Construction industry powers way to Park City's best month of year

Park City's construction industry powered its way to the best month of the year in May, pulling ahead of last year's figures and signaling that 2012 could be a rebound year from the poor performances during the height of the recession.
The Building Department reported the value of construction permitted inside Park City climbed to a little more than $18.6 million by the end of May. The number sat at a little less than $14.9 million through the same period the year before.
The department in May issued 114 permits worth a little less than $7.9 million combined. The dollar figure climbed from the approximately $5.8 million in permits issued the month before and the $4 million figure from May 2011. The number of electrical, plumbing and mechanical permits climbed from the previous month and the same month the prior year.
Permits for alterations and additions in May accounted for most of the value. According to the Building Department, permits for alterations or additions to dwellings, commercial buildings or industrial buildings were valued at approximately $5.5 million, or 70 percent of the overall value of the month. The alterations and additions posted in May represented just less than 30 percent of the year-to-date dollar figure.
Alterations and additions have had an outsized impact on the building numbers in the years since the recession as people decided to put money into existing buildings instead of putting up new ones. Permits for alterations and additions, though, normally are not as valuable as ones for new buildings, keeping the numbers down.
The Building Department in May also issued four permits for houses, valued at approximately $2.3 million. The department did not issue other permits for residential buildings.
The construction industry's numbers fell sharply during the recession from the record-setting years after the 2002 Winter Olympics. The recession struck at a time when the numbers were expected to level off if not drop as the number of major development sites inside the city dwindled.
It is difficult to predict what sort of year-end figure will be posted. There is a chance several high-dollar permits will be issued this year that would provide a boost to the numbers.

Source : http://www.parkrecord.com/ci_20815738/construction-industry-powers-way-park-citys-best-month

Starting a new nuclear construction industry is hard work

Construction at Vogtle units 3 and 4 and VC Summer units 2 and 3 is not going as well as many nuclear advocates would like. I’m not surprised, but neither are most people who have been involved in complex construction and technology projects that involve a lot of moving parts and numerous interested parties. Nothing that happens at those projects will change my mind that atomic fission is a superior way to produce heat and boil water. There is little chance that events at those individual projects will convince me that there is something fundamentally wrong with the advanced passive reactor plant design.

There are some important lessons that need to be shared widely so that the chances of them recurring is minimized, but it is difficult to completely eliminate the challenges that will inevitably be a part of all major construction projects. For the nuclear industry and all nuclear advocates, it is important to recognize that even if things were going perfectly, there would still be plenty of negative publicity coming from the professional opposition to what we do. We are involved in starting up a new nuclear construction industry, almost from scratch.

For the sake of brevity, I will put the current issues at Vogtle and Summer into three categories—backlog of design changes from the certified design, delays that were partially caused by licenses and permits whose issuance was resisted at every step of the process, and an error that resulted in laying concrete rebar that did not match the licensed standard requirements.

Licensing

Soon after the issuance of the AP1000 design certification and the associated combined operating license for Vogtle, the project leaders began the process of submitting design license amendments so that they could implement changes and refinements. Many of the requested design modifications are based on lessons learned during the construction of similar units in China. Unfortunately for the project owners, the Nuclear Regulatory Commission has no process for handling license amendments that can keep up with the needs of a construction project.

The “one step” licensing process that is described in 10 CFR 52 (CFR–Code of Federal Regulations) results in the issuance of an operating license based on a certified design. The underlying assumption by the regulators is that the design is complete and will not be changed during construction. Any changes to the design as certified need an operating license amendment.

Even if the change is an improvement, it requires a rigorous NRC evaluation and approval process designed to prevent unintended negative consequences directly affecting reactor safety. The operating license amendment process is quite different from the one used to process changes when the owners build based on a construction permit and request their operating license after completing construction and low power testing.

The problem with one step licensing is that it is a poor assumption to believe that it is possible to build first-of-a-kind (FOAK) construction projects without making any changes to a design that was completely conceived on paper and inside computers. Reality often does not match models. In addition, construction codes and standards are continuously evolving; even though the process is slow, there are inevitably going to be changes that might affect a design that was first submitted for certification 10 years before construction actually started.

