Now, To Build It

With Memorial Day passed, the construction industry is moving into its busiest season. Colleges have graduated and schools are about to let out for summer. Construction in Western PA is ramping up and the pool of labor has already “ramped” up. Hiring in the Pittsburgh MSA was reported last week as up 14,000 jobs April-over-April, an indication that the 1.5% employment growth is sustainable; and construction hiring helped lead the way.

Peters Township School District meets tonight to vote on contracts for the $89 million new high school. Low bidders for the electrical and HVAC withdrew their bids, making for more alternate decisions than expected. The Builders Exchange reported that Franjo Construction was awarded the $6 million expansion at Rose Plastics in California. UPMC is taking proposals from PJ Dick/Rycon, Mascaro/Barton Malow, Turner Construction and Massaro/AECOM Tishman on it $280 million expansion of Hillman Cancer/Shadyside Hospital. The Allegheny County Airport Authority has short-listed teams for A/E services and program management on its $1.1 billion Terminal Modernization Program. Finalists for A/E services are AECOM, Corgan/Michael Baker, Gensler/HDR and luis vidal + architects/CannonDesign. The program management finalists are AECOM, Jacobs and Parsons Transportation. Walnut Capital is bringing its final plans to the city for approval this week for Bakery Square 3.0, the rumored future site of Phillips. PJ Dick and Strada Architecture are the team working on the 328,000 square foot office building and 794-car garage.

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Combined-Cycle Disruption

Even as construction on Tenaska Westmoreland winds down and work is underway on three other combined-cycle plants in Southwestern PA, market forces are disrupting the power generation industry again. Headlines suggest that coal-fired generation is dead but a number of coal-fired plants that had invested in becoming EPA-compliant still operate. Moreover, the cost basis of most of these plants have been amortized, which means they can be cheap bidders on the energy grid supply auctions. With costs rising for construction of new gas-fired plants, this cheap supply dynamic is beginning to stress the pro forma for future combined-cycle plants. Projects like the $350 million, 550MW Invenergy plant in Elizabeth or Ray Bologna’s $420 million, 651MW project near Burgettstown will be harder to pencil out. The results of the 2021/2022 PJM capacity market auction, which closes May 16, will be an indicator of how tight the market will be, and how feasible the additional plant capacity is.

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Tenaska Westmoreland plant in South Huntingdon Township.

Another of Downtown Pittsburgh’s large adaptive re-use projects is out to bid. Arbor Construction – the construction management arm of Stark Enterprises – is taking bids on renovations to the former 441 Smithfield Street office building, now branded as Icon on Smithfield. The 220,000 square foot building was originally a department store that Stark Enterprises is proposing to adapt to apartments on the upper floors with about 60,000 square feet of retail/dining on the first two floors.

Mascaro Construction was selected as CM for the Health and Fitness Center at Carnegie Mellon, a $45 million renovation of Skibo Hall. RIDC awarded the second phase of Mill 19 to Jendoco Construction. The $12.4 million, 90,000 square foot building should start later this year. Carlow University has its $7 million St. Joseph Hall project out to bid to FSS, Franjo, Massaro, Mosites, Rycon and Volpatt. St. Clair Hospital has short-listed Mascaro, Massaro and Volpatt on its $15 million central plant project.

Good News About GDP

On Friday, the Commerce Dept. released its first estimate on gross domestic product for the first quarter on 2018. The 2.3% increase was a pleasant surprise, coming on the heels of an upward final revision about the US for the 4th quarter to 2.9%. Recent history has shown weaker first quarters, especially following strong year-end finishes. The first quarter GDP gains came from consumer and business spending growth, although inflation had more of an influence in the growth than in many years. The more troubling data from the estimate was the fact that both consumer and business spending was beginning to trend lower. It remains to be seen whether the additional data gathered for the 2nd and final estimates reinforces that slowing trend in the next two months.

The General Contractors Association of Pennsylvania (GCAP) has published a transcript of its interviews with Gov. Wolf and all three leading GOP candidates for governor. GCAP asked each of the four about their proposed policies that will affect construction. Some of them sort of answered. Read the transcript here.

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University of Pittsburgh’s Medical School is planning a $100 million investment in the expansion and renovation of Scaife Hall. Rendering by Payette.

Project news is light. Pitt is seeking proposals for construction management at risk services for its $100 million expansion of Scaife Hall from PJ Dick, Gilbane, Mascaro, Skanska, Rycon, Massaro, Turner and Whiting-Turner. PJ Dick was selected as general contractor for Providence Point’s $40 million expansion in Scott Township. Cavcon Construction is about to break ground on $3.5 million new Youth & Family Center and Admissions buildings at the Adelphoi Village in Latrobe. NRP Group will be building the Pittsburgh Flats apartments at 23rd and Wharton Streets that was originally proposed by the Edwards Communities. NRP will build 330 units later this year.

