The Contractor's Compass December 2015

THE

ASA’s

THE OFFICIAL EDUCATIONAL JOURNAL OF THE AMERICAN SUBCONTRACTORS ASSOCIATION

WWW.ASAONLINE.COM

TM

The Flight of the Managers— When a Compensation Problem is NOT a Compensation Problem

DECEMBER 2015

Construction Trends

Improve Bottom Lines by Managing Driver Selection and Cell Phone Distracted Driving Building for the Future— Addressing Construction Industry Workforce Issues SPECIAL FEATURE: Drones in the Construction Industry Commercial Construction Marketing: How Do You Measure Up? On-Page SEO Subcontractors and the ACA: Preparing for 2016 Top Trends in Merchant Processing

Legally Speaking: Do You Want to Be Paid for Extra Work?

Register Online!

March 3-5, 2016 Miami, FL • See page 14

Get Paid Faster

EPP

™

Textura’s Early Payment Program™ (EPP™) allows general contractors to offer subcontractors optional earlier payment.

With EPP, subcontractors can get paid about 5 days after invoice approval – 30 to 90 days sooner than normal payment timing – in exchange for a modest fee.

EPP works by leveraging the financial strength of the general contractor’s balance sheet and using Textura’s CPM® solution to facilitate early payment to subcontractors through Textura’s financial partner, Greensill Capital.

Cash Flow Faster payments Predictable timing Non-recourse funds Financials Reduce reliance on high-cost working capital Strengthen balance sheet Ability to fund growth, expansion Business Reduce business owner’s risk Offer more competitive bids Stronger relationship with general contractors www.texturacorp.com 866-839-8872

THE

ASA’s

December 2015

Features The Flight of the Managers—When a Compensation Problem is NOT a Compensation Problem................................. 10

TM

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.

by Gregg Schoppman

Improve Bottom Lines by Managing Driver Selection and Cell Phone Distracted Driving.............................................. 12

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).

by Michael Ahern

Building for the Future­—Addressing Construction Industry Workforce Issues............................................................... 16

EDITORIAL STAFF Editor-in-Chief, Marc Ramsey

by Laura Cataldo

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.

SPECIAL FEATURE Drones in the Construction Industry............................................. 18 Commercial Construction Marketing: How Do You Measure Up? On-Page CEO.................................... 22

by Jason Myers

FASA BOARD OF DIRECTORS Richard Wanner, President Letitia Haley Barker, Secretary-Treasurer Brian Johnson Robert Abney Anne Bigane Wilson, PE, CPC

Subcontractors and the ACA: Preparing for 2016.................... 24

by KC Cannon, Jr.

Top Trends in Merchant Processing............................................. 26

SUBSCRIPTIONS The Contractor’s Compass is a free monthly publication for ASA members and nonmembers. Subscribe online at www.contractorsknowledgedepot.com.

ADVERTISING Interested in advertising? Contact Tony Kozak at (716) 844-8174 or advertising@asa-hq.com.

by Kimberly Coley

Departments

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.

CONTRACTOR COMMUNITY............................................................ 4 CONSTRUCTION IN THE COURTS.................................................... 8 LEGALLY SPEAKING.......................................................................... 30 Do You Want to Be Paid for Extra Work?

by Ssara M. Thompson

Quick Reference

LAYOUT Angela M Roe angelamroe@gmail.com © 2015 Foundation of the American Subcontractors Association, Inc.

T H E

C O N T R A C T O R ’ S

ASA/FASA CALENDAR..................................................................... 32 COMING UP....................................................................................... 32

C O M P A S S

d e c e m b e r

2 0 1 5

3

Contractor Community

4

ENR Contractor Business Quarterly Profiles ASA President Tish Barker

President Obama Signs Subcontractor Payment Protections

In the Fall 2015 edition of ENR Contractor Business Quarterly, 201516 ASA President Letitia “Tish” Haley Barker, Haley-Greer, Inc., talks about what it’s like to lead the Dallas-based glass and curtain wall business, what it’s like to be a woman “running a company in the male-dominated construction industry,” and what it means to her to lead a national organization like ASA. When she first became vice president and chief financial officer of Haley-Greer, Inc., in 1995, Barker proved her capability — and leadership ability — when she took and “aced” a state glazier’s licensing test. Over the next two decades, Barker has led Haley-Greer to become “one of the most admired subcontractors in Texas for its complex glass work.”

As for being a woman in a maledominated industry, she said, “I just never thought of myself as any different from anyone else. I think a woman is just a person that’s qualified to do the work.”

Barker said she’s “passionate” about ASA. “I think they do such a great job of preparing subcontractors of all sizes to do better work and to have a better business and be more successful,” she said. “And if they’re more successful, then I always tell the general contractors, ‘That means that your job is going to be more profitable, it’s going to be done more timely and those people are going to be able to reach your vision.’”

Read the full profile via the ASA Web site.

On Nov. 25, President Obama signed into law two key surety bond provisions as part of the National Defense Authorization Act of 2016.

One provision requires individual sureties to pledge known and reliable assets to back their bonds, and to relinquish control of those pledged assets to the federal government.

The second provision increases the bond guarantee from 70 percent to 90 percent to sureties in the bond guarantee program sponsored by the U.S. Small Business Administration.

Subcontractors and suppliers on federal public construction projects have no control over the prime contractor’s choice of security provided to the federal government, but they suffer the most harm financially if the provided security proves illusory. “Under the new law, subcontractors and suppliers on federal construction projects will know that adequate and reliable security is in place to assure that they will be paid,” said ASA Chief Advocacy Officer E. Colette Nelson. There will be either a corporate surety bond from a company approved by the U.S. Treasury or assets from an individual surety with readily identifiable value pledged and relinquished to the federal government while the construction project is ongoing.

All persons and entities providing collateral to the federal government will now have to play by the same rules. The SBA Surety Bond Guarantee Program was established to ensure that small and emerging contractors who do not qualify for surety bonds in the standard market have access to the bonds they need to participate in the federal construction market. The sureties bring such contractors to the SBA, and with the SBA’s guarantee, they bond such

d e c e m b e r

2 0 1 5

T H E

contractors. The new law will help more small contractors participate in federal projects and grow their businesses by giving incentives to more surety companies and bond producers to participate in the SBA program. The new law will take effect one year after enactment to allow the Federal Acquisition Regulatory Council and the U.S. Small Business Administration time to develop and publish a regulation.

ASA, NASBP, and SFAA Say Surety Bonds Are Best Practice on P3s ASA joined The Surety & Fidelity Association of America and the National Association of Surety Bond Producers in a letter to the Federal Highway Administration contending that the U.S. Department of Transportation should include performance and payment bonds as a best practice on public-private partnerships in guides it is preparing for state and local governments.

“There are sound, well-recognized public policy reasons for requiring performance and payment security for P3s and the FHWA’s guide should reflect that,” the associations wrote.

The end result of a P3 is a project that provides a public service or facility. The risk to the public entity is increased in a P3 since the public entity is responsible to the taxpayers to deliver a public service or facility, but the public entity does not choose or control the construction contractor and could suffer financial loss if the private partner defaults.

The associations concluded, “The payment protection available for subcontractors, suppliers, and workers and the contract completion protection for public entities should not be compromised and reduced because some financiers and concessionaires are comfortable with less security.”

C O N T R A C T O R ’ S

C O M P A S S

The three associations supported DOT’s effort to provide technical assistance tools, including model contract provisions, to state and local governments undertaking P3 projects. FHWA is developing the tools as part of its Build American Transportation Investment Center, a one-stop-shop for state and local governments, public and private developers and investors seeking to utilize innovative financing and P3s to deliver transportation projects; BATIC was authorized by a Presidential Memorandum issued on July 17, 2014.

ASA and Surety Industry Associations Update P3 Guide Construction of projects for public use through public-private partnerships continues to increase at all levels of government, including at the state and local levels. Many of the P3 programs authorized by the states, however, provide no payment protections for subcontractors and suppliers on P3 projects, on which mechanic’s liens and the requirement for payment bonds most likely do not apply.

ASA, in collaboration with the National Association of Surety Bond Producers and The Surety & Fidelity Association of America, has reviewed the state laws authorizing construction projects to be financed by P3s and determined which programs provide payment assurances for construction subcontractors and suppliers through payment bonds. The revised guide published by ASA, NASBP, and SFAA, “Public-Private Partnership Laws in the States, including Surety Bond Requirements” (2015 Edition), will help subcontractors determine whether they have payment protections before they bid on a P3 project.

T H E

C O N T R A C T O R ’ S

“Many people think that P3s are used only for expensive horizontal construction projects, such as major bridge and highway construction; but P3s are increasingly being used for vertical construction projects, too,” said ASA Chief Advocacy Officer E. Colette Nelson. “They are being used to construct public housing, to renovate or construct educational facilities, and to build or renovate public buildings and public parking facilities.”

During 2015, the District of Columbia and Georgia enacted new laws authorizing public-private partnerships; both laws include requirements that P3 agreements include requirements for surety bonding. Ohio clarified its 2014 law to assure that its director of transportation will require a performance and payment bond on the construction portions of the project.

The chart also adds entries for a new Alabama law expanding the authorization of P3s for transportation projects; a new Arkansas law that authorizes the use of P3s for unpaved state roads; a clarification of a 2014 Maryland law; a Virginia law that authorizes P3s for solar energy projects; and another Virginia law that authorizes the use of P3s in an interstate transportation compact for Interstate 73.

Nelson reminded ASA members to obtain a copy of and review the prime contractor’s surety bond before signing a subcontract and certainly before starting work. Once a subcontractor obtains a copy of the bond, it can expeditiously check the validity of bonds by confirming that the surety is licensed in the jurisdiction of the project and that the bond has been authorized by the surety.

C O M P A S S

NASBP provides step-by-step guidance in its publication Always Verify Your Bond! ASA supports its chapters in their pursuits of state legislation assuring payment protections for subcontractors on P3 projects in many ways, including through its Subcontractor Payment Assurance on PublicPrivate Partnerships in Your State: A Legislative Work Kit.

ASA Tells OSHA: Follow the Law In comments filed on Oct. 26, ASA called on the Occupational Safety and Health Administration to follow the clear language of its authorizing statute with respect to employer recordkeeping.

ASA Chief Advocacy Officer E. Colette Nelson’s letter was sent in response to OSHA’s request for comment on a proposed rule on the “Clarification of Employer’s Continuing Obligation to Make and Maintain an Accurate Record of Each Recordable Injury and Illness.”

OSHA issued its proposal in response to a 2012 ruling by the U.S. Court of Appeals for the D.C. Circuit in AKM LLC, dba Volks Constructors v. Secretary of Labor. In that case, the court ruled that the Occupational Safety and Health Act does not allow the agency to cite an employer for a recordkeeping violation more than six months after the employer failed to maintain the required record. ASA suggested that in its proposed rule, OSHA is attempting to circumvent the court ruling by specifying that an employer’s duty to record an injury or illness continues for as long as the employer is required to keep the record of the recordable injury or illness. That is, according to OSHA, the employer’s duty does not expire just because the employer fails to create the necessary records when first required to do so.

d e c e m b e r

2 0 1 5

5

Nelson pointed out that the OSH Act states, “No citation may be issued under this section after the expiration of six months following the occurrence of any violation.”

Nelson called on OSHA to withdraw its proposed rule.

ASA and Construction Coalition Enter OSHA Dialogue on PELs ASA, in collaboration with 24 other construction industry associations, submitted comments on the management of hazardous chemical exposures in the workplace and strategies for updating permissible exposure limits in response to a Request for Information from the Occupational Safety and Health Administration.

The Construction Industry Safety Coalition told OSHA: “Technological and economic feasibility are issues of paramount importance to the construction industry. Control measures to protect employees from health hazards in the general industry environment do not always work in the construction environment, where work practices, control measures, and environmental conditions are highly variable.”

The coalition urged OSHA to follow key principles, including: • Any modeling used by OSHA to buttress its technological feasibility analysis cannot and should not take the place of “onthe-ground” data gathering by the agency.

• Any model that OSHA uses to enhance its technological feasibility analysis must be validated before use.

• Any modeling used to demonstrate that a proposal is technologically feasible must be presented to stakeholders as part of a proposed rule and stakeholders given an opportunity to comment on it.

6

d e c e m b e r

2 0 1 5

• OSHA must assess costs and

economic feasibility on small entities.

• OSHA should analyze economic feasibility at a micro-level.

In addition, the coalition reiterated that OSHA must continue to consider construction separately from general industry and maritime given the unique and variable conditions on construction worksites. OSHA’s PELs, which are regulatory limits on the amount or concentration of a substance in the air, are intended to protect workers against the adverse health effects of exposure to hazardous substances. Ninety-five percent of OSHA’s current PELs, which cover fewer than 500 chemicals, have not been updated since their adoption in 1971.

ASA Calls for Regulatory Accountability In a letter to the U.S. Senate, ASA called for support of S. 2006, the Regulatory Accountability Act of 2015. Introduced by Sen. Rob Portman (R-OH), Sen. Susan Collins (R-ME), Sen. Angus King (I-ME), and four other original co-sponsors, S. 2006 modernizes the Administrative Procedure Act’s rulemaking process, which has remained unchanged for nearly 70 years.

The bill would bring into the 21st century the rulemaking process now used by agencies to write multibillion-dollar rules by: • Increasing public participation in shaping the most costly regulations before they are proposed.

• Requiring that agencies must choose the least costly option, unless they can demonstrate that public health, safety, or welfare requires a more costly requirement.

T H E

• Giving interested parties the

opportunity to hold agencies accountable for their compliance with the Information Quality Act. • Providing for on-the-record administrative hearings for the most costly regulations to assure that agency data is well tested and reviewed.

• Providing for a more rigorous test in legal challenges for those regulations that would have the most impact.

Help ASA Fund PrecedentSetting Briefs with TaxDeductible Contribution As 2015 draws to a close and you consider how you’ll direct your year-end charitable giving, consider how much more you can do to help construction subcontractors by sending a tax-deductible year-end gift to the Subcontractors Legal Research Fund of the Foundation of ASA. ASA finances its “friend-of-thecourt” briefs entirely by voluntary contributions to its Subcontractors Legal Defense Fund and FASA’s SLRF. So, as you consider the size of your year-end gift, please think about the magnitude and the importance of the challenges that subcontractors face every day — issues like slow or no final payment, pay-if-paid clauses, retainage, a requirement to keep working even in the face of nonpayment, broad-form indemnity, misleading insurance coverages, and more.

As it looks ahead to the many precedent-setting court cases that impact construction subcontractors, ASA has to calculate how much funding is available to fund “friend of the court” briefs on each critical issue. It will help so very much if you can send your year-end gift by Dec. 31. FASA is a 501(c)(3) education foundation; contributions to FASA

C O N T R A C T O R ’ S

C O M P A S S

are tax deductible as a charitable contribution. You can make your contribution through the ASA online store. For more information, visit the ASA SLDF Web site at www.sldf.net.

Dodge Data & Analytics Economist Robert Murray Finds a ‘Number of Positives Going into 2016’ Dodge Data & Analytics economist Robert Murray forecasts total U.S. construction starts to increase 6 percent to $712 billion for 2016, following the 13 percent increase estimated for 2015, which drew much of its lift from the volatile electric utility and gas plant category.

“While the rate of growth for total construction starts in 2016 will be less than what was reported during the 2012-2015 period, there are still a number of positives going into 2016,” Murray wrote in the 2016 Dodge Construction Outlook.

Speaking during Dodge Data & Analytics’ 77th annual Outlook Executive Conference on Oct. 30 in Washington, D.C., Murray, vice president of economic affairs, Dodge Data & Analytics, noted that residential building in 2016 “should maintain its upward track, rising 16 percent.” He expects nonresidential building in 2016 to grow 9 percent, “regaining the upward momentum after the flat to slightly weaker performance in 2015.” Nonbuilding construction, however, is forecast to drop 14 percent after jumping 28 percent in 2015, he said.

