Tuesday, November 12, 2013

Huntley Opens I-90/Ill 47 Interchange

                   At 2 p.m. Friday the full, complete electronic toll interchange between the I-90 Jane Addams Illinois Tollway and Illinois Route 47 at the southern edge of the Village of Huntley formally opened, as the construction equipment pulled away from the cloverleaf and the orange barrels disappeared from view. At a ceremony officially opening the new $61 million interchange paid for in a cooperative effort by the Village of Huntley, the Illinois Tollway Authority, IDOT, McHenry County and Kane County, Huntley Village President Charles Sass thanked all the state, county and local officials involved in completing the project for their efforts, pointing out that the new interchange has “set the stage for attracting more development, creating jobs and expanding the local tax base for decades to come.”

                    The Village has zoned over 300 acres of land within the interchange area for industrial and commercial development, with streets and underground utilities already in place to support new businesses bringing construction jobs and permanent employment to Huntley. Businesses interested in developing new facilities with I-90 frontage and easy access to area highways are encouraged to work with Huntley village officials to arrange industrial revenue bond financing for their new construction within the village.

CTA And METRA Reject RTA’s Joint Bond Issue Proposal

                      CTA President Forrest Claypool promptly expressed opposition to a proposal by RTA Chairman John Gates, Jr. to have RTA take over the power to issue up to $5 billion in government bonds for funding new facility construction by CTA, METRA and Pace, replacing the borrowing now done by those individual agencies. RTA’s current borrowing limit is a mere $800 million. According to CTA spokesman Brian Steele, “This idea is simply the latest in a series of attempted power grabs that would hurt service, make it harder to invest in the system, and make the RTA answerable to no one.”
                    Ongoing METRA scandals and rising interest rates on the CTA’s sales tax backed construction bond issues have prompted Gates repeatedly to recommend legislative initiatives for consolidation of regional public transit authority planning, borrowing and spending power in RTA, as opposed to the four separate public transit agencies now operating in northeastern Illinois. Meanwhile, while Republican and Democratic politicians contend bitterly over control of the planning and funding of public transit in the region, efforts to establish commuter rail service between Huntley and Chicago for the safety and convenience of local residents, and to ease traffic congestion on I-90 between Huntley and the Loop, languish in the earliest planning stages.

Shermer Road Derailment Site Could Reopen Early

                        Union Pacific Railroad Company has completed installation of a wider railroad overpass above Shermer Road at the site of the July 2012 fatal derailment a month ahead of schedule, making it possible that the temporary track bed of crushed stone blocking Shermer near the Northbrook/Glenview boundary could be removed and Shermer Road reopened, at least partially, by year end. The $10 million, 150 foot span will permit widening of Shermer at that location to 3 lanes sometime in the future.

                    According to IDOT, plans for the widening won’t likely come to fruition for another 5 or 10 years, but Glenview and Northbrook residents will be happy to see the roadway restored to its pre-derailment 2 lane configuration as soon as possible. Union Pacific construction workers will begin removing the temporary road bed berm from Shermer in the last half of November.

2014 Construction Starts Should Increase 9%

                         McGraw-Hill’s Vice President of Economic Affairs Robert Murray announced that the Dodge Construction Outlook for 2014 predicts construction starts across the American economy could rise about 9% to a total of $555 billion, led by a solid housing market and rising commercial construction. The Dodge Outlook prediction is based on “more orderly” federal budget deliberations in Congress, and a predicted overall U. S. economy growing at between 2.5% and 3% in 2014.
                    The construction economy has been sluggish in 2013, mostly because of 2013’s contraction in overall U. S. economic growth to 1.6%, compared to 2.8% growth in 2012. Construction starts in 2012 were up 10%, but fell back to only a predicted 5% this year. Apartment construction leads all sectors with 36% growth in 2012, 19% growth in 2013, and a projected 11% growth to a total of $53.1 billion in 2014.
                     Single family home construction is expected to accelerate to $201.1 billion next year. Commercial construction starts increased 14% in 2012, 15% in 2013 and an expected rise of 17% to $72.7 billion in 2014. Nevertheless, it will be a long time before the construction industry sees 2005’s peak levels of activity, according to Murray.

Cash Strapped Owners And Developers Shift More Risk To Contractors And Trades

                   Upward creeping surety loss ratios and skyrocketing trade contractor borrowing for working capital are just two symptoms of increases in onerous contract terms imposed on the construction industry by public and private owners and developers, say speakers at the annual Construction Financial Management Conference sponsored by ACG and CFMA. According to Chubb Surety CEO Rick Ciullo, “Surety rates are down as new players join the fray and dilute prices with added capacity, helping drive profitability down 50% through June 2013.”
                    Consensus Docs Executive Director Brian Perlberg asserts that “We’re seeing larger, more complex projects that require collaboration and communication,” putting additional management responsibilities and computerization costs on building trades. Furthermore, increasing reliance on public private partnerships, design/build delivery processes and computer technology “is clouding how insurers respond to claims,” in the opinion of Marsh, Inc. Senior VP Danette Jones. The speakers agree that bonded contract loss ratios are significantly higher among smaller sureties with a higher number of small general and trade contractor principals.

                    Trade subcontractors furthest from the cash flow are being hit hardest, as both labor and material costs increase and owner payments get strung out over longer time frames. The financial stress on the trades will ultimately, of course, come back to plague owners and developers in the form of higher overhead and fee lines in trade contractor bids on future projects.

Inland Waterway Construction Moves Slowly Back Toward “Regular Order”

                       The Water Resources Reform and Development Act of 2013, passed with changes by the Senate Oct. 31, will go soon to a conference committee co-chaired by California Senator Barbara Boxer and Pennsylvania Congressman Bill Shuster. If the conference committee can reach agreement on the final details of this legislation, it will be the first time since 2007 that legislation providing for two year funding of water resources development and construction in the nation’s inland waterways has come to a vote in Congress. Because of the failure of comprehensive budget and appropriation legislation in the past three congressional sessions, projects to keep afloat the $185 billion in bulk cargoes moving on the nation’s rivers and lakes annually has ground to a virtual halt.

                    If appropriations for harbor, river and lake construction and development could once again become an agenda item of “regular order” in Congress every two years, the average of 52 service disruptions per day along the navigable waters of the United States might be brought down to more manageable proportions, not to mention the additional employment that will be generated in the construction sector of our economy.

