Page 1

Feb Cover_Layout 1 1/30/14 10:09 AM Page 1


76

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

1


President’s Message As we move through the first quarter of 2014, we continue to still face challenges in our industry. With the election past us, we move on to the work at hand by hoping our legislators will look past politics to do what is best for the New Jersey economy. The Governor’s final round of bills to sign in the recently concluded legislative session included S-2143: the Infrastructure Bank Bill. Unfortunately this bill was pocket-vetoed by the Governor. This bill would bring over a billion dollars a year to the New Jersey construction market. The present Transportation Trust Fund is broken and the likelihood anything will happen is dim since the last four administrations have chosen to kick this problem down the road. The beauty of the Infrastructure Bank Bill for the taxpayer is that the bill would not require setting up yet another bureaucracy that sucks up the useable money allocated for work and investments. This bill would establish funding through the NJEIT which has been an agency that has proven it can cut through the fat of typical government thinking and get funding out to the market in the cheapest and most efficient manner the state has ever had. As the education of our legislators continues to be our biggest challenge we will have to, as an association, push to further educate them on these matters. As members of the UTCA you can call on local politicians to push this bill so local municipalities can capitalize on these funds for their projects. I’d like to speak of a few of the common misconceptions about this bill. 1 - This would hurt the present Transportation Trust Fund. The present bank exists on paper only. It is not financed nor staffed. As mentioned before, this would run through the NJEIT and the additional number of employees would be minimal to administer this process. Starting from scratch would not be a wise decision and would take away from funds that would be available for construction. 2 - The changes would be harmful to the NJEIT. This legislation specifically segregates transportation monies from the other accounts. Funds would just be administered by the present staff at the NJEIT. The NJEIT is more than capable to add the transportation and energy components to its efforts. 3 - The Association of Counties has concerns that a Commissioner could reduce local aid. With all due respect to the Counties, this statement is invalid. The funds that would go into the NJEIT’s account would come from Federal TIFIA and/or Section 129 funds from MAP 21. These funds would be new money that currently does not come to New Jersey. Federal and State transportation grants are separate monies that would not come to the NJEIT fund as specifically spelled out in the bill. When the UTCA wrote the NJEIT legislation back in the 1980’s, we heard the same complaint from the League of Municipalities. Currently, locals borrow around $700 million per year for their infrastructure investments. Also, an added provision states that no harm will come to Local Aid (section 30). 4 - The NJ DOT is opposed to the bill because “it doesn’t provide anything that the Transportation Trust Fund cannot accomplish today”. Please go back to point number one! During the Senate and House conference on MAP 21 ( successor to SAFETEA-LU), 2

the Senate bill (representing 5 years of funding) specifically allocated monies for State Infrastructure banks, and after two years those States without one would lose their funding allocations. This would be a disservice to our state and taxpayers if we do not take advantage of these funds! 5 - As Federal funds do not appear to be available to the State Transportation Infrastructure Bank (STIB), it appears that it could be capitalized through state funds. Since the bill does not identify a funding source for the state STIB we assume funds would be redirected as provided in the bill, from the state Transportation Trust Fund (TTF). Once again back to the existing TTF! No Money! This bill does not require state funds and it specifically protects Local Aid. This bill in no way would rob from the TTF. The main source is Federal and Private monies. Nothing comes from state taxes. 6 - Another DOT concern is if the STIB is to issue bonds, then a recurring revenue stream will need to be identified to redirect for debt service. The bill is silent about a revenue stream. Redirecting funds from the TTF will cause projects to be delayed or not funded at all. DOT is concerned with any legislation that reduces funding from the TTF. Each loan is a separate borrowing contract and the individual borrower pays their own debt service so the question about revenue stream is not relevant. The borrower will pay its own loan as they currently do now when they fund road or bridge projects, however this bill allows them to borrow at a substantially cheaper rate (currently now at .5%-1.5%) and professional costs are at a minimum (bond, counsel,engineering, lawyers, etc..) The taxpayer wins! The NJEIT over the years has been one of the most highly efficient and top fiscally solvent government entities while we have watched the TTF be pillaged and become insolvent with over $15 billion of debt that will not be paid off for the next 20-30 years. Towns and Counties deserve other tools beside the broken ones should they choose to use them. Please get involved in helping to educate as this is one of the main functions of the UTCA. On a seperate note, I would like to thank all involved with this year’s Executive Seminar to Aruba as it was a great success. We had several great speakers on subjects that were very helpful and informative such as Kevin Ellman from Wealth Preservation Solutions, George Pallas and Shawn Farrell from Cohen, Seglias, Pallas, Greenhall & Furman and Nancy Damato from RDA Benefits. I believe we had 108 attendees on the Executive Seminar. I would also like to remind everyone of the educational series of events managed by Dan Neville on safety, professional development and many other subjects. These seminars are very valuable to our members. Finally, special congratulations to PKF Mark III on 45 years in business and also Applied Landscape Technologies on beginning its third decade in business.

Best regards,

Harry Chowansky Utility and Transportation Contractor, FEBRUARY 2014


FEBRUARY 2014 Volume XXXIX, Number 1

Contents Features

Published Bimonthly During 2014

4 9

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 Publisher: Robert A. Briant, Jr. Editor: Michael DeVito

23 31 36 58

71

PKF Mark III Completes 45 Years In Construction Coping With The Costs Of Employee Healthcare Ten Tips To Help Business Owners In Challenging Times $105 Million Port Authority Initiative Applied Landscape Technologies Begins Third Decade In Business Properly Implement Best Practices To Address Shortcomings, Not Create Them UTCA Executive Seminar Is A Big Success

Editorial Contributors: Michael DeVito Evan Piscitelli Dan Neville

4

4

4

40 36

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

Departments 2 15 21 42 51 55 68

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

71

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.

Cover Pictured on the cover, seated left to right are Mark Reisinger, Craig Kolbman, Peter Getchell, Glenn Ely and Larry Keough. Standing left to right are Ed Karslo, Fred Hertlein and Mitch Baland.

Utility and Transportation Contractor, FEBRUARY 2014

3


PKF MARK III COMPLETES 45 YEARS IN CONSTRUCTION Multi-Faceted Firm Makes Its Mark In the 1960’s, three enterprising gentlemen, Bill Perkins, Al Kanak and Dick Foster made the decision to leave Peter Kiewit Construction, a nationally known firm, and form their own construction company. PKF became incorporated in 1969 and initially setup operations in Perkins’ garage in Morrisville, PA.

designated as an S Corporation and approximately 1/3 of the company’s salaried personnel have ownership in the business. The company provides opportunity and the prospects for advancement to its employees. PKF is also very advanced in providing a safe work environment for its employees, and the company has always employed a safety director. Another company mantra involves equipment ownership. PKF is quick to purchase the necessary machines when needed, but will also sell un-needed equipment instead of letting the machines sit idle.

PKF crews drive sheeting on current NJDOT Direct Connect Project.

Bill Perkins and Dick Foster ran the field operations in those early days, while Al Kanak handled estimating and business operations. This new firm completed mostly small road and bridge projects in those formative years. The first project was performed in Cumberland, MD. A decision was then made to form a second company called Mark III. This second firm was founded in partnership with Tom Beveridge and focused on the mechanical side of the treatment plant and pump station market. In 1979, the two firms merged to create PKF Mark III. PKF Mark III self performs most of the critical aspects of construction on its projects. This company philosophy allows the firm to control its own destiny regarding schedules and costs. Today, PKF self-performs concrete work, mechanical and electrical installations, foundation construction and much more. The firm is

Deck is poured on Route 46 bridge project. 4

Crews pour base slab for Trenton Water Superpulsator Project.

