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Carl Molesworth

Pacific Northwest Construction Report
March 13, 2008

Welcome to the first-ever PB&E blog. I’m not sure where this blog is going over the long haul, but the people who sign my paycheck assure me it’s going somewhere so I’ll try to make it as interesting and informative as I can.

I’ve noticed that most successful blogs are written by people who are knowledgeable about a topic and have something pithy to say about it. For me, that means sticking pretty close to the subject I’ve been covering for the last 14 years as editor of Pacific Builder & Engineer, which I describe in my elevator speech as “non-residential heavy construction in the Pacific Northwest.” But bear in mind that as a journalist I’m an observer of the construction industry, not a contractor or engineer, so my comments will be coming from that point of view.

One of my favorite tasks as PB&E editor is compiling our Contract Awards Summary, the monthly roundup of new construction contracts in the Pacific Northwest states of Washington, Oregon, Idaho, Montana and Alaska. Maybe that says something about me, because when I describe to other editors the complicated process I go through to produce the report, they just shake their heads as if to tell me I’m crazy. But I think it’s valuable to take the temperature of the industry on a regular basis, which is what the CAS does. If takes me a day or more each month to do it, that’s just the way it is.

I wish I could claim authorship of the Contract Awards Summary, but PB&E has produced it in one form or another since long before I joined the magazine. The information is gathered from a variety of sources, with Reed Construction Data providing the bulk of it. The CAS originally measured activity strictly by dollar volumes, breaking down the award values of publicly reported contracts by state and further into seven categories of construction. Then each category in each state is totaled year-to-date and compared to the same period of the previous two years. A couple of years ago I added another dimension: quarterly comparisons of the number of contracts in each category and state.

Much as I like the CAS, I have to admit it has shortcomings as an economic indicator. For one thing, I’m not an economist, so I don’t have a means of adjusting the numbers for inflation. I think the numbers hold their usefulness for the short-term, but comparisons of totals over a decade or so would be meaningless. That’s one of the reasons I started comparing the number of contracts in addition to their values.

A second problem is that high-value contracts for mega-projects can throw off the year-to-date comparisons, especially early in the year before the dollar volumes have had time to build..

But perhaps most important, the CAS is limited because it only covers publicly reported contract values, so most of the private, negotiated work does not factor into the totals.

Inevitably, the forgoing suggests this question: Now that we know how the CAS works, what does it tell us about the current market conditions in the Pacific Northwest? Here’s the report summary for March, as published in the April 7 edition of PB&E:

Two large projects in this month were enough to push the 2008 year-to-date total for publicly reported construction contracts awards in the Northwest ahead of last year for the first time since January. Ironically, the projects were located in the only two states that continue to trail their 2007 pace. In Washington, the last major contract for King County’s Brightwater treatment plant drew a low bid of $168 million, while the Port of Anchorage Marine Terminal Development project came in at $95 million to boost the total in Alaska. Oregon continued to lead the region, posting a 48 percent year-to-date gain over the first quarter of 2008. Meanwhile, the tally of the number of projects going to bid in the first quarter of 2008 showed a different result: Though the dollar value of those projects rose 3 percent year-to-date for the first quarter, the number of projects fell by 3 percent.

I will be including reports from the CAS monthly in this blog. I hope you find them useful.

Posted by Carl Molesworth on March 13, 2008 | Comments (0)