Wednesday, 29 February 2012

State Construction Conference to examine NC building concerns

There is still time to attend the March 22 Annual State Construction Conference at NC State University. For those who are unfamiliar with the conference, the conference brings together state agencies and institutions, architects, landscape architects, engineers, contractors, and subcontractors to discuss mutual concerns relating to the planning, design, and construction of state projects.

Topics for the 31st conference will include: State Building Commission Updates, Senate Bill 668 – A Case Study, SCO Inspections, NC 2012 Building Code Changes, State Review for Historic Property and HUB Overview.

Click Here for a copy of the current agenda.

The Conference will be held from 8 am to 5 pm at the McKimmon Conference & Training Center, NC State University, Raleigh. There will be be a free networking reception and expo sponsored by the Office for Historically Underutilized Businesses from 5 – 7 pm following the conference sessions.

 Click Here to register.

Monday, 27 February 2012

Mammoth Grading decision impacts lien rights of NC subcontractors and suppliers

Guest Editorial from NC law firm of Smith Debnam Narron Drake Saintsing & Myers, LLP:

On February 23, the District Court for the Eastern District of North Carolina issued its decision on the appeal of the bankruptcy Court’s ruling in the infamous Mammoth Grading case that dramatically impacted the lien rights of NC subcontractors and suppliers.

The Court vacated the Mammoth ruling and remanded the case to the Bankruptcy Court for further proceedings. This means that the ruling of the Bankruptcy Court in the Mammoth case is no longer good law.

The District Court issued an order granting Mammoth’s Motion to Dismiss Ferguson’s appeal. However, the order went on to comment on the Mammoth ruling. In the order, the District Court questioned if the Bankruptcy Court’s rulings prohibiting the filing of notices of claims of lien upon funds and claims of lien after a bankruptcy case had been filed were in accordance with North Carolina statutory lien law and the constitutional protections afforded laborers and materialmen by Article X Section 3 of the North Carolina Constitution.

This provision of the North Carolina Constitution specifically requires the General Assembly to make adequate provisions for a lien to protect the rights of those that provide labor and materials for the improvement of the lands of another.

The District Court went on to express particular concern that the Bankruptcy Court may have erred in determining that a lien under Chapter 44A, Article 2, Part 2 of the North Carolina General Statutes does not arise until the filing of a notice of claim of lien by the subcontractor. The District Court elected to dismiss Ferguson’s appeal as being moot and therefore did not reach a decision on the merits of Ferguson’s appeal.

What does this mean for NC lien claimants?

Even with this ruling from District Court, not much has changed. In the Eastern District of North Carolina, the rulings from Harrelson, holding that the filing of a post-petition claim of lien or notice of claim of lien upon funds are a violation of the automatic stay, still remains.

Given the decision by the District Court there is now some doubt regarding the reasoning behind the rulings in Harrelson and Mammoth. That may lead other bankruptcy court judges to re-evaluate the Eastern District’s stance on post-petition liens in future cases. Also the Harrelson/Mammoth analysis of post-petition lien filings has not been adopted by the Bankruptcy Courts in the Middle or Western Districts of North Carolina.

Finally, a legislative study commission has been formed to look at changing North Carolina’s lien law statutes. The study commission has met once and has two more meetings scheduled. It is still early in the process, but it appears that the study commission may recommend changes to the lien statutes that they believe would effectively nullify the rulings in the Harrelson/Mammoth cases. Read More.

Byron L. Saintsing is a partner and John M. Sperati is an associate with the Raleigh, NC law firm of Smith Debnam Narron Drake Saintsing & Myers, LLP. Both concentrate their practices in construction law.

Sucbontractors concerned about lack of payment assurances on P3 projects

In a letter to the editor of Engineering News-Record, the American Subcontractors Association (ASA) expressed subcontractors’ concerns over the lack of payment assurances on projects financed through public-private partnerships.

“ASA is concerned that existing federal and state laws establishing payment assurances for subcontractors and suppliers may not apply to projects financed through P3s,” 2011-12 ASA President Kerrick Whisenant wrote in Subcontractors Raise Issues on P3 Projects” to be published in today’s issue of ENR. The letter was in response to ENR’s Jan. 30 special report, which focused on P3s.

At the core of the issue is that mechanic’s lien laws generally do not apply to construction on public land, but federal, state or local governments often own the real estate on which projects financed through P3s are built. Meanwhile, payment bonds may be required on contracts awarded by public owners, but the owners or primary contracting entities on P3 projects may be private or partially private.

 “Thus, neither mechanic’s liens nor payment bonds may provide payment assurances to subcontractors and suppliers on P3 projects,” Whisenant wrote. "[Subcontractors and suppliers] pay their laborers, suppliers and taxes even before submitting an invoice for their work to their prime-contractor client. When subcontractors harbor doubts about getting paid for their work, they may choose to charge higher prices to account for their increased risk or simply choose not to bid on such work at all. Ultimately, such projects will either cost more or not have the expertise of the best firms in the construction industry.”

ASA is educating federal and state legislators about the need for subcontractor payment protections on P3 projects. Read More.

