Archive

Tag Archives: construction


I love South Park.  Parody on the ridiculous stuff that goes on every day.  Most of the time the writers hit the target.  And I laugh.  There is an episode of South Park where the residents cry out about immigrants that “took ‘r jobs!!”  And then they go on to “rabble rabble rabble” because they don’t know what else to do.  And of course in the Republican debates, the illegal immigrant issue has arisen.  But how big a problem is this really?  And are these jobs Americans really want to do, or is the illegal immigrant market basically taken the bottom rung because today’s workers don’t want those jobs.

So first, what are those jobs? Steven A. Camarota and Karen Zeigler at the Center for Immigration Studies analyzed the census data from 2010 and found there to be 472 “professions” that could be categorized. Of the 472 civilian occupations, only six would be categorized as being “majority immigrant (legal and illegal).” The six are:

  • Plasterers,
  • Personal appearance workers
  • Sewing machine operators
  • Garment manufacturing, and
  • Agricultural occupations (2)

They note that these six occupations account for 1 percent of the total U.S. workforce and that even in those fields, native-born Americans still comprise 46 percent of workers even in these occupations.  In high-immigrant occupations, 59 percent of the natives have no education beyond high school, compared to 31 percent of the rest of the labor force.

Many jobs often thought to be overwhelmingly immigrant (legal and illegal) are in fact majority native-born:

  • Maids and housekeepers: 51 percent native-born
  • Taxi drivers and chauffeurs: 58 percent native-born
  • Butchers and meat processors: 63 percent native-born
  • Grounds maintenance workers: 64 percent native-born
  • Construction laborers: 66 percent native-born
  • Porters, bellhops, and concierges: 72 percent native-born
  • Janitors: 73 percent native-born

There are 67 occupations in which 25 percent or more of workers are immigrants (legal and illegal). In these high-immigrant occupations, there are still 16.5 million natives — accounting for one out of eight natives in the labor force.

Illegal immigrants work mostly in construction, cleaning, maintenance, food service, garment manufacturing, and agricultural occupations. They found no occupations in the United States in which a majority of workers are illegal immigrants. Even in the overwhelming majority of workers even in these areas are native-born or legal immigrants.

So then the question really is this – are they taking jobs that Americans want to do?  Historically the answer is no.  Both the agricultural and garment industries have struggled to get native workers.  The work is long, hard, and conditions difficult.  If you have education, you can find a better, higher paying job.  No American kids grows up wanting to pick beans or sew for a living.  Immigrants have always been the source of labor.  Plasterers are difficult to find when construction jobs are plentiful so that is the one exception to low paying jobs that no one wants to do.  Construction has always looked for labor help and certain specialties. And there are not that many of these jobs in comparison to the others on the list.  So for those 5 jobs the answer is no.  Same goes for most of the next seven (Maids, housekeepers, janitors, bellmen, etc.).  I should note that my great grandmother (an immigrant) cleaned houses, but made sure none of her kids would by making them get an education.  Ditto for my uncle who was a janitor.  Neither was well educated, but their kids were.  And there kids were far better  off economically.

So political rhetoric aside, the answer seems to be that immigrants do in fat take those jobs that we do not want to do that require less education.  These jobs mostly pay minimum wage. The study notes that 59 percent of the natives have no education beyond high school, compared to 31 percent of the rest of the labor force.   Get educated – get a job that pays better than minimum wage.  Seems like I have heard that rhetoric as well.


The US EPA estimates that there is a $500 billion need for infrastructure investment by 2025.  The American Water Works Association estimate $1 trillion.  Congress recently passes the Water infrastructure Finance and Innovation Act (WIFIA) at $40 million/year, rising to $100 million in 5 years, which is a drop in the bucket.  Peanuts.  We have so many issues with infrastructure in the US and Congress tosses a few scheckles at the problem and thinks it is solved.  The reality is that the federal government wants to get out of the water infrastructure funding business and shift all water infrastructure to the local level.  This is a long-standing trend, going back to the conversion of the federal water and sewer grant programs to loan programs.

