The Business Journal recently convened a gathering of construction industry leaders for a roundtable discussion at Conservation Garden Park in West Jordan. The following text was edited for clarity.
PARTICIPANTS:
Jennifer Stone, director, Big-D Cos., and also representing NAWIC (National Association of Women in Construction)
Jeff Davis, president, Construction Management Consultants Inc. and Vanguard Builders Corp.
Eric Stratford, director of business development and preconstruction services, R&O Construction
Ryan Bevan, president of construction, Gardner Group
Eric Calder, vice president, Zwick Construction
Tonya Timothy, project manager, Pentalon Construction, and president of the Salt Lake Chapter of NAWIC (National Association of Women in Construction)
Victor Fuchs, president and CEO, Helix Electric
David Dunn, CEO, Dunn Associates Inc.
Jessica Yurgaitis, CEO, Industrial Supply Co.
Scott Okelberry, chief operating officer and executive vice president, Clyde Cos., parent company of WW Clyde, Geneva Rock, Sunroc, Sunpro, Beehive Insurance, Bridgesource and Clyde Capitol Group
Construction industry: positives and negatives
Nathan Goodrich: Regarding industry trends and outlook, what current trends are shaping the construction industry in the U.S. and in Utah in particular?
Eric Stratford: A lot of thoughts, but maybe I’ll start with what we’ve seen over the last 10 years, a more teaming approach in construction, meaning regardless of the delivery method used, we’re brought in on the front end of things a lot sooner. We’re working hand-in-hand with architects and engineers and developers just to make sure we start the project right. Almost gone are the ways of the traditional design, bid, build, delivery method. And so regardless of what delivery method is chosen, we see that being a big trend.
Eric Calder: I think another trend that we’re seeing is a lot of the use with technology. Computers are a whole lot faster. The AI is an element that’s already coming into our realm. I got a picture, I think it’s like two days ago, from one of our project managers on the job, and they were power-washing one of our facades of our buildings with a drone. It’s interesting just to see the hose hanging from it, and I was like, “Man, that drone is big.” But the technology is allowing us to do things more efficiently, and it is opening up a lot of different ideas and applications.
Goodrich: Let me ask you this way, too. What do you see coming to our state in the next couple of years, next year, four or five years, that gets you excited?
Jeff Davis: I think what’s exciting is what’s happening with AI. In the industry, AI is not replacing anybody. It’s making us more efficient, it’s making us safer, it’s making things quicker, it’s improving communication. And we don’t see it replacing anybody in the industry. So that’s exciting, because it makes this a better industry.
Goodrich: That’s part of this next question, actually, as far as emerging technologies. AI is a big thing. You mentioned a robotic power washer. What other ways have your companies started to implement technology into your businesses specifically?
Davis: I think we’ve all seen AI notes on Zoom. That’s one of the simplest things I think we’ve all seen and just some of the ChatGPT and Copilot.
Goodrich: What percentage of your employees do you think are using ChatGPT for even email [or other actions]?
Davis: I’d say less than half.
Fuchs: Yeah, we encourage them quite a bit, our employees, to do that, and especially on the management side, we want the employees reaching out to ChatGPT just to write letters because some people are just not good at writing letters. ChatGPT is very good. Also, you’ve got to proof those letters sometimes because ChatGPT doesn’t know the personalities involved. But you have to do it. You have to do it with care. There’s a lot of data out there that is available. I mean, you can ask ChatGPT about certain projects. Like today, ChatGPT can basically construct schedule values for you on a project, just give description, whether it’s an apartment or a commercial job and several different criteria, and you’re going to get a baseline SOV (schedule of values) that you can start working from, which really cuts out a lot of time from a lot of our management because that’s one of the key things upfront for pre-planning the job. There is also now the full take-off that is available and analysis of estimates, analysis of change of the drawings. That really picks up and takes some of that time that helps PMs to be more productive.
Jennifer Stone: In Procore, there’s that new built-in AI tool where you can just write in, tell me everything that includes something that you’re looking at, and it will produce every submittal, every RFI, everything that you needed that was in that project, just using that AI tool. And I know our client, where we’re currently working in data centers, I mean, they’re very high-tech clients, and their expectation is that we are using high-tech and we’re providing data in high-tech where they can see it in dashboards and they can see it quickly and they can see real-time data. And so what we’re trying to do is combine all of the softwares that we’re using, whether it be P6, Procore, some sort of estimating tool, and combining all of those tools into one simplified dashboard for our clients so they don’t have to go to three or four different types, and using AI to help us create the coding and everything else that we need in order to do that. And I do also think the percentage that you’re using AI depends on the average age of your company. I mean, if it’s younger, I would say the average is higher, but if it’s an older company, it’s going to be lower.
Davis: I think it also depends on the position they have in the company. So, if they’re in the office a lot, they’re going to be using it, of course, a lot more. If they’re in the field and they’re not doing a lot of emails, it’s hit and miss there. They’re probably not using it too often.
Scott Okelberry: We see some more boots on the ground, close to the work applications of AI also. For example, there’s emerging technology that will take a camera on the back of a, say, large piece of equipment that has blind spots and it can detect if there’s a person behind to prevent running over somebody. But it can differentiate a person from some other object that maybe is supposed to be there. We have, for example, both forward- and driver-facing cameras in almost all of our heavy trucks on the road now. And the one that’s watching the driver is detecting things through AI like, are they distracted? Are they drowsy? Are they using their mobile device? Are they eating? Do they have their seatbelt on? And so it’s helping us to keep our people more safe but also operate more safely to protect the public and so forth.
Goodrich: Have you seen real-world examples of how this has saved somebody from an accident?
Okelberry: Yeah, absolutely. I could talk for a long time about all the different uses of it and what we’re doing. Coaching a driver on how to be better, for example. And so to avoid an incident happening. But also it gives us some information if something does happen to document what happened, what caused it, so we can be better in the future.
Goodrich: That’s great. We mentioned drones, robotics. Do you think that’s going to find its way into our industry soon or later?
