Increased productivity could help the industry achieve even more!

Which industry sector has grown the fastest two years in a row?

While many might think no sector grew during the recession, the real answer is “construction”.

The sector grew more than 20 per cent in 2008 and growth continued at double-digit levels during the economic downturn last year. While we might usually think about financial services or electronics as engines of growth, construction has actually been more dynamic.

The importance of construction in the total economy has also risen. Construction grew from 3.7 per cent of gross domestic product (GDP) in 2005 to 5.1 per cent in 2008, and its share likely grew further last year.

The outlook seems rosy, too, as Senior Minister of State (National Development) Grace Fu indicated last month when she said that “we expect to see a sustained level of construction demand over the next two to three years”.

The impact of the construction industry goes well beyond its share of GDP. Employment Situation report data from the fourth quarter of last year shows that the 385,200 workers in the sector accounted for about 12.8 per cent of the workers in Singapore.

The Ministry of Manpower raised the “dependency ratio” for construction in 2007 to allow seven foreign workers for every Singaporean, so a significant percentage of these workers are foreigners.

In comparison, construction accounted for about 7 per cent of GDP in Australia and 9 per cent of the workforce. In the United States, it is about 5.5 per cent of both GDP and employment.

Even as its role in the economy grows, efficiency and productivity are key issues for the construction industry. More than a decade ago, then-Minister for Manpower Lee Boon Yang said that “the Singapore construction industry also faces certain unique challenges which require prompt resolution. These include negative productivity growth, poor safety records, labour-intensive construction methods, and a host of social problems related to the industry”. The Construction 21 study was designed to promote improvements.

While there has been a focus on green buildings and lower usage of energy in new buildings in recent years, industry efficiency still appears to be an issue. As Singapore International Chamber of Commerce chief Phillip Overmyer said recently in an interview with MediaCorp: “The way we build buildings in Singapore is not at all like the way high-end countries build buildings. Japan, Australia and America and other countries use completely different technologies that don’t employ nearly as much foreign labour”.

Now, there may be greater impetus for change. The Economic Strategies Committee (ESC) recently said that “we must shift to achieving GDP growth by expanding productivity rather than the labour force”. The construction industry was specifically mentioned, with the ESC commenting that “in construction, productivity levels are half that of the US and one-third that of Japan”.

The impact of construction also goes beyond just efficiency or GDP and touches other goals, such as targets to reduce carbon emissions. As Singapore Institute of International Affairs research associate Natasha Hamilton-Hart has said: “While we do not know what the total carbon emissions for the construction industry are, we do know that cement production is a highly greenhouse gas-polluting industry”.

If Singapore wants to achieve a 16 per cent reduction in carbon emissions growth, construction has a role to play.

Construction’s high growth rate and increasing share of GDP thus seem to create a conundrum. On the one hand, simply slowing construction could negatively affect economic growth. On the other, increasing productivity may require far-reaching longer-term changes in industry practices and investments in technology.

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LONDON (AP) — BP PLC said Wednesday that it had made a “giant” oil discovery in the Gulf of Mexico but had not yet determined the size and commercial potential of the find.

The well, in Keathley Canyon block 102 about 250 miles (400 kms) southeast of Houston, is in 4,132 feet (1,259 meters) of water, the company said.

The Tiber well was drilled to a total depth of 35,055 feet (10,685 meters), making it one of the deepest wells ever drilled by the oil and gas industry, BP said.

BP has a 62 percent interest in Tiber, while Petrobras holds 20 percent and ConocoPhillips has 18 percent.

BP shares were up 1.9 percent at 529.5 pence on the London Stock Exchange.

Total U.S. construction spending rose 0.8 percent in April, the biggest one-month increase since August 2008, and was led by a jump in both private and residential construction.

A Bloomberg survey of 45 economists had projected a median drop of 1.5 percent.

The Commerce Department’s report from the Census Bureau says spending on private construction was at a seasonally adjusted annual rate of $657.3 billion, up 1.4 percent from the revised March estimate of $648.2 billion.

Residential construction rose 0.7 percent to a seasonally adjusted annual rate of $249.2 billion. Nonresidential construction rose 1.8 percent to an annual rate of $408.2 billion.

Total public construction fell in April, although spending on highway projects rose nearly 1 percent from the previous month.

A separate report from the Commerce Department last week showed construction of single-family homes rose 2.8 percent in April, the second consecutive monthly increase.

Gains in single-family construction were overwhelmed by a 46 percent drop in apartment and condo buildings, bringing total housing starts down 13 percent in April.

Source: The Business Journal

Defying signs that the global economy is in a major downturn, the 2,074-foot-tall Shanghai Tower, designed by Gensler, broke ground on Friday, November 28. The mixed-use glass-and-steel tower is slated to be the tallest building in China. 

