THE
ASA’s
THE OFFICIAL EDUCATIONAL JOURNAL OF THE AMERICAN SUBCONTRACTORS ASSOCIATION
WWW.ASAONLINE.COM
Develop Them and They Will Stay
NOVEMBER 2014
Senior Leadership
The Executive’s Role in Business Development Current Trends in Construction Ethics Motivating Your Workforce Legally Speaking: What to Do When OSHA Knocks—An Employer’s Guide
Register Now!
March 26-29, 2015 Seattle, WA • See page 18
Track Your Qualifications. Win More Business!
Technology for your marketing needs: PQM + GradeBeam + BidOrganizer Market your capabilities & credentials Search for bids. Select your best prospects Track your bids & follow up activity Measure your success Special discounts for ASA Members!
Textura
速
www.texturacorp.com
866-TEXTURA (866-839-8872)
THE
ASA’s
November 2014
Features EDITORIAL PURPOSE 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. The journal is designed to equip construction subcontractors with the ideas, tools and tactics they need to thrive.
Develop Them and They Will Stay—Developing a Firm-wide Solution to Retaining Top Producers....................... 8
The views expressed by contributors to The Contractor’s Compass do not necessarily represent the opinions of FASA or the American Subcontractors Association, Inc. (ASA).
The Executive’s Role in Business Development........................ 12
by Gregg Schoppman
by Stephane McShane
EDITORIAL STAFF Editor-in-Chief, Marc Ramsey
Current Trends in Construction Ethics......................................... 14
MISSION FASA was established in 1987 as a 501(c)(3) taxexempt entity to support research, education and public awareness. 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. FASA provides subcontractors and specialty trade contractors with the tools, techniques, practices, attitude and confidence they need to thrive and excel in the construction industry. FASA BOARD OF DIRECTORS Richard Wanner, President Letitia Haley Barker, Secretary-Treasurer Brian Johnson Robert Abney Anne Bigane Wilson, PE, CPC
by Joe Sapp
Motivating Your Workforce............................................................. 16 by George Hedley
Departments CONTRACTOR COMMUNITY............................................................ 4
SUBSCRIPTIONS The Contractor’s Compass is a free monthly publication for ASA members and nonmembers. Subscribe online at www.contractorsknowledgedepot.com.
LEGALLY SPEAKING.......................................................................... 20
ADVERTISING Interested in advertising? Contact Tony Kozak at (716) 844-8174 or advertising@asa-hq.com. EDITORIAL SUBMISSIONS Contributing authors are encouraged to submit a brief abstract of their article idea before providing a fulllength 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.
What to Do When OSHA Knocks: An Employer’s Guide Michael Davis
Quick Reference ASA/FASA CALENDAR..................................................................... 22 COMING UP....................................................................................... 22
LAYOUT Angela M Roe angelamroe@gmail.com © 2014 Foundation of the American Subcontractors Association, Inc.
T H E
C O N T R A C T O R ’ S
C O M P A S S
N O V E M B E R
2 0 1 4
3
Contractor Community
U.S. Appeals Court Grants Rehearing Requested by ASA in Texas CGL Case After ASA and others in the construction industry argued that an appeals court opinion called into question whether subcontractors can depend on their commercial general liability insurance policies for coverage — coverage previously upheld by other courts — a U.S. appeals court on Oct. 29, 2014, withdrew its prior opinion and granted a rehearing, saying the contractual liability exclusion does not exclude coverage for property damage arising out of breach of a contractor’s duty to repair. In the U.S. Court of Appeals for the 5th Circuit’s Opinion on Rehearing in the case of Doug Crownover and Karen Crownover v. Mid-Continent Casualty Company, the court essentially equated it to the same type of liability for breach of the implied warranty of performance of the work in a good and workmanlike manner under Texas law. That liability does not impose extra liability beyond general law. The opinion amounts to another limitation of the attempt to improperly apply the contractual liability exclusion in the construction context. It includes a discussion of other issues, all of which were resolved in favor of coverage for the insured contractor. “This case will have big picture significance because it sets out another example of a court beating down the effort to extend the contractual liability exclusion to general breaches of contract,” said Patrick J. Wielinski, an attorney with Cokinos, Bosien & Young in Irving,
4
N O V E M B E R
2 0 1 4
Texas, who prepared an amici brief for ASA. “In addition, it also clarifies the scope of the ‘your work’ exclusion to explicitly include damage to the named insured’s defective work and preserving coverage if it was performed by a subcontractor.” Wielinski noted that the opinion indicates that the amount of property damage need not be excessive. “This could open up coverage where a relatively small amount of property damage can give rise to significant consequential damages such as delay,” he said. “All in all, it was a good case for construction policyholders, and it may serve to cause the insurance industry to think twice about pursuing this line of argument, particularly since it lost again in the state where it had gained the most traction in the Gilbert case.” In the amici curiae brief filed on July 18, 2014, ASA, the Texas Building Branch of the Associated General Contractors of America, and the Texas Association of Builders asked the U.S. appeals court for a panel rehearing to decide whether damages for warranty claims due to an “occurrence” are covered under a standard CGL policy or are excluded from coverage by the “contractual liability” exclusion. “This Court’s opinion … denying coverage for defects in the construction of the Crownover home will have a profoundly negative effect, not only upon the construction industry and the insurance brokers and agents that service it, but also upon the ‘consumer’ side of the industry, that is, owners of projects, whether commercial, public or residential,” ASA, AGC-TBB and TAB wrote in the brief. “Amici Curiae respectfully submit that the Court’s opinion
T H E
misapprehends the scope of the coverage available to a contractor or builder for completed operations losses under its CGL policy. In applying the Contractual Liability Exclusion to the express warranty context before it, the Court overextended the exclusion’s scope far beyond the Texas Supreme Court’s opinion in Gilbert …, as clarified and limited by Ewing …. Read together, those two opinions establish that the ‘assumption of liability’ that is excluded must exceed the insured contractor’s liability under general law (Gilbert) and that the implied warranty against defects, equivalent to the implied warranty of good workmanship, does not constitute such an assumption in excess of general law (Ewing).” Read more about this case on the ASA Web site. ASA’s Subcontractors Legal Defense Fund supports ASA’s critical legal activities in precedentsetting cases to protect the interests of all subcontractors. Contributions may be made to the SLDF via the ASA Web site.
FASA Publishes New Edition of Prompt Payment in the 50 States Subcontractors seeking the most current information regarding state laws on prompt payment for commercial construction can now access a newly updated Prompt Payment in the 50 States. ASA and FASA’s 2014 Edition of Prompt Payment in the 50 States charts the state-by-state breakdown of such details as the time frame for payment between owners and prime subcontractors; primes and
C O N T R A C T O R ’ S
C O M P A S S
subcontractors; and subcontractors to lower-tier subcontractors. The 2014 edition provides subcontractors with the latest prompt payment laws for each state. For example, the report describes changes to the Nebraska Construction Prompt Payment Act, which requires the owner or the owner’s representative to pay the prime contractor within 30 days after receipt of a payment request for completed work and a prime contractor to pay a subcontractor within 10 days after contractor’s receipt of a periodic or final payment for subcontractor’s work, provided the subcontractor has otherwise satisfied all conditions precedent to payment. Prompt Payment in the 50 States is available as a downloadable PDF document only to ASA members. (Go to www.asaonline.com, click on LOGIN/ ACCESS MEMBER RESOURCES, and log-in with your email address and password. Then, click on “Advanced Site Search” in the upper right-hand corner of the site and search for “prompt.” The manual will appear under “Members Only and Limited Access Documents.”) Special thanks to ASA general counsel Kegler, Brown, Hill & Ritter, Columbus, Ohio, for preparing this chart for FASA.
