The Contractor's Compass - April 2023

wants to help you with Risk Transfer.

The following are important coverage considerations before executing a sub-contract agreement with an upper tier.

INDEMNIFICATION REVIEW

Are you indemnifying Owner/Developers, GC’s and Prime Contractors for contract provisions that are not covered by your Liability Insurance?

ADDITIONAL INSURED REQUIREMENTS

Does your Additional Insured coverage comply with contract language?

COVERAGE RESTRICTIONS & EXCLUSIONS

Do your insurance policies include coverage exclusions and conditions which may either restrict or not respond at all to certain contractual obligations you entered into, and land you in breach of contract litigation?

The Contractor’s Compass is the monthly educational journal of the Foundation of the American Subcontractors Association, Inc. (FASA) and part of FASA’s Contractors’ Knowledge Network. FASA was established in 1987 as a 501(c)(3) tax-exempt entity to support research, education

Through its Contractors’ Knowledge Network, FASA is committed to forging and exploring the critical issues shaping subcontractors and specialty trade contractors in the construction industry. The journal is designed to equip construction subcontractors with the ideas, tools and tactics they need to thrive.

The views expressed by contributors to The Contractor’s do not necessarily represent the opinions of FASA or the American Subcontractors Association, Inc.

To educate and equip subcontractors and suppliers with the education and resources they need to thrive in the construction industry. Additionally, FASA raises awareness about issues critical to and about construction in the

The Contractor’s Compass is a free monthly publication for ASA members and nonmembers. For questions about subscribing, please contact communications@asa-hq.

Interested in advertising? Contact Richard Bright rbright@ASA-hq.com advertising@ASA-hq.com

SUBMISSIONS

Contributing authors are encouraged to submit a brief 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 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 Contractor’s Compass to communications@ASA-hq. com.

ABOUT ASA

ASA is a nonprofit trade association of union and non-union subcontractors and suppliers. Through a nationwide network of local and state ASA associations, members receive information and education on relevant business issues and work together to protect their rights as an integral part of the construction team. For more information about becoming an ASA member, contact ASA at 1004 Duke St., Alexandria, VA 22314-3588, (703) 684-3450, membership@ASA-hq.com, or visit the ASA Web site, www. asaonline.com.

LAYOUT

Angela M Roe angelamroe@gmail.com

© 2023 Foundation of the American Subcontractors Association, Inc.

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PRESIDENT'S LETTER

Dear Readers—

Spring is here! April is a month of renewal, rebirth, and celebration of life. I hope you rejoiced and celebrated with your family and friends -whatever rituals and traditions you enjoy. Time for spring cleaning, starting anew, out with the old! No more dust bunnies, windows wide open (hack, hack - darn allergies), and daffodils, tulips, cherry blossoms, filled lakes and fast-flowing rivers are a welcome sight. This issue focuses on a slew of varied topics - from securing financing to technology as a way to improve productivity, supplier relationships… and your business.

Do you value your ASA membership? Then make sure you let others know how valuable you find being a member of ASA is, and encourage them to join. We work tirelessly for our members and hope to make this an association you’re proud of. And if you’re having doubts about renewing - what can we do to take those doubts away? We’re NOTHING without our members, and together we’re stronger and better than if we try and tackle our troubles alone. Our membership renewal period is coming up, and I want to personally thank all of you for making this such an amazing, active, powerful, and even fun, association - as you’ll read about in this months’ Always Something Awesome segment.

I’m so proud to be the one to help reintroduce FASA - the Foundation of the American Subcontractors Association. While The Contractor’s Compass has always been published by FASA, the FASA logo was rarely noticed. At SUBExcel in March we relaunched FASA, announcing our focus on two critical initiatives for the construction industry: Diversity & Inclusion and Suicide Prevention. We’ve gathered numerous resources all in one place on our website from various organizations, to help you navigate these issues. Our members will be receiving reminders about this information in the coming weeks. The ASA Chapters have been in front of this campaign and have also held lecture series and discussions to help their members tackle these tough issues. If you have information that you believe needs to be added to our resources, or other help you’d like to learn about, please contact Richard Bright or Matt Levine.

Let’s work together to make this industry stronger, more resilient, and ready for the future as it comes around too quickly.

Be on the lookout for your renewal notices - or just re-up now, and you can ignore the reminders!

Tell a colleague, supplier, partner, about ASA. It’s for the benefit of the industry.

In closing, please remember to take time for yourself, your family, and your health. A balanced life is a fulfilling life!

Rusty Plowman ASA President 2022-2023

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To GMP or Not to GMP: Cost of Work Best Practices for Agreements or Change Orders.

Wednesday, April 26th at 2:00 pm ET

Price escalation, supply chain disruptions, and inflation continue to cause unacceptable risks for many general contractors to lock in a fixedprice contract, such as a lump sum contract, or a guaranteed maximum price (GMP) contract agreement early. Join us virtually on April 26th at 2 PM EDT for a deep dive into cost-ofthe-work agreements and things to consider surrounding GMPs. During this webinar, you will learn how to identify which itemized costs fall into cost-of-the-work items and what should be considered overhead and profit. As a current ASA member, you will receive $20 off your registration rate using the code w23q2asa upon

checkout, reducing the price to $79. Click here to register.

ASA Supports the Small Business Payment for Performance Act of 2023

The American Subcontractors Association (ASA) commends Construction Procurement Caucus (CPC) Co-Chairs, Stauber (R-MN) and Peters (D-CA) as well as Reps. Veasey (D-TX) and Fitzpatrick (R-PA) for the introduction of the ‘‘Small Business Payment for Performance Act of 2023.’’ This critical legislation lessens the considerable financing burden placed on small construction businesses when federal project owners make unilateral changes to construction contracts. By requiring federal project owners to make interim partial payments

on owner-directed change orders, small construction businesses receive necessary and timely cash flow for performance. As the construction industry continues to face uncertain and variable market conditions, including supply disruptions and increasing materials prices, all construction businesses - but particularly small construction businesses, need federal payment practices that are not unfairly burdensome. Passage of this legislation will ensure that small construction businesses performing on federal contracts have confidence that equitable payment practices exist for owner-directed change orders. Thank you CPC Co-Chairs Stauber and Peters, and Reps. Veasey and Fitzpatrick for recognizing this significant issue and introducing this important procurement reform.

construction projects, along with extending the use of retainage bonds in lieu of retainage for all public construction projects to all private construction projects.

Welcome to our Newest ASA Chapter in Washington State

The American Subcontractors Association promotes and protects the rights and interests of subcontractors and suppliers by building strength in the community through education, legislation, networking and professional growth. And now we’re doing it in Washington! Thanks to Rob Scott of Scott Coatings for stepping up as President of this chapter. But he’s got lots of support from around the state: ASA members from Division 9 Flooring, Holmberg Mechanical, Patriot Fire Protection, ST Fabrication, Corona Steel, and DTG Recycle have all stepped up to make sure this chapter gets the foundation it needs to succeed!

