12 views on North Bay construction industry challenges and growth in 2019

Anticipating business growth in the low teens in some cases, area contractors are facing the problems of growth, detailed regulation, labor shortages and the need to address the results of massive 2017 wildfires.

The Business Journal asked prominent builders in the region questions about the local building industry and received responses from Eddinger Enterprises, Ghilotti Bros., Ghilotti Construction, GMH Builders, Jim Murphy & Associates, McDevitt Construction Partners, Midstate Construction, Nordby Construction, Precision General Commercial Contractors, Thompson Builders, Western Builders and Wright Contracting.

Their comments are listed alphabetically by company name.

Jerry Eddinger

Eddinger Enterprises Inc.

62 W. North St., Healdsburg

www.eddingers.com

Tell us how much your business is expected to grow this year.

Between 8% and 10%

What are the three biggest challenges you face this year, and how have you addressed each?

Planning and building departments: As advocates for our clients, we are well versed in building and land use codes and work closely with qualified architects and engineers as well as various city and county departments to shepherd our projects from planning to completion. The government process can be very slow.

Labor and materials cost increases: Working closely with our subcontractors and suppliers, we're better prepared for upcoming increases and we communicate this with our clients for optimum planning and materials usage

Subcontractor work loads: We've built strong relationships with our sub-contractors and suppliers and continue to use a team approach, pay their invoices very timely, and respect the expertise they bring to each project.

Assuming that labor is among your largest challenges, what do you think is needed from government and private industry to address this issue?

I would like to see the schools put more energy into teaching students the benefits of a career in the building industry. I would hope that with some form of government/private funding we can create more trade schools for Carpenters, Welders, Plumbers, Electricians, Pipe Fitters and so on.

If at all, in what ways does government regulation affect your ability to do business, as in the permitting process or in the regulation of overtime pay or other labor issues? How are you adjusting to these challenges?

The process through the planning and building departments is typically much slower than we like or is necessary. Delays are often boiler plate and not project specific, which is not only disappointing but also expensive. We make sure that we are knowledgeable in the project specific issues while working closely with architects and engineers as well as various city and county departments to shepherd our projects from planning to completion.

What are your three biggest jobs right now?

The Matheson - is a new 3 story building in downtown Healdsburg on the Plaza, with a restaurant, roof top bar and housing. We've changed our work hours to better accommodate the neighboring businesses and our community. As a new building within the constraints of the original storefront and common concrete side walls, it's an intricate project that we know will be a great fit on the Plaza.

Healdsburg Lumber Company - this new headquarters allows HLC to continue their 100 year plus tradition and remain in Healdsburg. The site is in the City limits but without some typical City utility infrastructure the location is challenging and interesting. Once completed this new location and state of the art facility will continue Healdsburg Lumber's legacy as a leader in building and hardware products in Northern California.

Red Custom Crush - originally built in 2014, currently we're doubling the wine tank farm and adding a canopy for solar. Construction at a working facility is always interesting but working closely with this client we're able to continue without interrupting their work schedule.

How do you see the market for commercial construction changing in the next year in general, and in your area of specialty?

I don't foresee much change in commercial construction except possibly even more growth. Because of the politics involved there might be large changes after the next election which could slow all construction.

Michael Ghilotti

Ghilotti Bros. Inc.

525 Jacoby St., San Rafael 94901

415-454-7011

www.ghilottibros.com

Tell us how much your business is expected to grow this year.

GBI experienced 12% growth in revenue for 2018 and expect 12%-15% growth for 2019.

What are the three biggest challenges you face this year, and how have you addressed each?

The top three biggest challenges for our industry this year are the Dynamex ruling, eliminating independent contractors and the huge impact it will have on the trucking industry. Especially as it relates to fulfilling the DBE requirements of local agencies. The other two challenges are the labor shortage and next generation not choosing construction.

Assuming that labor is among your largest challenges, what do you think is needed from government and private industry to address this issue?

