Thursday, 29 December 2011

Safe driving at home and the workplace pays

As your employees leave your office or worksite for a weekend of New Year’s celebrations, consider suggesting the benefit of a designated driver option.  

Safe Ride Home (SRH) is an alternative to driving under the influence (DUI). The designated driver service combines the convenience of a taxi with the comfort of the customer’s own vehicle. Safe Ride Home is available in Wake, Durham, Orange and Johnston County on Thursday, Friday and Saturday nights from 9:00 p.m. until 3:00 a.m. The service is also available at other times by appointment.

Over the coming months, North CarolinaConstruction News and our web service provider Qudeso, are supporting a community information campaign that we believe will give drivers the opportunity to avoid the very dangerous and very costly pitfall a DUI can bring. In the last four years, SRH has gotten thousands of Triangle drivers and their vehicles home without incident or injury to themselves or others. You can learn more by going to or by calling SRH at 919-520-4496. 

Under Construction: Trucking in the Work Zone

North Carolina’s highways are the workplace of the professional trucking industry. These professionals travel through work zones on a daily basis and regularly encounter the various hazards associated with a work zone. NCDOT partnered with  CarolinasAssociated General Contractors and the NorthCarolina Trucking Association to produce an educational video specifically for professional truck drivers.

Filmed in several North Carolina work zones and featuring real-life truck drivers, state troopers and an NCDOT engineer, Under Construction: Trucking in the Work Zone illustrates how professional truck drivers can make a difference by paying attention and driving the speed limit.  For details visit:

W-S office vacancy rate drops 60 percent

The Winston-Salem Journal reports office space filled at a faster rate in Winston-Salem in the past four years than in any of the other largest cities in North Carolina.

Almost 20 percent of the office space in buildings in downtown Winston-Salem was vacant at the end of 2007, according to Karnes, a market research company based in Charlotte. Karnes collects data from realty clearinghouses in cities across North Carolina each quarter.

At the end of September — the most recent information available — about 8 percent of the office space in Winston-Salem was empty. Those numbers mean the vacancy rate in downtown Winston-Salem dropped by almost 60 percent. The vacancy rate in Greensboro's downtown increased by about 33 percent; in Charlotte, the vacancy rate increased more than 300 percent.

Andrew Jenkins, a managing partner at Karnes, said the drop in vacancies in downtown Winston-Salem could be related to the city's efforts to attract businesses, shops and residences downtown.

"They've been kind of trying to revitalize their downtown, as well as get a stadium in place. … I think that's probably helped in terms of generating demand," Jenkins said. "There's an argument out there that there's a gravitation toward center cities and more urban living, so you might be seeing that across the state."

Winston-Salem's downtown has transformed in the past five years: Empty buildings and vacant storefronts now house restaurants with al fresco dining. There are still empty storefronts along Fourth Street, but the vacancies are dwindling.

Winston-Salem has almost 5 million square feet of office space in its downtown — more than any other downtown in North Carolina other than Charlotte, according to Karnes. Winston-Salem, too, has the lowest average rent per square foot.

Michael Clapp, owner of Michael Clapp Appraisals — which several times a year compiles information about office space prices and vacancies in Winston-Salem — said new office buildings have not been built in downtown Winston-Salem since 2002. And the space that is here, he said, is priced to rent. Read More.

Tuesday, 27 December 2011

SE contractors expect 'slight' change in new business in 2012

A majority of ENR Southeast readers responding to a one-click poll question on 2012 construction opportunities expects to see only "slight" or no change in the pace of new business in the coming year.

ENR Southeast posed the following question to its readers: "Compared to 2011, what is your firm's prediction for new construction/design contract opportunities in the Southeast region for 2012."   The largest group of respondents, 46%, expect to see "flat" market conditions in the coming year, for the same approximate activity level as 2011.

Approximately 40% expect to be see a "slight" difference in 2012, compared to 2011. Roughly 28% of respondents forecast a "slight increase" in the pace of new work, while 12% predict a "slight decline." Only 14% expect big changes ahead.

Roughly 8% of poll respondents anticipate a "significant increase" in the pace of new work, while about 6% see a "significant decline" for 2012, approximately twice as many respondents forecast some type of increase than projected a decline in new work opportunities, 36% to 18%, respectively. Read More.

Friday, 23 December 2011

New rule restricts use of handheld phones

Construction firms are getting behind this month's sweeping recommendation from the National Transportation Safety Board that calls for a nationwide ban on phoning and texting while driving, reports Engineering News-Record.

"From a work-zone perspective, we would be 100% supportive," says Brian Deery, who heads the Associated General Contractors' highway and transportation division. "Generally, you could say we're all in favor of it."

The safety board unanimously recommended that all U.S. drivers be barred from using cell phones and portable electronic devices—even hands-free devices—in non-emergencies while behind the wheel.

“It’s time to curb the carnage on our roads from distraction-related accidents,” says NTSB Chairman Deborah A.P. Hersman. She cited a study by the Virginia Tech Transportation Institute that found a “safety-critical event” is 163 times more likely to occur if a driver is sending or receiving text messages, e-mailing or using the internet.

