Suppliers Need to Perfect Payment Rights as Repairs Begin after LA Flooding

Sept. 2, 2016

Recent catastrophic flooding in Louisiana with an estimated millions in damages has displaced thousands of people from their homes and other properties. As the community embarks on the long road to normalcy, suppliers tied to repair and restoration projects should take special care to timely secure their mechanic’s lien rights for private projects or payment bond rights for public projects.

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Construction Spending is Up in July, Year-Over-Year

Sept. 1, 2016

Total construction spending at a seasonally adjusted annual rate of $1.15 trillion in July essentially remained unchanged from June and is about 1.5% higher than it was the prior July. Construction spending for the first seven months of the year amounted to $647.7 billion, about 5.6% above what it was for the same period a year ago, the Commerce Department said Thursday.

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Construction Cost Mostly Down, Volatility Ahead

Aug. 31, 2016

Construction costs, including for labor, material and equipment, fell again in August and led the IHS PEG Engineering and Construction Cost index into contraction territory. The index value for August was 45.4, down from 49.8 in July, as the current materials/equipment price index also dropped under the neutral reading to 47.5, IHS Markit said. Seven out of 12 categories tracked in the index fell in August and reflected falling prices. Only ready-mix concrete and wire and cable had rising prices in August, while fabricated structural steel, transformers and electrical equipment had neutral readings. “The drop in the materials/equipment sub-index highlights what we think will be a central feature of the pricing environment over the second half of the year: volatility,” said John Mothersole, research director at IHS Pricing and Purchasing. “Although U.S. growth looks solid over the rest of 2016, Chinese manufacturing activity looks unsustainably strong. Its eventual slowdown coupled with a U.S. interest rate hike in December will create headwinds for commodity markets and softening conditions in materials and equipment markets in the months ahead.” The subcontractor labor index dropped significantly to 40.5 from 48.2 in July, marking the fourth straight month below the neutral mark, IHS Markit said. The Midwest and South saw notably soft labor costs; the Northeast stayed steady; and costs rose in the West. “Despite tight construction labor markets, subcontractor rates have shown softness over the past four months,” said Emily Crowley, senior economist at IHS Pricing and Purchasing. “Driving this downturn is the decline in oil and gas investment, particularly in the U.S.” - Nicholas Stern, editorial associate

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Illinois Bankruptcy Court Decision May Complicate Remedies to Collect on Payment Bonds

Aug. 26,2016

A recent decision by the U.S. Bankruptcy Court for the Northern District of Illinois has potentially restricted the remedies that sureties—and, ultimately, the contractors and suppliers to construction jobs secured with payment bonds—may have to collect on payment from the owner.

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Kansas P3 Project Highlights Need For Supplier Security

Aug. 26, 2016

The Kansas Board of Regents could expand its oversight and control over public-private partnership (P3) projects because some legislators in the state have criticized the University of Kansas’s unusual method of getting financing for an on-campus, mixed-use project.

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Trust but Verify: The Key to Securing Payment Rights on Public Projects

Aug. 25, 2016

Whether one is new to the credit management field or an experienced hand, credit professionals working for suppliers and others can and do make certain assumptions about security instruments designed to ensure payment for their companies’ work. Those assumptions in turn bring added risks that can in some cases become very costly.

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Lower Inventory, Higher Prices Stall Existing-Homes Sales in July

Aug. 24, 2016

Reduced inventory levels in most regions of the U.S., minus the West, slowed existing-home sales in July after rising the prior four months, as year-over-year sales declined for the first time since November 2015.

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State Legislators, Governor Battling Over Direction of DBE/MBE Use on Public Jobs

Aug. 19, 2016

A legislative chess match that warrants watching by construction suppliers and contractors nationwide is pitting New York Gov. Andrew Cuomo’s efforts to further elevate disadvantaged business enterprise (DBE) or minority business enterprise (MBE) inclusion in state projects against lawmakers trying to reduce already hard-to-meet burdens on businesses.

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Short-term Prospects Bright in Construction, But Efficiency Still Critical

Aug. 19, 2016

Construction economists predict the domestic industry will see solid growth over the next year or so, with commercial construction and single-family housing leading the way to prosperity. This prediction—and some potential impediments to the forecast such as labor shortages and growing regulatory costs—seems to be playing out on a narrower timeline, the latest Commerce Department figures demonstrate.

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Construction Input Prices Steady in July, Down Year-Over-Year

Aug. 16, 2016

Nonresidential construction input prices remained flat in July, while input prices for both the nonresidential construction sector and construction as a whole remain 2.3% lower than they were a year ago.

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