Page 1

THE

ASA’s

THE OFFICIAL EDUCATIONAL JOURNAL OF THE AMERICAN SUBCONTRACTORS ASSOCIATION

WWW.ASAONLINE.COM

APRIL 2018

Shaping the Future of the Construction Industry with Technology by Michael McLin, Maxim Consulting Group

There’s Nothing to Fear But Fear Itself in 2018 by Tyler Riddell, eSUB

Digital Construction

by Carol Hagen, Hagen Business Systems Inc.

Electronic Signatures Are Enforceable—If You’re Careful by Joseph Kanfer, Woolford Kanfer Law, P.C.

How to Minimize Risks for Successful BIM-Powered Projects

Embracing Technology

by Tara M. O’Hanlon, Miller Nash Graham & Dunn, LLP

HR & Technology

Jamie Hasty, SESCO Management Consultants

LEGALLY SPEAKING: Innovative Legal Procurement Models Decentralizing Data in Construction

by James L. Salmon, Esq., Benjamin, Yocum & Heather

TM

AMERICAN

SUBCONTRACTORS ASSOCIATION


SAVE THE DATE

March 6-9, 2019 | Nashville, Tennessee www.subexcel.com

© Sean Pavone


THE

April 2018

EDITORIAL PURPOSE The Contractor’s Compass is the monthly educational journal of the Foundation of the American Subcontractors Association, Inc. (FASA) and part of FASA’s Contractors’ Knowledge Network. The journal is designed to equip construction subcontractors with the ideas, tools and tactics they need to thrive.

Features Shaping the Future of the Construction.................................. 6 Industry with Technology

The views expressed by contributors to The Contractor’s Compass do not necessarily represent the opinions of FASA or the American Subcontractors Association, Inc. (ASA).

by Michael McLin, Maxim Consulting Group

There’s Nothing to Fear But Fear Itself in 2018....................... 8 by Tyler Riddell, eSUB

EDITORIAL STAFF Editor-in-Chief, Marc Ramsey MISSION FASA was established in 1987 as a 501(c)(3) taxexempt entity to support research, education and public awareness. Through its Contractors’ Knowledge Network, FASA is committed to forging and exploring the critical issues shaping subcontractors and specialty trade contractors in the construction industry. FASA provides subcontractors and specialty trade contractors with the tools, techniques, practices, attitude and confidence they need to thrive and excel in the construction industry.

Digital Construction.............................................................. 10

FASA BOARD OF DIRECTORS Richard Wanner, President Letitia Haley Barker, Secretary-Treasurer Brian Johnson Robert Abney Anne Bigane Wilson, PE, CPC

by Tara M. O’Hanlon, Miller Nash Graham & Dunn, LLP

SUBSCRIPTIONS The Contractor’s Compass is a free monthly publication for ASA members and nonmembers. Subscribe online at www.contractorsknowledgedepot.com. ADVERTISING Interested in advertising? Contact Richard Bright at (703) 684-3450 or rbright@ASA-hq.com or advertising@ASA-hq.com.

by Carol Hagen, Hagen Business Systems Inc.

Electronic Signatures Are Enforceable—If You’re Careful..... 12 by Joseph Kanfer, Woolford Kanfer Law, P.C.

How to Minimize Risks for Successful.................................. 14 BIM-Powered Projects HR & Technology.................................................................... 16 Jamie Hasty, SESCO Management Consultants

Departments CONTRACTOR COMMUNITY..... ........................................................... 4

EDITORIAL SUBMISSIONS Contributing authors are encouraged to submit a brief abstract of their article idea before providing a fulllength feature article. Feature articles should be no longer than 1,500 words and comply with The Associated Press style guidelines. Article submissions become the property of ASA and FASA. The editor reserves the right to edit all accepted editorial submissions for length, style, clarity, spelling and punctuation. Send abstracts and submissions for The Contractor’s Compass to communications@ASA-hq.com. ABOUT ASA ASA is a nonprofit trade association of union and non-union subcontractors and suppliers. Through a nationwide network of local and state ASA associations, members receive information and education on relevant business issues and work together to protect their rights as an integral part of the construction team. For more information about becoming an ASA member, contact ASA at 1004 Duke St., Alexandria, VA 22314-3588, (703) 684-3450, membership@ASA-hq.com, or visit the ASA Web site, www.asaonline.com. LAYOUT Angela M Roe angelamroe@gmail.com

LEGALLY SPEAKING...............................................................................18 Innovative Legal Procurement Models Decentralizing Data in Construction by James L. Salmon, Esq., Benjamin, Yocum & Heather

Quick Reference ASA/FASA CALENDAR.......................................................................... 20 COMING UP............................................................................................... 20

© 2018 Foundation of the American Subcontractors Association, Inc.

T H E

C O N T R A C T O R ’ S

C O M P A S S

A P R I L

2 0 1 8

3


CONTRACTOR COMMUNITY

4

OSHA Delays Enforcement of Beryllium Rules to May 11

OSHA Inspectors to Look for Reporting Failures

On March 7, the Occupational Safety and Health Administration delayed enforcement of its rules on occupational exposure to beryllium by 60 days to May 11. That is, OSHA will not enforce the Permissible Exposure Limits and the Short Term Exposure Limits for beryllium in construction until May 11. OSHA also clarified that it will not enforce other parts of the construction beryllium standards without additional notice. Further, OSHA announced that if an employer fails to meet the new PEL or STEL, the agency will inform the employer of the exposure levels and offer assistance “to assure understanding and compliance.” ASA Chief Advocacy Officer E. Colette Nelson applauded OSHA’s action, while advising construction employers to “not wait until the last minute to comply. Establishing internal policies and establishing monitoring procedures take time in even the most sophisticated company,” she said. OSHA’s final rule on beryllium, issued on Jan. 9, 2017, established new PELS and contained several other ancillary provisions that apply to general industry, construction and shipyards. After objections from ASA and others in the construction industry, on June 27, 2017, OSHA proposed a new rule revoking the ancillary provisions for the construction standards. In that announcement, OSHA announced that it would not enforce the new construction standards without further notice. Then on Aug. 24, 2017, OSHA raised questions when it announced on its Web site that it would not enforce the ancillary provisions of the new standard, but did not address the PEL or STEL. OSHA reports its most recent delay is the result of its “extensive settlement discussions with several parties who have filed legal actions.”

In guidance issued on Feb. 21, the Occupational Safety and Health Administration directed inspectors to refer to the new OSHA database to assure that employers they are inspecting have submitted their 2016 data. Under a new OSHA rule implemented in 2017, employers with 250 or more employees or employers with 20 or more employees in high-risk industries, including construction, must submit their OSHA Forms 300A electronically. The deadline for the submission of such records was Dec. 21, 2017; employers can no longer submit their 2016 records electronically. Under the new guidance, OSHA will address employers that failed to provide records based on the individual circumstances: • If the employer attempted to submit its forms but failed due to a technical difficulty and can provide correspondence with an OSHA office to corroborate its efforts, the inspector will collect the records and issue no citation. • If an employer failed to submit its records, but provides a paper copy of the records immediately upon inspection, the inspector will issue an other-than-serious citation with no penalty. • If an employer failed to submit its 2016 data, but shows that it already submitted its 2017 data, the inspector will issue an other-than-serious citation with no penalty. • If an employer fails to produce its 2016 records and has not filed its 2017 records, the inspector will issue an other-than-serious citation with the appropriate penalty. The OSHA penalty for other-than-serious violations is $12,934 per violation.

A P R I L

2 0 1 8

T H E

Crane Certification Group Urges Employers to Prepare for Compliance “Every day that goes by without certified [crane] operators … means those working around cranes—and even the general public who daily navigate construction sites in city after city across the country—are being put at risk…,” said Graham Brent, chief executive officer, National Commission for the Certification of Crane Operators. Late last year, the Occupational Safety and Health Administration delayed its crane operator certification until Nov. 10, 2018. In a new briefing document and a series of short videos, NCCCO provides five compelling reasons why waiting to certify should not be an option for a responsible safety-minded employer or operator: • If you wait till the last minute you may not have time to be certified. • Employers still have an obligation to train. So why not see if that training has been effective by certifying? • You’re probably paying higher insurance premiums if your operators aren’t certified. • You’re likely missing out on work to employers who do have certified operators. • Ultimately, it’s the right—and safe— thing to do. “The safety benefits that accrue from professionally-developed, accredited certification … are so compelling, it just doesn’t make any sense to delay embracing it a day longer,” Brent said. NCCCO is the nation’s largest leader in accredited certification for crane operators and other personnel who work with and around cranes.