Case in point: Senate Bill 5528 recently passed a concurrence vote in the state Senate. The vote was 48-0 with one Senator being excused. The bill is now on its way to the Governor’s desk for signature. We do not anticipate any issues with the Governor signing it into law. The bill would take effect 90 days from the end of the session on April 23rd. So, July 23rd will be the effective date. The legislation would extend the 5% retainage cap for all public construction projects to private

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Fortune, Fulfillment, and Fun

With free education sessions (ever been to a “Do’s and Donuts” with an attorney to ask questions about contract law?), golf tournaments, silent auctions, expos, murder mysteries, and tailgate parties, ASA of Oklahoma chapter is known throughout the state as the “fun” association.

With 70,000 square miles and a population of 3.7 million, that’s a lot of ground to cover for our chapter Executive Director, Libby Hardy. But Libby, along with ASA’s other executive directors, is proud of her members and is a master at bringing the community together for the benefit of all. And with that

breadth of territory, networking events are vital.

Most of the activities take place in Oklahoma City and Tulsa, and just this year (so far), ASA of Oklahoma has welcomed 23 new companies into the chapter. They’ve done this by being super busy: A “Death of a Gangster Murder Mystery Party in January; in March, their 11th annual GC Expo (Hilti was their headline sponsor); in April, their annual Tulsa Golf Tournament at the Canyons at Blackjack Ridge; plus monthly lunch meetings and speakers in Oklahoma City and Tulsa. That’s a lot of networking going on!

The monthly lunch meetings with speakers on important topicsupcoming work, economics, safety, suicide prevention, marketing, negotiation tactics regularly attract dozens of attendees from the entire region.

But their biggest event is by far the Subcontractor Expo, which draws more than 300 people.

Later this year ASA of OK is organizing a tailgate party specifically for their suppliers and service providers at “Bedlam”, the traditional Oklahoma vs Oklahoma State football game, being held for the last time in 2023.

It WILL be bedlam. ;-)

Death of a Gangster Murder Mystery Party

ASA of OK lobbyist, Mike Thompson, and our President, Doug Yarholar at CIC (Construction Industry Coalition) Dinner at the Capitol

11th Annual GC Expo—Hilti was headline sponsor

ASA of OK hosted the Annual Tulsa Golf Tournament at The Canyons at Blackjack Ridge

ASA of OK lunch meeting held in Tulsa

LEGALLY SPEAKING

Have You Been Wrongfully Denied Coverage for a Construction Defect Claim? The Answer May Be “Yes” Based on Your ISO Classification.

by David Humphreys, Carson Law Group PLLC

A Game-Changing New Argument for Coverage in Construction Defect Cases

If you have ever been involved in a construction defect lawsuit, you know they can be costly, timeconsuming quagmires, involving prime contractors, subcontractors, design professionals, and owners each pointing the finger of blame at each other to establish responsibility for huge repair bills. To make matters worse, your commercial general liability insurance company, to whom you have paid thousands of dollars each year in premiums, will likely either outright refuse to defend you in the lawsuit or, if a defense is provided, “reserve rights” to later refuse to pay any judgment entered in the case.

Contractors in this situation should not accept their insurer’s denial of coverage, or reservation of rights, at face value. Instead, you should have a trusted attorney, with the necessary industry-specific knowledge and experience, review your insurer’s coverage decision and fight for your coverage if warranted.

In recent coverage battles for our clients, our firm discovered a new, game-changing argument for coverage in construction defect cases. The new argument challenges insurers’ reliance on certain CGL policy exclusions on which insurers routinely rely to deny coverage to contractors, including, most importantly, the “Your Work” exclusion.

A standard “Your Work” exclusion provides:

This insurance does not apply to: … “[p]roperty damage” to “your work” arising out of it or any part of it and included in the “productscompleted operations hazard”.

Thus, the “Your Work” exclusion purports to exclude coverage for damage to, or caused by, a contractor’s

own defective work. Traditionally, CGL policies have included an exception to the “Your Work” exclusion for work performed by subcontractors, which states that the “Your Work” exclusion does “not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor.”

However, contractor CGL policies we have reviewed recently removed the “subcontractor exception” by inclusion of Endorsement CG 22 94 101 01,

thereby removing from coverage claims arising from a subcontractors’ defective work.

However, with the new coverage argument, we have had several recent successes in convincing CGL insurers that the “Your Work” exclusion is inapplicable to construction defect claims when the insured contractor was assigned a certain classification during the insurer’s underwriting process. Specifically, when a contractor is assigned the classification “Executive Supervisor or Executive Superintendent,” as reflected on the insurer’s CGL Declarations page, we have argued the “Your Work” exclusion and similar exclusions are inapplicable to claims arising from completed projects. This new argument is game-changing because, of the more than twenty CGL policies we have reviewed for contractors in the past year since discovering the new argument, every one of the policies reviewed listed “Executive Supervisor or Executive Superintendent” as a classification. Accordingly, the “Your Work” exclusion was arguably nullified in every policy, and, based on this limited sample size, the new argument may apply almost universally to CGL policies written for the construction industry.

The specifics of the new argument are complicated, relying on the interplay between the “Your Work” exclusion and several definitions spread throughout the standard CGL policy forms. The argument also relies on rules and definitions in the Insurance Services Office’s (ISO’s) Commercial Lines Manual, which are incorporated only by reference in a CGL policy, and which are not even available for review by most insurance agents, much less their contractor customers.

To summarize the new ISO classification-based argument,

claims arising from a contractor’s operations under the ISO classification “Executive Supervisor or Executive Superintendent” are excluded from the definition of “productscompleted operations hazard,” and are therefore not subject to the “Your Work” exclusion. Remember that the “Your Work” exclusion applies to “property damage” to “your work”… AND INCLUDED in the “productscompleted operations hazard;” thus, if the claimed property damage is not in the “products-completed operations hazard,” the “Your Work” exclusion doesn’t apply.

The new argument also applies to other exclusions and exclusionary endorsements that insurance companies routinely cite in denying coverage to contractors. For example, we recently used the new argument to successfully challenge a “prior work” exclusionary endorsement, which read:

“This insurance does not apply to ‘your products’ or ‘your work’ completed prior to” a certain date listed in the endorsement.… “Specifically, this insurance does not apply to… “property damage”… included in the ‘products-completed operations hazard’ and arising out of… ‘your work’ performed by or on behalf of you prior to the date shown above.”

Again, this endorsement incorporates the “products-completed operations hazard” definition, which we successfully argued did not apply to a claim arising under our client’s “Executive Supervisor or Executive Superintendent” ISO classification.

...............................................................................