Presby Tower Moving Forward

UPMC selected the Whiting Turner/PJ Dick team was selected to build the $700 million new Heart and Transplant Hospital at UPMC Presbyterian. The new tower will be designed over the next year with construction anticipated in Mid-2019. The Heart & Transplant Hospital is one of three major specialty hospitals being developed by UPMC in the city.

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In Moon Township, Albert Higley Co. has started construction on the $55 million Tapestry Senior Living, a conversion of the 206,000 square foot former Embassy Suites that Crown Senior Living is developing. Bear Construction has started construction on the 140-room, 12.4 million Hilton Garden Inn being developed by Millcraft Hospitality in Center Township, Monaca PA.

Some Follow Up

Friday’s big news may have been the unexpected slowdown in hiring in the U.S. job market but there was some project news of note in Pittsburgh.  The PBX reported that J.C. Orr was the low general (at $45.6 million) on the $73.5 million new Altoona High School. That’s a good sign for the public market, at least in terms of the impact of rising prices on bids. News from distributors and specialty contractors suggests that more budgets may prove to be too low in the coming months. The bids on the $75 million Peters Township High School will be worth noting in that regard.

In the private sector, Burchick Construction was selected to build the $5 million Heights of Thorn Hill office building for Elmhurst Group. Champion Construction started construction on the 90,000 square foot Southpointe Fieldhouse. Volpatt Construction was awarded a contract for $3.5 million in renovations to Wean Hall/Doherty Hall classroom renovations at Carnegie Mellon. CMU also short-listed Mascaro and Mosites to determine the CM for the $45 million Health and Fitness Center project. DGA Construction has started work on the Refinery Condos, a 30-unit adaptive re-use of the former plant/warehouse at 2545 Penn Avenue that Joe Hardy is redeveloping. And the revised $15 million St. Clair Hospital central plant project has gone out to bid to PJ Dick, Landau, Mascaro, Massaro, MBM, Mosites, and Volpatt.

US Construction Up Again

The Census Bureau reported on February construction activity April 2 and the data showed a reversal of the recent trend in private/public spending. February’s construction totals reached a record $1.273 trillion (seasonally-adjusted), an increase of 3.1% over February 2017.  The AGC’s Ken Simonson noted that the increase was the result of a 5.5% jump in private-nonresidential spending. Spending declined in 12 of the 13 public construction categories, including the largest – highways and streets – which saw a drop of 0.1% from January and 5.1% from last year.
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The $80 million Peters Twp. High School has been released for bidding, due May 10. Bids are out on early packages at the AHN Wexford Hospital being managed by Massaro/Gilbane. CMU took proposals last week from Jendoco, Mascaro, Mosites, PJ Dick, and Rycon on its $45 million Health & Wellness Center – a renovation of Skibo Hall. Pitt selected A. Martini & Co. for its $3.2 million Thaw Hall renovation. The Steelers tabbed Mascaro Construction to build the $2.5 million expansion of Bud Light Pub 33 at Heinz Field. Turner Construction was awarded the 20,000 sq. ft.  build-out of Cozen O’Connor’s space in One Oxford Centre. Franjo was awarded the contract for the new Aldi’s in Greensburg. Nexus Construction has started work on the first of The Healing Center’s medical marijuana dispensaries in Monroeville and Washington. PA Turnpike Commission awarded Trumbull Corp. the $37.8 million contract for Section 55C1-2 of the Southern Beltway.

Construction Inflation Jumps Again

Bureau of Labor Statistics released information on February’s producer price index (PPI), which showed construction outpacing the overall inflation rate by a considerable amount. Year-over-year (y/y) the PPI for all finished products was up 2.8%. For construction the PPI increase for final demand rose 3.5%.

The AGC’s Ken Simonson noted spikes (note: no declines) in a number of categories. “Materials important to construction that had notable one- or 12-month price changes include diesel fuel, down 2.0% in February but up 38% y/y; lumber and plywood, up 4.4% for the month and 13% y/y; aluminum mill shapes, 2.9% and 12%, respectively; copper and brass mill shapes, -0.9% and 10%; gypsum products, 7.2% and 8.0%; and steel mill products, 2.3% and 4.8%. Among services important to construction, the PPI for truck transportation of freight rose 0.6% for the month and 5.6% y/y.”

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In local construction news, CMU’s $45 million Health & Wellness Center – a renovation of Skibo Hall – has gone out for RFP to Jendoco, Mascaro, Mosites, PJ Dick, and Rycon. Construction of a temporary helipad is getting underway as the first phase of the $21 million emergency department renovation. MBM Contracting is the project’s CM. Stantec is the architect. And nearly 20 years of trying, word is that the $40 million Shannon Transit Village is moving forward. The 152-unit apartment with ground floor retail and a 375-car garage is being developed by Jim Aiello (JRA Development) and built by Mascaro Construction. A schedule for construction is not set, however.