Lumenor Consulting Wins with Technology Also in this issue Research on DBE Success – Part II Turner Construction’s Reagan National Airport Project Shows Best Practices COTA & COMTO Columbus Form Winning Partnership
THG Companies Grows Using Clark Construction Program CERM Job Shadowing Program Exposes Next Generation to Success Legacy Rail Finds Industry Niche
GPI Building Texas Highway with DBE Partners / summer 2019
Your Career Journey Begins with Us The Metropolitan Washington Airports Authority (MWAA) offers small businesses and job seekers a place to grow. The Department of Supplier Diversity is strongly committed to maximizing the inclusion of small businesses in MWAA's contracting opportunities. To learn more about small business certifications, outreach events, current and upcoming contracting opportunities, the Airports Authority Small Business University, and conducting business with the Airports Authority, please visit http://www.mwaa.com/supplierdiversity.
Reagan National Airport
Dulles International Airport
We hope you will choose to start your career journey with us! We believe in diversity, our workforce is our strength, comprised of an array of backgrounds, cultures and interests which only makes us stronger. We offer a competitive total rewards package. Join our team: http://www.mwaa.com/careers. Dulles Corridor Metrorail
MWAA.COM Your Journey Begins with Us Dulles Toll Road
/ summer 2019
Our buildings change skylines. Our people change lives. Turner was the first major construction firm to establish a full time community outreach department within its organization during the early 1960s, with the major goal of raising the economic viability of traditionally under-represented businesses. In 2018 Turner awarded $1.64B in volume and 3380 contracts to under-represented businesses.
650 individuals graduated from the Turner School of Construction
Management in 2018. This nationally recognized training program is celebrating its 50th anniversary this year. The program helps UBEâ&#x20AC;&#x2122;s build networks, establish joint venture partnerships, and form long-lasting relationships.
/ summer 2019
Lumenor Consulting Stays on Top with Technology
DBE Power Player
Legacy Rail Finds a Niche in the Transit Industry
By Peggy Beach
THG Companies Uses Clark Construction Strategic Partnership Program to Hyperdrive Growth
Research Project on DBE Success - Part II By Janine Kyritsis and David Keen
CERM Job Shadowing Program What They See is What They Can Be
Planning an Exit Strategy
Understanding your EMR -a Safety Professional’s POV
Turner Construction Builds LDBE Capacity on Reagan National’s Project COTA and COMTO Columbus Form Winning Partnership
Things are Bigger in Texas... Including Highway Projects By Sarah Magargee
DBE Program Spotlight
/ summer 2019
By Allen Brown
By Carolyn Milliron
Equal Access in Bonding and Surety By Karen Barbour
18 Summer 2019 Volume VI - Issue 3 Publisher Shelton A. Russell
Managing Editors PR PROS, LLC
Creative Director Pan II Creative
Media Coaching & Training
Digital Media Premier Web Design Solutions
Research & Strategic Planning
Editorial Karen Barbour Allen Brown Janine Kyritsis & David Keen Sarah Magargee Philip D. Russell Jordan Taylor
Copywriting & Editing Graphic Design & Layout Public Relations & Media Relations Social Media Management Video Production Services
Headquarters 514 Daniels Street, #186 Raleigh, NC 27605 Website www.AmericanDBE.com About American DBE Magazine American DBE Magazine is the premier industry resource for individuals and stakeholders who work within the federal Disadvantaged Business Enterprises program administration. American DBE Magazine is published quarterly and distributed in all 50 states â&#x20AC;&#x201D; plus Puerto Rico and the U.S. Virgin Islands â&#x20AC;&#x201D; to DBE program administrators, business owners, and professionals in the Aviation, Highway Construction and Public Transit industries.
Subscriptions American DBE Magazine is published quarterly in Fall, Winter, Spring and Summer editions. The annual subscription rate is $24.99 including online editions, special industry reports, and four issues: single copy list price is $6.99 plus postage originating from Raleigh, North Carolina.
Advertisting Sales editor@AmericanDBE.com (919) 741-5233 (Office)
/ summer 2019
Upcoming National Events National Minority Supplier Development Council (NMSDC) 2019 NMSDC Conference + Business Opportunity Exchange October 13-16, 2019 Atlanta, GA http://www.nmsdc.org/2019-conference/ National Association of Women Business Owners (NAWBO) National Women’s Business Conference October 13-15, 2019 Jacksonville, FL www.nawbo.org/events/national-womens-business-conference-2019 American Public Transportation Association (APTA) TRANSform Conference October 13-16, 2019, New York, NY; https://www.apta.com/conferences-events/transform/
Mark Your Calendar!
Transportation Research Board (TRB) 99th Annual Meeting; January 12-16, 2020 Washington, D.C. http://www.trb.org/AnnualMeeting/AnnualMeeting.aspx Associated General Contractors (AGC) 2020 AGC Annual Convention; March 9-12, 2020 Las Vegas, NV https://convention.agc.org/
Helping Small Business Move Forward
How We Help • • • • • •
Bonding Education Program Women & Girls in Transportation Initiative DBE Certifications Procurement Assistance Capital Access Program Counseling and Technical Assistance
South Atlantic Region
DC Metro Area • Kentucky • North Carolina • Virginia • West Virginia
For additional information contact: Alyssa Mako, Project Director amako@TheInstituteNC.org (919) 956-2331 U.S. Department of Transportation Small Business Transportation Resource Center
/ summer 2019
BE A PART OF VIRGINIA’S LARGEST TRANSPORTATION PROJECT A DBE/SWaM Opportunity Event • Wednesday, September 11, 2019 • 8:00 AM – 12:00 PM Hampton Roads Convention Center - 1610 Coliseum Drive, Hampton, VA 23666
Learn About the Governor’s Commitment to DBE/SWaM Inclusion Governor Ralph Northam Governor Northam recently signed Executive Order 35 to advance equity for Virginia’s Small, Women, Minority, and Service Disabled Veteran-owned businesses. The order establishes a 42% target for state procurement contracting and further defines Virginia’s commitment to the small business community. Before he was inaugurated as the 73rd Governor of the Commonwealth of Virginia, Governor Northam served as an Army doctor, pediatric neurologist, business owner, state Senator and Lieutenant Governor.
WHAT YOU WILL LEARN • • • •
Learn about more than $500 million in subcontract opportunities Meet with key project decision makers Find out about upcoming opportunities to participate Explore opportunities from other key project stakeholders and HRCP’s community partners
Secretary of Transportation
REGISTER HERE: www.hrbtexpansion.org Registration is free but space is limited For questions, contact Malcolm Kates 757.439.7166 - firstname.lastname@example.org Hampton Roads Connector Partners is a construction joint venture of Dragados, VINCI Construction, Flatiron Constructors and Dodin Campenon Bernard
Sandra D. Norman Civil Rights Division Administrator , VDOT
WHO SHOULD ATTEND • • • • •
Virginia Certified DBE & SWaM Firms Minority & Women Business Owners Construction Professionals Architects & Engineers IT & Professional Service Firms
Hampton Roads Connector Partners is an Equal Opportunity Employer
/ summer 2019
From the publisher
Business Relationships in the Age of Technology and Innovation “It is mind blowing to think that I lived half of my life without a cell phone or a computer.”
n retrospect, how did I even survive in those dark ages before I could search the internet, tweet, post, pin, download, stream or email just about anything? Amazingly, I did just fine. If I remember correctly, I called people when I thought they would be at home – paying a dime or a quarter to use a phone with a wire connection inside a booth; read a map to find my desired destination; mailed a letter or a card to correspond long-distance; and scanned the daily newspaper to see when my favorite shows were coming on TV. Life was great! But we now live in an informationdriven age, where technology allows instantaneous access to all of the information and data that has ever been created and published. Literally anyone with a smart phone or a laptop can use an app, software or social media platforms to access or share information – and participate in local, national or global conversations for free. We are past debating the pros and cons of this new information age; it is what it is, and it is here to stay. DBEs across the country have embraced this era of information and innovation and are succeeding in growing enterprises using skills in these core
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competencies. Although innovation has always been critical to entrepreneurial success, the information age has sent the rate of innovation into overdrive. In this issue of American DBE, we feature a cover story on metro Atlantabased Lumenor Consulting Group, a woman-owned DBE firm providing information technology services to transportation clients like the New York Metropolitan Transportation Authority (MTA), the Metropolitan Atlanta Rapid Transit Authority (MARTA), and the Jacksonville Transportation Authority (JTA) in Florida. Lumenor’s information technology services are helping agencies improve mobility through enhanced performance and better service to customers. Another story in this issue profiles the innovative approach Chicago-based Legacy Rail has taken to help transit agencies like the Chicago Transit Authority (CTA) and Washington Metropolitan Area Transit Authority (WMATA) effectively and efficiently complete rail construction projects. The company is leveraging the vast knowledge base of retired transit operations professionals to create the missing link between major design/ build teams and transit operations professionals working on capital improvement projects. Legacy Rail recognized a need in the industry and developed an innovative business plan to address this need. The company’s reward for this innovative approach is a growing client list and increased market share.
Information and innovation are not only digital; they also include interpersonal sharing of knowledge and best practices as reflected in our story on THG Companies’ growth as a result of completing the Clark Construction Strategic Partnership Program – and by Corporate Environmental Risk Management’s (CERM) Job Shadowing Program for high school and college students. These two examples of people teaching people through face-to-face interaction reinforce the fact that technology can enhance, but not replace, the value of interpersonal communication, professional mentoring and relationship-building. Other stories in this issue include Part II of research on the essential characteristics of DBE business success, business development recommendations to help firms improve, and transportation modal articles sharing best practices for DBE Programs and overall business success. I hope you enjoy this issue of American DBE Magazine. Best regards,
Shelton A. Russell, Publisher American DBE Magazine
+ 2018 - Professional Women’s magazine Best of the Best Top Supplier Diversity Programs + 2018 - NMSDC Corporation of the Year award, Class I runner-up + 2018 - TSMSDC Champion of the Year Award presented to Stan Williams, Messer Vice President, Chief Inclusion and Diversity Officer
Regional Impact. National Success. Building better communities is a key part of Messer’s purpose. We are committed to creating economic opportunities for Minority- and Women-Owned Business Enterprises (M/WBEs) across all 10 of our regions in the Midwest and Southeast.
