Cash for Clunkers is robbing the construction industry

It looks like the "Cash for Clunkers" bill has been a huge success. A bill that was intended to stay in effect for many months, burned through a $1 billion budget within weeks. It looks like they hit the jackpot - at least until their money ran out.

So with a program this is fantastically successful for whatever it is trying to achieve, the logical choice would be to add more money to the bucket and "ride 'er till she bucks ya". But where do we get this money you ask? It comes from the stimulus money set aside to fund renewable energy construction projects. Another $2 billion dollars of funding for the cash for clunkers program has passed the House of Representatives and is expected to pass the Senate on Friday. Aren't they just robbing Peter to pay Paul. Actually, it's more like taking the money out of the left pocket and putting it in the right, but they could just be throwing it in the street.

"If Congress decides to extend this initiative, I believe we must not rob from the loan guarantees we provided through the recovery package that, in the long term, will shift our country to home-grown, renewable energy while creating good 'green collar' jobs," Senate Energy Committee chairman Jeff Bingaman said, according to a Reuters report.

I'm actually not that upset even though, I'm sitting here as a construction professional (no smirking) without a job, because I think it's a pretty creative idea that will in the least get people to drive more fuel efficient cars, and could rejuvenate a stagnant auto industry. As a card-carrying armchair economist, I'm not opposed to the whole thing, but even my slightly idle mind can point to some small holes in the oil pan.

So what if I trade in my "clunker" (that must get less than 18 miles per gallon) and get my $3500 rebate for a newish car (if the car gets less than 10 mpg you get $4500) and the dealer turns around and instead of demolishing it as they are supposed to, they sell it for $2,500? Then we've got two cars on the road instead of one and both the dealer and buyer lined their pockets with money that could have otherwise gone to building renewable energy facilities. Did they figure out a way to stop that one? I hope so.

But again, I'm not complaining because I think its a good attempt at being economically and environmentally sensible at the same time. It may take a couple more generations, but we should be good at it eventually - being sensible that is.

Cash for Clunkers is robbing the construction industry

Emotional Intelligence: What is it and what does it have to do with building?

You may know your IQ, and if it is a very high number then you should be very proud of your intellectual ability, but what about your EQ? That's right, do you know your emotional intelligence?

The answer is no. Nobody knows, and nobody cares, but if you get stuck in a contest about who has the higher IQ in a meeting full of egomaniacs (which is every meeting), I'm sure you'll have a group of people that should be the next Einstein if it wasn't for some third grade teacher that busted them for shooting spit balls.

While the debate over the importance of EQ vs. IQ rages, I think research has shown us enough evidence to at least conclude that IQ is far less important than most people think. In a world that relies heavily on communication, people skills, managerial skills, creativity, and strategic management, it is difficult to conclude that one portion of intelligence (IQ) can be solely responsible for success in work, and life.

*Note: Success is far from an absolute and really has to be defined by the individual or organization to which it applies, but this is the topic for at least another blog and at most a PhD thesis, but for the purposes of this lovely article we're going to leave the topic conveniently untouched. :) *

But before we go much further let's figure out exactly what emotional intelligence is. Wikipedia which is of course the authority on everything defines emotional intelligence as follows:

Emotional Intelligence (EI) describes the ability, capacity, skill or, in the case
of the trait EI model, a self-perceived ability, to identify, assess, and manage
the emotions of one's self, of others, and of groups.

Ok, so maybe EQ is important for a nurse, kindergarten teacher, or social worker, but we're rough and tough construction people and even if we were huge Leonardo DiCapprio fans we certainly wouldn't shed a tear during a screening of Titanic.

The reality is that there is plenty of emotion shown in the construction industry and in all business organizations. When an owner's rep throws his hard-hat at an underperforming sub (which I have seen happen), or a manager belittles an employee in front of co-workers, they are showing very little emotional control and very little emotional intelligence. The screaming and yelling that bellows through construction sites is unproductive and at times debilitating, but also displays very low emotional control of those involved. And while these folks may have very high levels of analytical intelligence (IQ), their emotional intelligence needs significant improvement.

When the intelligence yardstick is broken out at your next meeting feel free to bring up the topic of emotional intelligence. I'm sure it will be a huge hit.

