The Professional Contractor Spring 2016 by The Warren Group

THE PROFESSIONAL

SPRING 2016

A Publication of the Associated Subcontractors of Massachusetts, Inc.

Neighborhood on the Brink Bulfinch Triangle Steps out of the Shadows

THE PROFESSIONAL

A Publication of the Associated Subcontractors of Massachusetts, Inc.

14 Neighborhood on the Brink

cover story features

04 PRESIDENT’S VIEW A Symbolic Tower Project Revisited 05 BANKING Keeping Your Company Attractive to Lenders – Regardless of Economic Cycles 06 LABOR Companies Help Meet the Demand for Skilled Labor 08 INSURANCE Contractors’ Pollution Liability Insurance: Key Considerations 10 MEMBER PROFILE Interstate Electrical Celebrates 50 Years 12 HEALTH CARE Self-Funded Health Care Plans 18 ASK THE LAWYER What to Do about Jury Duty, Bereavement Leave and Sick Time

20 ACCOUNTING New Accounting Standard May Impact the Bottom Line for Contractors 22 TECHNOLOGY Report Highlights How Contractors Approach Emerging Technology 24 WORKERS’ COMP Getting a Handle on Your Workers’ Compensation Insurance 26 FACILITIES New DOE Standards on Rooftop Units to Affect Building Owners and Contractors

27 ASM NEWS & EVENTS

28 IN MEMORIAM William A. Collins 29 PROJECT PHOTO GALLERY

The Professional Contractor

PRESIDENT’S VIEW

BY JOSEPH H. BODIO

A Symbolic Tower Project Revisited

ust as this issue was going into production came the news that the massive air-rights tower project at South Station has come back to life after 10 years. Revived by Texas-based real estate development giant Hines, the project first received approval in 2006. It’s yet another sign of our booming regional economy, and the construction activity that goes along with it. The photo of the project in Banker & Tradesman and other business publications looked familiar, as it should – it was the same photo that graced the cover of the very first issue of The Professional Contractor, back in early 2007! As we begin our 10th year of publication, it seems fitting to reflect on this project that generated so much excitement a decade ago, and served as the hook to get readers to take a look at ASM’s fledgling magazine. For a time back then, the mixed-use tower project symbolized the surging economy and heady optimism for the future. But it was not long before it came to symbolize the recession, as markets crashed, financing dried up and plans for this and many other projects were put on the shelf. The years that followed were a period many of us would rather forget. In a business that is always cyclical, this was the worst downturn we had ever seen and the most difficult business environment we had ever experienced. But most of us survived – by sharpening pencils, tightening our belts, Joseph H. Bodio is founder, president and CEO of LAN-TEL Communications in Norwood. He can be reached through ASM at 617-742-3412 or by email at president@associatedsubs.com.

learning to operate “lean” and investing in new technology to gain a competitive edge. We took jobs with no margins, just to keep the doors open and workers Surge of Commercial employed. Starts Now, nearly a deon the Horizon cade later, we have come full circle. The economy has come roaring back, and the South Station project along with it. Fortunately, however, the financial markets operate differently today and lenders are more conservative. And contractors are smarter, too – staying mindful not to overextend and paying more attention to receivables. Legislation has been passed (thanks to ASM) to help with cash flow – most notably our Prompt Pay Law and 5 percent Retainage Law. So today the photo of the South Station Tower may look the same, but it will be going up in an economy that is very different, in a construction market that became more sophisticated and in a city that is being transformed in all directions, from the Seaport to the North End (see our cover story on all the activity underway in the North Station/Bulfinch Triangle district). Though none of us can predict the future, the return of the South Station Tower project is a symbol of resilience and a sign of continued optimism about our local economy and construction market, for the foreseeable years to come. We look forward to featuring the project once again in TPC, this time for the ribbon-cutting. s First Quarter 2007

Premier Issue

The Professional Contractor is published by The Associated Subcontractors of Massachusetts, Inc. 15 Court St., Suite 840 Boston MA 02108 tel 617-742-3412 | fax 857-453-4338 mail@associatedsubs.com | www.associatedsubs.com

ASM Officers

President: Joseph H. Bodio, LAN-TEL Communications, Inc. President-Elect: Susan M. Mailman, Coghlin Electrical Contractors, Inc. Treasurer: Russell J. Anderson, Southeastern Metal Fabricators, Inc. Vice President: Steven P. Kenney, N. B. Kenney Co., Inc. Vice President: Scott H. Packard, Chapman Waterproofing Company Past President: Richard R. Fisher, Red Wing Construction

Spring 2016

ASM Directors

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

©2016 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.

BANKING

BY MARK DREW

Keeping Your Company Attractive to Lenders – Regardless of Economic Cycles

e are one third through 2016 and the stock market has been on a roller coaster ride, much of the world’s economy appears to be troubled and oil prices continue to be volatile. It’s difficult to get a compass reading on where the economy is headed. However, if we look at what’s going on locally, it may make more sense. The good news is that Massachusetts outpaced the national economy in 2015. According to MassBenchmarks, “Revised data now reveal that in 2015 the state economy grew faster than the nation in all four quarters.” However, MassBenchmarks also indicated that “Leading Economic Index suggests that the state economy will continue to expand, but will grow at a more restrained pace in the first half of 2016 than in the first half of 2015.” Not great, but not bad, and certainly better than what’s going on in the rest of the world. How does the market fare for construction projects and subcontractors in Massachusetts? We can look at a survey of Massachusetts general contractors to get some opinions of what they think. According to a 2016 Massachusetts Construction Outlook survey conducted by The Associated General Contractors of America, 80 percent of respondents thought that the dollar volume of projects would be higher in 2016 than 2015. In the same survey, 75 percent of respondents thought that they would increase headcount from 1 percent to 25 percent. These responses appear to indicate a positive outlook for 2016, with subcontractors standing to benefit, as well. If this optimism is warranted, we can feel comfortable that in the short term, construction projects will be moving forward and there will be adequate jobs available. When there is work, businesses produce cash flow and bank financing is generally available to fund working capital and growth. But are commercial lenders sharing this optimism? The short answer is yes. Banks are lending money across the board. The FDIC reported a 7.67 percent increase in construc

tion and development loans and a 3.7 percent increase in commercial and industrial loans (business loans to operating companies) from 2014 to 2015 for all insured institutions. The trend is continuing in 2016. Although financing is available and banks are lending money now, what happens when an eventual downturn happens? I think we all know the answer. Construction projects will be put on hold and banks will tighten lending requirements. We saw it before in 2008, and it’s probable that we will see it again at some time in the future. We just don’t know when. A downturn could be a year, two years or five years away. Being prepared now will help your business not only grow during good times, but survive during bad times. Let’s get down to brass tacks and discuss what you can do now to keep your business attractive to lenders - not only today, but when the market cools. Focus on the balance sheet. When times are good and cash is flush, you should retain earnings in the business and increase the equity of your company. Retaining earnings also provides available cash-flow to pay debt obligations. A strong balance sheet equals a company that can withstand a downturn, and is a company that is attractive to a bank. Put controls in place now to collect receivables in a timely manner. An early indicator of a downturn is when receivables start to push out further. Not only will proper controls provide you with an indication of what is to come, but it’s better to be one of the first to get paid than one of the last, or not at all. Accounts receivable aging reports are reviewed by banks to approve and renew lines of credit. Speak to your banker and ask him/her questions. Get to know your banker and continued on page 13 Mark Drew is vice president of commercial and industrial lending at Needham Bank. He can be reached at 781-474-5978.