The safety board, an independent federal agency, has no regulatory authority and cannot mandate changes in operations, equipment or policy. But its recommendations carry weight with other federal regulatory agencies.

Truckers Can't Text

Commercial drivers already face tighter restrictions. In November, the Federal Motor Carrier Safety Administration issued a new rule banning commercial drivers from reaching, holding or dialing a phone while on the road. Hands-free devices are allowed while push-to-talk phones are not. Operators who violate the rule can be fined up to $2,750, and carriers that allow such behavior could face penalties of up to $11,000.

Some four million truckers are affected by the new rule, which goes into effect on Jan. 3. For regular passenger-car drivers, nine states, the District of Columbia and the Virgin Islands have banned the use of handheld phones while driving, and 35 states have banned texting while driving. Many states ban minors from using cell phones while they are behind the wheel.

Orange Cones, No Phones

Legislation isn’t the only tool to get people to stop using cell phones while driving—a shift in culture can be effective, too, says Jeff Wagner, who is in charge of public affairs for Fluor and Transurban’s 14 miles of improvements on Interstate 495, the so-called Beltway outside of Washington D.C.
The companies started “Orange Cones—No Phones,” a campaign that encourages drivers to hang up their phones when in a construction zone.

In addition to signs and public outreach, more than 100 companies have signed pledges to encourage their employees to hang up their phones in a construction zone. Fluor itself took the pledge and asks its workers to keep off the phone while in a work zone. More than 200,000 drivers travel a section under construction, and conditions in the zone change on a daily basis, says Wagner.

“People need to be very alert and paying attention,” Wagner says. Distractions could harm the drivers and the 2,000 workers on the project. “When you are in a construction zone, just hang up your phone," he says.

The campaign seems to be working: A third fewer drivers on the Beltway used handheld cell phones in 2011 compared with in 2010, according to a survey by Transurban-Fluor and AAA Mid-Atlantic. Sixty-four precent of those surveyed said they have changed their texting or calling habits while in a construction zone. Read More.

Thursday, 22 December 2011

NC jobless rate drops

North Carolina's unemployment rate fell in November for the second consecutive month, but the job market nonetheless remains bleak, reports the Charlotte Observer.

The unemployment rate for North Carolina was 10 percent in November, down from 10.4 percent in October, according to seasonally adjusted data released by the state Employment Security Commission.

The decline in the statewide unemployment rate mirrored that of the national rate, which dropped .4 percentage points to 8.6 percent last month. Some 43 states reported that their jobless rates had declined in November while 29 states saw payrolls increase, according to Bloomberg News. Just four states and the District of Columbia have a higher unemployment rate than North Carolina, according to the Bureau of Labor Statistics.

A year ago, the statewide unemployment rate was 9.8 percent. Since then, the ranks of the unemployed have increased by 12,215. November unemployment numbers for the Triangle are scheduled to be released Jan. 4. In October, the Triangle unemployment rate stood at 8.7 percent.

Over the past 12 months, private sector jobs have risen in North Carolina by 30,800, a 1 percent gain. But that increase has been partially offset by a 1.6 percent drop - 11,200 jobs - in state and local government jobs. The bottom line: The number of jobs statewide has risen a scant one-half percent over the past year.

"Layoffs in the government sector continue to be a big drag on the economy," said Mark Vitner, senior economist for Wells Fargo Securities in Charlotte. Vitner predicts jobs will grow at a better-but-still-modest rate of 1.5 percent next year, which would drop the state's unemployment rate to 9.5 percent. "I'm being careful not to over-promise," he said. "I'll be happy if I'm wrong and it falls to 9 percent or 8.5 percent or something." Read More.

Wednesday, 21 December 2011

Architectural Billing Index climbs into positive territory

Continuing the positive momentum of a nearly three point bump in October, the Architecture Billings Index (ABI) reached its first positive mark since August, reports the American Institute of Architects. (AIA).

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.  AIA reported the November ABI score was 52.0, following a score of 49.4 in October. This score reflects an overall increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 65.0, up dramatically from a reading of 57.3 the previous month.

“This is a heartening development for the design and construction industry that only a few years ago accounted for nearly ten percent of overall GDP but has fallen to slightly less than six percent,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “Hopefully, this uptick in billings is a sign that a recovery phase is in the works. However, given the volatility that we’ve seen nationally and internationally recently, we’ll need to see several more months of positive readings before we’ll have much confidence that the U.S. construction recession is ending..”

Key November ABI highlights:
      • Regional averages: South (54.4), Midwest (50.9), Northeast (49.1), West (45.6)
      • Sector index breakdown: multi-family residential (55.8), commercial / industrial (53.9),
      • institutional (48.9), mixed practice (41.6)
      • Project inquiries index: 65.0
The regional and sector categories are calculated as a 3-month moving average, whereas the index and inquiries are monthly numbers.  Read More.

Monday, 19 December 2011

Rankings of state's best performing metro areas falls over previous year

Overall, of the state's nine large metro areas, only two improved their rankings in the past year — Asheville from 106th to 85th, and Hickory-Lenoir-Morganton from 197th to 189th, reports the Winston-Salem Journal.
Raleigh-Cary was the highest ranked North Carolina metro at 14th, down from seventh according to the Milken Institute's 2011 ranking of the 370 best-performing metro areas.

