Monthly Archives: October 2012

Sunset Forces Review of GC/CM, D-B, JOC

“39.10”.  That’s the parlance for the state’s alternative public works contracting procedures, reflecting the pertinent chapter in the Revised Code of Washington.  But unless the Legislature reauthorizes it, 39.10 goes away next year.  39.10 is set to sunset at the end of June 2013 and were it to do so, most state and local government entities would no longer be able to use GC/CM, Design-Build or Job Order Contracting (JOC) as alternatives to Design-Bid-Build.

That is not expected to happen, as most if not all stakeholders, including AGC, support the alternative methods and the general parameters that regulate their use.  Plus, the Washington State Joint Legislative Audit and Review Committee (JLARC) issued a report recommending that the Legislature reauthorize 39.10.

But reauthorization is still a big deal, because it allows the Legislature, and the Capital Projects Advisory Review Board (CPARB) that advises the Legislature on public works matters, to step back and consider how 39.10 might be improved.

CPARB established a Reauthorization Task Force to gather input and make recommendations on any changes to 39.10.   Its chairman, Ed Kommers of MCA, discussed the issue at a recent AGC Seattle District meeting.

“The overriding thing is reauthorization,” Kommers said, “and contentiousness works against reauthorization.”  He believes the one thing that could doom reauthorization would be for it to become a “Christmas tree” of sweeping changes that don’t have broad support.  The Reauthorization Task Force, therefore, will be looking for more incremental changes with agreement from stakeholders.

“Our goal is to have strong consensus within CPARB regarding any changes recommended to the Legislature,” he said.  “We are looking at GC/CM, Design-Build and JOC one at a time, and asking what and the issues are and where are the areas of agreement.”

Kommers noted that some of the areas for which changes have been discussed are:

  • CPARB membership:  Some may want to address the make-up of CPARB and who’s represented on it.  (Click here to see the current list of CPARB members.)
  • Design-Build:  It’s little used and considered burdensome for owners and contractors alike.  Changes are likely.
  • Subcontractors:  There currently are allowances for MC/CM and EC/CM, but what about other trades or subcontracts?
  • Sunset or not:  Kommers supports expiration of 39.10 at some new date in the future in order to force a review every few years, but others have suggested making the statute permanent.

In its report recommending reauthorization, JLARC suggested a couple tweaks regarding CPARB’s data gathering and JOC reporting periods.  JLARC also noted, without recommendations, that GC/CM contracts are concentrated among fewer companies than traditional D-B-B contacts.

Sustainable projects, cool buildings, designers speak


Did the Great Recession slow down sustainable projects? Not so, according to Jim Kleppe of Golder Associates. Kleppe was one of the authors in the DJC’s A&E Perspectives special section, which hit the newsstand today.
Read Kleppe’s article by clicking here.
But, don’t stop there. Brian Runberg wrote about how sustainable living doesn’t have to be expensive. Then there’s the TAF building, a really cool project built in Lakewood Park in White Center.
Finally, to get a good pulse on what designers are thinking, check out the DJC’s A&E Surveys. For example, Baylis talks about its stellar year here.

Skanska holding world’s largest workplace safety initiative


Skanska is in the midst of its eighth annual Safety Week, which it bills as the world’s largest workplace safety initiative. That means all of Skanska’s 53,000 employees around the world, including its 9,400 U.S. employees, are putting an extra focus on workplace safety and wellness. Subcontractors, suppliers and business partners are also included.

The program has thousands of activities held at Skanska jobsites and offices that educate employees on how to better avoid workplace risks and evade injuries. Examples are rescue techniques and fire training, flex routines, health and first-aid training, and ladder safety.
Speaking of ladder safety, Skanska is hosting a ladder safety presentation at 7:30 a.m. on Thursday at its UW Medical Center jobsite. Doug Wing from Little Giant Ladders will give a demonstration.

Skanska has developed some best practices for ladder safety:
• Always inspect the ladder prior to use.
• Choose the right ladder for the job based on if you are working at low, medium or high heights.
• Move slowly and deliberately while on a ladder. Over-reaching or leaning can lead to a loss of balance.
• Most importantly, always maintain three points of contact while ascending and descending a ladder. The user should keep either two hands and a foot or two feet and a hand on the ladder at all times.

Over the past six years, Skanska’s lost-time accident rate for employees has been reduced by 50 percent. By 2015, the company aims to eliminate three out of four lost-time accidents.

More information on Safety Week 2012 can be found at www.skanska.com/safetyweek. It runs until Sunday.

Economic Forecast: It’s all about numbers — and people!

