BY CARYN GIZNIK In
Volume 12, Issue 4
A Builders Association Publication
May 2007, a crane slammed into a Loop building, causing surrounding buildings to be evacuated, and several problems for public transportation. This July, a Mason County man was killed at a construction site in Normal, IL after the boom of the crane collapsed onto the basket of the aerial lift. According to the Bureau of Labor Statistics there were 72 crane-related fatal occupational injuries in 2006, 61% were related to the contact with objects or equipment. This year there have been nine crane-related deaths in New York. From urban to rural locations, crane safety is being dissected within the construction industry to ensure contractors and crane owners take the right precautions. “The demand for power cranes has been so great that it’s been harder for the owner to keep the equipment properly maintained,” said Ralph Pound of James McHugh Construction Company. “The second that crane is done on a job, somebody needs it somewhere else.” “It’s slowing down a bit now, but there’s no doubt that one of the biggest concerns the last few years has been having enough time and enough people to do things the right way.” Brian Sturtecky of the Occupational Safety and Health Administration (OSHA) explained that crane accidents are more likely than not the cause of human errors due to rigging failure, knowing the proper weight a crane can hold and whether the rigger is qualified. Engineering NewsRecord reported that the tower BY CARYN GIZNIK injuries in 2006, 61% were related to the crane snap in New York this May was contact with objects or equipment. caused by a faulty weld made in China. The In May 2007, a crane slammed into a LoopNew This year there have been nine crane-York related deaths in New York. From urbanNew Times reported in early September the building, causing surrounding buildings to be evacuated, and several problems for public York crane-related accidents in March transportation. and to rural locations, crane safety is beingMay dissected within the construction industry occurred during a jump or rising of This July, a Mason County man was killedthe to ensure contractors and crane ownerscrane. “Crane accidents occur because of an at a construction site in Normal, IL after the take the right precautions. “The demand for power cranes has operator’s lack of inspections, and lack boom of the crane collapsed onto the basket of the aerial lift. been so great that it’s been harder for the of crane maintenance,” said Sturtecky, who added According to the Bureau of Labor Statistics owner to keep the equipment properly that OSHA has up to six there were 72 crane-related fatal occupational maintained,” said Ralph Pound of James months to investigate an accident. He also see CRANES page 18 points out that there are many factors for consideration and that whoever knew of the conditions that caused the accident is ultimately responsible. Both general contractors and subcontractors are responsible when it comes to crane safety. Contractors are required to: Libby Named New • Annual Meeting, Project Also In Carpenters President Manager Seminar Insure This Issue... Page 6 Page 4 •
Who’s On The Hook?
Recent Incidents Around The Nation Underscore Importance Of Crane Safety
subcontractors Make sure the lift plan is in place
Putting Water To Work Clark Construction Utilizes Chicago River To Produce EcoFriendly Building Downtown BY DAYNA SCHLARB The new 60-story, 1.3 million square foot structure at 300 N. LaSalle is scheduled to be complete by December of 2008. While a waterfront café, a fine-dining establishment, a public plaza and 52 floors of retail and office space will provide plenty of reasons for Chicagoans to go there, the true star of the building is outside of it…the Chicago River. Clark Construction Company is working to achieve LEED Gold certification thanks in part to the river. The installation of an eco-friendly system which utilizes river water as part of the cooling process. “Although other buildings are using the Chicago River for similar needs, our cooling system is brand new,” Clark Construction Vice President Dave Trolian said. “The cooling system is the only one of its kind in this area and I think it will be the standard as other companies build along the river in the future.” The cooling system features a series of gates and pipes that lead to a river water vault, and chillers which have been designed to operate with heat exchangers. “Because of the cooling system, the building avoids using cooling towers and no domestic water is needed, which will allow for lower energy and utility costs,” Clark Construction Project Manager Stephanie Calhoun said. Traditionally, building structures make use of domestic water for central plant condensing, but the convenience of the Chicago River contributes to efficiency that would otherwise not have been possible. “Rain water is collected throughout the building from roof and plaza drains which is diverted from the city’s already burdened storm and sanitary system,” Calhoun said. Thereafter the collection of rain water joins the river water. The H-shaped floor plan is intended to bring natural light into every floor. In further keeping with the LEED requirements, over ninety percent of the construction waste has been diverted from going to a landfill to date, throughout the construction process. This goes above and beyond city ordinance requirements to divert as much waste as possible from a landfill was a major staple in meeting Gold certification. The LEED requirements for Construction Waste Management have two criteria that need to be met: The first to eliminate fifty percent of waste from going to a landfill and the second to eliminate seventy-five percent. When Clark Construction broke ground on the project in 2006, the City of Chicago standards for
300 N. LaSalle works towards LEED Gold Certification through a brand new cooling system, collection of rain water and a number of other “green” features.
waste management were below both of these credits, so Clark to date has been able to not only exceed the city requirements, but those set forth as part of the LEED process, as well. The structure is made up of: • 34 caissons • 9,100 tons of steel • 50,000 cubic yards of concrete, and • Over 580,000 square feet of exterior wall Yet another distinctive element of the building is a unitized curtain wall system with low-emissivity glass. There are stainless steel accents seen throughout the entire structure. “Whereas much of Chicago’s current architecture is made with flashy materials that appear as stainless steel, 300 N. LaSalle applies the real thing to make the structure have more class,” Trolian said.
see WATER, page 19
T H E
B U I L D E R
Out With The Old... In With The Old? Applying band-aids to budget shortfalls by borrowing from pension plans and other projects has left the state of Illinois in a bind. When the state legislature is sworn in this January, a bandaid might not do the trick anymore. “The state is at the point now where it can’t even rob from Peter to pay Paul, because both Peter and Paul have left the country,” said Jeff Glass of Capitol Consulting Group, the Builders Association’s lobbyist in Springfield. “There have been so many non-realistic budgets and non-revenue generating budgets in a row that the state can’t pay its bills. There are a lot of things to fix, which might make this the year that one of the Chambers brings a larger basic business tax to the table.” Glass stopped by the Builders Association office to give a preview of the coming legislative session. He believes that it’s unlikely a business tax or anything else makes headway early in the session, as the legislature will sit in a virtual holding pattern until the Senate picks a President to replace the retiring Emil Jones, Jr. There are at least five viable candidates for the post, and majority support for one of the candidates on the first couple of ballots seems unlikely. “I think any of them would be a good leader for the Senate,” Glass said. “It’s definitely going to dramatically change the dynamic of the Senate, no matter who it is.” Waiting for the Senate to select a President could take some time, but that could mean a flurry of activity when things are settled. An additional tax on business is one thing contractors might see coming out of Springfield during the next legislative session – although with the Presidency up in the air it’s hard to say when or how severe that tax would be, or if it would come at all. That uncertainty extends to the possibility of the Structural Work Act returning to the forefront. The trial lawyers lobby fought hard to pass the SWA last spring and while the bill didn’t pass, it garnered significant support from Democrats in the House. House Speaker Mike Madigan was reportedly one supporter of the bill. Depending on its importance to the Speaker, Glass doesn’t discount the possibility of seeing the SWA again in the near future – perhaps even this session. “We could very well see the Structural Work Act coming up again,” he said. “There was some support for it last year, so it wouldn’t surprise me to see a similar push.” Democrats held a strong majority in both chambers last session and made a hard charge to secure even more seats in the recent elections. The Democrats fell short of the veto-proof supermajority they sought in the House, but did pick up three seats and outnumber the Republicans in that chamber, 70-48. “There are thousands of pieces of legislation out there and there could be a lot of things happening in a very short period
V O L U M E
1 2 ;
I S S U E
Retirement Of Senate President Emil Jones, Jr. Leaves Much In Doubt For Upcoming Legislative Session, But Structural Work Act Could Be Back
of time,” Glass said. “Between revisiting the Structural Work Act and labor issues and a number of other things that could affect contractors, your members are going to have to keep an eye out for legislation that could have a bearing on their business.” The Structural Work Act never came to a vote on the floor of the House last year, due in part to active participation in the process by Builders Association members. Opponents of the bill commented that grassroots efforts from businesses in the form of letters, emails and calls to legislators helped ensure positive results for the construction industry. A prevailing wage bill and movement on a capital improvement plan are other things that can be expected when the Chambers reconvene. Keep an eye on the Builders Association’s website and The Builder Blast for information on legislation that could impact your business as it starts to move in either the House or the Senate. “There are a number of legislators who want to steer clear of anything that would harm business,” Glass said. “It’s important that people who own businesses develop relationships with their legislators. “For the bigger bills, those owners need to let the people representing them know how these bills are going to affect their business. “It’s hard to tell right now what’s going to happen in terms of which bills will be introduced and which won’t. Until there’s a President in place, it’s really hard to gauge what’s going to happen.”
