STA December 2014 Newsletter by Subcontractors Trade Association

SUBCONTRACTORS NEWS December 2014

Bringing New York’s Union Subcontractors Together to Build a Stronger Construction Industry IN THIS ISSUE

2 President’s Message By Robert J. Ansbro

3 STA Achieves Major

Legislative Victory! School Construction Authority Bill Signed Into Law by Governor Cuomo!

7 Fulton Transit Center: A New Gateway to Lower Manhattan

9 Looking Back at 2014

December 2014

STA Achieves Major Legislative Victory!

and Forward to 2015 By Henry Kita

11 New Members 13 Standing up to Your Insurance Carrier: Additional Insured May Still be Covered Despite Attempted Disclaimer by Carrier By Henry L. Goldberg

17 New Guidance on

Revenue Recognition – Is Percentage of Completion as We Know It Gone Forever? – Part 3 By Anthony J. Campolo

23 Specifiers Cautioned in Use of Adhesive Anchors By Gary Higbee

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PRESIDENT’S MESSAGE We are pleased to have seen the opening of the newly redesigned Fulton Transit Center last month, a project completed by many members of the Subcontractors Trade Association. The station is now a brilliant, sleek architectural structure that makes transit easier for the public. In this issue, our Executive Director, Hank Kita looks back at the accomplishments and improvements we saw over this past year. During 2014, we saw many large-scale projects boost the residential construction market as well as a new mayoral administration take office and some new legislation which passed pertaining to our industry. Most notably Governor Andrew Cuomo signed the proposed SCA Bill giving us a great victory. Many thanks to our lobbying group, Gotham Government Relations and Communications, for their help in getting this accomplished. Looking ahead, we are expecting to have another year of positive changes, advancements, and progress in our industry. Our persistence has paid off. This month’s newsletter also features Gary Higbee, who cautions contractors on the use of adhesive anchors. He reminds us that complications stem from the International Building Code (IBC) referencing a provision in American Concrete Institute (ACI), Building Code Requirements for Structural Concrete, requiring workers installing adhesive anchors in certain orientations to have ACI certification. There are also many new requirements in the new building code that go into effect on December 31, 2014 that affect all of us subcontractors in some way and we must be aware of these ramifications. One that affects the roofing industry is Item 1504.8 Aggregate. “Aggregate used as surfacing for roofing covering and aggregate gravel or stone used as ballast shall not be used on the roof of a building located in hurricane-prone regions as defined in Section 1609.2 or any other building with a height exceeding that permitted by Table 1504.8 based on exposure category and basic wind speed on site.” Please take heed of these and other new requirements in the 2014 Building Code. I welcome our new members to the STA and look forward to seeing the continued support of our association and its programs. I extend my best wishes for a Merry Christmas, joyous holiday and a wonderful happy, healthy and successful New Year to all of you and your families!

Sincerely, Robert J. Ansbro

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STA Achieves Major Legislative Victory! School Construction Authority Bill Signed Into Law by Governor Cuomo! Governor Cuomo has signed into law the School Construction Authority Reform Bill championed by the STA. It has been the STA’s number one legislative priority. This new law will dramatically improve the change order process for subcontractors working with the New York City School Construction Authority (SCA). The law takes effect immediately, with regard to all SCA contracts executed on or after December 17, 2014. The Law now effectively “preserves” a subcontractor’s right to file a Notice of Claim against the SCA on an unresolved change order for up to three months after the amount claimed was denied by the SCA. (The old, unfair claim trigger for the running of the crucial three month period was of “accrual” of the claim.) It has been stated that there are thousands of unresolved change orders pending at the SCA. This means that scores of companies are being seriously harmed by the SCA’s slow resolution of extra work and other disputes. What makes this even worse is that contractors and subcontractors on SCA projects have been disadvantaged in protecting their rights against the SCA because of this unfairness in the Public Authorities Law §1744. Prior to this amendment, under Public Authorities Law §1744, a contractor was precluded from bringing any lawsuit against the SCA unless: (1) it had submitted, a detailed, written, verified notice of claim upon which such action is based to the SCA within 3 months after the accrual of such claim; and

