bgjulyaug09

THE MAGAZINE OF THE MASTER BUILDERSʼ ASSOCIATION OF WESTERN PENNSYLVANIA JULY/AUGUST 2009

Mid-year Update on the Market

Making the Case for Tilt-up

When Will the Commercial Debt Market Return?

TECHNOLOGY and

CONSTRUCTION

BG July_Aug_09:Layout 1 7/8/09 1:46 PM Page cov1

1BreakingGround July/August 2009

PUBLISHERTall Timber Group

www.talltimbergroup.com

EDITORJeff Burd

[email protected]

CONTRIBUTING WRITERSSuzanne Elliott

Jon O’Brien

PRODUCTION MANAGERCarson Publishing, Inc.

Quellé Diggs

ART DIRECTOR/GRAPHIC DESIGNCarson Publishing, Inc.

Jaimee Greenawalt

CONTRIBUTING PHOTOGRAPHYCarson Publishing, Inc.

ADVERTISING SALESJeff Burd

412-366-1857

MORE INFORMATION:

BreakingGround is published by Tall Timber Group for the MasterBuilders’ Association of Western

Pennsylvania, 412-922-3912 orwww.mbawpa.org

Archive copies of BreakingGroundcan be viewed at

www.mbawpa.org/articles

No part of this magazine may be reproduced without written permission

by the Publisher. All rights reserved.

This information is carefully gathered andcompiled in such a manner as to ensuremaximum accuracy. We cannot, and do

not, guarantee either the correctness of allinformation furnished nor the complete

absence of errors and omissions. Hence,responsibility for same neither can be,

nor is, assumed.

Keep up with regional construction andreal estate events at:

www.buildingpittsburgh.com

3 PUBLISHER’S NOTE

4 NEWS FROM THE STREETEconomist and the Brookings Inst i tute rank P i t tsburgh regionhighly, Dept . of Homeland Secur i ty cracks down on employers , Green Bui ld ing Al l iance new off ice becomes the f i rs t LEED Plat inum in Western PA.

8 REGIONALMARKET UPDATE$30 mi l l ion projects keep popping up, whi le hous ingweakens.

10 NATIONALMARKET UPDATEMid-year look at the forecasts

12 WHAT’S IT COST?Energy r i ses but pr ices seemstable.

14 FEATURE STORYTechnology and construct ion.

23 PROJECT PROFILEButler Color Press expansion.

28 FIRM PROFILECase Technologies .

30 LEGAL PERSPECTIVELabor law issues in Congress .

32 FINANCIAL PERSPECTIVEWhere are the ‘green shoots ’ in commerc ia l mortgage secur i t i zat ion?

34 MANAGEMENT PERSPECTIVEIntegrated project del ivery :lower case or upper case ‘ I ’ .

37 MBE/WBE SPOTLIGHTProfess ional Mechanica l Sa les & Serv ices , Inc .

38 TREND TO WATCHThe case for t i l t -up construct ion.

42 BEST PRACTICELean pract ices come to construct ion.

44 AWARDS AND CONTRACTS

47 FACES ANDNEW PLACES

48 THE INDUSTRYIN THE COMMUNITY

IBC CLOSING OUTPeople, technology & des ign.

C O N T E N T S

FEATURES & DEPARTMENTS

2009

The new Consol Arenagot an impromptumakeover after thePenguins’ Stanley Cup victory.

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I’ve found myself increasingly occupied with thoughtsof economic recovery of late. As I researched the eco-nomic factors that effect construction and real estateto make an educated forecast about the market forthe second half of 2009, I was struck by how many

opinions about the economy are now available on theWeb. What I discovered was that the amount of doomsaying out there in the economic and business media hasmade it difficult to analyze the status of the recession/re-covery dispassionately, especially since the signs are be-ginning to turn positive.

In the weeks prior to the printing of this edition of Break-ingGround the economic news began to shift decidedlymore positive in direction. Not good, mind you, but morepositive. Unemployment dropped significantly, factory or-ders increased, corporate purchasing managers’ senti-ment went positive, and some of the housing newsinvolved better performance than last year. It will bemonths before we can gauge this as a turn or just a stopoff before another leg down, but the news machine does-n’t have the luxury of patience.

The media are in an interesting position right now. Since Watergate was being reported in the Washington Post,no journalist seems willing to pass up a good crisis without giving it undue weight (in fact, you can tell how far along the reporting is when the crisis gets its unique “-gate” suffix). The business reporters rarely get to dig upsuch sexy stuff as the political beat, but they can matchthe political writers word for word in the doom depart-ment. And right now, there is almost no conclusion that abusiness reporter could draw that you can legitimatelyconsider too crazy, especially after so many of the ‘crazy’reporters were predicting that a financial meltdown wasdue about this time last year.

The week of June 22 produced two articles that juxta-posed two somewhat different takes on where the finan-cial crisis stands.

The Harry Schultz Letter is a stock-picking newsletter witha burnished reputation of late because it accurately pre-dicted a ‘financial tsunami’ last summer. Based on someintelligence that certain foreign embassies are being toldto quietly buy a year’s supply of that country’s currency,the Schultz Letter now predicts that a bank holiday is inthe offing. Their conclusion is:

“Another FDR-style 'bank holiday' of indefinitelength, perhaps soon, to let the insiders sort out thebank mess, which (despite their rosy propagandacampaign) is getting more out of their control everyday. Insiders want to impose new bank rules. Wide-

spread nationalization could result, already under-way. It could also lead to a formal U.S. dollar deval-uation, as FDR did by revaluing gold (and thenconfiscating it).”

Newsweek’s edition that week featured an article by Fareed Zakaria, entitled ‘A Capitalist Manifesto’ that offered the opinion that the world was not spinning out ofcontrol. He pointed out that similar financial crises had occurred every decade or so, and that each crisis hadspawned reasoned predictions that finance as we knew itwas over, each prediction also proved to be wrong. His theory is that capitalism isn’t in crisis, just finance fora while.

Finance has a history of messing up, from the Dutchtulip bubble in 1637 to now. The proximate causes ofthese busts have been varied, but follow a strikinglysimilar path. In calm times, political stability, eco-nomic growth and technological innovation all en-courage an atmosphere of easy money and newforms of credit. Cheap credit causes greed, miscal-culation and eventually ruin. President Martin VanBuren described the economic crisis of 1837 inBritain and America thusly: "Two nations, the mostcommercial in the world, enjoying but recently thehighest degree of apparent prosperity and maintain-ing with each other the closest relations, are sud-denly plunged into a state of embarrassment anddistress. In both countries we have witnessed thesame [expansion] of paper money and other facilitiesof credit; the same spirit of speculation, the sameoverwhelming catastrophe." Obama could put thaton his teleprompter today.

I think Zakaria’s a pretty smart guy. Apparently so do Yaleand Harvard (where he got his PhD). His analysis of theIraq War has been a little spotty, and his economic cre-dentials aren’t as strong as his political credentials, but histheory that this crisis will end as all the others in Americanhistory, with a recovery, is probably going to be correct.

At least for the near term, I’m going to try looking at theeconomic data without reading the hyperbole of the an-alysts. Just in case there is a recovery, I want to be readyfor it.

3

Publisher’s Note

BreakingGround July/August 2009

Jeff Burd


More Top Rankings for Pittsburgh (And This Time

It’s From Eggheads)

The Economist ranked Pittsburgh America’s most liv-able city. British magazine's ranking comes weeksafter President Barack Obama chose Pittsburgh tohost the G-20 Summit in September, calling it a sym-bol of economic recovery. Globally, the Economistsurvey ranked Pittsburgh 29th most livable, and thecity ranked first among all U. S. cities. Vancouver,Canada topped the list. The magazine considers sta-bility, health care, culture and environment, educa-tion and infrastructure.

The Brookings Institute listed Pittsburgh among thetwenty cities faring best in the current recession. TheBrookings Metropolitan Policy Program released itsannual MetroMonitor, an interactive barometer of thehealth of America’s metropolitan economies. Basedon the year ending March 31, 2009 the MetroMoni-tor looks "beneath the hood" of national economicstatistics to portray the diverse metropolitan land-scape of recession and recovery across the country. Itaims to enhance understanding of the underpinningsof national economic trends, and to promote public-and private-sector responses to the downturn thattake into account metro areas’ unique starting points,weaknesses, and strengths—the potential "grass-roots green shoots"—for eventual recovery.

DHS to Focus onProsecuting Employers

Who Hire Illegal Workers

Earlier this month, the Department of Homeland Se-curity (DHS) announced a shift in its workforce en-forcement priorities from the prosecution of illegalaliens working in the United States to the prosecu-tion of employers who knowingly hire them. Ac-cording to a fact sheet distributed by DHS, only 135of 6,000 arrests related to worksite enforcement in2008 were employers. As a result, DHS issued new

News From The Street

The Economist list of the world’s most livable cities.

RANKVANCOUVER1

2

3

4

5

5

7

8

9

9

29

VIENNA

MELBOURNE

TORONTO

PERTH

CALGARY

HELSINKI

GENEVA

SYDNEY

ZURICH

PITTSBURGH

CITY

Brookings Institute Metro Monitor ranking of healthiest regional economies.

RANKSAN ANTONIO TX1

2

3

4

5

6

7

8

9

10

18

OKLAHOMA CITY OK

HOUSTON TX

AUSITIN TX

DALLAS TX

LITTE ROCK AR

McALLEN TX

BATON ROUGE LA

TULSA OK

OMAHA NE

PITTSBURGH

CITY

4 www.mbawpa.org


guidelines to Immigration and Customs Enforcement(ICE) with instructions to immediately "focus its resourcesin the worksite enforcement program on the criminalprosecution of employers who knowingly hire illegalworkers in order to target the root cause of illegal immi-gration." Employers - defined in this context as hiringmanagers, management, owners, CEOs, supervisors andother occupational titles - can expect ICE offices to usetheir full authority when executing investigations such asthe use of confidential sources, cooperating witnessesand undercover agents.

House Bill 400 Passes House

Earlier this month, HB 400 passed the House. This bill isintended to assure that employees in the construction in-dustry are correctly identified as either employees or in-dependent contractors; and it imposes penalties forthose that misclassify. Prior to passing the House, theGeneral Contractors Association of PA stressed the im-portance of this issue, as unlawful contractors misclassifytheir workforce resulting in lost tax revenue, higher work-ers’ comp premiums, illegal profits and an uneven play-ing field against those that abide by the rules. This billcurrently sits in the Senate Labor & Industry Committee.

Construction Legislative CouncilAppoints New Executive Officers

The Construction Legislative Council of Western Pennsylvania (CLC) announced the election of its officersfor the 2009/2010 calendar year:

Chairman: Joe Fecek, American Society of Civil EngineersVice-Chairman: Paula Maynes, American Institute of Architects, Pittsburgh ChapterTreasurer: Michel Sadaka, Pennsylvania Society ofProfessional EngineersSecretary: Jon O’Brien, Master Builders’ Associationof Western PA

The CLC is a multi-discipline coalition of 13 constructionindustry organizations, representing the interests of thou-sands of contractors, architects, engineers, owners andmaterial suppliers from Western PA. The CLC’s primarypurpose is to advance an informed dialogue with electedleaders and policy makers who will advance the eco-nomic and political interests of the construction industry.For more information on the CLC, visit www.clcpa.org.

GREEN BUILDING NEWS

GBA Office is Western PA’sFirst Platinum Project

On June 26, the United States Green Building Councilofficially awarded LEED Platinum certification for the newGreen Building Alliance office renovation project at the Riverwalk Corporate Center. The 3,850 square foot proj-ect was built by Jendoco Construction Corp. and de-signed by Landmarks Design Associates. In addition tobeing the first LEED Platinum project in Western PA, theproject is also the first LEED Commercial Interiors Plat-inum project in all of PA, and the first USGBC chapter of-fice to be certified Platinum.

“I am thrilled to be part of an organization that not onlystrives to make this region a beacon of green buildingbest practices, but that also continues to push theboundaries of what we can accomplish in the greenbuilding arena,” said Holly Childs, GBA’s executive di-rector. “It is critical that we continue to devise ways tobuild, renovate, operate and maintain buildings in amore economically, environmentally and socially beneficial manner.”

On hand to present the plaque designating the LEEDcertification were USGBC President Rick Federizzi andUSGBC Sr. Vice President Rebecca Flora, who lead therenovation project while Executive Director of the GBA.

Rebecca Flora (left) presents GBA’s Holly Childs with theUSGBC Platinum plaque.



6 www.mbawpa.org



Massaro Corporation AdditionAwarded LEED Certification

Holly Childs, Executive Director of the Green Building Al-liance, presented Joseph Massaro III, President & COO ofMassaro Corporation with the plaque designating thecompany’s 8,100 square foot addition as LEED Certified.The addition to the corporate headquarters was com-pleted in January of 2008. For more information on thebuilding’s sustainable features, please visit the companywebsite at www.massarocorporation.com

U.S. House ApprovesLegislation to Modernize

& Green America’s Schools

On May 14, the U.S. House of Representatives over-whelmingly approved legislation to modernize, upgradeand green America's schools by a vote of 275-155. The21st Century Green High Performing Public School Facil-ities Act (H.R. 2187) invests billions of dollars in school re-pair and renovation projects that would create safer,healthier and more energy-efficient learning environmentsfor students.

GBA/MBA Host LEED2009 Seminar

Join the Green Building Alliance and the Master Builders’Association’s breakfast briefing on the recent changes tothe LEED Rating System. Register today to learn aboutthe recent changes in LEED and the new process for ob-taining and maintaining LEED Green Associate & LEEDAccredited Professional credentials.

The seminar will be held at the MBA’s new headquarters,a LEED registered facility that is on course for a Gold Cer-tification under the LEED Rating System.

Seminar details:

Breakfast Briefing: LEED 2009 Rating Systemand LEED AP Credentials UpdateWhen: Tuesday, July 21Where: Master Builders' Association ofWestern Pennsylvania631 Iron City Drive, Pittsburgh, PA 15205Time: 7:30-8:00 a.m.: Continental breakfastand registration8:00-9:30 a.m.: ProgramCost: $35 for GBA and MBA members; $45 for Non-membersSpeaker: Aurora Sharrard, PhD, LEED AP, ResearchManager, GBA

Attendees can register via the internet at https://se-cure.gbapgh.org/gba_oreg/index.cgi/eventspage or bymail by sending the names of registrants and checks madepayable to the Master Builders’ Association to:

Master Builders' Association of Western Pennsylvania631 Iron City DrivePittsburgh, PA 15205

Phone - 412-922-3912Fax - 412-922-3729Web - http://www.mbawpa.org. BG

GBA’s Holly Childs presents the USGBC LEED certificationplaque to Joe Massaro III at the company’s headquarters.


8 www.mbawpa.org

REGIONAL MARKET UPDATE

Let’s call it the year of the $30 million job.

When the year began, the region was feeling the after-shocks of the financial earthquake that had rocked the restof the world. The outlook for 2009 was for a lot of dollarsto be put under contract, but the problem was that a fewbig jobs were going to account for almost two billion dol-lars. That left a lot of businesses chasing very little busi-ness remaining. There seemed to be little hope for the$20 million to $50 million projects that seemed to pop uplike dandelions in the past three or four years.

At mid-year, the reality couldn’t have been more differentfrom the forecast.

