The Professional Contractor Winter 2013

THE PROFESSIONAL

WINTER/SPRING 2013

A Publication of the Associated Subcontractors of Massachusetts, Inc.

Recent Elections Relieve Some Uncertainty, but Economy Still

UNSTEADY

HR Record Keeping It’s Not Just a Good Idea: It’s the Law

Independent Contractor or Employee?

IRS Offers Incentives to Fix Worker Classifications

THE PROFESSIONAL

A Publication of the Associated Subcontractors of Massachusetts, Inc.

16 Recent Elections Relieve Some

Uncertainty, but Economy Still Unsteady cover story

features

04 PRESIDENT’S VIEW Up

Finally, Things Are Looking

14 RECORDKEEPING

Ready, Aim, File!

20 COMMUNICATION 06 MEMBER PROFILE

How to Become a Good Listener –

Spotlight on CTA Construction

and Why You Should 08 FEATURE

22 TECHNOLOGY

Helmest to Hardhats Struggles

BIM Paves the Way for Improved

After Loss of Federal Funding Collaboration

10 WORKER CLASSIFICATION 24 GALLERY

IRS Offers Incentives to Fix Worker

ASM Events Classifications

26 GALLERY

12 INSURANCE Year-End Project Review

Using Life Insurance to Meet Business

and Personal Objectives

The Professional Contractor

3

PRESIDENT’S VIEW

BY DAVID G. CANNISTRARO

Finally, Things Are Looking Up

F

or many people, 2012, will be remembered as a blur of campaign slogans and warnings of the impending “fiscal cliff.” But for those of us in the construction industry, 2012 will also be remembered as the year we started to see the turnaround, and business start to improve after more than three years of recession. There were signs everywhere – more cranes on the skyline, more holes in the ground, and more media coverage of highly visible projects coming back to life.

We’re not out of the woods yet, and there may still be some rough months ahead as our leaders in Washington figure out how to pull us back from the cliff, but overall, the outlook is more positive than it has been in a long time – which is good news for contractors, and for ASM. Hear what some of our local business experts have to say in our cover story, page 16.

We felt the effects at ASM, too, as more companies joined or came back to ASM, now that there is more work, and growing sense of confidence for the future. Finally, we have moved beyond sheer survival.

2012 saw progress on many fronts at ASM, too

– we helped win a legal case protecting subcontractor bond rights on public work; against great odds, we advanced our retainage bill on Beacon Hill; and we received approval from the state to form one of the first “health purchasing cooperatives” in the state. ASM’s new Health Insurance Co-op will launch in the spring.

For 2013, we will be back to business, focusing on programs and services to promote success as the economy rebounds. We are planning a great series of educational seminars, tailored to subcontractors – visit our website for details.

And as always, we will be keeping members informed of important business developments and trends through our weekly newsletters and this magazine. The range of topics in this issue of The Professional Contractor is impressive – from building information modeling to human reasources documentation; from life insurance options to classification of employees, and the Helmets to Hardhats program for returning vets. Please enjoy – and let me know what you think. Contact me anytime with your comments or suggestions at president@associatedsubs.com. s

David G. Cannistraro is executive vice president of J.C. Cannistraro in Watertown, and president of ASM.

The Professional Contractor is published by

The Associated Subcontractors of Massachusetts, Inc. One Washington Mall | Fifth Floor | Boston, MA 02108 tel 617-742-3412 | fax 617-742-2331 mail@associatedsubs.com | www.associatedsubs.com

ASM Officers

President: President Elect: Vice President: Vice President: Vice President: Treasurer: Past President: Past President:

4

ASM Directors

George A. Allen Sr. | Steven T. Amanti | Clement P. Clare | R. Lindsay Drisko | Roger A. Fuller William M. Gillespie | Wayne J. Griffin | Robert B. Hutchison | Dana E. Johnston Jr. Michael S. Kosiver | William J. (Mac) Lynch | Susan Mailman | Erik S. Maseng James B. Miller | Louis J. Sannella | Nancy H. Salter | Ann T. (Nancy) Shine | Frank J. Smith Lee C. Sullivan | Carolyn M. Francisco, Counsel | Monica Lawton, CEO

David G. Cannistraro J.C. Cannistraro, LLC Richard R. Fisher Red Wing Construction Joseph H. Bodio Lan-Tel Communications, Inc. Steven P. Kenney N.B. Kenney Co. Gregory A. Porfido Mark Richey Woodworking & Design, Inc. Russell J. Anderson Southeastern Metal Fabricators, Inc. Sara A. Stafford Stafford Construction Services, Inc. Scott H. Packard Chapman Waterproofing Co.

Winter/Spring 2013

The Warren Group Design / Production / Advertising www.thewarrengroup.com custompubs@thewarrengroup.com ©2012 The Warren Group, Inc. and Associated Subcontractors of Massachusetts, Inc All rights reserved. The Warren Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher.

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MEMBER PROFILE

BY JACKIE RAFFERTY

Spotlight on CTA Construction

F

ounded just 10 years ago, in 2000, CTA Construction has quickly become one of the Boston area’s premier general contractors and construction management firms. It was established through the collaboration and close friendship of co-founders Lyle Coghlin and Patrick Tompkins, whose unique combination of engineering acuity and hands-on expertise proved instrumental to CTA’s success.

The firm started with small office fit-outs and apartment building restoration projects gained from personal referrals from friends and family, ultimately leading to larger projects including work for a leading surety company. Later, CTA’s success was bolstered by developing a distinguished clientele and obtaining certification from the state for general building construction.

CTA Construction is adept at delivering a broad range of construction and project management services and has become a respected leader in the K – 12 school building sector, with over 30 school projects completed or in process. Their quality standards and highly trained professional team have proved paramount to CTA’s continued growth and success.

Further propelling CTA Construction to prominence in the industry is their reputation for incorporating innovation and technology into projects.

Beverly High School 6

Winter/Spring 2013

“Advances with technology within the AEC industry have been incredible at creating operational efficiencies and improving communication across all members of the project team,” Coghlin said.