ASA Asks Virginia to Clarify P3 Payment Protections In comments to Virginia’s Office of Transportation Public Private Participation on Aug. 18, ASA called on the agency to assure “that payment bonds with the tenets of the Commonwealth’s Little Miller Act are provided on transportation projects” financed through publicprivate partnerships. The agency had invited comments on revisions to its Implementation Manual and Guidelines for the Public-Private
T H E
C O N T R A C T O R ’ S
Partnership Transportation Act of 1995, as amended. In its comments, ASA asserted that “construction subcontractors and suppliers have the most ‘skin in the game’ as the entities that do the vast majority of the actual construction. Further, ASA emphasizes that experience in both the public and private sectors has demonstrated that the degree to which uncertainty of payment for work performed can be eliminated from the process of purchasing construction, the more likely that the construction owner, whether governmental, private or a combination under a P3, will get the best construction for the investment made.” ASA Chief Advocacy Officer E. Colette Nelson said that the Virginia rules are important to subcontractors across the country because “other states frequently point to the Commonwealth’s statute and rules as a model.”
Contractors Face Consequences for Failure to Pay Civil Penalties Federal agencies are increasingly taking steps to prohibit companies that fail to pay previously assessed civil penalties from engaging in further activities with such agencies. Most recently, on Aug. 7, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration issued a final rule that prohibits those that owe civil penalties for hazardous materials violations from performing any further regulated activities if their accounts are delinquent. Essentially, the rule prohibits a party who fails to pay previously assessed civil penalties, as ordered, to engage in any activity regulated by the Hazardous Materials Regulations until the payments are made or an acceptable payment plan has been agreed upon. Under the final rule, the
C O M P A S S
agency must provide the company with a written Cessation of Operations Order before suspending its activities. According to ASA Chief Advocacy Officer E. Colette Nelson, “Although the impact of this type of stepped-up enforcement activity remains to be seen, this rule is still another reason for companies to take seriously civil penalties imposed by federal agencies.” The PHMSA final rule took effect on Sept. 8, 2014.
U.S. Strengthens Subcontractor Payment Assurances On Oct. 16, the Department of Treasury issued a new rule that ASA Chief Advocacy Officer E. Colette Nelson says “will increase the value of payment bonds as a payment assurance to subcontractors and suppliers on federal construction projects.” Under the new rule, a federal agency may decline to accept a surety bond “for cause,” even if the bond is underwritten by a Treasurycertified surety, as long as it follows certain administrative steps assuring transparency and due process. “For cause” includes but is not limited to “circumstances when a surety has not paid or satisfied an administratively final bond obligation.” In a March 2011 letter to the Treasury, ASA supported the Department’s proposed rule emphasizing that subcontractors working on federal construction projects “rely on the payment bonds” underwritten by Treasury-certified sureties to assure final payment. As urged by ASA, the final rule also encourages agencies “to ensure that persons conducting business with the agency are aware that bonds underwritten by the particular certified company will not be accepted.” The new rule will take effect on Dec. 15.
N O V E M B E R
2 0 1 4
5
MAY 7 TH , 8:10 A .M .
A HANDY REFERENCE TOOL BRINGS HIGHER PROFIT WITHIN REACH IN AN INS TANT, A R IK M U L L EN R E A L IZE D THE VA LU E O F M OTI O N I S M O NE Y ®
AmSlab Solutions founder, Arik Mullen, is always finding ways to solidify his concrete business. So when he learned how a simple workbook available through CNA’s Motion is Money® program could highlight hundreds of hours of worker inefficiencies, he called his Risk Control Specialist, conducted a worksite audit, and developed a plan to minimize bending, lifting and reaching for tools. Now AmSlab productivity is up 3%, and Arik’s enjoying a much healthier bottom line.
When you’re looking for programs that help keep workers safe and businesses strong … ® we can show you more. To learn how CNA’s insurance programs for contractors can help your business grow more profitably, contact your independent agent or visit www.cna.com/construction.
The examples provided in this material are for illustrative purposes only and any similarity to actual individuals, entities, places or situations is unintentional and purely coincidental. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. CNA is a registered trademark of CNA Financial Corporation. Copyright © 2014 CNA. All rights reserved.
OSHA Extends Compliance Date for Crane Operator Certification Requirements On Sept. 26, OSHA issued a final rule extending the deadline for crane operator certification requirements by three years to Nov. 10, 2017. The rule also extends by three years the employer’s responsibility to ensure that crane operators are competent to operate a crane safely. During the three-year period, OSHA will address operator qualification requirements for the cranes standards, including the role of operator certification. The final cranes and derricks rule required crane operators on construction sites to meet one of four qualification/certification options by Nov. 10, 2014. After that rule was published, a number of parties raised concerns about the Standard’s requirement to certify operators by type and capacity of crane and questioned whether crane operator certification was sufficient for determining whether an operator could operate the equipment safely on a construction site. OSHA already has started the process of developing a standard to ensure crane operator qualifications.
OSHA Publishes New Injury and Illness Reporting Requirements On Sept. 11, the Occupational Safety and Health Administration published a final rule updating the injury reporting requirements for workplaces. Under the revised rule, employers are required to notify OSHA of work-related fatalities within eight hours and work-related amputations or losses of an eye within 24 hours. Previously, OSHA’s regulations required an employer to report
T H E
C O N T R A C T O R ’ S
only work-related fatalities and inpatient hospitalizations of three or more employees. Reporting single hospitalizations, amputations or loss of an eye was not required under the previous rule. The new rule also updates the list of industries that must maintain records of worker injury and illnesses (i.e., OSHA 300 logs), including adding building material and supplies dealers. All employers covered by the Occupational Safety and Health Act, even those exempt from maintaining injury and illness records, are required to comply with the new rule. To assist employers in fulfilling these requirements, OSHA is developing a Web portal for employers to report incidents electronically, in addition to the phone reporting options. The rule takes effect on Jan. 1, 2015, for workplaces under federal OSHA jurisdiction. Establishments located in states that operate their own safety and health programs (State Plan States) should check with their state plan for the implementation date of the new requirements. OSHA has encouraged such states to implement the new coverage provisions on Jan. 1, 2015, but some may not be able to meet this tight deadline. For more information about OSHA’s new reporting requirements, see https://www.osha.gov/ recordkeeping2014/.
