The Contractor's Compass February 2018 by American Subcontractors Association

THE

ASA’s

THE OFFICIAL EDUCATIONAL JOURNAL OF THE AMERICAN SUBCONTRACTORS ASSOCIATION

WWW.ASAONLINE.COM

10 Tips to Prevent the

Afternoon Slump by Jerry Teplitz

SUBExcel 2018:

Education and Networking for Subcontractors

FEBRUARY 2018

Engaging with Customers

by American Subcontractors Association

Cold Calling Is Dead—

Networking Lives

by Tom Woodcock, Seal the Deal

Legally Speaking:

Innovation in Construction Procurement: Legal Implications of Decentralized Databases and Blockchain by James L. Salmon, Esq., Benjamin, Yocum & Heather, LLC

See you soon! TM

Feb. 28 – Mar. 3, 2018

Tempe Mission Palms, Tempe, Arizona

AMERICAN

SUBCONTRACTORS ASSOCIATION

Featuring Keynote Speaker

Dave Sanderson Inspirational survivor, speaker, and author

February 28 â&#x20AC;&#x201C; March 3, 2018

TEMPE MISSION PALMS HOTEL & CONFERENCE CENTER | TEMPE, AZ

THE

February 2018

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.

Features 10 Tips to Prevent the Afternoon Slump ................................. 6 by Jerry Teplitz

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).

SUBExcel 2018: Education and Networking............................ 8 for Subcontractors

EDITORIAL STAFF Editor-in-Chief, Marc Ramsey

by American Subcontractors Association

MISSION FASA was established in 1987 as a 501(c)(3) taxexempt entity to support research, education and public awareness. Through its Contractors’ Knowledge Network, FASA is committed to forging and exploring the critical issues shaping subcontractors and specialty trade contractors in the construction industry. FASA provides subcontractors and specialty trade contractors with the tools, techniques, practices, attitude and confidence they need to thrive and excel in the construction industry. FASA BOARD OF DIRECTORS Richard Wanner, President Letitia Haley Barker, Secretary-Treasurer Brian Johnson Robert Abney Anne Bigane Wilson, PE, CPC

Cold Calling Is Dead—Networking Lives............................... 10 by Tom Woodcock, Seal the Deal

Departments CONTRACTOR COMMUNITY..... ........................................................... 4

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

LEGALLY SPEAKING...............................................................................13 Negotiating Subcontracts

ADVERTISING Interested in advertising? Contact Richard Bright at (703) 684-3450 or rbright@ASA-hq.com or advertising@ASA-hq.com. EDITORIAL SUBMISSIONS Contributing authors are encouraged to submit a brief abstract of their article idea before providing a fulllength feature article. Feature articles should be no longer than 1,500 words and comply with The Associated Press style guidelines. Article submissions become the property of ASA and FASA. The editor reserves the right to edit all accepted editorial submissions for length, style, clarity, spelling and punctuation. Send abstracts and submissions for The Contractor’s Compass to communications@ASA-hq.com. ABOUT ASA ASA is a nonprofit trade association of union and non-union subcontractors and suppliers. Through a nationwide network of local and state ASA associations, members receive information and education on relevant business issues and work together to protect their rights as an integral part of the construction team. For more information about becoming an ASA member, contact ASA at 1004 Duke St., Alexandria, VA 22314-3588, (703) 684-3450, membership@ASA-hq.com, or visit the ASA Web site, www.asaonline.com.

by Nicholas W. Schwandner, Esq., Harrison Law Group

Quick Reference ASA/FASA CALENDAR...........................................................................16 COMING UP................................................................................................ 16

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CONTRACTOR COMMUNITY ASA Introduces New White Paper on Contingent Payment Observers of the construction industry have seen companies go bankrupt, or go through torturous downsizings, layoffs and disputes, because of slow payment and nonpayment by customers. One cause of such difficulties is the contingent payment clause. In addition to the economic damage pay-if-paid clauses cause, they also raise serious legal and ethical questions in business. Simply put, “contingent payment” describes a contractual provision that makes one party’s right to be paid for services provided to a second party contingent on the payment of the second party by a third party. In the construction industry, this clause often translates into a subcontractor’s right to be paid being contingent on the owner’s payment of the prime contractor for the subcontractor’s work. You can master contingent payment by studying ASA’s new white paper now available free for ASA members on ASA’s Web site. Mastering Contingent Payment helps readers understand the important differences between pay-if-paid and pay-when-paid clauses, discusses industry practices, reviews existing law and trends, and provides tips on how a subcontractor can protect its business. The white paper is available to ASA members as a free, downloadable PDF document under “Contracts and Project Management” in the Member Resources section of the ASA Web site.

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ASA-Endorsed Change Order Bill Introduced in House

House Committee Approves ASA-Endorsed Risk Allocation Bill On Jan. 30, the House Judiciary Committee approved, by a vote of 16 to 14, H.R. 3808, a bill that specifies that lawsuits against property owners and contractors for injuries associated with slips, falls, and gravity-related risks at federally-funded projects must be judged under a comparative negligence standard. The bill is “an important measure towards common sense tort reform,” a coalition of 20 associations representing construction, real estate and insurance companies told the committee. As a part of the coalition, ASA said, “H.R. 3808 would enable a course correction for the proliferation of lawsuits relying on New York State’s “Scaffold Law,” which was enacted in the 19th century, long before the advent of federal and state OSHA and workers’ compensation laws. The courts have interpreted the “Scaffold Law” to subject property owners and contractors to “absolute liability.” This means that costs of injuries are completely borne by property owners and contractors, even if they are not the direct employers of the injured workers. According to the business coalition, “The U.S. government bears higher costs for general liability insurance at the dozens of federally-owned and -managed properties in New York State. As Federal property managers hire contractors to perform commonplace cleaning, painting, renovation, and construction activities within the Scaffold Law’s scope, taxpayers are ultimately on the hook for more expensive insurance to cover accidents at U.S. facilities.”