Calder: I think it’s already here with DroneDeploy. We use it quite frequently, and especially just taking a look at the site, it’s excellent for doing snapshots on time over duration. With drones, we can fly across the site and we can determine and calculate how many cubic yards of fill and import we’re going to need. And then we’re also using that same kind of technology when we’re walking through the building where we can take an account of what’s actually in place. And then these videos are uploaded to Procore or other different types of project management databases that we’re going to use to manage them.
Stratford: I think we’re just scratching the surface. There are so many emerging technologies, you can almost get lost in it, so to speak. And if you just look at AI, by the time you figure out some of the programs, they become obsolete because somebody else has developed a better one. But with that being said, there isn’t an aspect of construction from the beginning proposal side of things and contracts, to in the field, that it’s not affecting right now. But I think we’re just scratching the surface.
Goodrich: So, having said that, for leaders here in our companies, how do we implement that and make sure that we’re using the right systems, that we’re headed in the right direction, that we don’t get left behind? Do those things concern you?
Ryan Bevan: Maybe from an ownership perspective, we’ve seen technology be very valuable. Having a project that we conceive, operate and then maybe long-term sell, we’ve used some of the technology that Eric’s talked about to validate construction installation processes. We’ve had times where we’ve gone to sell a building and had to go back and prove that something was installed correctly because something may ding up as being deficient, and we can go back with these technologies and say step-by-step throughout the course of the project and show that flashing was installed correctly. And maybe there’s a defect on a tile, but that doesn’t impact the entirety of the envelope. That is maybe a claim that somebody might use to try and reduce the value of the building. So we see that oftentimes. And going back to AI a little bit, we’ve, from a development perspective, can use some of the AI technology to use analytics and compare and contrast proposals and cost breakouts so that we can see the deltas a little bit clearer and just get another recap summary that can help us quickly move through information fast versus a less timely response.
Jessica Yurgaitis: I can add on that a little bit. With AI, I’ve encouraged our senior leadership team to each have an AI project they’re working on. We’ve implemented some internal uses of it where we’ve loaded our operating procedures into AI. So, it’s user-friendly for our folks that don’t work in our main Salt Lake City office — we have eight locations — so they can go in and say, “How do we pick an order? What’s the process for packing an order?” Even our employee handbook, we’ve dumped into AI so people can access what is the company’s vacation policy or whatnot. They are reading all of that and responding like it’s on behalf of the business. So I’m actually excited about it because we’ve got our 10 senior leaders who are all working on a different project that impacts their area of influence, and I’m excited to see what they come back with. So, we’re all different ages, I understand, but the younger generation, they’re adapting much quicker, like Jen said, and it’s scary how fast it’s coming along. I think if we’re not in it every single day, we’re going to be behind.
Tonya Timothy: I think some of even just the more basic technology, Microsoft Teams, Zoom. I think COVID did horrible things to all of us, but one thing that I think it did is it forced us to be able to connect not in-person, which I think has a lot of negative connotations to it as well, but I think it forced us to use some of those applications. And now it’s just so much easier to communicate.
Like the project that I’m on, everyone’s out of state, and it’s just so natural and easy to jump on a Teams call and share your screen and get things figured out. And that wasn’t really something that was super-common a few years ago. I think just technology in general creates this connectivity and this roadway for information that can get just passed back and forth to people much quicker.
And there’s a lot of benefits to that, even on the project when you get down to punch list and stuff. I mean, take a picture, upload it to your construction software, send them a QR code. They can go to the unit, scan the QR code, and see what they need to do. I mean, there’s all these things that are just greatly making us more efficient. We just need to learn how to rein them all in and operate them and keep relevant with them.
Davis: I think with regards to technology, we should certainly bring up BIM, or building information modeling, which I think probably everyone is familiar with at some level. And it’s not really new technology because it’s been around for quite a while, but it’s getting better and better. And AI is now coming into it. It’s always been a little bit of the first-generation type of AI.
Victor Fuchs: Just to touch base on that BIM modeling, I don’t see how you can build a project nowadays without having BIM a hundred percent involved. It’s a must. In our organization, every project, it’s a must, especially when it comes to commercial. We’re involved in all kinds of construction, but when it comes to commercial, it’s complicated. We’re doing quite a few projects with Big-D on data centers. There’s no way around it, and it has to be planned, and we need to get notices early enough so we have plenty of time to plan the jobs rather than come in on the day off and try to figure things out. But in the long run, it’s amazing.
Davis: And it’s a whole another skill set.
Fuchs: We have 20 people in our organization; that’s all they do is BIM.
Goodrich: Great. Let’s shift gears a little bit. Let’s talk about some economic impacts, cost of construction, cost of money. How have tariffs affected construction costs, particularly for materials on projects you’re working on?
Bevan: I’m really interested to hear this.
Fuchs: When it first hit … we really didn’t know where this whole thing was going to go. So we sent standard notices to all of our customers and said, “Look, we have no idea what it’s going to cost, but probably it’s going to be something. We’re going to fight and advocate on your behalf with the vendors. But whatever happens, please don’t take it against us. We did not cause that and we certainly don’t want to be penalized.”
Well, now a lot has happened in the last week or so, and we have a major project, one house renovation down in Las Vegas, and the impact on that job was significant on the fixtures because these were specific fixtures that were made specifically for the purpose and they were made in China. And looks like it might, if not all of it, is significantly going to go away. The fixture package on the job was over $3 million, so you can imagine the kind of impact it could have had on the project. And it seems like it might go away. We already had tough conversations. And last week I got a note and it said, “Just put the brakes on. It might be OK.”
We actually have not had a problem of getting any additional costs and terms at the moment, at least for what’s going on. Now, we know how volatile things are and probably things could change in the next 30 to 60 days. I hope not. I think we’re moving the right direction. And it’s not our intent to hurt the project. We want the project to be successful, and obviously significant cost does not help that.
Davis: I think what the tariffs have caused is a little bit of apprehension and a lot of unknown. But I think it’s the same category as the interest rates. And it’s like, maybe we’ve all heard this, you marry the house and you date the interest rate. And that goes to the entire industry: You marry the building and you take the interest rate.
