Photo: Only a temporary footbridge for workers spans the Muddy Brook. The busy commuter route linking Williston and South Burlington is expected to reopen by December. VBM Photo.
Contractors busy while managing ongoing COVID-19 uncertainties
by Olga Peters, Vermont Business Magazine “No one here has the bandwidth to talk with you,” said a Chittenden County contractor politely declining an interview.
“I’ll give [the boss] the message, but I don’t know when he’ll be available,” said a contractor in Windham County. “He gets here at 5:30 am and is still here when I leave at 6 pm.”
Contractors regularly spin multiple plates to take a project from design to completed build. This summer, the side effects of COVID-19 have heaped on additional ingredients.
Extras like a backlog of projects rescheduled from last year’s industry shutdown as part of the state’s pandemic response.
“This has been the craziest two years I’ve ever seen,” said Don Wells, president and CEO of DEW Construction Corporation. “And I’ve been in this business for about 45.”
Or extras like material shortages and delayed timelines caused by knots in the supply chain.
PC Construction Vice-President Eve Norris said that it’s hard to guess which supplies will be back-ordered.
Recently, a project had a hard time obtaining chemical additives used for fire and waterproofing, Norris said.
“It’s pretty far-reaching,” she said.
Add a few dashes of price increases and workforce shortages, and 2021 has become a jam-packed year for Vermont’s contractors.
Norris and Wells said their companies have multiple job openings.
“I could add 20 people, but no one is available,” Wells said about the company’s immediate hiring needs.
The upshot of the upheaval, said contractors, is that 2021 is exceeding expectations.
“Hats off to the contracting community, it was able to complete work,” said Jeremy Reed, a construction engineer with the state Agency of Transportation.
Working Through A Backlog
In March 2020, as part of the state’s declaration of a state of emergency, construction sites across Vermont halted work.
One year later, and Norris and Wells said their companies are still working through an extensive backlog of projects.
Norris said that almost all PC Construction’s postponed projects in Northern New England have been rescheduled.
The company will enter 2022 with a strong backlog, she added.
With headquarters in South Burlington, the 100 percent employee-owned company claims an annual average volume of $500 million.
COVID postponed work across all PC’s offices located in Florida, Georgia, Maine, Maryland, New Hampshire, New York, and North Carolina. In Vermont, New Hampshire, and Maine, the stalled projects totaled more than $150 million.
Supply issues vary daily, she said.
Norris said most of the work in PC Construction’s backlog is for municipalities, the state, or institutions.
A sample of work in Vermont includes the 62,500-square-foot, four-story Firestone Medical Research Building. The new addition will house lab, office, conference, and support space for the Larner College of Medicine at the University of Vermont.
The company has also signed on to expand the emergency department at Bennington’s Southwest Vermont Medical Center.
At Stowe Mountain, PC Construction is building a six-story, 125,000-square-foot building with 27 residential units designed as ski-in/ski-out luxury residences, townhomes, and penthouses.
In May, the company broke ground on a $100 million project for the University of Southern Maine in Portland. PC Construction started work on the Manchester, NH Wastewater Treatment Facility Solids Train project earlier this year. Described as the largest treatment plant in Northern New England, the project costs $19.6 million.
For DEW Construction, 2021 started strong. And profitable, said Wells.
Material costs and workforce challenges dampened his spirits. But only a little.
“It’s now more of an okay year,” he said. “I still think next year will be exceptional.”
The company is digging into its backlog of postponed projects, he said.
He expects DEW staff will be working on the accumulated contracts into 2023.
Wells said most of the projects under the shovel in Vermont and New Hampshire this year are from the postponed list.
Wells talked enthusiastically about the company’s projects. For example, a $3.3 million addition at Charlotte Central School, a $10 million renovation of the inpatient unit at the VA Hospital in White River Junction, the newly opened $14 million Maple Ridge Lodge Assisted Living facility in Essex Junction, a $25 million housing project in Lebanon, NH, and next year, the approximately $35 million UVM Medical Center’s Outpatient Surgical Center in Williston. Once completed, the surgery center will replace the Fanny Allen location, which closed due to air quality issues.
Wells said he expects remote work is part of the new normal.
Working from home proved to be more effective for many of DEW’s employees, he said. Wells explained that many staff commute as much as an hour to the office.
The company has seen its most significant growth in its Manchester, NH office.
