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January 24, 2013

Construction Estimator: A Job with a Future
Filed under: Industry outlook — Tags: — nedpelger

In our current economy, few jobs are expected to experience faster-than-average growth. But, as Software Advice–a software research company based out of Austin, Texas–recently reported, that’s just what the Bureau of Labor statistics is expecting to happen for the role of construction estimator. Between 2010 and 2020, employment for cost estimators is projected to grow from 185,000 to 253,000 jobs–a 36 percent gain.

While construction estimating is hidden from the limelight, it’s one of the most important roles on any construction site, especially given the unstable economy and rapidly changing material prices which are coupled with shorter bidding windows. A quality cost estimator is critical to the success of any construction firm as the accuracy and timeliness of a bid is a determining key factor in which company wins the bid.

For people that are committed to the role, jobs should be plentiful. And starting in the role of cost estimator can be a great way to climb through the ranks. First, however, you need the skills to get the job:

  • Strong math skills, particularly in disciplines like trigonometry.
  • Attention to detail, while being able to see the big picture.
  • Intense competitiveness and desire to continually hone your skills.
  • Comfort with technologies like 3-D modeling and estimating software.

You can also get more advice from Tom Zind, contributor to the Software Advice website, by reading his article on progressing in the construction estimating career at: Skills You Need to Become a Construction Estimator.

Several friends have made nice careers as construction estimators. In good times and bad, they’ve had good jobs with good pay. If you’re considering the field, talk to some current estimators and get some real feedback.


January 8, 2013

How Will Sandy Money Get Spent?
Filed under: Industry outlook — Tags: — nedpelger

Gov. Chris Christie opposes a unified coastal commission to oversee the rebuilding effort. The Asbury Park Press notes that Christie wants state government to set some minimal safety standards, but allow each municipality to determine their own standards. This helps retain the diversity of the various Jersey shore towns.

“How high? How does that affect the maximum heights in the individual towns? What kind of setbacks?” Christie said. “All the rest of those things are things that I think the state has a role in regulating, and then have the municipalities use that as their floor. If they want to enhance them, they can. If they want to address issues that we don’t address in our regulations, that’s their business. But I would see us as the regulator of setting the floor of safety for rebuilding, and then let the towns go from there.”

“One of the great things about the Jersey Shore in my view, compared to some other places, some other vacation spots, is the uniqueness of the experience from town to town to town,” Christie said. “Belmar is different from Long Branch, and Long Branch is different from Sea Bright, that’s different than Spring Lake, different than Point Pleasant or Seaside and very different than Long Beach Island. I’d like to keep that difference from town to town, if I can, and I think the best way for me to do that is to set a regulatory floor but then allow the towns to work from there with individual homeowners and business owners on how they rebuild.”

NJ estimates a Sandy storm loss of about $37B US. The Federal Government emergency recovery bill would provide about $50B for NJ, NY and CT. The bill has been criticized because $400M of unrelated pork type funding has been included. Also, $17B of the bill will go out as block grants, which have few strings attached to how the money is spent. Christie defends the block grants as the most efficient way for the relief money to get spent, with decisions being made at the local level.

The Sandy Storm Relief benefit concert by Bruce Springsteen, Billy Joel, Bon Jovi and many others raised $50M that now must be distributed. The Robin Hood Foundation has that task.  Their list of $17.8M of funded grant requests is fascinating. I noticed Mennonite Disaster Services (I worked with them to build their headquarters) received $150,000 for supplies for volunteers to rebuild 10 homes. That seems like a great return on investment to me.

How will the Sandy money get spent? The Robin Hood Foundation funded grant requests gives a quick view of tasks now being done. But that amount is much less than one percent of what will be spent. It will be fascinating to see how the process works. And, with those huge numbers, opportunities to do good and to do well exist.


December 21, 2012

China Dams, The World Slams
Filed under: Industry outlook — Tags: — nedpelger

In a remote corner of Cambodia, Chinese engineers and dam contractors are building a 100 meter high dam in one of  Southeast Asia’s last great wilderness areas. Local villagers and activists protest, but the project plods forward. The AP photo below shows the locals laboring on the project.

