THE VOICE OF THE CONSTRUCTION INDUSTRY OF GEORGIA
CONTRACTOR Volume 7, Issue 5
September | October 2011
THE SHARD OF LONDON
STORY ON PAGE 6
Letter from the Editor September | October 2011
ADVERTISEMENTS AIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 A4 Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Dear Readers~ Shard of London at London Bridge was conceived in the year 2000 by the Italian architect Renzo Piano and was approved by the British Deputy Prime Minister in the year 2003. When completed in 2012, it will be the tallest building in the European Union and the 45th tallest building in the world. It will change the skyline of London. The building is also known as the Shard of Glass. The building will be the second tallest freestanding structure in England at a height of 1,017 ft. with 72 stories. Why do we mention it here? This is another example of excellent construction work, built by workmen of extraordinary skills, courage, and creativity. It does not matter where construction workers perform feats of the impossible, it is being done every day and deserves mentioning and recognition, as too often the ordinary person never thinks of the skills and knowledge that our workers bring to the job. Roy Keck took a moment out of his busy schedule to write on the Keys to Concrete Success—e Pre-Construction Meeting. This is an excellent article offering insights through experience in the use and handling of concrete. No one could be writing with more knowledge and experience about this subject than Roy. This is a great read. Other articles of note are on the subjects of National Transportation Funding; Contract Negotiations; Premium Pay for Overtime; Succession Planning; and our traditional Lessons Learned, but there is much more. The Georgia Contractor is one of the last few construction magazines in the nation, understandably so, as advertising revenue is drying up, and most simply could not maintain the level of reporting that is needed to be meaningful. Our task is to continue even in this period of tepid advertising support. We like to say that “it pays to advertise” and we really believe that is true. We cover the vertical and horizontal construction industry, and if you are a seller of products and/or services, you will want to be seen in the print media.
Atlanta Technical College . . . . . . . . . . . . . . . . . . . . 28 ATC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 CardnoTBE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Engineered Restorations Inc. . . . . . . . . . . . . . . . . . 11 Georgia Power . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 IBEW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 JAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 LPA Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 MidSouth Machine & Service Company. . . . . . . . . . 12 NES Rentals . . . . . . . . . . . . . . . . . . Inside Front Cover Prime Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . 3 RHD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 S&ME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Silt-Saver . . . . . . . . . . . . . . . . . . . . . Inside Back Cover T. Wayne Owens & Associates, PC . . . . . . . . . . . . . 18 Utilities Protection Center . . . . . . . . . . . . . . Back Cover Winter Construction . . . . . . . . . . . . . . . . . . . . . . . . 24
R. Petersen-Frey Editor-in-Chief
September | October 2011
On The Cover
The Georgia Contractor www.thegeorgiacontractor.com Managing Editor R. Petersen-Frey (770) 521-8877 Advertising Director Bo Ingram (770) 761-5920 Art Director Pamela Petersen-Frey (770) 521-8877
THE SHARD OF LONDON The Shard started as a picture sketched on the back of a menu. Irvine Stellar, an entrepreneur from London, and Renzo Piano, famous for his design of the Pompedu Center in Paris as well as our own High Museum in Atlanta, had met in a restaurant in Berlin to discuss the redevelopment of an office block next to London Bridge Station when Piano flipped his menu over and sketched an idea for a structure to take its place. See the story on page 6
The Georgia Contractor is published bi-monthly on a calendar year basis. It is a magazine designed around the construction industry associations and their members. It is supported by associations and their members. Executive, editorial, circulation, and advertising offices: 1154 Lower Birmingham Road, Canton, Georgia 30115 â€˘ Phone: 770.521.8877 â€˘ Fax: 770.521.0406 e-mail: email@example.com. Send address changes to your association and/or to TGC Publishing LLC. Opinions expressed by the authors are not necessarily those of any of the associations or publisher nor do they accept responsibility for errors of content or omission and, as a matter of policy, neither do they endorse products or advertisements appearing herein. Parts of this magazine may be reproduced with the written consent of the publisher.
The Georgia Contractor
September | October 2011
The Shard of London
8 Keys to Concrete Success: the pre-construction meeting
10 Contract Negotiations: An Indemnity Tug-of-War
12 Georgia DOT Takes On New Role To Deliver Projects Faster
13 Employment Practices Liability Insurance Update
16 New Considerations for Joint Venture Agreements
17 There Are and Will Continue to be Great Career Opportunities in the Construction Industry
18 National Transportation Funding Boosts U.S. Economy
19 Georgia Contractor News
24 Premium Overtime-Another Side to Compensation
25 Protecting the Tax Benefits of Employer-Owned Life Insurance Policiesâ€” Getting it Right
26 From Casual to Committed: How Alignment and Engagement Can Create Positive Accountability
17 September | October 2011
30 Accessibility Assessment 5
The Shard of London By Daniel J. Simmons | Staff Writer
The Shard of London would stand next to the Berj Dubai like a toddler next to a full-grown Viking. The 500 meter difference in their heights should be an indication that, despite being the tallest building in the European Union, the designers of the Shard of London didn’t set out to shatter any height records (pardon the pun). No, even though it may fall into the still-ratherrespectable position of 45th tallest building in the world, the Shard of London has other tricks up its sleeve when it comes to standing out in the evergrowing world of non-quadrilateral, shiny skyscrapers, but how? What does the Shard mean to London, and the rest of the world for that matter? In order to answer that question, let’s first take a look at its story. From inception to completion, how did the shard come about? The Shard started as a picture sketched on the back of a menu. Irvine Stellar, an entrepreneur from London, and Renzo Piano, famous for his design of the Pompedu Center in Paris as well as our own High Museum in Atlanta, had met in a restaurant in Berlin to discuss the redevelopment of an office block next to London Bridge Station when Piano flipped his menu over and sketched an idea for a structure to take its place. He told Stellar that his design was inspired by the Venetian painter Canaletto’s depictions of 18th century London with cityscapes that were dominated by numberless church towers and the masts of merchant boats that speckled the Thames, a detail that will prove very telling when it comes to understanding Piano’s vision of his work. Stellar must have liked the idea, because three years later designs were finalized and construction was approved. But the construction and funding processes would prove to be no easy ordeal. Funding began with an interim package of 196 million 6
The Georgia Contractor
pounds provided by the Nationwide Building Society and Kaupthing Singer & Friedlander. Shortly after, ground was cleared to begin construction and after a nearly 200 million pound investment, difficult economic conditions began to threaten the shard’s future to the point that construction would have to halt without financial help. The Halabi Family Trust, one of the project’s main financial backers, was going to be forced to sell its stake, a problem that could have stopped construction right then and there. Fortunately, this problem was solved in January of 2008 when a group of investors from Qatar paid 150 million pounds to ensure an 80 percent stake in the shard and to take control of the project. The financial groundwork had finally been laid and work began in February of 2009 at the hands of a construction company called Mace which won the deal to build the shard for no more than 350 million pounds. The plans call for the Shard to have 87 floors (only 72 of which will be habitable) and roughly 1.2 million square feet of useable space whose layout will be as follows: floors one-to-three will be public areas, four-31 will be used for offices, another public area and viewing platform will be on floors 34-36, the Shangri-la hotel will occupy floors 37-51, 52-64 will house a 114 unit apartment complex, and the last two public floors, 65-66, will be used for a viewing gallery. The onerous task of erecting the 1,000 foot behemoth was eased in part by Mace’s implementation of a unique construction technique never before used in the UK, the Jump Lift. Instead of using exterior lifts, which can be cumbersome and dangerous, the Shard’s construction crew made use of a unique kind of crane setup which uses the structure’s concrete core as an anchor for the hoist’s base. Developed by a company called KONE, the Jump Lift does just what its name indicates; as the tower’s core grows so does the crane, by jumping up along with it. The crane’s vertical support shaft goes right down the center of the tower’s core, which stabilizes the lift as it rises to match the core’s staggering rate of growth, around three meters per day. By keeping the crane at the structure’s core, the crew gets September | October 2011
the added benefit of being able to use the lift’s shafts as permanent service elevators allowing them to haul supplies up the core while simultaneously lifting other materials from without. In an interview, Tony Palgrave, Mace’s appointed Construction Director for the build, expressed his appreciation for the Jump Lift, saying: “This solution is fundamental to our strategy of transporting people and materials quickly and efficiently to the top of the building and down again in the safest possible way. It represents our ongoing commitment to finding ever better ways to deliver this landmark project." Along with its other superlatives and accolades the Shard also boasts a rather respectable environmental/ energy-saving distinction. Despite its glass exterior, it still manages to use around 30 percent less energy than comparably-sized structures. One reason for this is that the panes that cover the shard are made of no ordinary glass. Each panel is triple-glazed and laminated in a low-iron coating which helps to reduce infra red radiation. Another is the elaborate system of computer-controlled roller blinds that helps reduce solar radiation by as much as 95 percent. These factors form a double-edged energy saving sword. They reduce the energy needed for lighting by allowing in natural sunlight while simultaneously blocking enough of it to keep cooling needs low. Any extra heat generated by sunlight or the use of electricity within the lower floors is vented upwards and used to heat the air and water for the apartments on the upper levels as well as help control the climate of the winter gardens which can be found on every floor. If the building still has any unwanted heat by nightfall, an automatic night cooling system kicks in which opens the blinds on each of the Shard’s glass panels and allows the heat to escape more quickly overnight. Now, still under construction, the tower’s barely-unfinished peak stands 800 feet in the air. In the next several months it will grow 203 feet more to reach its final height of 1,003 feet; and with the addition of a 14 foot antenna it will attain its planned stature of 1,017 feet. It is worth noting that,
because of its spectacular height the designers were careful to make the Shard one of the first structures to be constructed in the UK in light of information gleaned from the National Institute of standards and Technology’s report on the World Trade Centers’ collapse. A precaution that will hopefully not prove necessary, but an interesting one nonetheless considering the symbolic similarities that the two structures share. That is, the Shard of London will largely be to London what the World Trade centers were to New York, a massive symbol of globalization brought about by commerce. The shard, of course, is the product of the cooperation of people from countless countries. It stands in London, it was founded by money from Qatar, the glass is from Holland, the architect is Italian, the first tenant is a hotel out of Hong Kong, the laborers building it are from all over the world, and so will be the tenants when they arrive. The Shard of London is an outstanding symbol of the growing unification of the world’s economic forces; and perhaps also, looking back at the paintings from which Piano drew his inspiration, an equally profound symbol of a changing culture. One might make the case that there was something missed in Piano’s interpretation of Canaletto. That is, simply by depicting an image of the city that he observed, the 18th century painter showed an image of London that had a kind of balance. The bobbing masts in the Thames port, which would have been images of wealth and commerce that could be likened to the skyscrapers of today, being suitingly washed about the ebb and flow of the economic tide, were offset and framed by the taller symbols of a culture that was grounded in something a bit more permanent. By combining the water-bound and land-bound symbols of Canaletto into a single towering spire, however, Piano chose to paint a different city. Piano saw in a depiction of economic and cultural dynamism the flat image of a world in which the former defines the latter. But this is not even Piano’s unique contribution. The Shard’s symbolic usurpation of Canaletto’s land-bound cultural symbols reflects the reality of modern London just as well as its surface does. v 7
By Roy H. Keck, FACI | Walker Concrete Inc.