Dick Foster served as President of PKF Mark III for many years. He eventually became the Chairman of the Board at which point Dick Scherr was named President. After Dick Scherr retired, Peter Getchell became President of the company and served in that position for over 20 years. Getchell was elevated to Chairman of the Board in February of 2013, at which time Glenn Ely became the new President. PKF Mark III performs work mostly in New Jersey, Southeastern Pennsylvania and Northern Delaware. However, the firm has at

Recently completed ITS pad for VMS Sign. Utility and Transportation Contractor, FEBRUARY 2014


times ventured out of its traditional work areas. During the 1990’s construction was completed on the Boston Harbor project and some additional projects were performed in Virginia and North Carolina. Projects have been completed for NJ Transit, NJDOT, NJ Turnpike Authority, SEPTA, and many Municipal Utility Authorities.

Nearly completed PKF installed Sludge Dryer Facility at CCMUA.

The firm has successfully completed many plant projects throughout the years. In the 1990’s, PKF was contracted to complete the $70 million Tri-County project for the New Jersey American Water Company. This contract included the completion of a new pump station with an outfall as well as a new treatment plant. This was also a modified design-build project. PFK has performed several projects for the Trenton Water Department. On one of the early projects, the filtration beds were rebuilt, while on the most recent project the remote pump station was upgraded. In between, PKF also completed a $50 million super pulsator project. Additional and substantial plant projects have been completed in Stony Brook, Rockaway, Little Falls and Camden. PKF Mark III has performed many major highway projects during its tenure. Early in PKF’s history, a $100 million widening project was completed on Route 295. Two contracts totaling $100 million were awarded for expansion of the Parkway’s Driscoll Bridge. Recently and as part of the NJ Turnpike widening program, the firm completed two contracts at interchanges 7A and 8 respectively, each valued at $110 million. Currently, four VMS projects are either complete or nearing completion on the Turnpike as well. Construction recently began on the company’s largest contract to date: the $160 million Route 295 Direct Connect project. One of the more unique projects that PKF has undertaken in its history was the Route 29 cut and cover tunnel project in Trenton. Working as a joint venture, this project was bid through a designbuild process. Once completed, PFK also constructed a $10 million park that was located on top of the newly-built tunnel. The Board of Directors for PKF Mark III includes Peter Getchell and Glenn Ely as well as long time members Craig Kolbman, Executive Vice President and head of estimating, and Steve Neidhart, Vice President and Chief Financial Officer. Neidhart will retire in March 2014 after many years of service with the firm. PKF has recently appointed two new individuals to its Board of Directors. Larry Keough, Vice President, and Mark Reisinger, Vice President, who both lead field operations for PKF. Utility and Transportation Contractor, FEBRUARY 2014

PKF crews drive H-Piles at Interchange 8 NJTA widening project.

The corporate structure for the company also includes an Executive Committee. This committee makes most of the management decisions for the firm and includes all Board members as well as Ed Karslo, General Project Superintendent, Fred Hertlein, General Project Superintendent, and Mitch Baland, General Project Manager. Other longtime personnel for the firm include superintendents Rock Hoffman, Fran Beveridge and Bob Haines. Steve Swiderski serves as Project Engineering Manager and Wayde Fitz is the General Equipment and Yard Manager. The principals of PFK Mark III have served as industry representatives for many associations over the years. Both Dick Foster and Glenn Ely were involved as Board members for the National Utility Contractors Association, while Peter Getchell has served with the American Road and Transportation Builders for many years and is the current President of the contractors division. The firm has also had significant participation with the ABC of Pennsylvania and the CFMA. Tom Beveridge was on the Board of Directors for UTCA and Peter Getchell continues as a UTCA Board member, serving as President in the 1990’s. The Perkins, Kanak, Foster vision continues with the current leadership of PKF Mark III, and this firm is well positioned for many more years to come. 5


6

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

7


8

Utility and Transportation Contractor, FEBRUARY 2014


COPING WITH THE COSTS OF EMPLOYEE HEALTHCARE Implementing Wellness Programs To Positively Impact The Bottom Line

By: Nancy Damato, Partner, RDA Benefit Services

DID YOU KNOW THAT 25-75% OF WHAT OUR COUNTRY SPENDS ON HEALTHCARE IS DIRECTLY RELATED TO WHAT WE HAVE CHOSEN TO EAT, DRINK AND SMOKE? The cost of healthcare continues to be on the rise. You want to offer quality healthcare solutions to your employees, while keeping costs as low as possible. A recent study has shown that executives ranked employee health and productivity as top corporate concerns. As a result, there has been a consistent rise in the popularity and importance of consumer-directed, cost-conscious employee health plans being offered. Adding Wellness Programs has shown to be quite beneficial for a number of reasons. Implementing a WORKPLACE WELLNESS PROGRAM has a positive impact on reducing health risks and costs, of course. But it also improves “present-ism�: employee productivity and morale, and reduces absenteeism. By creating and promoting wellness programs, in addition to using the wellness benefits through their healthcare plan, an employer, as well as its employees, will reap the rewards of these programs for many years to come.

Utility and Transportation Contractor, FEBRUARY 2014

Keep in mind, too, the wellness programs are not only for those that spend the majority of our healthcare dollars. You also want to insure that the healthy employees STAY healthy. Providing INCENTIVES is also key to a successful wellness program. TELEMEDICINE is also an important benefit that is being used more and more to supplement healthcare plans. It offers employees access to a doctor 24/7 over the phone to get a diagnosis and a prescription, if needed. This is a very effective way to redirect Emergency Room and Urgent Care over-utilization to a more affordable option. Both of these programs have been proven to lower the cost of healthcare, reduce employee absenteeism, due to illness and injury, increase productivity and lower employee turnover. To learn more about implementing wellness and telemedicine solutions, please contact Nancy Damato, RDA Benefit Services, LLC, toll-free at 855-693-0772 or ndamato@rdabenefits.com.