The reality is that local officials need to make their utility system self-sustaining and operating like a utility business whereby revenues are generated to cover needed maintenance and long-term system reliability.  The adage that “we can’t afford it” simply ignores the fact that most communities cannot afford NOT to maintain their utility system since the economic and social health of the community relies on safe potable water and wastewater systems operating 24/7.  Too often decision are made by elected officials who’s vision is limited by future elections as opposed to long-term viability and reliability of the utility system and community.  This is why boom communities fall precipitously, often never recovering – the boom is simply not sustainable.  Long-term planning is a minimum of 20 years, well beyond the next election and often beyond the reign of current managers.  Decisions today absolutely affect tomorrow’s operators.  Dependency on water rates may be a barrier, but this ignores the fact that power, telephone, cable television, gas, and internet access are generally more expensive hat either water or sewer in virtually all communities.  We need water. Not so sure about cable tv or he internet.  Great to have, but needed to survive?

The growth in costs can lead to mergers where a utility cannot afford to go it alone – as the economy of scale of larger operations continues to play out in communities.  Several small plants cannot operate at the same cost as one larger plant.  As a result larger projects will increase – from 87 to over 336 between 2005 and 2014.

But these costs are generally plant costs – treatment and storage, not piping.  Distribution pipelines remain the least recognized issue for water utilities (collection pipelines for sewer are similarly situated).  The initial Clean Water Act and Safe Drinking Water acts did not focus on piping systems – only treatment and supply.  The national Council on Public Works concluded their first assessment grade for infrastructure in the 1980s – but piping was not discussed.  ACSCE’s first report card in 1998 did not express concern about piping system.  Yet piping continues to age, and expose communities to risk.  In many communities greater than 50% of their assets are buried pipes.  Tools for assessing the condition of buried pipes especially water distribution pipes is limited to breaks and taps.  As a result the true risk to the community of pipe damage is underestimated and the potential for economic disruption increases.  The question is how do we lead our customers to investing in their/our future?  That is the question as the next 20 years play out.  Many risk issues will be exposed.  The fact that there are not more issues is completely related to the excellent work done by the utility employees.  More to come….


We are all cognizant of the low grades on infrastructure given annually by ASCE and periodically by USEPA.  We spend about 1.8% of our GNP on infrastructure.  We used to spend twice that much and it is likely that we need to spend upwards of 2.4% to stay even.  Much or our infrastructure is “forgotten” because it is buried.  American Water Works Association published a book to highlight his problem – Buried No Longer.  But is it helping.  In a recent Roads & Bridges article, they noted that the bridge system continues to age faster than the repair rate.  The states with more than 15% deficient bridges are mostly Great Plains states, and the northeast.  The latter is no surprise because the infrastructure is generally much older in the northeast.  What was also interesting was that in a recent American City and County magazine, many of the states that have bridge issues, also have below average trust among the public.  And most of the areas with the bridge issues are rural states, like North Dakota and West Virginia.  This harkens back to a prior couple blogs when it was noted that poorer, less educated people tend to live rural lifestyles, and lobby for less taxes, yet expect government to be there to resolve crises.  Interesting….

 


I had to share this, from a nonscientific survey of people adamantly opposed to any consideration of changes to our climate:

1. I can’t do anything about it so I don’t care about it
2. People can’t alter what is happening with the earth because it is too big
3. It’s natural, so we can’t do anything about it
4. It’s not an issue now, so it’s somebody else’s future problem
5. The science is inconclusive so why do anything yet. Let’s see what happens
6. Trying to address it will cut jobs
7. We won’t be competitive (i.e our profits will drop)
8. It requires changing our business model (energy)
9. If we talk about it no one will develop in our community
10. Costs too much

I had to post this as many of you will have comments. But before you do, these about this a minute……

The first five are based on no facts, but a desire to ignore the issue entirely. The second five are more poignant because aren’t these pretty much the same arguments to deny the need to correct water pollution concerns in the 1930s? Or 1950s? Or even 1970s? Or even today with hog farms, frack water, acid mine waste, coal dust slurries, etc.? Or actually pretty much every regulation? I seem to recall Tom Delay making this argument when he was in Congress before he was indicted.

