Utility and Transportation Contractor

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President’s Message As we come to the year’s end, we recall the 2013 election year with Governor Chris Christie beating Democratic Gubernatorial Candidate Barbara Bouno with 60.5 % of the Vote to her 38%. In a State dominated by Democrats, the Republican Governor was able to draw votes from both the Democrat and Independent sides.

Working in our state can be a very partisan road to navigate.

Somehow he was able to find a way to work with both parties and continue to move our State on a better path than we have seen in years. Now with the Election behind him he will have to address issues that can either continue to hamper our State economy or help it flourish. New Jersey being geographically located between New York and Philadelphia gives us a unique advantage over some surrounding states when it comes to moving commerce and goods.

Accessible ports are also something unique to New Jersey. A strong Technology and Pharmaceutical environment means high paying jobs. But without a thriving and strong infrastructure, business and its employees will look elsewhere to build their companies and raise their families. Lost revenue and production caused by congested roads can make our state a less desirable place to establish a home base.

In the State Senate, the Democrats were able to still hold a 24-16 majority. With the disastrous rollout of Obama Care coming after the election, it’s hard to say whether those election results would still stand if it happened earlier.

Unfortunately those costs to our Industry will be one more hurdle we have to overcome. The UTCA staff and Board will continue to work with State leaders on ways to create revenue sources that will be long term resources to keep our roads and bridges up to the latest standards. And most of all we have to make sure these dedicated resources stay in place to support solely our infrastructure needs.

The State Funding for 2014-2015 looks promising - The NJ Turnpike projects $700 million in road and bridge construction with an additional $450 million for its building construction program. These may be some non-traditional opportunities for our members but they are still an opportunity.

- NJ Transit has planned a $750 million program for State Fiscal Year 2014 which begins 7-1-2013 and ends 6-30-2014.

-NJ DOT $1 billion for State FY 2014 -NJ Environmental Infrastructure Trust $700 million and an anticipated $1 billion for State Fiscal year 2015.

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So as you see the NJEIT, where our own Bob Briant Jr. is an active board member, has a very robust program that continues to grow. The money from the trust is a huge help to our local municipalities that can borrow on very low interest loans and get money to the street in a very efficient manner. Also this work is a great source for small business to perform jobs in the public market.

At the time of this writing, UTCA’s State Infrastructure Bank legislation, A-3177/S-2143, is scheduled to be heard by the Assembly and Senate Appropriations Committees in the State Legislature.

This measure will enable New Jersey to receive federal seed monies for subsidized loans for local transportation, energy and disaster relief construction projects. The New Jersey Environmental Infrastructure trust will administer the financing of these projects which will result in addressing some of the backlog of infrastructure projects that need to be completed on a local level. Once approved by the committees, the legislation will be scheduled for Assembly and Senate floor votes and eventually on to Governor Christie for his review and signing. One important thing to note about this particular piece of legislation is that even though this will be administered through the NJEIT, this will not draw from any of its present or future funding programs. This is a separate Trust Bank that has always been available to our local municipalities and counties through the federal government. With the UTCA initiating this bill, New Jersey will now have access to these federal funds if the Governor signs the bill. Once again running this through the NJEIT is the most proven and efficient option as we have seen the results for our water and sewer projects.

In this issue of the magazine, we are featuring Northeast Remsco, which is completing 35 years in construction, and Pro Tapping, which is celebrating 30 years in business. I would like to congratulate these long-time UTCA members on reaching their respective milestones.

As we head into the Holiday Season, we wish everyone health, happiness and prosperity from our UTCA family to yours.

Best regards,

Harry Chowansky

Utility and Transportation Contractor, DECEMBER 2013

DECEMBER 2013 Volume XXXVIII, Number 6

Contents Features

Published Bimonthly During 2013

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Office Address: 1670 Route 34 North Farmingdale, NJ 07727 Mailing Address: PO Box 728 Allenwood, NJ 08720 (732) 292-4300 FAX: (732) 292-4310 www.utcanj.org

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Publisher: Robert A. Briant, Jr.

32 Editor: Michael DeVito Editorial Contributors: Michael DeVito Evan Piscitelli Dan Neville

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Northeast Remsco Completes Thirty Five Years In Construction It’s Finally Game Time For NJ’s American Dream End Of An Era: Preparing For New Growth In 2014 States Look To Maintain Planning, Design & Engineering Work In 2014 Acquisition Due Diligence: Know The Impact To Your Workers Compensation Mod Pro Tapping Completes 30 Years In Business Construction Engineers Creating A Better Future For All Understanding Your Health Insurance Options In 2014

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Advertising Manager: Helene Nasdeo Photographer: Michael DeVito Cover Photo: Image Up Production/Graphics: Lauren Hagan Helene Nasdeo 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.

Departments 2 23 39 45 57 61

President’s Message Legislative News Accounting Corner Safety Perspective Labor Relations Legal Dig

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Cover Pictured on the cover left to right are John Gutierrez, Juan Gutierrez and Roly Acosta.

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NORTHEAST REMSCO COMPLETES THIRTY FIVE YEARS IN CONSTRUCTION One-Time Pipe Contractor Diversifies Into Multiple Areas When Juan Gutierrez emigrated from his native Cuba to the United States in 1962 as a political refugee, running his own construction company must have seemed like a far-reaching and unachievable dream. However, Juan utilized the experience and knowledge gained from working in the utility construction industry as a young man to eventually found Northeast Utilities, Inc. in 1978. In those early days, the firm began performing utility pipe projects in Central Jersey.

As the company began to grow, it started to venture into other locations of the state of New Jersey for various owners in both the public and private markets. It was not long before the young firm was completing larger and more complex projects which allowed Juan to cultivate and grow his organization.

including New Jersey, Maryland, Virginia and New York. The company is currently performing tunnel work in Rhode Island, Long Island, Washington, DC and South Carolina.

In 2010, Northeast purchased Huxted Tunneling which is located in Florida, allowing the firm to expand its geographic reach. Huxted has also successfully installed over 50,000 feet of pipe via microtunneling and is completing tunnel projects in Florida, Texas, New Hampshire and South Carolina. Collectively, Northeast and Huxted own the largest fleet of microtunneling equipment in the country.

Launching of Huxted MTBM at Sun City Center in Florida.

Northeast installs a 36 inch diameter caisson in Charleston, SC.

By the 1990’s, Northeast was completing projects in Delaware, Pennsylvania, Connecticut and New York City. The company’s first New York City project involved the installation of pipe under Route 440. Northeast determined that the best method to install the pipe would be to use microtunneling due to the existing soil conditions and high water table at the site. The successful use of this technique enabled the company to expand its operations into the microtunneling field. Since that time, Northeast has installed over 50,000 feet of pipe via microtunneling in numerous states

A sludge storage lagoon is completed.

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Another area of diversification is in the water and waste water treatment construction arena. Northeast acquired Remsco Associates in 1995 and has successfully completed projects at the Sayreville Water Treatment Plant, the Swimming River Water Plant, New Brunswick Water Treatment Plant, North Hudson Sewer Authority and the Canal Road Water Treatment Plant. Currently, Northeast Remsco is completing an upgrade for the New Jersey Water Supply Authority at the Manasquan Water Treatment Plant.