“3-D modeling (BIM), integrated web-based project management software, smartphones, etc. have improved quality, mobility, planning and streamlining of project procedures. CTA has been on the leading edge of incorporating these tools and processes into our projects.”

CTA and the industry as a whole continue to move closer to a paperless environment.

The two founders have also developed a positive reputation among subcontractors. A vital component of CTA Construction’s success, subcontractors play a significant role in how the firm provides quality contracting services.

“We are committed to respectful partnerships through our principles of teamwork and trust. We work closely with all of our subcontractors to ensure that our projects run smoothly and that all parties’

expectations are met,” said Tompkins.

CTA believes successful projects are the result of strong management, coordination of resources, collaboration among all parties, well-informed decision-making, open communication and hard work. Leadership means not only assuming the role by virtue of a contract, but earning the respect and trust of the team. At CTA, satisfaction comes from knowing that they have led the team successfully to reach the common goal and make the architect’s and owner’s vision a reality.

CTA Construction’s recent portfolio of projects includes such academic buildings as Marshall Simonds Middle School, Beverly High School and Tewksbury Memorial High School (see photos). Their work in the K -12 sector has earned the firm several industry awards in 2012, including Building Project of the Year Award from Construction Management Association of America’s New England Chapter, in the category of Renovation/Modernization Projects Greater than $60 million, for the Beverly High School additions and renovations in Beverly.

In addition, CTA projects have received many other awards in recent years recognizing excellence in a variety of categories, including: • The Green Difference Award from the Massachusetts House of Representatives for the Abraham Lincoln Elementary School, New Bedford, and the Beverly High School addition and renovation.

• Public Works Project of the Year Award from American Public Works Association, for the Samuel Hadley Public Services Building, Lexington.

• AIA/New England Merit Award for Design Excellence; Reconstruction and Renovation Award from Building Design + Construction; and two distinguished Preservation Awards from Massachusetts Historical Commission – all for the Harvard Public Library, Harvard.

Marshall Simonds Middle School, Burlington

Marshall Simonds Middle School library.

CTA’s distinguished project record sets the stage for continued success, even in today’s challenging marketplace. ASM was proud to include CTA Construction in our GC Showcase this year, and looks forward to their continued participation in the years ahead. s

Jackie Rafferty is the manager of public relations and marketing communications for the Associated Subcontractors of Massachusetts. She can be reached at jrafferty@ associatedsubs.com or (617) 742-3412.

Tewksbury Memorial High School’s auditorium.

The Professional Contractor

7

FEATURE

BY JAMES CRONIN

Helmets to Hardhats Struggles After Loss of Federal Funding

Workers Remain as Volunteers to Support Veterans in Transition to Civilian Life

T

he crew operating the Helmets to Hardhats program, working to find jobs in construction trades for armed forces veterans, has something in common with many of the enlisted men and women they serve – they are volunteering the services they provide for their fellow countrymen and women.

The federal Helmets to Hardhats program started in 2003 both as a response to a dearth nationwide of skilled workers in the trades, and to guide vets through the transition from military lives into civilian employment.

But the program took a hard hit in 2010, when the federal government eliminated congressional earmarks, pulling the financial rug out from under Helmets to Hardhats. It lost its $3 million budget, which had funded 17 regional directors nationwide, as well as staff who traveled the country recruiting veterans.

That rendered the program’s various directors effectively volunteers, said Richard Eckler, the Massachusetts-based Northeast regional coordinator overseeing operations from Maine to Maryland. The website that vets use to sign up for the program is still intact (www.helmetstohardhats.org) and runs on donations made through the Building and Construction Trades Department of the AFL/CIO in Washington, D.C. Those donations come from the 15 international trade unions represented, as well as the contractors that actually hire the veterans, Eckler said.

“The program has put tens of thousands of men and women into jobs in the various trades around the country,” Eckler said in a recent interview. “Even if they’re in the green zone in Iraq or on the ground in Afghanistan, they can go online and register for the program.”

Eckler tasted firsthand the challenges of transitioning from the daily trials of military existence

James Cronin is a staff writer for The Warren Group, publisher of The Professional Contractor.

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Winter/Spring 2013

to the comparatively mundane civilian life when he faced a bleak job market upon returning from tours of duty in Vietnam. He found his way into the trades as an elevator constructor, building lifts for the next 35 years. Then in 2004, he joined Helmets to Hardhats to work on behalf of the men and women making similar transformations. Now he travels to military installations and pitches the program to returning vets alongside police chiefs and representatives from security guard companies.

When candidates from the program are ready, they are matched with a specific apprentice program in their local area, based on their interests and experience. Eckler is there to help guide them in the process. For Eckler, the greatest satisfaction comes from feeding candidates into an apprenticeship in one of the trades, and eventually a permanent job.

“It’s a very rewarding feeling when a kid calls and says how much they appreciate your help and [that they] are starting work at a new job next week,” Eckler said. “A lot of people in the unions are veterans. And a lot that aren’t, they hire veterans and it’s kind of their way of showing their appreciation for what [vets have] done.

It’s our way of saying, thank you for serving our country.”

That gratitude is shown in several forms. One is simply that the servicemen and women are shown preference for apprenticeships once they are registered in the system and apply for positions, said John Healy, sheet metal training coordinator for the Local 17 sheet metal union in Boston. Healy said the sheet metal workers usually have 10 to 20 Helmets to Hardhats applicants each year, and of those, about half are hired as apprentices. Just last year, the first class of apprentices from the program graduated from apprentices to journeymen, a five-year process.

Those former military personnel are ideal candidates to move up the ranks and become leaders in their chosen industries, Healy said.

They’re willing to take orders, and they’re good at giving them. Veterans have been trained to

work well on teams and under pressure. And they show up to work, every day and on time, he noted.

That discipline often translates into willingness to be trained and learn the trade. The chance to get paid for learning a new skill is not an opportunity that comes along every day, and because the veterans who enter the trades are often more mature than their peers, they are more likely to commit to the program, said Eric Redding, director of apprenticeship and training for the Finishing Trades Institute of New England.