The Charlotte-Gastonia-Concord MSA fell to 114th from 62nd in 2010.  Michael Walden, an economics professor at N.C. State University, said he is not surprised by the overall drop of state metro areas in the Milken rankings.

"North Carolina has lagged the nation in job growth, so any measure — like the Milken Institute — that focuses on jobs or job-related factors, such as salaries, will put the state at a disadvantage," Walden said.

"However, other measures show North Carolina … did better than the nation on growth in GDP from 2009 to 2010. It also saw worker productivity in the state increase twice as fast as in the nation between 2009 and 2010.

"The state's current improvements in worker productivity are a big plus for recruiting businesses," Walden said.

The Winston-Salem metropolitan statistical area fell 45 spots to 164th in the Milken Institute's 2011 ranking. The MSA, which consists of Davie, Forsyth, Stokes and Yadkin counties, was 119th in 2010 and 92nd in 2009 — its top ranking since Milken began the survey in 2003.

The report has become a prominent measuring stick of the Triad economy in the past eight years. When the rankings began, Winston-Salem, Greensboro and High Point were combined for federal data purposes.  After being ranked 165th in 2003 because of major manufacturing job losses, the Triad's three major chambers of commerce pledged to get the region into the top 50 by 2010 by cooperating more on economic-development projects and improving local workforce skills.

Since the Greensboro-High Point MSA was created, its best ranking was 136th in 2007. It was ranked 155th for 2011, up from 176th in 2010.  Read More.

Friday, 16 December 2011

Rise in construction materials prices outstrips contractors' bid prices

The amount contractors pay for a range of key construction materials edged down 0.1 percent in November but climbed 6.2 percent from a year earlier, outstripping the increase in contractors’ bid prices for finished buildings, according to an analysis of producer price index figures released by the Associated General Contractors of America. Officials with the construction association warned that the cost squeeze on contractors, combined with declining public sector investments in construction, may drive many contractors out of business.

“Price increases have moderated or even reversed direction at the moment for essential construction materials but prices are likely to increase in the next few weeks,” said Ken Simonson, the association’s chief economist. “Meanwhile, federal construction funding has slowed sharply, and some may be cut off completely by next week, leaving contractors in desperate shape.”

Simonson noted that prices have diverged greatly for key construction materials in the past month. The price index for diesel fuel leaped 8.9 percent in November and 32 percent over 12 months. The index for copper and brass mill shapes, which reached record levels earlier in the year, sank 2.3 percent in November and 7.7 percent year-over-year. Steel mill products also dropped in price for the month, by 1.1 percent, but rose 13 percent from a year earlier. Similarly, the index for asphalt paving mixtures and blocks declined 0.5 percent in November but posted an 8.1 percent year-over-year gain.
“Prices are likely to be as volatile in 2012 as they were this year,” Simonson predicted. “Wallboard makers have announced they intend to raise prices 35 percent on Jan. 1, and a variety of steel products appear to be headed higher again. In contrast, diesel fuel and copper prices are poised for further slippage in the near term but could shoot back up without warning, as they did in 2008 and 2011.”

Simonson observed that price indexes for finished nonresidential buildings, which measure what contractors estimate they would charge to put up new structures, have slowly strengthened in recent months but do not match the rise in materials costs. From November 2010 to November 2011, these indexes rose 3.4 percent for new industrial buildings, 3.7 percent for offices, 3.9 percent for warehouses and 4.5 percent for schools. Despite the increased bid prices, Simonson cautioned that materials prices have increased at a faster rate.   Read More.

Thursday, 15 December 2011

30-foot Frosty erected in Durham

Check out the larger than life Frosty the Snowman in Durham. Some of the scaffold erectors at Associated Scaffolding took it upon themselves, after their regular shift, to erect a 30-foot tall Frosty The Snowman at their Durham facility on Geer Street. The 2,000 pound "System Scaffold" structure took them over 22 man-hours to erect. For each 20 inches of height, the diameter of Frosty first increased then decreased to complete his rotund shape. The "System Scaffold" allows this kind of adjustment. After the structure was complete, the Associated team wrapped it with 6,000 lights to outline Frosty’s shape. It is Associated Scaffolding’s hope that their neighbors as well as residents in Durham will enjoy Frosty as much as their erectors enjoyed creating it. They are already making plans for next year’s display. See more pictures Here.

Wednesday, 14 December 2011

Turner Construction Company wins ABCC 2011 GC Project of the Year for Harrah's New Creek Tower

Meeting a project deadline is one thing. Meeting it four months early is another. Especially when that allowed the project, a new tower at Harrah's Cherokee Casino & Hotel, to open in time for the profitable New Year's Day holiday. But that is just part of the reason why Turner Construction Co. of Charlotte won the 2011 GC Project of the Year recently in the 2011 Excellence in Construction Awards competition presented by The Associated Builders and Contractors of the Carolinas (ABCC).

