May/June BreakingGround

K-12 MARKET UPDATE

CELEBRATING 50 YEARS OF

CHALLENGING OURSELVES TO EXCELLENCE AND BEING THE LEADER IN THE MECHANICAL CONSTRUCTION INDUSTRY

# W e A r e V o l p a t t ustrial institutional

PUBLISHER

Master Builders’ Association of Western PA www.mbawpa org

MANAGING EDITOR Ben Atwood 412-922-3912 ben@mbawpa.com

EDITOR Jeff Burd jburd@talltimbergroup.com

PRODUCTION

Carson Publishing, Inc. Kevin J. Gordon

ART DIRECTOR

Carson Publishing, Inc.

GRAPHIC DESIGN

CONTRIBUTING PHOTOGRAPHY

Allegheny Land Trust LGA Partners

Massaro Corporation

Massery Photography Master Builders’ Association of Western PA NAIOP Pittsburgh Rycon Construction Tall Timber Group

SPONSORSHIP DIRECTOR Mary Chuderewicz mchuderewicz@mbawpa org

MORE INFORMATION:

BreakingGroundTM is published by the Master Builders’ Association of Western Pennsylvania, 412-922-3912 or www.mbawpa.org

Archive copies of BreakingGroundTM can be viewed at www.mbawpa.org

No part of this magazine may be reproduced without written permission by the Publisher. All rights reserved.

This information is carefully gathered and compiled in such a manner as to ensure maximum accuracy. We cannot, and do not, guarantee either the correctness of all information furnished nor the complete absence of errors and omissions. Hence, responsibility for same neither can be, nor is, assumed.

On the cover: Trinity Intermediate School. Photo by Massery Photography

PUBLISHER’S NOTE

It’s time to fix our public school system. Pennsylvania has long relied on a funding mechanism, property taxes, that is now obsolete. That system is also unfair and, as of 2023, unconstitutional. Political pressures make raising millages or doing regular assessments to increase revenue unpopular. A new way to pay for public education must be found because the costs of public education are not going down.

I am now part of the demographic group that has most gummed up the works, although I am not yet on a fixed income. Those that are, especially those on a fixed income that is below what their working income was, understandably resist having their property taxes hiked while their income is not increasing commensurately. Do not count me among that group that resents paying more taxes to educate someone else’s kids. It is the quality and reputation of Hampton’s schools that increases the value of my home and makes it more desirable when I want to sell it. Moreover, it is part of the collective bargain we make (or used to make) as Pennsylvania residents and American citizens. Our individual freedom and prosperity have been enhanced by a variety of collective bargains, like road maintenance, public safety, or civil defense. I consider public education to be one of the most consequential of those bargains.

If you were asked to identify the reasons why America’s middle class rose to the point where it became the backbone of the world’s largest economy, you would be hard-pressed to find two more important factors than the 30-year mortgage and high-quality public education.

American capitalism will always be driven by its wealthiest class, the investors. What separates our economy from other developed nations is the presence of a large upwardly mobile working class. The 30-year mortgage allowed home ownership for those who could not save enough money to buy a house under other circumstances. That opportunity helped millions create a foundation for economic security. Perhaps more importantly, it insulated those homeowners from a lifetime of future rent increases and allowed them to benefit from asset appreciation.

Public education was therefore a vehicle that the ambitious could use for upward mobility. In other times and places, the working class was held in place by a lack of education. That may have served the ruling classes’ purpose, but it also perpetuated an ignorance that stifled society’s growth. For most of the last hundred years, all but a dwindling number of American adults had at least a high school education. That proved to be a powerful deterrent to ignorance and a foundation for providing even higher education to more Americans. In turn, that fueled innovation and economic growth that allowed America to transition from an industrial economy to a diversified economy. Education helps create

the rising tide that lifts all boats, and public education increases the overall level of education.

The facilities where our children are being educated are slowly but inexorably becoming inadequate. Because of many fiscal pressures, the elected leaders of our commonwealth have underfunded public schools for more than a decade. The primary vehicle for planning and building major capital improvements, PlanCon, has been effectively unfunded for 14 years.

When schools are too hot or cold, when there is poor air quality or asbestos present, where the learning environment has fallen well behind the demands of technology, students do not learn as well as they could. Pennsylvania’s students are not faring as well as they once did, according to the objective measures all states use to evaluate performance. The learning environments may not be the reason for the decline in performance, but they aren’t helping the cause either.

It is also financially irresponsible to neglect facilities. Deferred preventive maintenance leads to failures and higher costs of replacement. Taking care of facilities extends their useful life, which also saves school districts money in the long run.

Public schools operate their facilities much the same way we do our homes. Pennsylvania school districts also have a long-term funding mechanism to finance improvements or expansion in the same way its taxpayers do. By issuing long-term bonds, school districts can pay with today’s dollars for improvements that will improve facilities for the future. I was surprised to learn during the research for this edition that no school district has enough reserves or excess revenue to pay for a project that costs more than a few million dollars. That doesn’t go far today. Like us taxpayers, the school district needs to know that it has a predictable income to responsibly borrow for 20 years. It is that predictable income that is uncertain.

We have waited long enough to solve the problem that there will be some financial pain. Perhaps we have lost our sense of public duty or our will to endure present inconvenience for the benefit of future Pennsylvanians. I don’t believe that’s the case, but I don’t believe our lawmakers know that. If you believe, as I do, that we need to do what is necessary to reinvest in our public schools, find your legislators’ contact information and tell them that. Right now, those with the loudest voices are telling them to wait until tomorrow to figure things out. Tomorrow has come.

REGIONAL MARKET UPDATE

BY BEN ATWOOD AND JEFF BURD

The uncertainty caused by early-stage Trump administration tariffs and policies, especially those that have slashed or frozen federal disbursements for research and education, will reduce the amount of construction started in Western PA; however, construction starts and new contracting in the first quarter of 2025 (including construction put in place at UPMC Presbyterian in Oakland) were higher than normal. During the first three months of the year, starts and contract awards totaled $1.21 billion, a 31.6 percent increase over the first three months of 2024.

Among the major construction types, multi-family was the most active at $304 million in starts. Industrial projects totaled $110.5 million, followed closely by healthcare at $105.5 million (excluding the work at UPMC Presbyterian). Retail construction, almost exclusively tenant infill projects, saw $88.9 million during the first quarter. Healthcare spending was mostly for infrastructure and diagnostic upgrades. The major new project expected to get underway, AHN South Hospital in Canonsburg, was delayed.

The office market remained very strong for those firms that focus on tenant improvements. Pandemic-related market dynamics continued to plague landlords in the first quarter, as the vacancy rate edged closer to 23 percent metro-wide. Leasing activity remained robust, however, as tenants used the weaker conditions to relocate to new space or upgrade existing space when leases renewed. Office construction activity was low relative to other sectors but increased by 23 percent yearover-year to $66.3 million in the first quarter. (That total excludes

repairs and maintenance and projects under $100,000.) All but $4.5 million – from two new bank branches – was tenant or landlord improvements to existing buildings.

In a typical year, first quarter activity represents 15-17 percent of the full year’s construction, which would suggest that construction will top $5.2 billion in 2025. That scenario is very unlikely in 2025, as the current economic outlook portends slowing demand as spring and summer unfold. Tall Timber Group revised its forecast for the full year downward at the end of the first quarter, from $4.8 billion to $4 billion.

Some of the increased activity can be explained by the higherthan-normal number of projects awarded in 2024 (and 2023) that did not start because of construction costs and higher interest rates; however, bidding activity was also more robust. A survey of 30 general and specialty contractors across the full spectrum of size and approach to business found that there was an average of 20.3 percent more bidding opportunities in the first quarter of 2025 compared to a year earlier. Those opportunities represented total contracts that were 38.2 percent higher than in the first quarter of 2024.

The optimistic reading of this information is that it bodes well for the second and third quarters. Most of what started in the first quarter was priced or contracted before the first of the year. Much of what bid since January has either not been awarded or started construction. The less optimistic interpretation is that the market may be more competitive, so that more contractors are bidding the same opportunities. Moreover, with construction costs still increasing, the uncertain state of the economy could keep the projects that bid from January through March on hold.

Residential construction fell by 12 percent in the first quarter of 2025 compared to a year earlier. The Pittsburgh Homebuilding Report, which reviews public records of building permits issued monthly throughout the metropolitan area, reported that builders started 1,231 units of new housing in the first three months of the year. Construction of multi-family units fell by 14.1 percent, or 95 fewer units than in 2024. Builders started 648 single-family units from January through March, a 10 percent decline year-over-year; however, the biggest decline was in single-family detached units, which fell by 22.4 percent.

A variety of factors weighed on new home construction. In addition to the long-term structural problem of an insufficient lot inventory, single-family homebuilding faced headwinds from bad weather in January and February, increasingly higher construction costs, worker shortages, and mortgage rates that spiked over seven percent in mid-January. The recovery in townhouses and attached housing represented a return to the long-term trend, rather than growth. Construction of attached housing slowed significantly in 2024, so the 27.1 percent increase in 2025 puts that sector on pace for a more typical 1,000 units per year.

Pittsburgh consumers bucked the national trend and responded more positively about their economic outlook. Morning Consult’s Metropolitan Index of Consumer Sentiment for the first quarter of 2025 jumped to 96.3 from the 94.5 reading at the end of 2024. That reading was slightly below the positive/negative break-even point of 100. At the national level, consumer sentiment was 96.0. Morning Consult surveys 5,000 consumers daily, asking their views on the current and coming conditions for employment, finances, and the overall economy. The survey was completed before the steep correction in the stock markets following the announcement of U.S. tariff policy.

The Bureau of Labor Statistics (BLS) most recent data shows 1,224,800 total in the civilian labor force as of February of 2025. The unemployment rate registered at 4.3 percent, a slight downtick from January, but was up a full percentage point from the fourth quarter of 2024.

Total non-farm employment was 1,202,700 in March. This is a year-over-year (YOY) change of 0.7 percent and an increase from February’s total of 1,192,700. The largest

positive changes YOY were in education and health services (3.6 percent), other services (3.0 percent), and mining and logging (2.5 percent). The most significant losses occurred in the information (-4.1 percent), manufacturing (-3.5 percent) and leisure and hospitality (-1.5 percent) sectors.

Construction employment levels remained relatively unchanged between February and March and is up 0.2 percent from March of 2024.

The Federal Reserve Bank of St. Louis posted its most recent observations of Pittsburgh’s average hourly earnings of all employees in the private sector in March. It shows the average worker makes $31.50 an hour, up roughly $1 since March of 2024 and $4 since March of 2020.

The median Pittsburgh home price was $174 per square foot, according to March’s data from Realtor.com. This figure has trended down since summer of 2024, but is roughly in line with March of 2024 figures and about $20 a square foot higher than what was seen in March of 2023. There are just over 4,000 homes on the market at the end of March, a modest uptick from 2024’s figure of around 3,500. The median days on market for sale listings are 10.7 percent higher in March of 2024 than it was this time last year.

CoStar’s latest multifamily market report shows that demand is strong enough to absorb new supply. Vacancies currently sit at 6.1 percent and have fallen by 40 basis points over the past twelve months. This figure is skewed by heavy renovations to multiple downtown projects, which spike vacancies for the region and the submarket. New projects downtown have been able to lease at a healthy clip. Market wide rent growth year over year is nearly three percent, comparing favorably to the national index of 1.1 percent. There

New single-family construction permits fell in all six metropolitan Pittsburgh counties in the first quarter compared to a year earlier.

The average hourly wage for all employees in Pittsburgh rose 3.3 percent compared to a year ago. Source: Federal Reserve Bank of St. Louis, Bureau of Labor Statistics.

are currently 2,400 units underway across the market, slated to be delivered over the next 24 months.

The outlook for construction and development for the balance of 2025 will be more closely tied to macroeconomic forces than regional forces. Pittsburgh’s economy is not dynamic but is very steady at the end of April. The longterm drags on Pittsburgh’s growth – declining population and workforce, tepid new investment – tend to be less negative when the overall economy slows down. The perception of macroeconomic risk, especially from potential trade wars, is elevated and has begun to be a drag on projects in the pipeline.

The most specific impact of the macroeconomic disruption has been on construction costs, which were already elevated. Feedback since April 2, when the tariffs were announced, is very limited, but contractors and architects have been unanimous in reporting that pricing has taken a step higher. There has been sufficient response to the tariffs by some in the supply chain to push material escalation at a higher pace. Owners have been seeking more clarity about how the potentially higher tariffs will affect projects scheduled to start later this year. The response has been estimating that reflects conservative, more aggressive escalation than was seen in 2023 or 2024. If these higher costs persist, more projects in the pipeline will remain on hold.

