State Government Influencing Construction

As a buyer, the Commonwealth has been a minor force in the construction market for a decade. Over the past week, our state government has made a much bigger impact in other ways.

The legislature passed a 2019-2020 budget that has no relief for construction, but within the negotiations there was a break of sorts in the K-12 logjam. The results of a PlanCon task force report were accepted as the framework for a new PlanCon process. Sadly, this new framework did not coincide with a lifting of the moratorium on projects entering the PlanCon system (nor did it accompany funding for more projects). Getting agreement on what PlanCon will look like is a head start on the next wave of projects, which is building behind a decade of underinvestment.

Legislative action also occurred on PA’s Separations Act, although the action is likely to be moot. A full repeal of the Separations Act was passed in committee by a straight party 15-10 vote. Since Republicans control both houses, the repeal may pass; however, most legislators are aware that the full repeal will be vetoed by the governor and many understand that a full repeal was not the intent of the coalition lobbying for amending the Separations Act for years. A last-minute maneuver changed the proposed legislation from one that offers school districts choices of delivery methods to the full repeal. The last-minute measure was backed by AIA Pennsylvania, which had previously signaled alignment with the choice option. The full repeal legislation is probably dead on arrival, which means PA will remain the only state in the Union requiring separate prime contracts. Keep those claim forms handy!

Finally, PA’s attorney general, Josh Shapiro, may have catalyzed Pittsburgh’s two healthcare giants into an agreement that keeps the status quo for access. UPMC and Highmark announced last week that another 10-year agreement was reached. The upshot for construction seems to be limited. UPMC’s major capital plan is mostly aimed at replacing outdated facilities and supporting innovative new medicine (see Vision & Rehabilitation Hospital at UPMC Mercy). Its South Hills hospital is on hold, so the agreements with Jefferson and St. Clair probably make that permanent. Highmark/AHN has been investing significantly in facilities that were meant to capture the patients that would be without access to UPMC centers, so the construction is underway or completed on many of those. According to AHN officials, plans for further investment – like the $100 million Allegheny General Hospital Cancer Institute expansion and the Route 28 site – are being explored actively. It’s unlikely that the 10-year truce won’t have an impact on capital spending, but it doesn’t appear to be imminent.

Some project news updates:

The last two major K-12 projects of the bidding season were awarded. Franklin Regional re-bid its Sloan Elementary and new Grades 3-5 schools mid-June and awarded R. A. Glancy the general construction for the $14.6 million Sloan Elementary, and Walter Mucci Construction the general for the $26 million new 3-5 school. Mosites Construction won the $104 million Tuscarora Tunnel renovation on the PA Turnpike.

Volpatt Construction has started construction on the $4.5 million 6th floor Nursing Unit at Butler Hospital. Guardian Construction Management is underway on the $4 million renovation and addition to Grace Community Church in Cranberry Township. Turner Construction has been awarded the CM contract for the $8 million cooling tower upgrade at UPMC Shadyside Hospital, the enabling package prior to construction of a $50 million new central plant in mid-2020. PJ Dick is CM for a new Combined Cooling Heat and Power Plant for AHN in Wexford. Rycon Construction is renovating Ally Financial’s offices in Cranberry Township, a $2.5 million tenant improvement in Westinghouse Building 2000.

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