The backlog of potential changes for Vogtle and Summer developed because the leaders were understandably reluctant to submit any changes while the design certification work was still in progress. There is not much that the project leaders can do at this point other than to be even more reluctant than they already are to accept any suggestions that would require a license amendment.

With the clarity made possible by hindsight, the Part 52 one-step licensing process might not be the best choice for any FOAK nuclear power plant, even if similar units have been built outside of the United States. US licensing requirements are different enough to require what is essentially a new design and a different construction process.

  

The opposition’s strategy: delay

It is hard for nuclear advocates to fail to notice that the organized opposition—which did everything in its power to slow the licensing and permitting processes required for Vogtle and Summer—are engaging in “I told you so” crowing about the high cost of new nuclear plant construction. Every story about a potential cost overrun is accompanied by quotes from groups like Southern Alliance for Clean Energy and Arjun Makhijani’s Institute for Energy and Environmental Research. (Note: Makhijani is famous for fantasizing about a carbon free, nuclear free energy supply.)

Arjun Makhijani, the president of the Institute for Energy and Environmental Research, said efforts to rush such a complex project to completion set the scene for delays and rising costs.
“The cost increase should not be a surprise; rather it is déjà vu all over again,” he said. “It would be much better if construction were suspended until all design issues were resolved.”

(Source: Augusta Chronicle (May 11, 2012) Price of Vogtle expansion could increase $900 million)

There is no secret to the opposition’s recipe for making any construction project excessively costly. All they have to do is to force schedule delays and costs inevitably increase due to financing, idle labor, labor force reconstitution, issues associated with supply chains, and inflation. Project managers are rarely applauded for missing deadlines, even if they adhere to a carefully prepared, logical schedule that gets pushed to the right (on a timeline) by external forces. Once delays have been imposed, costs will increase again if efforts are made to revise schedules and accelerate work to attempt to get back on schedule.

Supply chain issues are especially difficult to explain to people who have not worked in an industrial setting. When the parts that are needed are large and custom made, they need to be ordered months to years in advance. Once those parts are finished, the manufacturer needs to ship or needs to get paid for storage.

If the parts require special environmental controls to ensure that they do not deteriorate, storage charges increase dramatically. Suppliers who have to delay order shipments or who receive purchase orders several months after they expected the orders to arrive become more reluctant to do business. (That means that they start negotiations for the next order at a higher unit price.) Suppliers also logically delay investing in production capacity until after the orders—and the associated payments—actually arrive.

Rebar

The final current issue associated with Vogtle and Summer is a specific error that resulted in rebar (reinforcement bars of steel that strengthen concrete) being laid at both projects that did not match the concrete standard that was included as part of the certified design. Correcting the error will result in a several month delay at both projects while rebar is removed, new rebar is cut and the new rebar is laid. No concrete can be poured before that happens and there are many steps in the construction process that cannot take place until the concrete is in place. Management is going to be distracted.

The source of the error has not been determined and the results of the investigation may never be made public. What seems to have happened is that someone or some group on the project team decided to use a reinforced concrete standard that was updated after the license was approved. That standard specified a different rebar configuration. The design change was prepared, but never approved by the NRC. Somehow, the rebar was installed to the newer standard even though the license amendment had not been approved. I suspect that there was a communications breakdown that prevented the installers in the field from knowing the exact status of the design. It might have been as simple as a drawing or specification that specified a standard without specifying the exact revision of the standard.

It is going to be an expensive lesson. It is one that can be avoided by projects that have not yet begun construction. In nuclear construction projects, effective change control and effective communications plans are essential.

Reviving a slumbering giant of an industry is hard work. There will be plenty of successes to celebrate, but I would not be a “nuke” if I did not seek to learn as much as possible from the difficulties experienced by others and if I did not seek to document those lessons so that others can also avoid making the same errors. That is part of our learning culture.

Source : http://ansnuclearcafe.org/2012/06/06/starting-a-new-nuclear-construction-industry-is-hard-work/

Grants boost activity

Economically empowered rural areas offer good growth prospects.

The building industry is cashing in on increasing development opportunities in semi-urban and rural areas, prompting companies to broaden their geographical footprint.