C O N T R A C T O R ’ S

C O M P A S S


of the labor, equipment and materials Suicide in the Construction Industry: What You Need to Know to be used and their costs (by unit, as

As a member of the Construction Industry Alliance for Suicide Prevention, ASA shares the mission of creating a zero-suicide industry. Workplaces that adhere to a strong culture of safety set a goal of zero workplace-related fatalities. Suicide is no exception. What if construction industry leaders believed that suicide could be eliminated and did everything in their power to prevent it? In construction, many lives are lost to suicide and workers to depression and substance abuse. Not only is there a profound human cost, but there is also loss of economic strength as companies wrestle with absenteeism, presenteeism, and loss of productivity. Whether you are an owner, executive, manager or supervisor in the construction industry, this topic demands your personal attention. One resource to get you started is Construction + Suicide Prevention: 10 Action Steps Companies Can Take. This guide and other resources are available on the Alliance Web site.

No Contract, No Problem—Just Sign Here! Sometimes, clients need services that are not outlined in contracts. For example, a paving subcontractor might be called in to help with roads needing immediate repair after a natural catastrophe. In cases where it’s not practical to negotiate a contract, subcontractors can take a few simple steps to minimize misunderstandings about the work they’ve been asked to do and how the bill will be calculated. Avoiding misunderstandings and getting the job done means getting a few critical details of the work in writing. These include brief descriptions

T H E

C O N T R A C T O R ’ S

appropriate). ASA, the Associated General Contractors of America (AGC), and the Associated Specialty Contractors (ASC) recommend using the attached work authorization form, developed and published as part of the AGC/ ASA/ASC Guidelines for a Successful Construction Project. While verbal commitments invite misunderstanding, a work authorization form, or some similar written agreement setting out critical details, will provide a basis for the cost of the work. This type of agreement will also show the representatives of the parties requesting the work who authorized it to proceed. The “Guideline on Charges for Non-contracted Construction Services” notes that, where practical, “[s]ervices should be rendered or material or equipment furnished” by the parties only on the basis of “prior notice” and “concurrence.” Except in those rare (read: emergency) scenarios where there’s not enough time for a client to authorize new work in writing, the subcontractor will want at least those essentials to back up a claim for payment. Major pieces of a formal agreement like payment and insurance terms will be lacking in the work authorization because it’s not as extensive as a traditional contract. Nevertheless, it will far surpass mere “he said” and “she said” arguments when the subcontractor wants to get paid. Another key when providing non-contracted services is to file payment claims promptly. The guideline states: ................................................................ “No charges for services rendered or materials furnished by the contractor to the subcontractor or by the subcontractor to the contractor should be valid unless a written claim is given by the contractor to the subcontractor, or by the subcontractor to the contractor, during the first ten days of the calendar month following that in which the claim originated.” ....................................................................

C O M P A S S

Promptness is particularly important when there is no contract. It’s better to know about any problems with payment as early as possible in case there are questions that need to be resolved, or lien filings or other actions need to be taken.

New Web Site Gives Readers One More Way to Read The Contractor’s Compass

Some readers may prefer to read The Contractor’s Compass in a digital, pageflipping format, while others may prefer to be able to print out a pdf and read the magazine on paper. Now, there’s one more way to read ASA’s official educational journal for subcontractors—online! A new ASA Web site, contractorscompass.org, devoted to The Contractor’s Compass gives readers the ability to read, and search for, articles on the Web. The seven newest articles appear on the home page, and all articles, including from past editions, can be found under the “Articles” link. Links to past PDFs and digital, page-flipping magazines are located under the “Archives” link. Using the “Search” box at the bottom of the site, you can look for specific topics, like “Legally Speaking” or “Cash Management” for example. If you’re reading an article on a topic and you want to find other articles on the topic, simply click on the boxed keywords adjacent to the article, like “Taxes,” “Forecast,” “Claims,” “Bidding,” or “Contracts.” Of course, you can still access The Contractor’s Compass under “News & Periodicals” or “Foundation of ASA Home” via the ASA Web site, www. asaonline.com.

A P R I L

2 0 1 8

5


Feature Shaping the Future of the Construction Industry with Technology by Michael McLin, Maxim Consulting Group Savvy construction industry professionals confess that acceptance of technology is the future. A good number resist committing their time and resources while hoping to see results by using tech for sake of tech. Tech innovations are sweeping the industry to the point that even the standard issue hard hat is changing, in addition to new advances that benefit every area of the industry—for those that embrace the future. Technology is making construction safer and more efficient. Implementation beyond the design and construction process is required if technology is to become mainstream and part of tomorrow’s strategic platform. Popular software, technologies and devices have proven themselves when deployed on larger-scale buildings and infrastructure projects. “Wherever the new technologies have properly permeated this fragmented industry, the outlook is an almost 20 percent reduction in total life cycle costs of a project, as well as substantial improvements in completion time, quality and safety,” according to the World Economic Forum. The following technologies are driving a more connected future.

Wearable Technology and Smartphone Use The smartphone is the single technology that is changing the construction worker’s day-to-day activity. Workers can stay more connected with the apps on their phones that combine tools such as a calculator, time, to-do list, GPS, a level and communication tools. Smartphones serve to sync construction plans and share project documents. Without this technology, communication and management is much harder and projects will take longer and companies might not generate the same revenues throughout the year.

6

A P R I L

2 0 1 8

Increasingly, wearable tech apparel and personal protective equipment are common on construction sites including hard hats, gloves, safety vests and work boots. Construction wearables are being outfitted with biometrics and environmental sensors, GPS and location trackers, Wi-Fi, voltage detectors and other sensors to monitor workers’ movements, repetitive motions, posture and slips and falls. However controversial, the promise of improving two long-standing issues is highly incentivizing for the industry. The options of viable solutions that will increase both worker productivity and safety, the construction industry is looking to be heavily impacted by wearable technology.

Customer Relationship Management

Autonomous Trucks: Driverless Solutions

Building Information Modeling, or BIM, has changed the way contractors operate. BIM is centered on utilizing digital tools “to efficiently produce information” in order to allow assets to be constructed, operated and maintained, according to the Institution of Structural Engineers. It enables architects, project managers, and contractors to design, plan, and construct buildings. BIM is a single program that lays the framework for how projects will unfold. By viewing projects digitally during preconstruction, you can immediately see that there may be an air duct running straight into a concrete column or other design issues. Pre BIM, this scenario would have unfolded at the expense of additional cost and time—not to mention a disgruntled client. BIM allows construction professionals to see these errors before they occur. BIM is also used for practical cases, such as staging a job site. A tight and well-managed construction job site in an urban environment requires thoughtful planning and preparation. The benefits of BIM don’t end once the project is complete. A detailed model can be handed over to the facilities

From bulldozers to freightliners, trucking is becoming increasingly “smart.” A mining company in Australia is currently deploying autonomous dump trucks with GPS to transport its loads. The trucks are controlled remotely by a single operator, which amounts to a more efficient use of resources and provides for a safer work environment for employees. These “smart trucks” get loads to their destination with fewer delays and less fuel usage than trucks with human drivers. We’re probably still years away from it being commonplace to see self-driving equipment on the jobsite. But the benefits of increased safety, higher productivity, greater fuel efficiency, and being able to hire fewer operators/controllers who can depend on equipment automation are viable enough for major equipment manufacturers to explore what’s possible.

T H E

The concept of customer relationship management, or CRM, is not new. CRM helps businesses manage every interaction with customers. CRM is relatively new to the construction industry. Many industries, such as marketing, use CRM to manage hundreds, or thousands, of customers. In the construction industry, a mid-size contractor may have just 15 clients they have active bids with and an additional 20 they know about. The proper implementation of a CRM program can help them manage their clients efficiently and result in greater productivity.

Building Information Modeling

C O N T R A C T O R ’ S

C O M P A S S


management department. There’s no need to unroll old and possibly modified drawings the next time someone needs to reference the structure.

Project Management Software Efficiency is key. An increase in the availability of project management software that will handle all aspects from bidding, scheduling, and specs to drawings, photos and even meetings has been one of the critical advantages of project management software. Gone are the days when you had to fax questions and responses back and forth. Now, everything is in a single system, creating a single record for everyone’s collaboration and reference.

