ABC: Project labor agreement order ignores workforce realities

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Originally posted on concreteproducts.com

In light of the White House’s “Build Back Better” ambitions, Associated Builders and Contractors Vice President of Regulatory, Labor and State Affairs Ben Brubeck questions a new executive order encouraging project labor agreement (PLA) mandates on federal construction contracts exceeding $35 million.

“The policy will not help America; instead, it will exacerbate the industry’s skilled workforce shortage, needlessly increase construction costs and reduce opportunities for local contractors and skilled tradespeople,” he contends. “This anti-competitive and costly executive order rewards well connected special interests at the expense of hardworking taxpayers and small businesses who benefit from fair and open competition on taxpayer-funded construction projects.

“Research has demonstrated that government-mandated PLAs increase construction costs by 12 percent to 20 percent, which results in fewer improvements to roads, bridges, utilities, schools, affordable housing and clean energy projects—and the creation of fewer jobs. PLAs steer contracts to unionized contractors and workers at the expense of the best-quality nonunion contractors and workers who want to compete fairly at a price best for taxpayers.”

“PLA mandates are bad public policy because they effectively exclude the nearly 9 out of 10 U.S. construction workers who choose not to join a union from building taxpayer-funded construction projects,” Brubeck continues. “These controversial agreements hold a third of employees’ compensation for ransom unless they join a union, pay union fees and prop up struggling union pension plans. PLAs also create excessive cost burdens and risks for high-performing nonunion contractors, which built more than half of the federal government’s large-scale construction projects during the past decade and are more likely to be small, women- and/or minority-owned businesses.”

With nearly 88 percent of the construction workforce not represented by a union and the industry facing a skilled labor shorted of 430,000 in 2021, he adds, the White House would be best served by promoting inclusive, win-win policies that welcome all of America’s construction industry to realize the potential of the recently passed Infrastructure Investment and Jobs Act; increase accountability and competition; and, reduce waste and favoritism in public works project procurement. ABC and a coalition of construction industry, small business and taxpayer advocates have been asking lawmakers to oppose PLA schemes and cosponsor fair and open competition legislation (H.R. 1284/S.403) on federal taxpayer-funded construction. Similar pro-taxpayer legislation has been enacted in 24 states.  —  www. buildamericalocal.com

Overcome Top Construction Risk Challenges in 2022

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By Craig Tappel and Kirk Chamberlain | Originally posted on constructionexec.com

Nobody was prepared for the fallout from the global pandemic, including the construction industry. But as 2022 and the pandemic’s third year arrives, contagion from new COVID-19 strains continues unabated and so has the fallout.

The pressure has only intensified to get ahead of barriers COVID-19 has created. The challenge facing the industry is to understand and manage the risks blocking its way.

Critical among them, of course, are shortages of everything, starting with materials and labor. By themselves, materials and labor shortages have led to costly delays in project completions, hurting revenues and the bottom line.

But the environment also has had positive implications for other deepening trends that construction firms should be prepared to leverage. Alternative materials have continued to evolve and—even without supply chain issues—will be more viable in 2022. And technology’s influence is unstoppable. It’s managing the downsides that may be problematic.

There’s a lot at stake in managing the challenges ahead for a booming North American construction market, especially given the added boost of the trillion-dollar U.S. infrastructure bill. Here are the prevailing trends shaping up for 2022.

 

1. SUPPLY CHAIN WOES CONTINUE, BUT ALTERNATIVE MATERIALS MAY HELP

Between the pandemic-driven shutdowns and impact of severe weather conditions in 2021, builders have been seriously squeezed by a shortage of materials needed to take on a surplus of projects. They should expect more of the same in 2022.

It’s worth noting that alternative materials will get more traction, though that’s more a function of continuing quality improvement than a response to supply chain bottlenecks. For example, mass timber’s strength and fire resistance make it viable for certain uses. Plus, it’s manufactured domestically, giving it long-term supply side advantages. And the disadvantages of “bendable” concrete can be balanced against a smaller carbon footprint and greater durability.

Still, downside risks must be weighed. Manufactured wood, for example, is not as susceptible as regular lumber to fire and water damage, but it’s not risk-free. Insurance implications, particularly property, general and product liability, must be checked before it’s used.

Conditions mean that managing the business won’t get easier in 2022. Cash flow cycles will continue to be interrupted, affecting costs, timing and project budgets. And delays due to materials shortages are leaving firms under further pressure to extend expiring builders’ risk policies.

It’s going to take resilience to get through this period. To mitigate the risks, supplier relationships—especially with local and regional resources—must be bolstered through regular engagement and use of backups. If possible, materials reserves should be built. And reliance on foreign-made supplies and just-in-time sourcing should be reconsidered.

2. THE LABOR SHORTAGE REMAINS A LONG-TERM PAIN

Over the long term, the perennial shortage of construction workers may cause more pain than shortages of materials. The greying of the workforce—with an average age of 43—makes the question more urgent. Where will the 1 million workers needed to meet the construction boom over the next two years be found?

Improved voluntary benefits can pose a near-term recruitment advantage. Vocational skills training and retraining is helpful, too, particularly in addressing the worrisome issue of retention as turnover has reached 21.4%. Members of Associated Builders and Contractors invested $1.3 billion in 2020 alone to upskill workers.

Making construction more relevant to tech-savvy to younger generations is also key given the way technology increasingly influences the industry. The growing deployment of technology with drones, robotics and “Internet of Things” solutions requires bringing in millennials and Gen Z who are comfortable using technology. Some firms are responding with cross-training programs, where older workers with manual skills and tech-savvy apprentices trade their knowledge.

3. THE PROFOUND AND CONTINUING IMPACT OF TECHNOLOGY (AND ITS RISKS)

Technology is having a transformative effect on every aspect of the construction business, a trend that will only continue to grow in 2022 and beyond.

It’s exciting to watch the wave. Drone use is skyrocketing and more contractors are using automated construction robots and self-driving vehicles. Smart project management tools make scheduling and budgeting more efficient. Robots and wearable sensors improve efficiency and safety.

Keeping up may pose a challenge to some given financial fallout from the pandemic. But participating in the trend is not optional when technology promises to improve the industry’s productivity by as much as 60% and deliver as much as $1.6 trillion annually in incremental global value.

