The Contractor's Compass - December 2022

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. (ASA).

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.

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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

Inc.

Angela M Roe angelamroe@gmail.com

© 2022 Foundation of the American Subcontractors Association,

PRESIDENT'S LETTER

Dear Readers—

I know you’re thinking about 2023. I certainly am. My message this month is to register ASAP for SUBExcel. Yes, it’s not until March, but “early bird” pricing ends in a few weeks on December 31.

Here’s why you need to go.

1. As a subcontractor, we sometimes feel we’re battling the beast by ourselves. At SUBExcel, the networking is unparalleled. We get both organized and unorganized times to just vent, empathize with people who have either been through it and found a solution, going through it too, or warn those that may be about to do it. Whatever IT is. Your spirits are lifted and you don’t feel so bad about your large - or small - problems. You’re not alone. ASA past presidents, officers, and everyone’s there, willing to just chat and chill.

2. I got involved about six years ago with National. While the Chapters are invaluable, I can honestly say, by networking, getting to know folks outside my local network, I’ve saved more than $100K. There was a GC from TN that was starting to do work in CO. I wanted to work with them, but needed to know more. I reached out to some of the people I had met at SUBExcel, and they told me these guys were tough. Thanks to the advice I received, I covered my tush, and my business made money. Some of the other subs who did work on good faith - like we sometimes do - got burned. I tried to help some of them after the fact, but having people I could call up and get honest answers about that GC provided the insight I needed to make sure I got treated right.

3. In addition to the networking, the education sessions are incredible. The speakers tell it to you straight, provide time for questions, and are so open and willing to share their knowledge with us. It’s refreshing to not hear a lot of BS.

4. Oh yeah - I’m looking forward to the down times as well. The honky tonk and cattle drive should be a blast. Oh…and the distillery tour. I’m there. And THAT’s where you do your best networking.

And remember:

Please, please PLEASE, nominate your boss, your company, your chapter for the amazing work on behalf of your success. Categories include ethics, best practices, federal and state advocate, leadership, outstanding service, chapter leadership, and safety. Find out more here. Deadline is December 31.

Wherever you are, however you celebrate this special time of year, on behalf of all of us at ASA National, thank you for being a part of this association, your time and support to make it a success, and ensure a bright future for subcontractors.

Be safe and blessed this holiday season!

Rusty Plowman

ASA President 2022-2023

CONTRACTOR COMMUNITY

ASA Platinum Sponsor COMPASS Congratulates ASA Members on Making the "COMPASS Select List"

COMPASS by Bespoke Metrics recently announced The COMPASS Select List, which recognizes the top subcontractors in COMPASS based on transparency and performance across Finance, Business, and HSE metrics.

The ASA would like to recognize and congratulate the ASA subcontractors who made the 2022 COMPASS Select List, which can be found here.

As we face economic uncertainty, we expect the volume and enforcement of prequalification to increase. In addition to a standardized prequalification to meet all your data request needs, COMPASS provides Subcontractors on the Select List a 2022 Select Badge, a public profile page, and a media page to promote your strength and expertise to supplement your prequalification and business development efforts.

For our members looking to get on The COMPASS Select List or learn how to promote their Badge, please contact COMPASS at info@compass-app.com or 1-800-689-6819.

ASA Awards Deadline is December 31st!

ASA Awards program is an incredible opportunity to shine a light on your company or another company in your area!

Awards available include:

• ASA Certificate of Excellence in Ethics

• ASA National Construction Best Practices Awards

• President's Award

• Subcontractor Federal and State Advocate Awards

• Attorney's Council Awards

• John H. Hampshire Distinguished Lifetime Service Award

• Timmy L . McLaughlin Exemplary Leadership Award

• ASA Outstanding Service Award

• ASA Chapter and Chapter Leadership Awards

• ASA Safety Award

Applications are due December 31st! Click here to learn more about the awards program.