Drones Officially called Unmanned Aerial Vehicles, or UAVs, drones equipped with cameras have been in use the past number of years to collect information and visuals in locations that are difficult to access. Captured images can support site assessment and inspections, as

well as augment a project team’s understanding of progress and as-built conditions. Drones also can be utilized to monitor logistics, deliveries, and the workforce. A number of progressive companies are taking drone footage and converting it into 3-D pictures that can be compared to architectural plans. Future improvements are focused on advanced cameras and lenses that can capture high-definition images, as well as enhanced communication, in real time, between drones and software on the receiving end. There is also the potential to utilize sensors for greater monitoring of the jobsite. And, of course, one low-tech issue is critical: rules, regulations and controls (currently under the purview of the Federal Aviation Administration) must balance the needs of the industry with the safely of the public. While more tools are being developed every year for the industry, construction is still perceived as one of the least tech savvy fields in the world. Mines, drilling rigs, and other remote worksites aren’t

exactly known for their Wi-Fi connectivity. However, many industry experts are optimistic about the future. Technology is transforming the way the construction industry operates. It’s not just about delivering a finished building. It’s increasingly about how that building is going to be operated and maintained for the next 30, 40, 50, 100 years or more. Michael McLin is the managing director at Maxim Consulting Group, responsible for leading the business and guiding the strategic direction. McLin works with construction-related firms of all sizes to evaluate business practices and assist with management challenges. Having worked in the industry, McLin has developed a practical and objective perspective to solving business challenges. Areas of specialization include organizational assessments, strategic planning, project execution, productivity improvement, prefabrication, peer groups, and training programs. McLin is a nationally recognized, dynamic public speaker and published author.

New On-demand Video from FASA When it comes to managing your business, the Foundation of ASA is your partner in education. View and listen to FASA’s on-demand videos at an individual workstation or in a conference room for group training. Your order includes access to the on‑demand video any time, and as many times as you’d like! This is just one of the on‑demand videos available through the FASA Contractors’ Knowledge Depot to meet your business management training needs.

“How the Difference Between Extra Work and Additional Work Can Impact Claims for Payment” (Item # 8119) In this video-on-demand, attorney Jay Morris, Galloway Johnson Tompkins Burr & Smith, helps subcontractors identify the difference between extra work and additional work, so that they can better decide on whether to proceed with the work without a change order or not. $65 ASA members | $95 nonmembers This and other on-demand videos are available through FASA’s Contractors’ Knowledge Depot.

TM

T H E C OONLINE N T R A C T O Rwww.contractorsknowledgedepot.com ’ S C O M P A S S ORDER AT

A P R I L

2 0 1 8

7


Feature There’s Nothing to Fear But Fear Itself in 2018 by Tyler Riddell, eSUB The Fear and Risk of Delaying Adoption of Technology

Construction is one of the largest industries in the world with an annual market capitalization exceeding $10 trillion. Despite its tremendous potential, many contracting firms are struggling due to a shortage of skilled workers, weak productivity growth, and new data showing that the industry generates immense waste, both in terms of human productivity and physical materials. Today’s proponents of technology have pointed to a lack of automation and adoption of technology as the primary reasons for the industry’s poor performance—construction is one of the least digitized industries worldwide, and has resultantly failed to significantly increase worker productivity in decades, all while productivity in sectors like retail and agriculture has grown by 1,500 percent or more since 1945. It’s time to shake things up—there’s nothing to fear but fear itself in the construction industry, and we think that automation technologies are the next big thing that will help construction firms thrive over the next 50 years. In this article, we highlight some of the most alarming drags on subcontractors and the important automation technologies that subcontractors can adopt and apply to enhance their productivity.

8

A P R I L

2 0 1 8

Relying on Old Methods for Project Delivery Many commercial subcontractors reach the inflexion point when the need to implement new processes and technology is required to make them more efficient. The current way of doing business (i.e., using paper time sheets or Excel spreadsheets) may have adequately served the needs for many years, but unfortunately, it does not provide the adequate infrastructure to scale and grow. When a subcontracting company is in its growth phase, the management team recognizes the value of technology to scale. However, the team is so busy working on projects that there is little to no time available to explore and successfully implement new technology. The resistance to investing time in new technology is compounded by the seasonality of different industries of the subcontractor. Depending on the region and type of specialty contractor, the work is very seasonal. For example, construction and concrete contractors in the northern regions are more susceptible to inclement weather and busiest from late spring to fall with summer serving as the peak time.

T H E

The misconception that training takes away from actually doing the work is the biggest hurdle to implementing technology during a busy time. But, this busy time is when construction project management software is needed more than ever. Scheduling mishaps—Managing the time and resource constraints to deliver projects on time and within budget can become a big puzzle for a subcontractor. Without project management software to manage the puzzle, there becomes a strong probability that labor and equipment are doublebooked or sitting idle because preceding tasks were not completed for work to begin. Poor scheduling can result in financial losses and project delays. Undocumented changes—When there is frantic energy to complete jobs to move onto the next project quickly, it is too easy for important items to slip through the cracks. Forgetting to complete a change order is a reality, and those undocumented changes are the biggest source of disputes in construction. Without project management software that connects the field operations with the team at the office to manage the paperwork, this greatly increases the risk of the subcontractor not getting paid for the work completed; or, even worse, the subcontractor may lose money and need to do significant rework for work done out of original scope. Employee frustration—Although the team may be too busy to implement new technology, the main source of their “busy-ness” is the result of inefficient workflows. If your company is using paper or spreadsheets for timecards, daily reports, RFIs, change orders, or submittals, they are likely spending hours capturing, searching, and tracking information and then transporting it from the field to the office. Without project management software, employee frustration festers

C O N T R A C T O R ’ S

C O M P A S S


on many wasted hours and lost productivity spent on tasks that could be completed more quickly and easily.

Implementation: Minimizing Pain to Maximize Gain Coaches drill “no pain, no gain” to push hard and even painful work in their athletes to take their performance to the next level. However, construction software implementations do not need to be painful to quickly gain the benefits. First, selecting subcontractor-designed software by experts in your field, make implementing technology much more manageable. Begin with one or two projects accelerates seeing the value from your investment then you can expand to other teams and projects. The key to successful technology adoption is simple: Use It! Leverage online and unlimited training services offered by the vendor. New technology can be intimidating, but you have options where project management and document control software is incredibly easy to use for subcontractors. However, it must be designed for your business.

Mitigating Risk and Avoiding Claims Unfortunately, stories are rampant across the industry where subcontractors and general contractors are caught in disagreements because of verbal favors or undocumented work. So, subcontractors must protect themselves from these situations with precise document control and project management best practices. Many general contractors provide their subcontractors with a user license into their project management software platform. In fact, we’ve heard that some general contractors even mandate that their subcontractors utilize their project management tool and will no longer respond to email communications. This is not an acceptable arrangement.  When the subcontractor enters daily reports, RFIs, photos, issues or change orders into the general contractor’s project management solution, the general contractor owns all the valuable documentation and information. In the event of a claim or dispute, the general contractor can and will likely revoke access to the subcontractor. In the event that happens, will the subcontractor have backup documentation to support their

T H E

C O N T R A C T O R ’ S

claim? If duplicate entry into two project management platforms is required for a project, so be it. You’re still protecting your construction business and avoiding expensive financial pitfalls.  The workflow of a subcontractor and business model drastically differs from that of general contractors. A large majority of construction project management solutions are geared toward general contractors. Subcontractors must utilize a solution that enables them to track their labor productivity on projects, provide documentation control to mitigate risk and avoid claims and manage all their projects holistically to ensure growth and profitability. The question shouldn’t be what chance do we have, it should be what choice do we have. Today represents the opportunity to use software designed exclusively for construction subcontractors. Subcontractor software that is connected to the office and field using mobile apps can address many current challenges and incorporate new automated workflows. Construction software, such as project management, can help overcome challenges and provide additional benefits as indicated below.

Improved Collaboration Cloud-based construction software unites all the members of the project team regardless of their location. The crew in the field can document jobsite activity from the field. The team in the office receives real-time updates to process paperwork in a timelier manner. With construction software, communication between the field and the office is improved to enable a more collaborative work environment. Everyone becomes more productive with all the necessary project information at his or her fingertips.

Professional Development Whether it is the desire to earn more money, improve their skills, or advance their career, many employees enter 2018 with a desire to improve themselves. Many job advertisements request their foremen and project managers have experience with project management software. Take this opportunity to invest in the professional development of your employees. Installing new construction software will provide them an opportunity manage their projects more effectively as well as provide them

C O M P A S S

the opportunity to learn important new skills that will advance their careers.