Opened three years ago, Wells said this office has as much work as the offices in Vermont and Keene, NH combined.
He attributes this to Manchester’s proximity to the Boston market and the influx of people moving from the metropolitan area.
Photo: Vermont Railway is installing a new track along the building on Burlington's Waterfront, which will also alter the bike path route. However, VR will be able to overnight the Ethan Allen Express Amtrak train just south of this location. Amtrak is expected to bring passenger rail back to Burlington next year for the first time since the early 1950s. VBM photos show construction in August 2021 and the former bike path in use in September 2019. VBM Photos.
Training The Trainers
The Association of General Contractors - Vermont (AGC/VT) spent most of 2020 training people to mitigate COVID risks at worksites.
What started as a program for the association’s approximately 200 members expanded to anyone who wanted the education, said Matt Musgrave, Deputy Executive Vice President.
Unlike most states, Vermont did not classify construction workers as essential workers under its pandemic response, he said. The only exception was for health and safety, such as power loss or sewer system issues.
Knowing that COVID safety protocols would be crucial for reopening the industry, Musgrave said the AGC/VT board of directors formed a task force.
This task force developed the state’s first return-to-work exposure action plan, he said.
According to Musgrave, the program expanded beyond other programs. For example, Vermont Occupational Safety and Health Administration (VOSHA) allowed people to self-certify they’d completed an online program.
AGC/VT designed a 2-hour, train-the-trainer program as a virtual, interactive workshop taught by AGC/VT instructors like Musgrave.
The workshop prepared people to train workers at job sites, provide safety oversight, and conduct COVID tracing.
Last year, Vermont’s construction industry had the lowest COVID rates than any other sector, he said.
Musgrave said AGC/VT organized the program to serve the association’s members but quickly rolled it out to subcontractors and finally to people outside the construction industry.
Altogether, AGC/VT trained approximately 2,500 people from a wide range of industries, including ski areas and childcare centers.
This summer, Musgrave said AGC/VT is watching the supply chain and cost issues disrupting the industry.
“We were fortunate that most people returned to work quickly,” he said.
Musgrave believes workers willingly came back to their job sites because they’re accustomed to risk.
The COVID virus is scary, he said. But so is hanging off the side of a six-story building or working with dangerous chemicals.
“You’re talking about people who have lived with risk and mitigate that risk as part of their career,” he said.
Because of these risks, contractors are also used to working with multiple regulations, protocols, and safety gear, he added.
Musgrave anticipates that the construction industry will grow by 20 to 30 percent more construction projects over the next few years, thanks to the influx of federal stimulus funds.
More projects mean more jobs.
To take on more work, however, the industry needs more workers.
Along with workforce issues, the costs and availability of materials have changed daily since the start of the pandemic, he said.
Vermont creates very few construction materials locally, he said. It must buy these supplies from elsewhere.
Since the pandemic started, Musgrave has seen wait times for materials grow from a few weeks to six months, and now some lead-times are as long as two years, he said.
These fluctuations can make a mess of projects planned, designed, and budgeted months — sometimes years — in advance. This process is especially keen for state and municipal projects that go through extensive budgeting, public, and bidding processes.
Musgrave has seen contractors or clients pull projects this year because costs have risen above the initial agreement.
AGC/VT is planning a summit to convene members from the state, municipalities, the construction industry, and experts in supply chain issues to discuss challenges, Musgrave said.
Kenneth Simonson, the chief economist with the national AGC, said, “Anyone who has tried to do construction — including renovations — have found that contractors are in short supply and materials, costs and delivery times are uncertain.”
In general, it seems the industry is dealing with a series of contradictory forces.
For example, the ups and downs with prices have made it difficult for distributors or warehouses to manage inventory. Increasing costs are an incentive for keeping inventory low, he said. But demand would point to keeping more products in stock.
Since COVID started, Simonson has clocked the gap between contractors’ bids and material costs.
Prices on lumber and plywood have increased 101 percent between June 2020 and June 2021, he said. Steel mill products have jumped 88 percent for that same time frame, copper and brass 61 percent, and gypsum products 18 percent.
Meanwhile, on average, contractors’ 2021 bids are lower than current costs, Simonson said.
In general, contractors are presenting bids to clients that are 3.4 percent lower than last year, while costs have increased 26 percent.
The gap is counterintuitive. Why would contractors lower their bids in an environment of increasing supply costs?