Annual Meeting, Project Manager Seminar Dec. 10 As the City of Chicago continues in its aggressive pursuit of an Olympic bid, Builders Association members can learn about what the Games in Chicago could mean to them by attending the Annual Meeting. Chicago 2016 CEO Patrick Ryan is among those who will speak at the meeting, which will be held from 3-6 p.m. at The Drake Hotel Wednesday, December 10. AGC of America Senior Vice President J. Doug Pruitt - CEO of Sundt Construction - will also deliver an address. The Association will recap the year’s activities, honor incoming and outgoing Board of Directors members and recognize Community Builder Award and Corporate Citizenship Award winners. In conjunction with the Annual Meeting, the Association will host a Project Manager Seminar from 10 a.m.2 p.m. December 10 at the Millennium Knickerbocker Hotel, across the street from The Drake.
The Project Manager Seminar will zero in on the business aspects of the job and marketing your business through maintaining relationships. FMI Senior Consultant Tim Treon’s presentation will cover the importance of client relations, recognizing opportunities and developing a plan for action for long term success. Registration is $165 for the Project Manager Seminar and $150 for the Annual Meeting. Those wishing to attend both events can do so for $250. Sponsorship levels for the Annual Meeting include Bronze ($1,000), Silver ($1,500), Gold ($2,500) and Torch ($5,000). The Torch and Gold levels include registrations for a table of eight at this event. If your company is interested in getting its name in front of the best contractors and subcontractors in Chicagoland at the Association’s biggest event of the year, contact Client Services Manager Kristin Garcia at 847.318.8585.
In Memoriam Robert Frank Parenti, 81 Robert Frank Parenti, Founder and President of Association member Parenti and Raffaelli, Ltd, passed away September 10 at the age of 81. The veteran of World War II was a beloved husband to wife Geraldine and is survived by children Barbara (Uwe) Naurath; Bev (Mark) Przybyla; and Robert (Nancy) Parenti; and six grandchildren, two great-grandchildren; and brother Ronald Parenti. The Builders Association sends its deepest condolences to the Parenti & Raffaelli family and salutes Robert for his dedication to his business and the construction industry in general.
John Maronic The Builders Association sends condolences to the family and friends of John Maronic, a Compliance Assistance Specialist with OSHA. Mr. Maronic passed away October 17 after a long battle with cancer.
3XPT Optimizes Delivery Value In an effort to integrate new and existing delivery constructs the 3xPT Strategy Group was formed in 2006. The group set out to help those in the construction industry benefit fully from technological innovations such as BIM. 3xPT is a collaboration of the Construction Users Roundtable (CURT), the Associated General Contractors of America (AGC), and the American Institute of Architects (AIA). The group was formed to help educate the construction industry and promote integrated technologies as well as 3D, 4D and 5D modeling technologies. “The 3xPT’s vision is a transformed and sustainable construction industry, where each project is designed, developed and delivered to optimize value across its lifecycle.” In July 2007 3xPT formed a workshop on Integrated Project Delivery (IPD). Integrated Project Delivery guides the industry to operate more efficiently while influencing owners to use new technologies. Four teams were composed of owners, architects, contractors, subcontractors, consultants, attorneys and insurers. The teams helped define options for integration and generated new ideas. The workshop looked specifically at four project delivery models: design-bid-build, design-build, construction management at risk, and project alliance. Following the IPD Workshop the 3xPT strategy group created a set of “first principles” of IPD. The principles are organized in five areas: process and organization, scope, performance metrics, tools and methods, and contracts. Integrated project delivery will help owners get the best value out of the design and construction process. The outcomes of the 3xPT Strategy Group IPD Workshop can be read in Integrated Project Delivery: First Principles for Owners and Teams in the Training/Education section at www. bldrs.org.
T H E
B U I L D E R
Continental Electrical Construction Company, LLC 5900 Howard Street; Skokie, IL 60077 847.677.1600, www.cecco.com Contact: David A. Witz, President Our firm has been providing electrical services to the Chicagoland area since the conversion of gas lighting to electric over 90 years ago. Whether it is electrical distribution or lighting, protective signaling (security), structured cabling (phone, data, network solutions), audio/visual or our MVP-Maintenance Value Program (thermal scanning, preventative maintenance, service trucks, etc.) we handle each discipline with professional preconstruction and installation services. Development Solutions, Inc. 1 North Franklin; Suite 3325; Chicago, IL 60606 312.629.2800, www.dsi-group.com Contact: Daniel Mazeiro, President Development Solutions, Inc. (DSI) is a Chicago-based, full service construction firm incorporated in Illinois in 1992. DSI provides a broad range of services to corporations, property managers, architects, developers and brokers. The Hylant Group 303 W. Madison Street; Chicago, IL 60606 312.283.1320, www.hylant.com Contact: Tom O’Connell, President Hylant is a full service, privately held insurance broker and provides the complete spectrum of insurance, employee benefits and risk consulting services. Our office is dedicated to insuring the construction industry. Knudsen Construction, Inc. 1440 Huntington Drive; Calumet City, IL 60409 708.730.0600, www.knudsenconstruction.com Contact: Pete Vander Wall, Controller Knudsen Construction, Inc. is a commercial general contractor in the Chicagoland region that offers a full range of services from design build to tenant improvement to ground up construction. Clients entrust Knudsen Construction, Inc. with a wide range of scopes and costs. Koroseal Midwest 9201 W. Belmont Avenue; Franklin Park, IL 60131 847.638.0421, www.koroseal.com Contact: Tim Schorn, Sales Representative Koroseal Wall Protection Systems offers the most complete and effective system of wall, door and door frame protection available today. Designed for use in assisted living athletics, corporate, education, healthcare, hospitality, retail and transit setting interiors, Korogard products are engineered to provide exceptional life cycle value. Murphy & Miller, Inc. 600 West Taylor Street; Chicago, IL 60607 312.427.8900, www.murphymiller.com Contact: Tom Dubsky, Vice President Service Operations For over half of a century, Murphy & Miller Inc. has been the leader in quality HVACR, service, maitenance and design/build installation.
V O L U M E
1 2 ;
I S S U E
professionals and construction specialists are proud to be members of the Builders Association. As Chicago’s fastest growing insurance broker, HRH brings you the best talent: Our local risk management experts have specialized in the construction industry for over 40 years.
