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President’s Message  

I know it’s a cliché but time just seems to be passing faster and faster and this past year as President of the UTCA has flown by. I have had the blessing of being able to rely on the guidance and advice of the Board and past presidents, even the very first president of the UTCA (UCA) Franklyn Grosso, who has been a great counsel to me. The Board of Directors, the Executive Committee and the Association’s various committees have worked very hard this year in the face of a challenging economy and lack of governmental leadership. I am confident that our new President, Tino Garcia, will lead us over this next year in which we face continued economic pressure and the need for federal and state funding solutions.   “The definition of insanity is doing the same thing over and over again and expecting a different result”. This quote has been attributed to a number of different people but the thought is still valid today. While the construction industry has always been a force to lead New Jersey out of bad economic times, our political leaders have not followed this course of action. It has been seven years since the start of the great recession and there is talk of an economic upturn, but quite frankly, I don’t see it. At times companies seem busy but, we know that there are no long term plans to address the significant utility and transportation infrastructure problems plaguing our state. As I write this column, the federal Highway Trust Fund is expected to run out of money in less than a month. Governors and legislators in New Jersey have expressed their concern for the need to invest in our dilapidated infrastructure but have failed to develop and implement long term financing solutions. I am convinced that the public will support an increase in funding to rebuild our infrastructure as long as the funds are dedicated 100% to construction projects and no funds are siphoned off for other purposes. We have spent this past year educating the public and the politicians on the need for repairs and new infrastructure. It is time now for every member of the Association to meet with their elected representatives and demand solutions and actions to repair New Jersey’s crumbling roads, bridges and water infrastructure.   The world is much different now than it was during the founding of the Utility Contractors Association in 1965. And quite frankly it is very different now than it was during the 25th anniversary celebration

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in 1990. Think about it, in 1990 there were no cell phones or iPods or lap tops. With the rapid changes in technology and communications, we as an industry need to recognize these changes and prepare ourselves in order for the industry to be successful. Our Board has been working with the UTCA staff on modernizing the Association and focusing on new ways of communicating our messaging and managing our activities.   It has been such an honor for me to be President during this 50th year of the Association. I hope to see all of you at the annual convention in October where we will not only be celebrating our 50th Anniversary but we will also highlight outstanding contributions to the industry and the association. Linda Gardner of Brent Material will be receiving the Larry Gardner Memorial Award. Henry Meyers of Anselmi & DeCicco will be the recipient of the Robert A. Briant, Sr. Memorial Award. And finally, Juan Gutierrez, Chairman of JAG Companies, will be inducted into the New Jersey Construction Industry Hall Of Fame. At the Saturday Dinner Dance, the association has a special ceremony planned to honor the past Presidents who have led this organization.   The UTCA staff has been hard at work to make it the best convention ever. On behalf of the Board of Directors and Bobby Briant and the staff of UTCA we want to thank all of the companies that are exhibiting at the convention and sponsoring the activities and events. Without their continued support of the Association, we would not be able to accomplish our goals and keep the association strong. Please make sure that you stop by the exhibitor booths and thank all of the sponsors during the convention. Best wishes to Tino Garcia as our new President and I look forward to a great year for the Association and the Industry.   It has truly been an honor for me to serve as President during this 50th year of the Association and I thank you for this opportunity.

Best regards,

Scott Lattimer

Utility and Transportation Contractor,


AUGUST 2015

Contents

Volume XL, Number 4

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. Editor: Michael DeVito Editorial Contributors: Anthony Attanasio Mike DeVito Dennis Hart Dan Neville Advertising Manager: Helene Nasdeo Photographer: Michael DeVito Cover Photo: Image Up Production/Graphics: Lauren Hagan Helene Nasdeo Circulation: Helene Nasdeo Printed By: Farmingdale Printing & Copy Center

Features 4 UTCA Celebrates 50 Year Anniversary A Message From Congressman 25 Frank LoBiondo 43 Tino Garcia UTCA President Elect 68 New Prince Concrete Construction Is Making South Orange Avenue Safer 75 The Affordable Care Act: Preparing For Changes In 2016 81 Introducing Paul Fader, UTCA’s New Legal Counsel 94 Excavators, Backhoes & Cranes, Oh My! 107 Golf Outing To Benefit Brain Tumor Center Scheduled For October 114 The Cost Of Safety

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Departments 2 15 33 50 59 88 103 110

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

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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.

