MONTHLY EDUCATIONAL JOURNAL OF THE FOUNDATION OF THE AMERICAN SUBCONTRACTORS ASSOCIATION AUGUST 2021

Sharing Best Practices

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EDITORIAL PURPOSE The Contractor’s Compass is the monthly educational FEATURES journal of the Foundation of the American Subcontractors Association, Inc. (FASA) and part of FASA’s Contractors’ Knowledge Network. Health and Safety Best Practices for Subcontractors when FASA was established in 1987 as a 501(c)(3) tax-exempt Staying Prepared for COVID-19 During the Current Outbreak...... 14 entity to support research, education and public awareness. by Kevin J. McMahon, MS, CIH, HazTek Inc. Through its Contractors’ Knowledge Network, FASA is committed to forging and exploring the critical issues How to Share Construction Opportunities with Students – shaping subcontractors and specialty trade contractors in the construction industry. The journal is designed to equip and Why You Should...... 16 construction subcontractors with the ideas, tools and tactics by Rachel Burris, NCCER they need to thrive. The views expressed by contributors to The Contractor’s Post-Pandemic Drives Best Practices...... 19 Compass do not necessarily represent the opinions of FASA by Jack Rubinger, Freelance writer or the American Subcontractors Association, Inc. (ASA). Tips for Today’s Harsh Reality of Communication...... 21 by Chad Pearson, Plexxis MISSION To educate and equip subcontractors and suppliers with the Five Ways to Ensure the Safety of Your Workers education and resources they need to thrive in the construction industry. Additionally, FASA raises awareness Without Breaking the Bank...... 24 about issues critical to and about construction in the United by Michael Zalle, YellowBird States. Best Practices 101: Ask the Right Questions...... 26

SUBSCRIPTIONS by Duane Craig, Freelance writer The Contractor’s Compass is a free monthly publication for ASA members and nonmembers. For questions about Everything I Learned About Business subscribing, please contact communications@asa-hq. from Michael Scott and Dunder Mifflin...... 31 com. by Gregg Schoppman, FMI

ADVERTISING Insurance Captives Grow in Popularity Among Contractors...... 34 Interested in advertising? Contact Richard Bright by Greg Hess, AssuredPartners at (703) 684-3450 or [email protected] or [email protected]. How to Handle Late Payments in Construction...... 35 by Patrick Hogan, Handle.com EDITORIAL SUBMISSIONS Contributing authors are encouraged to submit a brief Registration and Sponsorships at SUBExcel 2022...... 36 abstract of their article idea before providing a full-length feature article. Feature articles should be no longer than 1,500 words and comply with The Associated Press style guidelines. Article submissions become the property of ASA DEPARTMENTS and FASA. The editor reserves the right to edit all accepted editorial submissions for length, style, clarity, spelling and punctuation. Send abstracts and submissions for The ASA PRESIDENT'S LETTER...... 5 Contractor’s Compass to [email protected]. CONTRACTOR COMMUNITY...... 7 ABOUT ASA ASA is a nonprofit trade association of union and non-union ALWAYS SOMETHING AWESOME...... 9 subcontractors and suppliers. Through a nationwide network of local and state ASA associations, members LEGALLY SPEAKING: Reaching Your Best Subcontract Self: receive information and education on relevant business Tips for Negotiating Subcontract Terms to Maximize Profit...... 11 issues and work together to protect their rights as an by Michael Metz-Topodas, Cohen Seglias Passa Greenhall & Furman PC. integral part of the construction team. For more information about becoming an ASA member, contact ASA at 1004 Duke LEGALLY SPEAKING: The Ties that Don’t Necessarily Bind: St., Alexandria, VA 22314-3588, (703) 684-3450, [email protected], or visit the ASA Web site, Force Majeure and Price Escalations...... 13 www.asaonline.com by Jordan R. Pavlus, Esq., Byrne Costello & Pickard, P.C.

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33assuredpartners.comAUGUST 2021 THE [email protected]’S COMPASS PRESIDENT'S LETTER

Dear ASA Members: As the summer draws to a close, my oldest son Creighton has been asking lots of wonderful questions as he explores the balance of his K-12. Last week, he informed me that he wanted to study Civil Engineering when he goes to college and we discussed that path. Given that Engineering was the path I followed into the Construction Industry, I couldn’t be prouder that my son was laying a foundation that might take him into the industry that I love so dearly. In each of your companies, I hope you will reflect as we finish out summer on who are the next generation of leaders in your company. Are they your children? Trusted employees that you have trained from ground up? Soldiers, Sailors, Airmen, or Marines who have returned home after the longest war in our nation’s history who now chose to build our nation? This is the time, as it should be every single day, to develop and invest in the leaders in your company and the leaders in our industry. These will ultimately be our community, state and national leaders. ASA is a key cornerstone in building our next great industry leaders. As ASA members, I encourage each of you to take advantage of the endless benefits available to you locally and nationally. • Attend local/national events (available both in-person and virtually); • Read local and national ASA news to stay on top of the critical issue that affect our livelihoods; and • Make sure you access the online area of the ASA National website (known as the Info Hub) to unlock the knowledge base and tools of the vast resource library and special membership benefits Additionally, ASA members should take pride in the work going on to represent each of you behind the scenes on Capitol Hill. For example, ASA's top priority this legislative cycle was to ensure performance and payment bonds were included in federal Public Private Partnership transportation projects and the Senate voted 97-0 in favor of ASA supported legislation with the Van Hollen (MD) Amendment to protect subcontractors. This legislation already passed the House and will become law upon presidential signature. Candidly, a 97-0 vote in the Senate is HUGE, and this is our second such vote in two years with the first being the ban on reverse auction in federal bidding practices for construction projects. Our voices as ASA members are being heard loudly and clearly in the halls of Congress! Also, ASA’s Subcontractors Legal Defense Fund (SLDF) is active in a lien waiver case in Oklahoma (click here to learn more). So, ASA is full speed ahead representing subcontractors where laws are made and where laws are interpreted, both critical to how your businesses function. Another part of engagement is communication. Let us know if you aren’t receiving our weekly e-newsletter ASAToday, or our bi-weekly updates via Hammer & Nails. We want to make sure you are getting everything you possibly can from your ASA Membership. Let us know how we are doing. We are here for you. Together, we build America!

Sincerely in your service, Brian K. Carroll ASA President 2021-2022 JOINING THE SBA MENTOR-PROTÉGÉ PROGRAM IS AS EASY AS ABC AND 123! The SBA Mentor-Protégé Program (SBA MPP) is the government's largest business development program aimed at helping small businesses gain capacity in 1 the federal marketplace by teaming with more experienced businesses. Are you a small business that's ready to enhance your goods and services 2 offerings to the federal government? 3 2 3

STAYING IN— GETTING IN—THE ABC's AS EASY AS 1, 2, 3! ASSEMBLE MAINTAIN YOUR TEAM 1 ANNUAL EVALUATIONS  Find a mentor.  Complete your annual  Ensure you and your mentor evaluation each year are eligible. within 30 days from your anniversary date 30  Register both businesses in (on your welcome letter). SAM.gov.

BE SURE LET US KNOW YOU’RE READY 2 HOW IT’S GOING.  Visit the SBA website.  Any changes to the Mentor-  Complete the MPP tutorial. Protégé Agreement (MPA)?  Keep the certificate.  Any changes to the relationship?  Decide if MPP is right for you.  Need advice?

CERTIFY FORMING AND GROW! 3 A JOINT VENTURE?  Prepare your documents.  Create a SAM profile for your  Apply at certify.sba.gov. new entity.  Allow 105 days for SBA to process.  Provide Joint Venture compliance certificate to the  Remain responsive. SBA and the contracting officer.  Grab your welcome  Send SBA your annual letter and grow. statements upon contract award.

For more information and a detailed FAQ about the SBA MPP visit www.sba.gov/mpp. Email [email protected] for any questions. CONTRACTOR COMMUNITY

Smith Currie Named along with the IIJA, will be debated by the CDC Provides Updated House starting on Monday, August 23, 2021. Construction Law Firm of the Guidance Year ASA Submits Comments on This article is from our friends at SESCO Management Consultant, ASA's Human We congratulate Smith Currie being OSHA’s COVID-19 ETS Resource partner. To learn more about this named 2021 Construction Law Firm of the On Friday, August 19, 2021, ASA, along and all of the incredible benefits that are Year by Chambers and Partners USA and with the Construction Industry Safety included in your ASA membership, click its deputy editors. Coalition (CISC), submitted comments to here. The USA deputy editors at Chambers OSHA’s Emergency Temporary Standard The Centers for Disease Control and and Partners USA noted that Smith Currie’s (ETS). These comments supported the Prevention (CDC) has issued updated expertise in healthcare-related construction Agency’s determination not to include the guidance recommending that even fully- positioned the firm well to assist clients construction industry within the scope of vaccinated individuals should wear providing essential construction services the rule. The construction industry has masks indoors in geographic areas of across the U.S. in responding to the been consistently characterized as low risk “substantial or high transmission.” The CDC COVID-19 pandemic. The firm’s ability to for exposure to COVID-19 by OSHA and also recommends even fully-vaccinated help guide clients through the pandemic other regulatory agencies. The construction individuals get tested and wear a mask in helped place Smith Currie as the choice for industry has been at the forefront of public indoor settings for 14 days if they Construction Law Firm of the Year. efforts to implement proactive mitigation have a known exposure to someone with “In a challenging year for the sector, measures specific to COVID-19. Per our suspected or confirmed COVID-19 or until clients looked to the construction comments, “any attempts by OSHA to they receive a negative test. specialists at Smith Currie for guidance expand the ETS to cover construction is The CDC does not directly regulate through the unprecedented turbulence not supported by the evidence and would employers – it just offers recommendations of the COVID-19 pandemic,” said be impermissible under the Occupational and guidance. Time will tell how the Maddy Vincent, deputy editor USA, Safety and Health Act of 1970.” federal Occupational Safety and Health with Chambers and Partners USA. Our comments were separated into Administration (OSHA) and state agencies/ “Smith Currie’s COVID-19 task force several parts with Part 1 explaining governors will respond to the updated played a key role advising developers, the proactive measures taken by the CDC guidance. Of course, we will provide owners, contractors, and subcontractors on CISC and the construction industry to further updates when new guidance or the latest pandemic-related developments, address COVID-19 in construction. Part requirements are released. assisting them in remaining operational as 2 addresses the process that OSHA has SESCO retainer clients and members of lockdowns, delays, furloughs, and materials undertaken to develop the ETS and how shortages rocked the sector.” The firm’s select associations can call or email SESCO applying the ETS to the construction to discuss specific industry, state and/or task force was led by Scott Walters. Smith industry without engaging the Advisory Currie was nominated for this award and company questions and concerns. Those Committee on Construction Safety and receiving these alerts that are not SESCO chosen as the winner largely based upon Health (“ACCSH”) and specifically raising client input received through the Chambers clients can contact SESCO by phone, fax or construction-specific issues in the ETS email to explore support options. and Partners USA thorough ranking would be inappropriate and unlawful. Part methodology. 3 describes how and why the construction industry is low risk and thus applying Nonresidential Spending Infrastructure Status the ETS to the construction industry Slumps in June and Year-to- On Tuesday, August 10, 2021, the would be impermissible. Part 4 describes Date; Wages Post Record Senate voted 69-30 to pass a $550 billion how it would be inappropriate to apply bipartisan Infrastructure Investment and the requirements of the ETS, the vast Jump in Second Quarter Jobs Act (IIJA), which was highlighted majority of which would be inapplicable This article is from the Associated General in the August 6th ASAToday. House to the construction work environment, in Contractors of America. You can learn more Democrats are trying to keep the Senate the construction industry. Finally, Part 5 about the AGC at www.agc.org. passed infrastructure package intact and discusses how OSHA’ s anti-retaliation Construction spending in June climbed any changes that the House wants to make paragraph permitting OSHA to pursue 0.1% from May rate and 8.2% from June on infrastructure issues will likely take place Citations and Notifications of Penalty 2020 to a seasonally adjusted annual rate of on the reconciliation bill. On Wednesday, for alleged retaliation is unlawful and $1.55 trillion, the Census Bureau reported. August 11, 2021, the Senate passed a $3.5 impermissible under the OSH Act and Because project shutdowns depressed trillion budget resolution by a party line OSHA must delete this provision from any spending in the spring of 2020, it is more vote of 50-49 that is expected to have a final rule. useful to compare year-to-date figures for final vote in September. This resolution,