“The pre-construction meeting is vital to the success of the project because, properly done, this meeting is the single most important means of ensuring that each of the team members knows what they are expected to do and not do. I have conducted or been a part of hundreds of such meetings, and I have never had one in which we did not ahead of time resolve issues that would have been significant problems once construction started on the work.” Jerry Holland, PE – Vice President, Structural Services Inc.
uality concrete is important to your project, and there are a few items to attend to before you start placing concrete on your project. The first step to help insure your success is the pre-construction meeting. Attendees should include the supplier, the concrete placing superintendent, the testing lab, and the general contractor. The mix design submittal should be an early topic of discussion and here are some of the considerations for the set of mixes to be used. First on my list is to clarify which concrete building elements are truly exposed or non-exposed to weathering and freeze-thaw. This is very important because the default requirement of ACI 30110 is severe weathering exposure, unless the project engineer notes otherwise. In Georgia, we typically have only ‘moderate’ weather 8
exposure at worst. Refer to the weathering map in ASTM C33 which defines the potential. Importantly, if you use air entrained concrete in interior trowelled applications, you risk surface delamination of your floor slab. Concrete with entrained air will bleed out the mix water at a slower rate, and if the finisher begins trowelling too soon, early trowelling can seal in that bleed water just below the top layer of cement paste. This layer usually peels off later as the concrete gains in age, it dries, and it receives traffic. Another important consideration is that whenever you use air in concrete it affects the compressive strength. For strengths over 5000 psi, ACI permits lowering the air target by one percent. A general rule of thumb is that air lowers compressive strength by five-to-ten percent for each percent over four. So be careful with air entrainment—use it only if absolutely necessary and then at the correct percent. Lower air targets can help form removal strength to be achieved quicker. The Georgia Contractor
Another issue that comes up is what coarse aggregate size to use. Aggregate selection is important because it affects placeability of your concrete, especially where reinforcing steel is congested or you have thin sections. The best approach usually is to use the largest size available at the supplier’s batch plant, typically #57 or one inch nominal maximum. When you use smaller size coarse aggregate, ¾ inch #67 or even ½ inch #7, you increase the mix design water as well as increase the cement content needed in the mix. This adds cost and drying shrinkage. This additional shrinkage necessitates that proper control joint spacing be used or more random cracking will be likely. The number one owner complaint is cracking, so do all you can reasonably to avoid it. A frequent change to smaller aggregate is to accommodate smaller line pumps. Try to stay with hard line boom pumps, which can handle #57 stone. The time of year that concrete is being placed has a significant impact on the concrete mix. The effects of hot weather need to be recognized and addressed in the summer. The current ACI 301 allows concrete temperature to range up to 95 Fahrenheit. Most batch plants have admixtures to help manage the set time and slump retention of your concrete as a result of higher summer temperatures. At the pre-construction meeting, discuss the mix design and how it will perform at high temperatures. The supplier usually has retarders available. For a small added cost per square foot of slab placement, the right admixture can alleviate temperature effects. Also, if placing will be by long pump lines, slump retention is critical, and can be also achieved with the correct viscosity modifying admixture at the correct dosage. Chilled batch water is often available at the batch plant and is an economical improvement to concrete in hot weather. Also, placing concrete at night or early morning can help avoid peak daytime temperatures. Cold weather also presents its challenges as well, and should be discussed in the pre-construction meeting. Most ACI standards refer to minimum temperatures of 50 or 55 Fahrenheit, to preserve the strength gain needed for commercial conSeptember | October 2011
Placing concrete at night or early morning can help minimize the impact of hot weather we experienced this year in Georgia. struction projects. Non-chloride and chloride-based accelerators can help to get the finishing crew off the slab faster. Chloride accelerators may be permissible even in non-reinforced concrete and are usually the most cost-effective accelerator. Hot water is commonly available and the resulting higher mix temperature will help shorten set times of the mix. It may also be necessary that the supplemental cementitious materials need to be reduced in winter. This will add slightly to the mix cost, but will help get the set time shorter and the early strength gain quicker. For floor slabs, flatness and levelness may be a significant concern for the project owner, and if special consideration is warranted, there are recommendations in ACI 302 that should be discussed. Again, this is an aspect that the supplier may be able to
give the placing contractor support with by the appropriate blending of two coarse aggregate sizes such as #89 with #57 to give a smoother total grading curve. Admixtures such as mid-range and high range also can help with workability and minimize the amount of labor to place large areas of flatwork. Your supplier can offer suggestions of his off-the-shelf mix materials that can make the placing and finishing process more efficient. There are many items to put on the meeting agenda, and these are just a few to consider. Every project is different, but there is one common goal, and that is to produce an outcome consistent with the Owner’s expectation in quality, budget, and schedule. Make the pre-construction meeting a ritual every time you start a new project, and your outcome will be better. v
Contract Negotiations: An Indemnity Tug-of-War By D. Michael Williams, Esq. | Rutherford & Christie LLP
ontract negotiations are an inevitable tugof-war. While one party often digs in by using very broad terms to describe the contractual obligations owed by the other party, the other side usually pulls back by trying to limit the scope of those obligations. Despite the parties’ determined attempts to use either broad or limiting language, if a dispute arises then the court will be the ultimate arbiter of the extent of the obligations owed. The tension between broad and limiting language is often seen in the context of contractual indemnity provisions. The indemnifying party, or the party that owes the indemnity obligation, seeks to limit not only the scope of the indemnity, but also when the obligation is triggered. A common limiting condition is to provide that indemnification only becomes effective when the damages for which indemnity is sought occurred as a result of the indemnifying party’s negligence or the negligence of the indemnifying party’s lower tier subcontractors. Some of the AIA contracts used in the construction industry provide for indemnification only in the event that the losses at issue are caused by the negligent acts or omissions of the indemnifying party. The indemnified party, or the party to whom the indemnity obligation is owed, often resists tying the indemnity to negligent conduct. A commonly used clause that offers a broad indemnity obligation requires indemnification for “any and all, damages, losses, costs … arising out of or resulting from the work [of the indemnifying party].” The phrase “arising out of ” has been construed in the broadest possible terms by the Georgia courts and applies in situations that many indemnifying parties do not foresee. Unless the indemnity obligation specifically requires a showing of negligence, the courts have declined to require that the indemnified party prove the damages at issue were 10
caused by the negligence of the indemnifying party before enforcing the indemnity obligation. In a recent case decided by the Georgia Court of Appeals, the plaintiff was driving his car near the entrance to a residential subdivision when he saw construction barrels in the middle of his lane. The plaintiff stopped in traffic and waited to change lanes. As he waited, his car was rear-ended by another vehicle. After his vehicle was struck, he noticed a cement truck in the roadway, near the subdivision entrance, apparently being used in the construction of a sidewalk. The plaintiff sued the second driver and the developer of the subdivision for damages sustained in the accident. In turn, the developer sought to enforce the contractual indemnity obligation against the excavation contractor and a contractor that had the responsibility to furnish traffic control services. Both contractors sought to avoid the indemnity obligation by contending that the plaintiff ’s injuries did not “arise out of ” their work. Both contractors also argued that the plaintiff ’s injuries were caused or arose out of the work of others. Consistent with prior decisions, the Court of Appeals found that the contractors
were required to indemnify the developer from the losses claimed. In enforcing the contractual indemnity obligations, the court construed the term “arising out of ” in the broadest possible terms stating that the phrase “encompasses almost any causal connection or relationship.” Whether a party is seeking to broaden or limit an indemnity obligation, great care should be taken by legal counsel when describing the obligation in the contract. When the parties use descriptive language such as “arising out of ” and “any and all” the courts have traditionally extended the obligation to include claims that were not foreseen at the time the contract was executed. D. Michael Williams is of counsel with the law firm of Rutherford & Christie LLP, a certified Women’s Business Enterprise with offices in Atlanta and New York (www.rutherfordchristie.com). His trial and appellate practice focuses on construction litigation, commercial litigation, government liability, and zoning and land use litigation. Mr. Williams has served as trial counsel in a variety of construction litigation matters involving contract disputes and claims related to construction defects and material failures. He can be reached at (404) 522-6888 or firstname.lastname@example.org. v