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On Jan. 11, Rep. Don Bacon (R-Neb.), along with bi-partisan co-sponsors, introduced a bill to address change orders on federal construction projects. H.R. 4754, the “Change Order Transparency for Federal Contractors Act,” would require a federal contracting agency to provide with its invitations for bid and requests for proposals details on its change procedures and historical performance data about change orders. “Small business contractors deserve to know all relevant information before entering into a contract with a federal agency,” Bacon said. “Small businesses waste time and money while waiting for the approval of their change order requests.” ASA, in collaboration with the Construction Industry Procurement Coalition, has been working with Congress and federal contracting agencies to improve the federal government’s change order procedures. “When enacted, H.R. 4754 will help federal construction contractors and subcontractors learn and understand the risk of nonpayment for change orders before bidding and signing a contract,” said ASA Chief Advocacy Officer E. Colette Nelson. Rep. Steve Knight (R-Calif.), Rep. Stephanie Murphy (D-Fla.) and Rep. Al Lawson (D-Fla.) co-sponsored the bill, which is pending before the House Small Business Committee. Ask your Representative to co-sponsor H.R. 4754 by using the ASA Legislative Action Center.

ASA and Surety Industry Associations Update P3 Guide Construction of projects for public use through public-private partnerships continues to increase at

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all levels of government, particularly 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 a 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 updated guide, Public-Private Partnership Laws in the States, Including Surety Bond Requirements (2018 Edition), will help subcontractors determine whether they have payment protections before they bid on a P3 project. “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 2017, Alabama, Arkansas, Kentucky, Louisiana, Nevada, Oklahoma, Oregon and Utah enacted new laws governing public-private partnerships. 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

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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. NASBP provides step-by-step guidance in its publication Always Verify Your Bond!

Post OSHA Form 300A from Feb. 1 Through April 30 The Occupational Safety and Health Administration requires most employers with 10 or more employees to prepare and maintain records of serious occupational injuries and illnesses using the OSHA 300 Log. Employers who are required to keep the Form 300, Log of Work-Related Injuries and Illnesses, must post Form 300A, Summary of Work-Related Injuries and Illnesses, in a workplace every year from Feb. 1 to April 30. Visit OSHA’s Recordkeeping Rule Web page for more information on recordkeeping requirements.

DOL Announces Proposal for Small Business Health Plans On Jan. 5, the U.S. Department of Labor issued a proposed rule to expand the opportunity to offer employment-based health insurance to small businesses through Small Business Health Plans, also known as Association Health Plans. Under the proposal, small businesses and sole proprietors would have more freedom to band together to provide affordable, quality health insurance for employees. The proposed rule, which applies only to employersponsored health insurance, would allow employers to join together as a single group to purchase insurance

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in the large group market. The proposed rule would: Allow employers to form a Small Business Health Plan on the basis of geography or industry. A plan could serve employers in a state, city, county or a multi-state metro area, or it could serve all the businesses in a particular industry nationwide; Allow sole proprietors to join Small Business Health Plans, clearing a path to access health insurance for the millions of uninsured Americans who are sole proprietors or the family of sole proprietors. Under the proposed rule AHPs could charge individuals higher premiums based on health factors or refuse to admit employees to a plan because of health factors. Interested parties can submit comments at www.regulations.gov, the federal government’s regulation portal, on or before March 6.

OSHA Increases Penalty Amounts for 2018 The Occupational Safety and Health Administration has increased civil penalty amounts for violations of workplace safety and health standards by 2 percent from last year. Under law, the agency is required to adjust penalties for inflation each year. New penalties for willful and repeat violations are $129,336 per violation; penalties for serious, other-thanserious, and posting requirement violations are $12,934 per violation; and failure to correct violations is $12,934 for each day the condition continues.

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Feature 10 Tips to Prevent the Afternoon Slump by Jerry V. Teplitz, JD, Ph.D.

If you’re like two-thirds of the population, you’ve experienced the afternoon slump. You know the feeling … it’s mid-afternoon and you feel tired and drained and want to call it a day. While you still plug away at your work, you often find that you are not as productive as you need to be. You’ve hit the afternoon slump. This drop in energy is not all in your head. It is a physiological response from your body. Fortunately, you can employ methods to reduce the slump’s frequency and to shorten its duration once it does start. Some of the methods work solely on the individual level, while others require a company-wide initiative. When you utilize these 10 tips and instill them in your office, you will replace the afternoon slump with a time of increased productivity. Tip #1: Drink your water. Even if you are simply working behind a desk all day, your body still uses water. So don’t wait until you get that thirsty

