Successful general contractors understand that accurate cost estimates are essential to both project and organizational success. For decades, the cost of construction has been a function of marketplaces: labor, materials, insurances and fees. However, given increasing project complexity and greater technological capabilities, this reality is changing. The need to both understand and quantify the risk in performing complex projects will shape the way cost estimates evolve in the very near future.

WHY ACCURATE COST ESTIMATES ARE CRITICAL

It is safe to say that cost overruns have become common across the construction industry. According to a study from KPMG, just 31% of all construction projects from the past three years have been completed within 10% of their initial budget.

Reprinted courtesy of Justin Levine, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

In September, estimated not seasonally adjusted construction unemployment rates fell nationally and in 48 states and rose in two states on a year-over-year basis, according to an analysis of U.S. Bureau of Labor Statistics data released by Associated Builders and Contractors. For the fifth consecutive month, the construction unemployment rates for all 50 states were below 10%. For the nation and 29 states, this was their lowest September construction unemployment rate on record.

The construction industry employed 155,000 more workers nationally compared to September 2018, as the September 2019 national NSA construction unemployment rate fell from 4.1% to 3.2% over the same period, according to BLS numbers. But the worrying trend of declining growth in construction employment continues. September’s increase in year-over-year employment is the smallest increase since the January 2013 increase of 116,000. Part of the slowdown in employment growth may be result of the continued shortage of skilled workers.

Reprinted courtesy of Associated Builders and Contractors, Inc., Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

It seems we all agree the digitisation of construction and real estate is an imperative for buildings to be designed, constructed and operated more cost-effectively and deliver the changing needs of the building’s occupants.

There is much discussion about the benefits of AI, MI, Digital Twins and not forgetting BIM to support the digital transformation of the built environment. Yet I’m unconvinced these technologies will deliver their promised benefit without the whole supply chain addressing the underlying fundamental need to deliver structured data, and I repeat the need for structured data.

When is it right to start thinking about succession planning and preparing a construction company for transition? Many would agree – in concept, at least – that serious thought regarding succession and transition planning should begin at a company’s inception and be revisited throughout its lifecycle, but as a practical matter, it is frequently not part of the mindset when growing a business. This article explores issues that construction company owners should consider in order to achieve smooth transition of ownership and control. We will address three critical questions:

• What happens to the business when an owner retires;
• In the event an owner(s) become disabled; and,
• Unplanned exit/owner pre-deceases her/his exit from the company

Our earlier alert on AB5 outlined the Dynamex case, which brought the inflexible ABC Standard to California for determining whether a worker is an employee or an independent contractor for IWC wage orders. The Legislature passed, and Governor Newsom signed, AB5, codifying the Dynamex case and the ABC Standard for wage orders, the Labor Code, unemployment insurance, and worker’s compensation issues.

We also discussed the Borello test, which applies when a hiring party can meet the construction or construction-related trucking exception and which applies a more employer friendly multi-factor test.

A construction site is not a factory, so managing a construction project is unlike managing a production line. Aiforsite, a construction tech startup, uses video, IoT, and AI to make construction controllable – analogously to manufacturing.

“Contractors go to seminars and read about the benefits of digitalization. However, when they eventually want to buy a solution that would digitalize their construction sites, they come out empty-handed,” says Kari Hirvijärvi, the CEO of Aiforsite. “There are plenty of apps and services that are point solutions, that do not help to manage a site comprehensively. That’s where we come in.”

A joint venture led by ExxonMobil awarded Fluor Corp. and two partners the $3.73-billion engineering procurement and construction contract for onshore facilities associated with a $30-billion liquefied natural gas project in Mozambique, the company confirmed October 8. The project would be Africa's largest private investment, said Bloomberg.

Replacing two Cape Cod Canal bridges for an estimated $1 billion rather than rehabilitating them would be more cost-effective, according to a federal study announced on Oct. 3.

Finnish economics professor Osmo A. Wiio claimed that we typically overestimate the near future and underestimate the distant future. His thoughts resonate well with today’s perception of design automation.

Back in the 1980s, I took part in the first-ever Finnish “integrated CAD” projects, in which the architect, the structural, HVAC, and electrical engineers exchanged CAD files instead of blueprints. We used minicomputers, which had about as much computing power as today’s laser printer. Still, we were able to automate design tasks.

After 20 years, the end of the $550-million Brays Bayou Flood Damage Reduction Project in Houston is finally in sight

Reprinted courtesy of Louise Poirier, ENR and Pam Radtke Russell, ENR
Ms. Poirier may be contacted at poirierl@enr.com
Ms. Russell may be contacted at Russellp@bnpmedia.com

Even with a lot of focus recently on diversity in the workplace, construction is still a male-dominated industry. According to recent surveys, women make up less than 10% of the construction workforce.

There is a higher percentage of women serving in Congress (currently 23.7%) and in the active duty military (14%). Women do, in fact, make up 47% of the total civilian workforce. So, as the construction industry looks for ways to hire and develop skilled labor, diversity has become more important than ever.

There are several challenges to increasing diversity, specifically among women in construction that need to be addressed. These include unwelcome worksites, sexual harassment issues, flexibility and the perception by others that women on the team are not as capable for projects that require manual labor. It’s not the women, it’s the environment and the culture.

Reprinted courtesy of RubinBrown LLP, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.