Alaska to benefit from upcoming construction season: more than $6.5 billion to be spent in 2006 statewide.

As the weather gets warmer and the ground begins to thaw, the rumbling of heavy equipment signals the start of spring on the Last Frontier. As Alaska gears up for another construction season, employment and project spending are expected to increase, as are the number of new facilities around the state.

According to Dick Cattanach, executive director of Alaska General Contractors, in calendar year 2006, more than $6.5 billion will be spent on construction, which is up 13 percent from the previous year. Employment in the construction industry is expected to grow by approximately 4 percent, as it has in previous years.

"Part of the increase in construction spending is due to high energy prices-construction in the oil and gas industries is expected to increase by 20 percent in 2006 to more than $2 billion," Cattanach explained. "Utility spending will also be up, in part due to the new power plant that's being built in Fairbanks that is projected to happen this year."

According to the Alaska Construction Spending Forecast, published by the AGC and the Construction Industry Progress Fund (CIPF), this increase in oil and gas industry construction is mainly due to an increase in exploration and development activity on the North Slope and in Cook Inlet, as well as investments in refinery and pipeline upgrades. BP, ConocoPhillips and ExxonMobil are expected to invest $1.5 billion in their Alaska operations, much of which will be spent optimizing production from existing fields.

School construction also is expected to increase, with projects that were funded between 2003 and 2006 taking shape. "There will be quite a bit of school construction this year as money begins to hit the streets that was passed by the Legislature last year," said Cattanach. "Total university spending between Anchorage, Fairbanks and Juneau is estimated to be between 90 million and $100 million, and more than $200 million is expected to be spent on kindergarten through 12th grade construction statewide."

Roughly $300 million is budgeted for airport construction and improvements this year, including the A and B concourses at the Ted Stevens Anchorage International Airport, and major renovations at Fairbanks International Airport. The Port of Anchorage is also looking to spend approximately $40 million this year as part of a $300 million expansion project.

According to Cattanach, road construction will increase this year, up about $100 million from the $300 million appropriated last year. Many projects have yet to be determined, however, until a final decision is made on whether the current road program will contain both the Knik Arm bridge and the Ketchikan-Gravina bridge. "Though there will be an increase in the road budget, how it is used will depend on whether the state will be doing the same roads program in the past and one bridge project or two bridge projects," said Cattanach. "If we do two bridge projects in the amount the governor proposes, the state will end up cutting back on the current roads program."

One of the biggest players in this year's construction season is the U.S. Army Corps of Engineers, Alaska District, who is expecting to spend roughly $800 million in both fiscal years 2006 and 2007. This money will be spent on projects including military construction, civil works projects, environmental projects, operations and maintenance of existing projects and administrative services. In its biggest program ever, the district awarded $792.7 million in contracts between Oct. 1, 2004, and Sept. 30, 2005, and is continuing to award contracts for construction projects in the first two quarters of 2006.

INVESTING IN EDUCATION

In 2006, $78 million was appropriated by the Legislature for the repair and replacement of schools all over the state. Though this may not seem like a lot of money to do such a large job, there is actually a lot more money available this year to fund both small and large construction projects.

"In 2005, $160 million was appropriated for the repair and replacement of schools, and in 2004, that number was $254 million," explained Don Carney, building management specialist, state of Alaska Department of Education and Early Development. "In 2003, that number was $512 million. Right now, projects that were funded in all of these years are in play, since many of the larger jobs usually take between one and two years to get off the ground."

While a major amount of money is expected to be spent in school construction in Anchorage, Fairbanks, Sitka and Juneau this year, smaller $5 million to $10 million projects also are budgeted throughout the state to bring rural schools up to minimum requirements. "There are always maintenance-type issues in rural Alaska, though we're not seeing any really big numbers per any one school," said Cattanach.

In Southeast Alaska, a number of school improvements are planned in Haines, Sitka, Ketchikan and Juneau. "In Sitka, voters supported bond funding to build a $14 million auditorium at Sitka High School," said Carney. "There also will be $7 million spent on district-wide major maintenance projects, which will affect four schools."

In Ketchikan, a $6 million emergency project is under way at the borough level to fix the recently remodeled junior high school, which is already full of mold, according to Carney. "Other statewide emergency projects include a new school at White Mountain to replaced one that burned down, and a major project in the Mat-Su Valley to replace a roof that was determined to be unsafe," he said.