As the first quarter showed, the pipeline of projects is strong because so many projects scheduled to start over the past few years did not get to construction as planned. With what is currently in the pipeline for Southwestern PA – more than $12 billion in projects – the outcome for 2025 will likely turn on how many of those projects remain viable in a more costly environment.

There has been little change in demand within the sectors of the market. Healthcare and higher education are scaled back. Multi-family supply lags demand. The industrial and manufacturing sectors are experiencing robust investment, although the trade wars will impact these sectors in a negative way in the short term. Long-term interest rates have returned to the levels that were anticipated for 2025 after a brief run up following the tariff announcements; therefore, owners should not be discouraged from new projects because of borrowing costs to a greater degree than 90 days ago. The principal challenge facing the regional construction market going forward will be to justify projects to the cost of construction. BG

Quality.

Photograph: Henne Jewelers

NATIONAL MARKET UPDATE

BY BEN ATWOOD AND JEFF BURD

On Wednesday, April 2nd, President Trump placed tariffs on nearly every nation on earth. The administration’s moves sent shockwaves through the global economy and the domestic impact was immediately seen in the stock market.

The Dow Jones fell nearly 1,700 points, while the S&P 500 fell by more than 10 percent in three days. With the notable exception of China, the president soon after placed a pause on the additional tariffs for nations to negotiate their rates down. This enabled the market to recover somewhat but these negotiations exist under a time constraint and the chaotic implementation followed by rapid backtracking have created an elevated level of uncertainty clouding the economic outlook.

In response to the rapidly changing landscape, numerous financial institutions have updated their 2025 forecast. The Federal Reserve Bank of Atlanta’s GDPNow model attempts to forecast gross domestic production (GDP) in real time. Though heavily modeled, it forecasts GDP for the first quarter will be -2.5 percent.

Goldman Sachs now believe there is a 45 percent chance of a recession this year, up from 35 percent from their previous forecast. Vanguard’s recent 2025 forecast states that “the anticipated impact of tariffs and related policy uncertainty has led us recently to lower our forecast of economic growth and increase our forecasts for unemployment and inflation.”

Vanguard lowered their 2025 economic growth expectations to less than one percent, down a full percentage point from the start of the year. Additionally, they now anticipate four percent inflation this year, as well as five percent unemployment (up from the previous forecast of 4.5 percent) as well as two .25 percent interest rate cuts by the Federal Reserve.

The next opportunity for a cut to occur will be at an early May meeting of the Federal Open Market Committee (FOMC). Shortly before the implementation of the tariffs, that group also reduced expectations for the year, lowering its GDP forecast to 1.7 percent from 2.1 percent. It also raised core inflation projections by .3 percent to 2.8 percent.

During that meeting, the Federal Reserve voted unanimously to hold interest rates steady at 4.5 percent for the second consecutive month, following three consecutive rate reductions that began last September. Federal Chairman Jerome

Powell cited the steady progress of the economy with solid labor market conditions as reason for the sustained pause and pointedly said that the Fed will not intervene in stock market corrections caused by tariffs. Still, there could be considerable political pressure on the Federal Reserve to cut rates more at the May meeting.

Federal level economic data is still lagging the tariff announcements, but one place where the impact has been clearly visible is consumer sentiment. University of Michigan’s consumer sentiment survey shows a remarkable drop. The Index of consumer sentiment measurements for April of 2025 shows a reading of 5.25, a five point drop from March and a 32 percent drop year over year. This is the steepest drop off since 1990.

Current economic conditions registered at 59.8, a four point drop from March of 2025 and a 24.3 percent drop from April of 2024. Index of consumer expectations is 47.3, a five point drop since March and a 37.8 percent drop since April of 2024.

Despite this, consumers have not slowed retail spending yet. The National Retail Federation forecast in April that retail sales will grow between 2.7 to 3.7 percent over the course of 2025, roughly 5.5 trillion dollars. In 2024, the group forecast retail sales growth of 3.6 percent.

This might be changing, however. On April 30th, the BEA released its advanced estimate for GDP growth during the first quarter of 2025, which showed a 0.3 percent contraction. That marked the first decline in GDP since 2022. The decline was attributed to an increase in imports, a decrease in

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government spending, and a deceleration in consumer spending. The report, subject to two subsequent revisions, also shows an increase of 3.4 percent to the price index for gross domestic purchases and the personal consumption expenditures price index.

For the sake of comparison, a week before the tariffs were announced, the Bureau of Economic Analysis (BEA) released the final revision of 2024 gross domestic production (GDP) figures. The BEA shows that real GDP increased by 2.8 percent in 2024, slightly down from the 2.9 percent growth seen in 2023. The revision showed an annual growth rate of 2.4 percent for the fourth quarter, down from the third quarter, when real GDP growth registered at 3.1 percent.

Real gross output increased by 1.7 percent in the fourth quarter, reflecting an increase of 0.3 percent for private goods producing industries and 2.0 percent for government. The producer price index (PPI) for gross domestic purchases increased 2.2 percent in the fourth quarter, revised downwards by 0.1 percentage point from the BEA’s previous estimate. The personal consumption expenditure (PCE) price index increased by 2.4 percent, revised down by 0.1 percentage point.

U.S. Census data shows construction spending during February 2025 was estimated at a seasonally adjusted annual rate of $2.195.8 billion, .7 percent above the revised January estimate of $2,179.9 billion. The February 2025 figure is 2.9 percent above the February 2024 estimate, and during the first two months of 2025, total construction spending is estimated at $311.1 billion, 2.1 percent higher than the same period in 2024.

April data from the Bureau of Labor Statistics (BLS) shows that privately owned housing units authorized by building permits in March were at a seasonally adjusted rate of 1.48 million. This is 1.6 percent above the revised February rate of 1.45 million, but 0.2 percent below the March 2024 rate.

Seasonally adjusted private owned housing starts in March were 1.32 million, 11.4 percent below the revised February estimate, but 1.9 percent above the March 2024 rate. Single family housing starts for March were at a rate of 940,000, 14.2 percent below the revised February figure of 1,096,000.

The Census Bureau’s seasonally adjusted figures for March show that 724,000 new single-family houses sold, 7.4 percent above the February figure and 6 percent higher than what was seen in March of 2024. The median sales price of new houses sold was $403,600, 1.9 percent below the February price and 7.5 percent below the March 2024 price.

The Federal Reserve Bank of St. Louis shows that the average 30-year fixed rate mortgage average is at 6.81 percent at the end of April, up slightly from the start of March, but down from nearly seven percent from April of 2024.

April’s census data shows a national level increase in multifamily housing permits also from February to March. Close to 38,000 permits were issued in March, nearly 10,000 more than in February. However, the multifamily construction market has been trending downwards since 2023, following a

post pandemic explosion in construction.

Public construction for February was estimated at $509.3 billion, 0.2 percent above the revised January estimate. Educational construction was at a seasonally adjusted annual rate of $110.8 billion.

Private construction was measured at a seasonally adjusted annual rate of $1.686.4 billion, .9 percent higher than the revised January estimate. Nonresidential seasonally adjusted construction was $757.5 billion in February, 0.4 percent higher than the January estimate. Residential construction was at a seasonally adjusted annual rate of $928.9 billion, 1.3 percent above the revised January figure.

There was virtually no good news for the housing market in the first quarter. The hope of lower mortgage rates that followed the Federal Reserve’s fall rate cuts was dimming at the end of 2024, and conditions have worsened since then. Higher mortgage rates in January and February pushed buyers and sellers to the sidelines. Bad weather held down traffic. Pricing for construction surged due to tariffs, or the threat of tariffs. Pessimism about the direction of the economy pushed the direction of long-term rates higher as the first quarter ended.

Sales of existing homes fell almost six percent in March to a 4.02 million homes per year pace. That pace was the lowest since January 2024 and was 2.4 percent lower than March 2024 and 23.6 percent below the pre-pandemic pace. The decline in resales pushed the inventory of homes for sale higher by 18.6 percent year-over-year, which tamped down price appreciation to a 2.9 percent annual rate. The rise in mortgage rates in April held new listings down, however, which is likely to keep supply lower than demand in the second quarter. Sales of new homes rose six percent year-to-date at the end of the first quarter, but the inventory of unsold new homes was the highest since March 2007, at the beginning of the mortgage crisis.

The spring selling season started with the extreme volatility of the stock and bond markets following President Trump’s tariff announcements. The abrupt reversal of those tariffs and the uncertainty surrounding trade policy heightened economic concerns. Long-term rates reflected those concerns from bond investors, keeping the bellwether 30-year fixed mortgage rate a full percentage point higher than mid-September.

The Standard and Poor’s U.S. Manufacturing Purchasing Manager’s Index (PMI) rose to 20.7 in April, up slightly from 50.2 in March. Though the gains were slight, it marks the fourth consecutive month of expansion.

An April 4th release from the BLS shows that total non-farm employment rose by 228,000 in March, with little change to any unemployment measurements. Healthcare, heavily funded by state and federal governments, added 54,000 jobs in March, in line with the monthly average of the prior 12 months. Retail added 24,000 jobs in March, while transportation and warehousing grew by 23,000 in March, double the prior 12-month average gain of 12,000.

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On April 30th, the payroll processor ADP recorded a 62,000 increase in private employment in April, the smallest gain since July of 2024 and a significant drop off from March’s growth of 147,000. Real gross domestic income increased 4.5 percent

in the fourth quarter compared with an increase of 1.4 percent in the third quarter. Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $204.7 billion in the fourth quarter, contrasting with a third quarter decline of $15 billion.

The April jobs report, released on May 2, was in line with ADP’s observations. Employers added 177,000 jobs, roughly 28 percent more than expected. The pace of hiring was in line with the 12-month trend of declining job creation.

Uncertainty was the overriding reason given by the respondents to FMI’s Nonresidential Construction Index (NRCI) survey for a steep drop in expectations for the second quarter. The forward-looking index registered 43.5 for the second quarter of 2025, a 24 percent decline from the 56.9 reading for the first quarter. (A reading over 50 indicates expansion.)

The quarterly survey of construction and design firms done in early-to-mid March found that the optimism of late 2024 had been reversed by concerns over “deteriorating economic

POWER ON POWER ON POWER ON

Source: FMI Nonresidential Construction Index, Q2 2025.

conditions and shrinking short-term opportunities.” FMI reports that sentiment was lower across all economic indicators, including backlogs. The previous reading, done after the 2024 elections, had jumped 17.6 percent from the fourth quarter 2024 survey. The categories that saw the steepest reversals in sentiment were for the “Overall U.S. Economy” (64.5 to 36.1) and “The Economy Where We Do business” (63.8 to 37.7). Sentiment about the cost of materials fell from 35.5 to 8.2.

Economic expectations typically become economic realities. That gives policymakers some amount of runway to restore a sense of certainty about the direction of inflation and activity that businesses and consumers can expect, before negative expectations translate to reduced spending and increased layoffs and unemployment. For those looking for a silver lining, the low level of unemployment and relatively strong balance sheets of businesses and households remain a strong foundation for economic growth, should the way forward become clearer. BG

GDP declined from during the first quarter of 2025, compared to the end of 2024. Source: U.S. Bureau of Economic Analysis.

WHAT’S IT COST?

BY BEN ATWOOD

March data from the Bureau of Labor Statistics (BLS) was a mixed bag for consumers and those in the construction industry, with overhead data remaining stable but the impacts of President Trump’s escalating tariffs becoming visible.

There was little month-to-month change in the Consumer Price Index (CPI), which rose by just .2 percent from February, and a year over year (YOY) increase of 2.4 percent. The Producer Price Index (PPI) dipped by .1 percent from February to March but is about 2.7 percent higher YOY.

The biggest drops in construction pricing come from the energy sector, which declined by 4.2 percent over the past month, and are measuring about 16 percent lower than this time last year. One of the largest dips from the past month was #2 diesel fuel, which declined by 8 percent from February to March. This price has trended lower over the past six months, but its movement has been volatile, with dips often preceded or followed by spikes. Asphalt also saw a decline in price, dropping by 3.3 percent from February to March.

Overall, a total of 13 index categories were in the red month over month. A year over year measurement reduces that number to eight. Comparing March’s figures to December of 2024 indicates that 57 PPI’s pertinent to the construction industry experienced higher YOY inflation in March than that month.

