In late July, the West Virginia Purchasing Division of the Department of Administration issued an “emergency rule” that exempts construction contracts from a new law regarding change order approval. This new law, which went into effect on July 1, originally required that all change orders be approved by the Purchasing Division and the Attorney General prior to commencement of work. The emergency rule, which was adopted by the West Virginia Secretary of State, clarifies that change orders related to government construction contracts do not require prior approval. The rationale behind the exemption for government construction contracts relates to the lengthy work stoppages that would inevitably occur while waiting for the required preapproval. The Department found that these stoppages are “costly and unfeasible” and often lead to “increased costs for the taxpayer, state government agencies, contractors and countless others.” So as to avoid these delays and additional costs, contractors on public West Virginia projects must continue to work after submitting a change order request.

Contractors should be familiar with this change to the law’s applicability, as failing and/or refusing to perform work while a change order is pending approval may subject you to liability for any resulting delays to the Project’s completion and/or additional costs incurred by the government. Contractors faced with a change in their original scope of work should consult with an attorney prior to proceeding with the work to ensure that all rights to payment for performance of the new and/or additional work are preserved.

This month, West Virginia Governor Earl Ray Tomlin signed Senate Bill 361, which significantly adjusts the state’s calculation of prevailing wages to establish an amount more reflective of actual earnings in regions across the state.  As Governor Tomlin states, the new law will “address the concerns of hardworking West Virginians while establishing a common sense approach to continued investments in [the] infrastructure.”

Law gavel on a stack of American money.

Currently, all contractors on public projects pay wages calculated by the West Virginia Department of Labor.  When the new law goes into effect on April 13, 2015, economists at West Virginia University and Marshall University, as well as Workforce West Virginia, will be tasked with calculating those wages.

The most impactful aspect of the new law is that any West Virginia public project under $500,000 will be exempt from paying prevailing wages.  For projects over $500,000, before the public entity can advertise for bids, it must obtain from Workforce West Virginia the fair minimum rate of wages to be paid by the successful bidder to the laborers. This schedule of wages is to be made part of the construction specifications.

There is a July 1, 2015 deadline for the calculation of the new 2015 prevailing wages.  If, for any reason, Workforce West Virginia, together with West Virginia University and Marshall University, fail to determine the prevailing hourly wage rate by this date, no prevailing wages will be in effect until the determination is made.  There are provisions in the Bill that allow for an extension of time during which current prevailing wage rates would remain in effect, but if a determination is not made at the expiration of the extension period, no prevailing wages will be in effect until a determination is made.

West Virginia is one of a growing number of states enacting laws to narrow the types of construction projects affected by prevailing wages, and in some cases, to remove the law entirely.  We will continue to monitor the prevailing wage reform across the country, and, as always, we welcome your comments and questions.

Lisa M. Wampler is a Partner in the Construction Group of Cohen Seglias Pallas Greenhall & Furman PC.

Lori Wisniewski Azzara is an Associate at Cohen Seglias Pallas Greenhall & Furman PC. Lori practices in the areas of construction and commercial litigation and has experience in contract negotiation, claims for delay and inefficiency, mechanics’ liens, and all types of contractual disputes.

It is hard to dispute that the past three years have been difficult for West Virginia’s construction industry, and so far 2011 hasn’t seen much improvement. Employment in the construction industry is down approximately 10% this year over last year, according to The Contractors WVA.jpgAssociation of West Virginia Executive Director Mike Clowser, “We don’t see a lot of improvement for 2011. We’re hoping to see a greater upturn in 2012.”

Clowser pointed out there are areas of growth in West Virginia, including Morgantown (West Virginia University) and Fairmount (High Tech Corridor), where contractors and construction crews are working non-stop. But he says the Eastern Panhandle, once a hot bed of construction, and many other areas of the State, still haven’t recovered from the housing bust and the recession.

However, there have been several recent signs of improvement in the West Virginia construction industry, mostly in the infrastructure, education and energy sectors. These include:

  • The U.S. Department of Agriculture awarded more than $1 million for water and sewer projects in Logan and Putnam counties. The funds are part of an $840,000 grant and $230,000 low interest loan. The projects will replace sewer collection lines for certain customers and also build new lines to serve hundreds of additional households. The Department of Agriculture awarded the loan through its rural-development program, which provides funding to rural communities across the country for infrastructure projects.
  • Developers are ready for groundbreaking at the Mingo County site of the proposed TranGas Development Systems, LLC coal-to-gasoline plant. The $4 billion Adams Fork Energy plant, which will be the largest of its kind in the world and the first of its type in the United States, will produce 756,000 gallons of gasoline from coal each day. Construction is expected to take four years and create 3,000 construction jobs.
  • Acting Gov. Earl Ray Tomblin’s administration has doubled the number of low-traffic roads the state highway department intends to pave in 2011. According to the Department of Transportation spokesman Brent Walker, a new $11 million program, called the Secondary Road Renovation Program, will target roads that are traveled by 500 or fewer vehicles per day. Last year, before the secondary roads program existed, the state paved about 450 miles of low-traffic roads. “It’s our hope that we’ll be able to repair, fix and pave about 1,000 miles around the state that would not normally be a part of the paving program,” said Walker.
  • New River Community and Technical College intends to construct a $13.5 million administration building on its Raleigh County Campus. The college unveiled plans for the 55,000-square-foot building Friday. New River says it’s also going to renovate an 18,000-sqare-foot building on its Greenbrier Valley Campus in Lewisburg.