DOL Proposes Rule to Prohibit Pay Secrecy by Federal Contractors and Subcontractors On Sept. 17, the Office of Federal Contract Compliance Programs in the U.S. Department of Labor published a Notice of Proposed Rulemaking to prohibit pay secrecy policies and actions by federal contractors and subcontractors. The NPRM would
C O M P A S S
implement Executive Order 13664, signed by President Barack Obama on April 8, 2014. The NPRM proposes the following changes to the existing regulations: • Amends the Equal Opportunity Clause of Executive Order 11246, issued by President Lyndon Johnson in 1965. The amendment mandates inclusion of the requirement that federal contractors and subcontractors refrain from discharging, or otherwise discriminating against, employees or applicants who inquire about, discuss or disclose their compensation or the compensation of other employees or applicants. An exception exists where the employee or applicant makes the disclosure based on information obtained in the course of performing his or her essential job functions. • Requires that federal contractors incorporate the nondiscrimination provision into their existing employee manuals or handbooks, and disseminate the nondiscrimination provision to employees and to job applicants. • Defines key words such as compensation, compensation information, and essential job functions as used in the Executive Order. • Provides employers with two defenses to an allegation of discrimination: one based on enforcing rules against disruptive behavior; and the other based on the essential functions of the person’s job. Public comments on the proposed rule are due no later than Dec. 16, 2014.
N O V E M B E R
2 0 1 4
7
Feature Develop Them and They Will Stay—Developing a Firm-wide Solution to Retaining Top Producers by Gregg Schoppman The construction industry has experienced its fair share of shortages and scarcity. For the last several years, the scarcity could simply be defined by an overall lack of volume. Previously, concrete and steel both negatively affected construction industry in terms of cost and availability. Price stability is only one of the challenges a firm faces in a volatile marketplace. Managing schedules, meeting customer expectations and long-range planning are all examples of how material scarcity in the construction industry complicates an already complicated process. It is difficult to fathom that one of scarcest resources available to contractors today is not manufactured, mined, or processed. The shortage of qualified field personnel represents the single greatest predicament facing contractors today. The effects of a diminished labor force are not only multi-faceted but also compounding. First, it is important to consider how a labor deficit affects the way firms market and sell their services. Secondly, firms must manage the projects they do have with a depleted and often inadequate staff. As quality, safety, and schedule issues mount resulting from the efforts of poorly trained and poorly lead crews, firms are forced to address attrition of key customers all while continuing to attract new ones. Unlike the aforementioned materials shortages where new mills and plants are constructed to accommodate the market demand, the supply of
8
N O V E M B E R
2 0 1 4
qualified field labor lacks such a bolstering injection.
The Scarcity of Labor Construction leaders are experiencing this very real threat every day. In addition to the general shortage of field labor to do the work, firms are hamstringed with their lack of experienced field supervision and foremen to lead the work. While no one should dismiss the need for competent field technicians, an urgency also lies in identifying people to lead the field in a productive, efficient, safe, and profitable manner. Interestingly enough, the decline in the number of competent field leaders is further exacerbated by aging and impending retirement of many such individuals. The disparity in age among the personnel in the office and field is common. In most cases, it is common to see an average of 10 years age difference between a firm’s project management and its field supervision. On one hand the veteran, more seasoned field supervision, serve as excellent teachers for entry level project engineers and juniorlevel project managers. Conversely, this does nothing to help the shortfall firms will continue to experience without careful scrutiny of how they recruit, attract, train, and cultivate future field personnel. To understand the problem, it is important to look deep at the root causes of how this problem perpetuated. Construction schools and engineering programs have done a superb job in training and educating the current generation of project
T H E
engineers. It would be a fallacy to think that graduates of these programs enter the workforce completely unarmed to deal with the challenging and sometimes grueling world of construction. However, construction firms are slowly realizing the benefits of mentoring and training in order to protect these highly coveted assets. Next, look at the equivalent training grounds for the field. It would be false to say that vocational and apprenticeship programs across the country are doing a poor job in training carpenters, electricians, sheet metal workers, etc. In fact, one could argue that technology has enabled these programs to do a more effective job in teaching these tradesmen. Digging deeper, it becomes apparent that high school students do not lack the ability or the resources to do well in these programs. Rather, they simply lack the desire to enter these programs. Industry pundits have conducted studies on the attractiveness of the construction industry to graduating high school seniors. While attorney, doctor, and engineer always surface as the most au courant of professions, construction trades conspicuously dwell at the bottom of most lists. Not everyone is suited or skilled to endure medical school. However, it may be the increase in technologyrelated positions that have provided would-be construction tradesmen an alternative. Imagine the alternatives — work in an air-conditioned office environment at a call center with a computer, consistent schedule, and seemingly limitless personal growth potential or endure searing/
C O N T R A C T O R ’ S
C O M P A S S
chilling temperatures while exerting considerable energy framing homes or installing sewer lines in 10-foot deep trenches complete with all of the safety hazards and lack of formal career path and upward mobility. It quickly becomes clear that the allure of being a construction worker does not carry the same charm as it did 50 years ago. Times are changing and it would be a safe assumption to say that the supply of labor lags demand with no solution on the horizon.
Evaluating Future Leaders More often than not, most construction superintendents did not enter the workforce as superintendents. They began as general laborers or carpenters, exhibited traits that separated them from their peers, and elevated through the ranks. Top producers may still continue to be identified and promoted in this manner. While the talent pool may appear thinner than it did 10, 20, or 30 years ago, the critical step that is missing is a consistent methodology to identify those that have potential. Often carpenters, operators, finishers, etc., that express some level of initiative or superior technical ability are promoted to foremen, and so on and so on. Their promotion often comes at the encouragement of some superintendent to senior management or through the individual in questions’ own tenaciousness and drive. However, other individuals that may have equal potential but lack the right forum to exhibit their talents may be ignored or discarded. It is evident that this manner of promotion also has the potential to create an invidious environment amongst the rank and
T H E
C O N T R A C T O R ’ S
Figure 1: Career Path Skill Set Mastery file. There exists the same need for a career path at the field level as exists in the office. People will argue that this timeless method of hiring/ promotion has worked for decades and plenty of quality employees have been found in this manner. They themselves may have ascended in this fashion. Finding quality people in the future will require a more innovative approach. A “hit-or-miss” approach to finding future leaders is not only risky, but may fail to identify many other master tradesmen. After all, if the firm is dependent on the field, why not invest in their growth. The first step to proactively managing the human resource component of the construction business is to plot a “career path” for every position within the firm. This means every position from laborer to superintendent has a defined set of expectations and guiding trajectory
C O M P A S S
through the mastery of certain skill sets to assist not only the individual but also the firm in identifying future leaders. Figure 1 (above) provides a conceptual sketch of the skill set mastery process. Ascension up the ladder would require satisfactory completion of numerous critical skills sets complementary to the current position. A person’s foibles and inadequacies can be identified and appropriate training can take place to educate and reinforce. The key to a successful program will be to send the message that the firm is not only serious about the program but is committed to the development of every employee. Measurement through compliance graphics on employee progress will be one way of providing the necessary feedback to the entire staff. An example of a typical graph is
N O V E M B E R
2 0 1 4
9
illustrated in Figure 2 (below). This simple metric demonstrates the opportunities for field development compared to the firm’s actual performance. For example, the firm employs four operators. Within the firm’s “Growth Program” there are 15 modules or skill sets required to achieve a promotion of some kind. According to the data collected, within a year’s time, there are 60 total opportunities for growth (i.e. Four Operators x 15 Modules = 60 Opportunities). By the end of March, 10 modules were completed. Similar graphs can be developed for all positions to illustrate compliance. This aggregate total can be filtered further to examine specific position performance as well as individual performance. Figure 3 (below) illustrates the performance of the operators as on each skill set. In the case of the operators, three of the four operators have mastered Skill Sets 4 and 8. Upper management can quickly peruse this data and also examine the firm’s performance relative to the skill sets complete and not complete. For example, if the firm is continuing to perform unproductively because of poor daily planning and substandard short interval planning, it may be the result of not receiving the knowledge associated with this skill set in accordance with the firm’s set procedure on this matter.
