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South State Inc. Celebrates 45 Years In Construction
June 2017
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president’s message
From the desk of: Jim Coddington
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s the 2017 construction season progresses, I find myself asking the same question each time I travel throughout the state: “where is all the work?” With transportation funding secured and nearly half the year behind us, we haven’t seen the uptick in heavy highway construction work that many of us expected. At our membership meeting in early June, Dana Hecht, the NJDOT Director Of Project Management, spoke about the balance of the 2016 capital plan and the full 2017 capital plan, and I hope to see that come to fruition soon so we can get work out on the street and get our state economy moving again. To that point, the UTCA staff has continued to work closely with NJDOT executives to get work on the street.
On the utility front, we heard a very encouraging presentation at our Northern membership meeting by David Zimmer, the Executive Director of the New Jersey Environmental Infrastructure Trust (NJEIT). David reported that there is significant money approved in all 21 counties and multiple municipalities for major water and sewer infrastructure work over the upcoming years. In addition, the new Infrastructure Bank, which was a part of the legislation at the time of the gas tax, will provide municipalities a vehicle to borrow low interest loans, similar to the current NJEIT, to help pay for our aging infrastructure while saving the taxpayers billions of dollars. I am encouraged that we are moving in a very good direction as an industry and should expect strong uptick in activity in the upcoming months. I would like to recognize our friends at South State, Inc. on celebrating 45 years of success, as well as Walker Diving Underwater Construction on celebrating an amazing 60 years in business.
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Utility & Transportation Contractor | june | 2017
Well done! In addition to the feature stories on these firms in this magazine, please see our updates on legislative, safety, and labor issues impacting our industry. I look forward to seeing everyone at the Robert A. Briant, Sr. Memorial Scholarship Golf Outing being held on June 12th at the Eagle Oaks Golf Club in Farmingdale! This is an excellent networking opportunity for our members and raises scholarship funds for our future industry leaders. I would also like to remind our members that our booth registration for our 52nd Annual Convention is almost closed - at the time of this writing only a few spots remain! Thank you to everyone who has already registered and we look forward to seeing you September 28th to October 1st at the Borgata. Lastly, it is with a heavy heart that I acknowledge the passing of our good friend Bob Binder. We lost Bob unexpectedly this April, and he will be sorely missed. Bob was a pillar within UTCA and throughout our industry. Please keep Bob and his family in your thoughts and prayers. A celebration of life service will be held for Bob Binder on Wednesday, June 14th at 4:00 PM at the United Methodist Church in Summit, NJ. The service will be followed by a reception in the church social hall. Donations to the Billfish Foundation at www.billfish.org in Bob’s memory would be appreciated. Thank you for the privilege to serve you as the UTCA president!
Best regards,
Jim Coddington
Cover 40
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CONTENTS
Cover story 40 South state inc.
celebrates 45 years in construction
DEPARTMENTS
FEATURES
2 5 9 13 17 27 33
President’sMessage
50 walker diving celebrates 60 years in business
Financial Overview
21 investing in transportation
Legal Dig Accounting Corner Legislative News Safety Perspective Labor Relations
37 Engineering Exchange
NEWS 57 best practices for an up-to-date employee handbook 63 don’t let a good project go bad - start by planning for risk 75 2017 executive seminar - barcelona
Published Bimonthly During 2017
1670 Route 34 North Farmingdale, NJ 07727 PO Box 728 Allenwood, NJ 08720 PH: (732) 292-4300 FAX: (732) 292-4310 www.utcanj.org
Publisher: Robert A. Briant, Jr. Editor: Helene Nasdeo Editorial Contributors: Anthony Attanasio, Zoe Baldwin, Dan Neville Advertising Manager: Helene Nasdeo Production/Graphics: Helene Nasdeo, Lauren Hagan Circulation: Helene Nasdeo Printed By: American Plus Printers Affiliations: ARTBA, Clean Water Construction Coalition, Water Infrastructure Network UTILITY AND TRANSPORTATION CONTRACTOR (ISSN 0192-4843) is published six times a year by the Utility and Transportation Contractors Association of New Jersey, 1670 Highway 34 North, Farmingdale, NJ 07727. Periodical postage paid at Farmingdale, NJ and additional mailing offices. POSTMASTER: Send address changes to UTILITY AND TRANSPORTATION CONTRACTOR, PO Box 728, Allenwood, NJ 08720.
Utility & Transportation Contractor | june | 2017 3
part one - funds By: kevin ellman, cfp, ceo, wealth preservation solutions
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verything you need to know about managing your company’s 401(k) plan can be summed up with the four “F Words:” Funds, Fees, Fiduciary Responsibility and Fines. You must take care of the first three “F Words” if you want to avoid the real “F word,” FINES! According to Mass Mutual Financial Group, in 2015, 3,357 401(k) plans were audited by the Department of Labor. Of those, 72% were fined an average of $700,000 per audit, totaling over $1.5 Billion. The plan sponsor or trustee of your company’s 401(k) program, as its fiduciary, is held to a strict fiduciary standard. Specifically, a company’s fiduciary is responsible to its employees not only for running a program that facilitates their ability to save for retirement, but follows all fiduciary guidelines. Following proper guidelines protects a company from fines and potential lawsuits from employees. Actively Managed Mutual Funds vs. Passively Managed Index Mutual Funds Common practice in most company 401(k) programs is for the fiduciary to offer employees a selection of 20 to 30 actively managed mutual funds. If managed properly, the fiduciary then has to take the time to properly rate each fund, at least once a year, and replace the underperformers with “better” funds. In my opinion this is a waste of time and money, especially in light of the fact that a recent article in the Wall Street Journal revealed that during the last five, ten and fifteen year periods, over 85% of actively managed, US Stock mutual funds, failed to meet or beat their benchmarks. Index funds generally cost .07% per year, while the cost of actively managed mutual funds can
Kevin Ellman Wealth Preservation Solutions
be as high as 1.3 to 1.5%! (Investopedia) Why pay so much more for these funds, that history has shown will most likely fail to match the performance of the index funds, 85% of the time? More importantly, this extra - Kevin Ellman cost is borne by the employees. Employees could make the case that a company’s plan encouraged them to over pay for an underperforming fund. They may have a basis for challenging the lack of fiduciary supervision.
You must take care of the first three “F Words” if you want to avoid the real “F word,” FINES!”
Financial overview
The four “f Words” of 401(k)s
I recommend that companies consider simply offering a full suite of passively managed, index funds. If a company wants to offer a selection of both actively and passively managed funds, then it is essential and critical that the company follows fiduciary guidelines, by making sure that employees have all the facts about the costs and long term results of the two options, so that they can make an informed decision. Fund Selection Program – Qualified Default Investment Alternative (QDIA) Problem: Not all employees take an interest in their 401(k) plan. While they may enroll and start to defer part of their salary, they may neglect to select investment funds and will be invested in cash. If this went on for years, employees could make a claim that they missed out on potential stock market growth opportunities, because the company failed to properly guide them. Solution: The Department of Labor wants to avoid this scenario and therefore requires that each plan offer a Qualified Default Investment Alternative. If the employee fails to make a fund selection, they are automatically invested in the QDIA. To meet this requirement, the most common solution is to offer a full selection of Target Date Funds. According to Vanguard, nine out of ten plans in 2016, offered Target Date Funds and 72% of all participants in 401(k) plans had a position in a Target Date Fund.
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Financial overview
Target Date Funds
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Target Date Funds are a managed portfolio of mutual funds (either active or passive) geared to a particular retirement date, such as 2025, 2030, 2035, 2040, 2045 etc. Employees pick the fund closest to their projected retirement date. The manager of the fund starts out with a predetermined mix of stocks, bonds and cash. As the participant gets closer to retirement, the mix gradually becomes more conservative, by decreasing the amount of stocks, and increasing the percentage of bonds and cash. It is basically a turnkey portfolio. The employee can, “set it and forget it.” If an employee fails to make an election, they are automatically invested in a fund that targets the year they turn 65. They can always override this auto-selection later, if they choose. I recommend that you offer a full suite of Target Date Index Funds, as your QDIA! Risk Based Models Another, very effective, fund selection tool to offer employees are Risk Based Models, in the fund line up. Risk Based Models are managed portfolios of mutual funds (either active or passive) geared to a particular risk tolerance. The fund manager creates five, predetermined portfolios, from conservative to moderate to aggressive, each with a varying blend of stocks, bonds and cash. Employees fill out a short Risk Tolerance Questionnaire, upon which the appropriate model is recommended. It is important
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for the company fiduciary to encourage employees to revisit their risk tolerance over time, and adjust their Risk Based Models accordingly. I recommend including Risk Based Models built on stock and bond index funds. Open Employee Selection For those employees who want to select and manage their own funds, they can go to the company’s 401(k) website, and choose their preferred funds. UTCA Discounted 401(k) Program Wealth Preservation Solutions has designed a special, discounted 401(k) program for UTCA members. The program offers a full suite of index funds, target date funds, risk based models and open employee selection options, in a cost effective package. Call Kevin Ellman at 201-618-8818 to arrange for a complete review of your current plan and to find out how the UTCA 401(k) program might be a cost-effective alternative. Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Wealth Preservation Solutions, LLC is not affiliated with Kestra IS or Kestra AS..