The winning general contractor effort was a 21-story, 532-room, 459,509-square-foot hotel tower that included 78 suites, 454 guest rooms and a sky bridge connecting it to two existing hotel towers. . Turner, a national construction company that has Carolina offices in Charlotte, Raleigh and Charleston, began construction on this $120 million hotel in July 2009. The hotel is just a portion of the $633 million expansion program going on at Harrah’s Cherokee Casino and Hotel. Among the obstacles it faced was a "no-excuses" deadline, the need to get the tower occupied as soon as possible, and the unrelenting winters in western North Carolina.

To meet the challenges of the tower project, Turner used LEAN scheduling and principles, building-information modeling and integrated project delivery with its subcontractors and design team. All contractors had to produce weekly work plans that defined workflows, and Turner had a full-time scheduling engineer on site, who spoke with foremen for contractors and subcontractors every day to monitor progress.

In addition, Turner monitored activity on other projects at the site, including a general contractor who was building two parking decks. It held weekly meetings with the other contractors and Harrah's staff to go over site logistics, to make sure everyone knew what would be going on everyday and could plan accordingly so as not to negatively affect other work or Harrah's guests. LEAN principles used included: anticipating problems as soon as possible, slowing down when necessary to get quality right the first time, stopping to fix problems, analyzing the situation constantly, and empowering employees to identify problems.

“One of our key challenges was to erect this concrete frame building in a remote, mountainous location through a very harsh winter of rain and snow,” said Robert Thompson, operations manager of Baker Concrete Construction. “We were able to use the pre-construction period to carefully plan for a just-in-time delivery of materials. The planning and coordination paid off. The concrete floors were placed averaging one floor per week. This enabled us to meet the target for the expedited schedule.”

Despite the accelerated pace, the company also stressed safety during the project, according to Thompson. "As important as schedule and revenue are to a project, nothing is more important than safety,” he said. Working under Turner's safety program, Baker was able to erect this 21-story hotel without a single lost time injury.

“About 17% of the contract value was awarded to subcontractors and vendors certified by the Tribal Employment Rights Office, providing additional work for members of the Eastern Band of Cherokee Indians. That didn't go unnoticed. Scott Robertson, area director of design and construction for Harrah's Entertainment, says Turner was easy to work with. "They have performed with excellence in both preconstruction and construction," Robertson says. "We challenged them to meet an aggressive and expedited schedule. Their achievement enabled Harrah's Cherokee to market the Creek Tower for our busiest weekend of the year." He praised the company's use of cutting edge technology. It "ensured our expectations were met and our revenue maximized," Robertson says.

Ultimately, it set a standard for the hotel complex. "This is the first time of the Harrah's Cherokee history that any major project was delivered on time," says Ray Rose, project manager for Harrah’s/Eastern Band of Cherokee Indians. "Turner delivered on their promise."

The company also lived up to expectations in working with tribe members. "Turner has embraced the TERO program and … provided many contracting and employment successes, says Curtis Wildcatt, compliance office for the program. "Turner has made great efforts to ensure the Cherokee people benefit from this employment and economic opportunity and has cooperated well above all my expectations."

That's not the only way the company worked with the tribe. During a topping-off ceremony in April 2010, it began the day with a traditional prayer to the seven spiritual directions of the Cherokee, offered by a tribal elder. Jim Owle, chairman of the tribal council, praised other efforts by the company to become part of the community. "Turner partnered with the Tribe to create the Madison Hornbuckle Children's Cancer Foundation, which raised more than $100,000 in its inaugural year," he says.

Turner brought together companies from around the country for the project. It was designed by The Cuningham Group, an architectural firm based in Minnesota, while the mechanical and electrical design engineers, Xn-th, are located in Las Vegas and Orlando, Fla. The team used electronic submissions and requests for information to keep everyone looped in during the construction process. "This was our first opportunity to work together," says Michael Strand, AIA principal at The Cuningham Group, "and during that time, I have developed a high regard for their ability to manage the construction of this complicated, multifaceted project, and I was struck by their ability to understand the complexity of our design."

 And it was complex. The tower featured a waving roof form designed to complement the surrounding mountain view. Other features included a VIP check-in area, fire lounges, a café/bakery area and floor of "super suites." Custom light features hang throughout the main lobbies, and one of them uses fiber optics that can be customized to change colors.

The building is a post-tensioned concrete structure with structural steel on the 21st floor and lower porte cochere, which rests on pilecaps and auger-cast piles. Exterior finishes include stone, stucco, trespa panels, and a curtain wall system. Floors one and two contain the main lobbies for the tower, along with stores, a café, a fire lounge and an arcade.

The porte cochere provides the main entry and valet for the entire hotel complex. Floors three through twenty contain rooms and two-bay suites, while the top floor  consists of eight themed suites and two "super" suites, which all have exterior balconies overlooking the dramatic views outside.

Turner also has won a $100 million contract to expand the Harrah’s Cherokee casino. The project, which is scheduled for completion in January 2013, will add 110,000 square feet of gaming-floor area to casino while renovating the existing 130,000 square feet. It also will provide new modern bars, restaurants and entertainment stages to the casino and hotel, add a 70-foot interior waterfall and a rotunda that will change lighting and sounds with the seasons.

