AGC: House Highway Bill Will Reform Federal Transport Program, Accelerate Projects, Boost Economy.

For decades, oil and gas companies have faced the same problem: Where to drill?

Now, Microsoft co-founder Bill Gates is tossing his financial support behind a Houston company which hopes to utilize detailed analytics and measurement technologies to take some of the guesswork out of onshore oil and gas exploration. NEOS GeoSolutions — whose investors include the legendary venture capital firm Kleiner Perkins Caufield & Byers and investment bank Goldman Sachs — today announced a $60 million investment from Gates and others.

The company touts itself as a “geosciences company where Silicon Valley meets the oil patch,” and Gates’ involvement certainly adds some big-name technology credentials to the mix.

According to the company’s Web site, NEOS can can help oil, gas and mining companies more efficiently explore the Earth’s subsurface.

We do this by integrating a broad range of geological and geophysical (G&G) data – including data available in the public domain, owned by our clients, or acquired using proprietary NEOS platforms – to produce a highly constrained 3D model of the subsurface. By applying the latest geostatistical techniques, we help our clients determine which portions of a basin might be the most prospective and, at the lease level, what areas are most likely to contain commercial quantities of hydrocarbons or minerals.

This is not Gates only investment in the energy field. The billionaire also is a backer of TerraPower, the Bellevue-based nuclear energy startup that raised $35 million last year.

In addition to Gates, Goldman Sachs and KPCB, NEOS raised the money from Passport Capital and Energy Capital Group, an investment vehicle controlled by the Saudi-based firm Rawabi Holdings.

W. Michael Long, Executive Chairman of NEOS, said in a press release that the investor group believes that a new era of natural resource exploration is just beginning.

“They believe that NEOS has the ability to drive the development and commercialization of a new generation of geophysical sensors capable of recording more measurements with greater accuracy from the Earth’s surface and subsurface. When these measurements are processed with advanced software algorithms that include state-of-the-art geostatistical and intelligent search features, our customers obtain more accurate 3D images of the subsurface at less cost and in shorter periods of time compared to conventional subsurface imaging techniques.”

NEOS has raised about $100 million since 2006.

Source

Oil and Gas Construction Claims Expert Support

Seasonally adjusted US construction spending increased +0.4% in November according to the US Census Bureau. The total value of the industry stood at US$ 810 billion for the 12 months to the end of November, compared to US$ 807 billion for the year to October. However, the figure was still -6.0% lower than that of November 2009, when construction spending on a rolling 12-month basis stood at US$ 862 billion.

The biggest gains in November were seen in the public construction sector, which was up +0.7% on October at US$ 318 billion for the rolling year. This figure was also +4.2% higher than the US$ 305 billion spent on public construction in the 12 months to November 2009. The biggest gains in November were in construction of offices, water infrastructure and conservation-related work.

Private sector construction was up +0.3% on October’s figure at US$ 492 billion. However, this was still -11.5% lower than the US$ 556 billion seen for the year to November 2009. Among the growth areas in the most recent month were the power sector and construction in the amusement & recreation industry as well as structures for educational and religious purposes.

November’s rise has been received with cautious optimism by the industry. Ken Simonson, chief economist at the Associated General Contractors of America (AGC) said, “It is heartening to see three (monthly) increases in a row, but most categories showed more of a seesaw pattern over the past three months, indicating that construction spending remains fragile at best.”

Patrick Newport, US economist with IHS Global Insight said, “Construction spending may have turned the corner, but a solid rebound is months away.”

Source

Construction Cost Estimating Services

ABUJA — Nigeria and a Chinese state firm have signed a 23 billion dollar deal to build three refineries and a petrochemical complex in one of Africa’s biggest tie ups with China, officials said Friday.

Nigerian National Petroleum Corporation (NNPC) and China State Construction Engineering Corporation Limited (CSCEC) sealed the deal in Abuja on Thursday, an official statement said.

China is already the number one investor in Africa — ranging from oil in Algeria to mines in Zambia — and a senior NNPC official told AFP the new deal might be the biggest that China has made in the continent.