China has become the world’s top dam builder. Chinese companies currently have 300 dam projects in various stages of design and construction. They often take on 3rd world projects that Western companies and the World Bank won’t touch because of environmental, social, political or financing concerns.

“China is the one financier able to provide money for projects that don’t meet international standards,” said Ian Baird, an assistant professor of geography at the University of Wisconsin who has worked in Southeast Asia for decades. “You go to China if you want to have them financed.”

While Westerner experts and locals fret over lost natural habitats and cultures (real and valid concerns), the dams tend to deliver cheap, reliable electricity and improved irrigation opportunities. It’s not surprising to see so many poor countries jumping at the chance to utilize Chinese hydro-power expertise. The Chinese tend to adapt to the standards and  morality of the host country.

“My sense is that when the Chinese build a dam overseas, they give you the standards (the local officials) insist on,” said Kenneth Pomeranz, an expert on water issues at the University of Chicago. “When governments say, `We want it done right,’ they know how to do that too.”

Whether the dam boom is right or wrong, I don’t know. But it’s real, it’s happening and it’s going to get stronger. Better power in these countries will often propel many other increased business opportunities. Perhaps you see something in this trend that can help you.


December 17, 2012

Bridge Super Job
Filed under: Industry outlook — Tags: — nedpelger

An old friend contacted me last week looking for a bridge superintendent. His company is moving into bridge work and PennDOT tells him an experienced bridge super (particularly one that has built PennDOT bridges) will be a big plus in their certification.

His firm has been around for decades and has an excellent reputation. They are also starting up a bridge design and engineering firm at the same time, which will give them the ability to value engineer. This seems like a good opportunity for the right person. Shoot me a note if you have an interest.

I’m glad to see more construction companies expanding in many different ways. I remember hearing way back in 2008 that it may be 2013 till the construction market rebounds, which seemed kind of crazy. Now it seems prophetic.

I expect lots of projects to come out of the gates hard in 2013. The pent up demand, particularly in the industrial and commercial sector, should start driving the dream.


November 9, 2012

US Voters Approve 75% of Bond Initiatives
Filed under: Industry outlook — Tags: — nedpelger

How people vote on state and local bond initiatives gives an indication about their economic optimism. If you’re pessimistic about the economy, you’re less likely to approve public works spending that will raise your taxes.

An ENR article today reported that 75% of the state and local bond initiatives got approved in this week’s election. The bond referendums approved $3.2B US in the states and $36B US locally (mostly for schools).

The sign below helped the passage of a $750M US higher education bill (the first one approved in 25 years).

Arkansas voters approved a temporary 1/2% state sales tax increase to improve their roads and bridges.

Michigan voters, in a very different measure, rejected a requirement that international bridges or tunnels would have to be approved by a state referendum. This odd measure was pushed by the owner of the only bridge between Detroit and Windsor, Ontario. The Canadians offered to build the bridge at no cost to Michigan, but the existing bridge owner didn’t want to see his toll revenues drop. I love America.

Overall, though, these bond approvals sends a good message about the future of construction. Housing starts are rising through out the country and folks seem to be in a buying mood again. If you’re trying to time when to jump back into the market, this seems to be it.


October 26, 2012

Beware the Apartment Bubble
Filed under: Industry outlook — Tags: — nedpelger

Yesterday I wrote about the continuing spotty recovery in the US construction market. Today I saw an article from economist Jed Kolko that dovetailed nicely. His research indicates that in the 100 largest cities, buying a home is 45% cheaper than renting. He compares mortgage payments and taxes vs rents. The actual list of cities shows a gap from 24% to 70%.

I know we’ve been building lots of apartments in recent years and it seems many other contractors have also jumped into this market. So with all the new apartments being built (with high rents that follow new construction costs) and all the foreclosed houses starting to come back on the market, some price adjustments seem likely.

I’d expect to see rents start to come down and home prices go up a bit. Be careful not to get caught too far on the wrong side of this change.

As an aside, it’s interesting to see a sharp economist provide insights. Jed Kolko’s page says, “He transforms real estate data, economic trends, and public policy debate into digestible insights for home buyers, sellers and renters.” I like digestible insights.