Now think about the Clean Water Act, Clean Air Act, Safe Drinking Water Act, and others. These regulations are designed to correct ills of the past that were simply ignored due to the first five arguments above, ignoring the fact that prevention is always less costly than cleanup afterward. To we pass regulations to clean up problems and protect the public health going forward. Otherwise why have a regulation?

So let’s talk about that jobs impact. The reason is that after the passage of these regulations, didn’t the number of professional jobs (like civil and environmental engineers, environmental and other scientists – STEM jobs) increase? Isn’t increasing STEM jobs a priority? So won’t dealing with climate issue perhaps create a similar increase in STEM jobs? Yes, costs for water increased and the cost for the effects of climate changes will cost money, but don’t these challenges create opportunities? Isn’t this akin to dealing with problems with development from the past? Just asking…..


We all know that our infrastructure is deteriorating.  Deferred maintenance increases the risk of system failure. The need for capital reinvestment within the utility industry has historically been very low. As a result, in its “2013 Report Card for America’s Infrastructure,” the American Society of Civil Engineers assigned a grade of “D” to America’s drinking water systems, citing billions of dollars of annual funding shortfalls to replace aging facilities near the end of their useful lives and to comply with existing future federal water regulations (ASCE, 2013).  AWWA estimates that investments of at least $1 trillion are needed over the next 25 years.

While a pay-as-you-go capital funding seems like the best way to go, that is difficult to accomplish with the large outlays needed to upgrade the infrastructure system and the controls on rates often exercised by local officials.  As a result, borrowing is required and the condition of infrastructure and the lack of reserves are a part of how the utility is viewed by those who lend monies.   Utility managers need to understand how the lending agencies evaluate risk. 

Lenders use many tests.  Among them are: whether the utility’s annual depreciation expense is used of accumulated as reinvestment in the system, whether adequate reserves are present, whether  annual capital spending that is below the amount of annual depreciation and the amount of revenues in excess of projected debt (debt service coverage).  The target debt service coverage may depend upon the requirements of the underwriter, the rating agencies and the investors.  Debt service coverage could be as low as 15% or as high as 50%.  In 2012, the median all-in annual debt service coverage excluding connection fees for utilities rated “AAA” by Fitch Ratings was 220%, while the median for AA-rated and A-rated utilities was 180% and 140%, respectively. (Fitch, 2012).  

A working capital target of 90 days of rate revenue is a minimum, but since 2008, more is likely to be required depending on the size of the system and the history of revenues.  Where the revenues were stable despite 2008, less may be required.  For those utilities that suffered major decreases, reserves should be far larger – perhaps a year or more.  Other criteria that could be used to evaluate the projects when borrowing money include public health and safety, regulatory compliance, system reliability, the risk and consequences of asset failure, redundancy, community/customer benefit  and sustainability. At the same time, the expectation is that  the utility systems that retain all monies in the system to be utilized to improve the system and pay for debt service, except those used  for the purchase of indirect services from the General Fund that are justified with indirect cost studies. 

 

Despite the above, rate are an issue.  Fitch Ratings has indicated that it considers rates for combined water and wastewater service that are higher than 2% of the median household income – or 1% for an individual water or wastewater utility – to be financially burdensome (Fitch, 2012).  The Environmental Protection Agency (EPA) considers that rates for an individual water or wastewater utility that are greater than 2% of median household income may have a high financial impact on customers. (EPA, 1997). Utilities with a stronger financial profile might have residential charges for combined water and wastewater service that are less than or equal to 1.2% of median household income, or less than or equal to 0.6% for an individual water or wastewater utility. All revenues generated through system operations generally must remain within the system and can only be used for lawful purposes of the system.

Canadian utilities employ more formal polices to establish fiscal policies to provide reserves to insure stability in the event of unforeseen circumstances. Reserve targets focus on ensuring liquidity in the event there is an interruption in funding, increased capital costs due to new regulatory requirements or a short term funding emergency – all the issues evaluated by the bankers.  Reserve targets are policy decisions. Benchmarking is an evolving practice within Canadian public sector utilities particularly as it relates to financial planning and capital financing. The benchmarking exercise provides valuable information to help assess fiscal performance, the needs of customers, and provide the tools to help support optimum performance. 