Congressman Mica Predicts Dramatic Drop In Federal Highway, Transit Funding

                    Florida Congressman John Mica, former chairman of the House Transportation and Infrastructure Committee, told a meeting of state and local officials gathered in Orlando that they are going to have to find sources of money outside Washington, D. C. to pay for transit and highway construction in their future plans. While touting the $8.4 billion in federal taxpayer dollars funneled to Florida in the recent past to fund major highway, airport and rail transportation projects, Mica told the “Florida Forward” transportation conference that the federal motor fuel tax of 18.4 cents per gallon, last increased in 1993, no longer brings in enough money for road and transit construction.
                    “There is pressure when you’re borrowing 43 cents on every dollar you are spending,” Mica said. “Long term, we’re going to have to do something, since the gas tax is broken.” What he really means is that Congress is politically unable to raise the motor fuel tax rate so long as gasoline and diesel prices remain at current levels. Alternative proposals to force auto and truck owners to automatically report and pay an additional tax on vehicle miles driven have been dead on arrival in Washington.
                    A quick look around the Chicago suburban areas where huge paving contractors are busily at work reveals that Mica may be telling the truth. Most of the billions in road construction work in Illinois which is planned for future years will be done on toll roads paid for by the cars and trucks driving on them, rather than supported by cash from the Federal Highway Trust Fund. What this will mean for the tradespeople and laborers whose livelihood has depended on full employment during the Illinois road building season remains to be seen, but there is no easy solution in view.

With Steel Construction At Near Record Highs American Bridge Company Shuts Down Fabrication

                  Explaining the company’s decision to shutter its steel fabrication facilities in Coraopolis, Pennsylvania and Reeds Port, Oregon, American Bridge Company CEO Mike Flowers says the firm’s backlog of steel erection orders and revenues from new steel construction projects are at near record highs, but unfortunately both the projects being completed and those on the drawing boards use steel members whose gigantic dimensions are too expensive to fabricate in the United States. “The products the plants make no longer matches the products needed by the construction company,” Flowers said.
                    Instead, American Bridge, in a joint venture with international construction giant Fluor Corporation, is completing the $1.9 billion reconstruction of the San Francisco Bay Bridge using steel beams and columns fabricated in China where labor costs are dramatically lower. Construction companies unable to find low cost fabrication here in the US work around Congressional “Buy American Steel” legislation by purchasing U. S. made plate, shipping it by ocean to China, where it is fabricated into the required bridge elements and then put on freighters returning to American ports. So much for Congressional attempts to keep steel forming jobs in this country.
                    Because highway bridge construction in the U. S. turned primarily away from all steel bridges to less expensive reinforced concrete bridge members, the majority of bridges currently needing repair or replacement are not within the all steel bridge specialty of American Bridge. As a result, Flowers said, the fabricating arm of American Bridge has been financially unhealthy for years. If Congressman Mica’s prediction of rapidly declining federal highway construction funding is correct, neither the steelworking trade nor the ironworking trade can take much comfort in the highly touted “Buy American Steel” clauses Congress has inserted into many of its recent infrastructure funding bills.

Forged Chubb Performance Bonds Costing Contractors Millions

                  Chubb Group has been notifying obliges in nine states that performance and payment bonds supporting contracts of 22 construction companies and bearing the Chubb surety seal and purported signatures are forgeries. The 22 contractors presenting these bonds were bilked out of over $3 million in bond premiums over the last year and a half by the forgers, who, among other things, misspelled the name of one of the Chubb executives whose forged signature appears on the bonds. The contractors purchasing the forged bonds have been required to pay another premium and purchase a valid replacement bond in order to continue with work on the projects affected.
                    At least two forgers acting as individual sureties have been identified as the source of the forged Chubb bonds, and Chubb has successfully obtained summary judgment for fraud and racketeering against the two forgers in the U. S. District Court for the Northern District of Florida, in Pensacola. It remains to be seen, however, whether Chubb and its lawyers can ever track down and actually collect from the forgers.
                    It seems several of the victims of this bond forgery scheme are minority owned or woman owned contractors. Earlier performance bond forgery schemes resulting in criminal conviction of the forgers have bilked construction companies out of as much as $22.5 million in fraudulent bond premiums over a three year crime spree. That particular forger was eventually caught and sentenced to ten years in federal prison.

                    If your construction business works even occasionally on bonded projects, make sure you do your due diligence and follow the advice of Surety and Fidelity Association of America Corporate Counsel Robert Duke: “The thing that can be done, and we preach, is to create awareness among obligees that it’s a five minute phone call to verify the authorization of a bond and avoid any of this.”

Construction Unemployment Down Worker Hours Up

             The U. S. Labor Department announced that unemployment in the construction sector of the economy hit a six year low of 8.5% in September, though construction unemployment is still higher than the 7.3% unemployment in the overall economy.                   

In the last 12 months employment in construction jobs increased 3.4%. Hours worked weekly by construction company employees rose 4.2% over the same one year period, showing that tradespeople are putting in longer work weeks, in addition to the time worked by new hires.

                    Since 2010, unemployment in construction has declined from a high of 17.2% to the current 8.5%, demonstrating that construction industry unemployment has dropped by more than half from its peak.

New OSHA Rule Moves Toward Public Real-Time Company By Company Injury Statistics

                   OSHA’s Assistant Secretary of Labor for Occupational Safety & Health Dr. David Michaels announced a new OSHA rule entitled “Improve Tracking of Workplace Injuries and Illnesses” which will require 478,000 U. S. employers of 20 or more employees to electronically report illness and injury rates to the agency once annually, or quarterly for employers with over 250 workers. OSHA plans to eventually post the data on line, creating a public, facility specific database of workplace injury information for regulators, workers, competitors and prospective employees.
                    According to Michaels, such a database would have several advantages:
·                                   It will allow employers to benchmark their injury rates against others in the same industry and against worldwide industrial injury data generally.
·                                     It will allow government agencies, owners and developers hiring contractors to compare and contrast safety statistics among bidders for their work.
·                                       It will allow contractors with exemplary safety records to have bragging rights over their competitors.
·                                It will allow companies with good safety records to become “employers of choice” among people looking for work within their industries.
·                                       It will push employers to find and remedy safety and health hazards before illness or injury occurs.

     Michaels admits that OSHA and its various state government counterparts taken together have only enough staff to inspect each of the nation’s workplaces subject to OSHA jurisdiction only once every 100 years. Creation of the database should enable regulators to focus enforcement efforts on high risk industries and facilities.
                    The National Association of Manufacturers has already announced its opposition to the proposed rule. NAM Director of Labor and Employment Policy Amanda Wood denies that publishing company specific and facility specific injury statistics would “further the end game to achieve safer workplaces.”
                    “Discussing specific injury and illness data could lead to unfair characterizations of businesses by people who just see a statistic and don’t know the circumstances behind it,” Wood said. “We need best practices, not additional regulations, at this time.”

                    OSHA has scheduled a public hearing on the proposed rule in Washington, D. C. January 9, 2014, and public comment on the rule closes February 6.

Construction Injuries Down, But Fatalities Up

                   The Bureau of Labor Statistics just released data on injuries and deaths in construction industry mishaps shows a decline from an injury rate of 3.9 injuries per 100 full time workers in 2011 to 3.7 per 100 full time workers in 2012. However, the number of construction workplace fatalities increased 5% over the same one year period, to a total of 775.

