Tag Archives: Contracting

Check out our Construction & Equipment special

Want to get an idea of how local construction companies are riding out the economy, post-recession? Or how about a few tips on how to save gas with your construction fleet? Maybe you want to see some award-winning construction projects?

Those and other pertinent issues to the construction industry can be found in the DJC’s Construction & Equipment special section. Check it out!

Asphalt scammers hit Cowlitz County

The state Department of Labor & Industries says a scam contractor is at work in Cowlitz County.

According to an L&I press release, a young couple was recently persuaded to withdraw cash from the bank to pay for an asphalt paving job. Within a couple of weeks, the asphalt was breaking off in chunks.

L&I says representatives will often approach a homeowner or business and offer to repave a driveway or parking lot cheaply because they have leftover asphalt from another job nearby. The representatives are usually polite, drive nice work vehicles and can be very persuasive.

L&I says it’s not unusual in the summer months for these paving crews to come into the state and hit different communities – often targeting senior citizens. By the time problems appear, they are nowhere to be found.

“Never let anyone rush you into making a decision about home repairs or improvements, no matter how good the deal seems at the time,” said Rich Ervin, L&I’s program manager for contractor registration. “Be wary of great bargains, lifetime guarantees and other high-pressure sales tactics.”

L&I offers these 10 tips to avoid the bad guys.

Economic Forecast Still Not Looking Good

While I would love to provide some upbeat news about construction employment, it is not to be. The state just released its most recent economic update with May data. The report states construction employment has grown by a whopping 800 jobs in May, with a surprising 700 in nonresidential construction. Since December, there has been a net increase of 300 new construction jobs, which is better than losing that many. Data from the state and Dodge predict that we are near the bottom of the unemployment trough for construction employment, so I guess that counts as positive news, too. Residential square feet put in place bottomed out in January 2009, then rose the rest of the year, but then flattened out again in 2010. Nonresidential construction declined sharply through July 2009 and remained flat. While we have survived the worst (again, we survived, so that’s good!), nonresidential employment will continue to decline through the third quarter of 2011 and only begin to show significant improvement in 2012. The weak residential recovery, faltering now with the end of the homebuyers’ tax credit, will not be enough to offset the continued dismal employment picture for nonresidential workers – and their employers. When the economy dropped, I don’t think any of us expected what we are now experiencing, but here we are. The reality for the foreseeable future is more competition for fewer jobs and lowered profit margins but the same or greater risk. And then when work does pick up, we will be scrambling again to find skilled craft workers, superintendents, project managers, and safety officers.

Clark Family: A Century of Leadership

Last night I had the opportunity to attend a birthday party for a 100-year old.  If you don’t think a centenarian can’t have a great time, think again!  This party at the Museum of Flight was to celebrate W.G. Clark Construction Co.’s 100 years of service.

Bill Clark started the company in 1910, when steam shovels and horse drawn carriages were still part of a contractor’s fleet of machinery.  In 1923, Bill moved the company to the building it still occupies in the South Lake Union area.

On its company website, W.G. Clark Construction has posted a history of the firm, with some great old photos.  I encourage people to take a look (go to www.wgclark.com).  A review of the history of this venerable and modern firm is to take a trip back into the history of the Northwest – think about Clark’s work on the Joshua Green Building in the 1910s, the old Kress store in Seattle in the 1940s, Pike Place Market rehabs in the 1970s, the Bailey-Boushay House and (my personal favorite) Issaquah’s Village Theater in the 1990s.

Plus, the history of W.G. Clark Construction reflects the history of the Associated General Contractors, as three generations of Clarks have served as chapter president (Bill in 1941, Don in 1956, and Chris in 1988).  From my review of the “wall of presidents” in AGC offices, I can see that three generations of leadership is unique.  We’ve had a few father-and-son sets of presidents (Axel and Allan Osberg, Charles and Vince Wilder, to name two), but the Clarks have been the only three-generation family of AGC leaders.

Here’s to W.G. Clark’s first hundred years of great service and industry leadership!

AGC members due for awards

Tonight, the Associated General Contractors of Washington is honoring its members’ outstanding projects and safety records at its Build Washington Awards event at the University of Washington’s Kane Hall.

This year, there are eight construction awards, including ones for technology and green building. Nine awards are going to companies with great safety records. Then there’s a Superintendent of the Year award and Grand Awards for construction, safety and community service.

Congrats to all!

The DJC is celebrating the winners with a special section that publishes on Thursday. In it, section editor Jon Silver also interviews a handful of local industry players to see where they came from and what they think about today’s construction market. The roster includes Elaine Ervin of Moss Adams, Gary Van Loo of Andgar Corp., Jim Karambelas of GLY Construction and Dan Absher of Absher Construction.