Emotional Intelligence: What is it and what does it have to do with building?

Top 5 ways to save money on construction projects

In order to save money on construction projects, you must in fact have construction projects running. This is a very fundamental necessity of the construction business. No project, no paycheck, no savings for the owner. It’s really a very simple situation – we need to get banks to loan money to developers who will then go out and pay architects to draw buildings who will then wipe their hands clean of the design upon hand-off to the contractor who will turn around and blame every cost and schedule overrun on the architect until everybody lands in court fighting over money. It’s really a lovely system we have worked out, but without the initial financing from the bank, our diabolical plans cannot even begin.

Hey bankers! Yeah I’m talkin’ to you! Start loaning money damn-it!

Once our friends in the cushy banking offices up in Manhattan put down their Cuban cigars and close out of solitaire, we’ll have plenty of money with which we can build houses, retail and office space, condos, etc. So when that day comes, the following five items will help everyone save time, money, and lots of Advil.

5. Be nice.

Maybe it’s just me but if someone is a jerk (and most are), I really don’t feel like doing them any favors. When I worked for a sub, I would give breaks on change orders if someone wanted to work together and come to a sensible solution. If I was hollered at, belittled, or had a finger pointed in my face, the change order amount started to rise. Plus it made me never want to work with them again. And if I did bid a job for them, I would skyrocket the price.
Contractors are more sensitive than you think, if you piss them off, it’s just going to cost you money.

But again maybe that’s just me.



4. Be careful with changes

There are three truths in life: death, taxes, and changes to construction projects. And man, they are friggin’ expensive. However, we must realize that putting a design out to bid that is not complete or requires changes may allow a project to commence sooner and thus complete sooner. So if you do make changes make sure they are made in enough time to solicit bids from the contractors, collect pricing and negotiate the cost all without affecting the schedule. If the subs have to perform the work prior to receiving the change order you’ll never come to an agreement on the cost and if the number is high enough, you’ll land in court.

There is nothing wrong with establishing a unit cost for all changes prior to entering into contract. But just like the best way to avoid an STD is to not have sex, the best way to avoid costly change orders is to not make changes.



3. Can anyone say 3-D?

The capabilities of three dimensional CAD programs, otherwise known as building information modeling, are just beginning to become known and explored. There are of course the obvious benefits of conflict resolution with everything from a door swing to MEP and steel coordination, but the benefits reach much further.

I’ve seen millions of dollars thrown in the street due to lack of drawing coordination and conflict resolution in the field is extremely expensive. Often times the conflict will be partially fixed or not fixed at all which detracts from the quality of the project.

Beyond conflict resolution, the entire job can be estimated and viewed in three dimensions prior to lifting a shovel. The construction process can even be modeled in 3-D to look for conflict of equipment. I recently worked on a casino where concrete cranes and steel cranes were working in very close proximity. We didn’t use BIM but it would have helped significantly to avoid delays caused by cranes being too close. The steel contractor submitted a $200,000 change order for delays caused by the concrete cranes.



2. Be clear about expectations

I don’t know what it is with lawyers these days, all they do is stir up trouble. They’re like the kids in the back of the classroom that shoot spit-balls at the nerdy kid with glasses just waiting for him to snap and go postal. I guess they need to pay for law school somehow.

But regardless of the reason for the tendency of lawyers to cause conflict, even the most benign attorneys will look at the construction industry and see the bright lights of Vegas. How do we stop hungry lawyers from feasting on the profits of owners, designers, and contractors? We need to clearly define our expectations.

The construction disputes that I have seen mainly involve situations that could be easily discussed and agreed upon prior to entering into a construction contract. I don’t know if people are too afraid or just too lazy to bring this stuff up, but it needs to be discussed. How hard is it to ask what will happen in the event of a schedule over-run or how overtime rates will be handled? Will change order pricing be at an agreed upon unit rate or left up to the contractor? How will coordination issues in the plans be handled?

These are the same issues that come up time and time again, but we still refuse to bring them up in the contract. Perhaps we’re afraid of getting the project off to a bad start or souring relationships before the job begins, but a slightly uncomfortable conversation early on can prevent a torturous battle through mediation, arbitration, and court.


