MBEX Has the Scoop

Check out our latest updates & findings below.

Have news to share? We’d love to hear it! Send your company hires, news, events and press releases to ah@mbex.org.

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Industry

SECTOR WATCH: Distribution Centers & Warehouses

posted on 01.31.2022

POISED FOR GROWTH
Demand remains extremely strong for the construction of warehouses and distribution centers, and that should continue in 2022, according to industry experts.

"We gad a record-breaking year [in 2021] for pretty much every fundamental we track: vacancy, rental rate growth, leasing activity, under construction," said James Breeze, global head of industrial real estate at CBRE, a Texas-based commercial real estate services and investment firm. "We do not see anything changing [this] year."

Not only does he anticipate the same level of activity in the sector as was seen in 2021, he expects vacancy rates to remain at historic lows, with rents contining to rise at a quick pace. 

There is a steady flow of distribution and warehouse projects happening in early 2022, said Mike Jones, project executive at Pankow Builders, a California-based construction engineering company.

WHERE THEY'RE HAPPENING
Major transportation corridors near large metropolitan areas such as San Fransisco, Dallas, New York, Seattle, Miami, Houston and Chicao continue to be "hot markets for the distrbution and warehouse space." said Jones. Proximity to ports, airports, and trucking facilities are also underlying factors for determining where warehouse distribution facilities demand will continue to grow.

In addition to large projects, smaller buildings to support last-mile distribution are also needed. For example, dormant shopping center parcels are becoming an alternative for min-warehousing and last mile distribution facilities, whether by retrofitting a defunct department store or large parts of the shopping center parking lot.

HOW MBEX MEMBERS CAN BENEFIT
As of January 31, 2022, MBEX currently holds plans (by project category) for 10 Storage/Warehouse projects, 4 Retail Facility projects, and 6 Airport projects. Find them by doing a Quick Seach by key word inside the Online Plan Room, with terms such as "storage," "airport," and "warehouse," for example.

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Read the full Sector Watch article on Construction Dive.

Odds and Ends

Projects to Watch in 2022: Samsung Chip Factory

posted on 01.28.2022

This will be an 8-part series looking at some of 2022’s biggest project construction jobs.

A number of the nation’s largest construction projects are set to start construction, hit major development milestones, or otherwise spark interest in 2022. Some are highly divisive; some are tied to famous names or companies and others are groundbreaking innovations in manufacturing or transportation.

For our first installment, we look at the Samsung Chip Factory coming to Taylor, Texas, which is roughly 30 miles away from Austin.

 


The new site will be larger than Samsung’s Austin plant (picutred above), according to the Wall Street Journal.

 

JUST THE FACTS: SAMSUNG CHIP FACTORY
- Location: Taylor, Texas
- Cost: $17 billion
- Project Size: 1,200 acres
- Fun Fact: This will be the South Korean firm’s largest investment in the United States.

Samsung intends to start building the factory this year, with operations slated to begin in 2024. The company has not yet announced a lead contractor for the project.

This project announcement came amidst a global shortage of computer chips driven by supply issues related to the COVID-19 pandemic. Samsung is one of many chip manufacturers attempting to geographically diversify its manufacturing operations, according to the AP. Samsung already operates a chip manufacturing facility in Austin, and has since the late 1990s, and intends to share infrastructure and resources between the two sites.

According to Texas Governor Greg Abbott’s office, this project will support at least 6,500 construction jobs.

Read more about the project on Samsung's website.

Industry

Construction Bond Claims - Part 3

posted on 01.24.2022

So far, we have covered Bid Bonds and Payment Bonds. For our third and final exploration of bonds claims, we will take a look at Performance Bonds.

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Performance Bonds, a common type of surety bond, are issued either by a bank or surety company and provide a guarantee that a contractor will finish a project on time while meeting the agreed-upon specifications. Should a contractor fail to deliver on a project, either by not completing it or otherwise failing to meet their obligations, the developer of the project can attempt to recover their losses by demanding payment equal to the bond's value. This is known as "calling the bond."

It's been said that handling a performance bond claim is like driving an ambulance and not a hearse. Every claim has varying levels of urgency, cooperation/agreement among the participants, and unique challenges. 

When a bond obligee, the project owner, decides to call a performance bond, the claims process is set into motion. When a call is made on the performance bond, the first thing the surety company will do is launch an investigation.

The typical process is as follows:

- Acknowledge receipt of the claim and send an intial request to the project owner for information and documents;
- Send an intial request to the principal for documented position;
- Review the underwriting file, which is comprised of a credit file and a bond-specific file;
- Review the contract documents and bond form;
- Perform an accounting of remaining bonded contract funds;
- If appropriate, assemble an investigative team, which can include outside legal counsel, a construction consultant, and sometimes an accountant; and
- Attend a site visit and in-person meetings.

If the surety company determines that conditions have been met when the performance bond is called, they will then move on to one of four different options for handling the situation:

1.) Help finance the principal,
2.) Find a new contractor,
3.) Complete the project, or
4.) Do nothing.