Check out “tool library” coming to West Seattle

How many times have bought a special tool, only to use it once? Or, maybe you can’t afford a garage full of tools or don’t have space for them. Well, along comes a really cool idea — a tool library.

Folks at Sustainable West Seattle have been working for months on how to pull that off. Now, with the help of a $20,000  Seattle Department of Neighborhoods’ Neighborhood Matching Fund and other donations, the West Seattle Tool Library is slated to open on June 12 at South Seattle Community College.

The library will be more than a place to check out tools, it will offer classes and provide information on tool usage.

“So far we’ve partnered with organizations such as the West Seattle Nursery and Community Harvest of South Seattle, and have gathered tools from generous donors throughout West Seattle. Our biggest tool drive was held on May 8 at the West Seattle Community Garage Sale, which put our number of tools up over 300,” said coordinator Patrick Dunn of Sustainable West Seattle in a press release. “We’d like to encourage everyone to come out and join in the effort to provide community resources for West Seattle.”

The next tool drive will be held on June 5 at the Refresh Southwest festival. Tools can also be donated at the West Seattle Farmers’ Market and at South Seattle Community College. The library will be located at the college’s Garden Center, which is on the north end of campus at 6000 16th Ave. S.W.

Organizers are still looking for more tools (not gas-powered) and have put together a “wish list” that includes clamps, a pressure washer, portable table saw, portable planer, wet vacuum, wheelbarrows and more. Check out the full list: Tool Library Wish List.

Construction Rebound Weakest in the West

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

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

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

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

In the West, backlog stands at 5.76 months in March 2010, roughly the same level as in August 2009, and has yet to demonstrate significant momentum, which may be due in part to the prevalence of serious state and local fiscal issues, as well as weak housing market performance,” said Basu.

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

Plight of Mirage Subs a “Pay if Paid” Lesson?

An article in yesterday’s DJC discussed a general contractor’s (Perini) desire to get subcontractors paid, despite a nearly $500 million dispute over the construction of the $8.5 billion Mirage City Center project in Las Vegas. I was particularly drawn to this phrase in the article: “The subcontractors have not been paid as a result of the dispute, because their contracts require them to wait until Perini and MGM Mirage settle their final bills.”

Sure sounded like those subs have “pay if paid” subcontracts. Almost every subcontract we see these days has a “pay if paid” clause in it (an option for “pay if paid” was added to the AGC of Washington 2002 subcontract edition), which if done correctly, places on the subcontractors the same risk as is placed on the general contractor for the owner’s possible non-payment. Although some jurisdictions do not allow it (California, for example), “pay if paid” is doing away with the old “payment within a reasonable time” that Washington subcontractors used to count on. And, because “pay if paid” has changed the traditional risk paradigm for them, subcontractors have begun asking for assurances of the owner’s financing before committing to a project, just the way that general contractors do.

And why not? These days, other factors are beginning to test “pay if paid” in all-new ways. Owners have projects financed by banks on the FDIC watch list, and numbers of local projects have had lost their financing during construction, leaving no way for the general to be paid, therefore precluding the subs from being paid under the “pay if paid” clauses in the subcontracts. And, in Mirage-like disputes, subs must just stand by, because the general has no obligation to pay unless it has first been paid by the owner.

Also, the ways general contractors contract with owners continues to evolve, often without enough consideration of how that evolution needs to deal with the way subs get paid. For example, the “services addendum” model of general contracting, in which the general becomes a minority member of the owner’s developing entity has gained traction in our area. There are significant tax advantages for the project owner to have the general contractor as a “partner” in the project. But, doing so makes a “pay if paid” provision in a general’s standard subcontract agreement very difficult to understand or accept. If the general is one of the project’s titular owners, and “pay if paid” is designed to shift the risk of the owner’s failure to pay to the sub….well, you get the picture.

Add to the mix the fact that many subcontracts now require subs to waive their rights to lien the project. It’s easy to understand why a sub might have difficulty giving up its statutory right to the security of a lien while also accepting the risk of the owner’s failure to pay. Not a lot of protection left after agreeing to those two terms.

In the Mirage matter, Perini and the owner both have lots of money to spend battling about who owes who what, in a process that might take years to resolve. And even though publicizing the subs’ plight may be a self-serving effort by Perini to get the owner to resolve things faster, it’s nice to see a general contractor expressing concern about getting the subs’ needs addressed, regardless of a contractual clause that says it didn’t have to.