The most notable pricing jumps came from the steel and metals sectors. Steel mill products PPI rose by 7.1 percent from February to March, steel pipe and tubing rose by 5.3 percent, and the PPI for fabricated structural metal for bar joists and rebar and non-industrial buildings rose by 7.2 percent and 8.8 percent respectively.

The costs of steel will likely continue its upward trajectory in the coming months. In February, the White House restored a full 25 percent tariff on steel and aluminum imports, citing concerns that exemptions given to Argentina, Australia, Brazil, Canada, Japan, Mexico, South Korea, the European Union, Ukraine and the United Kingdom were being exploited by China. A pull from DataWeb, which tracks US gross imports

showed that in 2024, these nations accounted for nearly 97 percent of imported value for articles of iron or steel.

On April 3rd, the administration placed additional tariffs against goods imported from nearly every nation on earth, with the heaviest being placed on China, Mexico and Canada being largely exempt. On April 9th, after some negative market reactions, the additional tariffs were placed on hold, presumably for negotiations, while the 10 percent tariffs initially put in place remained. BG

K-12 Market Update

The public-school construction market has historically been a cyclical, but reliable market in Western PA. Driven by demographics that ebb and flow, and by changes in educational philosophy that change the programmatic needs of school buildings, public-school construction was one of the larger sectors of the market.

Bethel Park’s new $109 million elementary school is the largest K-12 project under construction.

Photo by Rycon Construction.

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Quaker Valley’s new $90 million high school campus will be one of the largest K-12 projects to get underway in 2025. Rendering by BSHM Architects.

When things were booming, like in the mid-late 1990s, the K-12 market led the construction industry to good times. When things were leaner, like in the 1970s, investing in public facilities was still popular with taxpayers and school builders could count on opportunities each year.

School districts could raise taxes to fund construction when public education was a popular political priority. The tide of public opinion has changed since the 1990s boom. School boards abhor raising taxes; however, salaries, operating expenses, and pension obligations have ballooned, putting more strain on budgets each year. Capital spending has fallen down the list of priorities for most school districts.

Now, the commonwealth and local school districts must wrestle with developing a new way to fund public education that does not rely on property taxes. The legislature also faces the problem of a growing inequity between the state’s many rural school districts and its suburban districts, a disparity that makes it harder to simply shift the burden of funding down to the local level. Over the next few budget seasons, Pennsylvania’s representatives and senators will have to make difficult decisions about how to invest in public education overall and, while it will be easy to kick the can down the road when it comes to facilities, doing so will just create a bigger problem in years to come.

The blueprint for reversing the tide could come from our neighbors to the west, although it is hardly a recipe for success. For decades, Ohio underfunded its public education facilities as its legislature wrestled with the loss of key tax-generating industries. From year to year, the reduced investment in capital projects was unnoticeable; however, 20 years in, Ohio’s leaders were forced to face the consequences of underinvestment. In the late 1990s, Ohio began the process of spending more than $2 billion to modernize and repair its public schools.

It has been nearly 15 years since the Pennsylvania budget funded the former Planning and Construction Workbook process, also known as PlanCon, adequately, or at all. Should the commonwealth choose to wait until school districts can no longer afford to maintain their facilities, as Ohio did, the price tag will be many billions more

Solving the Funding Problem

In February 2023, Pennsylvania Commonwealth Court President Judge Renée Cohn Jubelirer ruled that the property tax-based system of funding public schools was unconstitutional. The court’s decision will require a fundamental revamping of Pennsylvania’s public education

In her opinion, Judge Jubelirer devoted 10 pages to a review of the failing conditions of the commonwealth’s public educational

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facilities. Senator Lyndsey Williams (D-38th District), the minority party chair of the Senate’s Education Committee, explains that Judge Jubelirer saw facilities as an integral part of a student’s education experience.

“The court decision said we unconstitutionally underfunded and inequitably funded our schools,” Williams says. “It talked about all the things that go into comprehensive public education, including the basic education funding line item, special education line item, early childhood, and facilities. If students are not in a safe building, it’s not a proper learning environment. The court also decided that we needed an adequacy supplement.”

The adequacy supplement was intended to address the financial disparities between Pennsylvania’s 500 districts. The adequacy supplement provides additional resources to districts spending below the state-defined adequacy target. This supplement is part of the Ready to Learn Block Grant and is calculated based on a district’s student-weighted average daily membership and current expenditures. First funded in the 2023-2024 budget, the adequacy supplement was a response to a multi-district lawsuit that charged the commonwealth with failing to reimburse expenses for the districts that amounted to $6 billion. Roughly $200 million was funded in 2023-2024. Williams says the legislature needs to continue to provide those funds to stay ahead of further action by districts.

There have been other limited moves forward by the commonwealth to address the capital shortfalls of Pennsylvania schools. The 2023-2024 budget set aside $175 million for infrastructure improvements to 208 schools as part

of the Public School Facility Improvement Grant Program. In September 2024, Gov. Shapiro announced that another $75 million had been allocated for mitigation of asbestos, lead and other hazardous materials in 109 schools under the Environmental Repair Grant Program.

This additional funding is unfortunately an inadequate solution to the facilities problem, even if there was not a decade or more of neglect. Spread across 500 school districts, the current funding increases would allow for little more than a small renovation, a roof replacement or HVAC upgrade. What is necessary, and mandated by the 2023 court decision, is a comprehensive budgetary solution that provides reliable funding for the commonwealth’s schools. Such a solution would likely have to include some unpopular measures, such as an increase in taxes of some form and significant consolidation of school districts for more efficient operations. These kinds of measures would be more disruptive to smaller and rural school districts, which would exacerbate the current disparity. It is also likely that some reform of the charter school funding would be included, a proposal that is unpopular with educational choice advocates.

One Republican legislator, Senator Chris Gebhart (48th District) has proposed eliminating the school property tax completely by constitutional amendment. If voters approved the amendment, all public-school funding would come from the commonwealth’s annual budget. The proposal does not yet include a replacement for the $17 billion in annual property taxes that currently fund Pennsylvania’s schools. Gebhart says that suggested alternatives include raising the state income tax to 4.5 percent or the statewide sales tax

The design of the renovated Hempfield High School includes collaborative spaces for innovation. Rendering by Crabtree Rohrbach & Associates.

to eight percent. He also believes that some form of charter school funding reform is necessary. To place the amendment

pass it in two sessions. If successful, the earliest it could appear before voters is the November 2027 general election.

As it is proposed, the 2025-2026 budget proposed by the Shapiro administration does not include any such comprehensive solution. What is proposed in the governor’s budget is another $125 million for the Public School Facility Improvement Grant Program, well below the $300 million recommended by the Basic Education Funding Commission. It will be a stretch to achieve a bipartisan budget with that additional proposed funding, let alone a restructuring of the real estate tax revenue mechanism. The proposed budget also fails to fund PlanCon.

The PlanCon process has been formally in a moratorium since 2016, but PlanCon was originally paused four years earlier under Gov. Corbett. When it was reinstated during the 2014-2015 budgeting process there were more than a few kinks in the system.

For starters, most districts that had projects in the early stages continued to make progress on design and kept projects in the PlanCon queue.

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We are also committed to providing opportunity for all who share these values and want to pursue a lifelong, lucrative and satisfying career. For more information on building with our union trades and contractors, or to explore career opportunities, please visit www.buildersguild.org where you will find direct links to our Trade Unions, Joint Apprenticeship Training Centers and Contractor Associations.

Yields on the 20-year Treasury bond edged up near five percent in late April. Interest rates on 20-year bonds have only been that high once since 2007. Source: Federal Reserve Bank of St. Louis, Department of Treasury.

processed. By the time of PlanCon’s reinstatement in 2014, there were 338 projects in the backlog totaling almost $1.6 billion. More than $100 million was in arrears for projects that had been approved through PlanCon Part G and were under construction but without the reimbursements that were due. When the moratorium was put in place again in 2016, few projects had moved significantly toward construction.

The 2014 reinstatement also came with a catch. It was unfunded. Prior to the 2012 moratorium, which impacted projects in 2013, approximately $300 million was allocated to reimbursements annually. Pennsylvania’s school districts can still use PlanCon today to document any projects submitted prior to 2016, but no new projects have entered the process. Jessica Sites, the Department of Education’s director of the Bureau of Budget and Fiscal Management, told the Senate Education Committee last year that approximately $235 million in projects from 430 school districts have been funded through various sources since 2016.

Sen. Williams suggests that the annual budget should complete the reform of PlanCon and return to being an annual reimbursement source.

“What we’re calling PlanCon 2.0 was the result of study and legislative work that reduced it from 11 steps to four. It created a predictable way for schools to plan and build and know the amount that they would be reimbursed,” she says. “That has never been funded, however, and there is an ongoing moratorium. I believe the commonwealth has the capacity

to fund both the Facility Improvement Grant Program and PlanCon 2.0. We can walk and chew gum at the same time.”

Absent a reliable reimbursement mechanism, school districts with major capital needs have forged ahead with plans. Even in the heyday of the commonwealth’s funding, school districts had to come up with 75 percent or more of the project’s total costs. The mechanism for capital financing is a bond issue. School districts issue long-term bonds that are backed by their ability to tax as a certainty for repayment to the bondholders. Like with U.S. Treasury bonds, that certainty of repayment allows school districts to issue bonds that have a lower yield than a private mortgage of the same duration. For example, a 20year school bond will yield roughly what the 20-year Treasury bond yields, which is more than two percentage points lower than the 30-year mortgage rate. At the beginning of May, the 20-year Treasury yield was 4.77 percent. The average 30-year fixed mortgage rate was 6.81 percent.

Pennsylvania school districts experiencing growth or aging facilities over the dozen years that PlanCon has been frozen have had the consolation of a bond market that was unusually favorable. Following the Great Financial Crisis, interest rates plunged and remained low until 2022. School districts could finance (or refinance) long-term debt for three percent or less. Those rates jumped by one to two percent since mid-2022. Districts currently planning projects have been operating under the assumption of bond rates above four percent, but

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the current uncertainty and volatility is paralyzing. According to Alisha Reesh Henry, managing director at PNC Capital Markets, a change of even half a percentage point can mean an increase in annual debt service of four-to-five percent over the life of the bond.

On a $100 million new high school, this increased cost of borrowing would mean an additional $5 million to the taxpayers over 20 years. Given that school districts are mandated to get public approval of costs prior to the project’s going to construction, it is just as likely that the additional $5 million in costs would mean a corresponding decrease in the project’s program or scope.

Public bonds can be refinanced and Henry reports that the uncertain market conditions have existed since rates climbed rapidly in 2022. She says that many school districts have deferred capital programs until rates receded, only to find that construction costs escalated well beyond any additional borrowing costs. Waiting, Henry notes, has not been a winning strategy.

Trends in K-12

It should not be a surprise then that the overarching trend impacting K-12 is economic uncertainty. Beyond the uncertainty of the commonwealth’s funding mechanism and capital support, there is a subtle but significant impact on K-12 construction from the state of the global economy.

Consumer confidence has a strong impact on any organization that is governed by a board of directors or trustees. Beyond the effect that perceived consumer confidence may have on a board’s sense of fiduciary duty, the board members are also consumers. If consumer confidence is falling significantly, as

it is today, school board members will share that negative sentiment. Add in a market shock, such as the punitive tariffs announced April 2, and school board caution will multiply. Decisions to proceed will take longer. Decisions to delay will be easier to make. If the uncertainty is compounded by higher escalation of construction costs, few school boards will be able to disregard negative economic conditions.

One month on from the tariff announcements and subsequent suspensions, exemptions, and revisions to tariffs, the effect on local K-12 construction is profound.

“Were we having this conversation in January, I would have a different answer. Since then, the economy has become a lot more uncertain and I would anticipate that being a challenge as we move forward,” says Cassandra Renninger, principal and chief operating officer at DRAW Collective. “We’ve recently seen some unpredictable pricing come in. Anytime that starts to happen it creates hesitancy with clients that have public funding to move forward with projects. We don’t know how big a challenge that’s going to be or when it’s going to end, but we have definite concerns.”

Economic uncertainty, in and of itself, does not necessarily mean tough times for K-12 construction. Recessions typically bring more competition to public bidding, allowing school districts to get a better bang for their buck. In the current climate, however, the potential economic slowdown would come from a decline in demand because prices would rise because of tariffs. Those tariffs will accelerate construction escalation and disrupt supply chains again at a time when construction costs are already approaching prohibitive levels. Not surprisingly, just the threat of impending tariffs has already materialized in regional markets.

