2018 PA Budget Hearings with DGS

As was the case the last year, the Separations Act was a discussed topic during the Budget Appropriation Hearings with the Department of General Services.

In the Senate, DGS Secretary Topper was asked questions about the Act by Senator Folmer. The gist of the Secretary’s comments related around DGS experiencing increased administrative costs, but they are unsure if total cost is more. DGS would like to continue to study the issue more.

As for the House, Representative Everett led the way with the questioning. Topper echoed his comments from the Senate – increased administrative overhead in the norm for a Separations Act project, but he felt there was a need for more studying of the issue. Everett countered with hints about a new legislative strategy that allows for the current multiple prime delivery system to be used if that’s what the public owner chooses; however, the public owner can also select from other delivery options too.

Personally, I think if the DGS was serious about wanting to study the issue more they should make three phone calls to Pitt, PSU & Temple. When these schools receive state funds they have to abide by the Separations Act and build as the school’s call it: ‘the DGS way’ but when these schools build with their own money they build using Design-Bid-Build with Single Prime; Design Build; Construction Management At Risk; and PSU is even trying IPD. All DGS would have to do is review projects built on these campuses using multiple prime compared to using a variety of single prime. End of ‘we need data’ story.

Click here to hear DGS Topper answer questions from Senator Folmer: https://pasen.wistia.com/medias/6d6hud1x5z

Pennsylvania’s Top Construction Stories of 2017

The news was overwhelming in 2017. From healthcare mergers and insurance coverage to gender inequality to natural disasters to international relations to political squabbling…. Every time you looked at your phone or watched the nightly news there appeared to be another breaking news crisis being reported. Meanwhile the construction industry kept chugging along, adding jobs to the payrolls and improving the quality of life. That’s not to say that 2017 was just another typical year for the construction industry. No not at all. Last year we experienced some remarkable events.

Below are the top Pennsylvania construction stories of 2017 according to me. I kept them brief so you can breeze through it quickly, but if you want more information on any item listed please don’t hesitate to contact me at 717-731-6272 or Jon@KeystoneContractors.com.

Lastly, let me know what you think. What construction story in your mind did l leave off my list? Or what item did I list that is not a big deal?

Enjoy and keep in mind they are not listed in any particular order:

Amazon H2 Fever

After an announcement that it would build a second North American headquarters, online retail giant Amazon snagged 238 bids for its “HQ2” and the construction industry was on the edge of its seats wondering if this massive project would be built in their region. But I think construction professionals and the general public also were hoping that any sort of tax incentives included in the bid would not hurt their region too much in the future. Pennsylvania had numerous sites submit a bid. For more on Amazon H2 and the crazy amount of incentives click here:   http://www.businessinsider.com/amazon-hq2-cities-developers-economic-tax-incentives-2017-10/#memphis-tennessee-60-million-1.

 

Silica Standard Arrives

After a lengthy extension to review input from industry stakeholders, OSHA’s new silica standard went into effect on September 23, 2017. What that means for the construction industry is that contractors who engage in activities that create silica dust, such as cutting, grinding/ blasting concrete, stone and brick, must meet a stricter standard for how much of that dust workers inhale. The same goes for the employers of the tradespeople working around such activities. Numerous trainings were held and educational materials were produced to prepare the industry for this new standard. Many organizations, like KCA, even teamed with OSHA to host informational roundtable discussions. For more information please contact the KCA or visit: https://silica-safe.org/regulations-and-requirements/osha.

 

Opioid Crisis Continues to Plague Construction

The opioid epidemic is hurting America. Scary stats when you consider that our country makes up 5% of the world’s population, yet we consume 80% of the opioid supply and we are losing 100 people a day. The construction industry has been suffering along with most every other industry too. While it is not an easy task to find the stats by industry, insurance underwriter CNA estimates that 15.1% of construction workers have been affected by the opioid crisis. Much like the rest of society, KCA finds these stats unacceptable and we are doing something about it. Our plans are currently developing and we could use your help to implement them. If you want to join the fight to help Pennsylvania’s construction industry tackle the opioid epidemic, get in touch with us. This offer is extended to all – KCA members, nonmembers, organizations, etc. Together, we can make a difference.

 

USGBC releases LEEDv4 and AIA Updates its Contracts

Both of these items are similar in that in both instances two groups – U.S. Green Building Council and AIA National – worked with their respective memberships and industry stakeholders to update something that is of value to the construction industry. The USGBC issued its updated version of LEED version 4 and AIA issued its 10-year update of its contract documents. Both are also similar in that while they might have been updated in 2017, the industry can still use the previous version a little bit longer to have time to get acquainted with the newer version. The overall sentiment is that both are improvements from the previous version, encouraging collaboration in construction. For more information on LEEDv4 click:  https://www.usgbc.org/leed-v4-old-new and for information AIA contracts: https://www.aiacontracts.org/.