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feeling in your mouth. By that point you are already dehydrated, which can impair your physical and mental functioning. If dehydration is one of the factors attributing to your afternoon slump, you now are experiencing both a brain slump and a body slump. To prevent this, drink a minimum of eight glasses of water a day, more if you are physically active. Keep a water pitcher and a glass on your desk so you can easily sip water all day. Don’t fool yourself into thinking any type of liquid counts toward your water intake. Liquids like coffee or cola dehydrate you and worsen the slump. Tip #2: Avoid sugar and simple carbohydrates. While a candy bar mid-afternoon may give you a quick sugar rush, in the long run, it actually worsens the slump. Sugar and simple carbohydrates get absorbed immediately into the bloodstream. In response, your blood sugar rises, and your body secretes insulin to bring your

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sugar level back down. Unfortunately, your body doesn’t know when you’ve stopped eating the candy, so it drops you down into a low blood sugar level by taking too much sugar out of your body. This is why people who rely on sugar for energy have highs and lows throughout the day. But candy isn’t the only culprit. Simple carbohydrates, such as a white bread sandwich and some dessert at lunchtime, can cause your blood sugar to drop after an hour or two, causing the afternoon slump. To avoid this, incorporate more proteins and complex carbohydrates into your diet, such as products made with whole-wheat flour, brown rice, etc. They won’t trigger blood sugar highs and lows, putting you more on an even keel. Tip #3: Eat small meals. Have six small meals over the course of the day instead of three large ones. When you eat a big meal in one sitting, it overwhelms your body, causing it to work harder to digest the food. As a result, the digestive

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process diverts blood away from your brain and your extremities and uses it in the digestive track. With smaller meals, your body doesn’t have to work as hard. Tip #4: Evaluate your lighting. Most offices are lit with cool white fluorescent tubes, which have a terrible effect on how people feel and function at work. A better option is full spectrum fluorescent tubes, as these simulate the wavelength of sunlight. Studies have shown that full spectrum lighting provides many benefits: headaches disappear and afternoon fatigue declines, while productivity levels actually rise. If your office doesn’t already use full spectrum fluorescent tubes, you might want to replace the tube just in your office. Your company may want to replace the tubes company-wide because it is an investment in your company’s human capital. As everyone’s productivity increases, the company will quickly recoup its investment. The gains will certainly outweigh the expense. After one company re-lamped their offices, they started referring to their lights as their “happy lights” because employees feel so good being under them. Tip #5: Take walking breaks. Walking gets your blood circulating, helps you breathe better, and stimulates your brain due to the increased blood flow. Take a five- or 10-minute walk during the day. Walking outside will give you the extra benefit of fresh air, but walking around the office is OK too. If you don’t have time to take a walk, run up and down the stairs for two minutes. That will give you the same benefits in half the time. Tip #6: Meditate. Meditation is great for rejuvenating your body. Each time you meditate, you’ll feel like you just took a six-hour nap. By meditating for 15 to 20 minutes twice a day, you’re keeping your body continually energized. If you do run into the afternoon slump, meditating for a

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quick five minutes can immediately reenergize you. Physiologically, when you meditate, you go into a state that’s similar to deep sleep. Your heart rate, breath rate, and vital signs are lower than the normal state of sleep, so in effect, you give your cells and your body a tremendous amount of rest in a very short period of time. You may even find that you require less sleep at night since you are giving your body much well needed rest twice a day. Tip #7: Take your vitamins. Several vitamins have an energizing affect on your body, such as B-complex and Ginseng, so take them every day. You get the maximum benefit from your vitamins when you divide your dose throughout the day and take them with a meal. For example instead of taking 100 milligrams once a day, take 50 milligrams with breakfast and 50 with lunch. By doing so, you get much better absorption and greater benefit. Tip #8: Listen to some music. Music can energize you, but choose carefully. Some music can actually weaken your system and fatigue you. For example, hard rock can make you feel jittery. Find some music you enjoy. Upbeat music can get your body into a more upward stance. If you are listening to music with lyrics, make sure they are positive and motivating. Tip # 9: Take time to breathe and stretch. Deep breathing is another way to give yourself an energy boost. Your cells require an exchange of air in the lungs to get the waste products out of the body. If you’re not breathing enough, you’re getting a build-up of waste products. By doing some breathing exercises during the day, you’ll get a lot more fresh air into your system, your cells, and your brain. Try this exercise: Breathe in slowly, filling your stomach first, then the chest, and finally the shoulders while counting to seven. Then exhale slowly, starting to exhale at the shoulders first and finish

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with the stomach, again while counting to seven. Do this three to six times. When you do, you are dramatically increasing the exchange of fresh air in your body. Equally important is to stand up and stretch. When you stretch and move, you not only increase the blood flow in your body, but you are also stimulating the lymphatic system, which removes waste products from your body and only functions from muscular contractions. So, if you are sitting for hours at a time, you are actually building up waste products in your body. Do some stretches mid-morning and mid-afternoon. Tip #10: Handle negativity. Negative people and images can have a draining effect on your energy. Conversely, if you spend the day surrounded by positive people and images, you can feel energized by them. If negative people surround you at work, use your mind to go into the positive realm when they’re going into the negative. Make a conscious effort to stay positive even when others are negative around you.

Beat the Slump and Enjoy Your Night No one enjoys feeling tired and drained. So, incorporate these 10 tips into your day and encourage others in your office to do the same. When you do, you can turn the midafternoon hours into a time of increased productivity. And when you feel better at the end of the day, you will have the energy to enjoy your evening. Dr. Jerry V. Teplitz is an author, attorney and a Ph.D. in Holistic Health Sciences. He is author of Managing Your Stress In Difficult Times, Switched-On Selling: Balance Your Brain For Sales Success, which was a No. 1 Amazon Bestseller. Dr. Teplitz can be reached at (800) 77-RELAX or info@Teplitz.com.