The Georgia Contractor
September | October July | August 2011 2011
Georgia DOT Takes On New Role To Deliver Projects Faster Gerald Ross | Chief Engineer/Deputy Commissioner & Jeff Baker | State Utilities Engineer | Georgia Department of Transportation
hen trying to finish a job faster, adding more tasks to it wouldn’t seem the best approach. Yet, that’s exactly what the Georgia Department of Transportation is doing, and early results are promising. Each year, the department begins hundreds of millions of dollars in new transportation projects to help keep Georgians moving and our state growing. Hastening the completion of these often multi-year projects is a priority. Building new roads or widening existing ones almost always begins with relocating existing utility lines. Until the pipes, conduit, and wires for services such as gas, water, sewer, electric, phone, and cable are identified and moved out of the construction area, little work can be started. And that’s where Georgia DOT found that project delays often began—at their beginning! Bids would be awarded to a contractor; affected utilities notified; work authorized; sites cleared of trees and vegetation; and nothing happened; time passed...still, nothing happened. One regrettable project actually took four entire months just to get utilities moved, then less than three months to build! Every delay seemed to have its own special circumstance; every participant their own self-absolving rationalization. The end result though remained too common—a finger-pointing exchange among the department, its contractors and the utilities while angry local officials and exasperated citizens looked on and pleaded/demanded that someone just do something. We decided that someone would be us. The fundamental problem was utilities were spending—not making— money in relocations and had no incentive to hurry, while contractors, meanwhile, couldn’t start making money—and in fact were losing it—with men and machines 12
idled waiting on the utilities. Recognizing there had to be a better way, we asked the Georgia General Assembly to help. The result was a new provision that now allows Georgia DOT to include private utility relocations as part of a project contract. The department or contractor can make relocations themselves if the utility has so agreed. If a utility chooses not to allow such relocation of its facilities and instead opts to continue handling them itself, there now are penalties for delays. Damage claims can be filed against utilities for lost time, equipment expenses, and costs assessed for delaying the project’s benefits to the public. While the program is still relatively new, utility companies are warming to the concept. Agreements have been reached with major providers such as Georgia Power and Atlanta Gas Light with more in development. Everyone stands to benefit from the program. Utilities are freed of the need to disrupt schedules and divert crews from paying jobs. Contractors can be more precise in their bidding because they have more confidence in project timelines. And though it may seem counterintuitive, the department believes this approach should actually save taxpayer dollars too as the savings gained by meeting schedules will easily exceed the cost of the additional work. The end result isthe elimination of a big roadblock to delivering projects on time and on budget. And that’s the biggest benefit of all—the one legislators, local officials, the public, and the Georgia DOT are seeking. Georgia DOT’s program to reduce utility delays is a model for other transportation departments across the country and has drawn federal recognition. The people behind this program represent just one of many department groups committed to providing a safe, seamless, and sustain-
able transportation system that supports Georgia’s economy and is sensitive to both its citizens and its environment. v
Jeff Baker the State Utilities Engineer of the Georgia Department of Transportation.
Gerald Ross Chief Engineer/ Deputy Commissioner
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The Georgia Contractor
Employment Practices Liability Insurance Update By Gregg Bundschuh | Partner | Greyling Insurance Brokerage
mployment litigation has been compounded by the macroeconomic contraction of the past several years. There have been anemic wage increases (if not lowered compensation levels); hiring freezes; reduced hours, furloughs, layoffs, and other downsizings; and widespread job losses due to corporate bankruptcies. The resulting risk of employment practice-related claims has been further exacerbated by the lack of alternative job opportunities available to displaced workers and a greater awareness by employees of their rights.
Consider these numbers: In 2010, 99,902 complaints were filed with the Equal Employment Opportunity Commission (EEOC). The most commonly alleged forms of discrimination continued to be race (35.9 percent) and sex (29.1 per-
September | October 2011
cent), followed by disability (25.2 percent) and age (23.3 percent) [note: an individual charge can claim multiple types of discrimination; thus, the numbers add to more than 100 percent]. However, for the first time, claims of retaliation exceeded those of race discrimination. Beyond these private actions, the EEOC commenced 271 lawsuits against employers in 2010, with monetary benefits secured by the EEOC totaling $85.1 million (up nearly 10 percent over the previous five years’ average of $77.6 million). Almost 75 percent of all litigation against corporations stems from employment disputes. The average cost of defense exceeds $150,000; the median award is $250,000. The majority of these claims settle, with an average settlement of approximately $310,000. An employee has a 67 percent chance of securing a judgment against his or her employer, and a claim that proceeds to trial
has yielded an average award of around $440,000. Legal fees are not the only cost of defending against an employment action; such claims can disrupt business operations, as well as take a toll on management’s time, employee morale, and future hiring. Adverse media attention may arise from these cases. Fear of negative press can push a company to settle a case with little or no merit.
Employment practices liability insurance (EPLI)—developed some 20 years ago— guards against alleged violations of such employment statutes as Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, and the Americans with Disabilities Act, as well as more recent laws—such as the Family and Medical Leave Act and the Genetic Information Nondiscrimination Act—plus various
workplace torts. The majority of EPLI policies respond to such allegations as: • discrimination; • harassment and hostile workplace environment, including bullying; retaliation; • breach of employment contract; • invasion of privacy; • wrongful termination; • wrongful discipline or demotion; and • wrongful failure to employ or promote. Employers should bear in mind that any work-force interaction—from the hiring process through an employee’s termination—could be a catalyst for a claim, whether the alleged wrongdoing originated with management, a supervisor, or even a co-worker.
EPLI coverage is written on a ‘claims-made’ basis, meaning that the applicable policy is the one in force at the time the claim is first made against an insured, not the one in force when the wrongful act was alleged to have occurred. Coverage should include all of the following parties as ‘insureds’: 1. the organization; 2. management; 3. other employees; and 4. independent contractors. The policy should include such features as: • prior acts coverage; • coverage for back pay and front pay; • coverage for punitive, exemplary, multiplied, and liquidated damages—subject to insurability in the applicable jurisdiction; • coverage for claims brought by leased employees, independent contractors, and/or government agencies (in addition to employees and applicants); • a post-policy window for reporting claims; and • no requirement to provide notice of circumstances that could later give rise to a claim.
An important EPLI coverage option is third-party liability coverage, which addresses claims brought by individuals who are neither employees nor applicants— for example, customers and vendors. This coverage grant is routinely limited to dis14
crimination and sexual harassment. Nevertheless, increasing litigation is proving this coverage extension to be quite valuable.
Plaintiff attorneys across the country are bringing class-action lawsuits against employers alleging violations of the Fair Labor Standards Act—principally as respects underpayment of wages. Specifics vary, but common themes are misclassification of certain workers as “exempt” and failure to pay workers for various work activities (such as “donning and doffing”—time spent putting on and taking off special protective equipment and clothing). Very few EPLI insurers will provide coverage for unpaid wages or related fines and penalties, but a number will grant a defense sublimit with which to fight these allegations.
Underwriters look at many factors when considering an account for EPLI, including: • number of employees and independent contractors; • geographic location of work force; employment turnover (voluntary versus involuntary); • documented employment policies and procedures, including distribution to and acknowledgement by all employees; • financial condition; past or forecasted layoffs; and • loss history. The following table contains examples of EPLI pricing for architecture and engineering firms (by size of work force).
