Monday to urge the NC legislature to create this year a dedicated fund to build urgent road and other transportation projects they say are needed to keep the state's economic engines roaring in the decades ahead.

The Associated Press reported Perdue wants the General Assembly to create the North Carolina Mobility Fund, which the governor said would generate up to $300 million annually by 2013 through higher driver's license fees, and end a trade-in sales tax break on new car sales. Perdue's proposal would increase some fees in the coming year, including raising annual state vehicle registrations from $28 to $35 for cars and light trucks.

The governor said the Department of Transportation would use the fund to pay for efforts to ease congestion with projects of statewide significance. The current road-funding formula punishes regions that want to spend money on large projects, making them hard to accomplish.

The fund likely would first be used to widen several miles of Interstate 85 close to the Yadkin River Bridge in Davidson and Rowan counties — a key shipping corridor between Atlanta and points north. Work is about ready to start to replace the aging bridge by issuing bonds.

"North Carolina values the safety of our businesses and the people who call North Carolina home and travel through North Carolina," Perdue told reporters at a news conference. "It's our obligation to make our traveling public safe."

A portion of Mobility Fund money also would go to interstate maintenance, city transportation projects and improving the state's ports to attract industries that rely on shipping.

"The Mobility Fund is all about job creation," Morehead City Mayor Jerry Jones said. "We need to find new revenue."

Perdue inserted the fund in her budget proposal last month, but Senate Democrats declined to put the measure in their $19 billion spending plan last week. Senators didn't have enough time to consider the idea in the first week of the session but they're "open to new ways to fund transportation and are studying this issue," said Schorr Johnson, spokesman for Senate leader Marc Basnight, D-Dare.

The House is now considering its own version of the budget. While some House members back the idea, Sen. Nelson Cole, D-Rockingham, co-chairman of the House budget transportation subcommittee, isn't sold on it when the state unemployment rate is more than 10 percent.

Perdue said it would be shortsighted of the Legislature to avoid the issue because of what she called election-year worries over fees or taxes.

"I don't know of any business, both in North Carolina now and outside North Carolina, who will ever walk away from laying down jobs in this state because of what the cost of a DOT fee is or what the cost of a registration fee is," Perdue said. "They will walk away if the infrastructure doesn't meet their needs to do business."

Click Here for more information on the Governor's Mobility Fund proposals.

Thursday, 20 May 2010

EPA helps commercial businesses tap into greater energy efficiency savings

In partnership with several states and utilities, the U.S. Environmental Protection Agency (EPA) announced a new pilot program designed to further improve commercial building energy efficiency, reports Sustainable Facility.

Building Performance with Energy Star will help utilities and state energy efficiency programs achieve increased energy savings and fight climate change by strategically pursuing whole building energy improvements with their business customers.

The pilot program is being launched with Energy Star partners Com Ed, MidAmerican, National Grid, the New Jersey Board of Public Utilities, Pacific Gas & Electric, Southern California Edison and Wisconsin Focus on Energy.

Modeled after the successful Home Performance with Energy Star program, Building Performance with Energy Star will provide a framework for regional energy efficiency programs to align their financial incentives and technical assistance with a comprehensive approach to building upgrades.

Building Performance with Energy Star includes several key elements to help states and utilities promote an inclusive strategy for improving energy efficiency. These elements include measuring energy use with EPA’s online energy measurement and tracking tool, Portfolio Manager, to score building performance; approaching energy efficiency opportunities in light of findings from whole building assessments; and creating a robust delivery network for whole building efficiency services.

Utilities and states that partner with EPA will use Building Performance with Energy Star to help business customers strategically plan and implement energy efficiency improvements over time – e.g., starting with low-payback measures that can create revenue to fund capital upgrades in the future. Building Performance with Energy Star can also be used to help customers identify buildings with the most opportunities for improvement and prioritize technical assistance and incentives for projects that will deliver the largest energy savings.

Energy use in commercial buildings accounts for 17 percent of U.S. greenhouse gas emissions at a cost of over $100 billion per year. Thousands of businesses and organizations work with the Energy Star program and are saving billions of dollars and preventing millions of tons of greenhouse gas emissions from entering our atmosphere each year.

Click Here to learn more. www.energystar.gov/index.cfm?c=reps.pt_reps

Architecture billings index reaches highest mark in over two years

For the third straight month the Architecture Billings Index (ABI) has gone up. 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 April ABI rating was 48.4, up from a reading of 46.1 the previous month. Although 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 January 2008 when revenue at architecture firms headed into recession. The new projects inquiry index was 59.6.