Construction Conversations Podcast with ConsensusDocs

ConsensusDocs invites you to check out their latest Construction Conversations Podcast. Their latest episode features a conversation with Tracy Hart, President of Tarlton

Corporation, Dirk Haire, Co-Chair of Fox Rothschild, and Brian Perlberg of the Associated General Contractors of America (AGC).

In this podcast they discuss how the construction industry is often a family affair. Explore how current events shape the future of construction and how the industry continues to morph and pivot in today’s economic environment.

Click here to listen and learn more.

ASA FY23 NDAA Priorities

ASA, along with the Construction Industry Procurement Coalition (CIPC), shared their suggestions and proposals for the Fiscal Year (FY) 2023 National Defense Authorization Act (NDAA) with the House and Senate Armed Services Committee Leadership, along with the leadership of both chambers, which included the following inclusions and exclusions. We requested the exclusion of the following:

• House Sec. 319 – This section would require the tracking and reduction of greenhouse gas emissions from third-party, non-public sources such as vendors, contractors, and manufacturers—having a major impact on the supply chain and small businesses seeking to work on Department of Defense projects. The technology and expertise currently do not exist to support this section on a large scale.

• Senate Sec. 827 – This section would dramatically change the longestablished system for progress

payments, and proposes an unworkable formula that will harm federal procurement, needlessly draw out project close times, and seriously risks harming flow-down payments to subcontractors and small businesses.

• House Sec. 868 and House Sec. 5817 – These sections create new Blacklisting requirements for contractors, similar to Fair Pay and Safe Workplaces (E.O. 13673) that Congress stopped from being implemented. These sections would usurp long established existing rules for debarment and suspension, and blunt bureaucratic solutions for which there is a lack of statistically significant evidence of a systemic problem. The Federal Acquisition Regulation (FAR) already provides a number of avenues – like suspension or debarment – for federal agencies to deal with “bad actors” that willfully or repeatedly violate the law. Federal agencies already have broad discretion to suspend or debar contractors for a wide range of improper conduct indicating a lack of business integrity.

• House Sec. 2825 – This section attempts to correct a significant issue of non-standardized base access that causes inefficiencies leading to loss of taxpayer dollars, but the section has key deficiencies that risks making the issue worse. For example, one of the many challenges with military construction projects located on a base is getting large delivery trucks access to drop off construction materials. Under this section if a delivery driver traveled across the country to deliver materials to a base that driver would be unable to make such a delivery unless the driver is deemed fit to enter after a screening not less than 24 hours and not more than 14 days.

• House Sec. 2882 – This section is largely duplicative of established law and U.S. Army Corps of Engineers policy, but also adds the risk of

publishing federal contractors’ proprietary information. The section requires the Army Corps to investigate worker and thirdparty complaints, certify payrolls, and make such payroll information publicly available.

• House Sec. 5851 – This section would impose unnecessary reporting burdens on many American businesses and threatens the privacy of law-abiding, legitimate small business owners. It would also create significant liability risk for federal contractors for violating minor paperwork requirements related to “beneficial ownership” that can be challenging for business owners to comply with.

• House Sec. 5883 – This section takes a one-size-fits-all approach to PFAS that predetermines outcomes ahead of EPA’s review of the science and engagement in the regulatory process. The section would redirect resources away from EPA’s prioritized efforts to address specific types of PFAS and risks diluting current EPA efforts to set consistent, scientific, risk-based standards to address potential impacts related to those PFAS.

We requested the inclusion of the following:

• Senate Sec. 823 – This section would provide flexibility when requesting qualification for architectural and engineering services on a task or delivery order.

• House Sec. 870 – This section will help ensure small business construction contractors receive timely payment for change orders. Construction firms of all sizes, but especially small businesses, have had to weather the effects of the pandemic and soaring construction materials costs. This commonsense and bipartisan section will help ensure that our nation's small business construction contractors do not go bankrupt waiting to be paid for work the federal government

ordered them to perform.

• House Sec. 5326 – Removes barriers preventing rural communities from using Economic Development Authority grants to expand access to high-speed broadband internet. This section allows modern approaches to economic development and creates new opportunities for individuals to work, attend school, socialize, and access healthcare.