Automated Workflows In many commercial construction projects, subcontractors create hundreds of RFIs and change orders. Construction software provides users the ability to electronically create, email, and track the documentation. This process automates the workflow to ensure that documentation and correspondence does not slip through the cracks. With accurate documentation and improved communication, construction software enforces project management best practices for your busy construction firm.

Data-Driven Decision-Making Many construction software packages include an extensive number of reports and dashboards. These provide valuable insights for your management team. Reports include up-to-date project information that depicts summaries, trends, and forecasts on project activities. Additionally, a roll up of all projects summarizes the overall financial health of the company. The data provides concrete information for project managers and executives to make important decisions to keep projects on track and maximize profitability. This is a time of heightened growth in the construction industry, and many subcontractors are busier than ever. Mobile technology enables new productivity tools to assist field workers while cloud-based application services have eliminated the silos enabling the field and office to work more efficiently together. There may not ever be a perfect time to implement new technology, but every day that implementation is delayed is another day of wasted time, lost productivity, and increased risk. An easy-to-use system that provides a solid implementation plan and expert guidance will accelerate the time-to-value and empower your team to experience workflow improvements quickly. With a stronger and more affordable than ever technology infrastructure to support higher labor productivity and efficiency, a subcontractor will be able to take on more projects and scale effectively for increased profits. Tyler Riddell is vice president of Marketing for eSUB. He can be reached at (858) 266-8322 or tylerr@esub.com.

A P R I L

2 0 1 8

9


Feature Digital Construction by Carol Hagen, Hagen Business Systems Inc. Where are you on your path to a completely digital, connected firm? If you haven’t begun your journey, you’re at an extreme competitive disadvantage. This is where the rubber hits the road for your future survival. For those who are further along, what’s your road map? How quickly can you adjust to new technology or know whether to ignore that shiny new object? How can specialty contractors prepare for their digital future and ensure they’re moving forward with enthusiasm, not trepidation? As BIM has different levels, so does the digital construction journey.

Level 1—Low Hanging Fruit Most have started their digital construction journey. For those beginners out there, that low hanging fruit is actually affordable. Mobile solutions collect employee hours in real-time, from the field, and import that into payroll. Creating and distributing fillable forms for safety, HR, etc., so your employees can submit them from their mobile devices are prevalent. Many firms sign contracts, perform estimating take-off, compare document revisions, and navigate plan sets digitally. These get you quick wins and expose your team to technology, yet these are the bare minimum to keep your business viable today, even if you aren’t using Building Information Modeling yet.

Level 2—Workflows, APIs and CDE Workflows keep information moving and Common Data Elements are vital for data exchange. Couple this with an Application Programming Interface and your level one work, and you eliminate all double keying of data. Workflow puts data on a path of review, approval, distribution and archive. It can be automated with rules using decision tree logic. Implemented well, your archive is your searchable filing cabinet where

10

A P R I L

2 0 1 8

anyone authorized can retrieve their data from anywhere, anytime. This could be a project management solution or file system like OneDrive, Box, Egnyte, ShareFile, Sharepoint, depending upon your requirements. Recently, Archicad announced how a plan set exported to PDF, could be redlined using markup tools in Bluebeam Revu and the markups could be brought back into Archicad 21 as editable markups into the model. This eliminates the need to manually enter all PDF redlining into BIM and will significantly speed up the Request for Information and Request for Change process by supporting round-trip workflows. It also makes it easy for team members without CAD or BIM software familiarity to perform markups. (“Redlining PDFs: Bluebeam Revu and BIM,” Hagen Business) Having common data and APIs allow you to leverage numerous mobile and cloud-based applications to connect, collaborate and communicate efficiently between people, equipment, and software systems. The data exchange is seamless, using manual sync, a scheduled sync or a real-time data exchange. Data exchange frequency is based upon the data value and priority or internet connectivity availability. Common functions include QA/QC, design and constructability reviews, submittals, RFIs, photos. The key is not having this information trapped in a silo. Platforms as a service can help accomplish data interoperability. Data may be collected in one application, then the data is disseminated to a central repository, shared across platforms or has data exchanged bi-directionally, creating a communication loop. Larger software firms may have fully integrated solutions while niche software applications are dependent upon data exchange for survival. For subcontractors choosing how you approach this is

T H E

critical. Planning and strategy is necessary as silos are often created inadvertently. Disparate systems and separate developers are not on the same roadmap, and can take you down the road of dead ends, or experience acquisitions that create an end of life for an application.

Level 3—Automated Data collection and the Internet of Things (IoT) Level 1’s timekeeping systems have an element of automated data collection with automatic check in/out and may use a project geo-fence perimeter to determine the project to assign the hours to. If the employee only performs one task it can be set as a default, but for those who work across tasks (sometime called cost codes by finance people), there’s a human intervention to select what task or cost to assign the hours to on the job. So how can this be assigned automatically? What if it were tied to the tool or equipment they were using? Pairing between resources can switch a carpenter to a laborer (pick up a hammer or a shovel) with an RFID chip, Bluetooth or near field communication attached or built-in to each resource. The employee could wear a wristband, have a device clipped to their belt or affixed to their hardhat. Speaking of tools, imagine never walking to the Conex box to find the tool not there? Being able to walk to where the tool is will save hours of time on the jobsite. Tool manufacturers are vying for loyalty with systems that pair with vehicles so it’s inventorying simultaneously as well. One of my favorite tools is the electronic Total Station delivering faster and more accurate layouts, with real-time accessibility and eliminating errors and rework. Survey existing conditions, site stake-out, verify work in place and perform surface

C O N T R A C T O R ’ S

C O M P A S S


analysis all while documenting as-built conditions this tool is a must for the concrete trade. There are safety solutions to record worker trips and falls automatically, from what looks like a pager clipped to your belt. Dozens of sensors and communications devices available on heavy equipment and trucks perform safety alerts (proximity detection), record usage into back office equipment management systems, and relay maintenance and compliance issues. Caterpillar now has autonomous haulage for mining operations, using advanced guidance systems and CMD command, which can even back into dump sites. You can imagine what’s coming for construction. Practically every manufacturer is adding IoT connectivity to self report out of threshold conditions for everything imaginable that construction installs; chillers, pumps, valves and AC units. In manufacturing plants, refineries and critical systems IoT is becoming a standard, and a tidal wave is coming. So where does this data go? It’s heading to the manufacturer who then opens a service ticket to dispatch to the installer or service provider of record. Firms with facilities maintenance need to rethink their work orders as clients won’t need to call you, you’ll be notifying them, or better yet the manufacturer’s app reports to the customer and says “a tech is on their way.” Proactive service is born.

Level 4—Machine Learning, Photos and Augmented Reality Machine learning is a subset of Artificial Intelligence and is already being used in autonomous vehicles but it can be used for so much more. BuildingSP has their Revit Plug-in learning how to create clash free MEP, routing ductwork, conduit trays and pipe from point A to point B. Put this into

T H E

C O N T R A C T O R ’ S

collaborative design and a clash coordination meetings becomes final design reviews. At Microsoft’s 2017 Developers Conference they showcased how using AZURE and cameras mounted in two side-by-side simulated rooms, representing a typical jobsite, they could identify people, tools and unsafe uses or storage of tools. The software behind the scenes was developed with machine learning from photos, which could locate tools and then send a photo via text of the unsafe condition and what to correct to the nearest employee. Big brother is watching. With Microsoft HoloLens there’s software to overlay full-scale BIM models into real buildings. BIM Holoview is a new mixed reality visualization tool for Navisworks and Revit and the use cases are sure to expand beyond seeing inside walls and seeing where components should be installed. Why not have it self-report the percentage of completion? Add time collection from check in/ out together with material deliveries for your stored material and this info could be an automated AIA billing. Machine learning can be built-in with software that learns keystrokes, to help them understand how you use their applications, then develop business processes to automate those tasks. This same technology will also be able to help you learn and I suspect, make BIM software easier for everyone to master. Like macros is Excel, taking numerous tasks and combining them into a push of one button, scripting promises less button pushing and promises easier adoption for field workers. With the Level 4 the need for buttons are completely eliminated. The digital construction promise is about what will advance productivity. It’s really about investing in our people through workforce development. Online learning systems, integrated with virtual

C O M P A S S

and augmented reality will break down barriers, reinforce safety issues, and accelerate the time it takes to master a task. Whether you want your team to know how to avoid email phishing scams, work in a confined space safely, learn new software, hone their emotional intelligence and communication skills, work with new materials, or master new methods, the best-inclass firms will have a mix of digital and hands-on training accessible to their workforce. By combining AR and VR, the hands-on learners can advance as quickly as the book learners. They’ll incorporate game theory to encourage participation by showing how they rank compared to their peers. By offering a career path to excellence, it may also attract more people into the construction industry. Carol Hagen, Hagen Business Systems, Inc., is a construction software sales executive with broad experience in all aspects of construction accounting, project management and estimating, document imaging, enterprise content management, email management, e-discovery, electronic forms, mobile time collection, travel and expense apps, cybersecurity awareness, and Web-based construction billing/payment (alternative to Textura). She helps clients in the construction industry navigate digital transformation using technology. Hagen also assists clients with social media strategy and is available for professional speaking engagements. For more information, visit www.hagenbusiness.com and read her blog at www.hagenbusiness.com/ blog. She can be reached on LinkedIn at www.linkedin.com/in/carolhagen, on Twitter at https://twitter.com/carolhagen, by phone at (602) 570-7289, or by email at carol@hagenbusiness.com.