Friday, 24 February 2012

Architectural Billing Index remains positive for third straight month

On the heels of consecutive months of strengthening business conditions, the Architecture Billings Index (ABI) has now reached positive territory three months in a row. 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 January ABI score was 50.9, following a mark of 51.0 in December. This score reflects a slight increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 61.2, down just a notch from a reading of 61.5 the previous month. Every January the AIA research department updates the seasonal factors used to calculate the ABI, resulting in a revision of recent ABI values.

“Even though we had a similar upturn in design billings in late 2010 and early 2011, this recent showing is encouraging because it is being reflected across most regions of the country and across the major construction sectors,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “But because we still continue to hear about struggling firms and some continued uncertainty in the market, we expect overall economic improvements in the design and construction sector to be modest in the coming months.”

Key January ABI highlights:
      • Regional averages: Midwest (53.7), South (51.6), Northeast (50.7), West (45.6)
      • Sector index breakdown: multi-family residential (52.6), commercial / industrial (52.2),
      • institutional (51.1), mixed practice (46.1)
      • Project inquiries index: 61.2
The regional and sector categories are calculated as a 3-month moving average, whereas the index and inquiries are monthly numbers. Read More.

Thursday, 23 February 2012

Highway Construction Wage Survey to be conducted by NCDOT

The Carolinas AGC and Carolinas Asphalt Pavers Association, are working with the NCDOT and SCDOT to address Davis-Bacon wage determinations associated with highway projects. Beginning February 27, the NCDOT will be conducting a Highway Construction Wage Survey to determine the validity of the US Department of Labor’s recent wage determinations for North Carolina.

For an industry in survival mode for the past 4 years, eking through the worst economic environment since the great depression, the determinations are an economic body-blow to those who perform work financed with federal dollars.

The Davis-Bacon Act applies to contracts in excess of $2,000 for the construction, alteration, and/or repair of public buildings or public works, including painting and decorating, where federal dollars are in involved in the contract. The Act requires all contractors and subcontractors to pay the various classes of laborers and mechanics employed on the contracted work site, the wage rates and fringe benefits determined to be prevailing for corresponding classes of employees engaged on similar projects in the locality. In addition, the Act requires that certain labor standards provisions be specified in the contract awarded to the successful bidder. An applicable wage determination must also be included in the contract documents.

Even though many of the previous determinations were low, some of the new determinations are 200% higher and vary wildly between adjoining counties. Not only are rates substantially higher, they are now separated into multiple categories where they were previously divided into only two: rural and metropolitan. To make matters worse, the determinations do not take into account skill level/experience required for some jobs– designating higher wage rates for lower-skilled positions than for skilled positions.

The determinations forced the NCDOT to place a moratorium on lettings during December 2011 to adjust to the new wages. Contractors from all disciplines (utility, building, highway and specialty) are wrestling to comply with the determinations, paying one wage on private work and another on public projects. All this comes at a time when margins are low and contractors are doing all they can to keep overhead to an ultimate minimum.

Carolinas AGC is working to have the determinations revisited and assisting member companies to comply. On March 26, the association will conduct a webinar with Ogletree, Deakins, Labor & Employment Law Firm and representatives from the CAGC Human Resources Committee to review Davis-Bacon requirements and offering guidance on how to comply. Read More.

Wednesday, 22 February 2012

NC construction employment remains below peak levels

Construction employment remains below peak levels in 329 out of 337 metro areas, according to a new analysis released today by the Associated General Contractors of America. Given the continued weakness in construction employment, the association urged Congress to pass years-late infrastructure measures, including legislation to fund highway, transit and aviation construction work.

“What makes these job losses even more frustrating is the fact that many of them could have been avoided,” said the association’s chief executive officer, Stephen E. Sandherr. “Thousands more construction workers would be employed today if Congress wasn’t years late in passing measures like the highway and transit bill.”

The Charlotte area lost more construction jobs since its peak employment (down 23,400 jobs compared to December 2006, a 40 percent drop) than any other metro area in North Carolina. Other areas experiencing large declines in construction employment compared to peak levels included Asheville (down 5,000 jobs compared to December 2007, a 41 percent drop), Raleigh-Cary (down 12.100 jobs compared to December 2007, a 30 percent drop) and Wilmington (down 6,200 jobs compared to December 2006, a 47 percent drop).

In contrast, Fayetteville lost only 1,700 jobs compared to December 2006 (a 24 percent drop).

AGC’s Sandherr noted that the employment figures would have been higher had Congress not been years late in passing a range of key infrastructure investment bills, including a multiyear surface transportation bill that funds highway and transit construction projects nationwide. He said that the association is working with groups such as the U.S. Chamber of Commerce to push for passage of a new, fully-funded surface transportation bill as part of an effort called “Make Transportation Job #1.”

View new construction employment figures in twelve NC cities Here. Read More.

Tuesday, 21 February 2012

Gauge of future economic activity up 0.4 percent

A gauge of future economic activity rose in January for the fourth straight month, adding to evidence that the economy has strengthened in the new year reports USA Today. The Conference Board said that its index of leading economic indicators rose 0.4% in January. The increase pushed the index to its highest point since July 2008.

The measure of leading indicators is designed to anticipate economic conditions three to six months out. Its steady rise has coincided with other positive data that suggest the recovery is picking up. The unemployment rate fell in January to 8.3%, the lowest in nearly three years, after employers added 243,000 net jobs — the most in nine months. Auto sales are up, unemployment aid applications are down, and factories are cranking out goods at a healthy pace.