(2) a lawsuit is commenced within one year after the happening of the event upon which the claim is based. However, oftentimes a contractor did not know that it had a dispute until long after the time to submit a Verified Notice of Claim under §1744 had passed. Historically, an “accrual” of claim against the SCA arises when a contractor’s “damages are ascertainable.” The SCA could argue, therefore, that a contractor’s claim for extra work accrues when it first submits its change order proposal. At that point, arguably, the damages appear to be known, since the proposal values the work. At the same time, however, a contractor would not know of a dispute until the SCA actually denies its change order proposal, or offers an amount that cannot reasonably be accepted. Given the backlog of unresolved change orders, this process typically takes longer than the statutorily required three months in which one must submit a Verified Notice of Claim under §1744. This has been the conundrum faced by subcontractors until now. The STA achieved a major victory by having the Public Authorities Law §1744 amended to replace the words “accrual of a claim” with “denial of a claim.” The time to file claims against the SCA should, and now will, run from a denial of a claim arising under any SCA contracts executed after December 17, 2014. The Association thanks Governor Cuomo for acting fairly and signing this important legislation

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December 2014

continued from page 3 into law. This will directly benefit contractors and subcontractors doing business with the SCA. We also thank Senator Mike Ranzenhofer and Assemblyman Jim Brennan, along with their staff, whom sponsored and championed this bill for us in the Senate and Assembly. We also thank our allies and friends in the construction trade associations who worked so hard with us throughout this legislative effort. In addition, a special “thank you” is in order for the STA’s Legislative Committee led by Arthur Rubinstein, who has worked tirelessly advocating for this legislative reform and to STA General Counsel, Henry L. Goldberg, who brought this serious unfairness in the law to the STA’s attention and counseled the Legislative Committee throughout its effort. We are also indebted to STA Legislative Counsel, Perry Ochacher, Gotham Government Relations and Communications, who coordinated and lead the industry’s efforts in Albany. Finally, STA thanks its loyal and hard-working members for their support. Your calls, emails, attendance at meetings and critical participation in so many other ways helped build the political momentum we needed to pass this bill. Working together, we will continue to improve the business climate in New York’s complex construction industry. If you have any questions regarding the application of this beneficial new law, please call the STA for more information at 212-398-6220.

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December 2014

Fulton Transit Center: A New Gateway to Lower Manhattan

On Monday, November 10, 2014 the newly redesigned Fulton Center opened its doors to commuters after a ceremony presided by politicians and MTA officials. This monumental project could not have been completed without the contributions from members of the STA—E-J Electric and Enclos to name a few. With the hard work and expertise of STA members, a dazzling new landmark now stands, strengthening the revival of Downtown Manhattan. While the Fulton Transit Center began as a labyrinth of dimly-lit corridors, it has since been transformed into a bright, modern and attractive public space that revolutionizes the average MTA commuting experience. After part of the original complex was destroyed in the Sept. 11, 2001 attacks, a ‘mega project’ lasting 12 years was undertaken to make Fulton Center the Grand Central Terminal of Lower Manhattan. The introduction of the new Fulton Center accompanies the opening of the nearby One World Trade Center just one month prior, signaling the area’s rebirth. “This new station makes traveling easier for subway riders, and is a beautiful public space for visitors and commuters to enjoy,” said New York governor Andrew Cuomo. “We now have a new cornerstone in Lower Manhattan, and I am proud to see this unique complex opened to the public.” The centerpiece of the Fulton Center is the “SkyReflector-Net,” an art installation by James Carpenter Design Associates built into the conical roof dome, a 53-foot diameter oculus funneling in sunlight through hundreds of coated aluminum panels to