Many insurers provide their insureds with value-added services in addition to coverage, either free or at a discount. The objective is to prevent claims or minimize poten-
tial damages in the event of a claim. Such services include: • materials to assist in development of internal policies and procedures; • a toll-free risk management ‘hotline’ to trained human resources specialists; • access to outside legal counsel to discuss pre-claims employment situations and scenarios; and • information through newsletters and Web sites to help employers stay current.
Rather than viewing each employee as a potential litigant, the goal should be to create a positive and fair environment. That, in turn, should help reduce your firm’s exposure to costly and demoralizing employee litigation. Implementing the following practices should help to achieve this goal. 1. Draft and disseminate an employment manual to all employees—securing acknowledgement of, understanding of, and agreement to its policies and procedures. 2. Provide training for all management personnel, as well as to other employees, on employment laws as they relate to the organization’s policies and procedures. 3. Review job advertisements, job applications, job tests, offer letters, employment contracts, and employment manuals with outside legal counsel. 4. Prominently publish the firm’s equal employment opportunity policies. 5. Establish a written policy of ‘zero tolerance’ against sexual harassment and discrimination of all types. 6. Create and consistently enforce a confidential complaint procedure and progressive discipline policy. 7. Thoroughly investigate any charge of discrimination or sexual harassment. 8. Periodically evaluate classifications of employees and compliance with laws.
Against the backdrop of escalating employment litigation, employers with strong risk management procedures in place—and the protection of an EPLI policy—can reduce their chances of facing a loss and mitigate the organization’s balance-sheet risk if a claim does arise. v The Georgia Contractor
September | October 2011
New Considerations for Joint Venture Agreements By D. Michael Williams | Rutherford & Christie LLP
y now, many in the construction industry are probably aware of the three percent withholding mandate on government contracts, which becomes effective January 1, 2012. While Section 511 of the Tax Increase Prevention and Reconciliation Act (TIPRA) was enacted in 2005, contractors who perform work for federal, state or local governments should begin considering and preparing for the overall effect that the withholding mandate will have, since the effective date now looms at the end of this year. If you are unfamiliar with the withholding requirement, most trade organizations for industries that regularly provide goods and services to governmental agencies have detailed information about the withholding mandate available on their Web sites. Generally, the law requires that federal, state, and local governments with expenditures of more than $100 million withhold as federal taxes three percent of payments for products and services worth more than $10,000. There are lobbying efforts underway to attempt to have the withholding requirement repealed, but so far Congress has yet to pass any legislation that removes Section 511 from TIPRA. A recent report by the Treasury Inspector General for Tax Administration seems to have made the efforts to repeal the withholding mandate more difficult. The report found that more than ten percent of contractors performing work for the Internal Revenue Service had delinquent federal tax accounts totaling $10.6 million. Trade organizations for many of the industries affected by TIPRA have debated the effects of the withholding mandate. Opponents of the TIPRA withholding requirement have provided numerous examples of how TIPRA impacts the various industries that regularly conduct business with governmental agencies. In the construction industry, the TIPRA withholding requirement would impact the creation of project specific entities such as corporations, partnerships or joint ventures.
The agreements that create these entities need to anticipate the future effects of the TIPRA. For example, a governmental agency is required to withhold $600,000 in payments on a $20 million construction project. Because the payment withheld is applied to the potential tax liability of the entity, the agreement creating and governing the project specific entity will need to address how to account for the tax payment among its members. In addition, because the entity was created for a specific project, it usually would not have large cash reserves. Withholding a $600,000 payment may leave the partnership or joint venture cash strapped and unable to complete the project without a cash infusion. Any agreement that creates and governs a project specific entity should address how future capital needs will be handled. While the TIPRA withholding requirement does not apply to contracts with private entities, any joint venture or other entity created for a specific construction project creates a very complex set of problems that need to be addressed. Any agreement that creates a project specific entity should, at the very least, address the detailed scope of work for each party, a specific procedure for
managing the entity, the duration of the relationship, a method by which profits (or losses) will be divided, how future capital needs will be met, and how disputes will be resolved. In addition, joining forces and finances with another company also may require disclosure of confidential or proprietary information, including a companyâ€™s key employees. In such cases, the joint venture or similar agreement should contain a confidentiality provision and prohibit hiring away key employees at the conclusion of the project. Whether addressing problems created by TIPRA or those that are likely to occur on any project, anticipating potential problems and adopting a mechanism to resolve them proactively can go a long way toward ensuring the success of a joint venture. v
D. Michael Williams, Rutherford & Christie LLP
The Georgia Contractor
There Are and Will Continue to be Great Career Opportunities in the Construction Industry. By Scott Shelar « Executive Director | CEFGA
ike most other sectors of our economy, Georgia’s construction industry struggled in 2010 and continues to face hard times in 2011. Contractors tell us that bid lists are long and margins are tight. So, ‘Finding Work’ is still the top concern in our industry. But there’s a close-second concern in the construction industry today: ‘Finding Workers.’ An interesting trend is emerging in Georgia and throughout the country. That is, unemployment is high, yet employers can’t seem to find people with the skills they need. For example, the number of unemployed Georgians is just under 500,000. Yet, a quick internet search of construction jobs in Georgia turns up more than 5,000 opportunities. Anecdotally, companies are telling us that they are finding some work, but they are having trouble finding good quality, skilled workers—especially welders, concrete finishers, and high quality lead-people—even in this economy! There are many factors, of course. Some contractors point to Georgia‘s recent immigration bill and say it is ‘driving good workers out of the state.’ Another well-documented problem is our aging workforce. Baby Boomers (people born between 1946 and 1964) make up nearly 50 percent of the construction industry, and are retiring at an alarming rate. Combine these factors with an increasing demand for skilled construction workers, especially in the industrial construction sector (think nuclear and other power plants) and you begin to see a perfect employment storm on the horizon. Some people refer to this problem as a ‘Skills Gap.’ That is, there is a gap between the skills employers are seeking and the skills that job seekers have. And that’s certainly part of the problem. September | October 2011
We believe there is also an ‘Information Gap.’ That is, people are not aware of the opportunities in commercial and industrial construction. Indeed, before anyone is going to acquire the skills, they will first need to be convinced of the career opportunities and potential. CEFGA and its partners are working proactively to address both the Skills Gap and the Information Gap. We are addressing the Skills Gap by working with high schools and technical colleges across Georgia to implement the NCCER’s Contren Learning Series—an industry-driven, nationally standardized construction training program. We are addressing the Information Gap by reaching students through Careers in Construction Week (October 31 November 4, 2011) and our CareerExpo and SkillsUSA State Championships event (March 11-12, 2012). Through a combination of programs, CEFGA reached more than 7,000 students in 206 middle schools, high schools, and technical colleges across the state during the
2010-2011 school year. CEFGA is building a talent pipeline that will feed Georgia’s construction industry with skilled and motivated young people for decades to come. If you are passionate about the construction industry and would like to join CEFGA in getting the word out to middle school and high school students, please contact us at 678-889-4445 or visit our Web site at www.cefga.org. v,,
Scott Shelar is in his 13th year as executive director of CEFGA - the Construction Education Foundation of Georgia. CEFGA is a private nonprofit organization dedicated to promoting careers in construction as a top choice for any student pursuing a well-paid, exciting and rewarding professional life. 17
National Transportation Funding Boosts U.S. Economy By Jay M. Moreau
raffic congestion costs the U.S. $145 billion annually in wasted time, repairs, and operating expenses according to TRIP, a national transportation research group. That’s an unnecessary burden that our economy is in no shape to bear. Georgia is attempting to address this issue through its regional transportation initiatives that would allow regions to raise local matching funds for specific transportation projects. Yet Congress seems content to allow a deteriorating transportation system to shackle the nation’s economic rebound. The House Transportation and Infrastructure Committee has drafted a bill assuming cuts of 30 percent in transportation funding for each of the next six years. Such a move would cost Georgia $400 million annually and result in the loss of more than 86,000 construction jobs over that time, according to the Federal Highway Administration. Meanwhile, a Senate committee is drafting legislation that continues funding at current levels, but only for the next two years. Either approach would serve to delay our nation’s emergence from its economic morass, and more specifically, would undermine Georgia’s own efforts to improve transportation infrastructure funding. Economic growth depends on a transportation network that provides reliable, fast, safe, and cost-effective performance. Increasingly, businesses must contend with complex supply chains and ever-lengthening travel times for their goods, not to mention their customers and employees. Safety concerns and environmental pollution add to our transportation woes. Unless Congress provides sufficient transportation funding over a multi-year period, our economy will continue to stagnate from crumbling infrastructure, backedup highways, and gridlocked logistics. As Georgians, we have thrived on the foundation of a top rated highway system and have one of the premier east coast ports 18
at Savannah. But, economic viability depends on continued development of these foundations with a focus on the future. If goods can’t get from the port in Savannah, around Atlanta, and on to markets throughout the United States, Georgia will lose this business and these jobs to other states and regions. The current (and seventh) extension to the national transportation reauthorization, known as SAFETEA-LU, expires on September 30. America doesn’t need yet another short-term fix. In order to make investments in equipment and employees, private industry needs the assurance of a long-term transportation commitment from the federal level. So do the states. While ‘long-term’ may conjure up an image of delayed or far-removed results, just the opposite is true. A long-term plan would have immediate economic impact because it would give the road construction industry assurance of future business opportunities. They would quickly begin spending money for heavy equipment and for stockpiling raw materials such as crushed stone. They could also hire employees without the fear of near-term layoffs. None of this happens under a two-year law. Yes, new transportation projects will
create thousands of new jobs in and of themselves, but that’s small potatoes compared to how improved transportation and logistics efficiency will boost our overall economic picture. Congress should pass a long-term (at least six years), fully-funded (at least at current levels) surface transportation bill that allows for real road, bridge, rail, and transit improvements. It’s the best way to provide a far-reaching stimulus to our economy. And now is the time get more pavement per payment. Construction costs are at a low point, so state and local governments will get very competitive bids from contractors. Our economy simply can’t grow as long as cars, trucks, and trains can’t go. It’s time to get Georgia and the nation rolling again. v
Jay M. Moreau is president of the south central division of Martin Marietta Materials.
