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President’s Message I recently had the opportunity to attend two meetings with some of the most influential leaders in New Jersey politics. The first meeting was with Governor Chris Christie along with UTCA’s CEO Bob Briant, Jr. The second was a series of meetings with several of our Congressional Leaders in Washington D.C. for the ARTBA and TCC Fly-In along with the Clean Water Construction Coalition. The one thing which rang true in both meetings is that leadership, in general, whether at the state or federal level, is lacking. It seems all our “Leaders” want to do is lead the way to their next election. Very seldom will you see a leader take the lead or take the bull by its horns to resolve a situation that everyone knows needs to be resolved. Case in point is the Transportation Trust Fund. I have written numerous letters, as have past presidents, about fixing the TTF. It has taken me this long to realize that TTF is not the problem, the politicians are the problem. Sadly, we elect these people over and over again, expecting a different outcome. It has been more than twenty years since they have raised New Jersey’s gas tax. In general I am not an advocate of raising any tax and I wish they would actually find a way to reduce our property taxes. However, I do understand the need to raise the gas tax, in this instance, as the gas tax has not kept up with inflation or the cost of living. If we look at only one indicator: the cost of college tuition. What has that done over the last twenty years? It has quadrupled! So how have our elected leaders during the past twenty years dealt with funding our road improvements? They have borrowed, borrowed and borrowed again. We allowed the politicians to let that happen. It now shows with our State’s dismal credit rating. The borrowing has to end now. It seems as though our politicians, at the federal level, are doing the exact same thing. They just want to blame someone else, i.e. the Tea Party. As we all know the Tea Party was not in existence twenty years ago, yet our federal transportation

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funding was also an issue then. The bottom line is our elected officials, both Democrats and Republicans alike, cannot come together to do what is right for our nation. Memorial Day just passed and while we reflected on those who have made the ultimate sacrifice for our nation, on the political level, we should expect similar actions from all of our politicians… to do what is right for our Nation and State. There is one star that does shine bright and that is Assemblyman John Wisniewski. John was just at our Northern Membership Meeting and he was quite blunt about the TTF solution. He believes we should raise the gas tax. He recommends a 25 cent gas tax increase, and to make all transportation funding constitutionally dedicated for the sole purpose of transportation capital improvements – not for bloated payrolls, or miscellaneous diversionary tactics, but solely for the capital improvement of our transportation network. I applaud Chairman Wisniewski for his bold dedication and leadership. Continuing with the good news, I would like to congratulate Alpine Painting and Sandblasting for celebrating 40 years in business and Garden State Precast for celebrating 15 years in business. Congratulations to both companies and many more years of continued success. In closing I wish you a safe, healthy and prosperous summer and hope all of you have plenty of work and can take the time to enjoy your families over the summer months.

Best regards,

Scott Lattimer Utility and Transportation Contractor, JUNE 2015


JUNE 2015 Volume XL, Number 3

Contents Features

Published Bimonthly During 2015 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.

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12 29

36 45

Alpine Painting & Sandblasting Celebrates 40 Years In Construction Shifting Your Business Auto Policy Into Overdrive TMAW Keeps Fighting The Battles The Industry Can’t Afford To Concede Garden State Precast Completes 15 Years In Business May Is Disability Insurance Awareness Month

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Editor: Michael DeVito Editorial Contributors: Anthony Attanasio Mike DeVito Dennis Hart Dan Neville Advertising Manager: Helene Nasdeo Photographer: Michael DeVito Cover Photo: Image Up

Departments 2 19 22 51 58 67 71

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

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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.

Cover Pictured on the cover are Dave Scaturro, Ben Scaturro, Jr., Sam Scaturro and Steve Scaturro.

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Cover Story

Alpine Painting & Sandblasting Celebrates 40 Years In Construction Out Of Mom’s Garage One Of NJ’s Largest Commercial & Industrial Painting Companies Is Born

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n 1975, an idea turned into an opportunity. Steve Scaturro was studying to be an Engineer at NJIT College while his older brother Ben Scaturro had just started out as a full-time physical education teacher. To help pay his tuition, Steve acquired a parttime job as a superintendent at the Garden Apartments, where he resided. His responsibility was to hire different contractors and to oversee the maintenance of the building. This included finding a contractor to paint the apartments after someone moved out. As a 20-year-old college student, seeing the amount of money the painters were making, Steve saw a bright opportunity for him and his brother. To make a few extra dollars he and Ben started painting the Garden Apartments themselves.

Pictured is a completed project of an IKEA store. 4

With each apartment they became more skilled and more efficient. The two decided it would be smart to venture out of the apartment building and began painting residential projects during summer break and around the holidays. Ben and Steve increased their client base and provided multiple services in addition to painting including installing roofs, small additions, paving driveways, and doing anything they could to get ahead. “We did the best at painting; we made the most money, we were most effective, and got the best reviews from our customers” Steve said “I remember the first apartment Ben and I painted, we completed it in a day and a half; the following year, we could paint three apartments in one day.” And so it began, at the end of 1975 Ben and Steve partnered up to incorporate Scaturro Bros. Inc.

Alpine employees donate their time as a partner with Community Outreach Services. Utility and Transportation Contractor, JUNE 2015


Margate’s “Lucy The Elephant” was restored by Alpine.

In 1978, Steve graduated from NJIT with a BS in Construction Technology Engineering. He went full-time into painting with a 4-5 man crew while Ben was still teaching full-time and painting only part-time. With limited resources and a small team, Ben and Steve had to manage with what they had. Steve’s first office was a walk-in closet in his Garden Apartment where he built a homemade desk where the shelves once were. The two eventually upgraded to their first shop, operated out of their parent’s two-car garage. In the beginning of 1979, Ben left teaching to pursue growing their painting business full time. Although both still painted, Ben’s main role was running the crew and equipment while Steve’s main role was to create the business systems and handle the financials. Both were wearing multiple hats within the company. In 1980, Ben and Steve began focusing on finding commercial and light industrial painting projects. The bulk of their jobs were shutdown manufacturing work. When the factories would close for holidays, they would go in and paint the facility. At the beginning they started both painting in the same crew and then saw the benefit of splitting their leadership skills into two separate crews to tackle more work and increase their footprint. In 1981, Scaturro Bros added the trade name Alpine Painting and Sandblasting Contractors. From the start, both Ben and Steve were very interested in the technical aspect of painting. As a college grad with an engineering degree, Steve felt that communicating with engineers came a lot easier to him than dealing with the typical homeowner on residential projects. Ben and Steve joined painter trade organizations such as the PDCA and SSPC. They wanted to better educate themselves with the newest paint technology/ equipment and grow their business through learning from other successful painting contractors across the nation. Around the early 1980s, Ben and Steve slowly expanded their crew size to 15, focusing on larger projects. They both stepped out of painting themselves and into a sales and management role. Their jobs became strictly commercial and industrial which meant targeting manufacturing plants, warehouses, schools and sandblasting/ painting water tanks. In 1985, Ben and Steve purchased their first building on Thomas Street in Paterson, NJ, approximately a 1,000 sq ft office and 3,000 sq ft shop. Five years later, in 1990, they upgraded to Alpine’s present building on Florida Avenue in Paterson, NJ, with a 3,000 sq ft office and 8,000 sq ft warehouse. The new warehouse space was able to house its existing equipment and incorporate a blast barn and industrial spray booth for in-house painting. By this time Ben and Steve were working with a 35-45 man, full-time crew with 2 full-time employees working in the office. Utility and Transportation Contractor, JUNE 2015

