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RHCA’s Mission
to Give Contractors the Skills for Success FROM LEFT TO RIGHT: Bianca Sandoval, RHCA Chair; Ruben Landa, RHCA Past Chair; Chris Escobedo, RHCA Past Chair; Yesenia Garcia, RHCA Vice Chair; Luis Spinola, RHCA Past Chair and Ben Muro, RHCA Past Chair.
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World’s largest hard rock water tunnel boring machine debuts in Dallas
14 In the Subcontractors USA Community... The Greater Houston Business Procurement Forum kicked off the New Year
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Houston's Hobby Airport Starts 2020 With New Airline, Maintenance Facility
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Celebrating 5 Years! Connect, network and learn about procurement opportunities with over 16 HCC exhibitors and our community partners.
Tuesday,
March 10, 2020 8 a.m. – Noon HCC West Houston Institute Auditorium 2811 Hayes Rd. Houston, TX 77082 KEYNOTE SPEAKER: Ed “The Rainmaker” Robinson, CSP BREAKOUT SESSION: 9:30 a.m. Responding to an HCC Request for Proposal
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https://sbdp5.eventbrite.com HCC does not discriminate on the basis of race, color, religion, sex, gender identity and gender expression, national origin, age, disability, sexual orientation, or Veteran status. The following person has been designated to handle inquiries regarding the nondiscrimination policies: David Cross, Director, EEO, 504, & Title IX Coordinator, 3100 Main Street, Houston, TX 77002, 713.718.8271 or Institutional.Equity@hccs.edu
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PUBLISHER’S MESSAGE The Subcontractors USA Texas Journal highlights opportunities and news relevant to the construction, energy, architecture, manufacturing, education, engineering, oil and gas, transportation and IT industries we serve. We hope you find this issue not only informative, but inspiring and educational as well. This month’s issue highlights the Regional Hispanic Contractors Association in the Dallas/Fort Worth Area. RHCA was founded by a group of men and women contractors, all with over a decade of experience in business, who wanted to
help the next generation of contractors. They offer a variety of services to members and nonmembers aimed at equipping them with the tools to continue to successfully grow their businesses, and after 25 years in business, RHCA has much growth, success and service to celebrate. As always, thank you for your continued support of Subcontractors USA Texas Journal. When you support us, you are supporting more than just our company; you are supporting the communities in which we live and work. Working together, we can succeed in making positive things happen.
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BEHIND THE JOURNAL PUBLISHER & CEO Keith J. Davis, Sr. COO & MANAGING EDITOR Kimberly Floyd ACCOUNTING MANAGER Eugenie Doualla EXECUTIVE ASSISTANT Tiffany Brown
06 CONSTRUCTION 06 Generational Diversity and Its Impact on the Construction Industry 06 World’s largest hard rock water tunnel boring machine debuts in Dallas 08 Construction Employment Rises By 1,000 In November And 146,000 In 12 Months; Slowing Job Gains May Be Sign Of Labor Shortages, Not Slumping Demand 10 IT & TECHNOLOGY 10 Dallas recognized for ‘Deal of the Year’ award 12 5G: Houston's Next Leap in Innovation
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Three firm leaders ARCHITECTURE
describe how to survive an economic downturn By Subcontractors USA News Provider
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hat can architects do to prepare for financially turbulent times?
The last several years have seen a major boom in the architecture business, but now a period of slower growth indicated by the Architecture Billings Index is pointing toward an impending downturn. In preparation, three firm leaders—Tim Dufault, FAIA, president and CEO at Cuningham Group; Carole Wedge, FAIA, CEO at Shepley Bulfinch; and Ed Shriver, FAIA, founding principal of Strada—share their insights on how their firms weathered previous tough times and what they’ve learned from decades of financial ups and downs.
What lessons have you learned from the Great Recession and other, smaller downturns? Tim Dufault, FAIA: Diversification has been a key part of our practice; we try not to be too invested in any single market. Consequently, we can mitigate the typical fluctuations that happen in each of the different areas. Plus, I believe our geographic distribution – having six offices across the country – has helped alleviate some of the regional-based issues that pop up. Overall, our strategy has always been to focus on keeping a healthy mix of project types at all times. As the economic conditions in each of those markets change, we adapt and adjust appropriately. Carole Wedge, FAIA: Downturns affect capital building projects and slow things down considerably, but they don’t eliminate all work. During the Great Recession, one of our board advisors would say, “It might be 25% slower but 75% of the work still exists, so make sure you’re staying close to your clients and helping with their needs.” In a recession, stick to the things you’re really good at, make sure you’re talking to your clients at all times, and try and figure out what they need from architects. It could be more strategic planning, space utilization, small renovations, or a capital project that might be able to go through with a lower budget. Remember that you are always valuable as a problem solver. Ed Shriver, FAIA: As for lessons learned, I’ll start with my rule number one: The talking heads don’t know any more than you do. I remember – a month or two before Lehman Brothers collapsed – thinking, “I don’t understand why the economy is doing so well.” Everyone was saying, “Don’t worry, it’s not a bubble.” Two weeks later, boom. At that point, I said, “You know what? I’m not an idiot, and those people aren’t as smart as they think they are.” Pay attention to what you’re seeing, and trust your gut.
What steps have you taken in the past to survive during a downturn? Shriver: The first thing we did during the Great Recession was to call our landlord. We knew he was in the same boat as the rest of us, and an empty office space is much less
valuable than a tenant paying 75% of the rent. So we negotiated a discounted rate, which was in place until the recession ended. He was open to the idea, and we were able to show our employees a commitment to exploring outside-the-box options before considering layoffs. Hey, the worst thing he could do was say no. We also cut all salaries, including the partners, by 20%. But we also cut our work week from five days to four. Essentially, our staff was getting paid for the same effort; they were just getting less pay. And the partners still worked five days, even with the trimmed salaries. We could at least continue marketing. I think that meant a lot. You have to take care of your people first; that’s been our approach from the beginning. Dufault: What we did, and I don’t think many firms do this: for staff that we knew were valuable and could use over the longer-term, we set up rolling, 90-day furloughs. We basically put certain staffers on unpaid leave. They still had benefits, including health insurance; they still accrued vacation; and they were eligible to apply for unemployment. If things turned around at any point over those 90 days, we could bring them back. At the end of the 90-day period, we could decide to either extend the furlough for another 90 days or – if we really didn’t think a positive change in the market was coming – release them.
