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Feature Story - September 2009

Feeling the Recession East Texas builders welcome work

Firms survival strategies vary across market sectors

As constructors in Houston, East Texas and throughout the Piney Woods deplete their backlogs, concerns surface about 2010.

By Debra Wood

While not as slow as other places in the country, Houston and East Texas contractors are seeing a decline in new private projects.

Llewelyn-Davies Sahni designed the Houston Community College Southwest College/Stafford Campus located near Beltway 8 and U.S. 59.
Llewelyn-Davies Sahni designed the Houston Community College Southwest College/Stafford Campus located near Beltway 8 and U.S. 59.

“Construction activity in East Texas is pretty much a reflection of what’s happening in the rest of the state,” says Raleigh Roussell, president and CEO of TEXO in Dallas, which represents East Texas. “This area has been growing and had a nice spurt with the oil resurgence, but I think it has slowed like everything else.”


However, there are still projects to bid on, says Jerry Nevlud, president CEO of the Houston Chapter of the Associated General Contractors. But “there are a lot of projects on hold, waiting to be released,” he adds. “It has to do with the credit market.”

Bill Scott, division president of Linbeck in Houston, calls Houston an interesting market.

“We now know we are not immune from national developments, but Houston is still significantly below national unemployment,” says Scott, cautioning that it will likely go up to 9%. “We are experiencing a greater swing than we anticipated earlier in the year. We are seeing fewer opportunities, and the major institutional entities that have put projects on hold are a little surprising.”

Scott says that the University of Texas M. D. Anderson Cancer Center is completing its current projects but has canceled requests for proposals associated with its $5-billion building campaign. In addition, St. Luke’s Episcopal has put its Texas Medical Center projects on hold to concentrate on less capital-intensive jobs at its community hospitals. And Baylor College of Medicine decided to let Linbeck finish the exterior of its new hospital but not the interior build-out and core.

“We have not seen any of the larger hospital [projects] come out,” adds Kamal Ariss, vice president of JE Dunn Construction South Central in Houston. “I think a lot of them are on hold until the economy turns around.”

Randy Sahni, president of Llewelyn-Davies Sahni, a Houston architecture and urban design firm, adds that health systems also have cut their capital plans as money dried up. The American Hospital Association indicates 82% of hospitals it surveyed have put capital projects on hold. Forty-five percent of respondents said they postponed a project planned to start within six months, and 13% said they stopped capital projects already in process.

A matter of perspective Contractors’ perspectives seem to depend on their areas of expertise. Pat Pinkerton, president and CEO of PRP Construction Co. in Tyler and a TEXO member, which focuseson school and church projects and self-performs much of its work, says, “The East Texas area has not been hit by the economic downturn at this point,” although some private owners are waiting to start new projects.

PRP Construction Co. recently completed a 45,000-sq-ft gym at Eustace High School.
PRP Construction Co. recently completed a 45,000-sq-ft gym at Eustace High School.(Photo courtesy PRP Construction)
PRP Construction Co. is building a two-story, steel-frame athletic center at Brook Hill School.
PRP Construction Co. is building a two-story, steel-frame athletic center at Brook Hill School. (Photo courtesy PRP Construction).

RPR is currently working on the $14-million, 87,000-sq-ft Clarkston Elementary School in Tyler and recently completed the $5.5-million, 45,000-sq-ft gymnasium for the Eustace Independent School District in Eustace. On the private side, RPR is building a $3.5-million, 28,000-sq-ft athletic center for the Brook Hill School in Bullard. The company is constructing a $4.9-million, 25,568-sq-ft, four-story building for Christ Episcopal Church in Tyler.

TEXO member H.E. Wright & Co. of Texarkana had focused on private work, but as that market dried up, the company pursued government jobs, such as remodeling and upgrading facilities at the Red River Army Depot.

“Government is about the only growth industry in the United States,” says William Wright, vice president of H.E. Wright.

JE Dunn also is pursing government contracts. The company recently broke ground on the $58-million Fort Bend County Courthouse, scheduled for completion in April 2011. It expects to begin construction this year on the City of Houston’s $28-million fleet maintenance facility and to break ground in January on a fire station in Houston.

“Public work is progressing but is more competitive,” Russell Hamley, president of the Associated Builders & Contractors Greater Houston Chapter, says in an e-mail. “The quantity of bidders on public projects has drastically increased, and the list includes a lot of out-of-state contractors.”

Health care JE Dunn is working on projects for St. Luke’s Episcopal Health System and Memorial Hermann Health System in Houston, including a $6.5-million addition and exterior renovation at St. Luke’s to house a linear accelerator.