Moreover, guarding against technology’s risks, which are increasingly serious as cyber attacks continue to grow and cost the industry. No one’s safe from breaches; in one study, 75% of firms in construction fields reported having cyber incidents in the previous 12 months.

If riding the tech wave is not an option, neither is cyber insurance as attacks are only gaining momentum. While premiums are likely to grow by 20% or more in 2022, such policies more than outweigh the devastating costs of emerging from an attack without protection.

Economic outlook: The issues that will boost, challenge construction in 2022

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Originally posted on projin.co.kr

In late December, Deron Brown was having trouble finding a hotel room in Phoenix for a January conference. And from his perspective, that was a good thing.

As president and chief operating officer of U.S. operations for Edmonton, Canada-based PCL Construction, Brown constantly tries to read the tea leaves of where construction markets are headed.

As 2021 turned into 2022, many of those signs indicated it was at least in the right direction.

Beyond the lack of hotel rooms in Phoenix — a signpost for Brown that “people are getting back out there and doing things” — he’s noticed a distinct change in the tenor of PCL’s clients across its buildings, industrial and civil divisions. Namely, they’re no longer lollygagging when it comes to committing to projects.

“The key is whether people are actually pulling the trigger and signing contracts,” said Brown. “Over just the last couple months, we see people doing that.” For example, while hospitality construction has been one of the hardest hit sectors of the pandemic, PCL had at least six hotels in various stages of development and construction at the beginning of 2022.

 

Deron Brown

Courtesy of PCL Construction

“We have a lot of developers and hoteliers who are wanting to build,” Brown said. “Their estimating and pre-con departments are very busy.”

Indeed, across the four regions where PCL operates — Canada, Australia, the Caribbean and the U.S. — the firm had a record backlog at the end of 2021. For Brown, it all adds up to a robust outlook for the year ahead.

“We do see a strong construction market for 2022,” said Brown. “Some areas are still hurting, but a lot of other areas are very strong.”

Brown and PCL aren’t alone in that tentative, but rebounding, new year’s forecast.

NERVOUS OPTIMISM ON PRICING

Construction pros and economists are taking a cautious but more hopeful view on the year ahead, even in the face of the highest rate of inflation since 1982, material price surges, continuing supply chain snarls and the exploding COVID-19 omicron variant.

While these market observers still see plenty of challenges ahead in the sector — the endemic labor shortage being top among their concerns — their perspective at the beginning of the year marks a return, if not to normal, at least a resemblance to the pre-pandemic world.

 

Ken Simonson

Courtesy of Associated General Contractors of America

“Looking at 2022, I would say I’m nervously optimistic,” said Ken Simonson, chief economist for the Associated General Contractors of America. “Nonresidential construction, by and large, seems to have passed the low point and is on an upswing.”

For Simonson, that nervous optimism is based, at least in part, on some commodity prices coming back down at the end of 2021.

He pointed to copper’s 10% dip in December – though it started to blip up again in January – and hot-rolled coiled steel giving back 20% since its peak in September. Lead times for deliveries of materials were also shrinking, he said, a factor that should put further downward pressure on prices.

“I’ve gotten more optimistic about material prices,” Simonson said. While he doesn’t expect them to return to pre-pandemic levels, he anticipates more up and down volatility, which is better than the exclusively upward cost trajectory many material prices took through to the summer of 2021.

His bigger concern is continued threats from COVID-19, including omicron, the ever-changing vaccine mandate landscape and heightened vaccine hesitancy among construction workers, compared to other industries.

“It means there is a much greater risk for severe illness from COVID, and depending on what mandates are in effect, it adds to the difficulty construction firms will have fielding a full, healthy and eligible workforce,” Simonson said.

Those challenges add to the already endemic labor shortage in construction, where there were 345,000 unfilled jobs at the end of November. That was actually down from October, when openings hit an all-time high of 455,000, but up from 261,000 a year earlier, a 32% jump, according to the Bureau of Labor Statistics.

THE BENEFITS OF INFLATION

Yet, as some of construction’s biggest challenges converged in 2021 — namely rising prices and fewer workers — there’s also reason to believe that they might conspire to contractors’ benefit in the year ahead.

That’s the view of Anirban Basu, chief economist at Associated Builders and Contractors, when he looks at surging inflation in the economy as a whole — it rose 6.8% year-over-year through November 2021 — and the number of workers who are still sitting on the sidelines.

 

Anirban Basu

Permission granted by Associated Builders and Contractors

“Inflation is real. It’s not particularly transitory,” said Basu, countering the Federal Reserve’s view for much of last year that rising prices were temporary, before it pivoted to a more hawkish stance in December and signaled it would start increasing interest rates in 2022. “More and more people will have difficulty paying their bills.”

The silver lining of those increases is that they may very well force people to go back to their jobs. “That might induce them back into the labor market, which I think would be a positive,” Basu said. “It’s time to get back to work.”

Another looming advantage of rising prices is that it has put pressure on developers to lock in contracts now, before costs can go higher, and get their projects in the pipeline while contractors still have bandwidth. That’s a factor that Brown sees incentivizing his clients to move forward as well, especially as the pandemic recedes.

“There’s some confidence that we don’t have this thing beat yet, but we’re moving in the right direction,” Brown said in reference to COVID-19. “And to build a project, you don’t build it in a day — you build it in a year and a half, or two years. So people are starting to think that if they wait, they may miss the right opportunity to build their project.”

MANUFACTURING’S LONG JOURNEY HOME

For Richard Branch, chief economist at Dodge Data & Analytics, labor also figures into the biggest challenges facing construction in 2022, a trifecta he calls the “3 Ps” of “people, prices and productivity,” with the last hurdle referring to trying to do more work with fewer resources.

But he also sees evidence that construction might enjoy some tailwinds due to adjustments firms have made due to the very challenges COVID-19 has thrown at the country.

 

Richard Branch

Courtesy of Dodge Data & Analytics

A case in point is manufacturing, where a movement toward “onshoring” to overcome far-flung supply chain tangles overseas has led producers of goods not only to start ramping up their existing production volumes, but also to build new facilities to pump out more product.