We went that route because it’s expensive to hire and to terminate. On average – when you take into account interviewing and onboarding costs, plus the productivity losses while they learn our systems and standards – it costs between $40,000-50,000 to hire a person. That kind of money goes a long way, even if business is turning around, so we were very interested in directions other than termination. Wedge: Maintain a good relationship with your banker. Keep a constant level of communication so they know you and your business well if and when you end up really needing them. You want those relationships to be healthy all the time, but particularly when times are bad. And if you don’t talk to them until things get tough, they’re less likely to be helpful. You also might want to think about cutting vertically. Think about reducing a couple principals, or seeing if anyone wants to retire early or become a consultant. Someone might say, “I’d love to take six months off, or I was thinking about retiring anyway, or call me if you need me.” It’s another signal to your employees that you’re considering every scenario.
What signals do you watch for to indicate that your workload may be slowing in the future? Shriver: The ABI is down, and has been for a while now. I’m seeing projects that start and then stop suddenly, which is unusual. And I’ve seen, not with our firm but elsewhere, a rise in legal claims. Lawyers are out talking to developers and builders, and they’re getting more aggressive. I’m starting to see and hear about claims that never would have been filed 3 years ago. People are starting to look for extra money; architects have insurance, so they could be thinking, “Let’s see if we can get a little of that.”
What advice do you have for young professionals who may be bracing themselves for their first ever downturn? Dufault: My advice to young people always starts with, “Make sure you’re focusing on how you deliver the greatest value.” Regardless of your role in the company, you need to be delivering value that is exceptional and recognized. That’s the best protection in a downturn. And it doesn’t mean working 80 hours a week; it means, “How are you bringing to the table what the company really needs?” For many young people, this can be hard to understand, and firm leaders are not always the most communicative when it comes to those discussions. But really try to become a valuable resource that will help the company grow and prosper in good times and bad. Wedge: The more cross-trained you are, the nimbler you are. The more willing to do anything you are, the more likely you will stay employed. If you become hyper focused on one area, or your skillset is not looked at as broad, or you aren’t perceived as willing to pitch in and help when needed, then I think you’re at greater risk in a downturn. They say “hire for attitude, train for skill.” If you have a good attitude, I can probably train you to do anything. And you likely won’t be the first person we consider if and when layoffs become a necessity. Source: AIA
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CONSTRUCTION
CONSTRUCTION
World’s largest hard rock water tunnel boring machine debuts in Dallas By Subcontractors USA News Provider
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Generational Diversity and Its Impact on the Construction Industry By Subcontractors USA News Provider
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amily-owned businesses are the heart of the construction industry. Literally. It is the most frequently encountered ownership model in the world and impacts the global economy significantly. The generational leadership of a family business is credited for developing entrepreneurial talent, a sense of loyalty to business success, long-term strategic commitment, and corporate independence. According to the Family Owned Business Institute, family-owned businesses create seventy-eight percent of U.S. jobs and employ sixty percent of the workforce. And members of Associated Builders and Contractors of Greater Houston are working to keep the industry growing through their generational leadership. Craig & Heidt, Inc. is a general and industrial contractor and has been a family-owned business for over seventy years, with Charles Craig joining the company in 1959 and becoming Craig & Heidt in 1973. The company offers a broad scope of industrial petrochemical construction, commercial services, and has constructed major projects such as site preparation, concrete foundations, paving, and drainage construction. “I believe the family-owned small business model offers many benefits to the construction industry,” says Sam Craig, President of Craig & Heidt, Inc. “The compact corporate structure means quicker response time to most activities of the business. This includes customer service, human resource, and financial aspects to name a few. I have had comments from owners and engineers stating their preference to use small businesses because of those factors.” According to the U.S. Census Bureau, millennials are expected to overtake baby boomers as the largest generation in the United States this year, with most of them already in the workforce.2 In today’s workplace, and especially for family-owned businesses, this means that there are several different generations with unique viewpoints on work ethics, communication, and leadership – including a diverse collection of opinions and
skill sets that can help businesses set themselves apart and be more innovative than competitors. Craig says that Craig & Heidt has five family members representing three generations, and is currently in generation four. “This diversity has been a great help to me both personally and professionally,” continues Craig. “Diversity brings new viewpoints on communication and leadership and allows for training younger family members for future leadership and ownership positions in the company. This is one way that Craig & Heidt is currently training and fostering this current generation.” Darlene East, President of Holes, Inc., says that being a family-owned business has allowed her company to continue to foster values from generation to generation. “Holes is still developing the next generation of leaders,” says East. “We actively recruit young professionals from the construction schools as well as promote individuals from the field. In the meantime, we set up multi-generational round tables to discuss and brainstorm on the improvements and growth at Holes.” Since 1972, Holes has been on the cutting edge of concrete sawing, drilling, scanning, demolition, and removal. The company is dedicated to concrete cutting research and development and has led to the integration of many high-tech tools and services. According to East, Holes is focuses on taking care of employees and providing excellence customer service. As a family-owned business, Holes has the ability to offer best in class benefits, job training, and long-term career development for their employees. As the industry begins to recognize the need to offer better career opportunities, Holes has most of those opportunities in place, and is leading the industry by example. “I take pride in seeing our employees succeed in their careers here at Holes. As we recognize people reaching career milestones, I know that it is because we continue to live up to the original values of my parents. Putting our employees first by providing jobs, training, and opportunities are the key goals in our business.”