In West Virginia’s case, the numbers may not be showing the whole picture. While construction is down 10% from last year, there are a number of new construction projects planed throughout the state that may be the key to turning things around.

Cohen Seglias attorney Robert Ruggieri contributed to this post.

For an increasing number of contractors, survival in the current economy has resulted in the need to find and secure work in other states. The migration of contractors to neighboring states is apparent throughout Jobs.pngthe country. Besides the work itself, benefits of an expanded geographic footprint include a broader client base, thereby creating mutually beneficial relationships.

For a complete breakdown on which states are seeing the biggest increases in cross border work, please visit, The Construction Blog, which is a dedicated to construction software technology.

Construction Technology Facilitates an Expanded Geographic Footprint

Recent advances in technology are accelerating the migration of contractors to neighboring states. Such technology includes, but is not limited to:

  • Online Plan Rooms – This software aids contractors looking for jobs across state lines. A contractor can browse by project type, trade or location to find upcoming construction projects.
  • Bid Management Software – This program acts like a “virtual broker” and assists contractors in the bidding process, by connecting buyers with sellers.
  • Web Based Project Management Software – This technology allows for real time monitoring of construction projects.
  • Onscreen Takeoff and Cost Estimating – This tool allows contractors to build cost estimates for projects happening in other states.
  • Building Information Modeling (BIM) – BIM brings a project to life, through 3D, 4D and 5D models.

Contractors seeking an expanded geographic footprint should be aware of the upgraded technology as a means of facilitating work across borders.

Renovations are underway to restore the historic Wheeling, West Virginia Independence Hall. The Independence Hall building was constructed in the 1800’s and served as the capital building even before West Virginia was formally recognized as a state. As with any older structure, the passage city hall.jpgof time has led to the deterioration of the exterior of the building, particularly its leaky roof. The visual effects of the wear and tear, along with the desire to upgrade the interior of the building to make it more functional and user-friendly while maintaining its historic exterior, are the catalysts behind the renovations. The state of West Virginia has pledged $1 million for the project and general contractor Walters Construction Inc. of Wheeling, West Virginia began the project in May, 2010.

Similar projects to modernize buildings while preserving their historic exteriors have been popping up all over the country. In Philadelphia, the city has begun the fourth and final phase of a 17 year renovation project for City Hall. Philadelphia’s City Hall renovation project involved scrubbing the entire perimeter of the exterior of the 1.2 million-square-foot building. In New York City, a $106 million renovation project is underway to restore the 198-year-old City Hall building that is one of the country’s oldest, continuously-used city halls.

Wheeling, Philadelphia and New York are just the latest of many cities to undertake significant renovations of historic government buildings. With private construction projects slowing due to the economy, contractors are wise to look for similar government renovation projects in their local areas.

The April 20, 2010 BP oil spill in the Gulf of Mexico has been called the worst environmental disaster in American history. Although the well was recently capped, the spill has resulted in tightened regulations on oil drilling which may unexpectedly benefit other segments of the energy industry, such as Marcellus Shale and coal.

BP oil spill.jpg

Public uproar over the BP spill has prompted government officials to impose new, restrictive regulations on oil drilling. These regulations make oil drilling costlier and may drive companies out of the oil drilling market altogether.

Pennsylvania-Marcellus Shale

As oil drilling becomes more expensive and more heavily regulated, the energy industry may turn to alternative energy sources. One alternative is drilling for the natural gas trapped in Marcellus Shale, which is prevalent in areas of Pennsylvania. As Robert Johnston, Director of Energy and Natural Resources for Eurasia Group in Washington DC explains, “[b]oth shale gas and oil sands have their own challenges but the problems we have seen in the Gulf could lead to a capital shift away from deepwater drilling and toward other sources.”

West Virginia-Coal Mining

Another alternative is mining coal, which is prevalent throughout West Virginia. Some sources even consider coal to be one of the big “winners” of the spill, at least in terms of energy policy.  This is especially true because the coal industry was already growing before the spill occurred. President Obama has previously indicated an intent to invest in clean coal, traditional coal that is processed to reduce the emissions and pollution normally released when coal is burned. With federal funds available and coal plants being built, backlash from the BP spill may encourage additional investment in coal rather than oil.

Increased Construction Jobs for Both Pennsylvania and West Virginia

Marcellus Shale drilling could be a boon for jobs in Pennsylvania as coal mining already accounts for approximately 30,000 jobs in West Virginia. If the effects of the BP oil spill continue to positively impact the alternative energy industries, Pennsylvania and West Virginia stand to see an increase in construction jobs surrounding these alternative energy sources.