The Neville Street view of Central Catholic’s new $50 million student center. Rendering by HDG Architects.

“Right now, it’s kind of a one-two punch. The problems with the global economy are driving bond rates higher and we’re seeing construction pricing that is unexpected,” says Dan Kiefer, chief estimator for Massaro Construction Management Services. “What we’re hearing is that steel isn’t bad, but all the things coming out of China, light fixtures, plumbing, mechanical and electrical equipment have soared.”

While a large portion of the supply chain will react to tariffs before passing them on to customers – meaning the price existing inventory will not reflect the tariffs – Kiefer pointed to two recent projects as evidence that vendors or specialty contractors were pricing the risk of higher pricing into their bids.

“We bid two projects, an addition to Carnegie Elementary School at Carlynton and the Norwin Stadium, the first week in April,” he recalls. “Norwin bid on Tuesday, and we were about 4 percent over budget. The tariffs came on Wednesday. Carnegie bid on Thursday, and we were 9 percent over budget.”

Kiefer notes that the budgets for both projects were updated recently and reflected growing concerns that costs were escalating faster. The market nonetheless responded to the perceived risk by raising prices even higher. In the weeks since the April 2 announcement, trade policy has been inconsistent and unpredictable, which keeps the marketplace uncertain. Until the uncertainty eases, pricing is likely to reflect the perception of greater risk.

“The uncertainty is affecting all construction, not just K-12. The difference is in procurement,” says John Taormina, project executive at PJ Dick. “What will the tariff impact be? What will it cost me when the project goes out to bid? Those are the questions our public-school clients are asking. If you asked PJ Dick as a general contractor at risk to price a project that wasn’t going to start for a year and a half, we would be working with the owner to hedge our bets on what things are going to cost. That’s not how the Pennsylvania Procurement Code allows things to work.”

Taormina uses the Quaker Valley High School project, for which PJ Dick is construction manager, as an example of the difficulty of managing the risk associated with time.

“Quaker Valley High School is essentially two projects, the site and the building. They want to bid it at one time, even though the building will not start for a year and a half,” he explains. “I get it. They want to get this year’s pricing, but to do that they would have to award contracts, allow the successful contractors to buy the project quickly, and pay them to store materials.”

In contrast, Central Catholic is in the process of designing a new $50 million student activity center. As a private school, Central Catholic was able to hire the general contractor, Massaro Corporation, more than a year ago to work with HDG Architects during design. Central Catholic is not constrained by the PA Procurement Code and Massaro Corporation can work with subcontractors to ensure sufficient coverage when it took bids. Steve Massaro, president at Massaro Corporation, says that the flexibility during bidding got the project under budget.

“We got very good bid coverage, at least three bids in every sub-package of consequence. After the first round, the bids were a little bit over budget, but we went through a value engineering process and got prices down. We received additional bids that helped to bring the project within budget. There are no additional bids after bid day in public bidding,” Massaro says.

Setting aside the financial trends impacting K-12, there are interesting design trends that reflect some of the other issues school leaders are facing.

“The changes we see are in five categories. First is balancing safety and openness. Another is designing for a changing educational model because of the amount of technology coming into the schools and every child having their own device,” says Joel Bernard, partner at IKM Inc. “We talk a lot about biophilic design. Another category is supporting mental health through design. And the fifth is having active zones and calm zones.”

“For a while now there has been an educational push towards flexible learning environments that can be used for a variety of needs better focused on hands-on learning. Most of our

designs include those spaces,” says Renninger. “There’s also a variety of spaces for different learning styles. Some people learn better in large groups, some in small groups. There are opportunities for learning spaces as well as social interaction.”

“There is more awareness that students have different ways of learning,” notes Bernard. “Some can listen to a talk for 45 minutes, take notes, and absorb the material, but others need to be involved in activities, or they can’t learn. Some need more one-on-one instruction. Others need to physically move around. For some kids being able to move around or sitting in furniture that lets them move helps them focus more on the materials being presented.”

“What I’m seeing now is a change in the design of libraries. Most schools are now putting in media centers or makerspace with a lot of emphasis on online resources versus books. Magazines, encyclopedias, and atlases are all gone,” says Andreas Dometakis, partner and executive vice president at HHSDR Architects Engineers. “The other trend that I see, and we espouse, is to add a lot of natural lighting to the classrooms. There were a lot of studies done that show when there is more natural lighting, students perform better.”

“There have been studies for years about daylighting, greenery, and access to nature and how important that is to learning. That’s getting more traction and districts are paying more attention to that,” agrees Bernard.

Dometakis also sees the upgrading of the indoor environment as part of most programs, with both educational and external benefits to the school district.

“Air conditioning is now almost a must, not only because of changing weather but also because in the classrooms there is equipment that produces more heat,” he says. “Having the school air conditioned also gives the district the flexibility to use the school year-round. I have also seen some of the spaces in the school, like the cafeteria, gymnasium or fitness center, become community centers. Many schools have opened them to the public, including with membership fees.”

Bernard suggests that more connections to community assets could be one of the solutions to the problem of affordability for school districts.

“Districts looking to build a new facility may find that the best way to do that is to

use a community facility like a YMCA or a church with a gym in the basement. Renting those spaces may make more sense financially than building new ones,” he says.

One common thread among the architects interviewed was the need for more flexibility in design. Schools have to be more adaptable to changing technology and more efficient in how the facilities are used. Public schools can no longer afford to have single-purpose classrooms that may go unused for portions of the day. Even if the cost pressures of the past

five years recede, school budgets will remain lean for the foreseeable future. That means that capital dollars and the physical plant will have to work harder.

The Pipeline of Projects

One interesting characteristic of the current K-12 market is that, while financial conditions are as difficult as they have been in a generation or more, there are more major capital projects in the pipeline than since the late 1990s construction boom.

Two of the largest projects in the region have been in the pipeline the longest, for different reasons. Quaker Valley School District has been planning a new $90 million high school for nearly a decade and Hempfield Area School District is proposing a $132 million addition and renovation of its high school.

Hempfield’s high school project would have been well on the road to completion but for very unfortunate timing. Designed during the years following the pandemic, the high school project grew in scope at a time when costs were escalating by more than 20 percent year-over-year. When the project bid in August 2023, it attracted fewer bidders than desired and came in at $149 million. Since then, the school board conducted a new study, hired Crabtree Rohrbach & Associates as the architect, and is expecting to bid the revised design in October 2025.

Working with BSHM Architects from Youngstown and Bohlin Cywinski Jackson in Pittsburgh, Quaker Valley is planning a new high school campus on Camp Meeting Road in Leet Township, east of the Borough of Sewickley. Quaker Valley held the earliest of its public meetings on the feasibility of a new high school in 2017. The project required an evaluation of various sites and a municipal entitlement process that is unusual for public schools, which typically build on sites that are zoned to allow educational facilities. The pandemic, and the hyper escalation that followed it, added more complexity to the process. The school district recently hired PJ Dick as construction manager for the new high school. According to John Orsini, partner at BSHM, the project is on track for bidding at the end of 2025.

While the Quaker Valley and Hempfield projects are the two largest individual projects that have been announced in Western PA thus far, there are other projects of similar or larger size in the design pipeline.

In late 2025, Seneca Valley School District is expected to put its $100 million-plus Intermediate High School addition and renovation out to bid. The project is being designed by Cannon Design, which has completed the design development phase, but the project has not yet been publicly approved by the school board. Details of the project have not been part of Seneca Valley’s public board meetings, but the scope of the project identified in the 2022 feasibility study included

demolition of a wing, new construction of roughly 100,000 square feet, and renovation of the remaining existing school.

Hopewell Area School District commissioned two feasibility studies before moving forward in October 2024 with a plan that has two major components with the goal of consolidating education in fewer facilities. Hopewell Senior High School will be expanded and renovated so that grades 7-8 can attend to have a Grade 7-12 facility. A new elementary school will be built to include all K-6 students in the district. DRAW Collective is the architect for the project. No timetable has been set.

North Allegheny is in the early stages of planning major renovations to its high school, intermediate school, and three elementary schools. Architects Weber Murphy Fox and HDG Architects have been commissioned and are in schematic design on what is expected to be a $125-150 million program spread out over five years or more. North Allegheny’s school board has not approved any of the projects or announced its specific capital plans.

State College Area School District is implementing a $125 million capital program that is highlighted by a new Park Forest Middle School, which will cost $90 to 100 million depending upon final decisions about the project’s scope. Crabtree Rohrbaugh & Associates is developing the design. According to the public meetings and documents, bidding should take place in late 2025 or early 2026.

To the east, in Central PA, Southern Tioga School District has proposed an $89 million consolidated school renovation. Susquehanna Township School District in suburban Harrisburg is planning a $90-to-$100 million new elementary school, and Chambersburg Area School District is considering an $80-to$90 million middle school.

Among the smaller, but still significant, capital projects in the regional pipeline are the $30 million second phase of Hampton High School’s renovation, a major renovation at Freeport Area High School that will cost between $25 million and $50 million depending upon the district’s decision on the scope, and $30 million in major renovations at Plum School District. Shaler Area School District has proposed $20 million in renovations to its middle school, which is scheduled to bid in January 2026.

It has been 15 years since the outlook for the K-12 construction market has been this upbeat, ironically at a time when the public education system itself is edging closer to a point of crisis. Since the school building boom waned in the early 2000s, the supply chain for K-12 construction, especially the contractor roster, has been thinned by attrition or financial problems. The K-12 market has not recovered to the point where it is a reliable source of opportunities for small- to medium-sized contractors or architects to anchor their businesses. A sustainable longterm solution to the problems of K-12 education has yet to be found, but for the short-term, there will be more construction opportunities in the latter half of the decade. BG

PROJECT PROFILE

PENN HILLS CHARTER

SCHOOL OF ENTREPRENEURSHIP ADDITION

Founded in 2011, Penn Hills Charter School of Entrepreneurship (PHCS) grew steadily throughout its first decade of operation. By 2021, PHCS found itself at capacity in the former Washington Elementary School it had purchased from Penn Hills School District in 2018. Working with LGA Partners, PHCS planned a $7.3 million expansion and renovation that would allow it to keep up with enrollment and add curriculum.

“The school had the desire to expand their curriculum and needed more subject matter-focused classrooms,” recalls Sean Sheffler, senior associate at LGA Partners. “We had to right-size the program a bit because it wasn’t just six classrooms being added; it was also amenity spaces. The program shifted several times and there wasn’t much real estate to fit the addition.”

“We were trying to future-proof it to some degree. There was a desire to make the classrooms more modular to do that,” he continues. “One of our early concepts was to have a classroom with the same footprint as three offices, so that you could add a seventh classroom by giving up the offices.”

The solution for the real estate challenge was to expand vertically. Like many K-12 schools built during the 1950s, Washington Elementary School was a sprawling, single-story building. The final program for the addition expanded PHCS by six classrooms, plus office and amenity space. That translated to a vertical addition of 12,000 square feet above one wing and renovations of the existing floor below.

Dr. Wayne Jones, CEO of PHCS, noted that the project also intended to address several significant site improvements, particularly the addition of more parking and an additional access road to the school that would improve traffic circulation and add a bus lane.

PHCS employed Massaro Construction Management Services to publicly bid the project and award separate prime contracts in June 2022. Caliber Contracting Services was the low general construction bidder. Contracts were awarded to Caliber and prime HVAC, plumbing and electrical contractors for construction to begin before school let out that year.

Photo by LGA Partners.

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project profile

“We had done a budget for Penn Hills Charter School prior to the renovation and bid had other projects there from time to time, so we looked at this as repeat business with them,” says Kevin McNulty, CEO of Caliber Contracting Services, Inc. “The project was phased because there was a substantial amount of site work. We constructed a new parking lot, new stormwater management systems, new play fields, and we also constructed a new bus loop that went through an undeveloped wooded area of the site.”

Most of the site work was completed over the summer of 2022, when the school was unoccupied. The structural work for the addition also had to be done when the students were not occupying the school. Even though the first floor would not be occupied during the 2022 school year, the complexity of the structural work made it prudent to complete those activities before the modular classrooms were installed. The addition involved more than putting a box on an existing school wing.

“There were structural upgrades to the foundations of the existing buildings. Logistically, and from a design and construction standpoint, that caused some challenges,” McNulty says. “It was a challenge to keep the existing building weather tight while we were doing the new construction.”

When Washington Elementary was built, the structural design did not anticipate a future vertical expansion, a fact that was not discovered in 2022 until exploratory excavation was done. Sheffler says that the documentation of existing conditions was inadequate and inaccurate. Much of the documentation was the result of LGA’s field measurements from earlier projects at the building. The original pile foundation were only 18 inches, considerably smaller than LGA’s structural engineer expected. That foundation condition dictated the structural solution for the addition.

