The Professional Contractor FALL 2014 by The Warren Group

THE PROFESSIONAL

FALL 2014

A Publication of the Associated Subcontractors of Massachusetts, Inc.

RETAINAGE is Now the Law!

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FIRE PROTECTION

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THE PROFESSIONAL

A Publication of the Associated Subcontractors of Massachusetts, Inc.

cover story

16 5 Percent Retainage Is Now the Law

18 Highlights of Massachusetts’ New Retainage Law

features

04 PRESIDENT’S VIEW A Time to Celebrate

05 ASM CALENDAR

06 FINANCE Six Business Tax Breaks Worth Considering – if Congress Lets You 08 DIVERSIFYING YOUR TEAM A New Approach to Achieving Diversity in Construction 12 MEMBER SPOTLIGHT Apex Corporation

20 A NEW DAWN Shedding New Light on LED Lighting 22 TECHNOLOGY New Mobile Technologies Are Changing the Way We Work

24 19TH ANNUAL GOLF TOURNAMENT

LEGAL BRIEFS Superior Court’s Dismissal of CM’s Claim Leaves Many Questioning the ‘Risk’ on CM

30 MEMBER NEWS

14 INSURANCE Employers Need to Establish a Level Playing Field for Workers’ Comp

The Professional Contractor

PRESIDENT’S VIEW

BY RICHARD R. FISHER

Time to Celebrate!

ith 2014 just past the half-way point, it’s already a banner year for ASM and the construction industry of Massachusetts. After years of mixed, and often dismal, economic news, it’s great to see continuous improvement in construction hiring, and cranes going up in every direction, not only in and around Boston, but across the state as well. The uptick in work hasn’t improved profit margins yet, but it has brought a renewed sense of confidence for the future – which is key to a strong industry and strong economy. You could feel the confidence at ASM’s Golf Tournament – which was sold out and our most successful ever. See coverage of the event on page 24. And if economic news isn’t enough to cheer about, there’s also good news for the industry from Beacon Hill, where ASM has been right in the thick of the action over the past several months. Taking the lead with other construction industry associations, we expressed alarm earlier this year at proposed increases in unemployment insurance (UI) rates that would have increased UI taxes for most contractors by a whopping 36 percent! Responding to our concerns, the Legislature adjusted the rates, and in June passed fair UI reforms that provide significant rate relief to all employers, including contractors. We applaud their moderate approach, which is just what’s needed to give an added boost to the economy. With that issue resolved, we moved full steam ahead on another issue even more important

to the construction industry – retainage. In late spring, ASM and the AGC of Massachusetts announced a compromise on a groundbreaking bill that would cap retainage at 5 percent on private projects over $3 million, and set up a clear process that would improve project close out and speed the release of retainage. Though late in the legislative session, the bill quickly gained momentum, as legislators recognized the benefits not just to contractors, but to project owners

AFTER YEARS OF MIXED, AND OFTEN DISMAL, ECONOMIC NEWS, IT’S GREAT TO SEE CONTINUOUS IMPROVEMENT IN CONSTRUCTION HIRING, AND CRANES GOING UP IN EVERY DIRECTION, NOT ONLY IN AND AROUND BOSTON, BUT ACROSS THE STATE AS WELL. – and to the economy as well. We were thrilled when the bill was enacted by the Legislature on the last day of formal sessions, July 31 – and even more so when it was signed by Gov. Deval Patrick on Aug. 8. Now THAT’s cause to celebrate! Read more about our retainage campaign, and highlights of the new law, starting on page 16. s

Richard R. Fisher is founder and president of Red Wing Construction in Beverly. He can be reached through ASM at (617) 742-3412 or by email at president@associatedsubs.com.

The Professional Contractor is published by The Associated Subcontractors of Massachusetts, Inc. 31 State Street | Fourth Floor | Boston, MA 02109 tel 617-742-3412 | fax 857-453-4338 mail@associatedsubs.com | www.associatedsubs.com

ASM Officers

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

Fall 2014

Richard R. Fisher, Red Wing Construction Joseph H. Bodio, Lan-Tel Communications, Inc. Steven P. Kenney, N. B. Kenney Co. Inc. James B. Miller, Salem Glass Company Russell J. Anderson, Southeastern Metal Fabricators, Inc. David G. Cannistraro, J.C. Cannistraro, LLC

ASM Directors

The Warren Group Design / Production / Advertising www.thewarrengroup.com custompubs@thewarrengroup.com ©2014 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.

ASM CALENDAR OF EVENTS

Save the Date OCTOBER 6

GC Showcase Featuring the region’s leading general contractors and construction managers 4 – 7 P.M. SHERATON FRAMINGHAM

OCTOBER 27

Technology Seminar: Making the Most of Mobile Technologies in Construction Panel discussion with contractors and tech experts 4 – 7 P.M. EMBASSY SUITES, WALTHAM

NOVEMBER 17

Management Seminar: How to Turn Project Managers into Business Managers Presented by FMI, management consultants to the construction industry 4 – 7 P.M. WESTIN WALTHAM

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The Professional Contractor

FINANCE

BY LEONARD SMITH, CPA

Six Business Tax Breaks Worth Considering – if Congress Lets You

ver since the expiration of more than 50 temporary tax breaks at the end of 2013 – some aimed at boosting business activity during the last economic downturn – Congress has been working off and on to reinstate dozens of them, making them not only permanent but retroactive to Jan. 1, 2014. It’s probably no surprise, though, that most of these legislative efforts have fallen victim to political infighting over procedural details, amendment disputes, tax reform discussions and objections over the impact on future federal budget deficits. To slow things even further, Congress recessed in August for its annual summer break. But as lawmakers reconvene in September, there are a number of tax breaks that contractors and developers ought to keep their eyes on for possible revival. The action in Washington could especially pick up after the Congressional mid-term elections in November.

Section 179 Deduction

In June, the House voted to restore and make permanent the $500,000 limit (up from the $25,000 limit that it reverted to on January 1st) on the amount of qualifying expenses that businesses can write off immediately rather than having to depreciate them over a number of years as specified by Section 179 of the Tax Code. The bill included an adjustment for inflation on the new, higher limit, and would make it retroactive to the beginning of 2014. The bill awaits passage in the Senate.

Bonus Depreciation

Established during the Bush administration in 2008, bonus depreciation allowed companies to deduct an additional 50 percent of the value of an investment in the first year, on top of the regular depreciation schedule. For a time, it was expanded to allow all of an investment to be Leonard Smith, CPA, is a senior tax manager at accounting and business advisory firm Rucci, Bardaro & Falzone in Malden, Mass. He can be reached at (781) 321-6065, extension 136 and at lennys@rbfpc.com.

Fall 2014

deducted in the first year before it expired at the end of 2013. In July, the House voted to revive the original 50 percent provision and to remove the expiration date. However, balanced-budget supporters claim that the policy would cost $287 billion in tax revenues over the next 10 years.

Work Opportunity Tax Credit

The American Taxpayer Relief Act of 2012 (ATRA) extended through the end of 2013 the Work Opportunity Tax Credit (WOTC). The credit was designed to encourage companies to hire workers from certain targeted groups such as veterans. The credit had an upper limit of $9,600 per qualified veteran for taxable employers and a limit of $6,240 for tax-exempt organizations. The result can be a significant tax savings for employers – and a steady source of income for a deserving employee – if Congress decides to restore it. The recent turmoil surrounding the mistreatment of veterans’ healthcare requests by the Veterans Administration could provide extra incentive for Congress to reinstate this tax break in 2014. (Keep in mind that a tax credit is generally more valuable than a tax deduction. A tax deduction reduces the taxable income upon which a company’s final tax bill is calculated. A tax credit reduces tax liability dollar-for-dollar.)

