SAN FRANCISCO: Millions of people enjoy free Web-based software programs, but they have a drawback in that they are available to users only when they are online.

Now Google is hoping to help make many of those programs available offline as well, among them its own free Web-based applications like Docs and Spreadsheets. In doing so, Google will more openly challenge Microsoft and its office productivity tools, like Excel and Word, which are more advanced programs than Docs and Spreadsheets but cost hundreds of dollars.

That rivalry was heightened this week when Google released a set of tools to software programmers, which it calls Google Gears, that addresses what is perhaps the single most critical shortcoming of Web-based software. The tools can be used by all programmers, whether they work for Google or not, to enhance their own Web-based programs for offline use.

Google is making the technology available in an open-source model, so programmers can use it free, test its abilities and extend them as necessary to fit their needs.

“The whole idea of extending browser capabilities to offline is something that a lot of people are going to get pretty excited about,” said David Mitchell Smith, a vice president at Gartner Research.

Google introduced Gears as part of a coming-out party of sorts.

The company played host Thursday to what it called its first “developer day,” an event held around the world at which Google presented itself not as the worlds most-used search engine, or as the biggest Internet advertising company, or even as the creator of applications like Gmail, but rather as the provider of tools that others can use to build their own programs.

It is an event that underscores Googles evolution from its roots as a search engine into a company that hopes to become central to a new way of computing in which software is delivered over the Web, often free and supported by ads, rather than bought and installed on an individuals computer.

This evolution sharpens Googles rivalry with Microsoft and others that are trying to provide both new Web-based software and technology building blocks for Web programmers.

Google has been among the most enthusiastic proponents of this new computing model, and its executives say it will help usher in faster innovation because many Web applications can be created quickly by lacing together existing components created by others.

“It is a different model,” said Googles chief executive, Eric Schmidt. “The rate at which you can build applications is an order of magnitude faster because the components all fit together so quickly.”

Google hopes that other companies will use Gears to extend their own software and services. Some Microsoft rivals, including Adobe and Mozilla, which is behind the Firefox Web browser, are collaborating with Google on the technology.

But it could also help Googles rivals. If the Gears technology proves effective, scores of software programs, including Yahoo Mail and Microsofts Hotmail, which compete with Gmail, might one day be used offline. Users could read e-mail messages received during a previous online session and compose new ones to be sent during the next session.

Google said Gears was in early stages of development. “This is not a solution that is going to work with everything on Day 1,” said Smith, the Gartner vice president.

For now, Google itself has applied Gears to only one of its own programs, Reader, which is used to track blogs and news sources. But the company plans to use Gears to make other programs like Gmail, Calendar, and most notably, Docs and Spreadsheets, available offline. That would make those programs more competitive with the Office suite of programs, one of Microsofts cash cows.

Google has begun marketing a package of these productivity applications to businesses. But many analysts say these products, unlike Microsofts competing software, lack the support or functions that most businesses need.

“I dont think Google is a serious player in personal productivity applications, certainly not for businesses,” said David Card, an analyst with Jupiter Research.

This is not the first time that Google has offered tools to developers. The company, much like many of its competitors in recent years, has long opened up many of its own programs to others, in hopes that they would use them as building blocks for their own software and services.

For instance, when Google allowed others to build map-based software and services on top of its Google Maps product, an explosion of creativity ensued. Online travel and real estate companies used the maps to enhance their own Web sites or to create entirely new businesses. And even individual programmers used data from multiple sources to “mash up” new applications.

JACK McConnell will be forced out as Scottish Labour leader “within months” if, as widely expected, Alex Salmond is elected First Minister this week.

Senior Labour sources say McConnell will be urged to resign his post by autumn at the latest, following the SNP’s victory at Holyrood and after several defeats for Labour in the council vote.

McConnell faces a crunch meeting with his Labour MSPs this week when the party’s election defeat to the SNP will be debated.

The Labour leader is said still to have the support of the majority of his MSPs, but senior Labour figures outside the Holyrood group are now discussing potential candidates.

Scotland on Sunday understands that Labour MPs have made informal approaches to Home Secretary John Reid, who will be quitting the UK Cabinet next month when Tony Blair resigns. The MPs believe that someone of Reid’s stature is required to take on Salmond at Holyrood, arguing that none of the current Labour MSPs is up to the task.

But there is also strong support for former parliamentary minister Margaret Curran and backbencher Wendy Alexander. Alexander is well known to have the confidence of Gordon Brown, but Curran too is said to have been given tacit support by Brown as someone who could pull the party into shape.

Former health minister Andy Kerr is also in the running but may be viewed as too close to McConnell to be a front-runner.