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Cover Story

Pictured from the left are Bob Briant, Sr., Frank Stamato, Jr. and Roy Day at the ribbon cutting of the association’s first permanent office.

Creamer Environmental Completes UTCA CELEBRATES Twenty Years In Construction VOLLERS COMPLETES AwardsContractor Presented To Dave Smith & Cohen Seglias Pallas Greenhall & Furman Has Become A Leader In Remediation Work 50 YEAR ANNIVERSARY Scott Lattimer Inducted As President & Fletch Creamer, Jr. In The Hall Of Fame Contractor Excels In Multiple Areas Of Construction SIXTY FIVE YEARS IN BUSINESS Professional South Jersey Firm Provides Quality Construction Association Grows To National Prominence

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hen you turn back the clock to 1965, the utility construction industry had no established advocate to assist in problem solving for contractors that perform this type of work. This motivated five forward-thinking utility contractors to assemble together to discuss the common problems faced by this industry. These gentlemen had concerns about the lack of funding for utility construction as well as requirements that outside pipe constructionhistorically performed by the heavy laborers- needed licensed plumbers for installation. This group of people included Nicholas Corbiscello, Joseph D. D’Annunzio, Robert Hamilton, Franklyn Grosso and Gerald Malanka, and it was their collaborative vision that led to the establishment of the Utility Contractors Association of New Jersey (UCA). The creation of an association by these

pioneering leaders also coincided with the formation of the National Utility Contractors Association (NUCA) in Washington, DC, which was established for the purpose of gaining a much-needed national presence for utility contractors.

Tony Cammarata, Bob Carney and John Van Harte are pictured at an association event.

Pictured left to right are Mike Zichelli, Roger Hanson, Robert Johnston, Frank Renda, Franklyn Grosso and Bob Briant, Sr. 4

UCA secured assistance from Joseph Stone, NUCA’s legal counsel, and also received support from the Laborers Locals 172 & 472 in a legal action to protect pipe installations as the jurisdiction of the Laborers unions. The entities were successful in this legal challenge.   Franklyn Grosso was elected to serve as the first President of the fledgling organization, and served for 40 years on the association’s Board of Directors. Grosso is one of only two people to be elected as association President twice. Those formative years focused on member development, solving regulatory issues and providing a “voice” for utility contractors.  Utility and Transportation Contractor, AUGUST 2015


Larry Gardner and Dick Gardner helped with administration during the early years.

  Within two years, Gerald Malanka became President and the

organization published its first Industry Directory. The group established membership meetings in North Jersey and scheduled its first Dinner Dance. Larry Gardner, the founder of Brent Material Company provided a great deal of assistance to the new group. Along with his son Dick Gardner, the early business of the UCA was conducted on the premises of Brent Material. It was also at this time that Joseph D. D’Annunzio was elected President of the National Utility Contractors Association. Samuel Luciano and Anthony Cammarata led the association into the early 1970’s, by which time the group numbered approximately 60 member firms.

He really made a big difference in the industry.” At this time, a new association office was established in Edison, a committee system was organized and potential new members were sought to strengthen the group.   At the end of 1973, a second pivotal event continued to shape the organization, when William Feather, a highly respected South Jersey contractor, organized his southern colleagues to become part of UCA. Working with association officers Roy Day and Frank Stamato, Bill Feather spearheaded rapid growth with the enrollment of many new members from the area south of Trenton. This development allowed UCA to truly become a statewide organization. Within three years the association had grown to a total of 200 member firms.   Under Bob Briant, in conjunction with a talented and aggressive Board of Directors, the association focused on improving contract documents, promoted construction funding initiatives, and established legislative and regulatory responses to onerous construction regulations. During the Presidency of Edward Cruz, the association began publishing its magazine in 1975. The publication included project stories, legal, legislative and safety information as well as focusing on association activities. The magazine is now published six times per year, has received two national awards and is mailed throughout the country. This was also a time when Frank Renda, Mike Zichelli and Roger Hansen emerged as association leaders.

