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YOUR PERIODIC UPDATE FROM BOZZUTO CONSTRUCTION

SUMMER 2016 EDITION

FROM THE DESK OF

Labor Costs

The cost of labor continues to rise, while material prices, aside from a few items like metal studs and drywall, have remained relatively steady. The cost increase specific to metal is due to a tax on foreign materials, allowing US companies to charge the same tax-inflated price, resulting in a 60% increase in the cost, as reported by the trades. Conversely, manufacturing rates have not increased as they are still running fewer factories and/or shifts from before the recession.

With any construction project, on-site labor accounts for about 25% of the overall costs. Therefore, if on-site labor expenses were to increase by 50%, a nice raise by any comparison, the math would tell us the cost of the project should only increase by roughly 12.5%. But in the last two years, the cost to build has increased by 12–18%. Why? Price elasticity.

Price elasticity is calculated by taking the percentage change in quantity divided by the percentage change in price. This is why prices can change in disproportion to the actual costs of production. And this is what we are seeing from our subcontractors right now. Labor costs have increased because there is a very real shortage of skilled workers. It seems people have become the scarce resource, not material or goods.

I wish I could predict some inflation moderation in our industry, but until the equation is balanced (available labor = products being built), it is hard to make this prediction. Unfortunately, I don’t see the labor side of the equation fixing itself anytime soon. Perhaps one plus to all of this is that anyone looking for a new career path with significant growth could hone their expertise in a new trade or learn one soon. Because right now, the building industry can’t hire these folks fast enough.

Mike Schlegel I President | Bozzuto Construction Company| mschlegel@bozzuto.com


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PROJECT SPOTLIGHT

Columbia Hills Apartments Groundbreaking

The Bozzuto Construction team joined Arlington Partnership for Affordable Housing (APAH) President, Nina Janopaul (pictured), in addition to other local officials and leaders on Wednesday, June 8th to celebrate the start of construction on Columbia Hills Apartments. Bozzuto is the construction manager on this $56 million new construction project, which consists of 229 affordable apartment units and three levels of underground parking—all expected to be completed in Spring 2018. Columbia Hills is the second project Bozzuto Construction has built for APAH, and we are very proud of our continued partnership.


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TOOLBOX TALK

Project Systems Power Lunch at Anthem House

The latest session of Bozzuto Construction’s new “Project Systems Power Lunch” was held at Anthem House, a Bozzuto Development, War Horse, and Solstice Partners project located at Baltimore’s Locust Point. The subject was the Infinity Structural System installed by Miller, Long & Arnold—the concrete subcontractor on the nine-story composite concrete, steel stud, and metal deck apartment building with an integrated parking garage.

Project Manager Brady Davidow and Superintendent Richard Zgonc led field staff in a discussion about the system’s unique aspects, including site utilization requirements, production and schedule metrics, installation process, and more. Afterwards, the group toured the project and saw a live demonstration of the system installation, which involved setting panelized steel stud walls, the installation of metal decking and rebar, and prepping the deck for a concrete pour. The group also learned about temporary and permanent wall bracing, structural steel columns, and integral concrete beams that are unique to the Infinity Structural System.


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IN THE COMMUNITY

Bozzuto Construction Women's Build

Bozzuto recently partnered with Habitat for Humanity during Habitat’s Annual Women’s Build Week in May. A team of 15 women from Bozzuto’s construction division enjoyed spending the day building and cleaning up a previously vacant home in Riverdale, MD. From demo and framing to landscaping, the women worked alongside Habitat’s project team to prepare the home for a family of five that is expected to move in over the next two months.


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ACCOLADES

Recent Successes

Bozzuto has been named to The Washington Post’s 2016 Top Workplaces list of large employers in the DC metro region. We are honored by this recognition, as it is a reflection of how Bozzuto employees view our company culture and core values. In addition, Monroe Street Market recently won “Best Mixed-Use Development” from the Urban Land Institute (ULI). Bozzuto Construction completed work on this $106 million 562-unit multi-phase community in 2014.


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