HRH’s Construction Practice professionals in Greater Chicago include safety engineers, OSHAcertified trainers, bond specialists, claims advocates and contractual and financial specialists.
We deliver best-in-class service and risk management solutions to help reduce your total cost of risk.
HRH’s resources range from contractual risk transfer review to OCIP/CCIP expertise to risk financial solutions and surety and OSHA services.
Committed to the challenges you face daily Chicago Michael DeCaigny, ARM, CRIS 312.527.7046 firstname.lastname@example.org
Lombard Gregory Field, CPCU, CRIS 630.324.2562 email@example.com
www.hrh.com HRH typically acts in an agent’s capacity and receives compensation as a representative of one or more insurance companies. HRH may also receive compensation from other sources when acting as an agent. Unless HRH has a written agreement where HRH represents that it will be acting in a broker’s capacity and will be compensated only by agreement with the client, or is acting as a wholesaler for other licensed producers, HRH will be acting in an agent’s capacity.
Clean Break From Agreements Knowing The Difference Between Section 8f and 9a Collective Bargaining Pacts BY STEVEN H. ADELMAN Locke Lord Bissell & Liddell LLP Ordinarily, a union may not request recognition by an employer unless the union can prove it is supported by a majority of the employees in the proposed bargaining unit. Similarly, an employer may not recognize a union as the bargaining representative of its employees without being given proof of the union’s majority status. These restrictions stem from Section 9a of the National Labor Relations Act (the “Act”), which provides that employers are compelled to bargain only with unions that have been “designated or selected for the purposes of collective bargaining by the majority of the employees in a unit appropriate for such purposes.” Under Section 9a, a union becomes the exclusive representative of employees in a bargaining unit either through voluntary recognition by the employer or through an election conducted by the National Labor Relations Board (“NLRB”). Any employer that signs a collective bargaining agreement with a union that does not represent a majority of its employees will have committed an unfair labor practice. Even if an employer and union act in good faith in recognizing a minority union, believing it to represent a majority of employees, such agreements are unenforceable. See International Ladies’ Garment Workers’ Union v. NLRB, 366 U.S. 731 (1961). Because of the unique nature of the construction industry, in which employees frequently work for many different employers for a short period of time, Section 9a would be a serious obstacle to union organizing by construction unions. As a result, Congress carved out an exception to the majority representation rule for employees who work in the construction industry. Under Section 8f of the Act, employers “engaged primarily in the building
and construction industry” can enter into an agreement with a union regardless of the union’s majority status. As a general rule, once an employer recognizes a union as the majority representative of its employees, it can withdraw recognition only if there is a decertification election or there is objective evidence that the union no longer represents a majority of its employees. Therefore, under a Section 9a relationship, the employer must bargain with the union for a new contract even after a collective bargaining agreement (“CBA”) expires. Significantly, the presumption under Section 9a that the union continues to have majority support until there is proof to the contrary does not hold true when the union was recognized under Section 8f. In John Deklewa & Sons, 282 NLRB 1375 (1987), the NLRB held that Section 8f agreements could not be unilaterally repudiated during the term of a collective bargaining agreement – but they can be repudiated at the end of the contract term. In other words, even if there is a Section 8f relationship, the employer must continue to abide by a pre-hire agreement until the CBA expires. However, there is no “presumption of majority status” upon the expiration of the contract. Therefore, after expiration of the CBA, either party can unilaterally repudiate the 8f bargaining relationship and refuse to bargain with the other. The NLRB has also held that a that employer-union bargaining relationships in the construction industry are presumed to be Section 8f relationships unless proved otherwise. In view of the differences between a bargaining obligation under Section 9a and under Section 8f, the NLRB has applied different rules regarding withdrawal from multiemployer bargaining units and multiemployer CBA’s. Under Section 9a, if an employer wishes to withdraw from a multiemployer bar-
Libby Tapped As New Carpenters President Martin C. Umlauf, who has been President and Executive SecretaryTreasurer of the Chicago Regional Council of Carpenters since 2004, has retired after 39 years with the Union. Umlauf joined the Union in December of 1969 and held several offices within Local 54 before being named District Council Business Representative in 1994. He became SecondVice President in December of 2003 and President seven months after that. Frank T. Libby (above) was named his replacement October 13 by the Union. Libby has been a member of the Union since 1976 and held positions of Conductor, Recording Secretary, Financial Secretary-Treasurer, Business Representative and President of Local 10 before being named Second Vice President of the Regional Council. Other recent appointments within the Union included Gary Perinar Jr. (Second Vice President), Keith Jutkins (Assistant to the President) and Ron Culbertson (Executive Board).
gaining unit, it must provide “adequate written notice given prior to the date set by the contract for modification, or to the agreed-upon date to begin the multiemployer negotiations.” In other words, the employer must
see AGREEMENTS, page 7
T H E
B U I L D E R
AGREEMENTS, from page 6 withdraw from the multiemployer unit in advance of multiemployer negotiations. Mere inaction (e.g., failing to provide notification of withdrawal) can be enough to bind an employer to the new CBA negotiated between the union and the multiemployer association that bargained the previous contract. Under Section 8f, however, an employer is not automatically bound to a new CBA, nor is it obligated to negotiate with the union upon expiration of the contract. Rather, the NLRB has held in James Luterbach Construction Co., 315 NLRB 976, 979 (1994), that “mere inaction during multiemployer negotiations will not bind an 8f employer to a successor contract reached through those multiemployer negotiations.” Instead, the NLRB applies a two part test to determine whether a Section 8f employer has bound itself to the results of a multiemployer bargaining unit: • Was the employer part of the multiemployer unit prior to the dispute giving rise to the case, and • If the first inquiry is answered in the affirmative, has the employer, by a distinct affirmative action, recommitted to the union that it will be bound by the upcoming or current multiemployer negotiations. As a general rule, adhering to the new collective bargaining agreement – such as by paying contributions to the trust funds at the rate set in the new contract – will be considered the type of affirmative act required to adopt the new Section 8f. Based upon the significant difference in rights between a Section 8f and Section 9a bargaining relationship, employers in the building and construction industry who are interested in changing their relationship with a union must be keenly aware of what type of agreement they have with each union. If they have a Section 9a relationship, it will take extraordinary circumstances before the contractor will have an opportunity to change its relationship with the union representing its employees. If it is a Section 8f relationship, however, the possibility exists that, prior to the expiration of the CBA, the contractor can: • Give notice to the union of termination of the CBA • Give notice to the union, and to any trade association to which it may have assigned bargaining rights, that it is withdrawing all bargaining authority from the trade association, and; • Give notice to the union that it is repudiating its bargaining obligation and that it does not intend to enter into negotiations for a new CBA. The notice of termination of the CBA must be given during the period set forth in the CBA for giving such notice Ordinarily, but not always, that period is 60-90 days before contract expiration. The notice of withdrawal of bargaining rights should be given in advance of any negotiations beginning. Although negotiations generally commence 45-75 days before the contract expires, employers who want to repudiate the bargaining relationship should consider sending notice of withdrawal of bargaining rights from the trade association more than 90 days in advance of contract expiration, in order to ensure that it does not unwittingly become bound to a new CBA as a result of negotiations starting early. Shortly before contract expiration, notice should be provided to the union, and to the employer’s regular employees, that the employer is repudiating its obligations to the union and does not intend to enter into negotiations for a new contract.
