PLUS 2019 CONSTRUCTION ECONOMIC FORECAST - INEIGHT
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December 2018
t
u m W i l l Persis
t
Momen M o r e Q uarters
eral
For Sev
2019 CONSTRUCTION
ECONOMIC FORECAST
plus
WORK-LIFE BALANCE
HOT PRODUCTS
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TABLE OF
CONTENTS
CONSTRUCTION EXECUTIVE
DECEMBER 2018
DEPARTMENTS
4 Industry Insider
6 In Brief
8 Construction Markets
14 Safety
16 Technology
76 Workforce
78 Legal
80 Sustainability
82 Community Outreach
84 Equipment
88 Viewpoints
FEATURES
30
A Tower of Voices in a
Field of Honor
COVER STORY Building the Flight 93 National Memorial
in Shanksville, Pennsylvania.
20 2019 CONSTRUCTION
ECONOMIC FORECAST
Contractors should be quite busy next year, but beyond that the
35
Special Section:
Hot Products
The premier showcase for construction’s
economic outlook is decidedly murky. top industry innovations.
CONSTRUCTIONEXEC.COM
Construction Executive (ISSN 1544-3620, Vol. 27, No. 10) is published
10 times a year by Associated Builders and Contractors Services Corp.
U.S. subscription rates: $15/yr. for members of Associated Builders and
Contractors; $65/yr. for non-members. © 2018 by Associated Builders
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paid at Washington, D.C., and additional mailing offices.
Everything you need to know about editorial coverage planned for 2019, plus Postmaster:
print and digital advertising opportunities. Send address changes to:
Construction Executive, ABC Services Corp.
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1
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• Tips to Prevent and Detect Bid Rigging
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• Mobile, Connected and Data Driven:
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• The Importance of Understanding Dispute
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• No End in Sight for Current Economic Expansion
• Construction Contract Payment Terms Aren’t Worth the
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• Modern Technology Is Influencing Construction Safety Digital Edition
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• Partner With Higher Education Facilities to Build a Robust
Flip through this month’s issue and find
Pipeline of Craft Workers
direct links to surveys, organizations,
• Building Codes Evolve With High Wind Events companies and advertisers.
• Technology’s Role in Industrialized Construction
• Protect Employees From Electrocution
CONSTRUCTION EXECUTIVE | DECEMBER 2018
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WITH ABC CHIEF ECONOMIST SPONSORED BY construction-executive
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INDUSTRY
INSIDER
Predicting the Future and THE MAGAZINE FOR THE
BUSINESS OF CONSTRUCTION
Honoring the Past EDITORIAL
Associated Builders and Contractors
editor@constructionexec.com
Michael D. Bellaman, Publisher and
t has been a remarkable economic year for the construc-
I
ABC President/CEO
tion industry. Lauren Pinch, Editor-in-Chief
Joanna Masterson, Senior Editor
The ABC Construction Backlog Indicator hit a new Maggie Murphy, Digital Editor
high in the second quarter, expanding to a record 9.9
months—a 12.2 percent increase from the first quarter DESIGN AND PRODUCTION
The YGS Group
and 14 percent higher than the same time last year. (717) 505-9701
The industry has added nearly 300,000 net new jobs Mike Vucic, Senior Art Director
since August 2017, and the construction unemployment
ADVERTISING
rate (3.6 percent) is at its lowest level in 18 years. MagazineXperts LLC
As a result, more than three out of four construction firms expect that (973) 383-0888
sales will continue to rise during the next six months, while three in five dberry@magazinexperts.com
Donald R. Berry, National Sales Manager
expect higher profit margins, according to the latest ABC Construction
Confidence Index. REPRINTS
ABC Chief Economist Anirban Basu always keeps a close eye on financial reprints@magazinexperts.com
indicators, and this month turns his attention to predict what affect they will SUBSCRIBE
have on the construction industry in 2019. Check out page 20 for Basu’s full ConstructionExec.com/Subscribe
forecast, and stay tuned for weekly video insights from him in the coming
EDITORIAL ADVISORY BOARD
months.
Carole Bionda, Nova Group, Inc.
Inextricably linked to the industry’s future success is the workforce short- Ann Finley, Viewpoint Construction Software
age. With existing leadership and staff pressured to perform and produce so Tony Joyce, AvalonBay
much, it’s easy to let stress take over. But eschewing work-life balance comes Tony Rader, Schwob Companies
with real risks: burnout, turnover, health problems and an increase in work- Eric Regelin, Granix, LLC
place accidents. Read more about how to shift from work mode to home Ed Rojeck, Tradesmen International
mode on page 76. Michael Stilley, S&B Engineers & Constructors
Tim Walton, Walton External Affairs
Amid the scarcity of skilled workers, the AEC industry is adopting tech-
nology at an incredible clip. The technology column on page 16 offers five
keys to driving digital transformation, and the Hot Products special section
CONSTRUCTION EXECUTIVE | DECEMBER 2018
on page 35 showcases innovative construction-specific software on the
market.
While our final issue of 2018 is predominantly focused on the future,
I’m grateful for the work of one ABC member company in honoring the
past. I urge you to read the story on page 30 about the role Leonard S. Fiore
played in building the Tower of Voices at the Flight 93 National Memorial
in Pennsylvania. What a privilege to work in an industry that’s literally
changing the nation’s landscape, and in this case honoring the fallen heroes
of Sept. 11.
Michael D. Bellaman
Publisher
4
Long Beach, Calif.
ABC Convention 2018
started a merit shop movement to
Celebrate.
“ The experience far and away
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my life. More people should
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It’s bigger than any one
Collaborate. individual…this is a movement…
somewhere people’s lives
are changed significantly. The
Connect. event was well-planned and
”
organized and unreal.