+ Driving company purchases with M/WBEs
In 2018, Messer spent $154 million — more than 17% of our purchases — with certified M/WBE businesses.
+ Nationally-recognized best practices
To find out how you can register your organization as a subcontractor, visit messer.com/subcontractors/diverse-suppliers
+ Dedicated resources for strategic relationships
Building better lives for our customers, communities and each other
@messerwearebldg @messerei messer.com
/ summer 2019
///////////////// ///////////////// ///////////////// ///////////////// Bridgette Beato, CEO of Lumenor Consulting Group
Lumenor Stays on Top ////////////////////////////// with Technology By Peggy Beach
ver the last several decades, technology has increasingly changed our world. Cell phones have replaced landlines. Fans now download music from an app or website instead of buying a CD. Children see a typewriter in a museum and ask, “What is that?” The transportation industry is not immune and needs new technology. One company responding to this challenge is Lumenor Consulting Group (LCG).
/ summer 2019
Based in Roswell, Georgia, LCG was founded in 2007 and now has more than 30 employees. The company has worked all over the United States as well as London, England and Canada. Bridgette Beato, a co-founder of the company and CEO, said that the company deals with “people, process and technology.” LCG works with aviation and transit services, DOTs and private sector companies. Prior to starting the business, Beato spent 10 years as a functional
consultant and project manager on major systems implementations for companies that include The Coca-Cola Company, FedEx, Dominion Energy, Equitable Resources and others. She saw an emerging opportunity in the transportation industry since there were few small companies that provided technology solutions. “I was also interested in doing things differently and wanted flexibility to choose the kinds of projects and people I work with,” she said. “I had found that with larger companies I did
APC tracks the number of passengers on any given bus or train. AVL can pinpoint the location of a vehicle at any time. This information allows LCG to provide its clients with the detailed analysis needed to make business decisions. For example, “Let’s say we find that more people ride the bus from 7 to 9 a.m.,” said Beato. “We then could offer a discount if you ride the bus at 9:30 a.m.” Such data and its multiple uses are becoming a vital part of the transportation industry, she said. LCG provides asset management and supply chain implementation consulting expertise. This ensures timely repairs and routine maintenance are performed on all assets including bridges, tracks, buses, railroad cars, etc. to maintain a state of good repair. The company also helps its clients set up the technological devices needed to collect fares. A MARTA bus leaves the North Avenue Station in Atlanta. Lumenor worked with MARTA to assess information systems, data and analytics to support the executive team’s vision to improve service to customers. (Photo Credit: R32s on the E Train)
not have the opportunity to expand and grow in the areas that I found challenging. There were more restrictions than opportunities. With my own business, I have been fortunate to seek these challenges and help agencies to overcome obstacles to modernization. As a result, my firm has become recognized as a strategic advisor, in addition to a strong delivery organization.”
Client employees are not left on their own when the new technology is implemented because LCG provides teaching of the new technology. In addition, in partnership with NTI, LCG teaches courses on how to use systems and technologies.
Beato is proud that LCG has had the opportunity to work nationwide and serve many of the top agencies in North America. “In all that time we have never had a dissatisfied customer. We have excelled as a firm because we have been able to grow the business from small opportunities where we have performed beyond the tasks given and become part of that success story,” she said. Ever seeking industry knowledge, technology and opportunities, Beato is active in numerous transportation industry organizations. She was elected to the International Board of Directors of WTS (Women’s Transportation Seminar) in 2018. She also serves as the co-chair for the American Public Transportation Association (APTA) Systems Engineering Committee. Beato teaches courses on behalf of the National Transit Institute (NTI) and previously served as an adjunct professor for Rutgers University.
The Jacksonville Skyway travels through downtown Jacksonville, Florida. The Jacksonville Transportation Authority used Lumenor to revamp the organization’s infrastructure (Photo Credit: Matthew105601)
“One of the things we do is to leverage information so that we can understand how people use transportation systems,” she said. Beato referred specifically to the Automated Passenger Counting System (APC) and to the Automated Vehicle Location System (AVL). LCG uses various Intelligence Transportation Systems technologies to help provide visibility and tracking, and to optimize service and planning.
Beato cited the Jacksonville Transportation Authority (JTA) and the Metropolitan Atlanta Rapid Transit Authority (MARTA) as two examples of LCG’s success.
“We implement the technology and so we have first-hand experience on how to select and apply those to an agency. NTI provides training courses that are available to any agency and calls upon us to deliver those courses,” she said. “We conduct courses all over the country.”
When Nathaniel P. Ford Sr. became CEO of JTA, he partnered with Lumenor to revamp the JTA’s infrastructure. As part of this effort, previously manual and disparate processes were automated and coordinated, allowing for / summer 2019
MARTA train at Chamblee Station in Atlanta. (Credit: R32s on the E Train)
significant impacts across the agency’s back-office functions. JTA was able to reduce the number of payroll runs, automate accounting and finance to process requisitions and track DBE spending. The company was also able to better manage and track grant funding and reporting. Additional benefits from the upgrade include the automation of work order and asset management functions as well as online portals for human resources and vendor invoicing. In addition to upgrading from the archaic ‘green screen’ systems, the program included a data cleansing effort that rationalized and cleared up decades of old data from the system, reducing inventory and helping to provide better reporting. Jeffrey A. Parker, MARTA’s CEO, wanted to identify ways the agency could support ridership needs. LCG assessed MARTA’s systems, data and analytics by working with MARTA’s research and analysis team. Because LCG has extensive experience with the Atlanta region, the company was able to support the executive team’s vision and safety needs. Beato said that to provide the correct technological advances, it is important to understand the needs of the market. “We are expanding our services to include planning and engineering,
/ summer 2019
for example,” she said. “The entire transportation network is connected. We need to provide our clients with more services in order to thrive.” LCG qualifies as a DBE. However, Beato said that she was unaware of the DBE program until several years after the company’s founding. “We were working on a project with LA Metro when we learned about DBEs. We were then certified as a DBE,” she said. “But we continue to work as a prime contractor.” Prime contractors are responsible for the entire contract, said Beato. DBE firms often work as a subcontractor or in a joint venture contract. She urged other DBE firms to become prime contractors in order to get more business. “Some large agencies will want a contractor to have a $5 million insurance policy before doing any work with them,” Beato said. “Many DBEs don’t have that. However, if you have proven yourself as a prime contractor with small to medium sized agencies and can deliver a project, you can show prime contractors that you can work on larger projects and deliver a component of that project. This is very attractive to primes.” LCG is currently working with an international team of specialists to help New York MTA keep its assets in a state of good repair and comply
with regulatory and capital reporting. “This project will integrate asset management systems across of New York MTA. It is particularly exciting because it will transform and unify the entire process, helping to enhance safety and customer experience,” Beato said. Looking into the future, Beato sees more players becoming involved in the transportation industry. “It can be anybody,” she said. “Companies are being created all the time. Uber and Lyft did not exist 20 years go. MySpace was very popular until Facebook took over. The lesson learned is that companies need to be aware of new technology and ready to adapt. It’s always changing.” She also believes that organizations will find it necessary to share information making technology hubs such as Silicon Valley and Georgia even more vital to the nation’s economy. While process and technology are an important part of the LCG mission, Beato said that people remain the focus. “The core goal of transportation services is to get people safely from Point A to Point B. You always have to focus on your core mission. That is why we seek and use the technology –to help people and our economy.”
SEEKING DIVERSE SUBCONTRACTORS & CONSULTANTS
FOR THREE INFRASTRUCTURE PROJECTS FAM Construction, LLC
Transform 66 Outside the Beltway, Northern Virginia
This project will transform 22.5 miles of Northern Virginia’s Interstate 66 between I-495/Capital Beltway and U.S. Route 29 in Gainesville, VA into a multimodal corridor. The $2.3 billion design-build project will build two new express lanes alongside three general purpose lanes in each direction; auxiliary lanes where necessary, major interchange improvements, new expanded park and ride lots with more than 4,000 spaces, and multiple segments of a corridor-wide shared use path. Contact email@example.com for contracting opportunities or more information
North Perimeter Contractors, LLC
Interstate 285/SR 400, Atlanta, Georgia North Perimeter Contractors (NPC) was selected by the Georgia DOT and the State Road and Tollway Authority to design, build and partly finance the I-285/SR 400 project. The contract sum is approximately $457 million. NPC will rebuild the I-285/SR 400 interchange and make upgrades to the adjoining I-285 and SR 400 corridors. Contact firstname.lastname@example.org for contracting opportunities or more information
Grand Parkway Infrastructure
Texas SH 99 Grand Parkway Segments H, I1 and I2, Houston, Texas TxDOT awarded the design-build contract for two segments of SH 99 Grand Parkway to Grand Parkway Infrastructure – a joint venture between Ferrovial Agroman, Webber LLC and Granite Construction Inc. The segments begin north of Houston, TX in New Caney, TX and continue south for more than 52 miles to Baytown, TX; spanning four counties – Chambers, Harris, Liberty and Montgomery. The construction value of the project is approximately $900 million and has a 10% DBE goal. Contact email@example.com for contracting opportunities or more information
POTENTIAL CONTRACT OPPORTUNITIES* Barrier/Guardrail, Bridge Construction, Aggregate/Material Suppliers, Erosion Control/SWPPP, Concrete Structures, Drainage, MSE Walls/ Panels, Noise Walls, Misc. Design Services, Misc. Utilities Services, Traffic Control, Drilling (Sign Posts/Caissons), Utility Relocation Design**, Rebar , Flatwork, Electrical Work, Demolition- Exterior, Grading/ Earthworks, ITS and TCS Civil Work, Landscaping, Materials Testing, Lighting, Saw Cutting/Sealing, Striping, Steel Stud Walls, Utility Relocation**, Recycling/Milling, Paving, Excavation, Environmental, Geotechnical, Fencing, Misc. Concrete Work, Technical Design Engineering, Signage, Surveying, Ready-mix Concrete, Traffic Supplies/Signals, Trucking/ Hauling, Terrazzo, Masonry, Finishes (Tile, Carpet, Resilient Flooring), Framing, Drywall, Specialty Ceiling. *PLEASE NOTE: This list is not inclusive of all available opportunities, but a sampling of potential services that could be available on a project. The opportunities available on specific projects may vary depending on the type, scope and size of the project. ** Additional pre-qualifications may be required for these services.