Figure 2: Operator Career Development
10
N O V E M B E R
2 0 1 4
Table 1 examines the performance of each individual.
those at the crew level to have the greatest technicians and leaders in
Table 1: Individual Performance (Operator, “Joe Digger”) Keep in mind this tool is as much a development tool and edification of the individual as it is for identifying top producers within the firm. By monitoring individual performance, management can make conscious human resource decisions and mitigate the risk of utilizing illtrained personnel on complicated construction projects. There will be many people that will reject this system, finding the strict adherence to their professional growth bothersome and too rigid. Their caviling is a flag that they are not only wrong for promotion and advancement but also wrong for the firm. Once again, this program is as much for them as it is for the good of the firm and capturing the precious supply of labor. While some people may not be right for the firm and will filter themselves out through this process, not every person in the field is qualified to be a foremen or superintendent. The objective is not to simply pan for the most desirable candidates and toss away the rest. It is the aim to build people, including
all positions. It is an inalienable truth that some individuals can be great technicians, but lack the business acumen and communicative ability required to be a leader. Years ago, it may have been acceptable to be a “great builder” but be a “weak businessperson.” Now more than ever, superintendents need to be exceptional businesspeople. In light of the competitive margins, managing projects with the bottom line in mind is paramount. This by no means is an indicator that a construction firm’s superintendents and foremen be enrolled in the local university’s MBA or CPA program. Simply put, the best leaders in the field understand that what they do in the field has a direct correlation to the profitability of the firm. Furthermore, we should not abandon those technicians that do not have the desire or ability to reach the next level. It is just as important to continue to motivate and challenge people that have their goals and futures aligned with the firm but cannot physically or mentally achieve the next level. Retention of these individuals is also an important from a resource perspective.
Figure 3: Operator Skill Set Mastery Measurement
T H E
C O N T R A C T O R ’ S
C O M P A S S
Cultivating the Next Generation of Field Leaders Training at the lowest levels within the firm provides everyone with incentive and growth opportunity. It is this same training that provides opportunities to screen the next generation of foremen and superintendents. All of the aforementioned skill sets require some sort of exposure to not only the basic principles but also to the organization’s procedures and protocol. Figure 4 demonstrates a three-tiered training methodology that allows tradesmen the opportunity to educate themselves while allowing management the opportunity to identify key producers and potential leaders. Within Tier 1, tradesmen are given the opportunity to learn specific operational skills. Tiers 2 and 3 begin to indoctrinate the next level of employee to more leadership/business skills directly associated with their station. Within the more technical subjects it would be imperative to also include interpersonal training such as “Communication” and “Negotiating
Skills” specifically suited to the needs of the position. Another beneficial training tactic is to incorporate some level of cross training. While not every company may have the benefit of being able to cross train — possibly as the result of operating under union guidelines — those that do reap several advantages. We have already illustrated the scarcity of labor and its effects on the various trades. By cross training individuals, firms can leverage their ability to do work while minimizing their reliance on multiple streams of tradesmen that are currently in short supply. In no way can we expect concrete finishers to become expert trim carpenters or bulldozer operators to become electricians through a single training session, but through their innate technical ability, they may be able to help mitigate problems and find solutions not easily seen by their counterparts. Furthermore, individuals may find their aptitudes lie within another discipline and thus will ultimately serve the firm better in a new role. In some cases, people sometimes fulfill their current roles
only out of ignorance and simply need someone to show them options better suited and commensurate to their ability. Many will argue that spending time and money on career advancement and training for their employees, particularly in the field, is a waste of energy and resources. Human Resource departments may be viewed as needless overhead that exist only in large sophisticated companies. Regardless of whether the training and career path is conducted solely in-house or with the assistance of industry experts, there is some level of investment required. However, this investment is in a precious resource that appears to be one of the firm’s most important. In order to manage and lead construction firms in this generation, the greatest source of skilled labor and field leaders will come from within. It will be requisite for firms to cultivate their own leaders and technicians in order to meet the industry demands of the future. As a principal with FMI, Tampa, Fla., Schoppman specializes in the areas of productivity and project management. He also leads FMI’s project management consulting practice. Schoppman presented six education modules at ASA’s annual convention, SUBExcel 2014, in March in New Orleans, La., and will present four modules at SUBExcel 2015 in Seattle. Prior to joining FMI, Schoppman served as a senior project manager for a general contracting firm in central Florida. He has completed complex and sophisticated construction projects in the medical, pharmaceutical, office, heavy civil, industrial, manufacturing, and multifamily markets. He has also worked as a construction manager and managed direct labor. Furthermore, Schoppman has expertise in numerous contract delivery methods as well as knowledge of many geographical markets. He can be reached at (813) 636-1259 or gschoppman@fminet. com.
Figure 4: Utilizing the Field Training Pyramid
T H E
C O N T R A C T O R ’ S
C O M P A S S
N O V E M B E R
2 0 1 4
11
Feature The Executive’s Role in Business Development by Stephane McShane
As a construction executive, you have many important roles and responsibilities. Where does business development fall within those responsibilities? Do you know exactly what role you play and how it influences the balance of your organization? Many times, the instruction given by the executive team to the business development professional is, “Go get us more work.” So, what does that mean? It is critical to understand that a solid business development process can make the difference between stagnancy and growth. Your success in the role of leading the business development efforts will greatly influence its success or failure. So, where do we start?
Strategy Strategy is having a clear picture of what you want your company to be. To define this, there are several different type of analysis you can perform to answer three very important questions:
Without a clear set of answers to these three questions, it is very difficult to define where your company will procure new business. You answer these questions as part of
12
N O V E M B E R
2 0 1 4
the strategic planning process, which is a critical step to ensuring future profitability. Another key component of the strategic plan is to make a diversification decision, meaning where the growth is coming from. What customers or work will we pursue that we do not currently have? Diversification in our industry takes shape in six different ways: • Increase wallet share from current customers and markets. • Geographic expansion. • Service line expansion. • Transformative acquisition. • Horizontal diversification — new services to existing clients. • Vertical diversification — new markets and clients. Now that you have come up with a diversification decision, it is time for some robust market, competitor, and buyer analysis. Will the market support your desire to increase work there? Who are the competitors that you face in that market? Analyzing all of this in great detail allows you to focus your business development efforts, and eliminate those strategies
T H E
with a smaller chance of producing profitable opportunities.
