 Good afternoon, everybody. This is the Vermont State Senate Committee on Institutions and the House Committee on Corrections and Institutions. Today is Friday, April 1st, 2022. I'm Joe Benning, your host for this afternoon's festivities. Welcome to April Fool's Day. That is not to disparage our witnesses who are here for important business, but around the state house today, we've been finding various jokes and places. So you are as welcome today as we go through our conversation. We are meeting to talk with Associated General Contractors of Vermont and have a general conversation about building cost drivers with several different players. For those of you that have not been with us before, I'm going to give you a brief statement that, oh, our pro tem is bringing dessert. Greetings so much, Ken. Thank you, Senator, for being on the podium. Sorry to interrupt. Thank you, Madam President. We're going to have some conversation now over Duncan Munchkins. Is that what is in there? Don't worry about it. All right. Well, sorry, for those of you in our House counterparts, you probably don't have as good stuff on your table out there. But the bottom line is today's conversation, I should say to all witnesses, as we proceed, the first thing I would like you to do is introduce yourself. Give us a brief biographical background to let our YouTube audience know who you are, and then we can dive into your conversation. Now, should you be rolling right along in your testimony and say something that we on the committees may know and understand, but it red flags for me the possibility that somebody in YouTube land may not understand what you're saying. I may interrupt you, not to be rude, but just to make sure we get those folks on the same page with our bus. Now, I understand Matt Musgrave is here from Associated General Contractors. He is the Government Affairs Director. Matt, I think you've been with us before, at least in Senate institutions. I'm going to welcome you to both committees this afternoon, and the floor is yours, sir. Well, thank you, Mr. Chair, and thank you, Madam Chair, for inviting us to come to your committee, as well as thank you, all the committee members here. For the record, my name is Matt Musgrave. I'm with the Associated General Contractors of Vermont, and I've met most of you, most of you in person, at least. And for the people on YouTube, the AGC is the Trade Association that represents general contractors in Vermont of many different types, including road and bridge contractors, commercial building contractors, capital state project contractors, as well as we have some residential home builders within our ranks. And we generally employ in a really good economy. We've had up to 20,000 employees within our ranks, and currently we're operating around 16,000 employees within our ranks. One of the things that the AGC does on a regular basis with its members is organizes committee discussions, not unlike what you do at the State House, where we get together and we talk about specific issues that are related to our industry. And one of those committees that we have is our buildings committee. And our buildings committee meets once every quarter, and we discuss the particularly capital building projects. And we've been lucky enough to have representatives from buildings and general services, specifically Commissioner Jennifer Fitch and Joe Asia have participated with some of these meetings. And the purpose of those meetings is to really look at how jobs are being laid out, how we can best respond, how we can best deliver those services to the state and also the Vermonters that use those services, buildings, you name it, parking rides, all the capital projects that you work on. The pandemic has given us an opportunity that we didn't take advantage of in the past. And we lament living in these Zoom format worlds a lot. But one of the opportunities that it did create for us was we were able to expand our committee. And so it went beyond working with just the buildings and general services. We actually got involved in conversations with the American Institute of Architects in Vermont, as well as the American Council of Engineering Companies of Vermont who all participate in these different projects. And we started meeting last summer and in various shapes, fashions and forms to talk about in where we interact within the capital building process. Well, we did decide during the summer last year, and this has been a six month process to get us here before you today, was that we wanted to share some of the challenges with you on the institutions committee. We will also be broadcasting the recording out to other members within the legislature to deal with the challenges that we're facing and planning, design and construction of state projects due to the increased costs of the supply chain, the workforce and some of the other building requirements that we have. I'm gonna be quick with my piece and I'll pass it off to some of my friends that I've brought with me today. But just to set the stage for the conversation today, as you know, home and purpose built commercial buildings have significant differences from start to finish. When the state decides that they wanna build a building that's gonna provide services to Vermonters is generally expected to last generations. And I think the state house is a great example of that with 160 year history, although it's been through a couple of rebuilds due to fire as I'm aware. The difference between the commercial build and a home build is that a homeowner in ISIL real estate for almost 20 years of my life, the average homeowner stays in their building for seven to 10 years. So they don't take some consideration into the same processes that you do and the buildings and general services does when they're purpose building these important estate projects. So it's important that we talk about those different cost drivers today. And I brought some experts