9


10

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

11


12

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

13


14

Utility and Transportation Contractor, FEBRUARY 2014


Legal Dig

RECENT APPELLATE DECISION CLARIFIES GROUNDS FOR INJUNCTIVE RELIEF IN PUBLIC BIDDING MATTERS By: Steven Brawer, Association Legal Counsel A top priority in any bid protest action questioning the award of a public project is to try to maintain the status quo in order to prevent the award from being finalized, or at the very least to stop the work from proceeding, until the legal merits of the protest can be decided. In this area time is of the essence and a failure to move quickly and take steps to forestall job activities can lead to forfeiture of the opportunity to challenge the award. In December 2013 the Superior Court of New Jersey, Appellate Division issued an important decision addressing the criteria for granting temporary injunctive relief in public bidding cases in the state. That matter, Waste Management of New Jersey, Inc. v. Morris County Municipal Utilities Authority, arose out of the solicitation of a multi-year contract for operation of two county solid waste transfer stations and related transportation and disposal services. Substantively, the dispute giving rise to the bid protest involved the requirement that all bidders submit a “certified financial statement” and the claim that the apparent low bidder failed to satisfy that condition. In response to complaints filed by two unsuccessful bidders challenging the Authority’s award decision, the trial court held an evidentiary hearing regarding the meaning of the term “certified financial statement.” In a written decision, the judge determined that a stay of the award would not be issued because the challengers failed to establish by clear and convincing evidence that they were likely to succeed on the merits of their legal claims against the awardee’s bid. This decision in turn led to an appeal which presented the narrow question of whether the trial judge mistakenly exercised his discretion denying interlocutory injunctive relief. In considering this issue, the Appellate Division reviewed prior case law and reiterated that the factors which control the issuance Utility and Transportation Contractor, FEBRUARY 2014

of an interlocutory injunction are (i) whether the movant has demonstrated a reasonable probability of success on the merits; (ii) that a balancing of the equities and hardships favors injunctive relief; (iii) that the movant has no adequate remedy at law and that the irreparable injury tobe suffered in the absence of injunctive relief is substantialand imminent; and (iv) that the public interest will not be harmed. However, insofar as the trial judge did not consider all these factors and denied injunctive relief solely on the grounds that probability of success on the merits had not been established, the Appellate Division opinion concluded that the determination was “erroneous because it overlooks a court’s authority to impose interlocutory restraints regardless ofdoubts about the movants’ likelihood of success.” Specifically, the Appellate Court reversed the trial judge’s decision because it failed to balance the relative hardships; did not consider the irreparable injury that would follow the injunction’s denial; failed to examine whether the denial of interlocutory relief would impair or destroy the subject matter of the suit; and he did not weigh the detrimental impact on the public if a lucrative contract were to be given to a potentially unqualified party before a challenge to the bidding process could be fully and finally adjudicated. This last factor — allowing for a full review and evaluation of the bidding process before a contract award is made — suggests that an interlocutory injunction should be issued to maintain the status quo in any public bidding case where there is a colorable challenge to the low bidder’s proposal. Because of the important public interests at stake, this rule makes good sense and establishes the importance of the Waste Management case to all parties involved in the public procurement process in New Jersey. 15


16

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

17


18

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

19


20

Utility and Transportation Contractor, FEBRUARY 2014


Financial Overview

OUT OF HIBERNATION: FINANCING OPTIONS FOR 2014 By: William J. Ruckert, Provident Bank As you project work for the 2014 season, the first quarter is the perfect time to consider alternate financing options. Two possible solutions that your financial provider can offer that are especially useful are: Capital expenditure (CAPEX) lines of credit and Bonds in lieu of retainage. First, we’ll review CAPEX Lines of Credit. Capital Expenditures include the purchase of new or used equipment, real estate and/or leasehold improvements. These acquisitions typically require financing and put a strain on cash flow. After projecting capital purchases for the year, contractors can establish a CAPEX line that allows easy access to financing. Once the assets are purchased and advances are made under the line of credit, the outstanding amount automatically converts to a term loan to be repaid according to the conditions of the initial agreement. This arrangement provides contractors with the freedom and convenience to purchase what they need when they need it, at predetermined conditions, while not tying up cash. Another financing alternative is utilizing bonds in lieu of retainage when possible. Some government agencies and private entities permit contractors to offer bonds in lieu of retainage, to be held by a brokerage, which can help increase cash flow and provide a return on the investment. For instance, the New Jersey Department of Transportation allows contractors to pledge high-grade investment vehicles into an escrow account to avoid the withholding of retainage. The escrow agreement is between the contractor, the public or private agency and the financial institution. Investments must have sufficient ratings by Moody’s and S&P, have a market value at least equivalent to the retainage amount and be monitored quarterly. Utility and Transportation Contractor, FEBRUARY 2014

Many large banks have moved away from handling these types of accounts. However, there are some regional and community banks that have the necessary expertise, understand the contractor industry and the intricacies associated with bonds in lieu of retainage – and they are up to the task. Provident is committed to providing custom financial solutions for contractors, including providing CAPEX lines and handling bonds in lieu of retainage. We can help contractors focus on their business while we oversee the administrative needs, communicate with the proper entities, ensure investment ratings are maintained and proper compliance is met. In conclusion, if your firm is going to purchase long-term assets or is bidding on accounts for which bonds in lieu of retainage are an option, consider talking to your banker about how they can help meet your specific needs and reduce your cash flow burden. Finally, Provident Bank sends its congratulations and wishes continued success to PKF Mark III, which is celebrating 45 years in business and Applied Landscape Technologies, which begins its third decade in 2014. This is also a special year for Provident Bank, which received its charter in February 1839, exactly 175 years ago this month. Note to members: This column’s topic was sparked by a conversation with a Provident Bank customer (and UTCA member). If you have a suggestion for an upcoming column topic, or have a finance question you would like to submit, please send an email to Michael DeVito at mike@utcanj.org and we will consider using your topic in a future column.

21


22

Utility and Transportation Contractor, FEBRUARY 2014


TEN TIPS TO HELP BUSINESS OWNERS IN CHALLENGING TIMES By: Jay Gilston & Beth Ulrich, Emerald Financial You know how to assess and address your clients’ needs; however, it’s easy to neglect your own. What is the sign of a good decision?® It’s choosing a knowledgeable financial professional to help you assess and address your needs. In challenging times, when business decisions have considerable personal and economic impact, it helps to have knowledgeable advice from a network of professionals who can help owners overcome challenges and lay the groundwork for future success. Consider the following ten tips to help small and family business owners in challenging times. 1. Have a thoughtful, well-written business plan and stick to it Rather than getting caught up in daily operations of your business, set clear, realistic goals and objectives. Consider strategies that address the long-term plans of your business and how you plan to retire. 2. Seek out a network of business advisors By pulling together an informal board of directors made up of business owners in similarly sized companies dealing with similar short-and long-term issues, owners can realize opportunities within their businesses that they may not have been able to see themselves, and they can work together to solve each others’ most pressing issues. 3. Find a financial professional with experience in serving small businesses Choose an experienced, local financial professional, trained to meet business owner needs, who you trust with your business and personal aspirations and who will help you with your plan for reaching your short-and long-term goals. 4. Know your core customers and delight them Understand your customers. Segment them and know where profitable business comes from. Make the extra effort to know how you can keep and grow your base of recurring customers. 5. Define and communicate your unique value in the market What do you do that no one else is doing? How is your service better than other services? Why should customers see you instead of your competition? Take a look at the competition; some may have changed their approach or exited the business. Develop a unique message that articulates your unique value proposition. 6. Hire better and offer good benefits Typically, the pool of talented, highly-trained, and educated people grows in a down economy as more and more people lose jobs. Find and hire strong talent. Offer voluntary benefits – those that you, as owner, offer to employees at a typically lower cost than they could obtain themselves. Voluntary benefits can be provided at no direct cost to you and reward people. Utility and Transportation Contractor, FEBRUARY 2014

7. Revisit your overhead expenses and trim the fat Which overhead expenses can be reduced or eliminated? Can you reduce credit card fees? Discuss a reduction with your current provider. 8. Consider tapping your whole life insurance policy’s cash value, if stuck for credit Businesses hold whole life insurance policies for key person insurance, succession planning, and buy-sell arrangements. Whole life insurance builds cash value, guaranteed. A business can take a loan from its whole life insurance policy. The policy continues to receive dividends, which – although not guaranteed – can increase the policy’s death benefit and cash value or provide a source of income to pay some or all of the premiums due.* 9. Diversify into a complementary business A bad economy may cause business owners to retreat to their core business, but in doing so you might miss a chance to leverage your existing infrastructure. This is a time to understand the profitability of each line of your business. Ask yourself if there is a complementary option that might bring in more profits or heighten the visibility of the company overall. For example, an owner of a coffee shop could expand into some light catering for area business functions. 10. Develop an exit strategy and succession plan Are you approaching retirement and intending to sell your business for retirement income? An experienced financial professional can help you put a succession plan in place. Your customers depend on your business. Your business depends on you. In challenging times, or anytime, an experienced local financial professional can help you and your business interests. *Access to cash values through borrowing or partial surrenders will reduce the policy’s cash value and death benefit, increase the chance the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured.