Changes Proposed to Illinois Renewable Energy Law

                    Illinois electric rate payers have deposited $53 million into a fund to finance solar power panel construction in the state, but problems with the renewable energy legislation have left the cash sitting in the bank. Oak Park Senator Don Harmon will introduce a bill in the next session to remove the restriction against disbursement of the money to property owners putting up solar panels unless Ameren or Com Ed is actually purchasing power from the panel owners.

                    Because so many customers have switched away from Com Ed and Ameren to lower cost power providers, the two major utilities are not buying solar power, and solar power development in the state lags far behind other Midwestern low sunshine states with low electric rates.

Monday, October 28, 2013

Huntley Snags Cargo Equipment Corp. $3 Million HQ

Thursday evening October 24, 2013, the Huntley Village Board passed in Inducement Resolution proposing a $3.3 million industrial revenue bond issue to finance construction of a new 40,000 square foot headquarters and manufacturing facility for Cargo Equipment Corporation on George Bush Court in Huntley Corporate Park. Cargo Equipment, which is moving to Huntley from its smaller Elgin plant, makes bungee cords, ratchet straps and other load securing equipment for the moving and trucking industries. Construction on the new facility will begin in the spring of 2014, and will double the size of Cargo Equipment’s present plant.

The new Huntley plant will ultimately employ about 45 people. Cargo Equipment President Jeff Iden cited Huntley’s lower construction costs and its location at the new interchange of I-90 and Illinois 47 as key factors in selecting Cargo Equipment’s new location. In proposing the industrial revenue bond issue to finance the new plant, Huntley Village President Charles Sass said Cargo Equipment joins six other major businesses which have moved to Huntley within the last two years. The new facility should be operational by fall 2014.

Chicago Streamlines Rooftop Solar Power Permits

A new building permit process developed with the aid of a $750,000.00 grant from the U. S. Department of Energy’s Sun Shot Rooftop Solar challenge has cut the time involved in pulling a City of Chicago building permit for rooftop solar power installations from a month to a single day, and cut the permit fee to $275.00. Chicago’s new solar.cityofchicago.org website is touted by city officials as a “one stop shop” for approval, installation and connection of rooftop solar power panels.

Chicago’s electric utility Commonwealth Edison is preparing a year end launch for an online tool which will enable solar power users to receive utility bill credit for connecting their solar panels to Com Ed’s grid.

Chicago Infrastructure Trust Off To Slow Start

In March 2012 Chicago Mayor Rahm Emanuel and former President Bill Clinton sat together in a press conference at a carpenters union hall and announced formation of the Chicago Infrastructure Trust, a public/private partnership designed to find money from the private sector to invest in improvements in local government buildings and other infrastructure. The city ordinance creating the Trust was passed at an April City council meeting, and a board of directors for the Trust was appointed in June 2012. Then it took eight more months for the board to name venture capitalist Stephen Beitler as executive director of the new entity.
In his first eight months on the job, Beitler has invested most of his time in locating permanent office space for CIT, setting up the Trust’s computer systems, and reworking the Trust’s public website after it was hacked. The efforts to find private investors in the Trust has been limited to issuing an RFQ for registered securities dealers to place CIT investment vehicles, and three iterations of an RFP for “Placement Agents” to sell $83.1 million in investment vehicles to fund energy efficiency projects for 214 Chicago Public School lighting efficiency installations, Department of Water Management conversion of one pumping station from steam to electric power, and 208 various energy efficiency projects for Chicago’s Department of Fleet and Facility Management.
This first $83.1 million placement, dubbed “Retrofit One,” is intended to produce $8.8 million in annual electric bill savings to CPS and the City. Although the proposed terms of the investment instruments to be offered have not been made public, amortization of $81,3 million over 15 years at the current market rate for tax free pubic educational institution bonds of 5.25% would mean that 90% of the expected energy savings would be returned to investors, and only 10% of predicted savings would be realized by municipal government.
The financing for Retrofit One was supposed to be closed by summer 2013, but so far no registered securities dealer or dealers have been selected to place the investment. Meanwhile, Chicago Public Schools has already spent the $19.5 million allocated from Retrofit One for 241 school building lighting improvements, and that work has been completed. CPS hopes it won’t have to look elsewhere for the cash to pay for this work.
Public/private partnerships have been touted as financing vehicles for infrastructure at the federal, state and local levels recently. I have been involved in projects where this sort of investment has been successful, but the Chicago Infrastructure Trust seems to be struggling mightily to figure out how to find private sector investors, and how to move projects forward to closure in a timely manner.

The Construction Economy Is Better, But Not Much

Nationwide, overall construction growth slowed from July’s 1.4% to less than half that rate, at 0.6% for August, according to the federal Commerce Department numbers released October 22. Housing construction was up 1.2% in August, with other sectors of the construction economy lagging far behind housing. On the same day, the U. S. Department of Labor announced that construction businesses added 20,000 new jobs in September, a 3.4% increase over the last 12 months to a total of 5,826,000 construction employees across the nation.
Pointing out that both these sets of figures are from the time right before the federal government shutdown, Associated General Contractors Chief Economist Ken Simonson points out that catastrophe “likely disrupted a wide variety of projects and may have caused private investors and developers to delay decisions about new projects or plant expansions.”
Among Midwestern states, Michigan, Illinois and Wisconsin see construction contractors returning to work, while Indiana and Ohio suffered increases in the levels of idled construction equipment and tradespeople.

Now that the federal government shutdown is over, at least for the next three or four months, appropriations committees in the House are starting work on spending bills which will help contractors who depend on infrastructure work. Wednesday, October 23 the House passed the first such bill – the Water Resources Reform and Development Act – which funds flood control, waterway and harbor construction at a level $4 billion less than the Senate version passed last May, and $15 billion less than the 2007 appropriation bill, which is the last time Congress acted on waterway appropriations.

OSHA Moves Against Palumbo, Telegraphs Fourth Quarter Enforcement Agenda

Emphasizing the chilling effect of employer lawsuits against whistleblowing employees, OSHA last Thursday ordered Palumbo Trucking, Inc. to pay a penalty of $60,000.00 to a driver and a mechanic who reported a potentially unsafe truck to the North Branford, Connecticut police and the Connecticut DMV. Each former Palumbo employee is to receive $10,000.00 in compensatory damages and $20,000.00 in punitive damages for Palumbo’s violation of the whistleblower retaliation provisions of the Surface Transportation Assistance Act. Palumbo was also ordered to pay each worker’s attorney fees in the action, to provide neutral job references for both the driver and the mechanic, and to give all its workers a fact sheet on worker rights under the Act.
Meanwhile, various OSHA documents recently released have telegraphed to employers the enforcement agenda of the agency for the remainder of calendar 2013. Employers will find OSHA inspectors checking their facilities to make certain appropriate unlocked, unobstructed and clearly marked exit doors and exit routes for employees are provided, in compliance with 20 C.F.R. 1910.36. Make sure all your employees know how to get out alive in the event of an emergency.
OSHA’s new Hazard Communication Standard requires employers to train all employees on new chemical labeling and Safety Data Sheet formats by December 1, 2013. Make sure your employees know how to read labels of hazardous chemicals in use at your facilities and on your rigs, and that they know where to find and how to read the MSDS information on all those substances.
OSHA’s focus on worker injury avoidance concentrates strongly on fall protection – particularly applicable to construction industry employers – and the agency is in the midst of its Amputation National Emphasis Program respecting machine guarding, lockout and tag out regulations.