The Professional Contractor

LABOR

BY SCOTT SZYCHER

Companies Help Meet the Demand for Skilled Labor

T Jim Reardon President, The Peterson School

he expression “a good problem to have” certainly applies to the construction industry these days. While cranes dot the sky and the sound of heavy equipment is widespread, a significant challenge comes with this brisk activity: Contractors are struggling to find enough skilled labor to keep pace with their robust project workload. When you browse business headlines you are reminded of this dilemma. Last year an Associated General Contractors of America study reported 83 percent of construction firms were having a difficult time finding qualified craft workers, including roofers, carpenters, welders, masons, electricians and plumbers. With the torrid pace of construction activity, that is not likely to change quickly. All of the regional building trades unions are doing their part to expand their apprenticeship programs to meet the demand for highly trained, project-ready workers. And programs like Building Pathways, a collaboration between the unions and the city of Boston, is looking to address the problem long-term by encouraging young women and minorities to pursue careers in the trades. But with demand for skilled labor so high across the industry, other organizations are responding to meet the need with a focus on serving firms that don’t have a union affiliation. Once such company is The Peterson School. Best known for its decades of vocational training, including HVAC, oil and gas heat, electrical and facilities technician, and plumbing trades, The Peterson School is taking an active role in helping employers connect to their current students, as well as their graduates. Scott Szycher is the membership, marketing and communications director for ASM.

Spring 2016

“We’ve implemented a job board on our website that’s facilitating connections between employers and the labor market,” said The Peterson School’s President Jim Reardon. “We are focused on connecting these employers with our alumni and current students, who are eager to use what they’ve learned on project sites.” Reardon was inspired to focus on the job board after speaking to company heads and HR Directors during remote and onsite vocational training classes who relayed frustration about efficiently finding workers with specific skills and certifications. “For these contractors, they were receiving information from too many unqualified candidates through typical web-based hiring sites, and felt they weren’t reaching qualified workers who might be employed now, but could be available at the end of a project.” The Peterson School has access to both young students gaining skills, and experienced workers gaining new skills or keeping their certifications current. While the school has always offered job postings for its students, Reardon has allocated more resources to the effort. “While this service isn’t new, we invested time and money to improve the efficacy of the service. But still, neither contractors nor our students really knew about it,” Reardon said. “We are now proactive in making them aware of it, and promoting its use.” A quick perusal of The Peterson School’s online Job Site reveals job postings in over a dozen categories, from electrical and HVAC to plumbing and facilities and more. Every category included job listings that had been posted in the last two weeks, indicating a high level of interest among employers. Regardless of whether or not an employer is currently using The Peterson School’s training services, there is no cost to post jobs. “We consider it a positive service for the industry, employers and students,” Reardon stated. One well-known electrical company in southeastern Massachusetts used The Peterson School’s job board to identity and subsequently hire four recent graduates of the school’s basic electrical course for an apprenticeship program, demonstrating the synergy between The Peterson School’s training and job opportunities in a thriving market. The opportunity to connect construction employers to the skilled workforce hasn’t gone unnoticed by entrepreneurs, either. David Broomhead is the CEO and founder of Subease, a startup that has developed a mobile application (to be launched this summer) and website that connects contractors with skilled labor for full-time and temporary posi-

tions. Hailing from a family which owns a general contracting firm in Australia, Broomhead has a keen appreciation of the importance of finding qualified workers with the right skills for construction projects. Having spoken with contractors who confessed to posting jobs on Craigslist, he sensed an opportunity, but knew he’d need to offer something that was mobile, user-friendly and offered additional value to both employers and workers. “Contractors will be able to really drill down, and search by trade, location, availability and experience,” Broomhead said. “For some contractors on major construction projects, they’re really looking for candidates with a great skill set and experience on big jobs – and our

technology will enable them to do that very efficiently.” It’s not just employers who are intrigued by Broomhead’s concept; workers looking to capitalize on the hot construction employment market can quickly check for upcoming project work, and for educational opportunities that may lead to more lucrative assignments. To capture these workers, Broomhead has a multi-pronged strategy that includes partnering with key suppliers that consistently draw construction personnel. “Even for workers without a built-in construction network, like those coming out of the oil and gas industry, we want to connect them to work opportunities.” Subease’s website and mobile application include a functionality that will allow

applicants to list professional summaries, core skills and past experience – including pictures of completed projects and related budget information. There will also be a chat feature that allows applicants to check on the jobs to which they’ve applied. “Our goal is to provide more relevant information about job opportunities and about the workers, so that the whole matching and hiring process is faster, easier, more reliable and more transparent,” Broomhead concluded. So while the broader labor challenges remain in a robust business environment, it’s safe to say that both venerable companies and newcomers are adapting and innovating to help contractors keep their projects staffed with the right skilled labor. s

The Professional Contractor

INSURANCE

BY GREGORY G. PIERCE

Contractors’ Pollution Liability Insurance: Key Considerations

hile virtually all commercial contractors are familiar with commercial general liability (CGL) insurance, which affords protection against liability claims alleging bodily injury or property damage arising out of one’s operations, most are not aware of common limitations within a standard CGL policy relating to damage caused by “pollution conditions.” It is important to note that nearly all standard CGL policies contain some type of exclusionary language surrounding pollution. The Insurance Services Office (ISO)’s base CGL form includes what is commonly referred to as an “absolute pollution exclusion,” while many contractors’ policies are specifically endorsed to include a “total pollution exclusion.” ISO “Total Pollution Exclusion Endorsement” Form CG 21 49 09 99 states: “This insurance does not apply to … ‘bodily injury’ or ‘property damage’ which would not have occurred in whole or in part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants’ at any time.” The definition of “pollutants,” again per ISO, is provided as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste Gregory Pierce, CPA, LIA, is vice president and director of business development at NorthStar Insurance Services Inc., Needham. He can be reached at (781) 431-2500, ext. 125 or gpierce@nsins.com.

Spring 2016

includes materials to be recycled, reconditioned or reclaimed.” The bottom line is that CGL policies are generally not intended to provide coverage for bodily injury or property damage caused by pollution-related incidents. That said, the coverage gap created by exclusionary language within one’s CGL policy can typically be addressed by purchasing Contractors’ Pollution Liability (CPL) coverage, which affords protection against liability claims alleging bodily injury or property damage resulting from “pollution conditions” (defined as “the discharge, dispersal, release, seepage, migration or escape of ‘pollutants’”). There are many key considerations when seeking to purchase contractors’ pollution liability insurance; the remainder of this article will highlight some of these main concerns.

Occurrence or Claims Made Trigger CPL coverage can be afforded on either an occurrence or claims made policy form, and understanding which coverage trigger is employed is crucial to ensuring coverage responds as intended. An “occurrence” policy form provides coverage for any claim that “occurs” during the policy term, regardless of when the claim is reported. Conversely, a “claims-made” form only responds if a claim occurs and is made (reported) within the specified policy period. For example, in the instance an accident occurs during a policy period, but a resulting claim is reported after policy expiration, an occurrence form would respond, while a claims-made form would generally not afford coverage.

Mold Coverage Most standard CPL policies do not include coverage for exposures related to “mold” or “microbial substances” (e.g. bacteria or fungi) unless specifically added back via policy endorsement. A common example of a mold-related claim scenario would be bodily injury or property damage caused by a mold growth within a building’s HVAC system. If proper mold coverage is added to one’s CPL policy, coverage would likely be afforded for the cost to clean up the mold damage, renovate damaged property and/or defend suits alleging bodily injury caused by the mold growth.

Transportation Pollution Most standard CPL policies will exclude coverage for claims arising out of the “ownership, maintenance, use or entrustment to others of any auto, aircraft, watercraft or rolling stock.” Further, similar to a standard commercial general liability policy, the standard commercial auto policy form will typically contain exclusionary language surrounding the release of pollutants. As such, bodily injury or property damage claims resulting from pollution incidents that occur during transportation or handling of pollutants are typically not covered unless specifically addressed via specific endorsement for transportation pollution liability coverage on one’s CPL policy.