7 AUGUST 2021 THE CONTRACTOR’S COMPASS January-June combined in 2020 and 2021 the past 12 months increased 3.1% for total in permanent-site structures rose 4.8% than June rates alone. Year-to-date, total compensation, 3.5% for wages and salaries, (single-family structures, 2.6%; multifamily, spending increased 5.4% but there was a and 2.0% for total benefits (including 0.4% 16%). There was a 7.0% decrease in real huge disparity between strong residential for health insurance, the least since 1997). gross private domestic investment in spending growth and diminishing Construction employment, not nonresidential structures, (commercial nonresidential activity. Private residential seasonally adjusted, decreased from and health care, -11%; manufacturing, -10%; construction spending jumped 25% year- February 2020—the pre-pandemic power and communication, -14%; wells and to-date: single-family, 36%; multifamily, peak month for seasonally adjusted mining structures, 33%; other non-mining 19%; and owner-occupied improvements, employment—to June 2021 in 80 (22%) of structures, -14%). Real government gross 12%. Private nonresidential construction the 358 metro areas (including divisions investment in structures declined 25%, spending declined 9.4% year-to-date, with of larger metros) for which BLS posts including federal investment for defense decreases in all 11 components. The largest construction employment data, increased structures, -6.9%; nondefense structures, private nonresidential segment (ranked in 257 (68%) and was unchanged in 21, -36%; and state and local structures by year-to-date spending)—power— according to an analysis AGC released investment, -12%. The GDP price index slumped 6.3% (including electric power, on July 28. The share of metros with increased 6.0%, with price indexes for -4.0%, and oil and gas field structures and employment increases was far below the nonresidential structures investment up pipelines, -14%), followed by commercial, typical share—on average, 92% of metros 8.8%; residential investment, 14.5%; and -4.7% (including warehouse, 7.5%, and added construction jobs between February government investment in structures, 10%. retail, -20%); manufacturing, -3.8%; and and June from 1990 through 2019. (BLS Steel remains problematic. Steel office, -12%. Lodging had the largest reports combined totals for mining, logging, Market Update reported that hot- decrease, -29%. Public construction and construction in most metro areas, rolled coil averaged $1860, more than spending slumped 7.1% year-to-date. The to avoid disclosing data about industries four times the August 2020 low point largest public segment, highway and street with few employers; AGC assumes the of $440. Contractors report mills are construction, slid 6.0%. Public education construction-only changes in these areas quoting 11-12 month lead times for bar construction declined 8.7% (primary/ match the combined change.) The largest joists. New South Construction Supply secondary, -4.0%, and higher education, losses over 16 months occurred in Houston- reported, “Rebar remains in extremely high -20%). Public transportation construction The Woodlands-Sugar Land (-33,400 demand and tight supply. All four major fell 6.8%. (Census includes data centers construction jobs, -14%), followed by New rebar manufacturers in the southeast are in office construction and does not break York City (-22,000 combined jobs, -14%); reporting large backlogs, little to no sitting them out. Nonresidential combines Midland, Texas (-9,300 combined jobs, inventory, and a continual flow of incoming renovation and new construction.) As -25%); and Odessa, Texas (-7,900 combined purchase orders for more material. Lead usual in August, Census posted annual jobs, -38%). Odessa had the steepest times are running at a month’s time after state totals for private and state/local percentage decline, followed by Lake purchase order is placed….Wire rod nonresidential spending, and updated Charles, La. (-34%, -6,700 construction availability remains a major issue and length-of-construction-time studies. jobs), Laredo, Texas (-25%, -1,000 combined production is outpacing the arrival of more Wages and salaries in the construction jobs) and Midland. The Chicago-Naperville- raw materials. Lead times are out to almost industry rose 1.4 %, seasonally adjusted, Arlington Heights division added the four months, depending on gauge and size.” in the second quarter (Q2) of 2021, up from most jobs (14,300 construction jobs, 12%), 0.9% in Q1 2021 and 1.1% in Q2 2020, the followed by Minneapolis-St. Paul, Minn.- Construction Industry adds Bureau of Labor Statistics (BLS) reported Wis. (13,800 combined jobs, 18%) and on July 30. The increase was the largest Indianapolis-Carmel-Anderson (10,700 11,000 Jobs in July 3-month gain since the series began in construction jobs, 20%). Fargo, N.D.-Minn. The construction industry added 2000, Total compensation (wages, salaries, had the highest percentage increase (50%, 11,000 jobs between June and July but and benefits, including required employer 3,700 combined jobs), followed by Sierra nonresidential construction employment payments) in construction rose 1.2% in Vista-Douglas, Ariz. (48%, 1,200 combined remains far below pre-pandemic levels, Q2 2021, up from 0.9% in both Q1 2021 and jobs) and Bay City, Mich. (500 combined according to an analysis by the Associated Q2 2020,. Over 12 months, compensation jobs, 45%). Seven areas set new lows for General Contractors of America of increased 3.0%, vs. 3.3% in the previous June and 48 set new highs, in series dating government data released on August 6. 12 months, while wages and salaries rose in most cases to 1990. Association officials said nonresidential 3.2%, down from 3.9% in the previous 12 Inflation-adjusted gross domestic construction has been affected by declining months. BLS does not break out benefit product (real GDP)rose 6.5% at a demand for projects, particularly for public costs for construction, but the fact that total seasonally adjusted annual rate in Q2 2021, infrastructure work, and urged Congress compensation increased less than wages the Bureau of Economic Analysis (BEA) to quickly pass the new bipartisan (3.0% vs. 3.2%) indicates that benefit costs reported on July 29, following a 6.3% infrastructure measure. rose less rapidly than wages. For all private gain in Q1. Real residential investment industry employees, employer costs over

THE CONTRACTOR’S COMPASS AUGUST 2021 8 It's always something

TM Martin T. Rucker Development by Mary Klett, ASA Communications Team

DeLano Sheffield, Executive Director of Kansas City ASA, recommended I chat with Martin T. Rucker II, and find out his Always Something Awesome story. It ends with a doozy. As with any professional sports player, your life is consumed with getting better and being the best you can be. And Martin did just that, playing professional football for five years, before an ACL tear got him thinking about life after football. He knew he wanted to own his own business, but what would be best suited for him? So he got to thinking...What do people always need? Healthcare (“Do I really want to go to medical school?”), Funeral homes (“Just can’t do it.”), BBQ (“But I can’t compete with Gates.”), and...construction (“It slows down, but still never ends.”) His mentor suggested Martin meet with Jim Kissick, who owned one of the larger civil contracting companies in the region. Jim advised Martin to come work for him. “Lose a little of my money before you go out on your own and lose all of yours.” At Kissick Construction Company his first job was installing water lines outdoors in the winter months before the new streetcar lines. After six years, he was a project engineer, in the interim soaking up how to run a business, how the industry works, how projects work. He noticed that there were never enough trucks to haul debris away. In 2019 he saw his opportunity and bought three trucks. From April

9 AUGUST 2021 THE CONTRACTOR’S COMPASS through December he hauled asphalt and other construction materials. Just as COVID-19 closed down the country in 2020, he bought nine more trucks. Many businesses closed, and he was able to provide jobs for school bus drivers and others that needed critical income. Martin T. Rucker Development LLC went from 3 employees in January 2020 to 23 in August of 2020, with an impressive 33% female and 60% minority makeup. He has less than that now, but is actively hiring and looking for good employees (hint, hint). Contact mrucker at mruckerdevelopment.com or call 816-237-0015. Felicia, a school bus driver, joined Martin T. Rucker Development Employees typically work solo, when the pandemic hit and so masks and vaccinations are not schools were closed. mandated, although he has stepped up cleaning measures, sanitizing trucks between drivers. As far as being a member of ASA? It's construction month at their “It’s a no-brainer! I spoke to a buddy school so we brought a piece of the from college who’s a member, and industry to them. They were very also chatted with DeLano. He’s got a excited and loved the loud horn! lot of great ideas, and I look forward to having a positive impact on our chapter.” A bible version from Proverbs directs his life: “In all your ways acknowledge him, and he will make straight your paths.” And football taught him another lesson - “Never get too high, or too low. Keeping an even keel alleviates a lot of stress.” He’s going to need those thoughts in the near term, as the most amazing Something Awesome happened on August 14, when Martin's family welcomed Martin T. Rucker, III into this world. Welcome, Martin, to the ASA family, and keep being awesome!

The Contractor’s Compass is recognizing excellence in ASA’s ranks. Every month we are highlighting the activities, achievements, and actions of ASA members that might inspire others. Do you have something you want to share? Send us an email at [email protected].

THE CONTRACTOR’S COMPASS AUGUST 2021 10 LEGALLY SPEAKING Reaching Your Best Subcontract Self: Tips for Negotiating Subcontract Terms to Maximize Profit by Michael Metz-Topodas, Cohen Seglias Passa Greenhall & Furman PC