A P R I L

2 0 1 8

11


Feature Electronic Signatures Are Enforceable—If You’re Careful by Joseph Kanfer, Woolford Kanfer Law, P.C. It used to be that the last step in finalizing a contract or change order was putting pen to paper and signing it. But as computer technology becomes ever more pervasive in the construction industry, contract documents and signatures are increasingly exchanged by electronic means like email or even signed on a computer itself. Electronic signatures can save time and money and are legally binding if certain requirements are followed. The purpose of this article is to explain the basic requirements of enforceable electronic signatures, help you avoid some of the potential pitfalls of electronic signatures, and illustrate how good practices can reduce the risk of running into problems.

Electronic Signatures Laws The law on electronic signatures is complex and is covered by both federal and state laws, which are not always consistent. Under federal law, electronic signatures are governed by the Electronic Signatures in Global and National Commerce Act, known as the ESIGN Act. Additionally, all 50 states have adopted their own laws governing electronic signatures. Most states, as well as the District of Columbia, have adopted a law called the Uniform Electronic Transactions Act (UETA). New York, Illinois, and Washington have not adopted UETA and each have their own laws concerning the validity of electronic signatures. Therefore, you need to check with your legal counsel to confirm the requirements of each state. The ESIGN Act and UETA both provide that electronic signatures are generally enforceable to the same extent as traditional ink signatures. Under both the ESIGN Act and UETA, a valid electronic signature can be

12

A P R I L

2 0 1 8

any “electronic sound, symbol or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” Thus, an electronic signature could include anything from an image of an actual written signature to somebody typing her name on the signature line of a contract. The form of the electronic signature does not matter as long as the requirements of the applicable law are met. The ESIGN Act and UETA both share several general requirements. First, an electronic signature is valid only if the party whose signature is on the document intended to execute the document. Second, the parties to the transaction must consent to do business electronically. In most business-to-business commercial transactions, this can be shown by the circumstances surrounding the transaction. (Note that if your business offers services to consumers, there are additional disclosures that are required which are not discussed in this article.) Third, the electronic document must be in a form that can be retained and accurately reproduced for later reference by the parties. The most commonly used format to exchange electronic documents, Portable Document Format (PDF), is well-suited for accurately reproducing documents (and PDF files can even be protected against tampering using encryption technologies). Finally, the electronic signature must be shown to have been “the act of the person” who signed the document.

Unique Pitfalls These requirements may seem easy to meet, but they can create loopholes that a company can exploit

T H E

to get out of a contract. For example, in a Kansas court case called Kerr v. Dillard Store Services, an employee sued her employer for discrimination. The employee was required to sign an electronic agreement to arbitrate any employment disputes when she was hired. This process required her to log-in to the company’s computer system using her social security number and a password she had created and then click a button indicating that she accepted the agreement. The employee then received an email confirming her signature. Based upon this electronically signed agreement to arbitrate, the employer sought to compel the employee to arbitrate her discrimination claims. The court ruled that the signature was not enforceable because the employer could not demonstrate that the signature was “the act of” the employee. The court found the employer did not have adequate procedures to maintain the security of employee passwords, to prevent other people from accessing the employee’s account, or to determine whether electronic signatures were genuine. The employee’s signature was therefore not enforceable and the discrimination claim was not subject to arbitration. A California state court came to the same conclusion in Ruiz v. Moss Brothers Auto Group, Inc. In that case, an employee filed a wage claim against his employer. Just like the employer in the Kerr case, this employer required employees to login to the computer system with their unique username and password and electronically sign an agreement containing an arbitration provision by clicking a button. Seeking to get into court and avoid arbitration, the employee testified that he did not

C O N T R A C T O R ’ S

C O M P A S S


recall signing the arbitration agreement, and the employer was unable to explain how the company’s computer system stored the signature and generated the document with the arbitration clause. The court therefore concluded the employer had not shown the signature was “the act of” the employee. Showing that the person whose signature appears on the document is not the only difficulty in enforcing electronic transactions. In another California case, J.B.B. Investment Partners, Ltd. v. Fair, a court considered whether a settlement agreement that had been circulated by email was enforceable. In that case, an investor in a company that built apartments claimed that the owner misled the investor and threatened to sue for damages. The investor sent a proposed agreement to the owner to settle the investor’s claims. The owner wrote back in an email “I agree” and typed his name at the end of the email. The owner later refused to honor the settlement agreement. The investor sued in court to enforce the agreement, but the owner claimed that the electronic signature was not valid because he did not intend to sign the settlement agreement. The court ruled the agreement was not enforceable because it found typing “I agree” and the owner’s name did not show intent to sign the agreement. Without a showing of intent, the signature was not valid. Electronic signatures can also create unique issues of tampering with documents. For example, imagine a subcontractor prepares a proposal for a project and the estimator types his name on the signature line. The estimator then sends the proposal to the general contractor as a PDF. However, the general contractor

T H E

C O N T R A C T O R ’ S

modifies the PDF so that overall bid price is 10 percent lower than the proposal before typing a signature on the altered proposal and sending it back. The subcontractor would then be in the position of having to show that the subcontractor doctored the PDF, which can turn into the digital equivalent of “he said, she said.” While situations such as these should be kept in mind as potential worst case scenarios when conducting business electronically, they are a relative rarity considering how common electronic document exchanges are. In the vast majority of cases, there is no dispute as to whether an electronic signature on a document is valid. Moreover, the risks associated with electronic transactions can be mitigated though implementation of sound practices and procedures.

Making Electronic Signatures Valid Problems with electronic signatures generally arise when businesses do not use care when implementing procedures for digital transactions. In the Kerr case, the computer system did not have sufficient security measures. In the Ruiz case, the company’s employees were not sufficiently knowledgeable about the system to explain how it worked. In the Fair case, the parties to the contract failed to clearly establish what would constitute an electronic signature on the contract. These problems could have been avoided by using proper software and sound procedures. There are a number of computer programs and services that address the pitfalls of electronic signatures. Services such as DocuSign and Adobe Sign are designed to create certainty as to the identity of the party signing

C O M P A S S

a document through security procedures, as well as demonstrating that the party clearly intended to sign the document. Instead of merely typing in the signer’s name on a PDF document, these services require the person signing the document to go through a process to add a signature to a document once the document is finalized, much like signing a document with an ink signature. Unlike traditional ink signatures, however, these digital signatures contain features that allow a reader to instantly determine whether a signed document has been altered. However, using the correct software is just part of a responsible implementation of electronic signatures. Businesses must also implement processes and procedures to ensure that the software is used properly and consistently, such as including provisions in contracts indicating exactly how contracts can be signed electronically. Digital documents with electronic signatures will continue to become increasingly common as business owners and consumers become more comfortable with digital commerce. A well-planned and intelligently executed implementation of electronic signatures can save companies time and money, while also ensuring that electronic contracts and other documents remain legally enforceable just as if they were on paper. Joseph Kanfer, Esq., Woolford Kanfer Law, P.C., is an attorney in Lancaster, Pa., who represents subcontractors and other construction professionals. He can be reached at (717) 290-1190 or jkanfer@woolfordlaw.com.