with me that I'd like to introduce to you who can help describe this. I know next on the agenda, I think we had Commissioner Fitch. I don't see her on here. Is she in the room with you? She's here, he's here, he's with us. Okay, I'll pass it over to Commissioner Fitch and then we'll move on to our friends from the AIA. Thank you very much again for having us. Before you go, Matt, is it true you're working for Dick Wozzi? Sometimes I have to admit that, but yes. Well, in the 100th of April Fool's Day, would you tell him we offered you our condolences? Yes. This is becoming a tradition, happy to. Commissioner Fitch, welcome back to Senate and House, well, let's see, Senate institutions and House corrections and institutions. Well, thank you, Mr. Chairman and thank you, Madam Chair as well. And if you want to send over some of those donuts for us, we'll be happy to take them. Sir, so my name is Jennifer Fitch. I'm the commissioner of buildings and general services and Matt really said it all, which is when Chris Cole was the commissioner and I was the deputy commissioner of BGS in 2017, we really started reaching out to our industry partners both on the design side and on the construction side. And that created these quarterly meetings that we were basically having with each of the different groups. It wasn't until recently that we've had the opportunity to bring all three groups plus BGS together. And really that's where the power comes from, right? Because you have the planners, the designers and the contractors as well as the owner all in one room talking about our shared challenges, talking about innovations, talking about best practices and really working together to support successful outcomes, not only for BGS and in ourselves, but what are ways in which we can better support these different groups so that we get the best outcome. And that means quality projects, right? That are built basically at the lowest dollar possible, right? We'll still meeting all of the code requirements because we want to make sure that we are being very efficient in how we spend the money that we have. And so it's been a great collaboration and a couple of things have come out of that. One is we're here today for the first time you have all four, which is fantastic. And in a couple of weeks from now, we're actually gonna be putting on a buildings workshop, which is where we're inviting lots of different folks in the state. It's a four hour training and both architects and engineers will be able to get continuing education credits for participating in that workshop. But again, that's another opportunity where we brought all of us together to basically work together to create this training program. And we're sharing our lessons learned and we're sharing those best practices. So I really feel passionate about you're stronger when you're working together as a team. And at the end of the day, we all want to support each other because that's how we get the best outcome collectively. One of the things you'll hear about today in addition to cost drivers, and it is a big cost driver, is really gonna be workforce shortages. That's a big theme right now, not only just in general, but definitely in the trades industry. And we have been partnering with AGC on different ways in which we can try to encourage more people to go into the trades field. So for example, at BGS, we're gonna start a trade co-op program where next year we're gonna be hiring six students in their senior year. They will be working alongside some of our trades folks and that will allow them to get the hours that they need to get the certification when they go and graduate and then can go out into the tech field. So that's an example. And we're actually gonna have internships for the first time this summer as well on the engineering and architectural side, where we'll get students from architecture or engineering programs that will come and work for us for the summer. And by doing that, we're creating a pathway where we're encouraging people to go into the field and we're providing opportunity, but we're also creating a pathway to BGS as well because we've been struggling with recruitment and retention. So by working together collaboratively, we're really leveraging each other's strengths and we're leveraging these opportunities to basically fulfill mutual goals and figure out how we're going to tackle these shared challenges. Thank you. Thank you, commissioner. Alice, I cannot see your committee members. If anybody has a question, either room, please do just shout out. I see that you've properly banished representatives, Labor and Martel to separate quarters, but any of you who have questions, don't hesitate to let us know. The next person on the line is... We do have a question, Senator. Yeah, just quickly. Commissioner, so the architects and engineer interns are coming from Vermont colleges, is that right? We're gonna be targeting the three schools. We're just about to announce it. So it'll go to UVM, it'll go to Norwich and it'll go to VTC. Okay. And then hopefully we get applicants and we interview them and hopefully we'll hire three for this summer. True. Good. The next person that I have on my list is John Alden. I think I see you on the screen. John, I have an initial question. Do you trace your lineage? I'm here just waiting my turn. Well, Dave, John, can I just ask quickly? Do you trace your lineage back to John Alden on the Mayflower? Absolutely. Well, that's interesting because that means that you and I are related in some fashion. And we're apologized for that. No fooling. Okay. Welcome to the committees. Thank you. So I'm John Alden, I'm an owner at Scott and Partners Architects and I am a member of the AIA Vermont and co-chair of the AIA Vermont Public Policy Committee. So you may have seen some of our testimony around already in written form. I'm also on a planning commission in Essex Junction. So I've got a fair amount of background