And I think what’s super-encouraging is what we are hearing. And I think as things roll out, we’re going to see a new resurgence. I think things are going to get moving again. And things are moving. There’s a lot of work out there, there’s a lot of backlog, there’s tons of multi-family projects that are moving forward. There definitely has been a shift from office to multi-family and industrial. I’m very encouraged, personally.
Stratford: I think we all came off of COVID, and that is still lingering, and so last year we saw an election cycle and there’s some uncertainty, and this year we see tariffs and there’s some uncertainty. And like what Victor’s saying is, we’re gearing up like it’s COVID again. But we just don’t know.
Robert Spendlove came and did a presentation to an industry group recently, and he asked the question about what are our thoughts on what the tariffs are going to do. And it was probably 30 percent negative, 30 percent positive and then 30 percent neutral when he started the discussion, before he laid out any information. And then he laid out all the information of what’s happened and just gave the timeline and what’s expected to happen in the timeline, and he asked the same question again and it became 70 percent positive. And that was just for the industry group that we were meeting with, and he’s done it all over the state.
But I just think that it’s an uncertainty which creates problems with developers trying to figure out how they’re going to make a thing pencil on big projects that are two and three years down the road. And that’s the biggest challenge is, how do we help as an industry on something that we don’t control? But how do we do that and make sure that we’re partnering with our developer clients to control that the best we can?
Okelberry: I think that “uncertainty” is the word of the month or the year so far, and we just have to deal with that. And there probably will be some pain and some impacts from tariffs. I think that we try to look at a little bit bigger picture and say we have a generally pro-business, pro-growth leadership nationally. We have that type of leadership in our state. We are a growing state. We’re a well-run state. We have a housing shortage. And so, when you put all of that together, I think we’re in a good place, but uncertainty just makes it feel unsettled, and this apprehension is hovering over us. There are some unknowns and there will be some impacts, but overall I think that we’re trying to look beyond it and say it’s going to work out, we’ll find a path through it. Maybe some of the tariffs will stick and it will cause some cost increases, but overall we’re optimistic about the business environment, the economic environment, that we are working in.
Davis: I hope what we’re most optimistic about is that that $3 million light fixture order in the future doesn’t come from China; it comes from West Valley.
Timothy: I don’t know who said it, but there’s a saying that says uncertainty is the only certainty, and I think that is very true. So, I think we just have to do the best that we can navigating the waters, doing our due diligence and responsibility of working with the design team and the owners, and “this is what we know of” and just be very transparent with it. Don’t be fear-mongering, but also don’t put it all under the rug. Just be as transparent as we can because we’re all in the dark with how this is going to play out.
Fuchs: And you got to be ahead of the game. When COVID hit, I’m sure everybody in the construction industry knows about a switchgear situation. In our company, we have not delayed a single switchgear order because we knew we had to deliver to our customers. So we got together with all the top four manufacturers … and because it’s significant and the buying power and the size of our company, they have a lot of influence. We did not miss a single switchgear order all the way through the whole ’22 to now. And it’s either you accept it and say, “OK, it is what it is” and just pass it on, or you don’t accept it and find a solution. And that's our philosophy in our organization: We always find a solution and the word “no” is not accepted.
Stone: That is the good thing for you, though, being as big as you are, as you mentioned, you have buying power. So I don’t think that that would have such a big impact on you. But for the smaller trade partners that don’t have that option, that they don’t have that buying power, that they can’t work with multiple contractors or multiple suppliers, that’s where the biggest impacts will be on tariffs.
And the other thing is this is a known unknown for everybody. And so it’s not like you’re going into your clients saying, “We have this big impact.” Everybody knows, so that is also a positive. But I think the biggest impact will be to our smaller trade partners that don’t have the buying power that you just mentioned.
Calder: It’s interesting for me to see the impact that this is having on the industry itself. I think some of it’s being mitigated a little bit by the fact that people are using their existing inventory. There are some things that are being hit by the tariffs, but yet they’re able to pull from existing inventory at least to save and to maintain pricing that they’ve delivered or promised to the owners. I’m curious as to how that gets rebuilt back up. I’m not sure that I’ve been seeing people telling me and complaining to me about having a shortage of materials, at least not being able to get it back. But not everything has a tariff on it. We’re finding, to our delight, that there’s a lot of products that are made in America, and were sourced in America, were parts in America … I guess, we feel a little bit more comfortable with the uncertainty going on.
And then one of the things that we have been able to do is to go through, at least to our major vendors, and try to identify what those components are that are subject to tariffs to find out what the overall impact could be. But as Victor mentioned, initially it started out and this was going to be a big problem, and then through some negotiations that have been happening in the last week or two, that impact is back down. And so it is an interesting time to be in the construction industry.
Stone: And I think it forces us to look at alternatives. Can we find an alternative that’s U.S.-made? Can we find an alternative that benefits us?
Bevan: Yeah. A couple of things from an ownership perspective. I like what Scott talked about with our economy. It’s strong, it’s top of the growth platforms as it relates to the United States. As an owner, to get a project off the ground, you have to hit certain metrics, you have to have a certain return. And that varies between different product types, whether it be multi-family or industrial or office. They all have a different box that needs to be hit in order for investors and financiers to think that the project’s viable.
So, we as ownership, appreciate all you guys, because you really contribute to that pre-con … that we get. And tariffs have made it challenging because you have to account for it. You can’t just blindly go into a project and think, here’s your cost, and then maybe we’ll have to plug that tariff cost in there. So, we’re having to underwrite a budget for tariffs. And right now, it’s been volatile. It’s been 130 percent on some products and 50 on other products.
So, what we’ve tried to do, and playing into the interest rate and the returns, what we’ve typically been doing is just plugging an informed tariff amount, and going through each of the trade partners and anticipate what that import number is going to cost for that specific item and budget. And if it hits a metric and you can still get your return … and we have finance partners that are still interested, then that project moves forward.
But what’s really helpful from the industry is if we can get really good informed numbers on pre-con and then we can itemize what those variables are, and we can still hit a number, then we can move projects faster. Because there is so much pent-up money waiting to do work, but they’re not going to do work if you’re getting a five or a six on your return. They’ll just keep their money in these high-grade interest accounts that are risk-free. But we really want to infuse this market with more and more industry. So, the better information we can get from an ownership perspective, the quicker we can move to getting this project shovel-ready and kick it off.