he City of Dallas unveiled the Big Tex tunnel-boring machine (TBM) at the Mill Creek Drainage Relief Tunnel. The 38-ft by 230 ft long machine is the largest hard rock water tunnel boring in the world at the time tunneling begins. Big Tex will be used to dig a tunnel designed to provide flood protection for east and southeast Dallas. “The completion of the TBM assembly marks a major milestone in the Mill Creek Tunnel Project,” said Council Member Lee Kleinman, chair of the Transportation and Infrastructure Committee. “I’m thrilled to see this type of engineering marvel happening right here in Dallas.” The dual-diameter aspect of the TBM will be a firstof-its-kind conversion process. Big Tex will tunnel the first 9,000 feet of the project, then our team will work completely within the tunnel to remove the outer pieces of the cutter head to convert the overall diameter from 37.7-feet to 32.6-foot diameter. Once the conversion is complete, Big Tex will continue tunneling the remaining 17,000 feet of the project alignment. “I’m proud to say the project takes measures to minimize impacts to local residents and commercial properties, while enhancing economic value and bringing flood relief and flood protection to a large segment of our community,” said Majed Al-Ghafry, assistant city manager, City of Dallas. Southland Holdings and it’s subsidiary companies Southland Contracting and MOLE Constructors are working on this project and will be hiring over 300 employees to work on the Mill Creek Tunnel Project. “Big Tex will work 24 hours a day to excavate the tunnel with crews ranging in size depending on activities,” said Rachel Sackett, marketing and communications director, Southland Holdings. “With a project of this size, we are always hiring those eager to grow their career or learn a new skilled trade. We encourage those seeking job opportunities to visit our website.” It’s considered good luck for a TBM to be given a name.
With the permission of the State Fair of Texas, the TBM is named Big Tex for its size (everything is bigger in Texas), proximity to the State Fair and iconic name known around the world. The project is scheduled for completion in 2023.
Source: Associated Builders and Contractors of Greater Houston
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Source: City of Dallas
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CONSTRUCTION
CONSTRUCTION EMPLOYMENT RISES By 1,000 In November And 146,000 In 12 Months;
Slowing Job Gains May Be Sign Of Labor Shortages, Not Slumping Demand By Subcontractors USA News Provider
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onstruction employment increased by 1,000 jobs in November and by 146,000, or 2.0 percent, over the past 12 months, according to an analysis of new government data by the Associated General Contractors of America. Association officials said recent modest monthly increases in industry employment likely reflect the difficulty contractors are having in finding workers rather than a letup in demand. Officials urged federal officials to pass the JOBS Act and boost funding for career and technical education programs to help ease labor shortages.
Average hourly earnings in construction—a measure of all wages and salaries—increased 2.7 percent over the year to $31.08. That figure was 10.2 percent higher than the private-sector average of $28.29, the association official noted. Association officials said Congress and the Trump administration should address construction labor shortages by passing the JOBs Act, boosting funding for career and technical education and enacting comprehensive immigration reform measures. The JOBS act would make it easier for students in short-term credentialing programs that teach skills like construction to qualify for federal Pell Grants, they noted.
“Labor shortages are making it harder for firms to keep pace with demand, and more important, it is making it harder for them to add new people to their payrolls,” said Stephen E. Sandherr, the association’s chief executive officer. “Making it easier for young adults to acquire construction skills and for skilled workers to enter the country when they are needed will put many more people to work in high-paying construction careers.” Source: Associated General Contractors
“Contractors report they remain busy and have lots of projects on their order books,” said Ken Simonson, the association’s chief economist. “But they find it extremely difficult to fill many positions despite paying more than other industries. That’s not surprising, given that the total unemployment rate returned to a 50-year low in November—a sign that all industries are competing for workers.” Simonson observed that the average weekly hours for all employees in construction increased from 38.7 in November 2018 to 39.1 in November 2019, even though construction employment rose by 2.0 percent over the year. In contrast, weekly hours for the overall private sector remained flat at 34.4 hours, while total nonfarm employment increased by 1.5 percent. “One takeaway from these numbers is that contractors are adding workers faster than other sectors, but they are eager to hire even more people to keep pace with strong demand for projects,” Simonson commented. “To make up for the shortfall, many firms are asking workers to put in more hours.” The construction economist noted that it will be difficult for firms to continue asking existing staff to compensate for labor shortages in the long run.
ENERGY
Six Large-Scale Solar Farm Projects With Queue Positions in Texas Offered for Immediate Acquisition by Renewable Energy Developer By Subcontractors USA News Provider
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nnovative Solar Systems, LLC, (ISS) is offering for immediate acquisition six highly desirable large-scale solar PV projects in the ERCOT market. The six solar projects, IS 134, 206, 245, 377,
408, and 416, range in size from 85MW to 300MW for a total of 1,035MW. All six solar projects are filed and have secured a queue position, with estimated CODs ranging between 2021 and 2023. With their close proximity to major transmission assets and through ISS's relationships with offtake entities, these six projects represent a valuable investment opportunity within the Texas renewable energy market. ERCOT is one of the most dynamic, exciting energy markets in the US. Population growth in Texas and the shuttering of the state's coal plants have combined to create a level of electricity use unlike that of any other area in the country. In fact, ERCOT's projections for 2020 indicate electricity
demand for its in excess of 26 million Texas clients will continue the already rapid pace of growth occurring in the Lone Star state. Those who study this electricity market understand Texas remains an up-and-coming investment opportunity, and shrewd renewable energy investors are eager to include solar projects within the ERCOT region as part of a sound portfolio. Innovative Solar Systems, LLC (ISS), established in 2011, is an experienced utility-scale solar PV developer. With a significant portfolio of solar projects across the US, ISS is a developer investors can rely on to offer profitable, attractive solar farm sites in a wide variety of energy markets
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Source: PR Newswire
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IT & TECHNOLOGY
Dallas recognized for ‘Deal of the Year’ award Uber’s new hub. In what’s been called one of its most competitive Deal of the Year contests to date, Business Facilities’ Editor in Chief Jack Rogers said “Dallas is one of the nation’s fastest-growing data center hubs, and now it will be home to a coveted administrative HQ for an emerging tech giant.” Uber recognized the City of Dallas for the great partnerships formed between the Texas Governor’s Office, Dallas County, North Central Texas Council of Governments, Dallas Regional Chamber, and Uber.
