In exclusive April 14, 2015, article, the Pittsburgh Business Times reported that Skanska, a Swedish construction company that ranks as the world’s seventh largest, is opening a new office in Pittsburgh. The construction giant will occupy approximately 8,000 square feet of commercial space at 11 Stanwix Street in Downtown Pittsburgh. It remains to be seen what types of projects the company will pursue.
In construction industry news, the Pittsburgh Business Times is also reporting that O’Hara Township based Massaro Corp. is opening an office for its construction management business in Bellefonte, Centre County, Pennsylvania. The office will be located near the Centre County Courthouse and is intended to allow the company to serve its customer base in central Pennsylvania.
The Pennsylvania Supreme Court recently issued its opinion in Bruno v. Erie Insurance Company holding that the Pennsylvania Rule of Civil Procedure requiring a certificate of merit to pursue a negligence claim against a licensed professional in their professional capacity only applies to clients or patients of the licensed professional. Although certificates of merit are most common in medical malpractice cases, prior to the Bruno decision, many construction attorneys believed that the Pennsylvania Rules of Civil Procedure required a contractor seeking to pursue a Bilt-Rite claim against a design professional (essentially a claim that the plans issued by the design professional (either an architect or an engineer) constituted a negligent misrepresentation upon which the contractor reasonably relied) to obtain a certificate of merit in support of its claim. However, following Bruno, it is now clear that contractors need not obtain a certificate of merit in support of a Bilt-Rite claim because the contractor is not the design professional’s client.
Beginning January 1, 2015, there was a change to what covered employers are required to report to the Occupational Safety and Health Administration (“OSHA”). Employers will now be required to report within 24 hours: (1) all in-patient hospitalizations (even for just one employee, as opposed to the current 3-employee hospitalization rule); (2) amputations, and (iii) losses of an eye. The 24 hour notice begins when the employer first learned of the work related incident.
In-patient hospitalization is defined as “formal admission to the impatient service of a hospital or clinic for care or treatment.” Employers do not have to report an inpatient hospitalization if it was for diagnostic testing or observation only. Additionally, employers do not have to report the events listed above if the event resulted from a motor vehicle accident on a public street or highway. Employers must only report the event if it occurred in a construction work zone. Read more about the new changes and reporting requirements here.
According to a report in the Pittsburgh Business Times, Robert Bruno, a labor and employment relations professor at the University of Illinois at Urbana-Champaign, has determined that the shale fields in Western Pennsylvania, Eastern Ohio and Northern West Virginia are a strong job growth engine that have provided work for between 36,320 and 45,400 construction jobs between 2008 and 2014. The Pittsburgh Business Times quotes Mr. Bruno’s study, saying “An examination of national and relevant state employment data for the construction industry indicates that but for natural gas projects, the [Western Pennsylvania, Eastern Ohio and Northern West Virginia] region would have experienced substantially higher incidences of construction industry job displacement.”
The full Pittsburgh Business Times article about Professor Bruno’s study is available here.
On September 29, 2014, the Pennsylvania Department of Transportation (“PennDOT”) issued a press release announcing that the Pennsylvania Public-Private Partnership (“P3″) Board approved a project seeking a private partner to design, build, finance, operate and maintain compressed natural gas (“CNG”) filling stations at as many as 37 transit facilities throughout the state. According to PennDOT, the CNG filling stations must be designed to provide CNG for public transportation vehicles as well as for private parties with CNG vehicles. Once the fueling stations are build and operating, PennDOT will retain an unspecified portion of the fuel sales revenue for use in future capital projects. The rest of the fuel sales revenue will presumably go directly to the private partner.
The press release indicates that PennDOT will soon issue a Request for Qualifications to solicit interested parties and that PennDOT expects to invite qualified teams to submit proposals as early as next year, with a project team selection coming as early as summer 2015. Additional information regarding the P3 CNG Fueling Station Project is available at Pennsylvania’s P3 website.
On September 10, 2010, Frederick T. Prinz, an New Jersey based Occupational Safety and Health Administration (“OSHA”) instructor pleaded guilty to selling false OSHA 30 Hour cards to New Jersey construction workers. Mr. Pritz’s actions qualify as a felony, and he now faces up to five years in prison and as much as a $250,000 fine. Court documents indicate that Mr. Printz will receive his sentence on December 10, 2014.
An OSHA 30 Hour card certifies that the card holders completed 30 hours of OSHA regulations and standards training and may only be issued by a certified OSHA instructor to individuals who complete one of OSHA’s Outreach Training Program classes and pass a test. According to documents filed by prosecutors with the United States Federal Court for the District of New Jersey, Mr. Frintz became certified to conduct OSHA Outreach Training Program classes and then, for a period spanning February 2011 through July 28, 2012, Mr. Prinz issued authentic OSHA 30 Hour cards to construction workers in New Jersey that had neither taken nor passed the OSHA required safety courses. The Philadelphia Business Times has reported that Mr. Frintz sold more than 100 the false OSHA 30 Hour cards, charging a fee between $150 to $250 for each card.