“Recent data reflect an economy that started the year on a positive note,” said Ken Goldstein, an economist at the Conference Board.

Seven of the 10 indicators measure by the Conference Board increased in January, led by a widening in the spread between short-term and long-term interest rates. That indicates that investors buying long-term bonds want to be compensated for taking on the risk that inflation is going to pick up over the longer term because the consensus view is that rising inflation will accompany a strengthening economy.

Three indicators held the index back. The largest negative was a drop in consumer expectations. Goldstein said a separate index that tracks indicators tied to the current health of the economy had shown some strengthening in the October-December period and in January.

The seven indicators strengthened in January: the spread in interest rates, average factory hours worked per week, stock prices, a credit index, building permits, and two measures for manufactured goods. Read More.

Monday, 20 February 2012

Tracking HB 489: NC proposed lien law revisions

By: Gregory L. Shelton, Horack, Talley, Pharr & Lowndes, P.A.

Every ten years or so, North Carolina’s lien law is put on the legislative lift and given a tune up or overhaul. The last revision, in 2005, was more of a tune up. This time around, the industry groups are looking to overhaul the lien law to address issues that arose during the Great Recession.

Early on, the hidden lien problem received most of the attention. The original version of HB489 included a Florida-style Notice of Commencment, Notice to Owner system that would require subcontractors and suppliers to make themselves known to preserve their relation-back rights. I summarize the original HB489 here (Part I) and here (Part II). The House, however, substituted the original bill with a study bill, authorizing the Legislative Research Commission to study Chapter 44A and recommend ways to improve and modernize the lien and bond laws. Substitute H489 passed the House and crossed over to the Senate on June 1, 2011. The bill was then referred to the Senate Judiciary Committee (I) for study.

The Committee meets Thursday, February 23 at 9:00 a.m in Raleigh (LOB room 415) to hear from the Construction Law Section of the North Carolina Bar Association and from industry stakeholders on matters concerning Chapter 44A. The Committee currently is inclined to scrap the “hidden lien” portions of the bill because subcontractors and suppliers have expressed concerns over the paperwork required to protect their lien rights. Whether the title insurance industry moves to reintroduce the nuclear option (eradicating all liens not perfected prior to closing) remains to be seen.

The Committee’s focus has shifted to addressing a series of bankruptcy court rulings that have adversely impacted the ability of subcontractors and suppliers to secure their lien rights after a bankruptcy filing. The Eastern District bankruptcy court has taken the position that the subcontractor/supplier lien of funds does not arise under existing law until the Notice of Claim of Lien on Funds is served upon the obligors. The Lien and Bond Law Revision Committee (of the Construction Law Section of the North Carolina Bar Association) is working with the Committee to fix the existence date of the subcontractor’s lien as the date of first furnishing while at the same time enabling the project funds to flow freely in the normal course.

The Committee is also considering a fix to the Pete Wall decision. In Pete Wall, an owner and developer eliminated lien rights altogether by reframing the construction contracts and subcontracts as a series of leases. Pete Wall is not a published opinion, which means it has no precedential value, the fact remains that a complex real estate scheme deprived a plumbing contractor of protection under the lien law. Other issues remain in play, including harsher penalties for false lien waivers, model partial and final lien waiver forms, and changes to North Carolina’s Little Miller Act (payment bonds for public projects). Read More.

Friday, 17 February 2012

Anti-fog product tests positive at Camp Lejune jobsite

At San Juan Construction, a general contractor currently working at Camp Lejune and Cherry Point, the company motto is, “Safety first, people always.” Safety glasses on the job are standard, and now Defog It anti fog has been added to the safety gear after on-the-jobsite testing at a Camp Lejune construction site, part of the MOUT (Military Operations in Urban Terrain) project.

Heat and humidity, changing temperatures, and cold can trigger fogged eyewear. In a construction workplace, perspiration from exertion can also be a factor. “Heat and humidity are usually the problem,” says Josh Hollingshead, the Project Cost Controller on the North Carolina job. “In the summer it’ll get up to 100% humidity sometimes.”

San Juan had tried other anti fog products with limited success, so it was decided to test Defog It in a real-world working situation. A field test was arranged with Defog It supplying samples for the crew. The results proved positive.. “They really work great,” Hollingshead reported.

“No worker should ever have to take of their safety glasses because of fogging,” says John Swett, Vice President of Sales and Marketing for Defog It by Nanofilm. “That’s why Defog It is formulated to prevent fog in the toughest environments.”

Case studies are available at the Defog It website, http://www.defogitworks.com, along with research and whitepapers on preventing eye injuries, demonstration videos and product information. First used by the military worldwide, Defog It anti fog is proven in the toughest workplace environments where heat, cold, humidity and exertion cause fogged safety eyewear. Defog It is available as a liquid or reusable cloths and is safe and effective on safety glasses, goggles and faceshields.  Read More.

Thursday, 16 February 2012

NCDOL release trench hazard alert

The N.C. Department of Labor published the following hazard alert on the dangers of trenching and excavating in the January-February 2012 Labor Ledger:

Excavation and trenching operations are among the most hazardous of construction activities. Two excavation and trenching events last year in North Carolina resulted in willful citations.

