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Winter/Spring 2005 

 Essential Insights for Government Decision Makers

Green Building: An Increasingly Important Way of Doing Business

For years we in the design and construction industry have discussed the emerging green building trend. In October at the McGraw-Hill Construction (MHC) Outlook, our Chief Economist, Robert Murray mentioned green building as a macroeconomic trend in the construction industry, and AIA’s Chief Economist Kermit Baker stated that energy efficient products were overwhelmingly seen as increasing in residential construction. With energy prices remaining high, we can only expect references to green building to continue to increase.

It seems an opportune time to dedicate this issue of the Construction Industry Intelligence Report to green building trends and case studies. We recently released our Green Building SmartMarket Report, and with it, we have tangible data about the market, demonstrating green design is an increasingly important way of doing business. We found there is overwhelming participation in the industry: over 85% of a representative sample of architects, engineers, contractors, and building owners report involvement in green building activities.

We found that the motivations to build green are as influenced by a desire to “do right” as well as by perceived improvement to the bottom line.

And there is agreed consensus about green building’s expected paybacks:
• Operating cost reductions of
8% to 9%
• Building value increases of 7.5%
• ROI improvements of 6.6%
• Occupancy increases of 3.5%
• Rent increases of 3% on average

Groups such as the American Institute of Architects, U.S. Green Building Council, and National Association of Homebuilders are leading the charge, dedicating themselves to educating the public and motivating change throughout the construction industry. Industry leaders such as Turner Construction, PNC Financial Services Group, and a wealth of product manufacturers are adopting sustainable practices. And government at all levels is committing itself to practicing what it preaches by adopting green building principles into its way of doing business.

Suffice it to say, green building is not a fad. It is here to stay, and we are excited at the opportunities it will bring to our

The aforementioned statistics as well as the displayed charts and graphs can be found in the Green Building SmartMarket Report 2006. For information on how to get a copy, go to www.greensmartmarket.construction.com

Residential Housing Construction:
Energy Efficiency Drives Sustainable Building Practices

Most Frequently Installed Energy Efficient Feature in Homes

1. Insulated Exterior Doors
2. Energy Efficient Heating/
    Cooling Systems
3. Reduced Water-Used Fixtures
4. Improved Insulation
5. Energy Star Rated Appliances

Source: McGraw-Hill Construction, 2005

According to McGraw-Hill Construction’s annual homebuilder survey, energy efficiency drives most green building in the residential sector.

Results indicate the following:
    • 62% consider energy efficient technology the most important aspect of
      green building.
    • Higher energy cost is the most frequently cited reason for implementing
      green building into homes.
    • The Energy Star label - a program focused on energy efficiency - is the most
       frequently used method for identifying green building products in the home.

McGraw-Hill Construction is currently in the process of identifying the market trends in residential green building, modeling the research after that used to evaluate the commercial green building market and detailed in the Green Building SmartMarket Report 2006. The results will be available late spring/early summer, 2006.

McGraw-Hill Construction issues Residential Building Product Usage Reports based on the results of its annual homebuilder and remodeler surveys. To find out more, visit www.analytics.construction.com.

McGraw-Hill Construction and U.S. Department of Labor:
Encouraging Skills to Build America’s Future

The construction industry has long had a need for workers to fill jobs. At the same time, the industry is facing increased pressure to fulfill demand, and recent hurricane recovery efforts have placed additional burden on an already pressured industry.

In order to encourage tomorrow’s workforce to understand the opportunities and exciting challenges in the construction and energy industries, McGraw-Hill Construction has worked under contract by the U.S. Department of Labor and DTI Associates, Inc. to produce and release InDemand, a magazine designed to educate today’s teens about career opportunities. The first issue focused entirely on construction industry opportunities, while the second focused on careers in energy.

Each magazine features information on the industry, overviews of wages for various professions, profiles and interviews with professionals in the industry, a map of how professionals work together and the role each profession plays, an article on future trends or technology, two pages of fun facts, and resource lists. Additionally, at the back of each book is information on mentors, including tips for guidance counselors and teachers. The magazines conclude with a letter to parents on ways to engage their teens in talking about future career opportunities.

