Construction

Busy construction season slated for 2012

Alaska’s contractors are back in the upswing, according to the Associated General Contractors of Alaska. AGC released its annual construction spending forecast, and it’s good news for the most part, with total spending up, particularly in the private sector. Total spending for 2012 is expected to be up 3 percent to $7.7 billion compared to 2011. Without oil and gas spending, that amount is $4.6 billion, which is still an improvement. Wage and salary employment will remain unchanged from last year at 15,800. This is still down from the 2005 peak at 18,300. ACG’s forecast draws from data provided by the Institute of Social and Economic Research. ISER economist and researcher Scott Goldsmith joined AGC Executive Director John MacKinnon in addressing the numbers to expect this year. “Things look pretty healthy in spending from our private sector basic industries of oil and gas, mining. Some of us had hoped that they’d be a little bit higher than they are,” Goldsmith said. “In terms of our support industries, utilities and health care are strong and weaknesses in residential and commercial, we shall wait to hear some good news coming out of the economy.” Private spending will be up in all categories, most notably in mining, utilities and health, the latter two being helped by public funding for some projects. The biggest spending will remain in oil and gas construction at $3.1 billion. Most construction concerning the big three oil companies (BP, ConocoPhillps, Exxon) will be on infrastructure maintenance since they will not be doing exploratory drilling. Some will go to BP’s sustained production on light reserves with some heavy oil development. Work with ConocoPhillips and Exxon will go toward developing existing reserves. Work with other smaller operations will their support drilling programs, including ENI, Pioneer, Brooks Range Petroleum, Savant, Great Bear and Repsol. Construction spending relatively flattened over the last several years but is about double what it was in 2004, mostly due to work on existing infrastructure. “We’re seeing a tremendous amount of the increase is largely on the maintenance and structure side. It’s not on getting new production on oil,” MacKinnon said. Mining construction will see an 11 percent increase with significant spending related to the studies from the large-scale prospects of Donlin Creek, Pebble and Livengood. Capital spending will go down slightly at the large mines like Pogo, Kensington, Greens Creek, Red Dog, Fort Knox, Usibelli and Nixon Fork with efforts going more into facility upgrades than production. Utility work will see the biggest jump over last year as more effort goes into power generation, such as a new Anchorage Municipal Light and Power and Chugach Electric Association’s new gas-fired power plant plus wind farms at Fire Island near Anchorage and Eva Creek outside Fairbanks. There are hydroelectric projects under way at Blue Lake near Sitka, Terror Lake near Kodiak and Allison Creek in the Copper Valley. Many of these projects are being aided by increased state funds for fiscal year 2012. Work on other utilities like telecommunications and natural gas transmissions will go up too. Large federal funding will help push Native health projects forward this year, particularly on hospitals. Spending for other basic rural or commercial projects will remain unchanged, as will residential construction spending. Public spending will be down for traditional government purposes, particularly as the state will have to compensate for many projects as federal financing drops. This is especially evident with a sharp 67 percent decrease concerning the Denali Commission. The commission, like many public efforts, will see federal dollars getting tighter. “This may be a sign of things to come,” Goldsmith said of the state-federal partnership. This is also evident in defense construction, which will take a 17 percent hit this year at $460 million. This is compliant with nationwide defense spending cuts. However, many projects, particularly those related to transportation and education, will see hefty increases. Grant funds in the state capital budget will push highway construction spending up 10 percent, although federal funds continue to be the largest contributor in this area. This is also true for airports. Construction includes a number of projects at Ted Stevens Anchorage International Airport, ports and harbor work around the state and capital construction programs for modernizing the railroad. Education project funding will be up in part because of a $397 million statewide bond package that was passed in 2010. Goldsmith said Alaska is fortunate to have adequate funds in the capital budget for many public projects.

