The draft policy, which will take affect on Aug. 8, can be seen by clicking here. This new policy will serve as interim guidance for some time as L&I prepares formal rules to govern the matter.

The policy describes that commute time is compensable if it is "hours worked". It then lays out elements of the definition of "hours worked":

1. An employee is authorized or required by the employer,
2. to be on duty,
3. on the employer's premises or at a prescribed workplace.

All three of those elements must be satisfied. The draft policy fleshes out the meaning of "on duty" and "employer's premises or prescribed work place."

AGC has been urging L&I to provide more guidance to employers and is serving on a business/labor group advising the department on Brinks. L&I is releasing a policy, not a regulation, but nevertheless it provides better - if not perfect - clarity to employers regarding commute time in company vehicles. Plus, it will take affect almost immediately - Aug. 8 - without the prolonged comment period that a regulation must have.

Employers are encouraged to examine their individual company policies, assuring that they provide clear statements regarding company vehicle use.

AGC members with questions or comments about the draft policy may email Christine Swanson in the Government Affairs Office or call her at 360-352-5000.

Three weeks and counting!

The transition is in full swing and I am truly humbled by the opportunity to be the Executive Vice President of this great organization. Being able to transition with Dick Bristow is a distinct advantage for me and the association. His hard work, dedication, humor, and drive have made him the best at what he does. I promise - I am paying attention.

Dick and I have already been in the home office of 11 different member firms. It has been a great opportunity to meet face to face and get to know the companies and most of all to get to know the members. The input has been encouraging and honest about who we are, why the companies are members, and what we can do to improve. I am thankful that so many busy people have taken the time to spend with me and Dick and look forward to visiting with many more companies in the near future. We will be compiling the information to share with the AGC Officers and Board for future action.

I also have had the opportunity to interview many of the great staff members of the AGC of Washington. I can share with you that they are team players and truly have your best interests at heart. They are full of ideas and a great resource. Their strong desire for customer service is very apparent. We have already changed the new member process. Now, a new member, upon submitting an application, has instant access to the AGC web site and classes and events. In the past, the new members could wait up to six weeks before getting plugged in. With the continued support of the staff the transition will be seamless.

This is a busy time of the year for everyone at AGC. The officers are getting ready to go on their annual retreat. They will take direction from the new strategic plan and craft the budget priorities to start planning for next year. The results of the retreat will be brought to the full board for comment at the September 8 Board Meeting. The plan will then be given to the staff for budgeting and implementation.

The first three weeks have been full and exciting. Here's to many more!

Also, AGC of America has compiled information on the soaring cost of asphalt, including effects on owners and contractors, and information on price adjustment clauses on the construction economics section. Click AGC Asphalt Resource Center.

Inflation-related excerpts from Simonson's recent Data Digest (for complete issues of Data Digest and other data-and-analysis products from AGC of America, click AGC Construction Economics):

"The producer price index (PPI) for finished goods rose 1.6% in June, not seasonally adjusted (1.8% seasonally adjusted), and 9.2% over 12 months, the Bureau of Labor Statistics (BLS) reported on Tuesday. The PPI for inputs to construction industries, which measures changes in prices of all types of construction materials plus diesel fuel and other items consumed during construction, rose 1.8% over the month and 10% over 12 months. By segment, the largest increases were for inputs to highways and streets (2.9%, 19%), followed by other heavy construction (2.5%, 16%), nonresidential buildings (1.7%, 10%), multi-unit residential (1.5%, 7.7%) and single-unit residential (1.3%, 5.9%). Highway costs soared because of huge increases in the PPIs for commodities such as diesel fuel (5.7%, 85%), steel mill products (8.1%, 30%) and asphalt paving mixtures and blocks (6.7%, 17%). There were moderate increases in the PPIs for concrete products (0.7%, 3.8%) and plastic construction products (0.8%, 2.8%). Building costs were held down by falling PPIs for gypsum products (-0.4%, -13.8%), insulation materials (-0.3%, -4.6%), copper and brass mill shapes (-4.4%, -0.9%), brick and structural clay tile (-0.5%, -0.8%) and lumber and wood products (up 0.9% in June but down 2.8% over 12 months). In a sign that contractors and subcontractors may be cutting their profit margins, PPIs for finished buildings showed modest changes: new warehouse construction (0, 4.2%), schools (1.6%, 3.4%), office and industrial buildings (both -0.1%, 3.1%).