23


24

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

25


26

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

27


28

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

29


30

Utility and Transportation Contractor, FEBRUARY 2014


$105 MILLION PORT AUTHORITY INITIATIVE TO UPGRADE ROADS, REDUCE TRAFFIC BY PORT NEWARK IS MUSIC TO THE EARS OF NEW JERSEY HEAVY HIGHWAY CONSTRUCTION WORKERS By: Chris Colabella, Construction Information Systems The Port Authority of New York and New Jersey (PANYNJ) announced last December the approval of a $105 million program to pay for upgrades to the roads around Port NewarkElizabeth. The announcement was welcome news for New Jersey heavy highway construction contractors, many of whom will be tapped to reconstruct several major roads in the region. In a statement announcing the move, the PANYNJ said the capital will fund efforts to modernize infrastructure. The appropriation “will ensure that we bring the era of 1950s roads into modern times so they can handle the volumes of cargo and resulting trucks that we deal with today.” This program is part of a continuing PANYNJ initiative to make Port Newark-Elizabeth more efficient and environmentally friendly by reducing truck congestion on the port’s aging roads, according to the PANYNJ media relations department. Planners expect that the road improvement project will mean less truck congestion in the region near the port. Further, as an added benefit, the decrease in truck traffic will add up to a whopping reduction in harmful truck emissions — about 281 pounds per year! A Port Authority representative said improvements, design and reconstruction of five major access roads around New Jersey’s shipping terminals at Port, Corbin, Marlin and Kellogg streets and Doremus Avenue are expected to save $60 million in operating costs in the next 30 years.

The PANYNJ was expected to award the contract for engineering services for the Port Newark-Port Street Corridor

Improvement Project in late January (after the submission deadline for this article.) The Authority will coordinate and monitor overall design, including environmental design, landscaping design, geotechnical engineering services and civil engineering design. Additional projects are expected to go out to bid in the coming months. In addition to repaving the five roads near the port, the project also calls for upgrading barriers, improving drainage, replacing traffic signals and signs, as well as realigning portions of the roads. This also includes demolishing and replacing

Utility and Transportation Contractor, FEBRUARY 2014

the Corbin Street ramp. The PANYNJ media representative said the construction should provide $1.2 million in safety benefits in the same time period. In the past several years, these roads have been the site of numerous traffic accidents. When the widening of the Panama Canal is completed in 2015, the PANYNJ expects that the size of container ships needing to access Port Elizabeth will increase significantly. The current height of the Bayonne Bridge is a problem because officials believe it won’t be able to accommodate the larger vessels. Therefore, one other major infrastructure improvement is included in the $105 million strategy; the PANYNJ intends to raise the Bayonne Bridge by 64 feet by the time the Panama Canal project is completed. Making sure cargo is able to flow safely and efficiently through the port is critical to New Jersey’s ability to attract international shippers to do business in the region. Port Authority Vice Chairman Scott Rechler said the $105 million program, along with other initiatives that focus on improving Port Newark-Elizabeth, will further enable the PANYNJ to provide a safe and efficient network of roads, thereby ensuring that New Jersey’s port remains a “vital cog in the region’s economy for many years to come.” About The Author: Chris Colabella is the president of CIS, Inc., New Jersey’s only local construction lead service. For more information, visit www.cisleads.com or call 800-247-1727 to arrange for a free demo of CIS leads. 31


32

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

33


34

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

35


APPLIED LANDSCAPE TECHNOLOGIES BEGINS THIRD DECADE IN BUSINESS Firm Expands Into Premiere Synthetic Field Builder When Paul Martino was a college student, he realized that he had an eye for gardening and landscaping. During that time, Paul worked in garden centers and did some private landscaping on the side using just a shovel and an old Chevy Impala. One of the major influences in his life was his grandfather who assisted him on these projects. After he graduated from Delaware Valley College with a degree in Ornamental Horticulture, Paul Martino landed a position with M. Tomasello in 1988 and eventually began to work for VIP Contractors where he learned the highway construction business.

Applied Landscape technologies continued to perform residential and commercial projects and began bidding more state projects as a subcontractor. In those early years, Applied Landscape Technologies received guidance from John Sirocco, the firm’s insurance agent which enabled the company to grow.

On a project at Guantanamo Bay, Cuba are Mike Prendeville, Adam Reed, Steven Dills, Tony Cavallo, Kevin Petix, Paul Martino and Domingo Saquique.

Pictured are Paul Martino, left, and Phil Pirro.

By the early 1990’s Paul decided to venture out on his own by forming Applied Landscape Technologies. The company landed its first highway subcontracting job on the Route 287 project for D’Annunzio & Sons. After getting this chance from Jim D’Annunzio, Paul Martino sought to establish a solid reputation in highway construction. This project gave the young firm credibility in the industry.

Pictured left to right are Cory LaBarre, Paula Smith, Valerie Herwood, Paula Korinko and Kelly Tedford. 36

For the first eight years in business, Paul’s firm worked primarily as a subcontractor. He successfully completed work for Joseph M. Sanzari, Inc. on the Route 4 & 17 project, as well as on the Route 18 contract for Conti Enterprises. Applied Landscape Technologies has also performed work for J. Fletcher Creamer & Son, Della Pello Paving, Tilcon and Prismatic. This period during the transition from a small subcontractor to a general contractor could not have occurred without the hard work of his wife Debby who stepped in as the controller and set up the accounting system that would enable the rapid but controlled growth. After securing a substantial bonding line, Applied Landscape Technologies has bid work primarily as a general contractor. The firm expanded its services to include wetlands work, park

Multi-use athletic fields are pictured at Long Island University. Utility and Transportation Contractor, FEBRUARY 2014


construction and synthetic turf installations. Approximately twelve years ago, the company completed one of the first synthetic field installation projects at Camp Dawson in Montville. The company’s diversification is apparent as they successfully built the new carousel that was installed at the Turtle Back Zoo. Earthwork also proved to be a successful venture as the firm excavated approximately 1.5 million yards of material on a project for the Brick Reservoir.

Finished soccer fields at Athenia Park in Clifton.

Dutchess County Stadium project during construction.