The two owners still had a passion for building and construction. So in 1985 they purchased empty lots to build their homes. The process went so smoothly that they ended up purchasing several other lots in the Wayne and Kinnelon areas and building custom homes for other families. Residential development evolved into building commercial/industrial spaces such as the Lyndhurst/ Ridgewood Libraries, Hackettstown Fish Hatchery and Towaco Firehouse. To this day the company still provides construction services to bring added value to its existing customers. From 1993 to 1995, Ben’s three sons, Sam, Dave, and Ben Jr. began working part-time for Alpine, organizing the warehouse paint shop, sweeping floors and learning the painting trade from the ground up. They worked on summer breaks, holidays, and sometimes weekends. Although the three sons pushed their Father to put them on field projects, Ben strongly believed that the three should be educated, learn the skills of the painting trade and understand the different coating systems for each substrate before pursuing work in the field. After two years in the shop the boys were finally awarded the opportunity to work as apprentices in the field. They quickly climbed the ranks from journeyman, foreman to eventually project manager. Ben and Steve both knew that if the three brothers wanted to excel in this business they would have to learn each aspect of the company, position by position. Ben did not want his sons entering into the company full-time after high school. Secondary education was far too important to disregard. Both generations agreed that a college degree would assist to bring new light to the company and help Alpine grow to the next level. By 1999 the company continued to expand; Ben and Steve purchased a separate yard to store Alpine’s equipment nearby

Work is performed on the Newark Airport Monorail. 5


the backbone of the human resources department, hiring a sales, estimating, project management and support team that are passionate about what they do. Dave believes that “when you enjoy what you do, you are going to be good at what you do.” He has been very keen on creating a positive work environment and comfortable company culture for Alpine, where employees (even those without the name Scaturro) feel like family. In 2005, Ben Jr., graduated from Penn State University with a BS in Economics and like his brothers, began full-time at Alpine. His career began as Project Manager and focusing on building the company’s shop facility. He created a stream lined process for blasting and coating in-house construction equipment, structural steel, communications and pressure vessels. Ben Jr.’s new focus would be on Estimating and Managing Industrial Projects and providing value engineering to complete them efficiently and safely. With all three sons aboard, Alpine’s second generation was ready to build upon the values and customs of an already flourishing company. During its long and successful history, Alpine Painting & Sandblasting Contractors has performed many well-known projects. Included in these projects are work at the Barnegat Light House, the refurbishing of the famous “Lucy the Elephant” in Margate, a large scale repainting of the original Giants’ Stadium, a project at Drumthwacket (the New Jersey’s Governor’s Mansion), and several contracts with IKEA. Primer application is completed on Penstock project for First Energy.

their existing warehouse. As the company grew externally, internally this was an exciting time for Alpine. Ben’s three sons were beginning their careers with the family business signifying new blood with bright horizons. As each of the boys was groomed into the company, they used their college education to add value to their new roles. “The best way to grow was to pick an area within the company, make it your own; make it great,” said Steve Scaturro. The second generation evaluated and reassessed the current company actions to ensure that process for estimating, craftsman operation procedures, management etc.. was working. The updated processes were documented in a written system and implemented throughout the ranks. Dave Scaturro said, “We needed to collect the last 25 years of experience, knowledge and wisdom from my Father and Uncle and put it in writing. A detailed system/process can be duplicated from person to person and generation to generation.” In 2000, Ben’s oldest son, Sam, graduated from Rutgers University with a BS in Civil and Environmental Engineering and became a fulltime Project Manager/Estimator at Alpine. With an engineering background, Sam changed the whole technical path of the company and rigorously began obtaining certifications and training in SSPC, PDCA, NACE and OSHA. His focus was to ensure the safety of the craftsmen and to develop deep relationships with large industrial clients in the private and public sector. With Sam’s fresh perspective he incorporated new technology and techniques to make the projects more efficient to bring better value to the customers. In 2002, Dave, also graduated from Rutgers University with a BS in Labor Relations and Business Management, entered into the family business with Sales & Marketing and eventually took the Director Role within the company. With the goal to shine the very best light on Alpine, Dave updated the company’s website and took the marketing program to an entirely higher level. He became 6

Scaffolding is setup in preparation of a project.

Although the firm’s geographic footprint stretches within a 200 Mile Radius of Paterson, NJ, the company has, on occasion, expanded its reach to other states such as Virginia and Maryland. But one of Alpine’s more unique projects has been right here in the transportation hub of the state. Alpine was recently contracted to apply a skid resistant grit coat on the Newark Airport AirTrain in Elizabeth, NJ. Newark International Airport’s AirTrain is an 8 mile long monorail, opened in 1995 and run by Bombardier, which stops at all airline terminals and several parking areas. AirTrain allows passengers to travel to and from the airport without worrying about traffic, tolls, taxis or shuttle buses. Alpine Painting was awarded the contract to re-apply the grit coat to the track of the monorail over a three week period. The track grit coating system is a high performance epoxy floor paint with a broadcasted Estes abrasive which actually helps the train stop more efficiently. But prior to installing the new coating the firm needed to remove the existing track paint to the bare steel. With a recent purchase of a Farrow 650 Utility and Transportation Contractor, JUNE 2015


Max slurry blasting unit, Alpine developed a more efficient method to perform the work than in years past. With this new technology their men could achieve higher production rates to strip the coating, and use less labor to provide a higher quality surface profile for the new floor coating to adhere. With the new approved system, the scope of work consisted of cleaning, preparing and reapplying the grit coat system to the outer 8 to 10 inches (both tire paths) of the landside & airside monorail track. Bombardier has hired Alpine on numerous occasions because of their track record of meeting tight deadlines and providing cost effective methods for installing long term coating systems. Another one of the firm’s most interesting projects was completed in 2011 for First Energy Corp. at their New Jersey Pumped Storage Facility. This plant creates power by transferring water from an upper reservoir to a lower reservoir via a ½ mile long Penstock. The 2 billion gallons of water rushing down through this 20 foot diameter pipe each day, generate up to 400 megawatts of power for use during high demand periods during the day. Each night the turbines reverse and the water is pumped back up to the upper reservoir for the following day. This plant had been in operation since 1964 when the Penstock was built. The original lead coating was removed from the exterior in 1985 and an Inorganic Zinc/Chlorinated Rubber

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system was installed. The coating system has performed well over the years, but was beginning to show signs of corrosion and was due for maintenance. First Energy determined that the epoxy/ acrylic polyurethane system from Keeler & Long was the coating of choice for the re-coating of the Penstock. Alpine Painting & Sandblasting Contractors was selected as the contractor to complete this job. With an eye on the safety of its work force, Alpine designed a unique wire rope positioning system. This design required workers to be tied off, with nylon lanyards attached to a full body harness, to both sides of the Penstock by horizontal wire ropes. This focus on safety is nothing new for Alpine since the company has received a UTCA Annual Safety Award in each of the past three years. The quality work and attention to safety certainly makes Alpine one of the leading contractors of its kind. In fact, the firm has been able to obtain many certifications over the years that only 1% of the industry has procured. The accomplishments are numerous during a 40 year history that all began as a part-time side venture. As Ben Sr. and Steve begin to step back from the daily business grind, they leave their company in good hands with the next generation of the Scaturro family.