OSHA’s final fall initiative is expected to look at grain elevator inspections now that the harvest season sees increased bin entering, preventive maintenance, and rail car and ship grain loading activities.

Thursday, June 20, 2013

Plote Construction Is Low Bidder on $73 Million In Tollway Work

At the June 27 Illinois Toll Highway Authority meeting the board is expected to award contracts for $160 million in highway work as part of the $2.2 billion Jane Addams I-90 widening project which got underway this spring. Hoffman Estates based Plote Construction is low bidder on two of the major projects, totaling about $73 million, for reconstruction and widening of the westbound lanes to the west of the Elgin Toll Plaza. Plote is also already working on reconstruction of the !-90/Illinois 47 interchange in Huntley.

Winnebago County based William Charles Construction of Loves Park is expected to be awarded the contract for widening of I-90 in both directions between Lake Street and Anthony Road, at the same board meeting.

Wednesday, June 12, 2013

U. S. House Slashes Military Construction Spending

In the first 2014 appropriations measure to come out of the Washington D. C. gridlock, the House voted 421 to 4 to slash spending for military and veterans administration construction projects during the 2014 fiscal year. the bill cuts $670 million from the 2013 level of military construction appropriations, and also reduces spending on major VA construction projects by 36%. Funding for minor VA projects was boosted a paltry 18%.  

House Appropriations Committee Chairman Harold Rogers said in support of the measure: "We took the difficult but responsible step to reduce military construction spending ... but we made these reductions without affecting military readiness or effectiveness."  the cuts include a 6% reduction in spending for housing construction for military families, partially due to privatization of DOD family housing.

One Republican amendment to the bill, which would have deleted any funds for Davis-Bacon enforcement of prevailing wage requirements on military construction projects was rejected before the measure finally passed, giving some solace to the trade union members whose jobs are threatened by the massive reductions in these appropriations. The bill is on its way to the Senate for action there.

Monday, June 10, 2013

Water Resources Lobbying Focuses On U.S. House

Lobbying over details of the Senate passed Water Resources Development Act five year reauthorization has focused on the House Transportation and Infrastructure Committee, chaired by Pennsylvania Congressman Bill Shuster, following Senate passage of the measure by a vote of 83-14. The Senate's measure created a five year, $4.5 billion federal share for drinking water, waste water and flood control construction projects, including top priority Army Corps of Engineers slated for floor protection along the American River in California; the Red River Valley between Fargo, N.D. and Moorehead, Minn.; along the Gulf Coast in Louisiana and Mississippi; together with navigation improvements for the Sabine-Neches Waterway across Texas and Louisiana.

The Senate's bill, co-authoried by California's Barbara Boxer and Louisiana's David Vitter, avoids naming the specific projects to receive federal money, leaving those decisions to the executive branch. Chairman Shuster says he is concerned that Congress, rather than the White House, should set the spending priorities project by project, a Congressional prerogative commonly referred to as "earmarking." while the Senate has increased federal water project construction spending to eventually match the export tax revenue coming in to the Harbor Maintenance Trust Fund by 2019, construction and water transportation lobbyists hope to accelerate the pace of increases in the House version. 

The real lobbying battle in the House Transportation and Infrastructure Committee, however, pits construction industry interests favoring wholesale exclusion of certain categories of projects from environmental approvals under the National Environmental Policy Act against environmental groups who believe navigation and construction interests want to gut NEPA reviews of waterway projects. The outcome of that fight, more than the battle over whether or not to earmark specific projects, will likely determine the five year pace of spending on waterway improvement projects.

Wednesday, June 5, 2013

Construction Backlogs Drop - Public Firms' Prospects Nosedive

Despite recent upticks in housing starts and new home prices in the U. S., the near term economic outlook for publicly held engineering and construction firms still looks bleak. First quarter backlogs for those businesses dropped 1.5% below the first quarter of 2012, according to financial analysts at Robert W. Baird & Company. Credit Suisse analysts also take note of project execution problems and earnings misses by several public contracting firms. Quarterly net losses of $22 million at Granite Construction, $14.6 million in the oil and gas sector at Willbros Group, and cost overruns on 7 of 11 under construction projects at McDermott International highlight the ongoing economic troubles of the industry.

One bright spot in the cloudy skies of construction industry economics in the first quarter was the investment by Warren Buffet's Berkshire Hathaway of $376 million to purchase 6.5 million shares of Netherlands based Chicago Bridge & Iron. CBI touts itself as the world's "most complete energy focused infrastructure company," and just last February spent about $3.3 billion to acquire Shaw Group, thereby greatly expanding CBI's nuclear power plant construction capabilities.

Lackluster federal and state government construction spending in the foreseeable future, combined with significant risk of private sector project delays and cost overruns, make any quick turnaround of the downward trend unlikely.

Tuesday, May 21, 2013

Bay Bridge Problems Literally Fixed With Duct Tape

Corrosion problems during construction of the $6.4 billion Bay Bridge discovered as early as November, 2004, were "fixed" by a bridge inspector using duct tape to cover leaking vents leading to ungrouted galvanized ducts containing already stressed post tension tendons designed to add strength to the bridge deck carrying traffic, according to CALTRANS inspection records uncovered recently. California Governor Jerry Brown announced yesterday that this, and other corrosion related problems arising during bridge construction, has initiated a review of bridge construction documents dating back to 2003 or earlier, and will likely delay the scheduled Labor Day opening of the iconic bridge.

"I take it very seriously, and that thing's not going to open unless it's ready," Brown said. Besides defective girder welds, fracturing seismic equipment bolts, and questions about the strength of the bridge's concrete foundations, inspection records released recently reflect that hundreds of steel tendon inserted into bridge deck segments and stretched, to add strength to the traffic carrying bridge deck, could have been seriously damaged by corrosion during early phases of the construction project. At one point, the situation brought one of the bridge's engineering managers to tears, as he observed workers pumping gallon after gallon of rusty water from ungrouted tendon ducts.

Post tension bridge construction involves using precast concrete panels for segments of the bridge decking. The panels are manufactured with galvanized ducts inside them. Once the precast panels are in place on the bridge, steel cables are inserted into the ducts, and stretched under tension to compress the precast panel, adding significantly to its load bearing strength. Commonly used engineering standards, included in the Bay Bridge contract, require the ducts to be filled with protective grout within ten days after the tendons are put under tension, to avoid corrosion and early failure of the steel cables. Failure to timely grout the ducts exposes the stressed cables to moist air and other elements that can corrode the steel.

