Monthly Archives: October 2015

Construction Economic Forecast looks promising through 2016.

At a recent presentation to Associated Builders and Contractors of Western Washington economist, Anirban Basu, spoke of the outlook for construction in the Northwest and throughout the country.

Basu said that the U.S. economy is in the mid-cycle of recovery with no imminent indication of a recession. The global economy is expanding at three percent annually with the U.S. growing at 2.5 percent. We are adding jobs in the U.S. although some people have a negative perception resulting from being paid less than they were prior to the recession. With low unemployment, consumer growth, which leads economic growth, remains strong so we can expect the economy to continue to grow, albeit slowly.

Washington is fourth in employment growth in the U.S. Construction is strong here in all markets especially in multifamily residential. Commercial construction starts in the region plummeted 40 percent in August but that is more a result of work started in downtown Bellevue on the massive Lincoln Square expansion in August 2014 according to Dodge Data & Analytics, a New Jersey-based company that tracks the North American construction industry. So that drop doesn’t portend a dramatic drop in commercial construction projects – with permitting agencies seeing new applications for projects in all commercial areas on almost a daily basis.

Single family construction will likely pick up in the next few years when Gen Y members begin to have children. The in-city life style of living in small apartments will change and people will seek single family homes to raise their families.

However Basu issued some cautionary notes: one that the Fed has not raised interest rates in nine years and the current economy is based on low interest rates so a raise in the near future could be highly disruptive; and two that we need to beware of government intervention in the market economy. The latter is especially important in Washington based on our current political climate. Both should be considered as we fill out our ballots this fall.

Click here for Mr. Basu’s presentation.

 

“Progress” isn’t always, necessarily

It was great to see, earlier this year, state legislators respond appropriately to efforts by many in the construction industry to stop a proposed bill that had good intentions, I’m sure, but would be neither practical or effective.

House Bill 1754 would have mandated the listing of many building-envelope subcontractors, beyond the many already often required, at the time the lowest-responsive-bid general contractor was identified on a public-project bid.

Hardly an issue critical to world peace, but this one struck a personal chord with me.

As a past bid-runner for one of the region’s larger GCs, I’m pretty familiar with how bid days go on any mid- to large-scale project. Bidrooms are hectic and pressurized; there are myriad last-minute calls to make, bids coming in left and right; coffee consumed by the gallon. The amount of critical data that has to be accurately processed by the bidding team can be staggering. The clock literally does tick down to the last second as the guy or gal on the other end of the phone – me, for sixteen years – waits for the final numbers before completing the bid forms, sealing the envelope and slapping it on the counter — while, of course, trying to look as calm and collected as possible (sometimes I’d fake a casual yawn, even, for maximum effect, but really, I’m almost out of breath just describing it). It gets a little hairy.

Typically, submitted bids are then opened immediately by the owner. GC’s bid packages often include a base price, a number of itemized alternates and a number of lowest-subcontractors’ bids on major scopes of work. While the building-envelope scope is of course a critical component of any project, adding yet another sizable group of firms and bids to that list of immediately required data, to me, is just too much and unnecessarily compromises the team’s ability to deliver the truly critical numbers.

Doug Orth, of the State Building Code Council, put it well when testifying last May before the Senate Ways and Means Committee: “The way the bill is written, I would interpret the envelope as everything outside of the paint. That is everything from structural systems, window systems, framing systems, insulation systems, brick, masonry, glazing, roofing — everything. It’s not possible to list them all within days or a week.” Orth was joined by AGC’s Duke Schaub and Tymon Berger of Ashbaugh Beal.

The bill had already passed the House, but ultimately, it died in the Senate — which was good news for GCs and estimators, and especially for my fellow members of The Brother/Sisterhood of Construction Bid-Runners (it’s a secret society; that’s all I’m permitted to tell you).

– SL