1. Pre-con, pre-con, pre-con!

Above anything else, the more time spent in planning, the less cost and schedule overruns you will have during construction. However, we must be careful about over-analysing the project and bringing it to a halt. You have to remember that every day the building is not open is lost money for the owner, so we could talk forever about what kind of foundation to use, but the more we him and haw about it, the more we’ll have to accelerate the project during construction.
Pre-con is not as easy as picking the lowest cost for every material and contractor, it is very much a balancing act in an effort to get the project on line in the shortest amount of time with the lowest cost and highest quality. It’s difficult if not impossible to get all three, but the purpose of pre-con is to maximize the overall value of the project.

For example, if an evaluation is being made as to if you will be using steel or concrete for the structure of the building, one may point out that concrete is less expensive and should be used. However, steel will erect faster and may be less likely to encounter material shortage problems throughout the project. In light of this additional information steel could become the more prudent choice.

Pre-con will often be skimped on in an effort to break ground and save money in the short term, but a little more effort early could make construction less painful and the courtroom less likely.

Feel free to add some of your own tips on saving money on construction projects.

Top 5 ways to save money on construction projects

Berlin Wall: Concrete that did much more than just crack.

I was eleven years old when the Berlin wall was brought to the ground and at the time, the Cold War was in full gear and I remember being excited that what I believed to be a symbol of evil and corruption was crumbling to the ground.

Twenty years later, I was able to visit the hip and happening town of Berlin and see, before my own eyes, the concrete wall that split the city.

I always thought the the wall was one section of concrete or brick and if you were on one side you were in East Berlin and the other side was West. This may have been the case during the early years of the wall, but for the majority of its life, there was a 100 meter "no-man's land" separating two walls - both of which residing in East Berlin. No Man's Land was later named the "death strip". At least 100 people were killed trying to escape East Berlin, however, there were about 5,000 successful escape attempts including a hot air balloon ride over the wall, and sewer excursion under the wall, and driving a sports car through the wall.

The Berlin Wall actually had four phases:

Wire fence (1961)
Improved wire fence (1962–1965)
Concrete wall (1965–1975)
Grenzmauer 75 (Border Wall 75) (1975–1989)

The Berlin Wall and the Intra-German Border 1961-89 By Gordon L. Rottman andChris Taylor gives the following description of the earliest form of the Berlin Wall.

The first, expedient walls were low, and made of a variety of different building
materials, such as bricks and concrete blocks. These were rapidly replaced with
prefab concrete slabs, blocks and beams. The workmanship was crude, with speed
being the major concern. Rubble buttresses bad to be built to support some
sections. Lookouts and guardposts began to appear. Steel hedgehog
anti-vehicle obstacles were placed on streets. Wooden towers began to appear
every 1000m with searchlights sweeping barbed wire, and broken glass was cemented atop the walls. Log and earth lookout bunkers were positioned between the towers. A car driven at speed could crash through these walls in many places, and some of them crumbled after heavy rain as there were no supporting foundations.

The "fourth-generation wall" known officially as Stutzwandelement UL 12.11 (retaining wall element UL 12.11) was the final and longest lasting version of the wall. It was built from 45,000 separate sections of pre-fabricated reinforced concrete each being 3.6 m high and 1.2 m wide. Each segment was 22 cm thick at the base and 12 cm thick at the top. The top of the wall was lined with a smooth sewer pipe 30 cm in diameter intending to make it more difficult to scale. Below is a blueprint of UL 12.11.

The cost to erect this new sophisticated wall from 1975-1980 was $3,638,000 USD.

On a side note, the current construction market in Berlin looked far from stagnant. Everywhere I turned there was another tower crane or construction site. Certainly much different than what is going on in major cities in the US.

I briefly thought about applying for some construction jobs in Germany since I saw so much going on, but I quickly realized that I didn't speak a lick of German and I ascertained that work in a field like construction which is heavily dependent on verbal and written communication would be quite difficult. Maybe I'm wrong, and if things get much worse I hope I am, because I may be on the next flight to Berlin.

Berlin Wall: Concrete that did much more than just crack.

Back in the U.S.S.A

Back in the United (and Stimulated) States of America. Woo-hoo!