The most important part of his involvement, Redding said, is getting the veterans into a training program. He said it’s become harder for the vets to find out about the program since it lost its funding, and many hear about it by word of mouth. Once they know about it, they realize what an opportunity it provides because “it shows veterans sticking together and helping their buddies out,” Redding said.

Redding said the best way for subcontractors to find new military recruits is calling the local union training centers.

One subcontractor who does is Lee Sullivan, president of A&A Windows in Malden, who currently has two veterans from the program working for him.

“They have raw aptitude and ambition that is lacking in

the average high school graduate,” said Sullivan. “One is the best apprentice recruit I’ve seen in a long time. He’s gone through some really complicated training in the military. But a lot of it is showing up on time every day with the proper attitude to work. That gets you a long way in life. They seem to know that. It’s like they’re trained for it already.”

Sullivan himself is not himself a veteran. But he knew immediately upon meeting his current military employees that they were worth investing in.

“The vets make better employees,” Sullivan said. “It makes tremendous sense for my business to hire these guys. Their maturity level really stood out. They look at you in the eye when they talk to you. They already have accomplishments to talk about and they understand roles and responsibilities. They understand that their position as an apprentice is to learn and develop and pitch in when they can. They also immediately get more respect in the field with the existing crews.”

For more information about Helmets to Hardhats, contact the local office of any of the 15 trade unions or nine management associations supporting the program. For a complete list, visit www.helmetstohardhats.org. s

The Professional Contractor

9

WORKER CLASSIFICATION

BY WILLIAM F. RUCCI, JR., CPA, MST

Independent Contractor or Employee?

IRS Offers Incentives to Fix Worker Classifications

B

y now the construction industry has grown used to the often confusing stew of state and federal rules that guide how workers are classified for the purpose of determining tax, insurance, payroll and employee benefit obligations.

In an era of persistent budget woes, the pressure from both levels of government to make companies comply with current regulations keeps ratcheting up.

Massachusetts continues to vigorously enforce proper worker classification in part because significant state tax revenues are at stake. In similar fashion, misclassifying employees as independent contractors at the federal level has the effect of keeping substantial revenues out of the nation’s coffers.

This misclassification may be totally unintended – some companies that believe they are doing all they can to comply with state standards for determining worker status may in fact be violating IRS rules without knowing it.

But a new program launched by the IRS may help fix the problem. The Voluntary Classification Settlement Program (VCSP) allows companies to prospectively reclassify workers as employees for employment tax purposes. As an incentive for doing so, the program offers 90 percent amnesty on past due employment taxes for these workers, and waves interest and penalties.

With such favorable terms, the program may be a good opportunity for construction firms to review their worker classification practices, clarify any gray areas, and ensure that they are indeed complying with current IRS rules.

How the Program Works Under the VCSP, a company pays only 10 percent of the amount of employment taxes on compensation paid for the most recent tax year to the workers being reclassified. In addition, the company will not be liable for any interest or penalties Bill Rucci is a partner in the Boston area accounting and business advisory firm Rucci, Bardaro & Falzone PC, where he heads the firm’s Construction Business Services Group. For a complimentary copy of “Employee vs. Independent Contractor: 7 Tips for Business Owners,” contact him at (781) 321-6065 or billr@rbfpc.com.

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on that payment, and will not be audited for employment tax purposes for prior years. Companies must apply to participate, and enter into a closing agreement with the IRS. The VCSP allows companies to reclassify either some or all of their workers. Once a company chooses to reclassify certain of its workers as employees, all workers in the same class must be treated as employees for employment tax purposes.

Example: Acme Construction Co. currently contracts with its drywall installers, electricians and plumbers to perform services at housing construction sites. Management decides to voluntarily reclassify its drywall installers as employees. The company applies and is accepted into the VCSP and enters into a closing agreement with the IRS. Once the closing agreement is executed, Acme must treat all drywall installers as employees for employment tax purposes.

Determining Eligibility Companies that wish to voluntarily change the classification of their workers going forward and who meet certain requirements are eligible for the VCSP. Specifically, a company must be treating the workers as independent contractors and must have consistently treated the workers as nonemployees, including having filed the required Forms 1099 with respect to each of the workers for the past three years.

In addition, the company cannot be currently under audit by the IRS and cannot be under audit by the Department of Labor or any state agency regarding the classification of the workers in question. A company that was previously audited by either agency concerning the classification of the workers may be eligible for the program so long as the company has complied with the results of the audit.

Application and Acceptance Process In order to participate, an eligible company must complete and submit an application using IRS Form 8952. The application should be filed at least 60 days from the date the company wants to begin treating its workers as employees. No tax payment needs to accompany the application.

The IRS will then review the application and verify the company’s eligibility. Once accepted, the IRS will contact the company (or its authorized representative) to enter into the VCSP closing agreement. The company must make full and complete payment of any amount due under the program when it returns the signed closing agreement to the IRS. If the company is not eligible, the IRS will contact you to inform you that your application has not been accepted. This does not preclude you from applying at a later date, however.

Outcomes and Obligations The company must agree to treat the class or classes of workers as employees for future tax periods for employment tax purposes. It will not be subject to an employment tax audit with respect to the classification of the workers for prior years.

The company will pay 10 percent of the employment tax liability that may have been due on the compensation paid to the workers for the most recent year, with no liability for any interest or penalties. In addition, the company will extend the period of limitations on the assessment of employment taxes for the first, second and third calendar years beginning after

the date the taxpayer has agreed to begin treating the workers as employees.

Confidentiality Divulging information to the IRS about possible transgressions of the past is never easy. That is why the VCSP comes with a set of assurances in this regard. The IRS will not share information about applicants with the Department of Labor. Nor will it share information about participating companies with any state agencies.

If a company’s application to the program is rejected, it will not automatically trigger the initiation of a federal audit. (You could be audited for another reason, of course, but not as a result of the information contained on Form 8952.)