The construction of residential developments, schools, shopping malls and roads in outlying areas has increased, to serve a more economically empowered population. Part of this empowerment comes from social grants, says Cashbuild CEO Werner de Jager.

“Driving through rural towns, you find that everyone is doing something to improve their homes,” he says.

JSE-listed Cashbuild, which sells building materials directly to cash-paying customers, has 51 stores in rural areas, out of a total of 191 stores around the country.

Comparing its figures for the six months to December 2011 with the six months to December 2006 reveals that its rural business revenue has outstripped its urban store revenue . The average revenue per rural store increased by 80%, compared with the company’s average of 60% .

Cashbuild’s rural stores attract home owners who want to make their own improvements to their homes. Whereas in urban areas, Cashbuild stores generally serve bakkie builders (builders who work out of the back of a bakkie) who do small building jobs for home owners .

Cashbuild’s urban customers frequently buy from stores in cities like Cape Town, but arrange for their purchases to be collected at a rural store, in Butterworth, in the Eastern Cape, for example.

This form of remittance — or sending money home — is common, says De Jager. It supports the opinion that building activity, often the DIY-type, is on the increase.

PPC CEO Paul Stuiver echoes this sentiment. “Rural areas are feeling the effect of social grants. A portion of grant money is spent on home building and improvements, which has caused a general increase in demand outside the cities.”

He has noticed other pockets of investment. Construction in the Western Cape has slumped, affecting most companies that operate in that province, including PPC. But Stuiver says medium-sized contractors are busy. “I see the activity on secondary roads and small projects, like perlemoen farms.”

Data from Statistics SA reveals that building activity levels in Gauteng, the Western Cape and KwaZulu Natal are still the highest. But the percentage change of activity in the Northern Cape, Free State, Limpopo and North West has increased between the two comparable quarters, far in excess of any of the other provinces.

In the Northern Cape, for example, building activity rose by 86,1%, when comparing the first quarter of 2012 with that of 2011. However, its contribution to the total value of building plans passed in the country was just 1%.

The same report shows that building activity dropped in the first quarter of this year . The value of recorded building plans was 4,5% lower, at R15,4bn, compared with the first quarter of 2011. Non residential building activity decreased by 22,8%, while residential building rose by 4,2%, to R6,89bn.

The Bureau of Economic Research’s building confidence index rose from 29 to 34 over the quarter, after building contractors, manufacturers of building materials and quantity surveyors reported a better outlook for the sector.

Nevertheless, six out of 10 respondents still rate prevailing business conditions as unsatisfactory.

Government’s infrastructure plan supports growth in rural areas, which might boost building activity there . It has targeted investment in provinces such as North West, Limpopo and Mpumalanga, which should benefit rural economies and communities.

For example, with the promulgation of the Special Economic Zones Bill , government intends to develop multiple and geographically scattered pockets of industrial development. Small contractors report that rural activity is picking up.

Anele Madlanga, owner of Ola Paint, a Soweto-based company, says the limited availability of land in township areas has affected construction levels. But in outlying areas — rural and semi-urban — opportunities are on the increase.

Madlanga builds houses for low-cost housing developers in Fleurhof and Lufhereng, southwest of Johannesburg. He also does work in Orange Farm and expects to work on a housing project in Carletonville .

But he relies on subcontracted work and his profits are usually low. Smaller contractors believe tender requirements are preventing small and medium-sized enterprises (SMEs) from benefiting from infrastructure development.

Doctor Mfobela, owner of Doc’s Construction, says operating as a small contractor before 2000 was easy. He worked successfully in Queenstown in the Eastern Cape.

But that changed when contractors were graded according to Construction Industry Development Board guidelines. Such grading limits contractors to tendering for only those projects for which they are graded .

The system was designed to prevent capacity concerns that have been a problem in the past, where small operators take on projects that are too big for them. Mfobela says it has inadvertently cut out the small contractors.

He says government will have to resolve this shortcoming if its intention is to spread the benefits of large infrastructure projects to SMEs, particularly those in rural areas. Large companies already appear to be cashing in.

Stuiver says PPC has put systems in place to better serve rural areas. Contrary to popular opinion, cash-paying rural customers are extremely sophisticated . “They are more quality conscious than urban-based customers . They want to know exactly how many bricks they can make from a bag of cement. And they test quality by walking on the bricks two days after they have set, to see whether they will crack.”