Secure your spot at ABC —Richard Brown,
Convention 2019 today. 2018 Craft Professional
of the Year, Gaylor Electric
Register today.
Visit abcconvention.abc.org
INBRIEF
Global Hotel
Construction Hits
All-time High
A BIANNUAL REPORT from
Lodging Econometrics states the total
global hotel construction pipeline has
hit a record-setting 12,839 projects
worldwide (2,158,422 rooms)—
an 86 percent increase compared
to the cyclical low established
in 2011.
Nearly 6,000 of those projects
are currently under construction and
another 3,900 are scheduled to begin
within 12 months.
The United States has the most hotel
projects, accounting for 41 percent of
the global pipeline, followed by China at
20 percent.
According to the report, new hotel
openings could reach 3,000 in 2020,
with approximately 1,250 of them
located in America. The U.S. cities with
Fall Protection Tops OSHA’s 2018 List of the most pipeline activity are New York,
Dallas and Houston.
Most Frequent Safety Violations
FOR THE EIGHTH year in a row, fall protection was the leading workplace safety
violation cited by OSHA in 2018. More than 7,200 violations were recorded through
Sept. 30.
Work Resumes
And for he first time, eye and face protection joined the list in the 10th spot, with on $25 Billion
1,536 violations in fiscal year 2018.
The remainder of the top 10 list includes hazard communication, scaffolding, respira-
Nuclear Project in
tory protection, lockout/tagout, ladders, powered industrial trucks, fall protection training Georgia
requirements and machine guarding. FOLLOWING QUESTIONS
ABOUT whether to continue building
the Vogtle 3 & 4 nuclear units near
Waynesboro, Georgia, in light of $2.3
NLRB Proposes Revision to Joint billion in extra costs, all four of the
Employer Standard project co-owners—Georgia Power,
CONSTRUCTION EXECUTIVE | DECEMBER 2018
Oglethorpe Power, MEAG Power and
THE NATIONAL LABOR Relations Under the updated proposal, an Dalton Utilities—voted to move forward
Board is reviewing public comments sub- employer may be found to be a joint and agreed to finalize definitive agree-
mitted on a proposed standard that aims employer only if it possesses and ments that shift some of the project’s
to foster predictability, consistency and exercises substantial, direct and financial risk.
stability for determining joint employer immediate control over the essential The new units, projected to
liability under the National Labor terms and conditions of employment come online in November 2021 and
Relations Act. The action is a response to and has done so in a manner that is November 2022, are the first to be
an Aug. 27, 2015, decision in Browning- not limited and routine. built in the United States in more
Ferris Industries that uprooted more The “essential terms and conditions than 30 years. They are expected
than 30 years of precedent and greatly of employment” that establish a joint to generate enough emission-free
expanded joint employer liability under employer relationship include the ability electricity to power approximately
the NLRA—imposing burdens on con- to hire, fire, discipline, supervise and 500,000 homes and businesses.
tractor and subcontractor relationships direct employees of a second employer, Bechtel is the $25 billion project’s
throughout the construction industry. according to legal analysis. construction manager.
6
Facility Executives INDUSTRY EVENTS
Note Disconnect in CALENDAR
Building Connectivity
BUILDING CONNECTIVITY IS expected Structural Steel
to increase more than 410 percent by 2020,
yet few energy and facilities executives have Market to Hit Jan. 22-25
World of Concrete
documented strategies for utilizing smart $420 Billion in Las Vegas
building technology, according to Veolia’s 2018
Facility Management Benchmark Survey. Next Five Years
Nearly 90 percent of respondents have A RECENT RESEARCH report by Global
deployed energy sub-meters and sensors Market Insights determined the structural steel
across multiple facilities; 63 percent have market is set to surpass $420 billion by 2024, Feb. 4-7
advanced lighting controls installed at some with demand being driven by awareness of Association of Equipment
sites; and nearly two-thirds are using mature steel’s design flexibility, high strength, speed of Distributors Summit
solutions such as Computerized Maintenance erection, energy efficiency and seismic resis- Orlando, Florida
Management System software across some tance. An increasing number of infrastructure
or all relevant sites, while more than half use development projects in China, Japan, South
HVAC FDD software. Yet, 70 percent of facilities Korea and India are likely to stimulate product
departments feel they have not fully realized demand as well. March 5-8
value from their investment in technology. The U.S. structural steel market for com- Work Truck Show
mercial applications will experience gains Indianapolis
exceeding 5 percent, while industrial appli-
cations may reach up to 125 million tons
in the next five years. Rising nonresidential
applications include health care buildings, data
centers, airports, offices and stadiums. March 24-28
Per the report, global steelmakers are ABC Convention
offering tailored solutions that enable energy- Long Beach, California
efficient and carbon-neutral buildings, as well
of facilities departments haven’t fully as offer an extended life expectancy through
realized value from their IT investments design for reuse and disassembly.
April 8-10
Design-Build in Transportation
Pennsylvania Conference
Portland, Oregon
St. Louis County Modernizes State
Council Eliminates Building Code
Apprenticeship THE PENNSYLVANIA April 10-12
Requirements INDEPENDENT Regulatory Review
Commission has updated the state’s Uniform
Design-Build for Water/Wastewater
Conference
IN A 5-2 vote, the St. Louis County Council Construction Code to align with the 2015 Cincinnati
overrode County Executive Steve Stenger’s International Codes—a family of comprehen-
veto of legislation that changes the way sive and coordinated building codes used in all
contracts are awarded—namely removing 50 states that are updated regularly and take
the requirement that bidders on construction into account the latest health and safety tech-
projects have DOL-approved apprenticeship nology and building science advancements.
programs. Groups such as Associated Builders The change, which took effect Oct. 1,
and Contractors’ Heart of America Chapter marks the Keystone state’s first residential and
supported the measure as a way to include commercial construction building code update
editor@constructionexec.com
more women and minority contractors in the in nearly a decade.
procurement process and recognize non- At the city level, in October Philadelphia
apprenticeship training conducted in vocational adopted the 2018 International Building Code
schools and in-house by employers. into law for commercial construction. visit abc.org/newsline.