Prices for asphalt are leaping, and some states also report shortages of either asphalt or the petroleum-derived polymers added to improve its performance. The Illinois Department of Transportation's bituminous (liquid asphalt) price index rose to $621 per ton on July 1, up 20% from June and 100% from January. Readers reported on Monday that prices had risen to $640, from around $290 last fall in Memphis, and $675, from $425 recently in Atlanta. A reader forwarded a fax from an Illinois asphalt supplier on Saturday warning of additional increases this week. Newspapers in Boston, Lexington, Kentucky, St. Louis and Denver reported that highway departments are cutting the number of paving jobs they award; the last two also reported some contractors may use concrete instead."

We have received a number of inquiries regarding issues associated with the recent unprecedented price increases for various construction materials including asphalt cement, polymer-modified asphalt cement and steel. In addition to the price increases, we understand that there may be localized shortages of polymer modified asphalt cement in various regions of the US.

Please consider the following information in working with your State DOT in addressing these price / potential supply shortage issues.

Polymer Modified Asphalt Cement / Asphalt Cement Supply Issues:

There are several issues that are causing the current shortage in certain polymer additives:

• Styrene-butadiene-styrene (SBS) polymers are currently in a tight global supply due to unplanned cracker outages and raw material allocations of Butadiene. There have been reports of spot shortages of both SBS polymer-modified asphalt and SBS polymer emulsions. We are not currently aware of reported shortages of SBR latex modifiers, but SBR is a butadiene-based product.
• Global demand has gone up dramatically for SBS polymers and asphalt cement. In particular the demand for raw materials is especially high in China and India,
• With the significant rise in the cost of crude oil, many refiners have switched to lighter crude sources to produce more diesel and fuel oil products which have a better cost yield. This has caused a shortage of the base stock to produce C4 which is the basis for butadiene in SBS.
• Due to the high costs, winter stockpiling of binder is down.
• There have been some short term problems at a Shell Chemical cat cracker that makes C4 for Butadiene.
• Industry sources say that either naphtha or propane can be used as a feedstock for ethylene production. With the current market rates, propane has been the favored feedstock; however, it produces about 40% less butadiene than naphtha. As long as the price differential remains in favor of propane, SBS shortages may remain
• Given the significant global demand for certain polymers, some industry sources indicate that SBS suppliers placed their customers on allocation, leading to spot shortages in the market. Some believe that the availability of SBS will ease beginning in September / October 2008.
• We are aware of at least one state which has experienced shortages of PG76-22 binder. This State DOT is considering a switch to PG64-22 for new projects and issuing change orders for certain awarded contracts where the contractor is not able to obtain PG76-22. (Note: FHWA recommends that care needs to be taken in reducing the binder grade. In some cases a higher grade of binder was used as an insurance when the price/availability of modified binder was not an issue. However, there are some cases where the modified binder is called for due to traffic and temperature conditions. We should not arbitrarily reduce the binder in those conditions. There are other polymers which can be used to modify asphalt. These include ethylene ter-polymer (generic name for the brand name Elvaloy), EVA and crumb rubber. These other products should be evaluated before a blanket reduction of binder grade to non-polymer is considered.)

To date, supplies of asphalt cement have been more reliable than polymer modified asphalt cement, but some industry sources believe that spot shortages may develop later this year.

Other Related Supply Issues
The July 24, 2008 edition of the Wall Street Journal indicated that SemGroup LP, a major supplier of asphalt cement and modified asphalt cement, filed for Chapter 11 bankruptcy protection after citing financial losses of at least $2.4 billion in the crude-oil futures market. SEM Materials' July 21, 2008 letter notifies its customers that it may not be able to meet its commitments and apologizes for problems associated with their plans to allocate remaining inventories. SEM Materials is not a producer of asphalt, but does process it to produce emulsions and polymer modified asphalt. The financial status of SEMGroup should not affect the overall asphalt binder availability.