This project involves installation of two tanks, rehabilitation of sludge lagoons and an equalization basin as well as other upgrades to the facility. Northeast Remsco also continues to construct the

Northeast installs a shore diversion chamber.

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contractor’s largest wastewater project, the $130 million Gowanus Pumping Station in Brooklyn, NY.

and construction of a new shoulder and bridges. This $101 million project represents the largest highway project to date.

The company has also been pro-active in its safety efforts with the establishment of a company safety committee in 2012. Under the direction of upper management, the corporate safety director, and representatives from the office and field, the committee meets on a quarterly basis to discuss safety issues and areas of improvement. The committee has successfully implemented important safety initiatives that contribute to the safe construction of all projects.

Throughout the years, the company has been able to attract and retain many talented individuals who have contributed to the firm’s success. The company views these employees as its backbone and greatest asset. To accommodate growth and future expansion, Northeast is in the planning stages of constructing a new headquarters on Route 34 in Wall, NJ.

An articulated concrete mattress is set in place.

Approximately ten years ago, the company further increased its services to include marine construction with the purchase of Caldwell Marine. Caldwell continues as one of the top firms in submarine cable installation and heavy marine construction. The company has completed projects in New York, New Jersey, Alaska, the Gulf States, the Caribbean, Vancouver Island, and many additional locations over the years. On a project for the Bayonne Energy Center, Caldwell successfully completed the installation of the threephase 345kV BEC transmission power cable system across New York Harbor. On another project, the firm installed two 180 foot steel transmission towers supporting new 230kV transmission lines spanning the Mullica River. Caldwell Marine is currently installing 5 miles of 35kV cable in Martha’s Vineyard for NSTAR Electric Co.

The firm operates a PTMT power cutting head.

Following the example set by their father, Roly Acosta and John Gutierrez joined the company working first in the field and now are part of the management team. In 2010, the family-owned companies were reorganized as part of the succession planning and JAG Companies, Inc. was formed to create continuity and stability for the future. Juan serves as the Chairman of the Board, Roly was named President and CEO and John is a Vice President and Equipment Manager. Another of Juan’s sons, Brian Gutierrez, recently joined the family’s property company and serves as the Property Manager for all holdings.

Juan’s firm has been a long-time and active member of the Utility and Transportation Contractors Association of NJ, and he served as President in 1987-1988. He is still of member of the association’s Board of Directors.

Northeast Remsco has shown great ability to adapt to new areas of construction and as Juan reminds the boys, “the road to success is always under construction.”

An angled cutting shoe is installed on a project.

In recent years, Northeast Remsco has also become active in the road and bridge construction industry. The South Salem Street Bridge and Rockaway Road Bridge were replaced for the NJDOT in recent years and the firm is constructing its largest bridge contract, the $55 million Bass River Bridge. The Bass River Bridge is being widened and rehabilitated as part of the Garden State Parkway’s widening program. Northeast Remsco was also the low bidder for another Parkway project located between mileposts 93-99. This latter project began in the fall of 2012 and involves roadway widening Utility and Transportation Contractor, DECEMBER 2013

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IT’S FINALLY GAME TIME FOR NJ’S AMERICAN DREAM

By: Chris Colabella, President, CIS

The Meadowlands region is gearing up to show off its Big Game Sunday Best in February 2014, when Super bowl XLVIII comes to the MetLife Stadium. Plenty of businesses are counting on seeing green in the form of untold revenue dollars, thanks to football fans.

However, many people look at the nearby sports and entertainment complex, once called Xanadu, and all they can see are the nowinfamous walls of blue and white, red and orange.

In late October, Triple Five, developer of the project since 2011, received the go-ahead to restart construction on the long-stalled American Dream Meadowlands project. The Borough of East Rutherford authorized a half a billion dollars in bonds to get the project going (which is still awaiting final municipal approval) and the State of New Jersey offered Triple Five a huge tax break, as well.

Alan Marcus of the Marcus Group Inc., public relations company for Triple Five, anticipates construction will begin in earnest in mid-2014. He said completion is expected approximately two years later. “This is a very complex project with any number of moving parts which require careful coordination. We are very happy with our progress. We will make certain that it’s done right and we look forward to establishing a firm timeline for completion in the first or second quarter of 2014.”

It is estimated that the American Dream Meadowlands project will create 8,900 construction jobs between now and project completion. About 35,000 permanent jobs will be created once the complex is open to the public. Skanska USA of Parsippany will lead construction of the indoor amusement park while the WhitingTurner Contracting Co. of Bridgewater will complete the rest of the project.

New Jersey’s American Dream has been a long time coming.

Here are the highlights of the project’s long and often-frustrating 11-year history: * February 2003: Mills Corp. is selected by the Sports and Exposition Authority as the developer of Xanadu – a sports and entertainment complex. * November 2006: Much of the original first phase of the project is framed out, including what will be the first indoor snow hill for skiing in North America. * April 2007: Mills Corp. goes bankrupt; Colony Capital takes over the project as developer. * March 2009: With much of the first phase still to be constructed, lenders bail out and work is shut down. To date, about $2 billion had been spent on the project. * February 2010: Giants Stadium was torn down. * May 2010: A month after learning that the 2014 Super Bowl was coming to the Meadowlands, the MetLife Stadium, constructed adjacent to the old Giants Stadium property, opened its doors. The stadium, part of Phase 1, was built by two NFL teams, the Giants and Jets, with private funds – which is why its construction, at a cost of about $1.6 billion, was not affected by the financial issues that plagued the first two developers. * August 2010: Colony Capital is removed from the project by lenders.

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* May 2011: Triple Five takes over as the new developer and announces it will rename the project American Dream Meadowlands.

An indoor water and amusement park complex are added to existing first phase plans.

On Oct. 15, 2013, the Borough of East Rutherford authorized $524 million in bonds so that Triple Five could finally get the job done. Two weeks later, final approvals – and a huge tax break for Triple Five to the tune of $390 million — came down from the state.

An Idyllic, Beautiful Place… in the Heart of the Meadowlands It is rather fitting that the project is called the “American Dream.”

When the job was originally named, few regarded the swampy land around the Meadowlands’ Continental Arena as a “Xanadu.”

However, the visions of grandeur outlined by architects and developers caught everyone’s eye.

The original plans for the project included two phases of development. By the time the construction stalled at the end of 2006, most of the original first phase of the project — 2.9 million square feet of the complex — had been framed out, but the interiors were never close to completion. Original Phase 1 attractions included: * A new sports stadium (MetLife Stadium) * Retail space for more than 300 shops and 50 restaurants * An aquarium * An indoor ice skating rink * A movie theater with 26 screens * A performance arena with up to 3,000 seats, the ski hill – which will tower at 16 stories tall and 800 feet long * A 200-foot diameter outdoor observation wheel with glassenclosed passenger capsules overlooking New York City * A Bourbon Street-inspired nightlife scene.

When Triple Five took over as developer in 2011, it added a glass-and-steel-domed, climate-controlled amusement park with a water park and the world’s largest wave-generating pool to Phase 1.

Phase 2, calls for the development of an additional 4.5 million additional square feet which will include hotels, a convention center and a sports center.

With Super Bowl Sunday only months away on Feb. 2, 2014, Triple Five, the developer that also owns the Mall of America in Minnesota, says it’s almost game time for the long-awaited project.