Adams Electric Company wins ABCC 2011 Specialty Contractor Project of the Year for Carolinas Medical Center Main Surgical Service

Adams Electric Company won the 2011 Specialty Project of the Year in the 2011 Excellence in Construction Awards competition presented by The Associated Builders and Contractors of the Carolinas (ABCC). The project was a $10.3 million renovation and enhancement of Carolinas Medical Center's Main Surgical Service at its downtown Charlotte campus.

Adams Electric, with offices in Raleigh, Greensboro, Charlotte, and Charleston, worked on twelve floors and seven phases at once during the peak of the project. Management and scheduling of the project was complex, in part because construction had to be executed in an existing hospital adjacent to sensitive patient-care areas.

Among the tasks that were part of the winning project were modifications to the hospital's Blythe parking deck and renovations to the second floor, which specializes in physical therapy; the third floor, including the relocation of radiology offices; the fourth floor, which is an interstitial space; the fifth floor, which contains the family waiting room and called for construction of six new operating rooms; and the sixth floor, which has physician lockers and an administration area.

Carolinas Medical Center officials called the 3 1/2-year project one of the most difficult during the hospital's 70-year history. More than 60 electrical shutdowns were required during the term of work, originally scheduled for 43 months but completed in 39. Each shutdown had strict requirements from hospital executives because of the possibility of putting lives at stake.

How did Adams accomplish the project? By coming up with an intense work plan and monitoring it, with weekly coordination of personnel and execution of the plan.

Even those measures didn't solve all the challenges associated with the project. Chief among them were schedule changes made at several points by general contractor Rodgers to accommodate the needs of the hospital administration.

"The Adams team demonstrated a measured approach to the project that facilitated zero impact to the patient population and ongoing hospital operations, successful coordination with project phasing and a cooperative environment to continue work progress despite hundreds of design changes," says Andrew Cyr, construction manager at Charlotte-based Rodgers. "The challenges of this project are too numerous to list, but suffice it to say the Adams team was instrumental in helping us develop and implement countermeasures."

 That sentiment was echoed by John S. Boetjer, CEO and president of Caveo Consulting Engineers in Charlotte. "Over the three-plus years of the multi-phased construction, Adams Electric has proven its ability to be a proactive team player, paying careful attention to detail and focusing on a successful and timely completion," Boetjer says. "We especially appreciate the extensive efforts in completing the new Hybrid Operating Room Endoscopy Suite, which presented a multitude of challenges which easily could have circumvented the timely completion of this project."   Part of what impressed him and others at Caveo was how Adams went beyond the expected when challenges surfaced with the operating room/endoscopy suite. "Adams Electric presented a cost-effective design for the new power requirements, which was successfully carried out within this project schedule," Boetjer says.

Also praising the company was RDK Engineers, which again was impressed by the way Adams Electric responded to changes. "These emergency-power modifications and tie-ins were extremely complicated and meticulous, and at the end of the project, there were no problems or issues with the portion of work for which Adams was responsible," says Dale Norwood, RDK's senior electrical engineer. "Running two 2,000-amp bus ducts through an existing operating hospital to connect the K Wing doubled-ended switchgear to the ICU Tower Emergency Power System was the ultimate in coordinated construction."

Adams officials conceded the job was tough — they call it the most difficult in the company's more than 80 years of experience — for a number of reasons, including its phased nature. Work performed in early phases, for example, couldn't be re-entered at a later date because those phases were turned over to the hospital at the completion of each.

In addition, work was conducted on floors originally built in the 1940s, 1950s, 1960s, 1970s, 1980s, 1990s, and 2000s. Construction standards were different for each era, which made the renovation unpredictable and harder to plan. Company officials say they had to react to each phase of work differently, depending on the year and type of construction presented.

But RDK's Norwood and others weren't surprised that Adams pulled it off. "Adams Electric has continued to prove they are one of the top electrical contractors in the health care market, based on our experiences with them in multiple other projects," Norwood says.

Monday, 12 December 2011

Slower payments hitting some construction firms

As if weak construction demand isn’t tough enough, it seems contractors who actually find work these days must wait longer to get paid, according to a recent financial analysis report in Forbes magazine.

Sageworks analyzed accounts receivable days for privately held companies in various construction-related industries, including those tied to early-stage work, such as architectural design and foundation work, and those for drywall, flooring and other end-of-project tasks.

The results show that some businesses involved in the earliest stages of projects have fairly steady AR days compared with 2010. But contractors finishing up the projects have seen their AR days stretched.

“I think it’s a sign of the difficult times that we as a construction industry have been faced with,” said Brian Perlberg, senior counsel for construction law and contracts with The Associated General Contractors of America. “I’ve heard that payments have slowed down.”

 Accounts receivable days is a standard measure of the average number of days a company takes to collect payment on goods or services it sold. It represents a company’s receivables (after allowances for doubtful accounts) divided by sales, then multiplied by 365. The bigger the number, the longer it’s taking for companies to get paid, on average.