By Subcontractors USA News Provider
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he City of Dallas Office of Economic Development has won Business Facilities’ 2019 Deal of the Year Bronze Award for Uber Technologies’ U.S. Administrative Hub. Uber’s new hub, based at The Epic in Dallas’ Deep Ellum neighborhood, will create 3,000 new jobs and more than $75 million in capital investment. Uber will provide a new employment hub to bridge Downtown Dallas to Deep Ellum, and will greatly enhance Dallas’ economy. Additionally, current tech entrepreneurs working within Dallas (including many nearby co-working spaces) will find a new, energetic partner in Uber Technologies, generating a more dynamic and creative tech environment to further define Dallas as a 21st-century city of innovation. “The Office of Economic Development continuously works to attract and sustain businesses and development opportunities to help grow Dallas” said Michael A.
Source: City of Dallas
Mendoza Chief of Economic Development and Neighborhood Services. “These efforts will continue make Dallas an ideal destination for companies looking to expand.” Home to the largest tech workforce in Texas, as well as the only city where all Uber platforms are active, Dallas quickly became a top contender for
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IT & TECHNOLOGY
5G: Houston's Next Leap in Innovation By Subcontractors USA News Provider
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G technology has been touted as the next leap forward in the digital technology arena, and Houston is one of the first cities to roll out the new tech, but what does this mean for Houston's economy? Well, it could mean a lot. 5G networks need smaller and more closely deployed antennae that can attach to existing physical structures, such as light and telephone poles and buildings. These signals can also be carried faster and with more reliability. Last month the Houston Chronicle reported that T-Mobile turned on its 5G network in Houston and nationally. This launch made T-Mobile the latest commercially available 5G mobile data network available in the region. Sprint, which is planning a merger with T-Mobile later this year, and Verizon turned on their 5G capability in Houston earlier in 2019.
In 2018 AT&T announced that it had 5G capabilities in multiple areas in Houston. The company also has invested nearly $1.5 billion in Houston wireless and wired networks from 2015-2018 in anticipation of 5G coverage. The investment also included updates to improve reliability, speed and performance. These faster capabilities will offer Houston businesses better opportunities to create new and streamline old technologies, and companies are starting to take notice. When Accenture surveyed more the 6,600 business and IT executives for its Technology Vision 2019, 62% of the respondents said that 5G will have a significant impact on their industries within the next three years. Infrastructure Networks, a Houston based oilfield telecommunications company, is working with telecommunications company Nokia to bring 5G networking capabilities to the Eagle Ford Shale of South Texas, the Permian Basin, and two additional shale basins outside of Texas. That integration will allow customers of Infrastructure Networks to send and receive large gigabytes of data faster than ever before. "Operators, drillers and oilfield service
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companies can now embrace automation, artificial intelligence analytics and machine learning, only made accessible with nextgeneration, high-bandwidth, low-latency connectivity," Mark Slaughter, CEO of Infrastructure Networks, said in a statement this week. As a 5G city, Houston has the potential to utilize this technology to move forward with smart city applications that could assist in reducing traffic congestion, lower energy usage and improve public safety. This new technology could also bolster the region's economy. Over the next seven years, 5G networks are estimated to create 3 million new jobs and contribute $500 billion to U.S. GDP. "Houston has always been on the front line. It is who we are. It is in our DNA. We are a leading city," Mayor Sylvester Turner said at a roundtable discussion in October. "We didn't wait for somebody else to go to the moon. Or to be the energy capital of the world. Or the largest medical center in the world. But you don't stay at the front if you don't continue to lead." Source: Greater Houston Partnership
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The Greater Houston Business Procurement Forum kicked off the New Year
The Greater Houston Business Procurement Forum kicked off the New Year with their monthly breakfast at Houston Community College. This month’s focus was on "Starting the New Year Off With 20-20 Vision," with keynote speaker Stephen L. Klineberg, Ph. D, the founder and director of Kinder Institute for Urban Research.