The contracting volume through the first six months hasbeen less than impressive, approximately $1.3 billion inthe seven county Metropolitan Statistical Area, but thatvolume includes a significant second quarter recovery.Contracting in quarter two was approximately $800 mil-lion, and was marked by bids on a handful of projectsworth right around $30 million. Included in those were theDupre Science Center at St. Vincent’s College, the NorthShore Station finishes contracts, the K & L Gates tenantwork downtown, and the Robinson Court Fields/OlympicComplex at Pitt.

What wasn’t in the total that was expected to be were anyof the big industrial projects that had been announced in2008. The USS Clairton Works upgrade, reportedly worth$1 billion was shelved indefinitely while steel plant ca-pacity plunged to 40 percent or less. Not shelved, butmoving much slower, were the $1.2 billion Allegheny Lud-lum project in Brackenridge and the $200 to $400 millionproject at AK Steel in Butler. All of these were victims ofthe global recession, although the Allegheny Ludlumproject appears to be at least an even bet to get under-way this year.

Also in the industrial sector, the recessionary forces weretamping down natural gas prices, putting a damper on allthe once red-hot plans for facilities tied to Marcellus Shaleexploration. The mid-year rise in energy prices hadn’tlifted natural gas prices quite as high as oil and diesel, butthe outlook is more rosy, and the unfavorable hedge po-sitions have worked through the producers’ balancesheets. Drilling activity has picked up in the second quar-ter and plans have been revived for the third phase of thegas processing facility in Houston, PA and the $300 milliondistribution and processing plant proposed by MarkWestfor Majorsville, in Washington County.

At the beginning of the second quarter there were moreof the $30 million projects out for bid, along with a feweven larger. Bidding was in process for the University ofPittsburgh’s $32 million Chevron Science Center

expansion, a $30 million project at Upper St. Clair’s BoyceMiddle School, a $55 million convocation center at California University, and the new $80 million Bethel ParkHigh School.

Outside the immediate metropolitan Pittsburgh marketwere three prison projects worth roughly $17 million eachat Cambridge Springs, Indiana and Marienville, and the$200 million expansion of the State Correctional Institu-tion at Rockview, east of State College. In Grove City, thenew $20 million middle school was being bid.

As the quarter wound down there were also the first signsof ARRA money being put to work in the region. Acceler-ated bidding had worked about 40 percent of PennDOT’sadditional stimulus funding through the pipeline. The PATurnpike Commission let an unusually large project inJune, the reconstruction of the roadway between mile-posts 31 and 37 in Allegheny County, between CranberryTownship and Hampton Township. The $113 million sec-tion was awarded to Joseph B. Fay Co.

As encouraging as the bidding activity is, the recent upward trend in proposal requests for architectural serv-ices is equally positive. While the government’s shareof this has helped push the action, private developersmay be coming off the sidelines.

Architect Bob Grubb, partner at Lami Grubb Architects,says their practice has seen a change in sentiment fromthe private owners. “We are starting to see developerslooking down the road towards next year, and saying thatthey want to be ready for things when they turn around.”

That sentiment is being tested on the national level as pri-vate investment advances and retreats in the stock market,and a number of equity markets, including real estate. Thereal estate developers who make the most hay during a re-covery are those who put their projects on track during thelater stages of the recession. The trick, of course is judgingthe recession’s staying power. One developer with Pitts-burgh ties is cautiously proceeding with his project asthough a recovery is beginning, and he’s counting on therelative strength of Western PA to carry him even if the na-tional economy doesn’t rebound so quickly.

Kevin Dougherty was a partner in Michael Joseph Devel-opment in Wexford during the 1990’s, and relocated to theRaleigh area to found AdVenture Development earlier thisdecade. AdVenture is moving ahead with McCandlessCrossing, a million square foot mixed-use project alongMcKnight Road near Passavant Hospital and LaRoche Col-lege. He sees this market as a bright spot in his portfolio.

“We’re looking at other markets – Charlotte, Raleigh, east-ern North Carolina and Virginia – which are all pretty slowright now,” Dougherty says. “Thank goodness we’re working in Pittsburgh or we may not have anything goingright now.”



Like the larger economy, growth in Pittsburgh’s real estatemarket will depend on how the job market behaves overthe next six to twelve months. The most recent evidencesuggests that the national unemployment trend may bemoderating, which is great news for a region like West-ern PA, where unemployment has remained a couplepercent lower than the rest of the country. Pittsburgh’scurrent strong economy is built on a lot of jobs that theLabor Department didn’t know how to count in the firstplace, so it’s conceivable that the employment picture iseven better here than is being reported.

For private sector investment to escalate again to thelevel that government spending is approaching there willhave to be a rebound in development related to a per-ceived improvement in consumer spending. AdVenture’sproject, which will have as much as a half-million squarefeet of retail, along with the Settler’s Ridge project inRobinson Township, are advancing with the belief thatretail spending in Pittsburgh won’t soften significantlyfrom the current levels. No other large retail projects, likeSouthpointe Town Center or Newbury Market for exam-ple, are moving forward with any speed this year.

A rejuvenating stock market will also have a beneficialimpact on some of the strongest sectors of the re-gion’s construction industry, especially for hospitaland higher education projects. Diminished endow-ments have frozen capital expenses at the region’stwo biggest private construction spenders, Pitt andCarnegie Mellon. Reduced investment performancealso doused the capital plans of UPMC, which hasprojects ranging from a new tower at Mercy Hospitalto the Reidbord/Hillman Cancer Center to an $800million vaccination plant, in the hopper. Improve-ments in investment performance will re-energizethese kinds of projects, although the impact is likelyto be felt in 2010 rather than this year.

One sector of the regional market that is not uncer-tain is new housing construction. After falling morethan 20 percent in 2008, the volume of single-fam-ily detached housing is off even further in the firsthalf of 2009, declining almost 35 percent year-over-year. Total housing units are down 25 percent com-pared to last year. With low rates, and reasonableinventory levels, the explanation for the drastic dropis shrinking demand. With virtually no spec buildingoccurring, the low amount of new residential con-struction in the first part of the year is a direct re-flection of the deep economic concerns of evenWestern Pennsylvanians.

While it seems unlikely that the housing marketcould fall further in the second half of the year, es-pecially in light of the collapse in fourth quarter2008, the same could have been said at this time

last year. A reasonable forecast of single family con-struction for all of 2009 would be around 1,700 units,or less than half of the high water mark in 2003.

While the region’s economy seems to be much lessfragile than the national situation, a rebound in con-struction and real estate action in Western PA will de-pend on the perception of a continued recovery at thenational level, with signs that employment losses haveended later this year. Falling investment portfolio val-ues and slumping consumer sentiment will cool offplans for regional projects.

Assuming that the global economy, and particularly thefinancial markets, have at least stabilized, the secondhalf of 2009 will bring contracting more in line with thesecond quarter’s action. Another handful of $30 millionprojects are expected to get underway, and it’s likelythat one of the large industrial projects will move aheadthis year. With some increased institutional contractinglater in the year, volume could still eclipse the $3 billionlevel, and the spread of the projects may help easesome of the hyper competition that has marked the firsthalf of 2009. BG

SFD SFA TotalJan-June 2008 1151 641 1792

Jan-June 2009 750 580 1330

% Change (34.8%) (9.5%) (25.8%)

YEAR-OVER-YEARHOUSING STARTS

Allegheny, Beaver, Butler,Fayette, Washington, Westmoreland County

Building permits issued for single-family detached (SFD)& attached (SFA) units, actual issued in 2008 vs. esti-

mated 2009 permits. Source Tall Timber Group.


10 www.mbawpa.org

NATIONAL MARKET UPDATE

Getting a handle on how the national economy is going toeffect construction and real estate for the remainder of2009 has become less difficult since the second quarterplayed out. That doesn’t mean that forecasts (this one in-cluded) still won’t miss the mark, but the course of themacro economy finally seems to have some definition,which means the course of the construction market will bemore predictable hereafter.

May’s economic numbers offer the most recent total picturewe have to judge the health of the overall economy, butvirtually all indicators are that the worst results of the re-cession have occurred and that either stability or recoverywill mark the third quarter.

To highlight a few of the indicators that have turned posi-tive (or less negative), we can look first at the ConferenceBoard’s Leading Economic Index (LEI), a measurement often indicators (including building permits) which tend topredict future economic direction. The LEI turned sharplypositive after March, and is up 1.2 percent for the past sixmonths, the first such six-month climb in two years. An-other key positive trend is home sales, which have beenslightly positive for both new and existing homes since Jan-uary. While not a big upward move, the positive trend, ac-companied by low housing starts, is beginning to erodethe excess inventory of unsold houses. Further good newson housing was that the first two national builders to re-port quarterly earnings, KB Homes and Lennar, touted sig-nificant increases in orders in May.

The Commerce Department reported that durable-goodsorders rose 1.8% in May, contrary to analysts' expectationsfor a slight retreat. A gauge of capital spending in the re-port also jumped, and orders for non-defense capitalgoods excluding aircraft rose by 4.8%, after decreasing2.9% in April. It was the largest increase since 8.2% in September 2004.

Some early mid-year indicators are also showing more sta-bility, if not growth, in the business sector. The service sec-tors of the U.S. economy contracted at a slower pace inJune, the Institute for Supply Management reported July 6.The ISM nonmanufacturing index rose to 47.0% from44.0% in May. The decline was better than expected. Econ-omists were looking for the index to rise to 46.0%. AnthonyNieves, chair of the ISM services survey, said the report was"encouraging." The business activity index rose to 49.8%in June from 42.4% in the previous month. New orders roseto 48.6% from 44.4%. The employment index rose to43.4% from 39.0%. Inflation pressures picked up. The priceindex rose to 53.7% from 46.9% in the previous month.

For consumers, there is a mixed bag of indicators that ef-fect construction. The best news is that the pace of unem-ployment seems to have slowed significantly. The numberof initial claims dropped by several hundred thousand inMay. Continued slowing in layoffs would back up the LEI’strend showing recovery. Perhaps the firming employmentpicture is borne out in the reversal of the decline in con-sumer spending since January, however the level of spend-ing is still below $10 billion monthly, and well below thespending levels of 2007.

The most difficult indicator to use as a gauge is the savingsrate. On the good news side of the ledger is that personalsavings has spiked in the last three quarters, currently ataround seven percent. This reversal in trend was needed toprovide consumers the opportunity to reduce their debtburden, so that a healthier economy could return. The badnews is that personal savings has spiked in the last threequarters, meaning that consumers are paying off past pur-chases instead of making new ones. And that is not goodfor the nation’s retailers.

One of the bellwethers of future construction is retail. Sec-ond to increased housing starts, it is always a good indica-tor when retail chains begin to grow their capitalexpenditures in anticipation of a recovery, much like thestock market anticipates recovery. The size of the invest-ment in a new store represents a sufficient risk on the partof the retailer that they tend to research the market condi-tions thoroughly, and consequently, increased retail capitalspending always predicts increased construction spendingin general.

The current retail climate is improving, at least in terms ofearnings, but that is a result of reduced costs rather thanbetter sales.

“We’re looking at difficult conditions until at least springof 2010,” says Brooks Brothers president Diane Hamilton.“I think we’ll see things begin to eke out small increases,maybe one or two percent, in comparable stores salesthroughout 2010, but beyond that it’s hard to see muchmore than three or four percent growth. Most retailers aredown 25% from last year, so it will take a while to recoverat three to four percent.”

Construction of retail space began to tail off more than ayear ago, and as is cyclically normal, activity in other non-residential sectors is now following a downward trend.

The latest data from the two national construction services,Reed Construction Data and McGraw-Hill Construction,show upbeat May numbers in counterbalance to pretty dis-mal year-to-date performance. For the first five monthsReed shows a decline in total nonresidential starts of 6.1%,and while May was up from April, the volume in May was20% lower than May 2008.



“The May starts increasepartly offsets an unusuallyweak April but does not sig-nal that starts have moved toa rising trend,” says Reedchief economist JimHaughey. “Expect a mix ofmonthly gains and losses forthe balance of the year, withthe average level of startsnot significantly differentfrom May.” Haughey notedthat credit problems will con-tinue to plague commercialcontracting and that statedeficits will dampen publicworks construction that is notsupported by the stimulus.

McGraw-Hill’s data showed ajump in starts of 7% in May,but an even more severe de-cline year-to-date, with 38%lower start volume than thefirst five months of 2008.

“May’s strengthening was lead by a substantial increase forpublic works,” stated Robert A. Murray, vice president ofeconomic affairs for McGraw-Hill Construction. “Mean-while housing stayed flat and nonresidential building re-sumed its downward trend after the brief upturn reportedin April. For nonresidential building, there’s been the oc-casional display of resilience by such institutional structuretypes as healthcare facilities and public buildings, but thedownward trend for the commercial structure types is stillvery much underway.”

Both firms reported gains in non-building construction inthe range of 1-2%. While that is almost negligible in termsof all construction spending, it’s worth noting that the non-building sector would likely be down between two and tenpercent without the American Recovery and ReinvestmentAct (ARRA), since almost all state and municipal owners arelooking to fill budget deficits with lower spending on allfronts. More noteworthy is that the stimulus related spend-ing is entering the marketplace much quicker than antici-pated, meaning that the salutary effects that are expectedon employment will be felt sooner than expected.

One other impact that ARRA is having sooner than washoped for is in stabilizing a troubled sector of the financialmarkets that has made public construction difficult since fall,the municipal bond market. As the markets melted in fall2008, so few bidders existed for municipal bonds that yieldsskyrocketed, making public construction less affordable.

Part of ARRA, the Build America Bonds program offers a35% rebate from the Federal government to issuers ontheir interest payments. The rebate is meant to bridge the

gap between the lower rates that could be offered tax free,and the higher taxable rate that would be attractive to investors. This means that public authorities can offerhigher rates on their debt than they typically would be ableto afford, and so take their offerings into the taxable bond market.

For taxable bond investors, the attraction is diversificationas municipal bonds, which offer relatively low risk, are anarea that they rarely have exposure to.

The figures show how Build America Bonds are having thedesired impact. Through the end of May, the number ofnew issues in the tax-free market has dropped 17% com-pared to the year-ago period, according to The BondBuyer. In the same period, the number of taxable issueshas risen 32%. The numbers are even more dramatic forMay alone, as the Build America Bonds program reallystarted to take effect. Compared to May 2008, tax-free is-sues fell 40% while taxable issues were up 56%.

The growth in bond-funded public construction will helpwith schools, parks and public transportation, while thenon-building construction market will be aided directly byinfusions from ARRA, in some states (like PA) increasing in-vestment in infrastructure by 100% year over year. For theremainder of the construction industry, however, the restof 2009 will likely be a period of further soft conditionswhile demand is rebuilt and oversupply is absorbed. BG

The Department of Commerce amended its first quarter loss in gross domestic prod-uct, validating that a recession had created two consecutive quarters of decline.


WHAT’S IT COST?The conflicting forces of rising commodity prices and de-clining demand are pushing and pulling the prices of se-lected basic construction materials and building products atmid-year, but the overall cost of construction remains rela-tively unchanged over the past six month period.