Fabricated Structural Steel and Reinforcing Steel
To date, the rise in steel prices has outpaced even the sharp increase of early 2004. Issues related to the increased steel prices include:

• Continued strong global demand for steel products,
• Increased global demand for scrap material ; US exports of scrap have tripled since 2000,
• Rebar and steel fabricators may have difficulty providing fixed cost bids, especially for longer-term contracts, and
• The US Defense Department's Defense Priority Allocation System may induce temporary market allocation constraints as steel order priorities are shifted to meet the Defense Department's needs.

Contracting Considerations for Existing and Future Contracts
On a case-by-case basis, FHWA Division Offices should work with their State DOTs to determine if a reported material shortage is related to a circumstance that is beyond the control of the contractor and if there is a basis for a time extension in accordance with the contract requirements. In documenting these situations, the contracting agency should verify that:

• The contractor had a written commitment to supply the specified asphalt cement or emulsion in a manner that corresponds to the contract time,
• Written statements are available from the original supplier that they are no longer capable of supplying the specified grade and quantity required to meet the contract time, and
• Documentation indicates that the contractor is unable to supply material from all practical sources.

In such cases, the contracting agency may consider:

• Non-compensable time extensions or other contract extensions to postpone non-critical paving work until such time that the material is no longer in short supply,
• Switching binder types to a material that meets design criteria and is readily available (see the above cautionary note). Consideration should be given to equitable adjustments to compensate the contracting agency for differences in binder performance.
• As a last resort, contact termination and deferral of the work to another year.
• Some states are considering alternate pavement type bidding as a method to generate additional competition. While FHWA's non-regulatory policy is based on an engineering and economic analysis for the pavement type selection process, we recognize that there may be situations where this analysis does not show a clear cut choice between two or more alternatives having equivalent designs. Our SEP-14 evaluation program is available for states that want to evaluate the use of a life-cycle-cost adjustment factor in determining the successful bidder.

Price Adjustment Clauses
The FHWA encourages the appropriate use of price adjustment clauses on future contracts. Current issues regarding price adjustment clauses follow:

• The AASHTO Subcommittee on Construction's Fall 2007 Survey summarizes the use of contract price adjustment clauses being used by the states for asphalt cement, fuel, steel and portland cement (http://www.fhwa.dot.gov/programadmin/contracts/2007aashto.cfm).
• FHWA will not participate in retroactive adjustments on contracts that were awarded without adjustment clauses. Based on a legal opinion during the 2004 steel escalation period, we have no legal basis for participating in such costs.
• The December 10, 1980 Technical Advisory titled: "Development and Use of Price Adjustment Contract Provisions" is still a good reference: (http://www.fhwa.dot.gov/programadmin/contracts/ta50803.cfm).
• Some states are using opt-in clauses that provide the successful bidder with the option of using a price adjustment clause at /or before contract execution. Since all bidders have the same option, this is consistent with competitive bidding principles.
• Adjustments clauses should use an index which reflects highway material price increases, but is not susceptible to manipulation. Invoice-based adjustments are not appropriate as documentation may be problematic and there is little basis for competition in the selection of material sources.
• With the sharp increase in price for certain materials, contracting agencies should consider the need to use short term indices in determining their payment formulas. New Mexico DOT is considering changing its monthly payment index to include an average of the reported weekly selling prices as published by Poten and Partners, Inc.

FEMA is revising the floodplain maps in support of the National Flood Insurance Program (NFIP). The intent of the NFIP is to reduce future flood damage through community floodplain management and to provide protection for property owners against potential flood related losses through insurance, rather than relying solely on emergency relief programs. FEMA considers the floodplain to be the area expected to be underwater during a 100-year flood.

While few argue with the program's intentions, there is much disagreement over where, exactly, the floodplain lines should be drawn and what data and formula should be used to determine the placement of those lines. In Washington, the effort has become particularly contentious in King and Skagit Counties. There is much at stake since, as with the Growth Management Act and its urban growth areas, many property owners will find themselves on the restricted-development side of the line, with decreased property values to match.

"About 60 percent of Skagit County's commercial economic activity could be in the floodplains," says Mike Woodmansee of Fisher and Sons in Burlington. "It's like a ticking clock. Having property in the floodplain may not affect you for years, but once you want to develop, redevelop or sell, the restrictions and diminished value becomes real. It creates a high potential for economic decay in an area."

