By Greg Aragon for ENR
New AGC President Paul Diederich, a North Dakota contractor, will push to maximize market recovery for members; congressional gridlock is a key hurdle.

With attendance up 25% from last year at the Associated General Contractors convention in Palm Springs, Calif., earlier this month, association officials are optimistic that market recovery is starting to stick.

More than 2,200 attendees from 870 companies showed up at the group's 94th annual gathering, held March 6-9.

“My first order of business is to capitalize on the fact that our economy is coming back,” Paul Diederich, incoming president, told ENR. He also is president of Industrial Builders Inc., a West Fargo, N.D., building and transportation contractor.

But Diederich noted that political stalemate in Washington will hurt market expansion. "One of the biggest challenges we have is a do-nothing Congress," he said. "We used to talk about infrastructure needs; how roads and bridges are deteriorating and I can't imagine how people can be so shortsighted not to fund those kinds of projects because the return is like $6 to $1. We will try to address those things with Congress."

Speaking about sequestration, Diederich said he thinks it is going to be impactful in limited places. In his home state of North Dakota, he says the budget-cutting measure will affect two airbases.

"I think we are looking at $4 billion in 2013 that is not going toward fixing our roads and bridges and water systems," he said.

But Diederich thinks more private-sector funding may make up some funding gaps. "It's not only government funding that we need," he said. "There is a lot of private money out there."

However, legal experts told attendees that it's getting more challenging to stay on jobsites and keep contracts in place.

"In the past five years, I've had [owner] clients trigger the termination-for-convenience clause 10 to 15 times more than in the prior 20 years, said Bruce Merwin, an attorney with Haynes and Boone LLP, New York City.

Joanne Linley, an attorney with New York City-based Peckar & Abramson, noted that "it's not necessarily that termination for convenience is per-se a bad thing, it's that the wording [in contracts] has deteriorated to the point where it has become really bad for contractors and subcontractors."

Karen Fenaroli, senior vice president at management consultant EFL Associates Inc. also noted more impact for construction firms from the pace of leadership change generated by accelerated industry succession and acquisition.

"As companies go through changes with new CEOs and presidents, the ground shifts like an earthquake, so culture is an undeniable piece of business," she said.