“This year’s exceptional dollar amount for the electric power and gas plant category won’t be repeated in 2016, given a sharply lower total for LNG [liquefied natural gas] export terminals, combined with a modest reduction for new power plant starts,” he said. “The public works sector awaits Congress passing

T H E

C O N T R A C T O R ’ S

fiscal 2016 appropriations and a new transportation bill. Both are expected to take place either in late 2015 or more likely the first half of 2016.”

While passing a new transportation bill would alleviate some of the uncertainty being experienced by state departments of transportation, Murray said, the benefits of having a new bill in place are expected to be more apparent in 2017 than next year.

Highlights by sector include: • Single Family Housing: +14 percent in dollars to $187.4 billion (2015) and +20 percent in dollars to $224.8 billion (2016).

• Multifamily Housing: +25 percent in dollars to $85.1 billion (2015) and +7 percent to $91.2 billion (2016).

• Commercial Buildings: +4 percent to $84.3 billion (2015) and +11 percent to $93.7 billion (2016).

• Institutional Buildings: +6 percent to $110.2 billion (2015) and +9 percent to $120.3 billion (2016).

• Manufacturing Buildings: -28 percent to $25.3 billion (2015) and -1 percent to $25 billion (2016).

• Public Works: +2 percent to $122.4 billion (2015) and 0 percent to $122.9 billion (2016).

• Electric Utilities: +159 percent to $60 billion (2015) and -43 percent to $34 billion (2016).

Employee Handbooks: 2016 Required Changes If your employee handbook hasn’t been updated in the past 12 months, it’s out of date, according to SESCO Management Consultants. For example: • Is your at-will statement an invitation to a massive NLRA lawsuit (based on the NLRB ruling)?

C O M P A S S

• Do you realize that you can’t

prohibit discussions on pay and benefits?

• Have you provided clear rules on overtime and off-the-clock work?

• Have you updated your FMLA policy to reflect same-sex marriage couples’ rights to FMLA leave?

Do you know which same-sex marriages are considered valid?

• Have you changed your handbook to reflect the latest DOL rules on nursing mothers?

• Have you updated your leave policies to include time off for employees with relatives in the military, or to prohibit moonlighting while on FMLA leave?

• Have you changed your ADA reasonable accommodations policy to include accommodating pregnant employees?

• Do you have a loyalty, no-gossip or civility statement that could land you in court?

“Your employee handbook can be an invaluable organizational tool ... or an employment lawsuit waiting to happen,” SESCO said. “And in recent years, Congress and state legislatures have been busy enacting laws that directly affect your employee handbook.”

ASA members receive complimentary human resources services provided by SESCO, including Free Handbook Review.

SESCO staff will review and analyze ASA members’ current employee handbook or policies to ensure compliance with federal and state employment regulations, as well as to ensure the employee handbook is effective. Contact SESCO at (423) 764-4127 or sesco@sescomgt.com to request a review and update to this critical document.

d e c e m b e r

2 0 1 5

7

Construction in the Courts Edited by R. Russell O’Rourke, Esq., partner and chair of the Construction Law Group, Meyers, Roman, Friedberg & Lewis, Cleveland, Ohio.

A brief review of recent cases that affect your business Massachusetts. Pursuant to a Sept. 2, 2015, decision, the Supreme Judicial Court of Massachusetts, Worchester, held that an owner owes an implied warranty regarding the sufficiency of a designer’s plans and specifications to a construction manager at risk (“CMAR”).

Courts throughout the country, following the principles set forth in the 1918 United States Supreme Court case, United States v. Spearin, routinely have held that an owner impliedly warrants the sufficiency of the plans and specifications of a design-bid-build project. However, a few court decisions have decided whether the owner’s implied warranty of the designer’s plans and specifications applies to a public CMAR project.

Coghlin Electrical Contractors, Inc. v. Gilbane Building Company is one such decision, deciding that the implied warranty also applies on CMAR projects. The Coghlin decision addressed delays caused by design defects during the construction of a state hospital. The court observed that although a CMAR project differs from a design-bid-build project because the CMAR may have some input in the design process, a designer typically remains ultimately responsible for the design. Therefore, the court held that the public owner — who contracted with the designer — provided an implied warranty to the CMAR as to the sufficiency of the project’s design plans and specifications.

The Massachusetts court also observed that contract clauses requiring the CMAR to “carefully study” and field verify conditions did not disclaim the owner’s implied warranty. Accordingly, the court

8

d e c e m b e r

2 0 1 5

allowed the CMAR to seek damages from the owner for delays caused by deficiencies in the design. However, the court held that the differences in responsibility for the general contractor in a design-bid-build project and those in a CMAR project affect the scope of the implied warranty. This implied warranty on the CMAR project only is available to the extent the CMAR acted in good faith reliance on the defective design and acted reasonably in light of the CMAR’s own design responsibilities. The greater the CMAR’s design responsibilities, the greater the CMAR’s burden would be to show that its reliance on the defective design was reasonable and in good faith. Thus, contractors and owners may want to be mindful of the allocation of design responsibilities and preconstruction service responsibilities when negotiating CMAR project agreements.

Jim Sienicki and Chris Colyer are attorneys at Snell & Wilmer L.L.P. in Arizona. They can be reached at jsienicki@swlaw.com, (602) 382-6351, or ccolyer@swlaw.com, (602) 3826000.

Ohio. Resolving your construction disputes through arbitration is a right — assuming that you included it in your written contract — which you can lose if you are careless.

The Federal Arbitration Act (FAA) provides that a written provision in a contract to settle disputes through arbitration shall be valid, irrevocable and enforceable, save upon such grounds as exist in law or equity for the revocation of any contract.

That language is parroted by the Ohio Arbitration Act. Most states have similar provisions concerning

T H E

arbitration. The catch is the second half of the sentence. If you are not mindful, you can create “such grounds as exist in law or equity for the revocation of any contract.”

In the case Hunter v. Rhino Shield, published on Nov. 5, 2015, the Franklin County, Ohio Court of Appeals held that a party to a lawsuit must claim its right to arbitrate without acting inconsistently with that right. Here, the defendant asserted its right to arbitrate for the first time in its Answer to an Amended Complaint. Normally, this could have worked, but this happened after: acknowledging the court’s jurisdiction over it in its initial Answer — without referencing arbitration; waiting seven months before filing its motion to enforce the arbitration clause; exchanging discovery and scheduling depositions with the plaintiffs; filing a motion for partial summary judgment asking the court to interpret and enforce a provision of the contract — a provision in the contract specifically reserved to the arbitrator; requesting a jury view of the home; disclosing its witness list, opposing plaintiffs’ motions to compel and to amend their complaint; and filing a motion for a protective order. The court held that, “together all these factors militate against a stay of the case pending arbitration,” and focused on the defendant’s Motion for Partial Summary Judgment as, “inconsistent with the right to arbitrate because it places the dispute squarely before the court for resolution on the merits and demonstrates an election to proceed with litigation as opposed to arbitration.”

C O N T R A C T O R ’ S

C O M P A S S

Following a long line of both Ohio and federal case law, the court did acknowledge that, “a court will not lightly infer waiver of a right to arbitrate,” placing the burden of proving the waiver on the party asserting the waiver, requiring them to prove that the waiving party, “knew of the right to arbitrate and, based on the totality of the circumstances, acted inconsistently with that right.”

The lesson — hire a knowledgeable construction attorney to review and negotiate your contracts and other legal documents, and to help you understand their legal intricacies, including your right to arbitrate, if any. Then thoroughly discuss your options before you file a lawsuit or in any way participate in a lawsuit filed against you.

Russell O’Rourke is a partner and chair of the Construction Law Practice of the Cleveland, Ohio, law firm of Meyers, Roman, Friedberg & Lewis, LPA. He may be reached at (216) 8310042 or email.

Ohio. When you receive a phone call from a company looking for information on a former employee that was a less than stellar performer, or worse, fired, do you? (a) Ignore it. (b) Confirm only the fact of prior employment and dates. (c) Give a truthful, negative reference.

Most employers do either “a” or “b”, while very few opt for “c”. Many employers avoid “c” because they fear liability if the ex-employee loses a job because of a negative reference.

Yet, in Ohio and elsewhere, there is nothing illegal about providing truthful, negative information.

For example, Ohio Revised Code 4113.71 creates a privilege for employers to provide information about the job performance of a

T H E

C O N T R A C T O R ’ S

former employee to a prospective employer of that employee.

An employer who is requested by an employee or a prospective employer of an employee to disclose to a prospective employer of that employee information pertaining to the job performance of that employee for the employer and who discloses the requested information to the prospective employer is not liable in damages in a civil action to that employee, the prospective employer, or any other person for any harm sustained as a proximate result of making the disclosure or of any information disclosed, unless the plaintiff in … establishes … (1) … that the employer disclosed particular information with the knowledge that it was false, with the deliberate intent to mislead the prospective employer or another person, in bad faith, or with malicious purpose; or (2) … that the disclosure of particular information by the employer constitutes an unlawful discriminatory practice….

So, if the practice of providing a truthful, non-malicious, good faith, non-discriminatory negative reference is perfectly legal, why are so many employers wary of doing it? Consider Kienow v. Cincinnati Children’s Hosp. Med. Ctr. (Ohio Ct. App. 10/23/15).

Kienow concerned a former employee of Cincinnati Children’s Hospital who failed to get hired by a new employer because of a negative reference she received from her former supervisor. She sued, claiming defamation and tortious interference with her employment. She lost the defamation claim because she brought it too late, but the tortious interference claim survived despite ORC 4113.71.

C O M P A S S

In the court’s words: Cincinnati Children’s maintains that Kienow’s complaint did not plead facts to overcome the statutory privilege. But it is not obvious on the face of the complaint that the privilege applied: there was no allegation that Dayton Children’s “requested” information from Cincinnati Children’s or Morris.

In other words, because Kienow argued that her supervisor at Cincinnati Children’s reached out to her prospective employer without first being asked for the reference, ORC 4113.71 might not apply.

What does all this mean? It means that even though employers hold a legal privilege to provide a negative reference, the associated transactional costs from potential litigation (no matter how unlikely for an employer to lose) is enough of a deterrent such that negative job references are almost non-existent.

Can you provide a negative reference on a marginal exemployee? Absolutely. Should you?

That depends on your tolerance for the potential of litigation, and your belief that people deserve a second chance elsewhere. It is a good idea to speak with your attorney to develop a company policy regarding who in you company is permitted to provide references of any type and to decide what, if any, references should be provided.

Jonathan Hyman is a partner and member of the Labor and Employment Law Practice of the Cleveland, Ohio, law firm of Meyers, Roman, Friedberg & Lewis, LPA. He can be reached at (216) 831-0042 or email.

d e c e m b e r

2 0 1 5

9

Feature The Flight of the Managers — When a Compensation Problem Is NOT a Compensation Problem

by Gregg M. Schoppman The tides are turning once again.

For a time, contractors relished the fact that most of their associates would stay put. Gone were the days of job-hopping and resumes that looked more like patchwork quilts. However, the same forces that have allowed backlogs to grow have also created a new employeedriven marketplace. The market now abounds with free agents, leaving many contractors to question their own compensation models. It is easy to assume that the attrition a firm experiences is primarily due to salaries and employee compensation. For instance, after years of compensation stagnancy resulting from the Great Recession, it is no wonder that employees would experiment and look for greener pastures. The first reaction is one of doubt: “There is NO WAY, the competition is paying that!” As the flight grows from one person to an entire cadre of managers, the kneejerk impulse is to throw more money at the survivors. While money may solve some of the firm’s ails, is it really masking a deeper-rooted issue?

Does this reactionary behavior simply create an organization full of high paid, dissatisfied associates?

Is the Problem Strategic?

Why is it that so many employers think the root cause of their employees’ departures lie within the compensation model? Simply put, this is all the employer hears.

For instance, one could argue that leaving a firm for more money (i.e. “for my family of course …”) is hardly controversial. How often has “leave on a positive note” been pounded into the heads of a manager? On the

10

d e c e m b e r

2 0 1 5

other hand, what if the real reason for an employee departure lies in the fact that they cannot stand their direct superior or that they feel their direct superior is an un-strategic twit? What if that direct superior is you? It seems like the high road offers a less bumpy ride over those last two weeks. So it is easy to see why firms think their problems are bundled in their compensation model.

In fairness, there is a contingent of people that are in fact driven by money. However, there is a larger segment of the population that wants to be connected with a winner. Great construction leaders will often take an introspective approach and examine why someone would leave their firm: • “We’re not going anywhere …”

So often, firms confuse activity for productivity. What is the vision for the firm and how will they get there? If the firm has a vision but it is merely an empty platitude, employees can become deeply frustrated and perceive the firm’s leadership as apathetic and stagnant.

• “One second we’re busy, the next we’re not …” Recession aside, does the firm go from feast to famine in the course of 12 months regularly? Management shifts from chief business developers to chief operations officers and then back again. As the senior team slides from side to side on the ship, most of the passengers and crew will be sick from all of the rockin’.

• “We have no team depth…” A team with no succession plan — at the top and across the firm’s key positions — has no future. People in the firm see it and do not want to be last ones to turn the lights out.

T H E

• “I’m just a cog in the wheel of

this big machine…” This is a deep issue in many firms and manifests itself as a senior management that provides the perception that they care little for the welfare of its associates and rest happily as long as work is getting done in the field.

While none of these issues are insurmountable, the longer they linger, the more complicated the solutions become. One of the easiest solutions is to routinely examine the health of the firm. Ask the team, “how are we doing?” If you see sanitized answers, consider having an outsider – a coach, an accountant, a consultant, your legal counsel – serve as a sounding board. Listen to for key indications that the problems are deeper than just a paycheck.

What Else Are You Offering?

“Make hay while the sun is up.” This is the mantra of many contractors, especially exiting the Great Recession. After “sitting idle” for so long, putting work in place appears to be the cure for managers and superintendents that thrive on construction activity. As firms focus on limiting burgeoning overhead, the inclination is simply adding “just one more project.” Managers manage and superintendents supervise — easy enough to fathom, but what is your firm doing for your employees, other than just paying them. A manager can look at this sequence and see no end or more importantly no future. In the same fashion as the “cog in the machine” symptom, it is important for a firm’s senior management team to examine their team’s overall

C O N T R A C T O R ’ S

C O M P A S S

development. For instance, consider the following: • Long-term Plans — What is an associate going to achieve in the firm long-term? Even if an associate’s long-term plans involve being a senior project manager, what will their training plans look like?

• Innovation — What are you doing to keep your team razor sharp?

Running the engine at 8,000 RPMs is bad and so is running your managers as hard. What are you doing to train on new technology, new trends, etc.?

• Training — And not just the obligatory OSHA 10 hours. Many will argue, “But what if we train them and they leave?” The same argument could be said as a corollary: “What if you don’t train them and they stay?”

• Involvement in the Firm at 30,000 Feet — Sometimes a manager gets a better perspective on their own work when they see it from a different altitude.

• Keep it Fun — Not everyone’s definition of fun is the same, but how does your firm make it fun?

We spend 60 percent to 70 percent of our life at work. Why should this aspect be devoid of fun?

So often, managers and superintendents look like the “Dunkin Donuts” maker of the old 1980s television commercials: “Time to make the donuts.” “Time to build the buildings.” It is easy to get caught up in the minutia of the day-to-day grind, but it also leads to career fatigue and many questions about one’s future.

Maybe It Is the Compensation Maybe the problem is the money, but just not the way you think. The first distinguishing characteristics that should be examined is a firm’s fixed and incentive compensation.

During the hiring phase, base salary has a huge impact on a candidate’s decision-making process. Over time, the variable compensation piece becomes much more important and

T H E

C O N T R A C T O R ’ S

often drives many of the behaviors within a firm. Consider the two compensation models in Figure 1:

Figure 1 — The Continuum of Compensation Models

There are many firms that have migrated back and forth, searching for the perfect compensation program.