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Education and Networking for Subcontractors and Suppliers by American Subcontractors Association

Networking and education opportunities abound at SUBExcel 2018, ASA’s annual convention, which will take place Feb. 28 through March 3 at the Tempe Mission Palms in Tempe, Ariz. Visit www.subexcel.com for details.

NETWORKING Tuesday, February 27, 2018 5:30 p.m.-6:30 p.m. Hospitality Suite Open to all attendees

7:00 p.m.-10:00 p.m. Attorneys’ Council Dinner—Café Boa

Wednesday, February 28, 2018 6:00 p.m.-7:30 p.m. ASA President’s and ASA of Arizona’s Welcome Reception

6:00 p.m.-10:00 p.m. Reception, Banquet & Awards Ceremony—Rustler’s Roost—Wear your cowboy hats and boots!

Thursday, March 1, 2018 7:30 a.m.-8:45 a.m. Breakfast with Arizona Secretary of State Michele Reagan followed by Peer-to-Peer Leadership Round Tables —Facilitated by Danny Creed

EDUCATION

10:30 a.m.-10:45 a.m. Networking Break

Dave Sanderson is an inspirational survivor, speaker, and author. His thoughts on leadership have made him an internationally sought-out speaker. When US Airways Flight 1549, or “The Miracle on the Hudson,” ditched into the Hudson River on January 15, 2009, Dave Sanderson knew he was exactly where he was supposed to be. The last passenger off the back of the plane on that fateful day, he was largely responsible for the well-being and safety of others, risking his own life in frigid water to help other passengers off the plane. Despite the hazards to himself, Sanderson thought only of helping others and emerged from the wreckage with a mission: to encourage others to do the right thing. That experience profoundly changed his life and today he travels the globe sharing his inspirational and motivational leadership messages to help people make a difference in how they do business and live their lives.

12:00 p.m.-1:15 p.m. Lunch and Chapter Leadership Peerto-Peer Round Tables —Facilitated by Danny Creed 2:30 p.m.-2:45 p.m. Networking Break 4:00 p.m.-6:00 p.m. EXPO & Mini Golf Tournament with Exhibitors Friday, March 2, 2018 10:15 a.m.-10:45 a.m. Networking Break with Exhibitors 12:00 p.m.-1:45 p.m. Lunch with Exhibitors and Chapter Leadership Peer-to-Peer Round Tables —Facilitated by Danny Creed 3:15 p.m.-3:30 p.m. Networking Break

6:00 p.m.-7:00 p.m. Attorneys’ Council Reception —Café Boa

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Thursday, March 1, 2018 9:00 a.m.-10:30 a.m. Opening General Session—“Brace for Impact” by Dave Sanderson

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10:45 a.m.-12:00 p.m. Education Workshop—“Contract Strategies in Challenging Markets” by Teresa Magnus, Magnus & Company Successful contracting strategies on projects focus on shared objectives, maximizing communication and knowledge sharing, jointly mitigating project risks, and fostering a cooperative, trusting, respectful environment. With the exceptional challenges in today’s market, particular emphasis should be laid on mitigating the effects of the constrained labor market by expanding the pool of qualified contractors, thereby increasing access to front line supervision, scope of work expertise, and skilled craft labor. Traditional contracting models focus on risk avoidance at the expense of a single party and the resolution of conflict after the failure of the project. While improving contract language would help this scenario, it is generally not within the scope of control of the subcontractor. So, what role can a subcontractor play in contracting strategy and performance of work within a contract to improve project performance for everyone? 1:15 p.m.-2:30 p.m. Education Workshop—“Lean Transformations” by Stephane McShane, Maxim Consulting Group With the future bringing more of the same accelerated challenges of schedule compression, pricing pressure, and manpower shortages, the industry will be forced to innovate at a heightened clip. Most contractors are trying to solve these massive industry issues with tac-

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tical solutions and everyone is basically trying the same approach they have used for years. The reality is a new business model that is evolving to address these challenges with strategic, longterm solutions. Best-in-class electrical contractors are utilizing value stream mapping to visualize work systems (prefabrication, IT, financial systems, etc.) and identify the gaps, overlaps and roadblocks in how customer requests/ orders are completed. McShane will use case studies of U.S.-based contractors including pictures and detailed descriptions of what they have done, why, and the substantial bottom line results they are enjoying. 2:45 p.m.-4:00 p.m. Education Workshop—“Project Management Through Production Metrics” by Stephen Rohrbach, F.A. Rohrbach, Allentown, Pa. This is not a program about the merits of 10-unit measurements. This is about data. As a constructor, it’s your secret weapon and your best friend. When formulated into a metric, your data can tell you where and how to boost productivity, compare your planned vs. actual variances, and accurately forecast whether you are heading toward a profit or a loss. Used during the course of a project, these insights give you the opportunity to take real-time action and make the adjustments needed to ensure that your team delivers work that is on time and on budget. In this workshop, Rohrbach will explain how to analyze project budgets and costs to identify meaningful metrics that can be used to effectively manage your people, your process, and your client relationships. Participants are encouraged to bring actual project budgets and apply these concepts to current challenges. Be prepared for valuable discussion with your industry peers. Friday, March 2, 2018 9:00 a.m.-10:15 a.m. Education Workshop—“Recession Proofing Your Company” by Joel Stinson, FMI How do you prepare for the next economic downturn? While FMI does not see a recession on the immediate horizon, the next recession is inevitable and