The Georgia Contractor
New Report Details Deterioriating State of Nations’s Rural Roads and Bridges, Rural Fatality Rate Three TImes Above Average Research Group’s Rural Roads Report Provides ‘Distressing’ Reminder of Need for Federal Investments in Infrastructure as Some in Washington Seek to Eliminate Program Altogether The nation’s rural roads and bridges are rapidly deteriorating, causing the fatality rate along back roads to triple the national average for highway fatalities according to a new report on rural road conditions released today. The report’s findings prompted members of the business, construction, and transportation communities to call for passage of longdelayed federal legislation to fund road repairs and bridge maintenance. “Employers understand all too well that when rural roads crumble, bridges deteriorate and safety declines, virtually every aspect of the American economy suffers,” said Stephen E. Sandherr, the chief executive officer of the Associated General Contractors of America. “The best way to boost our economy, support private sector growth and cut unemployment is to pass a new surface transportation bill.” The report, “Rural Connections: Challenges and Opportunities in America’s Heartland,” found that the highway fatality rate on the nation’s rural roads was 2.31 deaths for every 100 million vehicle miles of travel, three times the fatality rate on all other roads. The report also found that 55 percent of the nation’s rural roads were rated poor, mediocre or just fair. And 23 percent of rural bridges were either structurally deficient or functionally obsolete. September | October 2011
The report, which was prepared by TRIP, a national transportation research group, ranked states based on their rural fatality rates, rural road conditions, and the state of their rural bridges. It found that South Carolina and Florida had the highest rural road fatality rates. Vermont and Idaho have the highest percentage of rural roads in poor condition. And Pennsylvania and Rhode Island lead the nation in the percentage of deficient rural bridges. “The back roads of America shouldn’t be on the back burner of public policy priorities,” said Brad Sant, American Road & Transportation Builders Association vice president of safety and education. “Making the investments necessary to ensure rural roads are safer and more forgiving is the responsibility of elected officials at all levels of government.” The business and transportation leaders noted that employers rely on rural roads to ship much of the nation’s produce and goods. They said despite the clear connections between the economy and the nation’s road conditions, some in Washington were calling for additional transportation cuts, while others were even calling for an end to federal transportation funding. They cautioned that doing either would deprive states of the resources they need to improve road conditions, repair bridges, and keep roads safe. “Killing funding for our aging roads and bridges would be tantamount to economic malpractice,” Sandherr said. Instead, he urged Congress to quickly pass new long-term legislation that would, among other things, help improve the nation’s rural roads and bridges. v
Ken Swofford Elected Vice President of Georgia’s Top Commercial Contractor Association
Ken Swofford The Associated General Contractors of America Georgia Chapter (Georgia Branch, AGC) elected Atlanta native E. Kenneth Swofford as the 2011-12 chapter vice president. Swofford is President of Austell-based Swofford Construction Inc., a full-service commercial contractor who for the past 33 years has specialized in building quality religious, educational, and industrial facilities. The firm has been an active AGC member since 1983. Swofford’s personal dedication to the construction industry has resulted in his election to serve in numerous leadership roles over the years with Georgia Branch, AGC including previous terms on the chapter’s board. He currently serves on the CompTrust AGC Mutual Captive Insurance Company board, the chapter’s workers’ compensation program. Swofford proudly supports several youth sports programs, the YWCA, Camp Glisson,
The Calvin Center, the Boys and Girls Club, and Make-A-Wish Foundation. Other officers joining Swofford in leading the chapter’s board of directors include Tony Pellicano, Pellicano Construction in Albany and Atlanta as president; Dave Cyr, Parrish Construction Group Inc. in Perry as secretary; and Randall Redding, R. K. Redding Construction Inc. in Bremen as treasurer. v Dave Cyr Elected to Second Term as Board Secretary of Georgia’s Top Commercial Contractor Association
tractors. Currently, he serves as chair of the General Contractor Division of the Board. In addition to volunteering time to serve the construction industry, Cyr is active in the leadership at Perry United Methodist Church. He enjoys participating in many civic, charitable and economic development organizations in and around the Perry community as well. “It is an honor for me to serve on the AGC Board representing our member firms and the state’s construction industry. I am pleased to be in the company of so many outstanding professionals who make up our great association,” says Cyr. v Pellicano Elected President of Georgia’s Top Commercial Contractor Association The Associated General Contractors of America Georgia Chapter (Georgia Branch, AGC) elected Tony Pellicano as the 2011-12 chapter president. Pellicano is President of Pellicano Construction, a regional construction management firm founded in 1976. With offices in Albany and Atlanta, the firm currently operates in
Dave Cyr The Associated General Contractors of America Georgia Chapter (Georgia Branch, AGC) elected Dave Cyr as the 2011-12 chapter secretary serving his second consecutive term in this role. Cyr is President of Parrish Construction Group, a Perry-headquartered, full-service contractor with expertise in facility planning, preconstruction, construction management atrisk, general contracting, and design build services. Founded in 1995, the firm specializes in academic, commercial, educational, and industrial projects for the public and private sectors throughout Georgia. Continued steady growth and expansion of the firm’s operations in 2010 with a new office in Alpharetta resulted in average annual revenues exceeding $60 million. Cyr was appointed by Governor Perdue in 2006 to serve on the State Licensing Board for Residential and General Con20
Tony Pellicano ten southeastern states managing construction projects in the retail, hospitality, healthcare, commercial, religious, financial, and industrial market segments. “My being elected president of this great association is an honor and privilege for me, my family and colleagues at Pellicano Construction. I am excited about serving the
outstanding professionals who are a part of Georgia Branch, AGC and representing our industry throughout the state and at the national level,” says Pellicano. v New Board of Directors Elected to Lead Georgia’s Top Commercial Contractor Association The Associated General Contractors of America Georgia Chapter (Georgia Branch, AGC) elected its new officers and board of directors: president, Tony Pellicano, Pellicano Construction in Albany; vice president, Ken Swofford, Swofford Construction in Austell; secretary, Dave Cyr, Parrish Construction Group in Perry; and treasurer, Randall Redding, R. K. Redding Construction Inc. in Bremen. Other new board members include Dan Baker, P. E., Duffey Southeast Inc. in Cedartown; Bert Brannen, Fisher & Phillips LLP in Atlanta; Nate Cecil, Wharton-Smith Inc.—Thamer Division in Norcross; Scott Clark, R. W. Allen, LLC in Augusta; John Coleman, Bonitz of Georgia Inc. in Savannah; Jim Cooper, Cooper & Company G.C. Inc. in Cumming; Brian Daniel, Carroll Daniel Construction Co. in Gainesville; Ben Garrett, RA-LIN and Associates Inc. in Carrollton; Walt Gill, Pinnacle Prime Contractors Inc. in Valdosta; Randy Hall, Batson-Cook Company in Atlanta; Tom Hall, Dublin Construction Company Inc. in Dublin; Brett Hawley, J. M. Wilkerson Construction Co. Inc. in Marietta; Paul Hogan, Hogan Construction Group LLC in Norcross; Shane Hornbuckle, Van Winkle Construction in Atlanta; Doug Hunter, Holder Construction Company in Atlanta; Lyndy Jones, JCI General Contractors in Moultrie; Bill Lusk, P. E., Lusk & Company in Alpharetta; David Moody, C. D. Moody Construction Company Inc. in Lithonia; Raymond Moody, Jr., BatsonCook Company in West Point; Gary Newell, Collins & Company in Smyrna; Eric Schoppman, Schoppman Company, Inc. in Marietta; Chris R. Sheridan, P. E., Chris R. Sheridan & Company in Macon; Kevin Turpin, The Conlan Company Marietta; Keith Watson, Bowen & Watson, Inc. in Toccoa; Brad Williams, Dabbs-Williams G.C., LLC in Statesboro; and Gary Young, The Georgia Contractor
Randal Redding Young Contracting/SE, Inc. in Atlanta. Michael T. Dunham is the Chapter’s Executive Vice President. v Cummins B3.3 Moves Forward to Tier 4 Final with a Particulate Filter-only Solution New Aftertreatment System Provides A Simple ‘Up Tier’ Capability For The 41 to 55 Kilowatts Mechanical Engine Cummins announced today that the mechanical B3.3 engine will move forward to meet Tier 4 Final emissions standards in 2013 with a particulate filter aftertreatment system developed specifically for use in compact equipment rated below 56 kW (75 hp). The new exhaust aftertreatment operates as an independent system to achieve near-zero Particulate Matter (PM) emissions, enabling the B3.3 to simply ‘up tier’ to Tier 4 Final without the need for any change to the engine. Using a particulate filter-only solution for Tier 4 Final means that the B3.3 engine maintains exactly the same class-leading performance and reliability that it achieves today at Tier 4 Interim emissions levels. The inherent simplicity of the mechanically controlled 3.3-litre engine continues forward without adding engine electronics or changing the fuel system. The ability of the B3.3 to easily up-tier with the particulate filter provides a more efficient installation solution by retaining the same engine configuration for use at all September | October 2011