The company began to venture into hazardous waste remediation work as well. On the $7.6 million Riverfront Walkway project in Newark, Applied Landscape not only performed remediation on the site, the firm also installed two new synthetic turf fields, constructed three new buildings, while self performing site work and paving as well. The company’s largest project to date was the $8.5 million project at the Joseph Medwick Park in Carteret, NJ. This contract involved soil remediation, construction of paths, installation of new tennis courts, and the completion of buildings with both natural and synthetic turf athletic fields. Another project of note was the $5.8 million Riverside Park project in North Arlington, NJ. This project included three synthetic turf fields, buildings, bleachers and a track. In the formative years of the company, Paul Martino operated his business from his home. Eventually the firm relocated to Lake Hiawatha until finally settling at its current location in Montville in the mid-1990’s. Applied Landscape Technologies purchased a 5 ½ acre site on River Road, built office buildings, and warehouses and provided room for the growing fleet of equipment that was needed to maintain their business. Starting out with only one piece of equipment, the firm has over forty pieces of heavy equipment, Tandem trucks, Roll off services that require full time mechanics and yard maintenance employees. The company has become the largest synthetic turf installer in New Jersey and one of the largest east of the Mississippi. Projects of note have been completed at Boston College stadium, Tropicana Field in St. Petersburg, the Citrus Bowl and at Guantanamo Bay. The firm has worked as far west as Wisconsin and as far south as Florida and every state up and down the east coast. The firm is approved for virtually all state agencies for bidding, both in New Jersey and New York and has completed many school and NYC parks and recreation projects in all five boroughs. The firm also performs field work for private universities and schools. Applied has been successful in providing design build services for many private and public entities. The firm has received Utility and Transportation Contractor, FEBRUARY 2014

many referrals from state and public agencies and has an impeccable reputation in the industry with agencies and design professionals. Such success could not have been possible without a strong team of employees. Approximately eight years ago, Phil Pirro, a professional civil engineer, joined the firm as vice president. He took on many responsibilities which helped lessen the work load on Paul Martino. In fact, Paul credits Phil with bringing the company to the next level. Cory LaBarre began with the firm eight years ago as a receptionist and now serves as the company’s estimator. The firm’s controller, Valerie Herwood has been on board for seven years, while Paula Smith, in charge of public relations and payroll administration, has been employed for four years. Long-time superintendents include Kevin Petix, Danny Fabiano and Gary Ricco. With the rapid increase in synthetic field use, the company added Paula Korinko to be director of sales specific to synthetic turf. Many of the firm’s union employees have been with the company for more than ten years, and these employees have commanded great respect over the years and are a credit to their union. The company started as a union contractor and has maintained its relationship with the respective unions ever since. From its humble start, this company has advanced to include land clearing, drainage, sewer and water pipe installation, fence installation, construction of retaining wall systems, poured in place concrete, all types of buildings, bleacher construction and lighting and electrical work. We can expect this firm to continue its successes for many more decades.

Pictured is the Snyder Avenue Park field in Berkeley Heights. 37


38

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

39


40

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

41


Accounting Corner

8 SIMPLE QUESTIONS THAT MAY MINIMIZE YOUR TAX LIABILITY IN 2014 By: Jack Callahan, CohnReznick Thank you I wanted to take a minute to thank the UTCA, its board and members for honoring me with the 2013 Larry Gardner Award. I am truly honored. All of your kind words, wishes and show of support meant a great deal to me. That being said now let me talk to you about taxes. When is it best to begin the tax planning process? While many business owners tend to only think about tax credits and deductions at the end of the year in relation to that year’s tax filings, tax planning should be a 12-months-a-year exercise. Even though business decisions are not based on tax consequences alone, they are an important component of maximizing cash flow and profitability. Take time now to look ahead and consider the following questions that might help minimize the tax bite of 2014 tax filings.

construction companies with fleets of vehicles and equipment will want to look carefully at the new regs to determine whether a change in income tax accounting method is warranted.

1. What will I spend on equipment, including repairs and maintenance? As of this writing, the fate of bonus depreciation for 2014 and beyond is still in play. This lucrative tax benefit has become one of the political footballs commonly referred to as “tax extenders.” Regardless of whether and when it is extended, remember that you can claim bonus depreciation for any equipment placed in service in 2013. Looking forward, routine repairs and maintenance on existing fleets of equipment also present opportunities to write-off expenses in the current year. With its final repair regulations, effective January 1, 2014, the IRS attempted to bring to an end years of uncertainty and controversy over the distinction between a capital improvement and a deductible repair. The rules are complex and full of nuance, so

The final repair regulations also allow a taxpayer to deduct rather than capitalize the acquisition cost of tangible property, up to a specified threshold. For businesses with audited financial statements, that threshold is $5,000 per invoice or per item substantiated by the invoice. For companies without audited financial statements, the threshold is $500. Keep in mind that the company must have a written capitalization policy in place at the beginning of the year in which the property was placed in service to qualify for this safe harbor.

42

Deductible Repair or Capitalized Improvement? Under the finalized repair regulations, replacing the engine of a road grader with the same type of engine may qualify as routine maintenance, and thus be treated as a deductible repair. If the engine is replaced with a more powerful and/ or efficient engine, it does more than return the property to its ordinary and efficient operating condition. Therefore, it must be capitalized.

2. Have I bought or am I considering buying a heavy SUV or truck? When considering what vehicle to purchase for business use, keep in mind that depreciation deductions for so-called “luxury autos” are capped. For example, if you placed a business vehicle in Utility and Transportation Contractor, FEBRUARY 2014


service in 2013, the combined depreciation and expensing deduction could not exceed $11,160, regardless of the cost of the car. However, if this was a truck or a sport utility vehicle (SUV) with a loaded weight that is more than 6,000 pounds but not greater than 14,000 pounds, up to $25,000 of the cost can be expensed and annual depreciation deductions can be claimed for the balance of the cost. Many common full-size pickup trucks with cargo box areas of at least six feet in length are not subject to the “luxury autos” or “heavy SUV” depreciation limits and can yield even greater tax deductions. However, be forewarned that if business use of the vehicle does not exceed 50% of total use, the SUV or truck is not eligible for expensing and must be depreciated on a straight-line method. 3. Am I investing in research and development (R&D)? Considering that the industry involves constant innovation, too few construction contractors take advantage of federal and state research and development (R&D) tax credits. Another perennial “extender,” the federal R&D credit was introduced to encourage innovation and business growth, and recent court decisions have loosened the “discovery test” restrictions and documentation requirements to make it more business friendly. Activities that qualify for the federal R&D tax credit include those aimed at developing the construction process for a specific job or improving the efficiency of overall process performance. While design/build, value engineering and LEED projects present the greatest opportunities for innovation, pre-construction planning and development of means and methods for plan-spec and hardbid jobs also can qualify. The bottom line: If your company has invested time, money and resources toward the advancement and improvement of designs and processes, then you likely meet the requirements for the R&D tax credit.

R&D Credits Reduce Contractor’s Tax Bill by $325,000 A construction company with annual sales of $25 million developed the means and methods to improve two boilers and associated piping for a medical center. Because the hospital needed the boilers to be operational at all times, the contractor designed a temporary system and associated piping to enable continuous functionality during the replacement of the system. These developments, which improved the efficiency of the building, qualified for more than $325,000 in federal R&D tax credits.