I'm not sure what “government” can do but clearly a “higher education only” point of view isn't helping. The construction industry needs to educate how no huge student loan, health benefits in a busting industry that needs young talent can be a good alternative.

If at all, in what ways does government regulation affect your ability to do business, as in the permitting process or in the regulation of overtime pay or other labor issues? How are you adjusting to these challenges?

Government over-regulation and compliance has only demanded more staffing but dramatically increased the cost of doing business. Plus, it's taking the heart out of family business and forcing them to sell to big companies.

What are your three biggest jobs right now?

19th Avenue rehabilitation in San Francisco

Fulton Road reconstruction in Santa Rosa

Larkspur Measure B pavement rehabilitation

Tell us what is interesting about them.

On the 19th Ave project, the biggest challenge will be 40 nights of paving in each direction and the impact it will have on surrounding neighborhoods and local traffic. GBI is proposing a Value Engineering Savings Proposal to reduce to two weekends of paving with limited access to get the whole operation done, so hopefully that's approved.

The Fulton Road project has been challenging because it involved a new type of road construction using roller compacted concrete and unfortunately the testing on pre-installation material has not met specifications and winter is coming!

And finally, Larkspur paving has us tackling some of the most remote on lane steep streets (goat trails) that haven't been resurfaced in over 30 years.

So, doing quality work, safely, and making budget is not for the faint of heart. But we did it, and the roads could only have achieved that level of quality with first rate paving crews and supervision

How do you see the market for commercial construction changing in the next year in general, and in your area of specialty?

I think the biggest change will be in the public sector because with all the work, contractors now, finally, have a choice of whom to work for so if you are not an Agency of Choice, believe in partnering, collaboration and being fair and reasonable, you will see fewer bidders & increased prices will cripple their budgets. Beware out there.

Richard Ghilotti

Ghilotti Construction Company

246 Ghilotti Ave., Santa Rosa, 95407

707-585-1221

www.ghilotti.com

Tell us how much your business is expected to grow this year.

Optimistically, it will grow 10% this year.

What are the three biggest challenges you face this year, and how have you addressed each?

The main challenge is finding a qualified skilled labor force, including operators, laborers, truck drivers, cement finishers, etc.

Assuming that labor is among your largest challenges, what do you think is needed from government and private industry to address this issue?

“More awareness an opportunities at the educational level including training and apprenticeship programs.” -Brian Ongaro, vice president of operations

If at all, in what ways does government regulation affect your ability to do business, as in the permitting process or in the regulation of overtime pay or other labor issues? How are you adjusting to these challenges?

“The construction industry is highly regulated which requires construction companies to have the proper framework and team members in place necessary to manage these complexities.” -Tom Smith, vice president of estimating

What are your three biggest jobs right now?

1. CalTrans Highway 101 expansion, Petaluma, $79 million

2. CalTrans Highway 101 expansion, Petaluma, $26 million

3. Santa Clara VTA, Alum Rock, $26 million

Tell us what is interesting about them.

The multiple stages of configuration in traffic flow.

How do you see the market for commercial construction changing in the next year in general, and in your area of specialty?

“With the high-octane economy providing lift to new highs, the last eight years have been a boon for the construction industry. It could be thought that with the cyclic action of the markets we are due for a slowdown in the industry.

“Perhaps, but the North Bay region has solid demographics across the spectrum that even at a more relaxed pace of construction the North Bay would still be operating at a high level. This primarily is due to the fact that the region is a cross-roads for a wide range of industries: wineries and wine-making, universities, schools, new homes and multi-family units, hospitals and medical technology companies, telecommunications companies and light rail expansion.

“All of that is to say we are bullish on what the construction market will look like in 2020 and look forward to being part of the strong community that is the North Bay.” -Tom Smith

Seth Maze

GMH Builders

901 Broadway, Sonoma

707-757-5050

www.gmhbuild.com

Tell us how much your business is expected to grow this year.

GMH Builders is on track to grow by 50% this year. This growth is attributed to the cultivation of projects over the last 12-18 months that are now reaching the construction stage.