During a November 2004 routine inspection of the under construction bridge deck, CALTRANS inspector Laura Rubalcaba found water inside ungrouted ducts containing cables which had been under tension for two months or more. That day, Rubalcaba wrote in her construction diary, "The top of the grout injection/vent hoses were not sealed against the rain. I ... found many instances where it was obvious that rain water was already in the ducts with the stressed tendons." Rather than stopping work on the deck section involved, Rubalcaba had a solution that should send chills up and down the spine of every bridge engineer around the world - "I duct taped over the tops of the tubes myself."

After Rubalcaba's report, and numerous other, similar observations of potentially destructive corrosion of post tensioned cables in wet ducts, CALTRANS undertook some inspection and testing efforts to evaluate the problem, finding it not a significant risk to the bridge. However, even after that report was issued, bridge builders left cables under stress within wet ducts for many months, and failed to use a special grout formula designed for wet ducts once the ducts were finally grouted, despite five to nine inches of rainfall during the six months it took to get around to grouting the wet cables.

The bridge is already billions over budget and years behind schedule. Any elected official who is in any part responsible for a premature decision to open this bridge to traffic, or releasing taxpayer dollars in final payment to the contractors involved in these failures, should be held fully accountable to the public for any future disasters which might befall this bridge.

Friday, May 17, 2013

ASA Documents Updated To Fight Bid Shopping

The American Subcontractors Association this month released a new version of its Subcontractor Bid Proposal form, incorporating Consensus Docs 750 Standard Form of Agreement Between Constructor and Subcontractor, in ASA's continuing effort to thwart general contractor shopping of subcontractor and supplier bids on construction projects. ASA's new bid submission form has added the following language to the subcontractor proposal:

"Subcontractor has devoted time, money and resources toward preparing this bid in exchange for Customer's express agreement that the parties shall have a binding contract consistent with the terms of this bid proposal and Customer unconditionally and irrevocably accepts this bid proposal if it 

(A) in any way uses or relies on the bid proposal or information therein to prepare "Customer's bid" for the project at issue and Customer is awarded a contract for the work; or

(B) divulges the bid or any information therein to others competing with Subcontractor for the work."

This language is designed to deter general contractors and construction managers from shopping subcontractor bids to competitors after a contract has been awarded to the general on the general's bid  which includes the subcontractor's pricing. Bid shopping is sometimes used by unscrupulous builders to increase their profits by squeezing subcontractor pricing after award of a contract based on subcontractor bids which are then undercut by competitors who never bid on the project, or who were outbid but are willing to cut their prices once the results of the bidding are known.

Thursday, May 16, 2013

Determined Chicago Window Builders Defy All Odds

Seventeen employees of a Chicago window manufacturing facility forced out of work not once, but twice, by plant closures are defying the odds and forming a not for profit co-operative to keep their equipment humming and preserve their jobs. The 17 were employed at what was, in 2008, Republic Windows and Doors. Republic abruptly shut down the factory in December, 2008, laying off 270 workers. After a union organized six day sit in protesting the plant closure, the workers settled with the bankruptcy creditors committee for checks amounting to between $2,000 and $8,000. A few months later, California based Serious Energy purchased the factory from the bankruptcy estate, and promised to hire back Republic's laid off work force.

Serious managed to bring back as many as 70 of the former Republic workers, but by May, 2012, Serious shuttered the plant for a second time. Now, with 70 employee-owners who each invested $1,000.00, New Era Windows Cooperative has leased factory space in a different building, moved Republic's machinery and tools into the new space, and set up a $665,000.00 line of credit from New York based non-profit foundation The Working World, is back in operation. 

The Working World co-founder Brendan Martin says of New Era Windows, "If this is successful, it could suggest a new path forward for our post-industrial economy, and certainly as a non-profit, we'll be trying to replicate this model." Initially, New Era does not expect to compete with giant, high volume producers of low cost windows for new construction. Rather it expects to participate significantly in the larger market segment for remodeling and replacement windows. Only time will tell if the ingenuity and courage of these 70 tough, persistent window makers can compete successfully where big corporations could not.

GSA Stiffs 1,334 Small Businesses

A Congressional investigation report released today by the House Small Business Committee demonstrates that Government Services Administration small business contractors in the Multiple Awards Schedules program were underpaid more than $3 million because the agency failed to honor the minimum payments provisions of GSA's own contracts with these vendors.  GSA's MAS program encourages small businesses to offer products and services to locally based federal agencies at fixed prices for relatively small quantities. In order to qualify for the program, each small business most endure an expensive and arduous vetting process, and promise to sell $25,000.00 in products or services to federal purchasers during the first two years of participation, and a minimum of $25,000.00 each year after that. 

Those businesses which qualify, but fail to meet the sales quotas, are eliminated from the program. GSA's own contract form imposes on itself an obligation to make a minimum payment of $2,500.00 to eliminated sellers who failed to get awards of that amount before they are dumped. House Small Business Committee Chairman Sam Graves (R-Mo.) acknowledged that the MAS program is supposed to promote government efficiency and encourage small business participation. "But when federal agencies don't live up to their end of the bargain, small businesses are discouraged from competing, and taxpayers lose the benefits of government efficiency," Graves said in announcing the findings of his investigation.

Apparently, for the last ten years, no one at GSA was responsible for making the minimum payments to terminated MAS contractors, though GSA wrote the form of contract each small business was required to sign to get in on the program. 

Skilled Trades Shortage Stymies Housing Recovery

Now that new homes are beginning to sell again, recovery in the housing market has met a new foe - shortages of skilled construction tradespeople willing to give up the alternative jobs they struggled to find during the hard times of double digit unemployment in our industry, and return to construction work. Some trade contractors report they are only able to fill 75% to 80% of the journeyman trade jobs needed to take on all the work offered to them.

The National Association of Home Builders reports that the five states experiencing the strongest recovery in housing starts are also finding severe shortages of framers, roofers, carpenters, and plumbers, a labor market problem which curtails even faster growth in new housing construction. Though construction industry unemployment still far exceeds the national overall unemployment rate of 7.5%, and employment in home building has increased only 5% from its 2011 all time low of 2 million workers, tradespeople who found other work during the five year industry slump are understandably reluctant to come back to the seasonal and cyclical construction workforce. Housing starts increased 47% in the last 12 months, but construction employment over the same year long period rose only 3.7%.

Half of the NAHB members surveyed report they have had projects delayed because of shortages of journeyman tradespeople, and 15% say they have refused to bid on some projects offered to them because they could not staff the jobs. Furthermore, new home price increases increased 12% from a year earlier, to an average of $247,000.00 driven by higher wages needed to attract skilled trades people back into the construction job market. NAHB estimates there are as many as 116,000 unfilled skilled construction jobs, and also that 22% of the home construction workforce is made up of foreign born workers.