It is also important to note that by signing the VCSP closing agreement, a company is not admitting any liability or wrong doing for past periods. The program concerns future years only.

The IRS is not making any determination with regard to prior years and you are not making any representation as to the workers’ proper status for prior years as far as federal employment taxes are concerned. s

The Professional Contractor

11

INSURANCE

BY RICHARD BOWERS

Using Life Insurance to Meet Business and Personal Objectives An Affordable, Tax-Efficient, and Often Overlooked Financial Strategy

A

s the owner of a business or professional practice, you know better than anyone that running your business seldom leaves you enough time to address important financial planning questions, such as: Is my business moving in a direction with which I’m happy?

Am I doing all I can for my key people? Have I structured things such that my family won’t be saddled with business debts if I die prematurely?

What about taxes and retirement? Am I doing what’s necessary to assure the success of my business and my personal financial security?

Finding time to reflect on how you’re doing, where you’re going, how you’re going to get there, (and keeping your key people happy along the way) is more than just important – it may also be critical to your business’ long-term success and your family’s financial security. Unfortunately, if you’re like most business owners, in addition to feeling squeezed for time, you probably feel squeezed for money. What’s more, you’re probably convinced that there’s not a lot you can do to address the above questions until you have the funds with which to address them.

The reality is, that’s not true. You can get started. And the solution to whichever of those questions is highest on your priority list may be a financial product you have not only overlooked, but possibly even avoided – life insurance. How can life insurance help? There are all sorts of ways.

For starters, life insurance provides both lifetime and death benefits you can use to protect yourself, your key people and your family, while simultaneously accomplishing important business objectives such as rewarding and retaining key employees, reducing income taxes, accumulating funds for retirement, and assuring an orderly succession of your business at death, Richard M. Bowers is the investment specialist at Life Solutions Group in Boston. He can be reached at Richard.Bowers@ lsgnewengland.com or 617-722-4314.

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disability, or retirement. In many cases, you can use business dollars, often on a tax-deductible basis, to pay for the policies. You can also generally choose from a wide range of plans that allow you accommodate such variables as uneven (or seasonal) cash flow. And that’s just for starters.

Following are just a few of the strategies that are available to you – right now, using life insurance – to meet your financial goals in a tax efficient and affordable manner.

Qualified retirement plans – If your business offers a qualified retirement plan (for example a 401(k), profit sharing, or pension plan), your contributions/accumulations can be used to buy life insurance on the participants. Premiums would be income tax-deductible to your business, and participants would be taxed each year on a relatively small “economic benefit” provided by the death benefit. The immediate benefits to you include a tax deduction for your business, the ability to provide an extra benefit to yourself and your employees, and protection for loved ones in the event of premature death.

Executive bonus plans – Under these plans, you and/or your key employees can purchase life insurance and your business can pay all or a portion of the premiums. The immediate benefits to you include a tax deduction for your business; the ability to provide an extra benefit to key employees; and the potential for supplemental retirement income (via cash values) down the road. You could also restrict your employee’s access to cash values for a stated period of time, thus creating “golden handcuffs” that make it more attractive for them to remain with your company. While participants will owe income taxes on the amount of premiums paid by the business, you could elect to pay those taxes yourself via a bonus in the amount of taxes due.

Split dollar plans – Split dollar plans allow you to share the cost and benefits of a life insurance policy with key employees to whom you want to extend an extra benefit. Depending upon how the plan is structured, your employees may have

access to the policy’s cash value, either immediately or at a designated future time; they may be able to name the policy beneficiary; the death benefit could be used to purchase the business interest of a deceased partner or coowner; and the business may be able to recover all of the plan costs at the death of a covered employee.

If your business owns the policy and pays the premiums, the IRS taxes the plan under an “economic benefit regime.” Premiums are not tax deductible; the “economic benefit” of the death proceeds is taxable to the employee; but the employee names the beneficiary for the death proceeds in excess of the cash value. If your business pays the premiums, but your employees own their policies, the IRS taxes your plan in the “loan regime” category, and premium payments are essentially treated as a series of loans to your employees. Again, premiums are not tax deductible, but neither are they taxable as income to the employee.

Employees, however, are responsible for loan repayment and interest on the loans. Under these plans, employees generally have full access to policy cash values for premium loan repayment. (Note: Withdrawals and policy loans will reduce the amount of the death benefit.)

PASS Plus – A PASS Plus arrangement involves the creation of a partnership between you, your co-owners (if any), and your business for the purpose of owning life insurance on you and the other partners. Basically, you (and any co-owners) purchase life insurance policies and transfer them to the partnership; your business transfers cash to the partnership, which is used to pay the policy premiums.

At the death of an owner, the partnership is dissolved; the business recovers its costs; and the balance of the proceeds

is paid to the deceased owner’s estate, income tax free. If an owner is disabled or retires, the partnership is dissolved; the business is repaid its cash contributions; and the policy is transferred to the disabled/retired owner who can, in turn, access its cash values via income tax free loans. (Note: policy loans will reduce the amount of the death benefit.)

Section 79 plans – If your business is set up as a C corporation, the IRS allows you to provide your employees with “group term life insurance” using individual cash value policies. Premiums paid by your company are tax deductible and participating employees will be taxed on the value of any insurance protection in excess of $50,000 as well as all “permanent benefits” provided by the plan. A large portion of the premiums will be considered income taxable to the participants, but because they own their own policies, they retain access to cash values via income tax free loans, and they can name their own beneficiary for the policy proceeds. (Note: policy loans will reduce the amount of the death benefit.)

Section 419 plans – The potential benefits of a 419 plan are many, and include life insurance, disability protection, severance pay, medical benefits, long term care, or illness and accident benefits. Premiums paid by your company are income tax deductible and are not considered taxable as income to the employees. Death benefits are paid income tax free and, in certain cases (such as multi employer plans), there are no stated limits on contributions. (Note: Because of the significant tax advantages and benefits of these plans, they are receiving increased IRS scrutiny.)

