Article

Resources

expect

Article

Insights

Recap of the NC State Construction Conference

April 1, 2025
By: Stephanie U. Eaton

Each March, our team participates in the North Carolina State Construction Conference in Raleigh, where thousands of construction industry members meet to hear about the current “state of the construction industry” in North Carolina and across the U.S., as well as learn about important code changes, legislation, funding opportunities, and other information relevant to the growing industry. Here are some of the highlights for those of you who missed this year’s event:

  • Construction Economic Outlook (by Ken Simonson, Chief Economist for AGC of America)
    • Construction employment is increasing in most states: From Feb. 2020-Dec. 2024, employment was up 9.2% in the U.S. and up 15% in North Carolina
    • NC Metro construction employment: From Dec. 2023-Dec. 2024, Charlotte/Concord/Gastonia increased 4%, Raleigh increased 2%, Greensboro/High Point increased 1%, Winston-Salem increased 4%, Wilmington increased 2%, Durham/Chapel Hill increased 5%, Asheville increased 2%
    • Net percentage who expect value of projects to be higher this year than last year, top 5 by project type: (1) Data Centers (42% in U.S.; 40% in NC); (2) Water/Sewer (35% in U.S.; 55% in NC); Power (32% in U.S.; 65% in NC); Transportation (29% U.S.; 39% NC); Other Healthcare (27% U.S.; 35% NC)
    • Only private office and retail construction are expected to have a lower value in both the U.S. and NC this year
    • Firms’ major concerns for 2025: (1) Rising direct labor costs (62% U.S.; 74% NC); (2) Labor shortage (59% U.S.; 76% NC); (3) Worker quality (56% U.S.; 62% NC); (4) Material Costs (54% U.S./50% NC); (5) Recession/economic slowdown (41% U.S.; 32% NC); (6) High interest rates (41% U.S.; 35% NC)
    • Highest wages as of Dec. 2024, ranked by construction type: (1) non-residential building construction; (2) heavy and civil construction; (3) general construction; (4) specialty trade; (5) residential building
    • Overall, input costs and bid prices have moderated, but some input prices remain volatile, such as copper and brass mill shapes, steel mill products, diesel fuel
    • The most significant change in construction spending from Dec. 2023-Dec. 2024 was on data centers, which increased a whopping 45%. Manufacturing was second with an 11% increase, followed by private residential construction, which increased 6%. Spending on private offices, commercial (i.e., warehouse, retain, farm) projects, highway and street projects, and healthcare projects all fell during that same time.
    • Population growth in SC, at 1.7%, was in the top six states. NC was close behind with a 1.5% population increase.
    • The AGC’s “Medium-Term” Outlook for Construction:
      • Economic growth continues, but policy uncertainty has risen amid higher tariffs, harsh immigration and deportation actions, increase in deficits, less support for renewables, although lessened federal regulatory hurdles may slow solar and EV-related projects
      • Single-family construction has a gradual pickup, but is vulnerable to higher mortgage rates
      • Multi-family, office and warehouse construction declines in light of higher costs and weaker demands
      • Data center, power, infrastructure construction enjoys strong growth
      • Manufacturing construction has slower growth
      • Material lead times (supply side) – few problems except for electrical gear
      • Material costs increase 1-3%
      • Labor costs increase 4-5% as availability remains the number one challenge for many contractors
      • HOWEVER, all costs could rise much more depending on the tariff and immigration policy impacts on the U.S. economy
  • State Budget Revenue Forecast (by Brian Farmer, Budget Analyst, OSBM)
    • After stable economic growth with enacted and triggered tax cuts, the forecast indicates shortfalls in FY 2026-27
    • Following the budget release in March 2025, the budget will be certified in July/August 2025 and Agency R&R Allocation Process will be in October 2025
    • State Capital & Infrastructure Fund (SCIF) was established by the NC General Assembly (GA) in 2017 and became effective on July 1, 2019; this is a “pay-as-you-go” model to cash flow capital projects as funds are needed
    • The Office of State Budget and Management (OSBM) can swap SCIF between projects to meet cashflow needs, although projects cannot begin until Fiscal Year is authorized by the General Assembly