Recent economic data suggests that construction starts are down significantly over the first half of the 2014 calendar year. According to the Tall Timer Group, as reported by the Pittsburgh Business Times, housing starts are down 37.3% and non-residential construction is down 29.4% during the first half of 2014. Much more information about the sluggish construction numbers for the beginning of this year may be found by following this link to a blog post about the subject found on Building Pittsburgh, a blog operated and maintained by the Tall Timber Group’s president, Jeff Burd.
On July 9, 2014, Governor Tom Corbett signed into law legislation amending Pennsylvania’s Mechanics’ Lien Law of 1963 (the current Mechanics’ Lien Law in Pennsylvania). The stated primary purpose of the amendments is to protect homeowners who pay the prime contractor(s) that perform improvements to their residential property from mechanics’ liens of subcontractors that the prime contractor fails to pay. The amendments accomplish this by eliminating a subcontractor’s right to a mechanics’ lien on residential property if: (1) the owner or tenant pays the full contract price to the prime contractor; (2) the property is to be used as the residence of the owner or a tenant of the owner; and (3) the residential property consists of one or two dwelling units.
Although this new law will likely be viewed as good public policy for owners, it potentially hurts the subcontractor or supplier who did not contract with the owner. Typically, subcontractors and material suppliers do not know if or when an owner makes payment to a general contractor. As such, mechanics’ liens can be effective tools for subcontractors and suppliers to obtain payment on a project when a general contractor absconds with the owner’s payment.
Now, subcontractors and suppliers must manage their projects and accounting more closely than ever before. Failure to do so could leave the subcontractor or supplier with no legal recourse after it financed a project to completion.
The amendments also clarify and significantly expand the definition of “costs of construction” as the term is used in the Mechanics’ Lien Law. Specifically, the amendments define “costs of construction” as
all costs, expenses, and reimbursements pertaining to erection, construction, alteration, repair, mandated off-site improvements, government impact fees and other construction-related costs, including but not limited to, costs, expenses, and reimbursements in the nature of taxes, insurance, bonding, inspections, surveys, testing, permits, legal fees, architect fees, engineering fees, consulting fees, accounting fees, management fees, utility fees, tenant improvements, leasing commissions, payment of prior filed or recorded liens or mortgages, including mechanics liens, municipal claims, mortgage origination fees and commissions, finance costs, closing fees, recording fees, title insurance or escrow fees, or any similar or comparable costs, expenses or reimbursements related to an improvement, made or intended to be made, to the property.
The definition is especially notable because it brings legal fees, accounting fees, and other “soft costs” that are typically not considered recoverable as part of a mechanics’ lien within the definition of “costs of construction.” Unfortunately, however, this expanded definition may have little or no impact for contractors and subcontractors performing work within the Commonwealth because the term “costs of construction” only appears in the the section of the Mechanics’ Lien Law related to the priorities given to mortgages on the property being improved.
Specifically, following the amendments, open-ended mortgages will only receive priority over a mechanics’ lien if at least 60% of the proceeds from the mortgage “are intended to pay or are used to pay all or part of the costs of construction.” Thus, while the amendments define “costs of construction” very broadly, that broadly defined term may have a very limited impact on the substantive rights the Mechanics’ Lien Law provides to contractors and subcontractors performing work within the Commonwealth because the term is not used to describe those things that an contractor or subcontractor may include in its lien.
Nevertheless, the inclusion of such a broad definition of “costs of construction” in the Mechanics’ Lien Law may open the door for parties to argue that their mechanics’ lien claims should include damages that were once thought to be well outside those that could be included in a mechanics’ lien claim.
The amendments took effect September 7, 2014, and will apply to any lien perfected on or after September 7, 2014 regardless of when the construction giving rise to the lien commenced.
The Pittsburgh Business Times, citing an analysis of Labor Department Data performed by the Associated General Contractors of America, recently reported that over the past twelve months, the Commonwealth of Pennsylvania has experienced the fourth highest amount of construction job gains. According to the Pittsburgh Business Times, over the past year, Pennsylvania has experienced a 4.3% increase in construction jobs. This increase translates to the addition of approximately 9,800 construction jobs within the Commonwealth.
Although 39 of the 50 states experienced construction job gains, the Labor Department data suggests that the construction industry is far from fully recovering from the recent economic downturn. In fact, according to the Pittsburgh Business Times article, only North Dakota is now adding construction jobs at a rate above prior peaks in job growth percentages. The full Pittsburgh Business Times article is available here.
The February/March 2014 edition of Foundation Drilling Magazine features an article written by Babst Calland attorneys Richard D. Kalson and Marc J. Felezzola entitled “P3: The Future of the Construction Industry?” The article discusses the growing popularity of public-private partnerships as an alternative means for public construction and the most common public-private delivery methods.
Foundation Drilling Magazine is published by the International Association of Foundation Drilling. For more information regarding Foundation Drilling Magazine, including how to obtain a copy of the February/March 2014 edition of Foundation Drilling Magazine containing the article referenced above, please visit the International Association of Foundation Drilling’s website or contact one of the article’s authors via the links provided above.