David Dunn: Obviously, all of these tariffs create margin compression for owners. And what it does is it presents a tremendous opportunity from the design side because there’s this hyper-causational cost — how we make deals work. Well, I can’t control the macroeconomic conditions, but what I can control is, how do I do my design and how do I create optimization there? Because if I create less stuff subject to tariffs, then maybe we can help control some of those costs and eliminate some of those uncertainties.
And so, I didn’t say much on the AI front so maybe I’ll integrate it here, because it really presents a great opportunity to create solutions to these challenges. And I consider them opportunities, really, because it’s how do we speed up the processing of data? And we have 30 years of design data, that if we can intelligently aggregate and if we can take this data and use it to inform decisions quicker, I can sit in a meeting with an owner and use parametric studies based on 30 years of design history, and I can do optimizations right there in a meeting and create those parametric studies and help them see, OK, if we do this, then it can be this; if it’s this, then that. And we can speed up the decision-making process. And also it helps us be more nimble because now we can pull this information quicker.
I think the fact that costs are so much in the forefront is a great opportunity as designers because we can really influence that. Through intelligent and optimized design, we can hopefully lessen the impacts and create a little bit more certainty by leveraging all the data that we have on our closed network. … There’s the open network and how reliable that is up for some debate. But we trust our data and we trust what we have developed over the years. We’ve created some tools that help us monitor real-time costs. We create parametric optimization studies. We have what we call Lever, which is a live engineering value report, which helps us see the cost of a project over time as the design progresses.
We’re using platforms like Revit that is this BIM modeling; a great accounting software because it’s got all the stuff in it. And so if we can work collaboratively with contractors and if we can get transparent and say, “OK, here’s our stuff. Here are the quantities. Help us understand where we can make a difference based on what you’re seeing in the macroeconomics. Where are things?” And sometimes that helps inform design because we may find alternative solutions that may seem counterintuitive, because of the way the markets are. Like, we were doing some wild stuff in COVID because of supply chain problems. Well, this is a version of that, where we might have to be intelligent with our contractor partners to determine the best way to deliver a project, the best materials to use, catering maybe to means and methods and how to work through those things together.
It’s a tier point. I mean, it really forces this early collaboration to ensure a more predictable outcome so that we can work together throughout the process. Because if we don’t do that, we’re all working in our silos, in our corners and we’re like, “Hope this works.” So it’s much better for us to get together and work through those challenges together. Because we have a lot of smart people in our industry and when we pool that expertise, it’s pretty magical what can happen when people are working together.
I don’t see true design-build quite yet in Utah, but it’s getting there. It’s getting closer.
Stratford: Hopefully soon.
Fuchs: We hope so.
Dunn: Well, I think there’s real value there because, and I understand the reluctance and resistance, but I also understand that it is a really important piece or potential solution to some of the problems that we’re facing. We work a lot in design-build on a national scale, but not so much in Utah. But when we do that, obviously there’s a real collaboration that is felt between design partners and contractors that is really critical. It works when it works. That sounds like an obvious statement.
Stratford: It’s struggling at best
in Utah.
Goodrich: Yeah, that’s a good description.
Stratford: Well, I’ve sat on the Design-Build Institute of America’s Utah chapter board for quite some time, and it is hard. And I think that there’s a fear with some owners and clients that they’re giving up something to choose that delivery method. And I’m not saying it’s a good delivery method for every project, but it’s an option that doesn’t get the scrutiny and consideration it probably ought to.
Fuchs: What we learned, because in our organization design-build is a huge part of this, probably 40 percent of the business is design-build … working with the strategic partners together, doing projects on the private side, on the municipal side, the military jobs. And when we came to Utah, people just didn't trust it because the local guys either didn’t have experience or didn't want to take that risk. They would never give them a guaranteed number. In our world, if we tell you this is X amount, this is what the project might cost them, any design-build, we expect that when we finish the design this is what it’s going to cost. And we’re going to work very hard all the way through the design to protect that cost.
And we met with some big guys in this market and I looked at it and said, “Well, how do you know what it’s going to cost you?” And my question was, is there any other way? That’s why you hire professional people that have experience, that have done it. So some people took a chance on us now and on some very serious projects, and we went all the way through the process, all the way to the end, and we talked with the clients and we said, “Wow.”
We have a lot of data, like you said. We have a lot of data stored. Probably there is a project out there that can be built that we haven’t built. And if there is, I think we know how to assess that potential risk and assign a value to it. But we would love and entertain all day long, entertain “this is what this project is going to cost you” and we’ve been through it before. To answer your question, some of the owners’ apprehension, they feel that they’re not getting a competitive value. Well, when you do get a competitive value and you have 20 percent to 30 percent change orders at the end, how would that work? You’re still going to get the same number, probably more than you started. So this is what we try to deliver as our value added to our customers. And I think people primarily recognize it in this market with some of the people that took a chance with us.
Goodrich: Let’s shift to the labor market and workforce. What are our biggest workforce challenges that we’re currently facing?
Fuchs: Obviously, the market is very busy and the availability of trained professionals … is short. In our company, we have six in-house recruiters working full-time, bringing people not just to join our organization but also from outside, people from outside to bring in here and add that workforce depth to our organization.
We also knew that we cannot hire people fast enough, so we created Helix University back 35 years ago. And now we have a local campus, Helix University, where we take kids out of high school. We go to high schools in the 10th grade and educate them that electrical trade is something that provides you a great living. I mean, there’s a way to go to college, but some kids are just not suited to go to college. But being an electrician, you can make a great living and support your family and do whatever you want to do.
So we have a full curriculum in our organization, starting from just being apprentices and learning how to read the drawings, to wire receptacles all the way through, and there are prerequisites. We run it like a college. There are prerequisite courses before you can take the next course, so you don't get yourself in trouble by not knowing something beforehand. And these classes are ongoing in our organization between three of our offices: Vegas, Reno and Salt Lake City. We spent last year $900,000 out of our bottom line, dedicated. We have three full-time instructors; that’s all they do is teach. And then a lot of our people that work for us volunteer in teaching those classes. But that’s the only way.