Domestic Production Activities Deduction

The benefits of this tax break were fully phased in beginning in 2010, and with no expiration date, its provisions aren’t technically subject to congressional action any time soon. But its relevance to construction businesses makes it worth including here anyway. IRS Code Section 199 allows a deduction equal to 9 percent of income derived from “qualified domestic production activities.” Income from these activities is defined as the excess of the company’s domestic production gross receipts over the sum of the cost of goods sold that can be properly allocated to those receipts and other expenses, losses, and deductions. Examples of qualifying activities include: •• the construction of real property in the U.S. in

the ordinary course of a construction trade or business; •• engineering or architectural services performed in the ordinary course of a trade or business with respect to the construction of real property in the U.S.; and •• the lease, rental, licensing, sale or exchange of property that has been manufactured, produced, grown, or extracted by the company, including electricity, natural gas or potable water. Examples of businesses conducting eligible construction activities include residential remodelers; commercial and institutional building construction contractors; foundation, structure and building exterior contractors; structural steel and precast concrete contractors; and electrical, plumbing, heating and air-conditioning contractors.

Alternative Fuel Tax Credit

In 2006 Congress passed a bill that allows companies to receive a fuel tax credit based on the amount of propane they use as fuel in a motor vehicle. A “motor vehicle” includes forklift trucks used at construction sites, industrial plants and warehouses. Originally set to expire in 2009, and again in 2011, the credit was retroactively extended twice, and then expired again on Dec. 31, 2013. The credit amounts to cents per gallon, 1/29/09 and is claimed SullGroupTPC 3:49 on PMForm Page4136. 1

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AS LAWMAKERS RECONVENE IN SEPTEMBER, THERE ARE A NUMBER OF TAX BREAKS THAT CONTRACTORS AND DEVELOPERS OUGHT TO KEEP THEIR EYES ON. New Market Tax Credits

Introduced into law in 2003, this tax incentive was recently slated to be extended two more years as part of The EXPIRE Act, which the Senate Finance Committee approved in April. The program is designed to help fund community development projects in economically challenged areas, and has proven to stimulate construction development in surrounding blocks and neighborhoods as well. Between 2003 and 2010, the NMTC doled out $5.4 billion in funds, which generated $45 billion in investment – an approximately 8-to-1 leverage. Of course, given the current mood in Congress and its penchant for political brinksmanship, the final fate of all these business-friendly tax breaks is anyone’s guess. And the White House has expressed its opposition to making many of these tax breaks permanent, because they benefit businesses but not individual taxpayers. Once again, it comes down to a matter of wait-and-see for companies that would rather operate in a more stable and certain tax environment. s

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The Professional Contractor

DIVERSIFYING YOUR TEAM

BY SCOTT SZYCHER

A New Approach to Achieving Diversity in Construction An Interview with Nicole Richer, The Compliance Mentor Group

ith any large-scale project, federal funding is a welcome supplement to the capital that states and/or developers have to put in. That certainly applies to Massachusetts’ high-profile Green Line Extension (GLX) project, which will extend existing MBTA Green Line service from East Cambridge to Somerville and Medford, including seven new train stations along the densely-populated route. But along with federal funding comes requirements that developers, contractors and construction managers set aside 14 percent of work (including construction contracts, and project-related supplies) for Disadvantaged Business Enterprises (DBEs) – i.e., businesses at least 51 percent owned and controlled by one or more socially and economically disadvantaged individuals. DBE status often includes Minority and Women-Owned Businesses (M/WBEs). That’s proven to be a challenge in Massachusetts, which is not overflowing with certified DBE companies in the construction industry. “Right now, there are not that many different ethnicities coming into construction,” observed Nicole Richer, CEO of The Compliance Mentor Group (TCMG), a full-service diversity compliance firm that helps construction companies improve their workforce diversity and inclusion of disadvantaged businesses. “The companies or individuals coming into the industry are trending towards construction management rather than the building trades.” An 18-year construction industry professional and diversity services specialist, Richer knows the construction industry well; she served as a project manager on several large-scale, high-profile city projects from 2008-2012 that required minority hiring targets. As a woman and minority herself, Richer saw the need to bring more diversity into the construction industry and that was the catalyst for launching TCMG and her signature youth mentor program, the Construction Mentor Program (CMP). Since implementing the CMP in 2008, TCMG has partnered with schools, developers, construction managers, trade-contractors, unions and public agencies. “Our approach is highly collaborative, communi8

Fall 2014

ty-based and focused on lasting solutions with meaningful impact for all stakeholders,” she said, noting that it’s often subcontractors who end up carrying the load when it comes to meeting minority hiring targets. “During the recession subcontractors diversity efforts were slowed and companies were running lean.” Meeting diversity workforce goals is often challenging for subcontractors. But Richer’s firm is trying to help subcontractors, and the industry in general, meet the challenge without relying on quick fixes. “There’s no magic wand that’s going to fix this (lack of diversity) overnight,” she said. “It’s a process, and all the stakeholders need to be engaged.” TCMG’s strategy goes beyond simply monitoring and reporting minority hiring efforts and workforce requirements. Richer saw a way to benefit all stakeholders – owners, construction managers and subcontractors – as well as future members of the construction industry and the

schools educating those young men and women. “We want to effectively enhance and sustain compliance levels on existing and future projects. This means helping build a stronger future workforce in the construction industry and building trades by engaging the young women, minorities and city residents in construction while still in school,” Richer said. She strongly believes that to truly solve this workforce development problem, young people need exposure to the construction industry before they’re out of school. The CMP program introduces high school seniors and post-secondary school students to the construction industry through the use of authentic learning experiences and teachable moments on construction projects with industry professionals. “When I speak with subcontractors, they tell me they want young people who are competent, eager and interested in construction,” she noted. “But many

students are unfamiliar with the career opportunities within construction, and simply ignore the industry, and more specifically, the building trades. Through the Construction Mentor Program, we work to create links and sustainable relationships between today’s youth, the schools they attend, and the hundreds of professional subcontractors working on construction projects.” “Other outreach programs most often are a half-day site tour, which can be a good start, but not enough exposure for students to get a complete understanding of construction, or enough time to identify which students are truly interested in the profession,” said Richer. The CMP is implemented in three phases: group learning, job shadowing and individual mentoring experiences over nine months that coincide with the student’s academic year. In addition, to get students engaged in construction industry careers, and gain critical hands-on industry exposure, continued on page 10

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The Professional Contractor

Diversity in Construction continued from page 09

For more information on the services of The Compliance Mentor Group, contact Nicole Richer CEO, at clientservices@tcmentor.com

Richer has set up her mentoring program to include career exploration experiences, workforce readiness/networking skills and academic enrichment. The mentoring program offers multiple benefits for construction companies, as well. It allows industry leaders to be a part of a long-term strategic workforce development effort that creates pathways of opportunities for young people who live in urban communities. The program also allows companies to get a firsthand look at a talent pool they may have overlooked, and can be seen as a “best faith effort” to meet the workforce diversity goals set forth by major cities like Boston. For the students, there are multiple benefits. They get an inside look at the realities and opportunities associated with construction projects. They develop character-building skills, as well as the academic and technical competency skills required to pursue careers in the industry. In addition, they can see what employment opportunities a company may have; and if that company is looking to hire someone at the entry-level, the students in Richer’s program often have the inside track to that job through the relationships with their mentors. Her mentor program, which has included 75 students from 2008-2014, has had some great successes to date, including a female minority student with skills in computer aided design (CAD) from the Benjamin Franklin School of Technology who was hired by her mentoring electrical subcontractor to assist in tracking and posting daily field changes. Other students have leveraged their networking and workforce readiness skills from the