To read InDemand visit www.construction.com

Top Five Average Annual Salaries
for Construction Professionals
Engineering Manager
Landscape Architect
Purchasing Manager
Electrical Engineer
Construction Manager
Top Five Average Annual Salaries
for Skilled Crafts
Equipment Operator
Top Five Average Annual Salaries for
Energy Professionals
General & Operations Managers
Petroleum Engineer
Electrical Engineer
Management Analysts
Financial Analysts
Wages, salaries vary by region
Source: U.S. Dept. of Labor, Bureau of Labor Statistics


McGraw-Hill Construction Launches New Online Store for Analytics Products

In order to make its products more accessible, McGraw-Hill Construction launched a new online store at www.analyticsstore.construction.com, dedicated to providing access to more than 8,000 separate analytic offerings.

In particular, this new store provides easy access to lower-priced items that can give forecast or historical information on a state or metro area or a snapshot of a particular market, such as green building or healthcare.

McGraw-Hill Construction Green
Building Resources:
New Green Source website online
New green magazine to launch in Spring

McGraw-Hill Construction’s new Green Source website
(www.greensource.construction.com) allows everyone involved in environmentally responsible construction access to news, feature articles, best practices for architecture, and product information published by Architectural Record, Engineering News-Record, Sweets, and other McGraw-Hill Construction publications.

Additionally, this spring, McGraw-Hill Construction will be launching a new publication, bringing all players in the design and construction industry the latest, most comprehensive information on designing and constructing environmentally responsible buildings.

To find out more on how to subscribe to the new magazine or for information on editorial features, email Construction_Intelligence@mcgraw-hill.com.
For information on advertising, email ARadvertising@mcgraw-hill.com

Improving the Energy Performance of Green Buildings

When the High-Performance Buildings Group at the National Renewable Energy Laboratory (NREL) recently completed evaluation studies of six newly constructed high-performance buildings, it determined that although the buildings did save a significant amount of energy, they weren't saving as much energy as the group had predicted. NREL researchers set up sophisticated building monitoring systems in an effort to pinpoint what went wrong in these buildings, how the performance of the buildings could be improved, and how to prevent such shortfalls from happening again.

In the six buildings evaluated by NREL's researchers, photovoltaic (PV), daylighting, and HVAC systems were not consistently performing as well as they should have. There are a mix of reasons for these buildings not meeting their performance targets:

Photo Courtesy: NREL
The Thermal Test Facility at NREL (above) is one example of a building with a successful daylighting strategy. The building features a limited amount of glazing and a stepped design, which reduces potential glare problems. The space inside feels natural and is sufficiently lit.
Find Out What Architects
Are Thinking

McGraw-Hill Construction’s new Architect Panel can be used to conduct research on the preferences, decisions, and products architects are using as well as trends in the design and construction industry. Call 800.591.4462 or e-mail construction_intelligence@mcgraw-hill.com for more information.

• It is difficult to accurately predict building uses.
• The various professionals in the construction and design
   process don't always communicate effectively with each
• It's often hard to do accurate modeling.
• Conflicting design priorities can cause designers to stray
   from energy performance goals.
• PV systems can be poorly implemented.
• Daylighting can be difficult to get right (see figure).
• There is often a lack of occupant and operator training in
   using new systems.
Although the NREL inquiry was focused on these six green buildings, the lessons apply to all building projects that incorporate new technologies.

Platts E Source’s research analyzed the NREL findings and offered specific recommendations on green building, namely that parties involved in green building projects should ensure these buildings perform as expected. The occupants are likely to pay more attention to energy performance goals and actual energy use than occupants of conventional buildings. E Source believes a central coordinator overseeing every building project from inception to post-occupancy is essential and could monitor building performance on a regular basis to ensure that all systems continue to work efficiently. This strategy will vastly increase the likelihood that buildings will perform up to expectations, which is crucial for sustaining the value of green buildings over time.

For more information, please visit www.greenbuildings.platts.com.

Making Daylighting Systems Work

Daylighting systems, which use natural lighting to supplement electric lighting, have the potential to cut energy use, reduce peak demand, and create a more desirable indoor environment, yet these systems often fail to live up to their potential. Researchers at The Weidt Group, who have studied more than 100 daylighting systems for a variety of building types, found that automatic switching or dimming control systems often don't provide the expected energy savings.

Yet some daylighting systems work well, cutting lighting energy use by 20 to 80 percent and offering intangible benefits as well. The key to getting more systems to live up to their potential lies in combining good design with commissioning, effectively coordinating the efforts of many building disciplines, and training building occupants in how to use the systems. This includes incorporating more-effective products that are either already available or soon to come to market.

Photo Courtesy: Lighting Research Center

Daylighting measures implemented at Smith Middle School in Chapel Hill, North Carolina (right), cut lighting energy use by an estimated 64 percent as compared with a computer simulation of that same facility built to code without daylighting.

For more information, please visit www.esource.com.

