MONTHLY EDUCATIONAL JOURNAL OF THE FOUNDATION OF THE AMERICAN SUBCONTRACTORS ASSOCIATION
MAY 2021
All About Contracts
1004 Duke Street, Alexandria, VA 22314 | (703) 684-3450 | www.asaonline.com | communications@asa-hq.com
FASA'S
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. 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).
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F E AT U R E S Employee Contracts Drive Attitudes and Engagement................................11 by Mark Marone, PhD, and Robert Graves—Dale Carnegie
Why Accuracy Is Important in Construction Contracts...............................19 MISSION FASA was established in 1987 as a 501(c)(3) tax-exempt 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 Courtney Little Richard Bright Anthony Brooks Brian Cooper Jack Austhof SUBSCRIPTIONS The Contractor’s Compass is a free monthly publication for ASA members and nonmembers. For questions about subscribing, please contact communications@asa-hq. com. 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 full-length feature article. Feature articles should be no longer than 1,500 words and comply with The Associated Press style guidelines. Article submissions become the property of ASA and FASA. The editor reserves the right to edit all accepted editorial submissions for length, style, clarity, spelling and punctuation. Send abstracts and submissions for The Contractor’s Compass to communications@ASA-hq.com. ABOUT ASA ASA is a nonprofit trade association of union and non-union subcontractors and suppliers. Through a nationwide network of local and state ASA associations, members receive information and education on relevant business issues and work together to protect their rights as an integral part of the construction team. For more information about becoming an ASA member, contact ASA at 1004 Duke St., Alexandria, VA 22314-3588, (703) 684-3450, membership@ASA-hq.com, or visit the ASA Web site, www. asaonline.com. LAYOUT Angela M Roe angelamroe@gmail.com © 2021 Foundation of the American Subcontractors Association, Inc.
by Patrick Hogan, Handle.com
Understand Why ASA Supports Revising TIFIA Now, for Your Protection. .........................................................................................................................20 When the Tide Is High, All of the Boats Are Up…However, When the Tide Goes Out, We See Who Is Skinny Dipping ......................22 by Gregg Schoppman, FMI
Nationwide Study Shows Construction Optimism Up................................25
by Gigi Wood, Contributor at ForConstructionPros
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ASA PRESIDENT'S LETTER.......................................................................................5 CONTRACTOR COMMUNITY...................................................................................6 ALWAYS SOMETHING AWESOME.........................................................................9 LEGALLY SPEAKING: Protect Yourself in the Subcontract Against Escalating Materials Prices & Supply Chain Delays.............................................................16 by Timothy Woolford, Woolford Law, PC
QUICK REFERENCE Upcoming Webinars..................................................................................................... 26
Coming Up........................................................................................................................ 26
March 9–12, 2022
Miramar Beach, Florida Registration Opens June 15, 2021 subexcel.com
PRESIDENT 'S LET TER Dear ASA Members: I am so excited to start this letter off with something we’ve all been waiting for: Events! We have had a jam-packed May with three incredible webinars, including the “ASA Day with SBA”. More webinars are coming up, so check the ASA website for the latest calendar. Even more exciting is that SUBExcel registration is opening soon! I hope you are as excited as I am to gather together in Florida after so much time apart. If you have never attended SUBExcel, this is the perfect time to plan to bring the entire family down to Florida for some sun and fun with ASA. SUBExcel will be on March 9-12, 2022, so mark your calendars now! ASA’s Government Relations Committee has been hard at work “behind the scenes” with the Construction Industry Procurement Coalition (CIPC), assisting Reps. Peters (D-CA) and Stauber (R-MN) with the launch of a construction procurement caucus for the 117th Congress to advance “sensible reforms” for federal contractors on Thursday, April 22, 2021. The goals of the caucus are to simplify the process for federal construction procurement, foster a competitive market for businesses of all sizes, support better opportunities for businesses in the federal marketplace, and advance procurement-related legislation. Thank you to all of the ASA Members that participated in the launch on April 22nd; your support is noted and appreciated.
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the interaction between the Small Business Administration’s small business programs and the goals of the Department of Transportation and the Environmental Protection Agency.
In yet another stellar event, ASA’s Government Relations Director, Mike Oscar, hosted a podcast on May 20th that highlighted ASA’s governmental affairs working relationship with the Associated General Contractors of America (AGC). This incredible event showed that we collaboratively work together on a host of legislative issues rooted in federal government procurement. The GRC continues to monitor closely the American Jobs Plan recently proposed by the Biden Administration - especially how it will present contracting opportunities to subcontractors, along with local and state governmental entities, in different areas of traditional infrastructure, housing, and environment. The GRC is also determining the capabilities our subcontractors will need to conquer these contracting projects regarding resources, funding, and how the plan will address them. We need to review
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To stay up to date on all of the latest news from the Government Relations Committee, make sure you check out each week’s ASAToday newsletter. ASAToday is delivered to your inbox every Thursday and is just one of the many incredible member benefits included in your ASA membership. We are coming up on the time of year for you to renew your ASA membership, and we want you to know just how hard we are working for you and the entire subcontracting industry. You joined ASA to strengthen not only your company but the entire subcontracting community, and we are all stronger when we stand together. I look forward to all of our amazing ASA members standing together for years to come, so keep your eyes open for renewal information in the next couple of months. To all of our members, I look forward to seeing you next year at SUBExcel! God Bless, Brian Cooper ASA President 2020-2021
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Contracts? We Don’t Need No Stinkin’ Contracts! Think before you sign, your businesses are on the line...we need FAIR contracts. Use your ASA resources: InfoHub - ASA’s online resource hub for all ASA members: - Subcontract Documents Suite 2020 - Includes: Subcontractor Bid Proposal, including Instructions page, form for completion and conditions of the bid proposal. Also included: Wrap-Up Insurance Bid Conditions: Subcontract Addendum, including Instructions page and form for completion; Wrap-Up Insurance Subcontract Conditions; Short-Form Subcontract Addendum - Subcontractor Negotiating Tips: A Compilation. This comprehensive guide includes information on SCOPE, SCHEDULE, PAYMENT, CHANGES...You name it, it’s covered. All of these documents are incredibly important to all subcontractors. If you aren’t using the InfoHub, you are missing out on one of the key benefits of your ASA Membership. To access the InfoHub, click the “Member Login” button at the top of www.asaonline.com, log in to your account, and then select “Resources” from the menu on the left side of the screen. Once there, use the search bar to locate the documents you need to succeed. - June 9, 2021 - 2:00 - 3:00 pm (EDT) FREE! with code “ASAWEB” - Learn, ask about negotiations to make sure you’re getting the answers you need. So how do you get better at contracting? » Prioritize the most important contact provisions like payment and indemnity » Establish your go/no-go decision points » Learn to leverage and customize standard construction subcontracts like ConsensusDocs » Consider qualifying your bids based upon unmodified ConsensusDocs subcontract » Learn the one trap that a majority contractor fall into that leads to failure 100% of the time » Gain insights on using a master subcontract agreement with project work orders » Understand how different project delivery methods and design assist can impact your negotiations
CONTRACTOR COMMUNIT Y
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ASA Supports Continued Investment in Surface Transportation Funding
for action on infrastructure legislation. Any broad infrastructure package should include, like last year’s H.R. 2, a new, fiveyear, robustly-funded highway and public transportation investment law.