• House Sec. 5899 – This section reauthorizes the Wastewater Assistance to Colonias program and increases program funding to $100,000,000 for the planning, design, and construction or improvement of sewers, treatment works, and appropriate connections for wastewater treatment to eligible communities for each of the fiscal years 2023 through 2027. Increases the amount of grants awarded to not less than 80 percent of the costs of carrying out the projects that are subject to the grants.

• House Sec. 5905 – This section attempts to correct a detrimental and complicated effect of the FAR Credits Clause on the Paycheck Protection Program (PPP) for highway and public transportation projects under cost-reimbursement contracts. Since the PPP loan forgiveness can be counted as a credit, if the Government deems the credit is related to the contractor’s allocable costs, then the contractor is required to pay the Government any credits received by the contractor to the extent the credit is properly allocable to costs. The consequence being many small businesses. This detrimental approach to PPP recipients also occurs in direct contracts with federal agencies that use these types of contract vehicles. We suggest this section be expanded to cover more types of contracts for construction, architect, and engineering services.

TM

Coordination, Cooperation, and the Texas Tres Amigas

Hey chapter directors! When was the last time you chatted with another chapter director? This past March at SUBExcel? It’s a little different In Texas these days.

When Beverly Reynal (North Texas Executive Director), Jennifer Swinney (San Antonio Executive Director), and Tamara Hancock (Houston Executive Director) learned earlier this year about the 2023 SUBExcel being held in their home state, they got super excited about showing off their amazing Texas to their ASA colleagues. They’re preparing to provide “a big TEXAS-STYLE HOWDY!” to all attendees next year.

While the three women meet regularly in normal times, this was a chance for them to really strut their stuff and get a good turnout from their members. Working alone, it’s easy to feel vulnerable, but they are now frequently supporting, laughing and venting via group text and Zoom. The three know they’re in a special situation, as they have many of the same members and experiences, working in the same state. They call themselves the Texas tres amigas.

As with any successful relationship, these three people have a mutual appreciation for each other, their strengths, differences of opinion, and noholds-barred communication. And lucky for us, thanks to the dedicated efforts and cooperation of our Texas tres amigas, SUBExcel 2023 in Ft. Worth, is gonna shine like a star!

Let’s give a shoutout to those Texas sponsors who are providing their support to make this the best SUBExcel YET!

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 communications@asa-hq.com.

The Control of Congress and the Lame Duck Session

As of now, the Republicans have won 221 House seats and Democrats won 213; thereby, the Republicans will be the majority party in the House for the 118th Congress. The Senate will maintain the majority with Democrats winning 51 seats and Republicans winning 49.

Democrats elected Sen.-elect Fetterman in a hardfought open seat in Pennsylvania and eked out wins with Sen. Kelly’s reelection in Arizona and Sen. Cortez Masto’s close call in Nevada. With Republicans capturing the House it will wield divided government next year with promised investigations and legislation to message conservatives’ visions for 2024. A Senate controlled by Democrats is a political lifeline for the president. His Senate allies could block Republican legislation adopted in the House and President Biden will continue to work with Senate Majority Leader

Schumer (D-NY) to confirm judges and executive branch appointees.

In the interim, Senate Majority Leader Schumer has warned that members should be “prepared for an extremely—underline, extremely—busy agenda in the last two months of this Congress.” Before December 16th, both chambers will need to fund the government for FY23 and pass the FY23 National Defense Authorization Act (NDAA), which includes ASA supported procurement policies regarding progress payments, cash flow, military base access, PFAS, architectural and engineering services, and wastewater assistance. President Biden’s priorities during the upcoming lame-duck session include funding certainty for the overall government, continued backing for Ukraine against Russia and federal resources for natural disasters.

Hear Real Conversations

on the Industry

Today from its Biggest Stakeholders

Construction is a relationship game, but players often work against each other instead of side-by-side. And good businesses suffer.

