June 5-11, 2002

WELCOME TO THE FAMILY
Two important players in the steel construction industry joined the ranks of the Great Lakes Fabricators & Erectors Association last month. Jay D. Houston & Associates Inc. is a management consulting firm specializing in strategic planning and organizational development for construction and construction related clients. The firm's address is 2500 Packard, Suite 206, Ann Arbor, Michigan 48104; 734/665-6910; fax: 734/665-6912. Witt Galvanizing does what its name says - it specializes in hot dip galvanizing. You'll find it at 4454 Steel Place, Cincinnati, Ohio 45209; 513/979-3109; fax: 513/871-0347.

CHALLENGING AIA DOCUMENTS
The Associated Owners & Developers (AOD) of Atlanta, Ga. - a collection of construction project owners representing such large corporations as Intel, Home Depot, and DuPont - is developing a standard form of agreement for owners and general contractors. Reportedly the new documents are being designed to remedy certain "issues" contained in standard contracts composed by the American Institute of Architects. The AOD form was written by a group of attorneys led by Ira Genberg of Atlanta. According to him, it incorporates a variety of different options into one collection of paper, including provisions contained in two AIA documents - the institute's standard form for owners and contractors as well as its standard form for general conditions. Some of the differences between the AOD and AIA documents is that the AOD treats consequential damages in a manner that covers more losses sustained by project owners; provides the project owner with a "limited, irrevocable license" to use the project's plans, even if the architect has been terminated; and releases the project owner from paying a contractor's costs if a force majeure event should happen, such as delays incurred as a result of bad weather. Critics responding to pre-published drafts of the AOD document are calling it unbalanced in the direction of project owners. They don't expect it will be popular among contractors. Those contractors who do find themselves compelled to use it will probably have to add substantial contingency costs to their bids to cover the enhanced risks they will be taking, one industry observer has pointed out.

RX FOR CONSTRUCTION
Crossing out of the blue, hospital construction is blossoming in southeastern Michigan, with the disclosure last week of four major hospital projects. Together they're worth nearly $270 million. The largest is to be $108.2 million in improvements to the Dearborn campus of Oakwood Hospital, with SSOE Inc., Troy, and HOK, Chicago, Ill., serving as architects, and Barton Malow, Southfield, as construction manager. A good chunk of the work will focus on expanding surgical services. Improvements to the surgery suites at Oakwood's Annapolis Hospital will constitute a bulk of a $25 million project there. A construction manager has not been announced for the work but Albert Kahn Associates, Detroit, is providing architectural services. Mt. Clemens General Hospital will soon begin a $55.8 million improvement program, with Roncelli Inc., Sterling Heights, as construction manager, along with an architectural design team consisting of SSOE, HOK, and Wakely Associates of Warren. That hospital is planning a north tower addition that is to house eight operating suites, to be used for elective surgery. It will also be renovating six of the eight operating rooms it currently designates for emergencies. Finally, Crittenton Hospital of Rochester is planning to build additions on its north and south sides and make other improvements worth an estimated $80.5 million. While not releasing the names of the project's architect and construction manager, the hospital's certificate of need outlines a two story south addition housing diagnostic and imaging services and a three story north addition containing a new emergency department, as well as administrative, education, and retail space. Reportedly, $13.2 million of the total project cost will be budgeted for equipment, $26 million for the renovation of existing spaces at Crittenton, and $12.9 million for new construction.

RELIEF MAY BE ON THE WAY
If a report from the national office of the Associated General Contractors of America is accurate, the U.S. Environmental Protection Agency will soon be publishing a new effluent limitation guideline (ELG) for the "construction and development industry" that makes sense. Early proposals for the ELG had raised fears the federal government would attempt to mandate numeric standards that would have been extremely expensive to meet. "The proposed rule balances our concerns for the environment and at the same time will help contractors effectively manage and protect water quality while holding down the cost of business on public and private construction projects," says Stephen E. Sandherr, chief executive officer of the national AGC. At one time the EPA was considering a requirement for contractors to design, install, and maintain a storm water treatment system on their project sites. Studying that idea, the AGC estimates a contractor on an average project would have been forced to spend an average of $35,000 for storm water sample collection, independent laboratory analysis, and corrective measures, when and where appropriate. The agency also studied the feasibility of making contractors liable for storm water runoff after project completion. But apparently objections raised by the construction industry were heard and understood. According to the AGC, the presently proposed rule indicates the EPA is considering three options dealing with the environmental quality of storm water runoff from construction sites. None appear to include numeric limits, discharge monitoring, or post-construction responsibilities. From the wording of the proposed rule's preamble, it seems clear the EPA had concluded that it lacks the cost-benefit and related data it needs to justify such expensive procedures. At least for today. The proposed rule is expected to appear in an upcoming issue of the Federal Register within the next several weeks.

BEWARE OF IMITATIONS
It may look real. It may say it's real. But the counterfeiting of construction equipment parts still plagues the industry. On May 29 it was disclosed the U.S. Customs Service had broken an international effort to counterfeit Caterpillar engine parts and software. The service arrested an executive of Aarkay Engineering Corp. of Calcutta, India, when he attempted to sell such bogus items to custom service agents in Columbia, S.C. The service also announced possible indictments against other individuals and companies related to the case. The arrest marked the culmination of more than a year of close cooperation between Caterpillar and the customs service. "We applaud the U.S. Customs Service for its aggressive efforts to stop the illegal importation of counterfeit parts into the United States," says James B. Buda, Caterpillar's vice president with responsibilities for the company's Legal Services Division. "This software is particularly valuable to our dealers and customers, because it contains the most current parts and safety information related to Caterpillar products. It's critical that we stop counterfeiters from distributing unapproved or outdated safety and product information."

NEARLY FLAT
Perhaps reflecting a rather stagnant market, construction costs in the second quarter of 2002 are expected to increase only 0.16% from the first quarter. That's the latest estimate from the Turner Corp., New York, N.Y. It says its Turner Building Cost Index should rise to 618, only one point above the 617 posted for first quarter 2002 and only 0.82% above the second quarter 2001 index of 613. "Optimism for the future remains strong while the current market sentiment seems to be apprehensive at best," says Karl F. Almstead, the Turner vice president responsible for the Building Cost Index. "Some major metropolitan markets appear to be experiencing a slowdown. Construction labor utilization nationally has fallen." With the coming of summer, let's hope that picture starts changing for the better, especially within the Great Lakes region.

Questions? Comments? Idea?
Please submit your responses to the Great Lakes Fabricators & Erectors Association as soon as possible. You can call our new offices in downtown Detroit at 313/309-2000. Or you can drop an email to Guy Snyder at guysny@concentric.net or call him at 313/961-9217. We hope to hear from you soon!