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SHIFTING YOUR BUSINESS AUTO POLICY INTO OVERDRIVE By: Carl Bloomfield & Shane Riccio, The Graham Company Last year at a monthly claim strategy meeting with one of our clients, we reviewed an auto loss that on the surface appeared to be of minimal impact to the company’s overall auto loss experience. The accident was a fender bender in our client’s parking lot between a company car driven by an employee and an unrelated third-party vehicle. Sounds harmless, right? However, the third-party vehicle’s driver did not have insurance. Even though the injuries to the employee were minimal, we predicted to our client that within one year this claim would be valued at several hundred thousand dollars. Unfortunately, we were right, and the result of this claim was rate pressure placed on our client by the insurance company. Even worse, a year earlier, our client opted to provide Uninsured Motorist Coverage to their employees, against our advice. Then, when the aforementioned claim occurred, they regretted that decision. To prevent such scenarios, this article will focus on six areas that business owners should consider when it comes to electing coverage provided by their Business Auto Policy, including: 1. Personally Owned Autos 2.

Employees as Insureds Endorsement

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Broad Form Driver-Other-Car Coverage

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Fellow Employee Coverage

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Uninsured/Underinsured Motorists Coverage

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Personal Injury Protection

1. Personally Owned Autos Do you have any Personally Owned Autos included in your Business Auto Policy? Under the “Who is an Insured” section of 12

your Business Auto Policy, employees are included as insureds except when the covered auto is owned by the employee or a member of his or her household. This means that if any of your employees (including executive officers) or their spouses personally own any of the vehicles included for coverage under the Business Auto Policy, and that vehicle is involved in an accident, the owner of the vehicle would be specifically excluded from coverage. In the absence of a specific endorsement adding the individual vehicle owner as an Additional Insured or Named Insured, your policy would not protect the employee’s liability arising out of the ownership of the personally owned vehicle. However, the corporation’s liability is still covered. 2. Employees as Insureds Endorsement The Employees as Insureds Endorsement would add your employees as insureds while they are using their personal autos in your business. This endorsement extends the Business Auto Policy to provide excess liability protection to the individual employee in the event he or she is involved in an accident while driving his or her own auto for company business. Without this endorsement, the Business Auto Policy will only protect the company’s interests in the event of an automobile claim involving an employee’s vehicle. By adding the endorsement to your policy, you would be providing coverage for the individual employee while driving his or her own vehicle, which exposes your Business Automobile Liability loss experience to additional claims and higher rates. 3. Broad Form Drive-Other-Car Coverage Are you given a company car? Do you rely on the Business Auto Policy to cover you and your family’s auto insurance? If so, you should purchase Broad Form Drive-Other-Car Coverage, which provides an individual named in the endorsement with the same Utility and Transportation Contractor, JUNE 2015


coverages and limits while driving a non-company-owned vehicle as that person would have while driving a company vehicle. This coverage is particularly important for individuals who are not covered by a Personal Auto Policy because they (or any of their family members) do not own personal vehicles. Key personnel who drive a company auto and don’t purchase their own auto insurance should be considered for this coverage. 4. Fellow Employee Coverage Should I choose Fellow Employee Coverage or elect to exclude this coverage? On one hand, you can grant coverage for all employees suing each other as a result of an accident while driving a company vehicle on business, or you can exclude coverage for all fellow employee suits. The correct answer is not to agree to either because, if negotiated properly, you can have limited coverage for specific types of employees including executives, management and other key employees. Negotiating this limited coverage would eliminate the risk of fraudulent claims by two lower-ranking employees “staging an accident,” for example, while at the same time protecting your management employees from fellow employee suits. 5. Uninsured/Underinsured Motorists Coverage What Uninsured/Underinsured Motorists Coverage limits should I purchase? Uninsured Motorist Insurance (UM) and Underinsured Motorist Insurance (UIM) pay for all sums that the insured is legally entitled to recover as damages from the owner or driver of an uninsured or underinsured vehicle. This coverage was designed to compensate for pain and suffering, emotional distress and wrongful death damages that should have been paid for by the UM/UIM driver. Keep in mind that your employees will still be made whole by your Workers Compensation and or Personal Injury Protection policies and that UM/UIM will only pay for severitytype situations where punitive damages are involved. The Financial

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Responsibility Laws in New Jersey require that Mandatory Uninsured/Underinsured Motorists Coverage be provided by your Automobile Policy. However, the insured does have the option to buy the coverage at minimum limits rather than the standard $1,000,000 limit. The decision to purchase the lower limits should reflect your risk management objectives. Note that claims against your UM/UIM limit directly impact your loss history, which can adjust your insurance costs from year to year. 6. Personal Injury Protection Personal Injury Protection (PIP) insurance covers actual economic damages as a result of an auto accident. PIP claims provide for reimbursement of medical expenses, rehabilitation expenses, loss of income, loss of household services, death benefits and funeral expenses. Non-economic injuries such as pain and suffering would not be covered by your PIP or “no fault” coverage. Again, note that the large insureds should consider purchasing state minimum PIP limits in order to protect your Auto loss history. After reviewing the multiple coverage options discussed above, you should have a strong understanding of what each type of coverage offers and some of the pros and cons to purchasing them. Most if not all of these coverages would come at a minimal cost to the insured in year one, however, each of the coverage choices you make will affect your loss history over time, which will ultimately be reflected in your rates over time. The key is to understand the decisions you make and build a risk tolerance that is the right fit for you and your company. About the Authors: Carl Bloomfield, AAI is a Vice President at The Graham Company and can be reached at cbloomfield@grahamco.com; Shane Riccio is a Producer at The Graham Company and can be reached at sriccio@grahamco.com

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Safety Perspective

CONTRACTORS OFTEN IGNORE SAFETY RISK RIGHT IN THEIR OWN BACKYARD By: Kevin Monaco, Leading Edge LLC While most UTCA member firms have comprehensive safety & health programs which outline their compliance with OSHA standards for construction, many ignore a significant risk which is in many cases, literally in their own back yard. 29CFR1926 describes the standards for construction project safety and UTCA member firms know these regulations inside and out, spending enormous time, money and energy to achieve compliance through development of written policies and procedures, training and education for employees and site safety inspections. This level of safety oversight is often dictated by the project owner and is usually a contractual requirement with which the contractor must comply. Because major construction projects involve significant oversight of labor, materials, scheduling and budgets, the field issues are often addressed swiftly and consistently. Meanwhile back at the equipment yard or shop, 29CFR1910, or the General Industry standard applies and contractors often look right past this forest of risk because the trees of completing a project are in the way. Many contractors have significant potential for electrical hazards, fall hazards, Lock-out/Tag-out issues, tool safety, rigging, compressed gas, fire safety and a host of other issues which are not reviewed, inspected or treated with the same level of seriousness as they would be if they were out in the field. It is quite common that we meet with contractors to discuss project safety issues and see employees with no personal protective equipment, emergency exits blocked, compressed gas not stored properly, old and worn out rigging, damaged ladders and any number of employees who have not been properly trained to identify and Utility and Transportation Contractor, JUNE 2015

address the hazards of their workplace, simply because they are not tied directly to a project which requires it. It is critical that contractors review all of their work areas when developing and implementing a risk management/corporate safety and health program. Contractors should conduct regular site inspections of their fixed locations and should conduct hazard assessments of all work locations to identify and either eliminate or otherwise manage potential risks. Employees who work in the shop and yard must be provided training and proper PPE to do their jobs safely and appropriate policies should be put in place to keep office personnel out of potentially hazardous work areas unless they also have appropriate training and protective equipment. A modest investment in safety at your office, yard and shop will pay dividends not only in the safety and productivity of the employees on site but in many cases also improves morale, makes them feel as though they are connected to the company’s core mission, and also allows those employees to better do their job, which is to make sure the field crews can safely and productively do theirs. Remember, accidents, injuries and fatalities do not recognize if the victim is working at the site of a bridge project or in an elevated storage area in a garage which lacks appropriate guardrails. The risk can be just a great, the injury just as severe and the OSHA penalties just as significant. Take the time to make sure your own back yard is clean and well maintained. I promise you’ll enjoy the benefits.

