This morning’s announcement from Allegheny Health Network is but the latest in a string of major construction project announcements over the past few months. Unlike some of the other, however, the AHN projects should be moving quickly. For contractors trying to maintain capacity (and build backlog) ahead of the growing wave of construction coming in 2018 and beyond, that’s welcome news.

The details: a new 160-bed hospital will be built in Pine Township next to the Highmark Wellness Pavilion in Wexford. That project, which should run $300 million, is slated to start in mid-2018. AHN expects to put out RFP’s for design and construction management within a few weeks. AHN also announced a partnership with Emerus, a Dallas-based developer/operator of “micro-hospitals” to build community hospitals throughout the AHN footprint. There will be four such micro-hospitals initially, one each in the north, south, east, and west suburbs. In other similar markets, Emerus facilities have been in the 40,000 square foot range.

The AHN program amounts to a $700 million expansion of its facilities. Some of that expansion includes projects already awarded, including the new cancer center in Butler, which was awarded to the design/build team of Mascaro and Stantec.

Another wave that is building is the follow on to Shell’s cracker, under construction in Beaver County. Multiple plastics companies have been in the market looking for sites for new manufacturing plants of between 60,000 sq. ft. and 150,000 sq. ft. At Starpointe, near Burgettstown, Scannell Properties has begun work on a 507,000 sq. ft. distribution center, which is rumored to be for Shell. ARCO/Murray National Construction is building that facility. In other logistics news, Al. Neyer has begun construction of a 220,000 sq. ft. Class A distribution center in Jackson Township near Zelienople and a major retailer is reported to be looking for a site for a million sq. ft. distribution center in Western PA.

In other project news, Carnegie Library of Pittsburgh awarded a contract to Massaro Corporation for its $3 million Carrick Branch. Landau Building Co. was selected by WVUH for the $3 million Ruby Hospital OR. PennDOT awarded Beaver Excavating an $87 million contract for the next phase of the Southern Beltway.

The story that started leaking out Thursday afternoon – that UPMC was abandoning its plan to locate a $220 million hospital at Newbury in South Fayette – should not be misconstrued as a negative sign about the healthcare construction market. UPMC is re-thinking its five-year capital plan but still expects to invest $900 million over the next five years.  Thus far, the decision to scrap the South Fayette facility has not altered plans to build the Vision Institute on the Mercy campus, expand Children’s Hospital or build some sort of new facilities in the South Hills. And construction to meet pent-up demand is booming in other healthcare facilities

UPMC is still continuing its investment at the former Jameson Hospital in New Castle and building the $111 million tower at UPMC Hamot in Erie. The Allegheny Health Network is taking design/build proposals for a new 30,000 square foot cancer center in Butler from Jendoco, Graziano, Mosites, Mascaro, Allegheny Construction and A. Martini & Co. AHN is also bidding a 30,000 square foot, $16 million cancer center at the St. Vincent campus in Erie. PJ Dick, Turner and Austin are known to be bidding that project.

Massaro CM Services put three State College Area School District elementary school projects out to bid, due October 10. The budget for the projects is $55 million and the district is taking bids on each or all three combined. The bids should be a good early barometer for how competitive it will be in the K-12 market as contractors build backlog for 2018.

Yesterday’s announcement by Highmark and Allegheny Health Network about the expansion of its cancer treatment added another significant project to the list of major hospital projects. In addition to the expanded partnership with Johns Hopkins, AHN reported that it would be building a new academic cancer institute at the Allegheny General Hospital campus, as well as suburban cancer treatment centers.

The AGH facility is to be a 59,500 square foot expansion with significant related renovations to the hospital. Costs for the project could top $50 million. The development of suburban centers are part of the overall healthcare trend to move treatment into the communities where patients live. AHN explained that these centers will be removed from the AHN system hospitals themselves, which will also receive renovations to upgrade cancer treatment facilities. Estimates of the capital spending for this cancer initiative are $150 million. Work is scheduled to start on the AGH facility by end of year. The target for completion of the overall cancer institute expansion is the 2019 expiration of the AHN/UPMC Hillman Cancer Institute agreement. No architects or contractors have been engaged for the specific projects, although IKM Inc. has been involved with AGH’s institutional master planning.

In other hospital construction news, PJ Dick was chosen as construction manager for St. Clair Hospital’s $80 million expansion. The agreement covers preconstruction services that will be done during the next year.

Although there is a little bit of a seasonal lull in bidding as June begins, there is plenty of activity in the Pittsburgh construction market. The brighter prospects, however, haven’t materialized in the public hard-bid market yet. Two projects that bid this week illustrate the market well. First, in the heavy/highway sector, Golden Triangle was low on the Airport Authority’s bid to replace Deicing Pad C at the airport. At $21,934,890, the low bidder was 0.5% under the next bidder. Canon-Mac took bids on its high school that saw Lobar Inc. (from Dillsburg/Mechanicsburg area) get low at $9.3 million, a little more than 1% below the third bidder. Both projects were well under the published budget. Public spending shows no signs of significant increase through 2018, meaning the market should stay tight. How that changes in a tightening labor market remains to be seen.

A public pension reform law went to the governor for signing today. It’s gratifying to see both sides of the aisle collaborating on this critical issue, but the finished product trims only $1.4 billion from the pension outlay over the next 20 years. It does shift more of the risk of pension shortfall to pensioners instead of taxpayers but leaves unanswered the question of how to manage the $60 to $70 billion unfunded pension balance that exists. That means that school districts and the Commonwealth will continue to have pension costs drag against capital investment.

In project news from Harrisburg, the General Services Administration is taking RFP’s on the $150 million federal courthouse now. Closer to home, the Pittsburgh Parking Authority has apparently short-listed three development teams – Oxford/PJ Dick, Millcraft/Mosites and Davis/Mascaro – for its 1,000-car 9th & Penn garage replacement/mixed-use development. Shannon Construction is working as general contractor for the announced $7 million renovation of the Arts Institute building on Boulevard of Allies. 

After months of pricing the new $40 million Campus Advantage student apartments at 3407 Forbes Avenue have a contractor. Rycon Construction was selected this week to build the project, which includes 197 apartments and 489 beds.

In other project news, Mosites Construction was awarded a contract for $3 million in renovations to Blackington Hall, Buckhorn Lodge and Sunset Lodge at Pitt-Johnstown. A. Martini & Co. is building out Rocky Patel’s BURN Cigar Bar on the North Shore. Penn State awarded PJ Dick a contract for a $5 million parking garage expansion at its Erie campus.