Non-Owned Disposal Sites Contractors, depending on specific trade, may dispose of waste or materials at various non-owned disposal sites (NODS). The environmental liability exposure associated with the disposal of materials at these sites is something

that is typically excluded under a CPL policy, but which may be added back with a specific coverage endorsement. For example, NODS coverage would generally be triggered if a contractor disposes of its waste at a non-owned disposal site which is then later deemed to be contaminated. In this instance, a contractor may incur significant defense and cleanup costs after being called in by a regulatory agency or other entity to remediate environmental damage.

Contractual Requirements Most subcontractors are very familiar with insurance-related contractual requirements such as the provision of additional insured status on a primary and non-contributory basis, as well as the provision of waivers of subrogation in favor of one’s contract partner(s). It is very important that contractual requirements are properly communicated to one’s insurance broker prior to the underwriting process, as not all CPL insurance carriers will agree to certain terms and conditions surrounding contract requirements.

Practice Policy vs. Project-Specific Policy Like most other areas of insurance coverage, CPL policies typically feature annual policy terms. That said, in many instances coverage can be structured to apply to a specific project (or handful of projects). This treatment may be useful if a contractor feels that its environmental liability exposure is extraordinarily high on one specific job, or if it is simply attempting to meet contractual requirements that are specific to one client/ project. environmental/pollution liability is a casualty exposure that many contractors tend not to address unless either they are in the business of providing environmental/remediation-related services or they work for clients that regularly require CPL coverage within contractual insurance specifications. That said, it is our view that virtually all contractors, regardless of trade, have some degree of liability exposure in this area, and would be well served to investigate this area of coverage with their agents/brokers. s

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The Professional Contractor

MEMBER PROFILE

BY LINDA GOODSPEED

Interstate Electrical Celebrates 50 Years

Pat A. Alibrandi Top left photo: Safran’s manufacturing facility in Rochester, New Hampshire. Top right: Shaffer Landfill in Billerica, Massachusetts, repurposed as a solar panel array.

Spring 2016

nterstate Electrical Services Corp. of North Billerica, which turns 50 this year, might be a second-generation family business run by a father and son team, but the extended family includes all 600 employees. “Our business and vision is predicated on people,” President James P. Alibrandi said. “We are so fortunate to have the quality of people we do. We do not take them for granted. They have made the company what it is. We are a family business, but that family unit extends throughout our company.” Interstate was founded on July 8, 1966, by Jim’s father Pat A. Alibrandi, who grew up in East Boston and learned the electrical profession in trade school and aboard ship in the Coast Guard. Interstate was not just any electrical shop – it was a merit shop, almost unheard of in heavily unionized Massachusetts in the 1960s. “Dad wanted to create a company where people could be rewarded on their individual merit, talents and work ethics,” Jim said. “It was a nonunion shop when just about all construction at the time was union-based. He was a real pioneer.” “The environment has changed significantly over the years,” Jim said. “Dad helped create an atmosphere that today allows many other nonunion companies to exist. In 1966, that was incomprehensible.”

President James P. Alibrandi

Interstate began operations in a small, rented office in Acton, and moved into larger space in Burlington shortly thereafter. In 1987, the company expanded its corporate headquarters into a modern, 20,000-square-foot office in North Billerica. “It was always my choice,” he said. “I loved working with my hands. I really enjoy construction. I like the process, building on a larger scale, the pride and accomplishment of leaving your mark behind on a facility, the excitement of the client.” Jim, one of three children, started working at the company at age 14. After earning a degree in electrical engineering from the University of Hartford, Jim joined Interstate full time in 1984, working in all aspects of the company. He was named president in 1998. Today, Interstate Electrical has offices in all six New England states. It works across all industries, including commercial, industrial, life sciences, health care, energy, education, institutional and large-scale, multi-unit residential. “We have the capability of doing a $1,000 project, coming into a facility and taking care of their lighting and power needs, to a $25 million electrical project,” Alibrandi said. The company has four divisions. Its largest division is construction and installation of electrical systems. The services group – the largest services group of any

electrical firm in New England – provides electrical service and maintenance and smaller construction. The network group provides data and telephone connectivity systems, and the controls group provides instrumentation and building controls. “Those four segments of the company are all supported with the capability of in-house design-build engineering,” Alibrandi said.

Dramatic Changes He said the electrical services and contracting field has changed dramatically in the last 50 years. “The driving factor is technology,” he said. “Technology has impacted every aspect of the industry – how we design and build buildings, electrical systems, and the equipment we use and install.” Alibrandi said Interstate will continue to expand and grow its services, and expand its geographical footprint inside New England. He said expanding outside New England is also possible through client relationships. “As clients expand or relocate, and provide opportunities for us, we will examine those opportunities in those regions, evaluate the market and consider moving into that region,” he said. “We take it one step at a time, and focus on building relationships.” Pat Alibrandi, who holds the title of chairman, is not involved in the dayto-day operation of the company, but remains a “great sounding board” for his son. “I’ve heard many horror stories about family businesses, but I have to say from my perspective, it’s been a pleasurable, rewarding experience,” Jim said. “It happened that way because of the structure Pat laid out. He provided me the opportunity; proving my capability and worth to the company was up to me personally. He was hands-off when it came to my job or assignments. Quite honestly, the business always came first. If I hadn’t been able to cut it, I wouldn’t have been able to take over.” Jim says his philosophy will be the same with any future third generation, which, he noted, is still a long way off. In the last 50 years, there have been many boom and bust cycles, many companies that have come and gone.

Alibrandi said the secret to Interstate’s success is a combination of their services, clients and people, while remaining true to the company’s core values. “You have to be driven. You have to be open-minded and willing to accept change,” he said. “What you did yesterday is only as good as yesterday. You have to constantly plan for the future and communicate with all your people. We’ve been on the forefront of change and technology. We’ve diversified substantially as a company. We now have six offices, a corporate office and five branches. We’ve expanded our client base and services from construction, to service, then into network, then into controls. It allows us to integrate ourselves into many different projects.” ‘Everyone in construction is focused on low price, that’s not what we are about. Our goal is to exceed our client’s expectations through professional communications and by having a high skill set of people to perform the work and deliver a quality installation. We work on building relationships through the services we provide.” s

Interstate’s Notable Projects •

Wyeth/Pfizer Pharmaceutical

•

Astra Zeneca

•

Autodesk (First of its kind in Northeast for IPD and BIM)

•

University of Hartford (IST project)

•

Pheasant Lane Mall

•

Trip Advisor headquarters

•

Manchester, New Hampshire Schools – six buildings

•

Manchester Airport Expansion

•

Concord State Prison

•

TJX

•

Kendall Square

•

Proctor & Gamble

•

Brown University

•

Storrs Center

•

Safran (Rochester, New Hampshire)

•

Shaffer Landfill PV Field

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The Professional Contractor

HEALTH CARE

BY PAUL J. LANDRY

Self-Funded Health Care Plans: What They Are and Who Should Consider Them

ealth care costs, and consequently health benefit costs, have been growing at an alarming rate in recent years. Employers have seen their health insurance premiums increase by 119 percent since 1999. Total health insurance costs for employers could reach nearly $850 billion by 2019, and according to PwC’s Health Research Institute, employer costs are projected to increase 6.5 percent in 2016. Unpredictable and uncontrollable health insurance rate increases are having a very serious financial impact on many employers and employees.

Why are costs rising so high, so fast? Several factors have contributed to climbing health care costs over the past decade, including an aging population, the dramatic rise of prescription drug costs, less competition among insurance companies and increased utilization of health care services, including breast cancer screenings, immunizations for children and diagnostic procedures that provide important, actionable information for health care providers and patients.