Simonson attributes this gap in part to last year’s drop in the number of projects that happened early in the pandemic. In response, this year, contractors are cutting their profit margins for new work.
In his opinion, supply shortages represent a more extensive problem than price fluctuations.
Contractors and clients will find ways to adapt to changing prices, he said. But if a school’s windows and desks won’t arrive until November, then classes can’t start in September.
Simonson said that new events are further complicating supply issues.
For example, last month, wildfires in Colorado contributed to a mudslide that closed Interstate 70. The route runs east-west between Maryland and Utah.
No one could predict the closure of this key trucking route, he said.
“The supply chain is already stretched, and unpredictable events make the situation worse,” he said.
Simonson recommends a few strategies for contractors and clients to help them navigate any uncertainties.
For contractors, he stresses communication.
He said to stay in touch with suppliers on their production and load schedule, travel times, and costs. Then quickly relay that information to clients.
This way, no one receives a nasty surprise, Simonson said.
“I really find stepping up communication is helpful,” he said.
To clients, Simonson recommends staying open to suggestions and being flexible.
One way both sides can support each other is during the agreement phase, he said.
For example, add a clause to the contract that if supply costs increase 10 percent, the client agrees to pay 10 percent more. If prices decrease 10 percent, then the contractor agrees to lower their bill by 10 percent.
Simonson said he’d like to see more awareness of the challenges contractors are experiencing from state and municipal officials.
He added that creating a more flexible bid process and expedited permit process would help contractors in these unpredictable times.
Despite Delays, Projects Completed
This summer, the weather has cooperated for the state Agency of Transportation’s road projects, said Jeremy Reed.
“We’re doing pretty well,” he said.
Despite last spring's delays, AOT’s construction season hit its project milestones.
Most drivers recognize state engineering and maintenance crews and their large orange VTrans trucks.
AOT also contracts out approximately an average of 110 to 120 of its more significant projects, such as bridges and paving, he said.
This year, the AOT will pay contractors approximately $200 million for projects.
The agency has three signature projects for 2021.
Work on the two Interstate 91 bridges in Rockingham is expected to finish this fall. This project is estimated to cost $50.9 million.
Progress continues on the $84.6 million replacement of the North Hero - Grand Isle Drawbridge project. This bridge is the only moveable bridge in Vermont.
The Middlebury Bridge and Rail Project should finish this year, said Reed.
AOT collaborated with the town of Middlebury to replace two rail bridges with a 360-foot tunnel between Main Street and Merchants Row.
According to information on the AOT’s website, 422 pieces of precast concrete U-walls form the tunnel. Each piece weighs approximately 40 tons.
Several significant road projects are also happening across the state, such as the Hartford and Sharon section of Interstate 89 and state Route 105 between Richford and Jay.
Reed said that the agency has protocols and processes to mitigate the risks of changing prices. These tools are essential to balance the financial risk for the contractors and the agency, he said.
If contractors take on too much risk, then it can result in high bid proposals, he said. But if AOT’s front-end costs are too high, then contractors carry all the risk.
Some materials, like petroleum products, have more tools to smooth financial ups and downs than others, like lumber, he added.
Price swings for materials spurred by COVID-19 are pronounced but not wholly new for the industry, Reed said.
The February winter storm and cold temperatures caused power outages in Texas led to a national shortage of several petroleum products and even some of the ingredients for epoxies and resins. As a result, the construction industry paid higher prices, he said.
Reed said he couldn’t talk about construction without mentioning safety. He reminded drivers to stay alert when traveling through worksites. Watch out for crew members, he said. Drivers and motorcyclists need to follow the posted speed limits.
“Safety is our first priority,” he said.
Another bridge being replaced is the one connecting Williston and South Burlington on the highly-trafficked Kimball Avenue route by Technology Park.
The original corrugated metal pipe culvert was constructed in 1986. According to the City of South Burlington, the pipe failed in the spring of 2017 due to substantial corrosion causing the closure of the crossing until a temporary bridge was installed in August 2017.
During the Halloween storm of 2019, the culvert was washed out and the bridge again closed until repairs were made.
Construction of a new bridge, costing upwards of $2.5 million, was commenced in early August. It is expected to keep the commuter route closed until early December. The choke point serves about 7,400 vehicles a day. The new span will include a pedestrian/bike crossing.
Local Projects See A Few Supply Issues
Brattleboro’s Department of Public Works Director Steve Barrett said the DPW quickly obtained materials to repair roads washed out by heavy rains last month.