in this kind of thing and I've been practicing in Vermont for 25 years. And what I'm trying to tell you about today, I think is programming and the importance of learning as much as you can about the details of a project at the beginning, which is hard, so that you can know more about your costs and the forecasting of those costs in the project. So when you get surprised, hopefully you don't get surprised later during the process of going to construction. So architects in general are spending a lot of time at the beginning of the project before we hand that project off to the contractors for construction. So we and our team of engineers will go through and I'm gonna speak mostly about commercial projects. We consider residential projects to be quite easy and generally familiar for the contracting community. And so the real challenges in commercial projects, some of the ones that we've done for the state of Vermont include the forensics lab and the state health lab, along with other engineers and architects on those teams. But so the projects can be large. They generally are never the same as something else you've done before. They all have their own particular details and requirements. The requirements will vary depending on the site. They'll vary depending on what's happening in the building. They'll vary depending on what they're being used for and what the construction type is or is required to be. And so our job is really to sort through all of those requirements that come from the building owner or the proposed owner and try and develop a building that matches all of those requirements for size and how does it look? It's like the last thing we're worried about, by the way. I mean, it's important, but the details of the technical compliance with all the rest of the codes and energy use and how you build the structural requirements. Those are the things that are really more important to our job than the actual appearance of the build. And you might find that odd to come from an architect. Yes, we care about the way they look, but I lose a lot more sleep on how well we've technically complied with all of those other requirements and frankly, what's out there that we don't know about. And so it's all those unknowns that are abundant at the beginning of a project that we're trying to pin down so that we can describe to the contractors and the owners, okay, if you wanna do this kind of building on that site, you're going to need to do all of the following things that's gonna cost you so much. And we don't always know the answers at the beginning. So this programming effort that we're talking about is where we try and put all of those things together. Give me the list, what do you need? Who's coming to the building? Where are they coming from? What are the soils like, where's the sun? What kind of utilities do we have available? How are we going to build it? What are the structural requirements? Oh, you're in a seismic zone that's different than normal, that has an impact. Oh, when we dig the basement hole, or just the foundations, the dirt's gotta go somewhere. We have urban soil on this project. Oh, great, well, where can the urban soil go? We don't need it on our site. Oh, it can only go to other places that like urban soil. I can't mix it around with everything else. So those are costs for us to figure out ahead of time so that when we develop a cost estimate for the project, we've identified not only the things that we know about, but we've put a stakeholder in for all the, a placeholder for all the things that might be costs. Like, okay, if you have to go dispose of all this urban soil somewhere, where's it gonna go and how much is that gonna cost? So I just wanted to say that it's always a good plan for us to put the work into that initial investigation at the beginning of a project so that you can identify as much of this kind of thing as possible because it all will come back and affect the final outcome of a project. So just having the great idea while we think it's gonna look like this and it's this big and that's a tip of the iceberg. So please try and give your advanced design team plenty of room to do that initial testing, whether it be subsurface testing or other types of investigation into what codes apply, how will they impact the final project and can you understand and contain as many of those costs up front as possible? And I think I'll turn it over now to ACEC, unless there are any questions. Anybody have any questions? I actually have Nick Haderis. Is that how you pronounce your last name, Nick? Very close, Haderis. Haderis, welcome. Thank you, thank you. My first time speaking to you all so I really appreciate your time today for the record. My name is Nick Haderis. I'm a member of ACEC, also chair of the ACEC and BGS subcommittee that has organized the workshop that the commissioner Fitch mentioned. I'm a senior project manager and also the federal department of defense program leader for VHB. So I work on projects both here in Vermont and elsewhere within our footprint for public agencies. So my area of expertise, I'm a civil engineer and my expertise is generally in large and complex public facility land development. So I'm gonna build a little bit, I think on what John just said and really kind of use an analogy to talk more about the planning and budgeting portion that happens both when you start thinking about a project and also once you start getting into design and planning and looking at how it's gonna go from there. So the analogy I like to use is that of a long road trip. So you've got a family member that is for some reason left Vermont and gone to Tennessee and you wanna go visit. That's a lot like a big project. You know you have a destination, you know you have something that you need to achieve and how are you gonna get there? You could take any road, go in any direction. So you start with that planning process. As John said, where are you going? What