What are the three biggest challenges you face this year, and how have you addressed each?

Responsibly controlling growth: In this market, there is the temptation to take every job you can. We see so many contractors doing this and then under perform with mismanagement.

We've grown quickly and thoughtfully by targeting clients with whom we can form lasting partnerships.

When we decide what projects to pursue, we look at the staff we have available and determine if the project would be a good fit for our company and our people. We aren't taking on jobs and then scrambling to hire an unknown player to run it for us.

Owner concerns with high and escalating construction costs: It's been challenging working with owners to make their project meet their initial budget expectations. Often times, these projects have been in development/design for a few years and the original construction budgets that were developed by the clients, without involvement of a contractor, are impossibly low for the project.

When we are finally engaged, it's an uphill battle of value engineering and proposed scope reductions to get the project to pencil for the owners.

To mitigate these challenges, we prefer to get involved early on in the process to provide valuable costing information back to the clients and design team, which allow them to effectively shape the project to meet the budget without having to make drastic changes once the permit is issued.

Managing subcontractor costs and availability: We hear it so often that subcontractors are so busy and that they don't have time to adequately review projects and/or responsibly price it. They throw out an inflated number on the project and if they get it, they will “figure it out.”

To maximize value to the clients, we identify a select list of subcontractors for whom the project is “right in their wheelhouse.”

We thoroughly scope the project for them, provide a schedule and, most importantly, we provide bid results to them once the job is awarded. A couple inflated numbers can kill a project. We strive to get the best value for the client.

Assuming that labor is among your largest challenges, what do you think is needed from government and private industry to address this issue?

We consider labor shortage a chronic condition of the construction industry. Ideas like enriching our educational programs at the high school and university levels seems like a trite response. There needs to be a true game changer.

If government would incentivize the built process to incorporate means and methods that reduce the physical burden and grow the skills of our tradespeople through automated technologies like robotics and 3D printing, we'd see the kind of transformational shift our industry so desperately needs.

If government would incentivize, private industry would follow. Our trades people may not be as fearful of becoming obsolete if government and private industry came together to invest in the workforce.

If at all, in what ways does government regulation affect your ability to do business, as in the permitting process or in the regulation of overtime pay or other labor issues? How are you adjusting to these challenges?

We see projects constantly hampered by delays in permitting approvals. Given the impacted local jurisdictions and prevalence of using third-party plan checkers, permits take 50% longer to issue. There needs to be some oversight on third-party plan-check services.

Some are fantastic while others seem like they are taking advantage of the situation by providing endless pages of unjustified boilerplate comments, most of which are unrelated to code compliance. They continually find more items to address on subsequent resubmittals. After all these events, they charge the clients for additional review times.

What are your three biggest jobs right now?

Russian River Health and Wellness Center, Guerneville, $14 million

Confidential health care client facility upgrades, $10 million

Confidential high-tech client facility upgrades, $8 million

Tell us what is interesting about them.

Located in Guerneville, the Russian River Health and Wellness Center is located just 20 minutes away from Santa Rosa. Interestingly, the project is perceived to be “remote.” With last year's floods fresh in everyone's mind, we are being highly scrutinized because the project is located in the floodplain. It is a reasonable concern, just not the norm and one that is driven by recent events.

Our confidential health care client projects are interesting because they are small in size but involve working in and around an existing and operational facility. A heightened attention to scheduling and sequencing is mission critical to mitigating the impacts to staff and patients.

Our confidential high-tech client projects are interesting because the company's technologies are evolving so quickly, that they require regular updates to interior spaces, some of which we completed in the last 12 months. It is important to us to manage our resources is a way that we can deliver what they need when they need it and never have to tell them no.

Steve Ronchelli, Jesse Malone and Jim Murphy

Jim Murphy & Associates Company

464 Kenwood Court, Santa Rosa 95407

707-576-7337

www.j-m-a.com

Tell us how much your business is expected to grow this year.

We anticipated a 17% increase in revenue over last year.

What are the three biggest challenges you face this year, and how have you addressed each?