Photo: These are of the early August storm washouts on Hinesburg Road. Photo: Steve Barrett, director of public works for the town of Brattleboro.
The town could source the raw materials like gravel locally, he said. The department also routinely stocks items like drainage pipes for emergencies.
Other town projects haven’t been so lucky.
The town’s $12 million Pleasant Valley Water Treatment Plant improvement project has experienced delayed items like a generator, piping, and valves.
Some of the delays have stretched a typical timeline from three or six months to a potential nine months.
Such delays mess with the department’s timelines, he added.
The town will likely need to adjust the department’s budget this year in response to higher prices, but Barrett doubts the changes will be massive.
The DPW creates its budget based on a five-year average, Barrett said. Looking ahead to building the fiscal year 2023 budget, he anticipates the price increases of 2020 and 2021 will influence the next fiscal year.
To what extent, he couldn’t guess.
Depending on how much supply costs balloon by then, Barrett said the town may decide to take on fewer projects in the new fiscal year.
Workforce Shortages, The Other Long Term Issue
A lot of attention over the past year has focused on how the COVID pandemic disrupted employment.
Like many industries in Vermont, however, the construction industry had workforce issues before the pandemic.
In early August, Musgrave attended AGC/VT’s annual golf tournament. He asked attendees about the challenges they were experiencing.
He expected to hear about COVID or the supply chain. Instead, almost everyone said they couldn’t find enough workers.
Musgrave said he hoped more people would enter the construction field.
Contractors view the industry as a career with good wages and opportunities for career advancement, he said. Most entry-level jobs have a $20 hourly wage and come with benefits, Musgrave said.
The industry is resilient, and it kept its workforce numbers despite COVID-related layoffs, he said.
The caveat, Musgrave said, is that the workforce is too small.
Put another way, Vermont’s construction industry had approximately 16,000 workers before the pandemic. One year later, employment is almost back to the same levels.
But the sector should have a workforce of approximately 18,000 workers, he added.
According to Simonson’s numbers, the sector’s workforce issues go deep.
It might feel contradictory given the number of help wanted ads posted by contractors across the state. Still, the number of available jobs in Vermont’s construction sector employment has dropped 8.5 percent.
This drop is more acute compared to other states, he added.
Simonson said it is hard to tease out of the data whether COVID or other reasons caused the job loss.
This smaller workforce can mean that clients’ projects are delayed or canceled because contractors lack the workers to take on new businesses.
Musgrave said that the average age of people in the trades is 55. Many workers are aging out, he said.
AGC/VT is developing a workforce development program to attract more workers.
Everyone is welcome, he said
Musgrave encourages anyone interested in learning more about working in construction to visit AGC/VT’s website. Most contractors are also happy to share their experience, he added, so reach out.
Norris said the nice thing about Northern New England’s contractors and clients is their willingness to collaborate.
So instead of weathering the uncertain times alone, the industry shares the burden of figuring out the supply chain, workforce, and the ongoing uncertainties of COVID-19 together, she said.
The Vermont Agency of Transportation (AOT) in August completed two major projects at Morrisville-Stowe State Airport: construction of a parallel taxiway and improvements to the runway surface area.
The goal of the projects is to provide a safer aviation operating environment by providing turnarounds at both ends of the runway and a new taxiway that meets Federal Aviation Administration (FAA) standards.
“This project significantly enhances the safety of airport operations,” said Transportation Secretary Joe Flynn. “The new parallel taxiway will allow aircraft to exit the active runway much quicker than previously.”
The project consisted of paving the runway safety area on both ends of Runway 1-19 and reconstructing approximately 150 feet of Runway 1. In addition, a turnaround of 150 feet by 35 feet was constructed on each end. A new parallel taxiway, 35 feet wide and approximately 1,500 feet long, was constructed to serve Runway 19.
The projects also included installation of new infiltration practices, installation of airfield lighting, pavement markings, removal of Taxiway B, replacement of the existing drainage system, relocation of the fuel farm, regrading of turf areas, and construction of a retaining wall along the west side of Runway 1 to prevent wetland impacts.
The project was constructed in phases from April through August 2021 to limit the impact to airport operations. The contractor was GW Tatro Construction, Inc. The cost of the projects was $2,903,913 for the taxiway and $1,247,168.50 for the runway safety areas.
Olga Peters is a freelance writer from Windham County.