A s a word of caution, this new ISO classification-based argument has not, to our knowledge, been addressed by a court. Our recent successes have concluded with favorable settlements for our clients. However,

we strongly believe that these settlements have been driven in part by the insurance companies’ desire to avoid a court ruling, especially given courts’ tendencies to construe exclusions against insurers and in favor of coverage. Accordingly, for now, the new ISO classification-based argument is a powerful new tool in the toolbox for challenging an insurer’s denial of coverage or “reservations of rights” for contractors facing construction defect claims.

This article is intended as a general educational overview of the subject matter and is not intended to be a comprehensive survey of recent jurisprudence, nor a substitute for legal advice for a specific legal matter. If you have a legal issue, please consult an attorney.

About the Author

With more than two decades’ experience as a commercial litigator and business transaction lawyer, David Humphreys has extensive experience representing contractors, owners, and design professionals in construction disputes, construction defect litigation, and insurance coverage matters. David’s experience also includes assisting clients with complex commercial transactions, regulatory compliance and government relations, and election law. Prior to joining Carson Law Group in 2016, David was a partner at another litigation and business transaction firm, a C.O.O. and General Counsel at a regional energy and transportation company, and, prior to law school, a Certified Public Accountant with KPMG. This article is published with the permission of Carson Law Group PLLC, which represents clients in Mississippi, Texas, Georgia, Arkansas, and throughout the Southeast.

Keep Up The Good Work: Why Managers Should Praise Their Employee’s Performance

by Dale Carnegie Staff

Why Don’t Managers Take the Time to Celebrate Good Work?

I wish I had the answer to that one because celebrating good work should be just part of what managers do every day. Although it takes time and effort to make it meaningful and sincere, doing so not only shows appreciation for employees’ accomplishments, but it also motivates employees by instilling confidence and encouraging desired behaviors.

Yet in research we conducted recently only 37% of respondents strongly agreed with the statement that their manager celebrates team wins. And many fewer—only 28%—say their organization’s leadership celebrates collective achievements. That leaves plenty of room for improvement.

Managers Underestimate the Importance of Recognizing Employees’ Accomplishments

Giving honest, sincere appreciation is one of Dale Carnegie’s fundamental techniques for winning friends and influencing people. Why? Because sincere appreciation makes people feel valued, important, confident and connected, and when employees feel that way, they are more likely to be engaged

Without sincere appreciation, employees might as well be working anywhere. According to our research,

about 1 in 4 employees are looking for a new job now or in the next year. And of those leaving, 79% say it’s because they don’t feel appreciated.

But you have the power to keep that from happening. Recognizing and appreciating employees is one of three indispensable manager’s skills—and one you can learn, too. It takes practice, but the payoff is huge.

Actionable Tips for Recognizing and Rewarding Your Employee’s Good Work

• Be consistent – both in what efforts you praise and reward, and whom you are praising. Recognize each team member for accomplishments that are relatively equal in effort and importance and don’t leave anyone out.

• Make an effort to understand the type of recognition that each team member appreciates. Not everyone is comfortable with public praise, while other people feed on it.

• And make sure the reward and praise match the accomplishment. A shout out in a meeting, gift certificates, time off or just a pat on the back can all be meaningful, but they should be sincere and appropriate for the accomplishment.

About the Editor

Robert Graves, MBA, is a Dale Carnegie Certified Trainer for Dale Carnegie Tampa Bay. His focus is Relationship Selling. He is the author of “Making More Money with Technology.” He often speaks on the evolution of Marketing, Sales, and Service. Robert can be reached at robert. graves@dalecarnegie.com or call/text 813-966-3058.

About Dale Carnegie:

Dale Carnegie is a global training and development organization specializing in leadership, communication, human relations, and sales training solutions. More than 9 million people around the world have graduated from Dale Carnegie training since it was founded in 1912. Dale Carnegie Training can help your organization build effective interpersonal skills that generate the positive emotions essential to a productive work environment that lead to increased profits.

Recogizing and rewarding good work does double duty. It makes employees feel valued, and it motivates them to do more good work.

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Four Steps Construction Contractors Need to Take to Secure Financing in 2023

by Sundip Patel and Sanat Patel, Avana Companies

In recent years construction companies have faced an abundance of challenges: higher wages, a strained supply chain, increased cost of supplies, and increasing interest rates. However, company owners should not be discouraged, construction companies cannot only survive in this challenging environment, they can thrive.

In order to thrive, construction companies must retool their financial house to take advantage of conventional, alternative, and/or

government lending programs. In the spirit of spring cleaning, we will provide four steps you should put into place to ‘clean your financial house’ to secure the financing you need.

1.Get your financial house in order.

The first step you need to take is to get your financial house in order. Make sure records are organized, financial statements are

on hand, history is documented, and you’ve updated your business plan. Updating your plan allows you to conduct an assessment of your business, which serves as the foundation for building and updating your strategy.

All businesses should document their story as a part of their business plan. In doing so, it's important to reflect on the elements that led to your company’s success, competitive edge, and ability to withstand economic cycles. By presenting a

clear narrative of your story, your progress, your vision and your entrepreneurship, lenders should easily see what your company has done to weather past economic challenges and what your company is capable of doing. Creating a story allows you to control how your business is perceived by lenders and investors. You might consider telling parts of your story to prospective clients through your marketing materials too.

2.Organize your financing package.

The second step to put into place is to have a well-documented and organized financing package, as opposed to providing piles of documents that can lead to confusion and questions. Remember, everything you share with lenders speaks, so be sure to make a strong first impression! Beyond having organized historical financials available, thoughtfully prepare a budget and financial projections.

Be sure to articulate your strategy for repaying debts and highlight your track record of debt repayment in the past. This will improve your likelihood of obtaining funding.

When presenting your request to any financial institution during these economically challenging times, include your recession playbook. Within it, be sure you articulate your strategy for managing your company through economic uncertainty. It is essential lenders see your ability and willingness to adjust to market fluctuations, a stalled project, challenging customers, and everything in between.

3.Know and clearly communicate your financial needs.

The third is to be clear about the capital needs of your business. Every dollar you request should have a job. It’s OK if there are several jobs to be done. For example, some funds may be earmarked for the acquisition of a long-term asset while other funds may be earmarked for working capital to support an upcoming project. Regardless of the use of funds, the common ‘job’ for every dollar is to unlock growth. This includes growth to top line revenue and to your bottom line, the latter being the way a loan gets repaid. While it's crucial to effectively communicate your funding requirements to potential capital providers, it's non-negotiable that your financial projections include the impact of the requested funds. Show how the money will be put to work! Projections should showcase the business's capacity to handle debt, address potential repayment challenges, and identify factors that increase the likelihood of timely repayment. Beyond the narrative that supports the financials, you should be ready to verbally answer questions that arise during due diligence. When addressing questions, be clear, be concise, and be direct in your communication.

4.Research and identify your lender options.

The last step to securing financing is to seek the right lender for your needs. Banks may be a great option, but you might not be approved for a loan by a traditional bank. If this is the case, consider an alternative lender that understands construction companies.

Choose a lender that is transparent, one that takes the time to understand your needs and one who is focused on making the process as painless as possible.