As a financial strategy, life insurance is often overlooked and sometimes even avoided. But in the right circumstances, it can be a tax efficient and affordable way to address the challenges you face in building and maintaining a successful business or practice. Whether it’s protecting your family, attracting and rewarding key employees, assuring business succession, or maintaining your business’ good credit rating, today’s life insurance contracts are worth a second look.

This information should not be construed as tax advice.

Please consult a qualified tax advisor regarding your individual circumstances. s The Professional Contractor

13

RECORDKEEPING

BY MICHAEL P. SAMS, CHRISTOPHER A. KENNEY AND RYAN P. MENARD

Ready, Aim, File!

Transforming Personnel Files From Lawsuit Liability To Your Greatest Asset

A

s a business owner, it can be easy to neglect your employees’ personnel files when there is so much else to do at work. However, when one of your employees becomes something else – specifically, a plaintiff or grievant – there are few resources as important to your case as the files you have kept.

As the old adage goes, failing to plan is planning to fail. This is particularly true for employers facing discrimination claims or labor arbitrations based on discharge or discipline, cases which often hinge on whether the employer planned ahead by keeping records justifying its decision. The best evidence an employer could ask for is a complete, consistent and candid personnel file containing documentation tailored to the employer’s business.

Good recordkeeping is not just for performance improvement and risk management; it’s also a matter of law. By statute, Massachusetts employers are required to keep certain records, and must follow certain rules for keeping them. Noncompliant employers could face penalties or, perhaps worse, evidentiary sanctions in litigation later on.

So, before winter hits, be sure to make room in your company’s filing cabinets for your employee’s personnel files, and consult an attorney on how best to utilize them – not only to comply with law and enhance your operations, but to best protect your business from employee lawsuits, too.

A Little-Known Legal Requirement All employers should keep comprehensive personnel files. But, by law, many employers must.

By statute, Massachusetts law requires employers with 20 or more employees to keep a file on each employee which contains all information which could affect the employee’s “qualifications for employment, promotion, transfer, additional compensation or disciplinary action.”

At a minimum, an employer must include the basics: the employee’s name, address, date of birth, job title and description; rate of pay and any other compensation or benefits; starting dates of employMichael P. Sams, Esq., and Christopher A. Kenney, Esq., are directors and Ryan P. Menard, Esq., is an associate with Kenney & Sams, P.C., a leading litigation firm in the Boston area. They can be reached at www.KandSlegal.com or (617) 722-6045.

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ment; and the employee’s job application and all related materials (e.g. resumes, cover letters and references).

Importantly, the employer must also include all written warnings of substandard performance, lists of probationary periods, waivers signed by the employee, copies of dated termination notices and any other documents relating to discipline. Before adding any negative information to the file – a discipline notice or unfavorable evaluation, for example – the employer must first give the employee 10 days’ notice that the information will be added to the personnel file. The employee then has five days to request a review of the personnel file, and may then work with the employer to remove the negative information or may submit a written explanation from the employee’s point of view.

Finally, employers must keep their personnel files for three years after the employee leaves the business or until the resolution of any relevant lawsuit, investigation, or claim. Employers who violate any portion of the statute could face enforcement by the attorney general and penalties of up to $2,500.

The Best Defense Consider a common occurrence in most businesses: After passively tolerating an underperforming employee for years, you finally decide to part ways. A week later, just as you are appreciating the wisdom of your decision to terminate, you get a letter from the employee’s attorney, claiming the termination was discriminatory and demanding a pricey settlement.

The value of that demand letter depends in large part on the records you have kept. Unfortunately, most employers discover this too late, and reluctantly must produce for a litigious ex-employee a personnel file containing sugarcoated performance reviews, inconsistent or nonexistent documentation of performance problems, and negative information which was not shared with the employee in accordance with the personnel-file statute.

The employee now has bargaining chips to negotiate a bigger settlement from you: rather than illustrating the inefficient employee you have come to know, the personnel file describes an employee with favorable reviews and few problems, if any.

This scenario results from supervisors who under-

standably prefer to appease underperforming subordinates rather than risk hostility by documenting performance flaws. Likewise, if there is documentation of problems but no notice was ever given, the employee might even argue – perhaps plausibly – that you should not be allowed to use this evidence to justify the termination.

Luckily, it is not too late to head off the next claim before it arises. Employers should take the opportunity to review their personnel files and recordkeeping practices, not only to comply with the personnel-file statute, but to build a strong defense for when a disgruntled employee will not take “you’re fired” for an answer. At a minimum, your business should: • Train your record-keepers in personnel-file law.

• Ensure that your supervisors and managers are consistently and accurately documenting your employees’ performance issues in writing, with notice to the employee – and make sure all employees are treated equally in this regard.

• Review your employment documentation and adopt comprehensive, easy-to-use forms such as Performance Appraisal Forms, and Discipline Forms.

• Remind your supervisors and managers to be candid in written employee reviews.

Taking just these small steps can drastically improve the prospect for your termination decisions to be upheld. Contact your attorneys to learn more about strategically managing your personnel files, to schedule an in-office training, or to obtain easyto-use written forms for you and your management team to use in your personnel files. s

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The Professional Contractor

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Recent Elections Relieve Some Uncertainty,

but Economy Still

UNSTEADY

By James Cronin The recent election has shown business leaders the path policies will likely take in the next four years. Now that the Democrats have won in Washington and Massachusetts, real estate developers and other industry professionals at least know who’s driving the bus.

The fact that the commonwealth’s two U.S. senators are donkeys isn’t exactly a new occurrence here. It certainly won’t affect investment or real estate development in Massachusetts, a state that, while not untouched, was largely insulated from the truly devastating effects of the recession felt in other parts of the country thanks to a regional economy founded in health care, education and life sciences.