emissions levels worldwide across the important 41 to 55 kW (55 to 74 hp) power range for compact equipment. The particulate filter has been developed by Cummins Emission Solutions to meet the EPA Tier 4 Final and equivalent emissions standards in Europe and Japan taking effect on January 1, 2013, for engines below 56 kW (75 hp). The aftertreatment reduces PM emissions by over 90 percent to a near-zero level of 0.02 g/kW-hr for machines such as excavators, aerial lifts, forklifts, tractors, gensets, skid steer loaders, and other compact equipment. “Cummins up-tier solution for the B3.3 to meet Tier 4 Final is unique in the industry, with the new particulate filter replacing the exhaust muffler and with no change to the proven mechanical engine
platform,” said Chris Calas, Cummins 3.3Litre Product Manager. “With only one B3.3 engine configuration required for all markets worldwide, this means that equipment manufacturers will benefit from more streamlined production and easier in-service support. The machine cooling system remains the same for all emissions standards, with no additional heat rejection and no need for engine aftercooling. “Our Tier 4 Final approach is intended to minimize equipment redesign and maintain our extremely reliable B3.3 with the benefit of mechanical simplicity. Customer demand for the 3.3-litre continues to grow significantly, and now we will move the capability of the B3.3 even further ahead of other similar 4-cylinder engines for Tier 4 Final,” added Calas. Cummins up-tier solution for the B3.3 is anticipated to realise higher residual
equipment value for operators and rental fleets. Using the same engine as today for Tier 4 Final in 2013 also means that owners will continue to benefit from the outstanding dependability and low cost of maintenance, proven under the toughest duty cycles. Independent Aftertreatment System The B3.3 particulate filter achieves nearzero PM emissions by leveraging proven technology with the unrivaled experience of nearly one million Diesel Particulate Filters (DPFs) produced by Cummins Emission Solutions, a world leader in exhaust aftertreatment and components. To maximize machine installation flexibility, the particulate filter is a self-contained package, with an oxidation catalyst and wall-flow filter ideally sized for compact-equipment applications below 56 kW (75 hp). The filter provides the same noise suppression as the muffler it replaces. “The particulate filter for the B3.3 engine is designed as an independent aftertreatment system to reduce emissions with no impact on machine performance or operation,” said Julie Furber, General Manager—Off-Highway Business Cummins Emission Solutions. PM emissions are removed by a regeneration process that takes place passively for most of the equipment operating time. However, as a backup, the aftertreatment features an integral thermal management
system that automatically initiates an active regeneration when required to clear the filter of PM buildup. “A key performance attribute of the system is the aftertreatment control module, which applies Cummins electronic logic to precisely monitor engine exhaust con21
ditions and control the thermal management active regeneration for the B3.3 mechanically controlled engine,” added Furber. Durability of the particulate filter is equivalent to that of the B3.3 engine, with very robust packaging intended for the harshest off-highway equipment operating conditions. The system features enhanced protection against vibration and shock loadings. Cummins B3.3 Moves Forward To Tier 4 Final With A Particulate Filter-Only Solution Naturally Aspirated And Turbocharged Ratings For B3.3 Tier 4 Final applications with the particulate filter, the naturally aspirated 48 kW (65 hp) and 45 kW (60 hp) ratings are joined by a lower 41 kW (55 hp) rating to further extend the application range, providing a strong 214 Nm (158 lb-ft) of peak torque. The turbocharged B3.3 is rated 55 kW (74 hp), with an impressive peak torque of 241 Nm (178 lb-ft) and a torque rise of 22 percent. For applications requiring less severe emissions standards than EPA Tier 4 Final and equivalent regulations in 2013, the same B3.3 ratings will remain available without the need for the particulate filter aftertreatment. The B3.3 mechanical ratings extend up to 63 kW (85 hp) for these lower emissions requirements. The B3.3 can be specified with the advantage of single-side servicing and will also be available with the new Cummins Direct Flow™ air cleaner, offering extended filter change intervals and a smaller space claim than typical cylindrical cleaners. A new production operation in Chennai, India, will complement B3.3 manufacturing in Japan, providing a major increase in build capacity to meet the continuing growth in demand from compact equipment manufacturers worldwide. v Balfour Beatty Construction has named Christian Jacobsen Director of Interior Services for its Georgia-based operations. In this role, Jacobsen will be responsible for the development and oversight of all interi22
Christian Jacobsen ors and mission critical work within the metro-Atlanta market and surrounding area. Initially, Jacobsen will play an integral role in the strategic planning of the necessary infrastructure to support these markets independent of other business units. Cool Southwestern Style If you find summer’s sizzling temperatures appealing and you gravitate to warm, earthy color tones, then it’s time to consider adding some southwestern style to your home’s exterior.
“A terracotta-colored roof can call to mind the casual and rustic setting of the southwest even if your home isn’t in that beautiful part of the country,” says national color expert Kate Smith. “The earthy shades that speak to the rich culture and picturesque desert landscape can add eye-catching beauty to any home.” Smith believes you should work from the “top down” when adding color to the home. “For lovers of the southwestern style,
the Sedona blend of colors found in Bellaforté polymer roofing tiles is ideal,” says Smith, president of Sensational Color. “This combination of colors includes shades of medium and dark terracotta mixed in with light and dark clay tones to create an earthy color that works perfectly on many homes.” DaVinci Roofscapes® introduced the new Sedona blend of colors to the marketplace early in 2011 as a result of requests from homeowners. The individual terracotta and clay colors were also launched this year and are available in the blend or as single colors in the company’s polymer roofing tiles. Working your way down the home, Smith recommends using shades of beige or tan on the home’s siding to ‘ground’ the house with your landscaping. Then, select a sharper color for accent features such as the entryway. “A fired brick red color on the door can harmonize with the terracotta roof, while a smoky blue topaz would complement the roof with a contrasting tone,” says Smith. “The different color shades of color found in the Sedona blend provide lots of options to play off of on window and trim elements, such as a blush grey- or claycolored paint.” Smith relates that there are 49 roofing colors available from DaVinci, all inspired by nature. There are also 28 standard color blends, and homeowners can also create their own custom colors or blends. Each polymer roofing tile resists insects, fungus, algae, mold, cracking, fading, and curling. Patented snap-fit, self-locating Bellaforté roofing tiles include an integrated rain gutter, leading edge tab, and rain dam. Backed by a 50-year limited warranty, the 12-inch slate roofing tiles have achieved some of the strictest testing ratings in the country, including the Miami Dade Notice of Acceptance (NOA) and Florida Building Code (FBC) qualifications. Bellaforté roofing tiles use twenty percent less material than traditional synthetic and natural slate shingles, saving resources and reducing the tile weight. A square of Bellaforté roofing tile weighs just 185 pounds, helping reduce both installation time and landfill load due to reduced conThe Georgia Contractor
struction waste. DaVinci Roofscapes is a member of the National Association of Home Builders, the Cool Roof Rating Council, and the U.S. Green Building Council, and a sponsor of Homes for Our Troops. For additional information call 1-800-328-4624 or visit www.davinciroofscapes.com. v Lafarge Introduces Portland-Limestone Cement in Canada to Reduce Carbon Footprint, Help Customers achieve High Standards in Sustainable Construction Approved by Canadian Standards Association and used in Europe for over 25 years, new commercial offering provides similar performance to portland cement with fewer greenhouse gas emissions. In response to ever-increasing market demand for sustainable building solutions, Lafarge has recently introduced a new portland-limestone cement (PLC) commercial offering in Canada. Widely used in Europe for over 25 years, PLC is a new category of cement that provides performance similar to conventional portland cement with up to ten percent less CO2 emissions. Approved for use by the Canadian Standards Association, the National Building Code of Canada, and the British Columbia, Ontario, and Quebec Building Codes, PLC is produced by intergrinding portland cement clinker with between six percent and 15 percent limestone. Based on a number of trials, considerable testing, and Lafarge’s innovative approach to PLC, the new GUL cement with up to 15 percent limestone, which is well below the 35 percent limit in Europe, will achieve comparable performance to regular portland cement in terms of concrete workability, set time, durability, and all ages of concrete strength development. Because of these performance similarities and the significant sustainability advantages, Lafarge will start the transition from regular portland cement to PLC this year. Customers in British Columbia, Ontario, and Quebec are currently being supplied PLC from Lafarge’s plants in Richmond, British Columbia, and Bath, Ontario. Product introduction to other provinces will occur as additional testing and updates to September | October 2011