do you need to achieve? If we're talking about a building, you're talking to the users, to the stakeholders. What is their program? How many people are they gonna have? How much parking do they need? What do they need for utilities? How long is the building going to be there? And is it gonna be expanded later? So you think about that first. How much cost can you afford for that building? That could also get into back to the analogy. How far can you travel? How are you gonna get there? Can you afford to take the scenic route? Or are you going to have to focus on avoiding tolls, minimizing how much gas you use? Same thing with a building project. What are your priorities? Having that all planned out upfront before you start talking about, okay, well, what's it actually gonna cost? Doing that planning upfront, have you checked the road ahead? If you get down the highway, somewhere on the way to Tennessee, and you find out there's highway construction and you're stuck, you have to back up, take another road. Same thing with a site that you're trying to develop. If you've got a site, you're already working on it, you find bad soils, shallow bedrock. There's an easement crossing the property you didn't know about. Now you've got to back up and try to take control of that easement or those other services. That all adds cost and design because it has to be redesigned. It adds costs in construction. Now you have to manage all of that bad soil or whatever else the challenge is, you're trying to overcome. And what happens then if, all right, you get past that, you get to your destination, and you find out your family members moved, they forgot to tell you, they're now in Colorado. What happens if the plan, if the need changes, if the users maybe weren't as involved in the upfront planning or during design, and you find out the parking lot needs to be twice as big as it already was. You've already got a site, it's now too small. So trying to overcome all of those challenges when you learn about those issues, when you're already in latent design or you're into construction, even worse, adds much larger costs. So it gets back to that old adage of an ounce of prevention is worth a pound of cure. What can you do upfront to mitigate those risks? Upfront plan and program before you set a construction budget. You do the planning and programming, you have the stakeholders involved. You know what your destination is and you establish your budget and schedule based on that. Then maybe you don't have a site already. You could proactively go out and find sites that meet certain criteria you might need. If you're waiting for somebody to offer you a site, it's a much more limited pool to choose from. It may not meet your requirements that may increase the cost for construction significantly. If you're finding those sites, you may pay a little more upfront because it's an owner that maybe didn't know they wanted to sell. But at the end, you may have a site that's easier to develop, less costly to develop, better meets the program needs. And then you update the budget and schedule. You've found your site. How difficult is it gonna be to develop? Is it already in a great location? And then, yeah, purchasing land, designing and constructing at that point, much more straightforward, a lot easier to predict and for a lower cost and a better product long-term. And I think that's what I wanted to convey and share as far as my perspective on how design and planning in particular can help to keep down costs for construction. And so I think I'll turn it over there to Sean Kelly for some of the other engineering considerations. I think Sean, just as a reminder, a little bit of a biographical background and then dive right in, but welcome. You're muted. You're muted. Star-six time, Ian. No, no, no, unfortunately not. You could call in. Can you do it from this side, anybody? No, no, no. No, it doesn't sound like we have to call in. You might have to call in. Can you tell me if you'd like or if you'd like? I'm sorry. Good. Okay, we can't hear you, Sean. I'm not sure if you're able to call in or not. I think it's a shame to remember. Mr. Chair, I'll send Alex, I'll send Alex McCracken, Sean's email address that hopefully he can forward along the call and information and get that. I'll send it right over. Thanks for that. I'm gonna skip down to Brendan Cosgrove, Executive Director of the American Council of Engineering Companies of Vermont. Brendan, welcome. Thank you, Mr. Chairman. And thank you very much, Madam Chair as well and the committee members for allowing us to give testimony today. And I really appreciate it. I'm gonna let my members do the expert analysis and give the information necessary, but I just wanted to make sure that I thank Commissioner Fitch for bringing together these organizations and also let you folks know a little bit about ACEC of Vermont. We represent the engineering firms in the state. We do a number of different collaborative efforts with state government, including VTRANS and VGS. We're really widespread, mainly civil engineers, but we represent a large community of engineering. And with that, I was hoping to have Sean come on. He's also the Chair of our Government Relations Committee. So, but I will pass it on to our next speaker as well. And thank you very much. Thanks for coming, Brendan. I have Peter Kelly, Vice President, Business Development, DEW Construction Corps. Welcome. Well, thank you. I appreciate the opportunity as background. I'm a media past president of AGC. I'm a Vermonter born and raised here at UVM, civil engineering degree. I'm a licensed professional engineer and the context of my discussion is going to be limited to the building trades. So I'm not going to be speaking about roads or bridges or what we call heavy civil. As a general rule of thumb, the cost of a building is approximately 50% labor and 50% material. So it's about split evenly. Competition reduces cost. So this