What are self-funded health plans? An employer has a self-funded (or selfinsured) group health plan if the employer assumes the financial risk associated with providing health care benefits to its employees. Rather than paying fixed premiums to an insurance company (which normally assumes the financial risk), the employer pays for medical claims out of pocket as they are incurred. An employer may choose to offer a self-funded health plan for a number of reasons: •• Instead of trying to purchase a “one size fits

Paul J. Landry is the director of Axial Benefits Group, which offers employee benefits – including self-funded health care plans – to a variety of commercial clients across New England. He can be reached at 781-2731425 or paul.landry@axialbg.com.

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all” plan, self-funded plans can be customized to fit the needs of an employers’ workforce. •• Employers with self-funded plans control the health plan cash reserves, allowing them to maximize interest income. •• Self-funded coverage is not prepaid, as it is when the employer pays premiums to an insurance company. Therefore, companies that self-fund their health plans may have improved cash flow. •• Self-funded plans are not subject to state health insurance regulations and benefits mandates. Instead, these plans are regulated by federal law. •• Employers with self-funded plans are not subject to state health insurance premium taxes. •• Employers can contract with the providers or a particular provider network that will best meet the needs of its employees.

Employee rights under a self-funded plan Self-funded health plans are regulated under the federal Employee Retirement Income Security Act (ERISA), rather than state law as insured health plans are. They fall under the jurisdiction of the U.S. Department of Labor. Federal regulations require the employer to provide employees with a summary description of the health plan and certain other documents related to the plan. Employees can also request a copy of the plan document that determines what benefits are available, and how they get paid. Self-funded group health plans are also regulated by other applicable federal laws, including: •• The Health Insurance Portability and Accountability Act (HIPPA) •• The Consolidated Omnibus Budget Reconciliation Act (COBRA) •• The Americans with Disabilities Act (ADA) •• The Pregnancy Discrimination Act •• The Age Discrimination Employment Act •• The Civil Rights Act •• The Impact of Health Care Reform Many health care reform regulations apply

to all group health plans, regardless of whether they are fully insured or self-insured, but self-insured plans are exempt from certain provisions of health care reform. Reforms that do apply to selfinsured plans include: •• Dependent coverage until age 26 •• Preventive health coverage without cost-sharing (grandfathered plans are exempt) •• No rescissions of coverage, except in the case of fraud or intentional misrepresentation of material fact •• Improved internal claims and appeals process and minimal requirements for external review (grandfathered plans are exempt) Reforms that do not apply include: •• Essential health benefits package •• Premium rating restrictions •• Review of premium increases Because a company on a self-insured health insurance plan assumes the financial risk of providing health care benefits to its employees, the

company can either save or lose money (as opposed to a traditional health insurance plan) depending on the level of claims incurred by its employees. As a result, having employees behave as wise health care consumers affects the employer’s ability to keep benefits high and costs low. Some ways that employees can help contain costs include eliminating unnecessary visits to the doctor; implementing healthy living habits; being proactive about preventive care; following prescription drug directions precisely; and using in-network providers if the company has a Preferred Provider Organization (PPO) or Point-of-Service (POS) plan. Choosing the right health insurance plan for your business is not easy and requires careful consideration of many different factors. It’s a decision best made with the help of experts. Talk with an expert to see if a self-insured plan would be a good option to consider for your business. s

You put building first.

Banking continued from 5

develop a relationship. Find out how well the bank is doing financially. Ask how the bank worked with customers in the 2008 recession. Check out public information available on the FDIC website (fdic.gov) about your bank. If you have any loans, make sure that you understand any loan covenants and how a default is triggered. Check to see if you have been in compliance with all agreed upon covenants, and stay in compliance. When a bank wants to discontinue with a customer, they can do so by exercising rights in your loan agreement if you have defaulted on any covenants of the loan. Taking measures today will help ensure that your subcontracting business is not only bankable as market conditions change, but will also strengthen the company to withstand a downturn. s

Whether you’re a plumber, an electrician or a general or specialty contractor, you need a risk plan developed by an agent who puts your needs first. As one of the largest independent insurance agencies in New England, we can design a competitive and comprehensive insurance plan just for you. And when you feel secure, we do too. For an in-depth review of your program, call Eastern Insurance Group at 508-946-3287.

insurance

We put you first.

Eastern Insurance Group LLC easterninsurance.com

The Professional Contractor

Neighborhood on the Brink Bulfinch Triangle Steps out of the Shadows

Clockwise from top: Marr Crane & Rigging provided a construction elevator for the exterior of The Forecaster Building (121 Portland St, Boston) while sister company Isaac Blair & Co. provided lateral bracing throughout the building’s interior basement level. Marr Scaffolding’s (South Boston) Mast Climber division supplied over 20 mast climbers for façade work on One Canal at North Station. John F. Shea Company, Inc. (Mattapan), which has been providing professional roofing services since 1917, is wrapping up work on the Lovejoy Wharf and Pavilion projects neighboring North Station, Boston.

Spring 2016

Nearly 8 million square feet of development are on the way in the North Station, West End and Government Center sections of Boston in the next few years.

Bulfinch Triangle Pending Projects One Canal 320 luxury apartments Developer: Trinity Financial Completion date: March 2016 Forecaster 121 80 loft condos Developer: Pizzutti Development Completion date: fall 2016

By Steve Adams Boston’s Bulfinch Triangle was a neighborhood frozen in time: a collection of century-old mid-rises containing dusty storefronts, second-tier office space and half-empty sports bars. Urban renewal schemes wiped the slate clean in the nearby Government Center and West End neighborhoods but left the Bulfinch Triangle untouched. Then the Big Dig opened it up to new development possibilities. “This was a dark, dank, seedy area,” recalls Abby Goldenfarb, a vice president at Boston-based developer Trinity Financial. “It was not an area you would go in unless you were coming out of a Bruins game.” Long gone are the elevated MBTA Green Line and Central Artery highway that bathed the neighborhood in shadows and noise. A two-lane bicycle track is being built down the middle of Causeway Street. Cutting-edge office space and luxury apartment towers are set to rise to the north and south. Minus the harbor views, but with better public transit, Bulfinch Triangle starts to look a lot like the Seaport District

Boutique hotel 104 Canal St. 90 rooms, 47,355 square feet Developer: Somnath Hospitality of Woburn Status: BRA-approved Workforce housing and hotel Parcels 1B and 1C (Causeway at Beverly Street) 239 apartments, 220-room hotel Developer: Related Beal Status: BRA-approved North Station Office Submarket Inventory: 2.5 million square feet Vacancy rate: 2.6 percent Asking rents: $37.50-$40.25 per square foot Source: Avison Young

continued on page 16

The Professional Contractor

From Seedy to Sizzling continued from page 15

of a decade ago. Think Fort Point before the glassy office towers began rising on the waterfront. “There was always good (office) demand but right now, with the amount of residential that’s going in, it’s a really interesting and hot submarket that we really like,” said Robert Hawkins, director of asset management for KS Partners of Woburn, owner of a 60,000-square-foot office building at 225 Friend St. that is 100 percent occupied. Multibillion-dollar mixed-use projects being developed by Boston Properties and HYM Investments at North Station and Government Center will bring millions of square feet of class A office space to the area, but for now, availabilities are scarce. Asking rents for the neighborhood’s 2.6-millionsquare-feet office market average in the high $30s, according to research by Boston-based brokerage Avison Young, with some properties topping the $40 mark for the first time. “It has a funky, down-and-dirty type of feeling, which is what lots of the tech companies like,” said Karyn McFarland, a principal for Avison Young, whose team recently completed 35,000 square feet of office leases in the neighborhood. Online ad manager Pixability relocated last December to 77 North Washington St., while software developer Projector PSA Inc. leased 8,175 square feet at 84 Merrimac St. Pixability sprang from the Cambridge Innovation Center incubator in 2013 and scouted properties in Cambridge and the Seaport before choosing more affordable office space at 123 North Washington St. After outgrowing that space with plans to hire dozens more employees in Boston, it recently leased nearly 14,000 square feet at 77 North Washington St., a nine-story office building overlooking the Greenway. “We’re working with YouTube and the top advertising agencies, and we’re going to be in a brick-and-beam building juxtaposing history and ultra-modern technology,” Chief Marketing Officer Rob Ciampa said. “It’s an environment people love to work in and it helps us with recruiting.” Pixability joins a cluster of marketing, public relations and ad tech companies in the neighborhood including 451 Marketing, AMP and CTP. “To me, it’s one of Boston’s best-kept secrets,” Ciampa said. Newton-based Boston Development Group has owned four office and retail properties in the neighborhood for over a decade: 98 North Washington St., 205 Portland St., 239 Causeway St. and 160-164 Causeway St. “We started (acquiring properties) when we realized the elevated T was coming down on Causeway Street,” CEO David Zussman said. “(Rents) have increased very recently. We offer a lot of brick-and-beam space, which is appealing, and the transportation is fabulous. With the retail that Bos16

Spring 2016

ton Properties and the Jacobs family are doing at the Garden, it’s going to change the whole area into a community.”