While the sports complex won’t get the new pre-Super Bowl paint job Gov. Chris Christie asked for early on in the Triple Five takeover, after close to 11 years, it looks like East Rutherford – and all of New Jersey – may finally be back on track to realize the American Dream.

About the Author: Chris Colabella is the president of CIS, Inc., parent company of CIS Leads and C-Source, the construction industry’s premier local lead service. Learn more about CIS, which is celebrating 20 years in business, or schedule a free demonstration of CIS Leads, by calling 800-247-1727 or visit www.cisleads.com.

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END OF AN ERA: PREPARING FOR By: Wm. J. Ruckert, III NEW GROWTH IN 2014 The Provident Bank As we prepare to close out the year, we look with hope to 2014 as being the first full post-recession year. During the past five years, many construction companies felt the best strategy was “wait and see,” as equipment purchases were delayed, staffing levels reduced and operating expenses lowered. According to some indicators, however, the industry can expect an improved business atmosphere as the economy strengthens.

With that in mind, it is important for firms to take time to revisit important components of their financial arrangements for the coming year.

As you review your balance sheet, overhead structure and potential jobs to help determine your cash flow, working capital and equipment needs, consider the following tips from The Provident Bank to help keep your company – and your bank account – strong next year.

Review business relationships. December is an ideal time to evaluate relationships you have with your banker to determine if your needs are being met. A solid banking relationship is extremely important, especially during uncertain economic times. Your banker can be a very effective business partner in terms of being objective in helping you set goals. Ask yourself: Is your banker helping you reduce costs or risks? Are they leveraging market opportunities?

Have they customized a financial program for your business?

Capitalize on cash management tools. For most contractors, cash flow is an ongoing challenge each year. But there are a variety of cash management tools available that can save your business time and money. For example, remote deposit capture service gives you the ability to conveniently scan checks using a mobile phone or image scanner that is placed in your office. It eliminates trips to the bank and enhances cash flow availability. Online banking is another easy way to monitor daily cash flow, analyze trends and make borrowing and investing decisions. Finally, a credit sweep account that is conveniently linked to a business line of credit offers easy and efficient cash applications. Businesses can set a threshold to cover expenses and excess funds are transferred automatically from your checking account to advance or pay down an existing line of credit. Talk to your banker about your business’ cash flow needs so they can make recommendations.

Project borrowing needs. Contractors tend to be capital intensive for a variety of reasons – equipment costs and seasonality are among the most prevalent. By looking at backlogs, you can make a fairly reasonable guess as to what will turn into revenue, and what areas may continue to be challenging. For example, if accounts receivables are stressed, what will that do to your working capital?

To help businesses cover seasonal changes in inventory, receivables, salaries or a large job, lines of credit are a cost effective way to supplement your cash flow during any of these events.

Your banker can help you find the right financial solution for each of these scenarios.

Take advantage of low interest rates. There are three good ways to make the most of the current low-interest-rate environment while Utility and Transportation Contractor, DECEMBER 2013

it lasts (which might not be for long).

First, many firms are finding that this is a good time to purchase or finance new equipment, locking in the low interest rate to maximize value. Others are taking this opportunity to review existing debt for possible refinancing options – a reduction of even one percentage point will prove extremely helpful as you ramp up for the 2014 season. Finally, firms that have excess cash might want to consider putting that to good use by paying down debt, which will free up purchasing power later in the season.

Make decisions about the future. The end of the year is an ideal time to make decisions about retirement and succession planning.

Many business owners get so tied up in daily operations that this is often pushed aside. However, establishing these plans now will save a great deal of time, money and uncertainty about the future – for both your business and family.

Contractors with solid banking relationships are already off to a good start. But next year, resolve to keep in touch more frequently with your banker. Keep them informed about how your business is doing throughout the year. Working as a team with your attorney, accountant and insurance agent, your banker can be a valuable resource in helping you reach your goals in 2014.

Finally, Provident Bank sends its congratulations and wishes continued success to Northeast Remsco Construction, which is celebrating 35 years in business and Pro Tapping, which celebrated its 30th anniversary in 2013.

UTCA Construction Safety Seminars Begin In January 2014 For More Information Visit Our Website:

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STATES LOOK TO MAINTAIN PLANNING, DESIGN & ENGINEERING WORK IN 2014 By: ARTBA Chief Economist Alison Premo Black, Ph.D

The national market for highway and bridge planning and design work is expected to remain stable in 2014, according to the latest ARTBA research and analysis.Although the outlook will vary from state to state, over half of State Departments of Transportation (DOTs) are planning to maintain their current level of consultant contract awards and expenditures for planning, design and engineering work in the coming year. Eleven states are expecting to increase the level of consultant work in 2014. We expect the market to decline in five states, and the outlook for eight states is unknown. 1There will be additional market opportunities for planning and design firms as various State DOTs wrestle with staff changes, growing programs and the use of design-build.

State and local governments spent an estimated $12 billion last year for project planning and design work, engineering costs, field inspections, material testing and other related costs, according to ARTBA analysis of data from FHWA. Over $7 billion of that total was for work on federal-aid projects. This included work from outside consultants and in-house staff.

For many states, consultants are handling fifty percent or more of their planning and design work.

This can be much higher in some states—private consultants complete over 70 percent of the value of design work in Kansas, New Hampshire, and Utah and over 80 percent in Louisiana, Ohio and Florida.

State DOTs Staff Challenges Provide Market Opportunities Nearly half the State DOTs report they either increased the use of consultants in 2012 or plan to use more private consulting services in 2013 due to hiring freezes, retirements or internal staff cutbacks.

Some State DOTs have been forced to reduce their own planning and design staff because of budget cuts. Last year Wyoming lost 10 to 15 percent of their design staff and subsequently increased their use of consultants. Michigan has downsized their employment by more than half, from about 5,000 to 2,400 employees. California continues to face department furloughs—delivering their program with a five percent reduction in resources.

In the face of a flat economy, State DOTs have not been replacing workers as they retire or when they are hired away. New Mexico, for example, has a 20 percent staff vacancy rate even though the government-wide hiring freeze ended in 2010.

Other states are expecting to grow their program with consultants, rather than hiring new DOT staff. Colorado will increase the use of consultants over the next few years to meet their program growth.

Even North Dakota, which saw a 372 percent increase in their budget and which operates in a booming economy, has not increased their DOT staff, adding only five engineers to a staff of 170. Several state DOTs are concerned about an aging work force. Over onethird of Louisiana’s engineering DOT staff is eligible to retire in the next five years.

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Design/Build Procurement Nearly 20 states report they plan to continue or accelerate designbuild project delivery as a major part of their program in 2014. North Carolina has instituted an innovative “express design/build” system, which sets up an easy qualification process before moving applicants to the low bid process, yielding prices “competitive to the traditional design/build system”.

Ohio also has a robust design/build program, as the state DOT delivered 24 design/build projects worth $133 million in 2013, with another 27 projects worth $696 million in 2014, not including the second Cleveland Inner Belt Bridge estimated at $336 million. Ohio is looking to prepare 52 design/build projects over the next five years.

The Florida DOT, on the other hand, wants to cut back on the amount of design/build in the state, as it currently consumes 59 percent of their $3.2 billion road and bridge budget.

New Jersey is also planning for about $100 million a year in design contracts. Vermont, which lost about half of their Interstate bridges due to flooding this year, plans to use design-build for repair work.