American Rescue Plan The Biden administration will begin distributing the $350 billion, provided by the American Rescue Plan (ARP), to states and local governments in May. The Treasury Department said that states that were hit the hardest economically by the
U.S. House Requests $14.9 Billion in Earmarks
ASA joined the Transportation Construction Coalition (TCC) in applauding the House Committee on Transportation & Infrastructure’s work last year on the $1.5 trillion Moving Forward Act, H.R. 2. This legislation marked the broadest and most robust proposed levels of federal investment in the nation’s transportation infrastructure ever passed by a body of Congress. With the current extension of the Fixing America’s Surface Transportation (FAST) Act set to expire on September 30th, ASA and the TCC are ready to work with Congress to heed President Biden’s call
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pandemic would be the first to receive the funds. The states that have a net increase in unemployment of more than 2 percentage points since February 2020 will get their total funds right away, and local governments will generally receive half of the money this month and the rest next year. The Treasury Department has also issued guidance to states explaining how it will determine if the money is being used properly. If the funds have been used to offset tax cuts, the Treasury would require those funds to be paid back to the Department.
Members of the U.S. House have requested $14.9 billion in spending on earmarked projects for a transportation bill that will be the vehicle for President Biden’s economic agenda. Republicans joined Democrats in making use of the new earmark process, inaugurated after the practice was effectively banned for a decade by Congress. On Tuesday, May 11th, the House Transportation and Infrastructure Committee released the list of requested projects and in all, 318 House members requested
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earmarks, including 213 Democrats and 105 Republicans. The largest request was from Rep. Graves (LA), a Republican member of the transportation committee, who is asking for $945 million for a highway connector. Rep. Schrier (D-WA) requested $665 million to widen State Route 18 in her district and Speaker Pelosi requested four earmarks totaling $32.5 million. The House Republican Leadership did not make requests, but Republican Whip Scalise (LA) did make some in a separate Appropriations Committee process. Rep. Stefanik (R-NY), who replaced Rep. Cheney as Republican Conference Chairwoman, requested seven earmarks totaling $72 million. There is no cap on the amount of earmarks in the bill, unlike the 1% cap being used for the annual appropriations bills.
OSHA’s New Enforcement Guidance on Beryllium Dust On Tuesday, May 4, 2021, OSHA issued new enforcement guidance for inspectors looking into potential cases of workers exposed to beryllium dust. The guidance applies to all types of beryllium inspections, including checks of manufacturers using beryllium as well as shipyards and construction sites where trace amounts of beryllium are found in sand-blasting materials. While the directions are intended for inspectors, the guidance also lets employers and workers know what inspectors will be looking for. The guidance includes instructions for how inspectors should set up air sampling devices to measure airborne beryllium and how to determine if a violation merits the “serious” designation. Beryllium is a metal valued by aerospace and nuclear weapons manufacturers for its light weight and high strength. Workers who are exposed to airborne beryllium particles are at risk of contracting lung disease. Skin contact with beryllium may increase a worker’s sensitivity and likelihood of becoming ill.
DOL Rescinds President Trump’s Independent Contractor Rule On May 6, 2021, The U.S. Department of Labor issued a final rule rescinding
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the independent contractor regulation without replacing it with a new interpretation of when workers can function as independent contractors and when they must be classified as employees under federal law, who are entitled to minimum wage and overtime pay. In deciding questions of employee status, the Biden administration will now rely on a longstanding multi-factor test established by judicial precedent. Per DOL Secretary Walsh, “by withdrawing the Independent Contractor Rule, we will help preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect.” This rule under the Trump Administration would have allowed companies to use an updated economic realities test to settle classification questions. It included five factors, but two were given far greater weight: the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss based on personal initiative or investment.
ConsensusDocs and Document Crunch announce Strategic Technology CollaborationPartnership Washington D.C. –Today, ConsensusDocs and Document Crunch are announcing a strategic collaboration that will benefit users of both platforms. ConsensusDocs contracts are developed by a coalition of 41 leading industry associations representing owners, contractors, subcontractors, designers, and sureties. ConsensusDocs contracts further the best interests of the project rather than a singular party, yielding better project results and fewer disputes. Document Crunch, curated by legal professionals and risk management experts in the construction industry, harnesses state of-the-art artificial intelligence/machine learning technology to quickly identify what curators believe are the most important provisions in contract documents, and to also provide key insights and rationale, as well as sample contract provisions and other language. The context gained from using Document Crunch empowers
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users in the construction industry to better understand risks during bidding, make better decisions as to risk during negotiations, and to better administrate day to day issues on construction projects.
CDC Guidelines on Mask Wearing - May 13, 2021
• If you are fully vaccinated, you can resume activities that you did prior to the pandemic. • Fully vaccinated people can resume activities without wearing a mask or physically distancing, except where required by federal, state, local, tribal, or territorial laws, rules, and regulations, including local business and workplace guidance. • If you haven’t been vaccinated yet, find a vaccine. • In general, people are considered fully vaccinated: ± • 2 weeks after their second dose in a 2-dose series, such as the Pfizer or Moderna vaccines, or • 2 weeks after a single-dose vaccine, such as Johnson & Johnson’s Janssen vaccine If you don’t meet these requirements, regardless of your age, you are NOT fully vaccinated. Keep taking all precautions until you are fully vaccinated. If you have a condition or are taking medications that weaken your immune system, you may NOT be fully protected even if you are fully vaccinated. Talk to your healthcare provider. Even after vaccination, you may need to continue taking all precautions.
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1 FORM. MULTIPLE QUALIFICATIONS. Join us and take part in bringing standardized qualifications to the industry! COMPASS aims to streamline the data collection process and help Subcontractors satisfy multiple qualification requests with our standardized form (the 1Form); eliminating the need to complete multiple unique forms. We are engaging General Contractors and other industry participants to adopt standardization, and would benefit from your support. If you agree with standardization in the qualification process, please show your support by filling out this short survey
https://forms.gle/FWPJrfaXZMKcGfer7
1-800-689-6819 info@compass-app.com http://compass.bespokemetrics.com
Houses Built from Shooting Clay
While not 100 percent sure, we can probably assume that February 20, 2020, was the highlight of the year for the Southwest Florida chapter of ASA. About 30 companies were represented as they gathered for the First Annual Clay Shoot Fundraiser. The clay shoot, a 50/50 raffle, sponsorships, and mulligans raised funds for chapter activities, a nascent legislative fund, and $1,500 for Habitat for Humanity. This past January 22ND welcomed the Second Annual Clay Shoot Fundraiser, where another $1,500 went to support the local chapter of Habitat for Humanity.
