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An Industry of Change

BY ANGELLE BERGERON

Often, time seems to cast a rosy glow, rendering the past with a bit more fondness than the present. Not so for people in construction, who thrive on the dynamics of delivering our built environment with innovation and aplomb.

People passionate about construction love the industry largely because it is so dynamic. And the industry has changed dramatically over the past 50 years.

“Everything that is happening is exciting,” said Peter Wert, Associated General Contractors of America’s 1998 president. “If you ever want to encourage youngsters to come into the industry, point out to them the huge opportunities that there are to innovate and to increase productivity.”

AGE OF TECHNOLOGY
The information technology (IT) revolution has had a profound effect on the industry in the last 50 years, said Brian Bowen, historian for AGC and professor of practice at Georgia Institute of Technology’s College of Architecture. “IT, which had its start in the industry in the 1960s, is now  so pervasive, and its use is growing by the day, leading to the need for investment in soft- and hardware, training, and recruiting people with IT smarts,” Bowen said.

During the 60 years he’s been in construction, Richard Pepper has seen every aspect of the industry transformed by technology. “It used to be that we took everything by hand, with a ruler, priced it up by hand, and added it up with adding machines,” said Pepper, chairman of the Pepper Companies, Inc., Chicago, member of the Chicago Building Chapter of the Illinois Builders Association.

“If someone changed a bid, you had to re-add it all.” Now, changes are entered into computer programs and automatically calculated. Technology means that, instead of working “every Saturday and Sunday,” like Pepper did in the old days, “now we only work half a day on Saturday,” he said, laughing.

Computer estimating programs have no doubt made the business of construction more precise, said Byron Farrell, AGC’s 1993 president. “Back 50 years ago, when you estimated a job, you put your best guess together on the man hours, equipment and everything, and then you put a cushion on it.” Now contractors can break down costs into specific categories on a daily basis.

The use of Building Information Modeling (BIM) has increased efficiency and, after the initial outlay for programs and training, actually saves money, Pepper added. “Once you get your modular system organized for mechanical, electrical and so forth, it is very organized and helps avoid conflicts.”

The growth of BIM, as well as interactive software, the Internet, new platforms like Facebook and Twitter, and the advancements in communications devices, offer more flexibility and connectivity. “You can be almost anywhere in the world and still be in continuous contact, still make decisions, and still have the information you need at hand,” Farrell said. “It’s a lot different now.”

Global positioning system (GPS) technology alone has been a tremendous boon to the industry, Farrell said. “When you do pile driving now, you don’t have to do all that surveying, just check the coordinates and drive the piling. It’s incredible.” Boh Bros. Construction, LLC, New Orleans used GPS technology to drive pilings for the $803 million Interstate 10 Twin Spans that was built over Lake Pontchartrain to replace the bridges that were destroyed by Hurricane Katrina’s storm surge in 2005.

“We started using GPS within the last 10 years,“ said Robert S. Boh, president of the Louisiana AGC member company. “Marine applications (like building the Twin Spans) are particularly difficult to survey because of lack of access,” Boh said. “You have to create access.”

With technology, productivity has increased exponentially in recent years, said Leroy Stromberg, chief operating officer, Alberici Constructors, St. Louis, Mo., member AGC of St. Louis. “When I first started with Alberici 33 years ago, we had 300 people in our steel fabrication shop,” Stromberg said. “We would have guys marking and drilling individual holes. Now, we put a slab or plate on a burning table that cuts the holes out to size with one guy watching. It’s all computerized.” Excavators and cranes are also computerized. “We used to go in and do demolition with laborers and torches,” Stromberg said. “Now we can go in with a big excavator with a shear that cuts the steel.” Even bolt technology has advanced from hand-installed rivets to bolt guns that automatically install to the proper torque.

“When machines do stuff, it is faster, at a better quality than you can do it by hand, and it is right the first time,” Stromberg said. “Anyone in the industry will tell you how much more productive we’ve become.”

FASTER, BIGGER, BETTER
Today’s owners want the work delivered faster and faster, Bowen said. “This has led, in part, to many changes in project delivery methods.”

When Stromberg started out, almost all work was designed, then bid and built. “Now we’ve got to be really flexible on delivery methods and do things like construction manager at risk, early contractor involvement and design build,” he said. In the old days, if a project cost more than the budget, the owner would have to re-design or ask for value engineering. Both would add considerable time to project delivery.

With ECI, CM@Risk or design-build, the contractor shoulders some of the owner’s risk burden, but is also involved earlier in design and constructability, which shortens delivery and gives the owner some price certainty, Stromberg said.

“Having options is better. It’s a good model. It’s good for the industry and contracting community to get contractors involved early.”

LAYERS OF COMPLEXITY
That is especially true because today’s projects are infinitely more complex, said Stromberg, citing Alberici’s work with URS Corporation on construction of Holcim U.S. Inc.’s energy efficient cement plant in Ste. Genevieve, Mo. and Olmsted Locks and Dam on the Ohio River near Olmsted, Ill. “Building a whole dam underwater is really complex. It is taxing us on using the most automated and hi-tech equipment you can imagine.”

Projects are also more complex because they are rarely, simply, new buildings or roads in an open area, said Jim Waltze, AGC’s 2004 president. “Everything now is a reconstruct.” Highways are being widened by constructing new lanes within existing rights of way, around existing utilities and congested traffic. “You’re dealing with existing facilities, gas lines, water lines, all of that, and putting things where they weren’t intended to go,” Waltze said. “It’s changed the whole complexion of our business.”