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REGIONA
CONTRACTOR
is Helping the Industry N By Subcontractors USA News Provider
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he Regional Hispanic Contractors Association was founded on the principle of helping the little guy and on being the helping hand that young businesses need to excel, and 25 years later, RHCA is still holding strong to that foundation. What started out as a committee of the Greater Dallas Hispanic Chamber of Commerce has grown into an organization of its own with over 1,700 members. RHCA was founded by a group of men and women contractors, all with over a decade of experience in business, who wanted to help the next generation of contractors. They started by asking themselves essential questions such as “How do we get more business for young contractors? What kind of training do they need? How do we introduce them to the right people?” which led to the development of the services and resources now offered at RHCA. “Most contractors know their trade very well,” RHCA President John Martinez said. “But if they’ve been doing that trade for 10-15 years as an employee, they don’t have the necessary business skills. They’ve never had to bid a project, hire people, get the supplies or handle administrative stuff, so they quickly found out that if they wanted to help grow these businesses, they’re going to have to offer a lot of training.” John Martinez has worked with RHCA for almost 15 years. As CEO and president, he is responsible for ensuring that the organization moves forward following its mission of “helping the industry.” He reports to everyone, whether it be the staff, board members, RHCA members, clients, Experience Our World of Advertising, Marketing, Media and Communication
volunteers, etc. “I try to stay five steps ahead a nd k now where we need to go next,” Martinez said. “I can only do that through the feed of all our constituents. I get told wher are trying to get to, and then it is my to figure out what that daily journey i us to reach the final destination.” Supporting its mission of “helping industry,” RHCA offers a variety of
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Not Just the Organization
dback re we y job is for
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vices to members and nonmembers aimed at equipping them with the tools to continue to successfully grow their businesses. The majority of contractors that attend RHCA classes come from a construction, architecture or engineering background. And although these contractors are masters at their skill, many of them are lacking the basic knowledge and skills required to operate a business. When these contractors first start a business, as Martinez puts it, “they don’t know what they don’t know.” RHCA offers courses on topics such as bidding, estimating, finance, human resources, and management so these new business owners have what they need to be successful. RHCA also places great emphasis on safety training. Texas is ranked number one in highest fatality rates, followed by California and Florida, all of which have a
very high Hispanic population. “Hispanics are, by far, injured and killed at higher rates on construction sites throughout the country compared to other populations,” Martinez said. “Falls are the number one leading fatal injury on construction sites, so we offer a two-hour safety training just on falls. People don’t realize how dangerous they are, especially when you are not educated on site safety.” Another aspect that RHCA focuses on is business development. Unlike larger businesses that have specific departments to handle business development, project management and other large tasks that come along with running a construction, architecture or engineering company, small businesses owners must bear the entire load themselves. “Big construction companies have the advantage of specific departments handling business development content and hunting down jobs,” Martinez said. “But as a small company, the owner is usually responsible for all that, plus the work of the actual trade. If they are not out there working themselves, they aren’t making money to support their own families.” Apart from the much-needed services provided by RHCA, they also play a big part in advocating for small business contractors. Because a contractor’s main focus is typically on getting the job done as well as securing the next job, they benefit greatly from organizations like RHCA who advocate for their inclusion on projects. “Unfortunately for minority contractors, it can still be a challenge to get work,” Martinez said. “So part of our group’s effort is to advocate that some of these big public projects, through a competitive bid process, hire these minority-owned businesses to work on the projects.” As much time as RHCA invests in providing essential services and resources to contractors, they still make time to recognize and celebrate successful and hard-working businesses around them. RHCA’s Pillar
“Unfortunately for minority contractors, it can still be a challenge to get work,” Martinez said. “So part of our group’s effort is to advocate that some of these big public projects, through a competitive bid process, hire these minority-owned businesses to work on the projects.” —John Martinez, President of Regional Hispanic Contractors Association
Awards is held every year to recognize things like project of the year, contractor of the year, subcontractor of the year and many more. Martinez and his team understand the importance of letting companies and individuals know that their great work in not going unnoticed. RHCA is also notorious for their annual Luna Awards ceremony. Created by Martinez, his teammate, Yolanda Tafoya, and Elizabeth Ponce, a young Latina entrepreneur, in honor of the late Maria Luna, the founding owner and operator of Luna Tortilla Factory in Dallas, Texas, the Luna Awards celebrates women in business. “We wanted to create an event that recognized women in business and gave them a space to network, train and develop and celebrate with each other without the pressure of a hierarchy. The Luna Awards was definitely ahead of its time with inclusion.” The Luna Awards is now recognized as
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the gold-standard for women in construction, architecture and engineering, and it has expanded statewide from Dallas-Fort Worth to Austin, Houston, Corpus Christie and San Antonio. After 25 years in business, RHCA has much growth, success and service to celebrate, but they are not even close to stopping. They have recently begun a $1.3 million renovation on their headquarters, giving much more space to hold trainings, meetings and more. “I know that because of our work over the last 25 years, there have been men and women who didn’t get hurt on the job, who were able to open a business and grow it into a successful business,” Martinez said. “And we don’t want to stop doing that. We want to keep answering our mission of ‘how do we help and grow the industry?’ just as our founders did.”
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LEGAL
Misapplication of Construction Trust Funds By Subcontractors USA News Provider
I
n the construction industry, the contract between parties is the principle source for determining the parties’ respective obligations. Project managers, superintendents, and other project-related personnel are routinely trained to review and understand contracts and administer projects in accordance with an industry understanding of the Contract. When juggling multiple projects, contractors are required to properly manage payments received to avoid violating Texas Property Code 162, commonly known as the Texas Trust Fund Act. This article will explain what payments are considered construction trust funds, who qualifies as trustees and beneficiaries, when a construction account is required, and how to avoid misapplication of construction trust funds. If payments are made to a contractor, under contract for the improvement of specific real property in the state of Texas, those payments are considered construction trust funds.1 Qualifying trust funds can come directly from an owner or the owner’s lender. The party who receives the funds and has control or direction of the funds, is considered a trustee. This could be a contractor, subcontractor, owner, officer, director or agent of the contractor or sub.2 For example, when pay application payments are deposited to a contractor’s account, the contractor becomes a trustee of the owner’s construction trust funds and has control and direction to spend the funds as necessary to advance the project. According to the Texas Trust Fund Act, artisans, laborers, mechanics, contractors or subs who furnishes labor or material for the construction, repair, or improvement of property in Texas are considered beneficiaries of any trust funds paid or received in connection with the improvement.3 Beneficiaries of construction trust funds can be any of the vendors listed in the contract. Additionally, a property owner of a residential construction contract is also a beneficiary of trust funds. When a property owner executes a contract exceeding $5,000 for residential improvements, the contractor must deposit the trust funds in a separately labeled “construction account”. 4 Failure to label a trust fund account may be a minor offense, but mismanagement of the construc-
