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2012: Southeast Rebound, Conflicts Mark Year in Construction

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For many contractors and designers working in the Southeast, 2012 will likely be remembered as the year in which the industry finally began to bounce back from the economic doldrums.

Photo: Southern Co.
The Southern Co.'s $14-billion Plant Vogtle nuclear power project, near Waynesboro, Ga., ramped up construction in 2012. The project reflected both the good and bad news of the year in construction, as it generated jobs, while at the same time it has experienced delays and contractual conflicts.
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Three of the four Southeast states experienced significant increases in the pace of new construction contracts during the past year—thanks mostly to a resurgent residential market in Florida and a pair of multi-billion-dollar energy projects in Georgia and South Carolina.

The outlook in Miami was positive for the region’s future prospects, as the value of new contracts soared by approximately 80% during 2012, according to data from according to McGraw-Hill Construction, which, like ENR, is a unit of the McGraw-Hill Cos.

Not all was rosy. Georgia’s nonresidential construction market—which is comprised of commercial and institutional projects—remained mired in decline. Through October, for example, that market was 10% lower than even the 2011 pace. And North Carolina’s overall contract volume was flat for 2012.

Additionally, construction industry employment continued to lag. In October, for instance the U.S. Dept. of Labor Statistics estimated that Florida construction jobs numbered 317,700—or less than half of the state’s historic high of 2006, when that figure was 691,900. Perhaps even more ominous was USA Today’s reporting that builders in North Carolina and Florida were suddenly unable to find enough workers as their project workloads increased, a potential sign of people having left the industry for greener pastures.

Other negatives also emerged. As a result of the long and hard-fought presidential election season, 2012 was full of conflict and political bickering. And, coincidentally, considerable contentiousness was reflected in several of the Southeast’s major construction news stories.

Consider these noteworthy events of the past year:

Florida Hops Aboard Rail. In late January, Rep. John Mica (R-Winter Park, Fla.), helped celebrate the start of the long-delayed, $1.3-billion SunRail commuter rail project in the Orlando area. With echoes of Florida’s high-speed rail fight, the project drew criticism from some conservatives for being too costly for such fiscally restrained times.

But the former transportation committee chairman of the U.S. House of Representatives remained steadfast in his support of the federal investment in the project. And as a result of that support—along with Gov. Rick Scott’s approval of the project—the first phase of the 61-mile-long commuter rail line is expected to be operational by 2014.

Going Nuclear. Two large nuclear power projects—the nation’s first in years—started construction in Georgia and South Carolina. Southern Co.’s $14-billion Vogtle Plant project was the first new nuclear project to start up in more than 20 years, and consequently drew an especially high profile. Nuclear energy remains controversial in general, with its high costs earning the most criticism lately.

On the other hand, the Vogtle project has already generated numerous lawsuits and countersuits between the owners and prime contractors over disputed payments and other issues. Additionally, a project monitor recently testified to the state public service commission that botched quality-control documentation—in other words, paperwork—has added months to the construction schedule.

Utility v. Engineer. On April 10, a federal jury in Tampa effectively ended the fight between Tampa Bay Water and HDR Engineering over cracks at the regional water authority’s 15.5-billion-gallon reservoir. After a roughly month-long trial in which the two sides argued over whether HDR’s design was to blame for the cracking, the jurors took less than four hours to find in favor of HDR, thereby rejecting Tampa Bay Water’s claim for an estimated $140 million in damages.

Prior to trial, the board of Tampa Bay Water had rejected a $30-million settlement offer. Last month, U.S. District Court Judge James D. Whittemore ordered that the utility owed HDR more than $20 million in legal fees. Tampa Bay Water was still appealing.

Regulator v. Utility. Another legal skirmish erupted in July after Duke Energy fired its new CEO, Bill Johnson, less than 24 hours after the North Carolina-based utility closed its merger with Progress Energy. The North Carolina Utilities Commission—which had approved the Duke-Progress merger based partly on assurances of Johnson as the new entity’s leader—reacted to the sudden, unannounced ouster with high-profile hearings and an investigation into the boardroom coup.

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