NAHB chief Economist David Crowe predicts that increasing prices for construction materials, along with the skilled labor shortage, will prevent a return to the peak home construction rates of 2002-2006 until at least 2016. "We need to rebuild the infrastructure of the industry," Crowe concludes.

Tuesday, May 14, 2013

Seattle Recovers Embezzled Million

Just over a year after discovery that a Seattle city engineer had embezzled a little more than a million dollars from municipal sewer extension projects, the Seattle City Pete Holmes reports that taxpayers have recovered all but $30,000.00 of the stolen funds.  Seattle utility engineer Joseph Phan still faces criminal charges numbering 70 counts of first and second degree theft in connection with the diverted funds. Holmes' diligent and persistent civil court efforts to get back the stolen million have made city taxpayers almost entirely whole. "We shower we will come after you with everything we have to make taxpayers and ratepayers whole," Holmes said in announcing completion of the restitution effort.

Phan was responsible for estimating the costs of hooking up sewer and water lines to new construction for developers anew home owners, drafting the city construction agreements, and collecting payment for the work from those owing the city for the construction. Allegedly Phan opened a bank in his own name into which he deposited the checks from property owners payable to the City, then using the money in the account to buy rental properties and vehicles in his own name, and to make cash gifts to relatives and to his church. He was arrested in March, 2012.

Seattle seized $96,000 from Phan's city pension account, $20,000 from his life insurance, and $43,000 from a college savings account he set up. Phan's scheme was uncovered after he was fired for hacking into his own city utility account to post payments he never actually made. After Phan was terminates, a developer asked the city to transfer funds it had paid to Phan from one property development which never materialized to the account of a different project, and sent in a copy of the check in payment. Seattle could find no record of any deposit of the payment into City accounts, and the following investigation turned up the million dollar embezzlement.

Criminal Charges Threaten Belize Contractor Bulldozing Mayan Ruins For Rip Rap

A highway contractor in northern Belize who chose to destroy a 2,300 year old Mayan ceremonial pyramid located in a privately owned sugar cane field, and use the decimated stone for rip rap on the highway project could face criminal prosecution under the laws of Belize protecting pre-Hispanic cultural ruins. The hundred foot tall pyramid complex at Nohmul, in northern Belize, is a well known archaeological site, and according to Jamie Awe, head of the Belize Institute of Archaeology, could not possibly have been mistaken by the contractor as a naturally occurring gravel mound. "These guys knew this was an ancient structure. It's just bloody laziness," Awe said of the desecration. "It's a feeling of incredible disbelief because of the ignorance and the insensitivity ... Why can't these people just go and quarry somewhere that has no cultural significance? It's mind-boggling."

Tulane University Anthropology professor Francisco Estrada-Belli, complains that the desecration of Mayan religious sites for construction material is a daily occurrence in Belize. "The only way to stop it is by showing that it is a major crime and people can and will go to jail for it," according to Estrada-Belli. Tension between the infrastructure construction needs of emerging modern societies and respect for ancient cultural heritage requires government vigilance which often is not supported by the requisite level of resources devoted to enforcement of historical preservation efforts.

San Joaquin Delta Water Project To Cost $14 Billion, Disrupt Farming

San Joaquin Delta vineyard and orchard owners are facing condemnation of their most fertile land and disruption of their carefully crafted soil drainage systems should Governor Jerry Brown push through his proposed Bay Delta Conservation Plan, including twin 44 foot diameter, 35 mile long fresh water aqueduct tunnels and related industrial infrastructure, landfills and reservoirs costing an estimated $14 billion. The proposal, seven years in the planning stage, is the governor's effort to resolve tension between the residents of the ecologically stressed delta, and the fresh water demand of 25 million Californians and 3 million acres of farmland elsewhere in the state.

The delta's picturesque thousand miles of waterways surrounding 70 islands, dotted with vineyards and orchards, some of which have been owned by the same families for over 160 years, is threatened under the planned condemnation of 1,000 acres of farmland for inundation as a reservoir, another 610 acres for excavation as a borrow pit, and various locations for permanent disposal sites for 27 million tons of tunnel muck storage to be spread 6 feet deep across a total of 717 acres of the nation's most fertile agricultural property.

In addition, delta residents and the native wildlife inhabiting the Stone Lakes National Wildlife Refuge could be subjected to the noise and vibration from 8,400 pile driving hammer strikes per day for a period of four months or more during landfill construction for the project. Delta landowners have been unable to market their real estate to anyone since the project's planning was launched seven years ago, because of their legal obligation to disclose to prospective purchasers the threatened condemnation of their land. Some have already become involved in court proceedings intended to delay or prevent the issuance of temporary entry permits so project planners could bore out soil samples for analysis in the project planning process. 

Legal proceedings respecting condemnation of the properties ultimately destined to be within the project's planned footprint could add years to the proposed project's timeline, and billions to its ultimate cost to taxpayers and water ratepayers. 

Sunday, May 12, 2013

Corruption Probe Could Delay $1.35 Billion Georgia Sewer Construction Project

Water and sewer projects in DeKalb County, Georgia worth a total of more than $1.3 billion could be delayed by execution of search warrants in an ongoing probe of fraud, bribery and bid-rigging in the award of public contracts by the county. One of the finalists for a construction management contract to oversee $800 million worth of the work - Colorado based MWH Americas - was mentioned by name in search warrants executed at the homes of DeKalb County CEO Burrell Ellis and Ellis' former campaign manager Kevin Ross. MWH received the top score among finalists for technical expertise, but county staff recommended awarding the contract to low bidder DeKalb Warer Partners. 

County commissioners last week decided to rebid the construction management rather than risk an award to a company involved in the bid-rigging grand jury investigation. Despite the fact that delays in completing the project imperil federal grants for partial funding of the work, county commissioners want to avoid any appearance that taxpayer funds are going into the coffers of corrupt bidders and county officials. Lee May, presiding officer of the DeKalb County Commission, said, "If we are protecting taxpayers, we have to err on the side of caution."

Ellis and Ross have petitioned the court to unseal a secret grand jury report so they can determine whether they are targets of the corruption probe. 

GAO Blames VA For Hospital Construction Delays And Overruns

GAO testimony to a House subcommittee last week demonstrated that Veterans Administration supervision of its own major construction projects is dysfunctional and fails to meet construction industry standards for construction management. As a result, according to the GAO  auditors who appeared at the hearing, VA medical center construction projects average three years behind schedule and $366 million over budget. Projects in Las Vegas, Denver, New Orleans and Orlando were the subject of the GAO review.

