How is the construction industry in the Pacific Northwest going to top a record-setting 2005? The answer is simple: Just keep the ball rolling.

For the second year in a row, the volume of publicly reported construction contract awards in the region set a record in 2005, topping the previous year's total by November in the monthly Contract Awards Summary compiled by Pacific Builder & Engineer magazine. In 2006, with population and job growth continuing in urban areas and uncertainty over transportation funding a thing of the past, it's very possible that the same thing could happen again.

The fact is, there are lots of places throughout the Northwest where people want to live, and many are willing to relocate from other parts of the country to get there. That fact similarly applies to natives, who are more likely to make their lives in their home region than are people who hail from other places. This drives population growth, which drives residential construction, which drives everything else.

For all that, the industry is facing some sticky issues as well. As might be expected when demand is high, construction materials are expensive and not always easy to get. Gasoline and diesel fuel are readily available, but costs are up. High prices for steel and rubber worldwide have trickled down to the cost of construction equipment. And the aging population of qualified construction workers, a concern that moved onto the back burner during the last recession, has re-emerged as a looming problem.

Washington flattened in most categories during 2005, but at a very high level that kept contractors busy and equipment distributors scrambling to meet demand for their machines. Part of the problem last year was uncertainty over transportation funding caused by the presence on the November ballot of Initiative 912, which sought to invalidate a gas-tax increase enacted by the Legislature earlier in the year. Highway projects were placed on hold pending the outcome of the voter, but then voters soundly rejected the measure, clearing the way for a strong rebound in highway contracting that will last for several years. Private markets for vertical construction remain strong, and the state is continuing to produce jobs at a steady clip. Look for 2006 to be a banner year in the Northwest's largest state.

In November 2005, PB&E's Contract Awards Summary showed Oregon running 31 percent ahead of 2004, year-to-date, with several categories doing even better than that. The construction market may not continue to grow at such a frantic pace in 2006, but it wouldn't need to do that to produce another great year for Oregon contractors. The state Office of Economic Analysis projects construction employment to grow by 1.9 percent this year, fueled by steady job growth and continuing population expansion. The state's aggressive highway-improvement program will continue statewide this year, and some counties in Eastern Oregon are pursuing the development of wind farms with much success.

Idaho can hardly contain itself these days, with residential, commercial and infrastructure projects coming fast and furious. As elsewhere, population growth and a strong economy are the driving factors. Taking note, two national magazines ranked Boise as the first or second-best city in the nation for doing business. Construction employment, including residential, was up 13.6 percent at midsummer 2005, accounting for a third of all the new jobs created in Idaho. One effect of the strong activity in residential construction around Boise has been a decided up tick in sewer and water projects recently. It's unclear if Idaho will sustain the growth in 2006, but even if it drops off slightly lots of work will remain to be done.

Montana has a lot going for it these days, and the construction market reflects that fact. Though Montana often seems to go its own way economically, the same forces are at work there as elsewhere in the region, with one result being an estimated $200 million state budget surplus. Equipment dealers are expanding and upgrading their facilities around the state, showing confidence that the strong market for their products isn't going away any time soon. That's probably so, with the state doing very well in last summer's SEAFETEA-LU highway bill sweepstakes to the tune of about $300 million a year for road work.

Conditions affecting the contiguous Northwest states don't necessarily apply to Alaska. Population migration in Alaska has been relatively flat since the end of the recession, though construction employment was up 4 percent in July 2005 versus the previous year. But conditions can change quickly in the nation's last frontier, with its vast natural resources, relatively small population and powerful congressional delegation. For 2006, a generous portion of the SEAFETEA-LU highway bill is assured, but it's also possible that the decision to build a much-discussed natural gas pipeline through the state could happen, and it's even possible that Congress could open the Artic National Wildlife Refuge on the North Slope to oil exploration. Either of those events could turn the Alaska construction market white-hot virtually overnight.