For those of you too busy looking for or doing work, here’s a quick review of what the state’s quarterly report from the Economic and Revenue Forecast Council has to say about the construction economy:
Our housing sector continues to strengthen, mainly in multifamily housing. Through August multi-family permits are averaging 11,500 (SAAR), or 265% higher than the 4,000 for all of 2009, the housing low point. For single-family permits, there was only a 26% increase from 2009 levels. Combined multi- and single-family permits are 74% higher than 2009. While that increase is somewhat encouraging, it is off the very low base number in 2009. Permits are still 48% below the hay day of 2005. With rents rising and home affordability improving, the single-family numbers are expected to improve. Contract data, indicating the next six months of activity have stabilized and are starting to rise.
On the flip side, nonresidential contracts have not turned around. They started to move up, but then stumbled to a new all-time low in March, but ticked up after the March low. The three-month moving average remains below the 2011 mark, indicating continued weakness in nonresidential construction.
Construction employment is expected to remain moderate for the rest of this year, slowing picking up on 2013. Construction employment has climbed out of the trough and is expected to post its first gain in five years, but only 1.1%. Again, residential outperforms nonresidential with a slight 3.4% increase for the home builders, while nonresidential continues to decline 0.8%. Overall construction employment is expected to increase just 1.2% in 2013 and 2014, and only 0.8% in 2015, before it turns negative in 2016 and 2017.
Those relatively bleak employment numbers for the next five years present a challenge for the industry. How do we attract, train and retain the best and the brightest when we can’t offer them much stability in future employment? And that just isn’t just in the skilled craft worker, but project managers, estimators, safety professionals and the other non-field staff needed to get jobs and make them profitable. No easy answers when construction didn’t have the greatest career reputation going into the recession. But as our industry becomes more complex and sophisticated, we need to make sure we have the human capital to build America. Good thing I am only in charge of the questions, not the answers! I think we are all in charge of the answers. We’d better get busy.

Court Ruling Dents Gas Tax Compact

The State Supreme Court recently ruled that the state’s hazardous substances tax is constitutional. (see the DJC article about it here.) On the face of it, it doesn’t seem too controversial, but the decision could have a severe negative consequence on transportation funding.

How are the two issues connected? The State constitution’s 18th amendment says that gas tax revenues can only be used for highway purposes — gas taxes are put in, as Al Gore would say, a “lock box” for transportation improvements. Washington State voters have shown a willingness to increase gas taxes, in part because they are confident that the taxes will be used to improve transportation infrastructure.

Without any examination of the history or of the context surrounding the adoption of the 18th amendment, the Supreme Court strictly construed that it is constitutional for the state to use the current .07 percent tax (called the MTCA tax) on oil products and other hazardous substances passed by initiative for environmental clean-up.  Nothing against environmental clean-up, but this decision dents that compact with voters that has been in place for 70 years — it no longer seems certain that taxes levied on fuel  will only be used for highway purposes.

The Court has condoned the use of  taxes on fuel for a non-highway purpose, but that’s not the end of the story.  Without the protection of something like the 18th Amendment, the Legislature may — and has already– swept millions of MTCA dollars  not for environmental cleanup, but to plug holes in the general budget.  Is this tantamount to a legislative bait and switch?

This is particularly concerning because the state is in dire need of additional transportation investments. It is likely that within a couple of years the voters will be asked to vote on a revenue package that could include new gas taxes. Would the Supreme Court’s decision imperil passage of a revenue package if voters are no longer confident that the Legislature couldn’t also levy taxes on fuel for other purposes (which could then be redirected any which way)?

Some may argue that the Court has provided an opening for a means to fund  any number of programs, but will the cost  not be an additional loss of trust in government?

Pro-transportation groups are looking into the ramifications of this decision more closely, but that’s the initial concern: that the gas tax “compact” with the citizens of Washington has been dented and in need of repair.

We aren’t out of the woods yet!

Just when we think we’ve turned the corner, do we have to now beware the upturn? According to the fall issue of the FMI Management Letter, yes. We aren’t out of the woods yet. The third quarter results of their Nonresidential Construction Index are five points lower than second quarter. Construction and project management fees are lower. There are some economists who fear we are in danger of entering a second recession. There are still plenty of bidders on every project, so there is continued downward pressure on profit margins. From what I hear and see, work is picking up and some contractors are quite busy. But because there still isn’t any or much backlog, contractors are holding off hiring, or hiring as few people as possible. Many contractors have gone out of business, left the business or left town, but now is also the time when there are new unknown and untried contractors hoping to catch the wave as things improve. So as generals bid, they are getting numbers from subs they don’t know, increasing their risk. Banks still aren’t loaning as much as we’d all like, so contractors are asked to become project partners, assuming risk beyond just the normal risk of being a contractor, as if that’s not bad enough. There is incredible uncertainty in the government arena, although we should have answers there in a little more than a month. The good news (there had to be some!), is that many forecasters think that this area is in better shape than most, that we have pent up demand, we just need to get the economic and market conditions right and we’ll see more holes in the ground and more cranes in the sky. Let’s hold on to that thought!

Seattle Draft Building Code Out for Review

The second draft of the 2012 Seattle Building Code is now available for public review and comment and can be downloaded at:  Draft 2012 Seattle Building Code.

It consists of the 2012 International Building Code (IBC) with proposed amendments.  The Seattle Department of Planning and Development would like the 2012 Seattle Building Code to take effect next summer.

To comment on the draft code contact:

Maureen Traxler, Dept. of Planning & Development, 700 Fifth Ave, Suite 2000, PO Box 34019, Seattle, WA 98124-4019; or maureen.traxler@seattle.gov