Contact the email address for each project listed above for specific contracting opportunities. However, for general questions about the Ferrovial Agroman Diverse Business Program email DBEinfo@ferrovial.com / summer 2019
THE LEWIS COMPANY 30 Years of Aviation & Consulting Services INVENTOR AND U.S. PATENT HOLDER OF THE
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/ summer 2019
ENVIRONMENTAL COLLECTION, TESTING & LABORATORY SERVICES
OSCAR M. LEWIS PRESIDENT & U.S. PATENT HOLDER Awarded 2016 National MBA of the Year by the National Black MBA Association
$ Cheo Hurley, President and CEO of THG Companies, LLC
THG COMPANIES USES CLARK CONSTRUCTION Strategic Partnership Program to Hyperdrive Growth
hen THG Companies President & CEO Cheo Hurley was encouraged to enroll his small but growing construction firm in the Strategic Partnership Program by a Clark Construction Group (Clark) project manager, he was told the program would help his company be more successful on future Clark projects. THG Companies was in the process of completing a contract for drywall installation on the Norman Cole Jr. Wastewater Treatment Plant in Lorton, Virginia, and was having challenges with some of the requirements of performing on a large project.
helping firms like THG Companies to overcome the challenge of learning how to best work on a major construction project and grow capacity. The program started in 2006 and has graduated 806 firms in its 19-year history. The program was developed by Clark Construction Vice President Wesley Stith. Stith is a procurement professional and has worked to engage subcontractors on numerous Clark projects. “We have awarded over $1 billion to companies that have graduated from the Strategic Partnership Program,” Stith said. “It’s a demanding program and takes some commitment, but it helps firms become more successful.”
The Clark Construction Strategic Partnership Program has a history of
Although Hurley knew of the time commitment necessary to complete the
10-month course, with classes nearly every Wednesday night from 5 p.m. to 9 p.m., he made the investment in himself and his company to enroll in the program. Hurley always valued education and training and made acquiring additional knowledge a priority for his personal development. He is a graduate of Howard University with a bachelor’s degree in finance and has two master’s degrees; one in public administration and another in Real Estate. He has also completed entrepreneurial training in the Goldman Sachs 10,000 Small Businesses Program. Hurley started THG Companies in 2009 as a real estate development firm in Baltimore, Maryland. But after experiencing the great economic / summer 2019
Graduates of the 2018-2019 Clark Construction Strategic Partnership Program celebrate completion of the 10-month program to increase their company’s productivity and capacity.
recession, recognized a new business opportunity as a construction subcontractor. “I saw where companies doing drywall, flooring and other trades were still working during the recession, so I thought this would be a good opportunity for me,” Hurley said. “Then I went back to school again to learn how to be a construction contractor.” Since that time THG Companies has focused primarily on subcontract work providing drywall installation, flooring and other construction services. The company won its first drywall contract in 2014 and has never looked back. “I never say never,” Hurley said. “But I think my real estate development days are over.”
previous career working with financial investments and economic development, Hurley is fully aware of the importance of sound financial management. However, the detail he didn’t quite grasp was the importance of working with an accountant with the expertise, experience and reputation for providing construction industry accounting statements. “I’ve always tried to support businesses from my community; and while that is important, in construction you must have an accountant with experience in creating reviewed or audited financial statements for a construction firm, no matter who they are,” Hurley said.
Despite this rich educational history, Hurley believes completing the Clark Strategic Partnership Program has been the stimulus to send the growth of his company into hyperdrive. “The Clark program helped me bring a lot of things together and learn some of the nuance of working in the construction industry,” Hurley said. By nuance he meant acquiring some of the unwritten information and subtle skills that determine the difference between having education and acquiring knowledge.
Hurley also earned the importance of having an accountant that has a solid reputation with bonding companies, because this relationship will make it easier to get a bonding company to look favorably at their client’s financial statements.
For instance, as a finance major in college and then having a
/ summer 2019
“I’ve learned that if an accountant has 10 firms who are already working with a bonding company successfully, the relationship between the accountant and the bonding company can help my company get bonding as well. This is because of the trust the bonding company will have in the financial statements prepared by that
accountant,” Hurley said. Clark’s instructor for the Financial Statements and Accounting course was Craig Brogan, CPA, who has taught the class from the start of the program. Brogan impressed Hurley during the class, so he reached out to him for assistance with his company’s accounting needs. Brogan became the THG Companies accountant and has helped the company get its first business line of credit from a bank and helped the company secure a $2 million aggregate/$500,000 single job bonding capacity. “It’s made a huge difference in my company,” Hurley said. Another lesson Hurley learned in the Strategic Partnership Program is the value of building professional relationships while he was in the process of receiving business training in areas like estimating, plan reading, insurance, Microsoft Excel and presentation skills. “I met several people from Clark that I did not know before joining the program,” Hurley said. “Everything is about relationships. Being an MBE or DBE might get you in the door the first time; but if you don’t have good relationships, and people don’t like you, and you don’t do good work, it won’t last.”
Clark Senior Vice President Bill Magruder (left) and Vice President Wesley Stith (right) congratulate Cheo Hurley, Joseph Justin and Mina Charles for winning the Capstone Project during the 2018-2019 Strategic Partnership Program.
Hurley wasn’t expecting to identify business opportunities with other entrepreneurs in the program when he started. However, as he began to develop relationships with classmates, he recognized opportunities to do business with them as well. “I met one company that is in the federal 8(a) program. We have scheduled a meeting to discuss the projects they are working on and opportunities to do business together in the future,” Hurley said. The program’s capstone project, an intense team competition to create a full business proposal, gave Hurley the opportunity to enhance his team building and collaboration skills. The competition is the final assignment in the program and required Hurley to work with a team of other entrepreneurs to develop a mock construction proposal; and to present the proposal to a panel of judges from the management of Clark Construction. The capstone project reinforced the ten months of training they received and allowed Hurley to reinforce the subtle skills of relationship building, collaboration and connecting with
the right professionals. Hurley’s team won the competition and a prize for creating the winning proposal and sales presentation in the Request for Proposals (RFP) scenario. Armed with the skills needed to grow a successful company and the other skills necessary to expedite the growth of his firm, Hurley is positioned to lead his company into the future. “Many construction business owners are good tradespeople, but it can take them 30 years to grow their company,” Hurley said. “But programs like the Clark Strategic Partnership Program have allowed me to accelerate the growth of my company. What it might have taken other companies 10 years to do, I believe I can do in ten years.” Hurley’s goal for the company is to double its revenues from around $4 million today, to over $8 million in the next 3-5 years. He also anticipates joining the SBA’s 8(a) program for minority business seeking to do business with the federal government and plans to become a certified HUBZone business with the federal government. His advice to other small
businesses is to not be afraid of doing business with large companies like Clark Construction. “You just have to tread lightly and start slowly so you don’t get into trouble, but it’s definitely worth it.”
“I’ve always tried to support businesses from my community, and while this is important, in construction you must have an accountant with experience in creating reviewed or audited financial statements for a construction firm, no matter who they are.” - Cheo Hurley
/ summer 2019
Participants in the Summer 2019 CERM Job Shadowing Day Program visit an active job site on Phase One of Westside Park at Bellwood Quarry in Atlanta. (Photo Credit: Brittany Denton)
CERM Job Shadowing PROGRAM What They See is What They Can Be
t’s impossible for a young person to envision being something they have never seen. But, seeing another person – especially someone who looks like them – accomplish something significant or interesting can create a spark in a young person that ignites a dream they desire to fulfill. For instance, basketball legend Michael Jordan needed to see sports icon Julius “Dr. J” Erving fly with a basketball to dream that he too could fly into the stratosphere of athletic accomplishment. Billionaire media mogul Oprah Winfrey needed to read Maya Angelou’s “I Know Why the Caged Bird Sings,” before she dreamed of and acquired transcendent mega-success and wealth. Likewise, entrepreneurs Albert G.
/ summer 2019
Edwards and the late Marcus L. Reese needed to see possibilities, potential and opportunities in the engineering field before they could envision having a technical career. The two high school students at Mattie T. Blount High School in Pritchard, Alabama, met in the early 1980s at a summer outreach program of the U.S. Army Corps of Engineers for high school, where they were exposed to careers in architecture, engineering and construction. This experience created a spark that wouldn’t ignite until more than a decade later, when the two friends reconnected in 1995 to form Corporate Environmental Risk Management (CERM). Since the firm’s humble beginnings in the South DeKalb Business Incubator
near Atlanta, Georgia, the firm has grown to more than 100 employees and provides customized engineering solutions to its energy, environmental, facilities, federal, transportation and water resources clients throughout the Southeastern United States. The experience Edwards and Reese gained from meeting at a summer outreach program encouraged them to make exposing young students to technical careers a major component of CERM’s business philosophy. The company’s early efforts at job shadowing consisted of bringing in students and allowing them to shadow employees. The employees would share their daily activities and discuss what a career in the engineering
park will eventually encompass a total of 280 acres, nearly 100 acres larger than Piedmont Park, which had longbeen Atlanta’s largest park. The tour of the construction site allowed students to walk in the dirt and mud of a construction site, view the construction plans being executed, and get a realistic view of the daily activities of an engineer.