    • $70 million in Flex Funds, which were established by Session Law 2021-180, are available to assist with projects under Sec. 40.1(b) and can be up to 10% of project authorization, but may not be used to increase project scope
  • State Construction Office (SCO) (by Michael Shumsky, PE, Director of the SCO)
    • The SCO is organized into four sections: Construction Management/Facility Condition Assessment Program (FCAP); Design Review; Consulting Services/Downtown Complex/Electrical Inspections; and Capital Project Management
    • In 2024, the Construction Management group presented 249 Award Letters (reflecting $1.1 billion in construction contracts) and accepted 116 projects (valuing $470 million total)
    • FCAP has a 5-year cycle to report on all state-owned buildings over 3,000 gross square feet, relying heavily upon owner representatives’ input on facility issues; reports are used by owners to identify future R&R funding requests
    • Review times for Full SCO Oversight Projects are as follows: advance planning is 15 calendar days, schematic design review is 30 calendar days, design development is 30 calendar days, construction documents are prepared in 60 days, and final approval review is 15 days
    • Review times for Limited SCO Oversight Projects are as follows: code enforcement is 15 calendar days, 6-month expiration re-review is 15 days
    • New NC Building Code - SCO Plan Approval
      • July 1, 2025 is the Final Approval Deadline for Design Development (DD) using 2018 Building Code
      • Otherwise, DD approval must comply with 2024 NC Building Code
      • Projects placed on-hold or remain active for one year after receiving DD approval must be resubmitted under 2024 NC Building Code
    • Highlights were provided regarding the 202,000 sq. ft NC Education Campus (LSO) completed in December 2024, as well as projects overseen by the SCO Capital Projects Management Section, including the NC DHHS Headquarters with a certificate of occupancy expected September 1, 2025 on a project with 20.8% HUB Participation
    • Capital Project Development Principles include (a) adversity to risk/risk management, (b) fair access and business opportunities on state-funded products involving proactive solicitation of HUB’s, and (c) oversight by the GA, OSBM, State Building Commission and SCO
    • Best Practices for use of InterScope: (a) notify SCO when InterScope user(s) are no longer with your organization; (b) do not share login accounts; (c) include SCO ID number when reporting a problem; (d) obtain supervisor’s notification for extra InterScope permission requests; (e) use InterScope “Report a Problem” instead of InterScope Admin email
  • Legislatively Created Building Code Councils
    • House Bill 488 created the Residential Code Council
    • Senate Bill 166 effectively dissolved the current Building Code Council and created a Commercial Building Code Council
    • Each Council has 13 members, six of which are appointed by the GA and seven of which are appointed by the Governor and confirmed by the NC Senate
    • Quorum is now set at nine people
  • Historically Underutilized Businesses (HUB) Office (by Alicia Lyon, Director, NC HUB Office)
    • Main Roles of the HUB Office – HUB Certification, NC Small Business Enterprise Certification (NCSBE), Advocacy and Business Development Services, Compliance and Reporting, Minority Business Development Agency Business Center
    • What is a HUB?Per NC Gen. Stat. Sec. 143-128.4, a HUB requires either
      • (a) 51% ownership and daily management/control by individuals in HUB Certification categories [which are Black, Hispanic, Asian American, American Indian, Female, Disabled, Disadvantaged];or
      • (b) Employee Stock Ownership Plan (ESOP) with 51% minority ownership (this is a NEW category)
      • Must be HUB-Certified to count toward HUB spending and participation
        • Certifications are managed by the HUB office and last four years, with ability to re-certify
        • No fee to apply for certification
        • 7,012 total HUB Certified Vendors as of 2/10/25
        • HUB Usage in FY 2023-24: Design ($19,516,119), Construction ($312,942,057) – FY 2023-24 was the second highest HUB spend reported
  • HUB-related laws
    • NC Gen. Stat. Sec. 143-128.2 (10% goal), 143-128.3, and 143-131 – Formal and informal construction contracting and reporting for any new construction, repair or renovation projects with total cost of $30,000 or more; describes Good Faith Efforts for project owners and bidders
  • Manufactured and Modular Buildings
    • P&C can issue specs, solicit bids, and award purchase of lease for both manufactured and modular buildings