Government regulations have also changed the way things are built. In the old days, “relationships were easier between us and the owners because their inspectors and resident engineers were just focused on the job, what I call the progress of the job, how we get this job done as fast as we can,” Waltze said. “We have an owner now that’s policing you for all the regulatory attachments, the mandates that come down with the funding, mainly on the federal level. They’re now policing your air quality control, your water quality control, your minority participation, your small business participation, your prevailing wages, all of these regulations that come down. All this has made relationships just that much more difficult.”

Rather than shrink from the challenges, the industry has accepted that environmental compliance is a necessary cost of doing business. However, industry has also become more politically savvy about its role in beneficially influencing governmental regulation. “The AGC works closely with federal regulatory officials that write law that will govern the entire country,” said Chris Ennes, western region environmental manager, Ames Construction, Inc., West Valley City, Utah, Utah Chapter AGC. Ennes serves on AGC’s environmental steering committee, which reviews potential legislation and flags anything that might be “burdensome or cumbersome to the industry, which means dollars being spent with no environmental benefit,” Ennes said. “A lot of times some of those folks making decisions have no real life experience or knowledge of construction.”

Since the 1970s, there has been a significant paradigm shift in construction regarding the environment, Ennes said. “There was a time when people would dump oil out in a field and pay no mind to it. Without environmental regulations and people watching over you with regulatory oversight, I think it would be a free-for-all unfortunately, to the demise of the environment.”

Successful contractors have learned how to maintain production and still comply with environmental regulations, Ennes said. “Companies are able to implement best management practices efficiently and economically, with the end goal of environmental stewardship. And that’s what we really want, to be good stewards. Face it, most people in the industry are outdoorsmen, who love to hunt and fish.”

RISKY BUSINESS
Increased complexity of projects, technology, regulations, and project delivery methods have all influenced the assignment, perception and cost of risk in construction. “Fifty, 40 or even 30 years ago, common, standardized wording to cover exposure of contractors was pretty typical from carrier to carrier,” said Mark Reagan, global construction practice leader for Marsh Inc., a construction industry insurance broker based in New York City. “Today, policies for virtually all contractors have a fair degree of customization by adding endorsement to address specific issues for the contractor.”

Risk varies according to type of project, delivery method, geographic location, joint venture partners, technology, green building standards and more. “The changes in the industry around risk have been a function of the ever-increasing litigious nature of our society where, more and more, someone must be to blame,” Reagan said. “Construction has always been a high risk/low margin business, but 40 years ago, when I started in the business, parties could come together with a broad agreement of what they wanted done and a handshake.”

Largely because of the increased appetite for litigation, exposures are higher, Reagan said. Today’s contractors are required to have a much greater sophistication in analyzing insurances and losses related to risk.

And they are smarter about how so-called, non-production costs (like environmental compliance, Worker’s Compensation insurance and safety) affect their profitability, Reagan said. “My grandfather was a construction worker in the California oil fields in the mid 1930s. He broke his back a year after California passed workers’ comp, and he was able to keep his family going while he was injured.” Today, workers’ compensation insurance is mandated by nearly every state. That, added with an enhanced emphasis on safety, have the dual effect of making workers feel valued, which actually improves production/profitability in the industry, Reagan said. “Many contractors for many years had the notion that safe would somehow be slower, less effective, less efficient. All today’s metrics show that if you build safe, you will build faster and more efficient.”

SAFETY IS JOB NO. 1
How construction views safety has significantly changed in the past 50 years. “Historically, in construction, workers were perceived as a means to an end. They were bodies or hands. They really weren’t people,” said Anthony O’Dea, vice president and director of corporate safety at Gilbane Building Company, Providence, RI, member Rhode Island Chapter AGC. “The new approach is to recognize that workers are enterprising people who are valuable and deserve safe and healthful worksites.”

That concept was legally formalized when the Occupational Safety and Health Administration was signed into law in 1970, O’Dea said. “At that time, there were about 20 recordable injuries for every 100,000 hours worked. Since that time, the policies, procedures and programs we’ve developed have resulted in 80 percent improvement for recordable injuries.”

Many contractors, like Gilbane, are looking for new ways to work toward an incident- and injury-free safety culture. Many believe the solution lies with an increased focus on the worker, including increased training and open communication. “Workers who are treated well, with respect and have the opportunity for feedback are more likely to exercise good judgment in performing work, more likely to look out for each other’s safety, and more likely to follow the contractor’s safety requirements,” O’Dea said. “The result is not only safer sites, but far more productive sites.”

Contractors are also working to create conditions that promote safety and an efficient worksite. Good housekeeping, material storage, proper access, and amenities like clean restrooms all contribute to a healthier safety culture, O’Dea said.

One of the most fundamental aspects that have changed in a positive way in the construction industry is the “elevation and importance of the safety and health professional in the project delivery process,” O’Dea said. “Health and safety professionals are more equipped to understand the process and contribute from design through execution. They have become important in ensuring planning and logistics of a project, which have a great bearing on safety performance.”

In the past three or four years, since Gilbane has taken this new approach to safety, the company has managed to beat the OSHA standard for four recordables per 200,000 man hours. “In 2011, on 32 million man hours, 90 percent had no lost work day cases and 80 percent had no recordable injuries,” O’Dea said. “That equates to a recordable rate of less than half of OSHA’s, and that’s just our experience.”

Fifty years ago, it would have been hard to imagine how far the industry has come. It will be exciting to see what innovations/ advancements are made by construction in the next 50.