tion account could result in penalties. As a trustee, the contractor must maintain a record of the construction account that provides: 1) the source, the amount and the date the funds were deposited; 2) the vendor receiving a disbursement, the amount and the date of the disbursement; and 3) the remaining balance of the account. The contractor must maintain a record of direct and indirect costs charged to the owner. Deposits and disbursements should include the construction account number so the transactions can be properly identified and documented. Finally, the contractor may not destroy account details until a year after the date of the improvement is completed.5 Simply attaching AIA continuation sheets to pay applications fails to provide transaction level details regarding sources, amounts, dates, recipients of disbursements and remaining balances. Similarly, QuickBooks files may also fail to provide adequate transaction level details unless properly administered. Bank statements would suffice if they show remaining balances after each disbursement and if the construction trust funds are not comingled with other unknown, unrelated deposits. It becomes increasingly difficult to definitively establish a current balance of trust funds if a single construction account is used for multiple jobs or if the account is used to cover expenses for another project. Therefore, to simplify the management of construction trust funds, separate bank accounts should be used for each project exceeding $5,000. Misapplication of trust funds occurs when a trustee knowingly uses or diverts trust funds without first fully paying all current or past due obligations to the beneficiaries.6 Signing pay applications and receiving construction trust funds, obligates contractors to use those funds to pay its subs and vendors. Diverting amounts under $500 to another job could result in a class A misdemeanor while diverting funds over $500 could result in a felony of the third degree. In conclusion, it’s very important to avoid comingling project funds by maintaining adequate and accurate accounting records. Source: Associated Builders and Contractors of Greater
LEGAL
ConsensusDocs Publishes New Standard PublicPrivate Partnership Agreement By Subcontractors USA News Provider
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onsensusDocs announced the publication of a new industry standard public-private partnership (P3) agreement. The ConsensusDocs 900 Standard P3 Agreement and General Conditions is a pioneering document from ConsensusDocs that represents a vast improvement of P3 agreements. Consistent with the ConsensusDocs philosophy, the document provides a fair and balanced standard for a P3 project to design, build, finance, operate, and maintain (DBFOM) between an Owner and Concessionaire. This new agreement is as part of the ConsensusDocs PublicPrivate-Partnership (P3) 900-series. P3 contracts typically involve complex 200-plus page contracts that obfuscate and inappropriately shift risk. The new ConsensusDocs Standard P3 Agreement provides a fair off-the-shelf solution for P3 projects that can be modified to meet specific project needs. This will significantly lower the transactional costs for small and medium sized P3 projects to both create a contract as well as assess the risk involved for pursing potential P3 projects. “Rather than create a P3 agreement from scratch, the new ConsensusDocs 900 P3 Sta nda rd Agreement provides a sophisticated and f lexible contractual solution that users can modify based upon the specific needs,” said Ernest C Brown, a San Franciscobased Construct i on l a w y e r, mediator a nd arbitrator, who chaired the ConsensusDocs P3 Working Group. “The P3 is an innovative contracting vehicle that offers a better mechanism to consider a projects life-cycle costs and flexibility in financing for project.” Brian Perlberg, Executive Director and Senior Counsel of ConsensusDocs adds, “P3 projects are often clouded by rampant risk shifting that ultimately hurts project outcomes. At the very least, the new ConsensusDocs P3 agreement creates a fair baseline for owners, financiers, builders, and designers alike to begin a real conversation to contract utilizing public-private partnerships.” Source: Associated General Contractor
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Houston
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OIL AND GAS
New Record:
TEXAS OIL AND GAS INDUSTRY
Paid $16.3 Billion in Taxes and State Royalties in 2019, Most in Texas History
Billions in oil and gas taxes and royalties directly support Texas schools, teachers, roads, infrastructure and healthcare facilities By Subcontractors USA News Provider
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exas ISDs received $1.54 Billion, Counties received $398.7 Million in oil and gas property taxes According to just-released data from the Texas Oil & Gas Association (TXOGA), the Texas oil and natural gas industry paid more than $16 billion in state and local taxes and state royalties in fiscal year 2019 – the highest total in Texas history. TXOGA President Todd Staples hosted a media briefing this morning to share the new report and to provide a closer look at how Texas uses oil and natural gas tax revenue to benefit all Texans. “Despite challenges in the global marketplace, state and local taxes and state royalties paid by the Texas oil and natural gas industry shattered records last year – exceeding $16 billion,” said Staples. “Continuous innovation and policies that encourage safe, responsible energy development are driving our nation, our state and our communities to new heights.” “Oil and natural gas does more than fuel our cars, power our homes and businesses, form the building blocks of our everyday goods and secure our nation. Taxes paid by the oil and natural gas industry support teachers and schools, build roads, boost essential and emergency services, improve healthcare facilities and bolster our state’s infrastructure,” said Staples. “Since 2007, the oil and natural gas industry has paid more than $149 billion in state and local taxes and state royalties. That’s money that benefits every Texan – whether you live near the oil patch or not,” he said. Staples detailed how oil and natural gas tax and royalty revenue is used to support education, transportation, healthcare and infrastructure through the State Highway Fund, the Economic Stabilization Fund (commonly known as the Rainy Day Fund), the Permanent School Fund and the Permanent University Fund – all of which are funded with taxes and state royalties paid by the oil and natural gas industry. “The reach and impact our state can make with oil and natural gas activity here in Texas is incredible,” he said.
Other than interest from the Rainy Day Fund itself, 100% of the money in the Fund comes from taxes paid by oil and natural gas companies. During the last legislative session, Staples noted that lawmakers appropriated more than $6 billion from the state’s Rainy Day Fund toward many essential programs and initiatives including:
$1.1 BILLION
$445 MILLION
$445 million to the Health and Human Services Commission to improve state hospital facilities.
Over $1.1 billion to the Texas Teacher Retirement System, with half this amount to be invested in the pension fund and the other half financing a “13th check” of up to $2,000 for retired Texas teachers.
$840 MILLION
$840 million to the Texas Water Development Board to develop and update flood risk maps across Texas and to provide grant funding for floodrelated projects.
$807 MILLION
$807 million to the Texas Education Agency to help school districts affected by Hurricane Harvey, including for easing the financial losses to school district property values and for remediating school campuses damaged in the storm.