Methuen Construction
CONSTRUCTION
MARKETS
Water/Wastewater Sector Keeps Methuen Construction is the
general contractor for the $70
million complex upgrade and
Contractors Busy and Seeking to Hire expansion of the Peirce Island
Wastewater Treatment Plant in
BY LAUREN PINCH Portsmouth, New Hampshire.
ontractors are meeting a high to Dodge Data & Analytics’ 2019 creative to install process tanking,
C
backlog of water and waste- Construction Outlook. piping and treatment equipment—
water work from both federal To put it simply: “Everybody plus support buildings—about
and private clients as funds is really busy right now,” says Joe three stories above grade, when
trickle toward long overdue Barbone, president of Methuen typically these systems would exist
projects, which range from Construction, Plaistow, New below or at grade.
small upgrades to large-scale system Hampshire, a self-perform general The completed project will
overhauls and new facilities for contractor that has been in the heavy include a new filter building with
expanding communities. Contractors utility and municipal contracting a biologically aerated/anoxic filter;
are having to pace themselves—and business for more than 50 years. a new headworks building with a
their workforce—to bid on and Methuen is more than halfway garage, electrical room, IT room
CONSTRUCTION EXECUTIVE | DECEMBER 2018
execute a wide variety of jobs. complete on one of its most com- and control room; and a new solids
According to the American plex jobs to date—the $75 million building so the existing one can
Water Works Association, $1 wastewater treatment expansion be re-purposed as a laboratory. All
trillion is necessary to maintain and upgrade of the Peirce Island construction occurred while the
and expand service to meet U.S. Wastewater Treatment Plant for plant remained operational.
water demands during the next 25 the city of Portsmouth, New Aging infrastructure abounds in
years. While that level of funding Hampshire, which will dramatically Massachusetts, providing a seemingly
is unlikely to get released in the increase the peak capacity of that endless stream of opportunities (and
near future, economic investment plant to 22 million gallons per day challenges). Methuen has ongoing
in the environmental public works (gpd). It is the largest public works work at the city of Haverhill’s water
sector continues to trend upward. project in the city’s history. treatment plant, where it’s install-
Construction spending rose 7 Because of the limited geographic ing new chemical feed systems, a
percent in 2018 and is expected footprint of the island, Methuen’s dissolved air floatation clarification
to jump another 6 percent to specialists, together with AECOM’s system, and sand and carbon filters
$41.7 billion in 2019, according engineering team, needed to get with automatic backwash systems.
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CONSTRUCTION
MARKETS
Methuen Construction
effluent pumping station, with
teams working double shifts to stay
ahead of schedule.
“It’s in a state of disrepair. It’s
probably 40 to 50 years old,”
says Executive Vice President Joe
Godin, who has been with ACE
since its very beginning in 2003
and has helped the company grow
into a specialized firm that focuses
almost exclusively on this sector.
“We basically have to bypass
pump 45 million gallons of water a
day. While we’re doing that, we are
rehabilitating the effluent pumping
station, and then we will do a com-
plete gut and replacement of all the
equipment, piping and everything
in the influent pumping station to
bring it up to date.”
Methuen Construction completes its fourth organics-to-energy anaerobic digester at the Greater ACE has a reputation for being a
Lawrence Sanitary District wastewater treatment facility in North Andover, Massachusetts, which will
process approximately 92,000 gallons of organics per day when complete.
key player on jobs that require some
creative problem-solving, as exem-
plified in its work at DC Water’s
It’s also constructing a fourth anaero- “I’m seeing more folks moving massive Blue Plains Water Treatment
bic digester at the Greater Lawrence out of urban areas and commuting Facility. The contractor works for
Sanitary District facility in North into the cities, and as they do that, the owner’s “High Priority Group,”
Andover along with upgrades to the some of those more rural areas meaning it handled critical repairs
primary water pumps, which, when are increasing their population and difficult work assignments—
completed, will increase overall peak and need to upgrade and expand three lump sum mini-projects with
capacity to 165 million gpd and pro- their infrastructure to handle the 105 separate task orders—during
cess approximately 92,000 gallons of additional building and influx of the project’s four-year Phase 3
CONSTRUCTION EXECUTIVE | DECEMBER 2018
organics per day to heat and power people,” Barbone says. Upgrade.
the wastewater treatment facility. American Contracting & Many of the tasks required
In new construction, Methuen is Environmental Service, Inc., design-build construction when a
currently building a pump station for Columbia, Maryland, can attest. design solution was not already in
the city of Worcester that can handle ACE is handling a heavy load of place to handle unknowns.
peak flows of up to 5.7 million gpd; projects for the greater Washington, In addition, ACE is currently
plus, it built the Long Pond Water D.C., area, where a backlog of work in the preconstruction phase for
Treatment Plant in Falmouth that results from aging infrastructure. Eastern Correctional Institution’s
handles 8.4 million gpd. One of those projects is a $15.6 wastewater treatment plant
million closed loop system of upgrade in Somerset County. The
Suburbs and Exerbs improvements for the Mattawoman $17 million project for Maryland
These projects have one thing in Wastewater Treatment Plant in Environmental Service will increase
common: increasing residential Charles County, Maryland, where the plant’s flow to .9 mgd and
development that expands in a radius ACE is performing a complete improve the effluent to virtually
from city centers, such as Boston. rehab of the combined influent/ drinking water quality.
10OC TOB ER 12TH , 10:15 P.M .