According to the Congressional testimony, the primary cause of the problem is VA's inability to deal with design changes in a timely manner, resulting in multiple demobilizations and remobilizations on each project, while contractors await, often for many months, VA decisions on proposed expansions or revisions of the projects. In some instances, significant mid-stream changes in dimensions of the latest imaging and other high tech medical equipment have meant on the fly revisions to room dimensions and floor load specifications. Many of the problems resulted from VA's determination to begin construction before finalizing the decisions about facility size and purpose.

During the hearing, several Congressmen questioned the award of significant compensation bonuses to VA administrators charged by GAO with responsibility for the delays and cost overruns. Kansas Congressman Tim Huelskamp said in questioning VA Acquisition, Logistics and Construction head Glenn Haggstrom that Haggstrom's pay should have been docked instead of augmented because of all the decision making delays.

Bay Bridge Troubles Halt Fundraising For Opening Gala

Further delays in decision making about the date for opening of the new Oakland to San Francisco Bay Bridge have put a halt to fundraising efforts for the planned Labor Day opening festivities on the span. Final decisions regarding the scheduled opening have brought fundraising efforts for the ceremonial opening to a stop until Caltrans decides later this month whether or not the project will be safe for traffic by the Labor Day deadline. Failed seismic support bolts, cracked welds, and problems with structural concrete testing on the bridge's foundation may result in the need for up to $10 million in repairs to the already over budget $6.4 billion construction project.

Despite the postponement of the decision regarding the opening date, it seems unlikely repairs could be completed in time for a Labor Day opening to auto and truck traffic. Bridge officials have already submitted a written request for the Federal highway Administration to initiate an independent engineering review of the proposed repairs. The project is already years behind schedule and billions over budget. Bridge engineers hawe just begun saltwater corrosion testing of a sample of the seismic bolts, and the results of those test are expected to be released at a special May 29 meeting of the California Transportation Commission, when the final determination about the opening date is also supposed to be released. California's Toll Bridge Program Oversight Committee has already punted the final decision about when the span will open to traffic to Governor Jerry Brown.

Toll Bridge Program Manager Tony Anziano acknowledges that "We are pretty confident that we don't have an immediate failure issue with these bolts, but we want to have a strong level of confidence over the long term." Nevertheless, Anziano doesn't want to have the fate of the opening gala and attendant fundraising efforts in his own hands.

Monday, May 6, 2013

Scaled Back Chicago Post Office Redevelopment Announcement Coming In June

Joseph Antunovich, architect for British developer Bill Davies, said during a May 3 fire safety meeting with City of Chicago officials that this coming June he expects his client to release a scaled back version of plans for redevelopment of Chicago's old main Post Office building straddling the Eisenhower Expressway at the Chicago River. A massive redevelopment plan released in 2011 called for construction of five residential, hotel and office towers on the site. That proposal has proved not to be economically viable.

The forthcoming, more modest plan will include retail shops on the bottom three floors of the existing  nine story structure, with residential space above. Davies also plans a 100 story hotel and residential tower on the portion of the site between the existing structure and the riverbank, atop Amtrak and commuter rail yards at the water's edge. Davies will also propose a parking garage just west of the old Post Office building, containing robotic car elevators designed to bring each driver's vehicle back to the exit lanes.

The announcement of the forthcoming design release came during a meeting with CFD officials to discuss improved sprinkler standpipes within the existing building and the 24 hour per day operation of the building's 11 exhaust fans to clear away diesel exhaust fumes from idling Amtrak and METRA commuter locomotives using Chicago Union Station's train sheds and rail yards.

Inappropriate Galvanizing Likely Led To Bay Bridge Bolt Failures

Potential significant delays in the scheduled Labor Day opening of the replacement for the San Francisco to Oakland Bay Bridge - replacing the span which failed, killing one motorist, 23 years ago during the magnitude 7.1 Loma Prieta earthquake -  could be the result of a flawed decision by CALTRANS engineers to call for galvanizing of the 288 three inch diameter high strength A354 BD steel anchor bolts connecting the bridge deck with its shear keys, bearings and columns, according to preliminary information regarding a soon to be released failure analysis of the 96 bolts produced for the project in 2008. An additional 192 bolts of the same type made in 2010 are also under review.

ASTM International has warned for decades against galvanizing A354 BD grade high strength steel fasteners, concluding that "research on bolts of similar material and manufacture indicates that hydrogen stress cracking or stress cracking corrosion may occur on hot dip galvanized Grade BD bolts." One bolt maker - Portland Bolt and Manufacturing - actually declined to submit a bid on the Bay Bridge project because of the CALTRANS specification calling for galvanized BD grade bolts. According to Dave McKinnon, Portland Bolt's quality assurance director, "We won't galvanize A354 BD bolts for any reason. We've chosen to take ASTM's warning as more of an absolute." McKinnon is a member of ASTM's fastener standards committee.

Galvanizing, a relatively cheap and long lasting anti-corrosive treatment for steel, is prohibited on BD grade bolts by CALTRANS' own bridge design manual. The CALTRANS engineers responsible for the galvanizing specification on the Bay Bridge have not yet explained why they elected to go against the prohibition of their own procedures in designing the new Bay Bridge. Thirty two of the 96 bolts produced for the project in 2008 - each 17 to 24 feet long - snapped apart while iron workers were tightening them during construction last March. Intensive testing of the 192 fasteners from the same supplier produced in 2010 is also underway.

A report expected to be released Wednesday, May 8, 2013, should identify the cost, methodology and schedule for repair of the bolt failures, the decision whether to replace the 192 galvanized bolts produced in 2010, and any change in the scheduled opening of Bay Bridge. The incidence of failure by one in every three of the galvanized bolts produced in 2008 has weakened public confidence in the often touted earthquake stability of the new bridge structure.

Sunday, May 5, 2013

Chicago Contractor Still Has "The Right Stuff"

Chicago based Walsh Construction showed over the last nine days that it still has the right stuff, despite the declining fortunes of the Chicago and Illinois construction economies. Walsh/II in One joint venture will apparently complete the complex, waterborne reconstruction of the bilevel Wells Street twin leaf bascule road and rail bridge across the Chicago River within the nine day schedule allowed, so the bridge can reopen to both auto and CTA rail traffic for tomorrow morning's rush hour commute.  With a minimum of interference to road, rail and river traffic, using twelve hour work shifts for nine straight days, the contractor has worked with the Chicago Transit Authority and Chicago's Department of Transportation to complete replacement of the bridge, last rebuilt in 1922. Wells Street, Chicago's busiest bridge, serves 12,000 cars and trucks, and 70,000 CTA bus and rail commuters every weekday.

The only other bilevel road and rail bascule bridge of its kind, crossing the Chicago River at Lake Street, was replaced in 1996, and that project took 12 months to complete. Kudos to the Chicago based Walsh brothers, Dan and Matt, for managing to complete this essential infrastructure project in 97.5% less time. Chicago's construction market supports some of the world's best!