We talked about tariffs, we talked about cost, you need to find solutions [rather than] sitting on the sideline and complaining that there’s not enough manpower.
And by the way, there’s another aspect in Salt Lake City which is not necessarily in any other state, which is good and bad, is the fact that you have to have a license. And that’s hard when somebody comes out of state, because how fast can you train at the get-go? Some guy’s been in the trade for 25 years; they forgot how to take tests. And so we’re now investing into specific training for those guys just to be able to take tests. They’re great electricians. We just need to get them over that line so they can work in the state.
Okelberry: I agree. There’s no surprise that labor is a huge challenge in our industry at both the professional level and obviously the craft level. And as Victor stated, what we’re doing about it is more important than trying to just say it’s a problem. One of the things on the civil construction side that we’ve recently been working on, we’re excited about, is a partnership with Mountainland Technical College. We’ve developed a program where you can get a civil construction certificate, and it’s for both new people coming into the industry that just want to learn about the basics of the craft, work, building civil infrastructure, but also those that are already in the industry. Maybe they’re an operator or labor and they want to elevate their career and have opportunity for advancement. They can go to evenings and they can go get this certificate, which improves their basic understanding of the fundamentals of construction, specifically for civil-oriented operations. We’ve just kicked that off recently and [are] excited about that partnership. So again, it’s what we’re doing about it more than just talking about that it’s a problem.
Goodrich: What other shifts have we seen or are making to attract the younger generation to join the trades? What’s the attitude towards the trades today versus 10, 15, 20 years ago?
Davis: I think that the trend is to make this industry more friendly, more family-friendly. We talk about the old-school superintendent that goes and beats the crap out of everybody that makes you feel like you’re an inch tall. That is going away. And there are construction companies in Utah that are now rated as some of the best companies to work for because they are doing things that good companies do to attract and keep workers.
When I hire a new employee, the first thing I tell him is, I want you to go home tonight and plan your next vacation with your wife, because I want her to know that I care about their family. And, whether it’s him or her, that I care about their family and that I want that to be on their calendar and they’re looking forward to something.
The other thing is, I wrote on my board the other day in one of our meetings, I said, “Are you having fun?” And everyone’s all, “No, it’s fricking construction; nobody’s having fun.” I said, “Well, we need to think about that because we need to be having fun.” We need to figure out how to bring fun into this industry. It can’t just be grueling every day, all day long, getting the crap beat out of you. You’re always under pressure and under the gun. You don’t feel like you can take a vacation. You don’t even feel like you can talk about what your family’s doing. You try to sneak off to your kid’s soccer game. I tell my people, “If your son or daughter has a soccer game this afternoon at two o’clock, you better be there. You are not to be here at this office.” And when they hear that and they’re like, “Oh, wow, that’s what’s important?” Yeah, of course we want to get these fricking projects built, but what’s important isn’t getting the projects built, what’s important is relationships, what’s important is family and being able to attract people and keeping them excited to stay in the industry.
Yurgaitis: I like that. I think developing and building on your company’s culture is that much more important right now, especially with Gen Z and millennials. They want more of a work-life balance. They don’t necessarily care as much about the paycheck. It’s the freedom, it’s the flexibility, it’s the feeling like they’re a part of something that really rings their bell. And so it’s really important to make sure that we’re developing that within our businesses as a place that they want to be.
And it’s different, I understand you guys are looking for a different type of labor than I am, but I think it’s a good time to attract good people. We have a lot of skilled workers in Utah. I think it’s very challenging to be in a position in the construction world to get people to actually want to use their physical bodies and not coast. I think there’s a lot of coasting, pristine, cushy jobs out there and you’re competing against that, which will be challenging. And there is a lot of labor out there, where if you post a job now, at least in our world, we have dozens of candidates really quickly. And that labor shortage over COVID and the last few years has really certainly changed, at least in our world.
Timothy: I agree. I think building the people is way more important than building the projects. Because if you build the people, then the projects are going to build themselves, so to speak, with the people that you have in those positions to help them with.
I don’t want to discount the importance of trying to get new people in the industry, because that is a huge push that I feel like we all have a responsibility in the construction industry to do, but then we need to keep on. I think our retention is also a huge problem. For example, women in construction, we’ve been around 10 percent for a really long time. We finally broke it and we’re 11.5, I think right now, I think it is the latest study. But we’re losing a significant amount within about three to four years of them being in the industry. And why? Why are we losing them? I only know the women’s statistics — we might be losing men as well — but why?
I love your take on it, which is you need to make sure that they understand they are an important part of your organization, you care about them both personally and professionally. And let’s not do all this work to bring them in to just lose them in a couple of years.
Stone: And to Tanya’s point, we’re here to represent our companies but also NAWIC. And she stated 11 percent are women, but only 4 percent of them are in the trades. So I pulled a lot of stuff from NAWIC before we came today. I think our messaging needs to be more inclusive, as well as with your university, your partnership with the college. I think it needs to be more inclusive. We can’t just send certain people to the schools to talk to the students. We need to send our women that are in the trades to the schools, our other under-represented groups to the schools so those kids can see themselves in those positions.
Technology is becoming a huge part of construction. If we can re-market construction to be a technology-type job, I think we would get a ton more kids involved in wanting to come to construction. I wrote a ton of stuff down because I’m super-passionate about this. Sponsorship — I think that that is one of the reasons we’re losing people in construction, is we’re not taking the people that are there in that three to four years and sponsoring them and giving them the opportunity to move up in their job. Because the younger generation, that is what they want. They see themselves moving up. They don’t want to continue doing the same thing day after day. And that is the responsibility of the people in this group. We’re aging out, it’s a fact. And if we want to continue and we want to fill those gaps, we need to look at those under-represented groups to fill those jobs, and women is one of them.
I’m also part of what’s called Utah A Bolder Way Forward. And there are “spokes” that have been working on this, there’s a workforce development group, there is a workforce culture group, there is the Women in Leadership Institute. There are three big construction companies on that list that are women-supported groups. Clyde is one of them, Big-D is one of them, Staker Parsons is the other that have women-inclusive procedures.