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By: Paul T. fader & Adrienne l. isacoff
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espite many decades of public bidding disputes being litigated in our courts, new cases continue to be filed that are variations on certain fundamental themes: there are some statutory requirements and common law principles of public bidding that may not be waived, while other elements of bid evaluation are subject to the discretion of the contracting entity. Several recent cases once again explore these themes. Specifications Must Encourage Open Competition
An underlying principle of public bidding is that its very purpose is to encourage free, open and competitive bidding. Our courts have routinely cited this principle and it is expressly embodied in statutory law such as the Local Public Contracts Law, N.J.S.A. 40A:11-1 et seq. (“LPCL”). In order to further that goal, the LPCL provides that no specifications may require any restrictions, conditions or limitations that are “not directly related to the purpose, function or activity for which the contract is awarded.” N.J.S.A. 40A:11-13(a). That statutory provision has been the basis for challenging numerous attempts by counties and municipalities to require that bidders certify that if awarded the contract they will afford certain benefits not readily available to open-shop contractors.
Both of these unauthorized objectives – award to a union contractor and award to a contractor that meets specified residency requirements – appear to have been the actual reasons that the City of Newark determined to reject all bids and readvertise a contract for janitorial services in order to revamp the bid specifications and steer the award to a favored bidder. In United Services, Inc. v. City of Newark, 2017 WL 1375359, the Appellate Division agreed with the aggrieved bidder that the City’s stated reasons for the re-bid were a subterfuge and that appellant was entitled to injunctive relief to stay award based on a re-bid, since it may have been entitled to award as the lowest responsible bidder on the first round of bids, in which its bid was at least $1,000,000 less than the second lowest bid. The court emphasized that the inserted specification relating to residency requirements was in derogation of the LPCL and was clearly an attempt to exclude the appellant from the bidding process because it was not a union contractor.
An underlying principle of public bidding is that its very purpose is to encourage free, open and competitive bidding.
Legal Dig
Public owners have very little discretion on some bid issues, and significant discretion on others
This unpublished appellate opinion is a reminder that local governmental units must abide by the strict requirements of the LPCL that bid solicitations must be drafted in a manner that encourages competition and does not unfairly exclude qualified bidders. Bidders Must Carefully Follow All Bidding Requirements to Preserve Their Entitlement to Award of the Contract
In addition to a general prohibition against restrictive specifications, the LPCL expressly prohibits certain restrictions, such as requiring that a bidder be a resident of, or that the bidder’s place of business be located in, the county or municipality in which the contract will be awarded or performed, “unless the physical proximity of the bidder is requisite to the efficient and economical performance of the contract.”
Public entities are not the only parties that must carefully observe bidding protocols – bidders must be careful to observe all statutory and bidding procedures to safeguard their entitlement to award of the contract. Bidders are generally aware that under the LPCL the contracting unit must award or reject all bids in no more than 60 days following opening of bids, provided that at the request of a public body a bidder may consent to extend its bid “for such longer period as may be agreed.” N.J.S.A. 40A:11-24. The DRS Group v. County of Union, 2017 WL 461297 is a case study of the care that bidders must take to use clear language to
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Legal Dig
extend their bids, or risk losing an award to which they were otherwise entitled. When award to the low bidder was challenged, the County undertook a documentary review and an investigation of site facilities of the two lowest bidders. Those activities led the County to be aware that the 60-day time period for award could not be met. Unfortunately for the low bidder, its counsel sent several letters that were ambiguous and somewhat contradictory regarding consent to the extension. The court focused particularly on an email by the bidder’s counsel that stated that “we have granted the extension however have not heard anything from the County as to the extension.” The term “granted” was perplexing since the County had not yet asked for an extension when that email was sent. Moreover, the bidder cannot “grant” an extension – it is only empowered to consent to an extension that the County requests. Although the County was willing to accept the poorly worded email as evidence of the bidder’s consent to extend its bid, faced with a challenge by the second low bidder, the appellate court determined that “there was insufficient evidence supporting the County’s conclusion defendant provided timely consent to a sixty-day extension of its bid prior to [the deadline].” The court also noted that the statute requires that a specific length of the time extension should be agreed to by the public owner and the bidder, and the email did not specify any length of time. Bottom line: if you want to extend your bid, send in the extension and use plain, unambiguous language!
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Public Owners Have Wide Discretion to Evaluate Qualifications Unlike the cases where courts hold both public owners and bidders’ feet to the fire in strictly observing statutory requirements, courts grant wide deference to public owners when they are exercising subjective judgments, particularly those that encompass evaluative decision-making. In the Matter of the Bid Protest of Agate Construction Co., Inc., 2017 WL 1165016, is another example in a long line of cases where the court refused to substitute its judgment for that of the contracting entity in evaluating the expertise needed to undertake a project. The court observed that the New Jersey Department of Environmental Protection had the “necessary expertise” to conduct that evaluation and the court would “not substitute [its] judgment of the facts for that of the administrative agency.” Takeaway These recent cases follow a familiar pattern: the courts will strictly enforce statutory requirements that apply to both public owners and bidders. But when a public owner is challenged on a decision that reflects its own expertise, the court will defer to that judgment as long as it may reasonably be defended, and will not substitute its own views. The information contained herein is for informational purposes only as a service to the public, and is not legal advice or a substitute for legal counsel, nor does it constitute advertising or a solicitation.
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Construction contractors can benefit from the r&d tax credit
By: Michael sexton, CPA, CCIfp, McCarthy & Company & Michael d’alessandro, Research Tax Credits, LLC
1. Technological in Nature ‒ The research must rely upon principles of the hard sciences including: biology, chemistry, physics, computer sciences, manufacturing, engineering, architecture, and design build. ‒ The research must be intended to discover new information for your business. ‒ Activities centered on accounting, finance, marketing, economics, humanities, management, social sciences or any other “soft sciences” do not qualify. 2. Uncertainty ‒ The information sought must be intended to eliminate uncertainty concerning the development or improvement of the product, process, technique, formula or design. ‒ Uncertainty exists if, at the conceptual phase, information available to the taxpayer does not establish the capability, method or functional design of the product, project or process.
3. Process of Experimentation ‒ Evaluation of one or more alternatives to a company’s original design objective(s). ‒ Involves the development of one or more hypotheses, testing, trial and error, analysis and refining or discarding the hypotheses as part of the development. 4. Permitted Purpose ‒ Activities must relate to the development of a new or improved product, process or design that attempts to improve the function, performance, reliability, or quality of a product, project, process or formula; or method to reduce cost, time or materials. ‒ Pursuit of government or industry certification qualifies (ISO, FDA, UL, ASTM, A2LA, etc.). ‒ Activities relating to aesthetics like style, taste, texture or preference factors do not qualify. Examples of the types of construction projects that typically contain qualified research include: • Planning new pre-construction processes and enhancements. • Funding research that you own the rights to the results and puts you at economic risk. • Developing new resources and delivery methods for hardbid jobs. • Customizing fixed-fees, bids, quotes, proposals and estimates where you may be at risk. • Designing schemes, developing processes and other intellectual property to meet the requirements of a request for proposal (RFP) provided you retain the rights and risks associated with the R&D. This would apply to bids won or lost. • Improving the infrastructure of highways, roadways, bridges or marine applications. • Refining runoff, drainage and storm water management systems. • Mitigating the effect of unstable soil or sand with foundation engineering improvements. • Enhancing structural designs to withstand hurricanes, storm surges, earthquakes, floods, high winds and other natural disasters. • Designing innovative green and energy efficient projects. • Testing material combination alternatives. • Installing high-tech equipment to operate more efficiently.
Accounting Corner
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any construction contractors assume that they cannot take advantage of the Research & Development (R&D) tax credit. Even though some projects may not qualify, many will if they meet the criteria established by the IRS. Generally, if you develop in the U.S. new processes to improve efficiencies or experiment with innovative ways to reduce or eliminate uncertainty within your business, you may be able to take the R&D tax credit. To qualify, R&D activities must meet the criteria of the following four-part test:
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• Optimizing the design, layout, and functionality of a production facility. • Improving construction processes to increase efficiencies. • Developing and using modeling software and tools for virtual mock-up designs. • Testing designs in new environments.
Accounting Corner
The portion of an employee’s W-2 wages directly associated with researching, performing, supervising, supporting or working on a qualified project may be included in the tax credit computation. The cost of materials used or consumed in the R&D process may also be added that were expensed not the cost of goods sold (COGS).
