Anchin’s ninth annual State of the Construction Industry event was held in New York City on September 18.
Presented in cooperation with the New York Building Congress (NYBC), the American Council of Engineering Companies of New York (ACEC NY), and the American Institute of Architects – New York Chapter (AIA-NY), Philip Ross, Chair of Anchin’s Construction and Architecture & Engineering Industry Groups, welcomed guests with a reminder of the changes he’s seen since Anchin’s first state of the industry event in 2005.
“From new technology and innovation to swings in the economy to the devastation of Superstorm Sandy, the construction industry has persevered and been an integral part of the transformational changes New York has seen,” he said.
Richard T. Anderson, president of NYBC, moderated the panel discussion featuring Charles J. Gozdziewski, PE, principal & chairman, Hardesty & Hanover and chair-elect, ACEC NY; Sabrina Kanner, senior vice president, Design & Construction, Brookfield Properties; Dr. Feniosky Peña-Mora, Commissioner, New York City Department of Design & Construction and; Richard Wood, CEO, Plaza Construction.
Anderson opened the discussion by asking Commissioner Peña-Mora what has encouraged him the most so far in his tenure. Peña-Mora quickly responded that investment in infrastructure across all five boroughs is what he’s excited about.
This lead to an exchange about the city’s need to balance available funds against four things: its backlog of approved projects, new needs, Mayor DeBlasio’s wish for affordable housing and the city’s cumbersome procurement process.
Wood noted that he’s seeing this play out as construction companies come up with better design and new techniques. This is establishing a real distinction between companies and creating real value for developers who look to hire competent companies, he said. Such entities do not view construction as a commodity.
He also acknowledged that competition and diversity is good for everyone and that unions are adjusting their expectations as competition increases with nonunion shops. While accomplishing this is like “turning a steamship,” trade unions need to understand that they will only survive by recognizing the need to make concessions. Wood shared that he believes blended costs are part of the answer.
Gozdziewski said that investment in infrastructure is directly related to the economy. Engineers were busy in 2008-2009 as they ate through the backlog of approved projects.
Now the economy is in better shape, and funding is available for rebuilding infrastructure, which is critical for the city’s future.
Expedited construction will help, he noted, and doing things like using pre-cast parts and offering incentives for meeting or beating deadlines are two ways to accomplish this.
Innovations like these and the ability of speeding delivery of engineering due to technology all play a role.
Construction costs are extremely important when renting properties, Kanner said. It is the largest driver of rent and reducing the cost of labor is crucial.
While this needs to play out over the next four or five years, she is counting on a three to four percent reduction in wage and hour concessions, which will translate to a substantial dollar amount.
Peña-Mora noted that the city is legally bound by the procedures that currently are in place. This creates a “chasm” that needs to be crossed.
Saying that his priority lies in modifying the city’s procurement process, he questioned how to better allocate the risk inherent in a project.
Anderson then questioned the panel about whether they thought the cost of construction, which is the highest in the United States, could be sustained.
Agreeing that the city needs to take a long-term view, the panelists concurred that NYC is a very attractive market for investors worldwide. It is both a safe haven and a good value, they determined.
Wood predicted a decline in the cost of labor as the unions make adjustments. He also said innovative technology, new procurement methodologies and the entry of new and national subcontractors into the New York market all will combine to keep the market stable.
Vanilla design is in the past, Gozdziewski observed, and innovation will be a driver in public procurement. He stressed the importance of the P3 process and the need for fewer regulations.
Anchin’s “Ethics in the Construction Industry” presentation will take place on Tuesday, October 28 at Anchin’s New York office. For more information, go to www.anchin.com.