With each new subcontract negotiated, when negotiating such clauses and drawings and specifications. And most contractors have an opportunity for adjusting their pricing. contractors know to review those the “art of the possible”—a chance to documents carefully and raise questions negotiate the best possible deal to work Price Escalation and issues with the owner, designer, on a new project. Doing so depends on Typically, subcontractors provide bid or GC regarding technical details and considering not only the scope of work pricing for a scope of work based on constructability. Some specifications, and pricing but also other commonly expectations for labor and materials however, do not address the technical used terms and conditions, as these can costs. The executed subcontract locks aspects of construction but merely affect how scope and pricing operate. To in that pricing, shifting the risk to the direct that the final constructed product help subcontractors successfully enter subcontractor should any costs change performs according to certain standards. agreements that maximize profit, here between when the subcontract is For example, such performance are considerations for negotiating several signed and the work is performed. In specifications can require a building common contract provisions. the past, subcontractors often accepted envelope to meet certain LEED such risk because they could rely on standards regarding air infiltration. Force Majeure relatively stable materials markets. Performance specifications create Construction subcontracts often Recent pandemic aftershocks have risk for subcontractors. To achieve contain provisions that excuse delayed resulted in larger price fluctuations for performance specifications’ standards, performance, partial performance, or materials, potentially creating a greater a subcontractor may need to modify, even non-performance resulting from risk to subcontractors. To account adjust, or even redesign work an unpreventable or uncontrollable for such dramatic price changes, performed in the field within what other event, often called force majeure subcontractors can negotiate to have project specifications permit. Those clauses. In the past, such clauses general contractors share some of this adjustments, modifications, or redesigns covered wars, floods, or acts of nature. risk through price escalation provisions. may require additional labor or materials, Recently, they have received greater Although such clauses come in almost but receiving additional compensation attention and use because the COVID- endless varieties, they typically establish via a change order for this in-scope 19 pandemic and related restrictions criteria under which the general work would likely face challenges. disrupted construction work nationwide. contractor (GC) agrees to pay an So, in negotiating agreements, Generally speaking, courts will enforce increased contract price due to a rise in subcontractors should pay close such provisions but construe them materials costs. For example, a clause attention to performance specifications, narrowly and apply them only to events may require that should average lumber the discretion afforded to meet them, and unforeseeable to the parties when they prices rise during the time between pricing and other terms so that they can entered the contract. At the pandemic’s execution and performance by more than control this risk as much as possible. onset, when such clauses did not 10% based on an agreed metric (e.g., a expressly list “pandemic” as a covered price index), the GC would compensate Pay-if-Paid event, subcontractors faced challenges a portion of the subcontractor’s actual Subcontracts frequently include in obtaining protection under them. And increased lumber costs. As this example provisions that tie a subcontractor’s now, over 18 months into this pandemic, reflects, such clauses can contain payment for work performed to the it hardly qualifies as an unforeseen many details about the conditions and GC receiving payment for that work. event. So, going forward, subcontractors terms for adjusting the subcontract Some clauses, typically called “pay- should consider ensuring that the force price due to materials escalation costs. when-paid,” pertain to a payment’s majeure clauses in their agreements Subcontract negotiations should find the timing and direct that when the GC explicitly include specific unforeseeable best arrangement that fits the project’s receives payment for a subcontractor’s instances that could reasonably circumstances. work, the GC must, in turn, pay the threaten performance. Unfortunately, no subcontractor, often within a specified agreement can cover all circumstances, Performance Specifications time. The more stringent “pay-if-paid” so subcontractors must consider the Most contracts outline a scope of clauses make a GC’s obligation to pay risks presented for a particular project work with reference to applicable its subcontractor conditioned on the

11 AUGUST 2021 THE CONTRACTOR’S COMPASS GC actually receiving payment for the cannot enforce a “no damages for on the requirements’ reasonableness subcontractor work performed. That delay” provision. Nor do such clauses relative to the project. Specifically, means the GC has no obligation to pay apply to delays from events that were does the requirement afford sufficient a subcontractor for work performed and unforeseen when the parties entered time to prepare the notice? Are timing accepted unless and until the GC is paid the contract. Regardless of the defenses requirements measured from when for that work. Unlike a pay-when-paid to a “no damages for delay” provision, the notice is sent or received? Also, clause, a pay-if-paid clause removes any subcontractors should negotiate their applicable law can affect the burden independent obligation for the GC to pay agreements to afford as much recovery notice requirements impose. Some its subcontractors and passes the risk of as possible for delay costs. Otherwise, states’ laws bar enforcing notice owner non-payment from the GC to the subcontractors should price their work to provisions when the party invoking subcontractor. To account for this risk, account for such potential costs. them, usually the GC, has actual notice subcontractors can adjust their pricing or does not suffer any prejudice despite or negotiate to modify this language— Work Continuation a breach of the contractual notice both challenging propositions. Some Most subcontracts have clauses that requirements. In other states, a missed jurisdictions, however, enforce a pay- require a subcontractor to continue notice deadline almost invariably waives if-paid clause only if it has very explicit working even after submitting a claim the right to any claim or right connected and clear language that payment to the for payment or after initiating any other to that notice. So, for example, failing to subcontractor is conditioned on the GC proceeding under the agreement’s provide a required 10 days’ notice likely receiving payment. dispute resolution process. Under makes a claim lost forever. In negotiating Further, under many states’ laws, this requirement, if a GC withholds such provisions, subcontractors need to if the GC’s actions are causing non- payment to a subcontractor because it understand how they operate within both payment for a subcontractor’s completed disputes the quality or extent of the work the project’s context and the applicable work, then the GC may lose the right performed, or for any other reason, a underlying law. to rely on a pay-if-paid clause. Lastly, subcontractor faces a no-win dilemma: a smaller number of states have found keep working without getting fully paid Conclusion pay-if-paid clauses unenforceable. So, or risk breaching the subcontract by A common theme runs through these negotiating such payment clauses needs stopping work. Fortunately, some states subcontract negotiation considerations: to account for the risk presented under have laws that permit a subcontractor to they vary with the circumstances of the the applicable law. suspend work for non-payment despite underlying project and the law of the what a subcontract may direct, as long applicable jurisdiction. For that reason, No Damages for Delay as the subcontractor complies with subcontract negotiations benefit greatly Due to the many “moving parts” and certain notice and other requirements. when involving experienced construction other variables on construction projects, Such laws should play a role in gauging counsel. The lawyers at Cohen Seglias delays frequently happen. Such delays whether to negotiate or accept a have been helping clients analyze, create extra costs for subcontractors— subcontract's requirement to continue assess, and negotiate subcontracts and often additional labor and extended working despite a pending claim or their provisions for over thirty years general conditions costs, to name a few. dispute. and welcome further opportunities to Typical subcontracts, however, limit a continue supporting subcontractors in subcontractor’s remedies for delays Notice Requirements the difficult contract negotiation process. to time extensions to the contractual Most subcontracts require the deadline for the subcontractor to subcontractor to notify the GC about About the Author complete its work. These “no damages certain project developments, especially Michael Metz-Topodas is a partner at for delay” clauses present another area events that could lead to a claim for Cohen Seglias. As a construction litigator, in which subcontractors end up bearing additional payment or performance time. he represents general contractors, significant risk. Extensions of time relieve Often, such notice requirements direct subcontractors, owners, designers, and a subcontractor of liability for liquidated the form, delivery method, and, most suppliers through all stages of private, damages or other consequences from importantly, timing for such notices. public, and federal projects. Michael not meeting contractual deadlines but For example, AIA A201-2017 Art. 15, helps clients navigate construction leave subcontractors without remedies Sec. 15.1.3.1 requires notice of a claim project disputes, including delay for costs incurred from extra time spent within 21 days after the event leading and inefficiency claims, design and on a project. In some jurisdictions, to the request for extra payment or construction defects, unforeseen site however, where an owner or GC causes the claimant’s awareness of such an conditions, project scope disputes, and a subcontractor’s delay by actively event (whichever is later). Negotiating payment claims. He can be reached at interfering with the subcontractor such notice requirements depends performing its work, the owner or GC and 267.238.4755.

THE CONTRACTOR’S COMPASS AUGUST 2021 12 LEGALLY SPEAKING The Ties that Don’t Necessarily Bind: Force Majeure and Price Escalations by Jordan R. Pavlus, Esq., Byrne Costello & Pickard, P.C.

When the COVID-19 pandemic hit, we Price (De)Escalation Clause? order at the start of the pandemic. At this all got a stark refresher in force majeure Ideally, a subcontractor would negotiate point, no one knows when the project clauses, which prior thereto were rarely language into its subcontract prior to will re-commence, if ever. For over one invoked. Force majeure clauses typically commencing work on the project which year during the pandemic shut down, the excuse contractual performance for some allows for an equitable adjustment in subcontractor receives periodic notices identified reason outside the control of the contract price due to material price from its material supplier of price increases. the contracting party, like an act of god, escalations which meet an agreed upon The subcontractor does not provide these war, labor strikes, etc. When the pandemic threshold. notices to the contractor or owner because shut down construction projects, many it does not know if/when the project will subcontractors combed their subcontracts Any such material price escalation clause re-commence. When the project is finally to determine whether they could obtain requires that the subcontractor keep re-commenced, the price of materials has any relief via a force majeure clause. records of material prices used to formulate sky-rocketed. The subcontractor submits Inasmuch as many force majeure clauses its contract price so that they can be its request for a material price adjustment did not explicitly reference pandemics, contrasted with later price escalations. when the project is re-commenced. The it was usually not a perfect fit, and it has It is no easy task to negotiate a material owner denies the claim because contractual been a mixed bag for subcontractors price escalation clause into a subcontract notice was not provided within fifteen days regarding whether they could obtain relief because the upstream parties are of discovery of the price increases (as via these clauses. Unfortunately, for many looking for certainty in cost. The typical required by contract). subcontractors, they had to work with what construction bid is a gamble based on Do not be a cautionary tale. Negotiating was already in their subcontracts, many of certain assumptions in material price, for a material price escalation clause at the which are for a lump sum price. schedule, labor costs, sequence of the front end of a project is a critical aspect work, etc. If the subcontractor made the of a successful project and notification Look Back. Learn. Look Ahead right gamble, it will be a profitable project. If requirements must be observed at all times. not, the project will be a loss. Most owners One of the positives to come out of this and general contractors will take this situation is that subcontractors can learn position. About the Author from it and recognize the potential project impacts from a global pandemic and its If a subcontractor is successful in Jordan Pavlus focuses his practice effect on their supply chain. This will allow negotiating for a material price increase primarily on all facets of construction law, subcontractors to anticipate potential clause, it should be anticipated that the including contract review, contract and impacts and negotiate to address them upstream parties will likewise seek a addendum drafting, terms and conditions on the front end of a project, rather than material price decrease clause. In other review and drafting, litigation, arbitration relying on a force majeure clause which is words, if the price of materials goes down, and mediation. He regularly advises they pay less. If it goes up, they pay more. not a perfect fit for the situation. clients on the nuances associated One of those issues which should be Subcontractors should also make with construction law, including bond careful note that they must comply with addressed by subcontractors on the claims, lien law, prompt payment law, applicable contractual notice provisions front end of a project is the potential for and a broad variety of issues faced construction material price escalations. when it comes to material price escalation clauses. If the subcontract requires notice in the commercial construction field. The construction industry continues to Jordan has served as solo trial counsel deal with extreme price volatility in the of any changes in price within seven days, in numerous matters and has also been material supply sector. The price of many the subcontractor must ensure to notify materials have more than doubled within the contractor within seven days of each lead attorney on multi-week arbitrations the last several months, much of which can discovery of material price escalations. This with damages in seven figures. He is a be attributed to the COVID-19 pandemic. means that every time the subcontractor frequent lecturer on construction related Even if price escalations are more modest, gets notice from a supplier of a material issues. For more information on Jordan any material price escalation can turn price increase, the subcontractor must in Pavlus and Byne, Costello, & Pickard, what could have been a profitable project turn notify the contractor. P.C., visit http://bcplegal.com/ into a money pit. The good news is that a subcontractor can protect itself from being It Pays to be Overly Cautious forced to proceed with a project without an Here is a recent cautionary tale which equitable mechanism by which it can seek is illustrative: the owner on a government relief from material price escalations. construction project issues a stop work

13 AUGUST 2021 THE CONTRACTOR’S COMPASS FEATURE Health and Safety Best Practices for Subcontractors when Staying Prepared for COVID-19 During the Current Outbreak by Kevin J. McMahon, MS, CIH, HazTek Inc.

The Delta variant of the coronavirus, we know of and that I have seen in my longer need to wear a mask,” he said, which began appearing in the US in 20-year career.” It spreads as similarly summarizing new CDC guidance and March 2021, now accounts for over easy as chicken pox, and although encouraging more Americans to roll up 90% of new cases. This form of the fully vaccinated individuals have good their sleeves. “Get vaccinated – or wear virus is much more transmissible, likely protection, breakthrough cases are a mask until you do.” (AP, May 13, 2021) more severe, and is affecting more occurring. As a result, many employers are younger people than the original virus. This is a rapid turnaround from when re-evaluating their approach to Dr. Rochelle P. Wilensky, director of President Biden announced on May 13 preventing further spread. There are the Centers for Disease Control and that we could take our masks off as a updated steps-to-take to ensure the Prevention, has said that “It is one of result of the distribution of vaccines. health and safety of subcontractors the most infectious respiratory viruses “If you are fully vaccinated, you no amid the pandemic.