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Financial Overview

YOU GOT THE WORK... NOW WHAT? FORECAST LIKE A METEOROLOGIST, OF COURSE! By: William J. Ruckert, Provident Bank The long winter is finally over—in more ways than one! Your contracting business has emerged from hibernation and been flung headlong into the busy season. I wouldn’t blame you if you had rejoiced in the spring awakening: jobs have been awarded and your work force is geared up for upcoming projects. But now that you’ve secured the work, and the summer season is in full tilt, what comes next? It’s no surprise that your cash reserves may have dwindled during the first quarter. Although your suppliers will provide some of the sorely-needed working capital to jumpstart the year, the conundrum you face, yet again, is forecasting cash flow. Because isn’t that always the problem? In previous articles I’ve discussed the services a financial institution can offer to cover gaps in cash flow. Now, I’m going to let you in on a little secret about helping yourself. Forecasting is a foundational business practice you can implement to help manage your company’s health. Becoming a Meteorologist Cash is king, but for a contractor, it’s even more than that: it’s your lifeline. Ample cash reserves can make the difference between sleeping comfortably at night and constant monitoring of receivables and payables. That’s why it’s imperative that you don’t dismiss forecasting as a distraction or impossible task. It’s not either. Rather, it’s a blue print to follow, a goal to shoot for. Better yet, it will engender buy-in from upper and lower management alike as their input is critical to the process and its success. Remember the old saying: failing to plan is planning to fail. So how do you do it? First, look at historical sales and decide how you’ll need to adjust based on current trends. Review the cost of materials, labor, fuel, etc. to see if your gross profit margin is expanding or contracting. 22

Then make a detailed list of operating expenses to determine whether the company is performing profitably. If not, you’ll be able to identify areas that need to be addressed. Past results are the best indicators of future costs, but adding variables to your projection will help you quickly identify strengths and weaknesses. Forecasting on an individual job basis is also a worthwhile exercise and these projections can be integrated into your forecast of the company as a whole. Decide how far out you want to forecast. Update inflows and outflows to see how cash is being used during each forecasted cycle. As each period ends, reconcile your projections to actual results. This will give you an accurate idea of the ebb and flow of your company’s performance. When forecasting, you should absolutely do four things: 1. Adjust often: Take variables into account and fine tune your forecast often. The more accurate you are, the better able you’ll be to create predictability and reliability. Adjustments also increase focus on individual job performance and force management to make time-sensitive decisions on weak jobs. 2. Develop a front-loaded billing schedule: Anticipate the timelines of costly up-front expenditures required for your projects and bill for those expenses immediately so you can recoup cash fast. Consider requesting accelerated payment methods (wire transfers, ACH, electronic checks.) 3. Match your forecast to your bids: Reconciling the cost of your bid to your forecast will provide timely information for management to act upon. 4. Share Your Findings: Share your forecasts with management so your employees are all on the same page when it comes to jobs on an individual basis and in the aggregate.

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Meteorologists Make Mistakes, Too Just like the weather, your projections are shaped by a number of factors and can be fickle. It’s tough to predict completion percentages and payment schedules when anything can happen on the job, including cost over-runs, change orders, new work, and bad weather. Be careful to avoid the typical mistakes. Do not project too far into the future. Remember, the shorter the prescribed time period and the more often you adjust, the more accurate your forecasts will be. 8-12 weeks (or less) should suffice. Also, beware the overly-optimistic project manager. Project managers must be unstintingly realistic, relying on the hard data. Optimism has no place here; underestimating real costs has no place here. Your project managers have to manage from the job site, not the office. Predicting the Weather Forecasting can be difficult at the outset, but its benefits are unmatched. It helps you manage discrete jobs and the company as a whole, allowing you to better predict the sun… and the storms. You’ll also be able to anticipate shortfalls and remedy them, build a cash cushion, analyze comparable periods, determine your borrowing needs, plan for capital expenditures, and make shortand long-term investments. Forecasts reflect strong leadership and go a long way in garnering the trust of banks, sureties, prospects, and investors. Just remember this: Whenever or however you do it, forecasting can bring you peace of mind, room to breathe, and more success. Cheers to that. To learn more, please contact the author. About The Author . . .Wm. J. Ruckert III is Senior Vice President of Middle Market Lending at Provident Bank. Based in Provident’s Iselin office, Ruckert oversees commercial financing for companies with sales of $15 million or more. He holds a bachelor’s degree in business administration from Loyola College in Maryland. Continued from Page 67 While none of the above sounds radically different from how we currently account for revenue, applying the steps in certain industries may be challenging and produce different outcomes than current practices. ASU 2014-09 is a principles-based standard, requiring judgment in its application. Accordingly, at a minimum, all entities will be subject to more disclosure requirements. However, the amount of enhanced disclosures will vary according to industry, and the extent of management’s judgments. ASU 2014-09 will amend the Accounting Standards Codification by creating a new Topic 606, Revenue from Contracts with Customers. This will replace almost all existing revenue recognition guidance. How will ASU 2014-09 affect the Engineering and Design industry? Based upon information currently available, we believe the impact on the Engineering and Design industry will ultimately be moderate. Since the engineering and design industry is governed by legal contracts, it is easy to default to the thinking that the changes will Utility and Transportation Contractor, JUNE 2015