Pictured from the left are Juan Gutierrez, John Van Harte, Joseph D’Annunzio and Cosimo Pedicini.

George Harms presents Bill Feather with a UCA Award.

  In 1972, the UCA hosted NUCA’s annual convention and first equipment trade show at the Playboy Club in McAfee, New Jersey. The event drew an astonishing 1500 attendees and the financial success of the convention spring-boarded the group to establish a full-time staff and permanent office. The organization interviewed a number of candidates before deciding to hire Robert A. Briant, Sr. as the association’s first chief executive officer in 1973. This would prove to be one of the best decisions that the young group would make. Bob Briant would take the association to new heights and unprecedented growth during his 32 year tenure as CEO. According to George Harms, a member of the search committee that hired Bob: “I was on the committee when Bob was hired and what a difference it made, from having a full time person and being able to put together our agendas and go do different tasks that we needed to undertake.

  In June of 1977, the association was shaken by the sudden death of William Feather, just prior to his ascendency to the office of President. Bill Feather’s foresight, vision and charisma were instrumental in the association’s early growth and his memory was honored with a scholarship and award that bears his name.   By the late 1970’s UCA formed close working relationships with Congressman James Howard and Congressman Robert Roe, who were members of the House Public Works Committee. In fact, these two representatives served as the Chairman of this important committee for a combined 28 years. Their devotion to infrastructure funding through such initiatives as the Clean Water Act allowed the utility contracting industry to grow its respective companies while also providing an environmental benefit to the public.   Association members began to diversify their operations by performing transportation construction as well as hazardous waste remediation projects in addition to utility construction and site work. With an eye on expanding the organization’s legislative efforts, the Board of Directors hired Robert Briant, Jr. at the end of

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years before passing the baton to the current chairman Joe Walsh. Cosimo Pedicini, John Van Harte, Juan Gutierrez, Bob Carney, John Purciello and one of the association founders Joseph D. D’Annunzio all completed a term as president during this time.   Since membership was now diversifying into related construction markets, the association became affiliated with the American Road and Transportation Builders Association (ARTBA) in 1983. ARTBA is the leading voice in our nation’s capital for the transportation construction industry. It was at this time that the organization officially changed its name to the Utility and Transportation Contractors Association of New Jersey (UTCA). With a focus on both utility and transportation construction, UTCA created committees to meet regularly with the NJDOT, the NJ Turnpike Authority, NJ Transit and the Port Authority of NY/NJ while continuing its long-standing relationship with the NJDEP. By the end of the 1980’s, UTCA membership had expanded to approximately 800 firms in the heavy, highway, utility, marine and hazardous waste construction fields. Long-time association staff person Michael DeVito came on board during this timeframe to assist Bob Briant and Bob Briant, Jr. “I was on the committee when Bob was hired and what a difference it made, from having a full-time person and being able to put together our agendas and go do different tasks that we needed to undertake. He really made a big difference in the industry.” - George Harms Robert A. Briant, Sr.

1982. Bob Briant, Jr. continues to serve the group as its current CEO. Throughout the years, the association has been extremely successful in the passage of meaningful legislation that would have an effect on the industry. The 2% retainage law for projects bid under Local Public Contracts Law was one of the first association-driven bills that was signed into law. Allowing value engineering proposals, the elimination of “No Damage For Delay” clauses, changes to the Underground Facility Protection Act, the inclusion of fuel and asphalt adjustments on projects and the Uniformed Traffic Directors law are just a few the important legislative initiatives supported by the group in its 50 year history. UTCA’s first president, Franklyn Grosso served as chairman of the legislative committee for many

Pictured in 1985 are Joseph D. D’Annunzio, Governor Tom Kean and Franklyn Grosso. 6

Harry Chowansky, right, makes Hall Of Fame presentation to J. Fletcher Creamer, Jr.

