In today’s news, we will look into the BJC campus renewal project in st. Louis, the United States Department of Labor and McCarthy building companies have signed an alliance to address worker dangers. Meanwhile, the use of Buy America provisions can save the amount of time it takes to complete building projects, but this comes at a cost. Other than that, how can the building industry fight the increasing storm damage? This is an important question regarding the climate transition.
The US Department of Labor and McCarthy Building Companies form an alliance to address occupational dangers at St. Louis’ BJC campus revitalization project.
During phase 3 of the BJC Healthcare Campus Renovation Project in downtown St. Louis, OSHA Area Office Director William McDonald in St. Louis partnered with McCarthy Construction Companies Inc. to ensure worker safety. Mid-America Carpenters Regional Council, Missouri & Kansas Laborers’ District Council, and Building and Construction Trades Council are partners.
New building and upgrades will reshape Washington University Medical Center over time. Washington University School of Medicine, Barnes-Jewish Hospital, and St. Louis Children’s Hospital are on campus.
A 16-story tower will replace Queeny Tower in Phase 3. The new structure will house acute and ICU patient care, diagnostics, imaging, and surgical support. An enhanced campus entrance with a pedestrian bridge will be next to the new tower.
Trenching, falls, struck-by, caught-in/between, ergonomics, and safe electrical work procedures are among the construction sector risks addressed by the alliance. The project will employ hundreds of St. Louis tradespeople and apprentices and feature daily and weekly safety evaluations and training.
Members will also continue to share information about OSHA efforts to promote workplace safety and help workers understand their rights and duties under the Occupational Safety and Health Act.
The OSHA Alliance Program allows companies to voluntarily cooperate to promote OSHA’s activities, outreach, communications, training, and education.
Quote: OSHA Area Director William McDonald in St. Louis, Missouri, said, “This alliance will foster a comprehensive and collaborative effort that exceeds minimum best practices in the construction industry.” “Alliance partnerships create a collaborative framework for employing industry and professional resources to ensure workplace safety for everyone.”
Buy America can speed up building, but at a cost
One-third of U.S. project materials are imported. Make-it-here would raise already high expenses.
As the COVID-19 pandemic hampered global supply chains, U.S. contractors relying on foreign building materials have faced extended lead times and high price fluctuation.
Marcum, a NYC accounting and advising firm, reports that 32% of building materials are imported. According to Marcum’s New Haven, Connecticut, managing partner Joe Natarelli, the U.S. imports construction supplies from the EU, China, South Korea, Canada, and Japan.
The most essential building materials come from outside the US. Include:
Barry LePatner, construction attorney and founder of LePatner & Associates in New York City, said this reliance on foreign products and materials may soon alter. New “Buy America” provisions for publically sponsored projects mandate US-made construction supplies.
LePatner predicted higher domestic project and material pricing. “But the assurances of more predictable delivery dates will be well worth the time and cost to attain better project completion certainty.”
The make-it-here movement raises costs for construction and project owners. Numerous building groups oppose the Biden administration’s onshoring program, saying some components aren’t accessible domestically at any price and will delay development.
“Our projects require a highly complicated mix of components, some of which are not domestically manufactured,” said National Utility Contractors Association CEO Doug Carlson. To finish a work, some components must be purchased overseas. Foreign materials are cheaper and reduce federal infrastructure spending.”
Most American manufacturing moved overseas decades ago to save money.
LePatner stated a “built here in North America” would increase labor, technological, and material prices. “Price increases.”
According to a Marcum supply chain analysis, onshoring is tough due to rising material prices, labor shortages, and technology adoption issues.
Felice Farber, executive director of the Subcontractors Trade Association, a New York union subcontractor organization, called high material prices “the largest concern right now for the construction business.” Despite pandemic-induced inflation finally falling.
LePatner said owners and contractors may have to pay more to maintain lead times and fulfill government rules.
The Infrastructure Investment and Jobs Act’s Build America, Buy America section was recently proposed by the White House’s Office of Management and Budget. The Department of Defense has raised its domestic content criterion from 55% to 60% until 2023 for U.S.-made components. From 2024 to 2028, the obligation rises to 65%, then 75%.
Natarelli said closer, more reliable sourcing pathways will help contractors and owners avoid project disagreements.
“Dependable lead times would avoid delay penalties and escalation clause expenses,” added Natarelli. That would reassure banks and surety companies about job completion timeframes.
Skanska USA president and CEO Richard Kennedy called lead times “exceptional,” especially for essential mechanical and electrical equipment. In its recent Construction Cost Index report, Minneapolis-based contractor Mortenson also cited extended lead times as an industry issue.
LePatner said the make-it-here drive “will be a sluggish shift for the next few years” for non-federal projects.
That’s especially true as owners and contractors struggle to reconcile project management and timeline control. He claimed abroad goods will be needed during that time.
LePatner said contractors and architects can still specify offshore components and are willing to wait for lower rates. “They know such things are not reliably available in North America so quickly.”
How Can Construction Face Escalating Storm Damage?
Weather-related business disruption losses cost the construction industry billions annually.
Global climate change affects many industries, including building.
According to a 2021 Air Force Institute of Technology assessment, adverse weather affects 45% of global construction projects and costs billions of dollars.
Climate change has caused project delays, damaged materials, and supply chain shortages. The sector is already battling with inflation-driven high materials costs.
Contractors and developers are looking for parametric insurance solutions to safeguard their bottom line as storms become more frequent and severe.