“It appears that the design and construction industry may be nearing an actual recovery phase,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “The economic landscape is improving, although not across the board, but doing so at a gradual pace. It is quite possible that we will finally see positive business conditions in the foreseeable future.”

Key April ABI highlights:

◦Regional averages: Northeast (51.0), Midwest (49.2), South (46.5), West (44.7)
◦Sector index breakdown: commercial / industrial (48.5), mixed practice (48.4), institutional (46.8), multi-family residential (45.8)
◦Project inquiries index: 59.6.

About the AIA Architecture Billings Index

The Architecture Billings Index is derived from a monthly “Work-on-the-Boards” survey and produced by the AIA Economics & Market Research Group. Based on a comparison of data compiled since the survey’s inception in 1995 with figures from the Department of Commerce on Construction Put in Place, the findings amount to a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction activity.

For additional details on The Architecture Billing Index, visit www.aia.org.

Tuesday, 18 May 2010

Buzz grows strong for collaborative construction projects

Collaboration is a buzz word in the state construction industry these day, Ellison Clary reports in this month's Triangle/Triad Construction News and Charlotte Construction News.

Dave Simpson of the Carolinas Associated General Contractors (CAGC) says joint venture arrangements are proliferating, including in the public building sector.

More general contractors are teaming up with each other, along with contractors and subcontractors, says Simpson, the North Carolina Building Director in the CAGC Raleigh office.

In a rough economy, “people are scrambling to survive,” he observes. With fewer dollars for construction and with greater competition, company executives are thinking innovatively.

Teamwork is a necessity as the NC Department of Transportation sends out more design-build projects, says Berry Jenkins, Simpson’s compatriot in Raleigh who is the NC Highway Heavy Division director for CAGC.

“The whole concept is predicated on DOT letting a contract where they give the team basic information,” Jenkins explains. “Then the team builds the project for a certain price.”

A giant joint venture is that of Archer Western Contractors and Granite Construction Co. on a 12.6 mile section of the Western Wake Freeway. The firms formed Raleigh-Durham Road Builders to work on the state’s first toll thoroughfare.

Dave Moyar, who came from Archer Western, is senior project manager for Raleigh-Durham Road Builders on the nearly $450 million job. Archer Western operates offices in Morrisville and Charlotte, with a regional hub in Atlanta. Granite Construction is from Watsonville, CA.

The size and complexity of work caused the partnership to make sense, Moyar says. On jobs this big, insurance companies encourage joint ventures, he continues, and adds, “It spreads the risk, so we’re not opposed to it.”

Though the road segment isn’t scheduled for final completion until mid-2013, Moyar already sees synergy among the 250 workers.

“The most pleasant surprise is how quickly we’ve jelled,” he says. “It happened because we have a common goal. The two firms have created a great marriage.”

A marriage is exactly what a joint venture is, says Bob Glusenkamp, senior vice president of Rodgers Builders. The Charlotte firm has been a partner in 25 joint ventures since the mid-90s.

“The cultures have to match,” Glusenkamp says. “At some point, tough decisions have to be made. You need to make them at the lowest level, preferably on the job site. You have to empower your people.”

The first Rodgers collaboration was with Hardin Construction of Atlanta on Belle Meade Retirement Community in Southern Pines. It succeeded because Rodgers brought strong healthcare experience and Hardin offered hospitality expertise.

Through the years, the two companies partnered on Charlotte’s huge Gateway Village as well as program management work at Central Piedmont Community College.

After a bond issue in 2000, Rodgers found partners to pursue construction manager at-risk projects at UNC-Chapel Hill and NC State.

Rodgers likes at-risk because owners choose contractors based on qualifications, yet the contractors must come together to provide a teaming structure. Since about 85 percent of any contract pays subcontractors which bid competitively, Rodgers doesn’t believe the method entails more client cost.

Other Rodgers partners have included the Walter B. Davis Company, The Rentenbach Companies, R.T. Dooley and Balfour Beatty. On student housing at UNC Charlotte, Rodgers is paired with H.J. Russell & Company of Atlanta, the country’s largest African-American-owned outfit, which keeps a Durham office.

Recently, the office for Historically Underutilized Businesses presented the Rodgers-Russell combination its Good Faith Efforts Award.