Despite the challenges construction companies are facing, contractors big and small continue to be resilient. By getting your financial house in order, organizing your financial package, being specific about your business needs, and choosing the right lender, construction companies can lay the foundation for securing the financing they need to grow.

About the Authors

Sundip Patel is the co-founder and Chief Executive Officer of AVANA Companies, the holding company for ESG fintech platforms serving entrepreneurs and investors since 2002. Sundip oversees LendThrive™ and EqualSeat™ platforms for lending and investment, respectively, focused on supporting sustainable growth in communities. Sundip holds an MBA from the University of California, Irvine (1998) and is a licensed CPA and CMA.

Sanat Patel is the Chief Lending Officer of AVANA Companies, as well as a co-founder of the legacy company AVANA Capital. He has more than 25 years of experience in the commercial banking industry. Before AVANA, Sanat served in various commercial banking functions within Wells Fargo Bank, Citibank, and JP Morgan. Sanat holds an Executive MBA from UCLA’s Anderson School of Management as well as the Banking Degree offered by Pacific Coast Banking School, held at the University of Washington.

Tips on Preventing the High Cost of Turnover

by Karalynn Cromeens, Esq., The Cromeens Law Firm, PLLC

I am not sure what the hell happened, but finding and keeping good people has become nearly impossible. Over the last year, I have cycled through 25+ employees; when my whole team is 30 people, that is a lot. I know I am not the only one, and many of you have gone through the same. Now being in a bit more stable position (knock on wood, I don't want to jinx it), I have also learned some important lessons through this experience. The most important thing I have learned is that when people need to keep their jobs, it hides many flaws in the company's leadership. Meaning when

people need to keep their jobs, they are willing to put up with bad leaders, but when they can get a different job the next day, they are not so willing to put up with a lack of leadership.

As the founder, owner, or person at the top, you are the company's psychology, vibe, and heartbeat. Your good traits, such as dedication, motivation, and hustle mentality, can be seen in your company, but your bad ones can also come through. Your impatience, lack of clarity, and knowit-all attitude are visible to employees too. The first step is self-reflection to

see which of your less-than-desirable traits is causing the most damage. If you have trouble seeing which of your traits is negatively affecting your company, I highly recommend the help of a life/ business coach. They can help you see things in a way you never have before. With the help of my coach, my failure at communication, specifically a lack of clarity, was causing the biggest issues at my company.

My lack of clarity issues is probably very familiar to someone who starts a business because they are good at what they do. You think everyone knows

what you do; they know how to paint the right way, they know how to install flooring the right way, and they know how to deal with the customers the right way. It all seems obvious to you, and the new team member has experience in the construction industry. Surely they know the same things you do. They don't... One of the most effective ways to reduce turnover is to be clear on what is expected.

A well-written job description is a great tool to clarify what is expected in a role. Even if you don't have an HR department, you can draft a great job description. If you already have one, you can start with that as your basic outline of what the new team member will be expected to do. If you still need to get a detailed job description, start by imagining what you want this new team member to do in a day and write down a sentence or less describing everything this new team member will do. Once you have this outline, you can add two or three more sentences to describe the activity, but you want to keep the job description two pages or under. You can have a more detailed description of a specific process you create for that activity in a training manual. It is very helpful to bring the job description to the interview so you can explain exactly what will be expected in the position. On the new team member's first day, review the job description with them and have them sign that they understand everything.

Another important tool for workplace clarity is a well-written and up-to-date employee handbook. An employee handbook does two very important things. It lets everyone know the ground rules and CYA (cover your ass). If you have any employees, you need an employee handbook. It is easier to start initially than get team members already working for you to agree to the handbook's terms. The following is a list of things that should be included in your employee handbook:

• Mission/Vision – Now more than ever, people want to know that they are making a difference and are part of a team doing the same. Taking time to create a Mission statement,

truly reaching for it, and giving examples of when you meet it is huge to the leadership journey.

• Values – What are the company's values, what do you want to be known for? When you act in accordance with the company's values, your team will too, and that is what the customer will experience.

• Attendance – When you expect everyone to show up and what time they get to leave.

• Breaks & lunch – when do they get to take breaks, lunches, and for how long.

• Time Off – If they need time off, who do they ask? Do you offer paid time off? How much? When do they earn it?

• Holidays – what holidays are you off, and do you offer paid holidays?

• First 90 days – It is a good idea to have the first 90 days be a probationary period where you can find out if this new team member is fit and have a check-in every 30 days to go over the things that are going well or things that need improvement.

• Reviews – When and how will reviews be conducted? After the 90 probationary period, it is good to have a review at least twice a year, once in the middle of the year to tell them what they need to improve if they want to see a raise at the next review.

• Benefits – do you offer any other benefits? When are they eligible, and what are the guidelines?

• Equal oppor tunity employer. –You provide equal employment opportunities to all applicants.

• Anti-Harassment Policy – That harassment of any type is unacceptable and how to file a complaint.

• Conflicts of Interest & Confidentiality –The team member will not take actions that conflict with the company's interest. The information they learn while employed is confidential and not to be shared outside the company.

• Safety Policy – What the company is doing and what the team member needs to do to ensure a safe work environment.

• Disciplinary policy - When a team member is not doing what is required, how many warnings do they get before being fired? Ensure all warnings are in writing and signed off on by the team member.

• Work From Home Policy – If working from home is part of their employment, explain what is expected when they work from home.

This is not an inclusive list, but just some ideas to start. If it is important to you, let people know by putting it in your employee handbook.

The second most important part of having an employee handbook is prioritizing everyone following what it says. That means as soon as you see something out of line, you need to have a hard conversation and address it immediately. There will always be a test to see if you mean what you say. It is important for all your team members to address issues immediately and not let them linger.

Challenging times such as now are what make great leaders, but you have to put in the work and do the hard things no one else is willing to do.

About the Author

With more than 18 years of experience in construction and real estate law, Karalynn Cromeens has filed more than a thousand lawsuits to foreclose or remove mechanics liens successfully. Her family also owns a material supply company, providing Karalynn first-hand knowledge of the construction industry. This personal understanding, combined with her extensive legal experience, guides The Cromeens Law Firm’s true purpose— To protect and defend all that you have worked hard for and be your partner in business. She is also a best-selling author and podcast host for Quit Getting Screwed.

AP Solutions Built for the Construction Industry

Get a leg-up on competitors with accounts payable (AP) solutions purpose-built for construction finance management.

AvidXchange integrates with over 220 accounting systems to automate your accounts payable (AP) process seamlessly and cost effectively.

Benefits include:

•Receive, track and approve invoices

•API integration’s enabling sharing and syncing of data

•Automated invoice and payment processing, plus our 2 and 3-way PO matching

Save time, money and paper with AvidXchange’s AP automation solutions.