It’s time to have an honest conversation with everyone at the table. For the first time, three representatives of the industry’s biggest stakeholders confront the issues that make construction so challenging, but also rewarding—and, more importantly, how we can secure the future of the industry in the face of mounting obstacles.

FEATURE

Why OSHA Will Stay Safe from Congressional Oversight in the Upcoming Term

by Michael Metz-Topodas, Saul Ewing LLP

The swearing in of a new Congress on January 3, 2023 could mean significant changes for the Occupational Safety and Health Administration (OSHA) and its safety regulation of construction, manufacturing, and other industries— but probably not. In the current political climate, Congress will likely leave OSHA largely untouched by legislation and oversight and free to pursue its enforcement and regulatory agenda.

Legislation

Congress will unlikely pass any legislation in the next two years that will affect OSHA’s operations¹. Due to a Republican-controlled House of Representatives, a Democratcontrolled Senate, and hyper-partisan spirit, Congress has few, if any, areas where it could craft laws on which the required majority in both chambers could agree. Further, despite the controversy surrounding the COVIDrelated Emergency Testing Standard (sometimes called OSHA’s “vaccine mandate”), no issue has captured Congress’s attention that could result in new laws that would substantially affect OSHA.

Even before Republican legislators officially won House control, they were announcing they intended to take full advantage of the oversight tool. They have identified several areas for investigation, such as border security, COVID-19’s origins, pandemic relief fraud, and cryptocurrency, to name a few. These anticipated inquiries do not include OSHA, nor touch upon OSHA-related activities. With such a broad range of investigative priorities, Congress will likely not get through all these investigations, let alone add any new initiative that would touch OSHA.

Enforcement

• Process Safety Management and Prevention of Major Chemical Accidents

• Workplace Violence

• Infectious Diseases

• Communication Tower Safety; and

• Infrastructure-related Fall Protection.

The new calendar year will feature an updated agenda for OSHA that will offer further insight on upcoming regulatory developments. For further insight on how OSHA will impact contractors and other businesses in 2023, you should contact your OSHA counsel.

About the Author

Oversight

Although this new Congress likely will not significantly impact OSHA, former Congressional acts will continue the current trend in increased enforcement. Since 2018, OSHA has had some of the lowest levels of Compliance Safety and Health Officers (“CSHO”s) in its history resulting in fewer inspections and citations. Recent increases to OSHA’s budget, however, have allowed for greater hiring, including more CSHOs. More inspectors have meant more inspections, enforcement measures, and citations. With further budget increases expected, this trend will likely continue.

Similarly, Congressional oversight, however intense in other areas, likely will not take aim at OSHA or matters related to the agency. Congress routinely exercises its power to investigate executive branch agencies’ operations, as their authority to operate comes from Congress.

Regulations

Independent from any Congressional involvement, OSHA will continue pursuing its regulatory agenda as many new standards are moving through the approval process, including those in these areas:

Michael Metz-Topodas is a partner in the Construction Group at Saul Ewing. His practice includes construction litigation, day-to-day project and claims counseling, and OSHA compliance and citation defense. Mr. Metz-Topodas represents general contractors, subcontractors, owners, designers, and suppliers on private, public, and federal projects. He counsels clients and handles construction disputes involving delay and inefficiency claims, design and construction defects, unforeseen site conditions, project scope disputes, bid protests, and payment claims, including mechanics liens, bond claims, and Miller Act claims. He can be reached at michael.metztopodas@saul.com. ¹ Some say that sentence remains accurate even if it ends at the word “years.”

FEATURE

Setting Goals for Success in 2023

by Dale Carnegie Staff

Successful leaders have a common trait – they set goals and help others achieve outcomes. The classic definition of a goal is a desire with a plan and a deadline.

These leaders take an active role in goal setting and hold their people accountable. Doing so in a supportive way is critical for the members of the team to feel that what they do makes a difference, keep engagement levels high, and ultimately achieve optimal results.

Victor Hugo said, “Where no plan is laid, where the disposal of time is surrendered merely to the chance of incident, chaos will soon reign.”