Meanwhile, McConnell has told friends this weekend that he intends to plough on as Labour leader, pointing out that with the SNP only ahead by one vote, a change of government could easily happen, which would propel him back into power.

But there is widespread speculation in the party that he will have to quit after the one-seat loss. One senior source said: “There is no question he will have to go. The campaign for the 2011 elections starts now. There is no way Jack can carry on for that. It is just a matter of time.”

Figures outside the Parliament say that if the party’s MSPs do not take matters into their own hands, then the party’s National Executive Committee will act.

Another influential insider added: “He is a goner. It is as simple as that.”

McConnell’s future was placed further in doubt by his own aides last night, who gave the First Minister’s chances of political survival less than a ringing endorsement.

A source close to McConnell said: “He is not going to step down this week. It is not something he is likely to do in the short term. Most of the views [in Labour’s parliamentary group] are that it is important he stays on and that a leadership campaign will take the pressure off the SNP at a time when the pressure needs to be kept on. It is inevitable that he will step down at some stage, but there is no campaign to replace him.”

With the SNP only ahead of Labour by one seat, McConnell is understood to have told friends a change back to a Labour government could occur at any time.

The party is still considering action over the disputed result in Cunninghame North, where the SNP won by only 48 votes.

However, internal critics of McConnell say the party needs a clean break now so it can start major internal reforms ahead of the 2011 election campaign. There are demands for changes to the organisation of the party, and a rethink about the future direction of Scottish Labour.

One theory is that McConnell may quit after Glasgow’s Commonwealth Games bid is decided in November. Last week, McConnell wore the blue Commonwealth tartan kilt when he was sworn in as an MSP for the new parliamentary session.

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Copper prices vaulted to their highest level in six months on Monday, but gold, orange juice and cotton prices tumbled, while the grains complex put in a mixed performance coming out of a holiday weekend.

Commodity markets were shut on Good Friday.

The May copper contract rallied 12.90 cents, or 3.8%, to settle at $3.5060 a lb on the New York Mercantile Exchange’s Comex division, after dealing from an overnight low of $3.3625 to a session peak of $3.5340 its priciest since early September.

A stronger-than-expected U.S. jobs report on Friday was the spark for the rally in copper as the data allayed some concerns about a slump in the U.S. housing and manufacturing sectors.

Gold prices reversed course after posting early gains to end lower, weighed by lower crude prices and a higher dollar.

The most-active June gold contract on the Comex lost $2.50 to close at $676.90 an ounce, dealing from $675.60 to $683.10.

Commodity fund sales knocked orange juice prices to a six-month low and speculative pressure dragged cotton to near an eight-week nadir.

The benchmark May frozen concentrated orange juice contract on the New York Board of Trade sank 5.85 cents, or 3.1%, to finish at $1.829 per lb, it’s lowest since mid-October.

NYBOT’s May cotton contract slid 1.10 cents to close at 51.81 cents per lb, also its lowest since mid-February.

On the Chicago Board of Trade, wheat and corn futures ended mixed after a rally on weather fears, while soybeans lost ground at the close.

Wheat went up in early trade over worries that cold weather in the United States may harm winter wheat crops and corn gained as well due to concerns the same cold weather may stall plantings.

But hefty gains over the past few sessions in both grains spurred profit-taking. Wheat has climbed 50 cents per bushel in the past week, while corn posted a rise of 40 cents from last week’s low to Monday’s peak.

The May wheat contract at the CBOT ended up 2-1/2 cents at $4.47 -1/2 per bushel.

The CBOT May corn contract fell 2-1/2 cents to finish at $3.63-1/2 per bushel, with the price swinging 24-3/4 cents per bushel.

Soybean prices slid as ideas spread that U.S. soy acres may rise the longer corn plantings are delayed by cold weather.

Economies around the globe are putting the pedal to the metal. Companies are flush with cash.

That money tends to burn a hole in the pocket, so businesses are launching capital spending projects. When they decide to build a big plant, pharmaceutical site, refinery or oil drilling rig, a lot of them are calling on Jacobs Engineering Group () to do it.

“It’s the best market we’ve been in in 30 years,” said Jacobs Chief Executive Craig Martin.

Jacobs cuts a wide swath in end markets that it serves. Oil and gas, chemicals, drug companies, bridge and highway construction, and government projects all are key parts of Jacobs’ customer base. It’s diverse enough that if one is down, another is probably up but that’s not an issue now.

“All of their end markets are seeing robust growth across the board, for the first time that I can think of,” said John Kearney, an analyst at Morningstar.

Sales for oil and gas, chemical and drug company projects all surged more than 30% last year. Sales to chemical and drug companies shot up more than 40% in the first half of this fiscal year.