In Skagit County the dispute has been over the use of data. Woodmansee and local groups argue that FEMA, which relies on the USGS and Army Corps of Engineers, is inappropriately using flood data from 1921 and earlier. While the survey data may be accurate, the modeling computations used by the federal agencies to create estimated river volumes significantly overstate those volumes.

"Because of the challenge of implementing solutions, local agencies are correct to put forth a great deal of effort toward making sure the threat is accurately quantified," Woodmansee says.

FEMA is at least giving some consideration to the local group's point-of-view, as it has yet to release draft maps for Skagit County, although they are expected within 6 months.

For King County, FEMA has released a proposed floodplain that would hamper development in the state's largest industrial area along the Green River, including much of downtown Kent and parts of Renton and Auburn's commercial districts. The draft plan would double the floodplain along the river, from 2,000 properties and $4 billion in assessed value to 4,100 properties with $7.5 billion in value, according to a Seattle Times article.

The key issue there is the existing levees. In creating the floodplain maps, FEMA considers levees as non-existent if they do not meet specific requirements. King County scrambled to approve a property tax increase for a new flood-control district that will fix Green River levees and get large parts of Renton, Kent and Auburn out of the expanded floodplains. But updating the levees could take years, and it is unclear how the floodplain maps would be affected in the short term.

In the meantime, King County has appealed the proposed maps which, if finalized, would mean most new construction in this industrial area would have to be raised four to 13 feet off the ground.

Pre-existing buildings in floodplains are grandfathered; no structure has to come down due to the floodplain mapping. But if an owner wants to construct a new structure or substantially improve an existing one, the owner will be required to comply with federal and state flood hazard construction standards. Local governments develop the ordinances regarding development in order to participate in NFIP. These ordinances must meet State requirements and include minimum requirements including:

• New construction and substantial improvement of any structure shall have the lowest floor, including basement, elevated to or above the base flood elevation (BFE);

• All new construction and substantial improvements shall be anchored to prevent flotation, collapse or lateral movement of the structure;

• All new construction and substantial improvements shall be constructed using methods and practices that minimize flood damage.

"Substantial improvement" means any repair, reconstruction or improvement of a structure, the cost of which equals or exceeds 50 percent of the market value of the structure.

There are additional restrictions and even more for property in the floodway, the section of the floodplain, such a stream and adjacent areas, through which the bulk of the floodwater is expected to drain out of the area. Local jurisdictions may choose to adopt more than the minimum restrictions, such as larger setbacks from the floodways.

Flood hazard insurance is not mandatory for property within the floodplain, but it is virtually so. Flood insurance is a prerequisite for receiving federal disaster relief after a flood, and lenders may require it.

Another aspect of the floodplain mapping effort is its affect on other laws. The new maps, should they expand the floodway and adjoining floodplain, will expand the areas subject to the Shoreline Management Act (SMA). Also, should the maps designate an area as floodplain that was previously designated as an urban growth area, counties will have to re-think their plans under the Growth Management Act (GMA).

A thorough "white paper" on the floodplain map issue was recently completed by attorneys at the GordonDerr firm on behalf of Washington Realtors. That paper is available by clicking here. The authors state that, "unlike drawing urban growth area boundaries, local jurisdictions have had relatively little control over FEMA's floodplain remapping efforts. Both King County and Skagit County have made significant efforts to influence the process and resulting maps with yet indeterminate results. Consequently, like the property owners themselves, many of the jurisdictions are also likely to find the new floodplain maps difficult to accept."

If you have or use any of these cranes, you are affected: power-operated cranes and derricks used in construction that can hoist, lower and horizontally move a suspended load (with or without attachments). Such equipment includes, but is not limited to: Articulating boom cranes (such as knuckle-boom cranes); crawler cranes; floating cranes; cranes on barges; locomotive cranes; mobile cranes (such as wheel-mounted, rough-terrain, all-terrain, commercial truck-mounted, and boom truck cranes); multipurpose machines when configured to hoist and lower (by means of a winch or hook) and horizontally move a suspended load; industrial cranes (such as carry-deck cranes); dedicated pile drivers; service/mechanic trucks with a hoisting device; a crane on a monorail; tower cranes (such as fixed jib ("hammerhead boom"), luffing boom and self-erecting); pedestal cranes; portal cranes; overhead and gantry cranes; straddle cranes; side-boom tractors; derricks; and variations of such equipment.