As the second quarter produced the first signs of economichope in a while, and sparked a rally in the stock market,prices of energy commodities began to rise along with thehope that demand would begin to grow. From the low pointof $34 per barrel in late February, the price of West Texas in-termediate crude rose to $72 per barrel by mid-June, be-fore falling a few dollars as June ended. Likewise, the cost ofhighway diesel rose from a March low of $2.02 per gallon to$2.50 per gallon during the same period. While the rise wassignificant, both higher levels were roughly half that of theirmid-2008 peaks.

The culprit for the increased cost can be attributed to a de-gree to improving demand, but there again seems to be aninordinate amount of speculation, particularly in crude oil,that is driving the price higher than demand merits. Likesummer 2008, energy demand will be tested by the impactthe faltering economy might have on vacation spending.

Consumers responded to the steep prices in 2008 bykeeping off the highways in summer. There is ample anecdotal evidence to suggest that Americans are becoming inured to paying more than $2 per gallon at thepumps, but this summer the higher unemployment (or thefear of coming unemployment) seems to be having aneven bigger negative impact on summer travel. Rentalproperty vacancies are much higher in summer 2009, airline capacity has declined further, and if this is the summer trend the result should be another fall decline inoil and diesel.

In the meantime, the recent run-up is having an effect on transportation costs, lubricants and energy costs in manufacturing.

Prices for steel have risen, as increased energy costs, betterexport demand and growing domestic demand for bridgeand highway construction come up against dramatically reduced manufacturing capacity. As an industry, steel plantcapacity is hovering near 40%, a level that has resulted inshutdowns rather than cutbacks. So, while steel demand isup for construction, the severely depressed demand for automotive and consumer product steel means that steel

makers will not be expanding capacity, and upticks in construction demand will meanhigher prices.

Reports in the Data DIGest, a weekly update from AGC chief economist Ken Simonson, tell ofstructural steel shape bids varying between$2,200 and $3,200 per ton within the samemonth, and of 5% to 7% price increases in rebarand stainless steel.

Other materials that are being impacted byhigher energy costs or the increased demandfrom infrastructure projects recently are cement,asphalt (up 3.5%), and copper (up 1%). Some ofthe basic materials that have seen lower demandmostly due to repressed housing activity, continueto see price erosion in spite of the rise in oil anddiesel costs. Among these are plastics (down 1%),gypsum products (-2.4%) and lumber and plywood (-.9%).

Absent a strong change in the overall economictrend prices will remain in the same range as thefirst part of the year throughout the rest of 2009.Summer demand should hold diesel pricesabove $2.40 per gallon, and demand for dieseland related refined products like road oil and as-phalt paving should grow significantly as theARRA ‘bubble’ becomes a reality in the late thirdquarter. Planning around a Labor Day peak forthese and other infrastructure products would bea good idea.

12 www.mbawpa.org

MAY 2009 COMPARED TO —1 mo. 3 mo. 1 yr.

Consumer, Producer & Construction Prices

Consumer price index (CPI-U) 0.3 0.8 -1.3Producer price index (PPI) for finished goods 0.5 0.4 -5.0PPI for construction 0.6 -0.4 -5.3

Costs by Construction Types

Highway and street construction 2.1 0.9 -10.8Nonresidential buildings 0.6 -0.3 -5.9New warehouse construction -0.4 -0.8 5.7New school construction 0.0 0.4 11.5New office construction 0.3 -0.5 6.4Multi-unit residential 0.2 -0.7 -3.8Single-unit residential 0.1 -0.9 -1.0

Costs for Specific Construction Inputs

#2 diesel fuel 4.4 14.6 -58.1Asphalt paving mixtures and blocks 3.5 -1.5 11.7Concrete products -0.1 -1.3 2.1Brick and structural clay tile -0.6 -1.2 -0.5Plastic construction products -0.1 -0.5 1.7Gypsum products -2.4 -2.5 4.2Lumber and plywood -0.9 -3.4 -13.8Architectural coatings 0.0 0.1 12.4Steel mill products -2.7 -9.5 -33.8Copper and brass mill shapes 0.8 21.4 -25.1Aluminum mill shapes 1.4 -2.2 -23.7Fabricated structural metal -1.6 -3.6 -8.1Prefabricated metal buildings -0.7 -6.5 -7.1Crude petroleum (domestic production) 18.6 68.5 -55.1Cement 0.0 0.9 0.5Iron and steel scrap 18.8 -3.8 -62.0Copper ore 18.4 36.0 -43.0

Source Bureau of Labor Statistics.Compiled by Ken Simonson, Chief Economist AGC

PERC

ENTA

GE C

HANG

ES IN

COS

TS


Beyond the demand from stimulus driven construction, there arenot many places where building material and product demandshould grow.

In the Pittsburgh region, costs for construction have been at orslightly below the levels seen in the later months of the 2008 build-ing season. Labor costs have remained at or slightly above the lev-els in 2008, and the carryover from the large construction projectsshould ensure that these costs will not decline during the remain-ing months of 2009.

The table on the left shows the cost ranges for selected buildingtypes since the beginning of the year. Overall, costs are trendingslightly lower than in 2008. Generally speaking, private construc-tion seems to be running 5% lower, while public construction proj-ects have been 10% or more below similar unit prices from 2008,although that seems to be varying with the kind of project, and it’sa little too early to judge how those publicly bid contract amountswill hold up through the project. In competitive environments likewe are currently experiencing, privately funded work is usually ne-gotiated or bid to a limited group of contractors, and the prices atthe time of bidding hold up through closeout. Public projects willattract more bidders in tighter markets (like the first half of 2009),and historically, the bid day price tends to be augmented by morechange orders and claims than private work, where there is a senseof client that isn’t recognized in public projects. BG


BANK

HOSPITAL

AUTO SERVICE

LIBRARY

HIGH SCHOOL

HOTEL/MOTEL

POLICE/FIRE STATION

RETAIL OWNER OCCUPIED

OFFICE CORE & SHELL

INDUSTRIAL

FLEX OFFICE

RETAIL FIT OUT

PARKING GARAGE

INDUSTRIAL WAREHOUSE

RETAIL SHELL

COST/SF BUILDING TYPE

$400-450

$370-400

$350-375

$200-275

$160-200

$150-170

$140-160

$130-135

$90-105

$65-120

$48-55

$45-90

$45-50

$38-60

$30-48

Costranges

for selected

buildingtypes in

Western PA, based

on 2009 contracting.

Source TallTimber Group.


14 www.mbawpa.org

Where Technology


BreakingGround July/August 2009

Inthe parlance of economic development the wordtechnology is almost always used to mean hightechnology, meaning emerging technology that

can be turned into jobs. However trite the political lead-ers tend to make the concept of high technology as asource of new jobs, we in Western PA understand fully theproof of the concept.

As the world roils with the storm of the recession that tookroot last year, Western Pennsylvanians could be forgiven fornot fully understanding what the fuss is all about. For thepast year, our region has been noted as being a place thatis as resistant to recession as can be by countless businessand academic groups. The recognition is deserved and thereason underlying the good economic fortune is the full flow-ering of the strategy to focus on technology as the driver ofour economy after the exodus of the steel industry.

Western PA’s economy is now built on the success of com-panies who have made breakthroughs in information,medical technology, life sciences, and communications.Some of these were startups that blew up during the techbubble only to fall back to smaller success stories (see ForeSystems/Marconi), or rode the telecommunications bubbleup and down (see Stargate), but the long-term successstories, like Medrad or McKesson, have had less spectac-ular, steady growth stories. Many of the region’s most im-pressive businesses didn’t exist when steel was king.Names like Respironics, Precision Therapeutics, VoCollect,or even UPMC, were not on the regional radar yet.

“We’re thinking of technology as all we do now,” saysPittsburgh Technology Council president Audrey Russo.“It’s almost that apparent. Jobs in service sectors or man-ufacturing that aren’t based on technology are all going togo away.”

With the global economy trying to recover, progress willbe measured in jobs as much as anything else. For the realestate and construction industry, the success of technol-ogy as an economic base means more space, and moreconstruction. In fact, a look at the driving forces behindthe boom in construction over the past few years revealsa parallel in construction to the leadership in technologyAudrey Russo describes:

“The pillars of our economy have been life sciences, med-ical technology, IT resources, energy, server management,nanotechnology and the beginning of gaming technology,with Disney and Pixar coming in for the EntertainmentTechnology Center.”is Taking Us

15


The roster of big projects during the past few years in-cludes many of the names above. Children’s Hospital,UPMC Monroeville, Medrad, Respironics, Consol Energy,Allegheny Energy, and Westinghouse Nuclear are a few ex-amples of how emerging technologies have created con-struction opportunities for even established companies.

The Westinghouse project, while not the largest con-struction contract, could end up having the biggest im-pact on the industry of any of these jobs. Although theoriginal plan for the Cranberry Woods campus was notsmall, totaling 845,000 square feet, the continued growthof the company has already resulted in leaseholdsthroughout the Cranberry/Marshall Township neighbor-hood of more than 200,000 square feet. And the companyhas had discussions of long-term needs of almost anothermillion square feet.

Beyond the sheer impact in new office construction, West-inghouse’s relocation to Cranberry had kept housing mar-kets in the North Hills unusually healthy, and should sparknew residential construction once the operations begin inearnest starting this summer. The move also spurredovernight interest in the office and industrial space in theimmediate area. Space was already tight in Cranberry, andthe clamped down credit markets have helped keep it thatway for now, but the impending move has motivated sev-eral regional developers to move forward with plans fornew construction in the area. While no specific plans havebeen revealed, Elmhurst Group, Crossgates and evenBuncher Company have been looking for space to de-velop new office or industrial space to the south or northof Cranberry Woods.

To the south and east of the city, new energy technologyhas been the source of a mini construction boom for nat-ural gas exploration. After a brief respite, interest in theMarcellus Shale formation has piqued again, and con-struction of new facilities for distribution and separationare expected in Washington County. The size of the gasdeposits in the region has developed a related opportu-nity for new technology that can create even more naturalgas jobs. Sequestration and storage of the gas in shallowunderground geological formations is a coming problemthat will need a solution that Western Pennsylvania busi-ness can develop.

In information technology, Audrey Russo sees a couple ofpressing needs that demand solutions.

“I think the next big thing for [the Internet] will be aggre-gation and application of information,” she says. “Theavailable information is like one big hose coming at uswhen we need a drink. Google is a great example of abusiness started to help with access to information. Therealso seems to be a huge movement in research and de-velopment, and commercialization of computerization forbuilding automation and building systems controls. Thereis a lot in development right here with Eaton Corp.”

A big part of the back-story of the region’s economicstrength has been the proliferation of small to mediumsized businesses that have been built around small but sig-nificant technology advances. These businesses are verydifficult for the Department of Commerce to identify, letalone track, but they have been the backbone of the suc-cesses of outlying regional agencies like the Westmore-land County Industrial Development Corp. or Fay-PennEconomic Development Corp. in Fayette County.

On June 12, the Urban Redevelopment Authority ap-proved the formation and funding of a source of supportcapital to make it easier for more small concerns to con-tinue to grow the technology foundation. The URA-ad-ministered Pittsburgh Entrepreneur Fund will be arevolving loan fund for start up and growing businessesincluding emerging technology based firms, such as in-formation technology, life sciences and green/energy andother start-up enterprises. It will provide low interest loansfor working capital, equipment purchase, and real estate,as well as couple clients with a technical assistance consultant to provide guidance and expertise during theinitial loan term.

FEATURES T O R Y

THE AVAILABLE INFORMATION

IS LIKE ONE BIG HOSE COMING AT US WHEN

WE NEED A DRINK.

16 www.mbawpa.org


“The high-tech and clean energy businesses that are driv-ing our city’s growth is part of the reason why PresidentObama chose Pittsburgh as the site for one of the world’smost important economic conferences,” Mayor LukeRavenstahl said. “Last year, 36 high-tech start ups receivedgrants through the Greater Oakland and Pittsburgh Cen-tral Keystone Innovation Zones. This new loan programwill build off existing momentum, and allow for our city tocontinue to be the model for other communities who arestruggling with economic hardship.”

Loans will be made available up to $200,000, not to ex-ceed 60 percent of the total project cost. Private share ofproject may include venture capital, stock purchases, in-vestor equity, intellectual property and/or private debt. In-terest rates will vary dependant upon loan risk.

“An often critical financing need for emerging technologycompanies is at the nexus between commercialization andfast growth where the company needs to finance thingslike a new sales force, and new contract fulfillment,” RobStephany, Executive Director, URA said. “The companiescoming out of the technology incubators are often at thiscrossroads, and seeking financing to move from formationand commercialization to growth and profitability.”

What’s Newfor Construction?

Two years after building information modeling (BIM)started to become part of the consciousness of the indus-try, the revolution is still in its infancy stages. The conceptbehind BIM was that design software would allow archi-tects to create three-dimensional information models asdesign and construction documents for their projects, witheach bit of information added to the model being retainedfor later use and updating all related aspects of the model.All information added becomes part of the model, and ul-timately the model and all its components become partof the contract.

Local architect Burt Hill was one of the firms that graspedthe opportunity BIM presented to both make its clientshappier and make its own business more profitable. ItsCEO, Peter Moriarity, committed the firm to doing all itsprojects in BIM by the end of the decade. In his words,BIM had the potential to be the biggest agent of changein two generations.

As the word of BIM began to circulate, showing up in mag-azines like this one, and as the subject of local associationseminars, it became clear that BIM wasn’t totally new tothe region. WTW architect Scott Womack had been usingBIM as far back as 2003. Carnegie Mellon’s Gates Centerfor Computing was designed traditionally by Atlanta ar-chitect Mack Scogin Merrill Elam, but at the constructionphase the project shifted to BIM with local architect EDGEStudio and contractor P. J. Dick Inc.

There is some similarity as to how BIM is slowly creepinginto the marketplace and how green building took hold.For those who got green, there was no reason not to useenergy efficient and sustainable design and constructionprincipals on every job. The mainstream of the industry,however, viewed green as a fad at worst, and a luxury atbest. It took almost a decade for the business case to become apparent, and for business culture to change andlook to green as something that added value rather than cost.

BIM’s acceptance will require a similar shift in culture, es-pecially since full implementation requires mutual trust be-tween parties who have been trained (and to a degree,educated) to mistrust other parties to a project. This issueof interoperability, the ability to share information acrossdissimilar software applications, has improved but thereare still a number of important design and project man-agement applications that will not interact with BIM.

What will shift the paradigm pretty quickly, of course, willbe when owners require projects to be delivered in BIMwithout exception, or when architects begin to do an

FEATURES T O R Y

Estimating tools allow forbetter quantity takeoffs fromconceptual design.Thisscreen is from a design/buildproposal using preconstruc-tion/estimating software On-Screen Takeoff. Imagecourtesy of P. J. Dick Inc.



18 www.mbawpa.org

in- depth study of their billable hours on BIM projects.Even in very efficient practices, the ability to update sched-ules, sections and details with the same piece of informa-tion (a change in door material or frame for example),without physically modifying any of those documents willproduce better margins.

As the pace of innovation of new construction estimatingor project management tools quickens, one comfortingthing that has happened to technology during the past

couple of years is that peripheral technology has caughtup with some of the things that were cutting edge twoyears ago.

Wireless devices were becoming prevalent and all therage just a few years back. As cool as they were, wirelessor handheld devices frequently operated only with othersof their kind. Sometimes this was a network issue andother times it was interoperability of devices, but regard-less of the reason, it wasn’t so cool to be the only personon a jobsite with a device that couldn’t communicate withthe office of the client or even your own home office.