The Labor Department recently published a hazard alert to remind employers of the dangers of excavations and trenches and of the requirements of the OSHA standard.

OSHA defines an excavation as any man-made cut, cavity, trench or depression in the earth’s surface formed by earth removal. A trench is defined as a narrow underground excavation that is deeper than it is wide, and is no wider than 15 feet (29 CFR 1926.650(b)).

In each case, accident investigators determined that the employer had knowledge of the Excavations Standard and the volatile conditions while employees worked inside unprotected excavations. One event involved the installation of a 14-foot section of PVC sewer pipe in a 12-foot deep excavation of Type B soil.

The other involved installation of a 10,000-gallon septic tank and reactive tank in excavations up to 15.8 feet deep in Type C sandy soil. The excavations in each event had nearly vertical walls with no trench boxes or shoring to protect employees from exposure to hazards.

One project was six to eight weeks behind schedule. Time became of essence and safety was compromised, which resulted in a cave-in causing blunt trauma and asphyxiation to an employee.
Cave-ins pose the greatest risk and are much more likely than other excavation-related accidents to result in worker fatalities. Other potential hazards include falls, falling loads, hazardous atmospheres and incidents involving mobile equipment. Nationwide, trench collapses cause dozens of fatalities and hundreds of injuries each year. Citations for these events included:
Employees were not trained in the recognition of hazards.
Daily inspections of excavations and adjacent areas were not made by a competent person.
No protective system was used for support of trench walls.
Proper access and egress from excavation were not provided.
Employees were not wearing personal protective equipment such as hard hats.
Work was performed in close proximity to overhead power lines.
The spoil pile and equipment were too close to the excavation and created a hazard.
Click here to read the entire hazard alert on the dangers of excavation and trenching.

Wednesday, 15 February 2012

Construction backlog expands by 10.9 percent from year ago

The Associated Builders and Contractors (ABC) released its Construction Backlog Indicator (CBI) for the fourth quarter of 2011. CBI declined 3.2 percent from the previous quarter from 8.1 months to 7.8 months, but is still up 10.9 percent compared to the fourth quarter of 2010. CBI is a forward-looking economic indicator that measures the amount of nonresidential construction work under contract to be completed in the future.

“Overall, the latest CBI numbers indicate a degree of stalling in the recovery of the nation’s nonresidential construction industry, likely due to a combination of the soft patch that developed in the broader economy early last year, a number of seasonal factors and the winding down of federal stimulus projects,” said ABC Chief Economist Anirban Basu. “But the good news is that given the recent acceleration in economic and employment growth, CBI is positioned to rebound more forcefully during the quarters ahead.

“In addition, the most recent data reflect the ongoing expansion in privately funded construction activity as opposed to the contraction of publicly funded construction,” Basu said. “The nation’s smaller construction firms are gaining an advantage from this shift, in contrast to the decreased construction activity among the larger firms that had benefitted from earlier federal stimulus projects and military base realignment-related construction.”

Regional Highlights
  • Construction backlog expanded in the Northeast from the third quarter to the fourth quarter, but declined in the South and West, and was essentially unchanged in the Middle States.
  • Construction backlog is higher in every region of the nation compared to one year ago.
  • Companies in the South, some of which are located in high-growth states such as Louisiana, Oklahoma and Texas, reported the lengthiest backlog at 8.9 months, up 14.7 percent from the fourth quarter of 2010.
Analysis

“The disparity between regional construction activity is on the rise,” said Basu. “One year ago, the difference in backlog between the South region, with the lengthiest backlog, and the West region, with the shortest backlog, was 1.98 months. During the fourth quarter of 2011, this gap rose to 2.81 months, with the South reporting a backlog of 8.92 months and the West at 6.11 months.
“The South appears to be the region most positively impacted by rebounding nonresidential construction, largely due to its central importance to the nation’s energy industry,” Basu said. “The West continues to deal with many issues, including the impact of weak residential real estate markets and stressed state fiscal conditions, both of which impact the vitality of broader regional economies.” For regional trend data click here.

Industry Highlights
  • All industry segments monitored by ABC’s CBI declined in average construction backlog from the third quarter to the fourth quarter, but backlog is up on a year-over-year basis in both the commercial/institutional and infrastructure categories.
  • Construction backlog in the commercial/institutional segment fell from 8.4 months in the third quarter of 2011 to 7.8 months in the fourth quarter, but remains 11.4 percent above the level reported one year ago.
  • Heavy industrial is the only segment in which construction backlog declined from the same time one year ago. Backlog for this segment fell from 6.6 months in the fourth quarter of 2010 to 5.7 months in the fourth quarter of 2011.
“The biggest surprise in the data is the lack of momentum in construction backlog associated with the heavy industrial category,” said Basu. “Manufacturing capacity utilization, or to what extent a nation uses its productive capacity, stood at just 71.4 percent during the third quarter of 2011, down from a typical historic level of more than 80 percent. This implies capacity utilization must rise a bit more before the industry experiences a significant increase in construction backlog.” For Industry trend data, click here.