V O L U M E
1 2 ;
I S S U E
Association Welcomes Davina Ware Davina Ware is the most recent addition to the Builders Association staff. She joined the Association in October as our Administrative Coordinator and is responsible for Association program assistance and office management. Davina graduated from Columbia College Chicago in May 2008 with a degree in Marketing. Before joining the Builders Association, she worked at a small market research firm. While pursuing her undergraduate degree, Davina was an intern at PHD Global, and was the Vice President of Membership for the Columbia College Marketing Association.
Of course, repudiation of the bargaining relationship does not necessarily mean the union will walk away and the employer is now non-union. Rather, the employer should expect a variety of union pressures, including picketing. However, the union is not allowed to picket forever in order to convince an employer to sign a new Section 8f agreement. Rather, picketing to “convince” the employer to sign a new Section 8f agreement will be limited to the time period allowed for “recognitional picketing” – i.e., a reasonable period not to exceed 30 days. A contractor should also expect “informational” picketing, for which there is no time limit. For example, if the employer pays its employees less in wages and benefits than the economic package in the new CBA, the union can put up picket signs at a jobsite that read: “ABC Contractor is not paying area standards.” If the employer is no longer performing jobs within the union’s jurisdiction, however, there will probably not be any immediate consequences. Contractors that repudiate a bargaining relationship should also expect audits by the Trust Funds – and of course they need to be aware of any “withdrawal liability” that might be assessed by the Pension Fund because of unfunded accrued liabilities. The cost of withdrawal liability may soon become the most significant reason for a contractor deciding not to exercise its Section 8f rights. Many Pension Funds were significantly underfunded even before the recent downturn in the stock market. Conclusion Construction industry employers may be bound to a collective bargaining agreement as a result of the union having proven at some point that it represented a majority of the contractor’s employees (a Section 9a agreement) or as a result of a pre-hire agreement (a Section 8f agreement). If the contractor is bound to a Section 9a agreement, it must continue to recognize the union after a contract expires unless, at the end of a contract term, the union loses a decertification election or there is objective proof that the contractor’s employees no longer desire union representation. If the contractor has a Section 8f contract, however, federal labor law would allow him to repudiate the union and try to operate on a non-union basis. Whether or not such a repudiation is practical, however, will depend on a wide variety of factors that will differ for each contractor.
All Eyes On The Overhead How Stock Market Troubles Change Day-To-Day Business, And What Your Company Should Be Looking At To Stay Financially Stable BY CARYN GIZNIK As the current economic conditions have those looking for financing worried, local bankers who work with contractors say it’s far from time to panic…but it never hurts to be prepared. “It is not all doom and gloom,” said Steve Trepiccione of The PrivateBank about the current financial landscape in the industry. “By historical measures, construction activity is still relatively robust. “While the credit crisis is having an impact on project financing and lending in general, there is still work being let out. The PrivateBank remains active and commited to the industry.” The stock market’s recent free fall and the resulting government activity was enough to cause trepidation for anyone in the business community, and AGC of America Chief Economist Ken Simonson told members at the Builders Association’s Fall Meeting that construction activity was showing signs of stalling. At the same time, it could be two years before the full effect
“If the backlog has covered 80 percent of those upcoming projects in the past and now you’re seeing that it covers 50 or 60 percent, it’s time to identify where you can cut some of your overhead .” -Jeff Steigelman Fifth Third Bank of this economic downturn is felt. Jeff Steigelman of Fifth Third Bank said the construction industry usually lags behind general economic trends by 18-to-24 months. While he pointed out that most of the contractors Fifth Third represents are continuing to work and credit is still available, the industry might not continue to follow this trend. “We are starting to see signs of things slowing down,” Steigelman said. “Historically, you have to look at what percentage of your overhead has been covered by that backlog. “If the backlog has covered 80 percent of those upcoming projects in the past and now you’re seeing that it covers 50 or 60 percent, it’s time to identify where you can cut some of your overhead in case things really do slow down. Now is the time to do that, while the work is still there.” The challenges that continuously deplete capital levels for banks could eventually be passed on to contractors. Trepiccione cautions contractors to stay attentive when working with banks to finance future projects and to be sure a company puts some time and effort into choosing the right bank. “As the country nears a recession, banks will take a closer look at construction companies looking for lending opportunities,”
He said. “Contractors will gravitate towards sectors where work remains. That competition will cause margins to shrink. “Contractors must have a well articulated plan, good financial flexibility and fewer surprises.” Both Trepiccione and Steigelman stressed the need for construction companies to communicate with bankers, and work together during the current economic conditions to ensure the construction industry can stay active.
Supplier Showcase The products and services offered by Builders Association Supplier members are among the best in their fields. With their association membership, these companies support the Chicagoland construction industry. The Builder will highlight suppliers in the Supplier Showcase, which will feature comments or information on a construction issue from those members. This issue’s contributor commented on recent financial unrest and how it changes things for the construction industry. Matt Doucet- Fifth Third Bank In light of recent financial issues, banks may be careful about who they lend to and when, and construction companies would do well to look at their own capital reserves in the same careful manner. “Banks have less money to lend, so they’re going to be more selective, in addition to revisiting interest rates and the fees they charge,” Doucet said. “If you’re a very well run business and have strong finances, you aren’t going to be hit with those rates, but banks will definitely be taking a harder look at which businesses they loan to.” Getting business loans now isn’t the only thing for construction companies to think about, as companies are now being asked to look closer at how an economic stall would effect their business in the future. “We’re asking our guys to look ahead a little bit,” Doucet said. “We want them to know what they have to be ready for in 2009 and 2010. There’s going to be less capital to go around, and we don’t want them scrambling to try to find work.” Fifth Third Bank 222 S. Riverside Drive 32nd Floor, GRVR2D Chicago, IL 60606 www.53.com
T H E
B U I L D E R
Member Milestones Michael J. Faron, W.E. O’Neil Construction Company Chairman, received the Award of Honor from the Chicago Building Congress during a reception October 15. The award recognizes an outstanding leader yearly for major contributions to the construction industry. The lifetime award identifies the accomplishments of a productive career. The Association values Mike’s commitment to the construction industry and salutes him on thirty years of excellence. W.E. O’Neil Construction Company is providing preconstruction services for the $700 million University of Chicago Medical Center’s New Hospital Pavilion. The building will include technology for both patient care and clinical research. The New Hospital Pavilion will connect to both the University of Chicago Comer Children’s Hospital and the Duchossois Center for Advanced Medicine. Construction for the 1.2 million square foot building will begin in 2009 and the hospital will open for patients in 2012.
Renderings of the Cicero Business Center - which Opus North is slated to complete in early 2009 - and Mori Seiki’s new American base of operations - which McShane Construction Company broke ground on in September.