That list comes straight out of the proposed L&I rule, which requires compliance by Jan. 1, 2010. The rule also requires NCCCO Certification as well as documented hours of experience for all crane operators. (NCCCO is the National Commission for the Certification of Crane Operators.)

The AGC Crane Task Force, chaired by Thom Sicklesteel of Sicklesteel Cranes, invites AGC members to attend its meeting on Aug. 21 at 10 a.m. in the conference room of the AGC Building in Seattle. The purpose of the meeting is to review the draft rule and discuss its impacts, and develop a position statement to be used during the rulemaking process. AGC members interested in attending the task for meeting or receiving more info about the rule should email AGC Safety Director Mandi Kime or call her at 206-284-0061.

AGC members are encouraged to participate in the rule-making process, and the Department of Labor & Industries has scheduled public hearings to discuss proposed rules implementing legislation that requires higher standards for construction cranes and crane operators. The proposed rules were developed after the 2007 Legislature required all construction cranes in the state to be certified by an accredited crane inspector and crane operators to be certified for the type of crane they are operating.

AGC and other groups worked with L&I during the pre-draft stage. Now that draft rules have been released, another round of hearings will be held. AGC members who want to participate are asked to coordinate with Mandi Kime.

Complete information, including copies of the draft rules, is available at L&I's Construction Crane Safety website.

Public hearings will be held at 10 a.m. at these locations:
• Yakima: Aug. 26, Yakima Clarion Hotel, 1507 N. First St.
• Spokane: Aug. 27, Doubletree Hotel, 322 N. Spokane Falls Court
• Vancouver: Sept. 3, Heathman Lodge, 7801 N.E. Greenwood Dr.
• Seattle: Sept. 4, Doubletree Hotel Seattle Airport, 18740 International Blvd.
• Tumwater: Sept. 5, Tumwater Comfort Inn, 1620 74th Ave. S.W.

Written comments will be accepted until 5 p.m. Sept. 12. Fax them to 360-902-5619 or mail them to: Cindy Ireland, Department of Labor & Industries, P.O. Box 44620, Olympia, WA 98504-4620.

We blush at including such an unabashed self-promotion in an AGC publication but, hey, the man is an expert. Paul has had a 30-plus year career in professional safety. For the last five years he's served as Corporate Safety Director for Diamond B Constructors in Bellingham, for whom he accepted the 2007 Governor John D. Spellman Safety Award from the Evergreen Safety Council.

Paul announced his retirement from DBC and was recently honored by AGC Northern District colleagues during an AGC Retro Think Tank event at Semiahmoo.

"We wanted to honor Paul for his passion to improve safety in construction and his willingness to be a resource to other AGC members desiring to do the same," said Lauren Gubbe, Director of the Retro Program. "He has also been a Northern District presence on our Retro Committee as well as the AGC Safety Committee for years and we have really appreciated his time and participation."

At the event Paul shared his "Top 25 Safety and Loss Control Best Practices" in addition to acknowledging the value of AGC's Retro and Safety programs.

"Chances are most firms are already doing most of the items on this list," Paul said. "But people might pick up an idea that they can add to their company's safety repertoire."

Among the tips on his best practice list is to use data relentlessly. Paul recommends keeping data and producing charts for BLS incidence rates; worker's compensation claims costs per hour worked; average time to close workers' comp claims; and even workers' comp claims frequency (claims filed per 200,000 man hours). Paul posted Diamond B's stats right on its website (view them here).

Paul can assist firms in setting up pertinent data bases. Post-retirement he will be available for consultation and assistance in L&I claims management, loss control and safety programs, and custom database applications. His email is pherbold@comcast.net.

For a copy of his complete list, click Paul Herbold's Top 25 Safety and Loss Control Best Practices.

Tim's background includes experience working with and within government agencies and for large associations. Most recently he was Public Affairs Director at the King County Department of Development and Environmental Services. Tim also handled public affairs for the Master Builders Association of King and Snohomish Counties and the Washington Food Industry Association.

Tim takes over for Van Collins, who became Legislative Counsel in AGC's Olympia office last year.

AGC of Washington welcomes Tim to the team! (One more thing...Tim is a Cougar, which should cost him $20 at the next Southern District Dinner!)