A GOOD NIGHT’S
SLEEP, WITH BLANKET
COVERAGE
IN AN
INS TANT,
B IL L L E W IS
M A N AGE D HIS
R I SK A N D GOT
THE J O B D O NE
The hotel renovation had to be completed in five
weeks. It would take multiple subcontractors to
pull it off, and Bill had no time to waste on
paperwork or mistakes. Thanks to CNA’s Blanket
Additional Insured Coverage, the contractors
insured with CNA’s form could meet the project’s
insurance requirements and start working without
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®
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To learn how CNA’s builders and contractors program can help you maximize
business efficiency, contact your independent agent or visit www.cna.com/abc.
The examples provided in this material are for
illustrative purposes only and any similarity to actual
individuals, entities, places or situations is unintentional
and purely coincidental. Please remember that only the
relevant insurance policy can provide the actual terms,
coverages, amounts, conditions and exclusions for an
insured. All products and services may not be available
in all states and may be subject to change without notice.
“CNA” is a service mark registered by CNA Financial
Corporation with the United States Patent and Trademark
Office. Certain CNA Financial Corporation subsidiaries use the
“CNA” service mark in connection with insurance underwriting
and claims activities. Copyright © 2018 CNA. All rights reserved.CONSTRUCTION
MARKETS
“We are working with the engi-
American Contracting & Environmental Service, Inc.
neering consultant KCI and the
owner to come up with a guaranteed
max price for the project,” Godin
says. “As our first major construction
manager at-risk project, it’s really
gone well, with a collaborative and
cooperative environment among all
the stakeholders, which is going to
result in a really successful job.”
The company is also knee
deep into the Annapolis WRF
Dewatering Facilities project for
Anne Arundel County, Maryland,
which requires a complete rehabil-
itation of the existing dewatering
building, a new truck load facility
and a new gravity thickener. All
work has been completed while
maintaining uniterrupted operations American Contracting & Environmental Service, Inc. handled three lump sum mini-projects with 105
of the existing dewatering operation. separate task orders for DC Water’s four-year upgrade of the Blue Plains Water Treatment Facility.
Workforce and Technology
Finding the workers to keep up management training program that showing them that general contract-
with the large backlog of work is prepares less experienced engineers to ing is a good career, that you can
the No. 1 challenge contractors are take on increased roles and responsi- make some good money, and that
facing in this sector. bilities in the office and the field. you can be just as successful as the
“It’s in crisis mode. The entire With 150 employees, ACE has other trades.”
construction industry is reeling a full-time talent director that Keeping up with technology
from the lack of skilled workers, or works constantly to recruit and helps, especially for contractors
lack of any workers for that matter. educate future leaders, and it such as ACE that take on more
It’s a huge challenge right now,” partners with Associated Builders design control.
CONSTRUCTION EXECUTIVE | DECEMBER 2018
Barbone says. and Contractors’ Baltimore Metro For example, ACE has used BIM
“We’re pulling out all of the stops Chapter on a work-to-hire program and LiDAR scans for at least five
in terms of recruiting and training. that attracts high school students to projects—tools that are especially
We have given up on trying to pique their interest in construction valuable to ensure the drawings
find ‘skilled’ workers; we just want (specifically water and wastewater) match up with reality in plants
workers with good work ethics and before they’ve committed to another that have been rehabbed by various
good attitudes to work coopera- career. One student from the pro- stakeholders over the years. It’s also
tively in a team environment and gram recently joined the ACE team incorporating ground penetrating
communicate effectively. We will full time after graduation. radar to help model underground
train them with the skills that we “When you come to work here, conditions.
need,” he says. it’s not just for one job experience; “With these models, you get the
Methuen has an in-house it’s for the duration of a career,” real nitty gritty of what is actually
apprenticeship program, a leader- Godin says. “It’s about identifying out there,” Godin says. “We mainly
ship development program and its young adults early before they’ve use it for clash coordination among
own “Methuen U,” a formalized made that career decision and the trades to ensure the MEP trades
12American Contracting & Environmental Service, Inc.
Long Overdue Projects Compete for Funding
C ontractors can expect to see more work ahead as approvals for low-interest,
long-term federal funding arrive to cities and municipalities through the EPA’s
Water Infrastructure Finance and Innovation Act program, which received a $63
million boost from Congress this year to fund 11 projects. The WIFIA funding is
supporting up to $5.5 billion in loans that, together with private capital and other
funding, can be leveraged to support up to $11 billion in infrastructure work and
create 170,000 jobs, according to the EPA.
The EPA received 62 letters of interest by the July deadline. To date, the EPA
has approved funding for several WIFIA projects to update aging infrastructure and
reduce exposure to lead and other contaminants for the City of Omaha, Nebraska;
King County, Washington; the Orange County Water District, California; and the
San Francisco Public Utilities Commission.
On Oct. 24, President Trump signed America’s Water Infrastructure Act of 2018,
a bipartisan measure that authorizes the EPA’s Water Sense program, reauthorizes
the WIFIA program and supports $6.1 billion in U.S. Army Corps of Engineers stud-
ies and projects, including water navigation, flood control, hydropower, recreation,
ports, harbors, inland waterways, water supply and emergency management.