Nigeria is in turn Africa’s leading oil producer, but it has for more than a decade been importing refined petroleum products to meet local demand.

The two corporations will jointly seek financing and credits from the China Export & Credit Insurance Corporation and a consortium of Chinese banks for the projects in Nigeria, the NNPC statement said.

“NNPC aims to accelerate the construction of new refineries in Nigeria to stem the flood of imported refined products into the country, currently estimated at 10 billion dollars,” the statement said.

CSCEC wants to “expand its presence on the African continent and establish its footprint firmly in the Nigerian oil and gas landscape,” it added.

The new refineries are expected to add some 750,000 barrels per day capacity in Nigeria and position NNPC in the international trading of refined petroleum products, it said.

Nigeria’s four refineries — with total capacity of 445,000 barrels per day — are using less than 30 percent of their installed capacity, according to official figures. Corruption and poor maintenance have undermined their performance.

“We are very excited about the deal. We thought it is the biggest ever in Africa, although I do not have the details yet,” said the NNPC official who demanded anonymity.

President Goodluck Jonathan arrived Friday in Nigeria’s oil capital of Port Harcourt for an official visit to inaugurate gas and oil projects.

The construction of the new refineries “will reinforce the ongoing oil and gas reforms in Nigeria”, as envisaged in legislation which has been before the Nigerian parliament for almost a year and imminent deregulation of the downstream sector the country’s oil industry, the NNPC statement said.

Anglo-Dutch oil group Shell in February criticised the bill, saying mistakes in it, if passed into law, will take years to correct.

Shell’s vice president for Africa Ann Pickard has warned that the country could lose 50 billion dollars in investment in the next decade if the bill was passed in its current form.

Jonathan has promised to pursue government reforms of the oil sector to make it profitable and end corruption.

His nascent administration recently sacked some key oil industry officials and redeployed others as part of the promised reform.

He has promised to give new impetus to an unconditional amnesty granted last year to thousands of ex-militants in oil-rich Niger Delta in order to bring peace to the region.

The training of more than 20,000 militants who surrendered their arms under the amnest deal begins next month, officials said.

The president of the Lagos Chamber of Commerce and Industry, Olufemi Deru, told AFP the establishment of the new refineries in Nigeria “will provide jobs for thousands of Nigerians and give them technical knowledge.”

“It will save the country millions of dollars spent on importation of refined petroleum products as well as give the country a sense of national pride that Nigeria produces and refines its oil locally,” he stated.

Source

Astronauts just had to get to the moon. They didn’t have to figure out how to extract oil from it.

With the new $3 billion Perdido oil and natural gas platform, in a remote deep-water area of the Gulf of Mexico, Shell and its partners have effectively done both.

After more than a decade of work, they began last month pumping oil at the massive floating facility, which sits in nearly 8,000 feet of water and draws from wells that far below the sea floor, setting several records along the way.

A recent visit to Perdido, roughly 200 miles south of Houston, brings the scope of the achievement into focus.

It also offers a g

limpse of what could be ahead for the oil and gas industry as it presses farther into one of the last remaining U.S. regions where big quantities of crude oil are still being discovered.

“What we’re seeing here is the start of a new frontier in the Gulf of Mexico,” Bill Townsley, Shell’s Perdido venture leader, said as he stood aboard the hulking steel structure, staffed with 150 people, that he has dedicated the last three years of his life to building.

Indeed, Perdido could offer a template for rivals to follow in coming years as they develop fields of their own in an emerging deep-water area known as the Lower Tertiary trend. In recent years, more than a dozen big oil discoveries have been in made Lower Tertiary formations — deposited from 65 million to 35 million to 23 million years ago — in a 300-mile band on the outer edge of the U.S. Gulf between Texas and Louisiana.

Shell’s Perdido — which in Spanish means “lost” — is the first to achieve commercial production there, but Lower Tertiary fields are also being developed by BP, Chevron Corp. and others and are expected to help reverse years of oil and gas output declines in the well-plowed offshore region.

Perdido alone is capable of producing 100,000 barrels of oil and 200 million cubic feet of natural gas per day — enough to meet the energy needs for over 2 million households for a year.