Missouri has three design/build projects now underway with general support, including a major rehabilitation of the I-70 through Kansas City, procurement on a Missouri River Bridge in St. Louis, and procurement on the Fairfax River Bridge in Kansas City. These projects were commissioned in 2012 as part of $125 million in design/build.

The Highway Trust Fund Fiscal Cliff Given that nearly two-thirds of planning and design and engineering work is on federal aid projects, any uncertainty surrounding the federal aid program is a wildcard for the 2014 market outlook.

Revenues to the HTF from highway user taxes are too low to support the current level of federal highway investment. Without increased revenues, the HTF would not be able to support any new highway investment in fiscal year 2015. All revenues collected in that year would be needed to pay for existing projects. Given the importance of the federal program to both highway and bridge construction and planning and design, such a cut in federal aid would have a significant impact on every state program. ### The preceding article has been reprinted with permission from the American Road & Transportation Builders Association (ARTBA). UTCA is an affiliate of ARTBA. For more information, visit www.artba.org.

(Footnotes) 1 State DOT representatives provided an outlook on their overall programs and consulting awards as part of the ARTBA Planning and Design Division breakfast meetings at the AASHTO regional meetings. Eight states did not provide updates.

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Legislative News

By: Evan Piscitelli, Legislative Director

Federal and State Update The fact that New Jersey’s gubernatorial election was called for Chris Christie two minutes after polls closed on election night pretty much says it all. Maybe it was more noteworthy that it actually took a full two minutes for CNN to project the winner. No matter how you look at it, though, the reelection of Governor Christie delivered the landslide that was expected. Winning more than sixty percent of the vote in what is often referred to as a solidly blue state, the Governor successfully appealed to more than just tried-and-true Republicans. It was the outcome that those around Christie were hoping for – and the nation was watching.

I would venture to guess that if you asked the average New Jerseyan whether or not Governor Christie had higher political aspirations, they would answer yes. Why not? Let’s assume for a moment that the Governor is interested in a run at the White House in 2016. While pundits banter back and forth about whether he is too moderate or too matter-of-fact, they may be missing a more critical wild card issue that will determine how he plays on the national stage. Lucky for us, that special factor rests entirely within our industry.

One word can describe what may make or break a Christie candidacy – infrastructure.

Let’s delve a bit deeper into this idea, and move somewhat chronologically through the events that are going to play out in the coming months which may have a significant impact on the Governor’s legacy as well as the body of accomplishments that he will be forced to run on. The first event is Super Bowl XLVIII. Yes, the Super Bowl is in New Jersey this season, thanks in a lot of ways to Governor Christie. The nation will be watching, or visiting East Rutherford, and the spotlight will be on NJ for several cold days in February.

It just so happens that a major infrastructure project has been underway to help improve the travelling situation around the stadium so that the game goes off without a hitch. Will the replacement of the Route 3 bridge over the Passaic River be completed in time for Super Bowl Sunday?

According to recent news reports, the

prospects look grim. The Governor may be out of time, or he may not be. Regardless, voters from around the country will be tuned in to see if this rare sporting event being played in the elements, in a potential President’s backyard, will be a smooth affair or traffic jam for the ages.

The Governor’s legacy, by his own choosing, has become inextricably linked to Superstorm Sandy and rebuilding in its aftermath. One of the most visible and symbolic representations of this undertaking will be the reconstruction of 12.5 miles of Route 35 in Ocean County. The photo op will be hard to beat … if it gets done on time.

Badly damaged during the storm and in need of both resurfacing and underground utility work, the Administration chose to compress a five or six year project into two and a half.

While the Governor promises that the new roadway will be better than before, and completed on time, once again the grumblings seem to indicate that problems exist and executive leadership will be needed to avoid having this project turn into Christie’s own “Big Dig”.

Finally, it’s no secret that the solvency clock is quickly running out on the Transportation Trust Fund. Finding a solution to the funding crisis that plagues the TTF and ending the constant borrowing that has effectively crippled its future if nothing is done, has to be at the very top of the Governor’s second term agenda. While many politicians view the issue as radioactive, I would argue that it presents the perfect opportunity for the Governor to demonstrate his commitment to bettering our economy while not being afraid to take on the unpopular and unquestionable need to raise revenue. Most state executives eyeing higher office would love to have the opportunity to bring a major public policy victory on the road with them. A long term TTF solution offers that gift.

Kicking the proverbial can down the road with more borrowing, however, will do the Governor no favors on the national stage.

He should also not be afraid to raise the revenue necessary to get the job done. If anyone can get the point across that safe bridges and congestion free roadways cost

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money, and there is no free lunch when it comes to building infrastructure, it’s Governor Christie. This is especially true if he packages the need to raise new revenue with efficiencies and savings in state government and uses his matter-of-fact style to sell it to the public.

When coupled with Route 3 and Route 35, it’s hard to ignore the importance of our industry to the Governor’s political future.

His leadership decisions as it relates to these key issues could just be the notches on his belt that he needs to become President or the blemishes that derail his ambitions.

Continued from Page 39 Anticipate the Unexpected – Another thing to keep in mind is that your internal controls are probably good at handling the routine transactions, but it is the unusual ones that often trigger problems. These may include implementing such controls as top level management approval of new vendors and subcontractors(to ensure they are legitimate companies), proper documentation, review and approval of journal entries, and review of cost coding of invoices to ensure they get to the right job and line item in the cost report.

Get Results – By regularly challenging and streamlining your construction company’s internal controls, as the owner or top management, you will be able to rest assured that your employees are working more efficiently, there will be less risk of fraud and less costly mistakes that go undetected. In turn, you will see positive results on your bottom line.

About the Author: Jerry Killian, CPA, CCIFP is the partner in charge of Construction Services at Wiss & Company LLP. Wiss, through its offices in Iselin, Flemington, Livingston and NYC provides construction specific accounting, tax, consulting and outsourced accounting services to the Construction Industry and many UTCA Contractor Members for over 25 years. Jerry can be reached at 732-283-9300.

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ACQUISITION DUE DILIGENCE: KNOW THE IMPACT TO YOUR WORKERS COMPENSATION MOD

By: Carl Bloomfield The Graham Company

The last few months I have been getting more and more inquiries from clients about making an acquisition. Organic growth has been tough to come by, and companies that managed their Balance Sheets well during the Great Recession are in a prime position to expand operations or expand their geographic reach through an acquisition.

So, let me tell you the story of ABC Company, which completed a thorough due diligence of another company’s financials before acquiring it. They looked under the hood and kicked the tires to make sure it was a good purchase. However, their insurance broker did not review with them the impact this acquisition would have on ABC’s Workers Compensation Insurance Experience Modification. As a result, six months after the acquisition, ABC Company received two surprising phone calls: Call 1: Their insurance company sent a bill for their Workers Compensation audit, and it was $75,000 more than ABC Company had accrued due to a surprise increase in their Workers Compensation Experience Mod. Call 2: Their bid on a large job was rejected because their Workers Compensation Experience Mod was now above a 1.000.

So, what went wrong?

Put simply, an analysis of the impact to ABC Company’s Workers Compensation Experience Mod was not performed as part of the acquisition due diligence.