$125 MILLION
$125 million for grants to counties to plan, maintain, and reconstruct roads affected by oil and gas development. In fiscal year 2019, Texas school districts received $1.54 billion in property taxes from mineral properties producing oil and natural gas, pipelines, and gas utilities. Counties received $398.7 million in oil and natural gas mineral property taxes. Some counties and ISDs saw dramatic increases in oil and natural gas property tax revenue in fiscal year 2019. Pecos-Barstow-Toyah ISD in West Texas ranked #1 receiving $109.2 million from mineral properties producing oil and natural gas, pipelines, and gas utilities – an increase of 266% from fiscal year 2018. Reeves County ranked #1 with $41.6 million paid in oil and natural gas mineral property taxes – a quadruple increase from last year. In fiscal year 2019, 98% of the state’s oil and natural gas royalties were deposited in the Permanent University Fund and Permanent School Fund, which support Texas public education. The PUF received $1.02 billion and the PSF received $1.11 billion – contributions that broke records. “Growth that drives these achievements is not guaranteed,” said Staples. “Texas’ commitment to science-based regulations and consistent policies, and the energy sectors’ ongoing investment in technology and innovation will ensure that our state and our nation can continue to lead the world in energy production, economic strength and environmental progress.”
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Source: Texas Oil and Gas Association
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PERMITS
7 Tips To Clean Up Your Act If Started Construction Without A Main Building Permit By Helen Callier Contributing Writer
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e receive a lot of phone calls from desperate project owners and often some contractors wave at us or knock on the window of our wrapped trucks at a particular jurisdiction. Conversations vary on types of projects and the kinds of problems being experienced. So, when a contractor approached me a few weeks ago in Austin asking if we help in pulling permits after a job has started, I asked him what kind of project and how much work had been completed to date. He quietly commented on the type of work being done and said that he was a small subcontractor that needed the work and did not want to get into trouble with the General Contractor. Here’s what we do know. Most Contractors are ethical and professional in their work and in serving customers. Some Contractors get busy and honestly think they pulled a main building permit but only have a demo permit. It happens and when this occurs, simply move forward right away in closing the gap in pulling main building permit. Also, truth-be-told, a few Contractors use questionable practices, and some are pushed by Project Owners to do whatever it takes to get a building renovated or newly constructed even if this means poor quality materials and shoddy work. That’s a nice story Helen about the subcontractor in Austin. What do I do if I am in a pickle needing help now
in obtaining a building permit and want to prevent the job from being shut down and possibly fined by the jurisdiction? Below are 7 tips to obtain a construction permit if you have started actual construction. 1 Stop all work on project (new construction, major renovation, etc.) including informing subcontractors to cease all activities. And if you are a subcontractor, alert GC that you failed to pull a permit and are stopping work to correct problem immediately. As painful as this first tip sounds and is a hit to your pockets, it is the right thing to do to insure building in a safe manner and to avoid major violations (fines). 2 Inform the Project Owner to let them know of failure to pull main building permit and relay your steps being taken to obtain a construction permit ultimately addressing a building safety issue. 3 Pull together all plans and prerequisite documents depending on the type of project. 4 QAQC permit package to make sure you are meeting building codes including using jurisdiction checklist as a guide. Most jurisdictions have checklists on their web sites. 5 If you have questions on building codes, contact a permitting expert like PermitUsNow or the jurisdiction by phone, email or schedule an appointment to meet with a plan reviewer. 6 Complete permit application and formerly submit to jurisdiction in person or using online
system depending on type of project and the jurisdiction. 7 Track, monitor and respond immediately to any plan reviewer questions or rejections so can continue in permitting. In addition, most of the large jurisdictions that we deal with across the state of Texas have a one-day or one-stop process for small projects if criteria are met. This means little downtime on your project while pulling a main permit for compliance and safety purposes. More complex projects require longer review times so make sure to factor in that time when readjusting construction project schedule and impact on budget.
In Conclusion Since the beginning, it has been our goal and commitment to be a resource to assist Project Owners, Architects, and Contractors in obtaining permits fast so construction can start in a timely manner. We answer calls coming into our toll-free line, respond to emails from permitusnow.com and chat with Contractors when at permitting centers. We believe that we are all on the same team so-to-speak in the construction industry that builds, repairs and renovates in a way that is safe and that improves the quality of use for persons using structure. And if by chance, you’ve had a hiccup in obtaining a building permit, please re-read the 7 tips above or call us at 1.844.PERMIT.4
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#Buildsafe
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24 | February 2020
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SAFETY
The PEER Initiative:
Protecting Employees, Enabling Reemployment By Subcontractors USA News Provider
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ach year, Federal civilian employees sustain work-related injuries and illnesses. In 2018, Federal workers filed almost 107,000 new claims and received approximately $3 billion in workers' compensation payments. Many of these work-related injuries and illnesses are preventable, and executive departments and agencies can and should do more to improve workplace safety and health, improve efficiencies, reduce the financial burden of injury on taxpayers, and relieve unnecessary suffering by workers and their families. Therefore, the Protecting Employees, Enabling Reemployment (PEER) Initiative is being created to set forth goals to achieve these important objectives and supports the President' s Management Agenda - Modernizing Government for the 21st Century and the President's Initiative to Stop Opioid Abuse and Reduce Drug Supply and Demand. Federal agencies and the United States Postal Service are expected to improve or maintain performance in seven areas: 1. reducing total injury and illness case rates; 2. reducing lost-time injury and illness case rates; 3. increasing the timely filing rate for workers' compensation claims; 4. increasing the timely filing rate for wage-loss claims; 5. increasing the rate of return-to-work outcomes during the initial 45-day post-injury period for traumatic injury cases; 6. improving the rate at which employees return to work in cases of moderate to severe injury or illness;
7. implementing and fully using the Department of Labor's electronic filing system. Goals one through six measure reductions in workplace injuries, reductions in time off work because of injuries, improvements in return-to-work, and improving the rate of timely filed claims, all of which help relieve unnecessary suffering by workers and reduce the financial burden of injury on taxpayers. The seventh goal will standardize the claims process. It will also aid in direct and immediate communication with an injured employee, facilitating prompt treatment and providing critical opioid awareness and pain education. Executive departments and agencies shall coordinate with the Department of Labor's Occupational Safety and Health Administration and Office of Workers' Compensation Programs to develop strategies aimed at achieving performance targets in each category. The Secretary of Labor shall lead the initiative by measuring both government-wide and agency-level performance.