More than $3.3 billion in construction projects are under way at the Texas Medical Center in Houston. McCarthy Building Cos. in Dallas is working on a $223-million, 12-story vertical expansion at the University of Texas M. D. Anderson Cancer Center. Tellepsen Builders of Houston is building the Jan and Dan Duncan Neurological Research Institute at Texas Children’s Hospital, and W.S. Bellows Construction Corp. of Houston is constructing a maternity center at the pediatric facility.

Hensel Phelps Construction Co. of Houston expects to complete the $237-million Methodist Hospital System Outpatient Center in 2010, and D.E. Harvey Builders of Houston is building the $218-million Methodist Hospital Research Institute. Linbeck continues exterior work on the $230-million Baylor Clinic and Hospital for the Baylor College of Medicine.

Higher education Linbeck’s Scott says there is an active capital campaign at Rice University in Houston, where his firm is wrapping up construction and tenant build-out of the $200-million BioScience Research Collaborative, which is designed for LEED-gold certification.

“It’s the largest project Rice has ever done,” Scott says.

JE Dunn is working on the Fort Bend County Courthouse.
JE Dunn is working on the Fort Bend County Courthouse. (Image Courtesy JE Dunn)

Linbeck also is completing the $100-million North Colleges residential facility for 600 students at Rice University. The team aims for LEED gold. It used a concrete with 70% slag from coal plants and features white brick, a green roof and fully piped, prefabricated bathrooms to speed construction and simplify maintenance.

While Rice as a private school has been able to access money for building, public schools may face more difficulties.

“The biggest problem we will have with public universities is that the Legislature didn’t approve tuition revenue bonds, which is a primary funding source,” says Chris Peck, vice president of McCarthy Building Cos. in Dallas. “It’s certainly going to slow, at least in the short run, public university construction.”

JE Dunn is building the $9-million, 41,966-sq-ft Richard and Lucille DeWitt School of Nursing building at Stephen F. Austin State University in Nacogdoches and the $8-million, two-story, 30,000-sq-ft Cemo lecture hall for the University of Houston.

Llewelyn-Davies Sahni is working on design for a six-campus, $480-million program at Houston Community College. Projects include creation of a HUB building and a public security institute, as well as master planning a 10-acre campus in the southeast part of town.

Gilbane Building Co. of Grapevine, Texas, is working on a multipurpose library building and central plant at Texas A&M University-Texarkana. Gilbane did not respond to requests for more information, but the Texarkana Gazette reports it’s a $75-million project.

Hensel Phelps broke ground last year on the $161.5-million, 393,000-sq-ft Dental Branch building and adjacent Biomedical Research and Education Facility at the University of Texas Health Science Center in Houston.

Port and industrial activity McCarthy Building has three port projects under way.

In Freeport, McCarthy is midway through construction of the Velasco Terminal Phase I Berth 7.
In Freeport, McCarthy is midway through construction of the Velasco Terminal Phase I Berth 7. (Photo Courtesy McCarthy Building Cos).

“We’ve seen solid activity on the Gulf Coast in terms of port construction,” Peck says.

McCarthy began construction earlier this year on a $100-million extension of the existing Bayport Terminal Complex at the Port of Houston. It also will allow for a substantial increase in container cargo traffic. More than 900 cased piers will support the concrete wharf extension. McCarthy recently received a $35-million contract to build a yard for those cargo containers. The project is a continuation of an expansion McCarthy completed in 2007.

At Port Freeport, McCarthy is midway through construction of the Velasco Terminal Phase I Berth 7, an 800- by 109-ft wharf supported by 796 auger-cast piles, reaching to depths of more than 100 ft. The project will allow the port to unload 730 additional ships annually. McCarthy is not releasing cost on the Freeport project.

The Bechtel Jacobs Joint Venture, a partnership between Bechtel Corp., which has an office in Houston, and Jacobs of Pasadena, Calif., continues work on the $7-billion Motiva Port Arthur Refinery Expansion Project. The expansion is scheduled to come online early in 2012.

Federally funded projects U.S. Army Engineers, Louisville District, plans to build a new Armed Forces Reserve Center in Tyler. Work has not started yet, but $29 million has been appropriated to build the center. The federal appropriations bill also includes $4 million for the Columbia Regional Geospatial Service Center System at Stephen F. Austin State University in Nacogdoches.

Big Creek Construction of Hewitt, Texas, broke ground on the Texas Department of Transportation’s first major project funded through the American Recovery and Reinvestment Act, a $7.5- million upgrade to FM 60 in Burleson County.

Other mobility projects funded, at least in part with stimulus funds, include a $57-million tollway in Tyler and a $397-million tollway in Houston. Also in Houston, TxDOT plans to build $50 million worth new ramps on BW 8, to reconstruct a portion of IH 10 and to rebuild part of IH 610, all with stimulus funds.


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