He adds that rural customers are prepared to pay for higher-quality products, which they get more out of . “They do the calculations,” he says.

Building materials supplier Afrimat says contract values are diminishing . Three years ago, it was common to tender for contracts valued at between R800m and R1,5bn. Today, contracts are more commonly valued at about R100m, says CEO Andries van Heerden.

But he suggests that smaller contracts create more jobs, which fits in with government’s intention to use infrastructure as a means of job creation. Van Heerden also says the projects are more geographically dispersed. Smaller firms like Afrimat are more flexible, allowing them to respond more quickly than their larger rivals to work opportunities in different locations.

To date, however, government’s largest initiative to direct money where it is most needed, the Expanded Public Works Project, has not achieved what it set out to. Only a small amount of funding has reached the intended beneficiaries. Wages have been low and much of the work is short term. 

Source : http://www.fm.co.za/Article.aspx?id=173859

Turkish contractors model for Europe firms

 The European construction sector should continue partnerships with Turkish contractors in order to grow, European Construction Industry Federation (FIEC) President Luisa Todini has said, according to daily Hürriyet.

“Turkish contractors are very good regarding quality, pricing, timing and working conditions. Turkish contractors will be a model for our federation,” she said at the Construction Summit held over the weekend. Antonio Tajani, European Commission vice president responsible for industry and entrepreneurship, Turkey Contractors Union President Emin Sazak and European Union Minister Egemen Bağış also attended the event.

Created in 1905, the FIEC represents 33 national member federations in 29 countries and construction enterprises of all sizes, carrying out all forms of building and civil engineering activities, according to the official website of the federation.

“Turkey became a member country in the year 2000. Economy always comes before politics. We are aware of Turkey’s economic growth. Turkey grew 8.5 percent last year. It is said that it will grow 5 percent despite [the] crisis,” she said, adding that the goals of Turkey and the FEIC goals match.

The European Commission has set up a 10 billion euro fund, which will create 150 billion euros of business volume, Tajani said. The fund is available only for European Union members, but, “There are service [funds] for countries in accession talks. Turkey can benefit from them,” he said, adding that Turkish firms partnering with EU firms can also benefit from this fund.

Meanwhile Turkish construction companies signed contracts for 88 projects worth $6.33 billion abroad in the first five months of this year, Turkish Economy Minister Zafer Çağlayan has said in a written statement, according to Anatolia news agency.

Çaglayan said Turkish companies claimed “the lion’s share” in Turkmenistan with an overall volume of over $2.6 billion, making the Central Asian country the second biggest market for Turkish construction companies after Russia.

He said Turkish companies have carried out 6,535 construction projects in 94 countries with an overall value of $213.2 billion

Source : http://www.hurriyetdailynews.com/turkish-contractors-model-for-europe-firms-.aspx?pageID=238&nID=22847&NewsCatID=345

Small businesses in housing industry see recovery

 The small businesses that drive the housing market are reporting signs the industry may be experiencing a real comeback.

At the beginning of the spring selling season, real estate agents and home builders were optimistic about the growing number of prospective buyers showing up at open houses and calling to inquire about listings. Now, it appears that interest has translated into sales.
"We had a terrific March, better April, and May is going to be the best closing month since 2006," said Mark Prather, whose real estate agency, ERA Buy America Real Estate Services is in La Palma, Calif., on the border of Los Angeles and Orange counties. Closings are up 50 percent this year from the same period of 2011.
It's a similar story across the country. Business is being driven by pent-up demand — many people had put off buying since before the recession. Prices are lower after plunging during the housing crisis. Rising rents are making buying more attractive. On top of all of that, financing is cheap. Mortgage rates are at record lows — 3.75 percent for a 30-year fixed mortgage as of last week. In some areas, people are even saying it's becoming a sellers' market.
Industry and government figures confirm that housing is recovering. The National Association of Realtors says more than 1.3 million previously occupied homes were sold from January through April, up 7 percent from more than 1.2 million a year earlier. The Commerce Department says 117,000 new homes were sold during the first four months of the year, up nearly 15 percent from 102,000 a year ago.
But the sales recovery isn't uniform. Although home prices have started to rise in many parts of the country, they're still falling in places like Detroit, Chicago and Atlanta, according to the Standard & Poor's/Case-Shiller home price index for March.
The numbers reflect an improvement from a weak spring in 2011, but isn't yet what you could be considered robust. A Realtors' index that measures the number of home sales contracts fell in April. The spring selling season got an early start because unusually warm weather in January and February encouraged many people to start looking at houses, and that may have taken away some sales from April. But the drop also coincided with signs the job market was slowing and a decline in the stock market. The Standard & Poor's 500 index fell nearly 1 percent in April, its first month with a loss since November. That may have led some potential buyers to pause. Another wrinkle: fiscal and banking crises in Europe and their potential effect on the global economy.