“The Black Box” ensures that a team environment is created, but leaves everyone in the firm confused about the criteria used to calculate each year’s bonuses. Additionally, it fails to foster a spirit of meritocracy and could also create free-riders. On the other hand, a compensation program driven totally by project profitability will create a team focused on project profitability. Forget team spirit, especially if that affects one’s annual compensation. “Good of the order” initiatives tend to suffer as time and resources spent in other areas will ultimately impact one’s personal bottom lines. While there is no perfect compensation system, great firms consider the following: • Thresholds and Guardrails — No one can argue that a minimum floor be established as the firm’s minimum before any bonus funding takes place. A minimum dollar value should be set in accordance with ownership desire for a return on their equity or some other financial benchmark.

The doors of the firm have to be kept open to make any bonus program viable.

• Transparency — The targets cannot keep moving. The grading scales, thresholds and parameters should be clear to everyone.

C O M P A S S

• Criteria that Speak to the Core

Values — If the core values of the firm are “customer service, safety, and productivity,” those are the criteria that should be identified as bonus-worthy. This hedges against having your best superintendent being on a job that is financially a failure but successful because of that individual’s merits. Assuming the “bonus pool” is funded, they should be rewarded for exhibiting core values. A firm cannot have core values but have their associates live their lives contrary to them. This brings everything together.

The key themes that every construction leader should recognize are that not every problem within the firm is tied to one’s compensation.

When someone leaves the firm, it should never be taken lightly. Sure, people will leave for a litany of reasons, some of which have little to do with the workplace, firm or strategic direction.

However, so much can be gleaned from attrition and how to use this critical intelligence to drive processes and tools for the betterment of the firm. The same people that are critical to running the projects of today will ultimately be running the business tomorrow.

As a principal with FMI, Tampa, Fla., Gregg Schoppman specializes in the areas of productivity and project management. He also leads FMI’s project management consulting practice. 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.

d e c e m b e r

2 0 1 5

11

Feature Improve Bottom Lines by Managing Driver Selection and Cell Phone Distracted Driving

by Michael Ahern Consider 27 percent of all crashes involve cell phone use, according to the National Safety Council, and past performance of driving behavior is often a “predictor” of future driving outcomes, according to the Insurance Institute for Highway Safety. Effective controls for distracted driving and driver selection of employees who operate company-owned vehicles and/ or a personal vehicle for company business is critical to managing your commercial automobile exposure to loss.

Cell Phones and Distracted Driving Today there are more than 320 million wireless connections in the United States, according to the National Safety Council. And although public sentiment appears to be turning against cell phone use while driving, many admit they regularly talk or text while driving. The National Highway Traffic Safety Administration estimates that 9 percent of all drivers at any given time are using cell phones, and the National Safety Council estimates about one in four motor vehicle crashes involve cell phone use at the time of the crash.

Liability Cases Against Employers from Cell Phone Use by Employees A jury found that a driver and the corporation that owned the vehicle were liable for $21.6 million because testimony revealed that the driver may have been talking with her husband on a cell phone at the time of the fatal crash, according to the National Safety Council.

An employee was involved in a fatal crash while making “cold calls” as he

12

d e c e m b e r

2 0 1 5

Sample company driving policy language • Cellular phones should not be

used while operating a vehicle.

• Allow voice mail to handle your calls. Return the calls and messages when you are not driving.

• If you need to place a call or send a text pull off the road to park in a legal and safe location.

• Ask a passenger to make or take the call.

• Inform regular callers of your driving schedule and when you will be available to talk.

• Keep your hands on the wheel and your eyes and mind on the road while driving.

drove to a non-business related event on a Saturday night. The firm did not own the phone or the vehicle, but the plaintiff claimed that the company was liable because it encouraged employees to use their “car phones” and lacked a policy governing safe cell phone use. His firm settled the lawsuit for $500,000, according to the National Safety Council.

Most employers don’t realize they can be held liable if an employee causes an accident and injures another party while driving a company vehicle or using a personal vehicle for business-related activities. Employers must realize the full extent of their exposure to liability. The legal theory of respondeat superior, or vicarious responsibility, means that an employer maybe held legally accountable for negligent employee actions if the employee was acting within the

T H E

scope of his or her employment at the time of a crash. The key phrase “acting within the scope of his or her employment” can and has been defined broadly in cases of crashes involving cell phones, according to the National Safety Council.

Employers should be worried because: • Cell phone records can be subpoenaed to prove the employee was on the phone.

• Other distractions cannot be identified to a specific time, and many drivers don’t want to say they were distracted and not driving safely.

With the risk of employer liability associated with employee use of cell phones while driving, society’s growing dependence on cell phones, and the new laws restricting cell phone use while driving, it is time — now more than ever — for employers to consider adopting or adapting comprehensive policies and practices concerning employee cell phone use. Considerations include adopting cell phone policies prohibiting employees from using cell phones while driving for business purposes and while driving to and from work.

The restrictions typically include the use of hands-free headsets, as cell phone distraction involves all types of driver distractions: visual, manual and cognitive. Studies indicate it’s the conversation, or cognitive distraction, not the physical act of holding the phone that often contributes to accidents.

While there is no guaranteed defense to liability, developing appropriate policies, training and enforcement mechanisms can help limit potential liability and increase public safety.

C O N T R A C T O R ’ S

C O M P A S S

State legislatures have also responded by passing laws on cell phone use. As of June 2015, according to the Governors Highway Safety Association: • Forty-six states ban all drivers from texting.

• Fourteen states and the District of Columbia ban all drivers from talking on handheld phones.

• Thirty-eight states and the District of Columbia ban Graduated Driver License holders or teen drivers from any cell phone use.

• Twenty states and the District of Columbia have laws restricting cell phone use by bus, school bus or transit drivers.

The Insurance Institute for Highway Safety has a current listing about all U.S. state laws.

Companies with a strong safety cultures can help reduce the risk of injuring employees and the communities in which they live and work by banning the use of cell

T H E

C O N T R A C T O R ’ S

phones while operating any vehicle while being used for company business.

Driver Selection Effective driver selection is one of the most important things an employer can control to prevent vehicle accidents. A company should manage a written Motor Vehicle Records program to assure that you are selecting the right employees to drive for your company and annually qualify them for acceptable driving records. By successfully implementing or updating your program, you can help ensure your company has reliable, skilled employees who are familiar with their vehicles and qualified to operate those vehicles or their personal vehicle that may be used for company business.

A study by the Insurance Institute for Highway Safety found the number of speeding tickets, non-moving violations and accident history a

C O M P A S S

driver has in the past is in a direct relationship to the number of accidents that person will have in the future. This has also been found to be true in other countries outside the United States.

These correlations include: • For every 1,000 drivers with no speed citations in the past three years they had 135 crashes in the next three years.

• For every 1,000 drivers with one speed citation in the past three years they had 199 crashes in the next three years, an increase of 47 percent.

• For every 1,000 drivers with two or more speed citations in the past three years they had 273 crashes in the next three years, an increase of over 100 percent compared to a driver with no speeding citations in the past three years.

Evidence supports that speeding increases the probability of accidents, but other traffic violations are often overlooked. However, a person with

d e c e m b e r

2 0 1 5

13

non-speeding violations has an increased risk having an accident as well. Findings include: • A person with any type of past traffic violation has a higher risk of having an accident than someone with no violations.

• A person with no convictions on their driving record for the past three years can have a crash in the next three years.

• A person with two convictions on their driving record in the past three years is more than twice as likely to have a crash in the next three years as a driver with no past convictions.

• A person with six convictions on their driving record in the past three years is four times as likely to have a crash in the next three years as a driver with no past convictions.

There is a strong pattern for drivers who have had accidents in past three years to have another accident.

• Drivers with no crashes in the past three years may be involved in accidents in the next three years at a rate of one.

• A person with two accidents in the past three years is over two times as likely to have an accident in the next three years as someone with no past accidents.

• A person with four accidents in the past three years is almost four times as likely to have an accident in the next three years as someone with no past accidents.

The increased probability for future accidents based on past accidents is almost the same as it is for past moving violations.

Recommended MVR Guidelines Whether MVRs are obtained by an employer or a third party, managing the driver selection and ongoing qualification process is the employer’s responsibility. There is a broad range of driving violations that CNA classifies into two major categories, “A” and “B”, based on severity level that can be adopted as objective criteria. Type A violations are more severe, such as driving under the influence of alcohol or drugs, speeding in excess of 14 mph over posted limit, etc. Type B

14

d e c e m b e r

2 0 1 5

violations, while still serious, are less severe, such as speeding 1-14 mph over the posted limit, improper lane changes, etc.

CNA has created a Driver Account Driver Profile Tool that is based on proprietary CNA underwriting driver performance data. It provides an insured with a snapshot of fleet driver performance, which can then lead to quality benchmarking and improvement programs of driver selection. Through this exclusive assessment, CNA risk control consultants can advise and assist insured’s in managing the effectiveness of driver selection.

The CNA driver account profiles, low/moderate/high risk, is a CNA definition used to differentiate insured

that contains 5 percent of their drivers with Type A violations and 15 percent with Type B, however they appreciate the information and can work with their CNA risk control consultant to improve their driver selection process.

It is crucial for employers to know their employee driver profile’s quality to help reduce the risk of serious consequences of physical and financial harm and perhaps and allegation or claim of negligent entrustment.

Mike Ahern is an assistant vice president of construction at CNA. CNA’s construction segment provides a complete array of coverages for thousands of contractors and construction firms countrywide.

Through its unique and flexible insurance programs, CNA has earned

Effective Jan. 3, 2012, the Federal Motor Carrier Safety Administration prohibits anyone operating a commercial motor vehicle from using hand-held cell phones while driving. The National Safety Council in their Feb. 21, 2012, newsletter indicated that this ruling affects more than 4 million trucks and bus drivers.

Commercial motor vehicle drivers are restricted from holding a mobile telephone to conduct a voice communication, dialing a mobile telephone by pressing more than a single button, or reaching for a mobile phone in an unacceptable and unsafe manner.

Any violation of this restriction may result in a civil penalty imposed on drivers in an amount up to $2,750; a civil penalty may be imposed on employers who fail to require their drivers to comply in an amount up to $11,000, according to the U.S. Department of Transportation, Federal Motor Carrier Safety Administration.

driver selection quality. The profiles are not necessarily an indication of insurability or overall account quality.

Using the definitions from the driver performance key enables the insured and CNA risk control to benchmark and set goals for improvement.

When viewing the results that generate moderate or high risk, an insured’s response may be analogous as follows: While we may not like the results from our annual physical, for example elevated cholesterol, it is better that we know so we can consult with the doctor and via medication and/or diet, we can manage the cholesterol to a more healthy level. Not knowing and taking no action will lead to elevated health risk.

In much the same way with the MVR profile, the customer may be disappointed to find they have a profile

T H E

the endorsement of many national construction trade associations for roofers, electricians, plumbers, landscapers and many more. For a complete list of CNA insurance solutions for this industry, call 800-CNA-6241 or visit www.cna. com/construction. Ahern can be reached at michael.ahern@cna. com. The information, examples and suggestions presented in this material have been developed from sources believed to be reliable, but they should not be construed as legal or other professional advice. Use of the term “partnership” and/or “partner” should not be construed to represent a legally binding partnership. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. CNA is a registered trademark of CNA Financial Corporation. Copyright © 2014 CNA. All rights reserved.

C O N T R A C T O R ’ S

C O M P A S S

American Subcontractors Association, Inc.

MARCH 3 – 5, 2016 HYATT REGENCY • MIAMI, FLORIDA

REGISTER ON LINE NOW!

IRD EARLY-B S NT END DISCOU

2016 FEB. 8,

1004 Duke St. . Alexandria, VA 22314 . www.asaonline.com . (703) 684-3450 . meetings@asa-hq.com

THANK YOU, SPONSORS! PLATINUM LEVEL

GOLD LEVEL

SILVER LEVEL

BRONZE LEVEL

YOU’RE INVITED! A national economist. A popular senior business consultant.

A national motivational speaker.

Our own government advocacy expert. A luxurious dinner cruise on board a $5 million yacht! And a skinny German juggler?

SUBExcel 2016 promises to be another outstanding, if not memorable, event that, in my opinion, you won’t want to miss!

Our annual convention will take place March 3-5, 2016, in Miami, Fla., where we will commemorate our 50th anniversary. I would like to personally invite you to attend!

I also would like to invite you to arrive early to Miami to attend the President’s Welcome Reception from 5:30 p.m. to 7:00 p.m. on Wednesday, March 2, on the lower terrace of the Hyatt Regency Miami, which overlooks the Miami River. The annual convention will begin the following morning.

One of the most recognizable economists, Anirban Basu of Sage Policy Group, Baltimore, Md., will kick off the program with the opening general session, “The Economist Who Loved Me,” on Thursday, March 3. Basu is the chief economist to the Associated Builders and Contractors and the chief economic advisor to the Construction Financial Management Association.

Also on Thursday, ASA Chief Advocacy Officer E. Colette Nelson will present “The Race for Re-Election,” where registrants will participate in a role-playing exercise and experience first-hand the challenges of a legislator deciding how to vote on controversial issues. “Will you be re-elected?” Nelson asks.

Then, we’ll enjoy the hilarious “Hilby the Skinny German Juggle Boy,” who will entertain us during our keynote luncheon with his juggling and circus skills.

On Thursday afternoon, we’ll have a “Shop Talk Round Table” where we will share in a

discussion about business issues and challenges.

On Friday, Chad Pearson of Plexxis Softare will facilitate a technology round table discussion, “Outpacing Technology, Trends and Rising Expectations in the Trades,” over breakfast and Stephane McShane of Maxim Consulting will present education workshops on “Performance-based Incentive Compensation” and “Change Order Management.”

On Friday, we’ll also have an “Ask an Attorney” panel discussion with the ASA Attorneys’ Council, a “Speed Dating” Luncheon Round Tables with Exhibitors, and built-in free time for many of us to explore Miami.

On Saturday morning, Dr. Scott Sheperd, a national speaker from St. Louis, Mo., will give the keynote presentation, “To Manage Stress, Rekindle Your Spirit,” and Dr. Nitish Singh, associate professor, St. Louis University’s John Cook School of Business, and president of IntegTree, will present “What We Need to Communicate & Why? Toward Effective Compliance Communications.”

ASA will conduct its Annual Business Meeting from 11:00 a.m. to 12:30 p.m. on Saturday.

Finally, SUBExcel 2016 will conclude with a 50th Anniversary Celebration on board the Biscayne Lady, a 111-foot luxury yacht on Saturday, March 5. The dinner cruise will include a reception, banquet and awards gala. Formal attire for this special event is encouraged!

I hope you will be able to join us in this special anniversary celebration!

Sincerely,

Letitia “Tish” Haley Barker 2015-16 ASA PRESIDENT

Get proven business tips from acclaimed speakers that will transform your company and your bottom line to succeed in today’s construction markets.

Learn about the latest productivity-enhancing products and services provided by ASA exhibitors.

Enjoy the excitement of the Hyatt Regency Miami!

On the Miami River in the heart of downtown, Hyatt Regency Miami provides luxurious amenities and accommodations in a vibrant setting. Explore the Riverwalk and shops at Bayside Marketplace, and tour nearby tropical gardens.

Conference Attire

Dress for education workshops, general sessions, committee meetings, council meetings, task force meetings, annual business meeting, and special events is business casual. Formal attire for the 50th anniversary celebration on board the Biscayne Lady is encouraged.

Hotel Information

Make your online room reservations in the ASA room block at the Hyatt Regency Miami at the special rate of $199 single/ double/$244 triple/quad. The cutoff date for the room block is on or before 5:00 p.m. on Wednesday, Jan. 26, 2016. Or, call (888) 421-1442 and identify yourself as a member of the “American Subcontractors Association 2016.”

Check-in 4:00 p.m.

Check-out 11:00 a.m.

Parking $39 per night Download a fact sheet about the hotel.

Airport & Transportation

Miami International Airport (MIA) is 7.6 miles, or a 16-minute drive, from the Hyatt Regency Miami. Founded in 1928, MIA offers more flights to Latin America and the Caribbean than any other U.S. airport, is America’s second-busiest airport for international passengers and boasts a lineup of more than 100 air carriers.

Enjoy special events, including the March 2 President’s Welcome Reception on the lower terrace of the Hyatt Regency Miami, the special 50th anniversary celebration on board the 111-foot luxury yacht, the Biscayne Lady, and other activities.