Though not at that level of production yet, getting to this point hasn’t been easy. Shell, with partners Chevron Corp. and BP, has done the equivalent of moving mountains to bring the project online.

To make the project feasible, Shell, the lead operator, and partners devised an elaborate plan for tying in three distinct fields — called Great White, Silver Tip and Tobago — and handling their production through a single platform. Doing it, however, would require drilling at least 35 wells, some as far as seven miles from the platform and all extremely costly.

“When we came at them with 35 wells, people’s heads exploded,” Townsley said.  >more

South Korean builders may exceed a $40 billion overseas order target for roads and refineries this year as oil prices recover and governments increase spending from stimulus packages to revive their economies.

Orders for industrial and infrastructure projects abroad in the second half may exceed $30 billion, compared with $13.1 billion in the January to June period, the Ministry of Land, Transport and Maritime Affairs said today. Contracts may exceed the full-year target as oil-producing nations resume bids for refineries, the ministry said.

Higher oil prices are encouraging companies globally to resume construction projects that were put on hold because of the credit crisis last year. Overseas orders may total more than $16 billion in July and August, the ministry said.

“Companies, especially in the Middle East, have restarted bids for construction projects because it may cost them more if they wait too long as raw material prices are recovering,” said Kim Suk Joon, an analyst at SK Securities Co. in Seoul. “We are definitely going to see more orders in the second half.”

Construction contracts from the Middle East may more than double to $17 billion in the second half from the first, while those Asia will probably more than triple to $13 billion, the ministry said.

“Orders are expected to increase in Asia in the second half as governments are expected to spend money to stimulate the economy,” the ministry said in a statement, without giving year-earlier numbers.

South Korean builders have announced orders won in Saudi Arabia, the United Arab Emirates and Algeria worth about $9.34 billion so far this month.

Source: Bloomberg

Construction spending rose 0.3% in March, boosted by spending on nonresidential buildings and on public works, the Commerce Department reported Monday. Economists were expecting a 1.5% decline. Spending in January and February was revised higher, which, all things equal, should lead to an upward revision to gross domestic product. Earlier reports had investments in non-residential structures falling at a record 44% annual pace in the first quarter. In March, spending on residential projects fell 4.2%. Spending on nonresidential construction projects rose 2.7% in March, while spending on public projects rose 1.1%.

Source: MarketWatch

Latin America’s oil and gas market has remained relatively strong over the past year, despite the impact of ongoing financial problems worldwide. Demand for drillships and semisubmersibles has led to fleet utilization rates of around 100 percent, and Petrobras has busied itself with a number of offshore field development projects.

However, while the discovery of vast reserves in the pre-salt area of Brazil has helped drive activity for state company Petrobras, the company has had its share of problems, as has Venezuelan state oil company PDVSA.

Troubled Waters

Petrobras recently had to contend with a five-day strike by oil workers union Federação Única dos Petroleiros (FUP). FUP began the strike, which affected refineries and exploration and production units, after becoming unhappy with a profit-sharing scheme proposed by Petrobras, along with grievances that the company had not guaranteed protection against layoffs or adequately addressed concerns over safety issues. The workers previously went on strike in June 2008, demanding payment for time spent commuting to oil platforms.

The latest strike ended March 27 after Petrobras agreed to a substantial increase in the base level for its profit sharing, overtime payment for May Day, new meetings on employee safety and an assertion that job and benefit cuts were not planned. Petrobras also agreed not to harshly penalize workers who participated in the strike.

During the strike, Petrobras’ contingency teams took over operation of its platforms, and the company asserted that there was no interruption in oil and gas production.

Due to low oil prices, Venezuelan state oil company PDVSA has had trouble making payments to drilling contractors and oilfield services companies since pushing out foreign operators and nationalizing its oil and gas industry. PDVSA has ordered gradual payment of all outstanding debts dating back to 2008, and started to renegotiate terms and conditions with rig owners and companies providing well services.