Investment Properties In Demand But Scarce While properties tend not to turn over frequently, the neighborhood’s transformation has attracted recent notice from out-of-state investors. “The North Station area feels very much like the Seaport did five to seven years ago,” said Ben Sayles, a director at HFF Inc. in Boston. “You get the sense that great things are around the corner.” Bridgeton Holdings, a New York private equity fund, acquired the 70-room Holiday Inn Express building on Causeway Street in early November for $24.5 million. CEO Atit Jariwala said Bridgeton has put in offers on half a dozen properties in Boston recently and is actively pursuing two more. Office renovations are one option, but many of the properties have redevelopment potential. Woburn-based Somnath Hospitality offered one approach to adding value on a tiny lot, acquiring a one-story vacant bank branch on Canal Street for $3 million and gaining the Boston Redevelopment Authority’s approval in 2014 for a 90-room boutique hotel rising 15 stories. The project has yet to break ground and Somnath executives could not be reached for comment. Zoning regulations in the neighborhood allow development up to 80 feet by right and up to 100 feet if applicants go through a large project review, according to Lauren Shurtleff, a senior planner at the BRA. “There are a lot of one-story buildings and the neighborhood is great for transit,” Shurtleff said. “It’s the right place for some density, but density respecting the historic fabric of the Bulfinch Triangle.”

Residential Projects Will Benefit Retail Approximately 1,800 residential units are proposed, approved or under construction in the West End, North Station, Bulfinch Triangle and Government Center neighborhoods in projects sponsored by Equity Residential, AvalonBay Communities, Boston Properties, Related Beal, Trinity Financial, HYM Investment Group and Pizzuti Development. The next wave of residents arrived in March, when moveins start at Trinity Financial’s 320-unit One Canal apartment complex. Agreements are in hand for 20 percent of the loft-style condos at Pizzuti Development’s Forecaster 121 on Portland Street, according to Laura Pizzuti, a partner with Pizzuti Development. Built as a conversion of the Forecaster raincoat factory, the condo building has been pre-selling units at an average price of $950 per square foot, Pizzuti said. Completion is projected for fall 2016.

“Our family began investing in the neighborhood over 30 years ago and it’s been amazing to watch the transformation, from the Green Line overhead coming down to all of the properties being built,” she said. HYM Investment Group late last year filed final designs with the BRA for a 45-story, 486-unit apartment tower at the Government Center Garage redevelopment site. “There are the move-ins from the suburbs and there are the young residents with a tech focus,” said Rosalind Gorin, president of Boston-based developer H.N. Gorin, which owns a pair of properties in the district. “We’re seeing this in the Innovation District, and I suspect we’re going to see it in the Bulfinch Triangle.” The infusion of full-time residents is likely to generate more demand for retail and fill in the dwindling ranks of vacant storefronts. “The office space is 9-to-5, five days a week, and you really need residential to have more activity in retail,” Gorin said. s Steve Adams is associate editor with The Warren Group, publisher of The Professional Contractor. He may be reached at sadams@thewarrengroup.com.

Some of the ASM member companies that have done work in the North Station/Bulfinch Triangle area recently (listed alphabetically):

• Cannistraro • Chapman Waterproofing • E.M. Duggan • J.C. Higgins Company • J.M. Electrical • John F. Shea Company • Marr Companies • Pavilion Floors • Southeastern Metal Fabricators • United HVAC

WORLD CLASS. LOCAL TOUCH.

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The Professional Contractor

ASK THE LAWYER: WHAT TO DO ABOUT JURY DUTY, BEREAVEMENT LEAVE AND SICK TIME “Ask the Lawyer” features questions that have come in recently on ASM’s “Legal Hotline.” Following are several employment-related questions relevant to all employers. We want to thank attorneys David B. Wilson and Catherine E. Reuben of the employment law firm Hirsch Roberts Weinstein LLP for their helpful responses.

ASM’s Legal Hotline is a free service for ASM members. Employment-law questions are answered by Attorneys Wilson and Reuben of Hirsch Roberts Weinstein LLP, while construction law questions are answered by partners at the law firm of Corwin & Corwin LLP, counsel to ASM. Have a legal question? Call ASM at 617-742-3412. DISCLAIMER: Information provided in this column or through the ASM legal hotline is for educational purposes only. 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. An attorney should be consulted with respect to the facts and law applicable to any specific legal issue.

Q: What is the law for jury duty? What do we need to pay an employee that has to sit on a jury?

medical issues such that sick time or other types of leave could come into play.

A: Under Massachusetts law, you must pay the employee their regular wages for any work missed during the first three days of service. This requirement applies to full-time, part-time and casual employees. After the third day, you are not obligated to pay for time spent on a jury, but you can do so if you wish. Many employers choose to make up the difference between what the court pays and the employee’s regular wages for some period of time.

Q: Can you fire an employee for overusing sick time? As in, they have used their allotted 40 hours and continue to call in sick?

Q: What is the law/employment practice regarding a death in the family and wakes/funerals?

A: The first 40 hours of sick time are job-protected leave and the employee cannot be fired or otherwise disciplined for using the time. After 40 hours, the Massachusetts sick leave law no longer applies so firing an employee for use of sick time beyond 40 hours would not be a violation of the earned sick time law. That said, other laws may come into play that could restrict your ability to fire the employee.

A: We are not aware of any law in Massachusetts that specifically requires employers to grant bereavement leave, whether paid or unpaid. You may have a contractual duty to do so, however. For example, if the employee is subject to a collective bargaining agreement that provides for bereavement leave, you will need to comply with that agreement. You also need to follow your own policies and treat employees consistently. Many employers do have policies that provide for some amount of bereavement leave. Typical policies allow for up to three days of paid leave for a death in the immediate family and a single day for other relatives. Remember also that grief can result in

For example, if you have 50 or more employees, the employee may qualify for intermittent leave under the Family and Medical Leave Act. Also, both federal and state disability discrimination laws require you to provide reasonable accommodation to employees with a disability, and that reasonable accommodation might include providing some amount of time off beyond 40 hours. If the employee’s use of sick time is related to a disability, you will need to engage in an interactive dialogue with them about reasonable accommodation, and assess whether permitting the additional time off would cause undue hardship to the business. s

Spring 2016

ubcontractors Work Hard.

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Protect your success: Join ASM Today!! Learn more at www.associatedsubs.com or call 617-742-3412.

“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

The Professional Contractor

ACCOUNTING

BY KEITH BLANKENSHIP

New Accounting Standard May Impact The Bottom Line for Contractors

n Feb. 25, 2016, after several years of proposals and deliberations, the Financial Accounting Standards Board (FASB) issued its new accounting standard – a long awaited regulatory update that will change the way that leases are reported on company balance sheets. The new guidelines reflect an effort to increase transparency in financial reporting. According to the FASB, a majority of asset leases are not currently reported, making it difficult to compare the financial status of companies who own their assets with that of companies who lease. Under the new regulation, companies will now be required to report all leases with terms of 12 months or more, including both capital (or finance) leases, as well as operating leases – which were not previously required to be reported.