LaRae Davenport, Executive Director of ASA’s Southwest Florida chapter, explains, “We chose Habitat for Humanity for several reasons: 1) they’re local, so we can see exactly what our contributions do; 2) they have done a lot for our community; and 3) they are construction-related. What more can you ask for?
Last year Habitat had to stop all volunteer efforts due to COVID. I know a bunch of our members help out on projects when they can. This was a small way we could give back to them. Hopefully we’ll be able to give them some of our time and labor in the future. I'm so thrilled to be part of this chapter. We've grown so much, and really gotten more involved in the community. The Board wanted to do a fundraiser, and Habitat for Humanity was the logical choice for us.” Next year’s event is already planned for February 11, 2022 in Ft. Myers. So if you’re in the area, and want to practice your clay shooting skills for a good cause, contact the South Florida chapter of ASA. LaRae Davenport presents check for $1,500 to the local Habitat for Humanity chapter.
The Contractor’s Compass is recognizing excellence in ASA’s ranks. Every month we are highlighting the activities, achievements, and actions of ASA members that might inspire others. Have something you want to share? Send us an email at communications@asa-hq.com.
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Employee Contracts Drive Attitudes and These days, it is popular to explain the success or failure of companies everywhere with the simple Engagement: statement “It’s their company culture!”. It’s an attractive and logical explanation. A strong corporate culture is hailed asCorporate the key to winning in aCulture competitive marketplace; a weak one, the death knell. While Defining the explanation is easy, the topic of culture is complex. We all think we know what we mean when we use the term, but do we? These days, it is popular to explain the success or failure of companies everywhere with the simple statement company culture!”. It’s an attractive logical A strong corporate While we“It’s cantheir begin to describe a company’s culture asand ‘based on explanation. how things are done and the values culture is hailed as the key to winning in a competitive marketplace; a weak one, the death Whileand they profess, a culture’s real essence is in the unconscious thoughts that drive employees’knell. decisions the explanation is easy, the topic of culture is complex. We all think we know what we mean when we use behaviors each day. These thoughts are based on employee contracts, the terms of which employees the term, but do we? apply to solve internal and external challenges over time. This success serves to validate the
assumptions and eventually results in a collective understanding of the right way to think, feel, act, and we can to describe While interpret the begin business world. a company’s culture as ‘based on how things are done and the values they profess, a culture’s real essence is in the unconscious thoughts that drive employees’ decisions and behaviors each day. These thoughts employee then, contracts, of which The terms of the employee contract are (thebased hiring on agreement), is thethe firstterms element in theemployees employee apply to solve internal and external 1 challenges over time. This success serves to validate the experience of company culture, how employees see themselves as part of the organization, how they of the rightproblem-solving, way to think, feel, act,they and assumptions andand eventually results a collective relate to peers customers, howinthey interact understanding with authority, approach how interpret the business world. understand the business overall, make strategic decisions, describe their company’s purpose and more.
Employee Contracts Drive Attitudes and Engagement: Defining Corporate Culture
The of the contract (the hiringinagreement), the first element the employee Theterms strength of employee a culture must be evaluated relationshipthen, to theisemployee contractinwhich defines it: in 1 how employees see themselves as part of the organization, experience of company culture, each company’s situation, there may be contract elements well-suited to achieving success how in itsthey current relate to peers and customers, how they interact with authority, approach problem-solving, how a part of and expected future business environment, and others that are not. When leaders suspect thatthey describe their purpose more. it, understand theisbusiness make to strategic decisions, their culture becomingoverall, maladapted overcoming the challenges theycompany’s face, they must act and to improve
beginning with the initial agreement. The strength of a culture must be evaluated in relationship to the employee contract which defines it: in each company’s situation, there may be contract elementsInwell-suited to achieving success in its current 2 , Dale a recent survey across four countries and expected future business environment, and others that are not. When leaders suspect that a part Carnegie & Associates set out to examineofthe they they must act improve it, their culture is becoming maladapted to overcoming the challenges perceptions offace, senior leaders onto the strength beginning with the initial agreement. of their own company cultures, their attitudes
about its importance and impact, and actions 2 , Dale Inthey a recent surveytoacross four are taking improve it. countries While studies of Carnegie Associates set out to examine the corporate&culture are not uncommon, they often perceptions senior leaders on the strength encompass of employees at all levels in an oforganization. their own company cultures, their attitudes Dale Carnegie chose to focus about its importance and impact, and at actions specifically on those who lead in order to understand their mindset and the efforts being taken the studies of they are taking to improve it. While highest levels of an organization to address this important issue. corporate culture are not uncommon, they often encompass employees at as all excellent. levels in anWe then The survey found that 21% of the respondents described their corporate culture organization. Dale Carnegie chose to focus out from their added more objective measures designed to select only those organizations that truly stand specifically on those who lead in order to understand their mindset and the efforts being taken at the competitors as being successful. In addition to senior leaders indicating they have an “excellent” highest levels of an organization to address this important issue. corporate culture, to be included in this best-in-class subset which we’ll call culture champions, the
organization must also be exceeding its financial goals compared to expectations and have lower The surveywith found that employee 21% of theengagement respondentsscores described theirtocorporate as excellent. We then higher relative others in culture its industry. turnover added more objective measures designed to select only those organizations that truly stand out from their competitors as being successful. In addition to senior leaders indicating they have an “excellent” corporate culture, to be included in this best-in-class subset which we’ll call culture champions, the organization must also be exceeding its financial goals compared to expectations and have lower Employee Contract Terms Definescores Corporate to others in its industry. turnover with higher employee engagement relativeCulture
“Corporate Culture as an Implicit Contract.” Jeffers,Corporate Jessica and Lee,Culture Michael Junho. Dec. 30, 2018 Employee Contract Terms Define 1 2
India, Germany, the United States and Indonesia
T H E1 “Corporate C O N Culture T R AasCanT Implicit O R ’Contract.” S C OJeffers, M P Jessica A S S and Lee, Michael Junho. Dec. 30, 2018 2 India, Germany, the United States and Indonesia
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corporate culture, to be included in this best-in-class subset which we’ll call culture champions, the organization must also be exceeding its financial goals compared to expectations and have lower turnover with higher employee engagement scores relative to others in its industry.