“They have the same philosophy we do,” Glusenkamp says of Russell. “We’re partnering to develop small minority companies.” An example is DayeCo Construction Company of Durham which has helped on sites at NC Central and NC State.

“The goal is to see DayeCo compete against us,” says Glusenkamp. “We would rather compete against good-quality companies.”

Richard Conner, partner at Conner Gwyn Schenck in Greensboro, injects a legal caution: A joint venture is a contractual business undertaking. “It’s very important that the agreement clearly identify the purpose of the joint venture and the rights and responsibilities between the parties. And it should be reduced to writing.”

Federal government work is another area where joint ventures are popping up, says Joe Angell, Department of Defense program manager in the Raleigh office of Vanasse Hangen Brustlin, Inc., headquartered in Massachusetts. It’s primarily a consultant and design firm.

“Partnerships bring a competitive advantage,” Angell says. “When Company A has a skill in site development and Company B has a skill in building, why not form a joint venture?”

As director of the North Carolina chapter of the Design-Build Institute of America, Angell promotes partnerships and is seeing a big up-tick. He praises the NC Military Business Center for its help.

Jennifer Burrell-Willson is a military construction specialist in the Fayetteville headquarters of the NC Military Business Center that operates satellite offices around the state. She lists three reasons for more joint ventures and teaming arrangements.

First, project size is mushrooming. The average large project used to be around $20 million but now jobs go past $100 million, mostly because the government feels a greater need to combine projects.

“There’s an increase in the design and construction of complexes at Camp Lejeune and Fort Bragg that include barracks, dining halls and operations facilities that are combined into one procurement,” she says. “So you see some awards in North Carolina in the $100 million to $200 million range.”

For survival, many contractors are moving into the government sector, so the government establishes more stringent selection criteria as competition grows.

“Sometimes it’s in the best interest of contractors not only to combine their forces for execution but to combine their experience and qualifications to present better for selection,” Burrell-Willson says.

Finally, federal small business procurements are getting bigger, she says, some up to $15 million or more. In response, small businesses are teaming to expand capacity and qualifications. Further, the Small Business Administration is encouraging mentor-protégé arrangements for socially and economically disadvantaged businesses.

With a different view on that subject is Katie Tyler, president of Tyler 2 Construction Inc. in Charlotte.

“Frankly, I don’t want to partner with somebody that only sees me as somebody that’s going to help them get a job,” says Tyler, whose firm has participated in arrangements she prefers to call strategic alliances.

Her firm participates in such alliances when they make sense by benefiting all parties, she added.

Tyler 2 cooperated with Charlotte’s FN Thompson when the Charlotte campus of Johnson & Wales University requested such an arrangement on a student residence building. Later, Tyler 2 was the lead company in an association with FN Thompson on a building for Charlotte’s Carolina Neurosurgery & Spine Associates.

“We as individual organizations know more than we think we do and have strengths we may not recognize until we have the opportunity to use them,” Tyler says. “We at Tyler 2 discovered the strengths of communication, paperwork and job-cost control. We’re good at those and better than other companies who had a whole lot more history.”

Currently, Tyler 2 is fast-tracking a 60,000-square-foot structure for Carolinas HealthCare System in an alliance with three major subcontractors. “We’re calling it an innovative design process,” she says.

Tyler suggests four important questions to answer before pursuing any collaboration: What is the reason? What are the strengths of each firm? What would be missing without an alliance?

And the most important, she says, is: “How does this benefit the client?”

Additional articles in this month's NC Construction News publications can be viewed by clicking on the covers in the right column.

Monday, 17 May 2010

How to increase company performance through increased cooperation

Bill Caswell, CEO of Caswell Corporate Coaching, writes, "It is a scientific fact that cooperating is natural for human beings. Since business difficulties and poor performance are constantly linked to lack of cooperation, the question is: why do people choose not to cooperate?"

The answer, addressed in today's Webinar lead by Bill Caswell, may surprise you. What to do about it may surprise you even more. A/E/C professions can gain permanent tools for increasing cooperation and company performance levels throughout your organization.

The seminar will speak to any construction business owner or manager challenged with employees with differering expectations, experiences and values.

Bill Caswell, who speaks across North America -- from Inuvik to New Orleans -- has also been a guest speaker in Mexico, Russia and Austria. An electronics engineer, Bill worked for technology firms incuding NASA, firing rockets into the upper atmosphere. The former company he founded of software engineers (offices in Ottawa, Toronto, Halifax, Seattle and Guadalajara, Mexico) set the stage for his becoming a mentor for CEOs around the world. He has authored 12 books that fulfill his motto of "Making comanies better places to work -- worldwide".