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welcome visitors into the 108-foot underground pavilion. The new center, designed by Grimshaw Architects, features improved accessibility with open direct paths, widened corridors and new mezzanines. There are more than 50 screens throughout that carry maps and service updates, digital art and advertisements. The facade is comprised of structural steel and glass and the dome oculus is clad in stainless steel panels. The interior of the building is constructed of architecturally exposed structural steel, stainless steel panels, granite flooring and decorated with a cable net structure. A spiral staircase and glass elevator add an extra touch of marvel. Vincent Change, Grimshaw project partner commented, “From the beginning, we were inspired by the ambience and activity of Grand Central Station. We endeavored to design a similar environment for transit customers and visitors, creating a new front door to downtown New York.” The complex is set to provide underground connection between 5 subway stations, 10 subway lines and the Port Authority of New York and New Jersey’s PATH train. The facility includes more than 60,000 square feet of commercial space, two-thirds of which is reserved for retail.

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Looking Back at 2014 and Forward to 2015 BY HANK KITA, STA EXECUTIVE DIRECTOR

As 2014 draws to a close, it would seem appropriate to look back at the events and issues that impacted construction in New York City and look ahead to what might be coming down the road in 2015. 2014 saw continued improvements in the local construction market. Construction projects continued to slowly come online in the five boroughs and the market for new work improved for union contractors. Large-scale projects such as those at Manhattan West, Hudson Yards and residential towers at 53 West 53rd Street, 220 Central Park South, 225 West 57th Street and 520 Park Avenue led the way in shaping a lively construction market. The economists and prognosticators see continued growth for construction in New York City in 2015 yielding continued business opportunities for contractors. A new administration began to take form at City Hall in 2014 as Mayor de Blasio took office, signaling an end to the 12 year reign of the Bloomberg administration. New commissioners and their management teams were installed at the various city departments that impact construction. Most notable among those team members, Commissioner Rick Chandler of the Department of Buildings, Commissioner Feniosky Pena-Mora at the Department of Design and Construction, and Commissioner Emily Lloyd of the Department of Environmental Protection began to reshape their respective agency’s management teams and as the year drew to a close began to put their stamp on the policies that would impact construction in New York City for the next four years. In addition, Bill Goldstein as an “Advisor to the

Mayor on Construction,” took his place as the point man for the de Blasio administration for all things construction. Affordable housing, the enforcement of local M/WBE laws and regulations, and the implementation of new Building and Fire Codes are likely to be the issues most affecting the local construction industry that will be “pushed” in 2015 by the de Blasio administration. In Albany, construction industry advocates led by the BTEA, AGC and Scaffold Law Reform Coalition continued the fight to reform the archaic Scaffold Law that has forced up the price of construction in New York State for decades while enriching the legal community. In spite of the best efforts of these advocates, the much needed reform of the Scaffold Law remained elusive as a coalition of trial attorneys and organized labor threw their best efforts and financial resources on maintaining the status quo. While the construction industry advocates established some momentum and made significant inroads in the fight for Scaffold Law reform, there will be much more work to be done in convincing Governor Cuomo and the State Legislature on the need to change this senseless law in 2015. If reform of this law is not achieved in 2015, it may be a long, long time before any meaningful change in this area is realized. Also on the legislative front in Albany, the STA was able to once again lead the way in getting legislation through both the State Senate and Assembly that would reform the Public Authorities Law as it relates to the claims process at the New

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continued from page 9 York City School Construction Authority. Similar legislation passed the legislature last year only to be vetoed by Governor Cuomo after an intensive lobbying effort by Mayor Bloomberg. In a victory for the STA, Governor Cuomo signed this legislation just as this newsletter was going to print. The STA also supported the legislative agenda of our statewide Empire State Subcontractors Association (ESSA) that pushed for a variety of bills that were designed to improve the financial well being of subcontractors

throughout New York State. While those bills did not clear the legislature, look for a renewed push in 2015 by ESSA with a focused and aggressive legislative agenda designed to make the lives of subcontractors easier here in New York. On behalf of the Board of Directors, Advisory Board and the staff of the STA, I would like to wish all of our members and supporters much prosperity and success in 2015!