However, the commonwealth is far from as well-positioned as it was when the liberal lion Ted Kennedy was its senior senator. The state has lost much of its bargaining power on Capitol Hill given how low on the congressional totem pole Scott Brown was, and Elizabeth WarJames Cronin is a staff writer for The Warren Group, publisher of The Professional Contractor.

ren now is. If John Kerry becomes Secretary of Defense under President Barack Obama, then Massachusetts will have not just one but two new, inexperienced, nearly powerless junior senators working on its behalf.

That’s especially bad news for many of those hospitals, research institutions and life science companies that have done so much to power the state’s economy through the recession, said David Begelfer, CEO of NAIOP in Massachusetts, a trade group that lobbies for office and industrial property landlords and professionals. Those institutions are also major recipients of federal research funding. If power shifts enough for some states, that funding could be sent to other regions, according to Begelfer. And just because it may not seem fair that Massachusetts get so much more governmental funding for research than other areas, that doesn’t necessarily mean things should change.

“Massachusetts receives a much higher percentage of research grants than many other states around the country,” Begelfer said in a recent interview. “With some shifts in power in Congress, clearly … there could be decisions to

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equalize a little more and some of our institutions would get less funding. But we certainly deserve that funding because we have some of the finest, most important research institutions in the world here.”

That’s coupled with the budget chopping known as sequestration that could occur if Congress doesn’t agree to $1.2 trillion in savings to reduce the federal deficit

by Dec. 31. If the country plummets over the proverbial fiscal cliff, Bush-era tax cuts will expire, eliminating around $500 billion from business and consumer balance sheets next year. At the same time, automatic budget cuts would also take hold, slashing another $400 billion from the country’s economy.

Despite those threats, major national retailers have been “sufficiently satisfied” with the economy in recent months that, “really for the first time in a few years are they beginning to consider meaningful expansion,” said Kenneth Goldberg, real estate attorney with Bernkopf Goodman in Boston.

“That’s new for the big retailers,” Goldberg continued. “Six months ago I could not have said that. We’re talking about retailers that are users where a single store may be 20,000 to 100,000 square feet. We’re handling new, large lease transactions like those right now,” and developers are getting new projects underway, not just those that were shelved during the recession. That does not indicate a dampening due to the potential governSullGroupTPC 1/29/09 3:49 PM Page 1 mental crisis, Goldberg added.

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Even so, the coming year will not bring any kind of dramatic improvements or degradations to the retail market, as it is still feeling the effects of the Internet, or in any sector, said Ted Tye, managing partner at National Development. Urban multifamily has taken the Boston area by storm, bringing thousands of new apartments online, and that will likely continue for a period of time. But Tye said he expects that bubble to pass in two or three years.

“We’ve had a long run with unusually low levels of tax – dividends at 15 percent – and I think we all understand there’s a deferral owed for not paying for that,” Goldberg said. “The capital gains tax difference is just going back approximately to where it was before [the cuts].

That level of tax existed during very significant real estate boom cycles. So 15 percent as opposed to the low 20s percent, which we expect Democrats will propose, is considerably favorable compared to the previous years when it was at 25 percent. There were cycles when capital gains tax was significantly greater than it is now.”

NAIOP’s Begelfer said he doubts Congress will allow the country to spin out of control, citing how “politically disastrous” it was for Republicans in 1995 when a budget impasse caused the shutdown of the federal government, putting non-essential government workers on furlough and suspending non-essential services for about a month.

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changes, we could just let it happen,” Begelfer said. “But then you’re giving up control. It’s like taking your hand off the wheel of your car while driving 100 miles per hour.

But there are also specific federal budget cuts that could seriously hinder research institutions and life sciences firms. If Congress’ petty gridlock drags the country over the cliff, National Institutes of Health spending will be trimmed by 8.2 percent, or about $2.5 billion annually. Massachusetts usually gets between $200 and $300 million annually through NIH grants, according to reports.

That is where politics could have an especially strong impact on the state, its commercial construction industry in particular. Hospitals and universities will have less funding for research, and will need less research and office space on their campuses so they will not undertake construction projects. And the small startup companies that spinoff from colleges and health care groups will need less commercial space or could fail altogether, according to Begelfer.

That could all but guarantee loss of business for construction companies and subcontractors that work in the health care and associated fields. One firm, Commodore Builders, has specialized in life science and health care construction and renovations, with the bulk of work coming from medical office buildings and clinical facilities in the $5 to $20 million range for total project costs.

But Commodore is focused on diversifying its client base, so the firm is working in retail, office and lodging sectors as well, said Joe Albanese, Commodore’s founder and CEO. After seeing what happened to construction companies that were dependent on corporate clients during the recession, when office users stopped expanding and in many cases closed down shop, he knew his company could not put all its eggs in one basket.

That’s been easier to do in an economy that, from Albanese’s vantage point, has been improving.

“Two years ago, for projects that were about $10 to 15 million, you had all your competitors pursuing the same projects because there was such little work, creating an unhealthy environment for subcontractors,” Albanese said. “Now, we see more of a balance in the competition on projects. And there’s more variety in the work that’s going around. People are hungry now, but they’re not starving, and that makes things a lot more reasonable for the competitive environment, and that will be a significant driver for growth in 2013.”

Bud LaRosa, chief business performance officer for Tocci Building Corp., echoed Albanese’s comments about diversifying. While multi-unit housing and life sciences have been booming, the next asset class to make headlines will be medical office space. But it won’t be near the hospitals themselves. It will be built in farther flung suburban locations as health care providers attempt to bring the healing to the patients, and not vice versa.

No matter what asset class is the next rising star, one of the most important things to propel the kinds of

growth Albanese and LaRosa’s companies have been experiencing will be for Congress to make concessions and reach a compromise for the budget uncertainty to be put to rest, NAIOP’s Begelfer explained. If the federal government told businesses and individuals they were going to raise taxes 30 percent, as painful as it would be, companies and consumers would adjust to the change. They would be able to adjust to it because they would know the playing field – the rules and the players. But when the country is mired in the darkness of uncertainty, and if that fog were to hang over the nation for another six months or year, then investments will freeze, people won’t be hired, companies will not grow.