local building codes are completed, which is expected to occur by the end of 2012. With the potential to bring about a ten percent reduction in greenhouse gas emissions, the production of PLC at Lafarge’s Richmond and Bath Cement Plants alone is expected to reduce CO2 emissions by 160,000 tons annually, which is equivalent to taking over 30,000 cars off the road. In addition, concrete containing combinations of PLC and varying levels of supplementary cementing materials (up to 50 percent) will permit further reductions in the carbon footprint. “Providing customers with innovative solutions to reduce energy needs and carbon dioxide emissions is one of our top priorities,” said Anik Delagrave, director of innovation for Lafarge Cement. “As an industry leader, one of our goals is to help reduce the
carbon footprint of the building sector, and the introduction of PLC in Canada marks yet another milestone in our ongoing commitment to protect the environment.” For additional information on Lafarge’s new PLC commercial offering in Canada, visit the company’s Web site or contact Daniel Hérouxat email@example.com or Matt Dalkie at firstname.lastname@example.org. The Lafarge Group entered the global "Dow Jones Sustainability Index" in 2010 in recognition of its sustainable development actions. The Group places innovation at the heart of its priorities, working for sustainable construction and architectural creativity. For more information about Lafarge North America, go to www.lafarge-na.com Contact: Steve Meima, Lafarge North America: (703) 480-3808 v
erratum “We regret that the article, “New Immigration Law—The Trend in ICE Investigations,” which appeared on page 26 of the July/August 2011 (Volume 7, Issue 4) edition did not include a by-line. The author was Carrie L. Christie, a partner with the law firm of Rutherford & Christie LLP. She was assisted on the article by Dylan R. Davis, a junior at the University of Georgia majoring in political science.” 23
Premium Overtime-Another Side to Compensation By: T. Wayne Owens, CPA Compensation has been a major topic of conversation for the past couple of years between the DOTs and consultants. Typically, people think of executive compensation levels, but there is another side to this compensation discussion: allocation. How is compensation allocated to the different ‘cost objectives’? In other words, how much payroll cost does a project incur for any given hour charged to the job? Uncompensated overtime has been discussed at great lengths, but I have not heard much formal discussion of premium overtime until recently. The premium portion of overtime for hourly employees keeps creeping up in conversations I have with DOT auditors. They are receiving overhead audit reports without any consistency in how premium overtime is treated. This is probably due to a lack of consistency in how firms are treating the cost. The problem begins when firms choose to charge the premium portion of overtime directly to a project. Based upon conversations I have had with multiple principals, it appears there are a multiple of reasons for this direct charging of the premium portion. They range from a simple “it has to go somewhere” to “we want to accurately charge all jobs” or “we have always done it this way.” The simple truth of premium overtime is we typically do not know which project caused the overtime. People typically work on multiple jobs during the week and it is hard to know if it is the first job or the last job that caused the overtime. Given the choice, most principals believe a cost plus job will create the overtime over a lump sum job. This will create a system of adverse selection for cost plus jobs. The real problem: will the cost plus contract allow you to charge the premium portion? Typically, these contracts don’t allow the premium portion, thus you are charging dollars to a job for which you will not be reimbursed. The cost stays in the direct labor base and reduces your overhead 24
annual overhead statement should reflect the costs incurred by the firm with no adjustments for direct labor. This creates a base that accurately reflects the costs of the firm and allows the consultant to be reimbursed at a fair rate allowing them to recovr all costs. This is the intention of the cost plus contracting method. v T. Wayne Owens rate. Not only are you not being reimbursed on the direct labor portion but you are reducing your reimbursement on all jobs. Some firms try to correct this problem by reducing direct labor on their overhead statement by the premium portion of the overtime cost. However, this only fixes part of the problem. Firms are still not being reimbursed for all of their costs. Basically, legitimate costs are being incurred which are not being reimbursed by the government. This is not a case of the government refusing to pay, but simply the consultant not requesting the reimbursement. We (or I) believe you should stay true to your labor costing policy. The two choices are standard cost or average (effective) cost. With standard cost, all employees have a standard cost, and all hours are charged with this cost. Any difference in standard cost and actual payroll cost is charged to the payroll (job cost) variance. In other words premium overtime increases overhead, and uncompensated overtime reduces overhead. With average cost, the total payroll (including premium overtime) is divided by total hours for each employee which creates a cost rate for that period. Premium overtime increases the cost, and uncompensated overtime reduces the cost. The only real problem with the typical costing methods is when a contract reimburses for the premium portion of overtime. This creates a situation where the firm must change their policy for this contract through a forward pricing agreement.The The Georgia Contractor
Protecting the Tax Benefits of Employer-Owned Life Insurance Policies—Getting it Right By Corinne Wooden, CPA – Deemer, Dana & Froehle LLP Is your design firm in compliance with the new rules surrounding employer life insurance policies? The consequences for failing to comply are harsh. The tax rules were changed for contracts issued after August 17, 2006, so if you have not changed or entered into an employer-owned life insurance contract since then, you may not be aware of the new requirements. Certain policy proceeds that are normally tax-free can become taxable if proper procedures are not followed. Losing these tax benefits can be costly, but can also be avoided by following certain notification, consent, and reporting procedures. It is important to comply with the rules now to properly preserve the tax benefits of proceeds you may collect later. If your firm plans on entering into any new contract, the time to act is before the policy is issued and at tax reporting time for each year that the policy is in effect. Employer-owned life insurance (EOLI) contracts are policies that are owned by a business and cover individuals, who at the time the policy was issued, were an employee, officer or director of that business. The other key characteristic of an EOLI contract is that the business is the beneficiary of the policy. Often times these are referred to as ‘key-man’ policies and are purchased by design firms to indemnify the firm for the loss of a key employee. They can also be a key ingredient in a buy-sell agreement by serving to fund the buyout of a deceased shareholder or partner by the surviving partners or shareholders. What are the consequences of not following the rules? The tax code does not allow the deductibility of premiums paid for employer-owned life insurance contracts and historically it also allowed businesses to exclude death benefit proceeds from income when collecting on the contracts. In 2006, a rule was placed into effect whereby the income exclusion is limited to September | October 2011
The firm must also obtain written consent from the employee and consent to have coverage that may extend after the employee terminates employment.For the consent to be valid, the EOLI contract must be issued within a year after the consent was executed or before the employee terminates employment, whichever is earlier. A new notice and consent needs to be issued and obtained if the aggregate face amount of the policy is increased to exceed the amount listed on the original notice and consent. Corinne Wooden an amount equal to the premiums paid for the policy, unless certain requirements are met. Policies that were in place before August 17, 2006 are not affected by the new rules but if they are modified the requirements may apply. There are three steps in meeting the requirements: notification, consent, and reporting. If the requirements are not met, the only portion that may be excluded from income is that amount of death benefits equal to the sum of premiums and other amounts paid by the policyholder for the contract. Notification & Consent For policies issued after August 17, 2006, the exclusion of death benefit payments from income will only be allowed for those employers who provide notification and obtain consent from the party they wish to insure. The notification and consent must be in writing and must contain all of the following information. Provide the employee with notice of intent to insure the employee’s life as well as the maximum face amount for which the employee could be insured at the time the contract is issued. The face amount must be in dollars or as a multiple of salary. The notice must state that your firm will be the beneficiary of any proceeds payable upon the death of the employee.