While construction of other skyscrapers, such as Norman Foster’s Moscow Tower and Santiago Calatrava’s Chicago Spire, has been halted due to the market downturn, the Shanghai Tower project is moving full speed ahead, according to the architects. “The client understands that there are cycles in the market,” says Jun Xia, a principal in Gensler’s Shanghai office. “The client is confident in positioning this building as the first significant building in the new cycle when it is completed in 2014.”

The client, the Shanghai Tower Construction and Development Corporation, comprises three state-owned entities: a construction company, a commercial development company, and a development company that is heavily invested in urban infrastructure. Xia says that unlike speculative projects, “the funding is already there” for Shanghai Tower.  >more

As many as 20 of the 100 deepwater oil rigs on order worldwide may be delayed or canceled as loan availability erodes, possibly slowing developments including the biggest petroleum discovery in the Americas in three decades.

About half of the 20 rigs in question are rented for when they’re completed in two to three years — no longer enough to ensure financing for units that can cost $800 million to build, said Brian Uhlmer, an analyst at Pritchard Capital Partners in Houston. The drillers building those rigs are mostly fledgling contractors and may lack enough cash to satisfy lenders amid a global credit crunch, he said.

Norway’s Sevan Marine ASA has lost 70 percent of its value this month amid concern it won’t get financing for two drilling units. Houston-based Atwood Oceanics Inc. said Oct. 16 that it won’t exercise an option to build a deepwater rig at Jurong Shipyard Pte. Ltd. in Singapore. New rigs were being ordered to ease a shortage of deepwater gear needed to exploit offshore prospects like Brazil’s Tupi, announced in November by Petroleo Brasileiro SA, or Petrobras.

“Petrobras would probably be the dominant oil and gas company that gets hit by this,” Uhlmer said.

Jose Sergio Gabrielli, chief executive officer at state- controlled Petrobras, said the Rio de Janeiro-based company may need to help find financing for some of its suppliers. “We are concerned about the supply chain of products for Petrobras,” Gabrielli told reporters at a conference in Houston last week. >more

Some projects for city, state could be delayed

The list of casualties stemming from the credit crisis is about to get longer.

Local governments, long dependent on debt as a bedrock financing mechanism, could be forced to put off or even scrap plans for new schools, sports stadiums, even road and bridge projects as credit markets continue to dry up.

While Houston has one of the strongest regional economies in the nation, as well as a high credit rating, the region’s public entities may not be spared the troubles rippling through municipalities around the country.

“Market circumstances right now are extremely difficult for any entity to navigate,” City Controller Annise Parker said.

She added that some public improvement projects may have to be postponed in the coming months, although it is too soon to tell which.

Amid the failure of lawmakers in Washington to pass legislation authorizing a $700 billion rescue plan for the country’s wounded financial markets, the City Council today will take up several measures intended to shore up city finances already hit hard by Hurricane Ike.

They include borrowing up to $95 million to deal with hurricane-related costs, restructuring nearly half a billion dollars’ of debt and shifting funds to pay for capital expenditures that ordinarily would be bought with bond monies.

Still, analysts and city officials said, the Houston area likely will weather the crisis well.

Many other cities, counties, school districts, transit authorities and states — already roiled by sagging sales and property tax revenues in the economic downturn — may not.

Public service cutbacks

Some states have made sharp cutbacks to public services, and some cities, such as Philadelphia and New York, have initiated hiring freezes that extend to police officers. Being cut off from credit could make matters worse.

But cities like Houston or states like Maryland, both of which have high credit ratings, will be able to borrow, said Robert Inman, professor of finance at the University of Pennsylvania’s Wharton School.

“For at least the next year or so, there may be a significantly lower quality of services,” said Inman, who specializes in public finance.

Protective regulation

Money will be tight, but few municipalities will be bankrupted because of regulations that govern how they can borrow and invest money, said Robert L. Bland, chairman of the Department of Public Administration at the University of North Texas.

Chief among them in Texas, he said, is the Public Funds Investment Act, passed by the Legislature in 1989 to protect municipalities from poor investments.

“We’re not immune, and not so arrogant as to say we’ll never suffer a loss,” Bland said. “But we have provisions so that we only incur losses if there’s total incompetence. And that’s not likely to happen.”

Around the region, elected leaders are keeping an eye on the credit markets. Budgets are busting with rising fuel and utility costs and steep tax revenue drops caused by housing foreclosures or lower consumer spending.

Harris County financial officials said there would be serious repercussions locally if Congress fails to inject liquidity into the markets. If the market to finance short- or long-term construction debt collapses, it could be difficult for the county to tackle expensive capital projects, officials said.

“I don’t think that’s going to happen,” said Financial Services Director Edwin Harrison. “But it could.” The county has $3.8 billion in debt outstanding in principal alone. The Harris County Toll Road Authority is responsible for about $2.1 billion of that.