In one of the more dramatic moments related to payment problems, PDVSA subsidiary Petrosucre took over operations of Ensco International jackup ENSCO 69 in January. Ensco had suspended drilling operations due to a lack of payment in the region of US$35 million. Petrosucre employees resumed drilling operations under observation by Ensco supervisory rig personnel, claiming that Ensco had violated contract provisions giving it 30 days to resolve such issues. PDVSA and Ensco are now working on resolving payment issues while drilling continues.

PDVSA President Rafael Ramirez said that the company would be “breaking away from structures that provide goods and services through monopolies, in many sectors of the oil industry” and create new companies, organizations and production units that “contribute effectively to the construction of socialism is the beginning of a new stage in the revolutionary process.”

Discoveries
In September 2008, Anadarko Petroleum made a pre-salt discovery at the Wahoo prospect offshore Brazil in the Campos Basin. The 1-APL-1-ESS well is on Block BM-C-30 in around 4,650 feet (1,417.3 m) of water, southeast from Petrobras’ pre-salt discoveries at the Jubarte field. Results at Wahoo indicate 195 feet (59.3 m) of net pay with similar characteristics to the Jubarte 1-ESS-103A well, Brazil’s first producing pre-salt field, which achieved rates of 18,000 b/d of light oil. Anadarko plans to run a multi-zone drill stem test toward the middle of 2009 at Wahoo and anticipates drilling more wells on the block later in 2009.

In late January of this year, Petrobras found  traces of natural gas in Blocks BM-ES-5 and BCAM-40. BM-ES-5 is in the Espirito Santo Basin in around 196.8 feet (60 m) of water. Scorpion Offshore jackup Offshore Defender is drilling on the block. BCAM-40 is in the Camamu-Almada Basin in around 967.8 feet (295 m) of water.

ExxonMobil has notified Brazilian regulatory agency Agencia Nacional de Petroleo, Gas Natural e Biocombustiveis (ANP) of two hydrocarbon discoveries in block BM-S-22, a pre-salt block known as Azulao. The discoveries were made in 7,293 feet (2,223 m) of water using Seadrill drillship West Polaris.

Rig Demand
South America continues to dominate Latin American drilling activity, with the majority of the rigs in the region working offshore Brazil or Venezuela. There are currently 128 rigs of various types in South America, and at least four rigs that are planned or on order will be headed to the region as well.

Of the existing rigs, 91 are under contract. The majority of the rigs with no contract are cold stacked or out of service drill barges and tender barges in Venezuela.

Other rigs are en route to South America. Noble semisubmersible Noble Dave Beard, Transocean semisubmersible Sedco 706 and Seadrill semisubmersible West Eminence will all begin contracts with Petrobras before the end of the year. Ensco International jackup ENSCO 68 is heading to Venezuelan waters to begin a three-well contract with Chevron.

Demand in both regions is expected to grow, with the majority of the growth coming from the semisubmersible market, according to ODS-Petrodata’s World Rig Forecast Short Term Trends report. In South America, an increase in demand to 52 semisubmersibles is predicted, but some requirements are likely to remain unfilled. At present, 40 semisubmersibles are in South America, all in Brazil, and all mainly operated by Brazilian state energy company Petrobras. Aside from Aban Offshore semisubmersible Aban Pearl, which will begin a contract with Venezuela’s PDVSA towards the end of the month, the rest of the arriving semisubmersibles will be working offshore Brazil for Petrobras or OGX Petroleo.

Of the seven rigs in Central America and the Caribbean Sea, all are in Trinidad and Tobago, with three jackups, one semisubmersible and one platform rig working, one platform rig warm stacked and one jackup cold stacked. One of the working rigs, Maersk-managed semisubmersible Kan Tan IV, has been drilling for Canadian Superior, Challenger Energy and BG Group on the Intrepid block, but will soon be leaving the region for Australia.

Field Development
Petrobras has been busy installing new FPSOs and production platforms offshore Brazil, and on Feb. 25 managed to set a new daily oil production record of 2,012,654 barrels with the help of the new facilities.