James McHugh Construction Company recently completed $25 million in upgrades to Hotel Allegro. McHugh also worked on the building’s major rehabilitation in the late 1990s. McHugh removed and replaced the hotel’s antiquated mechanical, electrical and plumbing systems and provided design-build services. The baths were completely rebuilt and the rooms revamped with new fixtures, furnishings and equipment. James McHugh Construction Company completed the 92nd floor of the Trump Tower. In three years, McHugh has poured 180,000 cubic yards of concrete-20,000 truckloads-and laid 25,000 tons of steel. McHugh introduced to the United States a three-story-tall windscreen that provided protection from cold and winds. In September crews were slated to begin work on attaching the spire that will cause the building to reach a height of 1,362 feet, making it the second tallest building in Chicago. Opus North announced it has started construction on the Cicero Buisiness Center. The 550,000-square-foot industrial development will bring modern warehouse facilities to a location that has experienced little industrial development. The center will include two buildings resting on 28 acres at 16th Street and 54th Avenue. Each building will include parking for over 100, 30 docks, 32-foot clear ceilings, trailer spaces and flexible office space. Opus Architects and Engineers designed the project and hope for completion in early 2009. Valenti Builders is pleased to announce the completion of the Chicago International Charter School at the Ralph Ellison Campus. Valenti and its partners completely renovated the 1920’s limestone building into a state-of-the-art high school. The new addition was built to house labs, a cafeteria, library, and the administrative offices. A new gymnasium was constructed to match the character of the surrounding community. McShane Construction Corporation will be the design/builder of Mori Seiki’s new American headquarters. They broke ground on the 102,000 square foot building in late September. The structure will be built on a premier 7.5-acre site at the intersection of West Central Road and Huntington Boulevard in Hoffman
V O L U M E
1 2 ;
I S S U E
Estates. The headquarters will feature over 59,000 square feet of Class A office space and a fully equiped 42,560 square foot showroom with two 25-ton cranes and a one-ton utility crane in order to showcase Mori Seiki’s product line of machine tools.
Breaking ground on a project? Finishing a project? Promotions or awards? The Builders Association wants to know about it! Send information for Member Milestones to: firstname.lastname@example.org Supplier members can be considered for inclusion in our Supplier Showcase by calling 847.318.8585.
Simonson Says... AGC’s Chief Economist Tells Contractors What He Sees In 2009 With contractors nationwide trying to navigate through uncertain financial waters, it helped to hear from construction’s equivalent of an economic lighthouse. One of the nation’s most respected construction economic minds, AGC of America Chief Economist Ken Simonson, gave his overview of current economic conditions and his preview of what contractors can expect in 2009 during the Builders Association’s Fall Meeting at the Hyatt Rosemont. “I’ve been saying that I don’t believe we’re in a recession,” said Simonson to a room packed with over 100 construction industry representatives. “I would say that my view is a little more pessimistic than it was awhile ago. “From an industry standpoint, we’re in now what I would call a stall. There would be a much needed boost if legislators would
Builders Association Honors Retiring Board Member
At this year’s Fall Meeting the Builders Association honored John O’Malley, retiring President of Case Foundation Company. John has spent most of his life in the deep foundations industry and has been President of Case for over 20 years. While attending Loyola University, John worked as a laborer for the company, then advanced to Labor Foreman, Estimator, Project Manager, Vice President, and finally President. John has successfully led Case Foundation Company to become a widely respected full-service deep foundation specialist company. John is a current member of the Builders Association Board of Directors and has served multiple terms on the board.
make a sizable investment in infrastructure.” Simonson outlined which materials prices are rising and falling and why, in addition to pinpointing the strongest and weakest segments for construction growth. Construction employment took over a six percent dive between July of 2007 and July of 2008, but wages went up over four percent in the same time period. Contractors were told they can expect a steady increase in prices for up to five years, with delivery of materials continuing to be subject to rising fuel prices. Simonson’s entire presentation is available online at www. bldrs.org. Since the Fall Meeting, a stock market shake-up and the resulting bailout of some lenders by Congress, a number of banks have been less likely to lend funds to contractors (see related story). Simonson’s publication on the AGC’s website, the Data Digest, indicated a five percent dip in new construction starts during the month of September, as well as an anticipated steady dip in starts through 2009.
T H E
B U I L D E R
Leading segments in 2008 2007 Segment
+20 to +30%
+20 to + 30
C Communication i ti
+5 5 to t + 10
+5 to + 10
+10 to +15
Source: Ken Simonson
Weaker segments in 2008 2007
Ͳ5 to 5 %
0 to +5
+ 1 to +4
+3 to +6
+3 to +7
I S S U E
Source: Ken Simonson
V O L U M E
1 2 ;
Feds Question Certificates-Of-Need BY DAYNA SCHLARB Federal agencies and state officials are debating the role of the free market in healthcare construction in Illinois. The U.S. Department of Justice and the Federal Trade Commission registered objections to the Illinois certificate-of-need process. Federal agencies claim that the law burdens consumers and weakens competition that is necessary in order to control healthcare expenses. Some states have already shifted to let the free market decide. The agencies feel that Illinois should do the same, and stated as much in front of the Illinois Task Force on Health Planning Reform. Many local contractors feel as if the certificate-of-need laws are superfluous. “The certificate-of-need continues to delay or cancel proposed projects which cause prices to go up,” said Paul Hellermann, President of Bulley & Andrews, LLC. “The law should be taken over by the free market or at least be modified. Without
Facilities such as the Loyola Medical Center, completed last year by Henry Bros., would be easier to obtain approval for without certificate-of-need laws currently applied in Illinois.
the law, I do not see any negatives as to why it would cause problems. Someone would not be building the facility if they
did not think it would turn a profit.”
see CERTIFICATES, page 19
Hit Us With Your Best Shots The Builders Association is looking to build on its archive of member photos for future publications, use on the Association’s website and a slide show at the Annual Meeting. Submit photos of projects your company has completed this year to acole@bldrs. org or call Communications Manager Andy Cole at 847.318.8585.
T H E
B U I L D E R
Calendar Of Events November 18
7:30-11:30 a.m.; Ralph H. Metcalfe Federal Building, 77 W. Jackson, Chicago
Make GSA Work For You December 10
10 a.m.-2 p.m..; SEPT. 15-18 Hotel Millennium Knickerbocker
Effective Time Project Manager Management Program Seminar
8 a.m. - 12:30 p.m. More information coming soon; Watch www.bldrs.org
V O L U M E
1 2 ;
Webinar, 1-2:30 p.m.