According to Kellie Wong, “Organizational culture affects all aspects of your business, from punctuality Employee Contract Terms Define Corporate Culture and tone to contract terms and employee benefits. When workplace culture aligns with your employees, they are more likely to feel more comfortable, supported, and valued.”3 If the terms of the employee According to Kellie Wong, “Organizational culture affects all aspects of your business, from punctuality contract define corporate culture, why aren’t more than 21% of the companies getting it right? and tone to contract terms and employee benefits. When workplace culture aligns with your employees, they are more likely to feel more comfortable, supported, and valued.”3 If the terms of the employee 1 “Corporateand Culture as an Implicit Jessica and in Lee, Michael Dec. 30, 2018business environment is Creating maintaining a Contract.” positive, Jeffers, unifying culture the face Junho. of a fast-moving contract definethe corporate culture, why aren’t more than 21% of the companies getting it right? 2 India, Germany, United States and Indonesia for many reasons, beginning with the challenge of creating contract terms that motivate successful difficult behavior. Research shows that employees from different areas of the same organization often have very Creating and maintaining a positive, unifying4 culture in the face of a fast-moving business environment is different perceptions of the company culture . In addition, simply because it is so ingrained and familiar, it difficult for many reasons, beginning with the challenge of creating contract terms that motivate successful can be difficult for those within the culture to see it clearly. One common element that employees do see behavior. Research shows that employees from different areas of the same organization often have very clearly is the hiring agreement (employee contract) that they signed. different perceptions of the company culture4. In addition, simply because it is so ingrained and familiar, it can be difficult for those within the culture to see it clearly. One common element that employees do see In the face of these challenges, the effective management of corporate culture depends heavily on the clearly is the hiring agreement (employee contract) that they signed. attitudes of an organization’s senior leaders towards hiring practices. In the face of these challenges, the effective management of corporate culture depends heavily on the
Attitudes attitudes of an organization’s senior leaders towards hiring practices.
As Dale Carnegie is credited with saying, “Our thoughts make us who we are,” and culture champions’ Attitudes thoughts and attitudes are different from their peers’ when it comes to corporate culture. Success begins with leaders who believe in the importance of a positive hiring experience and who are convinced of its As Dale Carnegie is credited with saying, “Our thoughts make us who we are,” and culture champions’ impact on their organizations’ corporate culture. When we asked executives about their company’s thoughts and attitudes are different from their peers’ when it comes to corporate culture. Success begins commitment to supporting a high-performing culture, very few said that company culture is not a priority. with leaders who believe in the importance of a positive hiring experience and who are convinced of its Delving deeper, though, differences in attitudes emerged. impact on their organizations’ corporate culture. When we asked executives about their company’s commitment to supporting a high-performing culture, very few said that company culture is not a priority. Delving deeper, though, differences in attitudes emerged.
Almost all the leaders in our study from successful companies (92%) believe that culture has a high impact on financial performance or is critical to reaching financial goals. By comparison, just 58% of all other leaders in our study believe that company culture has an important impact on financial outcomes. Almost all the leaders in our study from successful companies (92%) believe that culture has a high Since many leaders answer to shareholders who are primarily focused on financial performance, an impact on financial performance or is critical to reaching financial goals. By comparison, just 58% of all understanding of this link is imperative. A landmark study by James Heskett, Professor Emeritus at other leaders in our study believe that company culture has an important impact on financial outcomes. Since many leaders answer to shareholders who are primarily focused on financial performance, an understanding of this link is imperative. A landmark study by James Heskett, Professor Emeritus at 3
“Organizational Culture: Definition, Importance, and Development,” Wong, Kellie. Achievers. May 7, 2021 "The Workforce Institute at Kronos and Workplace Trends Employee Engagement Lifecycle Series: Who's the Boss of Workplace Culture?". (2016, March 9). Retrieved July 30, 2017, from https://www.kronos.com/about-us/newsroom/whos-boss-workplace-culture-hr-managers-and-employees-disagree-says-new-workfor 3 “Organizational Culture: Definition, Importance, and Development,” Wong, Kellie. Achievers. May 7, 2021 ce 4 "The Workforce Institute at Kronos and Workplace Trends Employee Engagement Lifecycle Series: Who's the Boss of Workplace Culture?". (2016, March 9). Retrieved July 30, 2017, from https://www.kronos.com/about-us/newsroom/whos-boss-workplace-culture-hr-managers-and-employees-disagree-says-new-workfor ce 4
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Harvard University, suggests that as much as half of the difference in operating profit between organizations can be attributed to effective cultures.5
Engagement A similar disparity in attitudes emerged on the financial impact of employee engagement which is an easy measure of corporate culture’s impact. Ninety-two percent of executives from the group of culture champions believe that having highly-engaged employees has a strong impact on financial performance or is critical to reaching financial goals. Therefore, the Terms of the Employee Agreement drives the initial metrics of employee engagement. (The co-author suggests the reader read that last sentence several times to absorb the implications.) From a Dale Carnegie & Associates’ employee engagement study – disengaged employees are likely to feel anxious, bored and irritated – hardly emotions we’d expect to bring out an individual’s best efforts at work. But despite the significant and mounting evidence to the contrary, one third of leaders from the survey from non-high-performing companies said that engagement has only moderate, slight or no impact on financial outcomes. How hard is it for employees to feel engaged when their Hiring Agreement is a litany of negative Terms and disastrous consequences? Culture champions (CC leaders) also differed notably from other senior leaders in terms of their perceptions of what they consider extremely important for creating a high-performing culture. They identified the following five factors as important areas of focus for positive employee attitudes and for fully engaged employees, in other words, a successful corporate culture: 1. 2. 3. 4. 5.
employee training (64% of CC leaders vs. 32% of all other leaders), trust in senior leadership (62% of CC leaders vs. 35% of all other leaders), strong customer focus (62% of CC leaders vs. 34% of all other leaders), clear strategy and goals (57% of CC leaders vs. 34% of all other leaders) and encouraging strong relationships between employees and their managers (57% of CC leaders vs. 30% of all other leaders).
5 Heskett, J. L. (2012). The Culture cycle: How to shape the unseen force that transforms performance. Upper Saddle River, N.J: FT Press.
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Another notable finding from the survey was that senior leaders from culture champion’s companies recognize that creating and maintaining the desired corporate culture is very much an ongoing process, beginning with hiring. While by definition, these leaders claim to have an “excellent” culture, more than one third of them (35%) also said they currently have room for improvement.
The Bottom Line If creating a high-performing and engaging corporate culture were easy, the business world would have tired long ago of its obsession with the topic. Instead, it is becoming increasing clear that the spotlight on corporate culture is not misplaced, and in fact should be intensified. Given the impact corporate culture has on everything from strategy to employee engagement and financial performance, powerfully positive Contract Terms are an element that can’t be left unattended by senior leaders who hope to win. As the first official element in the employee experience, the Employee Agreement merits attention and strategic design. Organizations are well-served to make the Terms of the Employee Agreement define the positive attitudes that need to be modeled. If this becomes a priority, subcontractors can navigate their own unique path toward cultural excellence.6 There is much to be gained by embracing the right attitudes and studying the successful actions of those who are demonstrating their ability to get it right from Day One.
