Construction Monthly Magazine | Atlanta 2021 Build Expo Show Edition

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CONSTRUCTION COSTS ARE HIGH BUT NOT A ROADBLOCK FOR NEW PROJECTS By Mary Scott Nabers It has been a very long time since construction opportunities were as plentiful as they are now. Upcoming opportunities of various sizes and types are abundant. But, the price of materials required for construction projects has escalated significantly. That could cause the demand to slow even though supply shortages are expected to ease in the coming months. Lumber prices, like every other commodity, fluctuate based on supply and demand imbalances. While demand is at an all-time high, supply has been negatively impacted by mill closings, labor shortages, wildfires that have destroyed thousands of forests, a beetle infection which has killed millions of trees, and slowdown at lumber mills as a result of COVID-19. Trucking and transportation issues – higher gas prices and too few drivers –also are impacting supply. For all these reasons, the country is experiencing a surge in construction costs that is historic. Not since shortly after World War II has the U.S. seen such an escalation in the price of lumber. Just recently, lumber experienced its largest price drop in history, which reflects the volatile futures market. Although demand for new homes and other private sector construction projects will continue, some believe that construction opportunities in government marketplaces will be greater for the next few years. Thousands of construction projects in government marketplaces are currently ready to launch in every state. Examples follow. Iowa A $23 million bond package was approved by voters in March of this year for a new Early Childhood Center at the Boone School District. The new facility will include a day-care area, preschool classroom space, a transitional kindergarten, regular kindergarten classrooms, and an area for first grades. The new building will replace two other school facilities. The project is scheduled for a completion date of fall 2023, and solicitation documents will be released in 2021. Louisiana A new $36 million building for Slidell Memorial Hospital has been announced. The planned three-story facility will house seven new operating rooms, a COVID, section and space for patients with infectious diseases. Hospital officials plan to break ground this year, and a projected opening date for the completed facility is spring 2023. Maryland Hartford County Public Schools is currently in the study stages for the Homestead-Wakefield Elementary School Rebuild project, which proposes replacing three existing buildings with a single 120,000-square-foot building to house more than 1,100 students. The project timeline targets June 2022 as the construction start date. District documents show a total project cost of approximately $45 million. 10 CONSTRUCTIONMONTHLY.COM
Kentucky The University of Kentucky board of trustees recently approved the design phase for construction of a new $30 million College of Medicine facility. The new construction is part of the university’s overall growth plan. It will be a 380,000-square-foot facility with classrooms, simulation suites, conference rooms, offices, and support space for staff. Texas City leaders in Huntsville are working on a plan to demolish and rebuild the City Hall at its current site. This project is on a fast track because the existing facility has structural beam and foundation issues. A future police building also is planned, and that construction project will be located in an area that adjoins 40 undeveloped acres. The construction project was envisioned as a two-story 32,500-square-foot building, but adjustments are being considered that could add approximately 13,000 square feet. Solicitation documents are expected before the end of 2021. Iowa Voters approved a $31 million bond election in March to fund the following projects at the Marion Independent School System: • New auditorium on the high school campus - $7.7 million. • New outdoor activities complex at the high school campus - $5.7 million. • Repairs to the high school exterior walls - $500,000. • New elementary school at Thomas Park - $15.3 million. • Renovation and additions at Francis Marion Intermediate - $6.6 million. Projects will be constructed beginning with the new outdoor activities complex, followed by the new elementary school. The new campus will replace Stary Elementary School at the same site as the activities complex at Thomas Park.. Virginia King George County is struggling with the increase in the cost of lumber and other materials as it prepares for construction of a new courthouse. An aging facility will be replaced with a new 50,000-square-foot building, but the projected cost has escalated by $4 million to a new estimate of $17.1 million. County officials may employ costcutting measures such as design, but time is short as the completion date has been announced as August 2023. Alabama Contractors will not want to overlook the vast number of upcoming opportunities in Alabama. Voters in Birmingham recently approved an $11.25 million bond package that will fund parks and recreation projects. Another $4.74 million is available from a former bond package and can be tapped. Voters across the state approved a $1.24 billion bond package to fund projects at K-12 schools, colleges, and universities. Approximately 1,600 public schools will benefit from the funding, and the Alabama Community College System has another $120 million to distribute among the state’s 24 community colleges. The good news is that demand for construction is exceeding rapidly. The bad news is that construction costs have escalated as well. The better news is that funding, especially for public sector entities, is more readily available than it has been in the past. The number of funding options which can be tapped is enormous as well as diverse. Federal funding sources include the American Rescue Act, Pre-Disaster Mitigation Funding, Community Development Block Grant programs, Public Private Partnership coalitions and more. Private sector options include eager investment options from regional banks, insurance firms, individual investors, and large private sector investment firms. Municipal bonds provide another option, and legislative bodies seem to be willing to allocate funding as well. If public officials want to move forward with construction projects, they can certainly do that using one or more of these options. Along with contracting opportunities such as these, elected officials at many jurisdictional levels of government are in conversations related to large collaborative infrastructure projects. Expectations are that Congress will pass an infrastructure bill - one that encourages public officials to move forward with substantial projects and incentivizes private-sector investment funding. Mary Scott Nabers is president and CEO of Strategic Partnerships Inc., a business development company specializing in government contracting and procurement consulting throughout the U.S. Her recently released book, Inside the Infrastructure Revolution: A Roadmap for Building America, is a handbook for contractors, investors and the public at large seeking to explore how public-private partnerships or joint ventures can help finance their infrastructure projects. Booth #421 GENERAL CONTRACTOR Medical | Office | Retail | Interiors | Industrial | Institutional | Renovations www.schoppman.com | (770) 693.9000 SPECIAL ATLANTA SHOW EDITION 2021 11
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