STA Would Like to Extend a Warm Welcome to All of the New Members Who Joined in 2014 and Thank Them for Their Continued Support A-VAL Architectural Metal Corp. Brett Glass Company Champion & Metal Glass Inc. Competition Architectural Metals Craftsman Storefronts & Glass Inc. David Shuldiner Inc. Elmont Glass Company, Inc. Empire Architectural Metal Corp. F&R Installers Corporation Forno Enterprises Franklen Glass Corp. Hudson Valley Glass & Metal Works Infinite Glass & Metal Inter County Glass, Inc.

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JEM Architecturals, Inc. Jerome Aluminum Products Corp. Jonathan Metal & Glass Knickerbocker Plate Glass Corp. Kuritzky Glass Company Lafayette Glass Company Lynbrook Glass & Architectural Metals Corp. Metal Sales Company, Inc. Metal Tek, Inc. Neversink Construction Corp. PRP Services Paladin Construction Philip Kaplan Glass Works, Inc. Service Glass & Storefront Co., Inc

Sy-Bee Contracting Co, Inc. W&W Glass Systems, Inc. Capstone Business Funding, LLC. Beach Erectors Inc. Pook Diemont & Ohl, Inc. NYC Shanty, LLC Northeast Structural Steel, Inc. Gettry Marcus CPA, P.C. ZBRELLA Delphi Plumbing & Heating, Inc. Sunbelt Rentals, Inc. The Hanover Insurance Group Riverso Associates

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December 2014

Standing up to Your Insurance Carrier: Additional Insured May Still be Covered Despite Attempted Disclaimer by Carrier BY HENRY L. GOLDBERG, MANAGING PARTNER & STA LEGAL COUNSEL

It is not often that the New York Court of Appeals, New York’s highest court, takes a strong, propolicyholder stance. Such a decision has recently come down from Albany with clear ramifications for the risk-burdened construction industry. Today, insurance carrier disclaimers of coverage are on the rise, whether due to the strict liability standard of New York’s “Scaffold Law” (Labor Law §240), or other causes. The exodus from New York of carriers willing to write CGL coverage upon reasonable terms has clearly begun. The market has turned extremely “hard” as demand exceeds the supply of fairly priced coverage. So much so that when certain carriers today see a crack in the wall of insurance coverage, they are “heading for the daylight.” However, the rules regarding how insurance coverage is provided in New York State is governed by statute. An insurer disclaiming coverage must give written notice of the disclaimer “to the insured” as soon as reasonably possible. In the case discussed herein, New York’s highest court took up the question of whether additional insureds must be provided direct notice of a disclaimer from the carrier, or if notice to the carrier for the additional insured (particularly where it was such carrier that made the original claim for additional insurance coverage), would suffice under the Insurance Law §3420’s “notice to insured” provision. The Court of Appeals sided with the policyholder holding that notice to its carrier was not sufficient to fulfill Insurance Law §3420 notice of disclaimer requirements.

Underlying Facts An owner (O) and managing agent (A) of an apartment building in Brooklyn entered into an agreement with a general contractor (GC) to perform renovation work. As is typically the case, the construction contract required the GC to maintain liability insurance and to name O and A as additional insureds, which it did from Insurance Carrier X. The O and A, of course, also had their own liability insurance policy, which was issued by Carrier Y. Subsequently, an employee of the GC sustained injuries on the site. However, O and A (and their Carrier Y) negligently waited over three months before notifying the carrier for the GC of the workrelated injury and claim. The injured employee subsequently sued O and A. Carrier Y made claim to Carrier X for additional insured coverage for O and A. However, the GC’s Carrier X responded with a letter to the intended additional insureds’ primary Carrier Y, which had made the original claim for additional coverage to Carrier X, disclaiming liability due to late notice of the claim. Notably, the GC’s Carrier X did not send notice of disclaimer to either O or A, nor to the attorney representing them in the underlying personal injury action. O and A brought third party claims against the GC and its Carrier X, asserting, among other things, that GC’s Carrier X must indemnify them as additional insureds. The trial court held that the GC’s Carrier X must, indeed, indemnify both the O and A as additional insureds. This was despite the fact that continued on page 15