For 10 years in a row, Utah has been the worst state for women to work in. I don’t know if any of you are aware of that. Ten years running. That’s horrible. So if we can get those women in construction, we can get them equal pay, good benefits, and that number will increase. And that will help Utah’s culture, that will help Utah’s families, that would do so much for our economics. It would just be such a great benefit.
Goodrich: What statistics are they gauging the women involvement? Is it just how many women have jobs in Utah?
Stone: Ten years. It’s WalletHub that does it. It’s based on equal pay, it’s based on health care, it’s based on graduation rates, it’s based on a lot of statistical analysis. You can find it, it’s the Bolder Way Forward. It’s from the Utah Women & Leadership Project out at Utah State. Dr. Susan Madsen has been running this project for over 10 years. It’s a great thing. It has a lot of data.
And I mean, it’s little things. It’s PPE (personal protective equipment) for women, I mean, it’s little things that make a huge difference. Big-D just got women’s vests yesterday. And I went and picked mine up, and it was an exciting day. I mean, it was great. And that was huge. I mean, huge. I don’t have a big, boxy vest to wear anymore. Women’s PPE has come a long way. There are so many companies that are making boots that fit now, vests that fit now, pants that fit now, fire-retardant gear. I remember I had to wear, when I was in a substation, fire-retardant pants you had to roll up because it was a tripping hazard now. Just so many little things that I don’t think a lot of people take into account that just make the construction industry more inclusive for everybody.
Stratford: I don’t think we can talk about labor without at least considering the Hispanic labor force. And I think that that is a whole ball of wax that none of us sitting at this table probably have a lot of insight as to how we fix that. But it comes down to immigration policy, and that’s just as volatile as tariffs are right now.
We just went through this with our executive committee, but if ICE shows up on our job site, what do we do? And what are the ramifications of that? We need to get better as a country as a whole in having a policy that’s friendly for somebody to come here and experience the American dream. And I think that if you go to any construction site across the state, a large part of our labor force is Hispanic. And they are great people, hard workers, and you can’t discount that. So there’s certain things that need to change to help with that. And it’s a long road, but we need to be advocates for some of that.
Fuchs: Eric, I think it needs to come sooner than later. We have Hispanics that probably did not get here in the proper way. I’m an immigrant, too, and we did it a certain way.
Stratford: It’s not easy, it’s expensive.
Fuchs: My point is, some of the Hispanics did not get there that way, but they’ve been in the country for eight, nine, 10 years and have been contributing to the country, contributing to the workforce, to the jobs. And in order for them, after putting in all this time, to get actually formal, they have to leave the country for two, three years. And that law has got to change. Because as far as I’m concerned, the same contributor as any U.S. citizen, and something has got to be done in our law to basically [provide] amnesty to those guys who put in the time, who work and everything else. And we haven’t seen that.
We have a tough time with that situation, too, because those guys sometimes work for us. Now, we do the E-Verify for our workers just because we are so involved in federal jobs and it’s important. Sometimes we have an excellent candidate who’s been in the country for a long time that he just cannot pass the E-Verify. And it’s unfortunate because we want him to come and work for us, and it’s an impediment. I know a lot of things are happening with ICE today with criminals and everything else, and I’m totally on board with that. But getting the good, working people that have been contributing to our society … how do we just get amnesty for them and let them just be part of our society?
Goodrich: That actually brings us to the next topic, the regulatory and policy environment. Have you seen any changes on the local or federal side, these regulations that are affecting your work, other than E-Verify? I’m not even sure if all of you are aware, I’m the chapter chair for ABC here this year, that there was a bill proposed that would limit or reduce the number of workers from, I think it’s 50 down to five. So if you have a company with over five employees, you’d have to E-Verify those. It didn’t pass, of course, but that’s the environment we’re in, the political climate. So, what other regulatory issues have you guys been faced with that are affecting the construction industry?
Stratford: I’m going to go on a local level. We’re seeing — and maybe the consultants and the developers in the room can speak more to this — but we’re seeing more and more cities becoming harder and harder to get through the permitting process, and it’s bogging down projects. And there’s probably a myriad of reasons and we could get into that. We were having a conversation just prior to starting the roundtable about that. It can cause some grief.
And then in addition to that, once they’ve done the review or however many rounds of review for whatever permit, to come back on the 11th hour of the project and change their mind on a review that they did, is causing developer partners a lot of grief. We’re seeing some of that. Some cities are better than others, but it’s a challenge.
Goodrich: Do you think that Gov. Cox’s executive order, GRIT (Government Reform, Innovation & Transparency) he just signed will address some of these issues?
Stratford: I hope so. Don’t know if it will. I mean, time will tell. But it’s a challenge.
Bevan: I’d be curious, from Dave’s perspective, just because I think he sees a lot of city comments, but I think it was legislation passed a few years ago that required that there was a response for plan submission. … I think what happened as a result of that is you get lots of cookie-cutter replies that don’t necessarily apply to your project. And so I think that has in part delayed the review process because you’re starting with a lot of minutiae.
One thing that is beneficial for developers, if we get in early with not only the city council and mayors, there’s a project that they really like and they want, those make projects a little bit easier. The challenging ones are the ones that have hair attached to it where the city patrons and residents don’t like a certain product, and that’s where things bog down a little bit, both from an entitlement perspective and a review process.
Some of the policies that have gone through with digital reviews, I think that’s been helpful, and third-party reviews, I think you probably get a chance to do some of those as well, but we do find that that is a significant hurdle to getting projects kicked off. And inevitably they push it past the prime time for construction — you’re starting a project in December. But it’s certainly something that we need to be advocating for, from a trade partner perspective all the way through development, to encourage timely responses.
Davis: Is there really anything this group or our industry can do to get plan examiners to pull their head out of their rear and have common sense? Is there anything we can do? I mean, it seems it’s only getting worse and worse and worse, that they get more nitpicky, that common sense goes out the window. It’s so far beyond the point of ridiculous that I don’t even know what the word is anymore. Every municipality is guilty of this without exception. They all suck. Anybody disagree?