CERM Managing Director Albert G. Edwards shares his experience as an entrepreneur with students in the Job Shadowing Program. (Photo Credit: Brittany Denton)
industry meant. “At first we would bring in kids and let them sit with us, see what we did and show them what it is like,” CERM Managing Director Albert Edwards said. “But over time, the Job Shadowing Program has become more structured and expanded into what it is today.” CERM’s Job Shadowing Program is now a formal effort that is offered three times each year for high school and college students, coinciding with when school is out of session. One session is during summer vacation, one during winter break, and one during spring break. The program is so highly regarded by parents and members of the Atlanta community that participation has become a competitive process, with applications being reviewed by the CERM Job Shadowing Committee for acceptance. “We currently limit the number of students in each group to about 12 to 15,” CERM Community Engagement Manager Bianca Frails said. “This is partly due to space; however, we have also determined that the smaller groups encourage more engagement from participants and allow a more curated experience.” Due to the high number of applicants this year, CERM expanded the summer session to two full-day sessions; one for college students and the second for high school students. Frails leads a group of CERM’s emerging leaders to plan and implement the program. The peer committee strives to keep the program interesting and exciting for the participants. “Our emerging professionals have taken the program
to a different level,” Edwards said. “They handle the planning and logistics for the program, as well as the selection process … I don’t know if I would have made the cut when I was a student – they are tough.” The Job Shadowing Program Planning Committee reviews all the applications from students and makes selections based on school grades, community involvement, extracurricular activities and essay responses describing why the candidate wants to participate in the program. “We look to see if CERM’s core values of integrity, loyalty, initiative and sustainability are reflected in the student,” Frails said. The summer 2019, program was held Aug. 1-2, consisting of a full day of activities beginning at 8:30 a.m. and concluding at 4:30 p.m. Students began the day with a welcome from the CERM Job Shadowing Committee and an ice-breaker exercise to get to know one another. Next a panel CERM’s emerging professionals talked about their background, why they selected technical careers, and their advice to the students considering a similar career path. The students then boarded a chartered bus, received personal protective equipment and were taken to CERM’s active job site on Phase One of Westside Park at Bellwood Quarry in Atlanta. The project will redevelop the city’s largest park to include a signature gateway and trails leading to the grand overlook area for views of a rock quarry-turned-reservoir. The
“This program showed me what it is like to be an engineer on a daily basis, especially out in the field,” program participant Derek Ewers said. Ewers is a rising senior at Peachtree City High School and maintains a 4.0 grade point average. He is targeting the engineering schools at schools such as Georgia Tech and Purdue University for his collegiate studies. Ewers said, “This program has given me a lot to think about as I get ready for college.” After the tour the students returned to CERM’s offices – and after shaking the mud off their shoes – they heard a presentation from Byron Hobbs, a transit planner at the Metropolitan Atlanta Rapid Transit Authority (MARTA) over lunch. Hobbs discussed his career as an engineer and project manager on major development projects for the transit system. In the afternoon, students participated in a bridge building competition where they used pieces of Lego toys to learn some of the bridge engineering concepts involved in making a safe and sturdy bridge. Four teams of students paired with a CERM employee to design a bridge. Each bridge was tested for the maximum weight it could carry before crumbling to the table. The exercise taught students about the use of design components like archways and trusses to strengthen a bridge and increase the load it can bear.
“This program showed me what it is like to be an engineer on a daily basis, especially out in the field.” - high school student Derek Ewers
/ summer 2019
CERM has reaped unexpected benefits from the program. Former participants in the Job Shadowing Program have returned to the company as college interns, and several past participants in the Job Shadowing Program have returned to work in the company as professionals. “It is a great experience to support young people gaining exposure to our company and industry,” Edwards said. “It’s nice if we are able to find talent to help us grow in the future, but we don’t do it for that. We do it because we have been blessed.” Job Shadowing Day participants and CERM employees display a model bridge project during the bridge building competition. (Photo Credit: Brittany Denton)
The day continued with a presentation from Darryl Gaines and Lakita Lowe of the National Aeronautics and Space Administration (NASA). Both professionals described their careers at NASA and encouraged the students to pursue STEM (science, technology, engineering and math) careers. The students’ activities ended with having a candid discussion with Edwards about
his day-to-day experience as managing director of CERM. Edwards told the students to, “... Ask me anything you want. I am an open book and I want to talk about what you would like to know.” The students asked about topics such as how he manages his work/life balance, running the financial operations of the company, and what is was like to lead over 100 employees.
The program is a labor of love for CERM and a way to give back to the community. Edwards said, “Marcus and I always enjoyed this program and looked forward to it every year.” Reese passed away after illness in 2018; and in his honor, CERM established the Marcus L. Reese Engineering Scholarship at Mattie T. Blount High School in Pritchard, Alabama.
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What You Will Learn: DBE/ACDBE Program History, Background, Purpose and Trends Duties/responsibilities of the DBELO/ACDBELO DBE/ACDBE Reporting The Airport Concession DBE Program Review of Joint Ventures for Concessions Counting DBE Participation/Commercially Useful Function (CUF) Compliance Monitoring & Reporting Goal Setting & Good Faith Efforts The Latest “Final Rule” (49 CFR Part 26, Nov. 3, 2014)
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National DBE Training Institute, P.O. Box 3113, Wilmington, NC 28406 Phone: 910.762.6297 | Fax: 910.762.5963 | Email: firstname.lastname@example.org | Web: www.natdbe-ti.com
/ summer 2019
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/ summer 2019
DBE POWER PLAYER
Legacy Rail Finds a Niche in the Transit Industry
usiness experts often say finding and fulfilling the need of a core customer is key to growing a successful business. Chicago-based Legacy Rail Operations, LLC (Legacy Rail) has followed this advice and is building a rail operation consulting firm that is filling a void in the transit rail construction industry by providing the missing link between large transit agencies and design/ build contractors performing rail development projects across the country.
/ summer 2019
Legacy Rail executive team members meet in a Chicago rail station (from left) Richard Newton, EVP Capital Projects; Daryl Brown, VP Operations; Marlene Taylor, VP Capital Projects; Greg White, Co-founder & CEO; Jeff White Co- founder & CEO; Evan White, Chief of Staff; Ronald Heard, EVP Operations
Legacy Rail began operations in 2015, under the leadership of Co-CEOs Jeffrey White and Gregory White, two siblings from Southside Chicago who combined their complementary skills to launch a firm offering unique skill sets and value to the transit industry. Younger brother Jeffrey (Jeff) is a rail operations expert who retired from the Chicago Transit Authority (CTA) after a distinguished 22-year career. Jeffâ&#x20AC;&#x2122;s final role at CTA was as the senior manager of CTAâ&#x20AC;&#x2122;s Operations Control Center, the facility that manages and controls the full complement of trains and buses operated by the
agency. Co-CEO Gregory (Greg) is an experienced entrepreneur with a former career as owner of an awardwinning energy company. Greg began his entrepreneurial journey after a successful career as an electrical engineer with 17 years of experience working in the public utility industry. The co-owners of Legacy Rail first recognized the opportunity to launch a unique consulting firm in the transit industry after Jeff was called out of retirement to help Dulles Transit Partners, a Bechtel Corporation-led team, manage the start-up control
center for the Washington Metropolitan Area Transit Authority (WMATA) Silver Line Phase I project. Jeff was called in after the person initially leading the start-up control center needed to leave suddenly. “I got the call from Bechtel looking for someone with control center operation experience,” Jeff said. “I went in and immediately saw where the agency and the construction firm were bumping heads, so I became the middleman working with them to help the project get back on schedule ... In the end, I helped save about $1 million in lost time and cost overruns.” Greg added, “Jeff was able to add insight that no one else could provide and he became very valuable, very quickly; so, they began to expand his role and give him more assignments.” The Dulles Transit Partners team commended Jeff’s efforts in a recommendation letter following the project saying, “Jeff White brought with him a wealth of experience in railway operations. Jeff was a key component to the testing commissioning program, including the Dynamic Readiness Testing on the new Silver Line (Phase I). Jeff’s integrity, vision, and foresight helped to shave months off the delivery of the project.” Jeff discovered that many large transit systems across the country encounter the same obstacles when completing a major rail project. By the end of the WMATA project, Jeff realized that he had the makings of a business opportunity. Jeff talked with his brother Greg about the idea and the two began to put a plan in motion. “I was already an experienced entrepreneur after running the energy company,” Greg said. “That company grew to be listed on Black Enterprise Magazine’s list of the largest African American-owned businesses. Our skills matched up perfectly; Jeff had the rail operations experience and I brought the experience of running a business and all of the executive and administration requirements that come with it.” The first step to launching the company was reaching out to other retired rail operations leaders from CTA who might be interested in joining
with the White brothers. “We pulled together other experienced operations managers that had retired from CTA like Jeff,” Greg said. “It was about 15 people and they all unanimously agreed with the idea and wanted to come on board, so we knew we had something.”
Legacy Rail Operations, LLC Co-Founders and Co-CEOs Greg White (left) and Jeff White.