In Juneau, $18.5 million is budgeted for maintenance projects at several schools, including $8 million for Phases 3 and 4 at Juneau-Douglas High School and $6 million to complete Phase 2 at Floyd Dryden Middle School; $58.5 million has been budgeted for a new Juneau high school, which will begin construction this year.

In the Anchorage area, a number of school improvements are scheduled, including renovations and an addition to Clark Middle School, which will take place in several phases. About $7 million will be spent on Phase 4 of East High School and $20 million on Phase 2 of Service High School. Chugiak High School will spend $4 million to complete Phases 2 and 3, and a new middle school in Muldoon is budgeted at $52 million.

"In Fairbanks, $7 million has been budgeted district-wide for maintenance, and $15 million will be spent on replacing Denali Elementary," said Carney. "Nordale Elementary, which was started in 2003 and cost $15 million, is also nearing completion."

Even as construction gets under way on schools all over the state, Carney expects to see a need for even more money, and facilities, in the future. "We create two request lists-a new construction list and a major maintenance list," he explained. "Over the years, a lot of projects have been funded on the major maintenance list, but very few from the new construction list."

"Unfortunately, a lot of Alaska's schools were built in the 1970s and '80s, and many didn't receive adequate care or weren't adequately built," he continued. "Now it's getting to the point where it's not practical to put more money into them, and we are in major need of some new school construction. We've been very fortunate in the last few years to have support from the Legislature in funding school projects, but we're playing a catch-up game and we're still quite a bit behind."

GETTING THERE FROM HERE: AIRPORTS, PORTS AND ROADS

In 2006, approximately $300 million will be spent on airports in Alaska, about $200 million of which will be provided by the Federal Aviation Administration (FAA). "Most of the money, about $200 million, will be used in rural Alaska, for projects in the $5 million to $10 million range," said Cattanach.

Though significant investments aren't expected at the Juneau International Airport, approximately $90 million will be spent at Ted Stevens Anchorage International Airport and at Fairbanks International Airport. Improvements to the Fairbanks Airport include a new lounge, dining area and larger security area as part of Phase 2 to enhance the upstairs area of the terminal.

At the Port of Anchorage, a number of facility improvements will get under way, including road and rail extension to improve cargo flow, reduce traffic conflicts outside the port boundaries, improve local air quality and support new military requests. Facilities improvements also will include marine terminal redevelopment to provide barge dock capacity and expand commercial dock space.

In early March, the Alaska Department of Transportation and Public Facilities announced that its three-year Statewide Transportation Improvement Plan (STIP) had been approved by the Federal Highway Administration. Approval of the plan means that federal funding will be available for those projects, as well as funding for municipal planning organizations in Anchorage and Fairbanks for the upcoming construction season.

"This final STIP shows a number of projects that we have been able to move forward because earmarked funds for the Gravina and Knik bridge projects were amended," said DOT Commissioner Mike Barton in a release issued in March. "This has provided approximately $179 million spread over five years. I am confident we have achieved a good balance between the need to go forward with large, regional connectors, such as the Knik Arm crossing, Gravina, and the Juneau Access project, and at the same time provide continuing funding for smaller, but vital highway and intersection improvements."

Under the plan, $91 million would be earmarked for the Gravina bridge and $93.6 million for Knik. Though overall road construction dollars will go up, much of this money will be spent in the planning process, causing the actual dollars spent on construction in 2006 to go down, according to Cattanach.

"Basically, we'll be seeing the same types of road projects as last year, which include maintaining, improving and upgrading the roads we already have," he said. "The governor and the Legislature are looking at the possibility of new roads through the 'Roads to Resources' project, but at this date, we don't know what's going to happen there."

COMMERCIAL AND RESIDENTIAL CONSTRUCTION

As Alaska's larger communities continue to expand, so it seems, does the need for big box stores. "We're probably going to see the continued expansion of Home Depot in Alaska, and I understand that Wal-Mart and Target are also looking to expand into the market," said Cattanach.

For more than a year, Home Depot has been negotiating with the Juneau Assembly to build a store, and it recently received the Juneau Planning Commission's blessing to build a retail store in an area zoned for industrial use. Though the sale of the land had not been finalized as of this article, if the parties come to an agreement, Home Depot is expected to begin construction in early May and complete the store in January 2007.

"In the Anchorage area, plans are already under way for a high-rise office building to be built at the corner of 36th and C, and there has also been discussion about constructing a high-rise office building on "C" by KeyBank," said Cattanach. "Downtown, there is ongoing talk about the construction of a combination office/ residential high-rise."