be profound, but when contracts are evaluated in terms of the guidance above it is unlikely that revenue will be recognized in a substantially different manner than it is now. The “cost-to-cost” method of revenue recognition that largely prevails now will generally continue, only under the auspices of new terminology. Much design work, specifically in the fields of civil, municipal and survey, create value to the customer as a function of time incurred, subject to agreed-upon pricing. This will yield revenue recognition that is very parallel, if not identical, to the current methods. Some engineering and design entities may have revenue streams that contain variable elements, such as incentive payments, awards, or penalties. For example, a $500,000 contract may contain a penalty of $40,000 if the work is not completed before a specified date. The $40,000 penalty is considered variable consideration under ASU 2014-09. The new standard requires variable consideration to be estimated as part of the transaction price (Step 3) as long as it is probable that a significant revenue reversal will not occur (this is referred to as a constraint). ASU 2014-09 provides guidance on how to estimate this. Further, any estimated variable consideration not subject to the constraint will then be evaluated for when to recognize it as revenue (Step 5). Generally, the revenue will be recognized as the related performance obligation is satisfied, subject to the constraint. Returning to our example, the entity will assess, based upon it’s experience with similar contracts, whether it is probable that the penalty will be incurred (not subject to a significant revenue reversal). ASU 2014-09 discusses factors to consider in this assessment, such as if the entity has a long history of performing this type of work on time,is it within their control to complete the work on time, and willthe uncertainty be resolved within a relatively short period of time. Given the swing from a risks and rewards approach to an emphasis on change in control, it is possible that engineering and design entities may recognize certain variable revenue streams sooner than they are today. What should we be doing now? Later? Companies are concerned about how much internal effort, external help, and time they need to address implementation questions. Therefore, we recommend the following: 1. Develop a broad understanding of ASU 2014-09 (now) 2. Perform a deeper dive. Identify and evaluate those aspects of ASU 2014-09 that will be different for your business along department lines: accounting, finance, technology, legal, tax, financial covenants, or internal controls. Specifically, select a few representative customer contracts or arrangements, and evaluate them using the new revenue recognition model to identify areas for a further analysis. (now) 3. Monitor industry-specific transition resources (see below) (now and ongoing). 4. Select a transition method, and plan for how you will retrospectively adopt ASU 2014-09. It would be valuable to evaluate each of your business units separately to ensure a full understanding for each of your core services (now). 5. Establish an implementation plan, including a timeline, educational sessions, third-party resources needed, and possibly a transition committee to oversee conversion (later). 6. Educate financial statement users and stakeholders about the changes ASU 2014-09 will have on your financial statements (later). 23


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Sonoma/San Francisco Executive Seminar

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TMAW KEEPS FIGHTING THE BATTLES THE INDUSTRY CAN’T AFFORD TO CONCEDE By: Nick Ivanoff, ARTBA Chairman The passage of a permanent Highway Trust Fund (HTF) fix and a multi-year highway and transit bill has been the focus of ARTBA’s Transportation Makes America Works (TMAW) program during the first quarter of 2015. As I write this column in mid-April, it remains unclear what direction Congress will take regarding these important measures. The funding authorization for the highway and transit program, which is financed through the HTF, expires at the end of May. And Congress can’t move to pass a longterm bill until it reaches agreement on the HTF. These are critical battles with no room for surrender. That’s why ARTBA, through the TMAW program, has been launching a wave of “advocacy carpet bombings” to keep the pressure on members of Congress and the Obama Administration. Bridge Report Card On April 1, ARTBA caused a big splash with the release of its second annual “bridge report card,” which showed that 61,000 structurally deficient U.S. bridges need urgent repair. ARTBA staff placed the story first with “USA Today,” which drove all the subsequent—and extensive— national and local news coverage in print and online, and on radio and television. Almost every story referenced the pending HTF crisis. Policy Substance On March 12 ARTBA released a substantive proposal to help jump start policy discussions on the Hill. Our “Getting Beyond Gridlock” (GBG) plan was well-received by members of Congress from both parties. GBG marries a 15 cents-per-gallon increase in the federal gas and diesel motor fuels tax with a 100 percent offsetting federal tax rebate for middle and lower income Americans for six years. It would fund a $401 billion, six-year highway and public transit capital investment program and provide sustainable, user-based funds to support it for at least the next 10 years. “Congressional Quarterly” noted: “[T]he ARTBA plan seeks to turn the tax issue on its head and perhaps change the terms of a long-running debate in Congress.” We will continue to push GBG. Social Media & Advertising Campaign In March, the 31 members of the ARTBA co-chaired Transportation Construction Coalition (TCC) used their respective social media networks to release 10 infographs over a two-week period, with each containing a key finding from new research conducted by IHS Global—”Transportation Infrastructure Utility and Transportation Contractor, JUNE 2015

Investment: Macroeconomic and Industry Contribution of Federal Highway and Mass Transit Program”—quantifying the economic impacts of the federal surface transportation program. The campaign was augmented with digital and print advertising. “Economy-Driven: Innovations Driving the ROI in U.S. Transportation Infrastructure” To educate the new Congress about the enormous value of infrastructure investments, ARTBA developed a custom, 32-page magazine showcasing industry innovation and the use of cuttingedge technology—through a series of 25 project vignettes—to deliver transportation improvements that provide a real return on investment for U.S. taxpayers. The magazine was distributed nationally to an audience of about 30,000 and to all congressional offices in late April. Coalitions While ARTBA utilizes TMAW to advance the transportation construction industry’s agenda, we are still making major six-figure investments in supporting industry coalitions pushing complementary messages about the HTF and the passage of a long-term transportation bill, including: the U.S. Chamber-led Americans for Transportation Mobility, TCC, The Road Information Program, and Energy Equipment & Infrastructure Alliance. More information about these TMAW initiatives can be found on www.tmaw.com. We continue to prepare other advocacy “smart bombs” to direct at Congress until it completes the task at hand, but we need your help. If you’ve already made your TMAW contribution again this year, we say “thank you.” If you have not, we ask your company to make a major financial commitment soon. As you can probably guess, many of our opponents outspend us every day. That’s why your continued financial support is so critical. Regardless of what happens by the May 31 stopgap funding deadline, or later this summer, let’s continue sharing the protransportation investment message with the American people and keeping pressure the 114th Congress. I know there’s some battle fatigue out there, but we can hardly afford to stop fighting for our industry. Editor’s Note: On May 19th the House approved a short term authorization followed by the Senate on May 22. 29


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Photo Caption: Gennaro Liguori receives his Hall Of Fame Award from Joe Walsh in 2012.

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Featured Article

GARDEN STATE PRECAST COMPLETES FIFTEEN YEARS IN BUSINESS Company Founded By Experienced Industry Representatives

W

hen one thinks about the precast structure industry in New Jersey and Eastern Pennsylvania, the name Garden State Precast immediately comes to mind. This well-known established firm has grown quickly and dramatically since its inception. Yet this entity is still a very young firm that recently completely 15 years in business. However there is more to this milestone when factoring in the vast experience of the three founders of the company.

industry experience! Kirby O’Malley, the President of Garden State Precast, is a graduate of West Virginia Institute of Technology where he earned a Bachelor of Science degree in industrial engineering. He began his career with InterPace in 1970 as a project engineer. He later worked for CSR Hydro Conduit before advancing to Duncan Thecker Precast as Vice President of Operations. Dan Morris, Vice President of the firm, attended Newark College of Engineering and also began his career with InterPace Corporation in 1966 as a Production Control Manager in East Brunswick, NJ. Dan has worked for the Cretex Companies, Hydro Conduit and Kerr Concrete Pipe. Eventually, Dan held the position of sales manager for Duncan Thecker Precast.

Pictured left to right are Gene O’Malley, Kirby O’Malley and Dan Morris, the company’s founders.

At the end of 1999, industry veterans Kirby O’Malley, his brother Gene O’Malley and Dan Morris partnered together to purchase an existing facility in Farmingdale, NJ from Duncan Thecker Precast. Together these men boast approximately 140 years of construction 36

Bill Morris, Paul Heidt and Mike Vergona are pictured at the Garden State Precast facility. Utility and Transportation Contractor, JUNE 2015


Circular structures are lowered into place for the Joint Base McQuire-Dix-Lakehurst project.