What does this mean for contractors? Operating leases – including real estate, vehicles, equipment and other assets – are an integral part of everyday operations in the construction industry, and with good reason. Leases provide contractors with Keith Blankenship, CPA, is a partner at Costantino Richards Rizzo LLP, a Boston-area CPA and consulting firm. Keith manages the construction industry services group at the firm, and has more than 20 years of experience providing tax and business services to general and specialty trade contractors. He can be reached at 781-279-7788 or keith.blankenship@crrcpa.com.

Spring 2016

more flexibility, allowing them to maintain cash flow, conserve capital, and lower the risk associated with asset depreciation and changes in the market. To comply with the new standard, companies with substantial lease contracts will need to add both assets and liabilities to their financial statements, affecting not only their balance sheets, but also their working capital, debt to equity and debt service ratios. In many cases, these ratios are used to determine bonding capacity, or the size of jobs a construction company can bid on, so this could potentially impact daily operations. Although the new standard will not go into effect until December 2018 for public companies (December 2019 for all other companies), construction business owners will benefit from preparing early – looking more closely at their lease vs. buy decisions and adjusting internal procurement processes to mitigate the costs of compliance. Contractors should consider whether it is more economical to lease or buy certain assets under the new circumstances, and may benefit from reevaluating their end of term decisions. Under the new regulation, only leases of 12 months or more are required to be reported, so contractors may also want to consider the terms of their lease contracts moving forward. Additionally, if the contract qualifies as a service, the lease is not required to be reported, so it will be important to look closely at contracts to determine what needs to be reported.

Costs of compliance Companies with large lease inventories may find that additional resources are required to track, evaluate and maintain their contracts. Technology can help organize this data, but the purchase and implementation of software can be costly. Alternatively, additional staff may be required to gather data, and to assess, update and maintain internal procurement processes to comply with the new regulations.

How can you prepare? Plan ahead. Although the standard does not go into effect until Dec. 15, 2018, for public companies (Dec. 15, 2019, for all other companies), the new rules will be implemented retroactively. This means that all operating leases will need to be capitalized

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in the financials reported in the transition year, and any comparative balance sheets must be capitalized in the earliest year presented – so you may be impacted sooner than you think. Review all equipment and asset lease and rental contracts. Create an updated asset inventory to include all leases, contract terms and dates, and all associated costs, including rent, interest rates and security deposits. Review your procurement processes, resources and technology. If you have a large number of leases, you may need additional resources to track, evaluate and maintain your lease portfolio moving forward. Evaluate your current procurement process and identify any available resources, both in terms of staff and technology, that may be used to address the new requirements. Talk to an expert. Your CPA or advisor can help you evaluate your current lease portfolio, determine how the new standard will affect your financial reporting, and recommend a plan for successful compliance. s

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successful project is understanding the needs of our clients. With over 35 years in the electrical contracting business, our commitment and passion to not only meet these expectations, but surpass them, remains steadfast. Our high standards mean never settling for anything less than excellence. Corporate Headquarters: 116 Hopping Brook Road Holliston, MA 01746 (508) 429-8830

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TECHNOLOGY

Report Highlights How Contractors Approach Emerging Technology

n a recent survey, over 2,000 construction professionals responded to questions surrounding the technology solutions, strategies and resources they’re implementing on projects. Amid their survey responses, published in JBKnowledge’s 2015 Construction Technology Report, was telling insight into their approach to adopting emerging technologies. According to the report, nearly 65 percent of builders say on a scale of 1-10 (10 being “Very Comfortable” with new technology), that they are at least an 8. While this is a self-diagnosis, it is still encouraging. The average comfort level of builders, no matter their role, is 7.8. That average drops to 7.4 for builders who do not perform an IT role, while those who do perform an IT role claim an 8.4 average comfort level. When asked what technology they would request if they knew they could get it approved to start using tomorrow, construction professionals gave responses ranging from the overwhelmed (“I don’t need anything else to implement this year”) to the daring (“I’d request the automatic ‘smart’ drone which operates on its own and inputs its own data”) to the practical (“I’d choose seamless remote access with full functionality and zero connectivity/ speed issues”). The answers ranged from indifferent to overzealous. This revealed that no matter how comfortable builders claim they feel with new technology, the prospect of taking on another technology solution tomorrow doesn’t inspire excitement for all. Most builders are still sorting through all of the software they use today that doesn’t integrate – and are not yet thinking about Baxter the Robot. Though in the minority, there are some adventurous builders setting aside budget and resources to research, develop and adopt emerging technologies. According to the JBKnowledge report, the likelihood of having a department dedicated to R&D increased as the size of the construction company increased. A construction company with more than 1,000 employees or $500 million in revenue is more likely than not to have R&D. Those with an R&D department are almost 50 percent more likely to be experimenting with emerging technologies. Among those experimenting, drones and 3D scanners are most likely to be seen on job sites today, and wearables are the least likely. As the most widely used emerging technology, companies are employing a variety of drones to capture data for aerial imaging, topographical mapping, video recording and much more. The DJI Phantom’s latest drone has ground sensing technology to allow for use indoors, where GPS cannot be referenced, and Kespry commercial drones allow users to measure perimeter, volume, cut and fill sizes of stockpiles. Parrot drones are one of the most affordable options because they capture less dynamic data but still produce HD photo and video for jobsite progress tracking and surveillance. 22

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nology solutions. But with aging Millennials and builders claiming a decently high comfort level with new technology, budgets could be prodded to follow suit. As technology continues to advance, and competition along with it, companies will need to take a more proactive approach to emerging technology. CEO of JBKnowledge James Benham (available at jamesbenham.com), commented, “Although in a minority, some companies are actually investing in R&D departments and have turned their technology departments into revenue generators. But I dream of how many more could accomplish this in the next decade if we can pull together as an industry and re-prioritize our investment.” Benham brought up two questions for contractors: •• How are you contributing to your company’s tech innovation? •• How can you as an individual create a culture of research, development and tinkering that proves tech advancement can create ROI and not just expenses? Visit the JBKnowledge website at jbknowledge.com/report to download the fourth annual Construction Technology Report, published in partnership with the Construction Financial Management Association, Texas A&M’s Construction Science Department and HCSS Construction software. s

“

JBKnowledge is a firm which develops information technology solutions for construction and insurance companies around the world. For more information, contact Liz Welsh at liz@jbknowledge.com or 979-217-1550.

col l aboration

Carolyn Hendrie, Principal Bargmann Hendrie + Archetype, Inc.

“

Photo: @ Bruce T. Martin

Next year, companies will be using more sustainable drone systems like Skycatch, that don’t need pilots and can even change out their batteries autonomously. Developing technology will also allow drones to connect with workers and machinery to power and monitor the jobsite through monitoring stockpiles, directing earthmovers, tracking productivity and much more. Drones will also become tools for more than just data capture and transmission, with load bearing capacity to haul equipment, move materials and transport tools. The real question isn’t if drones will continue to grow in use, but rather how will they be regulated. Builders should bookmark knowbeforeyoufly.org and keep a close eye on FAA regulations that will impact drone adoption and usage, especially since commercial drone use must be licensed by the FAA. Why are 3D printers, augmented reality, virtual reality and wearable devices seeing less promising adoption rates than drones? JBKnowledge’s survey respondents were asked to identify the factors most limiting their companies’ adoption of new technology, and budget was the most common answer, followed closely by lack of staff to support the technology. In fact, according to the report, IT budgets in construction companies average only 1 percent of corporate revenue. A recent Gartner report confirms that construction allocates the least amount of revenue (1 percent) for technology out of 19 industries. So where will emerging technology stand in 2016 at construction companies? With minimal budget, most companies don’t yet have the bandwidth for tinkering with potential tech-

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WOODWORKING

w w w . m a r k r i c h e y . c o m

The Professional Contractor

WORKERS’ COMP

BY NORMAN GOODMAN

Getting a Handle on Your Workers’ Compensation Insurance

ou can control the cost of your organization’s workers’ compensation insurance by knowing a few insider tips used by workers’ compensation cost control consultants. What follows are three proven methods to reduce the cost of this vital insurance to the absolute minimum.