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program and have been hired by industry companies, or gone on to pursue higher education degrees. “Just like any other industry, networking is critical for success in construction, and through the CMP program, students have the opportunity to meet successful construction professionals in an encouraging and supportive environment,” Richer noted. As for the companies participating in Richer’s program, it’s been a resounding success. “The companies partnering with TCMG in the CMP program connect to a different demographic of potential workforce talent; sometimes that leads to employment and capacity building opportunities, and other times it continues to break down barriers,” Richer said. Just as mentoring motivates young people, it also serves as a welcome addition to seasoned employees’ routines. “Once trade professionals see that some of these kids are like their own kids, it breaks down walls. Guys who are really good at their craft like teaching the tricks of the trade to others,” Richer observed. For the most part, The Compliance Mentor Group has been hired by developers and owners who realize the value that a diverse workforce can bring to their projects. “When it comes to urban projects, even ones that clearly benefit the surrounding community, developers face criticism that the people working on the projects don’t resemble that community,” Richer said. “My program helps companies identify young people who are talented, workforce ready, and come from diverse backgrounds, allowing companies to make progress toward their diversity goals, and gain support from community groups.”

Of course, this program is just one tactic in the larger struggle to diversify the construction industry workforce. Boston Mayor Martin Walsh’s Building Pathways program (a pre-apprenticeship program providing construction career opportunities to lowincome Boston residents) has already made major strides in connecting young people to opportunities in the construction industry, with over 100 pre-apprentices having graduated from that program. But the types of workforce diversity changes needed to consistently meet municipal and federal goals will take a consistent, long-term effort – one that Richer plans to address. Her next step is the launch of a Construction Exploration Program in conjunction with the GLX project, where teachers and students will learn about the many facets of this large transit project as a case study. “Students and educators can expect to meet architects, builders, engineers, technicians and managers working on the GLX project, all of which contributes to the learning objectives of the program: career exploration, workforce readiness and educational enrichment,” Richer explained. “With the billions in projects the MBTA has in the pipeline, the need for young, talented workers to meet today’s workforce challenges will become paramount in the years to come.” Meeting that need will take work, but it is work that Richer relishes. And she’s just getting started. s Scott Szycher is the membership, communications and marketing manager at ASM.

Teamwork We take a collaborative approach when we take on a project. Our project managers and skilled craftspeople partner with general contractors, owners, architects, and engineers to achieve outcomes that make us all proud. We know our best work is always the result of teamwork; and we appreciate the opportunity to be part of the team. Corporate Headquarters: 116 Hopping Brook Road Holliston, MA 01746 (508) 429-8830

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The Professional Contractor

MEMBER SPOTLIGHT

BY SCOTT SZYCHER

Apex Corporation 50 Years Strong

Sacco executives Tony, Marc and Philip Sacco.

ifty years in business is a long time. Tony Sacco would know, as 1964 was the year his father Felice Sacco started Apex Corporation (Apex). “Even before he started Apex in Quincy, my father (Felice Sacco) was well known within the construction industry in the Boston area,” said President and CEO Tony Sacco, who, with his brother Philip (vice president/treasurer), now run the family business, along with Tony’s son Marc (vice president of operations). “He was a sheet metal worker who had worked for numerous companies on some of Boston’s premier buildings, and was hired to start and operate an HVAC and sheet metal shop division for both a roofing company and a general contractor,” Sacco said. “When both his partners closed their primary businesses through retirement, Felice decided to start Apex Corporation.” Apex quickly became an established name in subcontracting circles, working for powerhouses like Thomas Gallagher (now known as TG Gallagher Mechanical Contractors), and cultivating key relationships. Now a third-generation family-owned company, Apex has been doing a lot of HVAC projects where the focus is on air distribution and ventilation. As part of the focus, Apex has a high concentration in the restaurant space, where the grease, smoke and odors from cooking present challenges not found in most commercial office buildings. They have also established a reputation over the decades for their work on schools, including the 12

Fall 2014

Apex works on the new Staples store in Boston.

HVAC design of the Whitman-Hanson Regional High School and HVAC installation at the Foxboro Regional Charter School, where they also served as general contractor, as well as other public projects that include Boston City Hall, the Third Harbor Tunnel, and significant work for Massport. “It feels like we’ve been at the airport for as long as I can remember,” Sacco quipped. They are currently doing work on the Government Center MBTA station in downtown Boston. Clearly, Apex isn’t afraid of big, complicated jobs that would intimidate many seasoned firms. Sacco insists that’s been part of his company’s and his family’s philosophy for years. “We like hard jobs; it weeds out the competition,” Sacco explained. “We’ve got mechanics working for us who’ve been here for 30 years, and they like challenges.” Apex’s success on challenging projects is one of the qualities that helps distinguish the firm in a crowded marketplace. Another notable aspect about Apex is the company’s uncanny ability to bid jobs at prices that always produce a profit, while delivering quality work for building owners and general contractors. “We don’t run financial losses on our jobs, and we don’t take jobs just to stay afloat,” said Sacco. “In the 1960s, there was a saying that if you had Felice Sacco’s price, you had the right price. We still operate that way.” “The decision-makers know that you need the right people on tough jobs, and that’s our strength,” he continued. “Apex has continued to

have competitive pricing because of our streamlined operations and low overhead costs, plus maintaining a consistent 25- to 30-person staff for years. We could have expanded over the 50 years in business, like many others, but chose to keep it small with our costs low.” That philosophy may not work for every company, but it has certainly worked for Apex. They have done jobs all over New England. Sacco also attributes much of the company’s success to its family-run structure: “When you call Apex, a Sacco picks up the phone. General contractors rely on us for quick answers, and like that we make decisions fast.” Of course, having been in business that long means the Sacco family has seen changes in the industry, not all of them for the better. Apprenticeships used to be a staple of the construction industry, but that’s changing, according to Sacco. “Companies aren’t training their apprentices well these days; I think they see it as too costly or time-consuming,” he said, adding that Apex doesn’t fall into that category. “When an apprentice leaves our program, he can handle numerous aspects of the HVAC trade.” Apex’s experience and multi-faceted trade expertise has helped land the company in an enviable spot: They have trusted industry partners asking them to bid on jobs. They don’t bid on jobs where they can’t leverage their competitive advan-

tages; and they don’t take every job that’s offered to them. “We do not just bid to every contractor bidding a project, as it may hurt the general contractors or mechanical contractors where we have long-standing relationships,” Sacco said. “These close relationships help us when the bids are awarded.” Apex joined the Associated Subcontractors of Massachusetts (ASM) in 1990 on the recommendation of a fellow member company, and the Saccos share ASM’s belief in the power of networking to maximize construction industry success. “A lot of my father’s earliest projects were the result of the relationships he had, including his relationship with Bill Strickland of William Collins Co., and the trust that came from those relationships,” Sacco observed. Over the decades, the Saccos and their team at Apex have built on those relationships and learned the keys to long-term success. As they celebrate 50 years, they are poised to keep going strong. “If you want a company that prides itself on a thorough job with an emphasis on detail, we are your guys,” concluded Sacco. For more information on Apex Corporation, please visit www.apexhvac.com, or contact Marc Sacco at (781) 871-6227. s

You put building first.

Scott Szycher is the membership and marketing manager for ASM. He can be reached at sszycher@associatedsubs.com or (617) 742-3412.