7:30-10:30 a.m.; Hilton Garden Inn, Des Plaines
How Insurance Plays A Role In Construction Risk
Multiemployer Pension Funds
Joint presentation of AGC of America, Green Building Initiative http://agc.org/cs/meetings_events
December 10 3-6 p.m.; The Drake Hotel
Annual Meeting Featured Speakers: AGC of America Senior Vice President J. Doug Pruitt Chicago 2016 CEO Patrick Ryan
I S S U E
Speaker: John “Rocky” Miller, Cox Castle & Nicholson LLP
7:30-10 a.m.; Doubletree Hotel, Oak Brook
BIMForward: The Business Side of BIM and Integrated Project Delivery www.bldrs.org
What To Know If The Whistles Blow Federal, State Laws Shield Employees JOSEPH F. SPITZZERI and STEVEN C. WEISS Johnson & Bell, Ltd. You’re facing a tight deadline and now you’re a week behind. Was it the weather? No, it’s sunny and dry. Was it a delay in transporting materials? No, the materials were delivered this morning. So why are you just looking at your jobsite? You’ve got a whistleblower in your midst. Before you get worked up, remember that the law encourages whistleblowing. Whistleblowing in General Often an employment relationship is one of at-will employment. Under an at-will employment relationship, an employer may fire an employee for any reason or no reason at all. But an employer’s seemingly broad discretion to hire and fire as they please is limited by a few exceptions. One such exception is the protection afforded to whistleblowers, which are employees that report employer misconduct. The reason for this protection is clear: The employer’s interests must be counterbalanced by the interests of employees in earning a living and the community’s interest in seeing its laws carried out. Understanding why the policy is in place has implications for understanding what types of protection it offers your employees. Employees in Illinois are protected by both state and federal whistleblower laws. Specifically, Illinois offers employees protection under the common law retaliatory discharge tort as well as the statutory Whistleblower Act. Illinois Whistleblower Act The Illinois Whistleblower Act protects disclosures which the employee reasonably believes disclose a violation of State or Federal law, rule or regulation. The Act protects employees in a number of ways. First, it prohibits employers from adopting and enforcing policies that prevent employees from making protected disclosures to government or law enforcement agencies. Second, the Act prohibits employers from retaliating against employees for making protected disclosures. Third, it prohibits an employer from retaliating against an employee for refusing to participate in an activity which would violate State or Federal law, rule or regulation. A determination of whether an employee is protected by the Whistleblower Act depends on more than just the type of communication that is protected (i.e. communications which the employee reasonably believes will disclose a violation of State or Federal law, rule or regulation). It also depends on to whom the communication is made and where the communication is made. This is a major difference between the Whistleblower Act and
the common law. Under the Whistleblower Act, the employee is only protected if he or she discloses information either (a) to a government or law enforcement agency or (b) in a proceeding, such as in a court or administrative hearing or before a legislative commission or committee. Other disclosures or complaints, even when made to a supervisor, are not protected. In the federal system, both the Northern and Southern districts of Illinois have addressed this issue and have concluded that disclosures made to someone other than those named by the Act are not afforded Whistleblower protection. Accordingly, obtaining a dismissal of a claim brought under the Act can be relatively easy just by virtue of who received the communication. An employer that violates the Act may be held civilly and criminally liable, as a violation of the Act is considered a Class A misdemeanor. Common Law Retaliatory Discharge Hangs in the Balance For nearly 30 years, Illinois courts have recognized the common law tort of retaliatory discharge in the context of whistle blowing. When the Whistleblower Act became effective in 2004, it was already well established that a claim for retaliatory discharge could be brought by an employee who had blown the whistle on his or her employer’s misdeeds. This Whistleblower Act appears to have created a rift between the federal courts and the state courts regarding whether retaliatory discharge actions can be brought for whistleblowing. Federal courts have acknowledged that the Act codifies the common law tort of retaliatory discharge as it applies to whistleblowers. Federal courts (particularly in the Northern District) have taken this one step further and held that the Act does away with the common law tort of retaliatory discharge for whistleblowing. From the employer’s standpoint, this represents a legal windfall
see WHISTLEBLOWER, page 15
T H E
B U I L D E R
WHISTLEBLOWER, from page 14 because it greatly limits the type of actions that can be brought against the employer. Under this approach, the Act does away with the common law, which allowed employees to bring actions for retaliation even if the disclosure was made to someone other than a government or law enforcement agency. In addition to doing away with the more protective common law, the Act only allows for recovery where the employee makes a disclosure to a government or law enforcement agency or in a proceeding. This is bad news for employees because disclosures or statements made to the employer are not protected. The First District Appellate Court of Illinois, which consists solely of Cook County, did not go so far as to say that the Whistleblower Act did away with the common law. Instead, the court made it clear that it believed the federal approach is wrong and that the Whistleblower Act does not do away with common law recovery tort of retaliatory discharge for whistleblower activity. Therefore, in state court actions brought in the First District, a plaintiff is given two bites at the apple. If their claim does not fit neatly within the requirements of the Act, they can bring the action under the common law of retaliatory discharge. Until the Illinois Supreme Court resolves the question of whether the Whistleblower Act disposes of the common law claim, litigants should be aware of the possibility that a five minute walk from one courthouse to the other can make the difference between winning and losing. The Basics of Common Law Retaliatory Discharge Employers should remember that, until the issue of ‘whether the common law action has been done away with’ is resolved, it may be possible to be sued under the common law tort of retaliatory discharge for whistleblowing. In Illinois, a plaintiff claiming retaliatory discharge must show that (1) he or she has been discharged, (2) the discharge was in retaliation for his or her activities; and (3) the discharge clearly goes against public policy – what is right and just and what affects the citizens of the State collectively. In Illinois, only a few public policies override employment at will. One of which is the fundamental principle that a person is responsible to report and refrain from engaging in illegal activity – whistleblowing. For twenty five years, courts have recognized whistleblowing as a public policy deserving of protection. The common law tort claim of retaliatory discharge is both more forgiving and less forgiving as to employers. It is less forgiving towards employers because more is included in the type of employee activity that is protected. For example, unlike the Whistleblower Act, the common law recognizes that an employee who reports illegal conduct to his or her supervisor is still serving the public policy of enforcing the law and is therefore protected from discharge. A retaliatory discharge cause of action is more forgiving with regard to employers because it places less restrictions on an employer’s conduct – specifically, it only applies to actual discharges. The Illinois Supreme Court has held that a claim for retaliatory discharge does not include retaliatory demotions, suspensions or any other circumstance in which an employee suffers a loss of employment status or income or both, but is not terminated from his or her employment all together. While the question has
V O L U M E
1 2 ;
I S S U E
not yet been addressed by a court, the Whistleblower Act seems to be broader in that it applies to retaliation generally, not just termination. Clients and their attorneys should also be aware of the nature of the claim. A claim based on situations of retaliatory conduct that do not amount to termination of employment should probably be brought pursuant to the common law tort of retaliatory discharge – which at least one state appellate court,but no federal courts, have held to still be a valid law from which a suit may be filed. Practical Considerations Under the Whistleblower Act, an employer is not precluded from taking action against their employees for making disclosures only to supervisors, employers probably will not be best served by taking advantage of this law. This is not the most practical approach because shutting the door to your employees will create no alternative but to go directly to the authorities. Furthermore, from a risk management perspective, employers should be aware that state law is unresolved as to whether the Whistleblower Act preempts the common law. Therefore, they may find themselves to be an unwilling participant in the final determination of the question. Mr. Spitzzeri is a shareholder at Johnson & Bell, Ltd. Johnson & Bell’s Construction Litigation Group attorneys have been involved in some of the most serious construction litigation in Illinois. Johnson & Bell prides itself on using innovative and creative methods to represent private, public, local and international clients.