The Workers Compensation Experience Mod is a factor calculated by the Workers Compensation Bureau based on a company’s prior loss experience. In simple terms, if ABC Company has lower loss experience than the average company for its class of business, ABC receives a credit Mod (such as .750). This credit Mod correlates into a 25 percent discount off of the standard Workers Compensation insurance rates.

Conversely, if ABC Company has loss experience that is higher than the average company for its class of business, ABC receives a debit Mod (such as 1.400). This

debit Mod correlates to a 40 percent surcharge to the standard Workers Compensation insurance rates.

Now, back to our two problematic phone calls; the mistake ABC Company made was thinking that only their loss experience would be used in calculating their Experience Mod. Their insurance broker failed to inform them that when you acquire a company, you will typically also acquire that company’s past loss experience and it will be included in your Workers Compensation Experience Mod calculations. Let’s take a look at two examples that illustrate how this can impact your company either positively or negatively.

Example 1: Stock Purchase of a Distressed Company ABC Company purchased the stock of a distressed company (XYZ, Inc.). At the time of the acquisition, the Experience Mod of XYZ, Inc. was 1.580 and it was the only company included in this Mod rating. ABC Company added XYZ, Inc. as a named insured on its Workers Compensation policy and retained a substantial portion of the employees of XYZ. The Workers Compensation Bureau included the bad loss experience of XYZ in ABC’s Mod. ABC’s Mod was then revised and increased 14 percent due to the negative impact of XYZ’s bad loss experience, resulting in an additional cost of $75,000 the first year. This problem was further exacerbated since the impact of XYZ’s bad losses was felt for a total of three years – until all XYZ’s bad losses dropped out of ABC’s future Mod calculations. The hidden additional cost of this acquisition was a shocking $180,000 over three years and $800,000 in work was lost due to a higher Mod. Example 2: Asset-Only Purchase of a Distressed Company ABC Company purchased only the assets of a distressed company (QRS, Inc.). At the time of the acquisition, the Experience Mod of QRS, Inc. was .780 and it was the only company included in this Mod. ABC Company took over the operations of QRS

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and retained a substantial portion of the employees of QRS. ABC did not add QRS as a named insured on its Workers Compensation policy. ABC sent an Ownership Change Form to the Workers Compensation Bureau so that ABC Company’s Mod was revised to include the positive impact of QRS’s good loss experience. ABC’s Mod was reduced by 11 percent, resulting in savings of $37,000 the first year, $24,000 the second year and $14,000 the third year. The hidden additional savings due to this acquisition was $75,000 over three years.

Lessons Learned Purchasing another company will likely impact your Experience Mod (either positively or negatively) for three years.

This analysis should be reviewed by your insurance broker as part of the due diligence prior to the acquisition.

However, it is important to note that purchasing another company will not always impact your Experience Mod. Here are some additional items to consider: 1. Two or More Companies and You Buy Only One: Our examples reviewed the impact of buying a single, stand-alone company. If however XYZ or QRS are part of a combined Experience Mod rating with other commonly owned entities and ABC only purchased one of the entities, ABC would not assume the prior loss experience of XYZ or QRS. This could have either a positive or negative impact depending on the Mod of the company being acquired.

Hence, as part of the acquisition due diligence, it is critical to verify if there are any other commonly owned entities that are combined in the Experience Mod of the company being acquired.

If you buy one entity that was classified by the Rating Bureau as two combined entities for Mod purposes, then you do not assume Company A’s prior loss experience (either good or bad). The seller will typically continue to use the prior loss experience generated by both entities. Therefore, it is Continued on Page 39 29

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PRO TAPPING COMPLETES 30 YEARS IN BUSINESS Founder’s Vision Lives On With Employees Pro Tapping has a well-earned reputation as one of the leaders in working on live and pressurized pipelines without system shutdowns. The firm has shown the expertise needed to maintain pipelines containing brine, propane, natural gas, syltherm, H2S, steam, water, sewerage, as well as other types of material.

pharmaceutical facilities. Line Stops are a way of stopping flow and providing a temporary shutoff. Line Stops are used to isolate piping systems or sections for repairs, alterations or relocations without shutting the entire system down.

Pro Tapping completes work at a Conoco Phillips facility.

Ken DeJoseph and Lumi Dumitrescu are pictured in the company’s yard.

Pro Tapping was the brainchild of the late Henry “Ross” Miller, III. Miller was a mechanical engineer and a union welder and steamfitter from the Chicago area prior to arriving in New Jersey.

After several years working in the line stop and tapping industry, Ross Miller decided to venture out on his own in 1983. The firm procured its first subcontract to perform a 1 inch hot tap on steel pipe at DuPont Station for M Davis Inc. In those early days, the company performed mostly work at refineries, and the services included hot taps and line stops on oil lines. Hot Taps are generally performed on carbon, stainless and galvanized steel, copper and brass, fiberglass and specialized materials used in refineries and

Workers complete a wet tap on a project.

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By the 1990’s Pro Tapping branched out into the building industry with contracts in the pharmaceutical and commercial building industries. Services were also diversified with the addition of wet taps, valve insertions and concrete wall wet taps. Wet taps are mostly used on water and sewer lines and provide a new branch connection. Valve insertions can be performed on cast iron, ductile iron, transite (ACP), and PVC pipe with most installation time frames in under three (3) hours total time – start to finish. In 2002, the company added the pipe freezing technique to its repertoire. With this type of service, a freeze jacket and liquid nitrogen are utilized to freeze the pipe and form an ice plug in order to isolate the line.

Such a process is used on pipe diameters of 30 inches or less. Bill Miller joined the firm to lead the pipe freezing operation. The first pipe freezing project for the firm involved the freezing of two 16 inch pipes for Peco Energy in Philadelphia.

A line stop was completed in Pennington.

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with design engineers such as URS and Paulus, Sokolowski & Sartor Engineering among others. Services have been performed in Maine, Rhode Island, Connecticut, Florida, as well as additional East Coast locations, plus Wisconsin, Oklahoma and Canada. The largest diameter line stop performed took place on a 36 inch diameter pipe for the NSA in Washington, DC. Following the bombing of the World Trade Center in 1993, Pro Tapping was hired to complete 8 inch 300# chiller taps to run temperature chillers to the building’s utilities. The firm was enlisted again following the tragedy of 9/11 in 2001, to complete taps in the Verizon building which would allow for cell phone service to be brought back online. Also completed were 24 inch diameter wet taps at the Pentagon.

Some recent projects for the firm include installation of taps and valve insertions at the Freedom Towers, two 20 inch line stops and two 20 inch re-stops on flare gas at Conoco in Trainer, PA without disrupting refinery functions, and a 12 inch double line stop with a bypass for Waters & Bugbee in Pennington, NJ. In 2013, Pro Tapping completed three 8 inch line stops and three 10 inch line stops on water lines at the Garden State Plaza Mall in Paramus as a subcontractor to VA Spatz. Pipe freezes have been completed at the Pentagon, the Grace Building and the United Nations Building in New York City, and at many major hospitals including numerous pipe freezes at Hackensack University Medical Center.

Pro Tapping performs line stop on a DEP project.

As the years progressed, Pro Tapping performed services for many of New Jersey’s top contractors including J. Fletcher Creamer & Son, Henkels & McCoy, Binsky & Snyder, VA Spatz, Spiniello Companies, Pioneer Pipe, EE Cruz & Company, The Conti Group, Waters & Bugbee and Cruz Contractors. Pro Tapping has performed work on projects for NJDOT, NJ Transit, The Port Authority of NY & NJ, New York City DEP, United Water, The Joint Meeting of Essex & Union, Pine Hill MUA, East Brunswick MUA as well as many more Municipal Utility Authorities. The company has also worked A pipe freeze is completed for Whiting Turner.