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continued from page 13 the basis for disclaimer, late notice to the GC’s carrier was, in fact, valid. The contractor’s insurer had failed to strictly comply with Insurance Law §3420, because it had not sent its disclaimer notice to the additional insureds themselves, but rather to their Carrier Y, which was, as indicated, the entity that made the claim to the GC’s primary Carrier X for additional insured coverage. Significantly, the trial court held that the fact that the additional insureds’ Carrier Y provided late notice of the accident, did not excuse the unreasonable delay of the GC’s Carrier X, itself, in disclaiming additional insured coverage for O and A. Court of Appeal’s Decision The Court of Appeals agreed, holding that the disclaimer notice sent only to the Carrier Y, on behalf of O and A, was not sufficient to satisfy the Insurance Law notice requirements. The O and A’s Carrier Y was not the “Additional Insured” under the contractor’s policy, nor an agent of the additional insureds. The Court stated that the interests of the O and A were not the same as those of their Carrier Y in the litigation, because: (l) there might have been a coverage dispute between the insured O and A and their Carrier Y, and/or (2) the injured plaintiff’s claim might have exceeded the additional insureds’ policy limits with Carrier Y. Because the additional insureds had their own interests at stake, separate and apart from their Carrier Y, they were entitled to direct notice from the GC’s Carrier X, delivered to them personally, or at least to their own attorney acting as their agent. G&C Commentary As the title of this article suggests, you may very well need to “Stand Up To Your Insurance Carrier.” This is increasingly so today in the current hardened insurance market in the New York metropolitan area. Insurance is difficult to come by, and, if underwritten, costly to carry. Do not accept the loss of coverage for which you already dearly paid.

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There are many creative ways to challenge a disclaimer of coverage. Even where you are compelled to challenge a disclaimer, and need to temporarily while pursuing such challenge, provide for your own costly defense in a complex personal injury action, all such defense costs will eventually be reimbursed, from the beginning, by the recalcitrant carrier if you are successful. This case underscores the validity of this advice. Here, both the O and A, as intended additional insureds, did not, in fact, give timely notice of the accident to the GC’s Carrier X. Nevertheless, the technicality of the carrier giving inadequate notice of the attempted disclaimer saved them. The O and A stood up to the GC’s Carrier X and received the protection they contracted for despite their own error. It is important to keep in mind that both insureds and carriers have responsibilities to fulfill, and putting carriers to the task of acting fairly, properly and lawfully at all times is absolutely essential to preserve your rights. Jeffrey I. Scott, an associate with Goldberg & Connolly, assisted in the preparation of this article. ©Goldberg & Connolly 2014 This article has been prepared for informational purposes only. It is not a substitute for legal advice addressed to particular circumstances. You should not take or refrain from taking any legal action based upon the information contained herein without first seeking professional, individualized counsel based upon your own circumstances. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you written information about our qualifications and experience.

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December 2014

New Guidance on Revenue Recognition – Is Percentage of Completion as We Know It Gone Forever? – Part 3 BY ANTHONY J. CAMPOLO, CPA, PARTNER, COHNREZNICK CONSTRUCTION INDUSTRY PRACTICE