Business Development Now that you have defined where you want your business to go, it is time to take that message to the market. Those efforts can be classified with three different methods. The strategy that you define will dictate the methods you choose. The illustration at the top of this page depicts the three different levels of marketing. Tier 1 is defined as reacting to those clients that are already customers. In other words, the phone rings and we respond. Growth via a Tier 1 process is heavily dependent upon your project level staff, your history with the client, your reputation in the market, and the subcontractors that you work with. Tier 2 is an active sales and marketing process in which new work is procured in the traditional view of business development. In this method, your sales force or business development professionals are actively targeting prospects utilizing networking, cold calling, and direct sales. Their efforts will be
C O N T R A C T O R ’ S
C O M P A S S
managed through regularly scheduled marketing and sales meetings. The limitations of these first two tiers of business development are many. First, they are usually dependent upon the volume of work that is available to your current client base. In other words, if their revenue stream fails, your revenue stream fails. The best outcome in this scenario is that your growth rate equals the market growth. Additionally, this level of business development can be subject to depending on one very good business development person, which has its own inherent risks. Tier 3 business development is a defined, systematic approach to winning accounts that are 10 to 20 times the size of your average project. This model will provide your firm with rapid and sustained growth. The requirements of this model are that the executive team is the business development team. Notice that this is an executive team that is combining talents and resources to pursue and close deals. Success in this model is dependent upon aggressive management of the sales process, a very high level of preparation, a tightly defined prospect list, and a close rate of 50 percent or better. Tier
3 business development is needed if there are bigger players moving into your niche, if you are swamped with RFPs but frequently land in second place, your revenues fluctuate with the market, or you’re unable to break through a perceived revenue ceiling.
Organizational Effectiveness You have defined the strategy of where you want your firm to go and have put in place the appropriate sales process to bring that work in the door. The other challenge lies in your ability to deliver on the product you sold. Operationalizing strategy occurs in three components: • Developing systems and processes that add value to the customer via business process re-engineering. • Providing scalable, flexible, and predictable project outcomes via proper project execution processes. • Ensuring that you have a stream of future leaders who are being properly groomed for their personal and professional growth. The executive’s role in the business development is best defined as a
New On-Demand Videos from FASA When it comes to managing your business, the Foundation of ASA is your partner in education. View and listen to FASA’s on-demand videos at an individual workstation or in a conference room for group training. Your order includes access to the on-demand video any time, and as many times as you’d like! This is just one of the on-demand videos available through the FASA Contractors’ Knowledge Depot to meet your business management training needs.
structured, proactive approach. Improved profitability begins with a clear picture of what you want your company to be. Once the strategy has been defined, your role is to craft the message to the market followed by the deployment of a marketing strategy that facilitates the growth goals you have defined. Assessing and realigning the organization to support the strategy structurally and operationally allows you to deliver on the promise you made to the customer and to deliver profitability to your company. Stephane McShane, associate director, Maxim Consulting Group, works with construction-related firms of all sizes to evaluate business practices and assist with management challenges. McShane is keenly aware of the business and, most specifically, operational challenges firms’ face. Her areas of expertise include leadership development, organizational assessments, strategic planning, project execution, business development, productivity improvement and training programs. McShane can be reached via email at stephane.mcshane@ maximconsulting.com.
Contractors’ Knowledge Network
“The Value of Technology and Data Management for Construction” (Item #8073) Do you know the benefits of technology as it relates to your firm’s bottom line? In the video-on-demand, “The Value of Technology and Data Management for Construction” (Item #8073), presenter Michael Pink, founder and CEO, Construx Solutions, LLC, Atlanta, Ga., discusses the technological landscape of the construction industry and illustrates how subcontractors can minimize the risk of budget overruns and delay by studying performance data. Pink also explains which data can be most useful, how it should be obtained, and what to do with the data once it is captured. Price: $65 Members/$95 Nonmembers
Order online at www.contractorsknowledgedept.com or call 1-888-374-3133 T H E
C O N T R A C T O R ’ S
C O M P A S S
N O V E M B E R
2 0 1 4
13
Feature Current Trends in Construction Ethics by Joe Sapp Ethics in construction has moved from being a “hot topic” to an everyday way of doing business. Ethics used to focus on specific situations, such as bid shopping and the perception that contractors and subcontractors treated project owners with disdain because of the way they would start and stop work at will and leaving project sites in a constant state of messiness. While those issues may still exist, ethics in construction is now concerned about the overall state of the industry and those who participate in it. In April 2010, Federal Acquisition Regulation 52.203.13 became effective. The regulation requires contractors and their subcontractors, on certain size federal projects, to have a written code
IN THIS ARTICLE . . . �
�
�
14
Construction ethics is no longer a ‘hot topic.’ It’s an everyday way of doing business. A code of ethics promotes the acting in a moral manner as defined by the employee. A business must actively foster the code of ethics with its employees.
N O V E M B E R
2 0 1 4
of business ethics that is subject to an employee compliance and awareness program. A contractor or subcontractor that violates these requirements can be fined or even terminated. States and other contracting organizations, such as the Los Angeles Unified School District, are refining and expanding their contract code of conduct requirements. Even private owners are adding codes of conduct into their construction agreements. If you read your agreements where 3D/4D modeling is required, you will likely see that you are contractually required to collaborate with all project parties in developing the model; notifying the parties when you discover an error in your work; and correcting your work for free. Whether you realize it or not that is a code of ethics that if violated can result in your being terminated from the project or even sued if damages arise from your non-compliance with the code. There is no question that this holistic approach to ethics in construction will benefit the industry. It also requires you to adopt an all-inclusive approach. This approach includes the development and implementation of a written code of ethics if you do not have one. If you already have a code, you should
T H E
be reviewing it for its effectiveness and compliance with the following important conditions. A code of ethics does not have to be complicated. It can also be called a code of conduct. The prime intent of a code should be to promote the acting in a moral manner as outlined by the company but defined by the employee. A code that tries to dictate what constitutes ethical behavior can have a stifling effect on individuals. Individuals perceive situations in accord with their experiences; personal beliefs; and up-bringing. Some individuals evaluate situations on a religious basis, while others may look at a situation from a legal perspective to determine if they are facing an unethical situation. Neither approach is wrong or right. A company’s code of ethics should not dictate how a person evaluates situations but to make the individual think about how their actions or inactions can affect others, the company, the industry and themselves. A sample code follows: 1. An employee shall treat his or her clients and colleagues with respect and professionalism at all times. 2. An employee shall have full regard to the public interest in fulfilling his or her responsibilities to their employer and client. 3. An employee shall not engage in any deceptive practice which creates an unfair advantage for the Professional Liability Underwriter or another. 4. An employee shall not willfully or recklessly injure or attempt to injure the professional reputation of others. 5. An employee shall ensure that advice shall be provided in a fair and unbiased manner.