  During the late 1980’s, UTCA established a Needy Projects Committee in an effort to “give back” to the community through volunteer efforts. A new septic system was constructed for the New Jersey Camp for Blind Children, an elephant compound was completed at Popcorn Park Zoo in Lacey Township and water and sewer systems were installed at a camp for children with developmental disabilities. This committee was also heavily involved in the construction of the New Jersey Vietnam Veteran’s Memorial at the PNC Arts Center, and more recently, members donated time and materials for the restoration and display of a Huey helicopter at the memorial.   In the 1990’s, new industry leaders began their service with UTCA. Anthony Caruso, Lee DeAlmeida, Roger Wuestefeld, J. Fletcher Creamer, Jr., Pete Getchell, Gennaro Liguori and Phil Schifano were among those that took the reigns as President. When Michael D’Annunzio began his term in the office of President, he joined his father as the first father-son combination to hold the office. During the 1993-1994 term of Edward Nyland, UTCA attained two major achievements. The association enrolled its 1000th member firm and was successful in a legal challenge to the mandatory use of Project Labor Agreements on public works projects. Fletch Creamer and Gennaro Liguori co-chaired the labor committee and were able to

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Pictured at a recent UTCA Convention are Gennaro Liguori, Frank Criscola, Jr. and Joe Walsh.

lead the group during important union negotiations. UTCA expanded its legislative initiatives during the 1990’s which culminated with the organization receiving a national award for its government relations program in 1996. UTCA also established the Construction Industry Hall of Fame in 1993 with Walter Binder as the first inductee.   Following the tragedy of September 11, 2001, UTCA member firms responded by assisting in search and rescue efforts as well as providing demolition, salvage and debris removal. Association members contributed more than $331,000 to a fund that was established for the families who lost loved ones during that horrific event. Gerard Burdi, Denise Cruz-Serpico, George Helmer, Jim Reid, James Johnston, Jr., Nelson Ferreira and Jack Murphy were some of the leaders of UTCA during this time.

  In December of 2005, UTCA became a founding member of the Clean Water Construction Coalition, which is a national organization of construction associations whose purpose is to promote federal legislation that improves water and wastewater infrastructure on a national level. In the ten years since its inception the Clean Water Construction Coalition has grown to include 27 state associations, representing 11,000 member firms. Bob Briant, Sr. served as the first chairman for the coalition and current UTCA CEO Bob Briant, Jr. now leads the group.   At the beginning of 2006, Bob Briant, Sr. stepped down as the association’s chief executive and was succeeded by Bob Briant, Jr. The transition was seamless as Bob Jr. continued to build on his father’s impressive legacy. Bob Sr. continued as a consultant to the group until his sad passing in February of 2013. A new stable of young, impressive contractors began service on the Board of Directors in these years including Frank Criscola, Jr. Rob Earle,

Harry Chowansky, III, Joseph Walsh, Darrell Harms, Dave Smith and Scott Lattimer.   In the most recent decade, the association advanced its safety and management education program for its members. During the winter months, the association offers safety courses on trenching and excavation safety, confined space, traffic control coordination, OSHA ten hour class, fall protection and crane safety and rigging. More recently, the group has added professional training courses for foremen, superintendents, and construction executives as well. Dan Neville, who joined the staff in 2007, manages the safety and education program for UTCA.   Tino Garcia of Ferreira Construction will take the helm as association president during the upcoming 50 th anniversary convention with Jim Coddington of Tilcon to serve in the office of senior vice president, Tom Hardell of George Harms Construction as vice president and Joe Walsh of J. Fletcher Creamer & Son as secretary/treasurer.   In recent years, the association staff was bolstered by the addition of Dennis Hart in 2013 and Anthony Attanasio in 2014. They joined the current UTCA staff that also includes Michael DeVito, Dan Neville, Helene Nasdeo and Lauren Hagan under the leadership of Bob Briant, Jr.   UTCA has forged relationships with many other organizations in an effort to better serve the construction industry. Joint committee meetings and labor negotiations are conducted with such groups as the Associated Construction Contractors, the New Jersey Asphalt Pavement Association, the New Jersey Concrete and Aggregate Association, the New Jersey Society of Municipal Engineers, the American Council of Engineering Companies of New Jersey, the New Jersey State Safety Council, the New Jersey Work Zone Partnership, the New Jersey Common Ground Alliance, the New Jersey Alliance For Action, the New Jersey Professional Engineers in Construction and many, many more.   In reflecting back on such humble beginnings for the association, few could have foreseen such impressive growth in both membership and services to the infrastructure construction industry. According to Franklyn Grosso, the association’s first President: “Knowing the beginning and how far it has come and what it means to represent its place in the industry and the achievements and the respect and the position that it has, it’s a great feeling for me just to have been, in my own modest way, associated with it.” UTCA is now one of the largest and most successful construction associations in the country. And it all started in 1965 by five sewer contractors with a vision.