Gene O’Malley attended Morris Harvey College and, like his current partners, began his career with InterPace Corporation in East Brunswick in 1970 as a Quality Control Technician. Gene’s experience also included a stint with Cretex Corporation before an eighteen-year career with New Jersey Concrete Pipe Company where he served as General Manager. By 1997, these three men were all part of the Duncan Thecker Precast team, and within two years were able to purchase the business from its founder. Morris and the O’Malley brothers immediately mapped out their plan for advancing the business. They continued to foster the relationships with the existing Duncan Thecker customer base while also initiating training of employees and focusing on production of quality structures. Such attention to detail and producing quality items allowed for the firm to be one of the first in New Jersey to receive certification of its products by the National Precast Concrete Association. This certification enabled the company’s structures to gain approval by the NJDOT as well as by other agencies in the tri-state area. Today, Garden State Precast is an approved supplier of not only the NJDOT, but also the Delaware DOT, New York DOT, the Port Authority of New York and New Jersey, PENNDOT, PSE & G and the New York City Department of Design and Construction.

A pedestal foundation structure is transported to a project.

Garden State Precast structures have been used on many major construction projects in the area. One of the firm’s early projects involved the manufacturing of a 70 ton precast diversion structure for placement along the Passaic River on JH Reid’s Route 21 project. Originally the specifications for this job required the use of a cast in place structure. However, Garden State was able to offer the precast item as an alternative. Utility and Transportation Contractor, JUNE 2015

On other projects, the company constructed unique precast structures for Montana Construction and Northeast Remsco Construction on their Bergen County Utilities Authority Overpeck projects. These structures measured 120 inches and 144 inches in diameter, respectively and were ten feet tall. These monolithic structures were some of the first of their kind manufactured in the United States. Following the devastation caused by Superstorm Sandy in 2012, the Garden State Precast team was enlisted to furnish 35 poured-in -place boxes for Union Paving & Construction. These structures would serve as replacements for the damaged pump stations on Route 35. Additional materials were supplied to George Harms Construction and Agate Construction for the ten mile rehabilitation of this highway. Construction on Route 35 proved very challenging due to the high water table. Recently, Garden State serviced all contractors involved with the widening of the Garden State Parkway including Northeast Remsco, George Harms Construction, Midlantic Construction and Earle Asphalt.

A concrete box culvert is lowered into place.

The firm has also expanded its array of products with the production of electrical boxes that are approved by PSE & G. These items are available in various sizes and have been utilized for duct banks on projects for the NJ Department of Transportation and other public and private owners. Garden State Precast is also now a supplier of Advanced Drainage Systems (ADS) products. Products are available for sanitary sewer, storm drainage, electrical, retaining wall and highway projects. Garden State produces manholes, lift stations, catch basins, utility vaults, electrical junction boxes, box culverts, headwalls, water control structures, and water filtration systems. The company also partnered with Romtec Utilities for pump station projects on the East Coast. On a recent project for a new wastewater lift station for the Lakehurst portion of the Joint Base McGuire-Dix-Lakehurst near Trenton, Garden State Precast supplied the precast concrete wet well and valve vault. Garden State Precast had the reputation and ability to manufacture the components for pump and lift station systems. These items included a specific type of barrel joint, a monolithic base slab, custom guide brackets, lifting clutches, precast hatches, a precast crane-mount, and precast pump discharge elbows. While the three founders are all still active with the firm, there are other key employees who have contributed to the success of the 37


business. Paul Heidt serves as the engineering manager for the company and was recently appointed to the Board of Directors of the National Precast Concrete Association. Mike Vergona is the plant manager at the 20 ½ acre headquarters in Farmingdale, NJ, while Bill Morris coordinates production scheduling and plant operations. Garden State Precast employs 75 people, many of whom are members of the Construction & General Laborers Union Local 172. To better serve its clients, the firm also operates Garden State Trucking which allows for swift delivery via its fleet of vehicles. Garden State Precast has been an active member of UTCA since its inception. The firm has a working relationship with several other members of the association including True & Associates, Leading Edge, Wiss & Company, as well as with George Pallas and Shawn Farrell of Cohen Seglias Pallas Greenhall & Furman. With solid and dependable products, a wide variety of experienced construction industry representatives, and a superior reputation, Garden State Precast will certainly thrive in the years to come.

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Pictured are poured-in-place boxes for pump stations following Superstorm Sandy.

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WITHUMSMITH+BROWN CELEBRATES 40 YEARS IN BUSINESS

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Featured Article

Firm Provides Support Services To Contractors

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MAY IS DISABILITY INSURANCE AWARENESS MONTH Disability Protection Is Key To The Continued Success Of Your Business

By: Nancy Damato, Partner, RDA Benefit Services Many successful business owners spend a great deal of time and effort building their businesses. So protecting that business should be a key component of any business plan. A prudent way to safeguard this asset, including the key executives, is with business overhead protection, buy/sell disability insurance and individual income protection insurance. Why is Disability Insurance so important? It protects you, your partners and your key executives from losing the MOST IMPORTANT ASSET of all— the ability to earn a living! Everyone has insurance coverage for their cars, their home, and their other possessions. Protecting your business and the ability to earn a living should be paramount! No one can ever predict when an accident or illness will occur. So having this income protection allows you to safeguard your business and your family, ensure your future and help to maintain your lifestyle. UTCA Executive Disability Insurance Plan now offers an additional 15% discount for business owners of member firms. Highlights of this comprehensive disability coverage include: “own occupation” definition of disability, guaranteed renewable, total disability and partial disability benefits, recovery benefits, compassionate disability benefit, automatic increase of benefit and a catastrophic disability benefit rider. Consider these statistics: * Almost one-third of Americans entering the workforce today—three out of 10—will become disabled before they retire. (Source: Social Security Administration, 2007)

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* 95% of disabling accidents and illnesses are NOT work related. * At age 32, the chance of being disabled for 90 days is 6.5 times greater than the chance of death. (Source: National Association of Insurance Commissioners) * In the past hour, almost 3,000 Americans became disabled. That’s 49 disabilities every minute. (Source: National Safety Council, “Injury Facts 2008 Ed.”) * Accident or illness will force 1 in 5 U.S. employees to miss work for at least a year before they turn 65. (Source: Life and Health Insurance Foundation for Education, 2005) * Every year, 350,000 personal bankruptcies are attributed to injuries and unexpected illnesses. (Source: “Illness and Injury as Contributors to Bankruptcy”, Health Affairs, 2005) * The average monthly benefit paid by Social Security Disability Insurance (SSDI) is only $1,004/month. (Source: Social Security Administration, 2008) Do you have a Plan? Consider the importance of protecting your business with Disability Protection—through Business Overhead Protection, as well as individual disability insurance. Contact us for a complimentary benefit review and no-obligation quote to see how this important benefit fits into your overall plan—855-693-0772 or ndamato@rdabenefits.com.