Four Steps Construction Professionals Need to Take to Ensure They Get Paid

by Danielle Maya, Galvanize Law Group, LLC

Secretary of State’s office makes the name and contact information of the owner publicly available. Other states offer anonymous business registration programs to certain business entities such as Limited Liability Companies (LLC) or corporations. Importantly, however, while anonymous business registration can provide additional privacy, it does not shield the owner from all legal or regulatory requirements associated with running a business.

#3: Required Contract Disclosures for Each State

#1 and #2: Licensing and Secretary of State Registration

State and local level licensing requirements are important in the construction industry to ensure that contractors are qualified and capable of performing the work that they are contracted to do. This generally involves passing exams, demonstrating knowledge and experience, and meeting other requirements related to safety, insurance, and financial responsibility. From a payment perspective, these licensing requirements ensure that contractors are legitimate and trustworthy businesses, which can increase the likelihood that you will be paid for your work. In the same vein, registering your business with the Secretary of State’s office is equally as

important both legally and reputationally. Registering with the Secretary of State’s office is often required by law, depending on the state in which your business is operating. While failure to register your business can result in legal penalties, fines, or even suspension of business operations, it can also result in the loss of legal recourse if you are not paid for your work. Compliance with state laws for registering your business is required if you wish to enforce your contract and ensure that you obtain the proper payment for your work. At the very least, many states will require that you have a registered agent in each state that you do business with a physical address within that state. It typically costs somewhere between $35-60 per year to maintain your registered agent. In some states, registering with the

Most states have specific requirements on residential contracts and if they are not included the contract could ultimately be determined to be unenforceable or the contractor could be precluded from asserting mechanic’s liens. Required contract disclosures can help protect both parties to a contract. They promote transparency in the contracting process so parties can be sure that they are entering into a fair and equitable contract. Some examples of common required disclosures include Scope of Work, Payment Terms, Change Orders, Dispute Resolution, Insurance, Termination, and Notices. By requiring certain disclosures, parties can better manage their risks. However, every state has its own laws governing disclosure requirements when contracting with residential homeowners. This makes knowledge about the laws governing required contract disclosures very valuable, especially if your business operates in multiple states that all have different laws regarding contract disclosures.

#4: Strong Contract Provisions

If the goal is to guarantee payment for the work that you and your employees

did on a project, it is very important to make sure that the provisions of your contract reflect that goal. The following types of provisions should be included to increase the likelihood of receiving payment.

• Money held in trust provisions can ensure that funds are available to pay for the work performed by a contractor and its subcontractors. Under this type of provision, the owner agrees to hold a certain amount of money in trust for the contractor, which is then used to pay for the work performed.

• Choice of Law and Venue provisions clarify the legal framework under which any disputes between the parties will be resolved. This helps the parties avoid confusion and uncertainty about which laws and courts will apply in the event of a dispute as well as avoid the expense and inconvenience of traveling to a distant location for legal proceedings.

• Payment Terms provisions specify the amount of payment, the payment schedule, and any penalties for late payment. Clear payment terms help to avoid disputes by setting out the expectation of the parties upfront which, in turn, can also help to ensure cash flow throughout the course of a project.

• Interest on Non-payment provisions specifies the interest rate that will be charged on any unpaid amounts owed by one party. This provision is typically included in payment terms of the contract and is intended to incentivize timely payment by the party that owes the money.

• Default or Termination provisions clarify the circumstances under which one or both parties may terminate the contract prior to the completion of the project. This provision provides a clear process for dealing with situations where one party is in breach of the contract or otherwise unable to fulfill its obligation under the contract.

• Confidential Information provisions are a good idea for protecting information such as drawings,

plans, specifications, trade secrets, and other proprietary information. Exceptions may exist where certain disclosures are required by law or where the information is already in the public domain.

• Damages Remobilization provisions outline the damages that a contractor will be entitled to if the project is delayed or interrupted due to the fault of the owner or other parties forcing the contractor to demobilize and then remobilize in order to complete the work. This type of provision can help to protect you against financial losses that may result from delays and interruptions that are beyond your control.

• Price Volatility provisions are a good idea in so much as they define what constitutes price volatility such as unexpected market fluctuations in the cost of labor, materials, or other factors that affect the overall cost of the project. If tailored correctly, this type of provision can help to ensure that both parties of the contract absorb a fair amount of any unexpected costs of this nature.

• Standard of Care provisions establish the expectations for the quality of work and services to be provided by the contractor and provide a framework for determining whether those standards have been met. This provision would set out the required level of skill, care, and diligence by which the work will be performed. Language such as “good and workman-like manner” or “reasonable standard of care” are often used in this type of provision.

• Prime Contractor’s Right to Accelerate or Complete Work provisions allows the prime contractor to address delays or other issues that may arise during a project and help to ensure timely completion.

• Force Majeure provisions excuse the parties from performing their obligations under the contract when unforeseen events beyond their control occur. Often referred to as “acts of God,” examples of these events include natural disasters, strikes, government regulations, or

other events that could not have been anticipated or prevented. Force Majeure provisions should generally be broad in scope to allow parties to respond to unforeseen events in a reasonable and flexible manner.

To ensure that you are up to date on all state and local licensing requirements, making all required contract disclosures, and including necessary contract provisions to protect your payments, it may be helpful to consider retaining an attorney to navigate this process.

As a construction professional, it is crucial to your business and your bottom line that you are paid fairly for the work that you do. Late or missing payments can make it difficult to cover your overhead expenses, to pay your employees on time, to keep to a project schedule, and for your business to make profit, among other issues. Staying up to date on both state and local level licensing requirements, registering your entity with the appropriate Secretary of State offices, being aware of the relevant contract disclosure requirements, and implementing strong contract provisions are key to making sure that you receive the payment that you work so hard to earn.

About the Author

Danielle Maya is an accomplished and effective attorney, with over 20 years’ experience serving the construction industry. Danielle’s practice encompasses all areas of construction law including employment law, construction defect litigation, lien law, bond law, building code violation defense, OSHA defense, construction license issues, and contract review and drafting.

The experienced attorneys at Galvanize Law Group are happy to assist you in ensuring that your contracts allow you to get paid. Our attorneys are licensed in CO, WY, TX, OR, AR, and MA and assist clients in doing business throughout the mountain west. Contact us to learn more about the steps that can be taken to make sure that you and your employees are getting the payment you deserve.

FEATURE

Is Technology the Key to Stronger Supplier Relationships?

by Jim Campbell, AvidXchange

Kicking the year off amidst a host of unavoidable challenges—from skyrocketing pricing to unrelenting supply chain and labor shortages— construction companies have a powerful opportunity to protect the foundation of their business by focusing on what they can control—their supplier relationships. Strong supplier relationships are the lifeline of a successful construction business. Without them, work can come to a standstill and new opportunities can be lost to the competition, potentially stifling growth and jeopardizing survival.

A staggering 80 percent of construction firms surveyed for the Association of General Contractors 2023 Construction Outlook have trouble hiring the workers they need to complete projects and take on new ones, a fact that shines light on the importance of investing in existing relationships.