Highlights by Company Size
  • During the fourth quarter, construction backlog for firms with annual revenue exceeding $100 million declined 3 percent. However, firms in this category continue to report the largest construction backlog among all revenue categories.
  • Construction backlog for firms with less than $30 million in annual revenue remained at roughly the same level between the third and fourth quarter, but is up 14.1 percent year over year.
  • Construction backlog for firms with annual revenue ranging from $30 million to $50 million increased from 7.3 months to 7.4 months during the fourth quarter.
  • In the $50 million to $100 million revenue category, construction backlog declined from 9.7 months to 8.9 months during the fourth quarter, but is still 4.2 percent higher than the fourth quarter of 2010.
“The most important finding in this quarter’s report is the growing construction activity taking place among smaller firms,” Basu said. “Early in the recovery, the lion’s share of construction work seemed to favor firms with annual revenues in excess of $50 million. This had much to do with federal infrastructure spending. As the economic recovery has broadened to encompass more construction segments, work has steadily spread to smaller firms – a trend that is likely to continue.” For Company Revenue trend data, click here.

Tuesday, 14 February 2012

Greensboro Partnership seeks construction-ready sites

The Greensboro Partnership has reaffirmed its commitment to five industry clusters along with supporting collaborative education efforts between the public and private sectors and entrepreneurism in a new strategic plan.

The plan follows a similar one completed in 2006 and echoes some of the same priorities from six years ago, reports the Triangle Business Journal.

It also looks to build on successes, such as the creation of the Gateway University Research Park in east Greensboro and ongoing pursuits like the development of construction-ready sites.

The strategic planning process was supplemented by an analysis of the local and regional economy by Garner Economics LLC, an Atlanta-based site consultant that looked at the assets and challenges of Guilford County. Part of that process was identifying industry clusters here that will fuel economic growth, and the clusters Garner identified independently mirrored those the Partnership had identified in 2006 and focused on since.

Those clusters include the aviation industry, financial services, life sciences, advanced manufacturing and transportation and logistics.

“It was a validation that we had picked the right ones,” said Pat Danahy, president and CEO of the Greensboro Partnership.

A new initiative among the seven identified within the strategic plan is supporting the development of Greensboro’s downtown in cooperation with Downtown Greensboro Inc. and the city. Danahy said part of that is continuing a push for the adoption of a downtown economic development strategy completed in 2010 that includes priority projects such as the Downtown Greenway, a performing arts center and new mixed-use developments.

Within each of the seven initiatives identified in the Greensboro Partnership’s plan are strategies that will be assigned to members of the partnership’s operating group and committees, which will report quarterly on progress, Danahy said.

Among the notable strategies identified in the plan:
  • Expand the availability of construction-ready sites, including multijurisdictional revenue sharing sites. Areas being considered include Lee Street corridor from Interstate 40 to Interstate 85, areas around the Gateway University Research Park, the Guilford County prison farm and an unidentified location for a “mega-site.”
  • Support the projects and initiatives of Opportunity Greensboro, which focuses on collaboration between the private sector and higher education, including developing a strong higher education presence downtown.
  • Look at ways to regionally support Triad entrepreneurs, including the possible revival of an organization like the Piedmont Triad Entrepreneurial Network to provide ideas, capital and management to Triad entrepreneurs. Read More.

Monday, 13 February 2012

NC State Constructed Facilities Lab tests materials and design

Before launching construction projects, agencies from around the globe turn to the Constructed Facilities Laboratory (CFL) at North Carolina State University (NC State ) to test the limits of their materials and designs.

Asian Correspoondent.com reports the CFL has been one of the busiest research facilities in the United States to focus on structural engineering and innovative construction materials and systems. The lab is currently engaged in more than 20 funded research projects, and its work has been financed by agencies ranging from the National Science Foundation to the NC Department of Transportation – as well as a host of private companies and foreign countries from Korea to France.

The CFL designs experiments that test innovative construction designs and materials at full scale. For example, instead of testing a small sample, they have the tools and expertise to test a 42-foot reinforced concrete wall panel – subjecting it to extreme conditions to see how much abuse it can take before it breaks. Once they know the limits of new designs and materials, engineers can use them with confidence.

The CFL is equipped to test just about anything. CFL experts can simulate earthquakes, expose a structure to extreme temperatures, and see just how much weight a structure can take. “We can easily apply two million pounds of force,” says Greg Lucier, the CFL’s lab manager.

More importantly, CFL’s faculty and staff know how to use its tools to simulate real world conditions. For example, they can simultaneously expose a bridge piling to extreme heat or cold, the pushing and pulling of wind, salt water, and an extreme load of weight. That’s important, because it tells bridge builders exactly how the structure would behave in extreme real-world conditions.

The CFL team has worked on innovative structural designs and materials used across the country: from the reinforcements used in the foundations of the Freedom Tower in New York, to the massive wooden “glulam” beams in the new terminal at RDU airport. CFL has even worked with electric utilities to develop means of reinforcing existing nuclear power facilities.

“The key is innovation,” says Dr. Sami Rizkalla, director of the CFL. “New materials and techniques can make projects safer and more cost-effective. But before we use them, we need to know they are safe.” Read More.

Friday, 10 February 2012

How sending your bond claim to the surety helps

Guest editorial by Scott Wolfe Jr., attorney and publisher of the Construction Lien Blog.