Construction of a new convention center and expansion of the museum will also begin in Anchorage in 2006. "The convention center, which will be built by Neeser Construction Inc., is expected to cost in excess of $100 million," said Cattanach. The expansion of the Anchorage Museum of History and Art, which is expected to be completed in 2010, is being constructed by Alcan General Inc.

Though other areas are continuing to grow, construction in the residential area is expected to stay flat this year, according to Cattanach. "Residential construction, which represents about three-quarters of a billion dollars annually, is going to feed on itself this year," he said. "I don't see growth happening in that area."

MILITARY CONSTRUCTION, CIVIL WORKS PROJECT AND MORE

One of the biggest players this year on the construction front is the U.S. Army Corps of Engineers, Alaska District, which expects to spend roughly $800 million on construction projects in 2006. Military spending accounts for the largest increase in the Alaska District's program, with projects to support Army transformation and Air Force realignments and re-stationing creating a boom in construction.

"Between the awards made last year and the contracts being awarded this spring, Alaska can expect to see a huge amount of military construction taking place in 2006 and for several years into the future," said Bob Chivvas, acting military branch chief, project management, U.S. Army Corps of Engineers, Alaska District.

One of the biggest areas of construction is in family and single-soldier housing at Fort Wainwright, with five projects, worth a total of $250 million, getting under way this spring. Four contracts are currently in source selection, with Osborne Construction Co. being awarded the first contract this past February. That contract, worth $35.7 million, is for whole neighborhood revitalization to include the construction of 67 Junior Noncommissioned Officers' family quarters in the Southern Cross community.

"Because we are in such desperate need for family and single-soldier housing at Fort Wainwright, we've already had modular barracks buildings shipped up by barge and trucked from Valdez that are currently being installed," said Chivvas. The $37.8 million modularity project, which was awarded to Doyon/AMI joint venture, will house 256 soldiers until permanent housing is available.

In addition to housing projects, the Corps recently awarded a contract to build a replacement hangar for Hangar 6, which was home to the 68th Medical Company before it burned down in August of 2004. Bristol Environmental and Engineering Services Corp, who received the $28 million design/construct contract in September of 2005, began site work in early March. The replacement 52,540-square-foot hangar is scheduled for completion in July of 2007.

In January, a $7.93 million contract was awarded to Tunista Inc. for a utilidor project to upgrade the Ninth Street Housing utilities at Fort Wainwright. Other current projects at Fort Wainwright include a fence project and a barracks project awarded to Bristol Environmental and Engineering Services, and a barracks and company operations facilities awarded to Neeser Construction.

At Fort Richardson, current construction projects include a barracks project awarded to Watterson/Davis joint venture, and a housing project awarded to Watterson Construction Co. A $43 million family housing project was recently awarded to Davis Constructors and Engineers Inc., which will provide 93 Army family housing units. In addition, a multipurpose training range is being built by Cornerstone Construction, and a Sniper Field Fire Range was awarded to Kanag'lq Construction.

At Elmendorf Air Force Base, a large airframe hangar is being built by Kiewit Construction, and a physical fitness center upgrade is being completed by Unit Company. The construction effort to support the C-17 program on the base also is continuing, with construction on the $7 million flight simulator under way, and source selection taking place for the construction of the C-17 maintenance facility.

On the civil works side of things, construction of a small boat harbor inside the existing commercial vessel harbor at Saint Paul Island will enter Phase 3, and erosion projects at Dillingham, Bethel and Shishmaref will be awarded to small business firms in 2006. A sewage lagoon, inlet piping and a discharge control system will be constructed at Buckland to provide environmental infrastructure.

As new facilities go up and the state and local communities benefit from the money and jobs that construction brings, there is no doubt that 2006 will be remembered in the industry as a very good year.

Alaska Construction Spending
2006 Forecast

                                   Level      Change

PRIVATE                    $3,925,000,000        11%
  Oil and Gas               2,040,000,000        19%
  Mining                      200,000,000        -5%
  Other Basic Industry         50,000,000        --
  Residential                 715,000,000         2%
  Commercial                  300,000,000        20%
  Hospitals                   220,000,000       -37%
  Utilities                   400,000,000        45%

PUBLIC                     $2,600,000,000        17%
  National Defense            730,000,000         8%
  Highways                    450,000,000        13%
  Airports and Ports          330,000,000        --
  Alaska Railroad              80,000,000         7%
  Denali Commission           100,000,000        --
  Education                   310,000,000       107%
  Other Federal               400,000,000        23%
  Other State & Local         200,000,000        14%

TOTAL                      $6,525,000,000        13%