About the Author and Co-Author: Author, Mark Marone, PhD. is the director of research and thought leadership for Dale Carnegie and Associates where he is responsible for ongoing research into current issues facing leaders, employees and organizations world-wide. He has written frequently on various topics including leadership, the employee/customer experience and sales. Mark can be reached at mark.marone@dalecarnegie.com Co-Author, Robert Graves, MBA, is a Dale Carnegie Certified Trainer for Rick Gallegos and Associates. His focus is creating sales professionals from average salespeople. He is the author of “Making More Money with Technology.” He often speaks on trends in the Marketing/Sales/Service triad. Robert can be reached at robert.graves@dalecarnegie.com About Dale Carnegie: Dale Carnegie is a global training and development organization specializing in leadership, communication, human relations, and sales training solutions. More than 9 million people around the world have graduated from Dale Carnegie training since it was founded in 1912. Through franchises in over 90 countries and in all 50 states, Dale Carnegie’s mission is to empower organizations to create enthusiastic and engaged workforces by fostering confidence, positivity, and productive, trust-based relationships.
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“Company Culture & Contractors: Why it Still Matters.” Anistar Technologies. Aug. 22, 2017
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r ASA Members
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L E G A L LY S P E A K I N G Protect Yourself in the Subcontract Against Escalating Materials Prices & Supply Chain Delays by Timothy Woolford, Woolford Law, PC The good news for subcontractors is that the economy is beginning to take off following the Covid shutdown. The bad news, however, is that interruptions in the global supply chain and shortages in construction materials are causing delays and driving prices to all-time highs. The Wall Street Journal recently reported that lumber prices have soared to new records, and many economists believe that the skyrocketing materials prices will continue to remain at record highs for an extended duration. Associated General Contractors recently issued a Construction Inflation Alert indicating that prices of construction materials have risen nearly 13 percent since the Covid pandemic began. When prices of materials increase sharply or there are supply chain shortages, subcontractors often seek legal advice on whether they can obtain change orders for the additional costs or time extensions for the delays. Unfortunately, the law is not very accommodating for those seeking relief and it is difficult to obtain relief unless a contract provision specifically permits recovery of the additional costs or entitles you to additional time. Absent a contract provision, the general rule is that in a lump-sum or a fixed-price contract, the subcontractor bears the risk of price increases. If you are experiencing price escalation or supply chain delays on a project on which you have already signed a subcontract, the first step is to check the subcontract to see whether it affords any relief in these situations. In many cases, the subcontract will not contain specific language giving you the right to recover additional costs or to obtain a time extension. However, the subcontract might incorporate the contract between the general contractor and its customer,
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referred to as the prime contract. If it does, check to see whether it includes the American Institute of Architects A201 General Conditions. Article 8.3.1 of the General Conditions may give you the right to a time extension, as it provides as follows: If the Contractor is delayed at any time in the commencement or progress of the Work by … unusual delay in deliveries … then the Contract Time shall be extended for such reasonable time as the Architect may determine. If the prime contract is incorporated by reference into the subcontract and if there is language in the subcontract providing that the subcontractor is entitled to all the benefits and rights that the contractor has against the owner under the contract documents (referred to as a flow-down or flowthrough provision), then you have a good argument for entitlement to additional time. This provision only addresses additional time and does not authorize recovery of additional costs. Be sure to strictly comply with the contract provisions regarding notice of the claim and substantiating the delay. With respect to additional compensation for the price escalation, unless a contract provision provides otherwise, the general rule unfortunately is that in a lump-sum or fixed-price subcontract, the subcontractor must absorb additional costs caused by materials price increases. The same rationale holds that a subcontractor is not ordinarily required to provide a credit to the customer in the event the price of a material goes down. Do not be surprised, therefore, if your customer (or the architect, engineer or owner) denies your change order request claiming that the risk of materials price increases is on you.
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Without a contract provision addressing materials price increases or time extensions for material delivery delays, subcontractors have two primary arguments to support requests for additional compensation and time, which are based on the legal doctrines of commercial impracticability and frustration of purpose. Commercial impracticability is similar to force majeure. Unless the subcontract provides otherwise, the doctrine does not, generally, apply to fluctuations in materials prices. Many contracts include a force majeure clause, but they do not typically address materials price increases or shortages. They usually only provide relief in the event of a disaster, war, terrorism, strikes or fire. It is difficult to make out a case in court for relief based on either of these doctrines because the subcontractor must ordinarily prove that the price increases were so severe that the subcontractor would be put out of business due to the increases if it had to complete the project without additional compensation. Even then, the right to relief is not guaranteed. While severe price increases can be devastating to the bottom line, they are not usually fatal to the company’s mere existence and, as a result, courts often deny relief. Still, some courts have found that severe unforeseen price increases can, in some cases, justify an equitable adjustment to the contract price or contract time. Therefore, even if the subcontract does not expressly entitle you to relief, submit a change order request anyway and be sure to provide detailed backup for the additional costs and or additional time requested. Some owners are sympathetic to the predicament that contractors and subcontractors are confronted through no fault of their own with an extremely volatile pricing environment. They may
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agree to provide you with financial and schedule relief even if the contract documents do not specifically authorize it. One thing is for sure – if you do not request relief, you certainly will not receive it. To summarize, the most effective way to address price increases is to include a provision in the subcontract specifically addressing it and clearly giving you the right to relief in the event of price escalation or delays to material deliveries. If the subcontract gives you the express right to additional compensation for materials price increases, there is no need to resort to the two doctrines described above. To that end, you may elect to insist on inclusion of the following clause in the subcontract: In the event of a significant delay or price increase of material, equipment or energy occurring during the performance of the Subcontract through no fault of the Subcontractor, the Subcontract sum, time of completion or Subcontract requirements shall be adjusted in accordance with the procedures of the Contract Documents. A change in price of an item of material, equipment or energy will be considered significant when the price of an item increases ten percent (10%) between the date of this Subcontract and the date of installation. Under the above clause, if the cost of a material increases more than 10 percent, the contractor is entitled to a change order for the amount that exceeds 10 percent. The subcontractor would absorb the first 10 percent of price increases, but after that, the customer would be responsible. The percentage can be negotiated up or down – it does not have to be 10 percent. If you want the ability to get a change order for a smaller increase, simply reduce the percentage which triggers the equitable adjustment to, say, 5 percent. The lower the percentage triggering the equitable adjustment, the less the risk to you. If the customer is still resistant, consider offering to increase the percentage to 20 or 25 percent or to include a clause that requires you to pass on any savings in materials prices to the customer. You might also inform