Lack of labor and rising cost of construction. We spend a lot of time educating our clients and set realistic goals and expectations. Projects take longer and cost more than they did a short time ago.

Assuming that labor is among your largest challenges, what do you think is needed from government and private industry to address this issue?

The government needs to lower the construction-related fees. Labor and material are not the only items driving up the cost of construction. Both the public and private industry need to build vertically.

Not just think and talk about it, but they need to make it happen. Land in Sonoma County is too valuable as agricultural land and it is who were are. It is conspicuous that Santa Rosa, the fifth largest city in the bay area, has only two buildings that are over five stories high.

If at all, in what ways does government regulation affect your ability to do business, as in the permitting process or in the regulation of overtime pay or other labor issues? How are you adjusting to these challenges? ?

The permitting process has actually been getting better in Sonoma County, but it still takes too long. The government needs to understand that we (the business we are building for) is their client.

And that business is a revenue source for the government. The quicker we can finish the building, the sooner the tax revenue flows. The new building codes coming out in 2020 will have a big impact on the way we construct projects. California's Net Zero for Commercial Projects is coming 2030.

What are your three biggest jobs right now?

Our three largest commercial projects are: Verité Winery Expansion, Exchange Bank Sebastopol Branch and Solage Calistoga Resort Expansion. We are also building several very large residential estates.

Tell us what is interesting about them.

In the case of the winery and the resort, construction will be happening while the businesses stay open and in operation. The key to these types of projects is good clear communications between all of the stakeholders.

How do you see the market for commercial construction changing in the next year in general, and in your area of specialty?

Next year could be very interesting. We think we are going to start seeing some projects get postponed because of the high cost of construction. They just won't pencil out. But in certain sectors, like hospitality, public education and health care, where the demand is high and there are funds, we don't see a slowdown. In fact there may be an uptick in the number of projects we see.

Peter Rosell, John Bare and Willie McDevitt

McDevitt Construction Partners

3820 Cypress Drive, Unit 6, Petaluma

707-763-3000

www.mcdevittconstruction.com

Tell us how much your business is expected to grow this year.

10%-12%

What are the three biggest challenges you face this year, and how have you addressed each?

A shortage of skilled workforce continues to plaque the North Bay construction industry. Labor costs are rising rapidly and productivity in decline.

In addition, material costs are volatile because of market forces and the uncertainty of international trading agreements.

At the same time, there has been no easing of the regulatory environment as entitlements are becoming ever more complex and time consuming. It's vital to establish realistic expectations with clients and to maintain a foundation of solid relationships with key subcontractors and continuously building a quality team.

Assuming that labor is among your largest challenges, what do you think is needed from government and private industry to address this issue?

Government needs to find a way to streamline the entitlement process and make it somewhat consistent from city to city and county to county.

What are your three biggest jobs right now?

200 Nellen Corte Madera-Complex - Two-story mixed use office building including full tenant improvement buildout. A tight site right next to the 101 with the utilities coming from the middle of and opposite side of the arterial street.

Old Sausalito Theater - Conversion of the old wood framed Sausalito Movie Theater, originally built in 1911 and repurposed multiple times, into a open, contemporary interior multi-use 1st floor and Class A+ office 2nd floor.

The exterior façade is a stand-off, vertically slatted on edge, cedar panel system. The foundation has been rebuilt using both shotcrete & concrete extensions tied to the original shallow concrete.

New structural steel moment frame and 2nd floor framing systems have been erected within the existing structure. Creative shoring methods and detailed analysis of all major building elements were necessary to make the project economically viable for the Owner.

Balletto Winery - Renovation of an existing single story metal warehouse building into an attractive, cozy hospitality center with a new second story steel mezzanine with three wine bars, a commercial kitchen, future 2nd floor office space, and major sewer/septic improvements.

Finding effective and aesthetically pleasing value engineering options to create an intimate feel in the vast high bay warehouse space.