Here are some basic reasons why we don’t achieve our goals:

• Not written down.

• No plan to achieve.

• No commitment or action.

• No accountability partner or other supportive person in tune with the goal.

This time of year we typically evaluate our lives and make resolutions. Most of these resolutions are forgotten before long, because no intentional plan of action is created.

Creating and implementing a plan is the only way we guarantee moving forward successfully! Plan to jump into action on your professional objectives so that you have the time to cater to other areas of your life to achieve balance.

Instilling in your people the importance of individual, team, and development goals will also help in creating a culture of high performance. Here are some timely tips to build employee engagement that drives positive outcomes, and some best practices for holding individuals and teams accountable to the agreed upon goals.

An effective accountability process has seven steps:

1. Align goals and objectives.

2. Plan implementation.

3. Communicate the objectives and the plan.

4. Gain agreement and commitment (Shake on it.)

5. Announce - Broadcast the objectives and the plan to meet the goals.

6. Implement the plan.

7. Reward positive results.

Start the new year with your goals and intentions in place. By setting “SMART” objectives with a clear plan of action and holding yourself accountable by tracking them, you will be more likely to get things accomplished.

• Specific – Narrow down the goal.

• Measurable – Place a metric against the outcome.

• Attainable – Something you can hit the nail on the head.

• Realistic - No pie in the sky.

• Timely – Make it achievable in Q1. Let’s expand the goal setting process for further analysis:

1. Identify it - Write your goal(s) down clearly. Write exactly what you want to achieve...in the most specific terms possible.

2. Date it - Put a date (and time limit) to start the goal and finish it. Unless you commit to a start and target an end, your ability to achieve any goal is questionable.

3. List the obstacles you will have to overcome to achieve your goal. Identification of obstacles will help prevent them from occurring.

4. List the groups and people to contact who will work with you and help you achieve your goal. People will help you if you ask. This is a good place to identify a supportive person or two to give you an accountability partner.

5. What skills and knowledge do you need to have to achieve your goal? Do you have them or do you need to acquire them? Make a plan to acquire or hire the knowledge or skills you need.

6. Make (and write down) an action plan for each goal. The more specific and detailed your plan is, the more likely you are to enact it.

7. List the benefits of goal achievement - What's in it for me after I achieve this goal? What's my incentive? Is my incentive strong enough to ensure achievement?

8. Take action every day - It only takes ten or fifteen minutes a day to chip away at goal achievement. Make a personal commitment to act on your goals... and live up to that commitment every day.

We will use a principle found in Dale Carnegie’s Golden Book that will guide us in setting successful goals. (Email Robert.Graves@DaleCarnegie.com for a pdf copy of the Golden Book.)

One of Dale Carnegie’s principles to gain cooperation from others is to “throw down a challenge.” Challenge yourself right now to set a goal for the new year. The challenge should include having development goals as well as production goals – development goals for you and your teams that tie into monetary and performance goals.

We all feel the weight of our endless to-do list, and so little time to do it all. If we want to put an end to the stress and worry of feeling behind or idle, this method of goal setting is for us!

With time wasters out of the way, let’s open the path for quicker decision-making, increased productivity and stronger results which will allow us to reach our goals.

We will feel more confident, less pressured, and more productive by stretching to overcome obstacles as we see results.

Come away from this article ready to hit the ground running and get inspired! Now sign up your leadership team to take the 30-minute session on Goal Setting for 2023. Here is the link >>> https://www.dalecarnegie.com/ en/locations/tampa-bay/asa.

NOTE: If you would like further information or help registering your team, reach out to Robert.Graves@ DaleCarnegie.com for details. © 2022 Dale Carnegie and Associates. All rights reserved. Portions by Dale Carnegie staff.

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.

Shorter training sessions and special ASA Member rates to get all your leaders back on the job with world class

Set SMARTERGoals for the New

Year—FREE

Start the new year with your goals and intentions in place. By setting SMARTER objectives with a clear plan of action and holding yourself accountable by tracking them, you can accomplish your goals. Sign up for this goal setting and time management workshop ready to hit the ground running and get inspired!