Short-term loan

The Woodlands Township, a special district that collects sales throughout the master-planned Montgomery County community, has struggled to find a buyer for $17 million in bonds it needs for payments to Houston and Conroe under regional agreements.

The township may have to resort to a short-term loan, its board chairwoman said.

Houston Independent School District officials said they did not expect an immediate impact, although they are closely following the credit markets.

The district still must sell about $400 million in bonds approved by voters in November.

In the city of Houston’s $2 billion investment portfolio, finance officials already have begun to capitalize on some of the problems other areas are facing. In the past week, they have invested millions in bonds from the Broward County, Fla., Airport System and the Harris County Flood Control District. Interest rates in both cases hovered around eight percent, city officials said.

Today, City Council will vote on whether to refinance $423 million in public improvement bonds in an effort to get a lower interest rate. Council also will consider opening a line of credit for Ike-related expenses, a tab that already has hit $30 million.

Houston officials said those steps should ensure enough cash is available to run the city before the state releases property and sales tax revenues at the beginning of 2009. The city’s efforts to keep cash flowing are not unusual: municipalities often try to save money by adjusting high short-term interest rates or borrowing against anticipated tax revenues.

But because interest rates have remained high, city officials have had to delayed issuing some bonds or restructuring other debt used for planned improvements in airport and utility infrastructure.

The city currently has about $12 billion in debt, about $4 billion of which is supported by property tax revenues. The remainder is backed by airport and utility fees, and hotel occupancy taxes.

Sooner or later, Parker said, the city may have to pay higher interest rates for many of these projects, leaving less money for everything else.

“These are things we do on a routine basis,” she said. “The timing is a factor and the amount of money may be bigger because of market issues and Ike, but this is not yet an emergency situation.”

Source: Houston Chronicle

When the American Institute of Architects and the U.S. Green Building Council jointly announced on May 28 their intent to form a strategic alliance, many in the industry wondered exactly what that meant. One question that arose: Is the AIA getting ready to endorse LEED? “No,” is the answer from both sides, although Peter Templeton, USGBC’s senior vice president for education and research, says he certainly would appreciate the association’s support. “Of course we would like AIA to recognize the value of LEED,” he says.

The announcement, which can be read on the AIA’s Web site, says the groups have agreed to collaborate in the areas of advocacy, education, and research, and have identified at least 10 possible collaborative projects. Scott Frank, AIA’s director of media relations, emphasizes that they intend to form a strategic alliance, not a partnership. He says nothing more definitive can be said until the AIA board reviews the proposed alliance, which it plans to do during its next meeting in September.

The announcement came three weeks after the AIA released its assessment of three green-building rating systems. As RECORD reported, the study was favorable toward LEED, citing it as “a good example of a rating system that provides a measurement of environmental achievement.” Frank says there’s no connection between the study and the proposed strategic alliance. “The two things shouldn’t be connected whatsoever,” he says. “They’re two separate ideas.”

The strategic alliance could mark an important step toward creating some synergy between the groups. While Templeton says they have had “a strong relationship” since the USGBC’s founding 15 years ago, the AIA has worked independently, for the most part, in developing green-building standards and goals. During a forum at the Greenbuild convention last fall, USGBC president Rick Fedrizzi questioned why AIA hasn’t endorsed LEED and asked the association “to tell us what’s wrong with LEED.”

Nadav Malin, vice president of BuildingGreen*, an information provider for the sustainable design community, conjectured that the announcement is ³fundamentally about restoring trust² between the groups. The disconnect at the national level, he says, has been odd, given that in many places, close collaboration is common and green practitioners are often members of both groups.

The prospect of closer ties is exciting to Bruce Fowle, FAIA, senior partner of FXFOWLE, who laments competition between the groups. “There are too many independent green organizations that aren’t necessarily working together,” he says. “What’s great about the USGBC is that it’s being universally adopted. You can have a conversation with practically anyone in the world about how green you want to be.” The USGBC is continuing to improve its system, Fowle says, “and for AIA not to get on that bandwagon would be very shortsighted.”

Source: Architectural Record

When it started preparing for the 2012 Summer Games, the Olympic Delivery Authority (ODA) put two key items on its agenda: contribute to East London’s ongoing revitalization in a sustainable way, and avoid “white elephant” venues that would not be used after the Games end. As part of that vision, in March it announced that American landscape architects Hargreaves Associates and London-based LDA Design will design the Olympic Park. Its site in the long-neglected Lower Lea Valley, which is crisscrossed by waterways, recently was cleared for redevelopment.