goes for labor, material or subcontractors. Our Vermont marketplace, our little community of 620,000 people is sized for normal levels of economic activity. When you go outside of that normal range, we run into challenges with pricing. During boom times, pricing increases, during busts, pricing decreases. Our small scale and concentrated wealth has created pockets of limited competition. An example of that is gas pricing, gasoline pricing along the roof seven corridor. Rutland County has significantly lower gas prices than Chittenden County. And that's just a reflection of a lack of competition. So on labor, we have a shrinking construction workforce. It's been in gradual decline for years. It was not meaningfully impacted by the pandemic. If you recall, contractors went back to work within weeks of the shutdown, avoiding a huge draw on unemployment trust fund. Wage pressures, we have experienced pressures on wages as the labor pool has decreased. It's a classic example of supply and demand. Prices increase when there's more demand than supply. Right now we're seeing that in the housing market. We're seeing that in the construction market and conversely they decrease, prices decrease when there's more supply than demand. Wage pressure is also impacted by a healthy construction market. So there's more work than there are workers. So that puts pressure on the workers that are available. The federal stimulus funding will maintain or continue the upward pressure on wages in the short term. Prevailing wages are not impacted in our cost to deliver goods. Our market pays above livable wages. Meaningful advances in workforce development is needed to stabilize this trend. We need to return to a culture that fosters the trades from the early age. Material choices made during design will definitely impact costs. And when BGS and others make decisions about a design and the John Aldens of the world make decisions on designs, they have to make a decision early on about the initial cost versus life cycle costs. And so it's a classic of allocation of funds. Do you wanna spread it out over a time horizon or do you wanna incur those costs upfront or does the budget allow for those costs to be incurred on the upfront? Engaging contractors early to evaluate material alternatives and availability is helpful. We suggest that the state use the construction management delivery model which engages contractors early in the process for material selection, suggestions and logistics input and sub trade interest. On the design side, the design definitely drives the cost. The state must prioritize the importance on the aesthetics. So for instance, a welcome center might have more of a priority on the aesthetics because it's part of the Vermont brand. Whereas an AOT building that's less important. Permits impact the cost of construction as well. They're high cost and the risk associated with the permit process limits competition. Feedback that we've received from national firms is that if they can make their way through the permit process in Vermont, they will get above market profits in Vermont because there's such a barrier to entry to our market. I'll give an example. The Cold Chester Costco does about a million dollars in revenue every day they're open which on a revenue per square foot basis is higher than the national average. A residential activity which I'm just gonna touch upon is limited to a few major developers in Chittenden County. The smaller players just can't take the risk to do a bigger larger scale project and the possibility that it will never happen. Lastly, the energy standards, that increases the cost upfront but the life cycle costs are decreased with Vermont's higher energy standards. And that's all I have. Well, Peter, I'm terribly curious you brought up the revenue stream for Costco and Cold Chester. Have you ever done a comparison between Costco and Mazda's general store, Cold Chester, to see what the receipts are like? I haven't but I really like to support the small guy and Mazda's is great. You know, they're often. Are you more in five minutes than I do at home? All right, Peter, thank you very much. I'm gonna come back to Sean to see if you're able to get in. Can you hear me now? Yes, we can. Yes! Oh, I gotta love the technology and the different formats when my computer was set for teams and not Zoom. So I apologize to everybody. Thank you very much for the opportunity to speak to you all. My name is Sean Kelly for the record. I work at Sanborn Head and Associates Incorporated we're a private engineering consulting firm. I'm representing here today the American Council of Engineering Companies, ACEC and I'm the legislative committee chairperson. For my background in terms of engineering, I'm a project director here at Sanborn Head I have a PhD in geotechnical engineering and I'd like to speak to you about some comments that Nick and John already presented. So in terms of construction costs, the stuff that I am involved with are the things that John had mentioned in terms of the beginning parts of a project. So we do evaluation of the subsurface prior to the construction of the building and prior to sort of designing what the building is. So our work is directly related to just the board of a structure and it involves sampling the soil. And once you determine what the building will be sitting on, that's not the end of the story. There's a whole bunch of other components that happen and the old adage, you don't know what you don't know really comes into play when we do our subservice evaluation program. So we present to the owner a certain program that would say, hey, your building is X square feet. You should do traditionally so many borings per square foot and then we go ahead and perform that program. But when we do our work, it's sort of like putting pins in a pin cushion and we don't know exactly what's gonna happen in between those pins. So that could create cost overages as the