C O N T R A C T O R ’ S
C O M P A S S
6. An employee shall not divulge information of a confidential nature acquired during the course of their employment. 7. An employee, to the best of their ability, shall carry out their responsibilities in accordance with current professional practice. 8. An employee shall keep informed of new thoughts and developments related to the services they provide. 9. An employee shall support research and the educational processes associated with their employment. 10. The company shall promote, support and provide the employee with every opportunity to act in accord with this Code of Ethics without repercussion when acting ethically themselves. The above code is a sample code. It does not represent a code that all companies should adopt. It is a guideline that can be used to develop a code or measure an existing code. Company principles should dictate the code which is best for the company. In addition to a code of conduct, companies may want to establish a disciplinary code to enforce ethical behavior. Disciplinary codes are the most controversial portion of company ethics because they are seen as being a form of punishment. Others see disciplinary codes as being necessary to provide teeth to the code. It is argued that if unethical behavior is not punished, then a code is ineffective. Again, neither of the above positions is incorrect. A disciplinary procedure can be effective if it contains due process procedures and the “punishments” are reasonably exercised and not unreasonable sever. Similarly, disciplinary procedures are not needed if the company views ethical violations as not being a product of individual behavior but behavior caused by a company policy or procedure. Ethical concerns can evidence a procedure or policy that places the employee in an
T H E
C O N T R A C T O R ’ S
unethical situation or practice. However, having a code of ethics is not enough. A business needs to actively foster the code of ethics with its employees. A climate of ethical openness needs to be established and protected. Employees need to feel comfortable that they can raise ethical concerns with management, even when the issue may involve management. Employees need to know that there will be no repercussions if they raise a potentially ethical issue. Establishing an ethical safe harbor within the walls of a company is probably more important than having a perfectly worded and structured code of ethics. ENRON had a well-written and thought-out code of ethics. ENRON is also a prime example of companies that did not foster their codes of ethics with their employees. However, there was not a “safe” avenue for employees to take when faced with an ethical concern. Ethical issues appear to have been regularly dismissed. Employees raising issues appear to have been marginalized. Many argue that ENRON’s position regarding ethics is the reason for its downfall. In addition to having a code and safe harbor, leaders must promote ethical compliance with codes by encouraging and supporting employees in taking ethic programs, courses, classes, CEU seminars and other ethical educational offerings. Every employee should be encouraged and supported (financially and socially) to attend an ethics program each year. These programs can assist an individual to be more sensitive to ethical situations as well as alternate means of raising and discussing ethical concerns. The recognition of a possible unethical situation will rest with the individual. Ethics is an individual sport. We can be guided on how to act ethically, but acting ethically is left to the individual. A longtime manager and friend of Warren Buffet resigned because of concerns of ethical behavior. The results of
C O M P A S S
acting ethically can be tough. Acting ethically may not result in a monetary reward but it will always produce a satisfaction that cannot be equaled. The American Institute of Constructors publishes its “Mr. Ethics” column to assist individuals in determining whether they are facing an ethical situation and how to potentially resolve it in an ethical manner. For nearly 25 years, “Mr. Ethics” has been responding to inquiries such as the following:
Dear Mr. Ethics, I am in the process of accepting proposals from subcontractors for the construction of a mixed use project. I have two very competitive proposals that I am considering. The pricing of the proposals is separated by only a thousand dollars or so. One of the subcontractors has noted that it will give me a 10 percent discount on its pricing if I promise to pay invoices within 15 days of receipt. That subcontractor also has an employee on staff that used to work for the owner. The subcontractor wants to meet for to lunch to discuss their bid. I think the subcontractor’s bid proposal is good business practice and I would not be a good businessman if I did not meet with them. Do you think there are any ethical concerns? Regards, Low Bid Contractor How would you respond? How do you think Mr. Ethics responded? If you want to know, visit Mr. Ethics on the AIC Web site or look for the next issue of “The Subcontractor” when the Mr. Ethic’s response is printed. Read more from Mr. Ethics on his blog. Ethics is no longer a hot topic in construction. It is a mainstream, everyday-expected course of conduct. If you are not up to date with a written code of conduct, you are not engaging in best practice. Moreover, you may not be contract compliant. Joseph R. Sapp is the executive director of the American Institute of Constructors & Constructor Certification Commission, Alexandria, Va. He can be reached at (703) 683-4999, Ext. 224, or info@ professionalconstructor.org.
N O V E M B E R
2 0 1 4
15
Feature Motivating Your Workforce by George Hedley
I used to get tired of trying to get my people to do what I wanted them to do. They always had what appeared to be legitimate excuses why they didn’t get the job done on time, or why they didn’t follow my directions, or why it wasn’t their fault when something went wrong out on the jobsite. I used to think I couldn’t find any good help anymore. Or maybe people don’t care about doing a good job anymore. Ort, it seems nobody will take charge, be responsible or accountable. I thought I was the only one who could do the job right. Perhaps, you feel the same some days.
People Are Different from You There is a way to build your construction business with the people you have. You can get them motivated, all on the same page, and working like a winning team with common goals, drive, and excitement. First, successful construction business owners and managers know their people are different from them. They realize employees are not motivated for the same reasons they are. People have different life experiences, backgrounds, beliefs, needs, goals, and personal pressures. Most people don’t think the same as you do, they have different personalities, and will act and react differently than you in most situations. Everyone won’t do things exactly the same way you do with the same intensity. And just because you pay employees a good wage doesn’t mean they’re going to work their fanny off for you. Younger workers today are very different as well. They like continuous
16
N O V E M B E R
2 0 1 4
learning and personal growth in their careers. They don’t like dead-end jobs without advancement in sight. They think they can do your job better than you can. They want to make a lot more money than you provide and will leave jobs quickly when offered more pay. Their loyalty is to themselves and what you can do for them. But, they want to participate in major decisions. They want balance in their life and would rather go home early than get overtime hours. Work is not their No. 1 priority as they value family and friends more than their job. It is your job to discover each employee’s differences, what makes them tick, and help them achieve their goals in order for you to reach your business goals.
The Motivational Problem Is You Years ago, I went through 14 secretaries over a two-year period. I just couldn’t find anyone who would work as hard as I wanted them to work. No one was ever quick enough, or smart enough, or good enough for me. One day I finally realized maybe the problem was me! I had to take responsibility that it was my responsibility to motivate my staff. It wasn’t their job to motivate themselves. Once I realized this fact, my personnel problems turned around, our people became great, and our employee retention moved to 90 percent plus every year. I had been the problem, not them. To motivate your workforce, you’ve got to give them a reason to be motivated. People are motivated for their reasons, not yours. Don’t expect others to understand your passion for customers, or quality work, or the
T H E
need to make a profit. They must want to follow your vision, achieve your goals, and get the job done properly. For example, think of your children. You tell them what you want them to do, but they don’t always follow your wishes. Then you try to bribe them — $100 for an “A,” and they say, “Not enough, Dad.” Frustrated, you scream, “If you’re not home by 10:00 p.m., I’m going to ground you!” Well, you don’t. You let them off the hook and they continue to stretch the envelope. The real problem is lack of accountability and responsibility without consequences. It seems like the same problems you have with your kids are the same with your employees.