Since beginning in June 2015, with just a few retired CTA professionals, Legacy Rail has grown to more than 50 transit professionals with projections to bring more experts on board in 2019. “We are looking to bring the best of the best on board now,” Jeff said. “And not just retired CTA people, but the best from other large transit systems as well, especially in places where we are doing business.” The company’s first major contract began in 2016, when LTK Engineering invited Legacy Rail to team with them on a contract with CTA for the 7000 Series New Car Project, a project to upgrade CTA’s aging rail car fleet. “That project allowed us to bring in different specialties and disciplines, not just control center operations,” Greg said. The company expanded its staff of professionals and now offers an array of passenger rail services including: train operation, dispatching, power substation testing & commissioning, tower operations, signal maintenance/testing & commissioning, rail car maintenance/ testing & commissioning, training &
instruction, logistics & operations, and design/build coordination. In addition to the CTA 7000 Series New Car Project, Legacy teamed with Kiewit Infrastructure to win the CTA Blue Line Signal Upgrade Project. “We are starting to get work through recommendations and word of mouth,” Greg said. “It’s a very small industry, and people from different agencies talk to each other and share their experiences based on our track record.” The company’s track record was clearly on display when WMATA prepared to complete Phase II of the Silver Line Project. Per the recommendations of WMATA personnel, and based on his successful Phase I experience, the Clark Construction/Kiewit Joint Venture team reached out to Jeff regarding a return to WMATA to lead start-up control center operations for the next phase of the project. “They asked if we had a team; and based on our previous meetings with retired CTA managers, we already had people ready to go,” Jeff said. The Legacy Rail team initially sent two professionals to the project to address issues in the field involving safety and start-up control management. “We helped create a smooth transition between WMATA and the Clark/Kiewit team,” Jeff said. “We made it possible for all parties to perform well together based on our knowledge of what is required from an operations standpoint to complete the projects safely and on time.” The company shows no signs of slowing down anytime soon. Legacy Rail is currently pursuing additional contracts – along with new opportunities at CTA –and is DBE certified in the states of New York, Massachusetts and Georgia, with plans to expand operations into these markets as well. “Our company is at a point now where we are becoming a part of a design/build firm’s strategy,” Jeff said. “We are getting involved in the design phase to help firms understand how their design will impact service – and to help develop the plan and project schedule.” / summer 2019
PROUD TO GIVE BUSINESSES A LIFT CATS is proud to provide opportunities for businesses to create local jobs through the advancement of transit projects. CATS also seeks to create an environment that gives small and socially or economically challenged local businesses the opportunity to compete for publicly funded contracts by participating in the Small Business Opportunity (SBO) and the Disadvantaged Business Enterprise (DBE) Programs. On the LYNX Blue Line project, for example, CATS spent $42.9 million with 38 DBE firms to build the new light rail system. As the major provider of public transportation to Charlotte and the surrounding region, CATS relies on the communities we serve to build and operate the service every day. By working together on these new opportunities, we can all keep our communities moving in the right direction. For more information, visit ridetransit.org.
/ summer 2019
DBE PROGRAM SPOTLIGHT
IN-DEPTH PERSPECTIVES ON DBE SUCCESS Results of a National Survey By Janine Kyritsis and David Keen
wners of DBE firms find their own paths to success. Even so, there are lessons from DBE success stories for new and emerging business owners. In this extension of our Spring 2019 article in American DBE Magazine, Keen Independent Research highlights our research on practices of 749 DBEs identified as “most successful” by state departments of transportation. We performed this analysis as part of our nationwide study for the Transportation Research Board of the National Academies of Sciences, Engineering, and Medicine (TRB). The full report, “Compendium of Successful Practices, Strategies, and Resources in the FHWA Disadvantaged Business Enterprise (DBE) Program,” will be published by TRB in the coming months. Our first article in American DBE Magazine discussed the number of successful DBEs working for state DOTs and reviewed data about their characteristics. We described how Keen Independent Research worked with state DOT staff and other groups to identify the DBEs that were most successful in working with their state DOTs. They identified 749 successful DBEs, including graduated firms, based on different criteria for “success.” This second article provides an indepth look at DBE perspectives on what made them successful. We also summarize the types of training and other assistance that successful DBEs see as helpful and compare those insights to what state DOT staff think are most useful. These results are gleaned from in-depth interviews with current and graduated DBEs, survey responses from DBEs and state DOTs, and review of interviews and focus groups conducted with successful DBEs.
Practices and Behaviors of Successful DBEs Successful DBEs seem to go through the same stages of development as any other firm, but with better results. These stages of development can be summarized as:
• Pre-start-up; • Start-up; • Growth and change; • Surviving unfavorable economic conditions or other events; • Relative stability and profitability; • Succession planning; and • For some, exiting the DBE Program or another program. Different types of assistance are needed for a company to move from one stage of development to another, as discussed later. The in-depth interviews with successful DBEs revealed nine common factors important to their success:
1. Experience and relationships prior to start-up 2. Being in a field with demand for services 3. Access to capital 4. Business acumen 5. Quality of work and reputation 6. Relationships with customers 7. Ability to hire, train and retain quality workforce 8. Operational efficiency competitive pricing 9. Succession planning.
Many owners of certified businesses said that they had prior experience in their respective industries (see factor #1). Many owners had family in the industry as well, and this factor often influenced their decision to start their own business. For example, an African American business owner commented that because his wife’s family owned a construction business, he’s “always been around it,” and was confident enough to start a similar business of his own. Access to capital is also needed for success (see factor #3). Access to capital, financing and bonding are all related, and many businesses examined in this study commented on the importance of those factors. An African American owner of a certified professional services firm, for example, said that access to capital and financing are key to her firm’s success. She credited a microloan she received from a local business initiative as being especially helpful. One African American owner of a construction firm credited his state DOT’s loan guarantee program as a reason for his firm’s continued success. Positive relationships with customers were identified by most successful DBEs as a reason for their continued success (see factor #6). Business owners said that reputation and quality of work, business longevity, and building good business relationships with customers and others are keys to the success of their companies. One interviewee said that good relationships with prime contractors and “doing the job 100 percent” are reasons for their success. Another interviewee, an Asian American / summer 2019
business owner, said simply, “It’s all about trust … and great relationships.” Hiring quality employees and investing in their training (see factor #7) were also discussed by many successful DBEs. An Asian American business owner and graduate of the DBE Program said that his company had always planned to be “the best,” to keep their employees happy, and have “good in-house training.” Another interviewee, a Native American owner of a certified specialty contracting firm, suggested, “Value the employee and try to provide them a different atmosphere to work in than [other] places.” She went on to say that her company has parties, events and a wellness program to engage employees. Ignoring the importance of any one of the first eight factors can lead to failure of a company, even if it has strong capabilities in the others. For example, having just enough financing or capital is not always sustainable and can cause business failure. One successful female DBE owner commented that “one lawsuit would put [them] out of business.” The ninth factor, succession planning, was not often discussed among DBEs and state DOTs. However, for small businesses owned by individuals who are becoming older, effective succession planning will not only determine whether a company continues to be a DBE, it will determine whether it remains in business at all.
relationships on job sites and beyond. One interviewee commented that, “DBEs that have existed in the program for a long time have developed strong relationships with primes.” Training is also offered by most state DOTs. In some states, trainings are tailored to meet the needs of individual firms. For example, one state DOT offers a technical assistance program that gives DBEs an assessment of their strengths and weaknesses and then coaches them to put recommendations into action. Some state DOTs are using new delivery methods for training (such as web-based, on-demand assistance) that may better meet how DBEs want to receive that assistance, while saving costs long-term. In addition to training and other assistance under the Federal DBE Program, DBE contract goals have helped DBEs achieve success. Nearly all successful DBEs interviewed as part of our study said that the program was helpful. Most agreed that without it they would not be as successful today, with some even saying that without it they would no longer be in business.
More Information for DBEs and Small Businesses Ensuring business success is an ongoing process for any business owner. The data and anecdotal information collected for the TRB study, summarized in Keen Independent Research’s “Demographics of Successful DBEs, Results of a National Study” (Spring 2019) and discussed in this second article, identify many keys to success. Additional information and studies related to business planning, growth and success, can be found at www.keenindependent.com and www.trb.org.
Other Strategies for Success Keen Independent Research found three strategies that were employed by some successful DBEs and not others: • Diversification or vertical integration (expanding types of work performed and adding new services);
State DOT Assistance to Promote DBE Success
• Serving a geographically large market (traveling across states to reach new customers); and
There are many ways DBEs can obtain training and other assistance. Many forms of assistance including DBE contract goals, are offered by state DOTs (see Table 2).
• Bidding or proposing as a prime contractor or consultant (working directly with the client by expanding from subcontract work to prime contract work).
Many state DOTs said that they foster relationship-building between DBEs and prime contractors and sometimes with state DOT staff. One state DOT representative said that successful DBEs make efforts to build
The factors discussed in this article and the three strategies above apply across different fields and regions of the country. Work specialization versus diversification, identifying the size of geographic markets to
/ summer 2019
serve, and choosing whether to focus on subcontract work or to also compete as a prime are key questions successful DBEs have had to address.
David Keen, Principal Keen Independent Research
Janine Kyritsis, Senior Consultant, Keen Independent Research
Table 1 Table 1. Keys to success for DBEs involved in state DOT work
Relationships with customers
Table 1 shows which of these nine factors were mandatory at business start-up and which were mandatory as the small business matured. Many factors overlap, including offering goods or services that are in demand, having access to capital, possessing business acumen, doing quality of work, and having positive relationships with customers. New business owners and those thinking about starting a business can benefit from recognizing these factors and planning for the challenges that come with success.
Table 2 Table 2. State DOT use of different types of DBE assistance Training on how to do business – specifically with your state DOT – is available in some states. For example, one state DOT said they offer weeklong, in-person and online courses that focus on estimating, bidding and project planning. Although a few successful DBEs said the services offered by their state DOTs are too “basic,” many said they still use the training and assistance and will continue to do so.
/ summer 2019
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TURNER CONSTRUCTION Builds LDBE Capacity on Reagan National Project Journey
Reagan National Airport exterior rendering of the new 14-gate concourse looking to the southwest. (Courtesy: Metropolitan Washington Airports Authority)
“The journey of a thousand miles begins beneath one’s feet” is a quote attributed to the Chinese philosopher Lao-Tzu. The meaning of the quote is even the longest, most arduous undertaking is accomplished by taking small, seemingly inconsequential steps to reach the goal. In 2017, Turner Construction began the task of reaching a 25% contractual requirement for the participation of Local Disadvantaged Business Enterprises (LDBEs) on Reagan National Airport’s Project Journey, the capital program to transform the passenger experience. In a program budgeted at more than $500 million, this task is significant by itself, however, Turner Community Benefits Director Carolyn Ellison knows that finding willing and able contractors in the already stretched metropolitan Washington, D.C. construction market is an even tougher assignment.