 

Philadelphia is Carrying Good Times into 2018!

By all accounts, 2017 was a great year for the construction industry in the City of Brotherly Love. But 2018 is going to a new level in Philadelphia. More than 8 million square feet of development is forecasted in Philly. To put this into perspective, during 2017 Philadelphia finished 3.3 million square feet of construction. A big chunk of this upcoming work will come from Aramark’s new headquarters, uCity Square on Market, and One Franklin Tower in Logan Square. For more information click here:    https://philly.curbed.com/2017/11/30/16715170/philadelphia-new-construction-analysis-2018.

 

Separations Act Gets Some Attention

As stated in my blog last week, the Separations Act had some memorable moments in 2017. To read this post click:   https://wordpress.com/post/buildingpa.blog/267.

 

Federal Tax Legislation Helps Construction Industry

Before ringing in the New Year, Congress passed a comprehensive tax reform legislation that will lower rates, spur economic growth and have a positive impact on construction businesses for years to come. The AGC of America put together a comprehensive chart to illustrate the benefits of this tax reform package:  http://images.magnetmail.net/images/clients/agca/attach/1218_House_Senate_Tax_Reform_Comparison_v6.pdf.

 

Harrisburg has Big Plans in its Sights

During 2017 two mega projects having been moving closer to the bidding/construction stages. The one project, the Federal Courthouse, has been in the works for the better part of the past decade, but it received a big boost early in 2017 when it received funding authorization. Since this funding announcement, the GSA has been moving quickly on this $200 M-plus, 243,000 square foot Federal Courthouse project. This project has encountered a few snags this past Fall, but hopefully it will break ground soon. Here is a blog post I wrote about this project: https://wordpress.com/post/buildingpa.blog/51.

Another project on the mega scale includes the vision that Harrisburg University has in constructing the tallest building in Harrisburg. In the Fall of 2017, the school announced plans to build a 36-story, $150 M mixed-use tower that will feature 200,000 square feet of educational space that includes fitness center, conference space, hotel, and housing for 300 college residents. For more information:  http://www.cpbj.com/article/20171115/CPBJ01/171119902/harrisburg-university-plans-to-build-citys-tallest-tower.

Separations Act in 2017

During 2017, there were some memorable stories involving Pennsylvania’s  Separations Act. Today I’m going to touch on a few of the major stories.

But before jumping right into the fun, here’s a quick explanation of the Separations Act: this law requires public construction projects in Pennsylvania to build utilizing a multiple prime delivery system and hire at least four prime construction companies for one project. Our state is one of three states that require this handcuffing of public agencies to build in this cumbersome manner – don’t get me wrong the multiple prime delivery system can be a good option depending on numerous factors (owner’s expertise, complexity of project, budget, schedule, etc.), but multiple prime is one of many delivery options. The construction industry has evolved over the years and we now have more innovative and collaborative team approaches to consider, yet our state only allows one delivery option. Considering that the multiple prime delivery system is rarely used in the rest of the country, federal government, and private sector, it’s time for our state to amend our law and allow options in construction delivery systems.

Here we are in 2017 and PA is still mandating we follow this ancient law that impedes the construction industry from progressing. However, our current state is led by a self-proclaimed Harrisburg outsider, so maybe Governor Wolf will play a vital role in advancing the construction industry, and maybe, just maybe the Harrisburg outsider moniker played a role in kick-starting efforts in advancing the construction industry in 2017. Without further ado, here are my top Separations Act stories of 2017:

2017 Senate Appropriation Hearing

On Monday, February 27, 2017, the Separations Act got off to a good first step this year during the PA State Senate Appropriations Committee hearing. At this event, the Governor’s appointed Department of General Services Secretary Curt Topper said: “we face some significant constraints that the private sector does face when it comes to managing our money efficiently. So, for example the Commonwealth, when we go to market in order to contract to do construction, we are bound by the Separations Act of 1913. We are one of only three remaining states in the U.S. that has a Separations Act. That Separations Act requires that we do business less efficiently than we could otherwise do business.” Bravo to Governor Wolf for appointing a forwarding-thinking individual like Secretary Topper who sees an issue and wants it addressed to improve the Commonwealth. Plus, bravo to Secretary Topper for knowing that you were appointed to do a job and you didn’t let politics get in the way.