project progresses because you don't get to see everything that's on the site until you're in construction and excavators are digging that soil out. But we do as engineers, the best that we can, we try to engineer what those foundations will be and then predict what the soil conditions will be once we're in construction. John also mentioned about urban soils and obviously we have to follow rules and regulations. One of those big rules right now is the eye rule and that manages soils that are contaminated at different levels. And so that comes into play in terms of how to estimate what the cost will be ahead of time and then try to move forward and get the best solution as we can as we move forward. I guess the last thing I'll say is this sort of goes with a lot of geotechnical and foundation engineering stuff. All the good sites, at least in terms of support are already taken. All of the, we obviously live in a built environment and most of the good sites where we have firm soils, shallow rock, firm ground so we can build on, most of those are gone and so all of our projects that we have to use are ground field sites, sites that have already been used and potentially contaminated. So therefore it adds those costs that traditionally years ago we didn't have to worry about. And I guess, sorry I was gonna say that was the last thing. One last thing is in terms of our building code. So we have to follow the international building code for commercial construction and that code constantly changes. And the reason why it's changing is because life's safe, we wanna make sure that we design and build structures that meet today's requirements in today's code. And that as we go through time, really adds costs to the project. So I guess I'll end it there and I apologize again to the committee for my audio technical difficulties. We're glad you can make it, Sean. I'm gonna skip right over to Ann Minor. Welcome from PC Construction, the floor is yours. Great, thank you so much. It's such a pleasure to be here. This is my first time as well, very cool. A little bit about myself. Project manager at PC Construction have been at PC for about nine years. And my focus is on commercial construction in buildings. And I have been doing work around Maine, New Hampshire and Vermont for the last nine years. So what I'm gonna be talking to you today about is the supply chain issues and forecasting challenges that we're seeing, again, focused on the commercial and building side of our work. And I will get right into it, but when I'm gonna start a little bit high level and then kind of get into some granularity, one thing that we often look at to support, make sure things are what we're seeing for pricing is on trend with the market is the producer pricing index, also called PPI, which I'm sure some of you are familiar with. And there's a few different indexes that we look at to evaluate pricing and the trends that we're seeing. First off from the subcontractors perspective, and when I say subcontractor, I should also back up and say PC is, again, I'm sure some of you know, we are a general contractor and also a construction manager. We do a lot of our work subbed out. So sub being a guy that's working for us, of course. So our subcontractors that are buying the raw materials or buying the commodities, their index, we're seeing at their level some pretty exuberant increases over the last year. And just to name a few percentages that we've seen and Pete mentioned a few of these a little bit as well, but diesel fuel has gone up 55%, trucking costs have gone up 18%, plastics 34%, steel mill products 127%, gypsum products 21% and insulation 17% and lumber and plywood 18%. And this was a snapshot in time that was taken about a little over a month ago through an analysis we did to look at why we're seeing some crazy increases overall. So at the manufacturer level, they're seeing those increases in raw materials, which obviously filters all the way up through to the owner. When you roll that up to the owner side of things and from the state looking to do a new project or BGS, we're seeing that overall for non-residential construction just in the last year, a 12.5% increase in construction costs. As it's all rolled up, subs are trying to do their best to keep things down, but they have to keep on forcing it down the chain, I guess. And just for an awareness, but the escalation that we saw in 2020 was 1.3. So it was a huge jump and we're seeing that greatly going into 2022 that 12.5% continuing and pushing our numbers. So obviously there's a lot of factors that go into that, those crazy increases such as labor shortage, as Pete mentioned, that's a huge factor, limited materials due to high demand, shipping delays with clogged shipping ports, manufacturing shutdowns across the world for either needing to do to COVID or they're taking pauses on orders because they can't keep up. We've seen that quite a bit. So it's really forced us into needing to pre-purchase materials early. So we're often going into projects and coordinating with the owner early to buy most of the commodity materials. So for example, I worked on a project down in Benton recently and we went two months before the project even started. We bought all of the mechanical piping, all the plumbing piping, all the electrical conduit and all the commodity materials, just even before the project started, we had a pretty good idea of what that was and we got it come and got it stored and now we have it because we knew those things were gonna continue to increase. And then we had another wave where we bought all the mechanical equipment and electrical packages as well. So we could lock down that pricing and of course the steel. Steel's been a big one for them. So we're also seeing too, the thing that's really tough with bidding out projects these days, whether you're bidding out a lump sum project or you're bidding out a construction management project, the quotes that