Volume 42, Issue 8 - August 2007

Contract Glazing      

Nonresidential Building Construction 
Forecasted to Remain Flat in 2007


The world is flat after all. The U.S. nonresidential building world, that is, according to Robert Murray, vice president of economic affairs for McGraw-Hill Construction. Murray presented a 2007 Outlook for U.S. Construction Activity webcast on June 28. 

“It is still a pretty good year for nonresidential building,” Murray said. “When you get to 2008 this might change a bit.”

Murray predicted “modest percentage declines” for nonresidential construction into 2009, while hoping that a slight increase in single-family housing construction will offset a decline in nonresidential construction, balancing overall construction activity. 

The webcast also addressed the increasing costs of materials. 

“The cost of materials has been a major issue from 2004 to the present,” Murray said. 

Among the rising costs, he noted that heightened global demand of steel and iron, particularly in China, has contributed to continuing increases in the prices of those products. 

However, the cost of glass products will remain flat, according to Murray. 

With respect to individual areas of nonresidential construction, Murray predicted that the construction of income properties—including commercial buildings and multifamily housing—is expected to see a 5-percent decline in 2007, but it’s a decline that follows big increases in the last two years. 

Murray said that hotel construction was the star of the show in 2006, and remains fairly strong this year. However, a 4-percent decrease in construction in 2007 might indicate “a pullback in lodging-related construction in 2008 and 2009,” he said. 

He noted that casino hotel growth stands out—with the top three projects in terms of square feet located in Las Vegas—as well as growth in convention center hotels and condominium hotels. 

Murray also expects a “gradual upturn” in the construction of office buildings in 2007. 

“The expectation is for another year of expansion getting up to 210 million square feet,” he said. That marks a 4-percent increase over 2006. 

Murray also noted that 2006 saw an all-time high in terms of healthcare building construction—110 million square feet. “We do see a mild pullback taking place in 2007,” he said. He predicted a 2-percent decrease to 107 million square feet. 

One big trend Murray spotlighted, was green building—which, according to a recent survey conducted by McGraw Hill, is hardly a trend anymore. The survey of 190 corporations found “growing acceptance and a growing tendency to engage in green activities and green building strategies.” Murray predicts a market shift in the next three years toward more green projects.

“By 2009, 80 percent of corporate America is expected to be engaged in green at least 15 percent of the time,” Murray said. 

In other survey results, 20 percent of corporations said they will be engaged in green practices 60 percent of the time, and 43 percent of the survey respondents said that green activities and green building are part of their firms’ growth strategies.

With relation to glass, Murray said that the Energy Policy Act of 2005 is one of a few major legislative actions that has spurred construction work. The act offers tax credits for, among other things, energy-efficient doors, windows and film. 

Texas Contingency Pay Bill Becomes Law
Texas Gov. Rick Perry has signed a contingency pay bill into law that allows glazing contractors to take legal recourse if a general contractor gets paid but does not pay them. The Prompt Pay Act (Senate Bill 324) was signed into law by Gov. Perry on June 15. 

“This bill is an important, common-sense measure that ensures subcontractors are compensated fairly and properly for their work,” says Krista Moody, deputy press secretary for the governor. 

According to the Texas House of Representatives, SB 324 “governs the enforceability of contingent payment clauses in construction contracts and defines the rights and duties of the parties involved—the contingent payor (general contractor), the contingent payee (subcontractor) and the obligor (project owner).” 

The Prompt Pay Act details circumstances in which a contingent payment clause may or may not be enforced when working with subcontractors, including glazing subcontractors. The strength of the bill lies in the following clause that prohibits a general contractor from withholding payment to a subcontractor based on the general contractor not receiving payment: 

“A contingent payor or its surety may not enforce a contingent payment clause to the extent that the obligor’s nonpayment to the contingent payor is the result of the contractual obligations of the contingent payor not being met, unless the nonpayment is the result of the contingent payee’s failure to meet the contingent payee’s contractual requirements.”

The Prompt Pay Act also enables both contractors and subcontractors to cease work after a reasonable period of nonpayment, during which they have given notice to the owner, until they are paid for the project. The Act provides circumstances under which a contingent payment clause may be enforced or disputed, and the steps necessary to take those actions. 

According to Virginia Lee, executive director of the Texas Glass Association, the progress of the bill realizes the founding principle of the local organization. “This was the reason we founded the association … it has taken from 1990 to 2007 to get this accomplished,” says Lee. “We are really tickled that it has gone to the governor to sign.” 

Sierra Glass & Mirror Inc. Classified as WBE
Las Vegas-based glazing contractor Sierra Glass & Mirror Inc. recently announced its certification as a Woman-Owned Business Enterprise (WBE) by the Women’s Business Enterprise National Council. Founded in 1979 by John Kight, Sierra Glass & Mirror is now headed by Kight’s daughter, Robyn McGinnis, who serves as the company’s president and chief executive officer.

Sierra Glass & Mirror has worked on many Las Vegas projects including the Bellagio, Caesar's Palace, The Mirage, Paris, Wynn Las Vegas, Mandalay Bay, Luxor and Treasure Island, among others.


USG
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