Indeed, it was the manufacturing sector — not warehouses, not healthcare, not other nonresidential buildings — that blew the doors off construction starts in 2021, increasing by 86%, according to Dodge’s data.

Nonresidential Building Starts YTD Through November Each Year, in Billions
Sector 2020 2021 Change
Manufacturing $14.4 $26.7 86%
Warehouse $31.6 $40.5 28%
Other Nonres Building $55.4 $62.6 13%
Retail $11.5 $12.8 12%
Health Care $25.5 $27.0 6%
Education $57.5 $56.7 -1%
Office $40.1 $35.6 -11%
Total $236 $262 11%

SOURCE: Dodge Data & Analytics

“The good news is we are starting to see factory output come back to close to where it was prior to the pandemic,” Branch said. “That should help the supply side, and if we start to see some improvements with the log jams at ports, perhaps by the back side of 2022, we might see some reprieve from these higher prices.”

MORE HOARDING AHEAD?

Until that comes, however, there’s another outlier that concerns construction watchers, and that’s an increase in stockpiling of materials in yards and warehouses by contractors, simply to have them, should a job materialize where they can be used.

It’s a trend Brown has picked up on as he goes out to compete for the increased amount of contracts he’s seeing in the marketplace.

“Remember when the pandemic hit and everybody stockpiled toilet paper? That’s happening today with businesses and materials,” Brown said. “People are stockpiling three months of piping, or whatever it may be.”

That has compounded the problem of availability and delayed deliveries.

“Some of it is a shortage, and some of it is shipping, but some of it is still a little bit of fear, where people are buying products to try to protect themselves,” Brown said. “That’s driving up the demand, which does not help the overall industry.”

Craig Tappel, chief sales officer in the construction practice for Chicago-based surety brokerage Hub International, said he’s seen that among his clients as well.

 

Craig Tappel

Courtesy of HUB International

“They’re trying to build stockpiles so that they have their own supplies, and that’s adding to the shortages,” Tappel said.

It also introduces another element of risk that contractors need to be aware of.

“If it’s not assigned to a particular jobsite, and it’s not part of materials headed toward a particular project, it’s not automatically covered under that builder’s risk policy,” Tappel said. “So you’ve got to think about that. What are you doing to mitigate that risk?”

It’s a question contractors will need to answer as they as they navigate the tenuous recovery expected for 2022.

Nonresidential Construction Employment Up 27,000 in December, According to ABC

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By Greg | Originally posted on site-kconstructionzone.com

The construction industry added 22,000 net jobs in December, according to an Associated Builders and Contractors analysis of data released today by the U.S. Bureau of Labor Statistics. Overall, the industry has recovered slightly more than one million (92.1%) of the jobs lost during earlier pandemic stages.

Nonresidential construction employment expanded by 27,000 positions on net, with all three subcategories posting gains for the month. Nonresidential specialty trade added 12,900 jobs, heavy and civil engineering added 10,400 jobs, while nonresidential building employment increased by 3,700 positions.

The construction unemployment rate rose to 5.0% in December. Unemployment across all industries fell from 4.2% in November to 3.9% last month.

“Today’s jobs report has economists shaking their heads,” said ABC Chief Economist Anirban Basu. “Not because it was an especially terrible report, but because the data are so difficult to interpret. The headline number of 199,000 jobs added economywide is deeply disappointing and makes December the fourth month in five that the headline number has fallen short of expectations.

“Dig a bit deeper, and the labor market appears much tighter and stronger than indicated by the payroll growth number,” said Basu. “Economywide unemployment dipped to 3.9% as the labor force participation rate remained unchanged. While it is true that the construction industry rate of unemployment ticked higher, this is likely because of seasonal factors as opposed to a rush of Americans joining the construction workforce.

“While the data are puzzling in many ways, the implication for contractors is reasonably straightforward,” said Basu. “The labor market remains extremely tight going into 2022. Contractors will be competing fiercely for talent. They already have been, according to ABC’s Construction Confidence Indicator, but that competition will become even more intense as dollars from the infrastructure package flow into the economy. Accordingly, contractors should expect another year of rapid wage increases in 2022. Those rising costs, along with others, must be included in bids if margins are to be sustained.”

Visit abc.org/economics for the Construction Backlog Indicator and Construction Confidence Index, plus analysis of spending, employment, GDP and the Producer Price Index.

Associated Builders and Contractors is a national construction industry trade association established in 1950 that represents more than 21,000 members. Founded on the merit shop philosophy, ABC and its 69 chapters help members develop people, win work and deliver that work safely, ethically and profitably for the betterment of the communities in which ABC and its members work. Visit us at abc.org.

ABC’s Construction Backlog Slips in December, Contractor Confidence Continues to Improve

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Originally posted on randrmagonline.com

Associated Builders and Contractors reports that its Construction Backlog Indicator fell to 8.2 months in December, according to an ABC member survey conducted from Dec. 16 to Jan. 4. The reading is down 0.2 months from November 2021, but up 0.9 months from December 2020.

Construction Backlog Indicator

ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels increased in December. All three indices stand above the threshold of 50, indicating expectations of growth over the next six months.

Construction Confidence Index

“Demand for construction services in America remains strong,” said ABC Chief Economist Anirban Basu. “Contractors have been upbeat about sales and employment prospects for months. What changed in December is that a growing fraction of contractors now believe that profit margins will rise during the next six months despite rising costs due to labor shortages and volatile materials prices.

“Backlog fell in the infrastructure category, but activity in that category is set to heat up in 2022 as federal infrastructure funds tied to the Infrastructure Investment and Jobs Act of 2021 begin to flow,” said Basu. “Backlog in the heavy industrial category also declined on a monthly basis, but over the past year backlog in this segment has climbed dramatically as manufacturers attempt to address goods shortages and more CEOs consider bringing some of their supply chains back to America. Industry backlog could be negatively impacted by elevated steel and other materials prices, with some projects cancelled and others redesigned to shift away from intense steel use.”

Note: The reference months for the Construction Backlog Indicator and Construction Confidence Index data series were revised on May 12, 2020, to better reflect the survey period. CBI quantifies the previous month’s work under contract based on the latest financials available, while CCI measures contractors’ outlook for the next six months.