“I think the best thing to happen in the past few years isthat all the toys seem to have caught up with each other,”laughs John R. Deklewa, vice president at John Deklewa& Sons. “Our field people have some nice toys and nowour servers and laptops and handhelds all work together.That’s a beautiful thing!”

Communications has become so reliable and trackable thata new paradigm has emerged with regards to transmittingdocuments of all sorts. Digital documents, whether originalor created from paper, are rapidly becoming the standard,so that email has become the current preferred means ofcommunicating, making obsolete one of the greatest in-novations of the past twenty years: the Fax machine.

FEATURES T O R Y

OUR FIELD PEOPLE HAVE

SOME NICE TOYS AND

NOW OUR SERVERS AND LAPTOPS

AND HANDHELDS ALL WORK

TOGETHER. THAT’S ABEAUTIFUL THING!



“One thing I’ve noticed in the past year or so is that Faxmachines are incrementally going away,” observed JeffThorla, chief estimator for P. J. Dick Inc. “When I startedworking in the late 1970’s no one had even heard of a Fax,and now we get most of our quotes and bids by email.”

Thorla related that more and more of P. J. Dick’s work wasdigital than hardcopy. “We don’t even keep hardcopy anymore. Everything is digital overlay,” he says. “We boughta product called On-Screen Takeoff that lets us quantifythe drawing on the monitor screen and keep run-

ning totals of the different materials in different areas.”On-Screen Takeoff saves the digital estimate as it devel-ops, leaving the color-coded marked up drawings fortransmitting to the owner or architect with the quantitiesand markups intact. Thorla explained that P. J. Dick’s teamuses it for design/build work, making their own limiteddrawing modifications, with related estimates, to commu-nicate back and forth with their design partners. “It’s likea poor man’s CAD.”

FEATURES T O R Y


20 www.mbawpa.org

John R. Deklewa tells of a low-tech application that hisestimators have found similarly useful. “For $300 wepicked up PDF-live, which takes documents that are pdffiles and makes them live,” he explained. The softwareallows a user to make virtually any digital document a.pdf file and make .pdf drawing files active. “The draw-ing lines are all alive as well. We can use our digital take-off tools and use PDF-live to email the estimate anddrawings to whoever we need to.”

Another technology that has been around for almost adecade that is still getting its footing is the project web-site. The majority of contractors and many architects andengineers have password-protected pages on their company websites for subcontractors or suppliers to getaccess to drawings, bidding documents or RFI responses.That familiarity with the medium has not translated into widespread acceptance of the shared project website yet.

Early in the decade some of the bigger constructionmanagement firms introduced project managementwebsites so that they could control document distribu-

tion, communicate progress meeting minutes, or evenhold meetings on line. Local engineer John Menitti de-veloped a web-based procurement service at that timeto act as a third party document control and biddingmanagement service, but the failure of reverse auctionservices to take hold in construction killed interest in hiswebsite as well.

Recently, Mascaro Construction used a project websiteduring the construction of the Medrad Disposables Man-ufacturing facility in Saxonburg. While the project wentwell, winning a number of national awards, and the web-site was considered a valuable tool for a successful proj-ect, the parties involved haven’t developed websites forother projects since.

The problem seems to be that developing the websitesis expensive, and the advancement of other productivitytools that can handle the function of a project website,lessens the benefits of the website.

The application isn’t without value, however, and itseems likely that the growth of collaborative processesfor delivering construction projects will lead to the useof the Internet for project websites as a regular tool foroptimizing the communication of project information toall parties as quickly as possible.

project websites

FEATURES T O R Y



As we reach the end of the first decade of the 21st centurythe use of new technology has become a salvation for a region whose economy had grown stale a generation ago.It’s often overlooked that the region became an economicpower in the first place because of the technological vi-sion of a handful of industrialists. It wasn’t that Carnegie orFrick made all their fortune on the backs of oppressedworkers; they also applied technologies that allowed themto make more steel cheaper than their competitors.

New technology is, in the end, simply theapplication of better techniques to getmore or better or faster from the existingbusiness structure. In the past couple ofdecades that has meant computers morethan anything else, but the next big thingcould come from anywhere, even con-struction or real estate.

“I imagine that ten years from now wewon’t even use the word ‘tech’ when wetalk about our economic progress. That isthe differentiator between Pittsburgh andother regions,” says Audrey Russo. “Wehave a sense that the world’s smartestpeople are working hard to solve theworld’s hardest problems right here.” BG

FEATURES T O R Y

I IMAGINE THAT TEN YEARS

FROM NOW WE WON’T EVEN

USE THE WORD ‘TECH’



Sometimes the most interesting technologycomes wrapped in a not-so-high-tech wrap-per. Such is the case with a $10 million ex-pansion the Butler Color Press completed inSummit Township, north of Butler, at the endof 2008. The project’s new construction is a

pretty straightforward industrial building, but the work in-side the plant’s main facility enabled the company to rampup their production while reducing their environmental im-pact, and created 25 new jobs to boot.

The project was conceived in 2007 when Butler Color Presshad the chance to evaluate a new press, the Goss C-700,which would allow them to add significant capacity to theiroperations while reducing their unit labor costs. The Gosspress is the product of a French-owned company, but thenew presses were being made in New Hampshire, and the engineering included technologies that made it a‘greener’ press.

Butler Color Press is owned by the Wise family, which alsopublishes the Butler Eagle, the county’s daily newspaper.As the project became more and more of a reality through-out that year, the Wise’s turned to a family-owned con-tractor that they had been dealing with for almost thirtyyears, Uhl Construction from Hampton Township.

“I guess we’ve done seven or eight projects for the Wisefamily, and we’d done the last addition at Butler Color’s ex-isting facility,” says Tim Hengelsberg, the principal at UhlConstruction who managed the project. “Butler Color ispretty typical of the kind of client we’re used to working

with on a design/build project. They came to us with anidea of what they needed and an estimate from their engineer, and then we were able to work to a budget from there”

Butler Color’s general manager Mike Lupi says the com-pany expected that from Uhl Construction. “We chosethem because we trust them to get things done the waywe want it,” he says. “They are always competitive withprice, and end up doing more than we expect. We justhave a great relationship with them.”

While the project requirements seemed straightforwardenough - add enough space to make room for a new press- the specifications for the press created circumstances thatdiffered from the last projects at the facility. To begin with,the press itself was massive, spanning 90 feet and weigh-ing 295,000 pounds, with the widest web printing surfacein the United States. Its heat recovery and pollution controlsystems required mechanical construction with a customsolution also. Once the 5,000 square foot addition was builtto accommodate paper storage and free up the plant floorspace, some of the press’s requirements began impactingthe planning and construction.

P R O J E C T P R O F I L E

The drying and pollutioncontrol systems of the pressallow for elimination of 95% of VOC’s and drastically reducenatural gas consumption.

COLOR PRESS

We chose them because we

trust them to get things

done the way we want it


24 www.mbawpa.org


Murray and Associates had been retained to determinethe impact of the new press on the existing structural floorslab. Their calculations showed that the weight couldcause some potential settling issues, but that the slabcould bear the additional load. At the eleventh hour, how-ever, when an engineer from Goss arrived to help with theinstallation, he discovered that they had not provided in-formation about the effect of the high speed drive shaft.The high speed and length of the shaft added vibrationand motion that would have compromised the floor inshort order. Making the situation even more ticklish wasthe fact that the end of 2008 was fast approaching, whichwas a deadline for Butler Color Press to take advantageof a tax credit.

“We brought in Conway Engineering to design afoundation, cut the floor out and poured about athree foot reinforced concrete foundation for thepress,” remembers Hengelsberg. “We used highearly concrete to make sure that the press wouldbe operational by the end of the year, and theproject actually completed December 15.”

The duration of the project wasn’t long but the en-tire process did span the beginning of the recession,and the financial panic of last fall. Butler Color’s de-cision to invest was based on the growth of their

printing of glossy inserts and mailers for retailers like GiantEagle and Macy’s. The wider web was the productivitydriver, allowing the company to print multiple books orhigher page counts with the same resources, a result that’shelpful when producing upwards of 35 million copies ofmaterial each month for Macy’s alone.

That’s not to say Butler Color Press was entirely comfort-able with how the economy cooperated. “Of course wewere a little nervous about the investment at the time butdecided to go ahead with it,” explains Lupi. “Buying thepress was for more productivity. It’s always about gettingmore pieces out of the equipment.” Lupi noted that theincreased productivity supported a strong part of theirbusiness, one that would allow them to ride out an economic slowdown better than competitors who hadmore debt.

Butler Color’s resolve wasn’t lost on Tim Hengelsberg.“For them to spend that kind of money during tough eco-nomic times is impressive.”

Beyond the 25 new jobs needed to handle the work ofthe new press, Butler Color Press also added technologyto do greener printing. The Goss press is a heat set op-eration, which involves a drying process, fired by naturalgas that extracts the solvents, and a pollution control stepwhich eliminates the volatile organic compounds (VOC)through incineration. In Butler Color’s installation, oncethe gas has heated the system sufficiently the heat in theexhaust is recovered to keep the process self-sustaining.And the pollution control system eliminates 95% of theVOC content.

“It wasn’t a green construction project but it provided agreen result,” says Hengelsberg.

For the Butler area the project was also a success. In ad-dition to making Butler Color more competitive in place,the expansion created 25 jobs to handle the new press’swork. Vernon Wise Jr., the founder of the Butler ColorPress and publisher of the Butler Eagle, stated “this in-vestment represents a commitment to Butler County and our employees that the Eagle Printing Company willcontinue to be a leader in the printing industry for years to come. BG

The new Goss press after installation at Butler Color’s existing plant.

Right Electric . . . . . . . . . . . . . . . . Electrical

Q-Dot Inc. . . . . . . . . . . . . . . . . . . . Mechanical

Overhead Door of Pittsburgh . . . Dock Doors

Varco Pruden Corp. . . . . . . . . . . Metal Building

SUBCONTRACTORS

P R O J E C T P R O F I L E



26 www.mbawpa.org


Case Technologies

Seven years ago Case Technologies founder Touf Hassoungot a glimpse of the future, and it was a jolting experience.As an Autodesk dealer charged with growing the Auto-CAD business, and succeeding for seven years, Hassounwas getting a demonstration of what would be his newestproduct, Building Information Modeling (BIM), when Au-todesk acquired BIM developer Revit. What he actuallysaw was that his business was coming to a crossroads.

“I had been focused on AutoCAD, helping our customersuse CAD to find solutions,” he remembers. “But when Isaw BIM I realized immediately that I was no longer inthe software business.”

Hassoun refers to the software side of his business as sell-ing boxes. Like many apostles of modeling, he is con-vinced that the software, the 3-D, the capabilities are themeans to an end; and he re-dedicated Case Technolo-gies’ mission to that of guiding their customers to mak-ing the business process changes needed to implementand successfully use BIM to grow their practices.

Touf Hassoun got into the architectural software businessin a circuitous manner, although his education was a bitmore direct in line with the profession. Hassoun was bornin Lebanon, and his father was a government official thereduring some of the country’s tumultuous years in the1970’s and 1980’s. Hassoun lived for a time in Greece, andreceived an unusual primary education in French monas-teries. When it was time to advance his education, Has-soun was accepted into a joint University ofPittsburgh/Carnegie Mellon program that gave him the

opportunity to get an under-graduate degree in engineer-ing from Carnegie Mellon, anda computer science degreefrom Pitt.

Case Technologies was startedin 1989 in Carnegie as a salespartner with Softdesk, a devel-oper of computer aided designand drafting application soft-ware. The company was ag-gressive and offered softwaresolutions to a broad spectrumof professionals. By 1996 CaseTechnologies had enjoyedenough success to be namedEmerging Technologies Entre-preneur of the Year by thePittsburgh Business Times.

Within a couple of years, as Softdesk was in the processof launching the commercial version of IntelliCAD in early1998, Autodesk acquired them. Case Technologies be-came a partner with Autodesk going forward, which gavethem access to the CAD software (including 3-D CAD),which was running on nearly 70% of the installed stations.Case capitalized on this market share leadership, grow-ing the number of firms it served and the number of in-stalled desktops steadily.

It was that demonstration of Revit’s BIM product, in 2002,that gave Case Technologies the impetus to take theirbusiness to another level.

“I could see pretty quickly that the value we were goingto bring to our customers was going to be in helpingthem use building information modeling to change theirbusiness approach,” Hassoun explains. “That didn’tmean selling boxes of software; it meant providing train-ing on how to change their business. There is really nocomparison to two-dimensional CAD because BIM isprocess-oriented.”

Mark Dietrick (left) with Case Technologies president Touf Hassoun

F I R M P R O F I L E


By 1996 Case Technologieshad enjoyed enough success to

be named Emerging Technologies Entrepreneur

of the Year


Case technologies began to focus its energies on pro-moting BIM. The successes resulted in sales of software,but the best results were coming from expanding theirtraining and consulting services. Case’s mix of businessbegan shifting from almost 100% software sales to a mixthat is 75% software and 25% consulting services. ToufHassoun envisions a future mix that is closer to 50/50.

“Providing training is a big advantage we have over ourcompetitors,” he says. “Just because someone is suc-cessful using CAD doesn’t mean they will be successfulusing BIM.” In fact, he says, some of the recent successeshave come from engagements to train architects and en-gineers who bought BIM from another sales company, onlyto see the investment flounder because of lack of use. “Wehave gained opportunities with firms who have tried toteach themselves BIM and were running into roadblocks.”

By 2005, the focus on solving customer business prob-lems was paying dividends. Case Technologies was con-sistently one of Autodesk’s top dealers, but in the fall ofthat year the company achieved “Dealer of the Quarter”nationally for its third quarter sales (the same quarter thecompany lost its offices to Hurricane Ivan). At year’s endCase was named Autodesk’s Channel Partner of the Year.

Another of Case Technologies competitive advantages

is that it has leadership that understands IT as well as itknows CAD systems. Case understands and can helpsolve infrastructure issues like hardware adequacy, stor-age capacity and networking that are issues because BIMis generally ahead of the hardware’s capability. What Has-soun felt Case missed was similar expertise in the designapplication problems that users faced.

Earlier this year Mark Dietrick, who was his company’s big-ger advocates at one of his bigger customers, Burt Hilljoined the company as Director of Services. Dietrick is anarchitect with twenty-five years of experience in the pro-fession, and was the chief information officer for 10 yearsand director of research for two years at Burt Hill. He wasalso one of the region’s earliest BIM proponents. Dietrickwas looking for an opportunity to influence a broader crosssection of the industry towards making BIM and integratedproject delivery (IPD) pervasive, and to help users optimizehow their businesses used BIM. Hassoun was convincedthat Dietrick’s commitment to business change was a keypiece to the puzzle that case was missing.

“BIM isn’t like training someone on CAD,” he insists.“You don’t teach a BIM customer how to draw a line, anda shape and then rotate it, and so on. I wanted someonewith us who could talk customers through the process ofreorienting their business.”

Mark Dietrick’s role is as much training and consulting, asit is business development. “My efforts are to help cus-tomers to expand BIM to its full use, doing visualization,energy modeling, performance analysis,” he explained.“Using BIM for performance-based design is one of themost compelling aspects of the process with the signifi-cant sustainability challenges facing the industry. Usingthe model early in design to analyze siting, orientationor building shape as well as fenestration permits the de-sign team to better capitalize on opportunities to en-hance environmental performance.”