When filing a bond claim, most state laws only require the claimant to file their notice of claim with the prime contractor and/or the public entity commissioning work. It’s then the responsibility of those parties to report the claim to the bonding company. One reason for this is simply because the claimant may not know who the surety is, and therefore, can’t file the claim with them. However, you can request this information, and should.

To qualify for a payment bond, a contractor must apply with the surety, and then to get the payment bond, the contractor must sign certain agreements with the surety. In the application process, the surety is looking at the creditworthiness and solvency of a contractor. A contractor will not be bonded for $5m if they have $20,000 in assets. It just won’t happen. Surety companies are going to issue a bond and take some risk, but they aren’t going to take much risk. Just like a credit card company reviews their cardholders before issuing credit, so too does a surety company do some due diligence on the company they are agreeing to protect.

Once approved, the surety company will require the contractor to sign contracts to acquire the bond. The prime contractor essentially signs away their corporate or private lives to these surety companies. The surety requires the contractor agree to indemnify it from any and all claims, meaning that any claims made against the bond will be paid for by the contractor, and the contractor will also pay any attorney fees incurred by the surety in dealing with the claim.

To ensure the contractor will do this, the surety also requires the contractor to pledge assets to it in the event of a default. The contractor may pledge rights to cash, stocks, or properties. In the event of a default, the surety can seize these assets without much judicial work, and use those assets to pay any claims. Since contractors have so much pledged to the surety, and such onerous contracts with those companies, they hate it when the surety discovers a claim. Immediately after discovering a claim, the surety sends a formal demand to the contractor requiring they indemnify the surety and resolve the claim, or else.

So, in reality, when contractors receive claims, they frequently procrastinate sending them to the bonding company. If times are tough enough for the contractor, the contractor may never send the claim along, trying to bury their head in the sand and forget about their problems.

It’s a good idea to send the claim directly to the surety so you need not trust that the contractor will do it. Send it to the surety and you turn up the pressure immediately, and you insure that your claim is correctly and timely lodged. The bonding company will force the contractor to assess the claim and pay it if there’s no legitimate dispute, and indemnify the surety, which all equals more expense and results in you getting paid. Read More.

Thursday, 9 February 2012

SUBWEEK events free for Carolinas subcontractors

The North Carolina Military Business Center (NCMBC), Procurement Technical Assistance Center (PTAC), Wake Tech Community College and Coastal Carolina Community College are co-hosting SUBWEEK during the week of February 14-21. Below is a list of free subcontracting events with prime contractor, projects and date/location. Additional information at NCMBC.

Prime Contractor/Project
Date/Location
Project Name. P1383/P1384 Base entry point and road, Phase II and III, Marine Corps base, Camp Lejune, NC
February 14, 2012 Jacksonville, NC
Project Name. Camp Lejuene, North Carolina, P-1253 Combat Engineer Maintenance OPS Center
Project Name. P-705 & P710 Hangar, Apron, Parking Garage & Ordnance Loading Area Addition MCAS, New River
February 16, 2012 Jacksonville, NC
Project Name: P-1253 2D Combat Engineer/Maintenance Ops Facility, Marine Corps Base, Camp Lejeune, North Carolina
Project Name: P705/P710 Hangar, Apron, Parking Garage & Ordanance Loading Area Addition, MCAS New River, North Carolina
February 17, 2012 Jacksonville, NC
February 21, 2012
Cary, NC

Wednesday, 8 February 2012

NCDOT gears up to replace aging bridges

Across North Carolina, the NC Department of Transportation is conducting a major overhaul of aging bridges. In Division 3, which covers six counties including New Hanover, Brunswick and Pender, 45 bridges are somewhere in the process of replacement, said Amanda Glynn, the division’s bridge program manager.

The Wilmington Star-News reported many other bridges are being preserved or overhauled, partly because of the state’s Bridge Improvement Program, which is ensuring the DOT meets the a General Assembly initiative to commit around $450 million in state funds to improve bridges between 2011 and 2013. In Division 3, that pot of money is supporting the replacement of 25 bridges, Glynn said. Federal dollars are being used to replace the additional 20. About 40 other bridges are being rehabilitated.

Since the General Assembly wanted the money spent in the 2011-12 and 2012-13 fiscal years, the DOT mainly focused on replacing small bridges and secondary roads that could go back in the exact same place, said Paul Garrett, the DOT’s state bridge program manager. Replacing low-impact bridges means faster permitting, he said.

In Southeastern North Carolina, those bridges are smaller and their replacement would have lower impact on the community and natural environment. “These are all quick and simple,” Glynn said. Ten of those new bridges will be inBrunswickCounty, and two will be in Pender County. “We’re trying to infuse more money,” Garrett said. “Currently, there’s more bridges becoming structurally deficient and in need of replacement than we’re replacing.” The money from the General Assembly helps address that, he said. In his 25-year career with the DOT, he has never seen the kind of blitz bridge replacement and repair activity he sees now.

In Raleigh, state Sen. Bill Rabon, R-Brunswick, serves as the co-chairman of the N.C. Senate’s Appropriations Committee for the DOT. He said he was alarmed to learn one out of three bridges in the state were in poor condition, as were other appropriations leaders. The legislature added a provision in the state’s budget to use system preservation funds to improve structurally deficient bridges. “They’ve just been let go over the years,” Rabon said. “We’ve got to fix what’s broken.” Read More.