When it comes to relationships between general contractors and subcontractors, nothing is more important than knowing payments will be processed timely for work that is properly billed. Delayed payments,

perhaps more than any other factor, put relationships at risk. According to Rabbet’s Construction Payments Report, 49 percent of subcontractors waited 30 days or more for their payments last year, making it tough for them to manage their own businesses and more likely for them to turn down future jobs in favor of work from firms that promptly pay.

Even with the best of intentions, complex billing and payment structures, frequent change orders, multiple stakeholders, and a paid-when-paid

mentality make it challenging for construction firms to quickly pay subcontractors and suppliers for work completed. Consider the volume of invoices generated in construction projects and the ensuing paper chase they create, along with the lengthy process of cutting and mailing checks, and it’s easy to see how supplier relationships are easily soured over delayed payments.

Fortunately, technology can directly impact and improve relationships by streamlining invoice and payments processing. Here’s a closer look at why investing in innovation, including automated Accounts Payable (AP) solutions, should be a priority for construction companies and how advanced technology can help firms earn loyalty by offering subcontractors profitable work with low risk.

Investing in Innovation to Protect the Business and its Supplier Relationships

While the construction industry has been notoriously slow to adopt digital transformation, 2023 analysis from Deloitte shows that most construction firms realize the time has never been more ripe to embrace technology. Still adjusting to a new normal following pandemic disruption, they need innovation to aid recovery and build stronger businesses. Research from the Construction Industry Institute shows that proven technologies can increase their productivity by as much as 30 to 45 percent. By saving time and money and working smarter, firms can build resiliency to better ride out the current economic turmoil and prepare for whatever lies ahead.

Back-office technology, including automated invoice management solutions, does its part by increasing efficiencies, providing visibility and protecting valuable supplier relationships. Integrated with companies’ existing accounting software, the AP solutions automatically collect and code invoices, leveraging Optical Character Recognition (OCR) and advanced

technology to match POs and receipts, and then circulate invoices for speedy approvals. Automating the work is far faster and more accurate than manually handling it and makes it easier for AP staff to decipher loads of invoices and POs coming in from multiple job sites.

Automated bill payment software can then give suppliers a choice of how they’d like to be paid, offering faster, more secure electronic payment methods, including Automated Clearing House or Virtual Credit Card payments, as alternatives to slow-moving paper checks. The options give suppliers control and potentially save them a trip to the office to pick up a check and eliminate the need to wait for money to arrive in the mail.

Cloud-based solutions help companies stay on top of the process by providing 24/7 visibility into payment status, making it quick and easy to identify any hold-ups and rectify them before they cause problems.

Speedy Payments Create Goodwill and Forge Loyal Bonds Between General Contractors and Subcontractors

Investing in AP technology provides a host of intangible benefits beyond speedy payment delivery. It fosters goodwill from suppliers by saving them time and making it easier and more convenient for them to get paid— enabling them to submit electronic invoices from job sites rather than dealing with keeping track of paper receipts.

It also recognizes and alleviates the significant risk subcontractors take on as smaller businesses with tighter margins. They typically foot the bill for materials and supplies long before they are reimbursed for them or paid for their work, making it tough to manage their cash flow. Leveraging automation gives them peace of mind that payment is imminent enabling them to sustain their business and invest in new opportunities. It also helps to keep projects on track,

assuring them of steady, dependable work.

Strong relationships offer intangible benefits for construction companies, too. In addition to enabling them to complete and take on new work, loyal, reliable suppliers can boost their reputation as a company that employs experienced, qualified workers and prioritizes a safe work environment. This makes it easier to maintain compliance standards, attract new hires and win business.

Future-Proofing Through Relationship Building

Despite a recessionary environment and critical shortages of necessary supplies and labor, construction companies can boost their bottom line by nurturing relationships with suppliers and subcontractors that make their business possible.

What better way to strengthen those relationships than making sure people are accurately and promptly paid for their work? Technology makes it possible, while delivering just as many benefits to the payer.

About the Author

Jim Campbell is Vice President of Construction at AvidXchange, a leading provider of accounts payable (“AP”) automation software and payment solutions for middle market businesses and their suppliers. AvidXchange’s Software-as-a-Service ("SaaS") based, end-to-end software and payment platform digitizes and automates the AP workflows for 8,800 businesses (our buyers) and we have made payments to 965,000 supplier customers of our buyers over the past five years. Additionally, AvidXchange, Inc. is a licensed money transmitter for US B2B payments, licensed as a Money Transmitter by the New York State Department of Financial Services, as well as all other states that require AvidXchange to have a license.

To learn more about how AvidXchange, and its publicly traded parent AvidXchange Holdings, Inc. (Nasdaq: AVDX), are transforming the way companies pay their bills, visit www. Avidxchange.com/construction.

Liens and the Importance of Payment Protection in Lean Construction

by Patrick Hogan, handle.com

To keep up with the pace of competition and the overall business landscape in construction, time and cost management are two critical factors that construction business owners and construction project managers must consider. Construction projects involve multiple stakeholders and many moving parts, making it challenging to maintain organization and efficiency. Implementing lean

construction techniques directly addresses these challenges and can help construction business owners mitigate risk and improve project outcomes.

Liens are essential weapons in the lean construction war chest.

What are liens?

A lien, often called a mechanics lien in the construction industry, is a party's

legal claim over the project property to ensure payment for materials supplied or work performed in a construction project. Liens provide contractors, subcontractors, material suppliers, and other professionals and workers who participate in construction projects with security for due payment. Liens act as a guarantee, allowing construction participants to continue work without the fear of getting stiffed.

Liens are an undeniably essential tool for securing payment, and their proper utilization is critical to the success of lean construction projects.

What is lean construction?

Lean construction is a methodology applied to construction projects that reduces costs by identifying and eliminating inefficiencies throughout the construction process. The goal is to increase productivity without compromising project quality. The lean construction approach aims to lower materials, labor, and overhead expenses costs while shortening project progress and duration.

Here are some examples of costcutting measures in lean construction:

1. Streamlining communicationEffective communication between project team members reduces misunderstandings and delays, reducing project duration and cost.

2. Optimizing resource utilization - Optimizing resources such as materials, equipment, and labor involves identifying opportunities to reuse or recycle materials, streamlining schedules, and using equipment more efficiently. With lean construction in mind, examples of inefficiencies identified and eliminated include excess inventory, overproduction, and unnecessary transportation.

3. Implement just-in-time (JIT) delivery - JIT delivery involves receiving materials and supplies only when needed.

4. Lean supply chain management - Optimizing the supply chain reduces lead times and costs associated with transportation, storage, and handling of materials.

5. Identifying possible points of failure specifically to avoid reworkReducing rework leans out project duration and costs. This is done by identifying and addressing quality issues early in the construction process.

6. Project assessment geared towards improving processes for subsequent projects - Continuously identifying and addressing improvement areas help optimize project outcomes over time.