The Webinair is cosponsored by Construction News and Report Group of Companies, which publishes several regional construction industry publications in Canada nd the U.S. including North Carolina Construction News.

Date: Monday, May 17, 2010 from 3:30 PM - 5:00 PM
Location: On the web.
Cost: $49

Click Here to attend.

Friday, 14 May 2010

Legal insights into new OSHA instruction

Jackson Lewis, LLP, a law firm providing “Preventive Strategies & Positive Solutions for the Workplace®,” comments in a recent web blog that a new OSHA Instruction has the effect of increasing penalties for employers receiving citations. Jackson Lewis recommends that all employers take note.

The law firm cites the following types of cases considered as SVEP cases under the program:

• A fatality/catastrophe inspection in which OSHA finds one or more willful or repeated violations or failure-to-abate notices based on a serious violation related to a death of an employee or three or more hospitalizations.
• An inspection in which OSHA finds two or more willful or repeated violations or failure-to-abate notices (or any combination of these violations/notices), based on high gravity serious violations related to a “high-emphasis hazard.” A high-emphasis hazard is defined as a high gravity serious violation of specific standards related to fall hazards, amputation hazards, combustible dust hazards, silica hazards, lead hazards, excavation/trenching hazards, shipbreaking hazards, and petroleum refinery hazards.
• An inspection in which OSHA finds three or more willful or repeated violations or failure-to-abate notices (or any combination of these violations/notices), based on high gravity serious violations related to highly hazardous chemicals, as defined in OSHA’s process safety management standard.
• All egregious enforcement actions.

Jackson Lewis reports that OSHA has also issued a memorandum to Regional dministrators that administratively enhances OSHA’s penalties, which are currently considered too low. The law firm notes in particular these OSHA changes in enforcement and penalties:

• Expanding the time frame for considering an employer’s history of violations (when setting penalties) from three to five years.
• Increasing penalties by 10 percent for employers that have been cited for any high gravity serious, willful, repeat, or failure-to-abate violations within the previous five years.
• Increasing the minimum proposed penalty for a serious violation to $500.
• Calculating final penalties serially, unlike current practice where all of the penalty reductions are added and then the total percentage is multiplied by the gravity-based penalty to arrive at the proposed penalty. (OSHA’s example in the memorandum results in an increase of approximately 50%.)

To read the full OSHA Law Blog, click Here.

Thursday, 13 May 2010

DOL to release final rules implementing two President Obama executive orders

The Associated Builders and Contactors reports the U.S. Department of Labor (DOL) released its regulatory agenda, including agendas for the Wage and Hour Division (WHD) and the Office of Labor Management Standards (OLMS), both of which have plans to issue final rules on President Obama executive orders.

Under WHD’s agenda, Executive Order 13495, which mandates federal contracts covered by the Service Contract Act include a clause allowing workers employed under a previous contract the first chance at any non-managerial and non-supervisory positions they are qualified for, will see a final rule issued by June. OLMS is also planning to issue a final rule by June implementing Executive Order 13496, which will mandate the size and content of the notice employers will be required to post that contains employees’ rights under federal labor laws.

In addition to WHD and OLMS agendas, the Office of Federal Contract Compliance Programs (OFCCP) agenda targets federal construction directly with plans to issue a proposed regulation addressing affirmative action requirements for contractors on federal projects.

Other items contained in WHD’s agenda include plans to issue a notice of proposed rulemaking by August to update the Fair Labor Standards Act recordkeeping regulations for employees that telecommute or work a flexible schedule, and plans to issue a notice of proposed rulemaking by November that will seek to expand military leave entitlements.

The agenda for OLMS also contains plans to propose a rule by November that will narrow the scope of the “persuader” exemption under the Labor-Management Reporting and Disclosure Act, which exempts from reporting requirements advice given to employees by employers about their rights to organize and bargain collectively.

For a comprehensive listing of all DOL agenda items by agency, visit the DOL website. See the ABC news release Here.

Tuesday, 11 May 2010

Construction industry adds another 14,000 jobs in April

Construction firms added 14,000 new jobs in April, the second consecutive month of employment gains for the industry, according to an analysis of new federal figures released today by the Associated General Contractors of America. After more than two years of dramatic job losses, the construction industry is once again adding jobs, thanks primarily to the increasing number of stimulus-funded projects now underway, the association noted.