Ellison’s role includes being Turner’s regional director for business diversity efforts, leading the company’s initiatives to meet the requirement established by the Metropolitan Washington Airports Authority (MWAA) on Project Journey. Her strategy to meet the project requirement has been to leverage all resources available to not only meet, but to exceed the client expectations for impactful participation of diverse firms on the major project. Ellison and the Turner Construction team is using three important resources to help complete the journey to success and provide significant opportunities to diverse firms in the Greater Washington, D.C. area. The three resources being used by Turner include the benefit of an exciting and historic project at one of the America’s leading airports; a company with a strong reputation and a history of working well with diverse firms; and a supportive client willing to collaborate with Turner to achieve success. Armed with these three resources, Turner
Construction is on track to achieve 29% participation of LDBE firms by the completion of the Project Journey program.
A Significant Project Project Journey is offering qualified firms the opportunity to work on a major development project at one of America’s busiest and most prestigious airports – Ronald Reagan National. The project consists of building a new 14-gate concourse to replace busing to aircraft, two 50,000 square-foot security screening checkpoints, and reconfiguring an existing terminal to create new concessions and passenger travel areas. The project provides LDBEs the opportunity to gain experience working on an MWAA project through the LDBE program, hopefully building a track record of success that will lead to greater opportunities at the airport in the future.
/ summer 2019
Turner Construction’s Carolyn Ellison (3rd from left) and members of MWAA’s Procurement team including Wande Leintu, deputy vice president for supplier diversity (left); Julia Hodge, VP of supply chain management; and Darren Durbin, contracting officer. (Photo courtesy of Megan Falla)
The project also offers LDBEs the opportunity to gain experience working on state-of-the-art facilities containing the latest technologies, materials and construction processes in use in the current construction industry. Additionally, these opportunities are presented for an owner with a strong program supporting the growth, development and success of diverse firms. With most of the procurement activities on the project completed, Turner has bid more than 150 packages resulting in over $140 Million in contracts to LDBEs. Partnership has really been the foundation for the success of the project,” Ellison said. “The entire Turner Team really worked together to ensure that the buyout of this project was an overwhelming success.” Ellison highlights the commitment from
/ summer 2019
Turner’s estimating and procurement team, which met and engaged with over 2,000 firms. This allowed the team to create bid packages and opportunities that were accessible and appropriate for creating opportunities for LDBE firms. “The ongoing flexibility and engagement with MWAA are ensuring the success of LDBE firms,” Ellison said.
A Strong Company Turner’s long history of partnering of diverse firms is another benefit the team utilized to attract capable firms to achieve MWAA’s LDBE project requirement. The company has developed industry leading outreach and contractor development programs to provide opportunities for diverse firms to thrive while working with
Turner. The Turner Team leveraged the success of its 50-year-old Turner School of Construction Management to offer LDBEs classroom training on the information and skills necessary to work successfully on major construction projects, especially with Turner Construction. Since the kickoff of Project Journey, Turner has offered nine sessions of the School of Construction Management, providing training to over 350 LDBEs. The first session was held in 2016 in partnership with Venture 1863 (formerly known as Project 500), a Washington, D.C.-based non-profit with the goal of increasing the capacity of diverse firms located in the district. Turner also offered two sessions in Spanish and conducted two sessions focused on bonding education. Turner has created a mentor/protégé program on Project Journey to
A course facilitator presents a session during the Turner School of Construction Management offered in connection with Project Journey. Turner provided training to more than 350 students during nine sessions of the course, held in both English and Spanish.
provide in-depth and personalized assistance to five companies working with the company on the project. Protégé firms work directly with Turner project executives to better grasp the intricacies of working on a major project. They also focus on providing guidance and recommendations to increase the protégé’s capacity to enable them to have the ability to work on larger projects in the future. Cap8 Doors & Hardware, a Washington, D.C.-based firm is a protégé working with Turner. The company is supplying doors on both the New North Concourse and the terminal renovation. Although Cap8 has worked with other projects with Turner, especially in the K-12 educational sector, this is the company’s largest project with Turner and first airport project. To help create a smooth transition to the airport industry, Cap8 founder and principal Lisa Williams has received ongoing mentoring from Chris Jahrling, vice president and general manager of Turner Federal Services. “He has been fantastic,” Williams said. “He has helped me better understand how to work in the airport environment and also to work with Turner more effectively.”
A Supportive Client Collaborating with an engaged and supportive client has also helped Turner’s success on the project. MWAA has been fully supportive of Turner’s LDBE outreach and procurement efforts and has been a partner in striving for meaningful LDBE participation on the project. MWAA assisted with the marketing and implementation of outreach events to make the LDBE community aware of opportunities to do business with Turner. “We had over 18 outreach events for this project,” Ellison said. “We started with a big outreach event for the project and then had more targeted pre-bid meetings for each specific opportunity.” Turner and MWAA worked to ensure the entire community was aware of the project and upcoming contracts. Turner used its project website to post bid opportunities and to market matchmaking meetings so smaller LDBEs could talk with first-tier contractors about subcontracting opportunities that matched their capacity. Turner worked closely with MWAA staff to identify specific trades and suppliers that matched their needs in order to implement a
streamlined and efficient outreach effort. Turner and MWAA continue to meet regularly to review progress and maintain an open line of communication. “MWAA has been aggressively open to working together to make this project successful,” Ellison said. “When we have challenges come up, they don’t ask who is to blame, they ask ‘how are we going to fix this.’ I feel really lucky to be a part of such an amazing team effort.”
“Partnership has really been the foundation for the success of the project. The entire Turner Team really worked together to ensure that the buyout of this project was an overwhelming success.” - Carolyn Ellison, Turner Construction
/ summer 2019
COTA-COMTO Columbus Partnership Driving Increased Diversity and Inclusion Members of the COMTO Columbus Chapter Celebrate their repeat victory as the COMTO Chapter of the Year at the 2019 COMTO National Meeting and Training Conference in Tampa, Florida.
cota-comto columbus Partnership Driving Increased Diversity and inclusion
he Central Ohio Transit Authority (COTA) and the Columbus chapter of the Conference of Minority Transportation Officials (COMTO) have been aligned as strategic partners since COTA employees established the chapter in the mid-1990s. However, after a strong beginning in the early years, the chapter struggled to maintain momentum in the previous decade and went dormant by 2013. Fortunately, a resurgence began in 2014, when former COTA CEO, W. Curtis Stitt, former COTA executive Clinton Forbes, and COTA Deputy CEO Emille Williams led renewed
/ summer 2019
support for the chapter. Forbes and Williams previously served in leadership positions of other COMTO chapters and on the national level. These leaders helped unite COTA staff members to rebuild the chapter. This rebuilding effort reached its peak after the election of Columbus entrepreneur Richard Crockett as chapter president in 2015. Crockettâ&#x20AC;&#x2122;s vision, leadership and strong work ethic helped unite a committed team of members, many of whom are COTA employees, to build a chapter that has been recognized as the strongest in the nation at carrying out
the mission of COMTO in the local community. Through the strategic engagement of the executive board, along with the efforts of the committee chairs and chapter members, the Columbus Chapter of COMTO was honored by the national organization in both 2018 and 2019 as Chapter of the Year. Some of the signature programs created and hosted by the Columbus Chapter include quarterly networking breakfast meetings with transportation leaders from agencies like COTA, Columbus Regional Airport Authority (CRAA), and the Ohio Department of
Transportation (ODOT). The chapter is a co-host of the Ohio Transportation Civil Rights Symposium in partnership with ODOT and the Columbus Chapter of WTS International. The engagement of diverse businesses in contracting with COTA and other transportation agencies in Central Ohio has been a focus of the Columbus Chapter during this period of resurgence. Crockett consistently uses his extensive entrepreneurial experience as owner of Capital Transportation to help develop relevant and targeted programs to expose diverse firms to business opportunities. Capital Transportation is currently a partner of First Transit on a 10year contract with COTA to provide paratransit services to handicapped and elderly customers. The First Transit contract provides management, administration, maintenance and call center operations for all paratransit services. Capital Transportation employees provide 15% of the more than 200,000 annual passenger trips for the COTA contract. “My experience in doing business in the transportation industry helped me understand the types of programs and activities we needed to create as a chapter to help businesses succeed in getting contracts,” Crockett said. Crockett believes the greatest source of business opportunities comes from the networking between members from transportation agencies like COTA and private sector members from diverse companies as they work together to carry out the chapter’s mission. Crockett said: “My strategic vision for the chapter was to promote the importance of establishing relationships with key public agencies locally, including: COTA, Columbus Regional Airport Authority, Ohio Department of Transportation, City of Columbus, and Franklin County. Additionally, I recognized the importance of including corporate partners, such as WSP, Smoot Construction, New Flyer and First Transit, in our membership ranks in order to establish partnerships
between COMTO Columbus and our public and private partners. When COMTO Columbus members work with agency and corporate members on projects and committees, relationships are established and COMTO member experiences and capabilities are recognized, which often leads to partnerships and business opportunities.” An example of the effectiveness of this approach to doing business is clear from the success of Zed Digital, a Central Ohio-based information technology firm providing ‘Mobility as a Service’ and ‘IoT’ (Internet of Things) solutions for transportation. Zed Digital President Sumithra Jagganath joined COMTO Columbus in 2016, while seeking to gain experience in the transportation industry and market her firm’s services to provide website development and multi-modal trip
the city of Cleveland and the city of Louisville. The chapter’s success in building business relationships was also recognized by COMTO National. Columbus member Ginger Cunningham, president of Ginger Cunningham & Associates, won the national Historically Underutilized Business of the Year in 2018, and Crockett’s Capital Transportation won the award in 2016. The resurgence of the COMTO Columbus Chapter coincides with COTA’s renewed commitment to diversity and inclusion. COTA’s recently released 20192024 Strategic Plan places Equity, Diversity and Inclusion at the center of its guiding principles to make the organization successful in the future. The strategic plan identifies “promoting the use of small and disadvantaged business by partners” as an area
(From Left) COMTO National Chair Freddie Fuller, COTA Deputy CEO Emille Williams, COTA CEO Joanna Pinkerton, COTA Board Chair Trudy Bartley, COMTO Columbus Past President Richard Crockett and COTA Chief Sustainability Officer Glenn Taylor celebrate Bartley’s recognition at the 2019 COMTO Women Who Move the Nation Program.