“You could say you’d raise taxes 30 percent, and they’ll adjust to it and move forward,” Begelfer said. “If you say, ‘we don’t know what will happen,’ then companies hold back from investments because they don’t have any path to envision the future. It’s the unexpected that hurts business growth.” s

The Professional Contractor

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COMMUNICATION

BY GREG ENOS

Listen Up!

How to Become a Good Listener – and Why You Should

A

merican businesses lose millions of dollars every year because “people don’t listen,” directions are not followed, or critical details aren’t properly communicated. While effective listening is an important element of most organization cultures, it isn’t usually given a great deal of attention – until there’s a problem.

Effective listening benefits us personally and professionally by increasing productivity, enhancing self-confidence, and reducing the number of misunderstandings in our lives. It’s also good for our health; heart rates and oxygen consumption are reduced when we attentively listen.

Listening is one of the communications skills we use the most, but also is one in which we have the least amount of formal education.

So what keeps people from being good listeners?

Part of the problem is that “people take listening for granted,” explains Alan R. Ehrlich, president of the International Listening Association. Most of our listening occurs in a limited context, communicating with the same people about the same topics, with which we are familiar. This comfort zone simplifies life and we are not frequently intellectually challenged. It becomes easy to gloss over what is being said.

“Everybody has the capability to be an excellent listener,” claims Ehrlich. A lack of commitment to the process is a primary barrier.

Good listening requires commitment and energy.

Tired listeners who have no dedication to the topic or the speaker will not get the message.

Emotionally charged words or symbols can divert our attention from the message being sent to us. These triggers send our minds off to think about our favorite sports team, celebrity or situation.

Technology delivers more information than our minds can process, so many folks believe it’s better to only digest the elements that they’re interested in.

We change, misinterpret or misunderstand over 70 percent of what we hear, according to consultant Valarie A. WashGreg Enos is a certified listening professional who has served on the executive board of the International Listening Association (www.listen.org), and promotes listening (www.gregenos.com) as a critical core skill in all of his work.

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ington. She also suggests that 60 percent of all management problems are related to listening.

What is listening?

It’s the process of receiving, constructing meaning from and responding to spoken and/or nonverbal messages, as defined by the International Listening Association. We experience it hundreds of times a day and it takes only a fraction of a second.

Amazingly, we use less than half of our brain capacity

when listening. Researchers believe that we can process up to 500 words per minute. The unused brain capacity could be used to make us better listeners.

How do we become better listeners in conversations and meetings?

tions as an aid in understanding and retaining the message. While some people see this as old fashioned, it’s a reliable way to ensure accuracy. New tools, like voice recognition software, can make this process easy.

Exercise your brain. Use more of its vast capacity to focus on the central ideas being articulated by the speaker.

The brain muscle can be strengthened by exercising it.

“It’s important to show that we are listening through our body language,” claims Dr. Laura A. Janusik, a researcher and professor at Rockhurst University.

The best way to facilitate a positive change in your listening skills is to pick one technique and apply it over a 21-day period. This helps make it a part of your communications toolkit and ingrains the habit so it becomes part of your daily routine.

You can be a better listener. You just need to invest some energy in the process. s

You can do several things to give yourself a significant advantage as a communicator.

Make a conscious commitment to be an effective listener. If you cannot make that commitment, schedule the conversation for a more convenient time, when you can concentrate. A two-person conversation requires two commitments.

Concentrate on what is being said and maintain eye contact. Block out both external distractions (phones, electronic media, other people talking) and internal distractions (other thoughts, anticipated responses).

Invest the energy to listen with an open mind, so you can get the most out of what is said. It actually takes more energy to listen than it does to speak.

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TECHNOLOGY

BY MICHAEL P. CANNISTRARO

BIM Paves the Way for Improved Collaboration

A

s we approach 2013, we embark on a new era in our industry; the era of collaboration. New technological advancements inevitably bring about new buzz words that spread throughout an industry. Over the past five years, there is no question that the AEC industry has had its fair share.

What is it exactly that determines whether or not a buzz word grows into a trend, and consequently, why that trend gets assimilated into the industry as standard practice? The answer is the value proposition found within the up-and-coming technology, process or invention.

What’s the buzz about?

In the construction industry, companies do not adopt industry trends overnight. In the early days of building information modeling (BIM), it was hard to convince engineers and contractors that the investment in modeling software and training would drastically improve the preconstruction phase of projects. Today, architects are transitioning to 100 percent BIM-enabled design, specialty contractors are using BIM to master the science of manufacturing, and construction managers are now bringing BIM to the field to maximize on-site efficiency. In a 2011 McGraw-Hill Construction study, nearly 75 percent of all AEC firms surveyed were using BIM on their projects. Four years early, only 28 percent said they were.

The statistics prove that BIM is not just an industry trend, but rather a transformational tool that helps AEC professionals deliver better projects.

Although users utilize BIM in different ways, BIM unquestionably provides them all with value. Ultimately, that value equates to a more efficient way of doing business that also produces a better quality product. As companies became more experienced in BIM, they soon learned how to maximize its return on investment by collaborating with others on the project team.

Incidentally, “collaboration” became the next buzz word to sweep the AEC industry. Each BIM user, no matter what role they play, brings their individual perspective, skills and experience to the overall project team. When executed properly, BIM can facili-

tate a high-performing team that has the potential to surpass each and every project goal they set. Proper execution however, relies on a commitment to change. And while it is easy for a company to talk about collaboration, many do not take the first step.

In our experience, the most successful projects are those in which collaboration is the first priority. And while a collaborative project will most certainly include BIM, the use of 3D modeling alone will not ensure successful delivery. In order to drive efficient construction, all trade partners must participate in the scheduling and constructability details up front.

Selection will require the companies involved to be on equal footing in terms of expertise and capabilities.