The wait is over. On May 28, 2014, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued the long-anticipated converged guidance on recognizing revenue in contracts with customers in Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers – Topic 606 (ASU 2014-09). The new guidance affects all entities that enter into contracts with customers to transfer goods or services, including construction companies, leading many to ask, “Is percentage of completion - as we know it - gone forever?” CohnReznick addresses the new guidance and the ways in which it can impact construction companies in the forthcoming discussion. Please note: In an effort to make this article as comprehensive as possible, it was decided to split it into three separate sections. In the first issue we reviewed methods to identify the contract with the customer as well as how to identify separate performance obligations (promises) in the contract. In the second issue we discussed the ways to determine the transaction price. In this final part we will discuss allocating the transaction price to the performance obligations in the contract as well as recognizing revenue when (or as) the reporting organization satisfies a performance obligation, disclosure requirements and finally the effective date and transition. Step 4: Allocate the transaction price to the performance obligations in the contract. Since the expectation is that for most construction contracts there will only be one performance

obligation, there would be no need to allocate the transaction price. However, in those instances when it is determined there is more than one performance obligation, the transaction price will need to be allocated to the distinct performance obligations on the basis of the “standalone” selling price of each distinct good or service promised. Revenue will be recognized as each distinct performance obligation is satisfied. The contractor can estimate the “standalone” selling price if it is not observable. Step 5: Recognize revenue when (or as) the reporting organization satisfies a performance obligation. Current revenue recognition for the construction industry is generally based on the activities and performance of the contractor, assuming reasonable estimates are available. Under the new standard, revenue is recognized when the contractor satisfies performance obligations which occur when the control of either goods or services are transferred to the customer. Entities will either select an input or output method (such as cost-to-cost) to measure the progress towards satisfaction of the performance obligation. In addition, transfer of control to a customer can occur either over a period of time or at a single point in time. For the construction industry, transfer of control generally occurs over a period of time and therefore applying the new standard to construction contracts may result in a similar revenue recognition pattern as under existing GAAP. However, construction contractors should be mindful of the specific criteria required by the new standard to recognize revenue over time. Those criteria include the existence of one of following: continued on page 19

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continued from page 17 1) The customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs. 2) The entity’s performance creates or enhances an asset . . . that the customer controls as the asset is created or enhanced. 3) The entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. One or more of these three criteria must be met in order to recognize revenue over time, if not then recognition at a point in time will be required. Most construction contracts meet one or more of the above criteria, so contractors can use appropriate methods, including input and output methods, to measure progress toward satisfying performance obligations and recognizing revenue over time. Disclosure requirements: The ASU includes new comprehensive disclosure requirements that are expected to provide more information that enables “users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.” Contractors should expect significantly expanded financial statement disclosures intended to provide both qualitative and quantitative information about contracts with customers, significant judgments in accounting for those contracts and assets recognized from costs to obtain or fulfill a contract. A key area of judgment will be on disclosures related to incomplete performance obligations, including the required actions, timing, and expenses necessary to satisfy the performance obligation. The new standard will require enhanced disclosure requirements. Revenue disclosures will be disaggregated by type of good or service, country or region, type of customer and type of contract. There will also be a disclosure that reconciles contract

revenue and costs. Effective Date and Transition: For public entities, the ASU is effective for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Early application is not permitted for public entities. For nonpublic entities, the ASU is effective for annual reporting periods beginning after December 15, 2017, and interim and annual reporting periods after those reporting periods. A nonpublic entity may adopt the ASU early; however the early adoption date must not be earlier than the effective date for public entities. The ASU outlines two methods of transition upon adoption: 1. Using the full retrospective approach an entity would apply the ASU to all periods presented with certain practical expedients. 2. Using the modified retrospective approach, an entity would record a cumulative effect of initially applying the ASU at the date of initial adoption. The ASU would only be applied to the current period presented in the financial statements as of the ASU’s effective date, meaning that the ASU would only apply to existing contracts with remaining performance obligations as of the date of adoption and any new contracts entered into after the date of adoption. The modified retrospective approach would not change the accounting for contracts already completed (contracts with no remaining performance obligation) prior to the ASU’s effective date. What Does CohnReznick Think? And . . . What Should Contractors Do Now? Although the effective date of this new standard is a few years away, the FASB and IASB provided this time so companies can properly prepare. CohnReznick recommends that contractors don’t let this time go to waste. Read and understand the new standard; continued on page 21