First hearings hydro project planned for March

JUNEAU — The Alaska Energy Authority and the Federal Energy Regulatory Commission will conduct  “scoping meetings” in March for the planned $5 billion-plus Watana hydro project on the Susitna River north of Anchorage. The meetings, planned for March 27 through March 30 in Anchorage, Wasilla, Talkneetna, Fairbanks and Glennallen, are the first step in a required federal environmental impact statement, or EIS, for the project, AEA officials told a state legislative committee in Juneau Jan. 26. The Federal Energy Regulatory Commission is the lead federal agency on the EIS, and will be the agency conducting the hearings. Following the “scoping” meetings, the next step would be preparation of a draft EIS document followed by a final EIS and record of decision, if the project is approved. On a separate regulatory track, FERC must also issue a federal certificate (a form of permit) for the project. AEA filed a Preliminary Application Document with FERC on Dec. 29 and anticipates filing a full application by the end of 2012, Wayne Dyok, Watana project manager for the Alaska Energy Authority, told the Energy Committee of the state House in the briefing.  An initial estimate of the project cost is $5 billon but Dyok said he expects to receive an updated cost estimate soon. The project would involve a 700-foot-high concrete dam at a location about 185 miles up the Susitna River from its mouth at Cook Inlet. It would create a lake 39 miles long by two miles at its widest, Dyok said. If it is built at the scale now planned, it would have a capacity of 600 megawatts and generate 2.5 million megawatt hours of power annually, which would meet about half of the electricity requirement expected in the future for communities in Interior and Southcentral Alaska now connected to the regional power grid, Dyok said. On its present schedule the Watana project would not be in operation until 2023. “We are still assessing the optimal size of the project and would have this at the time we file our formal application with FERC at the end of the year,” Dyok said. The project would be designed for expansion, most likely by raising the height of the concrete dam, he said. The powerhouse for the dam would be built from the start with sufficient capacity for expansion, he said. The agency is also still considering different route options for a road and transmission line corridor that would be built to the site. One is a route corridor from the Denali Highway south to where the project would be built. A second would be east from the Parks Highway near the Chulitna River bridge, and on a corridor north of the Susitna River. A third, the “Gold Creek” corridor, would also extend from the Parks Highway east to the project, but south of the Susitna River, Dyok said. Watana is a scaled-down version of the much-larger Susitna River hydro project planned in the 1980s which would have involved two dams on the river. If the project is built, it would generate electricity at a constant price for decades. Interior and Southcentral Alaska now depend largely on fossil fuels, mainly natural gas, oil and coal, for power generation, and the prices for natural gas and oil are subject to sharp swings. The state of Alaska conducted extensive studies in the 1980s for the large Susitna River project then planned, but dropped the project because of costs. It would have involved two dams, one at Watana and another upriver at Devil’s Canyon. The new version of the project involves just one dam at Watana and is smaller in scale. However, the AEA is now benefitting from a substantial amount of geotechnical work done in the 1980s that is still valid, Dyok said. That has reduced the amount of new geotechnical drilling needed, he said. Some new geotechnical drilling was done last summer, Dyok said. There were also a large number of environmental studies done for the earlier project which are valuable, although much of that information must be updated for the new EIS, he said. For example, federal definitions of wetlands have changed so that new wetlands mapping must now be done, Dyok told the committee. Last year the state Legislature appropriated $67 million, which is sufficient to fund planning and work on the FERC application through 2012, but more funding from the state will be needed to continue work after the application with FERC is filed late this year, Dyok said. If the project proceeds the state will have to decide at some point whether to make a large equity investment in the project, Dyok said. This could involve an appropriation of several billion dollars. AEA’s current plan for financing is to pursue a model similar to that used for the Bradley Lake hydro project near Homer, where utilities in Southcentral and Interior signed long-term power purchase agreements. On the basis of those the Alaska Power Authority sold revenue bonds to pay for construction of Bradley Lake. However, the state made a direct investment in the project, which lowered the amount of bonds that had to be sold, reducing payments and the price of power the utilities paid. Today Bradley Lake hydro power is some of the least expensive power available to the regional utilities, although coal-fired power, using coal from the Usbelli Mine at Healy, is also very reasonably priced compared with oil and natural gas.

Plea deal for one in massive contracting fraud case

WASHINGTON (AP) — A former Army Corps of Engineers employee has agreed to plead guilty for his role in what prosecutors say may be one of the largest and most brazen frauds involving U.S. government contracts, court papers show. Michael A. Alexander plans to plead guilty to charges of bribery and conspiracy to launder money, his attorney wrote in court papers, requesting a hearing as early as Monday. Alexander, another Army Corps of Engineers employee and two other men were indicted in October on charges of participating in a $20 million bribery and kickback scheme involving the awarding of government contracts. Alexander, a program director, and Kerry F. Khan, an Army Corps program manager, received kickbacks in exchange for directing government contracts to a subcontractor specializing in software encryption devices and other information assurance technology, prosecutors said. The kickbacks paid for luxuries including properties, Rolex and Cartier watches, sports cars and hotel accommodations, prosecutors said. The scheme, which authorities said spanned roughly four years, involved phony and inflated invoices for government contracts and millions of dollars in kickbacks that were funneled through a network of shell companies in the United States and around the world. Also indicted were Kerry Khan's son, Lee, and Harold F. Babb, the director of contracts for Eyak Technology LLC. Eyak Technology is a subsidiary of an Alaska native corporation with Virginia operations. It was the prime contractor for a five-year, $1 billion contract administered by the Army Corps of Engineers. The two Khans and Babb have pleaded not guilty, though two officials with an EyakTek subcontractor — Nova Datacom — have already pleaded guilty. It was not immediately clear whether Alexander planned to cooperate against his co-defendants, though his lawyer wrote that his client has agreed to plead guilty, "among other things," as part of a deal with the government. Alexander's lawyer, Christopher Davis, did not immediately return a call seeking comment Wednesday. A spokesman for the U.S. attorney's office in the District of Columbia, which is prosecuting the case, declined to comment.