The power of contracts and liens in lean construction success

In a lean construction project, liens are vital to the project's success. The lean construction approach emphasizes collaboration, communication, and continuous improvement to minimize waste, reduce costs, and maximize value for the owner. One way to achieve this is through the use of lean construction contracts that include provisions for liens.

Mitigates risk for all parties

By including lien provisions in the contract, the owner can better understand the risks involved when payments are not made promptly, allowing work to continue without delay. This is because contractors and subcontractors can file liens against the property if they are not paid on time, which provides them with the legal right to receive payment from the property's sale if necessary. As a result, the owner is motivated to pay on time, knowing they could face legal action due to nonpayment or excessive delays.

Streamlines the payment process

Liens help streamline the payment process. When all parties understand the lien provisions and the consequences of not paying on time, they are more likely to prioritize timely payment. This benefits not only the contractors and subcontractors but also the owner. There will be fewer disputes and delays if payments are made on time, resulting in a smoother project timeline and a better outcome for all parties involved.

Creates transparency

Liens also provide transparency in the payment process, which is crucial in lean construction. In a lean project, all parties are encouraged to work collaboratively to minimize waste and reduce costs. When parties exercise their lien rights by delivering the preliminary notices required to keep everyone on the same page, transparency is ensured in the payment process. This transparency promotes trust and encourages all parties to work together toward the project's success. Additionally, the lien process allows for the tracking of payments and helps identify any potential issues or delays in the payment process. Tracking will enable parties to address problems promptly and make necessary adjustments, ultimately increasing efficiency.

Final thoughts

Liens are an essential tool in the success of lean construction projects. By including lien provisions in the contract, the owner can ensure timely payment and motivate all parties to work optimally. As the construction industry evolves and with the current payment issues that plague the industry in mind, the use of liens in lean construction projects has become increasingly crucial in ensuring successful project outcomes.

About the Author: Patrick Hogan is the CEO of Handle.com, where they build software that helps contractors and material suppliers with lien management and payment compliance. The biggest names in construction use Handle on a daily basis to save time and money while improving efficiency.

2023 SESCO Webinar Series (Part 1)

SESCO is pleased to announce our training schedule for 2023. With the overwhelming success of participation and positive client feedback in 2022, the following provides our topics and dates. Schedule early as the events fill up quickly.

April 26: Navigating the Complexities of Wage and Hour Compliance

The Fair Labor Standards Act (FLSA), the federal wage and hour continues to cause big headaches for employers given the intricacies of exemptions, pay plans and state permissible pay practices. Non-compliance exposes companies to individual and other representative actions. Wage and hour laws continue to multiply, with new regulations, court decisions, and myriad changes to existing laws impacting employer compliance obligations.

The webinar will cover the rules for classifying employees as exempt or nonexempt and address other common wage and hour pitfalls. Participants will learn how to avoid mistakes in paycheck deductions, how to avoid problems with meal and rest break laws and will provide a refresher on the newly revised federal overtime rule. For experienced human resources professionals, this session will be a practical “refresher.” For less experienced human resources professionals, this webinar will introduce real-world advice regarding wage and hour essentials. To learn about what your organization needs to do to stay in compliance and out of court, join us for an overview of the legal requirements and best practices of federal wage and hour law.

May 17: Core HR Systems That Every Business Needs

When was the last time you conducted an audit of your personnel files? If it’s been a while (or if you have never done an audit) you may be putting the organization at risk. The best way to ensure your company remains in compliance and avoids liability is to conduct regular reviews of your personnel files and your filing practices. Join us as we learn the good, the bad, and the ugly of personnel file maintenance, including whether documents are being put in the correct file (i.e., personnel or medical) and whether you are retaining files longer than is required (or disposing of them too soon). Next, we will cover how to properly onboard new hires to set them up for success. Last, we will discuss the importance that the employee handbook plays in the new hire process and why it should be a living, breathing document which is critical to HR and management functions.

May 24: Understanding the Ins and Outs of Medical Leave of Absences

As experts in employment law compliance, SESCO will explore the practical application of crucial federal regulations such as the Americans with Disabilities Act and the Family Medical Leave Act. Further, we will delve into these pertinent and complex regulations to give participants a fundamental understanding on how to navigate and apply these regulations compliantly within their organization.

This session focuses on the intent and purpose behind ADAAA and FMLA and will cover the basic interpretations and practical applications of the law. Additionally, we will discuss and demonstrate how to reduce liability by avoiding common compliance mistakes.

Participants will learn how to properly engage in the interactive Reasonable Accommodation process for ADAAA and effectively manage FMLA leave for eligible employees.

Key take aways include:

•Understand the basic requirements of ADAAA and FMLA regulations and the impact to the organization.

•Explore the most common violations and how to avoid them.

•Recognize whom and when to apply the ADAAA and FMLA regulations and supporting documentation.

•Assist employees in handling accommodation and leave appropriately to protect yourself and the company from liability.

June 7: Management’s Role in Recognizing & Preventing Harassment and Discrimination

Harassment is rampant and it happens daily in our workplace. Whether it’s Hollywood, politics, academia, or business, you cannot escape the reports of misconduct in the workplace. With the heightened awareness, employers must do what they are required by law and in their power to prevent harassment in the workplace. This session will explore the true definition of harassment and discrimination under Equal Employment Opportunity regulations, such as Title VII of the Civil Rights Act, and the problems caused by inappropriate workplace behavior. Additionally, we will focus on preventing sexual harassment and discrimination, how to respond to harassment or discrimination, how to address unwelcome behaviors, the negative impacts of workplace misconduct, proper procedures for reporting and investigating complaints and consequences of false accusations. Last, we will cover how leadership should properly handle and respond to charges of discrimination received from the Equal Employment Opportunity Commission.

June 21: How to Conduct Internal Investigations

Are you prepared to conduct a proper investigation? Will it comply with all Federal, State, and local laws and all your policies? Will that investigation be objective and respect all party’s rights? Will it be presented in a professional manner?

If done properly, an internal investigation can help get to the bottom of things. If done wrong, it all too often makes things worse. The challenge of complying with all applicable standards/regulations is to educate and update all who are responsible for conducting investigations within the organization. Otherwise, they may not have the tools or skill sets to be aware of all those obligations and responsibilities which in turn can lead to unintentional violations of law and challenges to the integrity and credibility of the investigation and its results/ conclusions.

In short, this webinar is designed to provide you and your organization with a fundamental understanding of what’s required to conduct an effective and professional investigation while minimizing risk (financial, legal, damage to internal and external reputation, etc.).

Presenters include:

•Mr. William E. Ford, President and CEO

•Mr. Joel Cullum, Senior Vice President

•Ms. Jamie M. Hasty, Vice President

Tuition: $60.00 per person, per webinar

Schedule:

Every other Wednesday, through June 2023 1:00-2:30 pm Eastern time

Please click HERE to purchase and register for SESCO’s 2023 Webinars

Cancellation Policy:

Requests for cancellations or substitutions will be honored if they are received seven (7) days prior to the beginning of the seminar. The person(s) may be registered for another webinar session or other names may be substituted; otherwise, the company will be billed for the full amount.