Take a deeper look at your industry, your chapter, and your association and be part of mapping our industry’s path forward in ASA’s task force, committee and council meetings.

& much more!

Shuttle & Taxi Information

Passengers at MIA are advised to ignore offers of transportation from solicitors inside the terminal. Solicitation of ground transportation is an illegal activity and many illegal solicitors are unlicensed and uninsured. To obtain safe and legitimate ground transportation, please be sure to go to the designated Taxi and Shuttle stands that are located at the lowerlevel curb, outside of the baggage claim area, where uniformed Miami-Dade Aviation Department staff members will be happy to assist you. Please ignore any non-uniformed persons offering to assist with transportation or baggage. Always seek out uniformed airport employees with MIA ID badges for assistance.

Car Rental Information

The Rental Car Center (RCC), just 1 mile east of MIA, houses 16 rental car companies in one stunning new 6,500 vehicle facility. The RCC is located at 3900 NW 25th Street, Miami, Fla. 33142. Use the MIA Mover to connect between the airport and the RCC. The MIA Mover Station is located on the 3rd level, between Dolphin and Flamingo garages.

REGISTRATION Register online at www.SUBExcel.com — or complete and return the Printable Registration Form on page 11 to meetings@ asa-hq.com — on or before Feb. 8, 2016, to take advantage of the early-bird registration discounts. You can still register at the regular price after Feb. 8, 2016. Full registration includes admittance to all educational workshops, general sessions, meal events, social functions, and committee and task force meetings. Full spouse registration includes admittance to all educational workshops, general sessions, meal events, social

functions, and committee and task force meetings. The cost of the two special spouses’ outings — a tour of Miami and a visit to the Vizcaya Museum & Gardens — is not included, but tickets may be purchased separately.

Save $200 by staying at the convention hotel: Hyatt Regency Miami, 400 South East Second Avenue, Miami, FL 33131-2197, (305) 358-1234.

Make your online room reservations in the ASA room block at the special rate of $199 single/double, $244 triple/quad.

Early Registration (by Feb. 8)

Regular Registration (after Feb. 8)

(Add $200 if NOT staying at the Hyatt)

(Add $200 if NOT staying at the Hyatt)

1ST-Time ASA Member Attendee

$795

$895

ASA Member

$895

$995

2

$699

$799

$495

$595

$595

$695

$1,095

$1,195

Complimentary

Complimentary

$447.50

$497.50

ND

Company Registrant

Spouse/Guest Attendee **Spouses’ outings not included

Past National ASA President / National ASA Chair Attendee ASA Non-Member New Executive Directors & EDs Attending for the 1st Time **Includes ED Outing

All Other EDs (50% Discount) **Includes ED Outing

EDUCATION DAY PASSES If you are unable to attend the entire convention, you can purchase a day pass for $350/day and have access to all educational workshops and committee/task force meetings for one day. Day passes do not include entrance to ticketed events such as meal functions and social events. See the registration form on page 11 for details.

SPECIAL EVENTS WEDNESDAY, MARCH 2 President’s Welcome Reception Lake Terrace, Hyatt Regency Miami 2015-16 ASA President Letitia “Tish” Haley Barker invites you to arrive in Miami early to attend the President’s Welcome Reception from 5:30 p.m. to 7:00 p.m. Join colleagues and friends outside the Hyatt Regency Miami on the Lower Terrace overlooking the Miami River.

THURSDAY, MARCH 3 Spouses’ Outing: Miami City Tour 1:30 p.m. to 4:30 p.m.

This fully guided bus tour will showcase some of the major sights in and around Miami, Florida. Spouses will visit the Art Deco District, the Holocaust Memorial, Wynwood, the Botanical Garden, Key Biscayne, and Little Havana.

The cost of this special outing for spouses is NOT included in the full spouse registration. Individual tickets may be purchased online for spouses and guests.

The Biscayne Lady is where ASA’S 50th Anniversary Celebration will take place.

FRIDAY, MARCH 4 Spouses’ Outing: Vizcaya Museum & Gardens 1:30 p.m. to 5:00 p.m.

Villa Vizcaya, built in 1916, now named the Vizcaya Museum & Gardens, is the former villa and estate of businessman James Deering, of the Deering McCormick-International Harvester fortune, on Biscayne Bay in the present-day Coconut Grove neighborhood of Miami, Fla. The early 20th century Vizcaya estate decorated and furnished with antiques from Europe also includes extensive Italian Renaissance gardens, native woodland landscape, and a historic village outbuildings compound. The landscape and architecture were influenced by Veneto and Tuscan Italian Renaissance models and designed in the Mediterranean Revival architecture style with Baroque elements.

The cost of this special outing for spouses is NOT included in the full spouse registration. Individual tickets may be purchased online for spouses and guests.

Executive Directors’ Outing 2:00 p.m. to 5:00 p.m.

ASA chapter executive directors will tour Little Havana, experiencing the tastes, sounds, and atmosphere of the Cuban community in Miami.

SATURDAY, MARCH 5 50th Anniversary Celebration: Reception, Banquet & Awards Gala 6:30 p.m. to 10:00 p.m.

Biscayne Lady Dinner Cruise This year’s SUBExcel reception, banquet, and awards gala will take place on board the Biscayne Lady, a 111-foot luxury yacht. Boarding and cocktails will begin at 6:30 p.m. The cruise will set sail at 7:00 p.m. and will return at 10:00 p.m. Formal attire for this special event is encouraged.

CONFERENCE SCHEDULE *subject to change

WEDNESDAY, MARCH 2 8:00 a.m. – 1:00 p.m.

Finance Committee Meeting

10:00 a.m. – 1:00 p.m.

Executive Committee Meeting with Lunch

Noon – 5:00 p.m.

Registration Open

1:30 p.m. – 3:30 p.m.

Chapter Leadership Council and Leadership Training — “Unlocking the Best,” Jon Bohm, Driven Coaching, Goodyear, Ariz.

1:30 p.m. – 3:30 p.m.

EDs’ Council and ED Training

3:45 p.m. – 4:45 p.m.

Joint Meeting of the Chapter Leadership Council and EDs’ Council

5:30 p.m. – 7:00 p.m.

President’s Welcome Reception

1:30 p.m. – 4:30 p.m.

Spouses’ Outing — Miami City Tour

1:45 p.m. – 2:00 p.m.

Networking Break

2:00 p.m. – 4:15 p.m.

Education Workshop — “Shop Talk Round Table” — Bring Your Business Issues to Discuss

2:00 p.m. – 3:15 p.m.

Executive Director Education Workshop — “Meeting the State Legislator’s Committee Challenge,” E. Colette Nelson, Chief Advocacy Officer, American Subcontractors Association, Alexandria, Va.

2:30 p.m. – 4:30 p.m.

Exhibitor Set-Up

3:15 p.m. – 4:30 p.m.

Silent Auction Set-Up

4:30 p.m. – 6:30 p.m.

EXPO and Silent Auction

THURSDAY, MARCH 3 7:00 a.m. – 5:00 p.m.

7:00 p.m. – 10:00 p.m.

ASA-PAC Event

Registration Open

8:30 a.m. – 9:15 a.m.

Breakfast

9:15 a.m. – 10:45 a.m.

Opening General Session — “The Economist Who Loved Me,” Anirban Basu, Sage Policy Group, Inc., Baltimore, Md.

10:45 a.m. – 11:00 a.m.

Networking Break

11:00 a.m. – 12:15 p.m.

Education Workshop — “The Race for Re-Election,” E. Colette Nelson, Chief Advocacy Officer, American Subcontractors Association, Alexandria, Va.

11:00 a.m. – 12:15 p.m.

Executive Director Education Workshop — “Inspired Leadership,” Jon Bohm, Driven Coaching, Goodyear, Ariz.

12:15 p.m. – 1:15 p.m.

Keynote Luncheon — Hilby the Skinny German Juggle Boy

1:15 p.m. – 1:45 p.m.

Mini Workshop — Hilby the Skinny German Juggle Boy

FRIDAY, MARCH 4 7:00 a.m. – 5:00 p.m.

Registration Open

7:30 a.m. – 8:45 a.m.

Keynote Breakfast Technology Round Tables — “Outpacing Technology, Trends and Rising Expectations in the Trades,” Chad Pearson, Director Of Business Development, Plexxis Software, Woodbridge, Ontario, Canada

9:00 a.m. – 10:15 a.m.

ASA Task Force on Government Advocacy Meeting Part 1 — Facilitated

by E. Colette Nelson, Chief Advocacy Officer, American Subcontractors Association, Alexandria, Va.

9:00 a.m. – 10:15 a.m.

Education Workshop — “Performance-based Incentive Compensation,” Stephane McShane, Maxim Consulting, Denver, Colo.

9:00 a.m. – 10:15 a.m.

Executive Directors’ SHARE!

10:15 a.m. – 10:45 a.m.

Networking Break with Exhibitors

10:45 a.m. – Noon ASA Task Force on Government Advocacy Meeting Part 2 — Facilitated

by E. Colette Nelson, Chief Advocacy Officer, American Subcontractors Association, Alexandria, Va.

10:45 a.m. – Noon Education Workshop — “Ask an Attorney,” a Panel Discussion with the ASA Attorneys’ Council

10:45 a.m. – Noon Executive Directors’ SHARE!

Noon – 1:30 p.m.

“Speed Dating” Luncheon Round Tables with Exhibitors

1:30 p.m. – 1:45 p.m.

Networking Break

1:30 p.m. – 3:00 p.m.

Exhibitor Break-Down

1:30 p.m. – 5:00 p.m.

Spouses’ Outing — Vizcaya Museum & Gardens

1:45 p.m. – 3:00 p.m.

Education Workshop — “Change Order Management,” Stephane McShane, Maxim Consulting, Denver, Colo.

1:45 p.m. – 3:00 p.m.

Education Workshop — “Risk Management Panel,” Jonathan Watras, Zurich, Endina, Minn.; Michael Ahern, CNA Insurance Co., Chicago, Ill.; and others.

1:45 p.m. – 3:00 p.m.

ASA Task Force on the Subcontractors Legal Defense Fund Meeting

2:00 p.m. – 5:00 p.m.

Executive Directors’ Outing — Tour of Little Havana Experience the tastes, sounds, and atmosphere of the Cuban community in Miami.

3:15 p.m. – 4:30 p.m.

ASA Task Force on Contract Documents Meeting

5:00 p.m. – Evening on Your Own

6:00 p.m. – 10:00 p.m.

Attorneys’ Council Reception

SATURDAY, MARCH 5 7:00 a.m. – 1:00 p.m.

Registration Open

7:30 a.m. – 8:15 a.m.

Breakfast

8:00 a.m. – Noon Attorneys’ Council Meeting

8:15 a.m. – 9:00 a.m.

Saturday Keynote Presentation — “To Manage Stress, Rekindle Your Spirit,” Dr. Scott Sheperd, St. Louis, Mo.

9:00 a.m. – 9:15 a.m.

Networking Break

9:15 a.m. – 10:30 a.m.

Education Workshop — “What We Need to Communicate & Why? Toward Effective Compliance Communications,” Dr. Nitish Singh, associate professor, St. Louis University’s John Cook School of Business, and president, IntegTree

9:15 a.m. – 10:30 a.m.

Executive Directors’ SHARE!

10:30 a.m. – 11:00 a.m.

Networking Break

11:00 a.m. – 12:30 p.m.

Annual Business Meeting

12:30 p.m. – 1:30 p.m.

Executive Committee and ASA Board of Directors Luncheon

1:30 p.m. – 4:30 p.m.

ASA Board of Directors Meeting

12:30 p.m. – 7:00 p.m.

Explore Miami

6:30 p.m. – 10:00 p.m.

Biscayne Lady Dinner Cruise — 50th Anniversary Celebration: Reception, Banquet & Awards Gala

EDUCATION PROGRAMS WEDNESDAY, MARCH 2 1:30 p.m. – 3:30 p.m.

Chapter Leadership Council and Leadership Training — “Unlocking the Best” Presented by Jon Bohm, Driven Coaching, Goodyear, Ariz.

An interactive workshop to help you inspire others to bigger results while unlocking the best in yourself.

1:30 p.m. – 3:30 p.m.

EDs’ Council and ED Training— ”Understanding Yourself and Others: Personality and Leadership” Presented by Jamie Hasty, SESCO Management, Bristol, Tenn.

Effective leaders understand the importance of understanding their behavioral tendencies and how their style may affect others. Truly superior leaders recognize the importance of assessing behavior and using that knowledge in assigning work, directing tasks, and in creating efficient teams. Further, this assessment is vital in dealing with Boards of Directors and association members. During this presentation, participants will complete the DiSC Personal Profile to model their own leadership style.

THURSDAY, MARCH 3 9:15 a.m. – 10:45 a.m.

Opening General Session — “The Economist Who Loved Me” Presented by Anirban Basu, Sage Policy Group, Inc., Baltimore, Md. Basu will provide a detailed, datadriven update of the performance of the global, national, and relevant

regional economy. He will pay special attention to key aspects of economic life, including trends characterizing financial, real estate, energy, and labor markets.

12:15 p.m. – 1:15 p.m.

Keynote Luncheon — Hilby the Skinny German Juggle Boy 11:00 a.m. – 12:15 p.m.

Executive Director Education Workshop — “Inspired Leadership” Presented by Jon Bohm, Driven Coaching, Goodyear, Ariz.

An interactive workshop to help you build a growing organization and a high performing team by leading volunteers with inspiration and purpose.

11:00 a.m. – 12:15 p.m.

Education Workshop — “The Race for Re-Election” Presented by E. Colette Nelson, Chief Advocacy Officer, American Subcontractors Association, Alexandria, Va. Citizens are often quick to forget the geographic nature of government in the United States. No matter what groups are involved in an issue, on Election Day, it all comes down to the people who live and vote in a Congressional district. No matter how cynical you are, this case study will help you understand how critical it is for a lawmaker to respond to the district from which he or she is elected. In this case study and roleplay, you’ll experience first-hand the challenges of a legislator deciding how to vote on controversial issues.

Will you be re-elected?

SEE REGISTRATION FORM

2:00 p.m. – 3:15 p.m.

Executive Director Education Workshop — “Meeting the State Legislator’s Committee Challenge” Presented by E. Colette Nelson, Chief Advocacy Officer, American Subcontractors Association, Alexandria, Va. The legislative process is full of uncertainty. This is particularly true in the committees of state legislatures. Some votes are more important than others, as are some lawmakers and, depending on where they live, some grassroots advocates. So, strategy is critical for grassroots organizers, like ASA chapter leaders. In this case study and role-play, you’ll experience the challenges of a legislative committee as you pass a bill through the legislature while at the same time defeating the legislation of your opponents.

2:00 p.m. – 4:15 p.m.

Education Workshop — “Shop Talk Round Table” Bring your business issues to discuss.

FRIDAY, MARCH 4 7:30 a.m. – 8:45 a.m.

Keynote Breakfast Technology Round Tables — “Outpacing Technology, Trends and Rising Expectations in the Trades” Presented by Chad Pearson, Director Of Business Development, Plexxis Software, Woodbridge, Ontario, Canada Finding the right technology for your organization can be an overwhelming task riddled with tough questions.

How do you search through the endless options? Is your trade

becoming an app-driven industry?

Is there really a complete solution?

Learn from IT professionals, and fellow members, on how to build your road map to a better, more productive business.

9:00 a.m. – 10:15 a.m.

Education Workshop — “Performance-based Incentive Compensation” Presented by Stephane McShane, Maxim Consulting, Denver, Colo.

Eighty-four percent of organizations offer some form of reward programs to employees. A well-designed compensation plan rewards both individual and group performance, is connected to the performance management system, and incentivizes certain behaviors. Developing internal processes is critical to an effective incentive compensation system.

Stephane McShane will explain the importance of defined standards and processes, identify how to utilize the right tools to drive desired outcomes, and illustrate how to measure performance with objective metrics and establish KRA-based job descriptions.