October 25, 2012

Construction Forecast for 2013
Filed under: Industry outlook — Tags: — nedpelger

McGraw-Hill predicts a 6% increase in overall construction spending for 2013. That follows a likely 5% increase from 2012, so the trend continues positive. Unfortunately, that 6% increase would take us to a total US construction spending of $484B, 25% below the 2007 spending of $641B and well below the 2008 spending of $559B.

A fascinating aspect of the recovery is it’s unevenness. Single family housing gained 27% in 2012 and is projected to gain 24% in 2013. On the other hand, institutional and public works will likely fall.

Of course, the recovery varies widely of geography as well. So look carefully at what you build, for whom, and where you build it. You may be able to change one of those variables and substantially change your outcome.

Don’t do the same thing over and over and expect a different outcome. Take some time to think, then have the courage to change something.


September 4, 2012

US DOT Finds Half Billion Dollar Slush Fund
Filed under: Industry outlook — Tags: — nedpelger

“The rich are different from you and me, Ernest,” said F. Scott Fitzgerald.

“I know,” Hemingway replied, “They have more money.”

As I read this ENR story about DOT Secretary Ray LaHood instituting a $473M US program for funding construction on highway, transit, passenger rail or port work, I contemplated how different government is from business. Like the rich are different than the rest of us.

The $473M was actually funds appropriated between 2003 and 2006 that never got spent due to projects not proceeding. So staffers at DOT went through the files and found 671 idle earmarks, that could have the funds re-directed to some new project. States must apply to re-allocate their funds by October 1, 2012.

The substantial politics aside, imagine looking back in your business records 6 to 9 years and finding some plans that went differently, then pretending that money was available from that change. Your banker would have an issue with that thinking rather quickly.

Governments, though, don’t have to fiddle around (at least in the short term) with where the money comes from. The funds were approved and will be spent soon.

As I get older, I’m getting more comfortable with the large gulf between the way things should be and the way things are. Unhappy fanatics tend to live in “The way things should be” land. While I think we should all continue to strive to make things better, it’s reasonable to play by the current rules.

In fact, I’m currently working on a couple projects and pursuing some public-private partnerships. As I run the numbers, I’m amazed to see how some public funding leverage can help create hundreds of millions of dollars of private economic activity. So I’m not sure where I stand in my politics, but I seem to be living in “The way things are” land.


August 7, 2012

Happy Days Are Here Again for US Housing Market
Filed under: Industry outlook — Tags: — nedpelger

Well, not exactly here again, but coming soon. When I heard Warren Buffet earlier this year say he’d buy a couple hundred thousand houses if he could, I thought that idea would likely become an investment mantra for many. It has.

Investors groups are buying homes by the thousands (understanding that you still mostly have to purchase them one at a time) and shrinking the glut of vacant, foreclosed homes. The article The Housing Market: Pulling Its Weight at Last from the Economist shows the homeowner vacancy rate finally dropping while the housing starts increases.

The stock of new homes on sale is the lowest on record. Even though unemployment will likely stay reasonably high and more foreclosures still need to occur, it seems the worst is finally over. Home prices should continue on their rebound, with other home related spending also increasing.

Of course, we won’t be headed back into boom territory due to the tighter (and certainly more reasonable) credit requirements for home purchasers. You now need to do more than just draw breath and sign your name to get a mortgage.

This fact should keep the rental market continuing to be strong. We still build lots of apartments and they fill up as quickly as we build them. So if you are contemplating starting a new construction business or expanding what you have, now looks like a good time to me. Remember the basics: provide amazing customer service, stay current with technology and keep your overhead costs minimal.


July 31, 2012

Considering Moving for Construction Work?
Filed under: Industry outlook — Tags: — nedpelger

The construction job market remains tough in much of America. Yet bright spots exist. The explosion in shale gas projects should be considered by anyone seriously looking for construction work. As in all extractive industry projects, you have to go where the gas is, but it’s an option. The AGC map below provides locations.

Derek Singleton recently wrote an article “Should You Build or Should You Go? The Best States for a Construction Job” which shows an AGC of America graphic about the change in construction employment in States.

He concludes that apartments, shale gas and industrial projects all look healthy and will provide opportunities. I particularly liked the AGC conclusions about the current construction outlook.

Remember, successful people do the things unsuccessful people don’t want to do and won’t do. What does success look like for you in today’s (and tomorrow’s) world?

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