Industry leaders are likewise trying to minimize their emissions to make the sector more sustainable.
Climate Change and Construction: Project Destruction, Worker Safety, Supply Chain Delays
Global climate change confronts the construction sector, from worker safety to project delays and supply chain constraints.
Weather patterns and frequent, powerful storms can enhance workplace safety concerns daily. Construction workers, who regularly work outside and may not drink enough water or seek shade, are at danger of heat sickness in record high temperatures.
Young and inexperienced workers may be more susceptible to these injuries. Due to a lack of safety training, first-year workers are more likely to be hurt. Construction, which lost 56.9% of its workforce in 2021, may struggle to integrate younger workers.
High-temperature safety training can help.
“There’s a labor shortage and that means there’s a big chance for new training programs to get people into the industry,” said Aon executive director construction and infrastructure Jeffrey Segall, AU, ARM, CIC, CRM, CRIS, CPCU.
Hurricanes, tornadoes, and wildfires can damage or delay construction.
“Weather-related events… can disrupt scheduling and increase costs,” said AGC vice president of public affairs and strategic initiatives Brian Turmail in an email.
Severe weather can delay a project even if it doesn’t hit. Natural disasters delayed 2021 and 2022 supply chains. Builders may have to wait months or locate a new provider if a storm damages a supplier.
Turmail said the epidemic disruptions still affect supply chains.
“Some members are expressing concern about potential disruptions caused not only by climate but also well-intentioned climate measures that bring uncertainties, impair availability of materials and energy, and lead to cost escalations and marketplace uncertainty,” he added.
Resilience officers may help contractors plan for severe weather. These workers create safety and environmental risk plans for weather-related projects.
Turmail said resilience officers at construction firms may become increasingly frequent in the future. “Weather resilience generally relates to worker safety or environmental compliance.”
Project delays and supply chain constraints can raise contractors’ and developers’ costs, even with resilience officers. Additional expenditures can kill projects and small firms in an inflation-plagued industry.
According to an Associated General Contractors of America research, building materials jumped 20% between January 2021 and January 2022. The Federal Reserve boosted borrowing rates to control inflation, affecting contractors and developers.
Higher loan rates are halting certain projects. That’s affecting cash flow for smaller medium-sized contractors, which makes it harder to finish projects, Segall said.
“These projects are being led with significantly greater price tags. Segall says many contractors must form joint ventures to qualify for these projects due to their higher prices.
Joint ventures involve contractual and construction risks.
How Can Construction Meet Growing Storm Damage?
Parametric insurance helps developers manage climate change costs. Parametric insurance claims are triggered by wind speeds or hailstorms and pay out a defined sum.
Insureds avoid claims adjustment. Companies can acquire the money they need for storm-related project delays, construction damage, and supply chain shortages.
“We have witnessed an upsurge in queries from developers who are wanting to insure a specific construction project against natural disaster risk,” said Megan Linkin, senior parametric Nat CAT structurer, Swiss Re Corporate Solutions.
“Some of those developers like parametric insurance since they can utilize the money to pay any direct or indirect expense due to the occurrence versus one asset.”
During the past year, Linkin has seen developers and contractors request parametric covers for $1 million to $100 million.
Parametric policies pay out within 30 days of activation. “We can pay the cases exceptionally quickly,” Linkin added. “You don’t want to wait for a claims adjuster to decide.”
These products help builders with contingent business interruption costs. Insureds might seek a parametric plan that pays out based on weather occurrences if their vital supplier is in a natural disaster zone. Linkin said parametric products help buyers with business disruption.
Future: Building Industry Emissions Reduction
Contractors and developers are examining their industry’s carbon emissions due to storms’ increased threats to construction sites.
The Economist reported that 40% of energy-related carbon emissions come from buildings. 10% of those emissions are “embodied” carbon from building, maintaining, and dismantling.
Contractors can cut emissions in many ways. Builders may encourage recycling through reuse or sustainable purchasing. Associated General Contractors of America found that 78% recycle, 48% reuse, and 26% buy green in 2022.
Turmail said industry-wide recycling policies exist.
Construction vehicles are another focus. Nearly 30% of AGC contractors have equipment idle policies. Electric vehicles are promising, but Turmail believes “many of these solutions are years away.”
Summary of today’s construction news
Overall, we discussed McCarthy Construction Companies Inc. and William McDonald, director of OSHA’s St. Louis area office, working together to keep workers safe throughout the third phase of the BJC Healthcare Campus Renovation Project in the city center. Due to new construction and enhancements, the Washington University Medical Center will change over time. St. Louis Children’s Hospital, Barnes-Jewish Hospital, and Washington University School of Medicine all nearby. In Stage 3, a 16-story building will replace Queeny Tower. Diagnostics, imaging, surgical support, and acute and intensive care unit treatment will be in the new building. A pedestrian bridge will be added at the campus entrance along with the new skyscraper.
Meanwhile, by enforcing “Buy America” laws can lower construction costs. Imports make up 30% of US project materials. US production would be more expensive. Due to the COVID-19 pandemic’s impact on global supply chains, U.S. contractors that import building supplies have had to contend with long lead times and price changes.
On the other hand, the construction industry loses billions of dollars annually owing to weather-related business disruption costs. Construction is affected by global warming. Weather-related delays cost the global construction industry billions of dollars in 2021, according to the Air Force Institute of Technology.