4. Are the government buildings I have designed energy efficient? If a construction company was the primary designer of a government-owned, energy-efficient building, there may be an opportunity to claim the 179D Energy Efficient Commercial Building Deduction (assuming that it is extended). The Energy Policy Act of 2005 enacted Section 179D, which provides a deduction of up to $1.80 per square foot to owners of energy-efficient commercial buildings. When a government agency owns the building, however, the tax benefit can be transferred to the primary designer of the building. The primary designer is the person who creates technical specifications for installation of energy-efficient commercial building Utility and Transportation Contractor, FEBRUARY 2014

property, including an architect, engineer, contractor or environmental consultant. Note that installation, repair or maintenance of property does not meet this definition. To qualify for the 179D deduction on a government-owned building, the designer must secure a letter that assigns the tax benefits from the government agency to the contractor. If more than one entity is responsible for creating the technical specifications of the building, then the building owner can either determine which designer is the primary one or allocate the deduction between the designers. The significant tax benefits of this provision mean that it might be worthwhile to bring it to the attention of the building owner, architect or engineer. 5. Do I withhold significant retainage from my subcontractors? In addition to tax credits and accelerated depreciation deductions, contractors also stand to improve their tax efficiency through alternate methods of accounting. In particular, contractors with significant retainage payable can defer taxable income into future years. This only applies if a business has taxable income and significant retainage payable, and a Form 3115 Application for Change in Accounting Method must be filed. Because IRS approval can take months, talk to a tax advisor now about the potential taxsaving opportunities of a change in accounting method. Also, keep in mind that changing the method of accounting without filing a Form 3115 requesting permission to change accounting methods is not permitted, so be sure to secure IRS approval first. 6. Am I properly accounting for employees’ expenses and reimbursements? While the above points explore opportunities to lower your tax bill, another important component of tax planning involves avoiding penalties and interest by ensuring compliance with all applicable federal, state and local tax laws. One perennial area for IRS scrutiny is how the business reimburses employees’ expenses. Some contractors use a “nonaccountable plan” to reimburse travel and entertainment expenses. This means that the construction company allocates to an employee a certain amount (say $200 per week) to cover travel expenses. However, the company owner may not realize that unless the employee submits receipts to account for those expenses, that income is taxable. Another common (and incorrect) approach is the “tool allowance,” where the construction company allocates a certain amount each week to reimburse specialized employees for use of their personal tools. Unless the worker is being reimbursed for a specific tool or equipment purchase, that income will be considered taxable. 7. Are my contract workers really employees? Worker classification continues to prove a confusing area of the law – and a potentially expensive one. If the IRS determines that a worker who was designated an independent contractor is actually an employee, the employer will owe back payroll taxes, potential interest and penalties. Soon, that employer may also owe stiff penalties under the Patient Protection and Affordable Care Act (PPACA) if those reclassified employees push the company into the “large employer” category. The determination of whether a worker is an independent contractor or an employee generally turns on the degree of control 43


the employer has over the worker. It is advisable to consult a labor lawyer to ensure best practices are followed with regard to classifying workers. 8. Have I expanded my operations into new states? Contractors also can get tripped up when their operations cross state lines. One common area of confusion involves sales and use taxes. Generally, a contractor is deemed the end user of materials purchased in the construction of a building; therefore, the contractor is responsible for paying sales and use taxes. One problem occurs when the materials are shipped to a location in one state and then delivered to a different state. Depending on the states involved, the contractor will likely owe sales and use taxes in both jurisdictions. If sending people or materials across state lines, ensure compliance with the state and local tax rules in each state. What Does CohnReznick Think? Remember that tax planning should be an ongoing process. Once you have wrapped up your 2013 tax filings, keep a focus on the future. In particular, pay attention to Congressional activity regarding the “tax extenders�— including bonus depreciation, the R&D tax credit and 179D. Most important, maintain a continuous dialogue with a tax advisor to identify ongoing opportunities to grow business in the most tax-efficient way.

44

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

45


46

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

47


48

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

49


50

Utility and Transportation Contractor, FEBRUARY 2014


Labor Relations

UNITED STATES DEPARTMENT OF LAW WAGE & HOUR DIVISION TARGETED ENFORCEMENT -

ARE YOU VULNERABLE? By: Jill Tobia Sorger, Esq., Partner, Tobia & Sorger In September, we discussed “What Should an Employer Expect When the United States Department of Labor Investigates a Violation of the Fair Labor Standards Act.” This article discusses the Wage and Hour Division (WHD) component of the United States Department of Labor (DOL) strategic plan of targeting employers who violate the Fair Labor Standards Act. Some employers are much more affected than others. Wage and Hour Division strategic planning invariably involves enforcement initiatives in targeted industries. Employers of “lowwage” employees are always given a high priority, because: violations are common, employees are less likely to know how to file a complaint with the WHD, and employees are reluctant to file a complaint or to seek out a plaintiff’s attorney. Many employers considered to employ vulnerable workers treat the workers as “independent contractors,” subcontract the work, or utilize third parties to pay the wages. These employers are targeted for investigation under the portion of the strategic plan that deals with “fissured industries.” By applying the broad Fair Labor Standards Act (FLSA) employment relationship concepts, the WHD is usually able to establish that the principal is an employer (i.e., that the “independent contractors” are actually employees). If there are legitimate subcontractors, the WHD develops evidence to establish that the principal (or prime contractor) and the subcontractors are joint employers. When a third party pays the wages (e.g., a staffing or temporary help firm, professional employer organization, or contract administrator), there are usually two or more joint Utility and Transportation Contractor, FEBRUARY 2014

employers. All responsible entities and individuals are obligated to achieve and maintain compliance. Examples of fissured industries mentioned in the strategic plan include are but are not limited to construction and transportation and warehousing. Two other categories of vulnerable workers mentioned in the strategic plan are: Individuals with disabilities employed by certificate holders under Section 14(c) of the FLSA, and Employees in statutory programs for which there is no private right of action. Consequently, it appears that work centers utilizing § 14(c) certificates and federal contractors (service and construction) are included in the targeted investigation program. Advice for UTCA Contractors: How vulnerable are you? If you are included in the above list, there is a much higher probability that your organization will be scheduled for investigation. Even without “targeting,” investigations of these types of employment are common, and they generally yield violation findings. If the WHD district office that serves your area selects your industry as a part of its local strategic plan, the probability of investigation increases significantly. Accordingly, it is prudent for UTCA Contractors to once again take the time to review and revise their compliance policies with the FLSA and other WHD statutes. However, if you are included in one of the probable targeted industries or scenarios, you are encouraged to take steps to “get your house in order” before the WHD pays a visit. 51


52

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

53


54

Utility and Transportation Contractor, FEBRUARY 2014


Legislative News

FEDERAL & STATE UPDATE By: Evan Piscitelli, UTCA Consultant With the New Jersey political world fixated on stories of lane closures and Sandy relief, a great deal of legislative work was being accomplished away from the cameras. It was the infamous lame duck session – the very end of it in fact – where the clock was ticking on almost 150 bills. A new Legislature was soon to be ushered in, and once in place, all measures that had passed the Assembly and Senate, but were not yet acted on by the Governor, would go back to square one in the new session. As you can imagine, this chaotic period of lawmaking has become legendary for great ideas crossing the finish line, oftentimes in the company of terrible ones. Creating a State Transportation and Energy Infrastructure Bank, a landmark piece of legislation written by UTCA and sponsored by many lawmakers, found itself in the mix. It’s an example of a great idea that reached its day of reckoning in the waning moments of a lame duck session. Association representatives spent nearly a year and a half of intense lobbying on the bill’s behalf. Over that period of time S2143 was the topic of debate at five different committee hearings and in front of both the General Assembly and State Senate. It was also amended on no less than five different occasions to improve the bill and make various interests content. At every turn, the debates were largely positive, the votes in the affirmative and strongly bipartisan, and the momentum was going in the right direction. That was the case, until January 22nd rolled around. With a pile of “almost laws” on his desk, Governor Christie decided to sign 100 of them, and veto the remaining 44. Astonishingly, our Infrastructure Bank bill was part of the losing 44. The bill was not approved before the Utility and Transportation Contractor, FEBRUARY 2014