Backlog Growing

Want a sure sign that orders are pouring in? Jacobs’ backlog rose 18% in the March quarter, to $10.7 billion. That’s the biggest catalyst for future growth, says Alex Rygiel, an analyst at Friedman Billings Ramsey.

Oil and gas makes up more than one-third of Jacobs’ sales. Soaring oil prices in recent years have spurred a lot of oil company spending on huge projects, an area of expertise for Jacobs.

“It’s a broader story than oil and gas, but oil and gas are definitely helping a lot,” Rygiel said.

Take refining. That business is expected to spend $142 billion worldwide on capital projects in the next eight years, Martin says. Most are expansions to oil refinery capacity.

“There’s nothing like $70 (a barrel) oil, and the cash flow that creates for our customers, to drive spending,” Martin said.

Jacobs also does a lot of work for governments. A big growth area involves environmental cleanup.

The United Kingdom is about 15 years behind the U.S. in cleaning up federal sites, Martin says. That involves about $300 billion in contracts for top-level contractors.

“We see that as an enormous opportunity that’s just getting started,” he said.

The strength in chemicals is being fueled partly by those companies’ desire to open plants in the Middle East, Martin says. That’s become a region of strength for Jacobs, serving the oil and chemical industries.

Jacobs will likely make some acquisitions to further expand in the Middle East, Martin says. It’s also looking to add capacity and skills in the oil and gas field.

Acquisitions have been a big part of Jacobs’ growth over the years. It typically gets between one-third and one-fourth of its growth from newly acquired companies.

The opportunities are plenty. The engineering and construction market totals $4.3 trillion worldwide, Martin says. But no firm has as much as 1% of it.

“We can grow through acquisitions for at least the rest of my career,” the 57-year-old Martin said.

Jacobs strives to operate locally for its customers. So rather than bring business back home, it puts people on the ground in Europe or the Middle East. That sets it apart from most rivals, Martin says.

It also controls costs well, says Kearney. That’s a sign of how strong its management is.

“Jacobs is probably one of the best-managed firms in the space,” he said.

That’s reflected in its return on invested capital, which has topped its cost of capital in each of the past 10 years, Kearney says.

Its results show that strength. Fiscal second-quarter earnings jumped 49% to 55 cents a share. Sales rose 14% to $2.1 billion. Analysts polled by Thomson Financial expect earnings for fiscal 2007, which ends in September, to soar 39% to $2.23 per share and to gain 17% next year to $2.60.

Jacobs counts its business model as giving it a competitive edge.

It gets 75% to 80% of its business from long-term customer relationships. That’s the flip side of the rest of the industry. Most rivals go after jobs piecemeal, focusing on bigger projects rather than repeat customers.

Small Jobs

But Jacobs will take a small job that repeats in good times and bad in order to get the big job later from the same customer.

“It works for them and it improves the predictability and consistency of their results,” Rygiel said.

It also helps carry Jacobs through the industry’s down cycles. The good times are rolling now, but that will end at some point.

“We’re constantly worried about when this buoyant market will end,” Martin said.

He doesn’t see any signs of a quick reversal, but high oil prices are driving a lot of business. A shock to oil could slash spending in that industry.

That’s where Jacobs’ diverse base of loyal customers comes in.

Reliance on a small group of customers is a risk, Rygiel says. But while Jacobs gets 80% of its sales from about 50 customers, says Martin, those companies are in diverse markets.

And for now, the industry is in the catbird seat.

“There’s probably more work out there than these guys can take on,” Kearney said. “They can almost pick and choose their projects.”

The building boom that has boosted publicly traded heavy construction companies shows no signs of quieting.

Spending on new skyscrapers, oil and gas plants, public transportation infrastructure, and other big projects worldwide is expected to remain strong, analysts say.

Unlike the downbeat U.S. housing market, nonresidential construction is in an up cycle.

The heavy construction industry is benefiting from the fact that many subsectors are doing well at the same time, such as hotels and casinos, oil and gas production, road construction, and commercial buildings.

Growth is especially strong overseas in places such as China and the Middle East.

“Right now the industry is in very good shape,” said John Rogers, an analyst with D.A. Davidson & Co. “There’s strong growth and strong prospects. The order books for these companies continue to expand faster than they can burn it off.”

The American Institute of Architects is forecasting 7.2% growth in nonresidential construction spending throughout all of this year, driven by hotel and office building business. That’s on top of 6% growth last year.

The institute’s closely watched Architecture Billings Index, a leading economic indicator of construction activity, revealed a spike in design activity in May. That follows three months of moderate growth.

With a nine- to 12-month lag time between architecture billings and construction spending, the forecast for the nonresidential construction market remains favorable throughout 2007 and into early 2008, the AIA said.