Each executive department and agency shall bear its own costs for participating in the PEER Initiative. Nothing in this memorandum shall be construed to impair or otherwise affect the authority granted by law to an executive department or agency, or the head thereof. This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable by law or in equity by any party against the United States; its departments, agencies, or entities; its officers, employees, or agents; or any other person. The Secretary of Labor is authorized and directed to publish this memorandum in the Federal Register. Source: whitehouse.gov
SAFETY
OSHA letter: Portable headphones could be "safety hazard" By Subcontractors USA News Provider
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SHA issued a letter of interpretation in response to an employers question regarding the use of headphones to listen to music on construction sites. The employer stated that some headphones are advertised as “OSHA approved” and asked whether OSHA had any specific regulation that prohibits the use of headphones to listen to music on a construction site. While OSHA does not have a regula-tion prohibiting the use of headphones, the letter outlines several hazards and issues that employers should consider. First, the letter advised that OSHA has a construction standard that sets noise exposure limits and that, if those limits are
exceeded, the employee must provide hearing protection to reduce noise levels be-low the exposure limits. OSHA clarified that portable music players are not a substitute for proper hearing protection. Next, the letter states that while headphones may be allowed at the employer’s discretion, employers must consider whether the use “creates or augments other hazards apart f r o m
noise.” OSHA was par-ticularly concerned with the possibility that listening to music through headphones may expose em-ployees working on construction sites to struck-by hazards. OSHA stated that employers must “ensure that employees are not exposed to struck-by hazards while performing their work. Listening to music may produce a safety hazard by masking environmental sounds that need to be heard, especially on active construction sites where attention to moving equipment, heavy machinery, vehicle traffic, and safety warning signals may be compromised.”
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Finally, OSHA addressed the issue of headphones being advertised as “OSHA approved” by clarifying that “OSHA does not register, certify, approve, or otherwise endorse commercial or private sector entities, products, or services.” The key takeaway from the letter is that employers must address employee use of headphones to listen to music on the worksite, even if there is not specific OSHA standard prohibiting it. If the use of headphones would expose employees to potential hazards, such as the struck-by hazards described in OSHA’s letter, employers could still be liable for a violation of the general duty clause. Given this, employers should evaluate their worksites and determine whether a policy prohibiting the listening to music on the job is appropriate. Source: Associated General Contractor
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TRANSPORTATION
Houston's Hobby Airport Starts 2020 With New Airline, Maintenance Facility
By Subcontractors USA News Provider
H
ouston’s William P. Hobby Airport is marking the start of the new year with a couple of big announcements. Earlier this week, Allegiant announced it added Houston as one of a few cities it’ll begin serving in 2020. According to its press release, the new seasonal nonstop routes from Hobby Airport include Knoxville, TN, Asheville, NC, Savannah, GA, and Destin/Fort Walton Beach, FL. Allegiant says it’s also expanding to Boston and Chicago. It’s the largest expansion in the airline’s 23-year history, driven by the company’s focus on leisure travel. Allegiant’s announcement comes just days after Southwest Airlines unveiled a $125 million, 240,000-square-
foot maintenance facility at Hobby. It’s the largest in the Dallas-based carrier’s network, and includes offices, training facilities and warehouse space. “It’s proof of our devotion and our dedication to Houston,” Southwest CEO Gary Kelly said during the grand opening celebration, as reported by the Houston Chronicle. “And the opportunity that we see here, and the excitement that we have to continue to grow.” Kelly told reporters that Houston is one of three key cities where Southwest is focused on adding flights over the next 10 years, according to the Houston Business Journal. Southwest’s CEO said he ultimately wants to connect Houston to South America. “I don’t see that in the next year or so, but definitely down the road it’s something that we would be interested to do,” Kelly said. Houston is the international air gateway to the South Central U.S. and Latin America. With the addition of
international air service at Hobby Airport in ’15, Houston became the only city in Texas with two airports offering international service and one of only eight such cities nationwide. According to Houston Facts, domestic travel at Hobby Airport increased by more than 7% to over 13 million passengers in ’18. Airlines that offer direct domestic flights from Hobby include American Airlines, Delta Airlines, JetBlue Airways and Southwest Airlines. Southwest is currently the only airline out of Hobby offering direct international flights. The Partnership's 2019 Economic Highlights report says the Houston Airport System (HAS) offers nonstop flights to some 190 domestic and international destinations in 37 countries. Hobby is ranked as the 35th busiest airport in the nation. Source: Greater Houston Partnership
TRANSPORTATION
DFW in Top Three for Best Large Airport in North America in Annual USA Today 10Best Voting By Subcontractors USA News Provider
D
allas Fort Worth International (DFW) Airport finished among the top three in voting for Best Large Airport in North America in the USA Today 10Best Readers’ Choice 2020 results announced today. As one of 20 airports nominated in the Large category (airports serving more than 15 million passengers annually), DFW Airport was the highest ranked Texas airport and finished behind only Orlando Interna-
tional Airport and Tampa International Airport in the overall online voting. DFW Airport offers the most nonstop flights to domestic destinations of any airport in the United States, now at 193 nonstop domestic destinations with the addition of 14 new nonstop destinations in 2019. The Airport served more than 73 million passengers in FY2019, a 6.1 percent increase from the previous year and a record total. Voting for the Best Large Airport category began Dec. 16, 2019 and ran through Jan. 13, 2020.
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Source: DFW
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