Construction Informer

The American Institute of Architects (AIA), California Council, recently learned and published some valuable lessons from people on the front lines of building. They brought together 32 owners, architects, general contractors and subcontractors who had been involved in delivering projects using alternative methods, including Integrated Project Delivery (IPD). The group then dissected their experiences with these projects to determine if there were commonalities of what worked and what didn’t, and how the processes could be improved.

Right at the beginning it was clear the participants recognized the traditional way of building where each entity involved focused closely on only its own piece, was no longer a good way to go. Reasons listed included:

• Increasing project complexity
• Increasingly restrictive building codes
• More specialized business entities
• Greater chances of claims and litigation

The group also suggested there were escalating consequences for each player in the building process as long as traditional building practices are followed.

For designers the constant need to adjust design to meet the budget results in inefficiencies and slippage in design intent. For the contractors keeping up with the document flow including change orders and information requests results in inefficiencies and lost productivity in the field. Owners face ending up with a project that is less desirable while having to deal with high risk and unpredictable costs. Then too, everyone involved faces higher risks of financial loss.

The participants also had a lot to say about how IPD can turn much of that around. When owners, contractors and designers form a team with the goal of mutually collaborating to build the best they can build then many of the problems that plague traditional approaches to building are eliminated. Because the collaboration results in great efficiencies the project is delivered on time, and on budget. There is also a higher degree of accountability since the team has to solve the problem and not just the one who is affected by the problem. The other advantages of IPD include:

• Getting things right the first time
• Predictable and controlled costs
• Greater chance of accomplishing all owner goals
• The flexibility to adjust to and benefit from changing market conditions

The participants also had a lot to say about things that worked and didn’t work when it comes to forming the IPD team, and there will be more about that, right here, tomorrow.

There are at least 640 engineers and architects in the U.S. who have serious reservations about the conclusions of the 911 Commission as they relate to the reasons the towers fell. This is according to Architects and Engineers for 9/11 Truth.

Engineering, and architecture related to the structural aspects of buildings, have science as their basis. Structures can be expected to behave in certain ways, under certain conditions, if they are built in certain ways. Engineers especially get into the tiny details related to the characteristics of materials and whether or not they are adequate for the intended use of a structure with an eye toward the kinds of stresses the structure will experience over a lifetime.

These engineers and architects question the procedural aspects of the post 9/11 investigation, (including experts with “conflicts of interest” that were pre-selected as site investigators), and list anomalies that suggest the towers were finally brought down by thermite incendiary cutter explosives – the kind that would have to be placed on site in the right places to bring the buildings straight down.

The group has an exhaustive collection of evidence at its Website and is going to be showing a multi-media presentation at the upcoming American Institute of Architects convention beginning 4/30.

The recent release of the Architectural Billings Index (ABI) number, put out by the American Institute of Architects (AIA), is causing a lot of construction firms to carefully analyze their exposure to long-term economic risk. In December the ABI was at 36.4 after a showing at 34.7 in November.

If you consider those two numbers along with October’s 36.2 you get the picture that the coming summer could be quite challenging for those who aren’t positioned right. If you had a dead December, and then January and February haven’t been much better you are seeing the results of that very low ABI number last March, when it hit 39.7. The AIA says the index predicts construction activity nine to 12 months in the future.

Back in October the Construction Financial Management Association, (CFMA), put together a group of slides showing a forecast for 2009 and offered some strategies for companies to try. There is also a webcast you can view.

What a lot of its recommendations boiled down to was making sure that when you are doing planning that you envision a worst case scenario along with your best case and expected case scenarios. Then it listed operational strategies like tightening internal controls, tightly managing overhead costs, and tightening receivables management to include zero-tolerance for lien filings. It also suggested dumping excess equipment if possible and on the all-important financial side to manage equity very carefully, and safeguard working capital.

Within construction economic reporting there are a lot of numbers thrown around. Recently the American Institute of Architects (AIA) predicted a drop of 11 percent in the amount of non-residential construction in 2009. The following year, the drop in that sector is anticipated to be five percent.

Office and hotel building in 2009, says AIA, will be visited with an 18 and 20 percent drop respectively while retail properties will decline 19 percent and industrial 11 percent.

On the institutional side religious building leads the pack dropping 9.4 percent, and health care and public safety are nearly tied with a drop of three and a half percent.

Sometimes though as we read the construction economic reporting we don’t pay enough attention to the other numbers. Even if the AIA prediction for the decline in 2009 for non-residential construction holds true, and comes in at 11 percent, that still means there is 89 percent of it there. Somebody’s got to build that.

Last year, on September 24 to be exact, I took a close look in this post at the Architectural Billing Index (ABI) that is put out by the American Institute of Architects (AIA). At the time July 2007 billings had a score of almost 60 but was quickly followed in August by the biggest drop since September of 2006 hitting almost 54.

Remember, those numbers predict the level of construction activity about a year in advance. Then in March of this year the commercial ABI was reported to be at 41.8 for February. That was called its lowest level since 2001. That was followed in March by a drop to 39.7, it’s lowest ever.

So that pretty much wipes out this year as far as potential recovery on the commercial side and pundits are now saying it could be most of 2009 before that sector picks up.

So it’s little wonder the AIA is asking Congress to renew the Energy Efficient Commercial Buildings Tax Deduction beyond this year. That deduction amounts to $1.80 per square foot of constructed energy-efficient commercial building. The organization thinks this will provide some stimulus to the design and construction industries.

“Currently, many developers are reluctant to pursue new commercial projects because of uncertainty over whether federal tax incentives will remain in place beyond this year,” said Paul Mendelsohn, AIA vice president, Government and Community Relations. “Ensuring that the commercial buildings tax deduction remains in place for years to come will remove this worry, help provide a much needed jolt to the economy and address critical environmental concerns.”

The AIA says the construction industry accounts for one-tenth of the US gross domestic product.