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the best time to prepare is when times are good. Topics covered include: • Recognize key economic indicators and the state of current markets • Develop insights for your firm • Understand tactics for success • Assess readiness and implement steps to prepare your firm 9:00 a.m.-10:15 a.m. Executive Directors’ Education Workshop—“How To Be Productive Every Day: Tips on How to Tame Your Inbox & Apps You Can’t Live Without” by Soraya Herbert Ignore it all you want. But that intimidating number above your mail icon isn’t going anywhere until you take action. Your to-do list won’t disappear either. So how do you handle it all with the latest apps and tech out there? In this workshop, Herbert will share tips on how to tame your unruly inbox and a list of productivity apps that can make your life easier and more productive. Herbert will change the way you do things and help you create better habits with must-have apps! 10:45 a.m.-12:00 p.m. Education Workshop—“Riding an Elephant: Harnessing the Dual Challenges Leading for Impact While Managing Complexity” by Griff Hall, Johns Hopkins University Carey School of Business How do you harness your opportunities for growth while confronting the realities of labor, contracts, and running projects or the business? Leading for impact while managing for complexity are universal dual challenges. There are well-known reasons not everyone successfully meets the mark. The strategies for achieving both are surprisingly simple, yet not inherently easy. Using a framework for developing mastery to meet these dual challenges will help you think and act at deeper levels for sustainable success. 10:45 a.m.-12:00 p.m. Executive Directors’ Education Workshop—“10 Ways to Manage Your Online Reputation and the Social Media Tools to Get It Done Smartly” by Soraya Herbert Learn how to manage your online reputation like a pro. Your brand’s reputation affects your business directly. People

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won’t buy your products if they don’t feel they can trust you--or worse, if they feel that others don’t trust you. Monitoring what people say about you and your business may seem overwhelming, but there are many free or low-cost tools to help you monitor your online reputation. In this workshop, Herbert will: • Explore cool social media tools to help you manage your online reputation. • Explain how consumers see your business. • Share easy ways to manage your online reputation. 2:00 p.m.-3:15 p.m. Education Workshop—“Employment Law Mistakes Most Commonly Made by Subcontractors” by Philip J. Siegel, Esq., Hendrick, Phillips, Salzman & Siegel What steps can you take to minimize potential liability for employment law matters? Find out in this workshop, which will address the top employment law mistakes made by subcontractors. Philip Siegel will explain how to ensure that a former employee is prohibited from bringing claims against the company, and how to avoid other common traps in the employment law arena. He will also address proper classification of independent contractors, severance pay, documenting disciplinary actions, the importance of written job descriptions, the importance of a discrimination and harassment policy, and common wage and hour mistakes such as those made regarding travel pay. 3:30 p.m.-4:45 p.m. Education Workshop—“Trending Now: Lean Construction Top 10 Topics” by Bryan Bernardo, LEED-AP, Kitchell Contractors As experienced workers leave the construction industry and fewer trades enter, we must transform the way we think and deliver projects. Lean design and construction enables that shift by focusing on eliminating waste and increasing value with safer job sites, improved profitability and reduced schedules. In this workshop, gain awareness of the eight wastes plus 10 trending Lean construction tools that improve the way we build.

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Cold Calling Is Dead, Networking Lives by Tom Woodcock, Seal the Deal For decades people have tried to find business through the painstaking process of cold calling. I battle old school sales managers all the time who swear cold calling is the way to go. Think about it. Do you like someone coming in and interrupting you in the middle of working on a project and trying to sell you tools? No! Then why would you think someone else would? Don’t get me wrong. I grew up as a sales person cold calling my guts out. Back in the day we had no choice. Our lead source was the Yellow Pages. We hoped we would be greeted by a cordial receptionist and often only had the building sign as advanced information. This made cold calling not only necessary but mandatory. Currently, the ability to get advanced information on a potential customer is at its highest level in history. Via the Web you can secure company information, market presence and even contact information. This eliminates much of the need for a cold call. The issue here is you lose the physical presence with the customer. Therefore, we need to find a way to accomplish

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this in order to gain the initial meeting. The best way to do this is by going backwards to move forward—using associations, organizations and chambers of commerce. Yup, that’s right—pools of people. Add your own, designed network of contacts and you have a lead machine. Getting to events, happy hours, business breakfasts and business groups is paramount to finding opportunities. There are some qualifiers to keep in mind, so as to not waste time and effort. They are: 1. Customer-Rich: Does the event appear to be attracting customers or potential customers? Though often you’ll never really know until you attend, promotional media will give you an indication on the target market. Customer-rich environments are always your best shot at direct business opportunities. 2. Network Development: Are there going to be current or potential network contacts in attendance? These are individuals that also sell to your customer base. They can be great sources for introductions and inside information. Your

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personal network should have a high concentration of these types of individuals. 3. Association Affiliation: Events that are hosted by associations are often well attended. They tend to cater to specific groups, so it’s a bit easy to qualify attendees. Many times the events are limited to members and their guests, but every so often they’re open to visitors. Grab those chances or simply join! 4. Known Host: These are events hosted by individuals or companies well known in the industry. People will attend because they know historically that host has strong networking meetings. Some have a knack in setting up these programs. Why reinvent the wheel. Take advantage of their expertise! Simply using these four criteria will produce results. Then it comes down to your personal approach to networking. You have to develop a methodology that you’re comfortable with and matches your personality. Some people can simply own a room. Others, well, they need a good, structured plan of