THE CONTRACTOR’S COMPASS AUGUST 2021 14 spread of the virus and to apply the measures that are most effective in preventing the spread at their work sites. It is best to take a multi-layered approach, using a combination of control measures that will assure effective results, including engineering methods (e.g., ventilation and physical barriers), administrative controls (e.g., physical distancing, work from home, staggered shifts, temperature and symptom screening, infection testing, cleaning and disinfecting), as well as face coverings/masks and personal protective equipment (e.g., respirators, gloves). While mandating of vaccines Among the recent developments, Most importantly, employers should has not become universal, companies employers are using the following continue to follow the CDC guidelines should evaluate their specific needs, approaches: for preventing spread, as they have and encourage their employees to • Delaying return to the office/ from before the delta variant appeared. be vaccinated if eligible, and with a workplace for employees, i.e., AIHA, the association for scientists healthcare professional’s consultation. and professionals committed to continuing to work from home. An important tool for subcontractors preserving and ensuring occupational • Requiring vaccinations of employees to continuously evaluate their specific and environmental health and in the workplace or testing needs, and apply critical safety safety (OEHS) in the workplace and employees weekly. practices, is the use of Job Safety community, has from the beginning • Asking for proof of vaccination Analyses (aka, Job Hazard Analysis, of the pandemic, published guidance (showing documentation) or Task Hazard Analysis) discussed in the documents for workplaces. Recently attesting to having received the AIHA Back to Work Safely™ Guidance it published a series of Back to Work vaccine. Documents. In addition, AIHA Safely™ Guidance Documents (2nd members – Industrial Hygienists – can • Requiring the use of face coverings/ ed.) for small to mid-size businesses play a vital role in assisting employers masks for all individuals, regardless in 27 industry sectors including the to develop plans and evaluate their of vaccine status, or requiring those construction industry. https://www. workplaces to assure that controls are who have not received the vaccine backtoworksafely.org/construction- effectively being practiced. to wear face coverings/masks unless reopening-guidelines-covid-19 working outside and at least 6 feet Visit the AIHA’s COVID-19 The free guidance documents, (physical distancing) from others. Resource Center to access updated available only in English now (and in comprehensive information for Additional best practices include: Spanish this Fall), provide clear and responding to the pandemic. • daily tool-box talks to update and actionable steps towards the safe re-enforce hygiene procedures, operations of a variety of workplaces • frequent inspections to confirm through prevention, early detection, About the Author compliance with required and control of COVID-19. The 2nd Kevin J. McMahon, MS, CIH, is procedures, and editions offer practical guidance for Director of Technical Services for • limiting the use of pool cars and ride employers to implement multiple HazTek, Inc. a safety management sharing among employees, or use of layers of risk mitigation strategies consulting firm that specializes in N-95 respirators when traveling with through use of engineering controls services to the construction industry. He 2 passengers or more for more than (e.g., increased ventilation and air has contributed to the Focus on Health: 30-minutes. filtration), administrative controls COVID-19 document published by AIHA (e.g., staggered shifts), and personal Should the number of new cases and is a current member of the TAG protective equipment (e.g., respirators continue to grow rapidly, or other WG5 Committee for the forthcoming and gloves). variants appear, more companies are ISO 45006 standard for Occupational expected to take new measures to Since conditions are changing Health and Safety Management — curtail the spread, including possibly rapidly, and to varying degrees at preventing and managing infectious more requirements for vaccinations. different locations, it is critical for all diseases – General guidelines for companies to continue to monitor the organizations.

15 AUGUST 2021 THE CONTRACTOR’S COMPASS FEATURE

How to Share Construction Opportunities with Students—and Why You Should by Rachel Burris, NCCER

You can help make a difference — After that experience, I found a circumstances.” — Holly Mathis, Build not just for the industry, but for the job posting for the Build Your Future Your Future Manager young people who aren’t aware of the Manager role and started working at We’ve all seen the stats about the opportunities that construction offers. NCCER in September 2019. Part of my workforce shortage in the construction “I grew up in a small town with little focus is on helping the construction industry: education about career opportunities industry make connections with • 53% of the seasoned workforce is outside of the typical mold of a four- education, as well as recruiting and expected to retire by 2036. reaching people, with a large focus on year degree. Back in 2019, I drove • More than half of construction students. through my hometown and stopped at firms are having a hard time filling a fast-food restaurant to find that three However, the part of my job that both salaried and hourly craft of my high school classmates worked gets me out of bed in the morning positions. there — 14 years post-high school is knowing that what I do impacts • For more than seven straight graduation. It made me sad to realize lives. It is my mission to empower years, construction skilled trades that they probably didn’t know there students through information to find are the hardest roles to fill. were and are other options for them. opportunities that can change their

THE CONTRACTOR’S COMPASS AUGUST 2021 16 Let’s take a second to step back story and what construction has done to share how you got into the industry, and think less about the effect on for you. Be a mentor. what you find most satisfying and what construction and more about the you would recommend to the next impact a job in the industry could Be a spokesperson at your generation. have on somebody. For too long, local school construction careers have not been Be a mentor BYF works with many companies traditionally seen as a path to success. While mentorship typically begins The university route is portrayed as that connect with their local schools and do presentations, career day visits when somebody has already chosen the best way for students to ‘make their career, having an encouraging something of themselves’ only for and provide resources for educators and counselors. We always recommend mentor can be the key element them to fall into massive debt getting a to the mentee choosing to stay in degree that may not be needed in the having a craft professional attend these events — Gen Z, in particular, are the industry. In addition, although workforce. In fact, 25% of workers with the benefits to yourself may not be student loan debt are employed out looking for authentic experiences and who better to tell what it’s like working the first thing you think of when of their chosen field because of debt becoming a mentor, it’s definitely worth obligations. on the job site than you. Not only are you contributing to building a talent consideration. A 2006 study found As Holly’s story illustrated, young pipeline, but you’re inspiring the next that mentors were promoted six times people can also fall into jobs that don’t generation to consider a career they more often than standard employees give them much room to grow because may not have thought of. and the retention rate was higher — they see that as the only option 72% compared to 49%. Keep that available. Volunteer on local school in mind when the next opportunity We know that construction offers presents itself to become a mentor. The more — it teaches skills that are in advisory councils exchange of knowledge and guidance high demand, it has high salaries and Your local school has an advisory from those who are more experienced it provides satisfaction from jobs that council — or most likely several — and is an important part of craft training, have meaning. But how do we show they’re looking for volunteers from the and you’ll be furthering the education students that there are more options community. General councils come up of those newer to construction. available to them? with annual plans to improve education Working with BYF, you can help It’s up to you. in vital areas of the school, while make a difference — not just for the We’re not asking you to do this on other councils are more specialized industry, but for the students and your own. Build Your Future (BYF) is an in areas such as career and technical young people who aren’t aware of the initiative that aims to be the catalyst for education. Garrett High School’s world of opportunity that construction recruiting the next generation of craft Career Development program credits offers. Be a voice in your community professionals. Powered by NCCER, a good portion of their success to local about the benefits of construction and BYF creates pathways that bridge industry representatives sitting on their impact a student’s life. the gap between curiosity and career advisory board. Contact your local high Visit byf.org to see other ways you placement. school to see how you can contribute. can get involved. As a grassroots effort, we work to Share your story and what equip industry representatives with the About the Author resources needed to reach students, construction has done for Rachel Burris is the communications families and educators and effectively you manager at NCCER. She has over seven promote careers in construction. With Build Your Future is always on the years’ experience in communications Gen Z expected to make up 27% lookout for inspiring stories to tell. Our and public relations, including writing and of the global workforce by 2025, success stories bridge from apprentice editing content for emails, social media, it’s important to start making those to journeyman to CEOs — students and press releases, blogs and articles. She connections now. young people want to hear it directly holds a Bachelor of Arts in English from Check out these four ways that you from the source that construction the University of South Florida and a can get involved: Be a spokesperson offers viable, successful career paths. Master of Business Administration degree at your local school. Volunteer on local Contact us at [email protected] from Webster University. school advisory councils. Share your

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Post-Pandemic Drives Best Practices by Jack Rubinger, freelance writer

Right now we’re coming back to life. Some the cost of building materials, which was a change orders. We quote what it will cost may even be looking at the pandemic from reason to slow projects down with hopes that and we stick to it. He recommended us just their rearview mirrors. Many are reviving long the prices would become reasonable again. because we weren't a nuisance to deal with. dormant projects, programs, practices.The Lumber costing two to four times what it had So there are other indirect parts of business reopening of libraries, for example, means cost months prior caused most construction people don't think about,” said Cansler. ideas and books are being shared again. companies to look to other ways to build Mack Turner heads the Institute People are traveling again. using concrete beams and columns or lower for Safety in Powerline Construction. To survive and thrive in this current climate, quality materials like MDF and melamine,” Their business took a big hit during the networking and sharing ideas is vital — even said Alexander. pandemic. if the meetings are boring. If you go once in In Alexander’s experience, during the “When COVID hit we had 80% of our a while, that’s better than not going at all — pandemic the "low-guy" trumped hiring other business at customer locations and of course whether they’re virtual or in person. contractors. The cost of necessary materials that dried up completely. We started going Marketing construction-related products reduced the group of competing contractors after more work that we could do in-house and services is a lot about timing, filling considered. once we were able to get back to the office. a need and providing above-the-call-of- Another best practice?—Keeping We also started doing more webinars. Now duty customer service. It’s making on construction site documentation visible things have opened back up. We will try to the fly adjustments to rapidly changing and free from damage from the elements. go back to 80% at the customer’s workplace conditions. Themes can always be changed. Because construction doesn’t stop when it but still offer more distance learning How accurately can you project out six rains or snows and workplace documents opportunities,” said Turner. months from now? The pandemic changed like permits and procedures should always Finally, there’s Rigdon Fair, the founder predictions. be visible, TUFFA Products has introduced of The Pothole Man. Fair started five new Resiliency is the big theme of best a weatherproof permit document holder to businesses this year and is doing all he can practices. You adjust or you die. It takes store and display Permit to Works, Safety to keep up. Rigdon found ways to adapt to creativity. Persistence. Substance. Since Data Sheets, Instruction Manuals, Written difficult and challenging times that came the pandemic, companies have changed Procedures, and Checklists. along with the pandemic. strategies to survive, grow and compete in Health and Wellness Changes—At the time Looking ahead, the vibe among most this new environment. of this article, some states have removed small businesses is cautiously optimistic. Christine Zielke is the Operational the requirement for masks and a third of the While Dodge Data & Analytics forecasts Manager at the BC Municipal Safety people in the U.S. have accepted vaccines, construction starts to rebound in 2021 and Association in British Columbia, Canada. but two-thirds still threaten the population by 2022, with the prospect of far greater gains not getting vaccines. “The BCMSA made some large-scale if a Federal infrastructure spending plan is transitions to ensure we could continue In the workplace even a report of the flu or passed. to serve our membership throughout the a cold is intimidating for many people. The construction industry will continue to pandemic,” said Zielke. “This included “I think that employers are more willing to innovate, create and inspire new ideas, new transitioning our occupational health and let sick workers recover at home now and ways of thinking and add new influencers to safety training to a virtual platform. Now we employees are more willing to remain at home the mix. It's best to listen to others, weigh the reach more remote and small communities.” when they are sick to protect other people,” pros and cons and ultimately make your own The association provided a wealth of said Alexander. decision with respect to what’s best for you, resources in relation to COVID-19 as well as Maybe the days of being a martyr and your company and your customers. a venue to connect membership utilizing the showing up for work when ill are becoming a collective mind of experts in the construction thing of the past. About the Author industry to share knowledge and support Andrea Cansler is with Quality Tank & Jack Rubinger is a safe workplaces across the province. The Construction Co, Inc. in Sandy, Oregon. freelance writer, with more association also provided a free toolkit for They’re “over-servicing” customers to stay than 10+ years of mental health related to COVID-19. competitive. workplace safety and “A silver lining of the pandemic has been “We fix broken components that are construction industry how mental health has become a prioritized necessary to keep entire facilities running. research and writing subject,” said Zielke. It is necessary to find what companies need experience. Looking for an Laura Alexander is a Federal most. We try to help customers find long term article on a specific construction project manager. solutions to keep running smoothly and more construction topic? Construction continued through COVID efficiently for the long haul. I don't see our Contact: [email protected] or call even though buildings being constructed competitors going that extra mile,” she said. 503-964-4877. were vacant or would be vacant for a while. “I had a conversation with a purchasing “What harmed the industry the most was manager. He loved the fact that we never had