Constitutional deadline of noon on Tuesday, causing the measure to die. The Governor is not required to provide a veto message explaining this decision since it falls within the lame duck session of an expiring Legislature. Association representatives have repeatedly reached out to the Administration for an explanation, but so far, silence. The Governor’s action, or in this case inaction, represents a major setback for our industry. New Jersey will not be prepared to receive new federal funds, nor can the state accept private investment, for the financing of new road, bridge, and energy related projects. Money is out there. Had this bill passed, our State could immediately apply for TIFIA funding or section 129 loans to build up the balance. On the private side, large union pension funds were ready to infuse the bank with even more cash. And there is no doubt that towns and counties were dusting off shelved projects that they could now put on the street thanks to the benefits of the low interest loans provided by the bank. UTCA intends to have this bill reintroduced in the new Legislature as soon as possible. Representatives from our Association will try to find out why a bill that cost the state nothing, actually made it possible to receive free federal money that could not be secured otherwise, and that used an existing state agency without creating any new bureaucracies could have been vetoed. While this important measure was not the solution to all of our funding problems in New Jersey, it could have been another tool to get more projects moving. The news is disappointing, but the fight is not over. 55


56

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

57


PROPERLY IMPLEMENT BEST PRACTICES TO ADDRESS SHORTCOMINGS, NOT CREATE THEM By: Jim Schug, Principal & Engagement Manager with FMI Corp. Many companies have created initiatives to emplace best practices as a solution to the change around them. As the recession subsides and new work becomes apparent, hiring and growth create a demand for more structure in how we execute. A great set of best practices can help decrease organizational risk and improve profitability. Like most good intentions, many times companies develop best practices and implement them poorly. Done incorrectly, morale decreases, project losses increase due to bureaucracy and, ultimately, the company suffers from reduced profit. In some cases, companies spend significant time and energy developing their playbook, only to have it stagnate after two to three years and become only a memory. Best practices should be developed to become a communication tool and working document that synchronizes how we do things. There are three major causes for how best practice initiatives can end up hurting the company and reducing ability to execute. These include a lack of tie-in to the company structure and strategy, focus on processes only and a general disregard for the people behind the behavioral changes and best practices that reflect a continuous learning environment and adjust over time. The proper implementation of best practices is designed to address these shortcomings and 58

to the undoing of operational best practices if left untouched. The same standards that led them to success must be revised and updated continually to remain relevant and valuable.

ensure lasting success. Each is discussed in detail below. No. 1: No Tie-In Best practices must be customized to fit each company. Too often, we cut and paste a best practice from a peer contractor or another company and expect it will work. As no two construction companies are the same, no two best practices or standard operating processes should be the same either. Organizations often vary by structural organization. This may be the difference between a matrixed organization and a functional task-organized company. At the project-team level, many companies have project engineers or project administrators; some have working foremen or area superintendents. In some cases, project estimators and project managers are the same roles; in others, the estimators conduct vendor and subcontractor buyout. These structural subtleties require a customized

best practice and adjustments to roles and responsibilities. In addition, businesses may have different customer sets. Best practices developed for a public works contractor (i.e., DOT work) will differ significantly from a private-work contractor (i.e., work for developers). Standards adjust for companies that build in one metro area or city, compared to contractors that conduct work over several states. Job size may also be a driver of change in best practices. Companies that conduct many small jobs should have a different operational plan than those that build only a few large jobs. As companies shift their strategy over time, they must adapt their best practices to those changes. A clear and cohesive method for managing the chaos of construction allows contractors the ability to expand geographically or grow their business profitably. Unfortunately, these same positive results can often lead

No. 2: Process Only Best practices can be misinterpreted as forms, documents, checklists and binders. Many companies have standard operating procedures that are not used as a standard. The most important dimension of best practices is that the people follow them. Great leaders recognize the value of best practices in that behaviors are changed. Changing behavior is difficult and best influenced with leadership. In too many companies, the senior leadership team develops best practices and thrusts them upon middle management. A best practice can be called “best� only when those who will be executing it deem it so. Although time consuming, this occurs when middle management and those executing the work develop the best practice with the support and guidance of senior leadership. The true difficultly leadership faces in changing behaviors is to sustain buy-in while holding people accountable. Rigid enforcement does not work and can be just as ineffective as not holding anyone responsible in the first place. Change is tough and good leaders know to expect some resistance to it. At the

Utility and Transportation Contractor, FEBRUARY 2014


same time, good leaders must be able to have tough conversations and provide feedback to those who will not comply with best practices. People need feedback to sustain behavioral change. Feedback includes quantified positive results obtained from using the best practices (e.g., improved profit margins, decreased waste, faster projects, etc.) Great leaders reinforce the importance of best practices and company values at every instance possible. When leaders are engaged so too are their followers. No. 3: One and Done Best practices must continually adapt to keep pace with the learning organization. Typically, the first development of standard operating procedures takes the longest to create (Version 1.0). Version 2.0 is the first true refinement to ensure good fit and typically happens after six months to a year of use to work out the bugs,

formatting and usefulness. Following that adjustment, successive changes should be minor adaptations that reflect lessons learned across project teams. For instance, after completion of a project in a new county, the company may add a bullet in the pre-job planning section to reflect the change in timeline for utility requests required in that new county. Done correctly, this addition will help prevent that mistake by anyone else in the company operating in new geographies. Best practices do not remain stagnant after initial development. A best practice developed in a certain period and must adjust over time. Even when the company executes the same strategy, the best practice will change, as new materials become available, contract terms shift over time, municipal requirements adjust and means and methods become more efficient. “Written in stone” sets of best practices are a symptom of companies that do not

Utility and Transportation Contractor, FEBRUARY 2014

continuously learn and change over time. Best practices should reflect these improvements and adjust appropriately. Many companies gain customer feedback on their project performance. Some gain feedback from subcontractors and vendors. The end state of a well-executed set of best practices is a satisfied customer at an improved (lower) cost. Done correctly, we should regularly ask for feedback from our customers to ensure our best practices deliver value. This feedback on our performance may help adjust our best practices and identify methods to improve performance or address an incorrect customer perception. As time progresses, natural attrition brings new employees and leaders to the company. These new ideas can help shape the best practices. Newer employees use best practices as guidelines to understand how things work. After some exposure, they are best suited

to ask “why” questions and challenge the effectiveness of the operating procedures. This allows for continued improvement. Conclusion: Best-in-class contractors recognize the importance of using best practices. Effectively developed and employed, construction companies can win more projects on bid day while making more profit than their competition. Common pitfalls described earlier must be avoided to ensure long-term success. Incorrectly done, the development of a company playbook may have a maximum life span of 18 months or less. Done correctly and an organization can build a sense of buy-in and ownership across the company to continually communicate and improve execution.