are coming from these guys because they're getting such a volatile pricing from their vendors, of course, that translates up as like quotes good for 10 to 15 days. And that is the timing for getting some of these projects started up is tricky. So we're having to pre-purchase early to lock in that volatile price and hopefully lock in their price overall. You know, for example, I have another project starting up in Stowe and we're already pre-purchasing all the raw material right now as we speak to make sure that we have it in time. And well, the biggest piece is actually the price increase, not so much lead time with steel right now, but they have given us a warning that as of Wednesday next week, if we don't buy the raw material, it's gonna go up another 30 grand. So we're trying to make that happen before the product is even started. You know, another example I have is on the Spannington project I worked on, we have an operable partition and we actually locked in with our subcontractor the purchase of the operable partition by the end of December to mitigate a 9% increase on the partition. And we just got noticed that normally, you know, the vendor would be able to say, yep, here's my PO to you. We're locking it in, good to go. But the manufacturer just came back to our subcontractor and said, yeah, I know you gave this PO, but I didn't get any money in hand and we're changing our structure and we need to come back with another, you know, it was like a little over 10% increase. And if you give us the money down, we can work with you on that, but they're asking for more money ultimately. And what we're seeing is that more and more we can't just lock in with a PO, we have to put money down. So more and more, some of these smaller commodity guys like overhead doors, operable partitions, miss specialty stuff, we're having to put down 50% deposit to actually lock in the price, which has also been a bit of a challenge for the owner side to make sure they have that cash flow ready, of course. I have just a couple more examples for you and then I'll take questions, but we also had a project that a year ago, they were told their generator would be 10 weeks. And here we are a year later, they are now just receiving their generator. We have another project where we just learned about the transformers. You know, transformers used to have anywhere from 15 to 20 weeks, there are now 30 to 52 week lead time for transformers. Typical wood aluminum clad windows like a pillow or Marvin window used to have an eight to 10 week lead time are now projected up to 30 to 35 weekly time. And the bottom line with all these examples is that these things are changing every day. We're staying as nimble as possible and working together with our owners and our subcontractors to make these projects successful still, but every week we find out of a new product challenge, a new volatile increase. And so it's something that makes it quite tricky these days to manage and get ahead of as much as we're all trying to do our best. So, yeah, I guess that's what I have for you. Any questions? Well, again, thank you very much for coming. First off, I hope you enjoyed your first experience testifying before a legislative committee. I'm gonna throw out the first question. We have about nine minutes left by the way before we promised our house counterparts they'd be on the road at two o'clock. But one of the cost drivers that you have all not mentioned, perhaps to be kind or perhaps because you didn't think it all the way through is the legislative process. I am curious, what things do you wish we could do or wouldn't do to help you get through your business day? And you can be as blunt as you want to be because I'm not gonna be on this committee next year. Anybody wanna come? Anybody wanna come? And I can say my two pieces, I'm sure others have a piece. I mean, the piece that I think Pete hit on it too is doing, and forgive me, I don't know your process as well as obviously you do, but the thing that I see a lot of success with projects these days is going more of the construction management route and doing a lot of doing early design assist. So, the very early stages where maybe the contractors and subcontractors wouldn't be involved, more traditionally, they're involved more in the front end with the program planning and getting involved in helping price some of those scenarios out so you can learn head on what you're up against and mitigate some of those challenges that the boots on the ground are more aware of, obviously. So that we've seen a lot of success with and I think is a really positive approach to construction management. Thanks for that comment. John, I saw you had your hand up. I did, thank you. And I'll be also brief that I'll say that the industry in general is still struggling with the concept of all the energy code improvements and upgrades. And we're now already being asked to comment on the next round of ratcheting up the requirements. And I think that it will help all of us if the committees can really listen to some expertise from the field and not just the designers on the technical challenges we have to comply with all these things that are being, you know, they're great ideas, but when you actually try and fold them into the average construction project, it really is still causing, you know, quite a bit of disruption in the practice. So to the extent that we can all move forward together, that would be great. But, you know, let's, let's try and make it reasonable to achieve so that the best outcome can be obtained. Appreciate that. Senator Ingalls. How often does Act 250 get in the way of projects that are put a streamlined process of Act 250 help out your folks business? I'll weigh in on that one. Montpelier Hotel is a great example of an Act 250 challenge that DEW was involved in. We were hired to be the construction manager on that project. And that project got derailed through the Act 250 process and