Have you checked your experience modification? Most contractors accept the experience modification as an absolute number, with little or no room to improve. That’s a mistake that can cost large sums of money and put you at a competitive disadvantage when bidding for work. Here is how you can improve your ex-mod. Begin by obtaining a copy of either the Massachusetts Rating and Inspection Bureau’s or NCCI’s Interstate Experience Rating Worksheet. This document contains the payrolls, claims, and other factors that make up the ex-mod. It also includes the mod’s effective date and some other useful information that will impact the final cost of your workers’ compensation policy. You should have received a copy of the worksheet in the mail, but if you did not, it is available from your insurance agent, direct from your insurer or by ordering a copy from the Massachusetts Rating and Inspection Bureau or the NCCI in Boca Raton, Florida. With that worksheet in hand, check the following: Make certain the claims that have been charged to the ex-mod under the column labeled ‘Act Inc Losses’ belong to your firm. We have seen Since 1979 Norman Goodman has helped contractors and other firms in the construction industry lower the cost of workers’ compensation insurance with a variety of proven methods. He is based in Nashua, New Hampshire and can be reached at zapcomp@gmail.com or 305-482-1244.

Spring 2016

contractors charged for claims that belong to another organization, so it is a good idea to confirm that your ex-mod only contains your company’s claims. Be aware of your loss valuation date and make certain that every possible claim is closed before then. Generally, that date is six months before the ex-mod becomes effective. Otherwise, your ex-mod might include an open claim reserve that was settled. Remember, you can negotiate with the insurer’s claims adjuster to close claims before the loss valuation date. Confirm that ‘Loss Adjustment Expenses’ are omitted from the ex-mod’s Incurred Losses. These are the insurer’s expenses and should not be charged to you. Finally, check the payrolls in the column labeled ‘Payroll’ and confirm that correct amounts are used. Also look for payroll for uninsured subcontractors charged on the premium audits. Payroll charged to these uninsured subs should be included in the ex-mod. This will lower the ex-mod.

Get the most from classifications Contractors may allocate the payrolls of construction employees to different classifications of work, provided that the contractor keeps contemporaneous records that support the payroll allocation. You should preemptively discuss how to set up the payroll records with the insurer’s audit department so that wages are allocated to all the classifications to which you are entitled. You should subscribe to the online SCOPES Manual from the NCCI. It is a valuable tool that describes all classifications available and when they may, and may not be used. Sometimes the classification with the lowest rate does not result in the lowest premium. Because classifications are a component of the experience modifier and the CCPAP, seeking the lowest class rate might be more than offset by a higher exmod and a lower CCPAP – and generate a higher premium. Especially in the construction industry, a higher ex-mod might be a greater handicap than a lower premium is beneficial. Care should be taken, and a knowledgeable expert consulted, when determining the best available workers’ compensation classifications.

Another premium-saving suggestion: Prepare a pre-audit before the annual audit. When the insurer completes their annual premium audit they work from the records that you provide. Help make the auditor’s job more accurate by completing your own audit. Make certain that the prepared payrolls take into account all the credits, limitations and deductions available. Many auditors will accept your prepared work product as their own. Finally when the audit is complete, request a copy of the auditor’s worksheets, review the worksheets with the auditor and discuss how employees were classified. Then, when the final invoice arrives, be sure to compare that invoice to those worksheets.

Take advantage of state CCPAP program Contractors may be eligible for a potentially large credit, available through the Massachusetts Construction Classification Premium Adjustment Program (MCCPAP), which can significantly cut the cost of workers’ compensation insurance. MCCPAP is a sometimes overlooked credit that is available to contractors that pay wages higher than the statewide average. The purpose of the credit is to offset the higher premium that results from those higher wages. Since workers’ compensation premium is, at its simplest, a rate times payroll, the higher the payroll, the higher the premium. Unfortunately, an in-depth knowledge of the credit is spotty among contractors and even among insurance professionals. To receive the credit, it is up to you to know what is required and to apply within the permissible time frame. Right now the credit begins with an average hourly wage of $30 and maxes out at $40. The hourly rates will change over time. Here is how you receive the credit: Included within your policy is a form for you to complete. The form requires that you report payroll for the third calendar quarter of the year that precedes your policy’s effective date. That form has three columns: In the first you provide a class code or description of the

work (carpentry, masonry, supervisors, etc.); in the next, you provide gross wages (after adjustments) for each classification of work; and in the third column you provide the corresponding number of hours worked for each classification. If you are a new business and had no payroll in the previous year’s third quarter, use payroll and hours worked from the first complete quarter after the policy’s effective date. Next, you mail that form directly to the Massachusetts Rating and Inspection Bureau in Boston. They will calculate and forward your credit to your insurer. The insurer applies the credit to your policy and refunds the resulting premium to you. That credit carries over to the final audit and is applied to your final audited payrolls. In Massachusetts the credit ranges from 5 percent to 25 percent of premium, depending on your company-wide average wage. If your firm has operations in one of the fourteen other states that have adopted the CCPAP, you should complete separate applications for each state and mail to the NCCI.

Finally, the Rating and Inspection Bureau will make additional adjustments to the calculation to offset the beneficial impact of higher wages on the ex-mod (the details of this adjustment are beyond the scope of this article). When your policy is audited after it expires, the carrier has the right to verify the payroll and hours that you submitted. There are several conditions to the credit: You must have an experience modification, either Massachusetts only, or an interstate ex-mod. Your policy must contain at least one or more classifications that are eligible for the credit. Your completed application must be submitted and received by the rating bureau no later than six months after the policy expires or within one month of when you first receive notice of the credit, whichever is later. This credit is a great tool for contractors to save a significant portion of their premium. It is available for a reason, and you should take advantage of it. After all, your competitors are probably already doing so. s

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Construction Division We speak your language. Our Construction Division has specialized in your industry for over 85 years. Contact us today and see the difference an expert can make in your business. Property/Liability | Fleet Automobile | Workers Compensation | Surety Bonding Contractors Equipment | Group Health | Subcontractors Design E&O Pollution Liability | Railroad Protective

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The Professional Contractor

FACILITIES

BY SCOTT SZYCHER

New DOE Standards on Rooftop Units to Affect Building Owners and Contractors

hile most of us were preparing for the holidays last December, the U.S. Department of Energy (DOE) was busy issuing historic new efficiency standards for commercial air conditioners and furnaces, also known as “rooftop units.” Despite receiving relatively little attention, the new standards, intended to save more energy than any previously issued DOE standard, will have a significant impact on building operations and expenses.

What equipment is affected by the new standards? The new rules apply to standalone air conditioners or warm-air furnaces, or units that combine both heating and cooling. Rooftop units covered by the DOE’s new standards can vary in size, ranging from small systems with a cooling capacity of 65,000 Btu per hour, to large units with a cooling capacity of 760,000 Btu per hour.

What are the specifics of the new standard? The new standards would require commercial air conditioners and heat pumps to certify performance using the Integrated Energy Efficiency Ratio (IEER) metric, which measures the equipment’s performance at a variety of operating conditions over the course of the year, and helps building owners and contractors understand the relative efficiency of different equipment. The updated standards for air conditioners and heat pumps will take effect in two stages to allow manufacturers to update their technologies to the new specifications. Beginning Jan. 1, 2018, new air conditioners and heat pump rooftop units must be 10 percent more efficient than products available today. Scott Szycher is the membership and marketing director for ASM.

