But Michael Dudas, analyst at Sterne Agee, noted in a Dec. 29 report, a boost in petrochemical project work spurred by lower feedstock fuel prices, while Morrissey and Credit Suisse E&C sector analyst Jamie Cook speculated at year-end that producers' economic realities would raise oil prices next year.
Problems and Pressures
Business and management pressures also caused big problems and missteps in 2014.
The year had barely started when players in the epic $5.2-billion expansion of the Panama Canal finally ended a two-month standoff and came to terms but not without a worker strike and threats of a project shutdown. The owner and contractor building the locks portion of the project agreed to a financing plan to complete work on schedule.
The agreement between the Panama Canal Authority and contractor consortium Grupo Unidos Por el Canal requires the owner and GUPC to each provide $100 million to “jump start” the locks work. The contractors obtained relief from repaying $784 million in lines of credit.
But the contractor’s surety, Zurich North America, also provided a vital component: it agreed to create a supervised escrow account that the contractor can draw on to pay subcontractors and obtain supplies. How often do you see a contract impasse solved like that?
Participants and others are hopeful the pact will allow the project to essentially complete in the coming year.
Back in the US, casual influence peddling at public works agencies and turnpike authorities may be abating, but that trend apparently hadn’t reached a key member of the former Orlando Orange County Expressway Authority.
State prosecutors in Florida convinced a grand jury in April to indict R. Scott Batterson, a former expressway board member and senior project manager working for a consultant for allegedly offering a bribe in 2013.
The most incriminating charge in the scandal involves an expressway authority director's alleged offer to replace expressway general engineering consultant Atkins with CH2M Hill, if the latter firm agreed to hire some of his "friends."
Tipped off about the alleged offer, Florida investigators prevented it from ever being carried out.
Firms' use of Chapter 7 provisions in U.S. bankruptcy code to avoid debts by suddenly shutting down and selling company assets was another troubling trend. Squeezed contractors and their sureties often work together to finish projects and collect money from clients but in the cases of three fairly large contractors this year—Truland Group, LakeshoreToltest and Lamar Construction—Chapter 7 also involved considerable collateral damage for employees, creditors and clients.
Truland's bankruptcy filing turned out to be one of the messiest and most controversial, pitting its owners against the company’s main surety in a legal tug-of-war over indemnification to the insurer and how and whether key owner assets are accessible.
Cycles of Industry Life
Industry firms said farewell to leaders and pioneers who raised the bar in business, management and technology innovation.
They ranged from Arvid Grant, a pioneer of modern concrete cable-stayed bridge engineering who died in February at age 93, and congressional infrastructure finance champion James Oberstar, who died in May at 79, to B.D. Rodgers, founder of Southeast contracting giant Rodgers Builders and Willard Hackerman, who led Whiting-Turner for more than 59 years to become one of the country's largest building contractors and was still in charge at age 95.
Norberto Odebrecht, 95, was the founder and guiding light of Odebrecht S.A., which grew to become a global heavy construction giant, while Dick Mantia, 82, had been a trend-setting advocate for labor-management relations in St. Louis and Herman Russell, 83, a pioneering African-American contractor and philanthropist in Atlanta.
Some died suddenly while still leading firms or active in industry, including construction management firm founder Gene McGovern, 72, who was key to the intricate renovation of the Statue of Liberty, and Mark Ketchum, a noted California structural engineer and bridge design innovator, who was just 60.
Death was equal opportunity, also taking Ohio State University engineering academic and national GIS expert Carolyn Merry in a June car accident at age 63.
But in an ever-continuing cycle, CEO succession continued at a rapid pace this year, involving both internal candidates and outsiders, as firms sought new and more diverse innovators to lead them.
Mindful of a shrinking talent pool in executive management and in other technical, professional and craft ranks, companies took steps to improve recruiting and retention incentives—or were urged to do so by experts—to avoid competitive disadvantage.
"Each generation is critical to an E&C firm's success and needs a varied talent management approach aligned to an organization's business strategy to succeed," says PwC's Goetjen.
The push brought new linkages between educators and industry to promote industry careers and diversity, particularly in energy sector building hotspots in the southeast where shortages are pronounced, and increased outreach to key pools of potential workers, including an industry commitment in February with the Obama Administration to hire 100,000 veterans.
But other seemingly well-intentioned Obama orders may create new workforce challenges for employers who must meet changing rules in hiring undocumented workers and for federal contractors who are struggling to understand and implement a slew of still unfolding diversity and pay equity edicts.
Consultant Morrissey sees firms looking to use more technology to drive productivity and fees up, and to help fill in workforce gaps.
Execs "will spend less and less on offices and 'baby boomer' infrastructure and more on their brands and technology," he notes.
But adds W. Chris Daum, president and senior managing director at FMI Capital Advisors, Inc., "contractor pre-qualification and selection has become a strategic issue, as history has shown that the risk of default increases more during a recovery than in a recession."