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R&D tax credits are usually taken on a dollar-for-dollar basis on either the entire qualified project or the portion of the project that meets the criteria of the four-part test. If the R&D tax credit is not fully utilized, it may be carried back to the previous year, and carried forward for 20 years. The Protecting Americans from Tax Hikes (PATH) Act of 2015 made the R&D tax credit permanent. Congress also made two changes to make it more available to mid-size companies, small businesses and start-up ventures. Effective January 2016, eligible businesses ($50 million or less in gross receipts) may claim the R&D tax credit against the Alternative Minimum Tax (AMT). This provision allows businesses subject to the AMT, as well as pass-through entities (credits flow through to shareholders) to take the R&D tax credit. In addition, qualifying small businesses can now offset the credit against their payroll tax liability (capped at $250,000 for up to five years). To qualify for the payroll tax credit, a small business must have less than $5 million in gross receipts in the taxable year and zero gross receipts for any tax year before the 5-tax-year period ending with the taxable year.
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2016 R&D tax credit calculations we performed for a mechanical contractor yielded a $42,000 (dollar-for-dollar) tax credit with $5 million in gross wages and approximately $550,000 in qualified research expenditures (QRE’s - Box 1 W2 Wages). The contractor qualified for the credit by making improvements in its design build custom project estimates, design change orders, engineering change orders, and detailing and value engineering of bids and projects. The mechanical contractor also operates sheet metal fabrication and pipe fitting shops. Both made process improvement to their manufacturing operations using dies, fixtures and custom tooling which also qualified for the R&D tax credit. Other 2016 calculations yielded benefits for the following amounts in federal tax credits: • Small electrical and lighting design contractor: $26,000 • Solar and renewable energy design build firm: $72,000 • Small mechanical and piping contractor: $16,000 • Large mechanical contractor: $71,000 • Large commercial roofing and waterproofing contractor: $70,000 • Marine contractor: $35,000 • Engineering firm: $23,000 • Architecture firm: $65,000 Taking the R&D tax credit can help you to reduce the amount due in taxes. In today’s highly competitive environment, construction contractors need to find legitimate ways to save on their tax obligation so that more money is available for operating expenses. The R&D tax credit can help. For more information, contact either Michael Sexton, CPA, CCIFP, director of tax services with McCarthy & Company, PA at 610-828-1900 or MSexton@MCC-CPAs.com or Michael D’Alessandro, MBA, managing director of Research Tax Credits, LLC at 484-232-1076 or MikeD@ResearchTaxCreditsllc.com.
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state & federal update By: zoe baldwin, director of government & labor relations
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Your Association has been working hard to ensure that our industry’s priorities are protected from the rhetoric, and are reflected in both the federal and state spending plans. At the time of this writing, UTCA staff has met with legislative leadership at the state level and with members of our Congressional delegation in Washington DC, and will continue to weigh in as the budget hearings progress.
lawmakers will have to bridge tradition“It’s that time of year again; al partisan ideologies trees are in bloom, ‘men at in order to reach an agreement on how to work’ signs dot the roadways, fund the President’s and lawmakers in Washington infrastructure plan. While the vast majoriand Trenton are duking it out ty of Congress believes over fiscal ‘18 spending that we should invest priorities” more in infrastructure, there is no consensus - Zoe Baldwin in either party or either house on how to pay for it. For now, the debate follows the partisan divide, with Democrats pushing for significant investment of federal funds and Republicans pushing for heavy reliance on private capital.
ON THE HILL
What we do know:
The waiting is the hardest part - In Washington, it’s been a game of hurry up and wait for details of a federal fiscal plan. After seven months of continuing resolutions, a $1.1 trillion spending bill that covers the remainder of FY2017 has been passed by Congress and signed by President Trump. The passage of the omnibus bill narrowly averted a crisis, as the previous stopgap measure expired at midnight on May 5. Immediately following the successful vote, the House departed for a 10-day break, while the Trump Administration continued to work out the details of the 2018 “skinny budget” it plans to send Congress.
1) President Trump wants lawmakers to pass an infrastructure package that produces a $1 trillion investment in infrastructure, and thinks it should use both public and private capital to leverage the complete amount. Some in the administration have gone so far as to suggest that the total could be even larger than $1 trillion.
Next, appropriators must find common ground in order to fund FY18 spending, which starts in just five months. Lawmakers have their work cut out for them as the House has less than 50 official session days remaining before money provided by the omnibus runs out at the end of September. Shirts vs. Skins – Both policy and budget negotiations up to this point have largely served to highlight one thing:
Legislative News
ll about the Benjamins – It’s that time of year again; trees are in bloom, ‘men at work’ signs dot the roadways, and lawmakers in Washington and Trenton are duking it out over fiscal ‘18 spending priorities. The budget process is arguably the most important function of any legislative body, as it serves as both a financial plan and a policy document. This is especially pronounced for contractors that depend on the public project pipeline, as the consequences of decisions made each Spring last well beyond the budget year.
2) Trump has shown a preference for “shovel-ready” projects, which could be a boon for NJ given our healthy backlog of capital projects. 3) The plan is expected to be much broader than transportation-related infrastructure. Water and sewer components have been part of the ongoing discussion, but there are also significant forces pushing for the inclusion of other, as-yet-to-be-determined items. 4) The proposal will likely have some sort of component to streamline the regulatory process for labor requirements and environmental review 5) Trump has floated the idea of adding an infrastructure pay-for to the tax overhaul in an effort to flip some Democratic lawmakers What we don’t know: 1) What the public-to-private spending ratio will be. The Office of Management and Budget (OMB) Director Mick Mulvaney recently said he expected a 5-to-1 spending ratio and USDOT
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Secretary Chao has cited a $200 billion direct federal funding component, but until an official plan is unveiled, everything is very subject to change. 2) How the federal government will pay for the public spending 3) When the White House will roll out a proposal – the much-anticipated plan has been imminent for several months now, with deadlines pushed back as other initiatives such as healthcare and tax reform take center stage. 4) What the proposal will look like. Are we just waiting for a one-page document similar to the President’s tax plan, or (fingers crossed) will it be a more robust policy initiative with clear input from experts and stakeholders?
Legislative News
5) Whether and which major infrastructure projects already in the planning stages are a priority for the White House. If a plan is released without funding for the Gateway Tunnel, where will that leave our region? 6) Whether the proposal will have a private capital alternative to P3s for rural areas and hard-to-monetize projects 7) Will it address Highway Trust Fund solvency IN THE STATE HOUSE 23 cents & what do you get, a little bit older and deeper debt – Our industry breathed a collective sigh of relief after the TTF reauthorization last Fall, but it takes more than an historic gas tax to keep the project pipeline flowing. Recent transportation budget hearings have made it clear that we’re not out of the woods yet. Proposed transportation funding in the Governor’s budget remains largely the same, offering $1.514 billion for NJDOT operations and $140.9 million for NJ Transit operations. However, with the capital plan secured for now, lawmakers are taking a hard look at the governor’s accounting of NJTransit operating funds, which some legislators felt was inaccurate, as more than half of the money is derived not from general funds, but from re-allocated Turnpike Authority and clean energy monies. The actual amount allocated from the general fund is the same as last year, but looking ahead, bills are mounting and the state is almost out of one-time gimmicks. Staff has met with legislative leadership during recent weeks to discuss our budgetary priorities, and have seen those conversations bear fruit in legislative committee hearings. During the Assembly Budget hearing on transportation, Chairman Gary Schaer pressed department and agency heads on key UTCA items such as capital-to-operating transfers, and the overuse of nefarious GARVEE bonds, which are essentially a cash advance from the federal government that allows the state to borrow against its future federal highway allocations. It is unlikely we will see any major structural changes to our transportation agencies this year, but funding issues have already made headlines in the gubernatorial campaign. The NJ Environmental Infrastructure Trust (EIT) UTCA claimed another victory on May 11, when Governor Christie signed into law A1649/S853, which requires local governments and authorities to get a cost estimate from the NJ Environmental Infrastructure Trust (NJEIT) prior to advertising a project for
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bid. NJEIT is widely accepted to be NJ’s most successful environmental program, saving governments, authorities, and taxpayers millions of dollars each year that would have otherwise gone toward interest on a commercial loan. In 2016, UTCA revived legislative efforts to mandate due diligence so public entities don’t have to drain the coffers to fund necessary projects. Without a champion, A1649/S853 had completely stalled following concerted opposition. UTCA was able to resurrect the bill after garnering amendments critical to neutralizing the League of Municipalities and other detractors. Sponsored by Gary Schaer in the Assembly and Brian Stack in the Senate, the new law passed the full Senate 36-0 and the Assembly 66-4. NJDOL Contractor Registration In a recent meeting with the NJ Dept. of Labor, senior staff expressed frustration with the lack of consistency in contractor registration triggers in certain agencies, specifically citing Economic Development Authority projects. In response, UTCA has agreed to look into legislation that would make sure that contractors on all prevailing wage work are registered with the Department. Changed conditions After final stakeholder outreach including a very productive meeting with members of the NJ Society of Municipal Engineers (NJSME), the draft legislation is ready for introduction. Staff has identified potential sponsors and expects introduction in the coming months. It’s not shameless if it’s true - It’s an election year, and the entire legislature and the governor’s seat are on the ballot. Now more than ever, it is critical that we support our TTF champions, as many are now facing primaries for their votes in favor of responsible funding. If we lose even one friend in the legislature due to their vote for the TTF, we greatly endanger future renewal efforts. We sincerely hope that you’ll consider supporting the UTCA PAC, CONSTRUCTORS FOR GOOD GOVERNMENT UTCA continues to be the leading voice for the construction industry in Trenton and Washington DC. Whether it is providing expert testimony before business and legislative groups or positively effecting the legislative process, UTCA stands alone in its record of achievement for our industry. This success is only possible with your support of the Association, and more importantly, with your support of the industry’s PAC: Constructors for Good Government. Please consider contributing in 2017 as UTCA will continue to be very active in the upcoming legislative session, and a robust PAC only strengthens our voice. Thank you for your continued support.