In the last quarter of 2008, floating platform P-53 became the first production unit installed in the Marlim Leste field in the Campos Basin. The P-53 is capable of producing up to 180,000 barrels of heavy oil, 20 degrees API, and of compressing up to 211.88 MMcf/d. The platform’s oil production is offloaded by shuttle tankers with the assistance of autonomous repumping platform PRA-1 and floating storage and offloading vessel Cidade de Macaé. The P-53 is in waters of 3,543 feet (1,080 m).

In January 2009, semisubmersible platform P-51 began producing from Well MLS-99 in the Marlim Sul field in the Campos Basin. Installed 93 miles (150 km) offshore in 4,117 feet (1,255 m) of water, the platform is capable of producing up to 180,000 b/d of oil. P-51 is capable of compressing 211.8 MMcf of gas and has a water injection capacity of 282,000 b/d. P-51 is 410 feet (125 m) in length, 360.8 feet (110 m) wide, and weighs 48,000 tons.

Petrobras brought FPSO Cidade de Niterói online in February, also in the Marlim Leste field. Chartered to Modec, the FPSO is 75 miles (120 km) off the coast in 4,495 feet (1,370 m) of water. The FPSO is capable of producing 100,000 b/d of light, 28-degree API oil and 123.6 MMcf/d of gas.

Following these projects, Petrobras expects to bring FPSO Cidade de São Mateus and FPSO BW Peace online within the next six months. Chevron’s Frade FPSO should also begin producing from the Campos Basin by mid-2009.

A number of field development projects have been taking place offshore Trinidad & Tobago. A consortium between Fluor Corp. and J. Ray McDermott recently installed the Poinsettia production platform for BG Trinidad and Tobago. Gas is now flowing from the platform.

The platform, located in 530 feet (161 m) of water off the northwest shore of Trinidad, can produce as much as 350 MMcf/d of gas, which is transported via a 20-inch diameter pipeline to the existing BG Trinidad and Tobago Hibiscus platform before final pipeline transmission to shore.

In March, Trinidad Offshore Fabricators Unlimited (TOFCO) delivered the EOG Toucan Deck to EOG Resources. The deck, a conventional deck module with a structure designed to support a drill rig, gas processing system and manned operations, will be part of the EOG Toucan platform in 433 feet (132 m) of water, 43 miles (69 km) east of Trinidad.

Source: Energy Current

Pat McCown and Brett Gordon point to their company’s Shawnee Justice Center project as proof that there is commercial building work to be found in the Midwest, even as the nation’s economy continues its freefall.

Kansas City, Mo.-based McCownGordon Construction completed the Justice Center project – a new municipal building housing the police station, fire station and courthouse complex in the city of Shawnee, Kansas – in just 17 months. That included both construction and design work.

Contractors built the center, which covers 29 acres in a campus-like setting, using the design/build construction method. Because all the contracting teams involved in the project were selected at the same time, the city was able to start construction of the building even while the interior finishes were still being designed, saving precious time.

“This project would have taken at least an additional four months – and that’s only if everything went right – if we had gone with an alternative design method,” said Arlen Kleinsorge, division manager with McCownGordon Construction.

Kleinsorge, along with other construction pros interviewed for this story, agreed that build-to-suit projects are becoming more popular among municipalities, especially as these municipalities seek ways to keep their budgets under control in tough economic times.

“More municipalities are looking for expedited delivery of their projects,” McCown said. “Going with the design/build method is one way for municipalities to move projects along quickly and save money. You get the best team in place to execute a project. You’re not working with companies who happened to be the low bidders and are only responsible for one portion of the project. In design/build, you’re working with a team dedicated to bringing the project in on time and on budget.”

The growing popularity of the design/build method of construction is just one trend that commercial construction professionals cited when looking at the state of their industry as 2008 nears its end. They also pointed to continued demand for new healthcare facilities and research-and-development centers as providing a boost to a commercial construction market that is in the midst of a slowdown.

Interviewees also had kind words for municipal public works projects as one other area of the commercial construction industry that continues to thrive.

But other sectors – retail, certainly, and industrial and office in many markets – are slowing down. This means that it’s those general contractors and developers who adapt to what is certainly a changing market are those who will survive the slump, developers said.