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TRUE & ASSOCIATES CELEBRATES 30 FRENCH & PARRELLO CELEBRATES YEARS IN 40 YEARS IN BUSINESS BUSINESS Geotechnical Engineering Firm Expands Services Throughout The Years

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Labor Relations

EEOC CONCILIATION BURDEN: A SMALL VICTORY FOR EMPLOYERS By: Jill Tobia, Esq., Tobia & Sorger On April 29, 2015, the United States Supreme Court held that the EEOC’s conciliation efforts pursuant to Title VII are subject to limited judicial review. By way of background, when a charge of discrimination is filed by an individual at the EEOC against an employer, the EEOC investigates the matter and makes an initial determination. If it is determined by the EEOC that an alleged violation exists, the EEOC is supposed to engage in a mandatory conciliation process with the employer prior to filing a formal complaint under Title VII in District Court. Most employers believe that such a process is a waste of time and resources as the EEOC has already made a determination and therefore rarely engages in any type of meaningful discussions to resolve the matter. However, according to the Supreme Court, while the EEOC still has discretion over the manner in which it conducts the conciliation process, the courts may review whether or not the EEOC has met its burden of engaging in “good faith” conciliation efforts. While it is not a normal occurrence for a UTCA Contractor to face a discrimination charge, there has been a recent increase in such EEOC filings as more and more workers face layoffs and hard economic times. Accordingly, this Supreme Court decision gives employers some hope that if they are faced with such a discrimination charge, the EEOC will be reasonable in its attempts to conciliate the matter prior to filing a formal complaint against the employer in District Court. Mach Mining, LLC v. EEOC : In Mach Mining, LLC v. EEOC, the EEOC found reasonable cause to believe that the Company had discriminated against female job applicants at one of its mines by failing to hire them. After engaging in what Mach Mining believed was minimal conciliation efforts, the EEOC informed the Company that it had determined the Utility and Transportation Contractor, JUNE 2015

conciliation process was unsuccessful and that further conciliation efforts would be futile. Accordingly, the EEOC immediately filed its complaint in District Court against Mach Mining. Mach Mining argued to the District Court that the EEOC failed to meet its burden of engaging in “good faith” conciliation efforts. When the District Court denied the Company’s argument, the Supreme Court granted a review of this issue. According to the Supreme Court, during the conciliation process, the EEOC must provide the employer with specific evidence of its alleged wrongdoing and reasonable steps to remedy the alleged discrimination. The Supreme Court also found that the employer could defend against the failure of the EEOC to do so by demonstrating that the EEOC failed to provide the employer with either evidence of the alleged discrimination and/or reasonable ways to remedy the situation. According to the Supreme Court, “[a]bsent such review, the Commission’s compliance would rest in the Commission’s hands alone.” Advice for UTCA Contractors: UTCA Contractors should be aware of this Supreme Court ruling in the unlikely event they are faced with a charge of discrimination at the EEOC. While dealing with an administrative agency is often difficult for employers, as that agency often serves as judge and jury, having a meaningful conciliation process is a small but important victory. With respect to the EEOC, an employer can utilize the “good faith” conciliation requirement to encourage the agency to provide reasonable remedies prior to engaging in costly and time consuming litigation.

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Legislative News

FEDERAL & STATE UPDATE By: Anthony Attanasio, Executive Director Spring has been quiet on the legislative front in New Jersey. Talk of the Transportation Trust Fund (TTF) renewal has become something that the Governor and Legislature will most likely take up in the lame duck session after the November elections. The Governor’s frequent out of State travels combined with the entire State Assembly being at the top of the ticket this November has created a no-fly zone for any initiative that could become a campaign issue. In addition, the Governor and Legislature are fully into the budget season with a multi-billion dollar question mark in the form of how large of a pension payment the State will be required to make in FY16. The Governor is seeking to make a smaller payment than required by his own pension and healthcare reforms from 2011. The public sector unions (NJEA, CWA etc.) and the Democrat legislative leadership have filed a lawsuit to force the Governor to make the payment required by law. At the time this article was written the lawsuit currently awaited a ruling by the State Supreme Court. UTCA continues to meet with legislative leadership and the Administration to work on a final deal for the TTF. New Jersey is not alone in having a transportation and infrastructure funding crisis. Washington D.C. continues to wrestle with renewing the soon to be depleted Federal Highway Trust Fund (HTF). At the UTCA Southern Area Meeting in March, Congressman Tom MacArthur (R-3) addressed the group with his take on the HTF issue and to discuss legislation he was introducing. In the several months he has been in office Congressman MacArthur has already gained a reputation in Washington as a Congressman willing to reach across the aisle to produce sound policy. His introduction and support of bipartisan legislation to produce new revenues for 58

the HTF and to help protect and advance the interests of our industry make him a welcome addition to the New Jersey delegation. Between April 13-15 The Utility and Transportation Contractors Association participated in the American Road & Transportation Builders Association (ARTBA) and Transportation Construction Coalition (TCC) Fly-In in Washington, D.C to deal with the impending HTF disaster. UTCA representatives took part in a roundtable with leaders from the Federal Highway Administration (FHWA) to discuss various issues affecting the industry. In addition, UTCA took part in the ARTBA/TCC Congressional Briefing where Congressmen Reid Ribble (R-Wisconsin), Earl Blumenauer (D-Oregon), Bill Shuster (R-PA) (Chairman of the House Transportation & Infrastructure Committee), and Secretary of Transportation Anthony Foxx addressed the group on the current Federal Highway Trust Fund crisis. UTCA President Scott Lattimer, Senior VP Tino Garcia, VP Jim Coddington, Board member Glenn Ely , UTCA CEO Bob Briant, Executive Director Anthony Attanasio and Director of Utility Operations Dennis Hart met with several members of the New Jersey Congressional delegation and their staff. The full UTCA delegation met with Congressman Bill Pascrell (D-9) to discuss the Highway Trust Fund and Clean Water Construction Coalition activities. The Congressman shared with the group that he would be introducing H.R. 1846, also known as the Bridge to Sustainable Infrastructure Act. The bill would index gas and diesel user fees to inflation, which officials expect would raise $27.5 billion for 1.7 years. Following this, the Act provides for the creation of a Transportation Commission by September 1, 2015, whose function would be to determine “a path forward for Utility and Transportation Contractor, JUNE 2015


sustainable funding, and would be advised to consider all options,” according to a statement on the bill. It would require Congress to “enact the recommendations of the Commission, or any other funding mechanism that achieves at least three years of funding for the Highway Trust Fund” by a December 31, 2016 deadline. Missing the deadline would result in gas and diesel user fees to increase “to a level that would sustain the trust fund for a three-year period.” Again, if no funding solution is achieved in that three-year period, the user fees would go up to fund five more years of the HTF. Adding these periods of time together, the bill’s sponsors believe 10 years of HTF funding will be provided. The industry welcomes such bold and direct leadership on the HTF issue and extends our gratitude to Congressman Pascrell. The group also met with Congressman Frank LoBiondo (R-2), member of the House Transportation and Infrastructure Committee and constant champion for the industry. Congressman LoBiondo continues to utilize his position in leadership to advance sound infrastructure policy. He provided a thorough briefing on where the House leadership stood on the issue and gave sound advice on a path forward for advocates in the industry. On May 19th, The House of Representatives overwhelmingly approved legislation (H.R. 2353) that is likely to become the 33rdshortterm authorization of the federal highway and public transportation programs since 2009. The Senate passed the measure on May 22. The measure would extend current policy and—more importantly—the authority for the U.S. Department of Transportation (DOT) to spend funds out of the Highway Trust Fund (HTF). Without either an extension or long-term authorization bill, the U.S. DOT would not be able to reimburse states for federalaid surface transportation projects beyond May 31, when the current short-term extension expires. As of the writing of this article the Senate had not taken action on H.R. 2353. UTCA continues to advocate for the industry’s best interests in both Trenton and Washington D.C. We continue to build stronger relationships with legislative leadership in both parties and support legislators that understand the industry’s goals and help advance them in Trenton and in our nation’s capital. Please consider supporting the UTCA’s Constructors for Good Government PAC. The stronger our PAC becomes the stronger our voice will be in the legislature and with the Administration. Thank you as always for your continued support of the UTCA.