10:45 a.m. – Noon Education Workshop — “Ask an Attorney” A panel discussion with the ASA Attorneys’ Council 1:45 p.m. – 3:00 p.m.

Education Workshop — “Change Order Management” Presented by Stephane McShane, Maxim Consulting, Denver, Colo.

Effective change order management can dramatically reduce a subcontractor’s risk and increase

profitability. This interactive course explores the change order process from a subcontractor’s view point and provides participants with handson training in recognizing, scoping, pricing, and negotiating change orders. This course culminates in a mock negotiation where participants can immediately practice the skills that they have learned.

1:45 p.m. – 3:00 p.m.

Education Workshop — “Risk Management Panel,” Jonathan Watras, Zurich, Endina, Minn.; Michael Ahern, CNA Insurance Co., Chicago, Ill.; and others.

This panel of construction insurance experts will discuss proven best practices to improve your companies’ risk management.

SATURDAY, MARCH 5 8:15 a.m. – 9:00 a.m.

Saturday Keynote Presentation — “To Manage Stress, Rekindle Your Spirit” Presented by Dr. Scott Sheperd, St. Louis, Mo. Dr. Sheperd uses a humorous but thought provoking approach that both challenges the audience to accept responsibility for their own lives, and gives them strategies to improve the quality of those lives. “I don’t want people to just feel good at the end of my talk and have it last two hours or even two weeks. I want them to have ideas they can use after they leave because that is when the work begins.”

9:15 a.m. – 10:30 a.m.

Education Workshop — “What We Need to Communicate & Why? Toward Effective Compliance Communications” Presented by Dr. Nitish Singh, associate professor, St. Louis University’s John Cook School of Business, and president, IntegTree The increasing number of regulations, their increasing complexity, and the broad application of those regulations, means that determining if one is ‘in compliance’ is becoming ever more difficult. Therefore, to adjunct your regulatory compliance regimen, you need to avoid many of the ethical pitfalls from which compliance regulations grow (e.g., dishonesty, fraud, and so on). Compliance communications can be an effective tool toward addressing key ethical blind spots, which are at the root of various compliance concerns.

However, you need to first identify these blind spots and then align your compliance training to effectively address them.

BRING YOUR SPOUSE SUBExcel 2016 will take place March 3-5, 2016, at the Hyatt Regency Miami. ASA warmly invites you to register and bring your spouse with you to SUBExcel 2016.

Your spouse’s full registration includes admittance to all social functions, educational sessions and other meetings.

If your spouse is interested in participating in the outings, you can purchase single event tickets separately.

Early-Bird Discounts End Mon. Feb. 8, 2016

THINGS TO DO Pérez Art Museum Miami: Located in Downtown Miami’s Museum Park alongside Biscayne Bay, Pérez Art Museum Miami (PAMM) is Miami-Dade County's flagship museum presenting international art of the 20th and 21st centuries. Designed by prize-winning architects Herzog & de Meuron, the state-ofthe-art facility offers 200,000 square feet of indoor and outdoor program space including flexible galleries, an education complex, the PAMM Shop with unique gifts, art books and furnishings, and Verde waterfront restaurant and bar.

HistoryMiami Museum: This premier cultural institution and Smithsonian Affiliate, is committed to gathering, organizing, preserving and celebrating Miami's history as the unique crossroads of the Americas. It accomplishes this through exhibitions, city tours, education, research, collections and publications.

The exhibitions rotate annually, and Tropical Dreams: A People's History of South Florida is on permanent display. Visitors can also stop in at the Archives and Research Center to peruse the non-circulating library featuring documents and more than one million photographs. Group tours are available by reservation only. Call for tour prices and times. Open Monday through Saturday 10:00 a.m. to 5:00 p.m. and Sunday noon to 5 p.m.

El Cielo by Chef Juan Manuel Barrientos: El Cielo by Chef Juan Manuel Barrientos' modern, creative style has been inspired not only by the molecular gastronomy movement and his ancestral roots of Colombia but also a desire to combine the schools of cooking and neuroscience. Chef Barrientos

is concerned not only with making his food taste heavenly but also how it makes his customers feel and what emotions it awakes in them. Guests begin a culinary journey of the senses in one of the restaurant's leather-backed chairs as the sun shines through the glass wall while the river outside soothes the soul and let Barrientos play with their palates and their minds. Private room for groups available.

Outdoor Dining; Reservations Required.

Mary Brickell Village: This retail and restaurant destination is right in the center of everything. Tenants include Balans Restaurant, Rosa Mexicano, P.F. Chang's, Oceanaire Room, Starbucks and Regions Bank.

Miami Center for Architecture & Design: This is the place for anyone interested in design and the built environment, with community meeting space and educational programs to enhance public appreciation for art and design. It is home to AIA Miami as well as the Visitors' Center for Downtown Miami.

The Visitors' Center is everything Miami - cultural events, attractions, maps, information and more. It houses flexible exhibit/gallery space that accommodate lectures, seminars, meetings, private events and includes a store for architecture and design-oriented books and gifts, space for urban lab studios and flex meeting rooms. The Center houses exhibitions celebrating the architecture of the City of Miami.

Downtown Miami Shopping District: Historic Flagler Street is the heart of the City of Miami. Hundreds of stores and shops make up the Downtown Shopping District, anchored by Macy's, Marshalls, Ross Dress for Less, and

Miami Center for Architecture & Design (photo by Silvia Ros)

La Epoca (imported from Havana). Visitors can shop all day, lunch on food from almost anywhere in the world, visit art and historical museums, or just stroll the streets of Miami's historic district. Also the destination for world-class jewelry shopping, including the Seybold Building which boasts more than 280 jewelers. Take the Downtown Miami Partnership historic walking tour every Saturday at 10:30 a.m. Call for reservations.

McCormick Place Miami: McCormick Place is a creative ecosystem integrating art, music, fashion and design. Located in the heart of Downtown Miami, it is the ideal venue for captivating and experiential event production.

Built in 1924 as a U.S. Customs Warehouse, the building was once used as a lookout post to spot nefarious characters entering Downtown via Biscayne Bay and The Miami River. Today, McCormick Place has been transformed into a cultural utopia, containing a fine arts gallery, a unique special events venue, artistic studios and creative offices. The venue consists of a ground floor 3,400-square-foot gallery and up to an acre of outdoor event space, featuring more than 100 private on-site parking spaces.

MDC Museum of Art + Design: Exhibits the work of renowned and emerging contemporary artists. Regular museum hours are Wednesday, Thursday, Friday, Saturday, Sunday, 12 p.m. – 5 p.m. We are open late every first Friday of the month, 12 p.m. – 8 p.m.

Free admission.

EXPLORE MORE THINGS TO DO IN DOWNTOWN MIAMI

MDC Museum of Art + Design

SEE REGISTRATION FORM

Registration Form March 3-5, 2016 — Hyatt Regency, Miami, Florida Attendee Information

Name ___________________________ Title _____________________________ Nickname for Badge ________________

Complete & return to: American Subcontractors Association, 1004 Duke Street, Alexandria, VA 22314-3588 Phone: (703) 684-3450 | Fax: (703) 836-3482 Email: meetings@asa-hq.com | Web site: www.asaonline.com

Company _________________________ Address __________________________ City/State/Zip ______________________

Email Address _____________________ Phone Number ____________________ Dietary Restrictions Yes No

Name ____________________________ Title _____________________________

Nickname for Badge ________________ Email Address _____________________

Phone Number ____________________ Dietary Restrictions Yes No

Name ____________________________ Title _____________________________

Nickname for Badge ________________ Email Address _____________________

Phone Number ____________________ Dietary Restrictions Yes No

Nickname for Badge ________________

Dietary Restrictions

Additional Employee(s) (if applicable)

Spouse/Guest (if applicable)

Name ____________________________

Yes

No

Registration Fee (Includes admittance to social functions, educational sessions, committee, task force & council meetings.)

Qty st

Early Registration (by Feb. 8) $795.00 $895.00 $699.00 $495.00

Regular Registration (after Feb. 8) $895.00 $995.00 $799.00 $595.00

Add $200 if NOT staying at Hyatt Regency, Miami

1 Time ASA Member Attendee x = $ ASA Member x = $ nd 2 Company Registrant x = $ Spouse/Guest Attendee x = $ Past National ASA President/National x $595.00 $695.00 = $ ASA Chair Attendee New Executive Director & EDs Attending = $ x Complimentary Complimentary st for 1 Time **Includes ED Outing All Other EDs **Includes ED Outing x $447.50 $497.50 = $ ASA Non-Member x $1,095.00 $1,195.00 = $ Voluntary contribution to the ASA Chapter Scholarship Fund ($25.00 suggested) = $ Voluntary contribution to the ASA Subcontractors Legal Defense Fund ($100.00 suggested) = $ I will attend the banquet on Saturday, March 5. There will be # people in my party.

RSVP

Single Event Tickets Thursday, March 3 Friday, March 4 Saturday, March 5 Saturday, March 5

City Tour (NOT included with registration) Viscaya Museum Tour (NOT included with registration) Attorneys’ Council Pass (INCLUDED with registration, pricing for spouse/guests NOT registered) Banquet (INCLUDED with registration, and pricing for spouse/guests NOT registered)

#

tickets

x

$50.00

=

$

#

tickets

x

$40.00

=

$

#

tickets

x

$175.00

=

$

#

tickets

x

$175.00

=

$

Education Day Passes (Pass permits entry to education sessions and council meetings for 1 day [social & meal functions are NOT included.] Cost is $350 per day. Indicate days for which you would like a pass): # of Tickets Thursday, March 3 Friday, March 4 Saturday, March 5 $350.00 x = $ TOTAL PAYMENT AMOUNT = $ Method of Payment (All faxed and emailed registrations MUST include a credit card number.)

Check enclosed (payable to American Subcontractors Association, Inc.) Check # _______________ or Charge my: American Express MasterCard Visa Card #__________________________________________ Expiration date _______________ Billing Address________________________________________________________________ Authorized Signature __________________________________________________________ Print name as it appears on credit card ____________________________________________ code:subx16

Cancellation & Refund Policy.

Full registration fees will be refunded if a written cancellation notice is received at ASA Headquarters by Feb. 8, 2016.

A $50 processing fee will be deducted from refunds made after Feb. 8, 2016.

No refunds will be made after Feb. 19, 2016. All cancellation requests must be made in writing.

TURN UP THE VOLUME & WATCH ASA’S NEW SUBEXCEL 2016 VIDEO Turn up the volume and watch the new ASA video, “SUBExcel 2016 — We Build Excellence,” about ASA’s upcoming annual convention and commemorative anniversary celebration March 3-5, 2016, in Miami!

“It’s going to be very exciting because it’s ASA’s 50th anniversary,” said 2015-16 ASA President Letitia “Tish” Haley Barker. “We have lots of great things, a lot of great celebrations [planned], as well as some new educational programs for the leaders of the companies. It’s going to be an awesome event, so I really would like everybody to mark their calendar and plan to be there.”

Register online by the Feb. 8, 2016, earlybird deadline, and make your hotel reservations online to stay in the ASA room block at the Hyatt Regency Miami. ASA has negotiated a room rate of $199 single/double or $244 triple/quad, and the cutoff date for the room block is on or before 5:00 p.m. Eastern time on Jan. 26.

The education program will be top-notch! On Thursday, economist Anirban Basu will present “The Economist Who Loved Me.” Then, ASA Chief Advocacy Officer E. Colette Nelson will present “The Race for Re-Election.” Hilby, the Skinny German Juggle Boy, will entertain us during a keynote luncheon,

followed by a mini workshop. In the afternoon, subcontractors will discuss business issues and challenges during a “Shop Talk Round Table.” On Friday, Chad Pearson of Plexxis Software will facilitate the Keynote Breakfast Technology Round Tables, “Outpacing Technology, Trends and Rising Expectations in the Trades.” Then, Stephane McShane of Maxim Consulting will present “Performance-Based Incentive Compensation,” and a panel discussion with the ASA Attorneys’ Council, “Ask an Attorney,” will conclude the morning education programming. In the afternoon, McShane will present “Change Order Management.” During a concurrent time-slot, Jonathan Watras of Zurich and Michael Ahern of CNA Insurance Co. will facilitate a “Risk Management Panel” discussion of best practices. On Saturday, Dr. Scott Sheperd will present “To Manage Stress, Rekindle Your Spirit,” and Dr. Nitish Singh of St. Louis University will present “What We Need to Communicate & Why? Toward Effective Compliance Communications.” ASA’s special 50th anniversary celebration will take place on board the luxury yacht, The Biscayne Lady, Saturday night. For the full schedule and education program, visit SUBExcel 2016 online.

Visit SUBExcel 2016 for more information or enter through the www.

SUBExcel.com portal. Be sure to download the new brochure and join the ASA Facebook Event Page.

March 3-5, 2016 Hyatt Regency Miami, Florida

www.SUBExcel.com

Feature Building for the Future — Addressing Construction Industry Workforce Issues

by Laura Cataldo The economic reports sound quite promising for the construction industry: 22 percent increase expected for 2016, private construction is booming, and infrastructure investment is strong. Yet almost every economic forecast includes a warning that the lack of skilled workers will make this growth opportunity next to impossible to meet.

Predictions of workforce shortages may be scary, but they can help us understand the challenges our industry faces and identify solutions for ASA members and chapters.

War for Talent There are many reasons why the workforce shortage is hitting the construction industry hard: • Aging workforce.

• Dislocated workers that are not returning to construction.

• Lack of diversification.

• Image issues with younger generations.

The impact that the recession had on the retirement of Baby Boomers has been well publicized. Many that were near or at retirement age elected to remain in the workforce after

losing a substantial amount of their retirement funds. These same workers are now planning an exit strategy, if they have not left the industry already. Interestingly, the construction industry skilled trades are older on average than other industries: More than 53 percent of the trades are over the age of 45, compared to only 44 percent of other industries. Given the physically demanding nature of the construction trades, this statistic seems counterintuitive, but does an outstanding job of demonstrating that we have an aging workforce.

A recent Wall Street Journal article, “Where have all the construction workers gone?” found that many of the workers laid off during the recession have moved on to other industries and have no plans to return. Recent employment numbers suggest that the nation is nearing a saturation point of eligible employment. With nationwide unemployment close to half of 2010, and as low as 4.3 percent in some states, there simply is not a surplus of workers available to work.

The demographics of the construction workforce do not match the labor force. In 2010 the workforce was composed of 15 percent Latinos, 12 percent African Americans, and 5 percent Asians. Very few companies

can state that their workforce aligns with national statistics. The reality is that, on average, the construction workforce is middle-aged white males.

The strategy moving forward must include the implementation of change to bring the demographics in much closer alignment to national statistics.

To accomplish this necessary action, the construction industry needs to do much more to diversify its workforce.

This would also include significant efforts to attract women to the construction workforce as well.

Many schools across the country have adopted a “college for all” mentality that has negatively impacted the construction industry’s ability to reach young people. Career and Technical Education has been declining for the last 20 years, as schools emphasized college preparation, not career preparation. Students today do not have the opportunity to experience the high-tech nature of the rapidly changing construction industry. In fact, some counselors threaten construction careers as the “last choice” if you cannot make it in the high school system. What happened to seeking the “best and brightest?”

No wonder economic reports are undermined by warnings of a workforce shortage — the construction

Labor Force by Race, 2010 Projected through 2050

The share of whites in the labor force will decline by 19 percentage points, while AfricanAmericans and Latinos combined will rise by 15 percentage points by 2050.

2%

66%

2010

5%

15%

12%

45%

2050

30%

5%

8%

16

d e c e m b e r

2 0 1 5

T H E

C O N T R A C T O R ’ S

12%

C O M P A S S

industry workforce is aging, it’s not diverse enough, and it isn’t attractive to young people. That said, there is plenty of good news on the horizon for the industry and opportunities to engage in workforce initiatives on the local level!

• Both federal and state governments are committed to workforce development, as it is critical to economic development.

• Education is starting to shift back to an emphasis on college and career preparation, providing the perfect opportunity for the industry to reach out an engage the future workforce.

• The construction industry is uniting through national efforts to find solutions to recruit and retain a future workforce.