"As today's report makes clear, the impacts of the stimulus are now being felt across a much broader section of the construction industry," said Ken Simonson, the association's chief economist. "The good news is the stimulus is for now turning the tide on construction employment; the bad news is the stimulus is temporary while the construction downturn will be protracted."

Simonson noted that the construction industry has added 40,000 new jobs since February. Those increases follow more than three years of employment declines that cost over 2 million construction workers their jobs. Even after the two months of job growth, the industry's unemployment rate was 21.8 percent, more than twice the national average and the highest April rate since the series began in 1976.

The economist said the job growth appears driven by the stimulus, noting that construction firms are reporting a surge in projects funded by the Recovery Act. He added that the nonresidential construction sector, where most stimulus construction funds were targeted, added 24,600 jobs in April and 36,500 jobs in March. Heavy and civil engineering construction, which includes highway and many public works projects that benefitted from the stimulus, alone added 9,000 new jobs last month, the fourth pickup in the past six months.

Simonson cautioned that stimulus funding for construction was likely to end before private-sector and state and local government demand for construction resumes, citing high vacancy rates and declining tax receipts. He said enacting the long-delayed highway and aviation bills, passing the Water Resources Development Act and the Building Star legislation, establishing a Clean Water Trust Fund and National Infrastructure Bank and keeping tax rates unchanged were the best way to avoid post-stimulus job losses in the construction industry.

"Without long-term federal investment programs in place, construction employment is likely to suffer significant new declines once the stimulus runs its course," Simonson noted. "The best way to build on today's momentum is by enacting the long-term investment programs that are crucial to the nation's continued economic prosperity."

Read the complete AGC press release Here.

To keep busy, many contractors turn to renovations

As demand for new commercial building projects has dried up, more contractors, designers and architects are finding themselves chasing smaller jobs that they might have once been too busy to do, reports the Charlotte Observer.

In March 2008, about a third of commercial building permits issued that month in Mecklenburg County were for renovations. In March, renovations and upfits accounted for more than 60 percent of permits issued. An upfit is work done to an existing space to fit a tenant's needs.

The total number of commercial building permits granted has plummeted since peaking in 2008. The Queen City was once dotted with construction cranes as firms, particularly banks, expanded. The growing demand, combined with easy capital, fueled a building spree. Then the recession hit, banks cut their spending and developers abandoned projects.

To survive the doldrums, construction companies are wooing firms that are either downsizing or adding employees but staying in their existing space.

Some building owners are taking advantage of relatively low labor and material costs to make their buildings more energy efficient. Other clients simply don't have the money to build as big as once planned but want to make changes.

"Upfits is definitely one of the big names of the game right now," said Dave Simpson, N.C. building director for Carolinas AGC, a contractors' trade group. "People in the construction industry are interested in doing any kind of construction, whether it be new buildings, old buildings, upfits, downfits, you name it. They're extremely hungry right now."

Getting more for their money

Johnson C. Smith University had planned to build a new student union building. Then the recession hit, and the university couldn't afford a $15 million center, said Gerald Hector, the university's vice president for business and finance.

So, the university reached out to its architect, Gantt Huberman Architects, to see what could be done to update the existing center, with its confining offices and stark blue and gold color scheme.

The firm spent 10 months redesigning three floors. Ultimately, the university spent around $1.5 million on changes that included updating the cafeteria flooring and ceiling, modernizing the color scheme and creating a contemporary glass partition that doubles as art.

Recyclable carpet and new lighting fixtures were installed in the upstairs lounge, along with a flat-screen TV and surround sound. The bottom floor, known as the bullpen, was opened up and modernized to create a more friendly gathering place.

A different type of work

Because renovations and upfits are typically quicker to complete and cost less than new construction, companies rely on a steady supply of the smaller jobs.

Of the $172 million worth of building permits issued in March, renovations accounted for $55 million.

"It's why architects are struggling these days," said architect Harvey Gantt, a former Charlotte mayor. "You have to do a lot of them."

RT Dooley Construction Co. is doing a large number of renovations in uptown, benefiting from the center city's oversupply of new office space.

Office vacancy rates have risen to recent highs - hitting 8.8 percent last year, up from 2.5 percent the year before - as an expected 3 million square feet of new space comes on the market. Tenants have been able to negotiate cheaper leases and upgrade existing space. Or they're moving to newer buildings.