Encompassing nearly 1 square mile, the project will be the largest park built in London since the Victorian era. It will include areas for community gardens, wildlife preservation, and concerts and festivals. The design also calls for bicycle routes and footpaths that will connect the Valley with the River Thames for the first time. Hargreaves Associates, which designed the Sydney 2000 Olympic Park, is aware of how much hinges on the project. “It is the centerpiece of Europe’s largest regeneration program,” says firm partner Andrew Harland, “and [it] will have a positive economic and social impact on the whole area.”

Another recently announced project aims to have a lasting impact: In May, the developer Lend Lease revealed the winners of a competition to design the Olympic Athletes Village on a site master-planned by Vogt, a Swiss landscape architecture firm, and London-based Patel Taylor. Whittled down from 400 entries, the chosen candidates are mainly established and emerging names from the U.K., such as DSDHA and de Rijke Marsh Morgan Architects. The overall scheme calls for 13 mid-rises and two 30-story residential towers. Post-Games, the Village will be wrapped into Stratford City, a 180-acre mixed-use redevelopment of derelict rail lands.

Similarly, Olympic venues already underway reflect a concern for long-term use. The 6,000-seat Velodrome, designed by Hopkins Architects, will be reconfigured with road cycle circuits and a mountain bike course, making it a major cycling hub in London. Zaha Hadid’s sinuous Aquatics Centre complex, with its two 164-foot-long swimming pools and diving pool, will be the city’s largest natatorium. And the Olympic Stadium, designed by HOK Sport and Peter Cook, contains a detachable top tier with 55,000 seats that will be removed after the Games. While critics have decried the stadium’s design as too ordinary for a world-class event, the architects say that practical character is precisely what ensures its usefulness well into the future.

Source: McGraw Hill

Washington, D.C., started it all in 2006 with legislation that required certain privately owned buildings to meet LEED standards. Boston quickly followed suit in early 2007, and Los Angeles and Dallas have both passed similar ordinances.

Although the ordinances vary in scope and timeframe as well as stringency, none of them requires buildings to achieve actual LEED certification. This makes the cities responsible for examining building plans for green attributes, presenting financial and organizational challenges.

Although the U.S. Green Building Council (USGBC), the organization behind the LEED Rating System, has noted that LEED-certifiable buildings may not perform as well as LEED-certified buildings, for municipalities, requiring certification presents political and legal challenges.

According to Krista Kline, the urban planning and design coordinator for Los Angeles, the City did not require certification because it is “expensive and time-consuming, and we wanted buy-in from the development community” for the overall green goals. Projects that pursue LEED Silver certification or higher are eligible for expedited permitting that saves between one and six months in the process. Kline noted that requiring certification would make building permits or occupancy certificates contingent on the decisions of USGBC. That situation is legally untenable, explains Kline. “We didn’t want to give USGBC control over our land use.” Although municipalities could incorporate green building requirements similar to LEED into their building codes, the rating system offers both recognition and choice for developers.

“People like LEED as a standard,” said Zaida Basora, AIA, assistant director of administration and architectural services for Dallas and a past board member for USGBC, “so we felt that it was better to go ahead and use it.”

Using LEED as a standard also makes it easy for developers to pursue certification for buildings if they want to do so, since many of the documentation requirements have already been met. In addition to its popularity and marketing cachet, LEED allows developers to choose which credits to pursue.

“We wanted to give flexibility to the development community and didn’t want to quash creativity,” said Kline.

Without certification through USGBC, however, cities must find ways to verify that buildings aren’t ducking requirements. In Boston, where buildings larger than 50,000 ft2 (4,600 m2) must meet LEED standards at the Certified level, an interagency permit-review process has evolved to encourage integrated design and ensure that large buildings are meeting green requirements. All members of a project team meet with representatives from several City agencies before a project is submitted for permit review as well as throughout the design process. The team must submit documentation to the City, approved by a LEED accredited professional (LEED-AP), that shows a project has met LEED requirements.

Coordinating several city agencies as well as project team members represents a shift from the typical permit review process and has not been simple. “There was a learning curve, and it’s challenging, but it’s a steadily improving thing,” said Barbra Batshalom, executive director of The Green Roundtable in Boston, a nonprofit. The biggest challenge, according to Batshalom, was educating city staff about green building and the LEED checklist so that all projects could receive similar assessments. The result has been a more streamlined, uniform review process.

In Los Angeles, the City had to figure out—quickly—how to include green building review in its permit process with little added funding. For now, front-line staff members are being trained to look for a LEED-AP on the project team and the basic requirements for the LEED checklist. Higher-level staff members are being trained to read the checklist and plans more closely. “We know it’s not perfect,” Kline said of this limited review, “but it’s what we could come up with without being punitive.”

To ensure green requirements are being met, every seventh project will be audited by USGBC; if the city finds a lot of projects would not have been certified, it will consider changing the ordinance. Both Los Angeles and Dallas plan to track energy and water use in the new buildings to see if the green building requirements are making a difference.

Source: McGraw Hill