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The Professional Contractor

INSURANCE

BY JAMES KERIN

Employers Need to Establish a Level Playing Field for Workers’ Comp

“The highest paid player on an NFL team is the quarterback. What you probably don’t know is the second highest paid player is the left tackle. This is because the left tackle’s job is to protect the quarterback from what he can’t see coming.”

his is the opening monologue from the film “The Blind Side,” albeit slightly paraphrased. And what that quarterback can’t see coming is pretty much the same thing employers can’t see either – a potentially devastating hit that could end a career. For the QB, the blow comes courtesy of a freight train disguised as a 300-pound linebacker. For the employer, the hit that could potentially end a promising business career comes in the form of high premiums when it comes to workers’ compensation costs. For years employers have felt the rules have been tilted to the other side because they feel they are in James Kerin, MWCA, CWCA, CPCU, is the CEO of Millenium Alliance Group, LLC, based in Sysosset, N.Y. He is a 40-year veteran of the insurance industry with extensive experience in working with clients to control Workers’ Compensation costs. James can be reached at Kerin@MillenniumAG.com.

Fall 2014

the dark as to how the system works, which automatically puts them at a disadvantage. They have been told by agents and advisers that workers’ compensation is workers’ compensation, and that there isn’t much they can do to impact the cost. They feel it is something that is not controllable, and they have no way to impact the system positively from their side. They see their costs skyrocketing and they feel helpless. But there are ways to change the workers’ compensation game in order to create a level playing field (and maybe even a home-field advantage), and it starts by using the proper techniques needed to help you control your costs and create better outcomes. We are currently in a paradoxical environment where the insurance marketplace has gotten progressively harder, prices are skyrocketing on workers’ compensation, and we are in a soft business climate where there are low profit margins and expenses continue to go up. But this doesn’t mean that the employer can’t take control of their own destiny and create better outcomes. There are a number of variables that can be worked with that can help employers reduce their cost, and it’s a multi-pronged procedure that starts with the hiring practices, particularly the implementation of pre-employment physicals to prevent hiring losses before they occur. It’s a very strong way to reduce costs. I have worked with several clients that have been plagued with prior losses because they hired people with pre-existing conditions, like bad backs or bad knees. The employees were an injury time-bomb waiting to go off, and once they did the claims exploded from a cost standpoint because the compensation payments and the medical payments were really higher than the injury itself because of preexisting conditions. The new buzzword in company hiring is “comorbidity,” which is where you are hiring an employee that is obviously overweight or has an illness (such as diabetes) which you don’t know about. And when that employee is injured, and it’s about as close to a sure thing as you can get, that claim may multiply out five to tenfold on an ultimate payout on medicals and indemnity because of the malady that pre-existed the loss. So the key to help level the playing field

and not get blindsided is to have a post-offer, pre-employment physical, and having a physician knowledgeable in occupational medicine interview the prospective employee, so you can avoid “hiring a workers’ compensation claim.” This is a tactic not to be taken lightly by employers, many of whom tend to agree to let their injured worker get examined by their friendly family physician and regret the decision down the road, when it is much too late. A great number of general practitioners will tell an employer, “Well, I did everything you wanted me to do. I’ve kept the employee out on workers’ comp and he is getting his benefits.” Unfortunately, that’s not what you want. You want to get them back to work as quickly as possible. So the second element of creating a level playing field is establishing an effective returnto-work program that will get the employee back to work faster, perhaps on limited-duty, which is going to stop the payout of a claim and have a positive impact on the all-important experience modification factor. Return-to-work can run the gamut, from bringing them in to do lighter office work to being a helper on a project. Maybe instead of hoisting 75-lb boxes into a delivery van, they are driving the delivery van. It’s an efficient way to keep the employee feeling that he is going to keep his job. They feel they work for an employer who cares, and that creates a positive culture. It instills the feeling in the worker that if there is an injury, he is not all by himself in the hands of the system. Just as important, when you have an employee returning to work and you are paying them on a limited-duty basis, it reduces the amount of money that the carrier is paying on the indemnity side of a claim, or more precisely what they’re paying him for his lost wages. So the faster you get him back on the job, the quicker you will limit both the claim and the amount that the insurance company is paying or holding against the claim and reserve, all of which could potentially increase the cost of the policy. Here’s a good example of what I am referring to. An HVAC company that we currently do business with had a severely overweight employee who was injured in the field as a boiler installer. It was determined that the conditions were pre-existing, enabling us to get some of the claim reduced through a second injury fund. When he returned to work, it was as a dispatcher in the office, which meant he wasn’t vulnerable to a second occurrence of the same injury. This allowed us to work with the insurance company in reducing the immediate loss of wages that were being paid, as well as the ultimate total payout in the amount of time they were going to pay. This action took the company’s reserve from almost $180,000 down to approximately $80,000.

Planning Ahead Long before an injury occurs, procedures have to be put in place, which includes the proper reporting of an incident when it occurs, how to get it to the carrier so it’s done in a timely manner, and not let it languish because the longer things are

incubating, the bigger the claims become. So you need to get your hands around it quickly. Once a claim has occurred, it’s imperative to work with the insurance company to make sure that the cases are not being overcharged from a cost standpoint, and that the reserves are being properly managed. This is paramount, because the employer’s reserves have a major impact on the cost of the policy, so you need to make sure that they are handled properly. As a business owner, you are hemorrhaging money unless you understand the rules of the game. And one of the major things you need to understand is the ins and outs of the premium audit. This means you need to have your payroll records easily understandable; be able to explain to an auditor in 25 words or less what you do, where you do it and how you do it; and segregate the duties of your employees so the premium calculations are appropriate and you’re not being overcharged. A premium audit process can also work to your advantage, as you may be entitled to credits. For example, in Massachusetts, beyond making sure that your business is properly classified as to what you do, there are premium adjustment credits that can be applied. In the Massachusetts Premium Adjustment Program, there is a calculation that’s done on one form, based upon your payroll records, which can give you a credit based on your average hourly wages. This is designed to set up a level playing field between higher pay-level employers, i.e. union and non-union businesses, and prevailing wage, because the unions pay a higher wage per hour. This allows contractors with higher average hourly wages not to pay inflated premiums where no additional exposure exists. Another big credit is the Construction Employment Payroll Limitation Program, where you can apply limitations to your gross payrolls that will reduce your workers’ compensation cost. Not accurately completing these forms can cause your premium to be higher than it should be, when all you need to do is the paperwork to earn the credit. A no-brainer. It’s important to make the auditor’s life as easy as possible, and he will in turn generally try to make your life easier as well. Treat them well when they show up, show them that you respect the process, show them that you are well-organized with the information you are going to give them, and have a nice package prepared for them on spreadsheets when they come in, so they can move through the audit quickly. If you’re a little disorganized and not disciplined, they will take your records and apply everything detrimentally to you by putting all of your payrolls in the highest categories, which will balloon your workers’ compensation premiums. In the end, a properly organized audit package, post offer pre-employment physicals, and the implementation of a well thought out return-to work program are three simple steps, albeit important ones, that will you to control premiums and no longer feel like you are on the ground end of a see-saw, looking up at a workers’ compensation system with all the cards stacked in its favor. And once the field is level, you’ll never be blindsided by high costs again. s The Professional Contractor

RETAINAGE Is Now the Law! BY MONICA LAWTON

On Friday, Aug. 8, Gov. Deval Patrick signed into law S.2271 as Chapter 276 of the Acts of 2014, An Act Relative to Fair Retainage Payments in Private Construction. Four years in the making, the new law represents a great victory for ASM and the construction industry of Massachusetts – and indeed, for the commonwealth! Taking effect Nov. 6, the new law restricts retainage to no more than 5 percent on all private projects over $3 million in value, and sets up a clear process and timeline for closing out a construction project and releasing retainage. The new close-out process sets a new standard for the industry, not only speeding the payment of retainage to contractors and subcontractors but also accelerating the final completion of the work and submission of all “deliverables” – which is much to the benefit of project owners as well. (Read a summary of key provisions of the law on page 18.) Monica Lawton is CEO of ASM.