* Any interested party may serve a demand on the claimant to initiate a lawsuit within 30 days of the demand. If claimant fails to do so, its lien is forfeited. * If none of the above options occur, a claimant must initiate an enforcement lawsuit within one year of the date of the last work performed or supplies delivered. N.J.S.A. 2A:44A-14. 7. Prohibition Against CLL Lien Claims on Public Works Projects No CLL liens shall be filed on public works projects. Liens on public works projects are limited to those available under the “municipal mechanic’s lien law,” N.J.S.A. 2A:44-125 et seq. On State projects, the claimant must look to general contractor’s payment bond for payment protection. The Appellate Division has recently held that, where the project is a public/private partnership where the procurement was made by a private partner, a CLL claim may be filed against the private partner’s interest in the project. See EnviroFinance Grp., LLC v. Envtl. Barrier Co., LLC, 2014 WL 8516071 (App. Div. 4/14/15). 8. Penalties for Frivolous Lien Claims The CLL provides for penalties for any claim made without basis. Penalties include a forfeiture of all lien rights, court costs, attorneys’ fees, and any damages sustained by the aggrieved party. N.J.S.A. 2A:44A-14. Remember, doing the work and getting paid is the only way to go!

Continued from Page 71 contractor and subcontractor against whom the claim is asserted. N.J.S.A. 2A:44A-6-8. 6. What are the Options After the CLL Filing After the CLL lien is filed and served, the following options are available: * Any interested party may pay the lien amount and, within 30 days after payment, the lien claimant must discharge the lien or face fines and penalties. N.J.S.A. 2A:44A-30. * Any interested party may discharge the lien by posting a bond with the county clerk or deposit cash with the Superior Court clerk in the amount of 110% of the lien claim. N.J.S.A. 2A:44A-31. This effectively transforms the lien claim into a bond claim. * Any interested party may commence a summary action to discharge the CLL lien. N.J.S.A. 2A:44A-30. Utility and Transportation Contractor, JUNE 2015

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Accounting Corner

ENGINEERING & DESIGN INDUSTRIES: WHAT YOU NEED TO KNOW ABOUT THE NEW ACCOUNTING RULE FOR REVENUE RECOGNITION By: Christina Lazaro & Margaret Gallagher, WithumSmith+Brown After years of refinement, FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (‘ASU 2014-09’). Our present industry-specific guidance will be superseded by ASU 2014-09’s broad principles. Application of these principles will necessitate greater judgment and advance preparation. This far-reaching standard establishes a uniform revenue recognition model for substantially all industries; however, the extent of the industry-by-industry impact will vary dramatically. The following are some frequently asked questions and answers regarding implementation of ASU 2014-09 in the Engineering and Design industry. When is ASU 2014-09 effective? Nonpublic entities are required to apply the new standard for annual reporting periods beginning on or after December 15, 2017, and interim reporting periods within annual reporting periods beginning after December 15, 2018. Nonpublic entities may elect early adoption no earlier than public entities. Public entities are required to adopt ASU 2014-09 in reporting periods beginning after December 15, 2016, and interim and annual reporting periods thereafter (for example, January 1, 2017 for public entities with a December 31 year-end). Early adoption of ASU 201409 is not permitted for public entities. While there have been no changes to the transition dates since the initial release of this ASU, the FASB is currently researching the delay of implementation and plans to discuss it in Q2, 2015, so stay tuned for developments. Utility and Transportation Contractor, JUNE 2015

What are the basic ideas? ASU 2014-09 establishes the following core principle: recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This replaces the current focus on recognizing revenue when risks and rewards are transferred, with an emphasis on when a change in control occurs. To apply that core principle, an entity should follow these steps: Step 1: Identify the contract with a customer. * A ‘contract’ does not mean a legal document; it is essentially an agreement between you and your customer that creates enforceable rights and obligations. Step 2: Identify the performance obligations in the contract. * The contract may contain more than one distinct good or service. Step 3: Determine the transaction price. * Variable elements will require up-front estimation and careful consideration. Step 4: Allocate the transaction price to the performance obligations in the contract. * Allocate using the relative ‘standalone selling price’ of each good or service, or an estimate if that is not available. Step 5: Recognize revenue when or as the entity satisfies a performance obligation. * This may occur at a point in time, or over a period of time. Continued on Page 23 67


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Legal Dig

WHEN YOU DO THE WORK MAKE SURE YOU GET PAID: The New Jersey Construction Lien Law - A Pracitical Guide By: Paul T. Fader, Association Legal Counsel I have often heard clients say “I would rather not do the work and not get paid then do the work and not get paid.” How true that is. Fortunately, there are many ways for those working on or providing materials to private construction projects to protect themselves. One way is the New Jersey Construction Lien Law (N.J.S.A. 2A:44A-1 et seq. “CLL”) The CLL establishes the procedure by which contractors, subcontractors, and suppliers may place liens on real property in the amount of the work, services, or materials they have provided for private construction projects, and for which they have not been paid. CLL liens can be an effective tool for contractors trying to fairly collect payment for work performed or supplies delivered because such liens bestow upon claimants a security interest in the real property that was improved. Therefore, in light of the significant implications of construction liens, contractors would be well-served to note the following salient principles of the CLL. 1. Who May File a CLL Lien Any contractor, subcontractor or supplier may file a CLL lien for the value of the work or services performed, or materials furnished in accordance with the contract as formally amended. N.J. S.A. 2A:44A-3. 2. Whom May a CLL Lien be Filed Against A CLL Lien may be filed against the “owner” of the real property being improved. Such a CLL lien becomes a lien from and after the time of its filing, subject, however, to prior filed liens, mortgages, and judgments. A CLL lien filed for work and materials provided to a tenant attaches only to the leasehold interest of the tenant, and Utility and Transportation Contractor, JUNE 2015

not the property itself, unless such improvements have been authorized in writing by the owner. N.J. S.A. 2A:44A-3. 3. When May a CLL Lien be Filed A CLL lien on commercial projects must be filed within 90 days after the last day the claimant provided materials or labor to the Project. The filing of a residential lien claim is a two-step process. Both steps must be completed within 120 days of the last day the claimant provided materials or labor to the Project. Within 60 days of the last furnishing of labor or materials, a claimant must file a “Notice of Unpaid Balance” (NUB) along with an arbitration demand. Thereafter, the lien claim must be filed no later than 10 days after claimant’s receipt of the arbitrator’s determination, and within the aforesaid 120-day time frame. N.J.S.A. 2A:44A-6. 4. What is the Permitted Amount of a CLL Lien Claim The amount of a CLL lien claim may not exceed the unpaid portion of claimant’s base contract price, as formally amended; disputed “extra” are not to be included. Any payments made to the claimant must be credited against the amount being claimed. N.J.S.A. 2A:44A9-10. 5. What is the Procedure for Filing a CLL Lien CLL lien claims must conform to the statutory form and be filed with the county clerk in the county where the improved property is located. Thereafter, a copy of the lien claim must be served by personal service, or registered mail, return receipt requested, within 10 days from the date of its filing, upon the owner and, if any, Continued on Page 59 71


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Utility and Transportation Contractor June 2015