A recent new customer to Case Technologies provides agood example of what Touf Hassoun visualized when hefirst saw BIM.

Ron Dellaria, Chief Compliance Officer at Astorino, hasbeen charged with implementing BIM into their organi-zation. Despite his original unfamiliarity with BIM tech-nology several years ago, Ron has become a majorindustry evangelist in a short period of time. He realizedalmost immediately that their BIM implementation wasmuch more about changing process than about the tech-nology. Having witnessed tight collaboration, teamworkand trust between integrated design and constructionteams enabled by computer modeling on several proj-ects in Italy dozens of years ago, Ron realizes that this isa much better project delivery model than the frag-mented model traditionally used in the US.

Having started Astorino’s BIM implementation and train-

28 www.mbawpa.org

F I R M P R O F I L E

Providing trainingis a big advantagewe have over ourcompetitors...Justbecause someoneis successful usingCAD doesn’t meanthey will be suc-

cessful using BIM.


ing using more standard methodologies, Ron turned toCase Technologies to assist with a more comprehensiveBIM implementation strategy that is more supportive of thecompanies larger industry process objectives such as sus-tainable design and integrating design and construction.

That kind of thinking gets Touf Hassoun excited about thefuture of Case Technologies as well. The company isadding software for infrastructure asset management,VUEWorks, and for facility management, Archibus, to itsofferings so that they can offer value to all parties in the lifecycle of a real estate asset. The additional products createdifferent kinds of prospects than in the past for Case Tech-nologies, and expand the scope of the project model fromconcept through operations.

The 2009 economic climate has Hassoun shaking his heada bit, but he knows that the vision he had of his businessin 2002 is becoming clearer. “People are not doing asmuch training right now because there is a cost associatedwith it, but that defies the logic of doing training whenbusiness is slow,” he says. “That will change as companiesget more work, and we like the idea of being there to helpthem solve business problems.” BG

COMPANY FACTS

Case Technologies Inc.

208 Pine Street

Carnegie, PA 15106

TEL 412-276-0500

FAX 412-276-0505

Touf Hassoun, President

Number of employees: 13

Offices in Carnegie

and Rockville, MD

Website: www.casetech.com

Email: [email protected]



Labor Law Reforms are ComingBy: William Bevan III

No person in the business community should take lightlythe current efforts in Congress to reform the NationalLabor Relations Act. A bill pending in both the Houseand Senate is the Employee Free Choice Act (“EFCA”)(H.R. 1409; S560). It is the same version of this legisla-tion that passed the House in 2007 but fell short in theSenate and would have died, in any event, from a threat-ened Presidential veto. All that has changed. There isa new political landscape in Washington. Organizedlabor’s supporters in Congress, members of the Demo-cratic Party, control both houses of Congress and the White House. The President has stated his strongsupport for EFCA, both during the campaign and afterhis inauguration. With the defection of PennsylvaniaSenator Arlen Specter to the Democratic Party, and the seating of Al Franken as the remaining senator from Minnesota, the Democrats could have a veto-proof Congress.

If passed in its current form, EFCA would enact the mostsweeping changes in labor law since the passage of theNational Labor Relations Act (“NLRA”) in 1935. It wouldamend the NLRA, the nation’s basic labor law, by: (1)permitting unions to obtain certification and bargainingrights through a mandated card check procedure, thuseliminating, as a practical matter, secret ballot electionsunder the Act; (2) imposing mandatory mediation and in-terest arbitration in first contract situations, after 90 daysof negotiations and 30 additional days of mediation, in-stead of letting free collective bargaining take its course;and (3) enacting a scheme of punitive remedies that pro-vide for triple back pay in discharge and discriminationcases and civil penalties of up to $20,000 for each viola-tion that occurs during a union’s organizational campaigndefined as the period from the commencement of theorganizing campaign until a first contract is reached be-tween the employer and the union. EFCA’s provisionsare a major change in federal labor laws because: (1)most bargaining relationships (approximately 90 percent)are now formed by the NLRB’s certification of secret bal-lot elections; (2) the NLRB supervises the process of col-lective bargaining but does not seek to impose the termsof the parties’ collective bargaining agreements; (3) theNLRA’s remedies are currently “remedial” and designedto make a party whole as the result of another party’s un-

fair labor practices; and (4) the procedures regarding firstcontracts will apply to all first contracts, regardless of thebasis of the union’s recognition.

Does having a veto-proof Congress insure that EFCA willpass in its present form? Odds are that it will not. Atleast four Democratic senators have publicly stated theirunhappiness with EFCA’s card check and mandatory in-terest arbitration features as currently drafted. This hasled to the introduction of alternative bills and discussionsboth inside and outside of Congress, in the hope thatsome bipartisan group can come up with a compromisepiece of legislation that Republicans could support.

Thus far, all of the proposed alternatives have involvedthe elimination of the mandatory card check provision ofEFCA which seems to be the one that has served as thebiggest lightning rod to rally support against EFCA. Withregard to mandatory interest arbitration, some alterna-tives to EFCA would retain it in the legislation and otherswould not. Since the current draft of EFCA is devoid ofhow such procedures are to be implemented, there hasbeen a suggestion that EFCA be revised to make anymandatory interest arbitration so-called “baseball” styleor final offer mediation. This particular addition mightmake this provision of EFCA somewhat more palatable tothe business community. It would certainly encourageharder and more candid bargaining by the parties.

30 www.mbawpa.org

Legal Perspective

If passed in its currentform, EFCA would enact

THE MOSTSWEEPING CHANGESin labor law since the passage

of the National Labor

Relations Act (“NLRA”) in 1935.



Most of the alternatives to EFCA would include strength-ened penalties and enforcement. Two proposals alsooffer something that labor has long sought but has notbeen able to obtain from either the Board or the courts:the right of equal access to employees. In one proposedpiece of legislation, if the employer is allowed to makecaptive audience presentations, the union would begiven equal time to address employees at the employer’sfacility. The same would be true of written distributionsof campaign literature by the employer. A group repre-senting a coalition of employers who embrace equal ac-cess in principle, but not card check or mandatoryinterest bargaining, would permit equal access but re-quire that all campaign presentations take place outsidethe workplace during nonworking hours at a neutral site.

It is hard to predict exactly where the debate on laborlaw reform will ultimately come out, but it is reasonableto believe that Congress will pass some form of reformsometime this year or next. This commentator believesthat mandatory card check will not be part of the finalbill, but some form of expedited NLRB hearing and elec-tion procedure will be part of the legislative framework.This idea is not new and was part of reform efforts in the1970’s. At this juncture, it is hard to predict whethermandatory interest will be part of the equation as well,but it clearly has a better chance than card check. Onecan only hope that those with extensive experience incollective bargaining can convince a majority in Congressthat this proposal will do more harm than good. With re-gard to remedies and enforcement, this commentatorbelieves there will be some form of enhanced remediesand/or penalties in any new legislation.

Finally, the business community should not lose sight ofthe fact that President Obama plans to restore the Boardto full strength. He has already announced the appoint-ments of two union-side labor lawyers whose nomina-tions will shortly be sent to Congress. There is littledoubt, at this point, that they will be confirmed. Therealso is little doubt that the Board’s decisions on substan-tive issues of labor law will shift back from the directionthey have taken under the Bush Board. Indeed, somecommentators have called on the Board to reform itselfand its approach to labor law. As a former colleague onAGC’s Labor and Employment Law Council was fond ofsaying, “We live in interesting times.”

Bill Bevan, a partner at Reed Smith LLP, has been prac-ticing labor law for 38 years and has been active in rep-resenting the construction industry in labor law and laborrelations issues. He recently served as Chairman of theAGC’s Labor and Employment Law Council and has pre-sented a number of symposium papers at the Council’sannual national construction labor law symposium.

BG


32 www.mbawpa.org

Looking for Green Shoots in the CMBS Market

The commercial debt market has been one of the collat-eral victims of the financial system breakdown that beganin the third quarter of 2008. Unlike the residential mort-gage-backed security market, commercial mortgage-backed securities (CMBS) were not dampened by amassive devaluation of the underlying assets as much asthe very simplest of supply and demand dynamics: noone wanted to buy them.

While the sub-prime mortgage crisis and global financialmeltdown have been reported ad nauseum, the roots ofthe freeze in secondary credit markets or non-mortgagedebt has been given less coverage. Ironically, the prob-lem infecting these markets has not been complicatedto explain. As uncertainty in one credit category spreadto fear of all markets, the bid for commercial debt (andmunicipal bonds or college loans for that matter) driedup. If you wanted to sell commercial debt by securitizingthe loans, the discounts you had to offer made them un-profitable to sell. Even after the global credit conditionseased somewhat after the first of the year, securitizationdid not move much towards normalcy.

“The chasm between bid and ask is still pretty wide,” ob-serves Dan Puntil of Grandbridge Real Estate Capital.“For lenders it should be a great time. Banks can get 400or 500 basis point spreads, plus 30 or 40 percent equity,but there’s no liquidity in the market.”

As 2009 unfolds, each month brings a bit more comfortthat the commercial mortgage market will not be the‘other shoe’ to drop on the financial markets, as hasbeen so direly predicted by the gloomier financialmedia. That’s not to say there isn’t the possibility of an-other sudden loss of confidence that could lead topanic, but there are several facts that support the argu-ment that a distressed commercial debt market won’tdegenerate further.

First and foremost among these is the difference in lever-age between the residential and commercial properties.Compounding the lost value in residential property is thefact that homeowners were allowed to borrow greaterthan 100 percent of the home’s appraised value. In theloosest of commercial markets, developers may have

been able to coax 90 percent loan-to-value out of ag-gressive lenders, leaving some equity cushion for declin-ing value or lost tenants.

Commercial underwriting standards were also more strin-gent than residential mortgages. Aggressive mortgagelenders encouraged or allowed the infamous ‘low doc’or ‘no doc’ applications, which gave borrowers the op-portunity to overstate income or home value. Commer-cial standards were more relaxed a few years ago, butdocumentation was never optional.

Another reality of the commercial real estate market isthat the properties, generally speaking, are owned byfirms that own other properties. Developers, like otherinvestors, diversify their portfolios so that a decline in onesector (like we’re experiencing in retail), can be sup-ported by better performing sectors. Also, the makeup ofmost commercial buildings is multi-tenant, so that rent isstill being paid on a portion, or majority, of the building,even if vacancies rise.

What all this adds up to is that declining business condi-tions make for decreased profits and cash flow in commercial properties, but not necessarily apocalypticloan defaults.

With the fall’s panic fading, and the cold hard facts dis-pelling concerns about rampant default, the conditionsshould be ripe for a return to CMBS and commercialpaper liquidity. But the “all clear” hasn’t sounded just yet.

“Unfortunately, there haven’t been any green shoots, oranything like a recovery going on in the CMBS market aswe see it,” says Matt Whitworth, partner at Meyer Un-kovic & Scott. “We represent a few lenders who used todo CMBS deals but all are retrenching right now. My un-derstanding is that no CMBS deals are being consideredright now.” Whitworth points out that the CMBS defaultshaven’t been anything like those in residential, but ex-pects no return of the market until at least 2010.

When the market returns it is likely to be tilted towardsthe distressed properties at first, a reality that will keepsecuritized commercial debt priced cheap. Currently,many savvy capital firms are amassing billions in cash asdry powder, to be used to buy discounted properties ordebt when investors feel the bottom is in.

Financial Perspective



“I think the CMBS market can only return when thelenders can unload the unsecuritized loans that they areholding,” says Puntil. “Those loans aren’t doing thelenders any good sitting there. I’ve begun to hear storiesof lenders calling borrowers and offering to sell the loansback at 70 cents or 50 cents on the dollar, just to get theirmoney back.”

Just because there is too much loan supply for demandright now doesn’t mean that the demand for commercialdebt isn’t building, or won’t return to similar levels as be-fore the end of 2007. But it’s likely to mean that the newmarket will have lower expectations built in.

Lenders need securitization, or some means of selling theirloans, to offload some of the long-term risk inherent incommercial real estate finance. They also benefit from thesale of the loans by regaining the leverage to loan againon the same asset once they have converted the loans intocash. Assuming that the lender collects fees and a spreadon the loans they originate, being able to originate a sec-ond loan on the same asset in the future increases theprofit margin of the asset. The more often a lender canturn assets, the higher the margin on the asset.

Investors benefit from purchasing loans by gaining thebenefit of the interest paid out over a longer term. Theappeal of commercial debt is that the perceived risk of de-fault on a commercial property is relatively low comparedto the return in normal markets. Packaging the loans intosecurities, which were given de facto guarantees by therating agencies who analyzed them and stamped the AAArating upon them, gave the perception of even lower riskthan normal. Of course, the markets have not been normalsince mid-2008 and no rating turned out to be as guaran-teed as it seemed.

If demand to sell and buy loans remains, and the lack ofliquidity is creating a pent-up demand imbalance, what iskeeping the market for commercial paper from returning?Oxford Development COO Steven Guy thinks it’s a matterof accepting new conditions, which is what is taking time.

“I think the hardest thing will be adjusting to the new rulesabout loan-to-value,” he explains. “I don’t know that evengreat cash stream will change the fact that equity contri-bution will be higher. The developers will have to adjust tonew standards, especially with bank financed debt. Theservicer just has very little latitude to maneuver.”

Guy believes that more equity will simply be a fact of lifefor a while. Without much upward rate potential, the in-vestor will have to adjust his return expectations. And Guybelieves investors will, eventually.

“I have confidence that the lenders will develop new financial products that include ways to package debt for sale,” he says. “When some form of repackagingcomes back in 12 months or whenever, you won’t seemuch change in leverage, but you will see an adjustmentin return.”

For developers and buyers of debt he sees a related adjustment as well. “It depends on how managers viewportfolios, but if they want high value properties as partof their portfolios, and they want to maintain the velocityof their development business, they will have to accept internal rates of returns in the high teens instead of thelow twenties.” BG


34 www.mbawpa.org

Integrated Project Delivery

Construction is one of those industries where thereseems to be a million different ways to skin the cat. As theinfluence of information and professional marketing hasgrown in the business, the proliferation of buzzwords hasgiven the impression that there is always an innovativenew way to skin the cat. As often as not, the buzzword isthe sizzle instead of the steak.

During the last decade, for example, a newcomer to thebusiness would have been forgiven for thinking that de-sign/build was the next big thing. Anyone familiar withthe work of the Navy Seabees can tell you that doing de-sign and construction at the same time (and on quite anaccelerated schedule) was how things got done inwartime more than 60 years ago. Even the pyramids weredone design/build.

Some of the recent breakthrough innovations, however,seem to have a little more substance to them.

Green building has proven its business case. Building In-formation Modeling (BIM) is one technology that clearlyhas staying power, and will likely change the industry for-ever. And integrated project delivery (IPD), which seemsto have grown out of BIM, is showing promise as a solu-tion to the dilemma of sharing information, responsibil-ity and risk fairly.

The problem is that the marketing types have co-optedthe phrase, and it is harder to tell whether what’s beingproposed is a formalized means of apportioning risk andreward between owner, architect and contractor (anupper case Integrated Project Delivery job) or a non-con-tractual way for various parties in a project to share in-formation and work together towards the common goalof project completion, customer delight, and worldpeace (a lower case integrated project delivery).