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Genesis of the New Law The new law is a natural extension of the 2010 Prompt Pay Law, which was the most significant legislation in nearly 15 years affecting private construction in the commonwealth. The goal of Prompt Pay was to speed up periodic payments during the course of a project, while also accelerating the approval and payment of change orders, restricting pay-if-paid payment terms and providing the right to suspend work for nonpayment. The Prompt Pay Law did nothing, however, to address the last and most difficult payment to collect on a private project – “retainage” – i.e., earned funds that are held back from every payment to contractors and subcontractors to assure the work will be completed to the owner’s satisfaction. The problem with retainage is that the amount withheld – typically 10 percent – is too much, and

it is held too long – typically, for many months after a project is complete and the owner has moved in. The 10 percent holdback for retainage puts a severe strain on cash flow, particularly for subcontractors, while essentially providing free financing to project owners. Less than two months after the Prompt Pay Law took effect in January 2011, the Associated Subcontractors of Massachusetts filed legislation to address the problem of retainage.

Path to Compromise Originally, it was a simple bill, calling for a cap of 5 percent on retainage, and release of retainage within 30 days of substantial completion. But it met with heavy resistance from the outset, from general contractors, architects, owners and developers groups, and the bill died at the end of the legislative session in 2012. ASM re-filed the bill in January 2013, and at a public hearing in July, Labor & Workforce Development Committee Chairs Sen. Dan Wolf of Harwich and Rep. Tom Conroy of Wayland urged the parties to try to resolve their differences. Heeding that request, AGC of Massachusetts in August 2013 contacted ASM to express willingness to work together in a good faith effort to achieve consensus. Over the next 10 months, teams from both sides engaged in negotiations that were at times challenging, but emerged in early June of this year with a classic compromise in which both sides made significant concessions, but still achieved their main goals. For ASM, the compromise preserved the core goal of limiting retainage to 5 percent; for AGC, the bill now included an extended, clearly defined close-out process with incentives to complete all final work before retainage is released.

nizing it would be a benefit not just to contractors, but to the economy, as funds tied up in retainage would now become available for businesses to spend and invest in growth. We extend a special thanks to Sen. Michael Rodrigues of Westport (Senate sponsor of the bill), Sen. Dan Wolf of Harwich, and Rep. Tom Conroy of Wayland, who each played a very critical role in moving the bill forward in the past six months. We also express our appreciation to Senate President Therese Murray of Plymouth and House Speaker Robert DeLeo of Winthrop, and their respective chairs of Ways and Means, Sen. Stephen Brewer of Barre and Rep. Brian Dempsey of Haverhill, for making the bill a priority for passage in the final weeks of the legislative session. And finally, we acknowledge the pivotal role of our own “ASM Team Retainage” – Russell Anderson of Southeastern Metal Fabricators; David Cannistraro of JC Cannistraro;

“THIS LAW WILL FUNDAMENTALLY ALTER– AND ACCELERATE – PROJECT CLOSE-OUT ON MASSACHUSETTS’ COMMERCIAL PROJECTS.”

Legislative Journey Although it was late in the legislative session, the compromise bill quickly gained support and momentum on Beacon Hill. Despite strong, last-minute opposition from commercial real estate groups, it was enacted by the Legislature on the last day of formal sessions – July 31 – and laid on the governor’s desk. There it met with even heavier opposition, but also with an outpouring of calls and letters from the construction community urging the governor to sign the bill, which he did, two days before the deadline to act. Massachusetts now becomes the 30th state to address the problems of retainage in the private sector by statute – but only the 10th to cap retainage at 5 percent on private work. It is an extraordinary achievement! It happened not only because S.2271 was a fair and reasonable bill, but because of the extraordinary team effort to reach the goal, which was led by ASM in partnership with the AGC of Massachusetts but also involved 10 other industry associations, 17 trade unions, hundreds of companies and thousands of individual company owners and employees. Even more important to our success was the support of key legislative leaders who championed the bill in the House and Senate and urged their colleagues to support it – recog

Richard Fisher of Red Wing Construction; Steven Kenney of NB Kenney; Mac Lynch of William F. Lynch Co. and Scott Packard of Chapman Waterproofing – who took part in the compromise negotiations with AGC of Massachusetts, and ASM Counsel, attorney Carolyn Francisco of Corwin & Corwin, who authored the bill text, together with counsel for AGC. Of course, it would not have happened at all if our colleagues at AGC did not step forward in August 2013, offering to work toward consensus. Exactly one year later, ASM and AGC join together in celebrating our success not only in reaching compromise, but achieving this milestone legislative victory! Chapter 276 of the Acts of 2014 takes effect in 90 days, on all new contracts signed after Nov. 6, and with it begins a new era for commercial construction in the commonwealth. In the words of construction attorney Stan Martin, “This law will fundamentally alter – and accelerate – project closeout on Massachusetts’ commercial projects.” That was exactly the goal! We trust that those who have concerns about this legislation will one day recognize the benefits. s The Professional Contractor

NEW LAW

BY CAROLYN M. FRANCISCO, ESQ.

Highlights of MASS New Retainage Law G.L. c. 149, sec. 29F

s counsel to the Associated Subcontractors of Massachusetts, we were pleased to represent ASM in negotiations with the Associated General Contractors of Massachusetts that resulted in a groundbreaking compromise on retainage legislation. We were even more pleased to report that Gov. Deval Patrick signed the compromise bill, S.2271, into law on Aug. 8 as Chapter 276 of the Acts of 2014, An Act Relative to Fair Retainage Payments in Private Construction. Following is a brief guide to the key provisions of the new law, which is codified at G.L. c.149 §29F.

What Does the New Retainage Law Cover?

The Retainage Law is a companion to the Prompt Pay Law (G.L. c. 149, sec. 29E), which was enacted in 2010. The Prompt Pay Law addresses periodic payments, change orders, pay-if-paid payment terms and the right to suspend work. The Retainage Law covers the amount that may be withheld for retainage, and the process for closing out jobs and paying retainage.

Which Projects and Contracts Are Subject to the New Retainage Law?

Like the Prompt Pay Law, the new Retainage Law applies to contracts governed by sections 2 and 4 of the mechanic’s lien law (e.g., written prime contracts, subcontracts, sub-subcontracts, etc.) on private projects where the original value of the prime contract is at least 3 million; and it does not apply to residential projects of 1-4 units.

What’s Included in the New Retainage Law?

1. Retainage may not exceed 5 percent of each progress payment. 2. “Substantial completion” is defined in the law as the stage of the project where the work is sufficiently complete under the terms of the contract so that the owner can occupy or utilize the work for its intended use. Substantial completion may apply to the entire project, or a specific phase if the prime contract allows for phased construc-

Carolyn M. Francisco is a partner at Corwin & Corwin LLP, one of the only law firms in New England dedicated solely to construction law, and counsel to ASM since 1950. She may be reached at (617) 742-3420 or email cfrancisco@corwinlaw.com.