Source : http://www.postcrescent.com/article/20120611/APC03/306110051/Small-businesses-housing-industry-see-recovery?odyssey=mod|newswell|text|FRONTPAGE|s

Unfair competition - Black contractors want a piece of cake

 

This week, the Black Business Council Built Environment (BBCBE) met the Construction Industry Development Board (CIDB) to re-submit a proposal to overhaul the board's grading system.
The BBCBE argues that the regulations have been a greater impediment to the advancement of black contractors than any other measure.
In order to qualify for government's multibillion-rand "priority infrastructure development programme", companies must be rated between grade 8 and grade 9 on the CIDB system. This is the domain of established companies.
For a company to progress from G8 to G9, it must demonstrate a fourfold growth in capital assets.
At present the highest echelon of the grading system is comprehensively dominated by "white established contractors, to the exclusion of black contractors", explained Gregory Mofokeng, secretary of the BBCBE.
He says the CIDB was established under the stewardship of established contractors. Its purpose is to develop and regulate the industry.
CIDB chairman Bafana Ndwandwe says his organisation and the industry are hamstrung by bureaucracy within the department of public works, which is the custodian of government policy.
The BBCBE's concerns were raised in 2009 but no progress has been made.
"The department has been virtually dysfunctional administratively. We've had no less than seven DGs including acting ones, such as the current incumbent, in the past four years. We've changed three ministers in that short time," Ndwandwe says.
Since its inception though, its thrust has been on regulation "with the intended or unintended consequence of tightening the perimeter for participation, which was discriminatory towards black contractors, notably the emerging ones", Ndwandwe adds.
Mofokeng says it's impossible for black contractors to compete with the established companies because of their size.
"All the top five companies have an order book in excess of R10bn, amassed from both the private and public sectors," says Mofokeng.
He says the established companies operate in the private sector as "an exclusive white boys club".
He says whites own land, are the major developers, own the largest construction companies and do not contract work to black companies.
"White companies have healthy order books. They did not grow from nowhere. They were supported by the previous government. Now they are the prime beneficiaries of the new government," he says.
In a few months the Presidential Infrastructure Coordinating Commission is expected to announce a massive infrastructure development programme. Of the 17 priority projects, none is below R1bn. Mofokeng says that by virtue of the CIDB grading, this systemically excludes black contractors.
He cited the case of the Gauteng department of education's R5,5bn school renewal programme, which the government intends to break down into 10 clusters of approximately R500m each. If this goes ahead, there might be no black contractors who win any bid.
"This is absurd because the programme is made up of small projects such as building classes or renovating a school, which can be done by small companies.
"But under the government's plan, black contractors must sub-contract to established companies under unfavourable terms and conditions," Mofokeng say

Investment boost for Jersey's building trade

The Jersey Construction Council said the money was a vote of confidence in the industry.

The council had predicted this year would be the worst of the downturn for builders in Jersey.

But chairman Martin Holmes said that could change now politicians had agreed to invest £27m in social housing.

He said: "It is a very welcome boost for our industry... obviously we are very pleased that the States have taken notice of the importance of the industry."

The money will be used on six projects to build new homes and refurbish existing homes including those at Le Squez and La Collette Tower.

Mr Holmes said the investment would provide much needed contracts for local firms and he believed it would go a long way towards helping the industry recover from the recession.

One in ten employees in Jersey work in the building trade.