“When things were on a roll, everyone and their mothers were opening a construction company,” said Bill Plesich, director of marketing with Columbus, Ohio-based Renier Construction. “These more challenging times will weed out a lot of the weaker contractors. The ones who are financially set, who are able to adapt to current market conditions, are the ones who are still going to be here when the economy starts to improve again. It’s just like in the housing industry. The ones who weren’t financially secure have gone out of business already.”

Preparing for a tough 2009

Commercial construction work may have slowed in 2008. But industry experts worry that this year may only be the beginning of a long stretch of sluggish building activity.

Commercial developers interviewed for this story said that 2009 may prove to be a tough year for the industry. The commercial markets in the Midwest tend to react to economic woes anywhere from six to nine months after they hit. Because the nation’s economy is suffering now, it makes sense, then, that the region will see a significant slowdown in commercial construction next year.

Part of the challenge is that developers will continue to find it difficult to obtain financing for their projects, said R. Hank Bellina, director of the division of major accounts for St. Louis-based ARCO Construction.

Banks and lending institutions are already requiring more equity on all types of construction projects, Bellina said. They are also looking for projects that already have several tenants attached to them.

“There is no such thing as a slam dunk for financing anymore for construction projects,” Bellina said. “It doesn’t matter how great your credit rating is. There are no more slam dunks.”

Speculative projects are drying up, and will continue to do so in 2009, he said. At the same time, the number of new retail projects, industrial centers and warehouse distribution centers is steadily falling, Bellina said, something that will only intensify in 2009.

“A lot of those projects have been put on hold,” he said. “It doesn’t look great for 2009. There are a lot of sectors that are definitely slowing down.”

Bellina does see some good news, though. The demand for healthcare and medical facilities continues to grow, and should do so throughout 2009, he said. Midwest construction companies are being called upon to build more biotech research laboratories and the developments that spring up around them.

Senior-living facilities are becoming a mainstay in the commercial construction industry, Bellina said. And public-works and university-sponsored construction projects are also providing a boost to the industry, he said.

“The universities and the public sector have money. They don’t necessarily have to go out and acquire these more difficult-to-get loans and project-financing that a typical developer would have to get,” Bellina said. “That’s part of the reason that those markets are still active.”

Staying active

Woodridge, Ill.-based Morgan/Harbour Construction is one of those construction firms that is adapting. The company, which specializes in design/build projects, is currently developing a 120,000-square-foot two-story public works facility for the village of Wheeling, Ill.

The facility, which will sit on nearly 12 acres of land, is another example of both the public-works projects and design/build construction method that is now fueling building activity.

As Warren Seil, vice president with Morgan/Harbour, says, the Wheeling project is a true public-works project. The village will house its police, public-works department, engineering staff, vehicles and equipment and road-salt dump in the facility.

“They have everything covered there,” Seil said.

Greg Freehauf, vice president with Morgan/Harbour, said he expects to see municipalities continue to rely on the design/build method even more frequently in the coming months and years.

“Design/build for the most part has been popular in the private sector. But now we’re seeing more of it in the public sector,” Freehauf said. “It is attractive to both the builder and the public municipality because it gives you the advantage of fast-tracking a project and compressing its schedule. It gives you a better value for your dollar. Right now the private-sector work is slow. The public work is helping us maintain our construction volume.”

The village has been schedule-conscious throughout the process, Seil said. That’s why going with design/build, and the speed and flexibility that it allows, was so important, he said. The goal now, he said, is to complete the project by Jan. 31.

It’s a compressed timetable that never would have been possible with more traditional construction methods, Seil said.

“We don’t necessarily have to do all the drawings, put them out for pricing and then wait for responses,” Freehauf said. “We can go out for pricing on those items that do require a long lead time, the pre-cast and the steel, say, and get those in order so we can rush the schedule for both design and construction.”

Under traditional construction methods, the possibility of delays is high, Freehauf said. In the standard way of building, the owner of a project hires an architect and then puts those drawings out to bid. This very beginning stage of the process is a lengthy one itself, as it can take anywhere from a month to two months for the architecture team to draw the plans and about four more weeks for the bidding process to play out.

There could be early problems, too. What if the bids all come in too high? The design process has to start over again, costing more precious time.