The U.S. Census Bureau is forecasting private nonresidential construction spending to rise nearly 9% this year to $343 billion. It sees public construction spending growing 6% to $285 billion.

1. Business

IBD’s industry group for building companies involved in heavy construction includes 26 stocks. These firms are involved in engineering, design, construction and facilities management for large-scale projects.

Leading the group are giants Fluor () and Jacobs Engineering Group. ()

What separates the winners from the also-rans in this construction segment is strong management, analysts say. The top-notch companies have a proven track record of project execution and bidding work properly.

“This isn’t a business where it’s easy to set up a shingle somewhere and open your doors,” said Richard Paget, an analyst with Morgan Joseph & Co. “People award you work based on what you’ve done in the past.”

The best performing companies have a firm grasp of local rules and regulations as well as issues associated with labor and materials.

One trend helping to improve the stability and profitability of the sector is the shift to more cost-plus contracts.

With fixed-price contracts, the rewards were higher but so were the risks. Companies often struggled when hit with unexpected increases in materials and labor costs or project delays.

Cost-plus contracts allow contractors to pass on some cost increases.

“The engineering and construction companies can push some of the risks back on to the project owners that historically they may not have,” said Steven Fisher, an analyst with UBS. “You’re seeing a decline in the amount of fixed-price work on backlog over time.”

Name Of The Game: The leading heavy construction companies have a history of satisfying their customers on big projects. They focus on choosing the right projects, meeting their goals and doing so profitably.

2. Market

The heavy construction industry is highly fragmented and dominated by many privately held companies.

The largest U.S. contractor is Bechtel Group, a privately held engineering, construction and project management company based in San Francisco.

Fluor is No. 2, according to Engineering News-Record.

The largest U.S. design firm, meanwhile, is URS, () followed by Jacobs, ENR reports.

The industry has seen a lot of acquisitions in recent years and that consolidation activity is expected to continue.

Larger companies are using acquisitions to make inroads into faster growing international markets, analysts say.

“As the bigger players generate cash, they will use it for making smaller, bolt-on acquisitions,” Fisher said.

In May, URS announced plans to buy Washington Group International () for $2.6 billion.

In March, Jacobs inked a deal to buy Edwards and Kelcey, a privately held engineering, design, planning, and construction management firm.

Last October, Perini () bought Rudolph and Sletten, an established building contractor and construction management company.

3. Climate

The heavy construction industry is a cyclical business.

But the current up trend is likely to continue, thanks to the need for more oil and gas production and refinery capacity, public infrastructure projects such as road and airport improvements and other trends.

“This particular cycle will be longer and drawn out,” Paget said. It also will be less volatile than in the past, he says.

Up cycles in the building industry typically last seven to 10 years and down cycles last two to four years, he says.

One of the big drivers lately has been the oil and gas sector, Paget says.

The high price and demand for oil has led to refinery expansion projects, oil sands ventures in Canada and petrochemical plants in the Middle East, he says. Fluor and Jacobs are two major beneficiaries of this trend.

Analysts also are seeing the start of an increase in power infrastructure spending.

With systems strained to the limit, countries need better power transmission and distribution systems, Paget says.

Eventually the market for power generation will stage a comeback, as new nuclear, coal and other plants are built, Paget says.

But about half the market for heavy construction comprises general buildings.

That includes office buildings, hospitals and schools. China and the Middle East, especially the United Arab Emirates, have seen big booms in general construction.

In the U.S., federal and state governments have recognized the need to fund more public infrastructure improvement projects.

In particular, California has pledged to spend tens of billions of dollars on infrastructure upgrades over the next decade.

4. Technology

Companies involved in the engineering and construction of big works projects have benefited from new technology to share design and planning with multiple offices.

In years past, a lot of the engineering, planning and project management staff had to be on-site or near the construction site, Rogers says.

But thanks to Internet-based project management and collaboration systems, a lot of the detail work can be done in virtual meetings.

“That’s one of the reasons some of the bigger companies are gaining an advantage,” Rogers said.

5. Outlook

The outlook for the heavy construction industry remains positive, analysts say.

Valuations for public companies in the sector are at historical highs, but there’s still room for growth, Paget says.

Since the building industry follows macroeconomic trends, analysts are keeping an eye out for signs of a slowdown.

They’re also watching trends in the energy sector and government spending on infrastructure improvements.

Possible shortages of labor and materials are a concern, too, since they could drive up costs and cause project delays and cancellations.

Upside: Lots of big construction projects are forecast for fast-growing markets in Asia and the Middle East.

Energy trends are prompting companies to add oil refining capacity and build new power generation and distribution systems.

Risks: The big risks for companies in the sector often are related to their performance on particular big projects.

Their execution on those projects can have a huge impact on their profitability.