Bids for Fairbanks' Illinois Street project under review

After 30 years, work is finally pushing forward on improving Fairbanks’ Illinois Street. The Alaska Department of Transportation and Public Facilities has opened bids to reconstruct a major throughway to help correct confusing lane configurations and improve safety conditions. Illinois Street is the city’s main access route downtown from the north. A number of safety concerns has spurred the state into pushing ahead. Bidding for the project is now closed and DOT is reviewing the bids, after which a Letter of Intent to Award will be issued to the lowest responsible bidder. HC Contractors Inc. of North Pole is the apparent low bidder so far with an unchecked bid of $21,965,862 but DOT spokeswoman Meadow Bailey said that all bids are still being reviewed. The work is intended to correct several issues. This includes improving inadequate pedestrian and bicycle facilities, as Bailey said there aren’t adequate sidewalks in the area. The work includes pavement improvements, drainage upgrades, lighting improvements and fixing sight problems. Bailey said this will improve safety condition and enhance the street’s long-term growth and redevelopment. The project also links College Road to a new bridge at the Chena River. Work is scheduled to begin this year and continue through 2013. “Work on the Illinois Street Reconstruction project started over 30 years ago,” she said. “To be at the point where we will see construction begin this summer is very exciting for everyone at DOT.” Bailey said the department fully supports the downtown development and that such work normally doesn’t take so long to get under way, but each case is different. It depends on funding, the state’s priority of the project and the transportation needs involved. “As transportation priorities have shifted, this project has risen to the top,” she said. Factors that helped influence these priorities include an accident rate at Cushman Street and First Avenue that’s three times higher than expected and poor sight distance at Church Street due to the road curvature. The unchecked bid is lower than DOT’s estimate of $22,687,027. The Fairbanks Daily-News-Miner has previously reported that the project would cost roughly $30 million. Bailey said construction has already been going on for three years, such as on the Barnette Street bridge. The bridge is not in use yet but is expected to be completed toward the end of the year.

Builders Choice cuts ribbon at new SD facility

See a link to story by KCAU-TV in Sioux City, Iowa, on the new Builders Choice facility.   Builders Choice celebrated its official opening in Vermillion, S.D., today with a ribbon-cutting ceremony at its new 45,000 square-foot facility. Anchorage-based Builders Choice, a modular building manufacturer, has already hired over 30 people at its Vermillion operation and expects to add approximately 30 more employees within the next year. “I have been very pleased with the skill level and work ethic of the Vermillion labor pool,” said Builders Choice President Mark Larson. “The South Dakota facility is already proving to be a good addition for our company, and we look forward to continued growth here.” The oil boom in North Dakota opened up a new market for Builders Choice products and caused the company to start looking at new facility options in South Dakota. “We obviously wanted to be physically closer to the expanded market, and Vermillion was able to put us within a desired proximity and offer us a strong workforce. This community is a great fit for us,” said Larson. South Dakota Governor Dennis Daugaard said the relationship between South Dakota and Builders Choice is mutually beneficial. “Together with Vermillion, we were able to meet the needs of the company and help poise it for growth,” said Daugaard. “And from a state perspective, it’s encouraging to find opportunities that allow job growth in South Dakota by leveraging the positive economic activity in North Dakota.” Steve Howe, Director of the Vermillion Area Chamber & Development Company said, “Builders Choice is great news for our community. The company is investing in Vermillion, creating jobs and helping us diversify our economy. We’re very excited to have Builders Choice in Vermillion.” Builders Choice builds modular solutions for both residential and commercial purposes. At the Vermillion facility, the company manufactures modular units for worksite housing, hotel and apartments, and office and administrative facilities. The company was established in 1996.

