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Weekly UpdatesNeeser Construction Inc. continues construction of the Anchorage Rental Car Center at Ted Stevens Anchorage International Airport, as pictured here on March 21. The 618,000-square-foot structure will feature a Quick Turn Around facility that includes 12 car washes, 16 fueling stations and vehicle prep stations. Venture Development Group is managing the design and construction of the facility and Koonce Pfeffer Bettis Inc. is the architect on the project.
Defying the state's boom-and-bust history once again, Alaska's construction industry is looking forward to another relatively stable year in 2007.
According to a recently released publication, "Alaska's Construction Spending 2007 Forecast," created for Associated General Contractors of Alaska by the University of Alaska Institute of Social and Economic Research (ISER), the dollar amount of construction anticipated to come online this year exceeds last year's by about 7 percent. The 2006 amount was $6.56 billion, and the 2007 projection is $7 billion.
"The increase is largely due to inflation," said Dick Cattanach, AGC's executive director, "and construction industry employment will essentially be flat in 2007."
Flat, however, is good news for a state with a long record of peaks and valleys.
"It's still going to be a strong year for the industry," Cattanach added.
The construction forecast divides current and upcoming projects into two categories: public and private construction, and estimates an increase in private spending of 15 percent to offset a decrease in public spending of 6 percent.
Public Construction
Public construction includes projects contracted by the state and federal governments. According to the AGC report, projected defense spending will sink by $160 million in 2007 due to the completion of Fort Wainwright's military hospital and the federal government's general slowdown in construction dollars. Included in this projection are all the Corps of Engineers' environmental remediation and civil works projects, such as flood control.
HIGHWAYS
Also included in the public construction forecast are highway projects. ISER's figures show a drop in federal highway spending for 2007 of about $125 million from 2006. One of the big questions in the public arena is the use of funds that have been earmarked in federal legislation for the Knik Arm Bridge and the Gravina Island Bridge to Ketchikan. ISER also predicts, however, an approximate $41 million increase in state funding for road projects to help offset the federal decrease.
AIRPORTS AND HARBORS
Airport and harbor spending is projected to increase by $30 million from last year-to tally $360 million in 2007. Much of that will go into airport construction projects across the state. Anchorage and Fairbanks international airports will see about $110 million in upgrades this year, and the Anchorage Port will see about $36 million in its large-scale expansion project. In addition to the $200 million in federal funds anticipated for these projects, the state will contribute about $10 million to the total spending on airports and harbors.
"One of the big airport projects in Anchorage is the parking garage," Cattanach said. "Neeser Construction has that contract. Another is the remodel of the Anchorage A and B concourses by PCL Construction."
The Alaska Railroad will see public funding of about $100 million for capital construction and modernization this year, up from $80 million in 2006.
RAILROAD
"The railroad has needed upgrading for years," Cattanach said. "When the state bought it, it was in a state of benign neglect-it needed track and roadbed work. Projects this year will target some of these needs, and the funding will come from railroad earnings as well as from federal sources."
MISCELLANEOUS
The Denali Commission will move into transportation projects this year, as well, with funding of approximately $100 million going into roads and waterfront development, as well as into energy projects and health facilities.
Federal and state funding of education projects in 2007 is expected to total $350 million, $30 million higher than last year. Projects scheduled include those for the University of Alaska-most of it going into the Anchorage integrated science building.
East Anchorage will see a new middle school open in 2007. The Nick Begich Middle School will serve the Muldoon area, and was recently completed by Roger Hickel Contracting.
"The school will go into use in the fall of this year," said Roger Hickel, president of Roger Hickel Contracting. "We're also looking at a remodel of Service High and, if Anchorage passes the bond proposition, an upgrade to Clark Middle School.
"What many people don't know," Hickel added, "is that the state funds part of that project. The bond proposition doesn't have to cover the whole thing."
Additional federal and state spending is slated to top $550 million for a variety of capital projects across Alaska, primarily for rural sanitation projects, which have been largely funded by grants from various federal agencies. These projects are predicted to be up $10 million for 2007, at $100 million--to fund the Village Safe Water Program.
The federal government also provides funding to Alaska's tribes, nonprofit organizations and local governments. The most important recipients of these grants are Native nonprofit corporations, housing authorities and health care providers. The largest single federal program is the Native American Housing and Self Determination Act (NAHASDA), which puts about $100 million annually into housing and housing-related construction, according to the U.S. Department of Housing and Urban Development.
Private Construction
Private construction, including resource development, hospitals and residential building, will be up approximately 15 percent from 2006, totaling more than $4.5 billion. This is the market in which many contractors, such as Roger Hickel Contracting, Neeser Construction, Davis Constructors and others, focus much of their effort. In 2007, their efforts should stand them in good stead.
NORTH SLOPE
Over the coming year, the large North Slope oil companies-BP, ConocoPhillips, and Exxon-anticipate investing more than $1.6 billion in their Alaska operations. According to ISER's AGC report, this oilfield work will focus on development of the Alpine satellite fields, West Sak heavy oil, and on continuing work in Prudhoe Bay and Kuparuk fields.
Independent developer construction is expected to increase significantly in 2007, to $813 million. Shell has announced plans to drill four offshore exploratory wells and to undertake a significant seismic program, according to the report. Eni, Anadarko, Pioneer, FEX, Brooks Range Petroleum and Savant also have announced plans to drill this year.
Chevron, Marathon and others are expected to spend slightly more exploration dollars this year in Cook Inlet exploration and development, up to $182 million.
MINING
The mining sector, according to the forecast, will remain stable at about the same level of funding as last year. The majority of construction money for mining will come from the continued construction of the Kensington Mine near Juneau and the Rock Creek Mine near Nome. Exploration will continue at the Pebble prospect west of Anchorage, and the Donlin Creek prospect northeast of Bethel. ISER projects construction plans for these latter two mines to be several years in the future.
Other operations-such as Red Dog, Pogo and Fort Knox-will have more modest construction budgets this year, according to the AGC report.
UTILITIES
Construction in the utility industry also is expected to remain relatively steady in 2007, with a slight increase to $160 million in telecommunications, and to $23 million in natural gas utilities. The increase in the natural gas sector comes from a project to supplement service to Fairbanks with liquid natural gas. Electric utility spending, however, will drop from last year's $170 million due to completion of the Golden Valley Electric Association capacity expansion.
HOSPITAL
Non-military hospital construction is set to drop slightly from 2006, as well. Providence Alaska Health Care System will have the largest building budget this year, and the Veterans Administration clinic in Anchorage will begin construction this spring.
Hickel said his company will be looking at the VA clinic when it comes up for bid in March. (Editor's note: the bid took place after the story went to press.) The clinic, a 172,000-square-foot building, is projected to cost in the $60 million range, and Hickel said he believes Outside contractors will be interested in bidding on it, as well.
"A job this big can attract Lower 48 contractors, but we feel local contractors can do the jobs more efficiently and better than the Outside contractors can," Hickel said. "We know the territory better and obviously, we have more experience here."
MISCELLANEOUS
Other private commercial construction spending in 2007 will consist of a wide range of retail office, medical, hotel and warehouse space, and will increase slightly over last year. Driven by a strong economy and a continuing demand for such space, these projects are anticipated to reach $350 million.
The largest of these private commercial projects are the Anchorage museum expansion, the new convention center and three new parking garages in downtown Anchorage.
Under the city's auspices, the Anchorage Museum of History and Art will undergo a $100 million upgrade, led by contractor Alcan General Inc., and the completion date for this project falls in 2010.
"Actual construction on the museum will start this spring," Cattanach said.
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