EPC Select

The findings by NetRegs.gov.uk indicate that 95% of “large firms will give preference to subcontractors who can prove their green credentials.” This and other related data was presented on www.constructionnewsportal.com in the article titled Large construction firms give preference to subcontractors who can prove their green credentials. The article’s thesis is that the current downturn in the idustry will allow project owners and managers to be more picky about the subcontractors they hire with respect to their environment friendliness and overall green policies. As a result, these circumstances may possibly lead to a significant shift in the manner companies deal with the environmental issues: “A staggering 93 per cent of construction industry bosses also think that proof of environmental responsibility will move up their firm’s agenda over the next two years.”   

Although most large firms already have in-house green policies, many subcontractors adopt those as a necessity after winning a contract that requires them. This naturally requires a certain amount of time for proper training and implementation, which is reduced or entirelyeliminated when the subcontractor has an established record working green. Still the vast majority of the survey responders laid the responsibility for turning the industry green at the door of the government and not the construction community.

The survey conductor is a UK government agency and the results discussed in the article seem to address that country specifically. However, this is probably a global trend and is certainly relevant to the American market, as well. Although European countries tend to be more sensitive to the green issues than the United States, they serve as a good indicator of American concerns, at least when it comes to the environment.

David Fessler published an article on www.seekingalpha.com, in which he presented an interesting discussion of the factors underlying the big project financing and its impact on the implementation of The American Recovery and Reinvestment Act goals. Given the substantial influx of funds granted by the plan, Fessler asks why so little construction still happens. And the answer is:

The current economic environment has upset the applecart with regards to funding these capital-intensive projects. As tax revenue continue to plummet, over 30 states have serious budget shortfalls, and most have shutdown funding for large capital projects. Most municipalities aren’t in any better shape.

At the Federal level, Congress is transfusing the Highway Trust Fund every year - last year it was $8 billion - as consumers drive less and switch to more fuel-efficient cars and trucks.  

Additionally, the global financial crisis has moved the funding agents to become much more conservative. And “earnings for infrastructure are off only 3% to -5%, versus the S&P index that’s off nearly 85%. Even infrastructure stocks are off 35% to 40% from their highs.”

As a result, Fessler expects an increased presence of public-private partnerships (P3’s). He say:

States and municipalities will partner with private equity funds and pension funds as a means of raising capital and reducing annual budgets. These P3s will proliferate at the local level, where partisan politics is relatively absent. Some state deals will happen, particularly in those states with budgetary crises, where raising capital by any means is paramount.

Fessler concludes his article with positive note about the industry’s future and current investment opportunities:

As credit markets loosen, it will begin to free up billions in capital that will be put to work on infrastructure projects all across America, creating hundreds of thousands of jobs in the process.

As most of you know, I’ve been following the energy and infrastructure sectors for some time now for both Investment U and The Oxford Club - I believe that in the next three to five years there will be incredible investment opportunities in these two sectors.

The June 2009 employment statistics published by the Bureau of Labor Statistics indicate a continual increase in the unemployment rate in the construction industry. The complete report may be found here. 

The report says that

Job losses were widespread across the major industry sectors, with large declines occurring in manufacturing, professional and business services, and construction.

and

In June, employment in construction fell by 79,000, with losses spread throughout the industry.  Since the start of the recession, construction employment has fallen by 1.3 million.

The report includes a table titled Major indicators of labor market activity, which provides detailed information.

Please share other data and information on this topic.

I came across an interesting article from www.forconstructionpros.com  about the benefits of using pavement consultant. You may find the article here.

The example shown in the article seems to be project / company specific, and I wonder if it couldn’t have been resolved by getting multiple quotes. Of course, there is probable good niche for this type of services and, as is typical of high-cost projects, an investment in oversight and consultation often pays off.

I am interested to find out more about this topic.