and doing ‘clash detections’ in framing submittals and shop drawings,” he says. Subs are embracing a process that will identify and eliminate these clashes on an automated basis, he says. Bolen agrees: “It really reduces rework [and] word travels fast in the subcontractor community.”

Greening of America

The growing public awareness of the environment and issues like global warming has increased pressure on owners to embrace sustainability. “I was skeptical about whether owners would buy in to green building. But we are seeing more interest lately,” says Bolen. “While there may be a price differential now in using alternative materials, as more projects use them, the prices will come down.”

One of the problems in the past with designing energy efficient or sustainable projects is that the owners’ people in charge of the capital budget did not work with the people in charge of the facilities management budgets. So there was little incentive on the capital budget side to spend the extra money on design for lifecycle cost savings that will only show up on someone else’s budget. The trend to build green and to analyze project life-cycle costs may be breaking down these owner work silos.

Makes of Turner says that a few clients have been asking for sustainable design for years. But it took the U.S. Green Buildings Council’s development of its Leadership in Energy and Environmental Design standards to provide a framework for designing and building to really kick off the movement, he says.

Some contractors say that the popularity of building green depends on regional interest. “Everyone likes to talk about green, but when it comes down to hard economics, some owners decide against it,” says McCoy of White-Spunner. “In a lot of regions where the awareness is higher, the demand is higher.” McCoy says that the construction industry must try to make building sustainable projects more palatable to owners. “We have to find a way to make the economic problem less of a factor in building design,” he says. He notes that the  influx of young people with new attitudes about environmental design can make sustainability a way of life in the industry.

But Makes says that sustainable design now is snowballing. “We’ve completed about $1 billion in LEED-certified work and have about another $1 billion underway. But there may be another $3 billion in LEED-related Turner projects in the planning stages,” he says.

Steep Price Tag

Materials prices have been skyrocketing over the past three years and there are new signs of price volatility on the horizon. Makes of Turner says that the wild inflation in materials prices of 2004-06 only now is settling down. But he has recently seen some spiking in steel prices  and copper seems to be on the rise again. “I think we are still looking at a potential overall inflation of 7 to 8% this year,” Makes says.

“Our general view is that nearly everything is under stress,” says Cates of BE&K. “Four months ago, people were predicting copper prices would settle down. Suddenly, they’ve taken off again.” And just as suppliers are stressed, so is the labor market. BE&K is exploring alternative ways of working, experimenting with modular construction of some project elements. “That way, we can move more of the work from the jobsite to a manufacturing setting, where things may be a little more stable,” Cates says. But he admits that this will require major changes in the design process.

The public sector seems to be where materials prices seem to be having the most impact. “On the public side, many projects have engineers’ budgets that are several years old,” Karlstrom notes. “With the rise in materials prices, some of those projects won’t get built.”

The recent spike in oil prices is affecting contractors across the board, but none more than the heavy civil contractors. “Fuel costs are a real problem,” says Crawford of Sukut. “Many private sector clients are being pretty flexible on fuel escalators, and so are a few states.” But California is not one of them. “Here, the public sector still wants to push all the risk onto the contractor,” he says.

On big international projects, Bechtel is seeing a willingness to be flexible on materials prices among some major customers. “What we are seeing are price escalators linked with deescalators, as some major customers believe that some of the materials prices are overinflated and may come down,” says Laspa.

Petrodollars To Burn

On the international front, the biggest market is in petroleum, spurred by high oil prices. In that market, national oil companies increasingly are demanding to control their projects, rather than leasing reserves to independent oil companies. Many of these state-owned oil companies also are bidding on new oil reserves.

For EPC contractors in the petroleum markets, this means increasing demands for local content, says Laspa. He says that this is bringing up the levels of local expertise and capacity in the marketplace.

But beyond local content, the expansion of national oil companies into the world oil markets is pushing use of local firms in the international markets. “Most clients are relying on old-line EPC firms to do the work,” says Sambles. “But as the national oil companies move into the international market, they are bringing their domestic companies out into the market with them,” he says.

For contractors, it is a time of plenty. Most are being more selective and owners are starting to recognize that contractors can bring value to the table. “All we ask for is a little respect. You’d be surprised how smoothly things go when we get the trust and respect of the owner,” Mascaro says.