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tion. The statute includes a detailed process and responsibilities of the prime contractor and owner to establish the date of substantial completion. Once substantial completion has been achieved the owner and prime contractor must prepare the project punch lists within the time required by the statute. The punch lists must include all “incomplete and defective work items” and outstanding “deliverables” (close out documents). Punch lists must be certified as made in good faith. No later than 60 days after substantial completion the prime contractor and subcontractors may invoice for the payment of retainage. The retainage requisition must be in the form required by the applicable contract, and include a list of the items completed or corrected and deliverables submitted for which the retainage payment is sought. This list must be certified as made in good faith. Retainage requisitions must be paid within 30 days of submission. However, the time period for payment at each tier of contract below the owner may be extended 7 days longer than the time period applicable to tier above. For example, a prime contractor has 37 days to pay a retainage requisition; a first tier subcontractor has 44 days to pay, etc. Not more than the following amounts may be withheld from the payment of retainage: •• For incomplete, incorrect or missing deliverables, either the value of such deliverables as mutually agreed upon in writing by the parties to the contract; or if there is no agreement, the reasonable value not to exceed 2.5 percent of the total adjusted contract price. •• For incomplete or defective work items, 150 percent of the cost to complete or correct the item. •• For “claims” (defined as a breach of contract), the reasonable value of the claims, plus costs and attorneys’ fees if allowed in the contract. The above sums may only be withheld if the person seeking payment of retainage has received, before the date payment is due, a

7. 8. 9.

10.

11. 12.

detailed written list of the outstanding incomplete or incorrect work and deliverables, and the factual and contractual basis for the claims, along with the value attributable to each item, and such writing is certified as made in good faith. Additional invoicing for retainage as items are completed, corrected and delivered, and claims are resolved, is permitted. The prime contractorâ&#x20AC;&#x2122;s retainage for self-performed work is payable to the same extent as a subcontractorâ&#x20AC;&#x2122;s retainage is payable. So long as the prime contractor has not been declared in default of its contract, the owner may not withhold the retainage of a subcontractor for a claim that the owner asserts against the prime contractor that is not based on the performance or default of the subcontractor. Applications for payment of retainage may be submitted at least once per calendar month. Any rejection of an application for retainage is subject to the applicable dispute resolution procedures, which may be commenced within 30 days after the rejection. Payment of retainage is subject to G.L. c. 149, sec. 29E(e), which prohibits pay-if-paid payment terms except in two limited circumstances. Any written communications required under the law

may be submitted in electronic form and by electronic means. 13. Any provision in a contract which attempts to waive or restrict rights under the law is void and unenforceable. The purpose of the Retainage Law is to set a reasonable, not to exceed, limit on the amount of retainage that may be withheld; establish an organized and timely method of closing out a project; and provide a reasonable, not to exceed, time period in which retainage must paid. The amount and timing for release of retainage are not-to-exceed provisions in the law. Retainage may be less than 5 percent, or may be released sooner than substantial completion, if the contract allows. There are many more details of the new Retainage Law. The above represents some of the major, noteworthy items, and is intended as a general guide. In the next 90 days the industry will digest the new law, and contracts and subcontracts will be modified for compliance. The foregoing is intended as a general guide. It is not legal advice and should not be considered or relied upon as a substitution for consultation with an attorney. The legal and factual issues involved in any matter vary significantly from project to project and contract to contract. An attorney should be consulted with respect to the facts and law applicable to any specific construction law issue. s

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The Professional Contractor

A NEW DAWN

BY SCOTT SZYCHER

Shedding New Light on LED Lighting

ED lighting has come a long way in a relatively short time. And it’s not just the technology itself that has improved, providing better lighting while consuming less energy, thereby saving money for building owners and tenants. In recent years, the real revolution is the integration of LED lighting with the sophisticated building automation systems that are increasingly common in commercial construction. There are many LED options, however, and choosing the best solution is not a simple matter even for traditional lighting experts. Celeste Wunder is president of International Marketing Management Inc. (IMMI), a minorityFor more information on Newington, N.H.-based International Marketing Management Inc., please visit www.immiintl.com, or contact Celeste Wunder at (603) 430-1119. For more information on Automated Logic, please visit www.automatedlogic.com, or contact Stephen Melniczek at stephen.melniczek@automatedlogic.com.

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woman owned certified business that supplies industrial, medical, health care and scientific laboratory products to industries and government agencies. She has established a niche for herself as a solutions provider to building owners and electricians integrating LED lighting into their existing facilities and new development projects. “I’ve seen how the industry has moved from fluorescents to LEDs, largely due to technological innovation, and also from government-supported energy efficiency rebates, which helps shortens their payback period on the investment,” said Wunder. She possesses two things of great interest to those in the market for lighting upgrades: an extensive knowledge of the LED lighting products available by working with manufacturers both in the USA and China, and a similar knowledge of governmental support and rebates across the six New England states. She prides herself on representing only products that are UL, DesignLights Consortium (DLC), and Energy Star-certified, and thus are eligible for rebates from states with incentives in place. And that’s a real value-add for building owners weighing their lighting options. “The electricians are in a tough spot: They’re being asked to keep up with how certain LED products are enabling energy efficiency, and they’re finding themselves under pressure to use products that qualify for rebates,” Wunder noted. “And when you combine the rapidly-changing landscape of LED lighting with financial incentives that vary on a state-by-state level, it’s just not realistic to think electricians can stay on top of this.” That’s where IMMI provides critical value – Wunder personally goes into facilities to see what lighting products they’re using, and makes recommendations that combine the best in lumens, look and rebates. “I’ll do a needs analysis, then come in with the most energy saving products with the maximum rebate. With my audits, a building owner can know his return on investment ahead of time,” Wunder said. “The big problem is the utility rebates, which are governed by the states. I’ve seen people with great intentions replace 1000-watt halide lights, then get a rude awakening when they find out that retrofit wasn’t eligible for a rebate.” With that dual set of knowledge in both LED

technology and the highly variable rebate landscape, Wunder’s found herself on projects across New England, including multiple audits in Massachusetts; a hospital in Connecticut; a warehouse in Rhode Island; and even one of New Hampshire’s popular, state-owned liquor stores. She often finds herself working side-by-side with master electricians, who find themselves pleasantly surprised – and sometimes shocked – at the amount of energy savings which can be realized through LED lighting retrofits and/ or replacements.

Benefits Beyond Cost Savings Even better, when modern LED lighting technology is integrated with building automation systems – which allow facility managers to monitor and control the mechanical, security, lighting, HVAC and ventilation systems – the end results can be sparkling for building owners. Automated Logic, a national provider of building automation technology with three offices in southern New England, is known for its major lighting integration and control projects. “We’ve retrofitted many lighting panels that have become inoperable with age,” said Leo Perritano, senior sales engineer. “By reusing existing lighting panels and relays, we can reduce installation costs, and replace low-voltage interior boards with building automation and control networks.”

These devices give facility managers the ability to control lighting across a building’s entire footprint, including its perimeter, lobby area, corridors, interior offices, conference rooms, stairways and more. Frequently, occupancy sensors are in place to provide light when needed, but modern systems now leverage the use of daylight harvesting systems, which use natural light to offset the amount of electric lighting needed for a given space. The benefits aren’t just limited to better controls and reduced energy costs; they extend to a building’s workforce, as well. Academic studies demonstrate that cerebral blood flow was increased when light came from sophisticated “edge-lit” LED lighting, a technology that helps distribute light more uniformly across a fixture. Moreover, employers may find their employees in better moods, and more productive, when LEDs provide the lighting instead of fluorescents. Researchers at the Natick Soldier Research Development and Engineering Center investigated the effects of different lighting types on soldiers, and found that LED lighting in a work environment fosters positive moods, increased alertness and faster performance on visual perceptive and cognitive tasks. Between cost-savings, heightened lighting control, and a more upbeat and productive workforce, it’s no wonder that the LED revolution shows no sign of slowing down. s

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TECHNOLOGY

BY WAYNE NEWITTS

New Mobile Technologies Are Changing the Way We Work A New Type of Computing

New mobile hardware puts information and applications in your hands faster and easier. But to do so, there has to be a source that these devices can tap into for the processing and data they need. Enter cloud computing; a term surrounded by much hype and confusion but one that is really quite simple. Instead of counting on the user having the computing horsepower to display and process complex job information, all the computing work and storage is done by centralized machines built for the task.