Tuesday, 7 February 2012

Bonding Best Practices

Darlene Musica, Surety/Fidelity Bond Underwriter, Erie Insurance, spoke at the January Triangle Chapter luncheon meeting of the American Subcontractors Association of the Carolinas. Following are excerpts from her speech.

The first step towards establishing surety capacity is to contact a professional surety bond producer, one who understands the intricate process of surety bonding and unique underwriting standards and practices of the surety companies he or she represents.

As a contractor you must have reasonable expectations. Requesting a bond for a project several times larger than any past job completed is unrealistic. The number one cause for contractor failure is growing faster than resources allow. Contractors should start small and gradually work their way up to larger projects. Taking on work that is outside your normal area of expertise can be devastating. The surety seldom wants to pay for the contractors learning experiences. Stay in your own territory. Doing work long distances from your home base can create problems including weather, local politics, soil composition, and unexpected miscalculations.

Give the surety enough time to review your bond application. For a new account bidding a small project ($500,000 and under) the surety company will need 2 or 3 days to get you an answer. Don’t miss a bid opportunity due to lack of planning.

A contractor’s success is also dependant on having adequate working capital. Sureties calculate working capital by taking the current assets and subtracting the current liabilities. It is not a straight forward calculation as current asset values are almost always discounted. Adequate working capital indicates the contractor’s ability to perform all work in its current backlog without encountering financial difficulties.

Contractors also need to have good in-house accounting and record keeping. A contractor with good internal bookkeeping systems and financial statements prepared by an independent CPA is better equipped to estimate and mange job costs and turn a profit. The ability to maintain a bank line of credit can make or break a contractor when faced with unforeseen problems on a job. With an available line of credit the contractor can maintain positive cash flow and finish the work without adversely affecting the remaining work on hand.

The surety industry is committed to helping small, less experienced contractors obtain their first bond and increase their bondability. Many sureties have developed programs especially for contractors called the prequalification process. The prequalification process is the surety company’s underwriting process to enable the surety company to capture a clear picture of the contractor and how the surety company feels they could best support the contractor As the size and number of projects the contractor wants surety bonds on grows, so does the surety underwriting requirements.
Additional resources are available from the National Association of Surety Bond Producers.

Monday, 6 February 2012

US construction industry unemployment rate rises

Despite the addition of 21,000 jobs in January, the nation’s construction industry unemployment rate jumped to 17.7 percent, up from 16 percent the previous month, according to the jobs report by the U.S. Labor Department. However, construction employment is up by 116,000 jobs, or 2.1 percent, compared to January 2011, and is down from the 22.5 percent rate posted the same time last year, reports the Associated Builders and Contractors.

The nonresidential building construction sector added 6,000 jobs in January and has added 12,000 jobs year over year, or 1.8 percent, as January employment levels stood at 662,000. The residential building construction sector added 3,000 jobs for the month and has added 14,000 jobs, or 2.4 percent, year over year as January employment levels stood at 575,000.

Nonresidential specialty trade contractors added 10,000 jobs in January and have added 42,000 jobs, or 2.1 percent, during the past twelve months. Residential trade contractor employment increased by 4,000 jobs in January, and is up by 28,000 jobs, or 1.9 percent, from the same time last year. In contrast, heavy and civil engineering construction employment slipped by 1,000 jobs for the month but has added 21,000 jobs, or 2.6 percent, year over year.

Across all industries, the nation added 243,000 jobs as the private sector expanded by 257,000 jobs and the public sector shrank by 14,000 jobs. Year over year, the nation has added 1,953,000 jobs, or 1.5 percent to job totals. The unemployment rate fell to 8.3 percent in January, down from a revised 8.5 percent last December.

Analysis

“Today’s employment report was substantially better than consensus estimates, both for construction and the overall economy,” said Associated Builders and Contractors Chief Economist Anirban Basu. “It was anticipated that the construction industry would add roughly 0.1 percent to jobs totals,” Basu said. “This pace of growth would have been in line with the past year. Surprisingly, construction employment expanded 0.4 percent for the month, and is now up 2.1 percent for the year.

“Clearly, the recovery in private construction has been accelerating,” said Basu. “Job growth was particularly rapid in the manufacturing, commercial, and power categories, a reflection of rising private momentum. “However, the impact of strained public finances also continues to be apparent, including the trend of diminished employment in the heavy and civil engineering categories, which declined 1.4 percent for the month,” Basu said.

“The U.S. economic momentum appears to have returned to a level sustained before the soft patch of economic activity emerged early last year,” said Basu. “January represented the fastest pace of job growth since April 2011.” Read More.

Friday, 3 February 2012

In late 2011, U.S. Secretary of Transportation Ray LaHood announced the finalization of a new Federal Motor Carrier Safety Administration (FMCSA) rule banning interstate truck and bus drivers from using handheld cell phones while driving.

Effective on January 3, the new regulation penalizes individual drivers with fines up to $2,750 and their companies with fines up to $11,000 per infraction. So what should interstate fleet operators do? The Steel Erectors Association of America suggests two ways to take action and start ensuring compliance with the new rule:
The new rule bans 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. Some four million truckers are affected by the new rule. 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. Read More.