OGLETREE DEAKINS Attorneys at Law Construction Industry Group
LIFTING SERVICE TO NEW LEVELS
Two First National Plaza, 25th Floor • Chicago, Illinois 60603 P: 312.558.1220 • F: 312.807.3619 • www.ogletreedeakins.com
Best Practices To Ensure An Authorized Workforce EDITED BY MARK JOHNSON & ROGER PRICE Seyfarth Shaw LLP The following is the continuation of an article that originally appeared in Seyfarth Shaw’s Construction Law Report. For more information, visit www.seyfarth.com/ constructionlawreport. Because audits can be expensive, some employers choose to perform a selfaudit. The success of audits varies. Most employers underestimate the resources required to complete an I-9 audit, and most assign HR staff to perform the audit. The problem with this is clear: the individuals who committed the I-9 errors are unlikely to identify them. And even if the errors are identified, many untrained auditors do not understand the proper manner in which to correct the errors. Consequently, if a company insists on completing its own I-9 audit, the individuals responsible for auditing the I9s should undergo thorough prior training. Ideally, the company should have an I-9 expert on call to answer questions from auditors throughout the process. E-Verify E-Verify is the federal government’s online verification ystem that uses SSA and Department of Homeland Security (DHS) databases to verify that an employee is authorized to work in the United States. While the system is not 100% accurate, it is currently an employer’s best tool for ensuring that newly hired employees are authorized to work. Once registered, employers must use E-Verify to confirm the employment eligibility of all new hires. The system must be used by the end of the third business day of a new hire’s employment and may only be used once Sections 1 and 2 of the Form I-9 have been completed. Currently, the system cannot be used to verify the work authorization of current
employees, but this rule will change in the fall, at least for federal g o v e r n m e n t contractors, who will be required to use the system for any existing employee who is assigned to perform work in connection with the government contract. Once an employer inputs an employee’s I-9 data into the E-Verify system, the system will (within seconds) return one of three results: “employment authorized,” “SSA Tentative Non-Confirmation,” or “DHS Verification in Process”: • Employment Authorized: This indicates that the employee is authorized to work. The employer must record the verification number generated by E-Verify on the employee’s I-9 form. No further action is necessary. • SSA Tentative Non-Confirmation: This indicates that there is an information mismatch with the SSA databases. The following instructions must be followed by an employer for SSA and DHS Tentative nonconfirmations (TNCs): • The employer must inform the employee of the TNC and must print the TNC notice (generated by E-Verify) and review it with the employee. • The employee has the option to contest the TNC or not to contest the TNC. • If the employee chooses not to contest the TNC, a final nonconfirmation results, and the employee should be terminated. • If the employee contests the TNC, the employee must contact the appropriate agency (SSA or DHS) within eight (8) business days to resolve the discrepancy. • While attempting to resolve the
discrepancy, the employee may continue to work. Once the employee resolves the discrepancy, the employee should inform the employer. • SSA or DHS will automatically update the system once the discrepancy is resolved or once it is determined that the discrepancy is not resolvable. At that point, the status of the verification will change to “Employment Authorized,” “Final Non-Confirmation,” or “Review and Update Employee Data then Resubmit.”uction Law Rep • DHS Verification in Process: This indicates that DHS is working to confirm employment authorization in its databases. In general, DHS will make a determination within 24 hours, and the status of the verification will change to either “Employment Authorized” or “DHS Tentative Non-Confirmation.” • Final Non-Confirmation: This means that the employee must be terminated. The employer should keep records to indicate the reasons for termination. For many employers, E-Verify is unattractive due to its rumored inaccuracies, the training required for implementation, the fear that a significant number of employees would need to be terminated or that fewer qualified job candidates will surface, a lack of technological resources, and/or concerns about voluntarily providing I9 information to the federal government. While these concerns are well-founded, it is important to remember that, at least under the current rules, only new hires may be run through the system, so employers will not lose their current workforce due to its use. In addition, the federal government
see IMMIGRATION, page 17
T H E
B U I L D E R
IMMIGRATION, from page 16 continues to take steps to make use of E-Verify mandatory for as many employers as possible. For this reason, many employers are voluntarily registering one or two worksites at a time to become familiar with the system so that they are not overwhelmed when and if it becomes mandatory. Social Security Number Verification Service The Social Security Number Verification Service (SSNVS), is recognized under some state laws as an E-Verify substitute. It allows employers to check the SSA’s database to determine whether an individual’s name and SSN as provided to the employer match the SSA’s records. It does not verify the employment authorization of employees. And it is used by employers for many other purposes, such as for tax reasons. Employers who use the system should do so consistently to avoid charges of discrimination. If it is used for a new hire, it should be used for all new hires. If it is used for a current employee, it should be used for all current employees at the same worksite. If the system informs the employer that an employee’s information has “failed verification” or that the name and number provided belong to a deceased individual, that employer must take proper steps to resolve any errors and, if the errors cannot be resolved within a reasonable time, must terminate employment. Suggested best practices in this area align with the steps suggested to be taken upon receipt of a mismatch letter, as described below. Social Security Mismatch Letters These letters are generally sent to employers on an annual basis by the U.S. Social Security Administration to inform them that the names and social security numbers provided by the employers to the SSA do not match the SSA’s records. The stated purpose of the letters is to solve the problem that is caused when social security taxes paid and credits earned by certain employees cannot be credited to the proper individuals’ social security accounts. In 2007, DHS published a rule requiring employers who receive a social security mismatch letter to take specific steps to resolve the mismatch within a given time frame. Under the rule, if the mismatch is not resolved and if the employer continues to employ the individual, then ICE can use the mismatch letter as the basis to find that the employer knowingly continued to
employ an unauthorized worker in violation of federal I-9 law. While the so-called “safe harbor” regulations are currently not in effect due to a pending lawsuit, the regulations describe what the federal government believes to be the best practice for employers who are in receipt of a mismatch letter: • First, within 30 days of receiving the notice, the employer should check its records to determine whether the discrepancy results from a typographical, transcription, or similar clerical error in the company’s record or in communication to SSA or DHS. If there is such an error, then the employer must correct the record, inform SSA or DHS, and then verify that the corrected record has resolved the discrepancy. The employer should document the manner, date, and time of the verification. • If there is no clerical error, then the employer should ask the employee to confirm the accuracy of the record. If the employee states that the company record is incorrect, then the employer should make the appropriate changes according to the employee, inform SSA or DHS of the corrections, and verify that the corrected record has resolved the discrepancy. If, however, the employee maintains that the record is correct “as is” then the employer must ask the employee to pursue the mismatch matter directly with SSA. • If the discrepancy is still unresolved 90 days following receipt of the mismatch letter, the employer may have the employee complete another Form I-9, using the same procedures as if the employee were newly hired except that no document containing the SSN or alien number that was the subject of the discrepancy may be used. In addition, no document without a photograph may be used to establish identity. The new Form I-9 must be completed within three days following the initial ninety day period. • If the new I-9 does not resolve the matter, the employer must either terminate the employment or risk a finding that the employer had “constructive knowledge” that the employee is an unauthorized worker (thereby putting the employer in violation of the federal I-9 laws under IRCA). While employers may not yet be prepared to follow these steps or the strict timeline, employers should adopt a mismatch letter policy. The worst thing to do is ignore a mismatch letter. It is not much better to simply inform the affected employees of the mismatch without follow up. Employers are expected to seek to correct mismatches proactively and be able to show the government that it has fulfilled its obligation in this area.
