In addition to the spate of workers’ comp bills Jerry wrote about, there are also numerous prevailing wage reform bills that have been introduced. Some seek to expand the scope of the act — to continue what seems to be a never-ending expansion of who must be paid prevailing wage, some seek to shrink the act back to its original job site boundaries, another requires certified payrolls on all projects. There are others that seek to increase transparency through public postings of wage determinations or remove the payment of prevailing wage from certain school construction. It’s much too early to predict where these bills might end up, but it certainly is proof that prevailing wage reform is a hot topic for organized labor and for construction firms — and should be for public owners and taxpayers who ultimately foot the bill when the application of prevailing wage increases the cost of roads, schools and other publicly funded construction projects.

Contractors should keep an eye on House Bill 1007 about covered loads.  The bill:

• Requires that from August 1, 2013, through June 30, 2014, any vehicles operating on a paved public highway hauling dirt, sand, rocks, or gravel susceptible to escaping must use a cover if the vehicle is equipped with a load cover.
• Requires that after June 30, 2014, a vehicle operating on a paved public highway hauling dirt, sand, rocks, or gravel susceptible to escaping must use a cover and must not exceed the horizontal freeboard of the bed of the vehicle hauling the load.
• Provides an exemption for the Department of Transportation when applying deicers and sand for snow and ice control, maintenance operations for emergencies, or maintenance on closed roads, but still requires six inches of freeboard.
• Requires the Washington State Patrol to conduct random emphasis patrols to enforce covered load requirements.

The bill is sponsored by Reps. Kagi, Clibborn, Stanford, Ryu, Moscoso, Hudgins, Reykdal, Fitzgibbon, Appleton, Maxwell, Green and Fey.

Does recent economic data signal a return to weakness in the economy or even the beginning of another downturn, before we’ve had much of an uptick? To read what ABC’s economist, Anirban Basu, has to say, keep reading….

Despite a decline in the nation’s gross domestic product (GDP) in the last quarter of 2012, the Bureau of Economic Analysis Jan. 30 reported nonresidential fixed investment increased 8.4 percent for the fourth quarter as investment in equipment and software jumped 12.4 percent, which outweighed a 1.1 percent decline in investment in structures. For the year, nonresidential fixed investment increased 7.7 percent, with investment in structures up 9.6 percent and investment in equipment and software up 6.9 percent. Residential fixed investment increased 15.3 percent in the fourth quarter following a 13.5 percent increase in the third quarter. Annually, residential fixed investment increased 11.9 percent over 2011.

“Fourth quarter GDP is not only disappointing, it reveals how much damage was done to the economy by the ongoing slowing of much of the balance of the global economy and fiscal cliff fears,” said Associated Builders and Contractors Chief Economist Anirban Basu.

“Much of the economic momentum generated during the initial nine months of the year dissipated during the fourth quarter as investors, business decision-makers, consumers and others paused in anticipation of a resolution to fiscal issues such as automatic sequestration, the scheduled expiration of the Bush tax cuts and the fate of the payroll tax cut,” Basu said.

“While some of this uncertainty is behind us, confidence among key economic decision-makers continues to be compromised by impending federal spending cuts associated with automatic sequestration, a scheduled end to the federal budget continuing resolution in late March, and debt ceiling discussions to take place later this year,” remarked Basu. “For construction contractors and others, this means that the first several months of 2013 will remain too soft to produce an environment consistent with more robust nonresidential construction recovery.

“Based on the clues supplied in today’s GDP release, construction industry stakeholders can expect construction spending data to also reflect ongoing weakness in momentum,” said Basu. Stakeholders also can expect plentiful discussion in the days to come regarding whether or not last year’s fourth quarter represents the beginning of the next economic downturn.”

I wasn’t really counting on it, being a bit jaded, but I had hoped that Gov. Inslee’s opening speech would have a little more substance now that he is duly elected and moved into the second floor of the Capitol. His campaign speeches were feel good, no specifics, green energy, yay for innovation pablum aimed at potential voters. I thought that since he has no executive experience and served with little distinction in his years in Congress and probably knows way more about THAT Washington than THIS Washington, we might be in trouble. Let’s hear specifically how you are going to unleash the economy, lessen the stranglehold of regulation and urge job creators to create. Let’s talk real-life job creation. I truly hope I am wrong. We need to worry about the economy first, Jay! Let’s get specific.

The Seattle Council recently approved changes to the city’s solid waste system, including a prohibition on recyclable materials from construction and demolition going to the landfill.  The new rules also require a waste diversion report for most sites and the certification of all construction waste recycling facilities.  Seattle Public Utilities and the Department of Planning & Development are in the planning process of how to administer the changes and more specific details will follow.