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By: assemblyman joseph a. lagana, district 38
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nvesting in transportation is one of the best uses of New Jersey’s scarce resources. We are an extremely densely populated corridor state and our economy relies on the ability to transport people and goods safely and on time using our many highways, bridges, tunnels and rail options. No other public spending yields the immediate and impactful returns that improving our infrastructure does. It creates good paying construction jobs that put New Jerseyans to work and keeps the rest of our economy in gear. If you cannot get around you simply cannot conduct business and New Jersey badly needs to make life easier for the many industries that rely on our complex network of roads and bridges. My family and I live in Paramus, where I served on the Borough Council prior to being elected to the New Jersey General Assembly. To many, our borough is known for the stretch of land where many of the Northern highways intersect at the shopping hub of Bergen County. I am on these roads every day traveling to and from work and my District Office. I know firsthand the level of abuse the roads in our town take. I also see the direct correlation between their upkeep and the ability of our businesses to compete with nearby New York to bring in revenue for the borough and the State. The need for safe and convenient commutes cannot be understated. Paramus does more retail sales than any ZIP code in the entire United States, even with our stores being closed every Sunday. The booming local economy is largely successful because we are home to several major roads, including a few exits on the Garden State Parkway and large chunks or Route 4 and Route 17, all of which are necessary for our stores to thrive. Our businesses rely on these passageways not only to move goods in and out of their doors, but also to gain access to potential customers in the incredible amount of people traveling through our otherwise quiet suburban community. The revenue generated from retail and strong economic output along the highways, coupled with wise management by local officials, allows the municipality to keep property taxes much lower than many of the surrounding communities and for reinvestment in other services. Our roadways are essential for commerce and thus also a high quality of life in Paramus. If we scale out and look at the entire state, the same holds true. An understanding that transportation investments pay off well has guided many of my decisions in the General Assembly from
NEWS
investing in transportation day one. Two years ago, while still in my first term, I put forth legislation to amend the State Constitution in order to ensure all revenue derived from the gas tax would be dedicated to the Transportation Trust Fund, which of course pays for road and bridge repairs. Pushing to use money for its intended purpose should not be necessary. However, those dollars were regularly redirected to the general fund and this accounting gymnastics contributed to us reaching a crisis point for the safety of our roads and bridges. In fact, the practice of using revenue that was raised for a specific reason as a political slush fund to pay for other projects seems to be an unacceptable status quo in Trenton. Thankfully, voters agreed and would eventually approve a ballot question dedicating the money from our motor fuels tax to where it should be spent – on transportation improvements. Continuing to allow our bridges to crumble and roads to go unrepaired would not only be devastating to potential economic growth, but also presents serious safety risks for our residents. The most basic role of government is to provide a level of security. It is unconscionable to stand by and expose New Jerseyans to dangerous driving conditions because of political convenience or to stand firm on an ideological position against any and all spending. I remain just as committed to improving our existing infrastructure as when I first drafted that legislation to dedicate transportation funding. Admittedly, New Jersey has serious budgetary issues and I talk to hard-working constituents and local business owners regularly about the serious tax burdens they carry in this State. However, that does not mean we should be shying away from doing the necessary work to make our transportation options world class. These investments pay dividends for us all because our roadways create opportunity and our economy needs the boost that infrastructure projects provide. I look forward to working with groups like the UTCA to fight for this shared objective.
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would like to Congratulate
South State on its 45th anniversary in the construction industry.
www.asphaltpavingsystems.com
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What is the real “driver” of your company’s fleet program? By: jay sciortino, construction risk partners
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ow difficult is it to remain “auto accident-free” in New Jersey? I’d be willing to bet that most readers of this article have been involved in a motor vehicle accident (MVA) during their driving history. How can anyone avoid it, by luck, maybe? We live in one of the most heavily populated areas in the country, with more cars and congestion than we even want to think about. In fact, just thinking about it causes me angst.
By now, most contractors have implemented a fleet safety program, or at least have a several pages about fleet safety in their corporate safety manual. Frankly, basic fleet programs are a dime-a-dozen. Canned programs and detailed information are readily available on the internet, just Google it. The question is, what are you actually doing relative to the management of your fleet, and your drivers?
“You must control the use of your vehicles.”
In past years, it was our practice as the insurance broker to review the motor vehicle reports (MVR’s) of contractor employees. My observations of reviewing hundreds of MVR’s allow me opine that bad drivers cause accidents. Today, current privacy laws now preclude insurance brokers from viewing motor vehicle records. So it’s easy, right? Control the bad drivers and you will minimize the potential for MVA’s. Well…YES! That said, I’m going to throw out some basic suggestions and guidelines.
Safety Perspective
Personally, I consider myself a good driver (some people I know may disagree). Hey, look it up! A squeaky clean record over the past 30 years, although I did rear-end a police car some years ago, which is a topic for another time. On the other side of the ledger, I’ve been rear-ended three times! However, this is not about me. The point is, things are going to happen on our New Jersey roads, like it or not. The objective is to minimize the potential for MVA’s, which is the purpose of this article.
As far as the subject of this article, I would like to focus on one particular element, and that is your vehicle drivers. My many years of experience in dealing with auto accidents and auto claims - Jay Sciortino tells me one thing….. very simply, many at-fault accidents are caused by bad drivers. It is not unusual to see an at-fault driver who has had prior at-fault accidents, or a very questionable history of motor vehicle violations.
Start at the hiring process. New employees, whether they are assigned a vehicle or not, should sign a company vehicle agreement. Included in the document should be an authorization to run a motor vehicle report (MVR) to check the employee’s driving record. Keep in mind that some workers, while not assigned a vehicle, may still drive one of your vehicles. It may be to run an errand, or just run some materials to another side of a job site. ANY VEHICLE USAGE exposes your company to potential liabilities, on the public roads or elsewhere. It’s your right to ask for this! You just have to think about who might drive your vehicles. Fleet programs that include a detailed vehicle maintenance schedule are good. However, one thing I’ve come to learn about contractors is that they tend to take good care of their equipment and motor vehicles, whether or not they have a formal vehicle maintenance program. This just makes good business sense. I don’t see lack of maintenance as a problem for most contractors.
In fact, some contractors are switching from the practice of providing company vehicles to giving car allowances. Even with this, an employee using their personal vehicle on company business still potentially exposes the company. While I’m not going to get into all the various insurance issues surrounding these sit
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uations, suffice to say that you are exposed. As such, you should still be running an MVR on employees who are getting car allowances that use their personal vehicle on company business. The MVR will give you a good snap-shot of what you are dealing with. The MVR will show accidents and violations. Obviously, if you see speeding, careless/reckless driving, DWI’s, etc., you’re getting a tip-off. Just as important, running an MVR will also ensure that the employee has a valid driver’s license.
Safety Perspective
In addition to the hiring process, make the investment of running MVR’s at least once per year on all drivers. Some contractors are even doing it twice per year. There are many services available to run MVR’s. Again, search on Google. The objective is to be aware of what’s going on with your drivers….you might be surprised at what you will discover. Your fleet program should be fairly specific as to how your company deals with driving violations. Some fleet programs assign point values for the number and type of moving violations. Higher values are assigned to the more serious actions, such as DWI’s and reckless driving. Speeding tickets are next on the list. By the way, speeding is a good indicator of a driver’s mentality, e.g. impatience, aggressiveness, etc. The number of cell phone use violations continues to increase. Talking without a hands-free device, or even worse, texting, must be addressed! We have seen the statistics that show cell phone use while driving can be as distracting, and dangerous, as a driving while intoxicated. Personal use and family member use of company vehicles must also be addressed. You cannot run MVR’s on employee’s families
so you must restrict this usage, unless there is an emergency, or at very least, pre-approval by the employer. Driver training and defensive driving courses are helpful. I’m just not convinced that all poor drivers can be rehabilitated. However, driver training serves to raise awareness and allows for a forum to discuss the corporate fleet program and policy. If you can get through to even one driver, you’re making progress. Further, engage your insurance broker and insurance company loss control representative for assistance. Your insurance company is most willing to provide basic program samples, and some will help you coordinate driver training. Finally, just do this! Auto accidents produce some of the biggest exposures for contractors. Big trucks, pickup trucks and just plain private passenger autos can cause significant damages and injuries. Unfortunately, some of you have seen this firsthand. I’ve seen it! You must control the use of your vehicles. Weeding out the poor drivers will greatly improve your chances of reducing the potential for accidents. About the Author. . . Jay Sciortino is one of the founding partners of Construction Risk Partners, a company providing Insurance & Surety solutions exclusively to the construction industry. Construction Risk Partners is a long-time associate member of the UTCA, and Jay is a long-time member of the UTCA safety committee. He has over 35 years of experience in risk management and insurance. For more information, check out their website at www.constructionriskpartners. com, or call them at 908-566-1010.