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attack. Either way, it’s best to attend with a little information and strategy. Here are some tricks to get more bang for your buck: 1. Get There Early: Check out those nametags and select a couple of targets you want to approach. 2. Permission to Call: Politely asking if you can contact a potential client goes a long way. Do not be challenging or confrontational. You’re hoping to get permission to contact them. 3. Use Your Existing Network: Connect with those already in a network relationship with you to meet new contacts. This is the easiest way to gain new personal contacts. 4. Stay Late: A lot happens after the scheduled meeting is over. Those that hang around tend to be more open and freer in their discussions. This can provide an inside track on potential projects or opportunities. I’m a firm believer in the power of networking. I feel that if you combine a good physical network with a functioning electronic network you’ll have the basis for a lead-generating machine. Finding business opportunity is a primary goal of all companies. Without leads there aren’t sales; without sales there aren’t projects; without projects there aren’t contractors. Continually priming your network will result in a steady stream of leads and prospects. Under-valuing the power of networking can not only be short-sighted but may result in business decline. Forcing a cold call first mentality displays a dated sales approach. It also reveals a weakness in network development. With the increase in communication and social connection, it is far easier to find, as well as secure, sales leads. The final piece of the networking puzzle is to be sure to follow up on the information secured at the networking event. This, of course, is assuming you gained some information. What good is information that is never acted on?

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It happens all of the time. Taking the time to make the phone calls and get the appointments is where the real rubber meets the road. Not turning networking information into business is inexcusable. The discipline to attend networking events has to be followed by the discipline of acting on the results. A healthy sales effort includes between four and eight networking events a month. That’s roughly 50 a year! I find it hard to believe that kind of networking commitment will not produce results. As a matter of fact, I know it will because I do it myself. The results have been impressive and it will always be a part of my sales regimen. I would be remised if I didn’t at least mention the vehicle of social media. Though I do agree social media can have an impact on network development, it should never supplant physical networking. Social media can be very consuming and before you know it your wasting good sales time surfing on Facebook. Your social media regimen should be quick and easy to manage. I find the best scenario is to pick one platform that is successful and work it diligently. That diligence is in regards to daily connecting with business people and linking posts that relate to your business or trade. Avoid social conversations that tend to replace personal interaction. Electronic communication cannot replicate personal contact with clients and customers. In all truthfulness, social media is a nice compliment to true networking. It does lack the advantage of reading faces and body language, shared experience and normal person-to-person interaction. These elements are critical to get competitive differentiation—which in itself is crucial to customer buying decisions and profitability. By combining a strong physical network with a good digital presence, the need for cold calling absolutely disappears. In this current climate, who on Earth wants their busy day

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interrupted by someone coming in without an appointment and trying to secure their business? I’ll answer that. No one! So, if you don’t want to be cold called, why would you think your customers would enjoy it? In actuality, cold calling is somewhat rude. That’s why 99.9 percent of sales people hate it. Plus, the success rate is brutal. Even if you were to get one spontaneous appointment, what about the other nine that were so put out by your unannounced visit that they will never do business with you? Opportunity gone! Cold calling played a role up to the early 1980s, as it was a great information gathering tool. We had the Yellow Pages and our feet as lead sources. Cold calling was investigative work as well as a sales requirement. The internet and Web sites removed the investigative component. Therefore, it is no longer a sales requirement. Networking is. If you do not get out and network, you may as well cold call, because you’re not going to be successful either way. There are STILL companies that don’t want to engage with associations, hate their business development people being on social media and skip big industry events. Now there’s a recipe for growth! It boggles my mind that some owners continue with this dated approach. I imagine they feel if it worked 30 years ago, it will work now. Yeah, and 30 years ago we were using payphones! Get out and network, have a social media regimen and get to key industry events. Simply do these three sales methods and you’ll reap the benefits. How do I know? Because I do it consistently myself! Trust me, it works! Tom Woodcock, president, Seal the Deal, Manchester, Mo., is a speaker, trainer, and author of the book You’re Not Sellin’, They’re Buyin’! He can be reached at (314) 775-9217 or www. tomwoodcocksealthedeal.com.

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Legally Speaking CONTRACTOR COMMUNITY Innovation in Construction Procurement: Legal Implications of Decentralized Databases and Blockchain by James L. Salmon, Esq., Benjamin, Yocum & Heather, LLC Procuring a substantial built asset requires an owner to engage dozens of entities via a myriad of contracts. Those entities engage others, including specialty designers, suppliers and trade contractors. Stakeholders, represented by individuals, then deliver on the promises set forth in that complex array of contracts. The antiquated legal framework used to procure most built assets often collapses under the strain, failing all parties involved. ASA recently convinced the Kentucky Supreme Court to allow subcontractors in that state to pursue claims for unjust enrichment against owners under that legal framework. In a case styled, Superior Steel, Inc. and Ben Hur Construction Company, Inc. vs. the Ascent at Roeblingâ&#x20AC;&#x2122;s Bridge, LLC, Corporex Development & Construction Management, LLC, Dugan & Meyers Construction Company and Westchester Fire Insurance Company the court adopted arguments set forth by Thomas Yocum of ASA-member firm Benjamin Yocum & Heather in an amicus, or friendof-the-court, brief funded by ASA through the Subcontractors Legal Defense Fund. While ASA successfully defended the interests of trade contractors in Kentucky, the win may prove pyrrhic for the subcontractors and suppliers involved. Those litigants, represented by law firms other than Benjamin Yocum & Heather, spent more than $1 million pursuing claims worth approximately $400,000. Precedent-setting litigation like this, while beneficial to many, remains prohibitively expensive and raises serious questions regarding the viability of the existing legal framework within which the built

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industry operates. ASA recognizes the challenges facing its members and seeks not only to understand those challenges but to overcome them. This article briefly explores the current state of procurement, emerging procurement processes and concludes with a look at the looming impact of blockchain technology on construction.