This is avoided in the design/build method.

“In design/build, we are working with pricing much closer,” Seil said. “We can put together a budget much quicker. That’s what we did on this particular project, and it is paying off in a compressed construction schedule.”

William Birck, president of Chicago-based Reed Illinois Corporation, a general contractor and construction manager, says that his firm has relied upon a diverse pipeline of projects to ride out the construction slowdown so far.

Reed is doing what other survivors are doing: The company does not focus its efforts on one particular sector of the market. Instead, it tackles projects in all fields.

“We are strong believers in diversification,” Birck said. “We are active now in health care, in corporate construction and in institutional markets. We will even get involved in hospitality and retail projects. Of course, at this point in time those markets have slowed, it not stopped.”

And that’s the point. Reed is able to overcome the slowdown in the retail and hospitality businesses by focusing on the other areas of its practice that are doing well, such as healthcare and public-works projects. In fact, Reed is now involved in about a dozen hospital projects in the Chicago area, Birck said.

This focus on diversity has led Reed to have an active first two quarters of the year. Business has slowed in the third and fourth quarters, Birck said, but his company will still have a profitable and successful year.

“You have to always be looking for those markets that are doing well,” Birck said. “If you look at healthcare, you see that hospitals are driven by the demographics of the population. No one is getting any younger. Hospitals also benefit from the development of new technology. That’s a driver to more hospital work, too. As new technology comes in, hospitals have to embrace it.”

Several different projects have helped keep Reed busy during even these slow economic times.

“Our company has been through the Great Depression. We’ve been through two World Wars,” Birck said. “We’ve survived the recessions of the ’70s, ’80s and ’90s. What we’ve learned is that all you can do is maintain good relationships with your clients, and provide them with the best service you can. That is what has kept us going this long. It’s not exciting, but it works.”

Happy to be in the Midwest

When Paul Chuma reads the headlines that bemoan the state of the housing and construction industries across the country, he has one quick thought: “I’m glad I work in the Midwest.”

Chuma is president of Meridian Design Build in Deerfield, Ill. His company has seen the effects of the slowdown, of course. But it’s also staying active with several projects, including many that are renovations and adaptive re-uses, work that has remained steady in the Midwest.

“When the economy goes through its cycles, being in the middle of the country and in the Midwest seems to really help,” Chuma said. “We don’t experience the high highs or the low lows that other parts of the country experience. It definitely helps.”

That being said, Chuma isn’t denying that the construction industry is a bit sluggish these days, even in traditionally steady markets like Chicago.

“The velocity in the market has definitely declined,” he said. “There is definitely cause for concern, but there are opportunities out there for those companies that are willing to put forth the effort to figure out how to get a deal done.”

For Meridian, that involves tackling the company’s specialty, design/build projects. The company is now working on a 30,000-square-foot facility near the old stock yards area in Chicago for Gypsum Supply Co. and a 103,000-square-foot build-to-suit headquarters for Auto Truck Group in Bartlett, Ill.

“The big-box spec development has slowed,” Chuma said. “It hasn’t stopped entirely, but it certainly has significantly slowed. We’ve seen several developers who had planned projects that are sitting on the sidelines now. They may eventually happen, but now is not the time. Now it seems that the developers and the commercial brokers are focusing more on pursuing build-to-suit clients.”

Russ Henke, principle at Edwardsville, Ill.-based Contegra Construction, said that not all is gloom-and-doom in his industry. It’s impossible to predict when the commercial market will shake out of its doldrums, Henke said, but he’s looking for positive signs to start showing up as soon as the November presidential elections wrap up.

“We could definitely use some positive news,” Henke said. “There have been enough people waiting it out. I think people are looking for any reason to kick loose and move ahead. Look at it this way, owners are going to see in this coming fourth quarter and the first quarter of next year some of the best construction pricing from a materials and installation standpoint than they are going to see in a long time.

“There are still companies wanting and planning to grow,” he said. “That is the good news. There is nothing worse than the status quo. There are still market sectors that are strong. There are still opportunities on the horizon to take advantage of.”

Source:  RE Journals

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