CONGRATULATIONS TO SOUTH STATE on 45 Years of Excellence We wish you many more years of continued success! from your friends at
Berenato Contractors and Hammonton, NJ 08037 Hammonton, NJ 08037 Phone: 609-567-8080 Phone: 609-561-0722
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The national labor relations board joins the list.... it really is time to revisit the issue of misclassifying employees as independent contractors By: Jill sorger, tobia & sorger
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The NLRB’s Analysis: On August 26, 2016, in an Advice Memorandum, the NLRB General Counsel determined that a Complaint should be issued alleging that an employer violated the National Labor Relations Act by misclassifying its drivers as independent contractors. The
sel reasoned that the misclassification of employees as independent contractors also violates Section 8(a) of the National Labor Relations Act which makes it unlawful for an employer “to interfere with, restrain, or coerce employees - Jill Sorger in the exercise of ” employees’ Section 7 rights to engage in concerted activity regarding the terms and conditions of employment.
“UTCA Contractors must be mindful that some employers intentionally misclassify workers as a means to cut costs”
In order to determine independent contractor status, the NLRB has adopted and will apply the following eleven (11) factors, with no single factor being determinative of the outcome: (1) The extent of control that the employer may exercise over the details of the work. (2) Whether or not the one employed is engaged in a distinct occupation or business. (3) The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision. (4) The skill required in the particular occupation.
Labor Relations
ver the past few years, this column has repeatedly encouraged UTCA Contractors to review their independent contractor relationships in light of the fact that the New Jersey Department of Labor (“NJDOL”) had established a task force specifically devoted to ensuring that workers are classified properly and the New Jersey Supreme Court had also endorsed a subjective test favoring the finding of employee status. Additionally, both the IRS and the U.S. Department of Labor have continued to aggressively investigate and prosecute alleged misclassifications. As if these efforts weren’t enough of a warning, the National Labor Relations Board (“NLRB”) has now thrown its hat in the ring by stating that the NLRB will treat employee misclassifications as a violation of the National Labor Relations Act. Accordingly, if UTCA Contractors haven’t done so already, they definitely need to re-evaluate their independent contractor relationships in order to determine compliance with the varying independent contractor tests of each of these federal and state agencies.
(5) Whether the employer or the individual supplies the instrumentalities, tools, and the place of work for the person doing the work. (6) The length of time for which the individual is employed. (7) The method of payment. General Counsel reasoned that by treating workers as independent contractors, and not employees, an employer interferes with the workers’ rights under Section 7 of the National Labor Relations Act to organize and join a union and engage in other protected concerted activity. Furthermore, the General Coun-
(8) Whether or not the work is part of the regular business of the employer. (9) Whether or not the parties believe they are creating the relation of master and servant.
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(10) Whether the principal is or is not in the business.
Advice for UTCA Contractors:
(11) Whether the evidence tends to show that the individual is, in fact, rendering services as an independent business (i.e. whether the individual has a “significant entrepreneurial opportunity for gain or loss”
While true independent contracting relationships can provide significant advantages to both the worker and the business, UTCA Contractors must be mindful that some employers intentionally misclassify workers as a means to cut costs and avoid compliance with labor laws. In addition to depriving the worker The NLRB has emphasized that these factors are non-exclusive, of valuable workplace protections such as and should be viewed in the totality with minimum wage, overtime compensation, regard to the specific facts of the matter. unemployment insurance and workers’ Additionally, In applying the above factors, compensation, misclassification also results the NLRB, like other governmental agenin lower tax revenue for the government cies, has stated that it will “construe the inand an uneven playing field for employers dependent-contractor exclusion narrowly” who properly classify their workers. With so as to not “deny protection to workers the its issuance of the Advice Memorandum, Act was designed to reach.” the NLRB has now opened itself up to be yet another venue to allege misclassificaOnce it determined that misclassification and has added another set of penalties tion was tantamount to a violation of the that can be issued against an employer for - Jill Sorger NLRA, the Advice Memorandum went on misclassification of independent contracto provide for a wide range of enforcement tors. Accordingly, it is imperative that all and other penalties against an employer UTCA contractors examine their independeemed to have misclassified its employdent contractor relationships to ensure that these relationships ees as independent contractors including the ability to seek an comply with the various subjective independent contractor tests order requiring the employer to cease and desist from treating utilized by the different state and federal agencies. A simply inthe individuals as independent contractors and to rescind any ternal audit with the help of legal counsel can help the employagreements classifying them as independent contractors. Clearer identify classification issues before an audit or charge arises. ly, with the presumption heavily in favor of employee status as With a proactive and informed approach, UTCA contractors can opposed to independent contractor status, the NLRB has insertavoid costly investigations by examining and documenting its ed itself firmly in the worker classification arena and provided independent contractor relationships before they are questioned. yet another forum to adjudicate alleged misclassifications.
Labor Relations
“With a proactive & informed approach, UTCA contractors can avoid costly investigations”
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“BS+30” - What you need to know By: Joe fiordalisio, President ACECNJ
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CECNJ and UTCA are pleased to be working closely together to advance the business interests of consultants, contractors, and the broader construction industry in New Jersey. We’re doing this by building partnerships between our member firms and enhancing working relationships and collaboration with key clients like the New Jersey Department of Transportation. We’re also doing it by teaming up on important legislative battles, including a recently-floated proposal that would decimate New Jersey’s engineering profession, harming contractors in the process. An initiative underway in New Jersey is based on the proposition that a four-year degree is “not sufficient” to prepare licensed engineers for the future. This initiative proposes to require a Master’s Degree or additional 30 credits of graduate or upper level undergraduate courses; supporters have dubbed it “BS+30”. The initiative is being bankrolled by the Washington DC-based American Society of Civil Engineers (ASCE) who have hired a Trenton lobbyist to sell the idea here in New Jersey. Here’s the skinny on BS+30:
Unprecedented: There is zero precedent for this type of proposal. No other state legislature has adopted these standards. No State Licensing Board has taken a formal vote in support. Many of the PE Society’s own local chapters even oppose this. Even ASCE has acknowledged that a majority of its own membership doesn’t support BS+30. Anti-Business Climate: BS+30 would put New Jersey at a disadvantage and create an anti-business climate by threatening our ability to attract engineers to New Jersey firms from other states that do not require the additional education. This inability is a major detriment to New Jersey engineering firms. BS+30 would also make it difficult to retain our young engineers who will be more likely to become licensed in states without these unnecessary additional requirements.
Increases Costs, Decreases Competition: BS+30 would increase the cost of doing business for firms, thereby increasing costs for owners and clients. At the same time, by discouraging students from becoming engineers, BS+30 would cause the size of the profession to shrink, decreasing competition which increases costs and potentially results in lower quality work. Brain drain, employee retention: Public agencies and authorities that are already plagued by attrition will see it increase as it becomes harder to attract and retain engineers. ACECNJ and UTCA have joined forces, along with other trade associations whose industries would be hurt by this horrible idea. We are committed to making sure that New Jersey maintains the proper balance when it comes to a Professional Engineer’s education, both pre-license and throughout his/her career. Through our strong advocacy efforts, we’ve been able to educate Trenton legislators about BS+30’s harmful impacts; as a result, ASCE has not been able to identify a bill sponsor. However, they haven’t given up yet. Help us send a strong message to ASCE’s leaders in Washington that they picked the wrong fight by coming to New Jersey. Tell your legislators not to support legislation that would harm the construction industry by decimating the engineering profession. Stay tuned for additional opportunities to get involved.
Engineering Exchange
Solution in search of a problem: There is no demonstrated decline in the quality of engineering graduates by any measurable matrix. Their ability to perform has not declined and we have not seen any increase in failure rates on the licensed PE exam. There is no data supporting that errors/mistakes/lawsuits/ claims are higher in a way that would substantiate this initiative. Moreover, New Jersey already has a continuing education law on the books for Professional Engineers to stay abreast of changing trends in the industry.