Rethinking Procurement Models Consumers of services required to deliver built assets traditionally seek competitive bids for such services under the Design-Bid-Build procurement model. Pursuant to that opaque system design firms create construction documents in a silo and general contractors review those instruments in a vacuum, with no opportunity to explore the design with its creators. The winning general contractor tosses those documents created in a silo over the wall to key subcontractors and solicits hard bids for certain scopes of work reflected in those documents. In tough economic times bids received may be further shopped to tamp down costs, though when the construction market booms subcontractors return the favor by increasing prices. Estimates of costs, from materials to equipment and labor are notoriously inaccurate and actual construction occurs months or even years after bids are accepted. Accordingly, to account risks inherent in bidding early and building later, every bidder pads the bid a little. Meanwhile, the owner eventually gains an understanding of what is being built and invariably requests changes. In addition, subcontractors arrive on site and confront as built conditions that impact their ability to deliver their scope of work.

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These issues trigger requests for information, at a minimum and often require change orders that modify the controlling contract. When disputes arise the parties typically resolve those disputes via litigation. All of the foregoing actions are encouraged, if not mandated, by the contracts that represent the component parts of our broken legal framework. Conventional industry wisdom teaches novice owners that the hard bid process described above ensures best price. Nothing could be further from the truth. In reality the built industry, operating primarily on the Design-Bid-Build procurement model, wastes more than 60 percent of the resources used to create built assets and expends approximately 10 percent of those resources on legal disputes. Addicted to extracting profits from that enormous waste stream, industry leaders cringe at the prospect of adopting innovative new procurement models that reward value rather than waste. Granted, in the late 1990s and early 2000s the use of modified procurement models like Design-Build, Construction Manager at-Risk and public-private partnerships increased, but Design-Bid-Build remains the dominate procurement model. You get what you contract for and the contracts executed in the built environment require or reinforce fragmentation of the team, adversarial resolution of disputes and mistrust. To improve we must adopt, adapt to and deploy contracts that foster delivery of built assets by integrated teams that identify and resolve disputes proactively, as they arise in an environment characterized by trust based relationships. The

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baby-steps taken via the alternative delivery models mentioned above fail, utterly, to substantially modify the existing legal framework that controls procurement of built assets in the built environment. But bigger changes loom on the horizon.

The Blockchain Revolution in Construction Innovative solutions percolating in the built environment pose dire risks to that broken legal framework and responsible professionals owe it to their clients and the firms to understand those solution. Two highly disruptive innovations, building information modeling and integrated project delivery, may soon threaten the status quo. While each developed independently, and in respective silos, combining the tools

increases efficiency and productivity to an alarming or amazing degree, depending on one’s perspective. Alarming if your firm operates in an old school silo but amazing if your firm seeks to deploy BIM and IPD in a collaborative environment. BIM and IPD represent the tip only of the towering iceberg of innovation in the built environment. Blockchain technology, the software protocol that underpins Bitcoin and similar cryptocurrencies, threatens to blowup existing paradigms in the industry by enabling BIM and IPD on the Web. Planning, designing, constructing and operating a facility virtually first enables stakeholders to adopt, adapt to and deploy tools and processes never thought practical before. In the next 10 years expect to see built assets procured utilizing a new generation

legal framework that leverages virtual planning, design and construction tools and processes to create a virtual asset that users explore and critique in advance followed by a physical asset tied to a virtual version that augments the users’ reality in powerful and practical ways. Decentralized databases that leverage blockchain technology, incredibly powerful computer processing speeds and vast amounts of cheap, secure storage space on the Web all promise to revolutionize our built environment. Decentralized blockchain-driven databases, in particular new graphic databases, promise to speed the exchange of data and enable innovation in the built environment only dreamed of in the past. These new generation, decentralized graphic databases promise interactive

New On-demand Video from FASA When it comes to managing your “Putting Your Best Foot Forward: How to Impress Prospective Clients and Get the Job” (Item # 8040) business, the Foundation of ASA is In this video-on-demand, presenters Dennis Bausman, Ph.D., FAIC, CPC, your partner in education. View and Clemson University, Clemson, S.C., and Kevin Burnett, CPA, CCIFP, listen to FASA’s on-demand videos The Sundt Companies, Phoenix, Ariz., explain how to position your firm at an individual workstation or in a to get the job, including how to get and use information about the prime contractor, its business practices, and its pre-qualification processes. conference room for group training. $65 ASA members | $95 nonmembers Your order includes access to the This and other on-demand videos are available through FASA’s on‑demand video any time, and as Contractors’ Knowledge Depot. 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. TM

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virtual software tools that access dynamic data and feed smart contracts built on innovative blockchains. Traditional databases, created in the 1960s and 1970s, remain in use today and like their antiquated counterparts in the legal environment those traditional databases shackle users to constraints that no longer exist. In a dynamic, Web-based world data is created, moved and leveraged at light speed. Storing, tracking and sharing data on decentralized graphic databases powered by blockchain will free built industry professionals from the clutches of slow cumbersome databases, outdated legal instruments and our broken legal framework. Delivering built assets utilizing BIM, IPD and blockchain technologies requires participants throw off the shackles and constraints imposed in the past and embrace the future.

