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Construction Industry Trends: May 2022 Roundup
Spring has finally sprung (in most places)...even though we’re nearly heading into Summer. For the construction industry, May brought us an array of headlines ranging from the good (positive construction starts and sustainable projects) to reminders that the industry still has a lot of catching up to do (fallout from construction related disasters and continuing action needed on industry DEI measures). Here’s a look at those stories.
Dodge Report Reveals Some Positive Construction Trends
A new report from Dodge Data & Analytics shows some positive trends in terms of the near-term construction industry forecast.
According to the research firm’s data, total construction starts rose 3% in April to a seasonally adjusted annual rate of $945.8 billion. Year-to-date, total construction was 6% higher in the first four months of 2022 compared to the same period of 2021.
“The construction sector is seemingly shrugging off the fear of higher interest rates and a potential recession,” said Richard Branch, chief economist for Dodge Construction Network. “Many building sectors have made the turn from weakness to recovery as underlying economic growth and hiring are solid.”
Branch added that an expanding pipeline of new projects coming online is also fueling positive trends. A downturn or recession, though, is not yet being written off completely, and the industry is closely watching how the Federal Reserve deals with interest rates in order to combat inflation. And, materials costs, supply chains and labor all remain challenges.
The Takeaway: Dodge’s report is a bit of fresh air, and it mirrors some of the data we’re seeing with our own clients-captured in our Quarterly Construction Metrics Index reports. Contractors, many flush with cash from reserves, appear eager to get started on larger, more profitable projects. In order to get out in front of the bounty of work ahead, many leading contractors have been busy during the pandemic modernizing their own operations, including moving to the cloud, leveraging more mobile solutions, implementing cutting-edge construction analytics, and more in order to “future proof” their businesses.
$997 Million Settlement Reached in Surfside Condo Collapse
A tentative settlement, worth nearly $1 billion has been reached in a class-action lawsuit that victims and families of the deadly Champlain Towers South collapse in Surfside, Fla. in June 2021. In the early morning hours of June 24, the 12-story condo tower—completed in 1981—suddenly collapsed, killing 98 residents and guests.
More than 20 different entities were included in the suit, including the insurers of the security company for Champlain South, the developers of the condominium next door, engineers, architects, and a law firm that represented the Champlain South condo association.
The lawsuit contended that work being done on the Eighty Seven Park tower next door damaged and destabilized the Champlain Towers building, which was already in dire need of its own major structural repair. Video footage collected by a team of federal investigators showed evidence of extensive corrosion and overcrowded concrete reinforcement in the building.
Miami-Dade Circuit Court Judge Michael Hanzman, who was presiding over the case, had earlier approved a separate $83 million settlement to compensate people who suffered economic losses such as condominium units and personal property.
The Takeaway: This was one of the worst disasters in recent memory and it led to the Florida House unanimously passing a bill that would require statewide recertification of any condo building above three stories high. The tower’s collapse also put a spotlight on building practices and calls for better quality control in the construction process. It’s a somber reminder of what can happen when corners are cut, or mistakes slip through—especially true when working with outdated or disconnected construction workflows.
Work Starts on Largest Floating Solar Project in United States
Work has begun on an 8.9-MW floating solar panel installation in New Jersey that will become the largest of its kind in the United States when complete. NJR Clean Energy Ventures (CEV) in conjunction with New Jersey American Water began construction on the installation in Millburn, New Jersey in May.
More than 16,500 solar panels will be installed using a floating rack system on a reservoir located at the New Jersey American Water Canoe Brook Water Treatment Plant. The clean power generated by the solar installation is expected to provide 95% of the facility’s annual power needs through a power purchase agreement with CEV.
According to Solar Power World, the floating solar panels offer a number of advantages over conventional solar arrangements, including finding suitable locations to accommodate large-scale commercial solar installations. Floating solar panels can help reduce evaporation and algae growth, which protects the water source. Water also provides a cooling effect on the arrays, which helps the panels operate more efficiently.
“As the state’s largest water and wastewater utility company, it is essential for us to be good stewards of the environment by operating efficiently and in a manner that helps protect our natural resources,” said Mark McDonough, president of New Jersey American Water. “This initiative provides a meaningful reduction of traditional energy use that benefits the environment, as well as our customers through limited capital expense and reduced power costs.”
The Takeaway: It’s great to see more and more projects like this get underway–especially at a time when there are growing energy concerns due to supply and demand, tariffs, sanctions and more. Both with and independently of the $1.2 trillion infrastructure bill, there is the potential for booming new construction opportunities around clean energy. But to take advantage, contractors need to show they not only have the building chops, but can run sustainable operations themselves.
A ‘Mixed Bag’ on Industry’s Progress with DEI, Thwarting Racism
Two years after the death of George Floyd, the ensuing social justice movements and a groundswell of diversity, equity and inclusion (DEI) improvements made across the American business landscape, Construction Dive took a look at where the industry currently stands with regard to racism in construction and whether companies’ efforts have made an impact in a May 23 Deep Dive segment.
The article surveyed CEOs how they were delivering on their DEI promises, as well as how minority contractors and frontline workers felt about progress made. The result, it seems, was a bit of a mixed bag.
Frontline workers noted that while open exhibitions of racism, sexism and other derogatory acts are down, there’s still a lot more that the industry can do to help foster safer, more inclusive working environments. For instance, the number of nooses hung on construction jobsites, has dropped after a large spike in 2020 in the middle of calls for social justice reforms, yet those numbers are still hovering around 2018 or 2019 levels. Hateful graffiti, messages and acts of violence on jobsites are also down, but have not gone away.
Turner Construction, the largest general contractor in the United States is one company trying to address hate and bias. It began tracking all bias-motivated events across its approximately 1,500 jobsites and 100,000-plus workers in 2020. The company said it assigns someone to walk each of its sites twice daily, looking for signs of hate. That could include nooses, graffiti or even inappropriate verbal barbs. Turner’s policy then calls for superintendents to notify headquarters within two hours of a possible incident. Sometimes, incidents will cause entire jobsites to be shut down while they’re thoroughly investigated-something we’ve seen more recently over the past couple of years.
The industry has also seen a significant spike in contractors either updating or creating brand new DEI programs. These programs aim to foster more positive career growth for all, provide resources, and educate professionals about diversity, sharing personal stories, or reporting incidents.
Turner Construction assigns someone to walk each of its sites twice daily, looking for signs of hate or discrimination.
So, have these measures helped? “I won’t say these problems have been abolished, because I don’t think that’s going to happen in our lifetimes, but more people are mindfully watching. There’s an attitude of, ‘If you see something, say something,’” Nate McCoy, executive director of the Oregon Chapter of the National Association of Minority Contractors, told Construction Dive.
Others, like Wendell Stemley, emeritus national director at the National Association of Minority Contractors, noted that contractors’ inclusion initiatives on a business level can oftentimes be too broad-based, lumping small businesses, women-owned firms, minorities and veteran-run companies together.
The Takeaway: A powerful piece by the Construction Dive folks, and it’s clear that while progress has been made, it’s slow and oftentimes frustrating. That said, we have seen a significant pickup in interest around construction DEI programs and stronger workforce management solutions. Some of this could be prompted by more stringent rules and regulations around federal and state construction work, including the $1.2 trillion infrastructure bill, which puts an emphasis on DEI-forward construction operations and ensuring women and minority-run contractors get more opportunities. But whether it’s contractually required or not, building diversity in construction is simply the right thing to do.
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