Foundation, structure and building exterior contractors (NAICS 2381) are usually among the first workers on the site, because they’re pouring concrete and handling the masonry, framing and roofing work. Their AR days have increased slightly in 2010 and 2011, to an average of nearly nine weeks, according to the financial statement analysis of private companies by Sageworks.

Building equipment contractors (NAICS code 2382) this year have collected payments in about 57 days, on average, which is pretty consistent with recent years. Building equipment contractors are those who create the “guts” of a building, such as the electrical, plumbing, heating and air-conditioning systems. Like foundation contractors, these workers are often involved in the earliest phases of construction.

But building finishing contractors – those who do drywall, insulation, flooring, finish carpentry and painting – have the largest number of accounts receivable days in the group, as they wait on average 11 weeks to collect payment. That’s up from about 9 weeks last year and 7.5 weeks in 2009 for the NAICS code 2383, according to Sageworks’ data.

With sales languishing, any slow payments can push up AR days. And because many contractors have submitted low bids for work, they could be more likely to issue change orders that could bring them more money for unforeseen work. But those change orders are often settled up once a project is completed, which means later payments, said Bruce Kaminer, an accountant in Fair Lawn, N.J.

Kaminer suspects that some finishing contractors may also be hurt by builders running over budget. If builders run over budget, they might have to renegotiate a line of credit or credit facility, so the last person in line for payment may wait longer, he said.

Architectural, engineering and related services (NAICS code 5413) companies have also seen a notable increase in AR days, with collections stretched to an average 73 days from 60 last year. Some sources suggested that could be the result of preliminary design work being done for projects later scrapped due to lack of financing or other matters that could result in slower payments.
Read More.

Multifamily builders are breaking ground in in the South

With so many homes for sale and so few buyers, you'd be crazy to build a new house in this market, right?

Nevertheless, multifamily and single-family home building has been heating up in pockets across the nation, causing more than a few people to scratch their heads, reports Southeast Construction.
Nationally, construction permits, starts and completions are still a fraction of what they were in the mid-2000s boom and low even compared to the more normal pre-boom levels of the '90s and early 2000s.

But after falling precipitously through 2009, declines in construction permitting - a leading indicator of future construction activity - have leveled off in some areas. The trend line has even reversed direction in some places. New activity is taking hold in Texas, the mid-South and the mountain states, according to real estate information website Trulia.

But why are builders breaking ground in some regions and staying on the sidelines in others?

For one, many of the regions now seeing glimmers of new construction activity experienced relatively mild recessions. Thanks to a strong energy industry, Texas emerged from the Great Recession relatively unscathed. Houston is nearly back to normal construction permitting activity, according to Trulia, as are Dallas, San Antonio and Omaha, Neb. In essence, metro areas that had fairly light recessions have less ground to make up during the recovery.

Also, Texas, like many other regions with new construction activity, has a fast-growing population, which ultimately puts pressure on housing supply. Indeed, the best predictor of construction permitting activity is population growth, says Trulia chief economist Jed Kolko, and Raleigh, N.C., and Austin, Texas - some of the regions with the highest permitting activity - were among the fastest-growing metro areas over the past 10 years.

"Builders build where they expect the population to grow," Kolko said. More people means more demand for housing, multifamily or single-family.

To be sure, there are other parts of the country with fast-growing populations, such as California and parts of the Southwest, but those regions were much harder hit by the twin scourges of overbuilding and severe price declines. "There's now less demand for new construction in those places even though they were fast growing," Kolko said.

The supply side also plays a role. "What you're going to start to see is construction activity pick up in parts of the country where, although we have an excess supply of homes nationally, we don't in that location," said Stan Humphries, chief economist at real estate site Zillow. "The fact that we have vacant inventory is a national phenomenon, (but) we don't have vacant inventory in certain markets, which means new construction is going to pick up in some of these markets."

However, it's important to distinguish between multifamily and single-family new construction. Multifamily constructions tend to outpace single-family projects in more densely populated cities, such as Dallas and San Antonio, where demand for rental properties coupled with rising rents has shifted builders' focus to multifamily projects.

Lower-density areas like those in the Carolinas have seen more activity in the single-family home space - multifamily projects make up just 8 percent of permits in Charleston and only 5 percent in Raleigh - because renters make up a smaller portion of residents.

The nascent reawakening of the construction sector in some parts of the country bodes well for the local economy and the jobs outlook too. Construction jobs account for as much as 5.5 percent of all U.S. jobs.

While most experts don't expect the industry to recover to pre-recession conditions, new construction means more demand, which means building firms will likely be hiring. That in turn could translate into even more demand for housing - and new construction - as workers' incomes get a boost.
 Read More.

Thursday, 8 December 2011

Webinair to help employers deal with social media

Social media can benefit the construction industry, but Facebook, Twitter and other sites are leading to new challenges for those who manage and supervise employees.  What can you do when a worker complains on a social media page? Can bosses mandate how workers behave on-line?