The Future of Procurement in Construction Would you rather be on the cutting edge or the bleeding edge? It’s your choice. Many owners are choosing the cutting edge. In Canada, innovative public owners seeking to procure built assets from integrated teams issue requests for qualifications to determine which planners, designers, constructors, trades and suppliers are ready and willing to play in the BIM and IPD sandbox. After identifying those entities those innovative owners then ask qualified firms to form integrated teams and respond, as teams, to requests for proposals for the planning, design and construction of built assets for which the owners created a relatively robust program. In the next phase of that innovative procurement process select integrated teams are asked to submit a guaranteed maximum price for fulfilling the requirements of a validation period contract. That validation period contract essentially

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asks the integrated team whether the owner’s program is viable. For a proposed fixed price each integrated team agrees to place the owner’s program under a BIM and IPD enabled microscope to determine whether the scope, cost and schedule, along with other priorities of the owner, make sense from a design, construction, supply and operations perspective. The owner then interviews three to five integrated teams and selects a team to complete the validation period contract. Low bid is NOT the deciding factor, though cost is a component. The team selected to complete the validation period contract reviews the owner’s program requirements, including scope, cost and schedule and reports back to the owner regarding the viability of the project. If the project proves not viable the owner terminates the process. However, if the project proves viable the owner and the integrated team proceed to negotiate and execute an integrated agreement for delivery of the built asset. Canada isn’t the only place where BIM and IPD are being successfully deployed. Those innovative gamechanging tools are here to stay. Now blockchain is coming, and the exponential increases in efficiency it threatens may decimate existing enterprises in the built industry. Many experts with knowledge of blockchain and its potential contend that every business on the planet is at risk of being disrupted by a blockchain version of itself. Entities operating in the built environment are no more immune from that risk than those operating in any other sector. Blockchain technologies and smart contracts crafted and deployed on the blockchain promise profound change in the built environment and especially procurement therein. Lip service paid to collaboration in the past few years will give way to concrete action when the transparency, immutability and consensus decision making

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that underpin blockchain manifest themselves in integrated agreements signed by owners and integrated teams for the delivery of smart built assets accompanied by robust and smart digital assets. Big law, like the big banks and insurance companies may be slow to change but change it will, or it will find a whirling dervish of innovation tearing through it similar to the digital revolution that killed Blockbuster and decimated Sears, K-Mart and the rest of a recalcitrant retail industry. Sit idly by while the foregoing innovations tear down the existing legal framework or get in the game. The choice is yours. Collaborative Construction Resources, LLC, through its Smart Built Culture program intends to participate, actively, in the coming revolution. We invite you to join us! James L. Salmon, Esq., joined Benjamin, Yocum & Heather as a BIM and IPD consultant in 2010. As president of Collaborative Construction Resources, LLC, Salmon advocates the use of virtual planning, design and construction tools and integrated project delivery. Salmon also serves as an adjunct instructor of a master’slevel BIM strategy course offered by Middlesex University in London. Salmon is also a special advisor to the buildingSMARTalliance’s Thought Leadership Committee. Salmon advocates the use of integrated project delivery and the use of virtual planning, design and construction software tools. He relishes the challenge of replacing the built industry’s broken culture with a smart procurement culture. Salmon works with clients to modify existing legal frameworks to ensure support for the vision, skills, incentives, resources and actions required to achieve the changes necessary to adopt, adapt to and deploy a smart procurement culture throughout the built industry. He can be reached at (513) 721-5672 or jameslsalmon@gmail.com.

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ASA/FASA Calendar

Coming Up in the March 2018 Issue of ASA’s

28–March 3 — SUBExcel 2018, Tempe Mission Palms Hotel, Tempe, Ariz.

THE

February 2018

March 2018 13 – Webinar “Technology and Transparency, Part II— Linking Technology to Performance” presented by Stephane McShane, Maxim Consulting Group April 2018

Theme: Construction Trends • Lean

10 — Webinar “Lien & Bond Claims” presented by Timothy Woolford, Woolford Law, P.C.

Construction

• Blockchain • Cranes—Who

Owns the

Project Air?

May 2018 8 — Webinar “Change Orders” presented by Joe Katz, Huddles Jones Sorteberg & Dachille, P.C. June 2018 12 — Webinar “Cash Management” presented by James L. Salmon, Benjamin, Yocum & Heather, LLC

• Legally

Speaking: An Overview of Immigration and Customs Enforcement Worksite Raids and Inspections for Subcontractors

Look for your issue in March. Contact information for ASA/FASA events and programs: www.asaonline.com, education@asa-hq.com.

PAST ISSUES: Access online at www.contractors knowledgedepot.com

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SUBCONTRACTORS ASSOCIATION

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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, places or situations is unintentional and purely coincidental. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. “CNA” is a service mark registered by CNA Financial Corporation with the United States Patent and Trademark Office. Certain CNA Financial Corporation subsidiaries use the “CNA” service mark in connection with insurance underwriting and claims activities. Copyright © 2018 CNA. All rights reserved.