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the customer that if an escalation clause is not included in the subcontract, you will have no choice but to increase your proposal cost to cover the risk of materials’ price increases. ConsensusDocs has a standardized amendment addressing materials price increases that can be customized and attached to the subcontract. It provides a baseline price and calculation method for potential adjustments due to materials price increases. The amendment contains a schedule in which the parties can elect to identify materials and if the price of the designated material goes up or down, the subcontract price is adjusted accordingly. The amendment also addresses time extensions in the event of a delay caused by delivery delay. Another tool to limit the risk of sharp increases is to impose a limit on the time within which your bid or proposal can be accepted. The pandemic has made many projects slow to get underway and the subcontractor should therefore specifically limit the length of time that the proposal pricing remains valid (e.g. 15 days, 30 days, etc.). Also, the proposal should contain an escalation clause (such as that suggested above) and should state that it is expressly conditioned upon the escalation clause being included in the subcontract. Change order pricing should be expressly limited in similar fashion and the change order proposal should expressly state that it is valid only for a specific period of time, such as 30 days. Another tool to consider is ordering as many materials as possible in advance and storing them if it is feasible to do so. Negotiate early for a provision permitting payment for stored materials. Avoid waiting until the middle of the project to address this issue because many contracts permit the owner to decide, in its sole discretion, whether to pay for stored materials. Be proactive and address this important issue up front so there is no dispute regarding your entitlement to payment for stored materials. Subcontractors should also be aware that it may be possible to recover the cost of price increases that occurred as a result of a delay during the construction
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period. If a subcontractor can establish that the price increases occurred during a delay caused by the customer or the owner, an element of the delay cost may be escalated material costs. The theory is that as a result of the delays to the construction, the subcontractor had to postpone ordering materials and that by the time the project was ready to receive the materials, the price increased. However, the subcontract may contain no pay for delay or no damages for delay provisions which could prevent recovery of these additional costs. Subcontractors should always resist such provisions particularly now in the current environment where prices are escalating rapidly. In summary, check the subcontract to see if an argument in favor of additional costs or time can be made based on its provisions. If not, there are a few legal arguments that can be made based on commercial impracticability and/or frustration of purpose, but courts have not been overly cordial to arguments based on those doctrines. For future projects, make sure an escalation clause is included and limit the duration of quotations and change order proposals. As always, consult with counsel on all of the above issues. About the Author Timothy Woolford, Woolford Law, P.C., is a construction attorney in Pennsylvania that represents subcontractors and other construction professionals. He is also an adjunct professor of law at the Penn State Law School where he teaches construction law to second- and thirdyear law students. He can be reached at (717) 290-1190 or twoolford@ woolfordlaw.com.
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F E AT U R E Why Accuracy Is Important in Construction Contracts by Patrick Hogan, Handle.com
A construction contract is a document that is central to every construction project. It is a key piece of paperwork that lays out the scope of a contractor’s work, the responsibilities of the stakeholders involved, the cost breakdown of the entire project, among other important details. A contract is also the primary source that construction participants can go back in cases of disputes. It is therefore imperative that the construction contracts you sign are airtight and robust. This means that the pieces of information outlined in your contracts must be accurate, specific, and correct. Ambiguities and inaccurate details may lead to bigger problems down the road. Below are just some of the reasons that you may have to face if you sign a poorly worded contract that is riddled with inaccurate information.
Overestimation may lead to project cancellation. A construction contract must include a cost breakdown based on reasonable estimates of how much the project will cost. While the cost breakdown is simply an estimate, it must be done as accurately as possible. Overestimating the cost of a project may not seem like a big deal. However, it may cause your client to back out of a project due to the high costs. When preparing a cost estimate, you should strive to be as accurate as possible so you do not run the risk of losing a potential client.
Underestimation may lead to poor company reputation. When you underestimate the cost of a project in a contract, you have to either pay for the unforeseen expenses yourself or charge them to your clients. Your clients will most likely be dissatisfied if the amount they end up spending for a project is significantly different than the amount that they initially agreed to. Client dissatisfaction will lead to poor company reputation. Your clients will not want to work with you again, and they will
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not give you positive feedback when they speak with your other potential clients.
Inaccurate cost estimation can result in poor resource management. The accuracy of your cost estimates must be accurate, not only so you can ensure that your clients are satisfied, but also so you can manage your resources better. When your estimates are accurate, you will be able to allocate the right number of staff, assess whether you need subcontractors and third-party help, and you will be able to prepare for contingency expenses as necessary. Being accurate, therefore, leads to being organized and efficient when it comes to managing a project. You have more time to focus in ensuring that the quality of your work, and also in ensuring that your deliverables are completed on time.
Poorly defined scope of work may lead to disputes. The scope of work is arguably the most important part of a contract. It lays out the specific work tasks that a contractor must do, the deadlines for when they must be done, and all the other details related to the work that is required to finish a project. When the scope of work is vague, poorly worded, and not accurate, the parties involved will most likely argue on who is responsible for doing what. Project completion may even be delayed, simply because the contract does not clearly say who is expected to complete the specific tasks.
Ambiguous payment terms may result in late payments and other issues. The payment terms included in a construction show the payment structure and schedule for a project. It tells a client when they must pay a contractor depending on specific milestones or project progress, and it also lays out any potential penalties if payments are not made on time.
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The contract provisions surrounding construction payment must be accurate and clear. Otherwise, parties may not be paid on time and payment disputes may arise.
Vague liability clauses may lead to client-contractor conflicts. A robust construction contract must also include provisions on the liabilities of each project stakeholder. These provisions must be clearly stated. For instance, a contract must explicitly state whether the general contractor is obligated to assume the liability of the subcontractors and other third-party construction parties. If the clauses on contractual liabilities are ambiguous, it may lead to conflicts among the project stakeholders. These conflicts may even result in legal battles, which is not only time-consuming but is also costly.
Accurate information can help settle disputes. At the end of the day, having accurate information in your construction contracts will help project stakeholders settle disputes. A robust contract means that you have one solid piece of document that you can refer to every time you have a question about your scope of work, about the costs of a project, or about your contractual liabilities.
About the Author Patrick Hogan is the CEO of Handle.com, where they build software that helps contractors, subcontractors, and material suppliers with filing documents like preliminary notices to avoid late payments. Handle.com also provides funding for construction businesses in the form of invoice factoring, material supply trade credit, and mechanics lien purchasing.
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Understand Why ASA Supports Revising TIFIA Now, For Your Protection Ensure TIFIA-Financed Projects Maintain Payment and Performance Protections Since its launch in 1998, the Transportation Infrastructure Finance and Innovation Act (TIFIA) has financed 72 diverse infrastructure projects representing over $102 billion in infrastructure investment across the country. To ensure the federal investment in such projects is protected, TIFIA should be modernized to include the same payment and performance security requirements that protect all other federal infrastructure funding.