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continued from page 19 establish a management plan for the adoption process; identify typical and recurring contracts with customers; evaluate new contracts within the context of the new recognition model; and identify potential implementation issues. Companies should identify where the data needed to implement the ASU exists within the organization. Special attention should be focused on how this new standard will impact current bank covenants, surety requirements, and employee performance incentive/bonus plans that are tied to revenue or net income. Starting now allows proper time to make required modifications to agreements and to modify internal processes, policies and procedures to address this new standard well in advance of the effective dates.

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Please feel free to reach out to Anthony J. Campolo, CPA at CohnReznick, LLP. He can be reached at Anthony.campolo@cohnreznick.com or 914-922-2126 or visit www.cohnreznick.com for more information on revenue recognition.

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December 2014

Specifiers Cautioned in Use of Adhesive Anchors BY GARY HIGBEE, CSI, AIA, DIRECTOR OF INDUSTRY DEVELOPMENT, STEEL INSTITUTE OF NEW YORK AND THE ORNAMENTAL METAL INSTITUTE OF NEW YORK Designing proper construction details is an important part of architecture and engineering practice that involves more than just a grasp of building technology. If designers are not also alert to market conditions, then their details—no matter how elegant—can be ineffective and hinder the pace of a project. Overlooking the complications surrounding the specification of adhesive anchors is a prime example, as recent code changes regarding their use threaten to stall building projects in some of the United States’ largest jurisdictions. The complications stem from the International Building Code (IBC) referencing a provision in American Concrete Institute (ACI) 3182011, Building Code Requirements for Structural Concrete, requiring workers installing adhesive anchors in certain orientations to have ACI certification. In big construction markets poised to enact the provision, such as New York City, contractors are finding that a lack of opportunities for their installers to become certified places them in an impossible position. They cannot use adhesive anchors on jobs unless their installers are certified, and if they install without certification, they risk a violation or stop work order. How did this problem arise? It seems the only path to certification is by completing ACI/Concrete Reinforcing Steel Institute (CRSI) Adhesive Anchor Installation Certification Program—a two day course costing from $500 to $900 per person and requiring success in both written and skills tests. The hurdle is ACI restricts the training and testing to entities it designates. Typically, these are ACI chapters, which, in the larger construction markets are ill-equipped to handle the volume of requests. In New York City, the group tapped to provide this training (one of only three sponsoring groups throughout the state) is only able to

certify 15 to 20 installers each month. With many building trades installing adhesive anchors, this will only produce a small percentage of certified installers needed in the city for projects getting underway in 2015. Solutions such as sending installers to programs out of the city for certification are unlikely to make a dent in the need and only add to the training’s cost. Since ACI developed the certification requirement in response to the anchor failures that caused the collapse of several ceiling panels in the Boston Tunnel of Big Dig infamy, it is surprising this deficiency has not received more attention. Impact on the industry The bottleneck resulting from this shortage of training opportunities has the potential to interrupt construction schedules citywide. In correspondence with Louis J. Coletti, president/CEO of the Building Trades Employers Association (BTEA), the author was warned “at least 40,000 tradespersons must be certified by the effective date of the new code if we are to avoid stalling major public and private projects in the city.” For specifiers, steering clear of adhesive anchors in favor of other types is a way to elude this glitch. However, in some applications, these products may be the preferred, or only acceptable, anchorage method because of the superior holding power in cracked or damaged concrete. Thus, it is important to clarify not all adhesive anchor installations require the installer to be certified. Only when anchors are installed in a horizontal or overhead orientation and under a sustained tension load is the ACI requirement applicable. Due to the history of failures in these orientations, continued on page 25