Back during the dark days of the late-1970s, when America was being held hostage by Middle East oil interests, the Department of Energy was created, ostensibly to free our economy from the dependence on foreign oil and all that trappings that go with it.  It was a noble goal – the American economy could grow without the risks posed by foreign governments.  Thirty five years later, could we finally be reaching that goal? 

Interesting the often criticized billions of energy company subsidies of the Bush era do not appear to be responsible for solving the issue.  Nor are the prior efforts to subsidize or otherwise encourage investments before.  The energy subsides since 2000 do not appear to be the reason, but the arctic wilderness did not need to be disturbed either.  The success had nothing to do with any of it, but instead a series of private risk takers to a gamble on an unproven technology, to make great strides – fracking.

Based on the success of the development of fracking for natural gas, we have made major improvements.  But it is not just fracking, as many power plants are or have been rehabilitated to convert away from oil and coal to cleaner burning natural gas, thereby developing the market for natural gas.  Local governments have been migrating their fleets to natural gas for years – natural gas can use the same engine with an $8000 conversion kit that allows automobiles to run on both.  The conversions have made the demand for natural gas greater, making the investments needed to frack, more profitable.  The US has significant reserves of natural gas, and fracking has made it easier to capture this resource.  The benefit of natural gas is that the demand for oil is down, creating a glut of oil on the market and a decrease in price (at least for now).

But the question that has been left unanswered is what the domino effect of natural gas is.  Certain advertisements will argue there is 200 years of natural gas available for the US so we don’t need to worry about energy.  Others will argue that only 10-15% of that supply is actually recoverable (it should be noted that this assumes current methods), which is a far shorter horizon.  But in either case, natural gas in the ground is not a renewable resource so the question must be asked – does the fracking boom interfere with investment in truly renewable resources? 

Since 2000, Washington has invested heavily in renewable resources – wind, solar and to an extent waves.  Some energy companies like NextEra have been investing heavily in wind and solar power (they are the biggest investors in renewable power in the US), so what of these truly renewable investments?  Will the rush to frack turn resources away from truly renewables?  Or will renewable continue to be a small fraction of energy demands for the near future?  The question remains unanswered for now.

The bigger question for utilities is whether fracking will divert money away from plans for renewable efforts like digester gas capture, solar cells and wind power at reservoirs and the like that utilities are using to help reduce power purchases.  Will it impact utility efforts to become self-sufficient energy consumers like East Bay MUD?  You see the economy has few favorites.  Government can create favorites, by subsidizing products that would otherwise be too expensive like PV panels. The benefit of subsides can be to reduce costs of emerging technologies that may never otherwise see widespread use.  Subsidizing renewables fit this mode.

Utilities should be concerned that the rush to frack pulls money away from their plans for renewable power.  As the feds look to reduce their contributions to water and wastewater infrastructure, public money to energy does not appear to be decreasing.  And unlike publically owned water and sewer systems, private investment in energy is increasingly available as a result of the potential profits that can be made.  The diversion of funds may decrease prospects for funding water and sewer utility options, especially if interest rates begin to rise.  The Federal Reserve Bank’s concern about rising interest rates was manifested earlier this year when interest rate increased, housing sales decreased immediately.

Of course the issue of fracking goes beyond the potential to disrupt monies for renewable energy.  There are questions about the practice of fracking include water quality impacts, causing earthquakes, land subsidence, etc., issue that have yet to be resolved.  Keep an eye out for a risk assessment that AWWA and others will be involved with to look at these risks.  


In the field of engineering, the concept of sustainability refers to designing and managing to fully contribute to the objectives of society, now and in the future, while maintaining the ecological, environmental, and economic integrity of the system.  Most people would agree that structures such as buildings that have a lifespan measured in decades to centuries would have an important impact on sustainability, and as such, these buildings must be looked at as opportunities for building sustainably. When people think about green buildings, what generally comes to mind is solar panels, high efficiency lighting, green roofs, high performance windows, rainwater harvesting, and reduced water use.  This is true, but building green can be so much more.