    • Site utilities and layouts are designed by the owning agency
    • Specifics were provided for Site Evaluations, Site Utilities, Foundations, Exterior Steps and Ramps, Sprinkler and Fire Alarms and Inspections
    • Manufactured buildings
      • Must be built to HUD Standards (residential use only)
    • Modular Buildings
      • Plans must be submitted to NC OSFM for review and compliance with NC Building Code
      • Offsite construction must be inspected by a third-party inspector
      • Data plate is issued and attached at the point of manufacture
      • AHJ permits for final on-site assembly are required
  • Safety and Sustainability for Existing Concrete Structures (by Dave Tepke, PE, Principal Engineer, SKA Consulting Engineers, Inc.)
    • Structural Safety defined --- See International Building Code 2021, 2024 in Sec. 101.3 – Purpose: “The purpose of this code is to establish the minimum requirements to provide a reasonable level of safety … through structural strength … and protection from the hazards of…dangerous conditions…”
      • Sec. 202 defines “dangerous” and “unsafe”
    • ACI 562 – Concrete Repair Code – Sec. 2 definitions for “potentially dangerous”
    • Since absolute safety where there is zero probability of failure is not absolute/attainable, designs have to be for failure and ductility
    • Address “live load” and “structure risk categories” such as Risk II (typical coastal residential) and Risk IV (critical structures)
    • “Sustainability” has a variety of definitions, many of which are focused on social, economic, health, environmental and other requirements of present and future generations
    • Existing structures must address safety, environment, durability/service-life extension, cost and function
    • Structural Condition Assessments include visual inspections that may be supplemented with sounding, deflection, prelim NDT, stress analysis, crack measurements)
    • Consider historical exposure, changes in building use and manufacturing processes, concealed problems, prior repairs, maintenance practices for the building
    • Billions are spent annually on corrosion control and concrete repair in the U.S., and service-life extensions will have a max value/benefit to building owners
    • The most sustainable form of building management is preventative maintenance
    • Industry consensus documents are published by ACI, ICRI, AMPP
    • New and Developing ACI Standard Codes
      • ACI 562 Concrete Repair Code 2013, 2016, 2019, 2022, 2025 (NCEBC 2022; IEBC 2024)
      • ACI 440.11 – GFRP Reinforced Concrete Code 20222 (2024 IBC)
      • ACI 323 – Low-Carbon Concrete Code 2024
      • ACI 321 – Concrete Durability Code expected 2027
    • Education
      • Concrete Surface Repair Technician (CSRT) – 2016
      • ICRI Repair Applicator Training Program Initiative – 2023 (pilot in Raleigh Feb. 2024)
    • Recent and evolving technologies for building evaluation
      • AI and machine learning
      • Lidar and photogrammetry
      • Structural health monitoring
      • BIM
      • Drones
      • Industrial rope access
  • High Rise Construction Lessons Learned (by William Johnson, RA, Asst. Dir. SCO; Chris Roberts, AIA, VP/Principal LS3P; Paul Kitchens, PE, Partner, Newcomb & Boyd)
    • High Rise defined in NC Building Code Sec. 202 as a building with an occupied floor located more than 75 feet above the lowest level of fire dept. vehicle access
    • Owner Best Practices - Reserve Funds
      • For state projects in NC, 5% of construction costs should be for renovation, 3% of construction costs for new construction; Reserve Funds are not sufficient for large capital projects
      • Scale Factor – economy of scale vs. penalty of scale
    • MEP Building Information Modeling (BIM) uses for Clash Detection & Resolution led by Construction Manager
    • SCO Inspections of Electrical, Above Ceiling, Sprinkler System and Final
    • Case Study related to UNC CH McColl Building Addition and involvement of FAA because of building height in relation to RDU airport, as well as coordination with local fire marshal related to fire command room, building approach and how fires would be fought, emergency planning
    • Case Study also addressed program stacking and modularity to minimize floor-to-floor height, selection of tempered vs. heat-strengthened glass, smoke removal glazing, unitized curtain wall to reduce installation schedule but that increased costs; and design to keep sprinkler water from entering elevator shafts