A main topic at this year’s National Governor’s Conference was workforce development. Economic development is only possible when employers are successful and this requires a productive workforce.

The Federal Workforce Innovation and Opportunity Act provides $9.8 billion a year and is the single largest source of federal funding for job training and career services. WIOA promotes apprenticeship and industry credentials, such as NCCER, and provides reimbursement for employerdriven, work-based training. Sounds too good to be true, doesn’t it?

How can the construction industry position itself to get access to this $9.8 billion to ease its workforce challenges? Opportunity America has partnered with industry organizations and construction employers to develop this Roadmap to Workforce Solutions. The roadmap identifies four ways that companies can engage workforce development in their own communities.

Influence Policy WIOA funds are awarded to each state by the Department of Labor.

State and local Workforce Investment Boards are the bodies that identify which industries get priority for funding, determine how much money is awarded, and provide training and employment services. ASA members and chapters can have significant influence by volunteering to serve

T H E

C O N T R A C T O R ’ S

on state and local WIBs. At the very least, make sure that the construction industry is represented on these boards. As with most things in life, you have to be at the table in order to take advantage of the opportunities available. Find your workforce board: http://www.servicelocator.org/ workforcecontacts.asp

Hire Workers If your company participates in a registered apprenticeship program, WIOA provides funds to make hiring pre-apprentices and apprentices easier. One Stop Centers are the outreach arm of local WIBs where job seekers can access job listings and career services. Most of the potential employees that you will engage through the One Stop Centers are untrained in the skills required by the construction industry. WIOA funds can be used to provide basic skill training, test readiness, and work experience for those interested in the apprenticeship pathway. Individual Training Accounts provides vouchers for individuals to receive training through community colleges, vo-tech centers, for-profit training centers, trade associations or union training programs. The local WIB will help connect you with other partners, such as Community Based Organizations, that can assist the hiring process by targeting outreach programs at a more diverse population.

Partner with Educators Engagement at the local level with the K-12 school system is critical to educating teachers, students and parents about the tremendous career opportunity our industry offers.

This can be as easy as offering to donate equipment and materials for classroom projects, hosting jobsite visits, providing guest speakers in the classroom, participating in organized outreach programs like ACE Mentoring, and utilizing students for job shadow and internship employment. Dispel the myth that a construction career means you shut the door to continuing education by sharing information about apprenticeship and the tremendous opportunities to advance. Many educators and guidance counselors

C O M P A S S

do not understand the apprenticeship system and that many states offer technical college credits for apprenticeship. Unlike most industries, construction is one of the few where you can start out at virtually any position, and end up owning your own company some day, if that is your goal. We have a great story to tell, we just need to get out there and tell it in order to engage a future workforce

Seek Training Reimbursement On-going training is very common in the construction industry as changing technology, OSHA requirements, and owner demands require a skilled workforce. Under WIOA, employers can seek funding for on-the-job and incumbent training for new and existing employees. On-the-job training funds cover 50 percent to 75 percent of the trainee’s wages, for a limited duration, in order to give workers the knowledge and skills necessary to do the job. Customized training to meet specific requirements of a job, such as Signaling training, also qualify for reimbursement as long as the training results in an industry recognized credential.

Trade associations, like ASA, are in the perfect position to help members develop local, regional and statewide partnerships to address workforce strategies. Utilize the collective experience, geographic reach and resources of members and industry partners to make the largest impact on the workforce opportunities that are facing us.

Laura Cataldo, associate director at Maxim Consulting Group, works with construction organizations of all sizes to evaluate business practices and assist with management challenges. Having worked in the construction industry for over 20 years, Cataldo offers a depth of experience working with contractors, associations and workforce partners to improve profitability and succeed in the changing marketplace. She understands the challenges of today’s construction marketplace and is keenly in touch with future trends. She can be reached at (608) 616-2835 or laura. cataldo@maximconsulting.com.

d e c e m b e r

2 0 1 5

17

SPECIAL FEATURE

Drones in the Construction Industry

18

d e c e m b e r

2 0 1 5

T H E

C O N T R A C T O R ’ S

C O M P A S S

More Than Blue Skies Above: The Growing Use of Drones

by Michael Alberico and Jay Shelton Unmanned Aerial Vehicles (UAVs), or drones, are often used to enhance public safety, support agriculture, help the environment, monitor the climate and mitigate disasters.

The construction industry is slowly jumping on the drone bandwagon, as these devices are extremely costeffective and can be used in several capacities, including:

• surveying large areas; • providing real-time data on job progress;

• identifying potential hazards; • scaling bridges and buildings to assess condition through highresolution images; and

• making basic repairs.

But with this newer technology comes complex challenges, specifically related to insurance and privacy liability.

For instance, a contractor could be building a road, and while surveying it, the drone inadvertently takes images of nearby homeowners in their backyard.

This invasion of privacy could mean a lawsuit.

A recent Reuters Ipsos poll cited that 73 percent of respondents wanted regulations for drones and 71 percent thought that drones should not be allowed to operate over someone else’s home. Even President Obama weighed in by ordering the Federal Aviation Administration (FAA) and other U.S. agencies to make sure drones are not dangerous and don’t violate people’s privacy.

The national attention and concern over privacy is warranted as drones become more mainstream, especially for contractors looking to be more economical. The FAA forecasts that the number of commercial drones could reach 7,500 by 2020; other reports estimate the number could be as high as 20,000.

Currently, it is illegal to fly drones for commercial purposes unless the operator has a specific exemption from the FAA for testing or government use. Looking ahead, commercial drone flights could be legalized under

T H E

C O N T R A C T O R ’ S

proposed rules issued by the FAA on Feb. 15. If adopted, the new rules would allow any company to fly a UAV so long as it abides by specific guidelines.

• Commercial pilots will now be

considered operators and must pass a test at a FAA facility, obtain a certificate rated for flying a small unmanned aircraft and renew that test every two years.

• Operators must be at least 17 years old.

• Commercial drones have to stay

under 500 feet, as well as fly only during the day and within an operator’s line of sight.

• Rules apply to all units classified as

a “small” unmanned aircraft, which the FAA defines as 55 pounds.

Even with the FAA rule changes, UAVs carry a host of other risks for construction companies, including bodily injury and property damage.

UAVs can strike buildings, cars and other property, especially if “loss of link” happens, where the operator loses contact with the drone. Another concern is that current commercial general liability policies generally exclude aviation risk.

Minimizing Risk for Construction-Related Businesses There are a few ways construction companies can mitigate the risks associated with UAVs. For instance, a company operating UAVs should understand the FAA rules prior to operation and remain fully compliant. If hiring a company that operates UAVs, make sure there is a contract that indemnifies the company from losses that occur as a result of UAV operations.

Finally, implement a financial backstop from losses by purchasing UAV insurance. This is a relatively new product, and Lexington Insurance is one of the first to offer a standalone policy, as well as an endorsement on existing policies. Many operators are small entities and may be able to wrap all of their insurance into one policy that

C O M P A S S

has professional, general and aviation liability together.

As this industry continues to evolve and utilize more technology, the biggest challenge for insurers will be evaluating three key areas of risk: the quality of the equipment, the qualification of the operator of the equipment and what is the environment in which the UAV is being operated. For companies that utilize UAVs, addressing the key underwriting risks and implementing best practices will ensure the use of UAVs remains practical and costeffective.

Michael Alberico is a Senior Vice President and Construction Practice Leader at Assurance. He maintains a special focus on the construction industry as well as alternative risk financing. With nearly 30 years of experience, Michael’s primary responsibility is to provide a comprehensive and integrated risk management program that fully addresses risk needs while maintaining price sensitivity. Michael graduated from the University of Illinois at Champaign-Urbana with a Bachelor of Arts degree in History.

Michael can be reached at malberico@ assuranceagency.com; http://www.assuranceagency.com. Jay Shelton is the Senior Vice President of Risk Management Services at Assurance. He performs a full range of risk and insurance management functions, including policy selection and negotiation, broker and TPA management, claim management, risk identification, forecasting model development, trend analysis, OSHA and EPA compliance and the development of performance benchmarking. Jay is a veteran of the United States Marine Corps, earned a Master of Business Administration from Notre Dame University and a Bachelor of Science degree in Criminal Justice from Indiana University. Jay can be reached at jshelton@assuranceagency.com; http://www.assuranceagency.com.

Reprinted with permission from Construction Executive, a publication of Associated Builders and Contractors Services Corp. Copyright 2015. All rights reserved.

d e c e m b e r

2 0 1 5

19

Drones Show Potential to Aid Jobsite Safety and Efficiency

by Judy Schriener and Paul Doherty The use of unmanned aerial vehicles (UAVs), or drones, on construction jobsites is in the early adopter phase, but the initial results are compelling.

The goal of using UAVs is to reduce costs associated with poor communications from the field, reduce material theft from the jobsite and increase worker safety. The primary role of UAVs is to provide real-time reconnaissance and surveillance from the jobsite in the form of high-definition (HD) video, still images, and light detection and ranging (LIDAR) to create 3-D models. These images and models can be superimposed over existing plans and each other in order to:

• • • •

identify changes; provide evidence; proactively solve or prevent issues; communicate more effectively and efficiently; and

• report cost, time and energy

savings.

Rapid advances in camera, sensing, aeronautics, battery and autopilot navigation technologies have helped make UAVs affordable, reliable and easy to operate. These small, vertical take-off or landing (VTOL) multi-propeller helicopters (called quadcopters) can be equipped with cameras or LIDAR. As long as the UAV weighs less than 4.4 pounds and travels less than 400 feet (120 meters), it is considered “Hobby Class” and there is no need for a permit from the Federal Aviation Administration.

Although they have raised many privacy issues, UAVs have great potential on jobsites. Today’s UAVs use GPS, position sensors, accelerometers and gyroscopes, plus the main processor, all of which enable drones to orient themselves and follow routes independently. The use of HD cameras for video (real time and recorded) and still images are common in the market. Depending on the batteries, UAVs can fly for up to several hours, are barely louder than a bee and are simply recharged when they run out of power. UAVs can be controlled through joysticks, PC and laptop software, and iPad and iPhone apps.

20

d e c e m b e r

2 0 1 5

There are two primary areas of research concerning jobsite reconnaissance and surveillance, photogrammetric analysis and LIDAR. Both are using UAVs to create a 3-D model of the jobsite that is compared with site plans and construction documents, allowing significant deviations in construction progress, process, materials and methods to be identified. A simple report can superimpose the site plans/construction documents over the images or LIDAR data model to communicate deviations indicated by colored patterns. As a result, construction teams can adapt plans to the current needs.

Currently, the Georgia Institute of Technology; Siemens; and the University of Pennsylvania’s General Robotics, Automation, Sensing and Perception (GRASP) Laboratory are all conducting UAV experiments and pilot projects. Georgia Tech’s focus is on using UAVs for safety inspections in the construction industry. Two-way, real-time communication can occur anywhere on the jobsite via live video/ audio connection between workers in the field and the safety manager using the UAV as a video phone. Being able to move around the site quickly using the drone can improve the safety manager’s efficiency by an estimated 50 percent.

As the emerging use of drones continues, some future uses can be seen in UAV-based construction and installation prototypes at GRASP at the University of Pennsylvania. Reducing the need for humans to perform highrisk tasks could be the first application of UAVs. Additionally, UAVs could be miniaturized as inexpensive and disposable nanobots that do repair and maintenance in difficult-to-reach or highrisk spaces.

There are two major areas of concern with the use of UAVs:

• The potential to view drone-based

reconnaissance as spying, leading to legal action based on privacy issues.

• The potential liability of UAV-induced injuries due to failure, misuse, distraction or operator error.

T H E

UAV/drone operation on jobsites is in its infancy in the same way email came on the scene 20 years ago. It is an exciting future with untold potential.

Judy has been covering innovative technology in the AEC space since 1995, while at ENR. She created the industry’s first blog on construction. com, As Managing Online Editor for McGraw-Hill Construction, she rode the Dot-Boom bubble until well past its decline into the Dot-Bomb era, living in and covering in detail the ups and downs of that tumultuous time and continued to cover technology long afterward. Judy is the author of Building for Boomers: Guide to Design and Construction with Co-Author Mike Kephart, and currently is the host of a radio Show, “Off the Record with Judy” on the RockStarRadioNetwork. com, which airs every Tuesday at noon ET, with old podcasts on iTunes.

Paul Doherty, AIA, is the President and CEO of the digit group, inc. and is one of the global industry’s most sought after thought leader, strategist and integrator of process, technology and business. A Senior Fellow of the Design Futures Council, Paul is an author, educator, analyst and advisor to Fortune 500 organizations, global government agencies, prominent institutions and the most prestigious architectural, engineering and contracting firms in the world. A former Fortune 500 corporate officer, Paul is a licensed architect and prominent and highly-rated speaker at numerous industry events around the world. He has been appointed as a guest lecturer at leading universities throughout the world. Paul’s current work is focused on Smart City solutions in the USA, Europe, MENA, India, Southeast Asia and China. Concurrently, Paul is the co-founder and producer of the critically acclaimed AEC Hackathon (www.aechackathon.com) that launched at Facebook Headquarters in Silicon Valley in November 2013. Reprinted with permission from Construction Executive, a publication of Associated Builders and Contractors Services Corp.

Copyright 2015. All rights reserved.

C O N T R A C T O R ’ S

C O M P A S S

Will Drones Replace Cranes or Can They Coexist?

by Michael P. Zucchi For more than 2,500 years, the crane has ruled the construction site. But is all that about to change? Unmanned Aerial Vehicles (UAVs), also known as drones, have rushed into the world of construction.

They are challenging how and what type of construction is being performed.

In its simplest form, a drone is a platform of processors, sensors and propellers running software that is connected to other software through the use of wireless network connections.

More complex manifestations of drones include, but are not limited to, Boeing CH-47 Chinook helicopters (without a pilot) or automated synchronous cooperation of many UAVs to achieve complex tasks such as lifting material to any point on a construction site.

Do drones have the ability to replace cranes in the near future or does cooperation between the two better express what is about to happen on the construction site? Can the cost per hour of a helicopter be priced reasonably enough to potentially replace cranes if human resources are removed from the equation? Will drones be able to lift materials or access any point on the construction site and then be used for other tasks to the extent that they are more valuable to the construction process? Will manufacturers begin to design materials with drones in mind?

In short, can drones replace cranes?

The chart illustrates the potential for drones to deliver greater value to the construction process. Is it realistic that drones will replace the crane anytime soon? No. Is cooperation between drones and cranes more realistic? Yes. Drones have the immediate potential to make construction more efficient through lifting materials and tools like a crane, but in a different and more productive way.

How? Today, automated drones can deliver tools, small materials and food to the jobsite, saving time that workers spend traveling vertically or horizontally. This process improvement could potentially make skilled laborers more productive during the day, leading to a faster build process while improving the efficiency of the crane to perform higher priority tasks and reducing elevator traffic so more deliveries could be made.

T H E

C O N T R A C T O R ’ S

As the number of human resources on the jobsite declines through prefabrication, robotics and automation, the number of drones and the size of drones on the jobsite will increase. There is an inverse relationship between humans and onsite technology.

Industry Challenges The challenge the construction industry is facing has forced firms to search for answers in technology.

Technology firms have been quick to answer the call, but in doing so, they have disrupted the entire industry, allowing competition to come from anywhere. Construction firms must think outside the box and find answers to shrinking profit margins, increased liability, higher labor costs and faster build schedules.

Drones are becoming part of that solution. For instance, use of drones can limit the time and availability in which elevators are being used to move materials and tools to any point on the construction site (whether it be horizontal, vertical, inside or outside).

The result is increased utilization of elevators, cranes and skilled labor with an overall increase in job efficiency.

Drones can add value to the construction process by delivering material from staging areas that are not located at the base of the construction site, delivering the material directly where it is needed, freeing up the delivery space below for larger, highpriority items that need to be delivered by crane.

If helicopters can be used to install heavy machinery to roofs of buildings, then why can’t an automated unmanned helicopter (simply a different size drone) do the same? What is the cost when labor is removed from the equation? Drones are the answer to many of these challenges. The versatility, flexibility and the ability to be automated are just too valuable to ignore.

