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.

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.

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.

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.