A P R I L

2 0 1 8

13


Feature How to Minimize Risks for Successful BIM-Powered Projects by Tara M. O’Hanlon, Miller Nash Graham & Dunn, LLP Over the last 10 years, building information modeling has morphed from a cutting-edge technology to a standard tool increasingly mandated by public and private owners and general contractors. Contractors reported that from 2013 to 2015, the percentage of their work that involved BIM was believed to increase by 50 percent on average. BIM technology uses a multidimensional computer model to create a virtual project before beginning construction. The use of BIM has expanded from its early focus on planning, design, and construction to include scheduling, cost estimating, sustainability considerations, safety planning, post construction operation and maintenance, and even decommissioning at the end of a building’s life cycle. The bottom line is that efficiencies gained in the process lead to cost and time savings, and thus to increased profits. Along with the increased use of BIM comes the heightened importance of contract terms addressing BIM. As with many other technological tools, risks increase with the improper use of BIM. Standard documentation that adds BIM language to existing contracts can help ensure that all parties adequately understand and allocate associated risks and responsibilities, while better capturing the tool’s efficiencies. Moreover, a written standard offers participants assurances and protections that may lead to better use of BIM and encourage even broader adoption.

New Contract Terms to Consider Standard forms are critical to BIM project communications because they help address basic concerns, such as who will own, manage, or run the model. The forms also identify responsible parties for each element and who can rely on the model for what

14

A P R I L

2 0 1 8

purposes. Once a contractor chooses to incorporate BIM contractually, BIM language must be melded into its standard contract and into a project’s various agreements to ensure that similar BIMrelated rights and obligations flow throughout. Factors to consider include the number of models, model management, intellectual property rights, data management, responsibility, and confidentiality. The parties to the contract should also agree on the content and format of each model and the standard language to employ. ConsensusDocs and the American Institute of Architects have made significant updates to their standard form documents addressing BIM. In 2013, AIA updated its BIM protocol exhibit, AIA E203-2013: BIM and Digital Data Exhibit, which establishes an agreement to implement the use of BIM on a given project. AIA also created new form documents, AIA G201-2013 and G202-2013, that actually spell out the details of a standard protocol, including policies for storing, transmitting, archiving, using, and modifying BIM and other digital data throughout a project. AIA’s 2017 new form contracts now mandate the use of agreed-upon BIM and digital data protocols, whereas the 2007 versions only suggested their use. This change recognizes the increasing use of BIM as the standard technology for construction projects. Similarly, ConsensusDocs, of which ASA is a founding member, has made recent and significant modifications to its BIM contract addendum, ConsensusDocs 301 BIM Addendum (2015), including expanding terms for risk allocation and insurance coverage, intellectual property rights, and terms that recognize that BIM may be used throughout a building’s entire life cycle. The standard contract forms address

T H E

the need for the contracts to account for the dynamic nature of BIM and its expanded use beyond design and construction. The new contract changes also encourage additional planning at the outset to develop a BIM execution plan that gives a detailed road map for which BIM software will be used on a project, outlines a schedule for development of the various models and their integration, and identifies responsible persons for each model.

Avoiding Conflicts While Using BIM Early BIM contract language focused heavily on the need to avoid conflicts between BIM and other contract documents. The new ConsensusDocs BIM Addendum makes a significant change, expressly giving the BIM Addendum precedence over other governing contracts. Regardless of whether a subcontractor chooses that route, its contract language should address the number of models created and the relationship between the models and 2-D drawings. If multiple models are used, the contract should indicate which model takes priority in case of conflict. The contract should also address how the component models (structural, mechanical, plumbing, etc.) will be integrated into a single usable model without losing or altering the component parts Subcontractors are critical collaborators in creating and capturing BIM efficiencies, including avoiding conflicts. By inputting information into the model, subcontractors can help evaluate plans and designs, troubleshoot potential conflicts, schedule project elements, and make modifications more efficiently. BIM offers more effective communications among all parties because each one is working from the

C O N T R A C T O R ’ S

C O M P A S S


same model and “speaking” the same language. Having adequate contract language to address BIM becomes even more critical if subcontractors have assumed design-build responsibilities for projects. Early concerns that BIM would permit one contractor or design professional to alter the BIM inputs of another professional have largely been appeased because the technology itself documents the source of each change to BIM and prevents changes without the original drafter’s consent. Regardless, contract language should address the powers and responsibilities of each involved party and place limits on liability to the contributions that each has made. BIM users should also contract for restrictive rules of access, copying, and transmission, particularly to protect competitive data containing trade secrets and other intellectual property issues. Conflicts can be further avoided through the use of a BIM manager: a person or entity designated to oversee the BIM process and delegate responsibility for each aspect of the model during a project. To avoid conflict, the manager’s explicit role should include exclusive responsibility and power to issue binding instructions on BIM-related issues. One of the primary challenges for the BIM manager is to coordinate the integration of different BIM software and models into a common single model that can be used by all. BIM managers are responsible for avoiding conflicts and preventing altering or losing data. This can be especially difficult given the various BIM software.

BIM in Litigation When adopting BIM, parties should carefully consider potential legal issues to minimize adverse legal consequences while facilitating collaboration. On the one hand, BIM’s purpose is to streamline communication and efficiencies to reduce litigation and insurance claims and their associated expenses. The unfortunate reality is that construction disputes on BIM projects do occur, and at least one reported case involves the use of BIM and its risks.

T H E

C O N T R A C T O R ’ S

In 2012, an HVAC subcontractor sued a general contractor in a multimilliondollar action for breach of contract and unpaid change orders relating to a hospital renovation project. The lawsuit included a BIM claim. The HVAC subcontractor alleged that it had submitted significant change orders as a result of BIM. The subcontractor alleged that (1) the architect’s drawings that had initially been used by the subcontractor to create its BIM were incorrect, requiring later modifications and additional labor hours, and (2) coordination problems resulted from other subcontractors not using BIM. For example, the subcontractor incurred additional costs when it was ready to install HVAC equipment in a space that was already occupied by another subcontractor who had not participated in BIM and therefore the use of the space was not reflected in BIM. Ultimately, the court awarded the subcontractor minimal damages on its claims for unrelated reasons. The case emphasizes the potential pitfalls of new technology and the need for traditional communication and adequate contract language while using BIM. For example, the parties in the case disputed whether BIM was a “Contract Document” or merely a tool used to help coordinate the work. The court also considered that the subcontractor realized that there were issues with BIM and communicated them to the contractor, including noting conflicts and omissions (doors were left out of the model, etc.). These issues highlight the increasing importance of adequate contract language. The challenge in developing BIM contract language is how to anticipate potential legal issues. For instance, the technology on which BIM is based may create liability issues. Software manufacturers are protected by blanket limitation-of-liability clauses that make it difficult to transfer the risk of BIM errors to them. Therefore, this risk should be contractually allocated and be borne by the party who takes responsibility for the BIM process. The parties should carefully map out the liability between consultants who choose the BIM technology and have expertise, and the owner or manager of the BIM process. The aim should be for the consultants to

C O M P A S S

bear the risks for technology errors that could have been avoided with proper care and diligence, and for the residual risk to lie with the process’s owner. BIM systems are likely easily converted into a tool that can help recount what happened in a dispute to a mediator, arbitrator, judge, or jury, but it is not yet clear whether parties may use BIM in litigation. Litigation expenses often include the cost of creating expensive, visually appealing models to help outside parties understand a dispute. BIM may be a useful tool in achieving that influential visual at no added cost. Of course, the use of BIM in legal disputes could dampen communication and collaboration between parties, so some project teams may elect to control the use of BIM in litigation through contractual restrictions. Finally, it is important to ensure that the parties take out appropriate insurance to cover their engagement in the BIM process. Project insurance that includes BIM risks should be adopted if available.

Successful BIM Projects Require Careful Contracting The construction industry will continue to be driven by technology and the use of BIM. The risks associated with BIM are far outweighed by the benefits, particularly if planning and adoption of contract language are carefully executed. Many issues can be addressed through a standard amendment incorporated into the contract. By laying the proper contractual groundwork, contractors can minimize risks and ensure successful BIM-powered projects. Tara M. O’Hanlon is an attorney with Miller Nash Graham & Dunn, LLP, in Seattle, Wash. O’Hanlon focuses her practice on construction litigation and contract drafting, condemnation, commercial litigation, and employment litigation. She has second-chaired three multi-week trials and has extensive experience preparing and arguing motions for summary judgment, arbitrating claims, and successfully mediating complex multi-party cases. She can be reached at (206) 777-7442 or Tara.O’Hanlon@MillerNash.com.