Thursday, 2 February 2012

Wallbridge consruction seking local subcontractors for NC projects

Walbridge, a large construction general contractor, is seeking local subcontractors and suppliers for future federal construction work in North Carolina. The North Carolina Military Business Center (NCMBC), Coastal Carolina Community College and the North Carolina Procurement Technical Assistance Center will host a subcontracting networking event for Walbridge at Coastal Carolina Community College (Melton Skills Building, Room 104, 444 Western Blvd, Jacksonville, NC 28546) on February 17, 2012 from 9:00 am – 11:00 am.

“This event will help specialty contractors and suppliers connect with an established general contractor for military construction work in North Carolina,” said Scott Dorney, Executive Director of the NCMBC. “We look forward to working with Walbridge to provide highly qualified NC subcontractors and suppliers – and to help businesses win work and grow jobs in North Carolina.”

Walbridge is currently bidding and actively seeking subcontractors for multiple opportunities at military installations in North Carolina, including: Combat Engineer/Maintenance Operations Facility, Marine Corps Base, Camp Lejeune, North Carolina (project P-1253 2D) and Hangar, Apron, Parking Garage & Ordnance Loading Area Addition, Marine Corps Air Station New River, North Carolina (project P705/P710).

Each of these opportunities represents significant capital investment. Project P-1253’s estimated contract budget is $66,750,000, and the estimated contract budget for project P705/710 (not including furniture, fixtures and equipment) is $79,666,700.

“Walbridge has been in business for 96 years and is dedicated to developing lasting and beneficial partnerships with our subcontractors, many of whom are small businesses,” said John Rakolta, Jr., chairman and CEO of Walbridge. “We’re committed to helping qualified local businesses succeed.”
Walbridge’s goal in this session is to provide information, guidance and technical assistance to assist small businesses to take advantage of the federal government procurement activities.

Walbridge is committed to using small businesses, small disadvantaged businesses, woman-owned small businesses, HUBZone small businesses and veteran- and service-disabled veteran-owned small businesses. Walbridge also wants to ensure that the economic benefit of these construction projects remains in the state through the use of North Carolina based contractors and vendors. Walbridge is seeking subcontractors within ALL divisions of work including specialty and HUB/DBE/VBE/MBE/WBE/SBE contractors.

The subcontracting networking event is free to attend. However, pre-registration on the NCMBC website is strongly encouraged, since Walbridge will receive an e-book of capability sheets on all businesses that pre-register for the event. For additional event information or to register, visit http://ncmbc.us/Walbridge.php. Read More.

Wednesday, 1 February 2012

Modest improvement in non-residential construction activity expected this year

Construction contractors and equipment distributors are optimistic local non-residential activity will improve in 2012, according to a recent survey by Wells Fargo Equipment Finance Inc., part of Wells Fargo & Company. In the company’s 2012 Construction Industry Forecast, Wells Fargo’s Construction Optimism Quotient (OQ) – the survey’s primary benchmark for measuring contractor and equipment distributor sentiment – is at 114 for 2012, marking a material increase from 96 in 2011. An OQ over 100 is considered optimistic of year-over-year improvement in local non-residential construction activity.
“This high rating is an encouraging sign that, for the majority of contractors and equipment distributors, business has stabilized and the worst may be behind us,” said John Crum, senior vice president and national sales manager of the Construction Group at Wells Fargo Equipment Finance, Inc. “We expect to see modest improvement in non-residential construction activity this year and Wells Fargo will continue to support the industry with its construction equipment financing and leasing needs.”
Highlights of the 2012 Construction Industry Forecast:

The worst is behind us… The OQ of 114 is a strong indicator that the industry expects 2012 non-residential construction activity to improve from last year. The 2012 OQ exceeds the score of 109 recorded in 2005, near the height of the construction boom. After falling to an all-time low score of 42 in 2009, the OQ climbed to 66 in 2010 and 96 in 2011.

...but overall numbers of contractors remains a concern. In spite of rising optimism over the last three years and strong optimism for 2012, industry executives remain cautious about the amount of available work to sustain the current number of non-residential construction contractors. About four in ten respondents (41.7%) said they expect fewer contractors in their markets by the end of the year. Only 10.4% expect the number of contractors in their area to increase in 2012.

Equipment distributors are very optimistic. When asked about their forecast for new equipment sales, 73.3% said they expect to sell more in 2012 than in 2011, and zero respondents said they expect a decrease in new equipment sales. Optimism among construction equipment distributors was high with nearly six in ten distributors (58.1%)expecting an increase in local non-residential construction activity. Only 1.5% said they expect that activity to decrease in 2012.

Contractors are optimistic, but not as much. While 18.3% of contractors said they expect to acquire more new equipment in 2012 than they acquired in 2011, 52.% said they would acquire the same amount and 29.2% said they expect to buy less new equipment in the coming year. 40.3% of contractors said they expect non-residential construction activity to increase in the coming year; 47.3% expect the same level; and 12.4% said they expect non-residential activity levels to decrease

This survey marks the 36th year in which Wells Fargo Equipment Finance, Inc. and its predecessors have published primary research findings for the infrastructure construction industry. Conducted between January 4 and January 15, 2012, the survey recorded the responses of 394 construction industry executives from across the U.S. Read More.