Roger Nelson, Monica Nelson, Patrick Draeger and Wesley E. Barry II

Midstate Construction Corporation

1180 Holm Road, Petaluma 94954

707-762-3200

www.midstateconstruction.com

Tell us how much your business is expected to grow this year.

Gross revenue will continue to grow due to the demands of construction in the North Bay. We expect a 5% growth relating to revenue as well as addition of manpower.

What are the three biggest challenges you face this year, and how have you addressed each?

Finding qualified and available subcontractors with sufficient labor forces is our biggest issue. For the same reason, project pricing has increased to a level which is unaffordable for many developers. We mitigate these issues by reaching out to a broader range of subcontractors and working with our subcontractors to aide in their growth.

Assuming that labor is among your largest challenges, what do you think is needed from government and private industry to address this issue?

We do not look to the government to solve our problems. It is private industries responsibility to attract new qualified workers and to train those that aspire to succeed in out our industry.

We are active in the local high schools through the Career Technical Education Foundation and participation in the North Bay Construction Corps program. Additionally, we are active at both Santa Rosa Junior College and Sonoma State University in their educational construction programs.

We actively train our existing work force and participate in our local trade organizations to aid with solving these problems.

If at all, in what ways does government regulation affect your ability to do business, as in the permitting process or in the regulation of overtime pay or other labor issues? How are you adjusting to these challenges?

The permitting process continues to be slow and these costs are increasing to the point that some projects are no longer economically feasible.

We build both private and publicly funded projects. Our labor relations in both are very strong. The changes in the California energy code may be are our largest difficulty from an affordability standpoint. The energy savings is always a fantastic goal but the large cost increases will mean fewer buildings to house residents and become part of the community.

What are your three biggest jobs right now?

Our three largest North Bay projects are:

Altura Apartments, Petaluma $30,000,000

Stoddard West Apartments, Napa $15,000,000

Celestina Garden Apartments, Sonoma $12,000,000

Tell us what is interesting about them.

Each of these three projects is meeting the needs of the ongoing housing challenge that we have in the North Bay. Midstate is pleased to be a part of the housing solution through the construction of each of these communities.

How do you see the market for commercial construction changing in the next year in general, and in your area of specialty?

As we enter our 85th Year building relationships, meeting the budget and schedule needs of our clients will continue to be our goal through the ongoing implementation of our core values: Integrity, Quality, Commitment, Safety, and Relationships. It is through those core values that we will fulfill our mission to build with a commitment to quality, clients, community, and co-workers.

Tony Simmons and Craig Nordby

Nordby Construction

1229 N. Dutton Ave., Suite C, Santa Rosa 95401

707-526-4500

www.nordby.net

Tell us how much your business is expected to grow this year.

We are currently tracking a 22% growth over last year.

What are the three biggest challenges you face this year, and how have you addressed each?

High construction costs, finding qualified labor and meeting schedule expectations.

High construction cost: As everyone is aware we are at an unsustainable level of construction costs and is our biggest challenge as a GC.

We focus on designing new strategies and practices that focus on lowering costs while not diluting the finish product. This is a time consuming process that is needed in the design stages of a project and not after the fact when a project is being bid out with permit drawings.

We are in a new environment and some potential clients have a hard time seeing the value in this process. This is when past client relationships are extremely valuable in giving testimonials or speaking your accomplishments.

Labor: The labor market is still understaffed but as more of the fire rebuilds continue to finish we are finding the market is starting to balance out more. We are seeing more subcontractor proposals and the availability to perform the work is increasing as well. In addition another strategy of ours is to have more self-performed work to fill the labor gaps.

Schedule expectations: I think every GC is feeling the increased pressure to complete projects on time and with the labor shortage this has been an extremely challenging task. This is were subcontractor loyalty comes into play.

Having a solid relationship with the subcontractor market is key when keeping your project on schedule. Providing quick payments and producing 4-6 week look ahead schedules for the subcontractors so they can manage their workloads within our schedules are tactics we practice on all our projects.

Assuming that labor is among your largest challenges, what do you think is needed from government and private industry to address this issue?

