Dog Days of Summer

One of the more deceptive characteristics of the market in summer of 2015 is the bidding activity. For general contractors, the activity is slow, maybe slower than normal; but there is action taking place in the next tiers down the food chain. Within the past 60 days there has been a marked shift in the subcontractor bidding environment, a shift that bears watching if you’re an owner.

Subs and suppliers are busier. In part this is due to the releasing of projects that had been delayed over the past year or so, or had a general on board while designs were being completed. There is also the reality that the skilled labor force is nearing full capacity. Within the majority of the trades, the halls are empty. One other consideration is that the Pittsburgh market may finally be shifting like the rest of the country to delivery methods other than design-bid-build. And subs have been bearing more of the burden of this extended slowdown, carrying an unfair share of project costs because of longer (meaning slower) pay cycles and increased administrative expense. There will be some hay-making while the sun shines.

Any or all of these factors will move the focus of the bid market from generals to subs and specialty contractors. The evidence of this is in higher prices and less participation. More than a few generals have expressed the sentiment that the latter is a reality now, especially when it comes to budgeting. Owners that haven’t brought a project to the market in six months or more may find it a very different environment. It may be too early to declare it a seller’s market but construction is no longer the buyer’s market that has existed since 2009.

For those looking ahead to big bidding opportunities, the PA Builders Exchange reported this morning on an $81 million new treatment plant for West View Water (with a general package over $40 million) that should bid in the fourth quarter. Check out the details at http://tinyurl.com/oq6qnz6. On the commercial side, Milhaus Development selected Strada Architecture and Rycon Construction as the team for its $100 million redevelopment of the 12-acre site west of the 40th Street Bridge in Lawrenceville.

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