Bevan: Tell us how you feel, Jeff.
Davis: In my position as an owner’s rep, they are the bane of my existence. I don’t even want to talk to them because it only upsets me.
Calder: So, you asked, are there things that we can do?
Davis: Yeah.
Calder: And I’ll say yes. I think there’s a practical thing that we could do because oftentimes we’re finding that different municipalities or entities are applying code interpretations differently. One of the things that we could do is show, “Hey, we did this in this municipality, and here’s all the stuff we did.” And it gives them at least a precedent that maybe it can help make that go faster.
Davis: I’ve never found that helped. … They have such egos and they’re just so right all the time. …
Calder: One of things I wanted to make a comment on, Ryan mentioned these, maybe it was a mandatory time turnaround on plan check, we’ve seen a lot of municipalities go do that because it’s wonderful. We like to say, “Yeah, that’s great; you’re looking at our stuff.” The challenge that we’ve been seeing is that you get your first plan submission and you go and answer all those things and then we resubmit. And then they’re picking up, they’re not just reviewing the things that we’re resubmitting; they’re going back and giving you a whole list of stuff they should have got in the first submittal. And then the time you do the third submittal, you know, yeah, they’re going back and doing things.
Stratford: It almost made it worse.
Davis: It has, not almost. It absolutely has made it worse. Hundred percent, it’s made it worse.
Stratford: Because now what they’re doing is they have this deadline. And so they just try and meet the deadline while they kick the can down the road. And instead of going through one or two rounds of comments, you’re into three or four, and now you’ve kicked the can even further down the road so this deadline doesn’t even matter anymore. And every single comment costs money.
Timothy: And then you go to the CMO and they give you a whole other list of things.
Davis: All they did was meet the first deadline, and you get your permit a year and a half later.
Goodrich: Dave, what’s your experience been about this?
Dunn: Yeah, so I’m just sad that I missed the whole spectrum, because often the structural is third-party reviewed, and we have good relationships with those reviewers. Generally, there’s more common sense in the structural world than there might be in others, is my experience. … And so I know that that is probably harder.
So I think having good relationships helps. Selfishly, I do want the bar elevated, but I’m surprised at what they choose to focus on. It seems sometimes like they’re checking a paper rather than checking for life safety. It’s like, “Hey, this detail reference is wrong.” It’s like, “Is that a code issue?” I don’t know, maybe I don’t want to give them the benefit of the doubt, that maybe they’re well-intentioned.
Davis: They are not well-intentioned.
Dunn: But I would like to see the bar elevated because I don’t like being measured against my competition in the way that I’d like — just because you get a stamp doesn’t mean the value in the service is the same. So, I hope that it could elevate the bar so that I can differentiate our services from some of our competition in providing complete code-compliant drawings.
But it’s another great use case for AI, right? Who did the review? OK, here’s my canned responses to your canned responses. So you can play ball there too.
But I’ve sensed that it’s probably less structural and more other things. Maybe you guys can correct me if I’m wrong, but it seems like it’s fire code. And who are the ones that are the loudest? Fire?
Davis: Fire marshals.
Fuchs: Fire alarm.
Stone: Urban forestry.
Dunn: And the thing that’s sad is when we’re negotiating schedules and timelines and design, and we have to leave more time for the city to review our work than the time I get to design it, that doesn’t seem right.
Fuchs: Dealing with a lot of egos. … But I do like what you’re saying about value added services. I hope people can appreciate that.
Dunn: I mean, if it was done right, it probably would contribute, but my sense is it is a little bit picky and punitive more than it is helpful sometimes.
Timothy: I think you take it a step forward with municipalities, as we’ve experienced a big problem. They’re also having manpower shortages. They don’t have enough inspectors. And this probably varies from city to city, but we oftentimes call in for, let’s say, three inspections. And they show up on-site and they say, “I only have 10 minutes. What’s your most important thing?” “Well, they’re all important.” “Well, you have to choose which one.” And you have to wait another two days for them to come inspect the other two things. So it’s greatly affecting the schedule by them not having enough manpower or not wanting to spend the time, whatever the case may be. And so that’s caused another kind of problem.
And we’ve also had that same problem with third-party inspections. They don’t have enough manpower. So you call for a compaction test, and sometimes they say, “Well, we can’t get there for a week and a half.” Well, we all know that sometimes when you need a compaction test, you need it. Something happened and the schedule got accelerated, and you need it tomorrow. You don’t have a week and a half to wait. I don’t really want to defend them because I also struggle with them, but I wonder if they suffer the same thing with shortages.
Davis: There’s meaningless regulation. I mean, you call it an inspection, and for the code you need four, but do you really need four? I mean, if it went back to the very beginning, the only one you really need for life safety is probably one out of six.
Dunn: I mean, from an ownership perspective, it’d be a little bit of a bummer because you’re paying for that, and if you’re not getting the services commensurate with the fees that you’re paying, that would be frustrating. So if they’re not able to perform, I mean, they’re making their money, they’re getting paid to do that. …
Bevan: Are we hitting our target end date? Are you hitting the end date?
Goodrich: Sounds like there’s some work to do on our side in regards to this. Maybe the AGC and the ABC can focus on some of those things.
Davis: It’s also huge with regards to just the cost of a project and all the regulation. You look everywhere across the country, it’s a meaningless regulation that just costs tens of thousands of dollars on every project.
Stratford: We get kicked around a little bit because construction costs are so high. They are high. But I would love to see a report on how much regulation has caused that over the last five or 10 years. … I’m not saying that code is a bad thing, I’m saying that we’ve taken some things a little bit too far and it’s causing developers and owners and user groups to have to burden the load of the rising construction costs.
Davis: Well, a great example is, ADA was passed in 1988, That’s the only legislation that’s ever been in place since 1988. Every single year, there’s new regulation with regards to ADA, and it all goes back to 1988, and it just gets completely reinterpreted. Someone comes up with some grand new idea of what we have to have with regards to ADA. It’s just a perfect example of how things are so out of control.
Dunn: Well, knowing the pain point, I tell our people to turn that stuff around as fast as possible because I don’t want it on my desk. I don’t want to be the reason that a project is maybe unnecessarily delayed.