The truth is that the built environment provides countless benefits to society; but it has a considerable impact on the natural environment and human health (EPA 2010). U.S. buildings are responsible for more carbon dioxide emissions annually than those of any other countries except China (USGBC 2011). In 2004, the total emissions from residential and commercial buildings were 2,236 million metric tons of carbon dioxide (CO2), more than any other sector including the transportation and industrial sectors (USGBC 2011). Buildings represent 38.9% of U.S. primary energy use,72% of U.S electricity consumption (and 10% worldwide), 13.6% of all potable water, and 38% of all CO2 emissions (USGBC 2011).  Most of these emissions come from the combustion of fossil fuels to provide heating, cooling, lighting, and to power appliances and electrical equipment (USGBC 2011). Since buildings have a lifespan of 50 to 100 years during which they continually consume energy and produce carbon dioxide emissions, if half of the new commercial buildings were built to use only 50 percent less energy, it would save over 6 million metric tons of CO2 annually for the life of the buildings. This is the equivalent of taking more than one million cars off the roads each year (USGBC 2011).

The United States Green Building Council (USGBC) expects that the overall green building market (both non-residential and residential) to exceed $100 billion by 2015 (McGraw Hill Construction 2009).  Despite the economic issues post 2008, it is expected that green building will support 7.9 million U.S. jobs and pump over $100 million/year into the American economy (Booz Allen Hamilton, 2009). Local and state governments have taken the lead with respect to green building, although the commercial sector is growing.

Green building or high performance building is the practice of creating structures using processes that are environmentally responsible and resource efficient throughout a building’s life cycle, from site to design, construction, operation, maintenance, renovation, and deconstruction (EPA 2010). High performance building standards expand and complement the conventional building designs to include factors related to: economy, utility, durability, sustainability, and comfort. At the same time, green building practices are designed to reduce the overall impact of the built environment on human health and use natural resources more responsibly by more efficiently using energy, water, and other resources, while protecting occupant health and improving employee productivity.

High Performance Buildings are defined by incorporating all major high performance attributes such as energy efficiency, durability, life-cycle performance, natural lighting, and occupant productivity (EPA 2010). High performance buildings are constructed from green building materials and reduce the carbon footprint that the building leaves on the environment. A LEED-certified green building uses 32% less electricity and saves around 30% of water use annually (USGBC 2011). Building owners know that there is a return on investment of up to 40% by constructing a green building as a result of savings to energy and water (NAU 2012).

The cost per square foot for buildings seeking LEED Certification falls into the existing range of costs for buildings not seeking LEED Certification (Langdon, 2007).  An upfront investment of 2% in green building design, on average, results in life cycle savings of 20% of the total construction costs – more than ten times the initial investment (Kats, 2003), while building sale prices for energy efficient buildings are as much as 10% higher per square foot than conventional buildings (Miller et al., 2007). At the same time, the most difficult barrier to green building that must be overcome includes real estate and construction professionals who still overestimate the costs of building green (World Business Council, 2008).

New data indicates that the initial construction cost of LEED Certified buildings can sometimes cost no more than traditional building practices.  A case study done by the USGBC showed that the average premium for a LEED certified silver building was around 1.9% per square foot more than a conventional building.  The premium for gold is 2.2% and 6.8% for platinum.  These numbers are averaged from all LEED-registered projects, so the data is limited, but demonstrates that in some cases it does not cost much extra to deliver a LEED certified project which greatly improves the value of the building and lowers operating costs (Kuban 2010).  The authors’ experience with the Dania Beach nanofiltration plant indicated the premium was under 3% to achieve LEED-Gold certification compared to standard construction.

So the question is, why don’t we see more green buildings?  We know water plants can be green (Dania Beach Nanofiltration Plant), but that was the first nanofiltration plant in the world to be certified Gold.  The SRF programs prioritize green infrastructure – so why do more people not pursue them?  It may be an education process.  Or maybe the market just has not caught up.  CIties and states are leading the way here.  Utilities may want to look at this as well.Image

%d bloggers like this: