THE MAGAZINE OF THE MASTER BUILDERS’ ASSOCIATION OF WESTERN PENNSYLVANIA JULY/AUGUST 2016 Higher Ed in Transition Mid-Year Results The Trend in Student Housing CMU’s New Scott Hall What to Expect from the Cracker STONE VENEER CLAY BRICK HARDSCAPE MASONRY Carnegie Mellon University Sherman and Joyce Bowie Scott Hall Congratulations to CMU on their new Sherman and Joyce Bowie Scott Hall. A 100,000 SF building, home for Nano Fabrication, Wilton E. Scott Institute for Energy Innovation and a new campus location for the Biomedical Engineering Department. Jendoco is a proud partner of CMU Carnegie Mellon University Industry Intelligence. Focused Legal Perspective. HIGH-YIELDING RESULTS. Meet our construction attorneys at babstcalland.com. Whether it’s negotiating a construction contract, litigating a mechanics’ lien or bond claim, resolving bid protests or dealing with delay, inefficiency, or acceleration claims, we help solve legal problems in ways that impact your business and add value to your bottom line. PITTSBURGH, PA I CHARLESTON, WV I STATE COLLEGE, PA I WASHINGTON, DC I CANTON, OH I SEWELL, NJ Babst_Construction_DEVPGH_8.625x11.125.indd 1 3/6/16 9:41 PM Contents2016 PUBLISHER Tall Timber Group www.talltimbergroup.com EDITOR Jeff Burd 412-366-1857 Cover image: [email protected] Carnegie Mellon’s Scott Hall. PRODUCTION Carson Publishing, Inc. Kevin J. Gordon ART DIRECTOR/GRAPHIC DESIGN Carson Publishing, Inc. Jaimee D. Greenawalt CONTRIBUTING EDITORS Anna Burd CONTRIBUTING PHOTOGRAPHY Tall Timber Group Master Builders’ Association of Western PA ADVERTISING DIRECTOR Karen Kukish 07 REGIONAL MARKET 58 MANAGEMENT 412-837-6971 PERSPECTIVE [email protected] 13 NATIONAL MARKET What to Expect from the Shell Cracker MORE INFORMATION: 17 MARKET METRICS 61 MBE/WBE SPOTLIGHT BreakingGroundTM is published Imbue Technologies by Tall Timber Group for the 19 WHAT’S IT COST? Master Builders’ Association of 64 BEST PRACTICE Western Pennsylvania, 412-922- 20 FEATURE Marketing in Slow Sectors 3912 or www.mbawpa.org Higher Education in Transition 67 TREND TO WATCH Archive copies of BreakingGroundTM can be viewed 34 PROJECT PROFILE Student Housing Update at www.mbawpa.org Carnegie Mellon’s Scott Hall 71 INDUSTRY No part of this magazine may be 49 FIRM PROFILE & COMMUNITY NEWS reproduced without written permission by the Publisher. All rights reserved. Casework Installation Company LLC 76 AWARDS This information is carefully gathered and compiled in such a manner as to ensure 53 FINANCIAL PERSPECTIVE maximum accuracy. We cannot, and do Protecting Against Profit Fade 82 FACES & PLACES not, guarantee either the correctness of all information furnished nor the complete absence of errors and omissions. Hence, 56 LEGAL PERSPECTIVE 84 CLOSING OUT responsibility for same neither can be, Implied Warranties as to Plans and Specs Quintin Bullock nor is, assumed. on a CM At-Risk Project President, Community College of Keep up with regional construction Allegheny County and real estate events at www.buildingpittsburgh.com BreakingGround July/August 2016 3 STAR ELECTRIC WESTERN PA T.P. ELECTRIC PRECISION ELECTRICAL TJR ENTERPRISES WE POWER PENNSYLVANIA THE WESTERN PENNSYLVANIA CHAPTER, NECA SPECIALIZES IN PROVIDING OUR MEMBER CONTRACTORS WITH: • LABOR RELATIONS • EDUCATION • BRAND GROWTH • GOVERNMENT AFFAIRS • EVENTS & PROGRAMS • • 5 HOT METAL STREET, SUITE 301 • PITTSBURGH, PA 15203 • • 412.432.1155 • • WWW.WPANECA.COM • @WPANECA & @WPANECAGovAffrs Publisher’s Note have an old friend named Roger Carothers who When the whole economy is taking on debt, often under the was in charge of construction (among other things) guise of investing for growth, it’s easy to understand why at LaRoche College and, later, Grove City College. boards of trustees for colleges would consider doing the We met in 1991 and a few years later we had some same to build facilities that would attract more students. If interesting discussions about the future of colleges that strategy worked out, the loans or bonds would be easily Iand facilities. The spark of the conversation was the Pacem paid back by the additional tuition revenue of the future; and in Terris program initiated by Monsignor Kerr of LaRoche with so many Americans willing to re-mortgage their homes in1993. Msgr. Kerr has a vision of making LaRoche a global to pay ever-higher tuition rates, those future revenues could education center, offering sanctuary for students from around be even higher than expected. the world. The program was intended to enhance peace and bring LaRoche a higher profile internationally. The arms race theory was just the flip side of the growth scenario: if Your College didn’t build the slickest new dorms The practical issues involved in such an ambitious program or student activity center, then Their College would win the included changes to the campus’ physical plant. LaRoche recruiting battle. Your College would be left with declining expected Pacem in Terris to boost enrollment and to spur enrollments or falling SAT averages and crappy old buildings. new educational offerings. That would mean more space and a significant capital investment. It could also mean more Of course, those competitive strategies didn’t seem to ac- tuition, grants and gifts. My friend Roger wasn’t paid to think count for what would happen if every college built attractive about the impact of more funds; he was paid to worry about new buildings. In the end, Your College would be stuck where to put all the students and how to pay for that. And differentiating itself from Their College on other strengths, Roger was good at worrying. strengths that were probably there without the new facilities. Sometime in the mid-1990s, we had a discussion about why What higher ed is experiencing now is something of a hang- all this change was so worrisome to him. Roger was concerned over from the excesses of the last 20 years. Virtually every col- that costs for education were going up at an unsustainable lege or university had buildings that needed to be replaced or rate and that technology was creating an unpredictable envi- updated so the building boom wasn’t all bad. The new reality ronment. He thought that the pace of technological change of higher education in a post-Great Recession world isn’t all made keeping up very difficult but he was especially worried that bad either. It’s clearer now that a traditional four-year that the college of the future would have such different physi- college may not be necessary for every student. There are cal surroundings – or none at all – that it made planning for growing needs for students to learn technical skills after high facilities very risky. He often referred to 2017 as a watershed school, instead of getting a liberal arts degree. Household year when birth rates were predicting a decline in enrollment income didn’t grow nearly as fast as tuition and fewer parents for college students. Roger felt certain that there would be are going into debt to send their kids to college. colleges that simply couldn’t remain solvent and he worried that LaRoche could be one of them if things didn’t go well. Some common sense has crept into how colleges and univer- sities are thinking about their strategies. You can see that in As I say, Roger was paid to worry and he was good at it. He how facility planning is going. There is more thinking about was also pretty prescient. None of the individual concerns facilities in terms of the institutional priorities. Trustees are he had has become manifest to the degree Roger feared; asking questions about justification for capital spending and however, all of those things – and a few others – are part of the answers have to be better than “the college down the what haunts higher education at the moment. road is doing it.” We know that LaRoche did not succumb to the changing The pause in activity will inevitably lead to more construc- landscape, although the Pacem program went on hiatus (the tion that revamps the physical plants that already exist. Many final students from the original program graduated in 2009). of the changes that Roger Carothers worried about are still Since the time that Roger expressed his concerns, LaRoche creating demand for newer facilities. And of course, the first has also spent quite a bit less on expanding its facilities. college freshmen born to the Millennial generation should Over the past 20 years, however, the same cannot be said start moving into dormitories in the fall of 2030. If those kids for most institutions of higher education. Now that we can are anything like their parents, that should create a tsunami of look back at the early 2000s with the wisdom of hindsight, it change all over again. seems as though colleges and universities were engaged in a combination of the arms race and the debt bubble. Being on the wrong end of either of those was a bad thing. Jeff Burd BreakingGround July/August 2016 5 The banking behind the business. At First Commonwealth Bank®, we’re proud of the partnerships we’ve developed to help companies of all sizes start, grow and succeed. In 2015, our Corporate Real Estate group extended more than $300 million for projects across Pennsylvania and Ohio, bringing their credibility, honesty, personal service and years of experience to every relationship. If you’re ready for a financial partner who can help you overcome challenges and achieve your vision, you’re ready for a partner like us. We look forward to helping you build something great. EQUAL HOUSING OPPORTUNITY fcbanking.com 800.711.BANK (2265) Member FDIC FCB-2416-BreakingGround_rev1.indd 2 4/20/16 11:01 PM At the same time, the final investment decision exagger- REGIONAL ated a different kind of uncertainty for Pittsburgh area con- struction firms.