A 16 inch valve insertion is completed.

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Leading the firm’s field operations since its inception is Ken DeJoseph. Another long-time employee is Lumi Dumitrescu, who is a mechanical engineer. The firm has capability of performing work on projects in multiple locations at the same time and has continued to excel in completing emergency projects in many locations. Pro Tapping is on call 24 hours a day, seven days a week, 365 days a year. Today the company is the largest privately held pressure tapping company in North America that specializes in working on live and pressurized pipelines without system shutdowns.

On February 9, 2012, Ross Miller passed away at the age of 68, yet the company he founded will continue on with this employees.

Miller considered his employees as “family” and referred to Pro Tapping as a “family owned business”. He was excellent at teaching his crew all aspects of the business. Such instruction will go a long way in moving the company forward following his death.

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Accounting Corner

By: Jerry Killian, CPA, CCIFP Wiss & Company

Tune-Up Your Internal Controls For A Better Bottom Line A contractor would never buy a piece of equipment, then, not perform a “tune-up” or necessary maintenance for the equipment to perform at maximum efficiency. However, in many construction companies, internal controls are put in place and left to operate on their own. Owners and managers figure that they dealt with the issue of internal controls at one time or another and now can move onto the next priority- namely bidding and building! As a result, one essential internal control is the continual review and revision of internal controls. Keeping a construction company’s policies and procedures up to date not only can help prevent fraud, but also can bring some real dollars to your company’s bottom line.

Recognize the Importance – Internal controls used to be left to the accounting staff. But there is one clear lesson from the construction companies that have had a fraud happen to them – the owners and management must actively involve themselves in the implementation and execution of these critical processes. No longer can the CEO, Executive Vice President or any other high level company executive not be involved.

should not be limited to making deposits, writing checks and doing bank reconcilations. Contractors need to address the management and execution of projects.

For example, many project managers are responsible for approving and cost coding invoices. Thus, a periodic budget-to actual review that goes deeper than the schedule of values on your billings could be a valuable internal control. Job performance can also dictate the need to revisit your controls in this area. For example, the final costs on one project manager’s projects always comes in less than expected at the end than the project manager has reported during the course of the project. A further review of this project manager’s projects may indicate a breakdown in controls in preparing accurate estimates to complete, change orders that ultimately were not approved (or forgotten), favorable change orders to subcontractors, or worse—some type of fraud is occurring. Almost every contractor would say “Fraud – could never happen to me”. But just read the daily newspapers, and there are usually multiple articles on the long term bookkeeper or project manager that is being prosecuted for theft of services, monies, equipment or materials.

Protect Your Projects - While the most commonly thought of internal controls relate to the handling of cash receipts and cash disbursements, policies and procedures

Think Technologically – Internal controls are also needed for the everchanging technology issues that most companies face. In light of new ways that

Continued from Page 29

as retaining 51% or more of the company’s employees). If your intent of the acquisition is not to maintain a “substantial portion” of the employees, you will likely not assume the prior loss experience of the acquired company.

worth doing a detailed analysis of the Experience Mod of the target company.

2. Partial Sales: If an entity disposes of only part of its assets or operations but otherwise continues to operate its business, all loss experience prior to the sale will remain with the seller. The purchaser’s Mod will not be impacted.

3. Not Retaining Most Employees: The Workers Compensation Bureau indicates that you will assume the past loss experience of the acquired company if you maintain a “substantial portion” of the employees of the acquired company (typically the Workers Compensation Bureaus view this

Keep in mind that these transactions are complex and answers vary based upon circumstances and the procedures of the specific State Workers Compensation Bureau. We know that this is only one of many items to consider when looking at an acquisition, but prior to making an acquisition, a thorough analysis of the impact to your Workers Compensation Experience Mod should be completed by your insurance broker based on the specific

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contractors are communicating and transmitting data with such devices as wireless, PDA’s, iphones and through the internet, additional policies and procedures are needed to ensure your company’s privacy and protect the integrity of data.

These controls could include programs that “lock data” on company’s laptops/ PDA’s / phones if the device is lost or stolen, frequent changing of passwords to access data and connections, restricted internet use to approved business sites only and of course, a comprehensive company policy on the use of technology.

Another area is with electronic banking.

While most banks today require a company to use “positive pay” process to ensure that only authorized checks are cashed, there are many other areas where internal controls are needed to be enhanced. For example, banking passwords should be secured and not taped on a yellow note on someone’s desk, wire tranfers out of bank accounts should be authorized to the bank by more than one employee and documented in writing, and bank reconciliations should be prepared by someone other than who is responsible for cash receipts / disbursements or the general ledger. There are many other controls which are necessary for a proper segregation of duties.

Continued on Page 23 situation as one part of the overall insurance due diligence process. This analysis may uncover extra savings created by the acquisition or prevent the surprise of additional costs that develop after the acquisition has been finalized.

About the Authors: Carl Bloomfield is a Producer at The Graham Company, one of the largest insurance and employee benefits brokerages in the Mid-Atlantic region.

Bloomfield is responsible for new business development in the areas of Property & Casualty insurance, Employee Benefits and Surety.

He may be contacted at cbloomfield@grahamco.com

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Safety Perspective

By: Dina Pomarico Phoenix Safety & Associates, LLC

Keep Safe On The Highways I would like to thank the UTCA for this opportunity to write in the December 2013 volume of its magazine. I am the owner of Phoenix Safety & Associates, LLC, a NJ SBE/WBE and SAFETY is my business. I am an active member of my company, I have taught on many OSHA related topics, conducted on site safety audits and have written and updated many Corporate and Site Specific Health & Safety Manuals for a variety of clients. I see the necessity of safe work practices in everything we do, from working at home to working on the roads of our great state.

Over the past 8 months, I have traveled extensively up and down the east coast in the search for the perfect college for my son.

My journeys were full of fun and laughs and long heartwarming talks with him.

Unfortunately, it was also filled with frustration, aggravation and a few “near misses”. In my travels, I found myself on many different roads including major highways and local roads. Never did I realize that almost every road from New Jersey to New York to Pennsylvania to Connecticut to Delaware to Maryland to Washington DC to Massachusetts had some type of construction activity going on, every day. I know that roads and bridges are in desperate need of repair and new ones need to be built to support the increasing population of our states. I also have a deep admiration for those men and women who are improving these roads for us to travel on.

I cannot believe the impact this journey has had on me and the obsession I have with checking out every work site as I pass it. Are these men and women protected from the speeding traffic beside them? Is their workzone a safe one? Do they have drinking water? Toilet facilities nearby? Are the motorists being informed properly that road work is being performed ahead? Are there any police helping to protect the workzone?

And if not, why not? I was not always a part of the “near misses” I previously mentioned, but the road workers were involved in a few.