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FEATURE Tips for Today’s Harsh Reality of Communication by Chad Pearson, Plexxis

It’s an ugly truth that most businesses, • adding a new standard operating up and said “I did this at our company two relationships and company initiatives procedure or meetings to the weekly years ago and it was the best thing we ever fail. And poor communication is often agenda did. We posted our personality types on the root cause of the failures. But is poor • hiring management or DiSC/Myers our doors and wore badges so we all knew communication the problem or a symptom? Briggs consultants how to communicate with each other. It Before you answer, consider these two • creating team building initiatives to works great!” facts: improve connections This glowing reference is similar Fact 1: Google ‘improve communication • adding more reports and forms to to others I heard but remember, skills’ and you’ll find over 1.1 BILLION daily task communication is not a problem. It’s a results that include; symptom...A giant red flag you cannot • people feel bogged down by ignore. • Endless seminars, books and TED additional requirements and Talks. information If communication is not the REAL problem, then what is the problem? • Countless companies, consultants, 4. Then problems persist and then the therapists, psychologists who focus on cycle repeats itself. For this example, Mr. Rogers, AKA improving communication. Fred Rogers from the television series The above cycle doesn’t solve the core Mister Rogers' Neighborhood, has the • Personality assessments like DiSC problems, which continue to fester and and Myers-Briggs as well as endless answer. Fred was known as an exceptional harm everything and everyone on the team. communicator. The truth is, he simply gave technology and apps, ALL designed to Addressing symptoms while ignoring core improve communication. people his undivided attention and great problems is like taking sleeping pills so you communication was the result. Fact 2: You, along with many people and can sleep on the floor instead of sleeping in leaders, have most likely invested time and the comfortable bed right beside you. Mr. Rogers says it best during an interview with Tom Junod; “Do money into one or more resources above in Fear not. There “can” be a bright light at order to improve communication, yet failure you know what is most important the end of this tunnel… and it need not be to me right now? I’m talking to rates did not improve. a train coming at you! At Plexxis Software, So then, if that level of effort is being you, so right now you are the an integral building block of our internal most important person to me. committed to improving communication, training is a high-performance course of and if poor communication is the core Our conversation is the most 20 classes over 7 weeks and one of the important thing to me right now.” problem when things go off the rails, 20 classes addresses this problem. Keep then most businesses, relationships and reading to learn more. Mr. Rogers personified ‘being present’. company initiatives should be making He was authentically interested in every “But first, if you are still reading, person he spoke to which enabled him tangible progress...right? CONGRATULATIONS! You have a greater Shouldn't they be as successful as to communicate as humans were meant attention span than 38% of the population. to communicate. Most people already they appear on social media and in their The rest of this article will test that attention marketing? have everything they need for elite span even more, on purpose, as paying communication, yet most are thinking Uh...well...they are not! attention to attention will prove really about other things while they are speaking Communication is not a problem. It is a important in the solutions that follow.” with people standing right in front of them. symptom...it is a giant red flag you cannot To understand the problem and Also, people tend to listen in order to ignore. Does this workplace example sound solution better, it will help to review one respond rather than listening to understand familiar? of the most popular communication which erodes the trust in relationships 1. Something goes wrong at work solutions from the list above, the DiSC and prevents people from noticing critical 2. Poor communication is identified as assessment. Some companies experience behavioral cues which results in poor the problem a significant improvement with their team’s communication. communication after the DiSC program yet, 3. Company reacts by we’re claiming it’s a waste of money. Even though we stated that DiSC is a waste of money for companies with • adding new email templates and/or Why would we say that? notifications distracted workers and leaders, it’s a very Personally, I have done the DiSC good use of time. Those companies who • adding more people to emails and assessment 3 times and observed the same notifications benefit from the DiSC program realize symptoms and core problem each time. At success NOT because DiSC’s outdated • creating bulletins or newsletters one conference in 2018, an attendee stood pseudoscience from the 1920s is magic,

21 AUGUST 2021 THE CONTRACTOR’S COMPASS but because the distracted workers start don't know what I said until you tell me what because of harmful behaviors that persist paying attention to each other. you heard”. despite knowledge of the harmful behaviors Poor communication in this case Extra tip: Face to face wins the race! being known by leaders. There are many was a symptom. Poor attention was the When possible, communicate face to face reasons for this type of inaction but almost problem. as humans are hardwired to recognize all of the reasons can be traced back to a DiSC is a waste of money because these countless non-verbal behavioral cues weakness in leadership. companies can achieve the exact same that improve communication. (Tactics to An example of effective AARs are officer result, or even a better result, simply by overcome challenges of communication safety notifications in police work. These emulating Mr. Rogers, which is free. over media are covered in other classes.) notifications describe incidents where How then, do high performers Tactic 2 of 2: AARs (after action police officers were injured or killed in avoid using poor communication as a reviews) and how do you use them action by a means that could be occurring scapegoat? properly? An example of effective AAR in other locations. They inform officers is a 3-10 min meeting after every major across the service, and sometimes across Like Mr. Rogers, high performers ‘appear’ North America and Globally, so they can to be great communicators, but the reality event (ie: projects, missions, presentations, training exercises etc.) that answers 3 prevent injury or death to themselves and is, they’re EXPERTS at paying attention to others on their platoon. people they are communicating with. As questions; a result of providing undivided attention, 1. What was the goal? An example of effective AARs in business which leads to great communication, 2. We’re we perfect and what did we is sales demonstration AARs. These help they can build the habit of recognizing, learn? identify new objections or competitive intelligence that injure sales so sales teams diagnosing and voraciously attacking real 3. Who else needs to know? underlying problems. across an entire company can implement Proper use of AARs ensure real problems corrective measures immediately to protect This habit helps high performers are identified and preventative measures sales pipelines. continuously outpace and outperform are distributed across the entire team to competitors. As most businesses, relationships and prevent recurrence. company initiatives fail, most people, teams Two tactics that, when used properly, AARs seem simple enough for cavemen and leaders commit inspirational levels help people achieve this level of to do (again, sorry cavemen) but few of effort and grit to pursue success. Their performance and build the habit of succeed because of 2 fatal flaws. effort, however, is focused on symptoms, recognizing, diagnosing and voraciously Fatal flaw #1: Inconsistency: AARs not the problem. attacking real underlying problems are must be done after EVERY major event. When done properly, back briefs and ‘back briefs’ and ‘AARs (After Action A mistake companies make is that they Review)’. AARs help shine a big giant beautiful only do them when things go wrong. This bright light on the real problems, enabling Tactic 1 of 2: Back Briefs and how do is catastrophic because people start to leaders and team members to refocus their you use them properly? Back Briefs are associate AARs with negative events, impassioned energy and turn every step so simple a caveman can do them (Sorry which damages the psychological safety backwards into 3 steps forward. to any cavemen reading this. We mean no team members need in order to be open offense). and candid in AARs. Each time you brief team members on When team members censor themselves About the Author important information or assign tasks, out of fear, AARs fail to be effective. Chad Pearson brings a unique have team members repeat back what they Fatal flaw #2: Inaction: AARs require perspective to AEC mixing 13 years in ‘heard’. And of course, when team members immediate distribution and execution of ConTech with careers in law enforcement provide leaders with important insight or solutions across teams to be effective. and over 30 years competing in combat arts requests, leaders too shall repeat back To avoid information overload, AARs are and coaching top professional fighters. what they heard. limited to major events and resolutions for At Plexxis software, Chad is the Dir. Biz This validates the speaker's ability to problems that harm the mission and the Dev and Dealer of Truth & Happiness and be clear, the listener’s ability to listen team. Problems that impact individuals or help subcontractors unite their teams with and it builds trust within the group as one-off events do not apply here. technology. Chad also coaches Plexxis people show they care enough to listen A mistake companies make is they teammates on high performance during while helping the team communicate treat AARs like reports to feed analytics chaos and critical stress. with military precision. When things go for future decisions. Again, this is the Chad's formal training includes a Bachelor wrong, they can eliminate communication catastrophic equivalent of continuously of Arts, Crisis Resolution, Police Defensive concerns from investigations, bypassing collaborating with coworkers and Tactics, Use of Force, CBRN Response symptoms, and focus entirely on identifying agreeing on positive changes, only to have (Chemical, Biological, Radiological & core problem(s). co-workers come to work the next day and Nuclear), emergency response, criminal “Want to improve your communication do the things you just agreed not to do. investigation and outlaw motorcycle gang odds? Say the following phrase in EVERY Employees routinely leave companies liaison work. key discussion until it becomes a habit: “I

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Live-Online, Instructor-Led, Dale Carnegie-Certified Training opportunities that develop leaders who keep the crew running right, support important clients, and who move your projects ahead! FEATURE Five Ways to Ensure the Safety of Your Workers Without Breaking the Bank by Michael Zalle, YellowBird Shorter training sessions and special ASA Member rate to get all your leaders back on the job with world class

Managing Conflict: Winning Presentations in the Disagree Agreeably in the Field Construction Industry

Nothing can destroy productivity, derail Whether your listeners are prospects, projects, and damage your reputation faster clients, vendors, or employees, your presen- than workplace conflict. Learn to diagnose tations matter. This course is especially use- conflict before it intensifies, apply appropri- ful for people involved in consultative selling, ate conflict resolution techniques to specific vendor relations, and customer service. situations, and remain poised when tension Learn to present yourself in any situation, to any audience, building Trust, Respect and is high. ASA Members: $399 Non-Members: $599 Credibility. ASA Members: $399 Read More Non-Members: $599 2 (2-hour) Sessions, August 17 & 24, 2021 Read More 2 (2-hour) Sessions, September 15 & 22, 2021 Safety is a critical challenge for construction industry intensifies government agencies, compliance employers across the country and recruiting efforts, you should consider should be a top priority. This should Leadership Training for New Managers Develop Trust, Credibility and Respect construction remains heavily regulated. safety a valuable recruiting factor, be a sincere effort and a constant According to the Occupational implementing simple steps, and reminder for workers of all ages, sexual in the Construction Industry Company-Wide Safety and Health Administration leveraging new tech solutions. Here orientations, and genders. (OSHA), in 2020 alone, the three main are five ways you can ensure your An excellent course for managers with Accountability starts with clearly defined per- general safety and health inspections subcontracting company is compliant, 2. Host Safety Sessions 3 years or less experience in the field, to formance objectives, and effective leaders totaled more than 1,300 recorded keeps workers safe, and saves Mandatory to All Workers help them retool and focus on leading with violations¹. Each of these violations thousands of dollars. measure individual and group contributions Your employees will do what confidence. can cost between $14k and $135k, against those ends. Learn effective coaching a hefty expense for subcontractors. 1. Make Safety One of Your they see management do. Training If you are promoting Team Leads, this is the The citations, along with potential sessions are no exception. Your techniques and other tools to help close the Company’s Top Values company management team can set must-take course to prepare them to lead gap between expected performance and injuries and fatalities, can be avoided with authority. by following safety programs, Due to the amount of physical an example and show that safety is for labor required in construction jobs, everyone, not just for frontline workers. actual results. ASA Members: $199 implementing training sessions, and ASA Members: $799 it’s imperative that the workforce be Demonstrate that the entire company is Non-Members: $299 seeking out environmental, health Non-Members: $1199 and safety (EHS) expertise. As the properly trained. To avoid incidents, invested in the safety and health of all Read More Read More fatalities, and fines from various employees. 4 (2-hour) Sessions, Oct. 5, 12, 19, 26, 2021 1 (2-hour) Session, Wed., Nov. 17 , 2021

Live-Online, Instructor-Led, Dale Carnegie-Certified Training opportunities that develop leaders ¹ https://www.osha.gov/sites/default/files/MFC_Construction_FY20.pdf who keep the crew running right, support important clients, and who move your projects ahead!