Education & Workforce Development

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Originally posted on ibj.com

Educators still too focused on traditional paths

In IBJ’s Thought Leadership roundtable, experts at Project Lead The Way, Associated Builders and Contractors of Indiana/Kentucky, CREA Foundation and Greater Education Opportunities Foundation, discuss the state of Indiana’s education system and how it must improve to prepare Hoosiers for the workforce.

Q: How would you grade the state’s educational system for the job it does preparing students to enter the workforce and excel in their chosen field?

Vince Bertram: There is too much focus on memorization and calculations and not enough being done to teach the application of subjects in schools and how they apply to the real world.

Despite the fact that nearly two million people graduate from college every year with STEM-related degrees, the U.S. still needs to import nearly 100,000 foreign workers to fill our needs in areas ranging from science to engineering. This means the U.S. education system simply doesn’t produce enough graduates with the skills employers need.

The surge of transformational technologies in recent years has forced companies to become less resistant to change. They must change if they want to survive, but to do that they must employ skilled workers. There’s mounting evidence that the skills needed by the emerging workforce to compete in this new economy aren’t necessarily the skills that most college graduates possess.

JR Gaylor: If a student’s chosen field requires a traditional four-year post-secondary degree, then our educational system prepares those students well. I’d give it an A. However, 65% of jobs will not require a bachelor’s degree. Currently, the share of Indiana’s labor force without a four-year degree is 70%. Educational systems need to adjust their focus to a much more balanced approach in preparing students for their next step instead of focusing their expectations, attention, and resources on attempting to prepare 100% of students for 35% of the job openings. Much work needs to be done for educational systems to make the appropriate investment in educational options other than earning a four-year bachelor’s degree. On that front, I’d give the state a C-.

Arvetta Jideonwo: Unfortunately, our educational system has some work to do when preparing students for post-secondary education and the workforce. This is particularly concerning for low-achieving students and those experiencing financial barriers to pursuing college.

According to the National Assessment of Educational Progresss (Nation’s Report Card, 2016), only about a third of U.S. high school seniors are prepared for college-level coursework in math and reading. And while the performance of the country’s highest achievers is increasing in reading, the lowest-achieving students are performing worse than ever.

Research shows that the lack of a stable home environment for students throughout their K-12 and post-secondary education experience has a great impact on their ability to persist, attain a credential, and ultimately become employed. There should be a greater focus on support and wraparound services for these students.

As one of the nation’s largest financial syndicators for low-income housing communities, CREA’s mission is focused on providing families with solutions to maintain a stable home environment. We believe there is a direct correlation between where a student resides and access to the best educational environment to ensure that they reach their highest potential.

Kevin Teasley: I would give the K-12 system in our state a C. High schools are too focused on providing a basic and traditional education for most students and meeting state accountability measures, which are limited in scope. While there are pockets of successful relationships between high schools and workforce, these opportunities are just that—pockets. Not systemwide, nor available to all.

Providence Cristo Rey High School in Indianapolis should be the norm, not the exception in Indiana. This terrific school has hundreds of partnerships with corporate Indianapolis. Its high school students gain valuable real-world experience.

Q: What is being done well in preparing people for careers?

JR Gaylor: From the private sector, there are two shining examples of assisting students in finding the best pipelines for careers. The Indiana Manufacturer’s Association’s INFAME program is worthy of note. INFAME (the Indiana Federation for Advanced Manufacturing Education) works with educational entities to establish and endorse programs and curricula that develop the skill set students need for manufacturing jobs. Another private sector initiative is the ABC Prep Academy, “From Junior to Journeyperson,” which gives high school students accelerated entry into a formal, four-year construction college.

Arvetta Jideonwo: The educational system is incorporating practical learning experiences for students, in particular in the STEM fields, to increase critical-thinking skills that are vital in the work environment. There are some excellent examples of these programs, such as Project Lead The Way, which creates an engaging, hands-on classroom environment and empowers students to develop the in-demand knowledge and skills they need to thrive. While the program does not reside in every school across the country, it has a large footprint in Indiana and is creating an excellent model for preparing students for the workforce.

Kevin Teasley: Providence Cristo Rey High School does an excellent job exposing students to future careers by placing them in real-world situations at area companies. 21st Century Charter School in Gary and GEO Next Generation High School Indianapolis focus on supporting students to do more than high school, too. These schools place students in real college and career certification classes while in high school so that students graduate from high school with experience and self-confidence, earn more than a high school diploma (college degrees and certifications or credits toward them), and are ready to continue and complete a college degree and/or get a high-paying job right out of high school.

Q: What are the biggest opportunities for improvement?

Arvetta Jideonwo: A consistent area for opportunity is the incorporation of career readiness skills and development into the K-12 environment. This is particularly true of high school, where internship and mentoring programs can be introduced. These programs not only provide students with vital critical-thinking skills, but they also enhance soft skills and decision-making processes through experience in a work environment. The Cristo Rey Network is the only network of high schools in the country that integrates four years of rigorous college preparatory academics with four years of professional work experience through the Corporate Work Study Program. Providence Cristo Rey in Indianapolis is consistently ranked as one of the top schools in its network, with over 90 Corporate Work Study partners. The school also has a full social services team that connects students and their families to resources in the community that can contribute to their success.

Kevin Teasley: GEO has been working since 2002 to meet student, workforce and societal needs by creating a sustainable school model that blurs the lines between K-12 schools, higher education and the workforce. Our schools have proven that it is possible for students in underserved communities to do much more than tradition suggests. In Gary, where the city had an annual dropout rate of 50%, our school regularly posts graduation rates greater than 90%. But more important than our graduation rate is the fact that our students earn associate degrees and career certifications while in high school—all at no additional cost to the taxpayer. Indiana can replicate this model and take it statewide. High schools, higher education institutions and employers need to come together to clearly define needs and then align educational pathways that support those needs and don’t duplicate efforts. GEO is working toward this goal.

Vince Bertram: We need to ensure our students can see what is possible, and they need to be exposed to career opportunities sooner. Having confidence in the classroom from an early age can significantly influence a student’s choice to pursue higher education when they are older. Exposing students to a wide range of career opportunities—and the knowledge and skills to pursue them—is critical to helping them make informed decisions about their futures.