Davis: You see a Braille sign. How many Braille signs do you think ever get touched in the history of the building? None? Those types of things are just so ridiculous.
Okelberry: Another interesting angle, it shifts the conversation a little bit from the building challenges to our world in the civil and infrastructure, and that is this “not in my backyard” concept that’s been around for decades. But gravel pits have really had a target on them, and municipalities, cities, towns, counties don’t want them in their area. And if they’re not managed properly and according to regulation, they can be a problem. But if they’re well-managed and well-run, they can be a decent neighbor. But those are what we call critical infrastructure materials, which is sand and gravel and stone that go into so many things that most people don’t even know it’s a part of their life, from concrete to asphalt. And sand and gravel is in every utility and every road and every building. And so it’s an important part of our lives and it’s an important piece of the cost of construction. And not just in roads but in buildings also.
And so we’ve done some efforts to help in Utah the Legislature to see that this is a growing problem and it’s going to keep pushing up costs to where they’re unmanageable. They’ve done some things recently that we’re pleased with. So this is on the positive side. Maybe cities and counties won’t necessarily like it as much, but it has opened up the opportunity for existing and new sand and gravel operations if they have been in existence to be able to expand, whereas everybody’s been trying to shut them down and close them out.
So it’s not a complete solution, but just in this last legislative session, House Bill 355 passed, and that has been one step in a positive direction for trying to keep the cost of those materials more manageable. Because without that, they say, “Well, truck it in, rail it in.” And the cost to rail aggregates, they’re heavy, and if they have to come from the middle of nowhere, it costs a lot of money and it’s really unmanageable. So that’s been, I think, a success, something moving in a small step in the right direction.
Goodrich: I think it’s obvious that there are a lot of challenges in our industry. There are a lot of opportunities in our industry. And there’s a lot of work that we need to do to promote our industry to keep it strong, and somehow we’ve got to figure out how we can work together rather in silos. How do we work together to move our agenda forward? It’s easy to recognize a problem, [but] what are we doing about it? So how do we work together as an industry to overcome some of these challenges? I think sometimes we’re afraid of working with our closest competitor or our biggest nemesis. How do we overcome those feelings to work together as a group to move the construction industry forward?
Timothy: I think discussions like today, the different associations… the job fairs and career fairs and things that everyone in this table generally goes and tries to work as well. I feel like in the last couple of years, the partnerships have been a lot stronger.
I’m a project manager, I consider my project team — the owner, the design team, the GC, the subs, the suppliers and all of the ancillary people — to me that is what the project team is. It is not the four or five people that sit in the job trailer. It is everybody. And I feel like that has been a lot more collaborative the last couple of years. Maybe I’ve just been lucky with the team that I’m currently on, but I feel like there’s a lot more give and take between everybody. … Through COVID, definitely, we had to get really creative. And now as we start going into this new adventure — I don’t know if I want to call it adventure — but what’s coming forward in the political environment, I think we need to all work together and just be very transparent. And we all want the same goal at the end of the project. We all want the project to come in at cost, on schedule and be a home or a monument or whatever for many, many years to come for the community. That’s what all our ultimate goal is. And the only way we’re going to do it is if we continue to be collaborative and work together.
Stratford: I think we wouldn’t be in construction if we weren’t all problem-solvers. It’s funny, because we sit around a table and we give all of our challenges, but day-to-day I think that’s what makes construction fun in a sense. Yeah, yeah, it’s hard sometimes and it’s mind-numbing sometimes. But really the reason that I am drawn to construction is because on a daily basis there’s a challenge and I’m going to conquer that challenge. And at the end of the day, you feel accomplished because you’ve done that.
And to your point, we have gotten a lot better at doing it together, and bringing in trade partners or bringing in ownership groups or their design teams and working together to solve those challenges. We’re not just trying to do it by ourselves because of an ego. We work together. And I think that’s the fun part of construction.
Davis: That’s my almost daily soapbox, it’s not whether or not there’s going to be problems. This is construction, it’s just a set of problems, so it’s how we deal with them.
The other part is that no problem in construction or business anywhere gets solved without somebody spending money. But what makes it fun is when you can focus on the problem, then deal with how to get it paid for. Because if we’re just focusing … on the money, then we lose perspective and we don’t come up with the best solutions.
But if we can figure out who needs to be at the table to solve this problem: Do I need the electrician here? Do I need the structural engineer? Do I need the architect? Do I need the owner? Do I need the owner’s representative? Who needs to be here? Who has the expertise? Let’s figure out the solution. Now, of course, we have to figure out how to get paid for it, obviously. But if that then becomes the focus afterwards, you get to better solutions quicker. And your owners are happier.
Goodrich: Is that true, Ryan?
Bevan: Yes, it is. We appreciate the multiple layers of effort that happens from a supplier, from the design, from a trade partner and GC perspective to get a project done. And it doesn’t go without notice. And I think we live in a unique area where we feel like there’s a lot more of a partnership approach to solving issues, and so that’s what makes it enjoyable. And I think there are lots of things we can complain about and find maybe solutions that have issues. But, by and large, I think it’s a great industry to be a part of, that’s growing and there’s opportunities. And it’s fun to see something being from a conceptual level come to fruition and then turn over and have a patron to occupy the space.
I think, just to capture what’s been discussed today, I think we live in an incredible industry with a diversity of folks. I sit on the advisory council down at BYU and the women in construction has blossomed over the last couple of years. And I’ve seen on the projects that I’ve been on, when we have women involved, there’s a little bit more care to detail sometimes and there’s a different approach. And I think if we take those strengths and that diversity and blend it in, we can be a leader in the national economy as it relates to construction.
Calder: Jeff’s talked about making sure that we can make the journey the enjoyable part of what we do. But one of the things that I think a lot of us enjoy here is, our industry is a very tangible product. At the end, there is a building that we built or a road that’s there, and to me there’s a lot of satisfaction in seeing that. Some of these other jobs, you can get into different industries that are just pushing papers from here to here, and there’s really not a lot of stuff you can see. But with building, there is. And that, I think, will be a great draw to folks in the future as well.