Do Your People Want to Follow You? Leaders influence others to want to do what they want them to do. The key word is want. Employees must want to do what you want them to do to get the results you want. You ask and they decide if they’ll do it. When you ask your kids to clean up their rooms, they decide if they’ll do it based on needs, consequences, accountabilities, and responsibilities that affect their decisions. Ask yourself, “What makes people want to follow me?” You know what doesn’t work with your children (and employees) — confusion, lack of trust, no integrity, no accountability, and no consequences. A lot of business owners and managers say, “My people won’t do what I want them to do. I should get rid of them, but I can’t afford for them to leave, so I don’t fire them.” What kind of accountability is this? If they don’t have to do what you
C O N T R A C T O R ’ S
C O M P A S S
want them to do, why should they do more than the minimum to keep their jobs? You’ve got to make them want to do what you want them to do. Exceptional employees require two things — money and happiness. Money includes fair pay and competitive benefits, plus working for a strong company with a good reputation in the community. Happiness is the same, being motivated. You effectively motivate your people with inspirational leadership, continuous motivation, clear and continuous two-way communication, an exciting vision, step-by-step directions, holding people accountable, and giving them full and unquestioned responsibility. Your No. 1 job is to encourage and motivate your people to perform with energy, effort, and enthusiasm, so they’ll go beyond where you want them to go.
Four Steps to Motivate Your Workforce There are four simple and proven action steps to achieve bottom-line results through people. 1. Provide Clear Expectations. People need to know exactly what you want them to do and the results you want them to achieve. Weak managers assume people understand what’s required, don’t take time to spell out what they want, and then don’t make people accountable for achieving desired results. The norm is to tell people to work real hard and try your best. But, this doesn’t let people know exactly what’s expected. People must be told and understand exactly what you want, the specific end results. Examples of clear expectations include: • “By Friday, I expect you to have this installed and 100 percent complete.” • “By the 30th of the month all invoices must be sent out.” • “No extra work will be started without a signed change order.”
T H E
C O N T R A C T O R ’ S
• “All timecards must be complete
and turned in by 9:00 a.m. on Mondays.” • “You must complete all footings within the 750 man-hour budget.” Be specific with clear targets and define the exact results you want. And, make sure your people understand what their individual targets are, what’s acceptable and what’s not, when they hit or miss their target, their consequences for not achieving the results you want, and their rewards for a job well done. 2. Provide Regular Recognition and Praise. The second important action step you must use to get the results you want is to provide ongoing recognition and praise to the people who do the work. Weak and ineffective managers don’t take time to thank people for a job well done. Over time, this causes lackadaisical employees and poor results. In a survey of why people left their company, over 90 percent said they’d never been recognized or praised by their boss, ever, for anything. People want and need feedback and positive reinforcement often for their contributions and efforts. Effective leaders give out praises at least every week to everyone in their sphere of influence. Use words like, “I appreciate you” and “Thanks for a great job.” Keep a simple chart in your day-timer to ensure you recognize all your staff on a regular basis. Strive to praise everyone at least every week and check it off on your chart so you won’t forget someone. Verbal praises work the best, but occasionally write short, handwritten
C O M P A S S
notes to those who went beyond the call of duty. 3. Provide a Clear Understanding of the Big Picture. The third thing your people need is a clear understanding of the big picture (company, employees, customers, projects, etc.) and how they fit in. Successful business owners, managers, and foreman are open and honest and tell employees where their company is going — its vision, what the future has in store, positive and negatives, and changes or adjustment required to be successful. People need to know what’s happening. Otherwise, they tend to think the worst. Several times a month I present seminars to company managers who learn great ideas to build and improve (continued on page 19)
IN THIS ARTICLE . . . �
�
�
Successful business owners understand that their people are different from them. Employees may not be motivated for the same reasons business owners are. Just maybe, you’re the problem!
N O V E M B E R
2 0 1 4
17
Feature
Register Now!
March 26 - 29, 2015 www.SUBExcel.com
Seattle, Washington
Renaissance Seattle Hotel
their businesses. When they go back to their offices, their people are often afraid they’ve been scheming how to squeeze them to work harder. That’s not reality, but without information people fear the worst. Successful leaders constantly tell the real deal — business is good or bad, the future is positive or negative, sales are up or down, productivity is acceptable or not, our people are doing a good job or not. Hold semi-annual, all-company meetings plus monthly project and department meetings where the big picture is discussed and open to questions. 4. Provide a Caring Company Attitude. The fourth action step is to let your people know you care about them as individuals. People need to know you appreciate them as employees and contributors to the company’s success. Employees want to know you care about them,
their personal goals, future, personal development, and their children and family. People must know they’re important. They want to know they will be listened to and have a say in the future of their company. To ensure that you continuously show you care about your employees, keep a “team member profile” sheet on each person in your day-timer. Include their name, family members, schools, hobbies, sports, interests, goals, challenges, contributions, etc. This way you can refer to it on a regular basis and keep track of each team member’s life. By following these simple guidelines you will get your people to want to do what you want them to do, your people will respond and make your life better. Without employee problems, your bottom-line will improve and your company future will be brighter. The key to implement
these recommendations is to do it! All it takes is time. And your investment will equal money in your pocket! Get started! Go motivate someone now! Yes, right now! George Hedley works with contractors to build profitable, growing companies. He is a professional business coach, popular speaker, and best-selling author of “Get Your Business To Work!” available online at www. HardhatPresentations.com. To help you setup a training system, email GH@HardhatPresentations.com for your copy of ‘Field Tracking Systems For Contractors!’ Email George to sign-up for his free e-newsletter, join his next webinar, be part of a BIZCOACH program, or get a discount coupon for online classes at www. HardhatBizSchool.com.
ASA NATIONAL CONSTRUCTION BEST PRACTICES AWARDS Does your company: q
Perform work as a prime contractor?
q
Excel at project management and teamwork?
q
Have a great subcontract?
q
Want to be recognized as an industry leader?
Learn more under “Education and Events” at www.asaonline.com.
Apply by November 21, 2014 T H E
C O N T R A C T O R ’ S
C O M P A S S
These awards, to be presented during ASA’s annual convention, SUBExcel 2015, in Seattle, Wash., March 26-29, 2015, recognize an extraordinary level of commitment to industry best practices. Your application will be evaluated for: (1) use of a standard subcontract whose provisions substantially reflect the best practices incorporated into the ASA-endorsed ConsensusDocs 750, 751 model subcontract agreements; and (2) highly favorable evaluations from three specialty trade contractors, based on 20 project management factors.
N O V E M B E R
2 0 1 4
19
Legally Speaking What to Do When OSHA Knocks: An Employer’s Guide by Michael Davis
The call comes to the lawyer first thing one morning: “An OSHA investigator is in our lobby and wants to do a site visit! What should I do? What rights do I have?” The voice is dripping with panic. That scenario is all too frequent an occurrence these days. If the first time you think about these questions is that very morning, you are already at a distinct disadvantage. Contractors should be prepared for a visit from the Occupational Safety and Health Administration. This includes understanding your legal rights, who should be present, what they should and should not do, and most importantly, how to create a safe work environment for your employees.