Click here to Secretary Topper’s hearing:  http://www.pasenategop.com/budget-hearings-summary/

Here is an OpEd on his testimony:  http://www.yorkdispatch.com/story/opinion/contributors/2017/03/07/oped-s-time-repeal-separations-act-pa/98857412/

Here is commentary from Philly Inquirer’s John Baer: http://www.philly.com/philly/columnists/john_baer/Another-old-PA-law-enters-the-states-fiscal-follies.html

 

Pennsylvania Organizations Want Change

What happened on that Monday in February of 2017 had tremendous reach beyond the room where the Senate Appropriations hearing was held. Organizations across the Commonwealth had a bounce in their step, as an executive in the governor’s cabinet publicly supported modernizing the Separations Act. This newly formed coalition mobilized in 2017 and even launched an online petition (located here:

https://www.change.org/p/time-to-modernize-the-pa-separations-act). More to come from this coalition in 2018.

 

A Union Uses Separations Act to Gain Marketshare Over Another Union

In a bizarre twist of fate, a school in the Pittsburgh area signed a project labor agreement (PLA) which pleased the union construction sector in that area. Promoted as a tool to assure labor harmony, West Jefferson Hills School District could not imagine their PLA project being shut down when one building trades union sued the school district, architect, construction manager, and others – but that’s exactly what happened. The plumbing contractor filed suit claiming that the site utility work outside the building footprint should have been assigned to them and not the general trades contractor. It is typical on a construction project (public and private) to have the plumbing contractor perform plumbing work from inside the structure to five feet outside the building. Yet, this plumber wanted work to exceed the ‘typical’ scope of work and this contractor wanted the site utility work assigned to them, which took work from the general contractor, site contractor and the Laborers Union. The Court of Common Pleas of Allegheny County sided with the plumbing contractor stating that the project ‘willfully’ violated the Separations Act. This ruling changes years of precedence that could have major consequences on construction in Pennsylvania – both public and private.

 

 

Separations Act Project a Mess on a Grand Stage

The saying goes, that nothing attracts a crowd like a crowd. Well, in construction, nothing attracts the masses like a massive project. Originally set to open during November of 2015, the State Correctional Institution Phoenix in Montgomery County, PA, which is the largest public building project in our state’s history, is way over-budget and years past schedule. Since this project is so mammoth and expensive, it has the attention of many people statewide, from construction professionals who want to see how it’s built to concerned tax payers who want tax dollars spent efficiently. But a disastrous, multiple prime construction project should have been foreseen since it took years to bid the project, bidding three times over the timeframe of two Governors – Ed Rendell and Tom Corbett. I could go on and on about the mess that is the SCI Phoenix, but I think the PA Corrections Commissioner John Wetzel summed it up best in a Senate Budget hearing when he said: “It’s been a terrible construction project.”  For more information on this developing, and apparently never-ending story, click here to read one of the many articles on it:   http://www.philly.com/philly/news/crime/prison-graterford-phoenix-phila-convention-center-20170901.html

 

Well those are my top Separations Act stories of 2017. They were each briefly presented but if you would like additional information on any item listed please do not hesitate to contact me. Also, if you have an opinion on these stories or think I’m missing an item, I’d like to hear from you.

Remembering (& Helping) A Mentor

The benefits of being a mentor are well known. You can position your company, industry, etc. for a better tomorrow as you pass down your knowledge and information to future leaders. I hope that mentors don’t ever feel like it’s a thankless job helping the next generation. Sure, there might not be immediate payback, but being a mentor can be extremely rewarding when the mentor sees the protégé blossom into an industry leader.

I have been extremely blessed when it comes to mentors assisting with my professional development. After the Navy, I enrolled and graduated from the University of Pittsburgh with a dual degree in Journalism and History – not your typical degrees for the construction industry. However, some people saw something and cultivated me to succeed in this industry. There are too many to name, but today I’d like to focus on one individual – Dwight Kuhn.

Dwight saw something in me and always took the extra time to thoroughly explain construction topics to me. We were part of an industry group comprised of experienced leaders that met in the evenings to discuss construction best practices; I was the lone individual who was not an “experienced industry leader,” but I kept good notes and ran good meetings so I was involved. The next day, after our meetings, my head was spinning when I tried to comprehend all the topics we discussed the night before. More often than naught I found myself calling Dwight for an explanation. He always had time for those phone calls.

But the special thing about Dwight was, it wasn’t just me that he spent time with. He really cared about the next generation and getting them engaged. As I mentioned earlier we had a group of current industry leaders that focused on best practices, but to be honest – this book of recommendations was dated and archaic. A few members of this group decided that we needed a complete overhaul. But it was Dwight who made the breakthrough suggestion that we needed: let’s involve the industry’s future in this activity.