Construction job demand promising in Homer

  HOMER — Foundations going in, walls going up, roofs going on. Who knew this year's construction season was going to be so busy? Not Steve Bowen of Little Knife Construction. Every job that came Bowen's way this spring, he took. As it's turned out, the seven projects — some done by his company, some done as a project manager for Bruce Petska of Big Mountain Builders — are not only keeping Bowen busy, but also boosting his reputation as a builder. "He's been running my projects and doing most of the work this summer," said Petska. "A lot of people are starting to know him." For Petska, the tempo of this year's construction season is just about what he'd anticipated, with the bulk of his work focused on building homes or garages. "It's been right on par with about an average or as busy a year as we've had," said Petska. To keep busy, however, meant "we had to become a little more resourceful" and plan ahead "to make sure you can get a project off the ground. And we do some of our own construction financing, so that simplifies it." Three of the projects have been homes on Fairview Avenue — one near the high school, two near Fairview's intersection with Hohe Street. "People are looking for new, energy-efficient houses," said Bowen. "Having that (energy efficient) quality opens up the door for financing." The combination of energy efficiency, square footage — something in the 1,000-1,400 square foot range — and an affordable lot seems to be a winning combination right now. "That's the other thing we're up against in Homer, area lots available in a price range you can build an entry-level house on," said Petska. "If you get over $135,000-$145,000, you start to run out of clients. It's tough to build something for less than that in Homer. That's the fine line right now." Putting together that kind of a price requires advance planning. "People aren't aware a lot of times that they can get one for that price range if they work with the builder ahead of time," said Petska. Some new construction indicates a coming increase in the city's population, such as the house Rod Bennett of Bennett Construction is building for his two sisters. The 1,500-square-foot house is being done for his two sisters who grew up in Alaska, but currently live in Wasilla and Alabama. Smaller, more energy-efficient homes and new multi-unit housing developments suggest a possible trend toward affordable housing for low- to middle-income families and away from vacation and high-end retirement homes. Several large commercial projects and an increase in residential construction indicate more building going on in the city of Homer this year compared to 2010. City of Homer building permits for 2010 show the following: New residential permits for 2011 to date are 28 for a total of $5.5 million, compared to 17 permits at the same time last year. Commercial zoning permits are 4, for a total of $3.5 million, compared to two at the same time last year. The record low for residential permits was 16 in 1993 and the record high was 51 in 2005. Sheldon Beachy of Beachy Construction also was surprised at the number of projects in which his company is involved this year. "It started out a little slower, but right now we're almost swamped. We're pretty busy," said Beachy. The work he and his crew of eight to 10 employees are doing range from a smaller three-bedroom, two-bath home to a couple of 4,500-square-foot homes for retirees moving to Homer to a large remodel job that will be a 15,000-square-foot combined residence and bed and breakfast. "We're not complaining," said Beachy of the workload. In addition to single-family dwellings, several large construction projects are under way. The Kenai Peninsula Housing Initiative is currently building Alderbrook Apartments, a six-plex, and MainTree Supportive Housing, said Steven Rouse, KPHI executive director. The projects were competitively advertised. Architectural work was done by the Anchorage firm Bezek Durst Seiser; construction is being done by Sundance Construction of Kasilof; Shank Electric of Homer is doing the electrical work. "There is definitely a need for high quality, affordable rental properties in Homer and this is evidence of that fact," said Rouse. "We anticipate this to be the first phase and we are preparing to add another duplex in a couple of years at the same site." MainTree is a $1.9 million remodel and expansion project that is turning a four-plex formerly owned by South Peninsula Behavioral Health into a 10-unit supportive housing facility. Similar to KPHI's Brookside, built in 2004 on Mattox Road, it will offer independent living with supportive services on site for beneficiaries of the Alaska Mental Health Trust, individuals who are either developmentally disabled or have a mental condition requiring living skills training and medication management, said Rouse. Construction is scheduled to be complete by spring of 2012.    

Construction fatalities decline 


  The number of construction fatalities declined by nearly 10 percent between 2009 and 2010 and by almost 40 percent during the past five years, according to an analysis of new federal data prepared by the Associated General Contractors of America. Association officials pointed to an industry-wide commitment to improving workplace safety as a key reason for the safety improvements. The number of construction fatalities in 2010 was 751, down from 834 in 2009 and 1,239 in 2006, according to a written release. The construction industry has taken a range of steps to improve workplace safety during the past two decades, according to AGC. Safety planning is considered an essential part of all pre-construction plans. Construction workers also undergo rigorous and ongoing safety training both at construction sites and within company training rooms. Many firms also now regularly participate in association-led safety stand-downs, stopping all construction activity during a particular day to hold intense safety training and drills. The association has also worked to establish a host of safety programs and materials from which construction firms are benefitting. The work the association has done to train construction workers in fall protection measures in helping cut fall fatalities from 447 in 2007 to 260 in 2010, a 42 percent decline. He added that the association offers a wide range of safety training programs and tools to construction firms across the industry. Sandherr noted that the association remained committed to working with federal, state and local officials to continue improving workplace safety. “Nobody has a monopoly on improving workplace safety.”  

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