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The right surety partners will work with contractors to avoid claims, and if the situation is unavoidable, to mitigate the severity of it. Choosing the right surety with a track record of resolving claims while minimizing legal fees is important for any contractor to consider. 

Industry

Construction Bond Claims - Part 2

posted on 12.20.2021

Everyone appreciates getting paid for the work that they do, but rarely do employers have to take out a special type of bond just to guarantee that they’ll pay their employees, subcontractors, and suppliers. This is where a Payment Bond steps in, the second type of construction bond we are exploring this week. 

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To start, what is a Payment Bond? A payment bond is a type of surety bond issued to contractors that guarantees all entities involved with the project will be paid. A payment surety bond is a legal contract, a type of bond, that guarantees certain employees, subcontractors, and suppliers are protected against non-payment. Other common names for these include "construction", and "labor and material". In government contracting, these bonds are sometimes referred to as "Miller Act Bonds".

A payment bond is one type of surety bond that most government projects require of all contractors bidding on their projects. Surety bonds are also becoming more popular on commercial projects.

A payment bond claim arises when the principal (known also as the contractor) fails to pay subcontractors, laborers, and/or suppliers. Generally the surety has the right to assert all of the principal's defenses as well as its own surety defenses --- which commonly include notice and time limitations. Notably, the bond provides recourse for only proper "claimants," so the principal and surety need to confirm the claimant has standing to pursue the claim. The project owner, or person hiring the contractor, will indemnify themselves through this type of surety bond in-case they become liable for unpaid employees, subcontractor or suppliers.

When might you need a payment bond? Payment bonds are typically used in conjunction with performance bonds and are oftentimes even on the same bond form. Contractors purchase payment bonds when negotiating a construction contract to reassure those working with them that they will be paid appropriately and on time.

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In short, as long as a contractor has clear means to pay their employees, subcontractors, and suppliers, they should be able to qualify for a payment bond. This will allow the contractor to bid on a much wider range of construction projects.

Industry

Construction Bond Claims - Part 1

posted on 12.14.2021

Contractors always work to avoid claims situations, but should also be proactive about understanding the process. There are 3 main types of construction bonds: bid bonds, payment bonds, and performance bonds. Contractors should be familiar with the claims that can arise from each. This week, we take a look at Bid Bonds.

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First, what is a bid bond? A bid bond is issued as part of a supply bidding process by the contractor to the project owner, to provide guarantee, that the winning bidder will undertake the contract under the terms at which they bid. 

The cash deposit is subject to full or partial forfeiture if the winning contractor fails to either execute the contract or provide the required performance and/or payment bonds. The bid bond assures and guarantees that should the bidder be successful, the bidder will execute the contract and provide the required surety bonds.

A bid bond claim arises when the contractor, also known as the "supplier" or "principal," is the successful bidder but fails to enter into the contract and provide final bonds.

Generally, the principal and surety are bound to pay a stated sum (for example, 5-10% of the contract price) to the owner (or general contractor), also known as the"obligee". The principal and surety should make sure the bond form caps liability at a defined amout --- typically the difference between the principal's bid and the bid of the next highest bidder, not to exceed the penal sum of the bid bond.

Contractors prefer the use of bid bonds because they are a less expensive option and they do not tie up cash or bank credit lines during the bidding process. Owners and general contractors also use bid bonds because they establish and confirm that the bidding contractor or supplier is qualified to undertake the project.

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Leveraging one's relationship with the right surety gives a contractor the knowledge and experience of their claims team. Knowing the basics is the first step for any contractor who wants to take on bonded jobs.

Odds and Ends

10 Gift Ideas for Construction Workers

posted on 12.03.2021

We are officially 23 days away from Christmas, which means the holiday shopping season is in full swing.

Whether you are shopping for employees, business partners, valued customers, family members, or close friends, the holiday shopping list is long and you might find yourself needing help with gift ideas. That's where we come in! 

We have a few construction-themed gift ideas that would be perfect for the construction worker in your life, and make sure to check back each Friday in December as we'll be sharing 10 more each week. 

Here are this week's 10 ideas for all ages and for a wide range of prices:

1.) Construction Hard Hat Keychain & Bottle Opener (Amazon, $12 for set of 12) 
2.) Construction Plate & Utensils (Uncommon Goods, $20-$34)
3.) DEWALT Bluetooth Jobsite Speaker (Amazon, $92)
4.) Otter Box Defender-Series phone case (Otter Box, $64-$130 depending on device)
5.) Personlized Red Tool Box Christmas Ornament (Ornament Shop, $20)
6.) OXX COFFEEBOXX Job Site Single Serve Coffee Maker (Home Depot, $200)
7.) Huepar Self-Leveling Cross Line Laser Level (Amazon, $110)
8.) The Grand Cookie & Chocolate Toolbox (Apple Cookie & Chocolate Company, $42)
9.) Personalized Laser Engraved Wood Handle Hammer (Amazon, $30)
10.) Carhartt Deluxe Dual Compartment Insulated Lunch Cooler Bag (Amazon, $25)

Check back next week for our next list of gift ideas!

 

*Prices may have changed since the publishing of this post.

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