Construction Outlook for 2006

The disruption caused by Hurricanes Katrina and Rita has reduced economic growth in the final months of 2005, but will be a net positive in the early months of 2006 as reconstruction efforts get underway. In addition to reconstruction, decent job growth will support the demand for offices and multifamily housing, the improving fiscal health of state governments will boost public institutional projects, and the new federal transportation legislation will speed funding to local highway and bridge projects. The only negatives facing the construction industry in 2006 will be the rise in long-term interest rates and higher construction materials prices.

On balance, new construction starts are expected to grow 3% in 2006 to $654 billion.

Housing will retreat from a record 2005, due to moderately higher mortgage rates and overpriced housing markets. Institutional building will rise in 2006 as the gradual upturn in the fiscal health of states, combined with the money coming from the huge amount of bond measures passed in recent years, help school construction see growth. Finally, electric utilities will essentially stablilize after the steep declines experienced from 2002-04 as the retrenchment for power plant construction seems to have run its course.

To order a copy of the Outlook 2006 Report, visit www.analyticsstore.construction.com

Save the Date

Engineering News-Record’s Award of Excellence

April 26, 2006
New York, NY

To receive information as it becomes available, email Chuck_Pinyan@mcgraw-hill.com

Office Construction Expected to Improve in 2006

This information is contained in the Construction Market Forecasting Service (CMFS). For information on CMFS or to order a copy, call 800.591.4462 or order online at www.analyticsstore.construction.com.

The demand side of the office building market is not only in good shape, it's improving. Office employment, the key to the health of office demand, has been performing exceedingly well. According to Economy.com, national office employment reached 28.6 million in December of 2005, surpassing the previous Internet-driven peak of 28.3 million set in February of 2001. Economy.com estimates that office employment will grow another 3% in 2006.

Yet despite indications of healthy demand fundamentals, 2005's office construction market failed to recapture the growth of 2004. 2005's more reserved construction occurred because a fewer number of truly immense projects reached the start phase. Firms hired at a solid pace, but remained uncertain about the future, and therefore were cautious about large expenditures.

The outlook for 2006, according to McGraw-Hill Construction, is more upbeat: construction starts will grow 9% to 172 msf. With office employment holding at historically healthy levels, corporations will find they must expand their office space to make room for the growing ranks of employees. Overall, the recovery will be more modest than in prior years, and office construction will not approach anywhere near the 2000 pinnacle of 300 msf.

Federal Legislation & Reconstruction To Further Lift
Infrastructure Spending During 2006-2007

2005 Top 10 States: Expenditures on Highway/Bridges
Ranked by Dollars
with preliminary data from 12/2005

1. Texas
2. Florida
3. California
4. New York
5. Illinois
6. Ohio
7. Pennsylvania
8. Michigan
9. New Jersey
10. Georgia

Source: McGraw-Hill Construction, 2005

The new year will bring with it increased spending on transportation and environmental infrastructure. The passage of the six-year $285.9 billion "Safe, Accountable, Flexible and Efficient Transportation Equity Act, A Legacy for Users" in late 2005 will support higher contracting for highways and bridges. Capital spending on drinking water, wastewater, and water resource projects is rising as well. Awards for drinking and wastewater projects are benefiting from the need to replace aging facilities, upgrade treatment plants to meet EPA mandates and accommodate growing demand from both businesses and households.

Last summer's hurricanes are pushing activity higher. McGraw-Hill Construction conservatively estimated that rebuilding the roads and bridges damaged by Katrina would require between $1.5 billion to $2.0 billion and that the reconstruction of the levees and floodwalls around Orleans Parish would cost nearly that much. Public works construction in the South Central will increase 15% in 2006 with the percentage gains in contracting for dams, river, shoreline, and flood control projects nearing 50%.

This information is contained in the Construction Market Forecasting Service. For a more extensive analysis of the outlook for highways and bridges over the next five years, call 800.591.4462 or order online at www.analyticsstore.construction.com.

The McGraw-Hill Companies
Executive Offices
2 Penn Plaza
New York, NY 10121-2298

(MHC Research & Analytics)

800.752.8878 (Platts)

© 2006 McGraw-Hill Construction and Platts are Divisions of the McGraw-Hill Companies, Inc.
All rights reserved.


McGraw-Hill Construction and Platts: Putting together information the government needs to make informed decisions.

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Backed by the power of Dodge, Sweets, Architectural Record, Engineering News-Record (ENR) and our Regional Publications, MHC serves more than one million customers within the $4.6 trillion global construction community.

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