Since project costs increase exponentially when changes are made in the field, early collaboration minimizes the risk of cost overruns by shifting the emphasis to the reconstruction phase. In some cases, owners believe so strongly in a comprehensive preconstruction effort that they incorporate early collaboration into the contract documents by using integrated project delivery (IPD). Although many parties are reluctant to share the risk associated with IPD, one thing is clear; everyone wants to collaborate. No matter what delivery method is chosen, whether it is design-assist, a variation of IPD or an entirely new method all together, it is sure to include the requirement to work together.

So, what does it all mean for our industry?

As an AEC professional, why should you believe the hype and start brushing up on some catchy, new acronyms? Buzz words make noise in an industry because value has been created, and someone wants to share what they have learned. Today, for example, there is buzz surrounding “lean construction,” or the concept of improving a project’s efficiency by minimizing waste.

While lean methodology can be largely attributed to Toyota’s manufacturing strategy, AEC professionals took notice of the “Toyota Way” and began applying the thought process to construction. As it turns out, industry trends like lean construction are enabling firms to become more competitive.

Knowing that projects are being built by high-performing teams that are assembled early in the design Michael P. Cannistraro, P.E., LEED AP, is the vice president process, it is up to each of our firms to embrace the latof service and engineering for J.C. Cannistraro LLC, www. est trends to truly sustain our success. This is the era of cannistraro.com, Watertown, Mass. Michael can be reached at collaboration, so let’s stay connected, create teams built mikec@cannistraro.com. on trust and respect, and achieve success together. s

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REACH GENERAL CONTRACTORS, SUBCONTRACTORS, BUILDERS, DEVELOPERS, BUILDING OWNERS, DESIGNERS, ENGINEERS, SUPPLIERS, AND OTHER MAJOR PLAYERS IN THE COMMERCIAL, INDUSTRIAL, AND RESIDENTIAL AREAS.

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PHOTO GALLERY – ASM EVENTS 2012 GC Showcase, Nov. 8 CTA Construction Showcase attendees 3 GC Showcase reception 4 Kenneth White and David G. Cannistraro 5 General contractors displays 1 2

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BIM in 2013: Lessons Learned from High Performance BIM Teams, Oct. 22 ASM members engage with speakers.

ASM members mingle and network during event’s cocktail reception.

3 BIM seminar speakers Chris Leary, Kling Stubbins; Luciana Burdi, Massport; Michael P. Cannistraro, J.C. Cannistraro; and Sarah Vekasy, Kling Stubbins.

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ASM Safety Roundtable, Wednesday, Sept. 19 ASM Safety Roundtable attendees engage in active conversation during the “hands-on� Sept. 19 roundtable hosted by Triple G Scaffold Services.

2 Participants view and inspect various scaffolds that each present a different safety issue, and record the violations.

3 Larry Chirillo of Triple G Scaffold Services provides a live demonstration focused on swing staging and other forms of scaffolding and shoring products including welded frame and systems scaffolding.

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The Professional Contractor

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YEAR-END PROJECT PHOTO GALLERY J.C. Cannistraro (Watertown) is pleased to complete a series of energy savings projects for new DCAM facilities. Throughout 2012, crews from J.C. Cannistraro have been leading the way on a series of energy conservation measures (ECM) at two state-owned health facilities in Danvers and Wrentham. Much of the scope of work being performed at the Hogan Regional Center and Wrentham Developmental Center entails upgraded, energy-efficient HVAC infrastructure, but the project also includes an expansive solar panel array and cogeneration plant installation.

1 Precise coordination and careful pre-planning were essential to the scheduling and rigging logistics for the boiler plant upgrades at the Wrentham Developmental Center.

2 HVAC-related ECM at the Wrentham facility included a renovated power plant with three new high-efficiency boilers, a new high-pressure steam system and a cogeneration unit.

3 The upgraded mechanical room installed by Cannistraro at the Hogan Regional Center in Danvers included three new boilers, two split-case pumps and a new de-aerator, as well as variable frequency drives.

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Wayne J. Griffin Electric, Inc. (Holliston) is pleased to announce that they have recently completed the electrical installation work at Dassault Systèmes in Waltham. Recent electrical work within the company’s 7,500-square-foot data center included the installation of power, lighting and a fire alarm system. A new 13.8 KV primary distribution, in addition to a 1,000 KVA pad-mounted transformer and 2,000 amp, 480 v service was also part of Griffin’s electrical contract, plus two new 750 KW generators, paralleling switchgear and a UPS backup system. Additionally, as part of the 212,000-square-foot tenant fit-up package, Griffin Electric installed extensive lighting and controls, and power and fire alarm systems.

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Committed to You With our many years of experience, financial capacity, and solid supplier relationships, you can rely on Griffin Electric to take on your next project. As an industry leader, we are committed to building trust, delivering superior results, and preserving lasting bonds with our partners and clients.

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The Professional Contractor

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Photo Gallery continued from 27 5 Auciello Iron Works Inc. (Hudson) is proud to announce that they have recently completed protective fencing work for GC Aetna Bridge at the Braga Bridge from Fall River to Somerset.

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5 11-0234 Boston Cedar_Layout 1 7/11/11 11:10 AM Page 1

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Daniel Marr & Son is erecting the 15-story Broad Institute for Suffolk Construction. The medical research facility will utilize approximately 6,000 tons of steel, with erection to be completed in January 2013.

6 At the Broad Institute, a 60-ton plate girder is set into place utilizing two huge hydraulic cranes.

7 40-ton plate girder is hoisted and set into position. The massive plate girders span over an existing parking garage and support the new steel building under construction. Marr Scaffolding provided the aerial lift equipment.

Photo courtesy of Dion and Company

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continued on page 30

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The Professional Contractor

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Photo Gallery continued from 29 8 Capone Iron (Rowley) welcomed hundreds of guests to their annual Open House on Sept. 28 in conjunction with National Steel Day. 9 One of the day’s special guests was state Sen. Bruce Tarr (far right) shown here with Stephen Capone, District Manager Lisa-Marie Cashman and ASM CEO Monica Lawton.

10 Gary and Stephen Capone roll out the welcome mat for tours of their fabrication plant, shown right. s 8

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