I think that everyone in the industry has been diligent about finding solutions to this challenge and there is no easy answer otherwise we wouldn't still be talking about it year after year.

I do think that as the fire rebuilding starts to come to a completion that we will see an increase in labor availability.

We are currently working with the North Coast Builders Exchange and their North Bay Construction Corps program to entice more high school talent into the industry, it is a really powerful program that is producing great accomplishments

If at all, in what ways does government regulation affect your ability to do business, as in the permitting process or in the regulation of overtime pay or other labor issues? How are you adjusting to these challenges?

I think one of the biggest challenges that I have seen increase over the past couple years is the permit process. This includes entitlements, design review, use permits, building permits, etc…. the entire process is understaffed and incredibly difficult to predict and manage.

Because of these current conditions owners have reached their limit and we are starting to see Owners not pursue projects because of the lengthy process with certain jurisdictions.

What are your three biggest jobs right now?

Fountaingrove Country Club

Billa Landing, North Laughlin Road, Santa Rosa

Park-A-Pup

Tell us what is interesting about them.

All of these projects have their own individual challenges, but I think the common challenge amongst all of them is maintaining the schedule.

As mentioned above maintaining a contractual schedule on any project right now is probably one of the most challenging problems. Being proactive with the labor market and helping the entire team with managing when and what is needed in the future is what is required in this market

How do you see the market for commercial construction changing in the next year in general, and in your area of specialty?

I think we are looking at a very similar 2020 as we have had in 2019. We have code changes coming into effect as of January 1st 2020 and I think we will see an influx of projects being submitted at the end of 2019 to avoid the code upgrades. I don't see a slow down of any kind in the near future.

Thomas Dawson

Precision General Commercial Contractors Inc.

300 Turney St., Sausalito

415-332-8390

www.precisiongc.com

Tell us how much your business is expected to grow this year.

10%

What are the three biggest challenges you face this year, and how have you addressed each?

Lack of available talent for the construction industry. We have expanded our geographic search and recruiting efforts.

Assuming that labor is among your largest challenges, what do you think is needed from government and private industry to address this issue?

Yes, labor is tight.

In the field there are several concerns and challenges including a lack of labor and a lack of qualified educated construction professionals.

Labor - Immigration Reform would be a benefit to the field labor and increase the pool of workers over time. Increasing training and technology at the high school Level would also help.

Construction Professionals - In the North Bay it would be expanding the Santa Rosa Junior College Jr or Sonoma State to include full construction management program as a four-year major and push they program for enrollment. Bigger picture push the State of California to open a California Poly campus in Santa Rosa with a focus on construction and technology. Build the Future.

If at all, in what ways does government regulation affect your ability to do business, as in the permitting process or in the regulation of overtime pay or other labor issues? How are you adjusting to these challenges??

In general the permitting process in our markets is typically held up at the zoning and use level. The County of Sonoma should be commended for its expedited permitting for the fire rebuild in the North Bay.

Our business has to constantly adjust our scheduling efforts for a lack of certainty in the permit process. We work with our owners and clients to build in a series of possible start dates and model the out comes. To work around the uncertainty.

What are your three biggest jobs right now?

38 Degree North Apartments, 120 units of new construction in Santa Rosa.

How do you see the market for commercial construction changing in the next year in general, and in your area of specialty?

We expect the multifamily construction market to expand over the next year for several reasons. First and foremost the demand is high and we are not building enough apartments to fulfill the current demand.

Demand will continue to be strong. The financing market and investment in apartments is strong, interests rates are at an all time low or near it and apartment financing is readily available.

Paul Thompson

Thompson Builders Corp.

250 Bel Marin Keys Blvd., Suite A, Novato 94949

415-456-8972

www.tbcorp.com

Tell us how much your business is expected to grow this year.

Our revenue is expected to grow 75% over last year.

What are the three biggest challenges you face this year, and how have you addressed each?

The greatest challenges are finding and keeping quality employees, meeting cost budgets, staying on schedule and material shortages. Also, subcontractors are all stretched too thin and often are understaffed.