Research shows that building self-confidence and self-esteem begins in early elementary grades. PLTW creates high-quality learning experiences accessible to more students, beginning in Pre-K, to give them the opportunity to engage in STEM.

The best way to increase STEM participation by students—especially those who are underrepresented in STEM, such as girls and minorities—is to start programs like PLTW early before children begin self-selecting out.

JR Gaylor: Expanding the initial successes of INFAME and the ABC Prep Academy to areas around the state could take proven models and provide immediate opportunities. These two programs are scalable, as more private-public educational partnerships can be added.

Q: What can employers do to help educators prepare students for careers?

Kevin Teasley: Employers need to reach out and engage high schools to share their workforce needs so that high schools can better connect what they are teaching to real world needs. Employers can help schools prioritize and update programs and can help show students future opportunities. Employers can also assist schools in creating real-world work situations and opportunities in the workplace. GEO is working to create work opportunities for our students who are already enrolled in college and/or career courses. These students are more than qualified to support employers in their needs.

Vince Bertram: Ultimately, we need our businesses to be better engaged. If you are waiting until college career fairs to connect with students, you’re too late.

We need businesses to support more holistic skill development—from technical skills to transportable skills, like problem solving, creative and critical thinking, collaboration, and communication. We must measure the skills that are most critical for career preparation, yet most academic tests still assess recall-level knowledge.

Business leaders can also provide real-world feedback on the curriculum students learn in the classroom. No one knows better what skills will make for industry success than those whose business success depends on qualified professionals in their workplace.

JR Gaylor: There is generally a chasm between the private sector and the educational systems. The private sector and schools speak a different language. They operate differently. To be fair, they both bear responsibility for not trying to bridge the chasm. There are too few opportunities to learn about each other. Each tries to fit the other’s way of doing things into their own expectations. Except for exemplary models, such as Area 31 Career Center in the Indianapolis area and the Prosser Career Education Center in New Albany, private sector engagement in Indiana’s public education career centers is lacking.

Arvetta Jideonwo: Employers can play a vital role in helping educators prepare students for careers through working collaboratively to identify proper skill sets for specific roles and by continuing to be flexible in work environments and job types. We learned during the pandemic that many companies could deploy a remote or hybrid work environment and still achieve their goals and objectives. We need to take this approach in recruiting talent, so that there are clear expectations. Also, investing in starting a college internship program can improve recruitment and retention efforts. Statistics show that internships can give college students a leg up when it comes to securing full-time employment after college. In fact, according to a report from the National Association of Colleges and Employers, 56 percent of 2019 college students who interned while pursuing a degree turned that experience into a full-time hire with the company. According to the report, the retention rate for interns hired is 71 percent after a year as compared to those who were hired without an internship or job experience. Their retention rate was only 42.4 percent.

Q: What should the state be doing to help prepare students for careers?

JR Gaylor: State leaders should be commended for establishing a new opportunity called Next Level Programs of Study. This program will provide a greater volume and quality of career and technical education courses that align to post-secondary certificate programs. In addition, state leaders have invested in the Next Level Jobs Initiative, which provides post-high school resources to individuals to better equip them with employability skills for high wage/high demand careers. Employers have access to training grants of up to $50,000 each as reimbursement for providing educational opportunities to their employees.

Kevin Teasley: The state is doing a great deal already, but more can be done. Accountability report cards matter to schools. Perhaps the best way the state can encourage schools to do more to prepare students for college and the workforce is by rewarding schools for going deep in these areas. The state already proved the power of accountability grades by measuring college and career readiness and rewarding schools that graduate students who took at least one Advanced Placement, International Baccalaureate, dual credit or career class. More than 68% of high school graduates achieve this today. But the bar is too low. Raise the bar and reward schools for graduating students with actual associate degrees and/or full career certifications in high-wage fields. This should not cost the state more, either. It requires a full review of where dollars are being spent, for what purpose and cutting duplicative expenses.

Q: How can educators address racial and income-based achievement gaps for students at the primary level?

JR Gaylor: Projecting a sense of hope that every student has a productive and fulfilling future. After establishing a sense of hope, the next step is to systematically connect the dots for the students so the students and parents see there is a viable and attainable path forward.

Arvetta Jideonwo: An unfortunate reality is that students of color and low-income students often do not matriculate at the same level in comparison to their counterparts. This is often a result of their community and access to proper education supports and wraparound services. According to the National Attainment Network, a low-income student is 29% less likely than a high-income student to enroll in post-secondary education directly after high school. Ultimately, only 35% of low-income high school students obtain a post-secondary credential by age 26. With the right support, low-income students and students of color succeed at similar rates to wealthier, majority-race students. A solution to close this gap is investment in support and wraparound services throughout K-12 to ensure that students reach their full potential by pursuing a post-secondary education pathway.

Kevin Teasley: We need to believe students can do much more than tradition suggests. Students have more capability than we give them credit for. We should also understand that the opportunities our students want may not be in our buildings. They may be at the college and/or career centers instead. Many people doubted our efforts to put 9th grade students in college courses, but these students are doing great. And their efforts are proving to their peers that they can do it. We are seeing a snowball effect in Gary, where we started with only one student taking a college course in high school. Today, nearly 90% graduate with a college degree or credit and/or career experience—22 points more than the state average.

Q: How can educators address racial and income-based gaps for high school and post-secondary students?

Arvetta Jideonwo: Educators can address these gaps by providing a strong system of support for this population of students, which is similar to the Cristo Rey Network model. Many students are dealing with family issues, food insecurity, housing, and other constraints outside of the classroom that inhibit them from completing their high school degree or post-secondary credential. At CREA, we believe housing is the first rung on the ladder to economic opportunity for many low-income individuals and families, and their access to the best schools and additional educational supports is intrinsically linked to their communities. CREA Foundation’s goal is to provide greater access to economic opportunity for students accessing post-secondary education, helping them earn a credential, and break the cycle of poverty, no matter their race, place, or socioeconomic status. CREA Foundation is focused on providing student scholarships and partnering with educational leaders that share its commitment to advance the education of academically promising students by investing in systems of support and wraparound services to ensure students are successful.