Reporting Additionally, the new rules also require policyholders who own one or more EOLI contracts to report information about them annually. Form 8925 was developed by the Internal Revenue Service to satisfy the reporting requirements and needs to be included with the tax return of any business who owns EOLI contracts. The reporting stipulation requires the employer to disclose their total number of employees, the number of employees insured under EOLI contracts issued after August 17, 2006, and the amount of EOLI insurance in force at the end of the tax year. The form also requires the employer to report whether or not they have obtained a valid consent from the employee. There has been no change in the tax treatment of any interest included in the insurance proceeds. Interest that accrues between the date of death and the date the benefit is paid remains subject to income tax. If your firm already has employerowned life insurance contracts, make sure you inform your tax professional, and if you plan on entering into any new contract or modifying any existing contracts, consult your insurance and tax professional to make sure you are complying with the new rules regarding notice, consent, and reporting. It can save you from a costly tax consequence.v 25
From Casual to Committed: How Alignment and Engagement Can Create Positive Accountability By Walt Zeglinski “If your employees don’t know where you’re going, almost any road will get them there.” These are words that send chills through the hearts of leaders everywhere. And it’s why they work hard to develop business plans for their workforce to follow. Even the bestintentioned, savviest business plans can fail if the organization lacks consistent employee commitment. But you can’t just mandate commitment. Organizations that achieve the promise of their business plan are able to create ‘positive accountability’—a powerful, healthy culture that results from goal alignment and workforce engagement. Goal alignment is a common challenge, yet its solution can be as simple as how goals are established. If developed through a process of top-down collaboration with employees, strategic imperatives will cascade to frontline behaviors, dramatically impacting an organization’s success. Effectively channeling employees’ talents boosts their productivity and job satisfaction. And satisfied employees often become high-performing, passionately engaged employees. Workforce engagement allows organizations to tap into their employees’ discretionary efforts. However studies show that only one in four employees comes to work actively engaged, or ‘on purpose.’ These are the individuals that find their work personally and professionally meaningful. Of course, this means that 75 percent of employees consistently fail to execute to their full potential. More disturbing, the same studies show that almost one-third of these are actively disengaged and can undermine the engagement of others. Clearly, addressing alignment and engagement challenges can result in significant bottom-line dividends. Consider highperformance cultures like Google and Southwest Airlines. Two unique companies in very different industries, they both sustain their competitive advantage by leveraging the commitment of their employees. 26
They have created cultures that drive alignment and engagement to achieve their strategic goals. The Positive Accountability Model (below) helps to illustrate four different profiles that organizations typically fall into. Specifically, it examines how varying degrees of Goal Alignment and Workforce Engagement can result in Casual, Compliant, Chaotic or Committed cultures.
The Casual Culture Employees in the Casual Culture are unclear about how personal contributions support their organization’s success and, often, they don’t care. Most organizations struggle with disengaged employees, but Casual Cultures have more than their share. You’ll often spot the Casual Culture in the wake of a merger, acquisition or new CEO. It’s often embedded in entrepreneurial companies, fueled by passionate, egocentric leaders, rather than by calculated ones who, instead, implement collaboratively planned process discipline. In a Casual Culture, people often do mediocre work, maybe just showing up and following bare-bones procedures. They lack passion for the organization’s mission, and often don’t understand why or how they need to achieve both personal and company goals. The Casual Culture often operates in
‘survival mode.’ What to do? Use consensus-building to develop and implement strategies that establish clear goals and expectations, a Vital Factors metrics-based system to inspire success, and the means to hold people accountable. Once developed, the consensus plan must cascade down through the organization, and be communicated in both word and deed. Leadership must also leverage the strong ties created by alignment to improve engagement. When people feel that their goals and tasks have meaning, they’re more likely to provide the organization with an extra measure of accountability that leads to goal achievement. The Compliant Culture A Compliant Culture is clear about individual goals, but not about how these goals connect to strategic corporate outcomes. The workforce may understand the company’s direction yet remain generally disengaged, resulting in a deceptive behavior pattern of doing what’s asked but little more. This creates the ‘it’s not my job’ syndrome, as leadership finds it hard to tap into the discretionary effort of their people. Every manager has one or two people who fall into this behavior because of their personal style but, when it’s pervasive in an organization, it’s difficult to get things done and nearly impossible to implement change. Overcoming this major accountability barrier most often requires effective, inspiring leaders who encourage open, honest communication. If a safe environment can be established it’s possible to reverse this dysfunctional behavior. They enable team members to understand the business rationale behind their goals and take risk in an effort to achieve them. It will empower these employees to discover the alignment between what they do daily and their company’s goals. When an employee develops positive attitudes and beliefs relative to goal The Georgia Contractor
achievement, their motivation to maximize their potential grows along with the passion in their commitment to company results. The Chaotic Culture Most employees in a Chaotic Culture are engaged but unclear about their goals. Put simply, these cultures diffuse energy and squander talent, so there’s ample activity with little to show for it. Employees have the talent and passion for greatness, but their strengths can sour if not channeled into predictable, focused behaviors. Without clear expectations, confusion reigns in the Chaotic Culture. What’s more, studies show that employees commonly fail and leave organizations simply because they don’t know or understand the expectations. What’s needed is goal clarity, managed by a leader who sets expectations and deadlines for achieving them. To ensure employee engagement, leadership should encourage their participation in building a plan based around SMART goals—those that are Specific, Measurable, Aligned, Realistic, and Time-bound. Once that’s accomplished, an effective leader must hold the team accountable through regular performance assessments and check-ins, determining what goals have been met and any cor-
rective action that should be taken. The Committed Culture Engaged with a clear understanding of its goals, a Committed Culture both maximizes the potential of its employees and consistently achieve goals. It’s the healthiest of work environments—what every organization should strive to achieve. Employees work with clarity and purpose and, although they might not always meet all goals, they stay committed to an action plan to fulfill them. Because they have an understanding of what success looks and feels like, they can develop the attitudes and beliefs that release achievement drive. This provides the energy and motivation to execute with accountability. A Committed Culture isn’t foolproof. An aligned, engaged culture must be nurtured to sustain performance standards. Regular progress reviews can ensure employees are meeting their goals and whether corrective action is necessary to stay on track. Why strive for a Committed Culture? When your workforce is fully engaged and clear about its goals, your employees will be loyal to the core. And a loyal workforce is one that naturally inspires loyal customers –
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emotionally satisfied customers who refer new customers to you and generate repeat sales. An organization that develops a Committed Culture has unlocked the secret to successful plan execution and profitable growth. It has created a culture of Positive Accountability. v
Walt Zeglinski is CEO & Chief Client Advocate for Management Action Programs (MAP), a performanceimprovement firm that helps organizations achieve profitable growth. MAP’s performance and process solutions establish the disciplines that create a culture of accountability. Walt has 20+ years of successful experience in the corporate performance industry, with expertise in developing and implementing practical solutions for complex business challenges. He has worked with executive teams across most industries including financial services, healthcare, technology, hospitality, and manufacturing. For more information, visit www.mapconsulting.com or call 888.834.3040.
September | October 2011
The Georgia Contractor
September | October 2011
Accessibility Assessment Observations & Lessons from the School of Experience By ECS Corporate Services LLC.
he purpose of the accessibility assessment is to determine if a property has conditions out of compliance with existing regulations. e Americans with Disability Act, Public Law 101336 (1/26/1992) requires in all places of public accommodation or commercial facilities that: 1) new construction must be designed and constructed so as to be readily accessible to and usable by person with disabilities, 2) alterations to existing construction must be designed and constructed so as to be readily accessible to and usable by person with disabilities, and 3) in existing construction, all “readily achievable” barriers must be removed by January 26, 1992 to accommodate individuals with disabilities.
e ADA was revised on September 15, 2010, and the revised requirements took eﬀect on March 15, 2011. e compliance date for the 2010 Standards for new construction and alterations is determined by: • the date the last application for a building permit or permit extension is certified to be complete by a state, county, or local government;
tion and alterations must comply with either the 1991 or the 2010 Standards. e Department of Housing and Urban Development (HUD) still recognizes the Fair Housing Act for accessibility issues on their properties. At this time HUD has considered the new ADA requirements as a “Safe Harbor” for new construction. Here are some typical questions and answers concerning ADA requirements: Are there any limitations on the ADA’s barrier removal requirements for existing facilities? Yes. Barrier removal need be accomplished only when it is ‘readily achievable’ to do so. What does the term ‘readily achievable’ mean? It means ‘easily accomplishable and able to be carried out without much diﬃculty or expense.’ What are examples of the types of modifications that would be readily achievable in most cases?
• the date the last application for a building permit or permit extension is received by a state, county, or local government, where the government does not certify the completion of applications; or
Examples include the simple ramping of a few steps, the installation of grab bars where only routine reinforcement of the wall is required, the lowering of telephones, and similar modest adjustments.
• the start of physical construction or alteration, if no permit is required.
What are the ADA requirements for altering facilities?
If that date is on or after March 15, 2012, then new construction and alterations must comply with the 2010 Standards. If that date is on or after September 15, 2010, and before March 15, 2012, then new construc-
All alterations aﬀecting the usability of a facility must be made in an accessible manner to the maximum extent feasible. For example, when alterations are made to a primary function area, such as the lobby of
a bank or the dining area of a cafeteria, an accessible path of travel to the altered area must also be provided. e bathrooms, telephones, and drinking fountains serving that area must also be made accessible. ese additional accessibility alterations are only required to the extent that the added accessibility costs do not exceed 20 percent of the cost of the original alteration. Elevators are generally not required in facilities under three stories or with fewer than 3,000 square feet per floor, except as specifically required by the standard. ECS can provide varying levels of accessibility assessment from visual assessment and a Level II checklist assessment as part of a Property Condition Assessment to a full assessment of a property utilizing checklist of the United States Access Board. An Accessibility Assessment can provide the client with useful information to how to improve their properties. is information can be helpful in creating expense budgets to maintain or upgrade a property. We hope that these ‘Lessons Learned’ will be helpful to you in your next project. Respectfully, ECS Corporate Services LLC ©2011 ECS Corporate Services LLC All Rights Reserved
The Georgia Contractor
September | October 2011