“The second-floor structure is independent of the first floor. The existing foundation would not support the imposed loads from the second-floor structure, so we had to support them,” says Kevin Nestor, general manager of Massaro Construction Management

Services, the construction manager-agent. “We used a driven pile support system under the existing foundation, locking in the piles with the load being transferred about 20 ft deeper before the second floor was added to the building.”

Even though the ground floor was unoccupied while the addition was being constructed, care was taken to keep the weather out.

“There were additional logistics related to working on a second floor when the first floor is not a construction site,” says McNulty. “We were installing structural steel through the existing roof and tying into the structural members on the first floor. We would cut the roof, and the roofer would follow the steel contractor to make sure it was dried in by the end of the shift. The was also masonry demolition and reconstruction. Those three trades had to be planned to be completed every day.”

Tying in the new mechanical and electrical systems was another challenge. Because the original building was not designed with provisions for vertical expansion, there were no existing systems for the plumbing, drainage, or electrical to connect to from above. McNulty notes that there was extensive renovation to the corridors in the existing building to make connections. A new two-stop elevator was also cut into the building.

“The timing of the construction dictated that we perform certain activities, mainly concrete, through the winter. We poured a new concrete slab onto the existing building. We had to give some thought to how it would work around the school year, which forced us to perform some of the activities in the winter that would not have been our preference,” McNulty says. “We were fortunate to get a period of nice weather in the winter that allowed us to complete that work, but if we had missed that window, it would have had some major schedule impacts.”

McNulty explains that the scope of work meant that there was a full complement of subcontractors, including some unusual specialties like terrazzo flooring, in addition to the three other prime contractors. He says Caliber’s project management

The project scope involved renovating and adding a second floor to one wing of the former Washington Elementary School. Photo by Massaro Corporation.

approach tries to maintain the same level of coordination, regardless of whether the specialty contractor involved was a subcontractor or a prime contractor.

“We approach a multiple prime project as we do any other project. We coordinated the separate primes as though they were subcontractors. It doesn’t really matter who signs their contracts or checks. Everyone was part of the same team,” says McNulty.

Students returned to the first-floor classrooms in spring of 2022, when the work above moved to building finishes. Construction wrapped up ahead of the return to school in September 2023.

“The charter school ended up with six additional classrooms, lockers for their upperclassman, additional room for maker space, and a student lounge. It was an expansion of the building that allows the charter school’s programming to really thrive,” says Sheffler. “Going vertical gives them more presence on the site. The project gave them an opportunity to brand the building to suit themselves rather than occupying an abandoned Penn Hills School building. It was a challenging construction project. Caliber’s team played a large part in making it successful.”

“We were fortunate to have two very good superintendents on the project. There were weekly coordination meetings between us, our subcontractors and the multiple primes,” says McNulty. “There was plenty of support from the office. We did a detailed project schedule with phasing and contingent activities and made sure those were followed closely. We do that for every project, but on this one it was especially important.”

“Construction is a messy process. It takes good leadership to keep the team working together and get the project across the finish line. I was glad we had that in Kevin. Although there were many roadblocks and challenges we needed to overcome through the project, Kevin and his team worked with us to iron out problems, even after the project was substantially completed,” recalls Dr. Jones. “The end product was amazing.

What we envisioned early on, our contractors and architect ensured that the project met our expectations.” BG

PROJECT TEAM

Caliber Contracting Services, Inc. General Contractor

Penn Hills Charter School of Entrepreneurship Owner

LGA Partners Architect

Massaro Construction Management Services Construction Manager

East End Plumbing & Mechanical Plumbing

Sentry Mechanical HVAC

Three Rivers Electric Electrical

G & R Excavating Demolition

Folino Construction Concrete

Marsa Inc Masonry

Trinity Steel Steel

Tom Brown Waterproofing

Construction Concepts Metal Wall Panels

G&W Roofing Construction Roofing

Specified Systems Storefront & Glazing

RAM Acoustical Corp

Drywall & Ceilings

Touch of Color Flooring Ceramic Tile

Dan Taylor Interiors

Youngstown Tile & Terrazzo

Resilient Flooring

Terrazzo Flooring

A.J. Vater & Co. Painting

Hoff Enterprises Casework

TK Elevator Elevator

Ramsey Construction Excavation

Ramjack Special Foundations

Folino Construction

Asphalt Paving

Photos by LGA Partners.

LEGAL PERSPECTIVE

NAVIGATING TRUMP-ERA POLICIES IN CONSTRUCTION CONTRACTS AND PROJECT DELIVERY

BY MICHAEL D. KLEIN AND CAITLYN BECHTA

From streamlining permitting processes and rolling back environmental regulations to imposing tariffs on essential materials and altering labor policies, the Trump administration’s 2025 directives are creating both opportunities and challenges for contractors nationwide. Western Pennsylvania, with its historical industrial base and growing infrastructure demands, has experienced significant ramifications from the Trump administration’s 2025 executive orders and policies. In light of these directives, it is imperative that your construction contracts and project delivery plan for the allocation of risk resulting from the current climate of regulatory and economic uncertainty.

Tariffs on Construction Materials and Equipment

The Trump administration has implemented a series of tariffs that are anticipated to have significant implications for contractors and the construction industry as a whole. Below is a chronological overview of key tariff developments:

• February 1, 2025: President Trump issued three executive orders which imposed tariffs on most goods imported from Canada (25%), Mexico (25%), and China (additional 10%). A 10% tariff specifically targeted Canadian oil and gas imports.

• March 12, 2025: Per Proclamation No. 10896, a 25% tariff was imposed on all steel, aluminum, and derivative products.

• April 3, 2025: Per Proclamation No. 10908, a 25% tariff was imposed on automobiles. Tariffs on automobile parts delayed to no later than May 3, 2025.

• April 5, 2025: Executive Order 14259 went into effect, including a 10% universal tariff imposed on all imported goods to the US and reciprocal tariffs on 57 countries. An April 11 memorandum from the White House clarified that smartphones and other consumer electronics that contain semiconductors are exempted from these tariffs.

• April 10, 2025: There was a 90-day suspension on reciprocal tariffs on 56 nations, except for those on Chinese imports, which faced a 125% retaliatory tariff.

• April 22, 2025: Secretary of Commerce launched a national security investigation under Section 232 of the Trade Expansion Act of 1962 to determine whether imports of medium and heavy-duty trucks, along with related parts and products, may compromise U.S. national security.

• April 29, 2025: Executive Order “Addressing Certain Tariffs on Imported Articles” was issued to prevent overlapping (“stacked”) tariffs on certain imported goods—such as automobiles, steel, aluminum, and items affected by border-related duties—by ensuring that

only one applicable tariff is imposed, thereby reducing cumulative tariff burdens on U.S. importers.

• April 29, 2025: An amendment to Proclamation 10908 was issued to provide temporary relief for U.S. automakers. The amendment offers credits to manufacturers assembling vehicles in the United States, allowing them to offset a portion of the 25% tariffs on imported automobile parts. Specifically, eligible automakers can receive a credit equal to 3.75% of a vehicle’s value in the first year and 2.5% in the second year.

U.S. tariff policies are evolving rapidly, and the construction industry is navigating a complex landscape shaped by these tariffs. While the intention behind the tariffs, among other things, is to bolster the growth of domestic industries, the immediate effects will likely result in increased costs, project delays, and project uncertainties.

Contractors should adopt proactive measures in their contracts and project delivery to manage these challenges effectively. Here’s how:

1. Material Escalation. Material escalation clauses in construction contracts will serve as a valuable risk management tool in the face of unpredictable tariffs and fluctuating material costs.

2. Schedules. Detailed procurement schedules and early ordering of long-lead items can help mitigate delays by ensuring critical materials are sourced as early as possible. Project stakeholders should evaluate storage issues, including payment, availability, and insurance coverage, prior to placing early orders for materials or equipment.

3. Force Majeure. Force majeure or excusable delay clauses that specifically reference tariff-related disruptions can protect contractors. Careful attention should be placed on responsibility for increased costs and delays.

4. Substitution. Substitution clauses should be added to allow flexibility in replacing unavailable or unaffordable materials due to tariffs. Such clause should require compensation for the increased costs of substituted materials and equipment.

5. Contingency. Contingency provisions can provide financial buffers for cost increases tied to sourcing changes, escalation, and delays.

6. Communication. Early and frequent communication with project owners can help mitigate damages. Documentation on supplier updates and delays helps support requests for time extensions or change orders, ensuring projects remain on track despite these external trade challenges.

Labor and Immigration Directives

Continuing a hardline stance on immigration, the Trump administration introduced new restrictions that affect labor availability in the construction sector. The administration’s intensified immigration enforcement, including increased Immigration and Customs Enforcement (ICE) raids and deportations, has led to heightened fear among undocumented workers. This environment has resulted in absenteeism and reluctance to seek employment, further

Union Craftsmen

straining the labor pool. The construction industry already faces a significant labor shortage, and the administration’s restrictive immigration policies threaten to worsen this shortage, potentially leading to increased wages and project delays.

Policy Shifts Affecting Federal Contractors

On January 21, 2025, the Trump administration issued Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” rescinding Executive Order 11246. Executive Order 14173 eliminates the requirement for federal contractors to maintain affirmative action programs for women and minorities.

This rollback reshapes hiring practices across the construction sector, particularly for firms with federal contracts. While some welcome the change as a return to meritbased hiring, others have voiced concerns about potential discrimination and reduced workforce diversity.

Executive Order 14173 also raises concerns regarding the future of disadvantaged business enterprise (DBE) programs. Although Executive Order 14173 does not explicitly dismantle DBE programs, its broad directives against certain DEI initiatives introduce uncertainty about the future of such programs. Moreover, grant recipients and federal contractors may risk losing federal funding if they do not comply with Executive Order 14173. Notably, Executive Order 14173 mandates that grant recipients certify they do not operate programs promoting DEI initiatives that violate federal anti-discrimination laws.

Of similar risk and concern to federal contractors is the cancellation of government contracts. The Department of Government Efficiency (DOGE), led by Elon Musk, has undertaken a broad effort to reduce federal expenditures by canceling numerous contracts across federal agencies. Stakeholders involved in federal contracting should closely monitor legal developments and agency guidance to navigate the evolving compliance landscape.

With heightened immigration enforcement, restrictions on DEI initiatives, and a focus on the reduction of federal expenditures, contractors must build flexibility and foresight directly into their construction contracts and project delivery. Here’s how:

1. Labor Shortages and Delay Clauses. Contractors should include force majeure or excusable delay clauses that specifically reference labor shortages tied to government policy changes or immigration enforcement to protect against project delays due to factors beyond the contractor’s control.

2. Flexible Scheduling. By incorporating grace periods for completion and/or adjustable milestones, contractors can accommodate unforeseen workforce gaps and prevent liability for delays. Clearly defining labor availability as a “critical resource” ensures the project schedule can legally adapt to market conditions or political shifts.

3. Subcontractor Compliance and Worker Verification. Contractors should require subcontractors to verify employment eligibility and should require subcontractors to mandate the same from sub-subcontractors and suppliers. Doing so not only ensures legal compliance but also reduces liability stemming from undocumented labor issues.

4. Contingency Budgeting for Labor. Adding a contingency for labor cost overruns due to government policy changes and immigration enforcement provides financial room to cover overtime, additional recruitment, or higher costs for alternate labor solutions.

5. Termination. Including termination for convenience language in all downstream contracts with subcontractors and suppliers protects against the risk of unforeseen contract cancellations. This type of provision is especially important for those in government contracting

Navigating the construction industry under rapidly evolving tariffs, tightening immigration rules, and fluctuating labor availability requires more than operational adjustments — it demands smart, resilient contract language. By embedding these strategies into your contracts, you can protect your business and foster a more collaborative, realistic project environment amid ongoing policy shifts. BG

Michael D. Klein is a construction attorney in McNees Wallace & Nurick’s Pittsburgh office. He can be reached at mklein@ mcneeslaw.com or 412-227-2552. Caitlyn Bechta is an attorney at McNees Wallace & Nurick’s Radnor office. She can be reached at cbechta@mcneeslaw.com or 484-329-8039.

SCAN TO LEARN MORE

FINANCIAL PERSPECTIVE

FIVE WAYS THE TRUMP ADMINISTRATION AGENDA COULD AFFECT CONSTRUCTION .