Kevin Teasley: We are creating strong partnerships between our schools in Gary and Indianapolis with Ivy Tech, Indiana University and Purdue University to support students in their college and career pathways. This includes scheduling, counseling, academic supports, transportation, covering the cost of tuition and textbooks, and providing the social and emotional supports necessary for students to succeed. You don’t learn to swim by jumping into the deep end of the pool. You start in the shallow end and then as you get stronger, you go further into the pool. We take the same approach to preparing students for college and careers. We start them in 9th grade, and as they grow stronger in their college and career classes, they take more classes. We support them every step of the way. After graduating from our high school, they know Ivy Tech, IU and Purdue and are better able to successfully navigate college and/or careers.

JR Gaylor: With more dynamic partnering of the education system with the private sector. The sooner the access to the employer community, the better. The disadvantaged student likely has not been made aware by family, school, or community of the array of great careers awaiting them. Understanding and participating early in meeting employers from the larger community through job shadowing, summer jobs, and internships is a practical way to address the gap. This also requires educators to have developed a greater awareness of companies and industries and how they function and operate. To excite and connect students to employers, educators need to have relationships with the job creators in their sphere and must be able to articulate to students specifically what a job entails.

Q: Does our education system spend enough time making students aware of apprenticeships and certificate programs, or is the system too focused on traditional four-year post-secondary degrees?

Kevin Teasley: There are new initiatives underway right now to improve apprenticeships for high school students, and these show great promise. Ascend Indiana is doing a great job piloting an apprenticeship program with Indianapolis schools. More should be done to support Ascend’s efforts, and the effort needs to be supported statewide.

Vince Bertram: State accountability has shifted to place a greater emphasis on workplace certification and I believe this trend will continue. It’s also important for employers to reconsider educational requirements for employment. For instance, many employers have begun to question whether the four-year degree signifies someone who is ready for the challenges of the new economy. Alternatives to four-year degrees have continued to expand to offer students a more focused and specialized education.

In education, we must continually update our academic programs to reflect the unique challenges of the new economy. Skills matter.

JR Gaylor: As I mentioned before, the educational system generally still sees itself as preparing students for attaining the traditional Plan A: a four-year college degree. That is the formal and informal message students receive from all aspects of the educational system. Therefore, if a student does not envision himself or herself succeeding on that path, they tend to disengage. Progress is being made in some circles of educational leadership to understand that EMPLOYMENT in a career be the overriding goal. A cultural shift must occur among educators and parents for everyone to understand that employment prep, not college prep, should be the primary goal.

Arvetta Jideonwo: In my opinion, the system is focused on the attainment of four-year post-secondary degrees. I believe we have an opportunity to provide more exposure to two-year degree tracks and non-traditional education credentials to cater to the diverse skill sets of individual students. Ivy Tech Community College does an excellent job of exposing students to real-world experiences and non-traditional tracks.

Q: If you could do only one thing to help improve our educational system, what would it be?

Vince Bertram: Make learning relevant. We must focus on providing access to transformative learning experiences for all students and make clear the connection between learning and the opportunities it will create when they leave the classroom.

This is tied to the idea of a growth mindset and career learning. For example, how do we connect students and make learning in the third grade relevant to a career? We have to help students understand that what they’re learning today does matter—not just for the next test, but for the lifelong pursuit of an enduring career.

If students haven’t developed key skills over time, then we have dramatically limited their access to some of the most prosperous careers in our economy.

JR Gaylor: The Indiana Commission for Higher Education was established to define the educational missions of public colleges and universities and plan and coordinate Indiana’s state supported system of post-high school education. It works closely with the Department of Workforce Development and the Department of Education. Because of CHE’s charter, it focuses almost entirely on the traditional Plan A post-secondary, four-year degree college system. The CHE serves well those 30-35% of our students who succeed in that pathway and corresponding institutions.

A game changer for Indiana would be to create a parallel commission that would serve the interests of the 65-70% of our students who choose other options in career and technical education (CTE). This new commission could bring the same focus, oversight, credibility and authority to a coordinated statewide CTE mission that CHE does for the four-year traditional college system.

Arvetta Jideonwo: In Indiana, we have a multitude of school networks, private and public schools, charter schools, higher education institutions, non-profit organizations and funders that could work collaboratively to address the educational system gaps that are unfortunately leaving low-income students, students of color, and other students from marginalized communities behind. A comprehensive approach to address needs from a K-16 perspective with involvement from the public and private sectors could create a system of support to ensure Indiana students are reaching their highest potential. A collaborative approach to addressing this issue could reduce potential barriers to continued persistence through high school to post-secondary and earning
a credential.

Kevin Teasley: GEO encourages legislators to give qualified high school students and their schools access to the state’s 21st Century Scholars funding, which is typically available for paying college tuition only after high school. This will remove financial challenges related to taking college courses before high school graduation and will encourage high schools to further partner with higher education institutions. Students can receive academic and social and emotional supports from their high schools while learning to navigate real college and career opportunities. It will increase results regarding college completion rates among 21st Century Scholars and it will serve to encourage others in high school to engage in college and career pursuits.

Steel Prices Might Be Skyrocketing Soon: Here’s Why

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By TK Sanders | Originally posted on outsider.com

With the global supply chain currently experiencing unprecedented chaos, raw materials like steel are sometimes hard to find these days.

Steel is not a product that gets bought by consumers, but it comprises hundreds of products that consumers do buy each and every day. Therefore, even though a shortage may not directly affect you, the consumer, it would likely indirectly affect you in some way.

“Steel is certainly one of those examples of shortages, higher prices, and growing frustration among customers,” Associated Builders and Contractors chief economist Anirban Basu said.

When the pandemic began, steel demand (and prices) actually dropped. But once the market recognized an impending supply chain crisis bubbling, steel prices soared to unprecedented levels. Before the pandemic, steel prices averaged between $500-$800 per ton. Since then, it has gotten as high as $1,900 per ton.

When demand rises steadily, but supply dwindles, bubbles in the market form. Analysts worry that the bubble is going to burst soon.

“They have turned into a bubble. So, they go higher because they go higher,” CRU Group analyst Josh Spoores said.

Why Prices Continue to Rise

The effect on prices becomes exponential as demand grows. Currently, the economy continues to expand at unprecedented rates. Money is cheap to borrow, and the federal government wants to invest in infrastructure. Therefore, as more money than ever flows into a world dependent on steel, it bottlenecks at the point of distribution. Steel then goes to the highest bidder instead of circulating freely throughout the entire economy.