It’s really not fair to be so cynical about lower case ipd,especially if it encourages firms that would not normallywork collaboratively to do so. In fact, architectural andcontracting advocates of IPD often suggest the informalversion to help non-collaborators break down their ownbarriers to sharing information and establishing trust.

Before taking the comparisons any further, the workingdifference between the lower case ipd and an upper caseIPD job is in the contracts. Informal integrated projectdelivery can be done on any project, regardless of thecontracting, as long as there is a means for sharing in-formation and a spirit of collaboration in dealing with dis-putes. To truly cross the line into a formalized IPDrequires a contract that recognizes the separate respon-sibilities of all parties, apportions the risk and reward ofeach, and provides for management and resolution thatholds all parties harmless.

While IPD’s are not part and parcel to building in-formation modeling, there are similarities in theirguiding principals, and the rising use of BIMshould logically increase the number of formalizedIPD’s that are used to deliver BIM projects.

The underlying principal of Integrated Project De-livery is that sharing information and responsibilityfor a construction project provides cost savingsfrom efficiency, significant schedule compressionfrom non-redundancy, and lower (or no) cost over-runs from claims and disputes. In a ‘kumbaya’ sortof way, these concepts can be applied to any proj-ect that affords an opportunity for a contractor tobe involved while the architect designs the build-ing. With separate contracts between the ownerand contractor, and the owner and architect, how-ever, it’s practically impossible to not have turf todefend, even in the most collaborative of environ-ments. And most projects don’t exist in the mostcollaborative of environments.

Management Perspective

Contractual alignment for an integrated project delivery using separatecontracts aligned by general conditions. Source: William Quatman.



Implementing an IPD requires that each of theparties to the project participate according to theircapabilities, contributing value to the project fromconceptual thinking through the approval of shopdrawings. Without drawing an eighteen-monthdesign and construction critical path, you can ex-plain the flow of information in an IPD as havingthe owner’s needs for the project interpreted al-ternately by the designer and contractor (and theirteams), with each handling the areas within their expertise.

For example, the owner’s description of his busi-ness case and space needs is best interpreted byan architect’s programming, but even at that earlystage, the contractor’s market awareness or expe-rience with means and methods may shift the in-terpretation of the program to a lower buildingheight or alternate structure because of materialprices or availability. Such early exchanges canmanage the project’s budget or schedule long be-fore design development, without impacting thebasic design concept of the architect.

Likewise, an architect’s or engineer’s experience withbuilding systems can result in an keener understandingof life-cycle costs, for example, that would be persuasivein an early budget-cutting discussion. Saving an ownersignificant operating expenses is an architectural skill thatcould be lost in a ‘value engineering’ exercise after thebids are in.

Cynical readers can be forgiven for wondering what con-tractor is going to get away with changing the buildingduring design, or what architect could win a life-cycle costargument during a VE session. But the cynic would beoverlooking the foundation of the Integrated Project De-livery approach: trust.

Tri-Party Agreements

Even in an environment of trust it’s not a bad idea to putthings down on paper. For an IPD a non-traditional form ofagreement is needed to allow for documentation of theparticipants’ scope of work and how each role was to becompensated, how the project would be managed, andhow disputes would be settled. Most important, the con-tract has to create a model for collaborating while indem-nifying the other parties from damages.

As the trend toward collaboration developed in the mid-dle of the decade, a void was created in contract docu-mentation that would describe and protect all parties to anIPD. With an update not due from AIA 201 documentsuntil 2007, the Associated General Contractors of America(AGC) put together a consortium of industry representa-tives to create ConsensusDOCS, a standard contract thatwas endorsed by 22 disparate associations.

Within ConsensusDOCS is agreement 300, which is a tri-party agreement, designed to address the growth of BIMand other integrated project delivery systems. The tri-party agreement maintains the fundamental roles and re-sponsibilities of the individual firms while providing aframework for architects, owners, contractors and subs toshare information, risk and reward.

“The reason why [ConsensusDOCS 300] works is that italigns everyone’s interests in the project while letting theprofessionals retain their roles,” explains Brian Perlberg,senior counsel for AGC in Washington, DC. “The contrac-tor is still responsible for means, methods and techniques;the architect is still responsible for design.”

Article 3 of ConsensusDOCS 300 sets forth a four-pagelist of collaborative principles that define the intent of theparties to collaborate. The principles express that trust inthe parties is accepted, that sub-consultants and tradesubs should be brought into the process during design.The parties’ responsibilities are detailed and the alloca-tion of risk is spelled out with limits of liability. The con-tract calls for a management group with equalrepresentation from the parties to make decisions; and,specifies that the management group decisions will besafe harbor decisions, and waives consequential dam-ages mutually.

The AIA’s version of the tri-party agreement is the SinglePurpose Entity (SPE) model. In an SPE the various partiescreate a limited liability corporation unique to that proj-ect. The same principals are applied as the Consensus-DOC 300, but the SPE may have problems with theenforceability of its provisions because the legal entity is

Contractual alignment for an integrated project delivery usingSingle Project Entity agreement. Source: William Quatman.


36 www.mbawpa.org

the LLC, not the individual professionals. This creates ob-stacles in areas of licensure, indemnification and insurancethat some professionals consider insurmountable.

Bill Quatman, a vice president of Burns & McDonnell En-gineering in Kansas City and an attorney, was involved intrying to modify the SPE contracts that were part of theAIA 2007 update. At the 2009 AIA national convention inSan Francisco, Quatman presented several of his concernsduring an educational session.

His main points were that an LLC set up as the AIA docu-ments provided would be in violation of many state li-censing requirements for architecture and contractingsince those state’s require a licensed professional assumeliability for performance. Quatman also asserted that thesingle purpose entity made self-indemnification unen-forceable, and as a practical matter, uninsurable as in-tended. And, at the conclusion of the job, the LLC wouldhave no assets from which to deal with any of the issues,since its sole purpose is to plan, design, construct andcommission the project. Unless the owner over-funds theproject, the SPE will have no cash at the end (the com-pleted project is not owned by the SPE).

The AIA documents are a radical approach to the ques-tion of establishing a standard contract for IntegratedProject Delivery. Its solution puts the parties outside theirareas of expertise and comfort. The push back that theSPE is getting from architects could be because the con-tract puts the designer beyond his cultural norms, whichdon’t include pricing risk into providing traditional archi-tectural services.

Local attorney James Bauerle, of Keevican Weiss Bauerle& Hirsch, has drawn up IPD agreements and feels con-ceptual contract planning is the key to making good ones.

“The essence is to be as clear as possible about the con-tributions of each party, the deliverables, what’s due andwhen,” Bauerle explains. “That sounds obvious but it’ssine qua non for these agreements. Then you have to havesome mechanism for adjusting as the project proceedsand the conditions change.” BG



Professional Mechanical Sales and Services Inc.

Stanley Loper considers his limited experience in the con-struction industry to be one of his biggest assets as ownerof Professional Mechanical Sales and Services. After 25years with chemical manufacturer Bayer, Loper took theopportunity to purchase a majority interest in Pro Mech in2002. He didn’t believe it would hinder him to have grownup outside the mechanical trades.

“I thought it was just as important to have good businesssense,” he says. “It has been just as important to be agood listener and to manage people well.”

Pro Mech has grown from $2 million to $8 million over thepast seven years, and is involved with some of the biggestprojects - the Rivers Casino and the Consol Arena – andsome of the more recognizable businesses – UPMC, Eat ‘nPark, Rite Aid, Allegheny Ludlum – in the region. Theirbusiness is split fairly equally between new constructionand service, subcontracting and prime contracting. ProMech focuses on hydronic systems, refrigeration, and spe-cialty HVAC (like Liebert systems) as well as mainstreamheating and air-conditioning. The breadth of the businessis a result of Loper’s experience with Bayer.

“The diversity of Bayer’s lines taught me not to have toomany apples in one basket,” he says. “You have to dosomething that can add value to your customer to makethem choose you instead of a competitor. One of those isworking as a sub to the large subcontractors. It helps usspread the work.” Pro Mech is working as a sub toRuthrauff Sauer on the casino, and as a joint venture part-ner with McKamish on the arena.

Loper knew that Pro Mech’s MBE status would help themget opportunities but found that to be a double-edgedsword. “The toughest thing was selling our capabilities,getting them to look at us as a capable HVAC contractor,not a capable MBE,” he says. He believed that provingPro Mech was capable meant building a crew of mechan-ics in the field that would perform.

“I want to say that Ken Broadbent was very helpful in get-ting people that would help us grow,” Loper says. “Local#449 made a big difference for us.”

The company has swollen its workforce somewhat tomatch the needs of the large projects, with 36 in the fieldand 14 employees in the office. The office staff has ex-panded in recent years to help continue the growth. ProMech has a sales manager and added an estimator with in-stitutional experience this year to respond to proposal re-quests from Pitt and Carnegie Mellon that they hadn’t inpast years. The company has begun to work with energyconservation contractors on state funded projects, workingwith Honeywell at Northview Heights and TAC doing PennDOT projects.

Stan Loper believes working on the casino and arena proj-ects will help Pro Mech break through barriers to the nextlevel of growth. “We’ve still had to fight the perceptionthat we can’t do the big jobs,” he noted. “Those projectshelp prove that we’re technically sound. We don’t expectto just get work. What we want are opportunities; we cantake it from there.” BG

MBE/WBE Company Spotlight

COMPANY FACTSProfessional MechanicalSales and Services Inc.110 Cheswick AvenueCheswick, Pa. 15024Phone 724-274-4048

Fax 724-274-5921www.promechpgh.com

Professional Mechanical Sales president Stanley J. Loper


What’s Keeping Tilt-Up fromCatching on Here?

By Jon O’Brien

According to the Tilt-Up Concrete Association, the use oftilt-up is growing rapidly and its share of the constructionmarket is expanding, as its advantages are becomingknown. If that is true, you would have a hard time prov-ing that in the Greater Pittsburgh region. In a region sorenowned for its steel history, promoting the use of con-crete as the major material for a building’s shell can be atough sell.

“I really like tilt-up, but I’ve noticed it’s not really appreci-ated here,” said Drew Johnston, P.E., Program DirectorGlobal Facilities, MEDRAD. “I remember when I movedhere I mentioned tilt-up at a pre-job meeting, then after re-ceiving some unfriendly stares, I got off of that idea.”

CB Richard Ellis Vice President Chad Brinkley gained ex-perience working for Lucardi Construction in Californiaduring the late 1990’s. He was hired after graduating fromPenn State’s architectural engineering program. He de-cided to research the construction technique that his newemployer commonly employed.

“I went to the architectural school library after I was hiredto look up tilt-up,” Brinkley laughed. “There was onlyone book from the 1950’s on the subject. I remember ithad an appendix about how tilt-up would withstand anuclear blast.”

Tilt-up construction received its name as a way to describeits technique: formed concrete walls are cast horizontallyand then are lifted and set to form the building shell.While the name tilt-up was coined during the 1940’s, thisbuilding method dates back thousands of years ago to theRoman Empire, and, for a visual of the process, think of anAmish barn raising. For many the genesis of tilt-up wasafter World War II when concrete was reinforced with rebarand the mobile crane entered the scene.

Tilt-up is a construction technique used for commercialconstruction structures such as schools, office buildings,churches, retail centers, and manufacturing centers. Tilt-up projects range in size from four thousand square feet toover a million square feet. These are single and multi-storybuildings, going as high as four stories. Tilt-up concretewall panels average 6 to 8 inches thick and can range inweight up to 339,000 pounds, which is the heaviest knownpanel lifted. Locally, the heaviest panel discovered for thisstory was close to 100,000 pounds.

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Trend to Watch� � � � � �


“Tilt-up is not the perfect option for every building, but fora low-rise building with enough space to cast the panels,it’s a great option. In commercial construction, tilt-up com-bines the best of both worlds – traditional and pre-engi-neered buildings. It’s not as expensive as traditional,stick-frame on slab construction, and the end product ismore durable than the tin-can pre-engineered buildings,”said Joseph Burchick, President, Burchick Construction Co.,and the only contractor member of the Tilt-Up Concrete As-sociation in Western Pennsylvania. “Lifting day is a beauti-ful thing to see on a tilt-up job. In a few days, a brand newbuilding shell can be erected.”

PLANNING FOR TILT-UP

The tilt-up route for a building must be decided at an earlystage when designs are being developed. It is important toget the structural engineer in the loop early to provide inputon the design of the foundation, wall engineering and otherload-bearing analysis to understand what areas of the de-sign need attention. The structural engineer’s evaluation ofthe soil can assist the team in understanding floor and foun-dation details, and depending on the soil report, measurescan be taken that could impact the schedule.

Pre-construction and design will also go smoother if thecontractor is brought into the process early. Because of theamount of jobsite planning involved in tilt-up, it’s a naturalfor design/build delivery. Whether a design/build or tradi-tional delivery system is used, having both the structural en-gineer and the builder on board can make a tilt-up projectgo smoother, and constructability issues are addressed asthe design is developed.

Perhaps more than most construction projects, pre-con-struction planning is crucial to the success of a tilt-up proj-ect. Tilt-up projects require an organized, front-endplanning approach. Something as unrelated as jobsitetrailer location could result in lost time if workers have tostop to take down the trailer and relocate it on the site (tobe out of the way where the wall panels are created). Co-ordination and management are required to fully take ad-vantage of the benefits of tilt-up. The tilt-up panels can beformed quickly then lifted into position around the build-ing's slab. This means the tilt-up structure's exterior wall isvirtually finished when it is tilted into place. It sounds easy,and it can appear easy if an experienced, well-organizedteam approach is taken.

It may seem a bit simple, but planning is also important be-cause the horizontal pour is done into a form that is a re-flected version of the exterior elevation. Recesses becomerelief features once erected, and any imperfection in theforming appears, big as life, on the building’s exterior.

THE PROCESS

For a typical tilt-up building, the concrete slab is poured firstto create the floor. The floor slab is unexposed during the

construction phase so it has to be high quality finish. Thefloor slab, in most instances, will be where the tilt-up wallpanels will be created. After the floor has cured, the nextstep is to create the wall panels. For the walls, the first stepis to draw lines on the concrete floor slab where the con-crete panels will be formed and poured. These lines will in-clude door and window openings. After the lines havebeen drawn, workers build the tilt-up panel forms out ofwood connected to the braces. The tilt-up concrete panelsmust be sized and positioned in precisely the right dimen-sions and location. Rebar is then placed in the completedconcrete panel forms to ensure the strength of the tilt-upwalls, making the panels safer to lift into a standing posi-tion and more durable once in place. Also, prior to the con-crete pour, embeds and inserts are added to the panels foraesthetics. Early tilt-up projects were ‘boxy’ and unappeal-ing; tilt-up today includes many finish options, from paintsand stains to pigmented concrete, cast-in features like brickand stone to erosion finishes like sandblasting and acid-etching.

“Architecturally, there is potential for a good finished look,adding unique openings and embedding items to createan attractive building,” said Gary Carlough, President,EDGE Studio. Tilt-up panel shapes have also evolved overtime to become aesthetically pleasing with circular or ellip-tical openings. With the wood forms securely constructedand the rebar and embeds in place, the tilt-up concretepanels are ready to be poured with concrete.