"It's steady work," CEO David Dooley said of tenant upfits. His firm has been busy preparing the 48-story Duke Energy Center for occupants. "I think over the next five years, you'll see a pretty active market."

Interiors work requires different thinking and customer skills than new construction, said Dooley, whose firm was acquired last year by Balfour Beatty Construction U.S. Renovations are sometimes done at night or weekends. Employees may work in occupied spaces.

"You've got to be very detail-oriented," Dooley said, "and you've got to over communicate because you've got people working around you."

Keeping workers employed

The increase in renovation work has helped local contractors keep people on their payroll.

The Charlotte-area construction industry has suffered staggering job losses during the recession, losing 23 percent of its workforce in the year ending in February. The broader region's work force gained 0.2 percent during the same time.

William Caldwell II, a division president with Cox Schepp Construction Inc., said his company has devoted more time and people to landing tenant upfit and renovation work. He estimates there is about 50 percent more of such work available now than in previous years.

He said the company, which employs about 150 workers, is down to a "core group" and the goal is to keep that group busy.

As the market improves, he said, the company will hire more workers.

Last year, his division built six new office buildings. This year, it has two under construction.

"It's not like a total retraction, or the parting of the seas," he said of new commercial work. "But the level is just not as high as it used to be."

He said the interiors and renovation market has grown "very, very" competitive because more companies are seeking the work. Cox Schepp is heavily involved in Ballantyne Corporate Park in south Charlotte, and did more than a million dollars in renovations for the new headquarters for snack-maker Lance Corp.

Caldwell said he's been pleasantly surprised at how strong the upfit and renovations market has proved for his company.

Company earnings are down compared to previous years, he said, but "they're a lot better than we thought they were going to be."

Click Here to view the Charlotte Observer story.

Saturday, 8 May 2010

USDOT seeks changes in disadvantaged-business rules

Engineering News Record reports the U.S. Dept. of Transportation announced on May 7 that it is proposing changes in its requirements for disadvantaged-business-enterprise firms (DBEs), which include small companies owned by women and minorities.

The proposed rule, to be published in the Federal Register on May 10, would increase the ceiling on a DBE owner's net worth to $1.3 million, from the current $750,000. The $750,000 net-worth cap has not been changed since 1989, DOT said.

The department says its plan also would make it easier for a firm to be certified as a DBE in more than one state, requiring each state to accept other states' certifications, unless they determine there is "a good reason not to," DOT says.

DOT says the proposal aims to make state and local agencies more accountable in the DBE area. Under one provision, if state and local transportation agencies do not achieve goals for DBE contract participation, they would have to examine why they missed the targets and provide ways to meet the goals.

DOT says it will take comments on the proposed DBE rule until July 11. Click Here to view the ENR article.

Friday, 7 May 2010

Highway officials call for balanced approach to transportation choices

The U.S. Department of Transportation has indicated that livability is among the Administration's top priorities for future transportation funding. Soon it will be up to Congress to determine how "livability" will fit into the next multiyear transportation authorization legislation.

With the 40th anniversary of Earth Day this year, AASHTO released a new report, The Road to Livability, which describes how a full range of transportation options - including improvements to roadways, transit, walking, and biking - can improve livability in our communities.

"Even before livability became a buzzword, many of us in the transportation field were working hard at improving the quality of life through smart transportation choices and investments," said John Horsley, executive director of the American Association of State Highway and Transportation Officials (AASHTO). "The next authorization bill must take into account the important role played by road-related investments in enhancing communities and improving the convenience of travel and access to services for all citizens."

According to the report, state DOTs are using every opportunity to tailor transportation projects to the needs of the communities they pass through. States are also focusing their efforts on rapidly expanding options for biking, walking, and transit use, as well as implementing such road-related, livable policies as revitalizing urban centers, building local economies, and preserving historic sites and scenic country roads.

"Transportation is a critical link in creating more livable communities, playing an important role in connecting affordable housing, good jobs, a safe and healthy environment, and strong schools," said Horsley. In the past ten years, Horsley noted that state DOTs have used $5.2 billion to fund bicycle and pedestrian programs across the country, almost $1.125 billion in FY 2009 alone. In 2007, states spent $13.3 billion on transit, compared to federal funding of $10.7 billion. "But what's been missing from the national dialogue on livability is what can be accomplished through road-related improvements," Horsley said.

Click Here to view the "The Road to Livability."