Why congress needs to act to revise TIFIA now n
P3s (Public-Private Partnerships) have become a more common financing and construction delivery method used by state departments of transportation.
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P3s were not contemplated when TIFIA was first enacted, so TIFIA did not need to address surety bonds, which are required by law under all traditional (non-P3) construction delivery methods.
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TIFIA-financed P3 projects are large infrastructure projects with significant federal assets at stake.
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Bonding protects taxpayer dollars, ensures project completion, supports economic growth, and protects local small business subcontractors.
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Surety bonds are just as important for TIFIA-financed projects as other federally funded projects.
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The proposed amendment is needed to clarify that performance and payment security is required to protect the public interest, regardless of construction delivery method.
Federal funds are at the same risk no matter the construction delivery method Co-sponsors: n
American Property Casualty Insurance Association (APCIA)
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National Association of Mutual Insurance Companies (NAMIC)
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American Subcontractors Association (ASA)
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National Association of Surety Bond Producers (NASBP)
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Business Coalition for Fair Competition (BCFC)
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Council of Insurance Agents and Brokers (CIAB)
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Sheet Metal & Air Conditioning Contractors’ National Association (SMACNA)
The government and public have the same interest in completed projects and payments to local subcontractors and suppliers, regardless of the construction delivery method n
Construction is a risky business, and for over 90 years, the federal and state Miller Acts have protected against the risk of loss by requiring payment and performance bonds.
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The risks of the contractor’s default, nonpayment to subcontractors and suppliers, and the increased completion costs are the same no matter the construction delivery method.
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Finishing Contractors Association (FCA) International
The Association of Union Constructors (TAUC)
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Mechanical Contractors Association of America (MCAA)
The Construction Employers of America (CEA)
P3 bonding is not consistent under current law and practice
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Bonding on P3 TIFIA projects has been inconsistent.
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National Association of Electrical Contractors (NECA)
The Surety & Fidelity Association of America (SFAA)
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State laws usually require bonding for P3s, but in some states, the enabling P3 law did not address the requirement directly and bonding has not been required.
National Association of Minority Contractors (NAMC)
1140 19th Street NW, Suite 500 ph (202) 463-0600
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Women Construction Owners and Executives (WCOE)
Washington, DC 20036
e Information@Surety.org
Precedent exists for bonding non-federal projects using federal funds n
OMB regulations require all federal agencies to protect federal assets in awarding grants.
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Federal agencies can accept the bonding policy and amounts of the non-federal grant recipient if sufficient, and if not, performance and payment bonds for 100% of the contract price are required.
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The Small Business Administration has long required bonding for its 7(a) loans backing construction projects.
www.surety.org
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F E AT U R E When the Tide Is High, All of the Boats Are Up… However, When the Tide Goes Out, We See Who Is Skinny Dipping Don't wait for market correction to revisit your business imperative by Gregg Schoppman, FMI
When most business leaders are asked about their perspective on the current market conditions, there is a “double edged” answer. On one hand, leaders are enjoying the prosperity and in many cases see record high margins. Conversely, leaders also seem to have their skepticism at the ready when asked about how long they think this series of market conditions will last. These are good assessments and a healthy dose of realism probably does a firm good. However, strong market conditions also tend to mask many sins. For instance, profitability can be confused
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for productivity. Additionally, there are many bad behaviors that get lost in the shuffle such as disciplined cash management, risk management relating to client and vendor selection and the ever present issue related to staff complacency. Everybody looks good right now, but what happens when market conditions shift – will a firm’s “nakedness” be exposed and on display for all to see?
The Bad Behaviors Many firms accept the bad behaviors during the bright times because it is simple to discount them when
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they are making money despite their shortcomings. Short of life safety, many processes get discounted because team members are “too busy” and “too stressed” to follow through. For instance, below is a list that often become left by the wayside simply because teams are too busy: • Collections – It is not uncommon to see average collection times (without retention) creep from 45 days to over 60-70 days. • Change Order Management – Unsigned or unapproved change orders slip because customers may
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be dangling future opportunities and using that as leverage. • Hiring Practices – When firms have robust backlogs, hiring a warm body that can fog a mirror is a distinctly better option than having no body. • Performance Development – Training and developing when everyone is working 40-, 50-, 60- hour work weeks is impossible, right? • Performance Reviews – Evaluating current talent and culling out underperformers is difficult. It is often better to work with mediocre talent than no talent (See #3). • Close-out – With projects coming online quicker than they finish, the close-out activities tend to get relegated to the back burner. However, collection of retention is also on that back burner (See #1) • Inability to Focus on Productivity – Everyone is working as hard as they can, but are they working as efficiently as possible? The issue is this – there is no single “smoking gun.” In totality, each item above contributes to the delinquency of the firm. However, it is not uncommon to see a firm bidding projects at 35-40% and bring them in at 15-20%. Assuming their overhead is “normal”, the argument that can be made is “Well, we are still making money aren’t we?” What if the market shifted – could this same contractor be competitive and profitable at the same time? The common thread that connects the aforementioned items is a lack of discipline and lack of control. Obviously, hiring missteps and process hiccups are often viewed as a lack of control but does the lack of control begin at the top? Volume obsession or simply lacking a governor switch to provide control is a leading contributor to contractor failure when times are strong. Notice the choice of words – strong markets contribute to more contractor failures than down markets. The extra risk that a
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contractor will take during a strong market gets exposed when the market recedes – uncollected funds that can’t be paid because of owner default, subcontractors that are overextended and fail to meet these obligations, etc. Put another way, when the music stops and there is no chair to sit on, many firms will fall flat on their face.