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Starting in 2023, manufactured rooftop units will need to meet more stringent IEER requirements of 25 percent to 30 percent more efficient than current models. The new standard applies to both natural gas and oil-fired commercial air furnaces. The new standards have obviously caught the attention of Johnson Controls Inc., a leading HVAC equipment manufacturer. “We recognize that the new standards will impact every product we currently build twice in little more than seven years. The sheer magnitude of the design, testing and producing new equipment to meet the new requirements is a challenge to our organization,” said Eric Newburg, the director of commercial product management for Johnson Controls Rooftop Units and Commercial Split Systems. “We are investing in the resources (people and facilities) to make this happen while still developing new, innovative products for our customers. We are leveraging our strength in controls, compressor technology and heat transfer analysis to meet and exceed the new regulatory requirements.” It’s been estimated that a small commercial building with a 90,000 Btu per hour rooftop unit could expect to save about 3,000 kilowatt hours of electricity annually compared to today’s least efficient model, which would save approximately $6,000 over the life of the unit. Because owners and operators of large amounts of commercial space – such as big box stores – often use 20 or more rooftop units, the savings facilitated by the new standards are expected to be significant over the lifetime of the units, especially if each rooftop unit is fairly large. The new standards set forth by the DOE were the result of collaboration between major industry organizations, leading manufacturers, utilities and efficiency organizations. s

ASM NEWS & EVENTS

ASM Past President David Cannistraro of JC Cannistraro and ASM CEO Monica Lawton (both seated at center) gathered with leaders of the National Subcontractors Alliance (NSA) at the group’s annual conference April 1-2 in San Antonio, Texas. Also attending was ASM’s Counsel, Atty. John Curran of Corwin & Corwin LLP. Cannistraro serves as president of NSA, an umbrella organization of the most successful subcontractor associations in the U.S., that together represent over 4,000 firms. The annual conference provides a forum for exchange of information and ideas to improve the business environment for the subcontracting industry.

David Cannistraro (front left) joins National Subcontractors Alliance colleagues from Texas, Chicago, Minnesota and New York for a relaxing dinner on San Antonio’s Riverwalk at the end of the day.

ASM’s Golf Committee gathered in February to get an early start on planning ASM’s 21st Annual Golf Tournament, which takes place July 11 at the International.

Attorneys Catherine E. Reuben and David B Wilson of Hirsch Roberts Weinstein conducted a refresher on the new Sick Leave Law for ASM members on March 2.

ASM Members are riveted as Reuben and Wilson review the nuances of the law.

Wilson leads the audience in a skit to highlight key points and traps for the unwary.

Reuben dives into the details on the new law.

The Professional Contractor

ASM NEWS & EVENTS Tom Comeau and Steve Eustis of Commodore Builders shared tips on workforce development and building the company team, at our March 23 program on “Finding Top Talent for Your Firm.”

Phil Hammond of Wentworth Institute describes Wentworth’s internship programs and construction management courses at the “Top Talent” event.

Katie Webber and Laura Evangelista explained the co-op, internship and project management programs at Northeastern University.

Phil Hammond continues the discussion with members during the reception afterwards.

In Memoriam William A. Collins, Collins Electric It is with sadness that ASM recently learned of the passing of William A. Collins, chairman of the family-owned Collins Electric Company Inc. – the oldest and largest electrical contracting and engineering firm in Western Massachusetts, credited with the installation of the first fluorescent lighting system in the world, at the Springfield Armory in 1939. Collins is remembered by long-time ASM members for his loyalty and enthusiastic participation at ASM’s events, and his willingness to speak with influential legislators to support the interests of electrical contractors and the subcontracting industry as a whole. In his native Western Massachusetts, Collins was well known for combining sharp business acumen with trade skills to match: He held a master electrician license in several New England states; was a licensed professional engineer; and held a degree in physics from Holy Cross. He was also a 69-year member of the International Brotherhood of Electrical Workers, and chaired its pension committee for many years. 28

Spring 2016

After joining the family business in 1950 at the age of 24 after the unexpected death of his father, he was instrumental in its growth into a fullservice contractor, performing work on iconic buildings including Tower Square in Springfield; the building that is now known as the MassMutual Center; the Baystate Medical Center; and many more. But beyond his vast professional accomplishments, Collins was renowned for his community and industry participation, as well as his extensive charitable work. He served as one of the first co-chairpersons of the Diocese of Springfield’s Annual Catholic Appeal; was a director of Mercy Medical Center for center from 1992 until recently; was a trustee of both the College of Our Lady of the Elms and the Springfield Institution for Savings; served as director of Monarch Capital, Bay Bank Valley and the Greater Springfield Chamber of Commerce; and was active in numerous civic organizations, including the Springfield Rotary Club. William Collins – affectionately known as “Uncle Bill” by many of his beloved employees – will be sorely missed, but not soon forgotten by ASM and its members.

Len Monfredo and Vin Petroni of E.M. Duggan relax after our “Breakfast Conversation” program April 5 where they shared information and insight on the growth and success of E.M. Duggan, which is celebrating its 125th Anniversary in 2016.

ASM members listen intently to Len Monfredo and Vin Petroni as they respond to questions posed by ASM Membership & Marketing Director Scott Szycher.

PROJECT PHOTO GALLERY 1A 1B 1C Capital Carpet (Woburn) provided floor covering fwor the Staff Sergeant James J. Hill Elementary School in Revere. 1D Capital Carpet performs its initial Aqua-Step flooring installation at Metro Convenience.

2A 2B 2C Drake Company (Holliston) expanded the tee and relocated the HDPE irrigation lines at the Cranberry Valley Golf Course in Harwich, Drake Company. They also installed a 6-inch perforated drainage line through low spots on the fairway. 3 J.M. Electrical (Lynnfield) co-installed a 476-kilowatt solar energy system which powers Massachusetts General Hospital’s facility in the Charlestown Navy Yard. 4 John F. Shea Company Inc. (Mattapan) worked on the pavilion at Lovejoy Wharf in Boston. 5A Marr Crane & Rigging (South Boston) and Marr Scaffolding’s mast climber division supplied a 600-pound hoist at the Frank J. Manning Apartments in Cambridge.

5B Marr’s sister company Isaac Blair & Co. Inc. installed shoring at the Engineering and Science University Magnet School in West Haven, Connecticut.

5C Marr Scaffolding’s aerial lift division installed five swings at 888 Boylston St. 5D Marr Crane & Rigging was responsible for trucking and hoisting pre-assembled modules for Amgen in Kendall Square, Cambridge.

5E Marr & Son work including steel erection of the new expansion of Terminal E at Logan Airport. 6A R.H. Keleher (Sharon) provided Commonwealth Plumbing with pipe support materials at the Government Center MBTA project in Boston.

6B 6C R.H. Keleher Company (Sharon), the only individually-owned pipe hanger supplier headquartered in Massachusetts, is supplying several ASM member subcontractors on the Lovejoy Wharf and One Nashua Street projects in Boston’s North Station area.

6C The Professional Contractor

PROJECT PHOTO GALLERY 7A 7B 7C T.G. Gallagher (Cambridge) gave back to its community by helping to fund the plumbing and fire protection systems at Y2Y-Harvard Square, a student-run overnight shelter for young adults experiencing homelessness.

8A 8B Time Savers Services Corp. (North Attleboro) provides construction labor on a project site, while sister company Paul David Restoration removes mold. 9A 9B Wayne J. Griffin Electric (Holliston) completed electrical installations for the new Gables University Station residential complex in Westwood and Framingham State University’s Annex upgrade project. 10A 10B 10C Wright Architectural Millwork (Northampton) performed millwork for the Kensington Capital Holding project, which won a “Best Design” award from the International Interior Design Association. s

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10B

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