Bulley & Andrews, LLC General Contractors Since 1891
V O L U M E
1 2 ;
I S S U E
CRANES, from page 1 McHugh Construction Company. “The second that crane is done on a job, somebody needs it somewhere else.” “It’s slowing down a bit now, but there’s no doubt that one of the biggest concerns the last few years has been having enough time and enough people to do things the right way.” Brian Sturtecky of the Occupational Safety and Health Administration (OSHA) explained that crane accidents are more likely than not caused by human errors such as rigging failure, knowing the proper weight a crane can hold and whether the rigger is qualified. Engineering News-Record reported that the tower crane snap in New York this May was caused by a faulty weld made in China. The New York Times reported in early September the New York crane-related accidents in March and May occurred during a jump or raising of the crane. “Crane accidents occur because of an operator’s lack of inspections, and lack of crane maintenance,” said Sturtecky, who added that OSHA has up to six months to investigate an accident. He also points out that there are many factors for consideration and that whoever knew of the conditions that caused the accident is ultimately responsible. Both general contractors and subcontractors are responsible when it comes to crane safety. Contractors are required to: • Insure subcontractors • Make sure a lift plan is in place • Provide appropriate weights • Ensure the crane has been inspected and is certified operable • Make sure maintenance schedules are up-to-date Technology has allowed for computer safety features on cranes, but human error tends to exceed what is possible, therefore causing accidents. “A lack of proper maintenance and the rush to complete a job can also be factors,” Sturtecky explained. The economic environment combined with recent crane accidents have made obtaining insurance a bit more expensive, as well. “There’s a higher sensitivity now when it comes to insuring cranes,” Jim Naylor of Assurance Agency explained. Naylor advises general contractors to work with risk management personnel to guarantee subcontractors have the proper crane, liability and property coverage. Another insurance professional, Scott Rasor of Zurich North America, tells general contractors that there is no such thing as “over-prepared” when it comes to cranes. “Insurance companies will ask more questions and will request proof of crane maintenance along with operator certification,” Rasor said. “Crane product failure due to wear and tear and operator error are in play when it comes to assessing an accident.” “Underwriters have a high interest in crane inspection and operator certification. The more prepared a general contractor is, the easier it’s going to go.” Proper paperwork when leasing a crane or hiring a subcontractor should include: • Maintenance and use logs on the crane that is being leased • Vendor certification • Inspection report • Any recall information from crane manufacturers Given the recent crane failures, purchase orders no longer offer
enough protection for general contractors. A contract between the general contractor and subcontractor will offer a reasonable limit of liability. “If general contractors do not own or maintain a crane, they should protect themselves appropriately,” said Rasor. “General contractors have to know the necessary precautions when leasing a crane or hiring a subcontractor.” “A contract will provide more protection than a purchase order in the event of an accident. Work with your attorneys, agent and insurance company to make sure you have the right level of protection and limits of liability.” With more accidents occurring in major cities around the United States, New Mexico passed the Hoisting Operators Safety Act in 1995. The Act requires crane operators to hold a state license or pass a state-approved certification class. Currently, in Illinois there is no crane operation certification program, but a crane operator working in Chicago must be licensed. According to the National Commission for the Certification of Crane Operators (NCCCO), 15 states and six cities require a test to become licensed. To work a tower crane in the city, operators need to pass a written and practical exam after 2,000 hours as an operator in another jurisdiction or after an apprenticeship. While there’s no silver bullet for crane safety problems, there are plenty of precautions that contractors can take to greatly reduce the risk of an accident. “There’s an awful lot that the operator needs to be aware of, and if there’s a problem it needs to be addressed immediately,” Pound said. “Riggers need to be aware that many times, the operators are picking blind and can’t see the load. Communication is very important, either through signals or a squak box. “There’s so much that goes into operating the crane itself. You have to be aware of that and make sure you’re careful.”
OSHA Proposes Changes To Crane, Derrick Rules The Occupational Safety and Health Administration (OSHA) has announced proposed rule changes for cranes and derricks, now available for comment after being published in the Federal Register. OSHA is proposing rules that will further protect employees from accidents occurring with hoisting equipment. Under the proposed rule employers would be required to: • Determine whether the ground is sufficient enough to support the weight • Be required to assess work zone hazards • Ensure that the equipment is safe to operate through required inspections A PDF of the proposed rules can be found on the safety section of the Builders Association’s website. Comments can be made electronically at www.regulations.gov (Federal Rulemaking Portal) until December 8.
T H E
B U I L D E R
Once complete, 300 N. LaSalle (right) will be the 16th building taller than 700feet in the City of Chicago, and the fourth such structure built since the year 2000.
WATER, from page 2 Just as the location proved to be beneficial to the building process, it provided a number of challenges as well. Being smack dab in the middle of downtown, next to a large river, central bridge, and disgruntled neighbors across an alley only 12 feet away were among those. The location presented logistical challenges that needed to be hurdled to keep the project progressing smoothly. Another challenge was the installation of an intricate earth retension system to allow for the construction of the belowgrade parking garage. The three-level parking garage was constructed with an internally braced earth retension system that required a heavily coordinated effort between the installation of bracing and the removal of excavated material. “The excavation and logistics of constructing the building were the most challenging of all the projects performed throughout the process,” Trolian said. “Building right next to the Chicago River was a challenge in itself. Additionally, working on such a tall structure, especially with the jobs expected to be performed, it was a great thing that there were no injuries.” As was the case with many construction projects that worked last winter, Mother Nature provided an additional obstacle. “The team had to deal with the ruthless weather conditions we had this year,” Trolian said. The intense winds, heavy snowfall, and extreme temperatures were difficult for Clark, yet the project is scheduled to complete on time. In spite of these challenges, 300 N. LaSalle is well on its way to being the next great Chicago structure. The building’s tenants will include 52 floors of Class-A office space, specifically the worldwide law firm, Kirkland & Ellis, LLP, which will occupy 28 floors, retail and conference centers, waterfront café, fine dining restaurant, and a half-acre public plaza. The talk will soon be over, as the building is slated to open in early 2009. Upon completion, the building will stand over 800 feet tall, making it the 12th tallest building in the City. “It feels awesome to be part of something like this,” said Calhoun. “It’s an exceptional opportunity to be part of something this monumental.”
Tell Us A Story The Builders Association is always looking for ideas to develop content of The Builder. If there’s a topic you’d like to see highlighted or a challenging project your company is working on that you’d like to see featured, contact Andy Cole at 847.318.8585 or email@example.com.
V O L U M E
1 2 ;
I S S U E
CERTIFICATES, from page 12 Several hospitals in the suburbs were proposed to be built in recent years and have been denied due to the law. The cost of the law is proving to be detrimental to businesses and hospitals as they have had to hire attorneys to deal with the mess. In addition, agencies that oppose the certificate-of-need feel it is bureaucratic. The Health Planning Facilities Board, which makes the decisions about which hospitals in Illinois get built, has been heavily criticized since its creation. As a result, while determining whether or not the certificate-of-need is necessary, the board will be investigated. In Plainfield, Edward’s Hospital has not received approval due to this regulation. This project has been proposed continuously since 2003, most recently in August, and it is still being denied. This is despite the Mayor of Plainfield, James Waldorf, acquiring over 30,000 signatures in support of the hospital. Many other projects are in the process of getting approved, but through the state law it takes a long time before the projects can move forward. On the other hand, criticisms have been made against deregulation because of our economic crisis. Some experts believe there is no evidence to prove that the states without the certificate-of-need have seen lower healthcare costs or increased access. Illinois isn’t the only state debating the need and effectiveness of the law, as 36 states and Washington D.C. have some form of certificates-of-need legislation. “Although Bulley & Andrews has not been personally restrained from building due to the law, the certificate-of-need creates obstacles for those trying to build,” Hellermann said.
Builder The Builder is published periodically by the Builders Association, a trade association of commercial, industrial and institutional contractors and affiliated industry firms dedicated to quality construction in the Chicagoland area.
2008 Board of Directors
Builders Association 9550 W. Higgins Rd., Suite 380 Rosemont, IL 60018 (847) 318-8585 www.bldrs.org
Builders Association Staff Have a construction-related problem or question? You may find it helpful to speak directly to the individual who has primary responsibility for a particular area. Al Leitschuh, President Industry Relations, Strategic Planning Mike Schultze, Vice President Government Relations, Labor Relations, Builders Foundation
George Ferrell Henry Bros. Co.
Denise Herdrich, Director of Labor Relations Labor Issues, Membership Recruitment
J. David Pepper Pepper Companies
Benjamin Johnston James McHugh Construction Company
Kristin Garcia, Client Services Manager Education, Safety, Membership Retention
Leon LaJeunesse Custom Contracting, Ltd.
Andy Cole, Communications Manager
John Russell W.E. Oâ€™Neil Construction Co.
Stacey Kelly, Project Coordinator Meeting Logistics, Builders Foundation
R. Lynn Treat Ryan Companies US, Inc.
John Oâ€™Malley Case Foundation Company
Davina Ware, Administrative Coordinator Office Management,
Immediate Past Chairman
Howard Strong George Sollitt Construction Co.
Tim McPhillips, Accounting
Paul Hellermann Bulley & Andrews, LLC
Caryn Giznik Dayna Schlarb Communications Interns