“We estimate that for every $100 billion of new investment in infrastructure, that’s going to mean 5 million tons of additional steel demand,” American Iron and Steel Institute CEO Kevin Dempsey said.

The federal government has deep pockets and loves spending money on projects to campaign on later. How many billions of dollars will the government throw towards the construction sector over the next few years? Nobody can be certain, but what we know for sure is that demand continues to steadily increase.

The World Steel Association forecasts a global rise in demand of 3.8% over 2020 totals. This figure is most likely based on planned construction and a normal increase in consumer retail production. Toss in supply chain woes, and you start flirting with disaster.

Basically, the world hasn’t seen such a rise in demand for steel since World War II. What’s worse is that economies are fragile, so when the supply chain works out the kinks and steel becomes easier to purchase, the price could drop wildly.

The bubble has caused major steel-producing countries like China to safeguard their supply. China out-supplies the world with steel almost 10-1 over the next largest exporter, which is India. The United States sits all the way down in fourth place, producing just 72 million tons. China produces over 1 billion tons for comparison’s sake.

ABC Cheers Supreme Court OSHA COVID-19 Vaccination Mandate Ruling

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On Jan. 13, ABC applauded the U.S. Supreme Court for reinstating the stay on the U.S. Department of Labor’s Occupational Safety and Health Administration’s COVID-19 Vaccination and Testing Emergency Temporary Standard, which applies to employers with 100 or more employees. On behalf of the construction industry, ABC filed one of the emergency appeals to the Supreme Court leading to this successful outcome. The Supreme Court remanded the case to the 6th Circuit, which will consider the merits of the case.

“ABC is pleased that the Supreme Court blocked OSHA’s COVID-19 Vaccination and Testing ETS,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “ABC is proud to have played an important role in preventing OSHA from causing irreparable harm to the construction industry.

“This is a big win in removing compliance hurdles for the construction industry, which is facing multiple economic challenges, including a workforce shortage of 430,000, rising materials prices and supply chain issues. ABC continues to support vaccinations and encourages members to use its COVID-19 vaccination toolkit to keep workers safe on construction jobsites.”

Following the Supreme Court’s decision, U.S. Secretary of Labor Marty Walsh issued a statement, “I am disappointed in the court’s decision, which is a major setback to the health and safety of workers across the country……Regardless of the ultimate outcome of these proceedings, OSHA will do everything in its existing authority to hold businesses accountable for protecting workers, including under the COVID-19 National Emphasis Program and General Duty Clause.”

On Nov. 9, ABC and its Alabama chapter filed a petition for review with the U.S. Court of Appeals for the 11th Circuit against the OSHA ETS. ABC filed an emergency appeal to the Supreme Court to stay the ETS on Dec. 20.

Learn more about the Supreme Court’s ruling on the OSHA ETS in ABC general counsel’s analysis, Supreme Court Stays OSHA “Vaccinate or Test” Emergency Temporary Standard.

In a separate ruling issued by the Supreme Court on the same day, the court lifted injunctions that had been issued against the Centers for Medicare & Medicaid Services vaccination mandate applicable to health care institutions and their suppliers and contractors.

Learn more about the court’s ruling on the CMS mandate in ABC general counsel’s analysis, U.S. Supreme Court Lifts Injunctions Against CMS Vaccine Mandate.

On Jan. 18,  ABC offered a webinar for ABC members on what the Supreme Court ruling means for construction employers. To access the archived webinar, go to ABC’s Academy.

ABC members should continue to monitor these developments in Newsline and the Beltway Blueprint.

How contractors employ tech solutions to help mitigate pricing woes

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By Robyn Griggs Lawrence | Originally posted on https://www.constructiondive.com/

Firms like Boldt and DPR have embraced using data and BIM for detailed cost breakdowns on project bids.

When The Boldt Co. was asked to submit a proposal for a new building’s structural steel package based on very limited drawings of an existing one, the estimating team didn’t flinch. Using BIM software Autodesk Revit, Boldt designers were able to model the building in a matter of hours and send a detailed cost breakdown of the required tonnage to a fabricator, which sent back a price within a day.

“The typical way of doing it — sending documents to the subcontractor and having them do takeoff and pricing — would have taken a minimum of a week,” said Mark Nolta, corporate director of estimating and preconstruction for Boldt.

Over the past two years, Boldt has “made leaps and bounds to harvest technology” as it MacGyvers a system using several different software products to not only speed up estimating exponentially, but also make it more accurate, efficient and dynamic throughout a project’s life. Nolta said Boldt deems this effort crucial “to help us understand and keep in front of the ever-demanding pace.”

Similarly, at DPR Construction, the days of “Here are the drawings, go takeoff the job, bid it and submit a number” are over, said Philip Bartkowski, national preconstruction leader for the Redwood City, California-based contractor.

“There is a deeper expectation of preconstruction service from our clients,” he said. “The management of the entire process and guiding client/design decisions has become paramount — not just counting things and assigning a unit cost, though that’s certainly still important.”

Like Boldt, DPR uses estimating and bidding software from several different vendors, filling in gaps with in-house applications and development solutions. “The current toolset can get complex due to the expectations that have progressed in the past few decades,” Bartkowski said.

Having access to accurate and up-to-the-minute estimating capability is more crucial these days than ever, as material prices and availability fluctuate due in part to global supply chain instability. The rapid escalation of material prices, a crisis that revved up last spring, shows no sign of slowing down for at least another year, Anirban Basu, chief economist for Associated Builders and Contractors, told Construction Dive.

“Starting in March of this year, it just became all-consuming,” added Brian Perlburg, senior counsel of construction law and contracts for Associated General Contractors of America. “It hasn’t let up. It’s become an evergreen issue.”

Data-rich and ready

Boldt and DPR are exceptions in an industry that has been one of the slowest to digitize. When it comes to estimating, most contractors are struggling, according to a recent report by Dodge Data & Analytics and construction management software company Procore Technologies. They need solutions that can integrate final cost estimates into project budgets, track every aspect of a job’s impact on overall project costs, forecast critical costs with real-time data from the field and dynamically track every dollar. Technologies exist to address those challenges, the report found, but “only a fraction of the industry is currently taking advantage of them.”