You can join Nexsen Pruet's employment and labor law team for a webinar that looks at how the National Labor Relations Board is prosecuting complaints against non-unionized as well as unionized employers that discipline employees for critical and disparaging social media posts. The Nexsen Pruet ELL group will also look at how the NLRB is cracking down on businesses that have overly broad social media policies.  The complimentary webinar will also cover:
  • Discipline for misuse of social media
  • National Labor Relations Act
  • Protected concerted activities
  • Surveillance
  • Recent cases
  • Considerations for your social media policies
This 60-minute webinar will be offered at 8am and Noon on Tuesday, December 13th. To attend, please contact Summer Slaughter - sslaughter@nexsenpruet.comRead More.

Wednesday, 7 December 2011

Tighter lending equals a slower recovery

Guest Editorial by Bernie Markstein
Chief Economist, Reed Construction Data

The credit lending standards pendulum continues to swing. In the early 2000s it swung towards less restrictive lending requirements, ultimately reaching standards that were excessively easy. In 2006, as the housing market faltered and problems in subprime mortgage lending began to surface, the pendulum started back towards tighter standards. That trend continued for the rest of the decade, only showing signs of ending and some small movement back towards more reasonable standards in the past year.

Lax lending practices were a key factor in setting the stage for the Great Recession. Now, excessively tight requirements are acting as a drag on the recovery from that recession. A recent report from the American Institute of Architects (AIA), Stalled Construction Projects and Financing Problems, found that the share of projects stalled due to financing problems has almost doubled in the last three years alone. A July 2011 survey referenced in the report revealed, “Over 60% of architecture firms with stalled projects indicated that at least one of their stalled projects was having problems with financing.” This is similar to responses in past surveys by the National Association of Home Builders (NAHB) that showed over 60% of home builder respondents reported losing at least one sale due to financing problems.

Further, the Federal Reserve’s survey of senior loan officers at large national and regional banks has shown continuous tightening of lending standards starting in 2006 until about a year ago for consumer mortgages and commercial real estate loans. Recent surveys have shown only some minor loosening here and there over the past year, primarily by large banks.

So what’s the big deal? Didn’t poor lending standards get us into this mess? Isn’t a swing back to better lending standards desirable?

The answer to the last two questions is yes. However, the pendulum has swung much too far - lending standards have not just moved back to prudent standards, but are now excessively rigorous

The National Association of Realtors® (NAR) reported that contract failures among its member respondents jumped to 33% from 18% in September and from 8% a year earlier, clearly limiting the pace of existing home sales. Not all contract failures were due to financing issues, but financing issues were a major factor.

Among developers and home builders, viable projects are not going forward. And these are not just multi-million dollar projects. The AIA reports that “projects with estimated construction costs of under $5 million account for almost half of all projects stalled due to lack of financing” and that “only 15% of stalled projects have estimated construction costs in excess of $25 million.”

Thus, the answer to the first question is that lending requirements have not just moved back to sensible standards but to excessively tight standards. The result is the cancellation of reasonable (dare we say, prudent?) projects that would have been approved not just in the days when the standard for lending was simply that the borrower could fog a mirror, but for projects that would have been approved back in the 1990s.

Stalled construction projects keep construction workers unemployed and limit building product manufacturers’ sales. This unfortunate scenario results in money that does not go into the economy. Dr. Stephen Fuller of George Mason University has estimated that $1 spending on the construction of buildings results in an additional $1.88 in indirect spending to the national economy.

Excessively tight lending standards are clearly hurting the construction industry and the national economy. Ironically, the reticence to lend to both residential and nonresidential construction is hurting property values in both arenas, making loans to these sectors appear less secure.

We do not want a return to the “wild west” lending practices of just a few years ago, but we DO need to return to reasonable, prudent lending practices of a little over a decade ago. Read More.

House resolution supports NC workers for DNC

The NC House passed a resolution (H151) on November 29 calling on the Democratic National Committee to utilize North Carolina companies and workers during the preparation and execution of their national convention to be held in Charlotte next September. The resolution encourages the DNC to look within the state to hire and contract capable workers. Additionally, the resolution urges the DNC to respect North Carolina's right-to-work laws.

The Charlotte Observer reports North Carolina lawmakers approved a nonbinding resolution asking the Democratic National Convention to change its rules and "respect North Carolina's right-to-work laws." It comes after Republicans raised concerns about North Carolina firms not getting contracts for the September convention because they are not unionized shops.

The resolution asks the DNC to refrain from hiring workers and companies from outside North Carolina when qualified businesses or workers are available within the state. "It may astonish you - it's not about politics, it's about jobs," said state Rep. David Lewis, the Republican sponsor.  Lewis  said he supported the convention in Charlotte, but he wanted to make sure local workers are hired. I think it's only fitting that Tar Heel workers at least have the opportunity to benefit from (the convention)," he said.  Read More.

Tuesday, 6 December 2011

NC loses 4700 construction jobs

North Carolina lost 3 percent of its construction jobs between October 2010 and October 2011, according to an analysis of federal employment data released by the Associated General Contractors of America.

The state posted 179,000 construction jobs in October of 2010, and that had declined to 174,300 a year later, reports the Triangle Business Journal..