Thursday, 6 May 2010

New-home construction resumes in Triangle

Triangle homebuilders that have spent the last few months replenishing their stockpile of land are beginning to crank up their construction arms as the supply of new homes dwindles, the News & Observer reports.

The number of new homes started in the Triangle jumped 74 percent in the first quarter compared with the same period a year ago, according to the research firm Metrostudy. Over the past year, the inventory of new homes on the market has dropped 13 percent to a little over four months of supply, the lowest level in six quarters.

"There just aren't as many new homes out there as there have been," said Tim Minton, executive vice president of the Home Builders Association of Raleigh-Wake County. "We're not building them as fast as they're being depleted right now."

The 74 percent increase does come with a couple of caveats.

The first quarter numbers are being compared to the first three months of 2009 - a period when new home construction came to a near standstill across the country. The first quarter numbers also received a boost from the government tax credit program for first-time and repeat homebuyers, which expired April 30.

Still, the numbers are a positive sign considering that many other housing markets are having a hard time burning off the inventory of new homes left over from the boom years.

"It's encouraging," said Ed Dunnavant, who tracks Triangle housing trends for Metrostudy. "All of that could not have come from the tax credit."

The uptick in housing starts is being felt further down the food chain by some suppliers and contractors whose business depends on new residential construction.

"We've seen a greater increase in sales here in this market in the last several months than we have in the balance of the organization as a whole," said Jim Major, chief financial officer for Raleigh-based Stock Building Supply.

Stock sells windows, doors, roofing and other housing material in 20 U.S. markets. The company went through a bankruptcy restructuring last year that resulted in its abandoning 28 markets.

Stock remained in markets where it thought it could break even by summer.

"The Triangle is one of our largest and most important markets," Major said. "We certainly expect its performance to reflect that fact."

Metrostudy collects housing data in an eight-county region. While the 1,567 new homes started in the first quarter was a significant improvement over last year, it was still well below the levels the Triangle recorded before the housing bubble burst.

Between 2001 and 2005 the Triangle averaged 2,757 new home starts in the first quarter.

Post-stimulus demand

Among the many national builders that have increased their activity in the Triangle of late is KB Home, which is now building in subdivisions in Cary, Clayton and Durham.

Jeff Logsdon, executive vice president of KB Home Raleigh, said the company was pleased to see that orders for new homes did not fall off even after buyers knew their houses wouldn't be completed in time to qualify for the government tax credits.

"Even after that moment in time, people were still buying," he said.

View the News & Observer article Here.

Wednesday, 5 May 2010

Update on construction spending report

Bloomberg Business Week reports construction spending in the U.S. unexpectedly increased in March, propelled by gains in state and local government projects.

The 0.2 percent increase brought spending to $847.3 billion, and followed a revised 2.1 percent drop in February that was larger than previously estimated, according to Commerce Department figures released May 3 The value of private projects dropped to the lowest level in 11 years.

Federal government stimulus funds may be trickling down to the state and local level, promoting construction of power plants, transportation systems and hospitals. Other areas of the economy are struggling as high building vacancies and low plant use mean spending on commercial projects will continue to be depressed in coming months.

The increase is “definitely your stimulus dollars at work,” said Sam Bullard, an economist at Wells Fargo Securities LLC in Charlotte. “Non-residential, given the pressures especially on the commercial side, is going to continue to be a pressure on construction.”

Another Commerce Department report showed construction spending decreased 12 percent in the 12 months ended in March.

Private construction spending dropped 0.9 percent to $550.8 billion, the lowest level since January 1999. Homebuilding outlays dropped 1.1 percent and non-residential projects decreased 0.7 percent, led by declines among communications plants and office buildings.

Public spending increased 2.3 percent from a month earlier as state and local governments boosted outlays by 2.5 percent, the most since March 2009. Federal construction advanced 0.3 percent after jumping 2.9 percent in February.

Construction Slump

A slowdown in construction was one drag in the first quarter. The world’s largest economy grew at a 3.2 percent pace in the first three months of the year, the Commerce Department reported last week. Commercial construction dropped at a 14 percent pace, while home building dropped for the first time in three quarters, falling at an 11 percent rate.

Residential construction may show improvement this quarter as milder weather in March. Housing starts rose for a second straight month in March and building permits, a sign of future building, jumped to the highest level in more than a year.