Into the Future The possibility of drones totally replacing cranes is highly unlikely, but a world of cooperation between automated drones and automated cranes is the vision of the immediate

C O M P A S S

future. Cooperation on a construction site will lead to a more efficient and automated processes.

Cranes will continue to be the workhorses on the construction site of tomorrow along with drones and other technologies that are specifically fitted to work in conjunction with cranes to improve equipment utilization and construction process efficiency. What will most undoubtedly change is the amount of technology, the level of automation and reduction of human resources used in the construction process.

A drone captured aerial views of Apple’s new Cupertino campus.

SkyCatch has created a fully automated drone system with flight reservation, flight data streaming and battery changes. The same can be found with cranes, as Trimble has shown with its automated crane system. In the near future, materials will be tagged with Radio Frequency Identifiers (RFID) that will identify location and automatically instruct the crane to pick up and deliver to the construction site with computeraided efficiency. With the power of these two automated devices, the construction site will change forever.

The trend to remove humans from processes in order to reduce costs, increase efficiency, reduce liability, increase building speed, reduce errors and increase safety will continue and be amplified by automated systems in cranes and drones. The fully automated construction yard will operate as a system of systems and will reshape competition within the construction industry by erasing the boundaries between traditional building roles and other industries.

Michael P Zucchi, CEO of ZBRELLA Technology Consulting, is a Solutions Orchestrator by day and a futurist by night. He takes pleasure in dreaming up new ways to disrupt the world with technology by night and builds those very same systems by day to understand and automate the world.

He is the CEO of a futuristic, fun and thought provoking technology firm that changes the way we live. Reprinted with permission from Construction Executive, a publication of Associated Builders and Contractors Services Corp.

Copyright 2015. All rights reserved.

d e c e m b e r

2 0 1 5

21

Feature Commercial Construction Marketing: How Do You Measure Up?

by Jason Myers

Commercial construction marketing — specifically, on-page SEO— is an important part of your marketing, but many do it completely wrong.

The commercial contractor has an especially difficult job: stand out in the sea of consumer-oriented businesses with huge advertising and SEO budgets. Do you want to advertise your commercial contracting business online? Great, you’ll be competing with every residential player out there. This drives advertising costs from Web pay per click (PPC) or pay per impression (CPM) based advertising on Google and other platforms to exorbitant levels.

Furthermore, quality is diluted by the traffic (clickers), who more often than not are looking for some residential solution. Enter, the organic SEO tactic. A wise commercial contractor expends resources to bolster performance in organic SEO of specific commercial/industrial contracting phrases. This process of SEO optimization is neither

22

d e c e m b e r

2 0 1 5

fast, nor is it a one-time project. In fact, it requires a consistent focus and constant re-education to keep up with search-engine algorithm (methodology) changes that occur at least each quarter.

Driving Inquiries Via the Web The lion’s share of the traffic to Web site is driven by Google. Half of a Web site’s traffic will typically come from search results. About 60 percent of all Internet-enabled devices connect to Google on a daily basis.

Every time we turn around, another search-engine change has emerged creating havoc with Web site owners.

It is a bit of a shell game for Web site owners and SEO specialists. Google will adjust its formula to increase or decrease the weight of factors used to determine the ranking of a Web page in the search engine results page (SERP). Why do they do this? Because everyone is trying to improve Web site rankings by leveraging the on-

T H E

page and off -page SEO methods.

When one method is overused, creating a poor result-set, the mighty Google will adjust the weighting to rebalance the results.

There seem to be three camps of people when it comes to their focus on SEO: the avoider, the dabbler and the committed. Regardless of which camp you belong to currently, you must realize that the changes to search engines are perpetual and with each change comes new adjustments that increase or decrease the impact to anything you may have done to “improve” your site’s performance.

In today’s ever changing search engine landscape, the commercial contractor must be distinguished from consumer-oriented businesses.

Four Factor Formula The most important factor for a site is the on-page (within the site) factors. Off-page SEO is mostly about creating votes of confidence and relevance from third-party sites and

C O N T R A C T O R ’ S

C O M P A S S

is not as important in today’s search engine landscape as it once was.

There are four distinct factors in a successfully executed, SEO-friendly Web site: Platform + Architecture + Curation + Content On-Page SEO Platform. The platform you use must be fast. Page load times represent a major factor in the search engine indexing robot (Bot) being able to fully index the site. Take a look at your site using Google Webmaster Tools. It will show you the latency or speed issues that may be affecting the Bot crawls.

Most contractor Web sites use GoDaddy shared hosting or something comparable. This exposes the site to traffic spikes on any number of the hundreds or thousands of sites hosted on that single server. There are three issues caused by seemingly “affordable” shared hosting: • Latency or speed issues caused by neighbors hogging all of the server processing power and bandwidth.

• Guilt by association if there are spammers on the same server, the search engine can penalize your site.

• Malicious attacks resulting in hidden malicious code on the sites that phish or otherwise compromise the visitor, stealing data and other nefarious activities.

One insecure site on the server can jeopardize the whole network of neighbor sites on the server.

This is much like an outbreak of the flu in a family because of contamination and close proximity. Thousands of sites in a 2 square foot box is the epitome of close quarters.

T H E

C O N T R A C T O R ’ S

Architecture. Architecture is how the site is designed from a Bot perspective. Specifically, can the Bot crawl the site’s navigation and content in a logical fashion? Is the structure of the site logical and does it allow for proper meta information?

Curation. Curation is the portion where the business owner or Web site person steps in and adds information to the Web site using the content management system. However, this is not to be confused with content.

Typically, during this process is where many on-page SEO mistakes are born. For example, while adding pictures of a project, the curator skips the meta information on the image (alt tag). This creates an issue for the Bot to determine what the image represents and that affects the page the image appears on by reducing the evidence to the Bot as to what the page is about. In another common scenario, the curator is adding content to a post or page in a content management system (CMS) and forgets to use proper title, description, keywords and other meta information to help the search engine. The result is poor SEO. Content. Content is something that has become more and more talked about in terms of SEO and its importance. It makes sense that the Bot is trying to determine what the site is about in as human a way as possible. Many Webmaster and SEO experts will try to game the system. However, the reality is that good information is looked upon favorably. Information that is poor, stale or poorly written will get penalized in terms of the search engine ranking for relevant keywords and key phrases. The key is to create fresh, evolving content — give the Bot something to chew on. In recent years, the Bots have favored fresh, almost up-to-the-minute information.

Face the fact that with billions of Web pages, freshness is better than stagnation.

Think in terms of the three Rs.

C O M P A S S

Relevance, Recentness and Readability Contractors will often perform well on the Relevance and Readability, but fail miserably at Recentness. There can be many reasons for this. One of the most common is that the Web site is difficult to update or requires outside resources. This creates a real barrier to fresh information being updated on a regular basis.

This can be easier than you think. The challenge for a contractor Web site owner is to architect, build, populate, update and promote a proper Web site. This task seems like a one-time endeavor, however, we know that recentness of information is important. Indeed it is a tall order. Especially, for the resource constrained contractor who focuses on their business of contracting and making revenue and mitigating risk.

Make no mistake, your Web site is part of your business. Your Website is part of your marketing.

There are a few things you can do to help promote your business more effectively. One of the most powerful tools you can leverage is the ProView from The Blue Book Building & Construction Network. ProView was designed, architected, built for SEO and is constantly modified to keep up with all of the search engine updates. Because The Blue Book Network’s Web site has a very high trust rank and authority, your ProView-listed business is promoted to search engines. ProView presents industry-specific, buyer-focused information about your company.

Most importantly, it is easy to use and ensures that your information is optimized.

Jason Myers is a speaker and global thought leader on growing companies using effective and efficient marketing. He was a speaker at The Blue Book Network’s Baltimore “Who’s Who” Showcase in October 2015. To learn more, download the white paper at www.contractor-seochallenges.com.

d e c e m b e r

2 0 1 5

23

Feature Subcontractors and the ACA: Preparing for 2016

by KC Cannon, Jr. After numerous delays and extensions, provisions of the Affordable Care Act have taken effect for employers of various sizes. And while it’s true many of these changes primarily impact employers with 50 or more employees, there are a few issues that smaller employers need to be aware of when it comes to ACA compliance.

Is Your Company Subject to the ACA? Employer taxes for non-compliance in 2015 are based on the average number of full-time equivalent employees the company had in 2014 (other than newly established companies). If the company averaged 100 or more FTEs in 2014, then taxes can apply for any full-time employee who was not offered medical insurance coverage during 2015. In 2016, employer taxes will apply if the company averaged 50 or more fulltime equivalent employees in calendar 2015.

Even if the employer taxes don’t apply this year, if the company averaged 50 or more full-time equivalent employees in 2014, the company must report employersponsored medical insurance information to each full-time employee in early 2016 (on IRS form 1095-C), and file a summary report with IRS on form 1094-C. And even if the company averaged fewer than 50 full-time equivalent employees in the prior year, if the company sponsored a self-insured medical plan in 2015, they must report information to employees who were covered in the plan, including spouse and dependent coverage, and to the IRS in early 2016 on forms 1095-B and 1094-B.

24

d e c e m b e r

2 0 1 5

Notice that both taxes and reporting are based upon prior year averages. Even if the company’s employment levels in 2016, or for this year, are expected to be fewer than 50 full-time employees, the company can still be subject to both ACA taxes and reporting because of the prior year averages.

Individual Mandate and Davis-Bacon Compliance While the 2016 employer tax applies only to companies that averaged 50 or more full-time equivalent employees in 2015, the ACA requirement for all individuals to have health insurance is in full force.

If an individual is not offered health insurance through their company, they are forced to apply for coverage via either a state or federal exchange.

Rather than making important employees fend for themselves, subcontractors who work on government-funded jobs, like those subject to the Davis-Bacon Act or state and local prevailing wage laws, can use the fringe portion of the wage determination to assist in providing health insurance for their workers — and benefit their businesses.

Fringe dollars paid for bona fide fringe benefits are exempt from payroll taxes such as FICA, FUTA, SUTA, and in most states, workers’ compensation. This creates significant savings on payroll burden. In addition, when these savings are passed on in the form of lower job costs, bidding on government jobs becomes more advantageous. A conservative estimate is that these assessments add a cost of 25 cents for each dollar paid as additional cash wages instead of used to provide fringe benefits. In addition to health insurance, fringe dollars can be used for dental, vision, and life insurance, and retirement plans.

T H E

If you do government work, make sure you work with a partner that can provide education regarding ACA provisions and assist in designing a benefits plan that works for your company and your employees.

Work with your broker to find a third party administrator that specializes in prevailing wage benefits for government contractors.

Employee or Independent Contractor?

One important issue employers of any size should look into is whether workers are properly classified. Subcontractors who use independent contractors on projects should work with legal counsel to determine whether these workers in fact meet the guidelines to qualify as independent contractors and retain documentation as to how this determination was reached.

In addition to traditional misclassification concerns like retroactive employment taxes and workers’ compensation premiums, the proper classification is important to determine whether the ACA employer taxes or required employee reporting apply. While this is an especially ticklish issue for subcontractors who are right “on the bubble” of having 50 full-time equivalent employees, the implications of being determined to have improperly classified your workers are far-reaching.

In late July 2015, the DOL received guidance instructing the agency to use the broader definition of “employ” found in FLSA regulations. While this guidance may be challenged, it’s important to be aware of several key factors in this guidance: • The employer’s title for the worker is irrelevant.

C O N T R A C T O R ’ S

C O M P A S S

• The fact that an employer issues

a 1099 for the worker only proves that the employer does not view the worker as an employee.

• The FLSA statute referenced in the guidance defines “employ” as “to suffer or permit to work.”

• The legal test is whether the worker is economically dependent on the employer or in business for himself/herself.

• The guidance states that “most workers are employees under the FLSA’s broad definitions.”

In addition to the above guidance factors, the DOL continues to apply six economic realities factors in determining whether a worker is an independent contractor or employee, none of the six factors is considered determinative, and all six factors must be considered in each case.

The six factors are:

• Whether the individual’s work is

an integral part of the employer’s business.

• Whether the worker has an opportunity for profit or loss.

• The nature of the worker’s investment in the company.

• The worker’s use of business skills and initiative as opposed to technical skills.

• The permanence or indefiniteness of the relationship.

• The nature and degree of the employer’s control.

Regardless of whether the broader FLSA guidance is challenged, in light of the widespread crackdown on misclassification, every employer who uses independent contractors should take steps to ensure workers are properly classified.

While the impact of the ACA on smaller employers in 2016, such as subcontractors, may be nowhere near as extensive as it is for larger employers, it will still be felt. Taking steps now to prepare can help to ensure compliance and a benefits strategy that creates a win for both your workers and your company.

Finding the right partner will enable subcontractors to spend more time focusing on managing and growing their business.

KC Cannon Jr. is a regional vice president of Fringe Benefit Group, which has been helping the construction industry design and administer fringe benefit programs since 1983. Cannon can be reached at (866) 670-7442 info@contractorsplan. com.

IRS RECORDED WEBINARS FOR EMPLOYERS HEALTH CARE LAW Employers and health coverage providers now have access to recorded webinars from IRS about the Affordable Care Act’s employer provisions and related tax requirements. If you are a business owner, tax manager, employee benefits manager, or health coverage provider, you can access and review these videos anytime to better understand how the health care law may affect your organization.

Each of the following ACA videos on the IRS Video Portal provides about 40 minutes of detailed information on the specific tax provision mentioned in the title.

Employer Shared Responsibility Provision (47 minutes).

Learn about determining applicable large employer status, payments, and transition relief for 2015.

Employer-Sponsored Health Coverage Information Reporting Requirements for Applicable Large Employers (37 minutes). Learn about employer-sponsored health coverage information reporting requirements for applicable large employers, including: who is required to report, what information the law requires you to report, and how to complete the required forms.

T H E

C O N T R A C T O R ’ S

C O M P A S S

Information Reporting Requirements for Providers of Minimum Essential Coverage (35 minutes). Learn about the information reporting requirements for providers of minimum essential coverage, including employers that provide self-insured coverage. Learn about: who is required to report, what information the law requires you to report, and how to complete the required forms.

View the recorded webinars in the IRS Video Portal using one of the following tabs: Businesses, Tax Professionals, Governments, and Non-Profits. After clicking on one of these tabs, simply select “Affordable Care Act” from the list of topics on the left side of the screen, and you will see a list of recordings about these and other ACA topics.

In addition to videos about the tax provisions of the Affordable Care Act, there is a wide range of videos on other tax topics for individuals, businesses and tax professionals. For more information about the Affordable Care Act visit www.irs.gov/Affordable-Care-Act.

d e c e m b e r

2 0 1 5

25

Feature Top Trends in Merchant Processing

by Kimberly Coley The subject of electronic payment acceptance and processing has gone mainstream. No longer does one have to read obscure financial technology blogs to learn about EMV chip cards, digital wallets like Apple Pay and Android Pay, mobile acceptance tools, and data security measures to prevent breaches. It’s jumped from the back pages to the headlines.

EMV Cards EMV cards, also called “chip cards” or “smart cards,” are plastic cards that use a much more secure technology that was introduced in 1996 as a means to combat magnetic stripe fraud. An embedded computer chip securely stores account data and processing rules.

The microchip on EMV cards cannot be duplicated, making the data stored on them virtually impossible to capture and clone.

And EMV transactions are much

26

d e c e m b e r

2 0 1 5

more secure than mag-stripe transactions as a result of strong cardholder authentication combined with a unique cryptographic code that is sent and verified with each transaction, reducing the value of stolen data.

With EMV, the consumer inserts his or her credit or debit card face up into a slot on a payment device, where it remains until the transaction is complete. This allows the card, the reader and the bank to have an electronic conversation and share important information that helps validate that the card is authentic.

To stem the tide of fraud and propel the rollout of EMV cards and devices, the card brands introduced incentives that took effect in October. Known as the “Liability Shift,” it occurs when a fraudster presents a counterfeit card (and in some cases a lost or stolen card) at the point of sale. The entity — card issuer or merchant — using the least secure technology

T H E

will be responsible for the cost of the fraudulent transaction. With EMV, a merchant that can only process magstripe cards may be held liable for the costs of any in-person fraud resulting from certain counterfeit cards.