The bill includes $4.4 billion for the Drinking Water State Revolving Fund program,
which provides monies to states and utilities to improve drinking water infrastructure.
are coordinated with the structural But by being a trusted partner
components. It helps us solve and breaking out of silos to solve
problems ahead of time before they problems, these challenges can be
become major issues, and then we overcome.
can safely hand off the models to “With rehabs and retrofits of
our field people for their visualiza- existing plants, we try to build a American Contracting & Environmental Service, Inc. completed a
phased equipment replacement in the basement and wet wells of the
tion efforts.” strong relationship and work very Potomac Pumping Station, a massive 460 mgd station that includes
Contractors in a traditional closely with the owner and in eight 54-inch diameter cast iron motor-operated gate valves, four
design-bid-build environment often particular, the plant operators. They mechanical bar screens, 14 sluice gates and supporting electrical
face the challenge of incomplete know the inner workings of that and control equipment. With no crane access to the work areas, all
or inadequate drawings before the plant better than anybody,” Barbone hoisting had to be custom-engineered and constructed in place.
project even gets in their hands. continues. “Working together, we
“Typically, if you are competing are able to recommend or propose “By getting innovative with
for work strictly on a price basis, changes in sequencing or bring in re-sequencing the work, we look
you have to build what’s on the temporary treatment systems to for ways to shorten the duration of
CONSTRUCTIONEXEC.COM
drawings. And if the drawings aren’t allow us to expedite construction the project, which saves everybody
complete or don’t take into account in certain areas of the plant sooner, money.”
all of the design challenges, those rather than waiting for other systems
issues have to be wrestled to the to go online before we move to Lauren Pinch is editor-in-chief of
ground during the construction another part of the facility and start Construction Executive. For more
phase, and you have to resolve construction there.” information, email pinch@abc.org,
them without changing the end And of course, it’s always import- visit constructionexec.com or follow
date,” Barbone says. ant to stay on time and on budget. @ConstructionMag.
13Milwaukee Tool
SAFETY
How the New Dropped Object
Standard Is Changing Jobsite Safety
BY DEREK ROSE
ANSI/ISEA 121-2018 establishes the requirements tethering systems must meet to prevent drops.
n the United States, a dropped heights and that employers work to aims to reduce jobsite accidents,
I
object injures a worker every 11 provide jobsites free of hazards—for injuries and deaths associated with
minutes—equating to nearly most situations, it has been up to falling objects by defining mini-
50,000 cases every year. For users to determine the best solution mum design, performance, testing
those who seek medical treat- for effective drop protection on and labeling requirements for solu-
ment for these types of injuries, their jobsite. tions such as anchor attachments,
it can cost an average of $42,000. Until this year, there were no tool attachments, tool tethers and
In fact, 5 percent of all fatalities on industry standards covering perfor- containers.
CONSTRUCTION EXECUTIVE | DECEMBER 2018
jobsites are due to falling objects, mance of tool lanyards that users While most jobsites have relied
according to the Bureau of Labor and safety managers could reference on PPE such as hard hats and
Statistics. to help prevent dropped object barricades to prevent injuries from
These statistics highlight the injuries. dropped objects, tool lanyards
overwhelming importance of In July 2018, the American take safety to the next level by
dropped object prevention. OSHA National Standards Institute and preventing an object from falling
already identifies dropped object the International Safety Equipment in the first place. What makes this
incidents under the category of Association approved a new stan- standard groundbreaking is that
“Struck by Object” in its widely dard that defines the design and it officially establishes the design,
recognized “Fatal Four” list of the performance requirements for performance and labeling require-
four leading causes of fatalities in products to effectively prevent ments tethering systems must meet
the construction industry. dropped object incidents. to effectively prevent drops.
While OSHA did set up two The American National Standard According to the new standard,
general guidelines—that tools and for Dropped Object Prevention tool tethers must meet the follow-
materials should be secured at Solutions (ANSI/ISEA 121-2018) ing requirements.
145% of all
Milwaukee Tool
fatalities on
jobsites are due
to falling objects
• Design: Carabiner or
snaphook-type connectors,
when used with tool tethers,
shall have locking gates and
captive eyes.
• Performance: Each product
needs to be dynamically tested.
This testing involves dropping
a tethered object up to two carabiners to locking versions), or not only comply with the standard,
times the rated lanyard weight to simply sell something that does but include additional features
multiple times. The devices also not meet the standard. that improve performance and
must go through environmental Moving forward, all tethering productivity. Examples of potential
conditioning to ensure that system manufacturers will need to features include:
moisture, cold and heat do not consider the specific requirements • high levels of shock absorption
negatively impact performance. detailed in this standard to ensure to gently slow tools if dropped;
• Labeling: Each unit needs to be their solutions provide high levels • integrated swivels for reduced
marked to indicate compliance. of drop safety. Users will demand it. twisting;
The marking must include • color coding for easy
the name and trademark of What This Means for Contractors identification;
the manufacturer, product and Safety Managers • quick change systems for fast
ID, published capacity, ANSI With this new standard in place, tool swaps; and
standard number and maximum contractors and safety managers not • extended lengths for longer
tether length. only need to integrate drop preven- reach.
tion into their fall protection plans, Tool lanyards and tethering systems
What This Means for but they also need to select ANSI/ should not only improve safety,
Manufacturers ISEA 121-compliant products. but also overall productivity on the
Although ISEA/ANSI 121 is a Users should perform due diligence jobsite.
new standard, some manufacturers to ensure their chosen manufactur- With the new standard in place,
CONSTRUCTIONEXEC.COM
proactively tested their lanyards and ers can provide proof of consistent manufacturers and contractors have
accessories before its publication testing behind their claims of an excellent place to start working
to ensure their products meet or compliance. toward a jobsite united in drop
exceed the applicable requirements. This standard ultimately will prevention.
Other manufacturers now must help users discern which tethering
decide to either invest in research systems meet their performance Derek Rose is group product manager
and development to update requirements. Many users will for Milwaukee Tool. For more
their product (such as upgrading benefit from selecting lanyards that information, visit milwaukeetool.com.