really it was kind of specifically about the appeal process, which I don't think was exactly what you asked, but anything that can be done to tighten up Act 250 would be a positive from a contractor's perspective. In that regard, Peter, am I safe in assuming it's not the content of Act 250, but rather the time it takes on the appeal process? Well, I think to get party status is fairly easy. And I think that that should be reviewed and from my personal perspective, more restrictive. And the amount of time is definitely money. And so the longer something drags out, the more at risk the project is in terms of being viable. Is that particular project, Senator Muzz and I were driving by the other day looking at the building, I wasn't able to tell whether it's actually occupied. Is it actually in operation? So the project that I was referring to never got built. You're talking about capital plaza. Correct. All right. All right. I cannot see any hands from house members, except for a couple of you who are sequestered for whatever reason. So if you just want to shout out any questions you may have and identify yourself when you do, it would be very helpful. Can I just make a comment? Commissioner Fitch has a comment she'd like to make. So the other thing is we have something called weekly reports, which really aren't any fun, but they're important for reporting up the chain and they eventually make it to the governor. One of the things that I've been watching is trends on projects that we've put out, either for architecture engineering services or for construction. And for the first time ever, we are actually having a high percentage of not receiving any bids at all. And what are the architects and engineers? Both architects and engineers, which kind of group into one category and construction, I continue to see and Joe's on the screen so he can validate this, but I continue to see more and more weekly reports with we put this out to bid and we didn't get a single bidder. And now they're starting to put in reasons why a lot of it is workforce shortages, supply chain, we're too busy. There's a variety of reasons and we're starting to document those, but I will tell you that I've never seen this before where we're not having people bid on our projects. And so that means we need to rebad them and we do. And the hope is eventually we're gonna find someone that bids on the project. But what that means is two things. One, it's getting more expensive, right? Because as they talked about, it's the supply and demand. So projects are now getting more expensive and we're gonna see project delays because if we have to take more time to hire someone, right? That's gonna add more time to the schedule to deliver it. I will tell you that the governor has recommended now that we start prioritizing projects, knowing that there's gonna be so much more construction out there with all the residential as well as commercial and the influx of federal funds for infrastructure projects, not only in buildings, but also in transportation. So we now are going to have to start prioritizing projects to make sure that we are getting contractors and designers for the ones that are the absolute highest priority. We would love to cover all of them. That's the goal, but we're gonna have to start being really strategic. Matt, I see your hand up. Yes, thank you, Chairman. I know it's a Friday afternoon and the House Committee would like to be out at two o'clock. Before we do so, I wanna take a moment and read line by line the 2020 commercial building energy standards manual. If you'll just give me a question. We're gonna have to get started now and done. We're gonna end. We're gonna let the tape roll back. Yes, we're breaking up. On a serious note, on a serious note, I wanted to thank everybody. We just talked about a lot of different things and there are some things that we don't have the ability to change. We don't have the ability to control the supply chain in Vermont. We don't have the ability to rapidly grow people any faster than nature will allow that to happen. But things that we can control in what we're doing right now at the AGC is trying to build that workforce. And that's one of the things that we can do on our end to try to help out with these projects. So we've built the first ever in Vermont industry specific trades, job board and information, including descriptions of different positions, opportunities and even outcomes. We're showing people what kind of outcome that they can have. We put together a great workforce program with retention training, a new director and a whole program here at AGC. And finally, last but not least, and you can enjoy, it's two o'clock, you can enjoy your afternoon. We actually are holding the Super Bowl of career fairs at the Champlain Valley Expo Center on April 26th. We currently have 150 different employers from all different business verticals around the state. We worked with the Department of Labor on this and we're anticipating about 1500 attendees to come out. So we're working hard to create careers with livable wages and advancement opportunities for people to hopefully on our end improve that workforce piece. On your end with the workforce, you're gonna be seeing H703 come through that's got a lot of great stuff for the CTE centers. I'd love to see you pass that through. It's a good step forward with what government can do to help us build the workforce. So thank you very much for having us out today. Well, Matt and commissioner, appreciate you guys putting all this together. Matt, don't forget to say we gave you our condolences on Bobby and house members, if you're hungry, we've got some Dunkin Donuts munchkins down here. If you don't come and take them, you're gonna end up at Maz's store, two bucks a piece. So feel free to come up. Everybody have a great afternoon and a great weekend. Thank you. Thank you so much. Thank you all. Thank you so much. Thank you. Bye house members.