THE CONTRACTOR’S COMPASS AUGUST 2021 24 3. Ensure Access to PPE A safety audit, on the other hand, is of potential OSHA citations. Employers can also opt to have an EHS professional The construction workforce is more an objective analysis of the programs on site daily to perform inspections while open to injuries when access to the and strategies a business has in place the project is ongoing. right PPE and safety protocols are to help keep workers safe. A safety lacking. This happens because new audit provides documented findings The EHS professional will focus on all aspects of safety compliance, including (and veteran) employees underestimate that the company’s management team recordkeeping reviews, training the risks involved in apparently simple can implement to improve safety. documentation, OSHA log review, tasks. But access to PPE is not enough. Audits are typically conducted from an incident and accident documentation, as Make sure the protective equipment is external point-of-view, which is why many audits are conducted by EHS well as policy/procedure reviews. Finally, well fitted for all workers, and that it is it is important to perform a thorough adequate for women, for example. professionals. During an audit, an EHS professional will help you answer key facility walk through to identify safety questions such as: gaps that a regulatory compliance agent 4. Site Safety Management may notice. The professional will observe • How effective is my company’s EHS Not all construction contractors can safety details such as egress, safety recordkeeping? afford a full-time EHS professional to signage, evacuation routes, chemical enforce regulations and policies. Your • Are our safety programs and storage, and employee safety behaviors. company can still stay compliant and strategies compliant with current The consultant will then document have safety oversight by leveraging safety regulations? observations and compliance gaps, emerging technologies. If your • Is our hazard communication then provide you with a comprehensive company is too small to have a full-time effective? compliance report detailing all aspects EHS professional on staff you can hire • What weaknesses are evident of the visit. This report can be used as a on-demand expertise for fall protection in our safety programs and roadmap to better compliance. training, first aid programs, confined strategies, including training In essence, your workers’ safety is too space training, and more. documentation, incident and much of a risk for small businesses to be overlooked. If your organization is too Hiring EHS expertise on-demand accident documentation, and policy/procedure reviews? small to have a dedicated professional, allows you to use data points to quickly consider engaging a qualified EHS search candidates for a specific Even organizations that are professional to address your safety and location, which greatly impacts the compliant may still have weaknesses. A compliance needs while keeping your project timeline. In addition to saving safety audit can help you learn how to business financially healthy. time, you also reduce costs, since you improve safety programs and strategies can get the safety protocols assessed and provide the most protection quickly and pay by gig. Compared possible to your employees, worksite About the Author to hiring through staffing and temp visitors, and overall operations. Michael Zalle is the founder and CEO of agencies, using on-demand service Employers in the construction industry YellowBird, a gig-economy marketplace reduces costs by as much as 25%. But should consider having weekly or that quickly and easily connects Risk perhaps the most important benefit daily safety audits and reviews of the and Safety professionals with businesses for construction contractors is that the company’s safety plan. on-demand. By providing a fast and on-demand marketplace allows them The audit can cover a wide range efficient method for insurance companies, to accurately find candidates with the of safety needs within your company. business leaders and skilled professionals credentials they need. Some subcontracting companies need to consult, YellowBird matches the right an OSHA safety audit, or a general site people, in the right location, with the 5. Mock Safety Audits and safety audit, or perhaps a third-party right experience for the job. A career tech safety inspection for their insurance entrepreneur, Michael has accumulated OSHA Inspections provider. Whatever the needs are, an successful exits throughout his 25-year A mock OSHA inspection helps you EHS professional can help assess and career. He attended San Francisco State identify workplace safety and health identify areas of concern. The audit University and Pepperdine University hazards that need remedying to make can be completed within a day or be with a focus on Business Management. sure your company follows OSHA's scheduled weekly, which will ensure your He is a husband of 20 years and father rules and regulations. workplace is safe and compliant while of two great kids, Nicholas (16) and making your management team aware Josephine (12).

25 AUGUST 2021 THE CONTRACTOR’S COMPASS FEATURE Best Practices 101: Ask the Right Questions by Duane Craig, Freelance writer

Do you ever feel like you’re on project best practices might work From Questions to a treadmill, running after every on one project, but not necessarily Innovation new thing that comes along in on the next. If your business best your search for business and practices aren’t tailored to your When seeking out the practices project answers? To break free, unique business, they aren’t likely that align with your business, you you need a strategy based on to serve in the long run either. tap into solutions that fit your asking the right questions. And, Instead of chasing and adopting business culture and project types. for construction businesses that generic best practices, consider Answering the right questions also require seeing your company for what practices would work best inspires innovation. Nowadays, what it really is. for your business. innovation is a competitive necessity. As a general contractor, you A set of project best practices For centuries, innovation was create one-off projects with help might work on one project, but not considered an affront to the status from a group of partners. A set of necessarily on the next. quo and heresy in religious circles.

THE CONTRACTOR’S COMPASS AUGUST 2021 26 It posed a threat to the entrenched “How can I change materials or It causes you to focus on what you power structure. Today, innovation is methods used in this project to better can control, so you can see how you often necessary as it helps businesses balance client needs and cost?” might change the outcomes next time keep their competitive edge. For “What kind of performance model around. general contractors, innovation comes fits with my company culture and the It also helps you see situations in at least three types. The first type unique aspects of the projects I build?” where you didn’t have the control includes features for which the client is To come up with better questions, try you needed to get the outcome you willing to pay. Energy-saving items are looking at issues from different angles. wanted. one example. To come up with better questions, try When you are open to a range of The second types of innovations looking at issues from different angles. perspectives as you consider issues are those that reduce your costs, Then, you will naturally start asking you get insights into any skills or like adopting a construction project different questions. The answers often experience shortages behind the management solution or improving lead to insights and innovation. problem. your estimates. Improving your Suppose you spent 10 hours When you decide to really see reputation or boosting your credibility preparing a bid only to lose out to a something with an open mind, you places third. For example, you might new competitor in your area. If you will see the situation in its true light, decide to set up public relations events assume that losing the bid was a bad balanced for both the good and the to showcase new methods used on a thing, you might go seeking answers bad. project or increase your social media to a question like, “Why did we lose When asking the right questions, engagement to attract new recruits. out on this bid?” However, then you’ll you set yourself up to uncover From Right Questions to be focusing only on the negatives, with solutions that fit your business. your efforts focused on preventing the Best practices make a good Better Questions event from happening again. framework from which to explore However, those aren’t the only But, what if losing the bid was a improvements. It’s also time to start places where asking the right good thing? A good thing because asking better questions. questions can lead to innovative you weren’t really ready for that type strategies. In every phase of the of project. Your estimate might have About the Author project, you have opportunities to been too low, or the client saw what innovate. In the planning stage, you you didn’t. By asking, “How did losing Following roles as might use new processes to identify this bid affect the company?” you leave photojournalist, alternative materials or methods. the door open to see the event from all education director, During construction, you might set up sides, the good and the bad. landscaper and performance models to see whether residential project you can speed time to completion on The Better Questions manager/ superintendent, critical activities. Advantages The best solutions for your business Duane Craig moved to writing for a less Asking the right question means are less likely to arise from asking stressful life. For the past 14 years getting specific to the need, and questions like: Duane has covered the construction, specific to your business. As you food, finance and tech industries. This “What are the best practices start answering these more relevant article originally appeared in October for recommending materials and questions, you’ll find answers that 2019 in Procore’s blog and we are methods?” fit your business. You’ll get deeper republishing with their permission. “What are the best practices when insights into how your business designing performance models?” functions, and that often leads to But, you can discover better innovative ideas for improvement. solutions by asking better questions Asking the right questions will have like: several positive outcomes.

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2104416_Procore_BRD_SafetyWk_FP_v3.indd 1 2021-04-19 8:43 PM FEATURE Three Ways to Step Up Your Construction Photo Documentation by Jessica Meno, Raken

any images uploaded timestamp captures the date and time by your field team. an image was taken. (Construction This saves your field software, like Raken, also shows you crews time, too— who uploaded the photo and the site all they have to do is location.) snap a few shots with Timestamps can be powerful evidence their phones. in the case of a dispute or litigation. With cloud storage, Combining them with other digital you can easily save, documentation (like productivity data or store, and share safety checklists)? Even better. Historical jobsite photos online— data will give your company more legal no matter where protection in court, since you can prove you are. Automating your case with a clear record of events. the process for Just look at companies like Sellen photo management Production. Since they use construction also makes remote software, they can clearly document collaboration easier their progress—and improve compliance than ever. Since all as a result. your photos are a few “[We can] easily access data, keeping clicks or taps away, our field workers on site instead of in you’ll never have the legal office,” said Tyler Stewart, to search long for In construction, keeping a project Technology Solutions and Training important documentation. This makes on track (and your customers happy) Manager at Sellen Production. keeping clients in the know easier, too. is easier said than done. However, increasing your project visibility can Improve your photo 2. Highlight the most critical help you make more informed decisions documentation with Raken along the way. One of the best ways to project info with photo do so? Photo documentation. With Raken, your field crews can markup download the mobile app and start Photos let you see how teams Sometimes, your crews take photos taking project photos right away. Every are following safety protocols and to highlight something specific about a photo is automatically attached to their maintaining high-quality work. They project. Photo markup lets you do just daily reports—then, everything is stored can also help you identify any potential that. on the cloud for easy access. Hello, safety hazards or risks. By learning real-time insights and better project how your crews are working, you can With photo markup, workers can management. offer better support by giving them the draw directly on photos of the site. For resources they need. extra clarity, they can also add photo descriptions and captions. This helps Here are some best practices to About the Author your team have a clear idea of project improve your photo documentation—and progress—and helps them adjust Jessica Meno is a writer for Raken, your projects. accordingly to keep things on track. the cloud-based software that was built to connect the field to the office. Raken 1. Use cloud storage to keep 3. Protect against litigation helps boost productivity and safety by all your photos in one place streamlining workflow processes such as with date and timestamps daily reporting, time cards, production Photos help capture your project’s Time-stamped photos clearly tracking, and safety management. progress when you can’t be on the site document who’s doing what, when, and Schedule a demo today to see how yourself. Instead of sifting through messy where on a project. More specifically, a Raken can work for your business. project notes, you can quickly review