30-minute Session, Thurs., January 12, 2023 from 1 to 1:30 PM

Read More ASA Members: FREE Non-Members: $99

Executive Coaching Strategies in the Office and Field—FREE

You know that in your industry, accountability starts with clearly defined performance objectives. This 30-minute Live-Online, Instructor-Led Workshop provides effective coaching techniques and other tools to help close the gap between expected performance and actual results !

30-minute Session, Thurs., March 15, 2023 from 1 to 1:30 PM

Read More ASA Members: FREE Non-Members: $99

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!

LEGALLY SPEAKING

AI Is Great, But Still Learning to Read the Fine Print

by Jordan Pavlus; Byrne, Costello & Pickard, P.C.

Contract review is one of the most tedious, yet important, aspects of subcontracting. Contractual terms determine project schedule, payment rights, claims processes, dispute resolution, and so on. Virtually all of a subcontractor’s legal and equitable rights are determined and affected by the contract.

Like other aspects of subcontracting, the contract review process continues to evolve. Although AIA, ConsensusDocs and other form contracts are available for use in the construction industry, many general contractors utilize proprietary subcontracts. This requires subcontractors to devote a significant amount of time and resources to reviewing each proprietary contract (or paying an attorney to do so), and then marking it up, attaching an addendum, or some other negotiating mechanism. The process can be cumbersome, but it remains a critical component of risk assessment on any construction project.

Most subcontractors are familiar with master subcontracts. These were created by general contractors with the intent of streamlining future contract negotiations with subcontractors with whom they work on a regular basis. The master subcontract governs the primary terms between the general contractor and subcontractor and is generally in effect for 3-5 years. When specific projects arise, the general contractor and subcontractor then enter into a “work order” or similarly couched document which is specific to that project. This arrangement can be effective, and serve to streamline the contracting process, but it also makes the negotiation of the master subcontract more important because it governs the contractual relationship for multiples years and projects.

The most recent evolution of contract review is Artificial Intelligence (“AI”) based software which can serve as a mechanism by which subcontractors input the proposed subcontract and the AI software suggests changes and redlines.

Generally speaking, the AI review process requires that the subcontractor

upload a contract into the AI review software. The AI software then compares the subcontract to contractual terms you have pre-identified as priorities for your firm. The subcontractor then accepts, modifies, edits or denies the AI suggestions.

AI software can also identify if a previously known proprietary contract has minor modifications to language which may not be readily noticeable. This would avoid a person reading the subcontract with a fine-tooth comb looking for any inconsistency with the previously known proprietary contract.

At this point in time, AI software is unlikely to take the place of a human review of a subcontract, but it can serve an important purpose in identifying initial objectionable clauses or inconsistent clauses from a previous contract. This AI assistance saves employee time and company resources.

As AI technology advances and the AI software reviews additional contracts and clauses, the better the AI review software becomes at identifying potential problem clauses and making suggested modifications and edits.

While the thought of turning over such an important task to AI software may be alarming to some subcontractors, subcontract review is evolving in that direction.

With employees and employee time at a premium, offloading some time intensive tasks to AI software has the potential to save subcontractor’s dollars and also level the playing field when it comes to negotiating fair and equitable contract terms.

However, as AI software gets smarter, humans find ways to circumvent catch words or phrases which they know the AI will flag as objectionable.

For example, the contractor likely knows that the AI software will flag pay-if-paid language, so the contractor includes alternate exhaustion of remedies language or GC as “agent of the owner” language,

etc.

At this point, it is not clear that AI software is capable of identifying what a human would see as an objectionable term by another name.

An experienced construction attorney knows all of the objectionable clauses to look for and what is typically worth fighting over – AI software does not possess this ability for nuance. Humans can see nuance.