DOL Program Head says Women Need to "See It to Be It' in the Trades

Women comprise only about 14% of registered apprentices, according to the U.S. Department of Labor, although they account for half of the workforce.

The department is taking steps to increase that number. Last week it announced $5 million in grants to help up to 14 community-based organizations to attract and support women in registered apprenticeship programs, largely in construction, manufacturing and cybersecurity.

Read More...

Is Your Onboarding Process Retaining or Deterring Talent?

Once a candidate is selected and accepts a job offer, many companies forgo the courtship strategies that were used to keep the job seeker engaged during the recruitment process. However, even if a candidate accepts a job offer, that doesn’t mean they’ve fully made up their mind about the opportunity. The onboarding experience further shapes their initial impressions, and how it unfolds can either assist with retention or lead to turnover. Similarly, once word spreads about a company’s onboarding process, it can either assist with recruitment or deter talent, essentially prompting them to either pursue or avoid opportunities with the organization. If you’re concerned that your onboarding process is turning off candidates or new hires instead of attracting and retaining them, here’s what you need to consider.

Read More...

US Department of Labor Launches Toolkit to Help States Promote, Improve, Expand Equitable Access to Unemployment Insurance Benefits

To continue to promote equitable access, prevent and detect fraud, and recover fraudulent payments and ensure timely benefits, the U.S. Department of Labor announced the publication of an Unemployment Insurance Equitable Access toolkit to help states provide all workers with equitable access. The department has engaged in active efforts to help states promote equitable access for all workers, representing the most consistent focus on equitable access in the 90-year history of the UI program..

Read More...

CONSTRUCTION DATA & FIGURES

Watch: Top 20 construction companies by Sales 2003-2022

By Neil Gerrard | April 05, 2023

This chart draws on data from International Construction’s Yellow Table, which tracks the top 50 construction OEMs across the world. For viewing clarity, this animation follows the top 15.See chart here.

2023: North American engineering & construction outlook: second quarter

Download the second quarter 2023 edition of FMI’s comprehensive economic assessment for the engineering and construction industry. They offer sector-specific trends and forecasts.

Construction industry poised for savings as producer prices slow

Dodge Construction Network is closely monitoring the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics. The report indicates that the change in prices for final goods and services decreased slightly over the month. In the 12 months through March, the PPI increased 2.7%, a slower pace than February's reading of 4.9%. This represents the lowest rate of growth since January 2021. This drop was largely driven by falling goods prices, particularly lower energy prices, fresh and dry vegetables, and services.

Q1 2023 Recap: Construction showing signs of resiliency despite likelihood of recession.

Starts values predicted to remain flat amid economic downturn thanks to Chips Act, IIJA and other legislation. Read the entire article here.

The research report shows a considerable number of contractors are expecting an increase in revenue, with more than half of those (62%) attributing this to expecting more work. At the same time, a majority of contractors report a high need for skilled laborers; 72% are experiencing extreme difficulty sourcing the right workers. These contractors are also expecting to experience further attrition due to this lack of staff.

ABI March 2023: Business conditions improve slightly

Architecture firm clients place at least moderate priority on outcomes related to issues of health, resiliance, and equity.

Construction input prices dip 0.1 percent in march with wide variation among key goods and services, adding to uncertainty about future costs

The price of materials and services used in nonresidential construction inched down 0.1 percent from February to March, as plunging fuel prices outweighed increases in the cost of other goods, according to an analysis by the Associated General Contractors of America of government data released today. Association officials said new rules associated with federal funding for a range of infrastructure projects will make it hard for firms to procure materials and may drive bidders away from the projects.

“With materials costs fluctuating so much month-to-month, contractors remain wary about committing to projects with unpredictable costs and lead times,” said Ken Simonson, the association’s chief economist. “While inflation in the broader economy is settling back to earth, construction costs keep hitting updrafts.”

ABC’s Construction Confidence Index reading for sales inched higher in

March, while the readings for profit margins and staffing levels fell. All three readings remain above the threshold of 50, indicating expectations of growth over the next six months. “The deceleration in nonresidential construction activity may have started,” said ABC Chief Economist Anirban Basu. “With widespread fears of recession, credit conditions tightening and more decision-makers turning their attention to cost containment, new construction work may be more difficult for contractors to line up.

“While the confidence and backlog data weakened in March, they indicate a slowing of activity rather than a shift into reverse,” said Basu. “There is a widely held view that financial conditions are tightening in the aftermath of the failures of Silicon Valley Bank and Signature Bank. To the extent that this is true, one could anticipate further slowing and less industry confidence during the months ahead.”

When you run a construction business, your days are spent in the field, not behind a desk. It's necessary, but it makes communication with the back office tough.

KnowYour Numbers. ImproveYourCash Flow.

Communication breakdowns impact the overall financial health of your business. You don't have a good grasp on your numbers. You're survivingjob tojob. Your business decisions are based on good guesses, not actual financial data.

With first-hand knowledge of the construction industry and a deep understanding of taxes and finances, construction accountant Timothy Wingate Jr. provides tools, advice, and financial guidance so you have a firm grasp on your finances and improve your cash flow.

Timothy Wingate Jr., EA Construction Accountant

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Upcoming Webinars Coming

Prevailing Wage Summit

Wednesday, May 10, 2023 | 12:00 - 1:00 pm (EDT)

The presentation will focus on the Davis-Bacon Act and state-specific rules, regulations, and best practices. The agenda will include the following:

• Key legislative context, including the Davis-Bacon Act of Infrastructure Investment and Jobs Act of Inflation Reduction Act

• Best practices for submitting bids

• Identifying the correct wage determination

• Fringe benefit calculations

• Over time, holidays, paid time off (PTO), and weekend work

• Increases in wages over the life of the project

• Proper documentation for an investigation or audit

• How different funding sources trigger different prevailing wage obligations

• How to maximize fringe benefit obligations

• When bona bide benefits must be annualized

Presented by: Nat Peniston, Vice President, The Contractors Plan

Nat is a national expert on government-funded prevailing wage obligations and works closely with construction contractors to ensure proper compliance, particularly in bona fide employee benefits strategies. An accomplished author, he has published numerous articles in the Associated Builders and Contractors Construction Executive magazine and published the book, “The Contractor’s Guide to the Davis-Bacon Act: Essential Knowledge for Bidding and Compliance on Prevailing Wage Jobs.”

Nat is the Immediate Past Chairman of the Board for the Central Texas Chapter of the Associated Builders & Contractors and is involved in various charitable organizations. He earned his bachelor’s degree from the University of Miami and lives in Austin, TX, with his wife and two daughters.

Register for this webinar