Construction Informer

Regardless of who slices and dices the proposed economic stimulus package making its way through Congress their assessments are enough to numb the collective consciousness of 30 math scholars confined to a room with one chalk board.

By using viral phrases like “shovel ready,” (right, like we want to do this work with shovels), the infrastructure spending has been touted as a quick way to get parts of the economy moving. The Congressional Budget Office found that 64 percent of the projects would be completed in 19 months, and that construction projects offered the slowest return on stimulus dollars. And then, there were of course, the inclusion of contentious items like millions of dollars for improvements to the National Mall that many believe will offer scant economic benefit at the price of driving up the deficit.

Meanwhile the states are lining up like dutiful recipients and are already peppering the media with prognostications about how glorious the packages will be. Virginia is arguably the most blatant about its prospects as one of its congressional delegates went on the record to imply that as a result of that state’s governor’s relationship with the President it was sure to “see a lot of money.”

In Nueces County, TX, there is some contention over stimulus money being requested for construction projects that are already funded.

A Senator from New Hampshire wants to see more construction money for that state’s colleges, and power line upgrades.

New Auburn, MN, has an aggressive plan to pave some streets and besides considering a special assessment, it is also hopeful the stimulus package will pay the bills.

Others complain of obscure requirements included in the bill and of the small amount of money made available for construction.

In Hawaii, one writer laments the requirement that all projects funded by the stimulus must pay Davis-Bacon prevailing wage rates. He estimated the result will be a $17 billion inflation of project costs, thereby depressing local economies.

A Congresswoman in WA claimed one of the reasons she voted against the stimulus package was because only five percent of the funds were devoted to infrastructure, and that much of the package wouldn’t take effect until 2010 or later.

If you are interested in what projects are being considered for stimulus money you can download information on 18,000 of them from Reed Construction Data. Then, get those pencils sharpened ’cause there’s going to have to be some serious estimating going on.

The Associated Builders and Contractors (ABC) recently got out the old crystal ball, dusted it off and peered into it looking for clues as to what would happen in 2009 for construction. Interestingly, and as reported here previously, much could hinge on what legislative efforts come to fruition in relation to infrastructure.

ABC says an infrastructure stimulus package could address both the issues of short term economic weakness and longer term competitive needs. On top of that, since construction input prices are falling there is the opportunity to get more bang for the proverbial buck.

As for the rest of the construction segments ABC sees a dismal picture with commercial building loosing 10 to 20 percent in dollar terms compared to 2008, lodging construction off by 20 percent, office construction down by 15 to 25 percent, and hospitals, prisons and schools down by five percent. One bright spot appears to be in alternative energy, provided the government supplies the encouragement.

The report also showed the changes in construction employment from 2007 through 2008 YTD. Nonresidential lost almost 4 percent of its workforce and residential lost a little more than 11 percent.

Perhaps one of the most compelling things to come out of a recent conference gathering of U.S. mayors was a call for a stimulus package aimed at infrastructure. Apparently cities have a bundle of projects ready to go and just need what of course everybody seems to need these days- some money. 

By one estimate there are at least 4,500 infrastructure projects ready to be built in 2009 that need more than $24.4 billion. Moving ahead with those projects is expected to create about 250,000 jobs, according to the mayors. The group further contends that metropolitan economies create 90 percent of the gross domestic product and that infrastructure build-out will go a long way toward alleviating a sour economy. According to Tom Cochran, the conference event CEO:

Mayors tell us that the job situation is dire and only getting worse. The unemployment numbers indicate a rapid deterioration in the job outlook for Americans, and thousands more jobs will be lost as each month passes with no action from the lame-duck Congress. Main Street is hurting. Metro economies of America need jobs now and our economy desperately needs help at the Main Street level. Our Main Street Stimulus is the answer.

The projects include transit, highway, green jobs, schools, public safety and public housing. The mayors have asked Congress to approve $89.8 billion in a visit to Capitol Hill on Oct. 29th.

From my vantage point however, it doesn’t seem Congress has moved beyond the haze of inaction that has stifled it for so long. Perhaps it will wake up momentarily but the bets are that not much will happen until after the holidays.