A P R I L

2 0 1 8

15


Feature HR & Technology by Jamie Hasty, SESCO Management Consultants Human Resource management and technology are intertwined. The year 2012 is considered by many HR experts as the mark of a generational shift in technology and a new league of applications in the HR technology industry. The convergence of these innovations led to a new era of tech-savviness in talent management being ushered in. Within a span of six years, HR tools and techniques that are driven by these technologies have been regarded as the “future of HR.” For example, more than 5,000 companies have moved to the cloud in the past five years. Yes, some companies are still using their legacy on-premise HR software, but the trend

16

A P R I L

2 0 1 8

is slowly dying, with everyone vying for the cloud. The pace of adoption of these futuristic HR technologies is only set to increase. What is the impact of this rapid evolution of HR technology? The entire organizational structure and responsibilities are changing for the better. Information Technology is no longer the department that owns HR. It is now the HR department that owns IT. Thus, the goal where business functions own their own processes and technologies, rather than relying exclusively on IT has now dawned. No doubt, IT continues to extend critical support, but it is the business leaders and managers

T H E

who are now taking core decisions related to systems and processes. The result is that the IT mindset is slowly but surely pervading business units. HR managers are now thinking beyond mere implementation and striving to create a great user experience. HR professionals are moving away from the traditional mindset of making software available, to making it a delight to use, akin to a smartphone app. User friendliness, intuitive and simplistic design thinking, and employee delight—these are the keywords that HR are imbibing to be able to create an effective HR intervention.

C O N T R A C T O R ’ S

C O M P A S S


Recruitment Earlier, recruiters would rely only on LinkedIn to scout for talent, and IT firewalls opened just enough to allow them to access this professional networking site. Today, we see recruiters turning to various social media platforms to engage and attract potential candidates. Social media has changed the very face of the employee value proposition. It is written all over Facebook, Instagram, and other social channels that young professionals are active on. In accordance, HR technology systems have opened up—one can no longer implement a stringent firewall that blocks all social media sites as a security means. Machine learning is automated data analysis through algorithms that automatically create analytical models. It basically allows for machines to not only collect information from corporate environments, but also learn from it. To date, machine learning applications in the human resource space are mainly focused on predictive analysis and talent relationship, mostly in the recruitment process. One instance of such an application is PhenomPeople.com, which takes marketing personalization practices and data analysis, and uses them in the recruitment process.

Performance Management Another high-impact change is the dynamic nature of performance management. Fluidic and always-on review systems are allowing HR to replace annual performance reviews by onthe-go check-ins. Even the barriers of distance and time are no longer valid— video conferencing tools built into performance discussions are breaking the boundaries like never before, enabling seamless and fruitful discussions, aided by the latest technology. Such video technologies are helping the cause of employee communications, bringing leadership messaging and engagement

T H E

C O N T R A C T O R ’ S

closer to the employee. Of course, it is the technology changes that came first and drove the subsequent evolution of HR. That is why we must acknowledge the contributions of technology innovators, those who have taken the first steps in envisioning the unimaginable and bringing it to life by way of technology. This is the way ahead for any function to become future-ready.

Virtual and Augmented Reality While virtual reality has been around for several years, consumer applications are barely making strides in the market. Meanwhile, virtual and augmented reality will continue to mature and find its way into the workplace environment. For example, Microsoft is preparing the launch of the Hololens headset which will likely be embraced by human resource professionals in the not-so-distant future. This type of technology is primed for disrupting talent management and productivity. We can envision the potential of virtual reality in enterprise training and learning, where employees can use it for anything ranging from off-site assignments to corporate training. Furthermore, in industries looking to enhance tasks on the job, this will become the new normal, as digital information will be superimposed on the physical reality. Onboarding and training in industrial environments can be transformed by adding virtual instructions on top of machinery and tools, as employees engage with the environment.

The Internet of Things Companies will continue to adopt cloud computing and HR is actually ahead of the curve, with more time being spent on using cloud solutions to efficiently increase workforce

C O M P A S S

productivity than other industries. The increase in use of these tools comes with availability of information, which will push HR expertise into middle management ranks freeing up human resource departments from training middle tier leadership. Part of HR’s functions will be taken over by line managers, while the role of HR will shift to business performance and execution. We can already see that time-consuming tasks such as keeping track of employees’ time, preferences and work patterns are being automated, freeing up HR to focus on engagement challenges, increasing productivity and aligning the human side of the organization with business goals. HR managers gain more strength at a boardroom level, as their departments move away from cost centers to revenue centers. As systems and objects become more connected, it falls on HR to manage performance. Jamie Hasty is vice president of SESCO Management Consultants. Under an arrangement with ASA, SESCO provides results-oriented human resource consulting services to ASA members. SESCO provides a special “retainer” relationship that provides a free “hotline” to ASA members to discuss day-to-day employment issues such as policy development, employee challenges such as disciplinary actions, terminations, or workers’ compensation issues, compliance to federal and state employment regulations, and many other management and human resource matters. Hasty can be reached at (423) 764-4127 or jamie@sescomgt. com. SESCO offers a variety of online and classroom training for employees and managers, customized to meet your organization need and budget. Contact a SESCO consultant to explore training and development opportunities for your organization.

A P R I L

2 0 1 8

17


Legally Speaking

Innovative Legal Procurement Models Decentralizing Data in Construction by James L. Salmon, Esq., Benjamin, Yocum & Heather Procuring a substantial built asset requires an owner to engage dozens of entities via a myriad of contracts. Those entities engage others, including specialty designers, suppliers and trade contractors. Stakeholders, represented by individuals, then deliver on the promises set forth in that complex array of contracts. This antiquated legal framework, used to procure most built assets, often collapses under the strain, failing all parties involved. ASA recently convinced the Kentucky Supreme Court to allow subcontractors in that state to pursue claims for unjust enrichment against owners under that legal framework. In a case styled, Superior Steel, Inc. and Ben Hur Construction Company, Inc. vs. the Ascent at Roebling’s Bridge, LLC, Corporex Development & Construction Management, LLC, Dugan & Meyers Construction Company and Westchester Fire Insurance Company the court adopted arguments set forth by Thomas Yocum of ASA-member firm Benjamin Yocum & Heather in an amicus, or “friend-of-the-court,” brief funded by ASA through the Subcontractors Legal Defense Fund. While ASA successfully

18

A P R I L

2 0 1 8

defended the interests of trade contractors in Kentucky the win may prove pyrrhic for the subcontractors and suppliers involved. Those litigants, represented by other law firms, spent more than $1 million pursuing claims worth approximately $400,000. Precedent-setting litigation like this, while beneficial to many, remains prohibitively expensive and raises serious questions regarding the viability of our existing legal framework. This article explores the potential use of blockchain technology as a platform upon which the built industry might erect a new and improved legal framework.

Rethinking Procurement Models Consumers of services required to deliver built assets traditionally seek competitive bids for those services under the so-called Design-Bid-Build procurement model. Pursuant to that opaque system design firms create a cheap, incomplete set of construction documents in a silo, general contractors review those instruments in a vacuum, with no opportunity to ask the designers questions, and then the winning

T H E

general contractor, aka the sharpest or dullest tool in the shed, tosses those same shoddy documents over the wall to key subcontractors and solicits hard bids for various scopes of work. In tough economic times bids received may be further shopped to tamp down costs, though when the construction market booms subcontractors return the favor by increasing prices. Estimates of costs set forth in bid documents, from materials to equipment and labor, are notoriously inaccurate and actual construction often lags years behind the bidding process. All of the foregoing actions are encouraged, if not mandated, by the legal framework—such as statutes and regulations in the public sector and standard operating procedures in the private sector, as well as the project specific legal agreements underpinning the system. But conventional industry wisdom teaches novice owners hard bids ensure best price. Of course, nothing could be further from the truth. In reality, the built industry, operating primarily on the Design-Bid-Build procurement model described above, wastes more than 60 percent of the

C O N T R A C T O R ’ S

C O M P A S S


resources used to create built assets. Addicted to extracting profits from that enormous waste stream, industry leaders cringe at the prospect of adopting innovative new procurement models that reward value rather than waste. Granted, in the late 1990s and early 2000s the use of modified procurement models like Design-Build, Construction Manager at Risk and public-private partnerships increased, but Design-Bid-Build remains the dominate procurement model. By the mid-2000s integrated project delivery and Lean construction processes emerged as viable tools via which sophisticated owners procured built assets. Unfortunately, the baby-steps taken via these alternative delivery models fail, utterly, to substantially modify existing legal frameworks that reward and reinforce the waste based Design-Bid-Build method. But bigger changes loom on the horizon.