The wall panels are created very similar to the way floor slabsare poured. The process for building the forms and pouringthe concrete tilt-up panels goes quickly. An experiencedcrew can take a large project from bare slab to completedtilt-up panels in a matter of two weeks. Once the concretehas cured, workers remove the wood forms and brackets toleave the tilt-up panels lined up on the floor slab.


Architectural elements and traditional finishes like brickcan be embedded in the panels during the horizontalpour (mockup photo courtesy of Burchick Construction).


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THE LIFT

“In the late 1990’s, I was visiting a jobsite in Boca Raton,Florida, and just across the street from my hotel was anotherjobsite where I saw something going on that I wanted tolearn about. What I saw was tilt-up, lifting wall panels intoplace,” said Andy Gildersleeve, Director of Development &Construction, The Elmhurst Group. “That day left an im-pression on me and I returned home set on learning moreabout tilt-up so I could use it on my projects.”

Lifting day is a memorable experience. The tilt-up panelscan be massive, typically weighing between 40,000 to60,000 pounds in this region. The mobile crane lifts the tilt-up panel and tilts it into position over the footing. Workershelp to guide the tilt-up panel and keep the braces fromgetting tangled in the lines. After the concrete panel is setin place, the crew attaches the braces to the slab to keep thepanel standing until it is attached to the other tilt-up panelsand the roofing system. The connections to the floor androofing systems are usually steel plates with headed studsthat were secured into the panels prior to the concretepours. The roofing attachment points are made to the rooftrusses. An experienced crew can tilt-up as many as 30 con-crete panels a day. After the building shell is erected, thespecialty trades begin their interiors work inside to com-plete the project.

WHY NOT HERE?

“I guess the tilt-up process has never taken off locally be-cause there are not enough local contractors comfortableenough and capable enough to pour and cast concrete withtheir own workforce to make it a lucrative business practice.We did a project that was a single-story building; and it wentsmoothly, completed on a fast schedule. But had it been amultiple story building we would have realized a muchgreater savings to the project,” observed Gary Carlough.

“People just don’t know about tilt-up and the benefits. Theeducation in the architectural community is geared towardsbuilding with steel, not concrete,” says Andy Gildersleeve.“Plus many myths exist, like tilt-up is only for warm weatherregions. Well that myth was bunked on my first projectwhen Michael Baker Airside 100 was constructed with thebulk of the work completed in the dead of winter of 2002.Some of the biggest tilt-up contractors in the WesternHemisphere are located in Canada.”

Gildersleeve’s employer, Elmhurst, has been one of thefew developers to regularly use tilt-up construction, withseveral tilt-up buildings in both its Airside and McLarenWoods parks.

CBRE’s Brinkley is among those who would like to see moredevelopers take a chance on tilt-up. “Contractors shouldlike it because they can control the schedule and really drivethe project,” he said. “But owners ought to be the onespushing it. The residual value of a tilt-up building blows thedoors off a metal building.”

Jon O’Brien is Director of Communications for the MasterBuilders’ Association of Western PA. He can reached at 412-922-3912 or [email protected].

BG


Best Practice� � � � � �

Lean Comes to ConstructionBy Suzanne Elliott

When the economy pulls itself out of the current reces-sion, it’s quite possible a new trend will emerge in com-mercial construction – lean construction, an industrybuzzword that first appeared in the late 1980s. Like greenconstruction, lean construction’s roots are in the manu-facturing industry and involves rethinking a project fromthe client’s perspective and his needs.

To understand why lean construction may become an im-portant trend in commercial building, you have to stepback to move forward. The roots of the lean concept were

developed by the Japanese to identify and eliminatewaste in manufacturing, particularly in the automobile in-dustry. The concept of lean says any expenditure – otherthan what is needed for the project – is considered wasteand needs to be eliminated.

So now you’re wondering how the lean concept can beused in construction? The first step is an attitude adjust-ment by the construction industry. Contractors need todefine the project from the client’s viewpoint. This refo-cusing is different from responding to what the clientwants in bricks and mortar and what they say they want ona blueprint. In other words, the contractor has to assumethe role of advisor and a blunt one at that.

One of the reasons – according to lean construction ra-tionale – that profits are down in commercial building isbecause too often the contractor tends to focus on thebricks and mortar instead of understanding what the clientreally wants. Contractors need to build relationships withtheir clients to help them find the best possible solution,according to lean construction principles. This doesn’tmean taking the client to a ballgame or dinner. What thismeans is establishing a dialogue with the client.

LEAN ROOTS

Toyota engineers shifted attention away from the mass au-tomobile production lines and instead focused on craftproduction. Toyota’s rationale behind this strategy was tobuild a car that a customer ordered, deliver it instantly,thereby building no inventory and eliminating the needfor intermediate stores.

“Waste is defined by the performance criteria for the production system,” according to information from theLean Construction Institute, a suburban Washington, D.C.think tank. “Failure to meet the unique requirements of aclient is waste, as is time beyond instant and inventorystanding idle.”

When Toyota – now the world’s largest automobile maker– executives and its engineers visited U.S. automobile as-sembly plants, they saw waste and they saw defects builtinto cars because of pressure to keep the assembly linemoving. U.S. engineers, by comparison, saw efficiencyand profit.

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Unlike the U.S. automobile manufacturing philosophy ofkeeping the assembly line going, Toyota will stop its lineif a defect or defective part is spotted. The thinking behindthis action is that it makes more sense to stop the line totake care of the immediate problem rather than add vari-ability into the final product, the Lean Construction Institute says.

A DIFFERENT WAY

Lean construction relies on specialists rather than unskilledlabor. Projects are systematically organized to maximizethe overall value, and not its various parts. The buildingoperation and maintenance and the salvage and recyclingneeds are part of the design of the project, not just last-minute afterthoughts.

With lean construction, decisions are made and distrib-uted by production control committees. On a typical con-struction project, by comparison, one person may bemaking decisions on several separate areas.

Lean also tries to make continuous improvements in thework flow and the end product. A construction projectmanaged the traditional way is more concerned with get-ting the work done and meeting a deadline, rather thancontinuous improvement.

Teamwork is important to the lean construction concept.It aims to lower boundaries between the project’s stake-holders, managers and construction crews so each knowsthe impact of the other’s work on the entire project, whichpromotes a sense of pride. This is a 180-degree turn fromhow most construction projects are managed – on themacro level.

With lean construction, projects are broken into piecesand then those pieces are put into a logical sequence, es-timating the time and resources – manpower hours – re-quired to complete each activity and then the entire

project. “Each piece or activity is further decomposeduntil it is contracted out or assigned to a task leader, fore-man or squad boss,” the Lean Construction Institute says.“Control is conceived as monitoring each contract or ac-tivity against its schedule and budget projections.”

IMPLEMENTING LEAN

Implementing lean thinking will lead to change in almostevery facet of the construction project and the companymanagement. Because the lean concept embraces the un-certainty and complexity of construction, you need tohave everybody on board with the idea that even the tini-est improvements benefit the entire project.

“Managers in most companies and on most projects havean inflated view of the reliability of their planning system,”the Lean Construction Institute says. “This attitudechanges once the decision is taken to make assignmentsto criteria and the results come in. New opportunities arerevealed and new demands arise in all directions.”

The first step in implementing lean construction is re-designing the planning system at the assignment level.This step will assure reliable – and steady – work flowthroughout the planning and construction.

Work needs to be repackaged so the various parts of theproject can proceed without the completion of the otherparts, which ensures efficiency. There also needs to be asystem in place that assures resources are delivered ontime and delivered to the correct location, the Lean Con-struction Institute says.

Construction companies that have implemented lean sayeach change it makes on a project creates the opportu-nity for more and better improvements. Here are sometips from the Lean Construction Institute on how to begin lean:

Find a change agent. This is a person in the companywho makes things happen and gets results.

Get the knowledge. Assemble a team and learn aboutlean. Once you feel you’ve mastered the book end of lean,try it out with a project. The best knowledge gained is by doing.

Forget the grand strategy. With lean, it is importantto change your thinking. Lean is a systems approach. Be-fore starting a project, it’s important to find its opportuni-ties and its potential bottlenecks. This step will revealinadequacies in other areas that need to be fixed for max-imum lean implementation at the project level.

Do it now. To make sure your team is on board with thelean concept, begin as soon as possible with a visible andimportant activity. BG


This is a180-DEGREE

TURN from how mostconstruction projects are

managed - on themacro level.


Burchick Construction Company, Inc. has been awardedthe general construction contract for the United StatesPostal Service Floor System Structural Upgrade at 1001California Avenue, Pittsburgh, PA. LLI Engineering is thedesigner.

Poerio Incorporated was selected as contractor for theWesco Headquarters renovations & additional officespace in Station Square, Pittsburgh, PA. Design 3 Archi-tects are designing the renovation that is to be completedin 2009.

Poerio was recently awarded the contract for renovationsof the JC Penney Department store in Christiana MallNewark Delaware. The renovations include complete pub-lic restroom modernization and redesigned exhaust sys-tems. Howard Nudell is the Architect on the renovationsthat is to be completed in 2009.

West Penn Allegheny Health Systems selected A. Martini& Co. as contractor for the $1,300,000 renovations to the CT suites at Forbes Regional Hospital. The completion date for this project is January 2010. IKM Inc.is the architect.

Dollar Bank awarded A. Martini & Co. a contract for ren-ovations for a new branch bank to be located on theSouthside. Project completion is scheduled for Septem-ber 2009. Integrity Design is the architect.

Landau Building Company was recently awarded a con-tract from the WVU Biomedical Research Center in theWVU Health Sciences Campus for the $4 million VivariumExpansion and Renovation. The incorporation and reno-vation of existing corridors, offices, suites, miscellaneouslabs, and storage rooms are included in the scope of work.Also included in the scope will be demolition and me-chanical improvements. The vivarium will remain a nor-mally operating facility throughout the project.

Landau Building Company was recently awarded a con-tract from Robert Morris University for the extensive ren-ovation of the following student housing facilities: AdamsHall, Hamilton Hall, Hancock Hall, Gallatin Hall and RossHall. A completion date of August 2009 is anticipated.

Joseph B. Fay Co. was the successful contractor on a$113.2 million roadway and bridge reconstruction project

on the PA Turnpike. The project involves work on nearlyseven miles of Turnpike between milepost 31 to milepost38 in Allegheny County.

Gurtner Contracting was awarded the general construc-tion contract for Renovations to Restrooms at CharleroiElementary Center, by the Charleroi Area School District.Foreman Architects and Engineers is the architect.

The University of Pittsburgh has selected Massaro Cor-poration to serve as the general contractor for the reno-vation of the Chevron Science Center Café. This 500square foot project began in early June of 2009 and willbe completed by August of this year to prepare for theincoming students for the Fall Semester. Massaro Cor-poration will also provide preconstruction and construc-tion services for the Chevron and Eberly Classroom andLibrary Renovations. This 2,000 square foot renovationwill be completed for the start of the Fall Semester. TheArchitect on the project is R3A.

Point Park University has selected Massaro as the de-sign/build contractor for the renovation to the university’sphotography laboratory. The renovations include new filmdeveloping and processing fixtures, dark room lighting,and individual work spaces. The project is slated to becompleted August 1, 2009.

P. J. Dick Incorporated was selected by the Bechtel Ma-rine Propulsion Corporation to provide general construc-tion services for the new Bettis Materials Research andTechnology Complex in West Mifflin, Pennsylvania. The$12,979,000, 41,000-square foot building, designed bySiemens will house general chemistry and radio chemistrylab space. Construction is anticipated to start July 1, 2009and be completed in December 2010.

P. J. Dick Incorporated has been selected by the Univer-sity of Maryland, College Park to provide ConstructionManagement at Risk services for the University of Mary-land Journalism Building $553,825 renovation project.The 22,468-square foot renovation is currently in precon-struction and is scheduled to begin construction in May2010.

P. J. Dick’s Small Projects Group was awarded de-sign/build services for the $9 million Fuhrer WholesaleWarehouse Expansion project located in the South Side of

&&WARDS ONTRACTS

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Pittsburgh. The 100,000-square foot refrigerated storagefacility addition, designed by GMA Design Group out ofSt. Louis, Missouri, began preconstruction May 1, 2009and is scheduled for completion at the end of the year.

P. J. Dick’s Small Projects Group was awarded Construc-tion Management at Risk services for Three PNC TrianglePark located between Fifth and Liberty Avenues and Mar-ket Street in downtown Pittsburgh. The $1.2 million spacerenovation across the street from the almost-completedFairmont Hotels and Resort will feature a center lawn filledwith trees, shrubs and seasonal flowers beds lined withpathways and benches. The approximately 10,000-square foot park, designed by LaQuatra Bonci Associates,is scheduled for completion in October 2009.

Rycon Construction, Inc. was recently awarded a contractto provide renovations to the Monroeville DoubletreeHotel (previously named the Radisson Hotel).

Rycon Special Projects Group was awarded contracts for these projects: University of Pittsburgh Ashman LabRenovation at Clapp Hall, University of Pittsburgh Class-room Renovations & UPMC Presbyterian South Tower Infill Project.

dck international, a dck worldwide company, has beenselected to provide Construction Management and Con-struction Services to restore the Four Seasons Nevis Resortin the Caribbean after it was heavily damaged by Hurri-cane Omar in October of 2008. The scope of work for this$30 million project will include the renovation of 100 guestrooms damaged by water, rebuilding of the Great Housefinishes and surrounding amenities, site work, and testingand repair of mechanical and electrical systems.

dck north america, a dck worldwide company, recentlybroke ground as the design/build contractor for a new $55million Federal prison to be located in Pahrump, Nevada,roughly 65 miles from Las Vegas. The 1,072-bed NevadaSouthern Detention Center is expected to house approx-imately 1,000 federal inmates and detainees. The facilitywill be approximately 200,000 square feet, including 204cells and eight 96-bed dormitories.

dck is working under contract to the Corrections Corpo-ration of America (CCA), the nation’s largest owner andoperator of privatized correctional and detention facilities.CCA was awarded a contract by the Office of the FederalDetention Trustee (OFDT) to design, build, and operatethis new correctional facility. CCA has selected dck to betheir design/build contractor.

dck pacific construction, a dck worldwide company,began work in May on the renovation of 356 guestroomsand corridors at the Kauai Marriott Resort. New con-struction of pool restrooms, a children’s activity pool, anda wedding kiosk are also a part of this 13-month, $25+million design-build contract with Marriott International.

Mascaro Contracting began construction of the Beaver-Rochester Bridge in May. This is the first project awardedby PennDOT District 11 under the American Recovery andReinvestment Act (ARRA). Mascaro’s scope of work on thisproject involves expansion dam and rocker bearing re-placement, structural steel repairs, concrete repairs, andpainting for the 1,140 linear-foot bridge.

Mascaro Construction is the construction manager for the$32 million expansion of the Chevron Science Center atthe University of Pittsburgh. Renaissance 3 Architects isthe architect for the project, which involves 30,000 squarefeet of new construction and major renovations to thebuilding.

Jendoco Construction Corporation was the successfulcontractor for Saint Vincent College’s $35 million Sis andHerman Dupre Science Complex. The project involvesconstruction of a 61,700 square foot new science centerand renovations to the existing Chemistry, Biology andPhysics Facilities at the Saint Vincent College CampusMacLachlan Cornelius & Filoni is the project’s architect.