59


60

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

61


62

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

63


64

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

65


66

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

67


Safety Perspective

HOW EFFECTIVE IS YOUR SAFETY PROGRAM? By: Ken Bogdan, JA Montgomery Risk Control Another calendar year has come and gone and many of us have made resolutions to do things better than we did in 2013. Well at least we try. It’s also a good time for checks and balances. How was your safety performance last year? If it was good, what did you do right? If it was bad, what can you do better? Here are a few things to take a look at: 1. Written Safety Programs Chances are your company has a written safety manual that outlines procedures for safe work practices and applies accountability. Take a good look at it because your organization may have changed. Your safety manual may include names of people who no longer work for you or may describe work tasks that you no longer perform. Also, many OSHA required programs like Hazard Communication, must be updated annually. Failure to update these programs can result in a citation or liability exposure. If you need a specific written program, templates can be obtained from consultants, your insurance carrier and even from OSHA so you don’t have to start from scratch. 2. OSHA Recordable Rates and Worker’s Compensation Losses Take a hard look at your OSHA logs and worker’s compensation loss runs. Loss runs can be obtained from your insurance broker or carrier. The information in your OSHA logs and loss runs should look the same. If not, 68

your record keeping may not be accurate. Compare your data from the past three to five years to look for trends. Can you track accidents back to a certain project or management team? Are you seeing the same injuries again and again? Are you seeing the same person getting hurt multiple times? These types of trends will tell you where you need to focus your energies. If you haven’t had any workplace injuries, that’s great. But don’t be complacent. Try to find out why you are doing so well and focus on that. 3. Safety Training The type of training that needs to be provided annually may depend on job duties and OSHA compliance. Some topics need to be covered once a year through refreshers and others do not. Make sure that you are keeping good training records for employees to ensure that everyone is getting what they need. You also may want to evaluate the quality and effectiveness of the training that you are providing to your employees. Are you using in house trainers or consultants? Is the training specific enough to your operation or is it more generalized? Is the training addressing accident prevention or simply being done to comply with OSHA or client requirements? Look at again at your accident records to see what you might be missing. There is a common misconception that OSHA Outreach training (30 or 10 hour) has an “expiration date”. The fact Utility and Transportation Contractor, FEBRUARY 2014


is that Outreach training may not meet any OSHA compliance requirement and therefore the training does not ever “expire” or require a “refresher”. However, many large CMs and GCs may require you to staff your projects with supervisors and foremen that have taken a 30 or 10 hour course within the past 5 years. Online training is becoming more popular because it can be cost effective and it allows employees to do the training on their own time. This is certainly an option that you should always consider for generalized topics like Hazard Communication and the OSHA Outreach training. But more complicated topics like Excavation Safety and Fall Protection, should be taught by a qualified instructor that can interact with your employees and answer specific questions. 4. Safety Audits, Inspection Protocols and Corrective Actions Are your field employees conducting regular, documented safety audits of your projects? If so, who is reviewing the documentation? Any time a report like this is generated it needs to be reviewed by your Safety Director and/or Senior Management. If you are using a standardized checklist, make sure that field employees are not “pencil whipping” the form. This will tend to happen if the individual completing form knows that nobody in management is looking at it. If the report includes documentation about unsafe conditions, make sure that there is follow up and corrective action. Remember, these are legal documents and can be easily discovered during litigation.

Utility and Transportation Contractor, FEBRUARY 2014

Best practice is to develop and implement a formal inspection protocol that assigns accountability for corrective action and follow up. Consider involving senior management in the inspection process to emphasize it’s important. Audit your inspection records at least twice a year to ensure quality and accuracy. What gets measured, gets done. 5. Culture Check How important is safety to your organization? Well, attitude reflects leadership so start at the top. Is safety discussed at management meetings? Are senior managers and project executives evaluated based on project safety performance or simply on getting the job done within budget? Are injury loss dollars charged back to each project? Ask your field employees what they think about safety. Is the message trickling down to them? If not, the message may not be a clear enough or it may not be getting past middle management. Safety programs should be designed to prevent accidents and mitigate losses. A good program will increase productivity, quality, customer satisfaction and profits. If you don’t feel that your safety programs is paying you dividends, don’t give up on it, just change the way you invest. About The Author: Ken Bogdan is a Certified Safety Professional (CSP) with more than 25 years of experience is safety and risk management. He is the Director of Private Sector services for JA Montgomery Risk Control and a member of the UTCANJ Safety Committee. He can be reached at 732-660-5040.

69


70

Utility and Transportation Contractor, FEBRUARY 2014


UTCA EXECUTIVE SEMINAR IS A BIG SUCESS Attendees Enjoy Weather and Resort In Aruba Last month, a total of 108 UTCA members, spouses and family members experienced the warm weather and spectacular facilities at the Aruba Marriott during the recent Executive Seminar, which was conducted during January 11-18, 2014.

Additional business meetings were conducted during the week. Topics included: Navigating the Claim Process with NJDOT, which was presented by George Pallas and Shawn Farrell, and Healthcare Reform 2014 and Beyond, which was presented by Nancy Damato. Attendees had many touring and activity options. UTCA utilized the services of DePalm Tours for tours and activities. People were able to register for off-road safaris, island tours, sailing, snorkeling trips, underwater submarine treks to depths of approximately 130 feet below the Caribbean Sea, dinner cruises and much more. DePalm also served as the transportation company that transported the group to and from the resort and the local airport.

Attendees are pictured at one of the morning business sessions in Aruba.

The seminar opened with a welcome reception and dinner for all attendees, which was sponsored by Wealth Preservation Solutions and Garden State Precast. The group enjoyed hors d’oervres and an Aruba Surf Barbeque. The following morning, the group attended the first business session of the week. This meeting included a review of local tours which was conducted by DePalm Tours. Representatives reviewed the different tour options for the attendees. This was followed by a presentation from Kevin Ellman of Wealth Preservation Solutions who gave an informative seminar on Estate Planning and Investing.

Pictured left to right at the Farewell Reception are Tom Hardell, Lisa Post, Scott Lattimer, Harry Chowansky and Lisa Chowansky.

The 2014 seminar program concluded on the Friday evening with a Farewell Reception that included several food stations, including a pasta station, beef tenderloin, shrimp skewers, antipasto, stuffed mushrooms and a wok station. Reception sponsors were Cohen, Seglias, Pallas, Greenhall & Furman and Construction Information Systems. The 2015 Executive Seminar will take place in Sonoma and San Francisco from March 7-15, 2015. The group will visit several wineries in the Sonoma area which is renowned for its vineyards. The attendees will then be transported to San Francisco which boasts some of the best seafood in the country and is a major and diverse city in terms of arts, music, cuisine, festivals, museums, and architecture.

Seminar presenters from left to right are George Pallas, Nancy Damato, Kevin Ellman and Shawn Farrell. Utility and Transportation Contractor, FEBRUARY 2014

71


72

Utility and Transportation Contractor, FEBRUARY 2014


Utility and Transportation Contractor, FEBRUARY 2014

73


74

Utility and Transportation Contractor, FEBRUARY 2014

Utility and Transportation Contractor February 2014  
Read more
Read more
Similar to
Popular now
Just for you