The Bad Strategies and Bad Tactics Managing risk is an everyday component to all businesses. Risk in construction is often viewed through the lens of life safety and surety. However, risk management should be extended to the proper selection of trade partners, customers, associates, etc. In fact, all decisions should require some level of vetting. In the world of finance, the terms internal rate of return, net present value, and weighted cost of capital are used to measure and compare investment decisions. It is easy to look at two potential projects – one that could yield 10% and one that could yield 15% - and make that binary decision. However, the world of construction is hardly a vacuum and projects often have many other variables to compare against. The best decision making comes from using a combination of objective and subjective data to support a hypothesis for any decision. Often, “gut decisions” lead to poor project selection, weak customer vetting, award to an unqualified low bidder, or hiring decision simply to fill a seat. This is certainly not an “anti-growth” message but rather a cautionary tale for leaders to get back to the basics and revisit their strategic plan and stick with it. Lastly, it is important to also use the rising tide to send the ships out on an exploration voyage. It is easy to look at the profitability of a current market or niche and ride the market, similar to ship riding a wide from crest to trough. However, is the firm better served by deploying a small portion
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of their time, energy and resources to find the “next big thing” and avoid the trough entirely? Similar to squirreling away a portion of a paycheck for the rainy day, this investment in a new venture allows for critical firmwide diversification. From there, the same discipline and control applies to governing and managing the business to ensure there is a firmwide consistency to process, tools and metrics to avoid misalignment. There is not doubt that sometimes the tide may even feel like a tsunami, wreaking havoc on all aspects of a business. Discipline and controls are essential to avoid over saturation and over tax a team’s resources. Thinking about and working on the business is imperative for all leaders, regardless of a good or lackluster economy. In the end, no one wants to see our tan lines when the tide goes out. About the Author As a principal with FMI, Gregg specializes in the areas of productivity and project management. He also leads FMI’s project management consulting practice. He has completed complex and sophisticated construction projects in the several different niches and geographic markets. He has also worked as a construction manager and managed direct labor. FMI is a unique and fast-growing firm of professionals passionate about creating a better future for engineering and construction, infrastructure and the built environment throughout North America and around the world. For more information on FMI, please visit www.fminet.com or contact Schoppman by email at gschoppman@fminet.com.
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F E AT U R E Nationwide Study Shows Construction Optimism Up by Gigi Wood, Contributor at ForConstructionPros The insurance company Nationwide recently conducted an online survey with 200 middle-market construction companies — defined as those with 25-500 employees, $10 million-$500 million in revenue or 20-plus fleet vehicles — about how they were affected by the COVID-19 pandemic and their outlook for 2021.
The Positives According to the survey, construction owners believe the economy and their company’s performance will increasingly improve over the next year: • In the next six months, 48% believe the economy will improve and 67% believe their revenue will improve. • In the next 12 months, 60% believe the economy will improve and 75% believe their revenue will improve.
How Construction Companies were Affected by COVID-19 The survey put into perspective the impact of the pandemic on construction companies in 2020. The survey found: • 70% of construction owners were negatively impacted by the pandemic, experiencing the biggest hits to total revenue (52%), their company’s ability to bid on new projects (45%) and their workforce/employee headcount (37%). • The pandemic also emphasized the need for increased planning, as more than 1-in-5 business owners lacked plans to help their businesses operate through economic uncertainty: • 27% didn’t have proper plans in place to successfully navigate project site shutdowns/re-openings. • 24% didn’t have a business plan to account for a potential recession. • 23% didn’t have enough employees or subcontractors to meet project demand. The pandemic has changed the way many construction companies do business, to improve continuity and efficiency. Workforce shortages also led to business changes. According to the T H E
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survey, the tightening labor market has also forced them to relax screening criteria for new hires. The study showed that 70% of business owners said they have, will or may relax new hire screening criteria and drug testing practices to account for a lack of qualified candidates. “COVID-19’s impacts have brought new and existing challenges to the forefront for many construction business owners,” says Linda Stueber, Nationwide’s senior vice president of middle market commercial lines.
Technology Adoption Many construction owners added new technology to their businesses during 2020. The study showed: • 92% of owners reported investing in technology within the past year to meet clients needs, and 87% said it was to increase the efficiency of operations. • Four in ten owners reported that their business uses cloud computing, IoT, BIM systems and vehicle telematics. • 48% use cloud computing • 43% use Internet of Things (IoT) • 42% Building Information Management (BIM) systems • 41% vehicle telematics • 80% of those owners believe telematics plays a critical role in their business’ operations. Among the construction owners that use vehicle telematics, their company uses telematics for: • 70% track the overall vehicle runtime or mileage. • 67% evaluate employee driving behavior. • 64% use telematics data to save on fuel costs. C O M P A S S
Near-Term Uncertainty While optimistic for the long-term, many survey respondents were worried about the first few quarters of 2021. The study showed that 79% are worried about meeting their 2021 revenue goals and 76% fear lower customer demand due to an economic recession. Despite their concerns, however, 84% of owners are optimistic about the strength of the 2021 upcoming peak season and their business’s preparation to meet increased demand. The survey took place between Jan. 5-14, 2021 as part of Nationwide's ongoing Agent Authority research series.
About the Author Gigi Wood is a staff writer for OEM OffHighway, Food Logistics and Green Industry Pros and a contributor for ForConstructionPros.com and Equipment Today. She currently works for AC Business Media. This article was originally published in ForConstructionPros on April 29, 2021, and is reprinted with permission from the author.
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Coming Up
Upcoming Webinars WEDNESDAY, MAY 26, 2021 | 12:00 – 1:00 PM (EDT) Does Your Insurance Program Cover All of the Insurance Requirements in the Contracts You’re Signing?
in the June 2021 Issue of ASA’s
Presented by: Gary R. Semmer, CIC, CWCA, Executive Vice President, AssuredPartners, Inc. Make sure you’re knowledgeable about insurance needs for contract requirements for all circumstances. Gary will facilitate this discussion. He is involved with many Insurance and Risk Management organizations and has served on the Associated Risk Managers International Board of Directors and was recently President of the Associated Risk Managers (ARM) of Illinois. REGISTER HERE.
Theme:
Keep Your Eye on Safety • Cornerstones to a Successful Safety Management System
WEDNESDAY, JUNE 9, 2021 | 2:00 - 3:00 PM (EDT)
• The Case for KASK
Subcontract Negotiations: When the Juice Ain’t Worth the Squeeze When You Really Want the Fruit
• Don't Overlook Mental Health Safety
The secret component to a competitive advantage in construction contracting is attracting the best contractors at their best price. Contractors don’t give the same price to an owner or general contractor if the risk profile is different. Studies show that changing just 5 of the most important contract terms can increase prices by 20% and decrease competition.
• plus more...
So how do you get better at contracting? • Prioritize the most important • Learn the one trap that a contract provisions like majority contractor fall into payment and indemnity that leads to failure 100% of the time • Establish your go/no-go decision points
• Learn to leverage and customize standard construction subcontracts like ConsensusDocs • Consider qualifying your bids based upon unmodified ConsensusDocs subcontract
• Gain insights on using a master subcontract agreement with project work orders • Understand how different project delivery methods and design assist can impact your negotiations
Look for your issue in June. To access past issues of The Contractor’s Compass, please click here. For questions about subscribing, please contact: communications@asa-hq.com
Speakers: • Jeff Forbes - Regional Director of The Beck Group, Dallas, Texas. • Courtney Little - President at ACE Glass, Little Rock, Arkansas. • Daniel McLennon - Partner at Smith Currie & Hancock LLP, San Francisco, California. • Brian Perlberg - Executive Director and Senior Counsel for ConsensusDocs, Arlington, Virginia
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