A New Way of Working

utting information into the hands of the people closest to the action is not a revolutionary idea. When the action takes place at multiple locations and involves constantly changing conditions and participants, the flow of information becomes even more crucial. This environment is what most contractors have faced every day long before the advent of smartphones, tablets, the Internet and even computing technology in general. Today, we face something more than the emergence of a new technology. Three fundamental aspects of information management – mobility, computing, and software – are transforming together. And it is when technologies come together and reinforce each other that they have the biggest impact on the way people live and work.

A New Level of Mobility

Although relatively new to the marketplace, tablet computers and smart phones now account for a significant amount of computing. These devices not only provide users with more ways to communicate, they provide access to powerful applications and large amounts of data. Project managers, job site supervisors, and other field staff have access to more information than ever before – information they can access from wherever work takes them. Wayne Newitts is director of marketing at Dexter + Chaney®. For more information on cloud-based technologies and software for contractors, contact Dexter + Chaney at 800-875-1400 or visit www.dexterchaney.com.

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We expect to be able to deliver data and documents to each other wherever we are. We need to work together with many people from different locations but still all access the same and most updated information. So the software we use cannot be tied to any one device or operating system, nor can we hope (or insist) that everyone will load the same software on their devices. Mobility solves the challenge of access, and cloud computing provides a platform to connect everyone to the same applications and data. But dropping traditional windows-based software into a web-enabled cloud does not work. Because the way we work is changing, our software has to change. Applications that anyone can access and use from any device are defining the next generation of construction software – software that is easy to use and designed specifically for mobility and for the cloud.

Building Profits with Technology

Contractors who take advantage of these transformations in technology will improve the flow of information throughout their organization and with their collaborative partners. Done with a plan in mind, an improvement in information flow can translate to better workflow. And more efficient work translates into better cash flow.

Case In Point: Interstate Electrical Services

Interstate Electrical Services, headquartered in North Billerica, MA, is one of the leading electrical contractors in New England. Perhaps the primary reason for their sustained success is a laser focus on client satisfaction. But their commitment

to using the latest information technologies has also helped them maintain a competitive edge. Their choice of cloudbased Spectrum® Construction Software by Dexter + Chaney keeps them on the leading edge of technology and puts vital information into the hands of employees wherever work takes them. According to Steve Drouin, Director of IT at Interstate, “The fact that Spectrum is cloud-based has numerous benefits for us. With six offices throughout New England, if we have IT issues at our headquarters, operations at the other locations are not impacted. Spectrum is easier to access, easier to use, and from an IT perspective, more reliable and secure.” Interstate Electrical uses Spectrum across their business, from accounting to HR to operations. “Compared to the previous, multiple software packages we were using, Spectrum provides us with more control and more updated information, all in one software package,” said Senior Project Manager Ron Martignetti. “Anywhere work takes you, you can access all the project information you need from any computer, laptop, or tablet.” Director of Human Resources Luiza Mills points out that the advantages of Spectrum go beyond providing a competitive edge in construction operations. “It’s important for a company to provide employees with easy to use software that represents the most current technology.” According to Mills, having up-to-date technology tools is a big part of attracting new employees and retaining them. “People feel good knowing that their company is supporting them with the best tools available.” To learn more about how Interstate Electrical Services uses Spectrum technology, watch the full case study at www. dexterchaney.com/videos/interstateelectrical-services.

The Future Is Now

The window of time to take advantage of the next generation of information technologies - to create a more connected organization and more efficient jobsite - is right now. And as with everything involving technology, what is an advantage today will become a requirement tomorrow. As you explore the options for cloud computing and mobile technology, let us know if we can help. s

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12/16/10 3:53 PM The Professional Contractor 23

19TH ANNUAL GOLF TOURNAMENT

ASM Members Storm The International on Bastille Day

he forecast called for “severe weather … thunder and hail” on July 14, but fortunately the computer models were wrong, and we had a perfect summer day for our 19th Annual Golf Tournament at The International in Bolton. But storm The International we did, with more than 270 golfers coming from every corner of the state to test their skills on The International’s two championship courses, against the iconic backdrop of Mt. Wachusett. There were contests of all types to challenge the serious golfers – including a unique “field goal” challenge – but also plenty of time to simply relax, reconnect with industry friends, and enjoy the day. And with over $60,000 in gifts and prizes up for grabs, no one went home empty-handed! We extend a huge thank-you to our sponsors – all 107! – for helping to make the day a record-breaking success. And we give a special shout-out to TGA Cross, Acadia Insurance and all our major sponsors for their leadership support of this event, which provides a major source of funding for ASM’s educational and legislative initiatives. Of course, no ASM golf tournament would be complete without the presentation of the association’s annual Scholarship Awards, funded by the event, which took place during dinner and provided a fitting end to a memorable day! ASM Vice President and Golf Committee Chair Steve Kenney (far right) with his golf foursome.

Golf Chair Steve Kenney (second from right) poses with scholarship award winners Brady Greene, Fallon Greene, Tucker Plante and Ryan Donegan. 24

Fall 2014

Four Students Receive Scholarship Awards at ASM’s Golf Tournament

The excitement of the day continued right through dinner, where we presented our 2014 ASM Scholarship Awards, funded by proceeds from the event. Thanks to the generosity of our sponsors, we were able to increase to four awards this year, each at $2,000. Competition for this year’s awards was stiff, with over 30 highly qualified applicants from ASM member companies across the state. The four young men and women selected by our Scholarship Committee showed exceptional talent – all excelling in their studies, while also juggling numerous community, charitable and athletic activities – and even entrepreneurial pursuits – in their free time. The winners were Ryan Donegan, sponsored by T.J. McCartney Inc. (Nashua, N.H.), who’s currently enrolled at Carnegie Mellon University; brother and sister twins Brady Greene and Fallon Greene, sponsored by Chapman Waterproofing (Boston), who will be entering Northeastern University and the University of New Hampshire, respectively; and Tucker Plante, sponsored by Mark Richey Woodworking (Newburyport), who will be headed to Colby College. We congratulate our 2014 Scholarship Award winners and are pleased to be able to help them pursue their college dreams and future goals! s

continued on page 26

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19TH ANNUAL GOLF TOURNAMENT continued from page 25

Fall 2014

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GRAND RAFFLE

Milwaukee Valve Northstar Rentals Plumbing, Heating, Cooling Contractors Association of Greater Boston Stafford Construction Services, Inc.

Chapman Waterproofing Company New England Mechanical Contractors Association, Inc.

PRACTICE TEE Airgas East, Inc. Frank I. Rounds Company

PUTTING GREEN

COURSE BANNER NorthStar Insurance Services, Inc. Johnson Controls

LONG DRIVE BlumShapiro NECA/National Electrical Contractors Association, Greater Boston Chapter

Colony Hardware Salem Glass Company

RAFFLE E. Amanti & Son Zurich Surety

RECEPTION Alliant Construction Services Group McCusker-Gill, Inc.

LUNCH DINNER Acadia Insurance Company J.C. Cannistraro, LLC

Energy Insulation Conservation Inc. R&R Window Contractors

PIN FLAGS FIELD GOAL Corwin & Corwin N. B. Kenney Co. Inc.

Greenwood Industries, Inc. Manganaro Northeast, LLC

SCHOLARSHIP AWARDS Capone Iron Corp. ENE Systems, Inc. Front Line Inc. Royal Steam Heater Co. Southeastern Metal Fabricators, Inc. William F. Lynch Co. Inc.