Another note is that attorneys have a professional ethical obligation to meet an objective level of competence in the work they perform for clients. This includes contract review. Thus, a construction attorney may utilize AI software as a component of contract review, but at the end of the day, the attorney is responsible for doing a competent job of reviewing the contract. As a result, an attorney may use AI software for a first pass at a contract, but will likely then review the contract in its entirety before making a recommendation.

Subcontractors should have a standard contract review process in place which is efficient and protects the subcontractor’s rights. Whether subcontractors use a standard form of contract, AI software, or rely on master subcontracts, negotiating fair contractual terms at the front end of a project can save many headaches at the back end. As they say, an ounce of prevention is worth a pound of cure.

About the Author

Jordan R. Pavlus is a construction attorney representing subcontractors throughout New York State. Jordan advises clients on all aspects of construction law, including bond claims, lien law, prompt payment law, and a broad variety of issues faced in the commercial construction field. Jordan has served as lead trial counsel in numerous matters and has also been lead attorney on multi-week arbitrations with damages in eight figures. He is a frequent speaker on construction related issues. For more information on Jordan R. Pavlus and Byrne, Costello, & Pickard, P.C., visit www. bcplegal.com.

FEATURE

Construction Spending – Volume – Jobs

by Ed Zarenski, Construction Analytics

This plot is not showing good performance. Volume and jobs should be moving directly in tandem. When inflation is very high, spending climbs rapidly. But most of the climb is just due to inflation. To find out what’s really going on we need to look at business volume.

Business volume = Spending minus Inflation. Inflation adds nothing to business volume. Inflation adds only to the amount of revenue that changes hands.

In 2022, residential spending is up 16%. Sounds great, homebuilder’s revenues are up 16%. It’s great until you note that residential inflation for 2022 is 15%. Real residential business volume for 2022 increased only 1%.

Since Jan.2020 spending is up 20%. Revenues are up 20%. It’s pretty hard to not think you need additional staff to support 20% growth in revenues. But inflation is 30%. Take out the inflation dollars and we find that volume is DOWN 10%. Well, during that time, jobs increased 1-2%. And yet, business volume is down 10%. That’s a massive 11%-12% loss in productivity. With labor being about 35% of the total cost of

a job, that’s added about 4% to total inflation.

Since Jan 2020, the construction industry as a whole has nearly +175,000 (+2%) more workers to put-in-place

-$175 billion (-10%) LESS volume. That’s a huge loss to productivity that may take years to recover, if ever.

About the author: Ed Zarenski retired (well, semiretired) in 2014 from a 42 year career in construction, 30 of those years as a building project cost estimator and construction economics analyst. He now spends his time as a construction economics analyst, author, educator and presenter. Upon retirement he focused on two life-goals; providing unique construction economics reporting and teaching, which he was fortunate to do at Worcester Polytechnic Institute. He created the blog Construction Analytics as a place where his readers can find in-depth, behind the headlines commentary related to the economics of building construction. This article was originally published on December 3, 2022, and is reprinted with his permission.

"#ForFortWorth" mural | 7 City Church | 2900 W Lancaster, Fort Worth, TX | Artist: Mariell Guzman

Wednesday, March 8

6:00 pm–7:00 pm ASA President's Welcome Reception

Thursday, March 9

7:30 am–8:30 am Breakfast & Keynote Speaker: Tom Thibodeau

9:50 am–12:15 pm Education Sessions

1:00 pm For t Worth Stockyards Cattle Drive & Pub Crawl

Friday, March 10

8:00 am–9:00 am Breakfast and Keynote 10:20 am–12:30 pm Education Sessions 12:30 pm–1:50 pm Lunch and Awards

2:00 pm–5:00 pm ED Share!