UTCA staff pictured left to right are Dan Neville, Bob Briant, Jr., Helene Nasdeo, Lauren Hagan, Anthony Attanasio, Dennis Hart and Mike DeVito. Utility and Transportation Contractor, AUGUST 2015 7


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Legal Dig

BID SPECS CANNOT REQUIRE A CONTRACTOR TO HAVE AN APPROVED APPRENTICESHIP PROGRAM...IS IT JUST FOR NOW? By: Paul Fader, UTCA’s Legal Counsel

  On several occasions over the last 10 years New Jersey trial courts have been asked to decide whether the Local Public Contract Law prohibits a public owner from requiring, as a precondition to bidding, that a contractor must maintain an apprenticeship program. This same issue was heard once again last month in the Earle Asphalt Co., et als. v. County of Union matter. Now, however, that case may bring those issues to a New Jersey Appellate Court which may issue an opinion binding all lower Courts in New Jersey.   In mid May 2015 Union County solicited competitive bids for a public works contract for the Replacement of the Madison Hill Road Bridge. The County’s Bid Specifications for the Bridge Project incorporated by reference to the 1998 County resolutions that required as a precondition to bidding that a contractor (1) maintain an apprenticeship program; (2) provide a representative of the County with unencumbered access to interview the contractor’s employees; and (3) complete an Employee Notification Acknowledgement Form for all employees.   The UTCA, Earle Asphalt Company, and a Union County Taxpayer, represented by Brian R. Tipton from Florio, Perrucci, Steinhardt & Fader, challenged the County’s bid solicitation arguing that pursuant to the Local Public Contracts Law, public owners may only require specifications that directly and reasonably relate to the objectives of the project such as a bidder’s financial ability, experience and capital, aggregate rating and bonding. We pointed out to the Court that the requirements contained in the Resolutions and bid specs did not directly relate to the purpose, function or activity for which the contract was to be awarded and would unfairly and illegally discourage highly competent non-union contractors from bidding on this and other County contracts.   The Court adopted our arguments and enjoined the County from requiring all contractors and subcontractors to participate in a

government-approved apprenticeship training program. The Court also enjoined the County from conducting interviews of individual workers in order to determine compliance with its apprenticeship requirements.   The Court recognized that the requirement that a contractor have an approved apprenticeship program had previously been rejected by Courts in other Counties including Mercer and Cumberland, but that there was no published opinion by a New Jersey Appellate Court serving as a precedent for all New Jersey Courts. The Judge then directly addressed the issue stating that “there is nothing that says that having an apprentice program is something that is…within the local public contracts law” and that it is not “directly related to the purpose, function, or activity for which the contract is awarded.”   The Judge explained that because many non-union contractors do not have an apprenticeship program, the apprenticeship requirement demonstrates a preference for union contractors and had the effect of shutting out otherwise competent non-union contractors from bidding on this and other County contracts. Clearly, the requirement of an apprenticeship program limits competition thereby frustrating the essential purpose of our state’s bidding laws.   Likewise, the Court held that the County’s demand for unencumbered access to interview a contractor’s employees did not have any rational relationship to the job itself and amounted to an ultra vires act, particularly in light of the fact that the Department of Labor can only interview contractor’s employees upon the issuance of a subpoena.   With respect to the County’s Worker Notification Acknowledgement Form, the Court fashioned a compromise. The Court did not invalidate the County’s requirement for submission Continued on Page 111