Those who think they are off the hook because they rarely accept inperson payments should think again.

Once fraudsters get locked out of in-person fraud opportunities, they will set their sights on e-commerce businesses, and the fraud will migrate online, as it has in every other country that adopted EMV.

Wallets and Watches Wallets and watches have gone digital. Both Apple and Android have introduced secure methods to store payment card data in a phone or other device. A consumer can pay with a simple tap of his or her phone or watch, leveraging a contactless standard called Near Field Communication that

C O N T R A C T O R ’ S

C O M P A S S

is included in most EMV-enabled card readers. Better yet, actual card numbers are replaced with tokens for processing, so account data cannot be compromised.

And companies like Uber are making in-app purchases frictionless for everyone involved. Actual money and cards never change hands.

Consider how advances in mobile at your business for functions like online alerts and text-to-pay can greatly shrink time-to-receivables metrics.

Replacing a card with a phone as a new way to pay may be just the tip of the iceberg. The card brands are already experimenting with innovations such as wallet-enabled vehicles. Imagine if a delivery driver could pull up to a job site, drop his or her load, and accept payment instantly without having to fill out paperwork or handle credit and purchasing cards?

Fraud Mitigation Cyber criminals break into data centers and steal valuable credit card data, which can easily be sold on the black market. The adoption of EMV technology will greatly eliminate in-person fraud and force criminals to set their sights on companies that do business online. Not only are the data centers at risk for being breached, but the stolen data can then be used to make subsequent e-commerce purchases. This puts further pressure on organizations to invest in solutions and processes that help mitigate the threat while not impacting sales or the bottom line.

Businesses need to arm themselves with advanced data security and fraud mitigation solutions including end-to-end encryption, tokenization and fraud detection.

Payment tools that remove actual data from your systems not only mitigate fraud, they can also reduce PCI compliance scope and the associated headaches.

A secure B2B-hosted portal offers control over the look and feel of payment and bill collection pages, while allowing businesses to securely capture credit card and/or purchasing card data, never passing or transmitting sensitive data through the business’s enterprise.

Tokenization replaces actual card data with a secure substitute that renders the data useless if stolen. It facilitates the card-on-file payments for subscription, recurring and installment plans.

What could a business do differently if fraud didn’t exist? Accept more orders from more people in more places? Expand to geographies/ vertical markets previously considered too risky?

Kimberly Coley is vice president of national accounts for Merchant e-Solutions, a Cielo company, in Redwood City, Calif. She can be reached at (310) 666-2627 or kcoley@ merchante-solutions.com.

New On-demand Video from FASA TM

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.

Contractors’ Knowledge Network

“Implementing Technology for the Jobsite: Turning Refusers into Adopters” (Item #8083) As the construction industry increasingly adopts the use of mobile software and gadgets, many companies are faced with the challenge of convincing their workforce to use and become proficient in new technologies. Learn how to help your project team understand the value of using new technology with the video-on-demand “Implementing Technology for the Jobsite: Turning Refusers into Adopters.” Julian Clayton, FieldLens, New York, N.Y., provides a road map for helping tech resistors adopt tech tools and examines strategies for helping bridge the gap between tech savvy millennials and veteran, experienced project team members to ensure that the strengths of both groups contribute to the effectiveness of your workforce.

$65 Members; $95 Nonmembers

Order online at www.contractorsknowledgedepot.com or call ( 703 ) 684-3450, Ext. 1321 T H E

C O N T R A C T O R ’ S

C O M P A S S

d e c e m b e r

2 0 1 5

27

1100 Via Callejon, Suite A, San Clemente, CA 92673

surety@southcoastsurety.com www.southcoastsurety.com (949) 361-1692 Fax (949) 361-9926

The Bond Only Agency

(800) 361-1720 DOI Lic# 0B57612

DISCOUNT PRICING AMERICAN SUBCONTRACTORS ASSOCIATION MEMBERS

for

The American Subcontractors Association partners with NPP to provide discounts on products and services. NPP negotiates the rates, and makes them available to ASA members.

NPP MEMBERSHIP IS FREE. Available products include: Wireless Service Office Supplies Travel Facility Maintenance

Tech Devices Fleet Management Remote Surveillance and more...

Access the nation’s largest and most reliable 4G LTE network.

Corporate Discount - 22% discount on eligible wireless calling plans $34.99 and higher (five line minimum, two corporate lines required). $20 for 3GB data on 3G/4G devices or $30 for 5GB with Mobile Hotspot on 4G smartphone devices for corporate subscribers.

Text Message Offer - 250 per month for free, 500 per month for $5, or unlimited per month for $10.

Employee Discount - Up to 18% discount on eligible wireless calling plans $34.99 and higher (15% discount, plus 3% if enrolled in paperless billing and My Verizon).

Accessories - 25% discount on select accessories. *Eligibility Requirement: Company must be a commercial construction company, home builder, remodeler or other trade craftsman.

All Verizon Wireless offers are for a limited time only and are subject to equipment availability. Verizon Wireless reserves the right to change or modify all offers at any time without notice. All terms and conditions are subject to and governed by Verizon Wireless’ Agreement with Customer including, but not limited to, Customer eligibility requirements. Every effort is made to ensure the accuracy of the Verizon Wireless offers, however, Verizon Wireless is not responsible for any errors or omissions.

Discount pricing on maintenance, repair and operating supplies.

Local products and service at over 2,600 stores.

Discounts on Industrial Coatings, Chemical Coatings, Architectural Coatings and Paint Supplies.

Exclusive savings with the world’s largest online travel agency.

Save 10% on hotel bookings—over and above Expedia’s industry leading prices.

Fuel up at over 98% of all major brand fuel retailers nationwide.

Start saving today on over 150,000 brand-name products.

HOW TO GET STARTED Signing up to be an NPP member is free and easy: • Visit www.mynpp.com, click on “Join Now.” • Select “Company” then “Construction,” then “Commercial.”

• Select “American Subcontractors Association” from the Association dropdown menu and complete enrollment.

mynpp.com 800.810.3909 customerservice@mynpp.com © 2015 National Purchasing Partners

Legally Speaking

Do You Want to Be Paid for Extra Work?

by Sara M. Thompson The answer to this question should be a resounding “YES!” However, subcontractors often place themselves in positions where they perform “extra work” without being paid. Extra work is work that is beyond the scope of work contracted for by the general contractor and subcontractor in the subcontract.

There are two common traps a subcontractor can fall into when performing extra work. One, a subcontractor will agree to perform extra work without obtaining a written, signed change order. Two, a subcontractor decides not to pursue delay damages caused by intentional interference or wrongful act by the owner.

Hypothetically, an owner wants a building constructed in Texas in time for an event. A subcontractor, John Doe, Inc., performs services related to the installation of flooring. John Doe, Inc. enters into a subcontract with the general contractor, GC, LLC. The subcontract states that John Doe, Inc.’s scope of work includes installation of linoleum in the main lobby of the building. John Doe, Inc. begins installing linoleum flooring in the main lobby of the building.

After completing 40 percent of the installation, the owner decides it does not like the appearance, and instead requests hard wood flooring.

GC, LLC and John Doe, Inc. orally negotiate a change order for the new type of flooring, labor and materials.

During negotiations, John Doe, Inc. advises GC, LLC that it will take

30

d e c e m b e r

2 0 1 5

a substantially greater amount of time to install wood flooring. The linoleum has to be removed, the wood has to be selected by the owner and supplied from out of state, and installed by John Doe, Inc. The owner acknowledges the delay this change will cause. However, the owner continually fails to respond to requests for information and requests for a change orders related to the new flooring. But, in the meantime, insists the schedule be met. Lo and behold, the project runs behind schedule.

John Doe, Inc. incurs delay damages as a result of the owner’s intentional acts.

John Doe, Inc. approaches GC, LLC for payment of the extra work. GC, LLC approaches the owner, and the owner refuses to pay for the extra work because there is no written change order. Also, John Doe, Inc. seeks recovery of the delay damages.

The owner advises GC, LLC that it will not pay GC, LLC the delay damages due to the no-damages-for-delay provision in the contract. Thus, GC, LLC will not pay John Doe, Inc. for its delay damages. Rather than press the issue, John Doe, LLC decides to forgo its delay damages. How could these two situations be avoided?

First, obtain a written change order.

Secondly, recognize that under Texas law, the no-damages-for-delay provisions may not be enforceable if the provision protects a party from paying for delay damages incurred as a result of the party’s own intentional acts and/or wrongful conduct.

T H E

Written Change Order The best way to ensure that you will be compensated for “extra work” on a project is to have the extra work approved and the change order signed by the owner and/or general contractor. An oral change order usually occurs on the project site and is discussed among the parties.

Inevitably, after the extra work is performed, and the subcontractor seeks payment for that extra work, the owner will deny the request claiming the extra work is part of the original subcontract. Without a written document memorializing this agreement, it will be an uphill battle for the subcontractor to get paid for the extra work. The oral change order will likely be an unenforceable contract.

Practically speaking, it is in the best interest of the subcontractor to write down the scope of the extra work into a change order. Include on the document the exact extra work being completed and the agreed upon cost of the extra work, including materials and labor. Also, reference the job number and original subcontract number to make it clear that the change order applies to the original subcontract. An important reason to get the change order in writing is that a general contractor is more likely to get the owner to approve the change order in writing if it means the general contractor will be paid for the change.

This is more likely to happen if the change order is in writing.

C O N T R A C T O R ’ S

C O M P A S S

It is also important for a subcontractor to train its staff to understand the importance of obtaining a written, signed change order before performing the extra work on a project. Because this can be practically difficult on a job site, it is a step that is often missed by the subcontractor’s crew. However, as difficult as it might be in the moment, it is much more difficult getting paid for extra work after the project is completed when there is not a written, signed change order.

A general contractor might also convince the subcontractor’s staff to make an in-field change to do extra work. It will be important for the subcontractor’s staff to document the change, in writing to the general contractor, via emails and/or letters.

The subcontractor should note the change was made, what kind of change was made, how much it cost extra from the original subcontract price, and what materials were used.

It would also be helpful during this process to make sure the general contractor acknowledges, in writing, that the change was made outside the scope of the work called for in the subcontract.

If you feeling like being charitable and providing extra work for free, then proceed without a written, signed and agreed upon change order. If you would like to get paid for the extra work, do your best to obtain a written, signed and agreed upon change order. Remember, whoever wins in court is often times the one with the most written documentation.

The ‘No-Damages-forDelay’ Provision A subcontractor that enters into a change order for extra work that is then interfered with by the owner’s intentional acts and/or wrongful conduct may recover its delay damages suffered a result of the interference with the work to be performed under the change

T H E

C O N T R A C T O R ’ S

order. A subcontractor is entitled to recover delay damages caused by the active interference with the contractor’s work or other wrongful conduct, including arbitrary and capricious acts, as well as willful and unreasonable actions. Zachry Const.

Corp. v. Port of Houston Auth., 449 S.W.3d 98, 117 (Tex. 2014). A nodamage-for-delay provision is not enforceable if it prohibits the recovery of delay damages caused by another entity’s intentional conduct.

For example, in Zachry Construction Corporation, the general contractor entered into a change order with the owner for extra work not contemplated for in the original agreement. The contractor would construct a cut-off wall through the middle of the project in the ship channel because nine months into the project the owner decided it wanted additional space for the ships, which required a sixth 332foot section to the wharf. The owner and general contractor negotiated the change order for the extra work.

During negotiations the owner promised the general contractor that it would not impose liquidated damages for the delay as long as a ship from China could dock when it arrived. However, the agreement to conditionally waive the delay damages was not included in the change order. A few weeks later, the owner changed its mind and basically ordered the general contractor to revise and resubmit its plans without the cut-off wall called for in the change order. The general contractor protested, stating that changing the plans would cause delays with the project, but ultimately followed the orders of the owner, knowing that it would delay completion of the project. Despite this fact, the general contractor delivered on its negotiated change order promise and the ship from China docked when it arrived.

However, the owner still withheld liquidated damages from the general contractor’s work despite its oral

C O M P A S S

agreement during negotiations. The general contractor ultimately sued the owner for delay damages caused by the owner’s refusal to allow the general contractor to perform under the change order. The owner refused to pay the delay damages citing a “no damages for delay” provision in the contract. The Texas Supreme Court ultimately found the provision unenforceable due to the owner’s interference with the performance of the work.

Practically speaking, the general rule under Texas law is that “nodamages-for-delay” provisions are enforceable. However, the provision will likely not be enforceable if the delay was caused by an intentional or wrongful act of the party seeking to avoid payment of the delay damages.

Thus, if the owner intentionally or wrongfully interfered with the subcontractor’s performance of its extra work, the subcontractor should ask to be paid for its damages caused by the delay.

Conclusion To avoid providing free work on a project, obtain a written change order. Secondly, recognize that under Texas law, the no-damages-for-delay provisions may not be enforceable if the provision protects a party from paying for delay damages incurred as a result of the party’s own intentional acts and/or wrongful conduct.

Sara Thompson is an attorney with LeClairRyan, Houston, Texas.

LeClairRyan is a national law firm composed of over 380 attorneys providing business counsel and client representation in corporate law and litigation to a wide variety of clients across the nation. Thompson’s practice involves construction law representation and litigation, general commercial litigation, and employment litigation. She can be reached at (713) 752-8348 or sara. thompson@leclairryan.com.

d e c e m b e r

2 0 1 5

31

ASA/FASA Calendar January 2016

April 2016

12 – Webinar: The War for Talent Drives Construction Pay Higher: Pay Trends in the Construction Industry

12 – Webinar: The Payment Dance in the Construction Industry

14-16 – ASA Mini-Committee Week: Executive and Finance Committee and Rap Council Meetings, Hilton Garden Inn Scottsdale

May 2016

9 – Webinar: Negotiating Retainage

THE

14 – Webinar: Damages For Lost Labor Productivity

March 2016 3-5 – SUBExcel 2016, Miami, Fla.

Contact information for all ASA and FASA events/programs: www.asaonline.com education@asa-hq.com

Small Business Capital     

in the January 2016 Issue of ASA’s

10 – Webinar: Websites, Email, Social Media and Your Domain Name June 2016

February 2016

Coming Up

FUNDING UP TO $2,000,000 THE BEST FACTORING RATES THE MOST FLEXIBLE TERMS APPROVED IN 1 HOUR FUNDED IN 48 HOURS

THEME: Finding New Markets •

Specialized and Generalized Niche Market Strategies

•

Using Technology to Drive Contractor Success

•

Dangers of Expanding into New Markets

•

Hot Construction Markets—Don’t Get Burned

•

Job Costing with QuickBooks

•

Going Digital

•

Legally Speaking: Improving Cash Flow PAST ISSUES: Access online at www.contractors knowledgedepot.com

DANIEL McGLONE PAST PRESIDENT OF ASA’S NEW JERSEY CHAPTER OFFICE: (732) 297– 8184

TM

E: INFO@SMARTCHOICEUSALLC.COM 32

d e c e m b e r

2 0 1 5

T H E

C O N T R A C T O R ’ S

C O M P A S S

JUNE 5TH, 11:08 A .M.

A STAGGERING STATISTIC INSPIRES A LIFE-SAVING RULE IN AN INS TANT,

C A LV IN B ERGER SAW THE VA LU E OF IN - C A B B EH AV IOR TR A INING FRO M CN A

When a recent safety webinar revealed that 280,000 drivers are involved in serious accidents every year, Calvin Berger of Calberg Contracting took CNA’s recommendation to heart, and posted placards restricting cell phone use in each of his company’s vehicles. Now Calberg Contracting is filing fewer claims, and Calvin’s enjoying a handsome bonus for worker safety and performance.

When you’re looking for risk control programs that keep workers dialed in to relevant industry trends … ® we can show you more.

To learn more about CNA’s coverages and programs for building contractors, 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 or places is 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 © 2015 CNA. All rights reserved.