Discourages Engineering as Career: It is well-document“We are committeed to making ed that the US trails other nations in stusure that New Jersey maintains dents pursuing scithe proper balance when it ence, engineering and comes to a Professional math. BS+30 would do nothing to reverse Engineer’s education” this trend and could - Joe Fiordalisio actually turn students away from engineering as a career. At a time of rising student debt, shouldering engineering students with additional education debt is irresponsible.
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south state inc. Cover Story
celebrates 45 years in construction By: anthony attanasio, executive director
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n our industry, embracing change is necessary for survival. Technology advances, bidding processes change, and construction techniques and equipment evolve to meet the needs of an ever-growing industry; but to hear the Ottingers tell it, their forty-five years of success are due to a single, unchanging, underlying linchpin: the principles and philosophies of the late Chip Ottinger, Sr. More than just tools must be passed down for a family business to succeed, and South State Inc. owes its tremendous growth and success to discipline, diligence, and loyalty, but most of all, to embracing Chip Sr.’s founding principles of education and hard work. Although Chip Ottinger Sr. passed away in September of 2015, his spirit lives on in the company he created.
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Chet and Chip Ottinger, Sr.
Chip Ottinger Sr. and his father Chet, ran a small paving operation in Red Bank, NJ--but they had much bigger dreams. The duo founded South State Inc. after relocating to Bridgeton in order to purchase an asphalt plant, and begin a new venture as a combined asphalt producer and paving contractor. Chip Sr. was a tough man willing to take calculated risks, but his Engineering education at Lehigh University taught him to do so only with reams of data to inform his decisions. He believed in keeping South State’s operation as efficient as possible, while always keeping an eye on opportunities to grow.
Chip Sr.’s eye for growth and stability ensured that South State kept pace with advances in the industry, and reinforced for him the value in surrounding himself with quality people. While Chip has been described as a scrappy, yet serious man of few words, he was also known as an innovative leader who empowered his employees. He constantly challenged his staff to improve their skills and had several favorite sayings that he used to simultaneously teach and motivate his team. One of the most memorable maxims was the Five P’s: “Prior Planning Prevents Poor Performance. Another was, “Those in the ranks stay in the ranks, because they simply lack the abilities to get things done.” Chip knew that it takes more than just work ethic to succeed; it takes knowledge and consistent personal and professional growth to truly lead. For Chip Sr., all of these principles, lessons, and vision came to form in his son, Chip Jr.
PSE&G Southern Reinforcement Project Camden County, New Jersey
Chip Jr.’s road to running South State was not an easy one. His father expected him to learn the company from the ground up, without any breaks for being the owner’s kid. He was put to work on South State crews at a very young age, and as Chip puts it, “He really put me through the ringer to learn the company.” Chip was out in the field all summer long, working every hour he could in order to learn the company’s paving operation. When he reached college age, he made his father proud by being accepted to Drexel University’s School of Engineering. Immediately after graduating in 1993, Chip Jr. charged right back into the company headfirst and never looked back. Chip worked every aspect of South State’s operation from paving and material production, to project supervision, management, and estimating. Over the next 12 years, the company had its share of ups and downs, but it continued to grow and evolve. In 2005, Chip Jr. was honored for the oppor-
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tunity to buy the family business, knowing that it meant his dad entrusted him with the future of the company.
At times, Chip Jr. worried that his dad would think the company was growing too fast or that his son was taking too many risks. AfChip Sr. also had a great joy of flying and ter buying the largest crane the company had “You have to evolve as a owned several planes over the years, flyever owned, Chip Jr. remembers hiding it on ing countless hours for recreation and, as it company. You have to embrace jobsites in hopes his father wouldn’t see it. It turned out, for charity. While Chip, Jr. was turns out he had nothing to fear, because his change or you become a going through his father’s files to ensure that father was extremely proud of his son and his bills were paid during his hospitalization, what he had built. While remaining a leader dinosaur, but you shouldn’t he stumbled across a volunteer program that in paving, asphalt production, and emerging forget your roots” his father was involved with for years called asphalt mixes and technologies, South State Angel Flight NE. Through the program, - Chip Ottinger, Jr. has also expanded into many new disciplines Chip Sr. would fly economically challenged including heavy highway construction, utilihealthcare patients to a specialized facility ty work, and marine work. Chip Jr. not only for treatment. What shocked Chip, Jr. wasn’t increased the size and scope of the projects the fact that his father helped a tremendous his company was taking on, but also the skills and quality of amount of people and most likely saved many lives, it was the the people he surrounded himself with. In addition to Ottinger, fact that he had never mentioned one word about it in an effort South State is managed by a group of highly trained and skilled to seek recognition. His ability to pursue his passions and give so executives much back to society was made possible because he had successThrough it all, Chip knew that his father was watching him turn fully transitioned the ownership of South State to his son. South State into a bigger and more dynamic company, while Chip Jr.’s transition to CEO was a smooth one due to the fact continuing to adhere to the Ottinger family’s old school philosthat he had earned the respect of his team by working his way up ophies. Chip Jr. sums it up, “You have to evolve as a company. from the bottom. When Chip Jr. wanted to take more risks with You have to embrace change or you become a dinosaur, but you the company, and sought to grow at a much faster pace, South shouldn’t forget your roots.” State’s management and field staff were ready to answer the call. Chip Jr. continually returns to the fact that his dad valued educaBetween 2005 and 2009, Chip Jr. would take his father’s success tion and work ethic above all else, and that is what the company will remain focused on no matter how big it grows. It is truly a mantra for him and his entire team. He believes his father’s greatest legacy will be that Chip Jr. is passing those same exact principles down to his four sons in the hope that they will continue to value and follow them for many generations to come. Chip Jr’s oldest son is a sophomore at Drexel studying Engineering while also interning at South State. His second son is completing his junior year at St. Augustine Prep and also plans to pursue an engineering degree and enter the family business. Chip’s two youngest sons spend their summers working at the family golf courses, but will soon be reaching an age where they too will be groomed to contribute to the South State team. NJ Turnpike Authority 6-9 Widening Project
Cover Story
Chip Sr. found the next phase of his life by pursuing his passion of golf and golf club ownership. In 1999, Chip converted an old sand quarry next to one of South State’s facilities in Williamstown, NJ into the Scotland Run Golf Course. Chip would run his golf course on the same principles that governed South State. As Chip Jr., recalls, “My father could tell you how many rounds of golf had been played each day by how many hot dogs had been consumed!” Scotland Run subsequently ranked in the Top 50 Public Courses in the country by the Golf World Readers’ Choice Awards in both 2009 and 2010, in addition to being named a 4 ½ Star course by Golf Digest. Before his passing, Chip Sr. was proud to witness his son purchase the Atlantic City Country Club as well.
to new heights. The real turning point for the company came when they won a $42 million contract with NJDOT for Route 73 improvements that included the elimination of the Berlin Circle. Both the size and complexity of the job were firsts for South State and the job was universally recognized as a resounding success. The success of the Route 73 project led to larger and larger contracts, and in 2009, South State was the low bidder on five separate projects valued at more than $200 million. The projects included but were not limited to the elimination of the Route 70 & 73 Marlton Circle for NJDOT, almost 10 miles of widening of the Atlantic City Expressway for the South Jersey Transportation Planning Authority, and several contracts on the New Jersey Turnpike Authority Interchange 6-9 Widening Program.
Chip Ottinger Jr. truly misses his father. He thought they would have many more years to share the company’s growth and suc-
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Cover Story
cess together. He still finds himself wanting to forward certain emails to his dad for a laugh or some advice. Chip Jr. is proud of the new heights South State has reached under his leadership, but what gives him the greatest sense of accomplishment is the knowledge that his father got to see his success in running the family business.
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In memory of his father, Chip has become extremely active in the American Heart Association. He served as the Chairman of the American Heart Association’s 2016 Heart Walk in Ocean City, NJ. The event raised more than $400k and is the beginning of a new legacy Chip Jr. has created in his father’s memory. UTCA wishes South State Inc. many more years of growth and success.
In memory of Chester “Chip” Ottinger. 1946-2015
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Chip Ottinger, Jr. pictured at the 2016 Heart Walk in Ocean City, NJ.
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Feature Story
walker diving underwater construction celebrates 60 years in business
By: Anthony attanasio, executive director
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017 marks Walker Diving’s 60th year in business. Originally founded in 1957 by Glenn Walker, the first iteration of the company, known as Glenn Walker Inc., provided diving services until it was purchased by Harry Streit in 1973. Streit renamed the company Walker Diving Contractors, Inc. and ran the company for the next 31 years, while also operating other companies in the marine industry. Upon retirement, Streit sold Walker Diving to Alex Kalafatides, who renamed the company Walker Diving Underwater Construction Corp. In 2009, Kalafatides decided to become involved in other opportunities, and sold the company to a young veteran named David Earp who was looking to put his military experience to work in the private sector. Earp would rename the company Walker Diving Underwater Construction LLC and is taking a company with a proud tradition in underwater construction and commercial diving to new heights (or depths). David Earp grew up in South Jersey before being accepted to the U.S. Naval Academy in Annapolis, Maryland. After earning a B.S. in Ocean Engineering, he went on to proudly serve his country in the U.S. Navy from 1997-2007 as first a Navy Diver and then a Navy SEAL. After leaving military service, he attended the Tuck School of Business at Dartmouth earning an MBA in 2009. Following graduation, he immediately dove head first into the marine construction and diving industry with the acquisition of Walker Diving.