Construction jobs in the Triangle were about flat over the same period of time. They rose a mere 1 percent to 28,900, in the Raleigh-Cary Metropolitan Statistical Area over the past year. The number of construction jobs stayed at 7,200 in the Durham-Chapel Hill MSA.

The biggest loser among the state’s largest cities was Wilmington, where the number of construction jobs fell by 21 percent, to 7,200.

Nationally, construction employment declined in 146 out of 337 metropolitan areas between October 2010 and October 2011, the AGC said.

“Declining federal investments in infrastructure projects, including highway and transit work, are making matters worse for construction employment in many communities,” Ken Simonson, the association’s chief economist, said in a prepared statement. “If it wasn’t for a slight increase in private sector demand, construction employment would be down in even more communities.” Read More.

Monday, 5 December 2011

NC Military Business Center announces Charlotte area Defense Contractor Academy

The North Carolina Military Business Center (NCMBC)  announce the Defense Contractor Academy to be hosted at Central Piedmont Community College in Charlotte. The Defense Contractor Academy will offer advanced instruction and a certificate of completion to existing, small business defense contractors to provide the tools needed to grow the defense contracting portion of their business portfolio.

A series of nine classes will be offered over an nine-week period, once a week, beginning January 19, 2012 and ending March 15, 2012. Each session will include presentation of material and either a panel or guest business(es) to discuss their experiences regarding the topic of the session.

“The Defense Contractor Academy provides the advanced skills businesses need in federal business development, competitive processes and federal contracting procedures to grow in the federal marketplace – and to grow jobs in North Carolina,” said Scott Dorney, Executive Director of the NCMBC.

The Charlotte-based Academy will feature the following courses:

  • January 19th: DoD Federal Contracting Fundamentals, SB Programs & Business Development Tools
  • January 26th: Rules of the Road: Federal/DoD Source Selection and Contract Processes
  • February 2nd: Cost Estimating & Proposal Developments
  • February 9th: Teaming Arrangements, Joint Ventures, Subcontracting, Mentor-Protégé Programs
  • February 16th: General Services Administration (GSA)
  • February 23rd: Cost Accounting Standards & Contract Audits
  • March 1st: Financing Government Contracts
  • March 8th: Protests, Debriefings & Contract Administration Issues
  • March 15th: Federal Contracting Labor Law
Companies interested in applying for the Defense Contractor Academy can visit: Applications will close on January 2.

Friday, 2 December 2011

U.S. construction spending increases for third straight month

Construction spending increased for the third straight month in October as private activity strengthened while public spending shrank, the Associated General Contractors of America reported in an analysis of new Census Bureau data. Association officials cautioned that further declines in public sector activity may soon swamp gains in homebuilding and private nonresidential investment.

“The apparent stability in construction spending data is masking conflicting trends,” said the association’s chief economist, Ken Simonson. “On one hand, private investments in construction are slowly accelerating, while public sector investments are declining at an even faster rate.”

Simonson noted that total construction spending ticked up by 0.8 percent from September to October and inched down just 0.4 percent over the past year. He added that investments in private nonresidential construction increased by 1.3 percent for the month and 8.4 percent compared with October 2010. Private residential construction posted increases of 3.4 percent and 1.7 percent, respectively. In contrast, public spending declined by 1.8 percent last month and 9.4 percent from a year earlier.

The construction economist added that several private nonresidential segments have recorded double-digit year-over-year gains, led by power construction (power plants, renewable energy, transmission lines, and oil and gas projects), which climbed 5.8 percent in October and 18 percent over 12 months. The second-largest private nonresidential segment — commercial construction (retail, warehouse and farm) — was up 0.4 percent for the month and 12 percent from a year earlier. Next in size was manufacturing construction, down 0.4 percent for the month but up 14 percent year-over-year.

“I expect further gains in power, energy, manufacturing and distribution facilities in 2012,” Simonson remarked. “Apartment construction should also be strong. But these positives will barely offset the drop-off in public spending.” He noted that the two largest public categories, highways and educational construction, had each fallen about 6 percent between the first 10 months of 2010 and the same period in 2011. In addition, public spending on sewage and waste disposal is down 13 percent year-to-date and water supply is down 8 percent.

Association leaders said that Washington’s failure to enact years-late surface transportation, aviation and water infrastructure legislation was contributing to the decline in public sector construction spending. Without those long-term programs in place, it is becoming increasingly difficult for state and local officials to plan major infrastructure upgrades, they added. Read More.

Thursday, 1 December 2011

NC economic barometer shows slight improvement

North Carolina's economic barometer improved in October, its first gain since June. But the statewide economic index remains down from one year ago, a sign that the state's economy is stagnant and not expected to improve significantly anytime soon, reports the News and Observer.

The monthly index of leading economic indicators is compiled by N.C. State University economist Michael Walden. It showed a 1.4 percent increase for October and a 0.5 percent decline since October 2010. "Without a significant 'breakout' - either up or down - the outlook is for more of the same," he said.

The Walden index is based on five measures: jobless claims, housing permits, manufacturing hours worked, manufacturing earnings per employee, as well as the national index of leading economic indicators.  Read More.