‘Challenging’ Conditions

“Market conditions in the homebuilding industry are still challenging, with rising foreclosures, significant existing home inventory levels, high unemployment, tight mortgage lending standards, the expiration of certain government support for the housing and mortgage markets and weak consumer confidence,” Chief Executive Officer Donald Horton said in a statement. “However, new home inventory remains low, interest rates are favorable and housing affordability is near record highs.”

Commercial real estate faces more headwinds as vacancy rates remain high and factories have excess capacity.

Click Here to view the entire Bloomberg BusinessWeek report.

Tuesday, 4 May 2010

Mixed bag for March construction spending

In a good news/bad news report, private nonresidential construction spending decreased 0.7 percent in March, according to the May 3 release by the U.S. Census Bureau. On a year-over-year basis, private nonresidential construction spending is down 25.5 percent. However, total nonresidential construction spending, which includes both public and private construction, was up 0.8 percent for the month – the first monthly increase since April 2009 – but still down 17.4 percent from March 2009. As of March, the value of nonresidential construction put-in-place was $586.8 billion.

Nine of the 16 nonresidential construction subsectors with spending increases in March include transportation, up 9.6 percent; water supply, up 6.1 percent; and manufacturing-related construction, up 5.1 percent. However all subsectors, with the exception of power-related construction, which was 22.2 percent higher, are down from March 2009 levels.

In contrast, seven subsectors that had a decrease in construction spending include communication, down 12 percent; lodging, 4.5 percent lower; and commercial, which fell 1.9 percent. The worst-performing subsectors in construction spending on a year-over-year basis include lodging, down 59.7 percent; commercial, down 36.8 percent; and office, down 34.1 percent.

Analysis

“Today's report should be interpreted as a significant piece of good news regarding the nation's nonresidential construction industry,” said
Associated Builders and Contractors Chief Economist Anirban Basu. “While year-over-year construction spending remains negative, nine of the 16 subsectors of nonresidential construction were up for the month. In addition, March represented the first monthly gain for nonresidential construction since April 2009, an indication that the broader economic recovery is beginning to impact the nonresidential construction industry.

“From an optimistic viewpoint, April could very well represent the first in a series of months of sustained recovery and expansion in nonresidential construction spending,” Basu said. “The nation’s economy has been gathering momentum for quite some time, with consumer spending exceeding most people's expectations. If one presumes that the broader economic recovery is sustainable, it is also possible to conclude that the nonresidential construction industry’s emerging recovery will also be sustained. "

“On the reverse side, March could represent a month of false hope in which publicly financed construction has offset the economic weakness of privately financed construction. With the stimulus package money steadily being spent, the notion is that the early recovery in nonresidential construction will not be sustained, particularly if the broader economy suffers another slump next year. This perspective continues to enjoy a certain degree of credibility since the sectors that have rebounded are those largely oriented toward publicly financed projects,” Basu said.

Click Here to view the ABC Economic Update.

Monday, 3 May 2010

Nonresidential building construction still not out of recession

Nonresidential fixed investment grew 4.1 percent on a seasonally adjusted annual rate basis in the first quarter of 2010 following revised 5.3 percent growth in the fourth quarter of 2009, according to the U.S Commerce Department's April 30 gross domestic product (GDP) report. The gain in nonresidential fixed investment is largely due to a 13.4 percent increase in equipment and software spending. In contrast, fixed investment in nonresidential structures, a variable construction companies watch closely, slipped 14 percent during the first quarter.

Analysis

“Viewed in its entirety, today's GDP release is a bit of a disappointment,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “While it is true that the economy has now expanded for three consecutive quarters – and it would be nearly impossible to locate an economist who believes the recession is ongoing – much of the improvement was driven by consumers who opened up their purse strings more than had been anticipated.

“This is also consistent with increased investment in inventories as suppliers attempted to keep up with consumption. The nation's information technology and software industry is also clearly rebounding strongly, which has helped support solid recoveries in the nation's regional technology centers,” Basu said.

“Though the U.S. economy is out of recession, nonresidential building construction is not. Even casual observers are aware that commercial real estate is presently overbuilt and underperforming in general. The result is that there is little demand for new construction,” said Basu.

“Moreover, the financial crisis that deepened in September 2008 continues to have a lingering effect in the form of a still tight credit market. A rebound in commercial and other forms of nonresidential construction is not anticipated anytime soon,” Basu said. “The situation could remain problematic for quite some time as state and local governments combat fiscal issues, leading to diminished investment in school construction and other key categories in which public financing plays a major role.”

Click Here to view the ABC Economic Update.