BY BRIAN KASSALEN

Tariffs are just one dynamic that could affect the construction industry. Here are five ways President Trump’s policy agenda could affect construction and contracting from labor to energy costs.

Labor

The construction industry already faces a labor shortage. Changes to immigration policies could further strain the labor market and impact construction labor costs. The presence of such policies alone could create uncertainty among workers, potentially affecting their decision to show up for work. Due to these changing policies, worker shortages will increase wages. Additionally, the strain on the timing of getting projects completed becomes an issue, as delays caused by labor shortages can extend project timelines and further drive up expenses.

Tariffs

The bottom line is that tariffs will significantly impact the construction industry. New tariffs could increase the cost of building materials, as well as goods throughout the construction supply chain. Trump has instituted a 25 percent tariff on steel and aluminum imports which went into effect on Wednesday, March 12. Following his orders to impose reciprocal tariffs and then suspend them, intense negotiations with trading partners are expected.

Tariffs could lead to higher costs for raw materials like steel, aluminum, and copper. This directly impacts construction project budgets and supply chains, with the effects likely becoming visible in the next six to nine months.

It is possible, in the short term, that there could be a run on raw materials if a significant number of builders and developers try to stock up on these materials. We may also see contractors renegotiating contracts or delaying project starts. The good news is that there is a supply of raw materials out there. If builders have already broken ground and their project has already started, they are less likely to be impacted. For construction projects that are further out, the impacts could be felt. The impacts are disruptive, affecting both the builder and end-users. While it can be hard to know what amount some tariffs will ultimately be, contractors putting bids together should begin working with suppliers to factor in potential price increases.

A major challenge for contractors is how to maintain project momentum and stay within budget, especially as domestic raw materials become more expensive. While switching suppliers is an option, procurement delays and the long process of negotiating and implementing change orders could create roadblocks. Contractors must ensure materials meet their standards and arrive on time to avoid project

delays. Those who thrive in this environment will be skilled in estimating and have solid relationships with suppliers. Universal or reciprocal tariffs could also affect other buildingrelated imports, such as carpeting, electrical outlets, security equipment, furniture, tools, etc.

Trump’s implementation of tariffs could also increase the cost of raw materials imported from countries like Canada, Mexico, and Turkey, which may lead to higher construction costs.

Industry deregulation

Under Trump’s policies, contractors may see reduced regulations, streamlined permitting processes, and fewer Occupational Safety and Health Administration (OSHA) and environmental regulations. While this could speed up project timelines, there are risks as well. Contractors must still prioritize safety, even with potentially relaxed regulations.

Energy costs

Trump’s emphasis on domestic energy production could lower the cost of oil and gas. However, reducing incentives for green energy investments may discourage growth in the sector. With the expansion of data centers and other energyheavy industries, power needs will benefit from a balance of domestic oil and gas, as well as green energy sources like wind and solar.

Public-private partnerships

Public-private partnerships (PPPs) were significant during Trump’s first term and will likely continue to be a focus. These partnerships are ideal for large-scale infrastructure projects, such as roads, bridges, and power plants, which are costly and require private sector involvement.

As President Trump’s policies take shape, the construction industry will face several variables, such as labor shortages, tariffs, raw material costs, deregulation, energy changes, and public-private partnerships. Contractors will need to stay prepared for whatever comes their way. BG

Brian Kassalen is a principal with Baker Tilly and the firm’s construction industry leader. He can be reached at brian. kassalen@bakertilly.com.

MANAGEMENT PERSPECTIVE

KEY CONSIDERATIONS FOR BUILDING PRODUCT MANUFACTURERS AROUND TARIFFS

BY PAUL TROMBITAS

The construction and building products industry is navigating a rapidly shifting landscape influenced by newly enacted tariffs on countries such as Canada and China, particularly the 25 percent tariffs on steel and aluminum.

These trade policies are creating both challenges and opportunities for manufacturers, forcing them to reconsider supply chains, investment strategies and evaluate their competitive positioning. Some companies will gain pricing

The impact of tariffs on the construction and building products industry is both significant and ongoing...The only certainty is that tariffs and their influence on pricing will continue to shape the industry’s trajectory.

power, while others face supply chain disruptions and rising costs. The ability to adapt will define success in this evolving market. As Darwin stated, “It is not the smartest nor the strongest that survive, it is the ones that are most adaptable to change that survive.”

While the effects discussed in this article encompass all types of tariffs, if you examine the historical levies enacted in 2018 on steel and aluminum, materials costs rose about 14 percent the first year they were implemented, according to FMI data. Current projections see U.S. steel prices increasing 8.2 percent and aluminum rising 5.7 percent as a direct result of the current tariffs.

“Project pipelines may slow, and firms will need to adopt strategic countermeasures to navigate this volatile environment,” said FMI Partner Jay Bowman. “However, these challenges also present opportunities for firms that can adapt their procurement strategies, hedge against risk, and position themselves as trusted advisors to clients.”

Domestic Manufacturers: Pricing Power versus Supply Chain Pressures

For U.S.-based manufacturers that source materials domestically, tariffs offer a competitive advantage. With imported materials and products becoming more expensive, domestic producers can capitalize on pricing gains and reduced foreign competition. In a historically tight margin industry, the ability to raise prices without being

Photo by Alexander Rosu

undercut by international rivals is a significant benefit. The manufacturers we spoke with are considering how to take advantage of these opportunities.

However, not all domestic manufacturers are well positioned. Many rely on foreign raw materials such as metals, chemicals and specialty components, making them vulnerable to cost increases. For example, we spoke with several manufacturers that source raw materials from

markets outside the U.S. who are looking to reevaluate these strategies and find new suppliers to hedge against the unfavorable pricing dynamics.

Those with manufacturing operations outside the U.S. also face challenges, as imported goods from their international facilities may be subject to tariffs, eroding their pricing power in the U.S. market. Many are looking for places to shift production to the U.S. and evaluating potential shutdowns.

To mitigate these risks, firms should leverage domestic supply chains to gain market share from foreign competitors, identify alternative U.S.-based suppliers, consider reshoring manufacturing operations and strategically adjust pricing to offset increased costs while maintaining competitiveness.

TRE CONSTRUCTION

Foreign Manufacturers: Challenges in Exporting, Opportunities in U.S. Investment

For foreign firms exporting construction materials to the U.S., tariffs present a direct threat. Higher costs make their products less competitive against domestic alternatives, forcing companies to absorb price increases, pass costs to customers or explore alternative operations.

Over the last year, the number of foreign entities interested in the U.S. building product space (particularly metal) has substantially increased. These organizations are looking at acquisitions to create a foothold in the market as well as green fielding facilities to capitalize on the opportunity. The tariff impact was noted to increase the attractiveness for establishing U.S. operations.

Yet, the same challenge is driving many foreign companies to invest in U.S. manufacturing. For example, Recticel Group announced it would build an insulated metal panels plant in the U.S. to open in 2026. By establishing production facilities domestically, they can circumvent tariffs, improve supply chain efficiency and strengthen their foothold in the U.S. market. To adapt, foreign manufacturers have an opportunity to explore greenfield investments to establish U.S.-based manufacturing operations, form joint ventures or acquire existing U.S. manufacturers to retain market access, seek tariff exemptions or government incentives, and optimize pricing strategies to remain competitive despite higher import costs.

The Construction Industry: Pricing Volatility and Market Shifts

Tariffs are not just affecting manufacturers; they are reshaping the broader construction industry. Higher material costs can drive up overall project expenses, leading to budget overruns, construction delays and shifts in demand.

Developers, contractors and distributors must respond proactively to mitigate these risks. Key considerations should include assessing project budgets to account for material price fluctuations, exploring alternative cost-effective materials, securing long-term pricing contracts to hedge against market volatility and diversifying supplier networks to include more U.S.-sourced goods. These measures will help manage financial uncertainty and maintain project feasibility despite market disruptions.

U.S. Manufacturing as a Growth Opportunity

With the increased emphasis on domestic production, the U.S. manufacturing sector presents an attractive opportunity for investors. Non-U.S. firms looking to establish a foothold in the U.S. market may drive increased demand for industrial real estate, manufacturing facility construction and workforce expansion.

Private equity firms, industrial developers and corporate investors are closely watching these trends, recognizing the potential for long-term growth in U.S.-based production and supply chain infrastructure. To capitalize on these shifts, a potential opportunity exists to invest in industrial real estate to support manufacturing expansion, acquire or expand U.S.-based manufacturers, advocate for policy incentives that encourage domestic production, and support workforce development initiatives to sustain manufacturing growth.

The Road Ahead: Navigating a TariffDefined Market

The impact of tariffs on the construction and building products industry is both significant and ongoing. Some companies will benefit from pricing shifts, while others must rework their strategies to remain competitive. The only certainty is that tariffs and their influence on pricing will continue to shape the industry’s trajectory.

Manufacturers that proactively adjust— whether through reshoring, supply chain

diversification or strategic investment—will be best positioned to navigate this evolving landscape. In a market defined by uncertainty, adaptability is the key to maintaining a competitive edge.

BG

Paul Trombitas is a partner in FMI’s strategy practice and leads the building products sector team. He can be reached at paul.trombitas@fmicorp.com.

INDUSTRY & COMMUNITY NEWS

Massaro Corporation team members bagged and loaded more than 1,000 pounds of food for distribution throughout the community at 412 Food Rescue on March 20. Pictured from left are Dale Boggs, Josh Hardaway, Brandi Welsch, Jaylyn Spitnale, and Tim Jones.

PJ

Dick president, Eric Pascucci (far right), was the guest speaker at the MBA Young Constructors’ kickoff event at The Foundry on March 27.

(From left) Jake Roberts, Zac Roberts, and Mike Yohe from A. Martini & Co.

(From left) Miranda Slomski from Menard USA, CBRE’s Edie Hartman, from RM Creative, and PJ Dick’s Susie Slater at the CREW Pittsburgh/The Business Collective’s joint March 27 meeting. Photo by Chad Isaiah Photography.

(From left) Ann Sekely from McKim and Creed, TEDCO’s Kyra Sarver, Monica Senger, and Christopher Perez from Gilbane Building Co. at NAIOP Pittsburgh’s March chapter meeting.

(From left) Jamison Vernallis and CJ Saylor from Landau Building Co. Naley McKamish from McKamish Inc., and Landau’s Melissa Fasching and Elliot Frank.

(From left) Justin Herder from Jendoco Construction, Ryan Rhodes from Rycon Construction, and Jendoco’s Dominic Ammon.

Emily Landerman from A. Martini & Co. (left) and Allen & Shariff’s Paul Messineo Jr. at the April 25 Regional Development Update held by NAIOP Pittsburgh.

Justin Shaffer (left) from Easley & Rivers was the raffle winner at ASA’s Emerging Leaders’ networking event at Burn on April 24. Josh Restauri from raffle sponsor Seubert & Associates is on the right.

(From left) Kolby and Trevor Randolph, Matt Kuban, Ryan Petrunia, Kira Blenk, Kelsey Swantek, Tara Ponitz, Jack Gurbacki, and Kaitlyn Landram (plus puppies, Elvis and Penelope) represented Massaro Corporation at the American Foundation for Suicide Prevention’s Construction Hike for Hope on April 26.

Avison Young creates real economic, social and environmental value as a global real estate advisor, powered by people. Our integrated talent realizes the full potential of real estate by using global intelligence platforms that provide clients with insights and advantage. Together, we can create healthy, productive workplaces for employees, cities that are centers for prosperity for their citizens, and built spaces and places that create a net benefit to the economy, the environment and the community.

WESTMORELAND TECHNOLOGY DRIVE

Four industrial parks & RIDC Westmoreland Innovation Center. The PennSTART test track site. Excellent connectivity. Westmoreland Technology Drive Industrial Complex is ready for your site-selection needs.

Gilbane’s Chris Perez and Abby Krehl participated in the March of Dimes annual March for Babies on April 28. Pictured from left are, Toni Perez, Chris Perez, Abby Krehl, Baker Krehl (being held), Kit Krehl (standing front), and Noah Krehl.

(From left) Tory Leuthold of Bostwick Design Partners, Leslie Woods from Chicago Title Insurance, and Peggy Walsh from Meijer Inc.

(From left) Ann Sekely from McKim & Creed, Cameron Watters from Dick Building Co., PJ Dick’s Jessica McKinney, and Anne Peagler from BMS Cat at the May 1 CREW Pittsburgh Property Tour at Bakery Square.