IN THIS ARTICLE . . . �
�
�
20
Don’t panic! Understand your rights, who should be present, and how to create a safe work environment. Address any safety issues immediately.
N O V E M B E R
2 0 1 4
In order to be prepared for that knock on the door, address these steps: 1. Designate one person responsible to lead and accompany the OSHA compliance officer. Preferably, this should be the company safety director or the person with primary duty to oversee safety training and compliance. 2. Conduct regular safety training and maintain written records of attendees and subject matter. 3. Maintain a Company Safety Manual, OSHA 100s and 300s, material safety data sheets, and accident records in a central location, readily accessible. 4. Conduct periodic site visits to ensure safety compliance and, when applicable, discipline employees for violations, keeping written documentation of the discipline. If your employees consistently follow these guidelines, they will be ready for that knock.
Initial Meeting You can, to a certain extent, control what happens during an OSHA site visit. First, do not panic! Be confident and polite, but ask to see the officer’s credentials. Once you are told of the purpose of the visit, explain that, per company policy, you must have the safety director present to accompany the officer. Advise
T H E
that you must have authorization to begin the Opening Conference and also contact the superintendent and any involved subcontractors to be present for the walk-through. If you are unable to contact the necessary personnel, politely inform the officer that you or the safety director will call to reschedule the visit. The officer may not like that and will remind you that OSHA can get a subpoena. That is true, but rarely will they do so, if you remain polite and promise to call and reschedule later in the day.
Opening Conference During the Opening Conference, the OSHA officer explains what brought him or her to your site and what he or she intends to do, including a walkthrough, employee interviews and document review. Make certain to record good notes, including a list of all attendees. If the officer wants to interview members of management, the company is allowed to have its attorney present.
Inspection All events during the inspection should be recorded, including taking photos of everything the OSHA officer photographs. Note everything that the officer examines and record any alleged safety violations observed. If any violations are seen during the visit, correct the violations as soon as possible, such as a missing guard rail, lack of trench box, employees missing PPEs, etc.
Closing Conference The Closing Conference is your opportunity to hear the observations and conclusions, as well as any citations, that will be in OSHA’s report. Citations can range from non-
C O N T R A C T O R ’ S
C O M P A S S
serious (technical, paper violations) to serious (injury or death) to repeat or willful. Each citation carries with it a potential monetary fine, from $7,000 up to $70,000 (for willful or repeat violations), so if you disagree, state the reasons and facts. If the violation was committed by a subcontractor, ask the identity.
Post Inspection If the OSHA officer observes safety violations, make all necessary corrections and provide safety training to address these issues. Once you receive citations, forward them immediately to the safety director,
as time is of the essence in deciding whether to request an Informal Conference. Companies have 15 “work days” within which to file a Notice of Contest objecting to the citations on factual and/or legal grounds. During that same time period, a company can request an Informal Conference, which is an opportunity to meet with the OSHA area director or assistant director and negotiate either reduced penalties or elimination of incorrect citations. By following these steps, a contractor can be better prepared for an unexpected OSHA site visit. There will be no need to panic,
as your key personnel will have addressed required safety issues, such as training, enforcement and documentation well in advance. Moreover, you will know your legal rights, as well as the practical steps, to follow in order to protect your company’s rights. Finally, you will understand how to reduce liability and most significantly, maintain a safe work environment. Michael P. Davis, Esq., is a shareholder in Chamberlain, Hrdlicka, White, Williams & Aughtry, Atlanta, Ga. He can be reached at (404) 659-1410 or michael.davis@chamberlainlaw.com.
Use CertainTeed Products ...
REAP THE REWARDS! CertainTeed’s Building Solutions® Program offers valuable rewards when you use multiple CertainTeed products on your commercial projects. Submit your proof of purchase by December 31, 2014, and we’ll add a $50 bonus to your account. Sign up today and start earning! Already enrolled? View the full list of eligible products and redeem your rewards at certainteedrebates.com. 800-233-8990 • certainteed.com • http://blog.certainteed.com ROOFING • SIDING • TRIM • DECKING • RAILING • FENCE GYPSUM • CEILINGS • INSULATION
Insulation T H E
C O N T R A C T O R ’ S
C O M P A S S
N O V E M B E R
2 0 1 4
21
ASA/FASA Calendar November 2014
February 2015
18 - Webinar: Common Practices and Effectiveness of Incentive Compensation
10 - Webinar: Mechanic’s Liens: Protect and Collect
21 - Deadline for Application Submissions to Chapters for 2014 National Construction Best Practices Award
March 2015
in the December 2014 Issue of ASA’s
THE
26-29 - SUBExcel 2015 in Seattle, WA
Coming Up . . .
April 2015
December 2014 9 - Webinar: Where Are We Now? 2014 Election Results and Outlook for 2015 Legislative Sessions 12 - Deadline for Applications for 2014 Excellence in Ethics Awards January 2015 13 - Webinar: Negotiating Retainage
14 - Webinar: Non-Negotiators’ Strategies for Negotiating Outstanding Results May 2015 12 - Webinar: Managing the Life Blood of Contracting - Cash Flow June 2015
Theme: Industry Trends • Flawless Execution—A Brief Examination of the ‘Four Cs’ Affecting the Construction Industry • Howard University: A Case Study in Integrated Energy Solutions
9 - Webinar: Bidding from the Other Side: How GCs Use GradeBeam to Find Subcontractors
• Increasing Fuel Efficiency through Smart Fleet Management
Contact information for all ASA and FASA events/programs: www.asaonline.com education@asa-hq.com
• Employee Fleet Accidents: One of the Most Overlooked and Costly Risks on Construction Sites • 10 Things to Remember When Your Work Is Delayed • Legally Speaking: What to Look for in Upcoming Regulations from an HR Perspective
Win. Win. THE
Look for your issue in December.
Sell your products and services. Advertising reaches industry leaders and decision-makers who spend $11+ billion annually on products and services.
Support ASA. Advertising supports ASA, the industry voice of trade contractors.
Past Issues: Access online at www.contractors knowledgedepot.com
That’s a win-win situation. To advertise in The Contractor’s Compass, contact Tony Kozak at (716) 844-8174 or advertising@asa-hq.com
22
N O V E M B E R
2 0 1 4
T H E
C O N T R A C T O R ’ S
C O M P A S S
What other sureties wouldn’t dream of, we do every day. We’re accessible, responsive, flexible, and always ready to talk. Above all, we handle the bonding cases other sureties can’t. (Or won’t.) So if your case seems a little out of the ordinary, call us instead: (860) 415 8400.
SURETY FOR AN IMPERFECT WORLD
Surety Bonding • Treasury Listed • Rated A VI by A.M. Best • Licensed Nationwide • 30 South Road, Farmington, CT 06032 • (860) 415 8400 Henry Nozko Jr., nozkojr@acstarins.com • Henry Nozko III, nozko3@acstarins.com • acstarinns.com