Many contractors dismiss the importance of construction estimating software because they see it as a back-office function, said Kevin Sturm, senior director of product marketing for Procore, whose software connects field teams, office administrators and developers in one platform.

“People think, ‘Oh, that’s accounting,’ but it’s not. It’s real-time financials connected to what’s actually happening in the field,” Sturm said.

Using pre-built templates, construction estimating software creates material and labor lists, projects estimated costs, calculates margins and integrates with resource-planning workflows, eliminating humans’ tendency toward optimism bias and strategic misrepresentation. When estimating systems such as Autodesk’s Revit are connected to BIM, a widely used technology that creates a digital representation of a structure before it’s built, costs can be automatically calculated down to the minutest details and instantly updated whenever plans change throughout construction.

BIM-connected platforms determine the exact quantities of all materials and components a project needs, shaving estimating time from days to hours. And thanks to BIM, companies now have immense sets of historical data that can be combined with external factors like cost and quantity metrics to accelerate and improve estimating.

BIM’s next evolution, the digital twin — which uses AI and machine learning to create virtual models — is spawning even more data, which contractors can continue to use for scheduling and procurement throughout the design and construction process.

“We can analyze historic information to make better decisions going forward about what subcontractors we select, how we price work and how we look at our own staffing costs and schedules,” said Chris Mills, president of New York-based Plaza Construction, which enhances its BIM efforts with several virtual applications, including Revit for estimating. Relying heavily on data analytics, the company is able to identify potential problems in addition to streamlining the estimating process.

“From my seat, that’s really meaningful use of technology to deliver a better product to our clients,” Mills said.

Into the cloud

Patrick Murphy, executive vice president of his family’s firm, Miami-based Coastal Construction, launched Togal.ai in 2019 because he saw the repetitive, onerous estimating process as ripe for automation.

Murphy knew the construction industry had some catching up to do when it comes to technology, but he had no idea how far behind it was. When he set out on his tour introducing Togal to fellow contractors, he was shocked to find out many were still using legacy software that wasn’t connected to the cloud.

“I didn’t realize how many customers would be moving to us from other software just because of that,” he said.

Using an artificial intelligence-based engine based on AIA measurement standards, Togal calculates and accurately prices jobs in seconds, eliminating the need for weeks of manual and computer labor and hundreds of pages of reporting.

“People say it takes five, maybe eight years to train a good estimator,” Murphy said. “With all the work happening right now, they can’t do it.”

COVID-19 has forced slow-to-adapt contractors to seek out technology solutions they didn’t need or want before, said Murphy, whose team is onboarding several top U.S. construction firms and in conversations with many more.

“Now, especially in markets like Florida and Texas that are so strong, everyone we talk to seems to be behind and can’t get caught up,” he said. “When we introduce Togal, they say, ‘Holy cow, you mean I can get 15 weeks of my life back?'”

Federal contractor minimum wage to rise to $15 an hour

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By Ryan Golden | Originally posted on https://www.constructiondive.com/

Dive Brief:

  • The U.S. Department of Labor announced Monday a final rule implementing President Joe Biden’s executive order raising the federal contractor minimum wage from $10.95 to $15 an hour. The final rule retains the Jan. 30, 2022, deadline by which agencies must incorporate the new rate into new contract solicitations.
  • The requirements apply to federal contractors that perform work in all 50 U.S. states as well as U.S. territories, Jessica Looman, acting administrator of DOL’s Wage and Hour Division, said during a media briefing Monday. It also ends the tip credit as well as the subminimum wage provision for certain employees with disabilities.
  • The new rate does not apply to eligible federal contracts entered into before Jan. 30, 2022, but will apply to extensions of such contracts finalized after the deadline. Beginning Jan. 1, 2023, the minimum wage will increase annually by an amount determined by the Secretary of Labor. Looman said the agency would soon provide guidance and educational outreach to contractors on how to implement the rule.

Dive Insight:

The legislation’s effect on construction companies will most likely be minimal, as most construction firms that do business with the federal government already pay workers at wage rates higher than the $15 per hour minimum established in the rule, said Ben Brubeck, Associated Builders and Contractors vice president of regulatory, labor and state affairs, in a press statement.

It has been nearly four months since DOL published its proposed rule implementing Executive Order 14026, which Biden issued in April.

Questioned as to whether the implementation of the order would lead to excessive costs for contracting businesses, Looman said public comments on the proposal were “mostly very positive” and that the agency has been in contact with the Small Business Administration in developing guidance material specifically for small businesses. She noted that when an agency enters a contract, it must pay for the services provided.

“We want to make sure we are leveraging the buying power of the federal government to ensure fair wages for workers,” Looman said. “Because we are spending dollars on federal contracts, it really is our job to ensure wages are fair.”

In a tweet Monday, the agency said more than half of the workers benefiting from the wage increase order were women, while 25% were Hispanic and 15% were Black. Looman said that while the agency did not have a good estimate of all the workers that may be impacted by the rule, those in the childcare, restaurant and maintenance industries would most likely be impacted in states and localities where minimum wages had not recently increased.

Looman also said the rule could be seen as a “continuation of the evolution of the federal government using its purchasing power to increase wages,” citing former President Barack Obama’s 2014 executive order — and subsequent final rule — raising the federal contractor minimum to $10.10 an hour.

A fact sheet on the rule noted that certain contracts are excluded from the requirements, including grants within the meaning of the Federal Grant and Cooperative Agreement Act; certain procurement contracts for construction that are not subject to the Davis-Bacon Act; and certain contracts for services that are exempted from coverage under the Service Contract Act or its implementing regs, among others.

As part of the regs, contractors must meet notice-and-posting requirements by, for example, posting the applicable wage determination in a prominent and accessible place at the worksite, according to the fact sheet.

Future increases to the minimum must be determined by the Secretary of Labor and published at least 90 days before they take effect. The rule further specifies that such increases must be: not be than the amount in effect on the date of determination; increased according to the annual percentage increase of the Consumer Price Index for Urban Wage Earners and Clerical Workers; and rounded to the nearest multiple of $0.05.