29 AUGUST 2021 THE CONTRACTOR’S COMPASS THE CONTRACTOR’S COMPASS AUGUST 2021 30 FEATURE

Everything I Learned About Business from Michael Scott and Dunder Mifflin—An introspective on the best-in-class business from a not-so-best-of-class manager by Gregg Schoppman, FMI

Several years ago, The Office vast ineptitude. In fact, choosing to paper. Sometimes the recycled stuff dominated the national cofmedy white a piece on Michael’s “business but more or less, paper, and hardly television spotlight with its unique savviness” is a lot like writing a piece a sexy premise for a television show. “mockumentary” style filming of a on Bob Ueker’s vast baseball acumen However, if there was one thing small paper company in Scranton, or Bonnano Pisano’s deep knowledge that Michael Scott had was passion PA. The team was led by a naïve, of foundations (i.e. the architect who for paper. Michael and his trusty not-so politically correct but often designed that famous Tower in Pisa). assistant manager (or assistant TO kind-hearted manager by the name However, as an avid fan of The Office, the regional manager) Dwight K. of Michael Scott portrayed by Steve there are several business lessons any Shrute knew about paper and all Carrell (or Ricky Gervais if you prefer construction organization can easily of its many nuances. Yes, paper. the British original). Many of the apply to its strategy and approach to Nothing could be more vanilla (no stories focused on the escapades how it operates. pun intended) Now, ask yourself this of the office’s staff. One of the main question – How passionate are you observations that any watcher would Passion for Paper about the construction industry? How glean from these episodes was Dunder Mifflin, the fictitious passionate is your team? Channeling Michael’s inability to lead/manage company in The Office sold paper. Simon Sinek, the great and very real but achieve success considering his Garden variety, white copy/printer business guru, why do you do what ©NBCUNIVERSAL

31 AUGUST 2021 THE CONTRACTOR’S COMPASS you do? Does that passion resonate that new environment. Often, this is utilization, robotics, 3D printing and throughout your organization or do done with little guidance, little training blockchain are not only buzzwords you simply go through the motions? and little development. Michael Scott representing the future of the Michael Scott could make the most had no mentorship, short of his time construction industry but also the Everything I Learned About Business from boring product come alive for their with Jan Levinson Gould, his district world of tomorrow. An introspective on customers and keep his branch office manager. This is a tongue and cheek Michael Scott and Dunder Mifflin— alive. Does your team do the same examination of a WORST-case the best-in-class business from a not-so-best-of-class manager thing for its clientele? Recognition business management philosophy. On an annual basis, Michael Scott One of the enduring elements of by Gregg Schoppman, FMI Customer Service would engage in an unsanctioned, The Office’s sticking power is the One of the main premises for yet well-intentioned event known as audience’s ability to relate to the the show was the firm’s ongoing the Dundies. Receiving a Dundee awkwardness and cringe worthy competitive battle with the “big box was meant to be the equivalent of performances of Michael Scott. store” and how the competitive an Oscar or Emmy but had the same Everyone has had a manager or leader landscape caused Dunder Mifflin to impact as being given a number at the that seems to be “successful” in spite pivot repeatedly. Michael Scott was DMV. Nonetheless, Michael’s passion of themselves. However, The Office often the top salesperson for Scranton was once again on display. Winning a also provides a moment for leaders to and his firm. He could sell paper in Dundie for “Whitest Sneakers” might ask themselves rhetorical questions spite of having the intellect of a ream not get anyone’s attention in the about their style, approach and of paper. What made him a success – construction industry but at a strategic strategy. The construction industry customer service! He knew his clients level, when was the last time ANYONE is hardly showcased on The Office and in countless episodes he and in your firm “caught someone doing (short of Vance Refrigeration) but the Dwight could be seen in interacting something right?” In a world where lessons are pertinent and germane. with clients and showcasing Dunder we ripe with cynicism and where we And couldn’t we all use an event like Mifflin’s superior customer service. seem to thrive on watching someone “Pretzel Day” to get us motivated? While I may be guilty of reading stumble, why not showcase the “between the lines,” the Dunder amazing things your organization does. About the Author Mifflin did this in the face of enormous Just try not to do it in a Chili’s. customer price pressures in a hard-bid As a principal with commodity industry. Sound familiar? Innovation Adoption FMI, Gregg Never confuse marketing for old- specializes in the During one episode, the new areas of fashioned superior customer service. regional manager launches Listen to the customer! productivity and Dunder Mifflin Infinity which is the project organization’s strategy to combat the Positions and Promotions management. He increased traffic to the box store’s also leads FMI’s An entire piece could be dedicated and online retailers. Much to his project to Dwight K. Shrute as the Assistant chagrin, Michael bucks the trend and management consulting practice. He Regional Manager (Assistant TO the fights to keep the business status has completed complex and Regional Manager) but one of the key quo and also kidnaps a hapless pizza sophisticated construction projects in takeaways was about Michael Scott. delivery person in the process. His several different niches and geographic Michael was a superior salesperson belief is customer service alone will markets. He has also worked as a at Dunder Mifflin even winning an separate Dunder Mifflin from the online construction manager and managed award for Top Salesperson. However, community. While applauding his direct labor. FMI is a unique and Michael was hardly a great manager. zeal for face to face interactions with fast-growing firm of professionals How often do firms take a great his customers, halting the innovation passionate about creating a better foreman or great project manager and is a futile as using a paper towel to future for engineering and construction, promote them to a position that is not thwart a tsunami. However, there infrastructure and the built environment commensurate with their skill sets? are no shortage of industry laggards throughout North America and around Being a great builder does not always that serve as hold-outs amidst the world. For more information on FMI, translate to being a great builder of the strong tailwind of innovations please visit www.fminet.com or people or even of business. Many surging in the industry. Autonomous contact v by email at gschoppman@ firms make the mistake of promoting vehicles, augmented reality, real- fminet.com. for one set of skills and hope they time data collection/dissemination, enable that person to be successful in prefabrication/modularization, tablet

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Insurance Captives Grow in Popularity Among Contractors by Greg Hess, AssuredPartners

Many unique risks exist in the construction consisting of similar companies in the same Considerations industry. There are the obvious risks such industry. For example, there are captives • Risk Retention: Members need to be as operating large equipment, moving formed for only roofers or excavators, while prepared to retain some level of risk as the heavy loads, transporting shifting materials, other captives may consist of various trades premiums are not guaranteed. A bad loss performing work at various heights, such as carpenters, plumbers, electricians or year with a high frequency of claims could working with hand tools, etc. Add in the painters. result in paying additional premium. exposures that exist when working with The reasons contractors are turning to • Financial Stability: A strong balance sheet owners, GC’s, suppliers, municipalities and captives are many. Here are a few of the key is required to meet capital and collateral other subcontractors and you begin to see benefits of joining a captive and some issues levels. the complexities of managing risk in the to consider: construction industry. Contractors turn to • Risk Management: A solid safety program the insurance market to alleviate much of Benefits should be in place with commitment this risk and transfer these potentially costly from upper management for continued • Lower Insurance Costs: After fixed costs, exposures to the insurance market. Each improvement. all insurance dollars not paid out for claims year, most mid-sized construction companies • Claims Experience: Captives are picky and are returned directly back to the member, purchase traditional insurance policies with look only to add members who they hope not the insurance company. For safety guaranteed costs and low deductibles. to positively impact the bottom-line. To conscience firms with a favorable claims These well-known insurance policies provide get accepted into a captive, a firm needs history, this is a very significant savings. the desired transfer of risk. However, they above average claims experience. A five- have recently become more costly and the • Lower Fixed Costs: Captives operate year average of loss ratios under 40% is a commercial insurers get to keep all the at lower costs by spending less on good benchmark. marketing, acquisition and administration underwriting profits. Some savvy owners Despite the multiple advantages of using a costs. This lower cost creates a bigger and risk managers of construction firms have captive, construction firms need to carefully profit potential for the members. turned to group captives as a better risk evaluate their specific risk transferring transfer solution. • Control: Members can have as much needs along with their appetite to take on control over claim handling decisions as Group captives have been around for risk. A cost analysis needs to be done decades and were initially utilized by large they wish. Members can consult with claims administrators and direct whether to determine how a potential captive multinational corporations. However, through membership compares to what is the years, the captive market has become to “settle or fight” a particular claim. accessible to much smaller companies. Additionally, critical decisions about the available in today’s traditional insurance In recent years, interest in captives has captive itself are made by its members by market. For the contractor who exploded and the construction industry, in forming a board of directors and holding prioritizes safety, is financially stable and particular, has seen a growing number of annual meetings. is entrepreneurial and forward thinking, firms move into this space. Much of this • Improved Loss Control and Claims a group captive is often the best long- growth is due to the hardening insurance Services: These services are specifically term insurance decision. market and wild premium fluctuations. By geared toward the construction industry year-end, the average commercial insurance and its unique risks and characteristics. premium is expected to rise by 13.6% , Off-site safety seminars, webinars, About the Author accountability, and free consultant hours according to a survey of top insurers in Greg Hess, Vice President and a recent report by the Alera Group. This are often part of any established captive. Regional Captive Practice leader with follows double digit average rate increases • Underwriting Stability: Premiums are AssuredPartners. Greg has over 25 in 2020. Many companies are turning to based on a member’s individual loss captives as an alternative to the uncertainty experience making it much less vulnerable years of insurance brokerage experience. playing out in the traditional insurance to the cyclical nature of hard and soft He enjoys working with companies market. The construction industry has taken markets. Contractors can stabilize budgets to develop and evaluate alternate risk notice and many firms are evaluating the by having more consistent expenses solutions. AssuredPartners is the 10th benefits of a captive to solve their insurance around insurance. largest Insurance Broker and Consultant needs. • Enhanced Profit Potential: In addition to in the country providing Commercial What is a group captive? A group captive retaining underwriting profits, investment Insurance, Risk Management, Employee is simply an insurance company formed income is earned on premiums and Benefits through consulting and to insure only the risks of its member retained earnings within a favorable tax services. For more information on companies. Members wholly own and structure. control the insurance company and share all AssuredPartners, please contact Greg by underwriting profits. These captives often are email at Greg.Hess@assuredpartners. usually homogeneous in nature com or [email protected]