15TECHNOLOGY
Five Keys to Driving
Digital Transformation in
Engineering and Construction
BY ROB PHILLPOT
ngineering and construction Not surprisingly, the benefits of eliminating project management
E
companies increasingly find digitization across the E&C indus- headaches that lead to delays,
themselves navigating an try appear significant. In the next budget overruns and customer
era of disruptive and trans- 10 years, Boston Consulting Group dissatisfaction. By integrating key
formative change driven by estimates annual global cost savings processes and asset management
CONSTRUCTION EXECUTIVE | DECEMBER 2018
technology. And with the will reach up to $1.2 trillion for into centralized, cloud-based
industry going strong and con- nonresidential projects alone. systems, companies can capture
struction employment recently To build the worksites of the incremental productivity and
reaching a 10-year high, more future, E&C companies must over- profitability gains vital for success
companies recognize that it is time come a few hurdles. Here are five of today, as well as drive continuous
to embrace the efficiencies digital the most pressing challenges, and improvement.
transformation brings, in large some guidance on how they can be Software as a Service or cloud-
part to protect or enhance their surmounted. based tools can enable collaboration
competitive position. across a project regardless of where
A report from the Global 1. Integrating Digital Ecosystems the project team is—be it the office,
Industry Council notes that Implications of the digital trans- field or in transit.
modern technology is moving formation on the industry are The creation of a common data
to the strategic center of E&C profound. environment with BIM solutions
business models as part of an evolu- Centralized company data can be provides the capability for all teams
tionary process. seen and controlled from anywhere, on a project to interact, as well as
16MATT
CHAD MELORA
DAWN
KEVIN
BRIAN
MIKE ODE
PRESIDENT
FRED ODE
OWNER & CEO
like our family.
LET OUR SOFTWARE
GET YOUR ATTENTION »
foundationsoft.com/holidays
AMERICA'S #1 CONSTRUCTION ACCOUNTING SOFTWARE®
* See why we’re #1 at www.foundationsoft.com/claimTECHNOLOGY
capture and store information in a Technology will continue to be Organizations can accelerate
single place while being accessible critical in the next wave of growth adoption by simplifying the pro-
from any internet-connected in the industry. cess and helping all stakeholders
device. Employees in the industry understand the long-term value of
This, in turn, provides a single will need to be upskilled to help new systems. This can be achieved
version of the truth to aid trans- manage and implement digital by investing time and resources in
parency and manage conflict transformation, and organizations an adaptable readiness and change
resolution. must attract talent eager to harness management plan that addresses
Overall, whatever technology is the power of technology. all business functions and units, as
adopted by construction businesses, Organizations rely on a com- well as builds in robust training for
it must be collaborative, easy to petitive edge in an industry driven all internal and external parties.
implement, secure, flexible, con- by productivity gains. Technology Senior-level support and com-
nected and able to provide value. helps empower productivity munication is crucial to help define
gains by creating a better flow the digital strategy, explain why
2. Embracing Standards of information across the supply it’s a priority and how it fits the
With so much legacy technology chain, improved efficiency through company’s core objectives, and
infrastructure in place, it’s often standardization, reduced costs and demonstrate a measurable return
easier said than done to advise efficient project delivery. on investment.
companies to implement standards Organizations must invest and
across the enterprise. But that’s nurture the existing workforce’s 5. Establishing Value and ROI
what needs to happen. skill set and eagerness to innovate, Executive sponsorship is essential
As the Global Industry Council while recruiters need to evalu- for developing agreement on metrics
report notes, the construction ate tech savviness in their hiring before projects launch. Established
industry has much to gain from criterion. baselines will ensure faster commu-
implementing standards, whether Digital transformation is a cul- nication of results when available,
in processes, data management or ture shift that will impact the entire with clear proof points that rein-
methodology. organization, changing the tradi- force the strategic purpose and help
Companies going digital should tional ways of working and requiring employees and partners understand
consider system and software everyone’s support and commitment, the business impact.
standardization to help minimize from executive staff to new hires. A strategic plan that incorpo-
costs, reduce the need for special- rates the five areas outlined above
ized expertise for supporting diverse 4. Securing Adoption will help companies navigate the
CONSTRUCTION EXECUTIVE | DECEMBER 2018
tools, consolidate vendor manage- The introduction of new tech- challenges of rapid digital change.
ment, reduce incompatibility and nology—and related changes to By harnessing technology, they
streamline enterprise infrastructure. processes and business models—isn’t can make important strides toward
always met with open arms by all digitally transforming their opera-
3. Building Digital Talent parts of the enterprise. Frustration tions through increased efficiency,
Technology has moved beyond can quickly arise if new systems can’t lower costs and unlocked hidden
simply changing processes and how talk to each other. value.
things are managed. Additionally, employees and
Digital transformation has industry partners can have appre- Rob Phillpot is global vice president
spearheaded roles that never existed hension or revert to old systems if of product strategy at Oracle
before in engineering and construc- they are unclear about the benefits Construction and Engineering.
tion, including the BIM manager, of new technology or believe it may For more information,
chief innovation officer and digital increase their workload rather than visit oracle.com/industries/
delivery officer. reduce it. construction-engineering.
18BUSINESS PARTNER BUSINESS
2019 CONSTRUCTION ECONOMIC FORECAST Momentum Will Persist For Several More Quarters Contractors Should Stay Vigilant as Longer-term Inflationary Pressures Build BY ANIRBAN BASU
U
.S. economic performance has been
brilliant of late. Sure, a considerable Despite a narrative
volume of negativity has surrounded
issues such as the propriety of tariffs fixated on tariffs and
and shifting immigration policy, but
the headline statistics make it clear that trade wars, global
domestic economic performance is solid.
Nowhere is this more evident than in the U.S. labor economic performance
market. As of July, there were 6.94 million available jobs in
America, an all-time high, and recent months have shown remains decent.
11 job openings for every 10 unemployed Americans.