planning tools for transit agencies. After meeting the right people and sharing her company’s capabilities, Zed Digital won a contract to rebuild COTA’s website, which included launching trip planning software for COTA customers to plan their trips directly from the website. In the wake of ZED Digital’s success with COTA, Jagganath’s networking in the COMTO chapter and at the national conference has led to additional contracts in
targeted for greater improvement to achieve operational excellence. “We know that leadership starts from the top,” COTA Board Member Marlon Moore said. “Our President and CEO Joanna Pinkerton has raised the importance of Diversity and Inclusion, and so has the board of directors.” The board has taken an active role in providing oversight and accountability for the agency’s success in both / summer 2019
employment and supplier diversity by creating scorecards for performance and requiring detailed quarterly reports on the agency’s accomplishments. Moore also believes the COMTO-Columbus chapter has helped enhance COTA’s efforts. He said: “The success of the chapter shows the type of leadership we have at COTA; leaders like Deputy CEO Emille Williams that have brought best practices from other parts of the country to help us move forward.” Crockett’s term as president ended in July 2019, when COTA Contracts/DBE Administrator Quincy Howard assumed the role of president. Howard also has championed the chapter’s resurgence and led the membership committee for the past two terms. “We have grown to more than 100 members,” Howard said. “There are many people [who] have helped this chapter be successful, and the support of COTA leadership has been instrumental.” Howard’s success at the local level also led to him being asked to serve as chairman of the COMTO National Membership Committee. COTA employees have been key supporters of COMTO Columbus’ other initiatives to promote diversity in the transportation agencies. COTA is a lead sponsor of an annual scholarship luncheon to raise money to provide college scholarships for students pursuing careers in the transportation industry. The chapter awarded over $10,000 in scholarships to students in 2019 and has awarded more than $30,000 in scholarships over the past three years. “We want to help create greater diversity in the industry by helping build the next generation of transportation professionals,” Crockett said. “COMTO Columbus Chapter supports scholarships and internship opportunities for minority students interested in a career in transportation-related fields, which helps us develop the next generation of transportation industry leaders.”
Former COMTO Columbus 1st Vice President Melissa Thomas presents a $1,000 scholarship check to McKenna Hensley to study at The Ohio State University.
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“We know that leadership starts from the top. Our President and CEO Joanna Pinkerton has raised the importance of Diversity and Inclusion and so has the board of directors.” Marlon Moore, member of COTA board of directors
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Things Are Bigger in Texas… Including Highway Projects GPI has $90 million DBE Goal for the Next Phase of Grand Parkway Loop By Sarah Magargee of the corridor through aesthetic enhancements and landscaping improvements. Planning for the three new segments began in 2017 with construction ramping up in 2019 and estimated completion in 2022. Overseeing this $900 million portion of the parkway is Grand Parkway Infrastructure (GPI), a joint venture lead by Ferrovial Argoman US, along with Webber LLC and Granite Construction Inc. In 2018, the partnership was honored as one of the top 25 prime and subcontractors in Texas by Subcontractors USA.
Grand Parkway Infrastructure is currently completing work on the $900 million SH 99 Grand Parkway, Segments H, I-1 & I-2 in Baytown, Texas, just east of Houston. (Photo courtesy of Grand Parkway Infrastructure)
ome say that things are bigger in Texas, and the massive State Highway-99 Grand Parkway project around Houston is no exception. The proposed loop, which was conceptualized in the early 1960s, will ultimately span 180+ miles through seven counties surrounding the Greater Houston region. When complete, it will be the longest beltway in the U.S. and the third outer loop within Houston. The project is divided into 11 segments for construction and funding purposes. The first segment opened in 1994 and
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construction is currently underway on three new sections, H, I-1, and I-2, representing 52.5 miles of the loop spanning Chambers, Harris, Liberty, and Montgomery counties to the northeast of Houston. This phase of the Grand Parkway project includes a new tolled twolane controlled access facility, with intermittent four-lane sections for passing from U.S. 59 to I.H. 10 East and four additional toll lanes from I.H. 10 East to FM1405. Additionally, 74 bridges are being reconstructed along with upgrades to the visual appearance
A Commitment to DBEs Gracie Orr, diversity contract compliance manager with GPI, explained that at the heart of the Grand Parkway project lies a commitment to DBE firms. “We have a 10% DBE participation goal totaling roughly $90 million,” Orr said. “The project has been exciting but challenging. The toughest part is finding firms with the capability and capacity to work on a project of this size and scale.” Orr and her team are putting forth a significant effort to reach DBE firms by engaging in extensive efforts to locate and recruit DBE firms. One strategy has been participating in monthly meetings with the Houston Chapter
looking into.” Davila echoed this sentiment, saying there are many great opportunities for DBEs on the Grand Parkway project. “This [project] gives diversified firms a chance to compete with the big boys. The scale of the Grand Parkway provides smaller DBEs with a real stepping-stone to grow their firms.” Upcoming areas of opportunity for DBE firms include dump truck hauling, erosion control, landscaping, miscellaneous concrete, landscaping, utilities and drainage. Orr says interested DBE firms should register on the project website at http:// sh99grandpkwy.com/, respond to bidding opportunities, and attend outreach meetings for upcoming procurement opportunities. Construction workers move rebar during work on the Grand Parkway Project.
of the National Association of Minority Contractors and other organizations serving diverse contractors. “I am an advocate for minority small businesses. The Grand Parkway project has a lot of opportunities for large and small DBEs,” Orr said. “I want to encourage businesses not to be blinded by the scale of the project.”
“Even with the challenges, we are still about 60% toward our 10% DBE participation goal and are employing some phenomenal DBEs,” Roberson said. “One area of particular success is in engaging DBE professional services companies. One of our chief designers, Othon, Inc., and our quality control consultant are both DBEs.”
The Texas Department of Transportation (TXDOT) set the 10% DBE participation goal for the Grand Parkway project based on the results of a 2009 Texas Disparity Study. The study calculated the base figure of the relative availability of ready, willing and able minority and women-owned businesses and then adjusted this figure after a careful evaluation of past participation, comments from public consultation forums, and online survey results.
Danny Davila, senior project manager at Othon Inc., explained that the Grand Parkway is one of the larger projects the established DBE has taken on. “Our role is to design all the civil infrastructure of the roadway, bridges, drainage, and hydraulics. We are preparing everything that a contractor needs to execute the project,” Davila said. “The complexity of the project makes it stand out for us. This section of the Grand Parkway has a lot of very flat areas creating drainage and flooding problems. It is a complex project, and we are excited to be a part of it.”
Angela Roberson, director of diversity contract compliance for Ferrovial Agroman, US and Webber, LLC, explained that the construction market in Texas is booming, stretching the Houston subcontractor base thin and creating a challenge in meeting their DBE goal.
Angela Berry Roberson, director of diversity contract compliance for Ferrovial Agroman, US and Webber, LLC receives the 2018 Top 25 Prime & Subcontractors Supplier Diversity Champion Award from Keith Davis, Sr. (Photo courtesy of Subcontractors USA)
There is still time for DBEs to get involved with the next phases of the Grand Parkway project. “I would like the DBE community to know that although this is a big project, there are still resources and opportunities for them,” Orr said. “I think a project of this scale can be intimidating, but it is worth / summer 2019
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Planning an exit strategy
f you asked 100 business owners what a perfect exit from their businesses would be like for them, you’d likely get 99 different answers; although in reality, there are only eight proven ways to successfully exit a business. But this is not unusual. According to several studies, on average 66% of business owners are misinformed about how and when to exit their business. Odds are, there’s a good chance that you too are unfamiliar with the various ways to exit your business. So, why would an entrepreneur worry about exiting their business? Business owners often think it will take 10 to 15 years – maybe even more – before they’re ready to start considering an exit. What they often fail to realize is that every day they are making decisions that affect their ability to exit the business. Putting off planning and thinking about exiting the business until it’s time to walk out the door could have a significantly negative effect on the entrepreneur’s ability to exit the business on their own terms. By failing to plan a seamless exit, a business owner essentially is handing over their power and their fate to someone else to determine how they bid farewell.
Selling a business is not like selling a car or home. Although there may be a few similarities. But unless someone is in the business of selling cars or homes for a living, their current and future income isn’t tied to how much money they will make when someone buys either one of those assets. Deciding to sell a business is a major decision; and when done correctly, it takes planning, time and paying attention to the details. In order to keep a business successful and on track, the owner’s wisdom and experience is needed -- especially if the company lacks a strong internal team that is working to propel the company forward. Most entrepreneurs start their business from scratch, have their hands in every part of the business, and spend most of their time managing the day-to-day operations of the company with the focus on making money. Therefore, it could be said, that the process of making money to keep the business alive is causing the business to slip right through the owner’s hands when it comes to planning for a future exit. The owner spends time working in the business, at the expense of working on the
Allen Brown is a South Carolinabased CEPA (Certified Exit Planning Advisor) advisor helping entrepreneurs and executives of privately held businesses elevate their activities in order to get control of their companies while achieving their personal, business and financial goals. For more information and to download the Transferrable Value eBook, go to: www.wealthexchange.com
business; and could potentially have very little left to show for it at the end because the business has no market value. What can a business owner do to remedy this situation? The individual must decide to take control of the situation by starting to plan for their eventual exit. In the same way that a business owner plans to gain market share in their industry, they must also plan for their business exit. When they begin to do this, they become part of the 44% of business owners who are not only educated about exiting, but have also put together a plan of action to exercise one or more of the eight options for exiting their business. Ready to get started? Here’s the basic information you need to know on how to begin making plans for your exit strategy. There are four inside options: Intergenerational Transfer, Management Buyout, Sale to Existing Partners and an Employee Stock Ownership Plan (ESOP). There are also four outside options: Sale to a Third Party, recapitalization, initial public offering (IPO) and an orderly liquidation. Working on a business requires that an entrepreneur considers which of these eight options represents the best strategy to exit the business in the future, and then begins to work on a plan to maximize the value of the business using this strategy in order to have an asset of value when the entrepreneurial journey comes to an end.