Volunteers from Turner Construction, Perkins Eastman Architects, and McKim & Creed helped the Allegheny Land Trust clear out invasive species from Bethel Green on May 2. Pictured from left are Jarrod McDowell, Aline Funari, Claire Turvill, and Megan Shrout from Perkins Eastman, Laura Traczynski and Chris DiLorenzo from Turner, and Brad Palmisiano from McKim & Creed. In the back are Ellis Vogt (left) and Scott Fitzgerald from Perkins Eastman. Photo by Dani Kramer, Allegheny Land Trust.

Mascaro Construction Company and Community College of Beaver County (CCBC) were honored at the May 8 Emerald Evening with the Green Building Alliance’s (GBA) Pathfinder Award in recognition of their partnership on the Mascaro Construction Academy at CCBC. Accepting the award were Christopher Leininger, director and lead faculty for the Mascaro Construction Technology & Management Program at CCBC (third from left), John C. Mascaro, Jr. (center), and John M. Mascaro.

Stantec’s George Halkias (left) and Jendoco’s Michael Kuhn. Photo by Green Building Alliance.

Frick Environmental Center LEED Platinum

Carnegie Mellon University Cohon Center

PNC Tower LEED Platinum

The MBA held the first Shamrock Shootout on March 14 to benefit The Children’s Institute. Forty construction professionals-turned hockey players participated in the shootout, which was won by the Crimson Constructors (pictured above).

The Golden Girders were the other finalist in the Shamrock Shootout.

The MBA’s Lance Harrell (left) and GBA’s Chris Cieslak. Photo by Green Building Alliance.

MICA members are interior contractors who share a common mission: to provide their customers with the highest quality craftsmanship. We partner with the union trades that supply the best trained, safest and most productive craftsmen in the industry.

Alliance Drywall Interiors, Inc.

Easley & Rivers, Inc.

Giffin Interior & Fixture, Inc.

JLJI Enterprises

J. J. Morris & Sons, Inc.

T. D. Patrinos Painting & Contracting Company

Precision Builders Inc.

RAM Acoustical Corporation

Schlaegle Design Build Associates

TRE Construction Wyatt Inc.

Pittsburgh Theological Seminary - Clifford E. Barbour Library

Interiors contractor: Wyatt, Inc.

Another high quality MICA project

Photo by Craig Thompson Photography

”Mascaro

John C. Mascaro Jr. - President Mascaro Construction

“We

J.J. Stefanik - President Stefanik’s Next Generation Contracting Co.

“Working

AWARDS & CONTRACTS

Westmoreland County Commissioners awarded Caliber Contracting Services a general construction contract for the $1.16 million renovations to the showers at the Westmoreland County Prison in Hempfield Township. The architect is Design 3 Architecture.

UPMC awarded a contract to Carl Walker Construction for the renovation and modernization of the Shadyside Place Parking Garage.

Shannon Construction is the general contractor for the $4 million Tobii Dynavox tenant renovations at Pittsburgh International Business Park in Moon Township. The architect for the 37,500 square foot space is NEXT Architecture.

PJ Dick is the construction manager-at risk for Christiana Care’s $15 million Aston Neighborhood Hospital, a 40,000 square foot micro-hospital in Aston Township, Delaware County, PA.

PJ Dick is providing construction management-agency services to the University of Pittsburgh for the Alan Magee Scaife Hall East Side Addition and Mechanical Upgrades. The scope of the project consists of replacing the aging infrastructure serving the east wing of Alan Magee Scaife Hall, primarily mechanical, electrical and plumbing systems, along with waterproofing and decking under the DeSoto Street entrance plaza and replacement of the east roof.

Quaker Valley School District awarded PJ Dick the agency construction manager–advisor services contract for the district’s new high school. The project consists of extensive land development in preparation for the construction of the 191,000 square foot school building.

The design-build team of PJ Dick and Kimmel Bogrette were awarded the Penn State Abington Physical Education Building Renovation project. The renovation of the threestory, 44,000 square foot building includes improving building systems, reconfiguring existing spaces to be more usable, and expanding the school’s ability to host events in the facility.

PJ Dick is the construction manager-at-risk for Penn State Behrend’s new 45,000 square foot Center for Manufacturing Competitiveness (CMC) Building at Knowledge Park in Erie for collaborative industry research, and a separate facility for thermal runaway battery testing.

Volpatt Construction was the successful contractor on the $4.2 million Etna Center for Community, a renovation of the historic Ochse Hall owned by the Etna Community Organization. The architect is GBBN Architecture.

Massaro Corporation is the general contractor for the $4.8 million Gwen’s Girls headquarters on Ross Avenue in Wilkinsburg,

PA. The architect is Rothschild Doyno Collaborative.

Neighborhood Academy selected Massaro Corporation as construction manager for its $11 million classroom and gymnasium addition. The architect is SCHRADERGROUP Architecture.

Massaro Corporation is the general contractor for Geneva College’s new $7 million Welcome Center in Beaver Falls, PA. MCF Architects is the architect.

A. Martini & Co. was the successful contractor for the $2 million tenant buildout for Strada Architecture at 11 Stanwix Street.

A. Martini & Co. was selected to be the construction manager/general contractor for two projects at the Jewish Community Center Fitness Center. The first project, starting in May, includes the fitness area, cardio recovery room, and the manager’s office. The second project, starting in June, includes the sauna/whirlpool areas, toilet rooms, and locker rooms. Oxford Development is the owner’s representative and Rothschild Donyno Collaborative is the architect.

AIMS Construction was awarded the $1.6 million UPMC St. Margaret Hospital’s sixth floor patient unit re-roofing project. Smith Group is the Architect.

Ringgold School District awarded a $2.6 million contract to DiMarco Construction for the renovations to Joe Montana Stadium in New Eagle, Washington County. HHSDR Architects & Engineers is the architect.

Turner Construction was recently selected to complete a manufacturing facility for a confidential client in Weirton, WV. The project will consist of a new building that includes high and low-bay areas, office/cubicle space, and support spaces valued at $50 million.

Mascaro’s Client Services Group was awarded the contract for the Allegheny Health Network’s Allegheny General Hospital South Tower Facade Restoration and Window Replacement project.

The Mascaro Client Services Group also received the contract for the conversion of the Rheumatology Clinic at UPMC Murrysville.

Mascaro’s Buildings Group was awarded the CMU Hamburg Hall Renovations project. This project consists of updates to portions of Hamburg Hall’s A-level and first and second floors. The existing make-up air unit in the attic of the west wing of Hamburg Hall and its related equipment and controls will be replaced as well.

Mascaro’s Norfolk Southern Conneaut Creek Bridge project received the 2025 The Association of Union Constructors

International Brotherhood of Electrical Workers

L ocal Union No. 5

5 Hot Metal Street • Southside • Pittsburgh, PA

For more than 125 years , I.B.E.W. Local 5 has been lighting up Pittsburgh’s sports arenas, its hospitals and its skyscrapers.

Acrisure Stadium, PNC Park, Pittsburgh International Airport, PPG Place, UPMC Children’s Hospital of Pittsburgh and the new FNB Tower. Behind Pitts burgh’s major buildings is I.B.E.W. Local 5.

FACES & NEW PLACES

James Dudt, P.E. was promoted to vice president and Pittsburgh Business Leader at Gilbane Building Co. Dudt was a consulting mechanical engineer for 12 years before joining Gilbane in 2021. He is a graduate of Grove City College with a B.S. in Mechanical Engineering.

Independence Excavating Inc. welcomed Comron Sarnosky to its estimating team.

Candice Roberts started as project manager with Independence Excavating Inc.

Matt Kocian has started as a project engineer with Independence Excavating Inc. Kocian is a 2017 graduate of the University of Pittsburgh with a B.S. in mechanical engineering.

Chris Jaeger joined CPS Construction Group as senior construction consultant. Jaeger is a civil engineering graduate of the University of Toledo.

PJ Dick’s in-house virtual construction department welcomed Pooja Ravikumar and Christopher Roberts as virtual construction coordinators.

Travis King and Dan Miller join PJ Dick as assistant project managers.

Craig Frye and Don Jones join PJ Dick as superintendents.

Cost Administrator Beth Quigley and Cost Accountant Debra Arbaczewski joined PJ Dick’s accounting department.

Jodi Mamel joins PJ Dick’s estimating team as an estimating administrator.

PJ Dick Mid-Atlantic welcomes Superintendent Mike Apple Camron Sarnosky joined the Independence Excavating Inc. estimating team.

Candice Roberts joined Independence Excavating Inc. as a traveling project manager.

Matt Kocian has started Independence Excavating Inc. as a project engineer.

Jeffrey Hunsaker joined Independence Excavating Inc. as a traveling superintendent.

Rycon’s Accounting Department welcomed Darla Burns as a senior accounting analyst.

Rycon Pittsburgh welcomed Brian Miehl as a senior project manager, with over 26 years’ experience.

Matthew Rubright, a Robert Morris University alumnus, has joined Rycon Pittsburgh as a project manager.

Facility Support Services announced the semi-retirement of General Manager Tammy DeMarco effective December 31, 2024. Mrs. DeMarco has transitioned her role from general manager to business development specialist on a part-time basis. Mrs. DeMarco joined FSS in 2011 as office manager, and served various roles in estimating, project management and business development. She was promoted to general manager in 2020.

Wendy Steffes recently joined Facility Support Services as an administrative assistant. Wendy has more than 23 years of experience in the design and construction industry.

Higley Construction welcomed Madeline Cramer to its Pittsburgh office as a project engineer.

Landau Building Company welcomed Luke Surunis as our new Safety Director. Luke will be stepping into this role as Kevin Taylor prepares for retirement.

Massaro Corporation announced that Kelly LaBrasca started with the firm as project manager.

Mark Lazzaro joined Massaro Corporation as MEP and architecural code coordinator.

Brian McDowell joined Massaro Corporation as a project manager in its State College office.

Massaro Corporation announced that Bill Mroskey as a superintendent.

Massaro Corporation announced that Daniel Nies joined the firm as an estimator/project engineer in its Erie, PA, office.

Mark Tomaszewski joined Massaro Corporation as a superintendent.

A. Martini & Co. announced the promotion of Zachary Roberts to vice president of operations. Zak began with A. Martini & Co. as an intern from Kent State majoring in Construction Management and joined the company full-time as project manager in 2013.

A. Martini & Co. announced the promotion of Michael Yohe to vice president of preconstruction and estimating. Mike joined A. Martini & Co. as an estimator in 2011, and has more than 24 years of experience in the construction industry. After earning his degree in business from Indiana University of Pennsylvania.

Advocating Convening Educating

2219 Ridge Road South Park, PA 15129 (724) 538 -8227

Erin Joyce, Executive Director erin@asawpa.org

MBA MEMBERSHIP

2025 MBA OFFICERS

President

Michael R. Mascaro

Mascaro Construction Company, LP

Vice President and Treasurer

Alexander G. Dick

Dick Building Company

Secretary/Executive Director

David D. Daquelente

2025 MBA BOARD OF DIRECTORS

John P. Busse

F.J. Busse Company, Inc.

James T. Frantz

TEDCO Construction Corporation

Michael Kuhn

Jendoco Construction Corporation

Jennifer P. Landau

Landau Building Company

Anthony F. Martini

A. Martini & Co.

Steven M. Massaro

Massaro Corporation

David P. Meuschke, P.E.

Burchick Construction Company, Inc.

M. Dean Mosites

Mosites Construction Company

Jake Ploeger

PJ Dick Incorporated

Jodi L. Rennie

Turner Construction Company

John Sabatos

Rycon Construction, Inc.

Raymond A. Volpatt, Jr., P.E., Past President

Volpatt Construction Corporation

Neal Rivers (MICA President)

Easley & Rivers, Inc.

GENERAL CONTRACTORS

AIMS Construction

Allegheny Construction Group, Inc.

Burchick Construction Company, Inc.

Fred L. Burns, Inc.

F.J. Busse Company, Inc.

Caliber Contracting Services, Inc.

CH&D Enterprise, Inc.

Dick Building Company

DiMarco Construction Co., Inc.

E&G Development, Inc.

Elwood Construction Corporation

Facility Support Services, LLC

FMS Construction Company

Gilbane Building Company

Higley Construction

Independence Excavating, Inc.

Jendoco Construction Corporation

Kokosing Industrial Incorporated

Landau Building Company

A. Martini & Co.

Mascaro Construction Company, LP

Massaro Corporation

McCrossin

Menard USA

Mosites Construction Company

Nicholson Construction Company

PJ Dick Incorporated

Rocky Bleier Construction Group

Rycon Construction, Inc.