Uhl Construction has begun construction on a new man-ufacturing facility for Selectrode Industries at the HopewellBusiness Park in Hopewell Township, Beaver County. The50,000 square foot project was delivered design/buildwith Olsen Associates of Butler.

Northwest Savings Bank awarded a contract to John Dek-lewa & Sons for their new branch bank in Mt. Lebanon.The project involves the conversion of a former Friendly’srestaurant on Cochran Road. Lami Grubb Architects de-signed the project.

F. J. Busse Co. was the successful contractor for renova-tions to the offices of the Constructors Association ofWestern PA on Banksville Road. The architect for the$300,000 project is Ross Schonder Sterzinger Cupcheck.

The DePaul School for Hearing & Speech selected F. J.Busse Co. as contractor for renovations to their AlderStreet facility in East Liberty. Hayes Large Architects is thedesigner.

Washington County and the Meadowcroft Rockshelterawarded a contract for the Visitor’s Center Phase 2 to F. J.Busse. Pfaffmann + Associates is the architect for the$400,000 project.

Carl Walker Construction has been awarded a $4.8 millioncontract to build a three-story, 362-car, 115,200 square-foot horizontal addition to the existing parking garage atthe Louis Stokes Cleveland VA Medical Center.


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The Duggan Rhodes Group, a construction consultingfirm located in downtown Pittsburgh, welcomes summerinterns Joshua England and Yi Zhuang. Mr. England grad-uated from Pennsylvania State University in May with aB.S. in Structural Design and Construction EngineeringTechnology. Mr. Zhuang is currently a senior at The Uni-versity of Pittsburgh and will graduate in December witha B.S. in Industrial Engineering.

Steve Peterman has joined the Massaro CM Services, LLCteam with over 20 years of experience in the constructionindustry. Steve was hired as project manager. He has beenassigned to the Pittsburgh Public Schools – Frick Techni-cal Academy 43,574 square foot renovations project.

Massaro Corporation hired Sherry Freeman as a tempo-rary receptionist and has since been promoted to a full-time position as administrative assistant for theaccounting and finance departments. Sherry has earnedan associates degree in Specialized Business from TheBradford School.

Michael Larson-Edwards joined the Massaro Corporationteam in April of this year as a Project Engineer. A recentgraduate of The University of Pittsburgh, Mike earned hisbachelor’s degree in Civil Engineering with a concentra-tion in Construction Management. He joins Massaro fromthe Minority and Women Educational Labor Agencywhere he worked for two years while earning his degree.

P. J. Dick’s Small Projects Group is pleased to welcomeNoah Shaltes, LEED AP as a Project Manager. Noah is agraduate of Penn State University with a Bachelor Degreein Architectural Engineering and a Masters of Engineer-ing degree with a Construction Management Emphasis.

P. J. Dick is pleased to welcome Christopher Bekavac asAssistant Superintendent. Chris is currently assigned tothe University of Maryland, School of Public Health proj-ect in College Park, Maryland. Laura Malinak was hiredas a Site Safety Manager on the Bettis Materials Re-search and Technology Complex project. Laura is a re-cent graduate of Slippery Rock University with aBachelor’s Degree in Science in Safety, Health and Envi-ronmental Management.

P. J. Dick hired eight interns and two co-operatives towork in the Safety Department, the Estimating Depart-ment and on project sites. The interns are MatthewTurko, Anthony Pinto, Jocelyn Smith, Shane McCracken,

Christopher Dunlay, Roman Edmunds, Kelly Maiorino,Vincenzo Matarazzo, Stephanie O’Neill, and Robert Snyder, III.

Rycon Construction, Inc is pleased to welcome two teammembers to their Special Projects Group. Mark Young hasjoined as Chief Estimator. Mark has been in the construc-tion industry for over 27 years. Brandon McKee, a LEEDAccredited Professional and graduate of Penn State Uni-versity, was named Project Manager. With the addition ofBrandon, this brings Rycon’s total number of LEED AP’sto six.

Mascaro hired John Yerico as the MEP coordinator for theBuffalo Federal Courthouse project. Michelle Santangeloalso joins the Buffalo team as the site secretary.

Mascaro is pleased to announce that the following em-ployees passed the U.S. Green Building Council exam andare LEED® Accredited Professionals: Mel Miller and BillGreb. This brings the total count of Mascaro’s LEED APsto 30.

Schneider Downs & Co., Inc., promoted Ted M. Pettko,CPA to Shareholder in the Pittsburgh office, effective July1, 2009. Pettko has more than 15 years of experience inthe areas of audit, review and compilation and servesclients in the manufacturing, construction, nonprofit andprofessional services industries. He is a member of thefirm’s Construction and Nonprofit Industry Groups andSchneider Downs’ Audit and Assurance EffectivenessCommittee. Pettko is a member of the American andPennsylvania Institutes of Certified Public Accountants andis a member of the Master Builders Association MarketingCommittee. He holds his B.A. from St. Vincent College. BG

EW PLACESACESF &&N


Construction Legislative Council ofWestern PA Honors Colonel Crall

The Construction Legislative Council of Western Pennsyl-vania (CLC) honored Colonel Michael P. Crall, Commander,Pittsburgh District, U.S. Army Corps of Engineers with theCLC 2009 Community Leadership Award. The award waspresented at the CLC’s Annual Legislative Dinner, heldThursday, May 7, 2009, at the LeMont Restaurant.

“Presenting Colonel Crall with the Community LeadershipAward was an obvious choice. His exemplary leadership,dedication and service in promoting our region’s con-struction industry initiatives are to be commended,” saidWalter Krasneski, CLC Chairman.

Along with presenting an award, the CLC hosts the An-nual Legislative Dinner to build a rapport between con-struction industry professionals and legislators at theFederal, State, and Local levels.

DRG Helps with Park Restoration

On May 30, members of The Duggan Rhodes Group(DRG) teamed up with staff at The Frick EnvironmentalCenter located in Squirrel Hill to assist with some muchneeded park maintenance. The Frick Environmental Cen-ter is a City of Pittsburgh park facility, which provides in-formation and activities concerning the habitat, historyand ecology of the Frick Woods Nature Reserve. DRG vol-unteers, along with family and friends, assisted with therestoration of a handicap-accessible trail through thewoods. Volunteers also assisted with clearing out an over-grown space that will be used as a children’s garden dur-ing some of the Environmental Center’s upcomingsummer camps. This is the second in a series of activitiesDRG has planned for 2009 with the help of its communityservice partner, Pittsburgh Cares.

NDUSTRYHET Iin thein the OMMUNITY

CLC Chairman Walt Krasneski of SAI Engineers, Mike Dawidaof PA Utility Contractors Association with Rep. Joe Markosek.

Walter Krasneski presenting the CLC 2009 CommunityLeadership Award to Col. Michael P. Crall.

PA Society of Professional Engineers Pittsburgh Chapter Pres.Tom Weber of Swank Co. and Jason Koss of Constructors Association of Western PA.

Members of The Duggan Rhodes Group who volunteered atThe Frick Environmental Center included Andrew Rhodes, WillMotley, Ivonne Beltran, Andrew Dombroski and Sarah Shaffer.Family and friends were also invited to attend.

48 www.mbawpa.org

C


Massaro Holds High SchoolProfessional Day, Dedicates

Josh Gibson Field

On May 22 and 27, Massaro Corporation opened theirdoors to high school students from all over the city fortwo Professional Days. On the 22nd, students from UrbanYouth Action, Junior Achievement, FAME and CAPA,learned not only about the building trades, but the edu-cational and professional background of all the Massarostaff. The students visited job sites and had an opportu-nity to talk with the field staff. On the 27th, twenty stu-dents from the CLAAY program, a mentoring programseveral Massaro employees volunteer with all year, werewelcomed for the second Professional Day of the month.Massaro Corporation is thankful for the opportunity towork alongside educators and youth organizations in this capacity.

On May 30, the Josh Gibson Field officially opened with apublic ribbon cutting. Former Pittsburgh Pirates, the Mayorand several business and community leaders were presentfor the opening. Sean Gibson of the Josh Gibson Founda-tion shared the importance and meaning of the baseball

field and introduced the students involved in the youthbaseball program. The Pirate Parrot helped warm up thekids for their first game in their neighborhood field and en-gaged the local fans in the bleachers. The field features amedia box, dug outs, bleachers, snack bar, grass in-fieldand is the home to the Josh Gibson Foundation YouthBaseball Program. During the ribbon cutting presentation,Massaro Corporation received praise from the PittsburghPirates representation, as well as by Sean Gibson.

Hilary Brown of Massaro Corporation (far left) with a group of students on a site visit during Professional Day.

(L–R) John Hoover of Massaro, Sean Gibson, grandson of Josh Gibson, and George Germany of Massaro Corporation at the Josh Gibson Field dedication.



Mascaro Sponsors CF Walk

On May 7, Mascaro was the site sponsor for the Cystic Fi-brosis North Shore Great Strides Walk. Through the gen-erosity of those involved, this walk raised over $43,000,with $15,000 of that coming from Mascaro Construction,its employees, and their family and friends.

NAIOP Tours Consol Headquarters

NAIOP Pittsburgh held a networking event June 11 onthe rooftop of the new Consol Energy headquarters inSouthpointe. Approximately 75 members and gueststoured the building at the invitation of developer Horizon Properties. BG

Mascaro Construction’s team of walkers gathers at the North Shore Great Strides Walk.

Jamie White, partner at LLI Engineering (left) with Pat Tracy andAmy Brocato of Langholz Wilson Ellis Industrial.

Golfers from AMB, Inc. enjoy the Pittsburgh Builders Exchangeouting at Cranberry Highlands on June 5. From left to right areEd Simon, Frank Borgo, Brian McKay & Dan Hensehel.

Oxford Development's Anne Lewis and CEO David Matter atthe Pittsburgh Public Theater's VIP Party.

WTW Architects CEO Rich DeYoung and wife Candace (left) withHighmark's Jean Zellers and husband Rob Zellers, author ofHarry's Friendly Service at Pittsburgh Public Theater's VIP Party.

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MBA MembershipMBA MEMBERSHIPThe Master Builders’ Association (MBA) is atrade organization representing WesternPennsylvania’s leading commercial, institu-tional and industrial contractors. MBA con-tractors invest in a skilled workforce,implementing award-winning safety pro-grams and offer the best in management and stability.

The MBA is a chapter of the Associated Gen-eral Contractors of America, the nation’slargest and oldest construction trade associa-tion. The MBA is committed to improvingthe construction trade association througheducation, promoting technological advance-ments and advocating building the highestquality projects for owners. To learn more goto www.mbawpa.org.

MBA OFFICERSClifford R. Rowe, Jr. PresidentP.J. Dick Incorporated

Thomas A. Landau, Vice PresidentLandau Building Company

Steven M. MassaroTreasurerMassaro Corporation

Jack W. RamageSecretary/Executive DirectorMaster Builders’ Association

BOARD OF DIRECTORSJoseph E. Burchick Immediate Past PresidentBurchick Construction Co.

John C. BusseF.J. Busse Company, Inc.

John E. DeklewaJohn Deklewa & Sons, Inc.

Todd A. DominickRycon Construction, Inc.

Anthony MartiniA. Martini & Company, Inc.

Michael R. MascaroMascaro Construction Co. L.P.

Thomas L. MilletaryMICA PresidentEasley & Rivers, Inc.

M. Dean MositesMosites Construction Company

Thomas J. MurphyJendoco Construction Corp.

Raymond A. Volpatt, Jr. P.E.Volpatt Construction Corp.

REGULAR MEMBERSAllegheny Construction Group, Inc.Michael Baker, Jr., Inc. Construction Services

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Closing Out

The design of buildings and places today can beinformed by a variety of factors, including the im-pact of emerging technologies. These technolo-gies include building control systems, energyconservation and recovery, building envelope

strategies, and integrated communications. In addition, thetechnologies inherent in the design process - notably Build-ing Information Modeling (BIM) and mathematical 3-Dmodeling - have a profound impact on how architects andengineers approach design.

The promise of BIM is that it has at its foundation a databaseof powerful information about the building’s components,systems, and projected performance. In theory, all disci-plines contribute to the model, efficiencies are gained, andcoordination issues are detected early. Similarly, with math-ematical 3-D modeling, novel forms and complex surfacescan be modeled and fabricated. These models can also beused to create compelling images and animations that givea sense of how the building might look when constructed.

But in the end, does all this technology make for a betterbuilt environment? Do we really want the future describedin those persuasive images? Does it create space that meetsthe needs of the people that inhabit it? Is it comfortable,does it inspire, does it delight?

Henry Dreyfuss, the 20th century industrial designer whopenned the classic Designing for People, wrote:

“We bear in mind that the object being worked on is goingto be ridden in, sat upon, looked at, talked into, activated,operated, or in some other way used by people individuallyor en masse. When the point of contact between the prod-uct and the people becomes a point of friction, then the in-dustrial designer has failed. On the other hand if people aremade safer, more comfortable, more eager to purchase,more efficient - or just plain happier -by contact with theproduct, then the designer has succeeded.”

Although Dreyfuss was talking about the products of indus-trial design, these words of advice are equally significant forthe design of our environment. This salient message, that ourdesigns must thoughtfully consider the end user, is more im-portant then ever. An understanding of human needs - phys-ical, emotional and intellectual - is critical to this endeavor.

The problem is that people are messy. Our requirementsare fuzzy, our needs are variable, our desires change. And allof the fuzziness of an imperfect biological creature is difficultto program into a software package. The BIM models maytell us that ultimate thermal comfort will be achieved; but ifthe occupants can’t figure out how to adjust the tempera-ture and can’t open a window, they might be anything buthappy. A dynamic form might be achievable using the tech-nologies at our disposal; but if the space doesn’t inspire orimprove the human condition, was it worth the effort?

I am by no means a Luddite. New technologies are leadingto greater efficiencies in the design process, a better un-derstanding of building performance, and truly captivatingspaces. But it can be too easy to be seduced by the prom-ises of software and systems without question. As we inevitably incorporate these new technologies in design andconstruction, we cannot forget that we are designing for people.

Armed with that as our goal, we can bend technology toenhance the utility, comfort, and experience for the occu-pants of the places we design. The power of the informationembedded in these new processes can be used to map tothe messiness of humans, and create better environments.

In the end, it is in the thoughtful consideration of the inter-section of people, technology, and design that we will suc-ceed in building the future.

Dutch MacDonald is an architect and the Chief Operating Officer at MAYA Design, a human-centered design andtechnology consultancy

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People, Technology and DesignBy Dutch MacDonald

Jeff Senn, MAYA’s chief technologist, high-lights the dangers of thinking only as atechnologist or engineer by using thelowly parking lot as an example:

We math-centric engineers would love tofactor out (and ignore) all of those vague,hard-to-characterize human issues that af-fect the perception of a problem. But in

practice these often turn out to be wherethe amazing success or dismal failures indesign are found. A parking lot is morethan a pad of asphalt or concrete. Parkinglots have painted lines. Those lines obvi-ously have no real power or constrainingforce, and our well-intentioned engineermight reasonably doubt their efficacy.Clearly some sort of cement barriers

would be far safer and more reliable! Yetby mere suggestion, those treacherouslyvague paint lines work wonders at creat-ing order from potential chaos. Thoselines make the physical space "human lit-erate." And all things considered, theyare not only less expensive but probablywork better than a more "well engi-neered" solution.


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