Theoretically, there is a job for everyone, though job
growth has been far more rapid in the West and South
than elsewhere. Among the 25 largest metropolitan
areas, the fastest year-over-year job growth (August and higher interest rates are often bad for stock prices,
2017 to August 2018) was recorded in Orlando, Florida bonds and real estate valuations.
(4.1 percent). The Conference Board’s Leading Economic Index
Other communities registering profound rates continues to march higher, implying economic
of employment expansion include Seattle (3.9 per- momentum will persist for at least another two to three
cent); Houston (3.7 percent); Phoenix (3.6 percent); quarters. Historically, when the values of variables
Riverside, California (3.5 percent); Dallas (3.2 percent); embodied within the index shift unfavorably, the econ-
Denver (2.8 percent); Charlotte, North Carolina (2.7 omy is set to experience a downturn. This is precisely
percent); and Portland, Oregon, and Tampa, Florida the signal the LEI sent in August 2007, when it turned
(both 2.5 percent). negative four months prior to the Great Recession’s
The slowest growing major metropolitan areas are onset. While there have been instances in which the LEI
Detroit (0.9 percent), Chicago (0.8 percent) and St. predicted a recession that did not transpire, its accuracy
Louis (0.8 percent). Still, employment growth is appar- has been fairly on point during the past 50 years.
ent in virtually all significant cities. The LEI, which was indexed to 100 in 2016, stood at
In September, the nation added another 134,000 111.8 in August, meaning that the latest reading is 11.8
net new jobs. That number came in a bit soft, prob- percent higher than two years ago.
ably because of storms impacting the Carolinas. The Other leading indicators, such as the Architecture
official rate of unemployment dipped to 3.7 percent Billings Index, paint a similarly upbeat picture. Like
in September (and remained at that level in October), many diffusion indicators, any reading above 50 indi-
the lowest rate since December 1969, when the United cates that architects are busier in a given month than
States was entering an 11-month recession. they were during the prior month.
As of now, few signs indicate a looming recession, The latest readings have been above 50 without
CONSTRUCTION EXECUTIVE | DECEMBER 2018
though financial market volatility has returned. On exception. The index is thought to lead relevant con-
Oct. 10, the NASDAQ Composite slipped by more struction activity by nine to 12 months, which implies
than 4 percent, the S&P 500 was off by roughly 3.3. that contractors will continue to encounter many bid-
percent and the Dow was down nearly 3.2 percent. ding opportunities during the months ahead.
Technical fundamentals (e.g., the 200-day moving Similarly, Associated Builders and Contractors’
average) suggested more selling pressure. Construction Backlog Indicator suggests that the amount
But these losses should be juxtaposed against prior of work under contract, but that has yet to be completed,
gains. Don’t expect equity prices to rise indefinitely is on the rise. In many categories and geographies, backlog
without interruption. Despite the October loss, the established an all-time high during the second quarter.
NASDAQ remained at levels observed in late May. Apart from leading indicators, several common-sense
Moreover, recent market turbulence hasn’t been reasons suggest that the U.S. economic expansion will
motivated by bad news, but rather by good news. The continue for several more quarters. At the top of the list
notion is that ongoing economic growth will create is the fact that tax reform is still less than a year old. In
more inflationary pressures, which will translate into other words, the impacts of tax cuts are just now being
higher interest rates. Some of that already has occurred, felt in the economy.
22The Conference Board’s Leading Economic Index
Indicator February 2018 August 2018 % Change
Average weekly hours, manufacturing 42.3 42.2 -0.2% (bad)
Average weekly initial claims for unemployment insurance 224.9 210.1 -6.6% (good)
Manufacturers’ new orders, consumer goods and materials 133,875 135,392 1.1% (good)
ISM® Index of New Orders 64.2 65.1 1.4% (good)
Manufacturers’ new orders, non-defense capital goods (excluding aircraft orders) 39,063 40,053 2.5% (good)
Building permits, new private housing units 1,323 1,229 -7.1% (bad)
S&P 500 stock index 2,705.16 2,857.82 5.6% (good)
Leading Credit Index™ 0.02 -1.62 NA
Interest rate spread, 10-year Treasury bonds (less federal funds) 1.44 0.98 -31.9% (bad)
Average consumer expectations for business conditions 0.83 0.61 -26.5% (bad)
LEI composite index 108.5 111.2 2.5% (good)
The Tax Cuts and Jobs Act, passed in December What’s more, despite a narrative fixated on tariffs
2017, restructured income brackets, reduced personal and trade wars, global economic performance remains
income taxes for many Americans, shrank the C cor- decent, which, all things being equal, is supportive of
poration tax rate to 21 percent and made it easier to U.S. economic growth. The most recent forecast from
repatriate profits earned abroad. Much of the coverage the International Monetary Fund indicates that global
focused on changes to corporate filers or impacts on economic growth in 2018 will be 3.7 percent, about the
state and local tax deductions, overlooking some of the same as last year. While there are signs of growing stress
less flashy changes in the tax code. in countries such as Argentina and Turkey, nations such
For example, the new law increased from $500,000 as Canada, India, Australia and Germany continue to
to $1 million the amount a company can immediately report acceptable economic performances.
expense for certain types of purchases. These changes Earlier this year, it looked like America versus the
provide more flexibility and resources for contrac- world. But since that time, trade agreements have
tors when it comes to purchasing new equipment. been signed with Mexico, South Korea and Canada.
Contractors that buy midsize and full-size pickup trucks Discussions with the European Union are ongoing. The
for their businesses can write off the entire purchase as a situation with China remains unsettled, but at least
result of the changes in the tax code. fears of a global trade war have abated.
The law also expanded the definition of section 179
property. Qualified improvements, such as the renova- INDUSTRIAL PRODUCTION SURGES
tion and improvement of a building’s exterior, would be Prior to 2014, a considerable amount of business invest-
grouped under a Section 179 property. ment was traceable to the oil and natural gas industry.