“At Walker Diving. . . we bring a wealth of knowledge to our projects & strive for successful projects that bring our customers coming back” - David Earp
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Walker Diving provides a myriad of underwater services including inspections, surveys, repairs, maintenance, construction, and salvage. Additionally, Walker Diving performs some specialty marine work above the water’s surface to meet their customer’s needs. Walker
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Diving is a union contractor, and regularly performs work for both union and non-union general contractors. Work is performed on all types of structures including bridges, piers, wharfs, dams, intake and outfall structures, treatment plants, pipelines, and others. The company has performed major and minor projects for a variety of clients including UTCA members such as IEW Construction, J. Fletcher Creamer & Son, J.H. Reid, Montana Construction, Northeast Remsco, and Skanska Koch, in addition to a growing list of private customers that include wellknown companies such as DuPont and American Water. Walker Diving’s volume of work has grown considerably since Earp acquired the company in 2009. Recognizing the unmet need in the market for a diving contractor willing to price and complete a complex scope of diving work, Earp has worked to develop the company to meet that need. Many contractors were self-performing diving work or subcontracting diving on a time-and-material basis, when what they really needed was a subcontractor to assume responsibility for the underwater scope of work. Expanding the management, equipment and financial resources to meet this need and perform on a fixed price basis on multiple large projects at once has led to a large volume of additional work. Additionally, Earp recognized that many contractors who self-perform diving do not want to add additional diving capability when they experience a temporary increase in diving work. Walker Diving has been able to convince several general contractors that self-perform diving to try subcontracting to Walker Diving when they are busy or have a unique project. This has led to a significant volume of repeat business from several contractors. Earp says, “At Walker Diving, diving and underwater construction is what we do every day. We bring
that wealth of knowledge to our projects and strive for successful projects that bring our customers back next time.” David is proud of the quality work Walker Diving provides its customers and is looking forward to growing in the areas within the marine construction industry, in which he feels his company truly stands out. He is very careful to point out that he is not looking to expand outside of their area of expertise, but rather
While steady improvement of the company is a major goal for David, safety remains a constant priority. From his time serving our country to his current position running Walker Diving, David has always felt his most important job is to keep the men and women he works with safe. He has done a noteworthy job with safety and Walker Diving was recently recognized by the UTCA as a 2017 Safety Award Winner. Walker Diving has a very bright future ahead of it with a strong leader like David Earp at the helm. UTCA would like to congratulate David and everyone at the company for its 60 successful years in business.
Feature Story
to continue to do what Walker has always done well: capitalize on their experience in the field to grow within their niche. Diving and marine construction are indeed specialty work, and as such, David has sought to assemble a team of experts that truly stand out in the industry. David attributes most of Walker Diving’s success to their experienced management and highly skilled labor. His company’s management team has more than 100 years of diving and marine construction experience to offer their customers, which in turn leads to safer and more efficient projects.
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By: nancy damato, rda benefit services
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hether you are a small family-owned business or a large firm, it is very important to have an employee handbook. The purpose of a well-written handbook is to provide detailed information on your company policies, procedures, working conditions and expectations in the workplace. An employee handbook also needs to be updated on a regular basis, usually annually, to comply with all the changing laws and regulations, as well as to respond to changes in today’s work environment. Why is it so important to have an Employee Handbook? 1. The handbook confirms and defines the employment relationship as an at-will relationship. In an at-will relationship, the employer retains the right to make employment decisions at any time, with or without notice and for any reason, as long as it is not an unlawful reason. 2. It provides information to employees about the company culture, its mission and its values. This section of the handbook helps encourage a sense of pride and understanding of the corporate culture. 3. It gives employees information on company objectives and best practices. 4. It provides employees with a clear understanding of their responsibilities, their behavior and conduct. 5. It ensures that there is a consistent message regarding company policies on such issues as compensation, including frequency of pay and overtime. 6. It outlines all the company’s policies regarding benefits, including sick pay, vacations, PTO, 401(k), medical and ancillary insurance, paid leave, etc. 7. The handbook should also cover policies that are in compliance with federal and state workplace laws and regulations, such as Fair Labor Standards Act, the Occupational Safety and Health Act, the Family and Medical Leave Act and the Americans with Disabilities Act. 8. It also protects the employer against any personnel issues, to be sure that issues are handled in a fair and consistent manner. 9. It gives the employees information about their rights, should there be any issues they encounter in the workplace, such as discrimination, harassment, as well as discipline policies and procedures. Is there a formal complaint process in place? All employers should also require employees to sign an acknowledgement form, stating they have received a copy of the hand-
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best practices for an up-to-date employee handbook book (either a paper copy or electronically) and that they will familiarize themselves with the handbook. Key Updates for an Employee Handbook Here are some additional considerations that should be included in an Employee Handbook, in order for it to be relevant and effective. 1. Does your handbook have a policy that prohibits employees from revealing and discussing confidential business information, especially to people outside the organization? 2. Does your handbook have a policy on social media and data privacy, since so many of us do work-related tasks on our smartphones and tablets? Or even a policy on prohibiting the use of a work computer for personal use? 3. Does your handbook include a policy on working remotely, including security requirements? 4. Does your handbook include a section on reasonable accommodations for certain circumstances, such as physical health conditions or religious beliefs? 5. Does your handbook provide details on pay related issues, such as overtime pay and payout of unused vacation time? 6. Does your company operate in multiple states and do you include all the state specific employment laws for those states, in addition to compliance with all federal laws? 7. Does your handbook contain a smoking policy that covers the use of e-cigarettes and even medical marijuana? 8. Does your handbook include detailed sections on paid and unpaid leave for a wide range of reasons? 9. Does your handbook include a section on disaster preparedness? Does it include your organization’s emergency plans and a communications plan for employees to stay informed? Is there a plan in place for employees to work remotely in the case of an emergency? An employee handbook is a living document that is unique to every organization and it certainly needs to be reviewed on an annual basis. There are many resources available to help you with creating a handbook, as well as updating your current handbook. It even may be beneficial to consult an attorney when you are finalizing your employee handbook. If you have questions or need more information or additional resources, please feel free to contact Nancy Damato, RDA Benefit Services, LLC at ndamato@rdabenefits.com or 855-693-0772.
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By: James m. hanrahan, conner strong & buckelew
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hat makes a bad project?
You might say a project is only bad if it results in bad outcomes – wasted time, lost revenue, bodily injuries, ruined reputation. A truly bad project could end your company altogether. In that sense, there’s nothing inherently troublesome about any particular project. It’s only when the project isn’t undertaken in a controlled, safe, well-designed way that it becomes a problem. If that’s true, the flipside must also be true. A good project is one that results in positive outcomes – on time, on budget, no injuries, something you want to brag about. A truly good project will help your company grow. I believe that contractors can easily decide whether they only want to pursue good projects and avoid bad projects. It’s not a matter of hoping good projects happen to you and bad projects don’t. It’s simply a matter of taking the appropriate risk management steps, at the appropriate times, to set yourself up for success. I say the appropriate times, because that’s often the factor too many contractors miss. Everyone in construction has heard of risk management, and at least pays it lip service, to some degree.
Quite simply, if you want to ensure consistently positive project outcomes, you need to start with risk management. Why start with risk management?
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don’t let a good project go bad start by planning for risk “You might say a project is only bad if it results in bad outcomes wasted time, lost revenue, bodily injuries, ruined reputation. A truly bad project could end your company altogether”
Starting a project with - James Hanrahan a mindset toward identifying and managing potential problems and opportunities yields the biggest returns on your effort.
Just like investing money for your retirement early generates outsized returns, investing effort in careful analysis early in a project – or ideally before even taking on a project – will help you maximize the impact. On the other hand, failing to recognize a minor risk might allow it to snowball into a nightmare. To be more specific, the sooner you start thinking about what types of risks exist in a project, the more you could devise solutions to reduce exposures, insurance costs, delays, claims, etc. It’s pretty logical why this would be the case. Identifying a risk early in the process ensures your focus is concentrated in the most important directions. That might mean where you can save the most money, or cut the most costs. To this, some readers may say, “Of course. How else would you do it?” In my experience, the traditional approach is often, “Let’s wait and see.” Contractors wait until problems arise, and then try to find ad hoc, immediate solutions. The trouble with that way of doing business is that solutions are almost always more expensive and less effective.