In some instances, barricades and signage were not set up properly. Sometimes, it was the workers who were outside of the protected workzone talking on cell phones or just standing around. Some of the time

the attenuator truck was not set up properly and in some cases, there wasn’t even one on site. There were workers without hivisibly vests and others without proper PPE. I saw so many things that concerned me about how safely these men and women are working. These are some of the busiest highways in the country. I would constantly pass workzones where proper warning signs to alert the hi-speed traffic to slow down was missing. In too many instances, there was signage alerting motorist there was road work ahead, and traffic did slow down to later find out that there wasn’t any work going on at that time. I find this to be such a dangerous situation, to have motorists prepared for roadwork ahead and there isn’t any. It interrupts the traffic pattern for no

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reason and it misleads motorists into think that maybe they can’t trust the signs and the next time they come across roadwork signs they may ignore them. The safety mindset on roads needs to be addressed and better, safer practices must be implemented to keep everyone alive.

Every one of us has an obligation to not only keep our passengers and ourselves safe, but to keep other motorists and especially the men and women performing roadwork safe. Employers have a complete obligation to their employees to make sure the workzone is the safest it can be in sometimes extraordinary circumstances.

Proper signage and setting up the work zone Continued on Page 57

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Labor Relations

By: Jill Tobia Sorger, Esq. & James Y. Lee, Esq.

To Use Or Not To Use: Criminal Background Checks Revisited Last year, the Equal Opportunity Employment Commission (“EEOC”) published an Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. These Guidelines telegraphed the EEOC’s intent to focus it’s investigatory efforts on claims related to the discriminatory impact of an employer’s use of criminal background checks in its recruitment and hiring process.

According to the EEOC, arrest and conviction rates are the highest among minorities, especially African American and Hispanic males. The EEOC therefore cautioned employers that utilizing such information to make employment decisions can have a disparate impact on minorities and unfairly defeat minority hiring goals. As a result, the EEOC stated that it would investigate and scrutinize any employment decision where the results of a criminal background check are used in the decision making process.

Despite the EEOC’s scrutiny of the process, one year later criminal background checks still remain a widely accepted and useful employer practice. However, the EEOC has recently taken several employers to court in order to challenge their utilization of arrest and conviction information to make

employment decisions. UTCA Contractors, therefore, still need to review their hiring policies to ensure that background checks are not having an unintended discriminatory impact on the contractor’s workforce.

One Year Later: The EEOC has sought to explain and defend its guidelines concerning the use of criminal background checks in published letters to attorneys as well as in court documents. According to the EEOC, the Guidance issued encourages a two-step process when using criminal background checks in the hiring process. First, it calls for employers to use a “targeted” screen of criminal records. In the opinion of the EEOC, a “targeted” screen considers “at least the nature of the crime, the time elapsed, and the nature of the job.” Thereafter, the Guidance encourages employers to provide opportunities for individualized assessment for those people who are screened out. The EEOC maintains that using an individualized assessment in this manner provides a way for employers to ensure that they are not mistakenly screening out qualified applicants or employees based on incorrect, incomplete, or irrelevant information, and for individuals to correct errors in their records.

When reviewing employment decisions throughout the year, the EEOC has reinforced that the burden is on the

employer to prove that the use of the background check information was appropriate for the position sought in light of the employer’s legitimate business needs.

In addition, the employer must also demonstrate that there were no alternative criteria that the employer could have relied on in making the employment decision. The EEOC has remained steadfast that blanket policies barring the employment of individuals with criminal records will not be tolerated.

Advice for UTCA Contractors: Although this issue is far from settled, the EEOC has remained adamant that it will continue to scrutinize the hiring process of employers. It is worthy to note that the Office of Federal Contract Compliance Programs (“OFCCP”) has also issued a similar Guidance. Nevertheless, background checks still remain a useful tool for employer’s desiring to promote a safe, secure and reliable workforce. Accordingly, it is prudent for UTCA Contractors to once again take the time to review and revise their hiring procedures so as to ensure that any background checks are being performed in a non-discriminatory manner and are not having a disparate impact on the contractor meeting minority hiring goals.

Continued from Page 45 is key in accomplishing this. Road workers are up against it, they have to deal with weather conditions, working in restricting areas, dealing with speeding cars and trucks, and fumes, all while trying to be productive and getting their work done in a timely fashion. Employers must do everything in their power to keep their employees safe by setting up a proper and effective work zone and the employees have an obligation to their employers to always work safely while maintaining high productivity. It is the responsibility of all motorists to stay alert, to obey workzone signs and to contribute to a safe work environment for these workers by slowing down and paying full attention to what’s ahead.

The following needs to be taken seriously whenever a work zone is set up. Barricades and signage must be set up according to your Traffic Control Plan and covered when not in use. “Speeding in workzone” fines must be taken seriously and the only way motorists will do that is if they do receive fines. We need the help of our local and state police for this to happen. Workers must stay inside their work zones and wear the proper PPE, they must be held accountable for their actions. Employers must train and re-train their employees on working safely on all their jobsites, if employers take safety seriously than employees will also take it seriously.

As I traveled through the different states, I noticed that in most all other states, the

roadwork signs were covered when roadwork was not taking place. This is a practice that we need all employers who engage in road work to take seriously. Check your sites periodically, check them in the middle of the work day and again at the end of the day, to be assured that the work zone is set up as outlined in the Traffic Control Plan for the project, and hold Foreman and Project Supers responsible for keeping their jobsites and employees as safe as possible.

EVERYONE NEEDS TO SLOW DOWN, PUT DOWN THE PHONES, AND STAY ALERT..it may be someone’s mom or dad they hurt or kill by being distracted for just one minute, that’s all it takes for one person to change the life of another forever.

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By: Steven Brawer, Association Legal Counsel

Legal Dig Blame It On The Contractors . . .

On November 14, 2013 a federal jury in California unanimously rendered a verdict in a case with important implications for the underground construction industry. The decision held that during a ten year period from 1996 to 2006 JM Eagle, a major manufacturer of polyvinyl chloride (PVC) pipe, defrauded numerous states and municipalities by selling defective materials used in public drinking water, sewer, firefighting and irrigation systems throughout the country. Although the manufacturer vigorously contested those claims, the trial exposed JM Eagle’s deliberate efforts to cut costs by using shoddy manufacturing practices to make weaker but more profitable PVC pipe.

Three states and 42 municipalities participated in the seven-week trial, and hundreds more qualify to participate in a second phase of the proceedings, which will establish the damages to be awarded, because they also bought the affected pipe.

The matter was filed under the federal False Claims Act, which means that JM Eagle may be subject to treble (triple) damages as well as attorneys’ fees and additional penalties.

The pipe manufacturer’s damage exposure could easily run into the hundreds of millions of dollars, if not more.

The case was initiated in 2006 by John Hendrix, a former JM Eagle engineer from Clifton, NJ who worked in the company’s

product assurance division in New Jersey and whose duties included handling customer complaints. Among other things, the lawsuit against JM Eagle alleged that the company systematically cherry-picked the PVC pipe it inspected and manipulated test results about the quality of its product so that less than half of the pipe would have qualified for sale had it been properly tested.

When Mr. Hendrix told his superiors of his concerns they said the problems were a normal “business risk,” and when he pressed harder he was fired. His False Claims Act “whistleblower” lawsuit followed.

