Alaska Construction: Today and Tomorrow.

Steady growth, fostered by strong public-sector spending, will provide continued opportunity for the Alaska construction industry in 2000 and beyond. The growth trend, which began in the mid-'90s, may eventually match the boom levels exhibited in the Lower 48. Booms, of course, are dependent upon mega-projects not often seen in Alaska. Two such projects loom in the form of a National Missile Defense System and the long-awaited development of North Slope natural gas reserves.

In the meantime, the 2000 construction year will enjoy 10 percent growth, surpassing 1999 spending by an estimated $200 million. This year the Alaska construction industry has experienced a healthy balance between public- and private-sector spending. As the name indicates, "private-sector construction" defies exact quantification. However, as the third quarter of 2000 nears conclusion, it appears the private sector will chip in over $1 billion of the industry total projected at $2.2 billion.

Significant private projects include two downtown Anchorage condominium and office towers. A third welcome project includes renovation of the city's now infamous McKay Building. Elsewhere, private projects of significance include oil industry module construction taking place in Anchorage and Fairbanks.

In the public realm, the Alaska Department of Transportation and Public Facilities will support the industry with over $400 million in Year 2000 spending. Projects such as the Whittier Access Project and Ted Stevens Anchorage International Airport Landside and Terminal Redevelopment projects represent the most visible projects.

Alaska construction has also experienced a slight burst in hospital spending in 2000. Expansion projects scattered throughout the state (Anchorage, Juneau, Soldotna, Fairbanks, Valdez and Palmer) will account for $80 million this year. Additionally, Fort Wainwright is planning a replacement hospital valued at $132 million total project cost.

Beyond 2000, the Alaska construction industry can expect continued balance in the distribution of public and private funds for new projects. Aside from the two mega-projects referred to earlier, numerous opportunities will present themselves. Residential construction will likely dip below $400 million per year until interest rate concerns are eased. Commercial building will likely dip slightly as well, for much the same reason. However, the need for office space and a likely retail development in Muldoon are potential opportunities that may help sustain the pace of commercial construction.

Assisted by the rebound in petroleum prices, the industry should expect continued local module construction. This is somewhat speculative, as the major petroleum companies understandably are not at liberty to discuss the nature or volume of their projects. Suffice it to say that this market will likely remain a significant contributor to the Alaska construction industry.

Several educational building projects will add to industry volume in 2001. Three new high schools will contribute approximately $180 million to this tally. The new schools include Mendenhall Valley, South Anchorage and Dimond high schools. Elsewhere in the education sector, the University of Alaska Fairbanks is planning a $25 million museum, as well as a research space within the proposed NOAA facility to be constructed in Juneau. Meantime the University of Alaska Anchorage currently is planning a new $30 million library.

Alaska airports have become prominent commerce centers. Construction of these facilities will continue as the Ted Stevens Anchorage International Airport completes Concourse C and associated airside and landside improvements.

Private development in the form of logistics centers will continue as more freight activity lands in Anchorage. The Anchorage Economic Development Corp. has recently indicated that additional logistics-based opportunities exist for Anchorage International. A study is in the works to examine needs and alternatives to handle the freight demands currently experienced by AIA. Solutions include further development of the existing airport (presumably to the south) or even a freight-only facility located on Fire Island or some other site.

Airports across the nation are considering similar plans as the number of landings and takeoffs cram the airways. Las Vegas recently concluded that a separate cargo-only airport is a viable solution. Expect continued construction at Alaska's airports.

Public airports are not the only airports to experience construction. Military airports at Eielson Air Force Base and Elmendorf Air Force Base are presently building or planning several new projects. Eielson projects exceed $30 million, while Elmendorf has nearterm plans exceeding $20 million. Kulis Air National Guard and Kodiak likewise are planning projects.

As usual, the military supports the Alaska construction market in a myriad of ways. Congress is considering a $190 million allocation for Alaska bases. Projects would include $30 million for housing on Fort Wainwright and $40 million for the second phase of the proposed Wainwright hospital. Eielson would receive $40 million for a central staging area and dormitories. Elmendorf would receive $10 million for hangar upgrades, $7 million for a child care center, and $6 million for a marine reserve center. Under the proposed bill, Kulis would also receive $12 million for a corrosion control facility.

The prognostication for Alaska construction is bright. Should either of the multi-billion dollar mega-projects (National Missile Defense System or the Prudhoe Bay gas-to-liquids) become reality, the industry may find itself stretched beyond capacity.

Several rocks in the road must be addressed and overcome for the industry to remain healthy and to grow to meet the challenges of the next 10 years. For starters, interest rates represent tricky business for the Federal Reserve. Designed to calm the overheated new economy, the rates may elicit reactions by the private sector that could prove detrimental to construction. Another rock in the road lies with our state and federal agencies. Just as the construction community may find itself stretched, so too will owners who find themselves with inadequate resources to administer projects.

Nationwide this problem has proven insurmountable to some states. Many find themselves incapable of using all the TEA-21 funds received simply because they lack the resources to bring projects to the market for bid. In many cases this may be an opportunity for owners and contractors to utilize alternate delivery methods to bring projects to fruition. The design/build form of contracting perhaps represents the most promising option for staff-short owner organizations.

Perhaps the most challenging rock in the road created by opportunity in the next 10 years lies within the construction industry. Namely, America's population of trained crafts people is declining rapidly, while the market demand for trained craftsmen is increasing. The problem runs deeper than simple supply and demand. Construction careers often are not viewed as glamorous. Furthermore, in this new economy, construction must compete with the technical and dotcom keyboard careers available to today's graduates. Many companies have long ago developed internships and apprenticeships to attract and train young recruits to the construction industry. It will take stepped-up efforts to attract new individuals to handle the opportunities in a robust construction economy. Contractors, labor unions, schools and agencies such as the Associated General Contractors have all begun efforts to address the impending shortages. Despite this, we may find ourselves with more work than we can handle here in Alaska for constructi on in 2000 and beyond.

David C. Zemek is an area manager with Kiewit Companies, whose home office is Peter Kiewit Sons, Inc. in Omaha, Neb. Kiewit has been an active part of building and highway construction in Alaska since 1946.