THE CONTRACTOR’S COMPASS AUGUST 2021 34 REGISTER TODAY! FEATURE www.subexcel.com

How to Handle Late Payments in Construction by Patrick Hogan, Handle.com

Getting paid on time is one of the notice are correct and accurate. Specify reminders and late payment notices did biggest struggles among contractors, the amount due, the date the payment was not get your clients’ attention, serving a subcontractors, and material suppliers in originally due, and even the date when Notice of Intent to Lien could. construction. With construction’s complex the invoice was served. Also specify the Note that some states require serving payment structures and ambiguous payment methods available so the clients a Notice of Intent to Lien prior to filing contract provisions, the problem with late know how they can submit their payments. a mechanics lien. In states like Illinois, payments continues to persist and trouble By specifying these important pieces Pennsylvania, and Wisconsin, for example, in the industry. of information, you are also able to ensure serving a Notice of Intent to Lien is not Late payment issues are even worse that you have your details organized. just an option – failing to serve a Notice during major economic downturns. When For instance, you should not send a late of Intent to Lien could dissolve your lien nearly every company is going through payment notice if the related invoices have rights. tough financial roadblocks, payments are not been served yet. 5. File a mechanics lien even more likely to get delayed. 3. Charge late payment penalties If a client does not respond to your But no matter the state of the economy, Charging late payment fines is another notices and if negotiations fall through, knowing how to deal with late payments effective way to prevent late payments your next best recourse is to file a should become a matter of policy for every from occurring. A client is more likely to mechanics lien. As mentioned, filing a contractor and subcontractor. Here are exert effort in avoiding payment delays mechanics lien could reduce a property’s some notes to consider when putting up if they know that they might get charged market value, which could then alert your standard practices for dealing with extra. property owners and prompt them to pay late payments: The key to imposing late payment up. 1. Send payment deadline reminders penalties is transparency. Late payment Even when owners fail to settle the In an ideal scenario, your clients already fines should not be hidden from your outstanding payments, you can still know their payment deadlines. They clients, and your clients must be made recover your payment if the property should also know how often you issue your aware of the consequences for late gets foreclosed after you enforce your invoices and on which date you send them payment right when they sign the mechanics lien. out. However, it would not hurt to still give contracts. However, keep in mind that filing them regular reminders. Note that late payment charges should a mechanics lien is not necessarily a You can send your clients automated not be an additional source of revenue for simple process. There are lien-related emails or text messages to remind them of your company. Charging late payment fines deadlines and requirements that are upcoming payment deadlines. If you do not is a preventative measure to discourage strictly implemented in each state. To have the mechanisms for sending auto- your clients from paying late, and to file a mechanics lien successfully, make reminders, you can set internal reminders penalize them accordingly if they fail to sure that you understand the rules and for yourself to reach out to your clients honor their payment obligations on time. regulations applicable to your situation. manually. 4. Send a Notice of Intent to Lien Prevention will always be better Sending a Notice of Intent to Lien is About the Author than cure, and so it is imperative that like sending an ultimatum to your clients. Patrick Hogan is the you do everything you can to keep late When you send a Notice of Intent to Lien, CEO of Handle.com, payments from happening. Even though you are essentially telling your clients that where they build late payments may be unavoidable in the they need to pay or else you will file a software that helps construction industry, doing simple steps mechanics lien. contractors, like sending payment reminders can make Filing a mechanics lien is one of the subcontractors, and material suppliers with a big difference. most effective weapons against non- 2. Send late payment notices late payments. Handle. payment in the construction sector. When com also provides funding for construction Once the infraction has been committed you file a mechanics lien, you put a public businesses in the form of invoice factoring, and payment has not arrived on time, record against the property in question, material supply trade credit, and mechanics you should send the erring clients a late which can greatly reduce the property’s lien purchasing. payment notice. market value. When sending late payment notices, Clients are therefore more cautious make sure that the details included in the about mechanics liens. If the payment

35 AUGUST 2021 THE CONTRACTOR’S COMPASS REGISTER TODAY! www.subexcel.com

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Miramar Beach, Florida Onward!

THE CONTRACTOR’S COMPASS AUGUST 2021 36 Miramar Beach, Florida Event Sponsorship Opportunities The Beach Bash Event Sponsor - $30,000 You will be listed as the sole sponsor for The Beach Bash. Your logo will be placed on all event signage as well as the SUBExcel website. Your company name and logo will be attached to all messaging regarding this event. You will also be recognized at the event and offered two minutes of microphone time. • The Beach Bash Food Sponsor - $13,000 You will be the food sponsor for The Beach Bash event. In addition to your logo being placed on all event signage and SUBExcel website, your logo will also appear on signage representing you as the food sponsor for the event. • The Beach Bash Bar Sponsor - $7,000 You will be the bar sponsor for The Beach Bash event. In addition to your logo being placed on all event signage and SUBExcel website, your logo will also appear on signage at the beach bar. • The Beach Bash Activity Sponsor - $2,000 You will be the sponsor of one of the activities during The Beach Bash event. In addition to your logo being placed on all event signage and SUBExcel website, your logo will also appear on signage at The Beach Bash.

Reception and Banquet Sponsor - Sponsor $30,000/ Co-Sponsor $15,000 The reception and banquet are open to all registrants. Your sponsorship will be listed in the credits of the awards program video, on the SUBExcel website, and in all conference literature. Sponsors of this event will also be recognized verbally from the podium. Your company name and logo will be attached to all messaging regarding this event. • Cocktail Hour at Reception and Banquet Sponsor - Sponsor $5,000/ Co-Sponsor $2,500 Your logo and signage will appear at the reception area. Your sponsorship will be listed on the SUBExcel website and in all conference literature. • Wine Sponsor at Reception and Banquet - $2,500 Your logo and signage will appear in the banquet area. Your sponsorship will be listed on the SUBExecel website and in all conference literature. ASA President's Welcome Reception Event Sponsor- $20,000 Multiple Sponsorships are welcome! All Sponsors will appear on signage displayed in the room and will be listed in conference literature and on the SUBExcel website. Your company name and logo will be attached to all messaging regarding this event. All sponsors will be recognized verbally during the event. • ASA President's Welcome Reception Food Sponsor - $17,000 • ASA President's Welcome Reception Bar Sponsor - $3,000 • ASA President's Welcome Reception Friend of ASA - $1,000

Keynote Speaker Sponsors This is an opportunity to introduce one of the keynote speakers, the first speaker of the day, on either Thursday or Friday! You will have two minutes of microphone time to introduce the speaker. Appropriate signage will be displayed in the room. Your company name and logo will be attached to all messaging regarding this event. Your sponsorship will be listed on the SUBExcel website and in all conference literature. • Thursday Keynote Speaker - $20,000 • Friday Keynote Speaker - $8,000

Registration Area Sponsor - Sponsor $10,000/ Co-Sponsor $5,000 This is an excellent opportunity to sponsor the registration area. You will be permitted to provide promotional literature to all attendees as they arrive. Appropriate signage will be displayed in the area. This is the most visible area to all attendees to view your support of SUBExcel. Your sponsorship will be listed on the SUBExcel website and in all conference literature.

SLDF Fundraiser Sponsor - $10,000 or $1,000 sponsorships available You will be listed as the headlining sponsor of this event. In addition to your logo being placed on SUBExcel's event signage and website as a sponsor, your logo will appear on all promotional materials circulated for the event. Your company name and logo will be attached to all messaging regarding this event.

37 AUGUST 2021 THE CONTRACTOR’S COMPASS Miramar Beach, Florida

Luncheon Sponsor (Thursday and Friday) - Sponsor $10,000/ Co-Sponsor $5,000 The luncheons are open to all registrants. Appropriate signage will be displayed in the room. Your sponsorship will be listed on the SUBexcel website and in all conference literature. Sponsors will be recognized verbally from the podium.

Breakfast Sponsor (Thursday and Friday) - $8,000 / Two available Sponsor the morning's first activities during each of the breakfast sessions. Appropriate signage will be displayed in the room. Your sponsorship will be listed on the SUBExcel website and in all conference literature.

Audio/Visual Sponsor - Sponsor $8,000/ Co-Sponsor $4,000 Sponsor the A/V equipment being used throughout the convention, from the Opening Session to the Final Awards Banquet. Your logo and signage will appear throughout the convention. Your sponsorship will be listed on the SUBExcel website and in all conference literature.

Logo Key Card Sponsor - $5,000 - Three Spots Available This sponsorship offers visibility to all conference attendees as your logo will be placed on every attendee's room key card. Your sponsorship will be listed on the SUBExcel website and in all conference literature.

Event App Sponsor - $5,000 Your sponsorship will be listed on the SUBExcel website and in all conference literature as well as all sponsorship signage. Your logo will also be prominent on the event app software that all conference attendees use.

Hospitality Suite Sponsor - Sponsor $5,000/ Co-Sponsor $2,500 Your sponsorship will be listed on the SUBExcel website and in all conference literature. Your logo will also appear on signage in the heavily attended hospitality suite.

Refreshment Breaks Sponsor (Thursday and Friday) - $2,500 Your logo and signage will appear at the refreshment break area. You are invited to provide cups, napkins, and other utensils with your logo on each. Your sponsorship will be listed on the SUBExcel website and in all conference literature.

Annual Conference Tote Bags - $2,000 A wonderful giveaway, your logo will appear on all bags. Attendees carry tote bags throughout the conference and in many instances back home and beyond. Your logo will appear on the SUBExcel website and in all conference literature.

Email Blast Sponsor - $2,000 Be a featured sponsor on one of the ASA promotional emails that will go out to everyone in the ASA database. Your logo will be placed at the top of each email blast that is sponsored. This sponsorship will get your company noticed by all of ASA, not just conference attendees. Your logo will appear on the SUBExcel website and in all conference literature.

Video Recording Sponsor - $1,500 This year's convention will include a video during our awards program. Your sponsorship and logo will be listed in the credits of the video, on the SUBExcel website, and in all conference literature.

Hotel Room Drop Sponsor - $1,000 This is an opportunity to send collateral or gifts to all attendees in the conference hotel directly to their hotel rooms. ASA coordinates all activities with the hotel and ensures delivery of a gift which you will provide. Your sponsorship will be listed on the SUBExcel website and in all conference literature. No room drops will be permitted without coordinating with ASA.

THE CONTRACTOR’S COMPASS AUGUST 2021 38 Upcoming Webinar Coming Up

WEDNESDAY, SEP 8, 2021 | 12:00 – 1:00 PM (EDT) in the September 2021 Issue of FASA’s OSHA in the First Year of the Biden Administration: What We Know and What to Expect

We are now several months into the administration of President Biden and the “new” OSHA. OSHA has already been incredibly active in terms of new guidance initiatives. This informative session will discuss what OSHA has accomplished over its first several months and Theme: what to expect in the months ahead, including new regulatory and enforcement initiatives. Presented by: Bradford T. Hammock Human Resources in Bradford T. Hammock's national practice focuses on all aspects of occupational safety and health law. Brad works closely with employers to help them the Spotlight understand and implement safety and health management systems. In addition, he represents employers throughout OSHA rulemaking proceedings, • Leading a Multi-generational including OSHA’s informal public hearings on proposed rules. Brad also defends Workforce employers against OSHA enforcement actions. Register here. • The Farm System and Free Agency • and more... WEDNESDAY, OCT 13, 2021 | 12:00 – 1:00 PM (EDT) Power in a PDF? Using Existing Documentation to Create Beneficial Data Look for your What if adopting technology on your job site issue in September. could be as simple as using your existing company documentation to create beneficial data? What if the PDFs your field managers fill To access past issues out on a regular basis, could be filled out in the of The Contractor’s Compass, same comfortable format, by simply uploading please click here. a PDF? What if your team could eliminate using multiple systems for custom forms, and take your job site from a single- copy stack of messy paperwork to a single, digitized solution? This technology is For questions about available, easy to use, creates beneficial data based on your inputs, and is viewable subscribing, please contact: from anywhere. Join Fonn to see how using software for custom forms and fillable [email protected] PDFs can: • Seamlessly integrate with your company's existing forms • Automate "contactless" submission of forms • Reduce paper • Save time • Create efficiency • Improve access to critical data

Presented By: Eric Crawfod Eric Crawford is the Director of Sales for North America at FONN, a construction management application provider. FONN specializes in construction technology and provides a simple, yet robust platform for construction contractors to get the job done right. Eric is a national member of ASA, AGC and NAHB as well as his FOUNDATION of the local chapters in Northern Colorado. AMERICAN SUBCONTRACTORS Register here. ASSOCIATION

39 AUGUST 2021 THE CONTRACTOR’S COMPASS ASAdvantage 2020-2021 Program

40 JUNE 2021 THE CONTRACTOR’S COMPASS