But far too many firms think in terms of risk management far too late in the process, greatly limiting the impact of the approach. They may only be concerned with it around insurance renewal times, or when obvious issues arise, rather than planning ahead.
Don’t do business that way. Instead, think about risks and opportunities early and often. It creates more leeway for creative, cost-effective solutions. Whether through contingencies, contracts or insurance, you can much more easily deal with potential issues if you take a risk-first point of view. What risks are we talking about?
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When contractors typically think of risk, they think of all the physical risks they are legally charged with enacting processes to avoid. But, in reality, the risks that most frequently disrupt projects aren’t related to the actual construction activity.
Is weather a risk? Suppliers? Politics? Once you build a comprehensive list that applies to the type of work you do, it will likely apply to multiple projects moving forward.
Beyond safety, these are some of the most important risks to consider for every project: • Cost management. • Time management. • Scope and change management. • Procurement and contracts. • People management. • Information management. It surely goes without saying that every contractor wants to avoid these issues just as much as falls and backovers. No one creates schedules or makes budgets expecting delays and cost overruns that reduce profits and frustrate stakeholders. Nevertheless, a study by McGraw-Hill Construction found that scope and budget creep were the top risks facing the construction industry. Similarly, a study by the Surety & Fidelity Association of America found that management-related issues like scoping and accounting were the most common reasons that contractors failed. This means that the most common assumption of what entails risk management is far too narrow. Risk, and the opportunities that arise from avoiding or mitigating it, can relate to any aspect of a construction project. Expanding that definition to the fullest perspective is the first step to really understanding how to get your arms around everything that leads to a successful project. How can I start managing these risks earlier? There are countless processes to carefully analyze all the risks facing your work. There are calculations you can use to assess the numerical size of risks. There are grids, tables, checklists and software tools that will all give you a better idea of how to intelligently look at a project and predict everything that could happen. I can’t explain all of those techniques now. You also shouldn’t expect to read one article and understand all there is to know about risk management. It’s a way of thinking and approaching complex situations in a systematic way to create more predictable and advantageous results. I encourage you to learn more about the best approaches out there, because there are surely some brilliant ways of making the complicated much more manageable. For now, here are some general guidelines that you can’t go wrong in remembering. In fact, rip this page out and post this on the wall of your office. Until you come up with a better process that works for you, this will keep you thinking about risk management early and often in each project. 1. List risk sources. Take the list of risks categories from earlier in this piece, and build upon it with others relevant to your project.
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2. Rank risk importance. This can be a complicated process, because it will vary from project to project, and quantifying risks can be difficult. Remember that while safety risks may be most visceral, it’s often the softer risks, like scheduling and budgeting, that tend to disrupt businesses the most. 3. Manage the risks. This process has a list of approaches in and of itself. For each risk, determine whether you’d prefer to do one or a mix of these following things, remembering the acronym RISK: Reduce it. Take steps to lessen the likelihood of the risk. Insure it. Self-explanatory. Get insurance to cover the financial impact of the risk. Sidestep it. This might require saying no to something, or finding another way to do something that doesn’t face the same risk. Keep it. Sometimes a risk may be worth taking, keeping the current situation as is. However, this doesn’t necessarily mean do nothing about it. You should have a response for when that thing goes wrong. This is admittedly a 50,000-foot view of a construction risk management approach. And as in-depth as this subject goes, the ongoing monitoring and management of risks after a project starts can be even more complex. Again, this is a subject to study and perfect over time, not quickly get out of the way. That said, thinking in these terms before a project begins will give you a certain leg-up on competitors who wait to react to risks rather than proactively planning for them. Don’t let a good project go bad because you simply failed to fully consider the risks and opportunities ahead of time. The more you plan for risk, the more consistently you’ll realize reward.
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By: zoe baldwin, director of government & labor relations
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2017 executive seminar: barcelona
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TCA once again raised the bar for fun and productivity with this year’s Executive Seminar in Barcelona, Spain. Nearly 120 UTCA members and their families joined us at the Hotel Arts from March 31 through April 8, making it one of our most successful Seminars to date. Executive Seminar Chairman Tom Hardell organized a fantastic trip filled with group activities that truly let attendees get to know the richness of Barcelonan culture, and a little more about each other. The group arrived late-morning to the fabulous Ritz-Carlton Hotel Arts, where they were greeted with a delightful assortment of welcome drinks and snacks provided by Hoffman Equipment. Arrival day is always a treat, as long-time attendees greet each other warmly and discuss their plans for the week ahead. This year the group was abuzz with excitement for the whirlwind of activities to come, cheerfully sharing their best jet lag avoidance strategies, ready to make the most of the next seven days. The first official day set the pace for the trip, and April 2 came fast out of the gate. Following an impressive daily breakfast buffet, UTCA members headed downstairs, across, and downstairs again, for the first official business meeting. UTCA Counsel, Paul Fader, Esq. of Florio, Perrucci, Steinhardt & Fader, started us off with an important update on New Jersey’s pay-to-play laws and limits. Following the meeting, those that signed up for the Goth-
Tom Hardell, Tino Garcia and Bob Briant, Jr. are pictured at the Welcome Reception.
ic Quarter and Tapas Tour were treated to an afternoon of towers and finials followed by wine and traditional Spanish finger-food, known as tapas - but we didn’t stop there. As the day wound to a close, UTCA members were just getting
started. Despite a slight drizzle, the Welcome Reception happy hour was boisterous and fun, and a little more than our appetites were whet when we were ushered in to dinner. Special thanks are due to our sponsors for the evening, Florio, Perrucci, Steinhardt & Fader, Construction Information Systems Inc., Foley Inc., Garden State Precast, R. Kremer & Son Marine Contractor, Maser Consulting, Edward J. Post Company, and Taylor Oil Company; our sumptuous Welcome Dinner would not have been possible without your support. For many, Sangria is the first thought when it comes to Spanish wine, but thanks to a trip sponsored by George Harms Construction, Seminar attendees discovered first hand that the country’s vineyards have much, much more to offer. April 3 found the group deep in the caverns of Codorniu Raventos, the world’s oldest and second-largest producer of bottle-fermented sparkling wine known as cava. We were able to explore the cellars with a guide and see the winery’s centuries-old process, which mirrors that of traditional champagne. Only one question remained unanswered for our curious contractors: how did they mitigate groundwater intrusion while building the cellars back in the fifteen hundreds? Sagrada Familia has been jokingly referred to as “our lady of perpetual construction,” and in Barcelona, some contractors have literally devoted their entire career to the church. Construction on the magnificent basilica began in 1882 and only now, 135 years later, is the project entering the final phase of construction. By 2026, there will be six new towers, ensuring its rank as the tallest religious building in Europe. At 564 feet high, the basilica is a must-see for travelers to Barcelona, and thanks to Tim Watters’s relationship with Manitowoc Cranes, our group was able to
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do more than that. In addition to a cloudy, yet enjoyable day visiting famed architect Antoni Gaudi’s greatest projects, the group had the chance to get technical about the specialized equipment used to build the towers during a meeting with Orlando dos Santos Mota, Manitowoc’s Vice President for Europe & Africa. Our final day of activities began by getting down to the business of business. Chris Colabella, Co-Founder and President of Construction Information Systems, Inc., delivered a presentation on the newly revamped search functions that now include DBE look-ups, and Kevin Ellman of Wealth Preservation Solutions gave a comprehensive talk on the responsibilities of employers for employee retirement funds. From there, we took a trip up Montserrat Mountain to Santa Maria de Montserrat Abbey, where we saw a stunning 10th Century monastery, heard the angelic voices of one of Europe’s oldest boys’ choirs, and found ourselves ascending a rock-spired mountain at a 45-degree angle aboard a special cog-and-spoke style train. As anyone on the trip can now tell you, there’s nothing like going 2,300 feet above sea level on a mountain-climbing train to build bonds and camaraderie.
Seminar attendees at Codorniu Raventos.
Before we knew it, it was time to say goodbye. On the 40th floor overlooking the Mediterranean Sea, the group shared memories, cocktails, and a unified sense of industry as we readied for the trip home. Special thanks to Farewell Reception sponsors Wealth Preservation Solutions and Cohen, Seglias, Pallas, Greenhall & Furman for a relaxing evening with stunning views. In the end, the City’s slogan proved true for everyone: Barcelona Inspires. From informative business meetings to relationship building and the tons of fun in between, everyone went home a little bit lighter than they left, free from the stress of the daily grind, and ready to head into a new construction season. Next year, we’re heading out to the Sheraton Grand at Wild Horse Pass in Arizona, which features award-winning golf courses, river adventures, a racecar driving school, casino, horseback riding and much more. We hope you’ll join us April 7 through 14, 2018, and keep an eye out for more information to come.
“In the end, the City’s slogan proved true for everyone: Barcelona Inspires” - Zoe Baldwin
Manitowoc Cranes at work on Sagrada Familia.
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A M E M BE R O F T H E P H O E N I X G R O U P O F C O M PA N I E S
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