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December 2014

continued from page 23 ACI requires special inspection. This adds to both the project team’s responsibilities and expenses. The architect and engineer must identify on plans filed with a building department those adhesive anchors for which special inspection is required. Subsequently, the owner must engage an independent testing laboratory to perform the inspections, which ACI 31811 requires to be continuous—meaning no drilling and installing of adhesive anchors should occur unless an inspector is observing the installers’ procedures. The special inspector must furnish a report to the engineer of record and to the building official affirming whether the installation procedures and materials covered by the report conform to the approved contract documents and the manufacturer’s printed installation instructions. However, before any installation is performed—and this is critical—the inspector must verify the installer’s certification. This circles back to the original problem: limited opportunities for installers to get certified. While the designers and owners incur added costs and responsibilities, only the contractors are accountable for maintaining certified personnel to perform the installations. If construction activity is to move forward without expensive delays, these contractors must be able to find certified installers. Until alternatives—such as moratoriums on enforcement, and permitting other qualified entities to conduct the certification training—are in place to address this looming problem, designers should be alert to the potential for added costs and delay when specifying adhesive anchors for installations requiring special inspection.

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Gary Higbee, CSI, AIA, is the director of industry development for the Steel Institute of New York (SINY) and the Ornamental Metal Institute of New York (OMINY). Formerly the assistant director for technical services with New York State’s Building Codes Division and in architectural practice for three decades, he served in various capacities throughout this period on NYS, HUD, and ICC code drafting and development committees. Higbee is a member of the American Institute of Architects (AIA), American Institute of Steel Construction (AISC), American Society of Civil Engineers (ASCE), along with other national associations. He can be reached at higbee@siny.org.

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46TH ANNUAL

CONSTRUCTION AWARDS DINNER SAVE THE DATE Saturday, May 9, 2015 Glen Island Harbour Club Glen Island Park New Rochelle, New York

CELEBRATE WITH US AND HONOR THE ACCOMPLISHMENTS OF OUR 2015 LEADERS

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The 46th Annual Construction Awards Dinner Journal will be exclusively offered electronically. Camera-ready art and layouts should be attached or emailed promptly under a separate cover.

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December 2014 Subcontractors Trade Association 1430 Broadway Suite 1600 New York, NY 10018 T: 212.398.6220 F: 212.398.6224 e-mail: info@stanyc.com website: www.stanyc.com

Hank Kita Executive Director Subcontractors Trade Association Henry Goldberg Legal Counsel Goldberg & Connolly Active Past Presidents Greg S. Fricke, Jr. Leonard Powers, Inc.

Officers Robert J. Ansbro President The New York Roofing Company Robert Weiss 1st Vice President A.J. McNulty & Co. Inc.

John A. Finamore Treasurer Jordan Panel Systems Joseph Leo Secretary Atlantic Contracting & Specialties, LLC

Board of Directors Joseph Azara Jr. C.D.E. Air Conditioning Christine Boccia JD Traditional Industries Dan J. DeVita Penava Mechanical Corp.

Jerry Liss A. Liss & Co. Inc.

John Dierks Dierks Heating Company, Inc

Alan Nathanson (Honorary) Forsythe Plumbing & Heating Corp.

Andrew Drazic ATJ Electrical

Lawrence Roman WDF, Inc.

Peter Cafiero 2nd Vice President Island Painting

Scott Rives Woodworks Construction Co, Inc.

Craig Gilston Gilston Electrical Contracting Gloria Kemper Recon Construction Corp. Randy Rifelli United Iron, Inc. Guy VandeVaarst Firecom Inc. John Villafane Eldor Electric Upcoming Events Board of Directors Meeting Tuesday, January 13 5:30PM

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Arthur Rubinstein Skyline Steel Corp.

James Flynn Independent Temperature Control

Robert Samela A.C. Associates

Patrick Gallagher BP Mechanical Corp.

Gary Segal (Honorary) Five Star Electric Corp.

Stephen Gianotti Arcadia Electrical Co., Inc.

Lawrence Weiss A.J. McNulty & Co., Inc.

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