Bad News Dogs Chicago and Illinois Construction Markets

Non residential construction in Illinois fell nearly 30% year over year from the first quarter of 2012 to the first quarter of 2013, declining from $1 billion to $762 million. The corresponding first quarter plunge in the Chicago metropolitan market for non residential construction was a less dramatic 12%. Nationwide, the news for our industry was somewhat less pessimistic, but not very encouraging. Private residential construction , the only major market segment showing a nationwide gain, was up 0.4% in March. Private non residential construction was down 1.5% nationally, with federal government construction declining a steeper 1.7%, and state and local construction spending skidding 4.2% 

National new single family home construction rose 1.6%, and new single family home sales inched up 1.5%. New multifamily construction gained a mere 0.3%. March housing starts passed the one million mark for the first time in nearly five years. Although national unemployment hit a four year low of 7.5%, construction was the only private industry cutting jobs instead of adding them. Governments at all levels also slashed employment ranks.

Our industry continues to suffer locally and nationally, while the overall American economy expanded a modest 2.5% for the first quarter, comparing favorably with Eurozone unemployment of 12.2% and Greek and Spanish unemployment reaching as high as 27%. 

The Obama administration's April 10 budget request includes some mixed news for the construction economy, including fourteen fold increases in GSA construction and nearly three fold increases in GSA repairs and alterations, and much more modest increases of 5% in military construction, 1.5% in highway construction, and 0.9% for public transit construction. Federal construction budget cuts include 13.4% for airport improvements, 20% for EPA waste water and drinking water revolving funds, and 40% for Department of Agriculture rural drinking and waste water projects.

In the next few months and years, it looks like the driving force in any construction industry growth will be private market residential construction.

Bay Bridge Opening Could Be Postponed

The planned September 2013 opening of the new Bay Bridge connecting Oakland and San Francisco could be delayed by broken bolts and cracked welds threatening seismic stability of the structure, as well as political infighting and potential conflicts of interest involving a Legislative Analyst's Office panel of experts appointed to perform an engineering review of the structure's construction difficulties. The latest complication facing completion and opening of the new span is discovery of cracks in 20 welds in the bridge tower, each of which is 33 feet long and 4 inches thick. In a cost saving measure on the $6.4 billion construction contract,  these tower welds were completed using an inexpensive and faster welding technique known as electroslag welding. The cracked welds connect huge steel plates at the base of the 525 foot tall tower just above the water line. The seismic strength of the tower depends on the stability of these welds.

Back in 1977, the Federal highway Administration declared a moratorium on electroslag welding for bridge construction, and only lifted the ban in 2000, based on technical improvements and increased reliability using narrow gap electroslag welding techniques. the Bay Bridge electroslag welds are reported to be the longest ever performed using electroslag techniques. Engineering professors familiar with the Bay Bridge project attribute the cracked weods, as well as earlier failure of 32 broken bolts on the seismic equipment for the eastern pier of the Bay Bridge suspension span a couple months ago, on hydrogen contamination during the welding process from moisture at the construction site.

While the defective welds can be repaired, no one has yet estimated the cost or time involved in making the repairs and opening the bridge to traffic. Initial appraisal of the problem is expected to be released by CALTRANS on May 8. 

Meanwhile, an ongoing legislative investigation into the design and construction of foundations for the Bay Bridge is under attack for apparent financial conflicts of interest affecting five of the seven members of a Legislative Analyst's Office panel appointed to evaluate earthquake performance of  Bay Bridge foundations.  Panel Chairman and Georgia Tech engineering school chairman Reginald DeRoches has been paid by CALTRANS for work on a number of research projects, including one just being completed for which the agency paid $150,000.00. DeRoches also thanked CALTRANS chief engineer Brian Maroney for help with DeRoches' 1997 Berkely doctoral dissertation based on a project partly funded by the agency. 

Panel member Ahmad Itani, an engineering professor at University of Nevada, Reno, is a for,er employee of CALTRANS and a frequent recipient of CALTRANS research funding. His website lists CALTRANS as his most frequent grant benefactor. Itani has also worked in the past as an employee of Bay Bridge co-designer Parsons Brinkerhoff.

Panelist Sena Kumarasena started working on the panel while still employed full time by New York design and construction firm Ammann & Whitney, which did design work on the Bay Bridge suspension span. Kumaraena also worked for HNTB, one of the construction managers for the Bay Bridge, and for Kewit Corporation prime contractor for the Bay Bridge tower foundation. He was also a technical adviser fot design of the Bay Bridge.

University of Illinois professor Youssef Hashash has had one study funded by CALTRANS and has also worked for Bay Bridge co-designer Parsons Brinkerhoff. Stanford University professor Jack W. Baker has occasionally had research funded by CALTRANS. The only two panel members without any apparent financial connection to CALTRANS or its Bay Bridge contractors are  are University of Texas professor Robert B. Gilbert and Georgia Tech professor Roberto T. Leon.

Somehow, it seems odd that LAO could not find seven engineers across the globe qualified for panel membership who never took money from the Bay Bridge agency or any of the construction firms whose work is under review by the group.

New Obstacles Prolong California High Speed Rail Construction Delays

Groundbreaking on construction of the first segment of California's proposed high speed rail line connecting San Francisco to Los Angeles, originally scheduled for January 2013, and already pushed back to this coming July, is threatened with further significant delays because of federal regulatory and stats political difficulties. California's high speed rail authority lost the first round of its battle to keep the project out from under the jurisdiction of the federal Surface Transportation Board. The bullet train agency could take up to nine months in the process of seeking exemption from FSTB review of the entire project's design, financial and operational issues. Failure to procure the exemption could add years of regulatory wrangling delays to completion of the rail line.

Meanwhile, BNSF Railway, which already runs a freight line near the proposed route of the initial segment of the bullet train tracks, has sent a harsh letter to the authority's consultant Parsons Brinkerhoff, complaining that the agency has a planning process fraught with ambiguities and contradictions, including uncertainties respecting who has authority to negotiate on behalf of the state regarding the proposed route alongside BNSF's existing tracks through the Central Valley. BNSF asserts it will not approve high speed rail construction or operation alongside its right of way until the proposed route is clarified and safety issues concerning both construction and bullet train operations are resolved to its satisfaction.

California's House Rail Subcommittee Chairman Jeff Denham (R-Atwater) has scheduled a hearing for May 28 to address the BNSF issues, and California Senate Transportation Committee Chairman Mark DeSaulnier (D-Concord) has initiated an investigation into changes the bullet train agency made in its bid review process between the time of the bod opening and announcement of the successful bidder on the project. Opponents of the high speed rail project complain that the review process was altered in order to push costs which should be accounted for in the first segment construction estimate into later phases of the project to quell political opposition to the ultimate price taxpayers will pay for high speed rail in the state.

Meanwhile, all of this government regulatory and political posturing is setting back the timing of construction expenditures which could be a major boost to the west coast construction industry.