2:00 pm–3:00 pm SLDF Meeting

2:00 pm–4:10 pm Education Sessions

7:00 pm Billy Bob's Texas Honky Tonk

Accommodations

The beautiful Hilton Fort Worth was listed in the National Register of Historic Places in 1979, and is recognized as the site of JFK’s last presidential address. It is located in downtown Fort Worth, two blocks from Fort Worth Convention Center. Sundance Square is a fiveminute walk, home to theatres, restaurants, and shops. Enjoy all day dining onsite and local tips from the concierge. 815 Main Street Fort Worth, Texas 76102

FEATURE

Cover All Bases: Payment Protection Regardless of Political Season

by Patrick Hogan, Handle.com

Construction contractors are no strangers to uncertainty, and a split senate and congress can significantly impact the sector. Still, as we wait for changes to laws that govern payments to participants in construction projects, it’s best to be reminded of what bases to cover to protect your payments, regardless of the political season.

Strengthen your contracts

Contracts are the main risk management battlefield for construction project participants, so it’s prudent to pay special attention to insertions and clauses from all involved. Many subcontractors and suppliers fail to thoroughly review all contracts for various reasons: maybe they’ve worked with the same people multiple times and are counting on terms to be consistent, or a lack of awareness as to the possible risks an unexamined contract may entail if things go sideways.

There’s often some back and forth when it comes to finalizing contracts–remember to do a thorough review for each exchange. It’s only wise business practice. Of course, it won’t help to ascribe malice to every change in these documents, but you need to put review processes in place to protect your business interest at all times.

Maintain payment-related communication throughout the project

Clear communication is necessary for a project’s success. For many contractors, the focus is fulfilling contractual obligations. Sometimes, accounts receivables can lag in the priority list while causing the most stress and potential negative impact on the business. You must ensure clarity around payments from beginning to end, and any issues that crop up that impede getting paid on the agreed-upon timeline are addressed. Leaving the resolution of payment issues to the end of the project can

cost you significantly, not only in terms of potentially losing payments entirely in case of serious problems but also in terms of payment delays that can severely impact your cash flow.

Invoice regularly

Invoicing regularly is a simple and easy way to ensure that you’re top of mind of your clients’ AP team. Progress billing, in many cases, is the ideal way of issuing pay apps for many contractors. Establishing the invoicing cadence at the beginning of the project is wise. This allows you to ensure that you’re in sync with your client’s payment cycle and reduces the incidence of non-payment due to missing documentation, red tape, or other easily addressable issues as long as they’re identified early on. This also reduces the awkward and uncomfortable interactions about billing–frequent invoicing promotes transparency and staying on the same page, which can only be good for any client-contractor relationship.

File all required preliminary notices

The mechanics lien is a cornerstone of payment protection for subcontractors, GCs, material suppliers, and other allied professionals involved in construction projects. Mechanics liens allow providers and vendors to ensure they get remuneration for the work and materials they have contributed to projects. Lien laws were created to protect payments in construction--an industry that suffers from long payment cycles and other payment issues.

The legal right to file a mechanics lien often is paired with the responsibility to fully inform all parties–sometimes including the county recorder–of your involvement in projects for transparency regarding who is responsible for what payment. Failure to file the required notices can cause you to lose your right to lien. Every state has its rules, so part

of the responsibility is being familiar with the notice timing and documentary requirements for the states you operate in. Using a service for preliminary notice management is the best move because losing your right to file liens could be equivalent to not having the legal right to recover payments in case of issues.

Watch your deadlines

If payments go sideways and you find invoices unpaid after the agreedupon timeline in the contract, remember that using your right to lien to recover payments also comes with corresponding timing requirements that, when not adhered to, can still jeopardize your right to compensation. It’s a reality many construction professionals and contractors have to deal with–the lien-filing process can be cumbersome, especially when you’re involved in multiple projects. Missing deadlines and failing to enforce liens within the timeline required could also cost you to lose out on payments.

Getting the basics right will always serve you well, especially in construction, where shortcuts are rampant, even when the stakes are high. Ensure that you have established processes to avoid needlessly risking your cash flow and bottom line. Use tools that streamline high-value work, especially those essential for business growth and continuity.

About the Author

Patrick Hogan is the CEO of Handle.com, where they build software that helps contractors, subcontractors, and material suppliers with late payments. Handle. com also provides funding for construction businesses in the form of invoice factoring, material supply trade credit, and mechanics lien purchasing.

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