After over three weeks of overseas travel, as well as domestic vacation where I just didn't really care what was going on, I've returned to reality and removed my head from the sand trap to take a look at where we are in our quest toward economic recovery and growth. However, I'm tempted to run back to the airport and buy a one-way ticket to Anywhere But Here.

I was expecting to come back to a country pumped with more stimulants than a first grade honors English class, but what I've found is something that more closely resembles a mandated Saturday morning alcohol awareness seminar that even a well operated meth lab couldn't bring to attention. What happen to our $800 billion worth of Adderall and Ritalin that was promised to bring our sleepy, dreamy economy back on its toes and actually participating in the 7:30 AM Pledge of Allegiance? Well, I decided to do a little research and see where we're at.

Just to evaluate where we are, I found that the US unemployment rate is at a gaudy 9.5%. However, construction industry unemployment according to economajic.com stands at 17.4%, however this is off it's recent high of 21.4% in February '09 which is at least movement in the right direction.

As far as construction billings go, the data is not so promising. We're still at declining levels and while the decline seemed to be slowing for a while, the latest numbers are showing an increase in spending declines. Econoday.com provides the following chart of construction spending for the past two years.

So what about our much anticipated and much needed stimulus package? Well, the following chart from Recovery.gov shows the timeline for funds being made available for the next seven years. The majority of this money will be dolled out in fiscal year 2010 which starts October 1, 2009, so we've yet to see the flood gates open and we are painfully awaiting its arrival like an avid West Virginia kayaker would before opening day of Gauley season where the dam controlled flow of the Gauley River is allowed to run wild.

So why does the majority of this money come out in FY 2o1o and not immediately? In my opinion, it's an effort to avoid fraud and corruption that could easily be associated with a massive flood of federal money into a greedy and hurting economy. However, this is still a federal spending plan that dwarfs anything preceding it, so a little patience now may pay off in the long-run. I'm hopeful that this plan will not only provide a solid backlog of construction work for the next decade but will also provide some much needed infrastructure and capital improvement that will help people work and live better which could also help our country economically.

Just keep chanting - The USSA ain't far away.

Back in the U.S.S.A

What do Scotland and Google have in common?

If we were taking a standardized test, the correct answer would read: golf is to Scotland as Google is to search engine. However, there is no prep course or line of computer code that can prepare you for playing the Old Course at St. Andrews.
It is believed that golf was played in this portion of "links" land in the early 1500s making the Old Course truly live up to its name. I just kind of gazed out on to the open land and kind of realized how a game like golf would be invented here - in fact, it makes perfect sense. If the sheep herders didn't invent it, I certainly would have on my first European vacation.

Although I'm not a huge history buff or expert on the invention of earth moving machinery, I am fairly certain that back in 1500 they didn't have the earthwork luxuries of today. The land was left very much in its natural state and grass was cut to different lengths and holes were placed in the ground - it was very simple. The deep pot bunkers in Scotland are "revetted" where layers of sod were placed on one another to form a wall on one side of the bunker and making each bunker more or less a one stroke penalty. However there is in fact a reason for the revetting - with the coastal nature of most links courses, the bunker walls keep the sand from blowing all over the course while they also prevent players from shooting very low scores.




So who built the Old Course at St. Andrews? There are many contributors throughout history through renovations and what not and I'm sure somebody had a rough plan of what they were going to build back in 1500, but the real owner, architect, and contractor were the land, the wind, and the sea, collaborating on a fantastic joint venture.

What do Scotland and Google have in common?

Off to Europe..and a trivia question

I'm in the midst of a World tour starting in Mackinac Island, MI and ending in San Francisco, CA with stops in St. Andrews, Scotland, Berlin, Germany, and Los Angeles. Trust me, you don't even want to see my flight itinerary. But really I'm not expecting you to care too much about my travels, however you may be interested in some of the construction in Scotland and Germany. I'm going to post some info about the buildings and/or construction market in Scotland and Germany so be sure to stay tuned (like I even had to ask).

Trivia Question:

For what construction project were hard hats first invented?


Send your answers to poolejohn@gmail.com and if you are correct you will get a set of bagpipes (no, just kidding).

Off to Europe..and a trivia question