Shannon Construction Company

Stevens Engineers & Constructors, Inc.

TEDCO Construction Corporation

Turner Construction Company

Uhl Construction Company

Volpatt Construction Corporation

Carl Walker Construction, Inc.

SPECIALTY CONTRACTORS

A Crane Rental, LLC

A. Folino Construction, Inc.

Abate Irwin, Inc.

ABMECH Acquisitions, LLC

ACE Lightning Protection Inc.

Advantage Steel & Construction, LLC

All Crane Rental of Pennsylvania, LLC

Alliance Drywall Interiors, Inc.

Amelie Construction & Supply, LLC

Amthor Steel, Inc.

BrandSafway

Brayman Construction Corporation

Bristol Environmental, Inc.

Bruce-Merrilees Electric Co.

Bryan Construction, Inc.

Burke & Company, LLC

dba S.P. McCarl & Company

Burnham Industrial Contractors, Inc.

Buzzelli Group LLC

Centerpoint Painting Systems, LLC.

Century Steel Erectors Co., LP

Clista Electric, Inc.

Cost Company

Costa Contracting, Inc.

Wayne Crouse, Inc.

Cuddy Roofing Company, Inc.

D-M Products, Inc.

Dagostino Electronic Services

Dom DeMarco Construction, Inc.

Donley’s Concrete Group

Douglass Pile Company, Inc.

Easley & Rivers, Inc.

EMCOR Services Scalise Industries

Fay, S&B USA Construction

Ferry Electric Company

First American Industries, Inc.

Flooring Contractors of Pittsburgh

Franco Associates

G. Kidd, Inc.

Gaven Industries, Inc.

Giffin Interior & Fixture, Inc.

Richard Goettle, Inc.

Gregori Construction, Inc.

W.O. Grubb Steel Erection, Inc.

Gumpher, Inc.

Gunning, Inc.

Geo. V. Hamilton, Inc.

Hanlon Electric Company

Harris Masonry, Inc.

Hatzel & Buehler, Inc.

HOFF Enterprises, Inc.

Howard Concrete Pumping, Inc.

Hunt Valley Environmental, LLC

JLJI Enterprises, Inc.

Kalkreuth Roofing & Sheet Metal, Inc.

KELLER North America

Keystone Electrical Systems, Inc.

Kirby Electric, Inc.

Kusler Masonry, Inc.

L & E Concrete Pumping Inc.

Lanco Electric, Inc.

Lighthouse Electric Company, Inc.

Limbach Company, LLC

Lisanti Painting Company

Manheim Dellovade LLC

Marsa, Inc.

Massaro Industries, Inc.

Master Woodcraft Corporation

Matcon Diamond, Inc.

Maxim Crane Works, LP

McCrossin Foundations, LLC

McKamish, Inc.

Mele & Mele & Sons, Inc.

Mohawk Construction & Supply, Inc.

J.J. Morris & Sons, Inc.

NAES Power Contractors

Next 150 Construction, LLC

Noralco Corporation

O. Z. Enterprises, LLC

Paramount Flooring Associates, Inc.

T.D. Patrinos Painting & Contracting Company

Phoenix Roofing, Inc.

Pittsburgh Interior Systems, Inc.

Precision Environmental Company

RAM Acoustical Corporation

Redstone Flooring, LLC

Renick Brothers Construction Co.

Right Electric, Inc.

Ruthrauff | Sauer, LLC

Saint’s Painting Company, Inc.

Sargent Electric Company

Schindler Elevator

Schlaegle Design Build Associates, Inc.

Schnabel Foundation Company

Solid Platforms, Inc.

Specified Systems, Inc.

Spectrum Environmental, Inc.

SSM Industries, Inc.

Swank Construction Company, LLC

W.G. Tomko, Inc.

TRE Construction

Tri-State Flooring, Inc.

A. J. Vater & Company, Inc.

Worldwide Services, LLC

Wright Commercial Floors

Wyatt, Incorporated

AFFILIATE MEMBERS

4CTechnologies

84 Lumber

ADMAR Construction Equipment and Supply

ADP

Aeropol LLC

AEC Online Store LLC

African American Chamber of Commerce of Western PA

Allegheny County Airport Authority–

Pittsburgh International Airport

Alliant

American Contractors Insurance Group

American Producers Supply Company

Amerisafe Group

AmeriServ Trust and Financial Services Company

Aon

Assured Partners of PA, LLC

Atlantic Engineering Services

Atlas Marketing

Atlas Wholesale Co., Inc.

AUROS Group

Babst | Calland

Baker Tilly Virchow Krause, LLP

Michael Baker International

BDO USA, LLP

Beemac Inc.

Beth-Hanover Supply Co., Inc.

Black Diamond Equipment Rental

Bowles Rice

R.J. Bridges Corporation

Bronder & Company, P.C.

Tom Brown, Inc.

Building Point Ohio Valley

Burns Scalo Real Estate Services, Inc.

Burns White, LLC

Cadnetics, Inc.

Case|Sabatini

CENTRIA

A.R. Chambers & Son, Inc.

Chartwell Investment Partners

Chubb Group of Insurance Companies

Civil & Environmental Consultants, Inc.

Clark Hill PLC

Cleveland Brothers Equipment Co., Inc.

CliftonLarsonAllen LLP

Cohen, Seglias, Pallas, Greenhall & Furman PC

Computer Fellows, Inc.

Cozen O’Connor

CTR Payroll & HR

Dentons Cohen & Grigsby P.C.

DesignGroup

Desmone Architects

Dickie, McCamey & Chilcote, P.C.

Dingess, Foster, Luciana, Davidson & Chleboski, LLP

Ditto

Dollar Bank

DRAW Collective Architecture

Eckert Seamans Cherin & Mellott

ECS Mid Atlantic, LLC

EPIC Insurance Brokers & Consultants

EquipmentShare

FASTSIGNS of Pittsburgh

Fahringer, McCarty, Grey, Inc.

FDR Safety, LLC

FieldForce Equipment Sales & Rentals, LLC

First National Insurance Agency

Fisher Phillips

Frost Brown Todd, LLC

Gallaway Safety & Supply

The Gateway Engineers, Inc.

GM Equipment Rentals

Graystone Consulting Pittsburgh Cleveland

Green Dot Active Solutions, Inc.

A.L. Harding & Company

H2R CPA

J. S. Held

Henderson Brothers, Inc.

HHSDR Architects/Engineers

Highway Equipment Company

Hillis Carnes Engineering Associates, Inc.

Huth Technologies LLC

Intertek - PSI

IMA Corp

JLL

Karpinski Engineering

K&L Gates LLP

L & W Supply

LaFace & McGovern Associates, Inc.

Langan Engineering & Environmental

Services

Liberty Insurance Agency

Liberty Mutual Surety

Lytle EAP Partners/Lytle Testing Services, Inc.

Maiello, Brungo & Maiello

Marthinsen & Salvitti Insurance Group

McKim & Creed, Inc.

McNees Wallace & Nurick, LLC

Meyer Unkovic & Scott, LLP

Meyers Company Michael Brothers Companies

Milwaukee Tool

Mobile Air, Inc.

Mobile Medical Corporation

Morgan, Lewis & Bockius LLP

MSA Safety

MSW Supply

Multivista

NCI - Nursing Corps

New Millennium Building Systems

NextEra Energy

Ohio Valley Drywall Supply

OVD Insurance

PenTrust

Philadelphia Insurance Companies

Pietragallo Gordon Alfano Bosick & Raspanti, LLP

Pittsburgh Mobile Concrete, Inc.

Reed Building

Repco II

Republic Services, Inc.

The Reschini Group/Evergreen Insurance

Henry Rossi & Co., LLP

Saxton & Stump

Schneider Downs & Company, Inc.

Scotti Law Group

Seubert & Associates, Inc.

The Sherwin-Williams Co.

Sprague Energy

Stanley Black & Decker Stephany Associates, Inc.

Steptoe & Johnson PLLC

Suburban Propane

Sunbelt Rentals, Inc.

T-Mobile

Tarax Service Systems, Inc.

Travelers Bond & Financial Products

Triangle Fastener Corporation

Triumph Modular

Tucker Arensberg, P.C.

UBS Financial Services / The Sofranko Group

Unified Door & Hardware

United Rentals, Inc.

UPMC Work Partners

USI Insurance Services

Werner Co

White Cap

Willscot Mobile Mini

W. R. Meadows of Pennsylvania

WTW – Willis of Pennsylvania, Inc.

WNA Engineering, Inc.

Zurich NA Construction

CLOSING OUT

By Daniel Engen, AIA

Public school districts are often the cornerstone of communities throughout Pennsylvania and across the nation. They are frequently the largest local employers, central venues for community gatherings, sources of civic pride and historical identity, and key drivers of residential property values. However, these districts face mounting challenges: rising operational costs, expanded state-mandated programming, decreasing overall funding, competition from charter and online schools, increasing student behavioral health needs, and declining student enrollment in many regions.

As architects and engineers, we regularly visit school buildings throughout the region, supporting districts in evaluating their facilities and helping them master plan for the future of their educational environments. So, what are some specific challenges facing PK-12 school infrastructure in our region, and what lies ahead?

Pennsylvania has 500 public school districts, each differing in enrollment size, socioeconomic status, geography, and number of facilities. In Western Pennsylvania, for example, districts range from large systems serving 8,500 students (approximately 650 students per grade level) to small ones with around 1,000 students (roughly 75 students per grade). Over the past decade, the state’s school-age population has declined by three percent, with rural districts experiencing even steeper decreases. These declines reduce funding and raise the per-student cost of education, placing a disproportionate burden on small-town, rural, and suburban-edge districts. This is not to overlook the opportunities for cost-saving through consolidation, improved student-teacher ratios, or technology. It’s a complex issue. Many such communities are also struggling with aging populations, deteriorating infrastructure, fewer employment opportunities, and the corresponding reduction in PK-12 enrollment.

A major challenge is that districts must maintain building space designed for higher past enrollments, resulting in excessive square footage per student. Operational costs rise, while available funding often remains flat—or worse, declines. School districts are frequently forced to make difficult decisions: maintain outdated buildings for a shrinking student body or consolidate facilities to reduce costs and forge a sustainable path forward. While educators and community leaders are creative and resilient problem-solvers, they are navigating an increasingly difficult environment.

State financial support has been reduced significantly. Today, Pennsylvania provides limited funding through a maintenance-focused grant program that offers approximately $250 million annually across all 500 districts, with a cap of $5 million per project. For most large-scale improvements, this assistance is insufficient. This implies an even distribution, but competitive grant processes often favor districts with more administrative capacity, better planning, or political support.

Many school facilities in Pennsylvania date back to the postwar baby boom era of the 1950s through the 1970s. The

age and condition of these buildings present substantial and ongoing challenges. In the 1950s, Pennsylvania established a state-managed support system called PlanCon (Planning and Construction), which recognized that school facilities require significant upgrades every 20 to 30 years. PlanCon provided financial assistance to districts undertaking eligible capital projects, typically contributing 20-to-25 percent of a district’s annual debt service through a state-determined Aid Ratio. This ratio accounted for a district’s local tax base, offering greater aid to communities with limited financial capacity.

However, for the past 13 years, the state has imposed a moratorium on new PlanCon funding. This policy shift has created a heavy burden on all districts, especially those with the least financial flexibility. At the same time, construction costs and labor expenses have increased significantly, and market volatility has added further complications. The need for modernization is constant, but the capacity to address it is diminishing.

Today, most school districts are doing their best to manage costs while planning improvements to support student success and community use. Modern educational design must now respond to a growing list of needs, including enhanced school safety, behavioral health services, occupational and physical therapy, independent learning spaces, career development programming, and integrated technology. The pressure to modernize grows even as resources remain constrained.

The long-term consequences of underfunding capital improvements will be far-reaching. Ohio serves as a cautionary example: decades of disinvestment led to deteriorating facilities and unsafe conditions for students. It took the creation of a new support program—akin to PlanCon—and billions of dollars to repair the damage caused by years of neglect.

In Pennsylvania, we continue to see districts demonstrating deep pride and care for their schools and communities. Many are making progress by upgrading older buildings or consolidating facilities to better serve students and staff. But moving forward will require stable community economics and a renewed commitment from the Commonwealth to invest in the future of public education.

As with any infrastructure initiative, the path forward depends on sound planning, strategic investment, and a collective belief in the value of strong schools.

Dan Engen is a principal and president of DRAW Collective. He can be reached at daniele@ drawcollective.com

Dan Engen