Burdened by a sluggish economic recovery, cash-strapped public and private owners are shifting greater risk onto contractors through onerous deal terms with non-traditional project responsibilities.Contractors, as a result, must be alert to new risks, resist them whenever possible and keep costs low to stay profitable.That was the consensus of presenters during the AGC/CFMA Construction Financial Management Conference, which took place Oct. 23-25 in Las Vegas.The financial consequences of the risk-shifting are hitting subcontractors first since “they are furthest from the cash flow,” says Teresa Martin, vice president of Lockton Cos. LLC, Kansas City. The subs borrow more as costs rise
After a sluggish 2013, the construction industry could see a gradual uptick in total construction starts in 2014, according the McGraw-Hill Construction’s 2014 Dodge Construction Outlook. McGraw-Hill Construction forecasts that total construction starts could rise by 9% next year to $555 billion, led by a solid housing market and improved opportunities in commercial building. Non-building sectors, especially electrical utilities, could be drag on starts in the coming years.“It’s another step along the road to recovery, but on the painful to frustrating side at times,” says Robert Murray, vice president of economic affairs at McGraw Hill Construction.McGraw-Hill Construction announced its forecast
Courtesy suttonma.org Groundbreaking at the Sutton, Mass., school project in July, 2011. Attorney Wendy M. Mead has had many contractors as clients, so she understands some of the pitfalls of construction. But it wasn’t until she volunteered to manage a big school renovation and expansion project that she found out how difficult that part of construction could be. As chairwoman of the Sutton, Mass. School Building Committee, she’s learned tough lessons while dealing with a $59.9-million combined middle school-high school renovation and expansion (the cost is roughly split between the town and the state).Sutton’s Board of Selectmen voted recently to terminate
Photo by Steve Hill "We must lead the industry kicking and screaming ... to payment reform," said Bigane Wilson Photos by Steve Hill "Our motto is, 'Get to the hard yes instead of the easy no,' " said Littleton. Related Links: ENR's Risk & Compliance Summit Interview with Balfour Beatty Construction's Ed Littleton The perception of risk depends on where you live on the payment chain.That point became painfully clear after Balfour Beatty Construction's Ed Littleton described the way he manages through the changing landscape of construction risk, including subcontractor defaults, from the point of view of a top construction
City of San Jose Planned environmental innovation center is the heart of San Jose's plan to create green jobs. Related Links: In the rush to win federal stimulus tax credits for an environmental innovation center, the city of San Jose handed the project to a poor performing contractor, Applegate Johnston, that submitted the low bid. Now the Modesto-based contractor is bankrupt and the city and contractor's surety, Liberty Mutual, must find a way to finish the job.The innovation center is to be the heart of the city's ambitious initiative to create a nucleus of environmental innovation and bring 25,000 "clean
Related Links: Key Detroit Projects Appear on Track, But Contractors Have Questions Is Detroit's Bankruptcy Filing Credible Or A Charade? (Forbes) Detroit's story is a tale of two cities, one growing and one withering but bound in a record $18.5-billion bankruptcy filing whose resolution will determine the future of both.The city's downtown core and some historic neighborhoods have become hot spots for new businesses and residents. The influx has filled offices and apartments and is generating new restaurant and retail openings.The other city is what's left of a once-vibrant manufacturing hub, abandoned by most of the populace, leaving blocks of
Photo by Debra K. Rubin/ENR Work on the $279-million upgrade of the downtown Cobo Center event facility is not affected by the city's filing, say project officials. Related Links: Bankruptcy Filing Should Not Affect Arena District, M1 Rail Projects California Public Entity Bankruptcies: A New Contractor Challenge A Preliminary Road Map to the Chapter 9 Bankruptcy of the City of Detroit Although Detroit's Chapter 9 bankruptcy filing on July 18 is the largest in U.S. history with about $18 billion in liabilities, it is not expected to affect several key urban projects, project officials say. But state contractors are concerned
The costs of arguments and feuds on construction projects is significant, a recent study shows.According to research published late last year by the Center for Construction Research and Training, 41 incidents of conflict on construction projects each cost, on average, about $11,000 and 161 hours of work time.Those 41 incidents were part of a total of 86 conflicts that were analyzed. The 41 had enough details that the costs involved could be assessed.The results of the research come from interviews with 74 construction superintendents, project managers, foremen, supervisors, journeymen and fifth-year apprentices across Michigan’s lower peninsula.“The most interesting, to me,
Related Links: Bankrupt Jefferson County, Ala., Raises Sewer Rates Jefferson County Files for Bankruptcy After Talks With Creditors Break Down Jefferson County, Ala., will wipe out more than $1.2 billion of sewer debt and residents will face smaller sewer rate increases if the plan to exit its historic $4.2-billion municipal bankruptcy is approved later this year.The plan, filed on June 30, will be submitted to Judge Thomas Bennett in U.S. Bankruptcy Court in the Northern District of Alabama in August and go before creditors for a vote before another hearing in November.Final approval would free the county to start issuing
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