The Pennsylvania Department of Transportation (“PennDOT”) has announced that based upon responses to PennDOT’s request for qualifications for its Rapid Bridge Replacement Project, a public-private partnership involving the construction of more than 500 bridges, it will invite four teams to submit proposals for the project. Those four teams are:
- Plenary Walsh Keystone Partners: Plenary Group, The Walsh Group, Granite Construction Company, HDR Engineering, HNTB Corporation and Infrastructure Corporation of America
- Keystone Bridge Partners: InfraRed Capital Partners, Kiewit, Parsons, The Allan A. Myers family of companies, DBi and American Infrastructure;
- Commonwealth Bridge Partners: John Laing Investments, Fluor, American Bridge Company, Traylor Bros. Inc., Joseph B. Fay Co., STV Incorporated and Infrastructure and Industrial Constructors;
- Pennsylvania Crossings: Meridiam, Lane Construction, AECOM, Trumbull, Wagman Companies and Cofiroute.
PennDOT expects to release the final project details and requirements to the four teams this summer and select a preferred proposal this fall. Construction is anticipated to begin in the summer of 2015.
According to PennDOT, the selected team will manage the design, construction and maintenance for at least 500 bridges throughout the Commonwealth for yet-to-be determined number of years under one contract. The team will be responsible for financing the effort and PennDOT will make payments based on the team’s adherence to the terms of the contract.
To learn more about the Rapid Bridge Replacement Project, you can visit PennDOT’s public-private partnership website.
According to the most recent government data as reported by the Associated General Contractors of America (the “AGC”), construction employers added 15,000 workers to payrolls in February despite harsh winter weather throughout much of the nation. Those additions have pushed the construction industry employment to the highest level since 2009. The largest area of growth remains residential construction; however, over 50,600 non-residential jobs have been added over the last twelve months.
The AGC also reports that the unemployment rate for workers actively looking for jobs and last employed in construction declined from 15.7% in February of 2013 to just 12.8% last month. This unemployment rate is the lowest since 2008 and represents a significant decrease from February of 2010, when it reached 27.1%.
The AGC’s most recent construction industry employment report provides another indication that the construction industry continues to recover from the economic downturn. The AGC’s full report is available here.
The Ohio Department of Natural Resources has drafted, for public comment, rules concerning well site construction. The current draft requires submission of an application along with a set of detailed drawings, a sediment and erosion control plan, a dust control plan, a geotechnical report and a storm water hydraulic plan. Babst Calland has more on the draft.
A report analyzing data from the Department of Labor posted on the Associated General Contractors of America’s website indicates that while construction employment for the Commonwealth of Pennsylvania fell by 3% in 2013, construction employment for the Pittsburgh region increased by a slight margin of 0.4%.
According to the figures in the report, which is available here, statewide construction employment in Pennsylvania dropped from 225,000 jobs in December 2012 to 217,800 in December 2013. However, despite this overall loss of 7,200 jobs in the Pennsylvania construction industry during the 2013 calendar year, the data shows that the Pittsburgh region actually added 200 construction jobs, increasing its overall number of jobs 52,900 to 53,100 over that same time period.
Perhaps even more encouraging than the data about the Pittsburgh region, is the data from the neighboring Steubenville-Weirton, Ohio-WV region which topped the list in terms of percentage of growth, posting a growth of 31%. However, because Steubenville is a relatively small market, its 31% growth represents an addition of only 500 construction related jobs – a number equal to the total jobs added by Pittsburgh’s neighboring market to the north in Erie.
Overall, the jobs data remains promising, with construction employment growing in 192 metro areas, remaining static in another 63, and declining in 84. The Associated General Contractors of America’s chief economist, Ken Simonson, attributed much of the growth to the increased demand for apartment and single family housing, noting that private residential construction spending increased by 18% in 2013, while public sector spending decreased by 1% over the same time period. Mr. Simonson remained even more optimistic about the future, stating that an unusually cold or snowy December in many regions may have artificially held employment data down, and with the weather and economy both likely to improve soon, even more areas should post employment gains in the coming months. The Associated General Contractors of America’s press release, including quotes from Mr. Simonson, is available here.
Babst Calland will continue to monitor the construction industry economic reports, so please check back often for updates.
The Pittsburgh Post-Gazette recently published an article about how Pennsylvania’s Department of Transportation (“PennDOT”) plans to replace at least 500 decaying bridges across Pennsylvania via public-private partnerships (“P3”). According to the article, nearly 60 of those bridges are located within Allegheny County, with another 23 in neighboring Westmoreland County and another 13 in Butler County. The Post-Gazette reports that PennDOT hopes to get construction underway on 50 to 100 bridges in 2015 and that the party or parties with whom PennDOT contracts for the construction of the bridges will also maintain the new bridges for a period that may be as long as 40 years.
The entire Post-Gazette article is available here.