Assuming that labor is among your largest challenges, what do you think is needed from government and private industry to address this issue?

Increase in exposure to the construction industry for today's youth.

If at all, in what ways does government regulation affect your ability to do business, as in the permitting process or in the regulation of overtime pay or other labor issues?

Too burdensome.

What are your three biggest jobs right now?

Wheeler Plaza in San Carlos ($67 million); 360 Fifth St., San Francisco ($64 million); 950 Tennessee St., San Francisco ($51 million)

Tell us what is interesting about them.

950 Tennessee – Challenging site logistics, no convenient lay-down area, 60+ parking stackers

Wheeler Plaza – Aggressive schedule, two levels of public parking operational during construction

360 5th Street – Aggressive schedule and unique finishes

How do you see the market for commercial construction changing in the next year in general, and in your area of specialty?

We're not sure the current construction levels are sustainable and anticipate some type of market adjustment.

Robert Cantu

Western Builders

1400 N. Dutton Ave., #19, Santa Rosa 95401

707 542-3213

www.westernbuilders.info

Tell us how much your business is expected to grow this year.

Revenues are expected to continue to grow due to pent up demand resulting from the influx of projects arising from a better economy relative to the pace of governmental jurisdictions output of planning and permit processes.

What are the three biggest challenges you face this year, and how have you addressed each?

Labor supply, long lead equipment supply and regulatory process administration. Addressing by a heightened schedule control and partnering with governmental jurisdictions.

Assuming that labor is among your largest challenges, what do you think is needed from government and private industry to address this issue?

Continued focus on longer term solutions including workforce development and education programs focused on high school & graduating youth.

If at all, in what ways does government regulation affect your ability to do business, as in the permitting process or in the regulation of overtime pay or other labor issues? How are you adjusting to these challenges?

There is a direct correlation between permit processes and work output. The focus needs to start earlier with entitlement and planning processes with streamlining.

What are your three biggest jobs right now?

Redwood Credit Union: Lower Lake

Alexander Valley Vineyards

RCU Napa

How do you see the market for commercial construction changing in the next year in general, and in your area of specialty?

Market conditions should stay stable for the next year and somewhat beyond while the supply of work remains backlogged.

Mark Davis

Wright Contracting

3020 Dutton Ave., Santa Rosa, 95407

Branch office: 1303 Jefferson St., #200A, Napa 94558

707-528-1172

www.wrightcontracting.com

Tell us how much your business is expected to grow this year.

We expect revenue growth of approximately 10% over last year.

What are the three biggest challenges you face this year, and how have you addressed each?

Labor and material shortages: Due to the flourishing building climate in both the commercial and residential sectors, buoyed by the fire rebuild efforts there continues to be a shortage of both skilled tradesmen and unskilled workers. Shortage of workers, combined with material shortages and unheard-of lead times make scheduling and completion date projections difficult to forecast.

Cost escalation: Because of the labor and material shortages, lengthy, and often costly approval processes and many new regulations, codes, restrictions and permit fees; the cost for construction in the greater bay area and in particular the North Bay continues to escalate, much to the dismay of owners and developers.

Project start and completion dates: Due to the unpredictable approval and permitting process, many of our projects do not start construction when projected, which in turn typically means the completion is also pushed out.

This affects project staffing, our ability to commit to specific subcontractors and the procurement process for certain long lead time materials.

We are attempting to address all of these challenges first and foremost by being as flexible as possible.

This means that we are continuously evaluating alternative construction materials and methods, include prefab options.

In terms of helping clients achieve their budget and schedule goals in this environment, we work hard to articulate all of the different building materials and methodologies available to our clients, so that they can understand pros, cons and trade-offs of the decisions they're making. We also find that an even greater level of transparency and communication is necessary in order to keep stakeholders informed of moving dates and procurement challenges.

Assuming that labor is among your largest challenges, what do you think is needed from government and private industry to address this issue?

I would love to see both private and public high schools re-implement trade-related courses such as wood and metal shop.