/ summer 2019
UNDERSTANDING YOUR EMR -A Safety Professional’s POV We all have opinions. We all arrived at our point of view (POV) in very different ways, so welcome the WHY of “Should I care enough about EMR to improve (lower) my score?”
The Facts EMR – Experience Modification Rate
Experience Modification Rate (EMR) has a strong impact upon a business. It is a number used by insurance companies to gauge both past cost of injuries and future chances of risk. The lower the EMR of your business, the lower your worker compensation insurance premiums will be. An EMR of 1.0 is considered the industry average. If your business has an EMR greater than 1.0, the reason is simple: There has been a worker compensation claim that your insurance provider has paid. To mitigate the insurance company’s risk, they raise your worker compensation premiums. The other bad news is this increased EMR sticks with you for 3 years.
Photo Credit: Yerson Retamal by Pixabay
How Experience Modification Rates are calculated The base premium is calculated by dividing a company’s payroll in a given job classification by 100, and then by a ‘class rate’ determined by the National Council on Compensation Insurance (NCCI) that reflects the inherent risk in that job classification. For example, structural ironworkers have an inherently higher risk of injury than receptionists, so their class rate is significantly higher. A comparison is made of past claims history to those of similar companies in your industry. If you’ve had a higherthan-normal rate of injuries in the past, it is reasonable to assume that your rate will continue to be higher in the future. Insurers examine your history
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for the three full years ending one year before your current policy expires. For example, if you’re getting a quote for coverage that expires on January 5, 2020, the retro plan will look at 2016, 2017 and 2018. NCCI has developed a complicated formula that considers the ratio between expected losses in your industry and what your company actually incurred, as well as both the frequency of losses and the severity of those losses. A company with one big loss is going to be “penalized” less severely than a company with many smaller losses – because having many small losses is seen as a sign that you’ll face larger losses in the future. The result of that formula is your EMR, which is then multiplied against the manual premium rate to determine your actual premium (before any special discounts or credits from your
Use this quick checklist to determine your next action. My current EMR for my company: ______/ last year ______ / year before _____ The last time I talked with my Insurance Carrier was _________________________ My back to work policy is up to date ______ Yes _____No My Safety Program is up to date and accepted by Primes that I bid to: ___ Yes __No The Safety Professional’s POV is to get your Safety Program up to date, become Safety Culture conscious; and engage in continuous improvement. Your resulting MOD rate will pay for costs through reduced rates. You win by keeping your workforce safe; you lower your risk; you save time and you can get more work.
insurer). Essentially, if your EMR is higher than 1.00, your premium will be higher than average; if it’s 0.99 or lower, your premium will be less.
How does a high EMR affect costs? An EMR of 1.2 would mean that insurance premiums could be as high as 20% more than a company with an EMR of 1.0. That 20% difference must be passed on to clients in the form of increased bids for work. A company with a lower EMR has a competitive advantage because they pay less for insurance
How do I lower EMR? The good news is that EMR can be lowered. An effective safety program that eliminates hazards and prevents injuries is the starting point. Basically, no injuries equal no claims. In the real-world injuries will happen, but the response can help keep EMR from increasing as much as it could without proper management. Having a plan to manage injuries and workers compensation claims is a must to get control of the EMR.
Next, get control of your Experience Modification Rates and reduce your overall costs. Reducing EMR gives you an edge over your competition when bidding out work; you keep your workforce safe and you save money through lower insurance costs. Construction general contractors and owners are realizing the benefits of low EMR numbers and often prequalify companies before they even look at bids. It would be unfortunate to lose business and money because of high EMR. Now is the time to get started on the path to controlling and reducing your company’s EMR today.
Carolyn Milliron is the CEO of Keystone Environmental, Health and Safety Services Inc. For decades, Carolyn has been immersed in assisting commercial and industrial contractors to improve their capabilities, capacity and knowledge of what it takes to move a company from just making it through the project to becoming a legacy business. Keystone EHS Services works for companies to establish and maintain high standards of construction safety and compliance and is laser focused on helping construction companies “Stay Safe, Save Time, Cut Costs, and Gain More Work”.
/ summer 2019
Equal Access in Bonding and Surety By Karen Barbour
Image by Brian Odwar from Pixabay
n 2013, The Coalition of Contracting Fairness initiated the drafting and passage of a Maryland law called the Subcontractors Equal Access to Bonding Act (SB 599/HB 585) to prevent any prime contractor on statefunded work from artificially creating bonding barriers for subcontractors and to prevent unnecessary bonding waivers for MBE firms. The 2013 Maryland law requires a prime contractor awarded a state-funded project to provide a performance and payment bond from a surety company that meets the requirements of the Maryland
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Insurance Administration to secure its contract. The state does not require an AmBest rating or the need for the surety company to be listed on the U.S. Treasuryâ&#x20AC;&#x2122;s 570 Circular of Approved Sureties. Since a prime contractor can flow down the liquidated damages, retention requirements and other state procurement clauses to subcontractors, the Maryland legislature in 2013, voted nearly unanimously that the prime contractor must flow down its exact bond requirements, too. (Only one senator voted against the bill).
Many prime contractors, however, create more onerous requirements for subcontractors and mandate that the subcontractor provide a performance/payment bond only from a surety company having at least an AmBest rating of Excellent (usually A-rated or higher), meet high financial requirements and/or be a Treasury Listed Surety. Large prime contractors typically have their own internal list of approved surety companies; entities they have vetted and deemed worthy to provide bonds to their subcontractors, as required in their subcontract agreements.
Most of the surety companies that bond small businesses, however, often do not meet the criteria set by large prime contractors. Such criteria whittle down the bonding limits approved by state insurance administrations and the U.S. Treasury. For example, a surety company approved by the state and federal governments to bond projects up to $40 million can only provide bonds up to $2 million, according to some prime contractors. Also, some large primes require that if the net worth of any surety is less than $100 million, the surety company cannot bond critical path work – only ancillary work, such as the supply of materials or light installation work. These criteria have even whittled down the top five surety companies’ bonding ability, capping their limit to only $10,000,000 for the primes’ subcontractors. There are surety companies that partner with the Small Business Administration (SBA) Office of Bond Guarantees. The SBA will guaranty bonds up to 90% to entice the surety company to support a project. The SBA can guaranty bonds (issued by its surety company partners) up to $6.5 million for private and state projects, and up to $10 million for federal work. The SBA will allow up to 20 times working capital when establishing a bond program if the program is not more than two times the largest program completed. As an aside, “program” is defined as all costs to complete open projects (bonded and unbonded) at any one point in time. An important note to add is that the SBA will add into its working capital analysis the unused portion of the contractor’s business line of credit and extend a program of up to 20 times working capital based on the line’s availability. For example, an unused working capital line of $100,000 could easily yield a $2,000,000 bond program. (Working capital = current assets, minus current liabilities. Current Assets = what will turn into cash within a 90-day cycle, except for retention). Consequently, when a prime contractor limits the capacity of a surety company that can provide bonds, for example, from $40 million down to $2 million,
they are essentially decimating much of the SBA bond program’s ability to help small business contractors. (This is an actual example that occurred to a surety company that issues many bonds guaranteed by the SBA). Some primes have stated that exceptions can be made to their internal risk management surety company profiles, but that statement alone is concerning. In the 1980s, a quasi-public entity in Maryland was formed, Maryland Small Business Development Finance Authority (MSBDFA). This entity can extend surety credit to Marylandbased contractors if they have been declined by the standard surety market. The bonds are backed by treasury bills held by the State of Maryland. State procurement laws in Maryland permitted the use of MSBDFA’s bonds by prime contractors to secure state-awarded projects. Prior to the 2013 law, many large prime contractors performing work for the State of Maryland excluded this flow down in their subcontract agreements. There are other surety tools to help small businesses such as fast track programs that can extend surety credit up to $750,000, based on personal credit and up to $1.5 million based on quality in-house financial statements (accrual based). The SBA Office of Bond Guarantees has a “Quick & Easy” application to support bonds up to $250,000 that is not dependent on any personal credit score. However, the surety companies that partner with the SBA do run credit reports. As always, it just depends on the factors weighing down the score that will sway the underwriter. These types of credit-based applications are more widely accepted since the passing of the law. There is a perceived mystique to surety bonding because for many, it is too “weedy” to understand how and why a contractor is approved or declined. Surety is a very respectful trade and it rests on the integrity of the submission, the character and often the personal credit of the applicant; as well as the good and
fair practices of the obligee, the entity requesting the bond. For state-funded work with local small business, DBE and MBE goals, equal access to bonding should be assured at the state level so contractors can secure work in their back yard. By the time the small business subcontractor, MBE/DBE firm finds out their bond does not meet arbitrary internal guidelines of a prime contractor, their proposal and pricing are exposed; and the time and money spent on its preparation is lost. The message for MBE/DBE subcontractors is to be sure to state that proposal information is copyright protected, confidential and not to be shared with any third party under any circumstances. They should also ask prime contractors for their approved list of surety companies and the criteria needed to satisfy the bond requirements before submitting a proposal. The message for government agencies is that if the agency has goals for DBE/ MBE/Small Business on projects, then the agency should mandate that each prime contractor performing work shall not include in their subcontract agreements any higher standards than what the agency requires of them. As the adage goes, “What is good for the goose is good for the gander.” Hopefully, this article will inspire other agencies to adopt the Subcontractors Equal Access to Bonding Act to help ease the bonding barriers to procuring work. Karen Barbour is the founder and president of The Barbour Group, LLC. She is a veteran of the surety bonding industry. Karen was instrumental in the creation of the State of Maryland’s Change Order Fairness Act and is working to fully implement the legislation across the state. Karen started her career in surety as a home office bond underwriter in 1985. Karen is well known as an innovator and expert within the surety industry. Karen Barbour, karen@ thebarbourgroup.com
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