Although Hendrix himself did not take the stand during the trial, other witnesses told the court that plant managers removed “reject” tags from pipe identified as substandard and shipped it to customers. A total of more than 30 witnesses testified, many of them current and former JM Eagle employees including plant managers who stated they were under pressure to meet production quotas which lead to cutting corners. The jury also saw over 300 JM Eagle documents, including e-mails and internal test reports, and heard technical testimony about various pipe failures, Underwriters Laboratories Inc. (UL) standards and the forensic analysis of plastic to determine the root causes of failure.

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It is important to the construction industry that the verdict in this case may result in a staggering damage award against the largest manufacturer of PVC pipe in North America, but it is also revealing how JM Eagle sought to defend against the claims that it fraudulently covered-up deficienciesin its products. According to various trial witnesses, in response to customer complaints they were told to blame factors other than manufacturing defects, such as improper installation, and a press report about the recently concluded trial indicates that Mr. Hendrix said that JM Eagle “trained him to look for ways to attribute pipe failures to construction errors rather than flaws in the pipe itself.” This tactic reflects a disturbing willingness on the part of the pipe manufacturer to deflect liability for its own shortcomings by attempting to hold installation contractors responsible for its chronic product failures.Too bad for JM Eagle that the time-honored strategy of “blame it on the contractor” didn’t work here, and kudos to the jury for not letting it happen.

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CONGRATULATIONS TO NORTHEAST REMSCO from your friends at

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CONSTRUCTION ENGINEERS CREATING A BETTER FUTURE FOR ALL By: John Clearwater, P.E.

In 1995, I wrote an article and speech titled “Maxims for the New Millennium: A Vision of the Construction Industry’s Role in Shaping the 21st Century.” It was basically about building up the image of our profession—a vision of being the solution and not the problem, and all of us remembering who we are and what business we are in. We are in the quality-of-life business, building a better tomorrow for all.

Construction is America’s largest and most diverse industry producing annually up to $1.2 trillion of construction in place and employing 8 million people. At some 10% of GDP, construction is second behind health care as the largest sector of our national economy.

Since writing that article, the term sustainable development has become widely used in the construction industry. It’s a term I like because it puts the focus on a built environment in balance and harmony with the earth’s natural environment.

This is not just a worthy goal, it’s a necessity.

As an industry, we will build the 21st century communities and supporting infrastructures, as we always have, but for the next millennium we in construction must have a more proactive, central role in forging the political will to influence what is to be done and the best means and methods to make it happen.

Sometimes it helps to recall the great master builders of the ancient world, when projects like the Roman aqueducts were the hallmarks of the age and the design-builders were close to the centers of power in government and society. Not so in our times! It follows that our vision must be to create or reshape a new image and role for our profession that’s commensurate with our true importance to the nation’s economic and environmental well being—our quality of life.

The key question is then how to achieve it. This is where the maxims come in. Construction engineers, in my view, have always had the following: * A vision and hope of building a better life for all; * A pioneering spirit and brashness to think we can do anything; * A sincere belief that despite some missteps, we are the “can-do” profession and are the solution, not the problem; and * A serene sense that we are true environmentalists capable of creating a wondrous built environment in true harmony with the earth’s natural one.

So where do we go from here? We must retake the moral high ground, restoring and revitalizing the stature of our profession to its rightful place of leadership in building a better tomorrow. We must dedicate ourselves to arresting the national decline so vividly portrayed by the History Channel’s series The Crumbling of America and reinforced by the latest Infrastructure Report Card from the American Society of Civil Engineers. And we must do it in balance Utility and Transportation Contractor, DECEMBER 2013

with the environmental sustainability imperatives.

The keys to doing this will be: * Build partnerships and alliances among our professional societies and industry trade associations. One obvious opportunity and starting point is more mutual support and cooperation between ASCE and NSPE, as well as the American Society of Highway Engineers and others. These partnerships would greatly increase our organizations’ leverage in public policy arenas and provide increased value to individual membership and corporate sponsorship. * Promote new and more aggressive involvement in public policy through individual volunteer membership on planning boards and environmental commissions, for example, as well as pursuit of elective office, especially locally. * Following the lead of top universities in establishing departments of civil and environmental engineering, pursue partnerships with environmental groups and others in promoting design and construction that achieve conservation of energy and environmental resources as well as the four Rs: remediation, repair, reuse, and redevelopment of valuable real property. * Accelerate reinvention of construction engineering, vastly improving project delivery—better products, shorter time frames, and improved cost effectiveness. One critical need is wider acceptance, especially within the professions and public sector procurement, of a spectrum of rapidly expanding alternative project delivery methodologies. These methods, when properly matched to project-by-project requirements, are reducing delivery time and costs significantly.

The need to get on board this worldwide trend is made a nobrainer by the fact that design-build and its hybrids are now delivering nearly 50% of all engineered construction in place nationally, much of it large public-private partnerships.

The answers to the “crumbling of America” lie in partnership and collaboration among national construction engineering, environmental, and public-interest leaders working together. This calls for a major leap of faith and trust! All must agree that real solutions addressing both the built and natural environments in harmony are solely in the projects and products actually completed. We know who delivers them!

About The Author . . . NSPE member John L. Clearwater, P.E., Captain CEC USN (Ret.), has over 50 years experience in military construction, public works, consulting engineering, and infrastructure construction. He served for 20 years as managing director of the Construction Industry Advancement Program of New Jersey.

This article is based on a speech he gave to the New Jersey Society of Professional Engineers after being presented with the organization’s Distinguished Engineering Service Award.

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UNDERSTANDING YOUR HEALTH INSURANCE OPTIONS IN 2014 New rules and regulations with the Affordable Care Act in 2014 have had a major impact on health insurance options available to employers with fewer than 50 employees. New Jersey had chosen to participate in the Federal SHOP Marketplace rather than have a state-run exchange. And privately, in addition to traditional carriers—Horizon, Aetna, Amerihealth and Oxford/United Healthcare, there are also self-funded plans and defined contribution plan options for small employers.

We have gotten many questions from employers asking if their employees can choose to purchase their insurance individually through the exchange. But, if an employer offers affordable coverage, then the employee that chooses to go to the individual exchange for their health insurance is not eligible for a tax credit, regardless of their income. And keep in mind that the employer cannot pay for the employee’s coverage purchased through the individual exchange. And, this employee would count against the 75% participation requirement for group coverage.

Through the SHOP exchange, employers can only offer one plan option to their group, while, with private insurance, a group can offer up to three plans. And you are not able to offer both options

By: Nancy Damato, RDA Benefit Services

to your group. Also, keep in mind that premiums for the same plans offered privately and through the SHOP will be identical.

Plan designs for traditional plans need to include 10 essential health benefits, which has resulted in changes to the benefits, deductibles and maximum out of pocket costs for the employee.

Adding such items as pediatric dental and vision has contributed to the increased costs of these plans. And the new rates are agebased with the traditional carriers.

It is also wise to consider other alternatives, such as self-funded plans and defined contribution plans, to compare benefits, costs and networks. These may also be a good option for your particular company.

Quality health insurance is such an important part of the employee benefits package and it is important that you understand the options available to your group. No one can be an expert in everything, so working with a knowledgeable insurance broker, who understands the ever-changing landscape of insurance benefits, is key to being able to provide what best suits the needs of your organization.

Pictured left to right are Tino Garcia, Lou Pillari, Harry Chowansky, Assemblyman John Wisniewski, Scott Lattimer and Dave Smith at a recent UTCA event.

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Utility and Transportation Contractor, DECEMBER 2013