From Dwight’s idea we invited young, up-and-coming industry leaders to the table to serve on small task forces that included a few principles from architectural firms and executives from construction companies. I think the small group suggestion made it less intimidating and everyone was engaged. Sure we updated a few best practice recommendations, but more importantly his suggestion may have expedited the development of current leaders from Pittsburgh’s design and construction industry, people like; Sean Sheffler, Associate at LGA Partners; Anastasia (Herk) Dubnicay, Executive Director of ACE Mentor Program of Western PA; Gino Torriero, CEO of Nello Construction; Jen Landau, Project Manager at Landau Building Company; Kristin  Merck, a promising architect who opted to launch a successful photography business; to name a few. Plus, that little scribe who used to hound Dwight for help the morning after meetings is now Executive Director of the Keystone Contractors Association.

Please note, that exercise that grouped young and experienced leaders happened around ten years ago so I’m pretty sure my memory is leaving people off that are really successful today. Sorry. But the one thing I am sure about is that Dwight touched many people in a positive way during his career. We can all show him thanks by participating in the Dwight Kuhn Replenishment Blood Drive, which is this Thursday, November 2, 9:00 AM to 3:00 PM at the Master Builders’ Association. Even if Dwight did not touch you during your career, you can show your support of the mentorship process by giving blood. For more information on this blood drive or on Dwight, please contact Michael Kuhn at mkuhn@jendoco.com.

The reason for this blood drive is that during an annual routine physical in April of 2017, Dwight was diagnosed with Acute Myeloid Leukemia (AML). AML is a blood and bone marrow cancer that can quickly spread to other parts of the body. To date, Dwight has undergone three treatments of intense chemotherapy and has needed 40 units of blood and 40 units of platelets. His AML is currently in remission, but he has myelodysplastic syndromes, a precursor to AML. He continues to need blood transfusions every two weeks to keep his strength. If you would like to help, visit www.centralbloodbank.org then click “Make an appointment” and search with group code: Z0021025.

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Looking for a Good Construction Article to Read?

What does a four-time NFL Super Bowl Champion, a public relations specialist, and a human resources expert have in common? Each has been featured in the Keystone Contractors Association Construction Industry Articles of Interest webpage.

When I came on board at the KCA I expressed a desire to place a strong emphasis on education and the sharing of best practices. I was right at home with the KCA membership as they too feel strongly about education since it’s a vital aspect of career development. Members devoted time to creating our educational programming. Some topics were better suited for an in-person seminar/ presentation, while other topics were better in an article format. With the latter in mind, we created an online format.

During the past few months of its existence, we have been fortunate to have such intelligent and motivated professionals wanting to be featured on this new resource. We are extremely pleased to feature such diverse and important topics on this website. Sami Barry of Helbling & Associates, penned an article on women in the construction workforce; Tom Kennedy, UPMC consultant, wrote about Integrated Project Delivery from the Owner’s perspective; Rocky Bleier, Vietnam Veteran, Steeler Legend and Owner of RBVetCo, authored an article about teamwork in construction; plus, Jason Copley of Cohen Seglias, and Joseph Bosik of Pietragallo Gordon Alfrano Bosik & Raspanti, wrote separate articles about the Mechanics’ Lien Law.

The newest articles come to us from Christopher Martin, President of Atlas Marketing, and Thomas Williams, Partner at Reager & Adler PC. Mr. Martin’s article is on crisis communications. As an expert in this field, adding his insights to this serious topic was a no brainer. As a result of his interest in educating the construction community, we are in the talks now to create an educational program to prepare construction companies in responding when a crisis happens. Mr. Williams’ input is on a new contract provision being inserted by the Pennsylvania Department of General Services for construction services. Due to the potential ramifications of this new governmental clause, the KCA is leaning towards hosting an educational program on this subject matter too and it’s nice to know we have Mr. Williams if we go that route. Thanks to the proactive, and knowledgeable, input from both professionals KCA is able to educate the construction industry on serious topics.

If you want to be added to this resource, and position yourself as a construction industry expert of a specific topic, we’d like to hear from you.

To view the KCA Construction Industry Articles of Interest visit: https://keystonecontractors.com/industry-articles.

My Favorite Moment from My First Year at KCA: The Meeting that Changed It All

As I celebrate my one-year anniversary at the Keystone Contractors Association, I recall the meeting that changed it all for the KCA. I started at the KCA during the fall of 2016 and, after a three-month transition period learning from Mr. McDonough, I became the Executive Director of the KCA.