PLAYER GIFT: TRAVEL BAG GOLF BALLS

TGA Cross Insurance, Wakefield

SCORE CARDS

Eastern Insurance Group, LLC Construction Division

PLAYER GIFT: TRAVEL ACCESSORIES

Central Ceilings Inc. J & M Brown Company Inc.

Acadia Insurance Company

The Professional Contractor

LEGAL BRIEFS

BY CAROLYN M. FRANCISCO, ESQ.

Superior Court’s Dismissal of CM’s Claim Leaves Many Questioning the ‘Risk’ on CM

n a Division of Capital Asset Management and Maintenance (DCAMM) CM at Risk (CMR) project, a subcontractor filed suit against the construction manager (CM) seeking compensation for additional costs the subcontractor claims to have incurred as a result of the CM’s alleged mismanagement, including the handling of design changes. The CM denied the allegations and brought a third-party complaint against DCAMM allegedly that DCAMM was responsible for any damages arising out of design changes and errors, which the CM may be required to pay the subcontractor. DCAMM moved to dismiss the CM’s claim, citing several provisions in the CMR contract which DCAMM alleged precluded the CM from maintaining a third-party claim against DCAMM. The Superior Court agreed with DCAMM and dismissed the CM’s third-party complaint, leaving it potentially on the hook for the subcontractor’s claim. In its decision, the court analyzed several provisions of the CMR contract. The court highlighted the extensive responsibilities the CM assumed under the contract, including pre-construction and construction planning, scheduling, estimating, management, coordination and most especially reviewing the design documents “for clarity, consistency, constructability, maintainability/operability and coordination among the trades, coordination between the specifications and drawings.” Although under Massachusetts common law there is an implied warranty by an owner that its plans and specifications are sufficient for their intended purpose, the court held that the implied warranty does not extend to CMR projects where the CM assumes additional duties, responsibilities and risks under the contract. The court also took note of the broad indemnity provisions in the CMR contract which obligated the CM to indemnify, defend and hold DCAMM harmless against all claims arising out of the performance of the work, regardless of whether the claims were caused, in whole or in part, by DCAMM. Carolyn M. Francisco is a partner at Corwin & Corwin LLP, one of the only law firms in New England dedicated solely to construction law, and counsel to ASM since 1950. She may be reached at (617) 742-3420 or email cfrancisco@corwinlaw.com.

Fall 2014

The court held that the indemnity provision includes any liability that might be imposed upon DCAMM arising out of the work, including the CM’s own third party claim against DCAMM. The court found that the CM’s duty to indemnify DCAMM against its own third party claim creates “an impermissible circuity of obligation.” That is, even if the CM had a right to recover damages from DCAMM for design errors, that right is offset by the CM’s obligation to repay the same damages back to DCAMM under its indemnity obligation. The CM has appealed the Superior Court’s decision. Unless the Superior Court’s decision is reversed or contractual provisions are changed, many in the industry question whether the ruling will chill bidding by CM’s of CMR public projects.

Court Strikes Down City Ordinance

The city of Quincy solicited bids for a middle school construction project. Bidders were required to certify compliance with Quincy’s Responsible Employer Ordinance (REO) which, among other things, required bidders to maintain a bona fide apprentice training program registered with the Massachusetts Department of Labor Standards, where at least one apprentice had graduated from the program in the twelve months immediately preceding the bid. A trade association of construction companies filed suit in the Federal District Court challenging the enforceability of the REO. The Massachusetts Federal District Court ruled that the apprentice training requirement of the REO was unenforceable because it was pre-empted by the Employee Retirement Income Security Act of 1974 (ERISA). The First Circuit Court of Appeals agreed. ERISA is a federal law enacted to protect employees covered by employee benefit plans. By its terms, ERISA supersedes any state law that relates to an employee benefit plan. The Court of Appeals found that ERISA specifically includes apprentice training programs in its definition of employee welfare benefit plans. The court concluded that any “state-law mandate regarding the structure or administration of such plans falls within the ambit of ERISA’s preemption provision.” The court held that Quincy’s apprentice training program requirement in its REO was such a mandate, and therefore could not be enforced as it was preempted by ERISA. s

MEMBER NEWS E.M. Duggan and McGladrey Named Among BBJ’s ‘Best Places to Work’

Plumbing, HVAC and fire protection subcontractor E.M. Duggan and financial and tax advisory firm McGladrey LLP were named to the Boston Business Journal’s list of 2014 Best Places to Work.

Nardine Bellew Wins Next Street’s Strategic Growth Plan Award

Nardine Bellew, CEO of General Safety Services, was awarded the Strategic Growth Plan Award by Next Street Financial, a venture capital and management consulting firm that aims to maximize the growth, profitability and success of small and women- and minority-owned businesses. General Safety Services Corporation provides window cleaning, fall protection and pipe support systems across Massachusetts and Rhode Island.

LAN-TEL Communications Provides Security Solutions for Boston Marathon and St. Patrick’s Day Parade

In conjunction with Motorola and the Boston Police Department (BPD), LAN-TEL Communications installed HD surveillance cameras and other equipment along Boston’s St. Patrick’s Day and marathon routes to bolster

N.B. Kenney Finishes New Wegman’s Store

Attention shoppers: N.B. Kenney Inc. has completed plumbing and HVAC work at the two-level, 80,000-square-foot Wegmans Food Market in Chestnut Hill. Despite an aggressive project deadline and significant engineering challenges, N.B. Kenney had everything in tip-top shape for the store’s grand opening.

broader security efforts for those high-profile events. The effort included 30 cameras constructed and deployed on pole-mounts for street and traffic lights, as well as on building sides, with information and video streaming into BPD’s headquarters. The equipment is still being used as BPD’s primary video management system. The Professional Contractor

MEMBER NEWS

Abbot Building Restoration’s Project on St. Joseph’s Hall in Watertown

As part of a broader renovation project, Abbot Building Restoration Co. restored the pre-cast stone and brick façade of the venerable St. Joseph Hall in Watertown. Built in 1935, the five-story hall was the former site of the Rosary Academy High School; it now consists of 25 affordable senior housing units. As part of its work on the historic building, Abbot replaced the pre-cast and the entire set of stairs; replicated and replaced the ornamental detail above one of the doors; repointed certain brick areas; repaired the precast concrete around the building’s perimeter and more.

N.B. Kenney Completes Elementary School Projects in Andover and Newburyport

N.B. Kenney Co. recently completed HVAC work on the Bancroft Elementary School in Andover, a 106,000-squarefoot facility aiming for LEED Silver accreditation. Their work included installation of a displacement heating/cooling air distribution system, emergency generator, a chiller and related ductwork. The company is also in the process of new construction at Newburyport’s Bresnahan Elementary School, including installing all the HVAC equipment and ductwork for this new 12,000-square-foot school. The local school district will seek LEED Silver certification for the building. 30

Fall 2014

Griffin Electric Completes Avalon Natick Project

Wayne J. Griffin Electric Co. has completed electric installation work at Avalon Natick, a new high-rise luxury apartment complex offering 424 units. Their work included installation of several amp services (including two 4,000 amp services), site lighting, interior lighting, emergency generators and more.

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program, which has returned over $4 million in dividends!

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on both public and private work.

ASM Membership Benefits

“In Massachusetts, there is no other organization like ASM when it comes to informing subcontractors, and protecting our rights. I can truly say it is the best organization for our company and has been a key to our success.” – David G. Cannistraro, JC Cannistraro, ASM Past President

Everything you need for business success, all in one place! To learn more about all that ASM Membership has to oﬀer, please visit www.associatedsubs.com or call 617-742-3412.