BIM, IPD and the Blockchain Revolution in Construction Innovative solutions percolating in the built environment pose dire risks to the broken legal framework used to procure built assets and responsible professionals owe it to their clients and their firms to understand those solutions. Two highly disruptive innovations, building information modeling and integrated project delivery may soon threaten the status quo. While each developed independently, and in respective silos, combining the tools increases efficiency and productivity to an alarming degree. Alarming that is, if your firm operates in an old school silo. Planning, designing, constructing and operating a facility virtually first enables stakeholders to adopt, adapt to and deploy tools and processes never thought practical before. In the next 10 years expect to see built assets procured utilizing a new generation legal framework that leverages the virtual planning, design and construction tools and processes associated with BIM to create virtual assets that empower owners, designers, constructors, trades and suppliers to explore and critique built assets virtually before anyone ever sticks a shovel in the ground. Further, expect to see that robust digital asset tightly correlated with actual physical asset in ways that augment the users’ reality in powerful and useful ways. Decentralized databases that leverage blockchain technology, incredibly powerful computer processing speeds and

T H E

C O N T R A C T O R ’ S

vast amounts of cheap secure storage space on the web all promise to revolutionize the legal framework that underpins the procurement of built assets. Development of a new generation decentralized databases promises to provide interactive virtual software tools access to dynamic data to feed smart contracts built on innovative blockchains, the software protocols that underpin Bitcoin, Ether and other cryptocurrencies. Traditional databases, created in the 1960s and 1970s, remain in use today and like their antiquated counterparts in the legal environment those traditional databases shackle users to constraints that no longer exist. Specifically, computer processors and the memory and storage mechanisms that existed when designing databases and accompanying software and hardware in the 1970s and 1980s pale by comparison to speed of modern computers and the storage capacity of the cloud. In a dynamic, web-based world data is created, moved and leveraged at light speed. Storing, tracking and sharing data on blockchains and blockchain-enabled databases frees designers of databases, legal instruments and built assets to throw off the shackles and constraints imposed in the past and forge a brave new path forward. New generation decentralized databases, in particular blockchain enabled/compatible databases, promise to speed the exchange of data and enable innovation in the built environment only dreamed of in the past. A blockchain compatible database in the Beta testing phase is provided by Fluree DB, a company based out of Winston-Salem, N.C. FlureeDB is a decentralized new generation graphic database that leverages blockchain technology. Traditional relational databases were all created when computer processing power was limited and storage space was expensive, among other constraints. Today, most enterprise level databases kowtow to those constraints from a software AND hardware perspective. Not to mention legacy users. FlureeDB seeks to replace legacy software and hardware with modern options. FlureeDB leverages Cassandra, blockchain, sharding and a few other innovations to offer a flexible graphic database that can link to blockchains and traditional databases. Combined with blockchain and blockchain enabled computer code, FlureeDB may become a powerful

C O M P A S S

tool upon which to write truly smart contracts that tie valuable real time data to those contracts. Another interesting company to watch is Swirlds which provides a blockchain environment that utilizes a distributed consensus algorithms on a hashgraph to enables high levels of security on a distributed ledger/blockchain while simultaneously achieving throughput at rates of 100K+ per shard when the nodes of a network are sharded. One last blockchain-based enterprise to watch is SweetBridge. That enterprise voices the audacious goal of placing the $54 trillion global supply chain on the blockchain. Sweetbridge applies decentralized, blockchain-based solutions to complex problems in real markets. By forming blockchain-oriented ecosystems made up industry stakeholders with a vested interest in enabling liquidity and faster, fairer exchanges of value they expect to change the scope and nature of lending on a global scale by enabling individual enterprises to borrow against existing physical assets on the blockchain. Combining the solutions offered by companies like these might well enable real, fast cost effective use blockchain in virtually every area of the economy, providing access to a 21st Century internet platform that is secure, fast, cost effective and fair. In addition to modern cloud/blockchain-compatible databases the built industry desperately needs to deploy smart contracts on the blockchain. Creating functional smart contracts, that work effectively on the blockchain, presents a number of challenges, including a means of identifying the contracting parties, sharing proprietary data on a need to know basis, getting the incentives right and properly leveraging immutability, transparency and high end security available through blockchain technologies. Many blockchain facing entities are working to overcome those challenges. I say we join them.

The Future of Construction Would you rather be on the cutting edge or the bleeding edge? It’s your choice. Sit idly by while the foregoing innovations teardown the existing legal

(continued on next page)

A P R I L

2 0 1 8

19


Coming Up

May 2018

in the May 2018 Issue of ASA’s

8 — Webinar “Change Orders” presented by Joe Katz, Huddles Jones Sorteberg & Dachille, P.C.

THE

ASA/FASA Calendar

June 2018

Theme:

12 — Webinar “Digital Cash Flow in Construction” presented by James L. Salmon, Benjamin, Yocum & Heather, LLC July 2018 10 — Webinar “Lien & Bond Claims” presented by Timothy Woolford, Woolford Law, P.C.

The Worst Contract Terms • Contingent • Additional

Payment Clauses

Insured

March 2019

• Project

Schedule

6-9 — SUBExcel 2019, Nashville, Tenn.

• Design

Responsibility

Contact information for ASA/FASA events and programs: www.asaonline.com, education@asa-hq.com.

• Indemnity • Change

Orders

• Incorporation

Clauses

• Legally

Legally Speaking, continued framework or get in the game. Collaborative Construction Resources, LLC, through its Smart Built Culture program intends to participate, actively, in the coming revolution. We invite ASA and members of ASA to join us! In future articles these columns intend to delve more deeply into Construction on the Blockchain. James L. Salmon, Esq., joined Benjamin, Yocum & Heather as a BIM and IPD consultant in 2010. As president of Collaborative Construction Resources, LLC, Salmon advocates the use of virtual planning, design and construction tools and integrated project delivery. Salmon also serves as an adjunct instructor of a master’s-level BIM strategy course offered by Middlesex University in London. Salmon is also a special advisor to the buildingSMARTalliance’s Thought Leadership Committee. Salmon advocates the use of integrated project delivery and the use of virtual planning, design and construction software tools. He relishes the challenge of replacing the built industry’s broken culture with a smart procurement culture. Salmon works with clients to modify existing legal frameworks to ensure support for the vision, skills, incentives, resources and actions required to achieve the changes necessary to adopt, adapt to and deploy a smart procurement culture throughout the built industry. He can be reached at (513) 721-5672 or jameslsalmon@gmail.com.

20

A P R I L

2 0 1 8

Speaking: ForumSelection Clauses

Look for your issue in May. PAST ISSUES: Access online at www.contractors knowledgedepot.com

TM

20


The Kahua Network Leveling the Playing Field for Subcontractors in Collaborative Project Management

The World’s Only Collaborative Network for Construction Project Management Kahua provides collaborative project management solutions that help you connect field with office to streamline all aspects of your business, including new construction, service, maintenance and large program management. In addition, The Kahua Network makes it easy and profitable to connect, collaborate and grow your business with owners and general contractors.

Better Communication. Better Projects.

www.kahua.com


MAY 7 TH , 8:10 A .M .

A HANDY REFERENCE TOOL BRINGS HIGHER PROFIT WITHIN REACH

IN AN INS TANT, A R IK M U L L EN R E A L IZE D THE VA LU E O F M OTI O N I S M O NE Y ®

AmSlab Solutions founder, Arik Mullen, is always finding ways to solidify his concrete business. So when he learned how a simple workbook available through CNA’s Motion is Money® program could highlight hundreds of hours of worker inefficiencies, he called his Risk Control Specialist, conducted a worksite audit, and developed a plan to minimize bending, lifting and reaching for tools. Now AmSlab productivity is up 3%, and Arik’s enjoying a much healthier bottom line.

When you’re looking for programs that help keep workers safe and businesses strong … ® we can show you more.

To learn how CNA’s insurance programs for contractors can help your business grow more profitably, contact your independent agent or visit www.cna.com/construction. The examples provided in this material are for illustrative purposes only and any similarity to actual individuals, entities, places or situations is unintentional and purely coincidental. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. “CNA” is a service mark registered by CNA Financial Corporation with the United States Patent and Trademark Office. Certain CNA Financial Corporation subsidiaries use the “CNA” service mark in connection with insurance underwriting and claims activities. Copyright © 2018 CNA. All rights reserved.

The Contractor's Compass April 2018  

The official educational journal of the American Subcontractors Association

The Contractor's Compass April 2018  

The official educational journal of the American Subcontractors Association

Advertisement