We held two KCA Board meetings and some KCA Committees met during the first six months after the transition period. Despite not having much to go by as far as a comparison goes, it just felt like the KCA get togethers were business as usual – nothing special. Then it happened.

For those first two Board meetings, I thought we were accomplishing what was expected of us – financials were in line, Association was humming along with minimal issues, etc. But I could sense that each of us, the entire Board and I, that we wanted to do more. What I did next could be viewed as unconventional, and if it failed could be viewed as a lousy idea, but what happened was magical.

We held a Board meeting with no agenda. I sat in a room with twelve construction executives, successful ones too that run their own construction company. Their time is extremely important. When the meeting started I said: “for today’s meeting, I want to know what’s on your mind: what work related topics do you want to discuss? What challenges do you face in running your company? Look there’s no agenda today. I’m hopeful that we’ll have a lively discussion in any direction we all want to take it. So, who wants to start it off?” The room went silent and then I continued: “This meeting could last two minutes or it could last two hours; it all depends on all of us.”

Again, silence. I really started to doubt my idea for this meeting and then one Board member said: “Does anyone else in the room have trouble finding qualified workers?” The ice was broken. From that point on it was as if the levee had broken. We discussed a wide gamut of issues affecting construction company owners from safety inspections to leadership development to community service to managing millennials to construction legislation. You name it and we discussed it. We went over our self-imposed two-hour limit too.

For each topic, we would spend ample time discussing it. Board members would offer each other advice on addressing an issue and collectively we would discuss if it’s something the KCA should look into addressing. This agenda-less meeting was succeeding on various levels. As the ‘new guy’ I got to see how the Board members interacted and you could sense the strong relationships that existed among them. Plus, I got to understand what issues are facing the membership and I could create a strategy to address issues that were appropriate for the KCA to get involved in.

One major KCA initiative that came to life as a result of our agenda-less meeting is our efforts in workforce development. KCA talked about this issue in the past but there wasn’t much action. We are currently working on a strategy to address the serious construction worker shortage issue that exists with both labor and management. This strategy will feature activities that stretch from grade school to middle school to high school to college to post education. While this comprehensive plan is being created, the KCA has begun implementing some actions already. This week we’re addressing students from Harrisburg High School about careers in the construction industry.

I share this agenda-less meeting story because I believe in sharing best practices. It worked for me and I’m not saying it may work for others, but if considering and you want more details let me know. If you’d like to share your management strategies with me, please feel free to contact me at 717-731-6272 or Jon@KeystoneContractors.com.

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It’s always nice to leave a meeting and see a KCA member building a better quality of life. JC Orr is the General Contractor for the PA Housing Finance Agency in Harrisburg. This project is being built to achieve LEED Platinum and Passive House Certifications.

Let’s Spend PA Tax Dollars Efficiently

Today we are a few days away from the month of October. In Harrisburg, it should be a time that our legislature is working on crucial issues – education, healthcare, energy, opioid epidemic, etc., but instead our state is still trying to complete its budget. One Pennsylvanian even tracks it daily and any minute today we should see his post about the budget now being 89 days late.

Every time I think about the budget debacle, as a construction professional I think about a major issue that drives up the cost of public construction, that being the Separations Act. 10 to 13% – that is amount that we overpay for construction services in Pennsylvania. Think about that every time you drive around and see a public construction project underway – our state is paying 10 to 13% more from your tax dollars to construct that building than what Maryland would pay for it. Next time you hear that your local school district is holding a school board meeting, think about all the topics they cover under their buildings and grounds report and how those projects will cost tax payers 10 to 13% more than what New Jersey would pay due to a meaningless mandate.

The Separations Act requires Pennsylvania to build in an archaic manner where multiple prime contractors take a lead role, and point fingers at each other while standing next to their attorneys every step of the way. Claims, lawsuits, delays – those are the norm for public construction projects in our state and those are the factors that drive up the cost of construction. In other states, like West Virginia, Ohio, and 47 other states in our nation, they are free to choose the most efficient construction delivery method. Our federal government and the entire private sector are also free to choose the most cost-effective delivery method.

So next time you read a newspaper article on the state budget impasse, just think about how we overpay for construction services by 10 to 13%. Let that fact sink in while you start your day, the 89th day that we are late on this year’s budget.

Please share this petition with your contacts, urging them to sign:  https://www.change.org/p/pennsylvania-repeal-pa-separations-act. Also contact your legislators and let them know that you want action on Senate Bill 744 and House Bill 1529.