The majority of young students are not exposed to working with tools unless they grow up on a ranch or farm or one of their family members are in the trades. This is a big problem.

From our perspective the greatest labor challenge falls on our subcontractors who need to be able to hire skilled tradespeople.

In order to ensure that there are qualified and trained tradespeople in future generations, to replace the highly skilled people who will retire in the next decade or so, it's important for there to be programs in place, such as the North Bay Construction Corps and other career technical education (CTE) programs.

These programs provide young people opportunities to become familiar with the range of trades that are needed and begin to develop skills and to understand what opportunities they will have if they pursue a technical career.

Many CTE programs begin at the middle schools and help students continue that education after high school, ultimately connecting them with industry to gain the hands-on experience they need. Government funding can help build and strengthen these programs and it is critical that private businesses also engage in providing opportunities for students to explore and gain hands-on experience.

And because it takes resources for the private companies to provide that training, it could be very beneficial for there to be tax incentives or credits of some kind to help private companies subsidize the added cost of providing that training.

If at all, in what ways does government regulation affect your ability to do business, as in the permitting process or in the regulation of overtime pay or other labor issues? How are you adjusting to these challenges?

Government regulations do not necessarily affect our ability to do business. For some of the reasons I previously mentioned, these regulations tend to drive up the cost of construction, which in certain instances will cause an owner or developer to not build in the North Bay.

What are your three biggest jobs right now?

Montage luxury resort

Opus One Winery expansion

Novato High School Performing Arts Center and STEM building

Tell us what is interesting about them.

Montage Luxury Resort - This is our largest project ever.

The project is on a previously undeveloped property including 258 rolling acres in the hills north of Healdsburg and entails construction of a variety of types of buildings such as guest cottages, a hotel building, a spa, conference room, pool and other resort amenities. Challenges have included conducting a large-scale earthwork effort during one of the wettest winters in a very long time.

It also required us to grow our staff with exceptionally talented and experienced team members who are located on site full time.

The project is interesting not only due to its size, but also because it is just the first phase of a larger project which has been in the works for approximately a decade. The project dramatically expands the volume of hospitality units available in the Healdsburg area.

The Meadows of Napa Valley Retirement Community – This project began in 2016 and is now wrapping up.

What is most interesting about it is the population it serves and the level of engagement with the residents of the existing facilities. We have completed numerous projects at The Meadows over the years and this expansion added a large underground parking structure, many new independent living units, a new café and a recreation building with a swimming pool and rooms for other recreational activities including a gym and rooms for classes.

The residents in the existing facilities were very engaged throughout the project and met regularly with our extended project team to receive updates and provide input.

Novato High School Performing Arts Center and STEM Building – This project involves constructing a brand new 450-seat, 18,000-square-foot Center for the Arts, including gallery space, classroom/greenroom spaces and support spaces.

This balcony-style seating facility will support district-wide arts programs, as well as Novato High School's Marin School for the Arts.

Also part of the project is a brand new 15,000-square-foot Center for the Sciences to replace aging portable classrooms at the end of their useful life. The new building will house 10 lecture/labs, a demonstration area, breakout spaces, staff support space, as well as outdoor learning areas.

The building will be home to the school's chemistry, biology, sciences, engineering, and physics departments – all ushering in 21st century learning environments.

What is interesting about this project is the volume of construction activity currently taking place on campus and in the district.

In addition to the two projects we're engaged in, there is also a concurrent project involving a new athletic field complex. All of these activities are funded by a Bond Measure G which is simultaneously taking place on six different campuses in the Novato Unified School District.

How do you see the market for commercial construction changing in the next year in general, and in your area of specialty?

We see changes in the delivery and methods of construction that are geared toward reducing time and cost. In particular, the use of prefab buildings and systems is being explored by many of our clients across industries.

While schools have used modular systems for many years, the types of products available is expanding dramatically, providing options for hospitality and multi-family housing applications. Pre-engineered metal buildings are another variation on this approach and we see their usage being explored more broadly as well.