Recently, I had occasion to be a part of two free-ranging discussions of generals and subs about what they are experiencing now that work is picking up. The consistent theme was risk: risk assessment, risk management, risk assignment, risk shifting – you get the idea. Owners are hiring more owner’s reps and construction managers to have better control and watch over their projects more closely. Bank inspectors are more present and thorough. Owners and generals are more concerned about bonding. Not necessarily that there is a bond in place (which costs money!) but that they know the contractor or sub downstream from them is bondable. Contracts are more customized and lengthy, mostly addressing risk issues. No one, it seems, uses a “standard” contract any more – good news for attorneys on both sides of the paperwork. More subs are asking for the Owner-GC contract. Generals are astonished that all subs aren’t asking to see it. Generals and subs should both do whatever they have to do to satisfy themselves that the money is really there to pay them – or risk a nasty surprise. In a complicated, multi-layered, relationship-rich industry like construction, risk is an ever-present concern. It seems like, while it has always been a concern, there is even more emphasis on it now. Understandable, given the last few years and the current environment, but its kind of sad when one contractor related, “I don’t see myself as a contractor any more. Now I am a risk manager.” Bet he was having more fun building stuff!

“39.10″.  That’s the parlance for the state’s alternative public works contracting procedures, reflecting the pertinent chapter in the Revised Code of Washington.  But unless the Legislature reauthorizes it, 39.10 goes away next year.  39.10 is set to sunset at the end of June 2013 and were it to do so, most state and local government entities would no longer be able to use GC/CM, Design-Build or Job Order Contracting (JOC) as alternatives to Design-Bid-Build.

For those of you too busy looking for or doing work, here’s a quick review of what the state’s quarterly report from the Economic and Revenue Forecast Council has to say about the construction economy:
Our housing sector continues to strengthen, mainly in multifamily housing. Through August multi-family permits are averaging 11,500 (SAAR), or 265% higher than the 4,000 for all of 2009, the housing low point. For single-family permits, there was only a 26% increase from 2009 levels. Combined multi- and single-family permits are 74% higher than 2009. While that increase is somewhat encouraging, it is off the very low base number in 2009. Permits are still 48% below the hay day of 2005. With rents rising and home affordability improving, the single-family numbers are expected to improve. Contract data, indicating the next six months of activity have stabilized and are starting to rise.
On the flip side, nonresidential contracts have not turned around. They started to move up, but then stumbled to a new all-time low in March, but ticked up after the March low. The three-month moving average remains below the 2011 mark, indicating continued weakness in nonresidential construction.
Construction employment is expected to remain moderate for the rest of this year, slowing picking up on 2013. Construction employment has climbed out of the trough and is expected to post its first gain in five years, but only 1.1%. Again, residential outperforms nonresidential with a slight 3.4% increase for the home builders, while nonresidential continues to decline 0.8%. Overall construction employment is expected to increase just 1.2% in 2013 and 2014, and only 0.8% in 2015, before it turns negative in 2016 and 2017.
Those relatively bleak employment numbers for the next five years present a challenge for the industry. How do we attract, train and retain the best and the brightest when we can’t offer them much stability in future employment? And that just isn’t just in the skilled craft worker, but project managers, estimators, safety professionals and the other non-field staff needed to get jobs and make them profitable. No easy answers when construction didn’t have the greatest career reputation going into the recession. But as our industry becomes more complex and sophisticated, we need to make sure we have the human capital to build America. Good thing I am only in charge of the questions, not the answers! I think we are all in charge of the answers. We’d better get busy.

Just when we think we’ve turned the corner, do we have to now beware the upturn? According to the fall issue of the FMI Management Letter, yes. We aren’t out of the woods yet. The third quarter results of their Nonresidential Construction Index are five points lower than second quarter. Construction and project management fees are lower. There are some economists who fear we are in danger of entering a second recession. There are still plenty of bidders on every project, so there is continued downward pressure on profit margins. From what I hear and see, work is picking up and some contractors are quite busy. But because there still isn’t any or much backlog, contractors are holding off hiring, or hiring as few people as possible. Many contractors have gone out of business, left the business or left town, but now is also the time when there are new unknown and untried contractors hoping to catch the wave as things improve. So as generals bid, they are getting numbers from subs they don’t know, increasing their risk. Banks still aren’t loaning as much as we’d all like, so contractors are asked to become project partners, assuming risk beyond just the normal risk of being a contractor, as if that’s not bad enough. There is incredible uncertainty in the government arena, although we should have answers there in a little more than a month. The good news (there had to be some!), is that many forecasters think that this area is in better shape than most, that we have pent up demand, we just need to get the economic and market conditions right and we’ll see more holes in the ground and more cranes in the sky. Let’s hold on to that thought!

The second draft of the 2012 Seattle Building Code is now available for public review and comment and can be downloaded at:  Draft 2012 Seattle Building Code.

It consists of the 2012 International Building Code (IBC) with proposed amendments.  The Seattle Department of Planning and Development would like the 2012 Seattle Building Code to take effect next summer.

To comment on the draft code contact:

Maureen Traxler, Dept. of Planning & Development, 700 Fifth Ave, Suite 2000, PO Box 34019, Seattle, WA 98124-4019; or maureen.traxler@seattle.gov