While it still might be too early to see the impact But when those and other commodity prices slid lower
CONSTRUCTIONEXEC.COM
of the tax law in any data released by official govern- in 2014, high-flying economies in North Dakota,
ment agencies, other sources provide some insight. For Oklahoma and Louisiana took a step back. Through
example, as of this writing, year-to-date sales of Ford’s 2015, industrial production slid even in the midst of a
F-series of trucks, commonly used in the construction broader U.S. and global economic recovery.
industry, were higher in 2018 compared to the same But since early 2017, industrial production has more
time period in 2017. This likely is a result of the overall than bounced back. When asked what constrains them
strength of the economy coupled with advantageous most, businesses in recent years have indicated that it’s
changes built into the new tax code. regulations, not taxes. While many regulations remain in
23place, the way they are enforced has changed markedly, These surpluses have caused some states to reinvest in
and this may have helped bolster industrial production. their own roads and highways. For example, last year,
However, there’s more to it than that. Oil prices stand North Carolina awarded $7 million in matching grants
at approximately $70/barrel in North America. Natural to help fund 14 short line railway projects, and the
gas prices now easily exceed $3/million Btu. All of this Maryland Transit Administration already has commit-
has translated into a resurgence in energy-related invest- ted to spending $900 million during the next several
ment and production. years on its public transportation.
Rising property values, ongoing rapid job creation
INFRASTRUCTURE SPENDING CLIMBS and confident consumers translate into rising real estate
Another set of public policies are helping strengthen values, as well as income and retail sales tax collections,
construction activity and the broader economy: public which in turn creates additional resources to invest
works. It used to be that the country’s infrastructure in infrastructure. That helps explain the chunky year-
largely depended on what spending bills came out of over-year spending increases in a number of primarily
Washington, D.C., but that’s no longer the case. While publicly financed categories: water supply (up 37
a much-discussed federal infrastructure package has percent in August year over year), conservation and
taken a legislative backseat, the recent economic expan- development (up 34 percent), transportation (up 23
sion has helped pad state coffers. percent) and highway/street (up 14 percent).
According to the Pew Research Center, 34 states are
taking in more tax revenue than they were prior to the INFLATION AND INTEREST RATES ON
Great Recession, even after accounting for inflation. For THE RISE
example, West Virginia closed the last fiscal year with In economics, situations are seldom purely blissful.
a $36 million budget surplus, the first time in eight Economists have a unique ability to perceive good news
years (not counting surpluses created via budget cuts). amidst misery. Stronger economic growth has placed
Maryland, which experienced moderate job growth more pressure on input prices, including the cost of
for much of 2018, ended the fiscal year with a surplus deploying human capital.
exceeding $500 million. Similarly, North Carolina ran a The ongoing growth in demand for construction
$440 million surplus. workers is rendered apparent in data characterizing
ABC Construction Backlog Indicator
Q2 2017 vs. Q2 2018
Middle States
CONSTRUCTION EXECUTIVE | DECEMBER 2018
Q2 2017: 7.91 months
West*
Q2 2018: 7.23 months
Q2 2017: 6.82 months
Q2 2018: 10.69 months –0.68 months Northeast
Q2 2017: 9.7 months
Q2 2018: 10.4 months
3.87 months 0.7 months
South 2.17 months
Q2 2017: 9.01 months
* Includes Alaska and Hawaii. Q2 2018: 11.18 months
Source: Associated Builders and Contractors
24Number of Job Openings in U.S. Construction
July 2008 – July 2018
300
250
200
150
100
50
0
Jul-08
Jan-10
Jul-10
Jan-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Source: U.S. Bureau of Labor Statistics
industry job openings. According to the Bureau of materials. According to the most current data available,
Labor Statistics, a decade ago, the number of job construction materials prices rose 7.4 percent on a year-
openings for construction workers was roughly a third ago basis in September.
of what it is today. With the construction industry Shrinking materials prices were common two to three
unemployment rate standing at just 3.6 percent (as of years ago, but that has changed. Between September
October), contractors are scrambling for workers. A 2017 and September 2018, crude petroleum prices
year ago, the construction industry unemployment rate rose by more than 47 percent, steel mill products by 18
was 4.7 percent. Nine years ago, it stood at 17.1 percent percent, and prepared asphalt, tar roofing and siding
and then rose to 27.1 percent by February 2010. products by more than 9 percent.
Back then, there were far more construction workers The combination of rising human capital and materi-
available then there were positions. Today, a precisely als costs is rendering the delivery of construction services
inverted set of circumstances characterizes the economy. more expensive. This is occurring at a time when devel-
Associated Builders and Contractors cites an estimated opers and other purchasers of construction services are
500,000 open construction positions in the United encountering higher interest rates. Should these dynam-
States. There is only one thing that can happen when an ics persist, and they are poised to, the level of demand
abundance of job openings meets an inadequate supply for construction services will decline as prospective pur-
of workers: Compensation costs must rise, and they are chasers no longer find the value proposition appealing.
doing just that. Perhaps there are already indications that this is
CONSTRUCTIONEXEC.COM
Amazon’s announcement that it would raise its mini- occurring. The global engineering and construction
mum wage to $15 an hour illustrates that even the most firm Fluor recently saw its stock price decline nearly 12
powerful enterprises are having to work harder to attract percent on a single day, in part because of downgraded
and retain talent. revenue expectations.
But wages are where cost pressures begin, not where
they end. Other sources of inflation include fuel LOOKING AHEAD
prices, borrowing costs, health care, tuition, apartment Despite an uncomfortable level of stock market volatility
rents, home prices, food and, of course, construction beginning in October 2018, the U.S. economic outlook
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