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A Message from Congressman Frank LoBiondo   Every resident and visitor to New Jersey has driven on our roadways. They have drank from or washed their hands using our public water systems. They have performed these actions countless times, every day of their lives. Not often appreciated for the planning, hard-work, professionalism and craftsmanship that went into building these complex systems, we all have an expectation that critical infrastructure is in place, operational and safe. Our health at home, the success of our business, the sustainability of our community, and the state’s economy are dependent on these expectations being met.   In the current budget environment, investments in transportation systems and public infrastructure are policies the American people recognize and agree upon as a solid return on their tax dollars. Whether it is the statehouse in Trenton or the halls of the U.S. Capitol, these investments garner strong bipartisan support. While there is a strong will by both political parties and industry stakeholders to put forth a multi-year authorization to provide stability and certainty for project planners and construction crews, finding a steady funding stream or identifying enough money to redirect within the current budget remain elusive for policymakers at both the state and federal levels.   As a senior member of the H o u s e Tr a n s p o r t a t i o n & Infrastructure Committee, I have long been involved in issues related to transportation networks, mass transit, interstate commerce, and economic growth. I am a strong advocate for public-private partnerships, which capitalize on the individual strengths and vested interests of multiple parties to complete a common goal. To solve the myriad challenges facing New Jersey, working together at the local, state and federal levels with private industry and labor unions will be critically important.   With nearly 40,000 miles of public roads in New Jersey and hundreds of thousands of miles of public utility lines, our infrastructure needs cannot be ignored. In South Jersey, we have made steady progress to upgrade and improve public infrastructure to meet growing demand. Recent and ongoing projects include

expanding the Garden State Parkway to three lanes and removing its traffic lights in Cape May County as well as new public sewer and utility systems in communities from Wildwood to Alloway. While some long-planned projects are newly finished or nearing completion, many more are on the drawing boards and eagerly awaited by residents and businesses alike. This is especially true for road and bridge construction projects.   When Congress returns in September, we will again turn towards the bipartisan goal of finalizing a multi-year, fully-paid authorization bill that ensures highway and transit projects from New Jersey to across the country can move forward. Any legislation will require cooperation and compromise, which is possible given the stakes and bipartisan support. It should incorporate lessons learned in the aftermath of Superstorm Sandy to ensure the strongest construction and installation possible. A successful bill would help reverse the tide of America’s crumbling infrastructure, improve safety and functionality for consumers, and provide job security for construction workers and contractors -- a key component of our economy. I will continue to be fully engaged as this critical legislation moves through the House T&I Committee towards a vote on the House floor.   On a final note, I’m deeply appreciative of what you and your colleagues do to make our communities safe for all of us. Dedicated organizations like UTCA and its members work day in and day out to -- quite literally -- build and repair the foundation of our nation. For a half century you and your colleagues have been at the forefront of improving our infrastructure to strengthen our economy. From Trenton to Washington I have worked closely with UTCA’s leadership and members in South Jersey to advocate for greater investments in smarter, safer infrastructure projects. This is a partnership that has delivered results for our state, reliability of services for its residents, and countless benefits for its economy. It is a partnership I remain committed to as UTCA begins its next 50 years. Congratulations on your milestone anniversary!

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Sonoma/San Francisco Executive Seminar

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Legislative News

FEDERAL & STATE UPDATE By: Anthony Attanasio, Executive Director

  Summer is here and we are more than halfway through the UTCA’s 50 th Anniversary. While the UTCA has had several legislative successes in our 50 th year, our most prized and desired accomplishment, a fully renewed, robust and sustainable Transportation Trust Fund will have to wait a little longer to be realized. Governor Christie has formally announced what was the worst kept secret in New Jersey, that he is in fact running for President. The Governor has been spending far more time in other States so far in 2015. Combine that with the entire State Assembly being on this fall’s ballot and what we now have is a holding pattern until the lame duck session after the November election. Senate President Steve Sweeney, Assembly Speaker Vincent Prieto and Assembly Transportation Chairman John Wisniewski, amongst others continue to promote the issue and are working closely with the UTCA to make sure that everyone is properly positioned for the window that could open after the election.   The UTCA was very successful in amending a piece of legislation (A3859/S2489) looking to increase the State’s authority to enter into Private Public Partnership’s (P3). The bill has now been sent to the Governor for his action. Due to the lack of investment in transportation funding, our industry and the State are being forced to explore new funding sources. The concept of leveraging private financing to support public projects is not a new one, however P3s have also had a checkered history throughout NJ and the country. The idea of leveraging private dollars to support public projects often sounds too good to be true, and without safeguards usually is. The original version of this bill would have minimized the private sector’s risk while leaving the public sector (in the case of transportation projects that means the nearly broke TTF) to carry the load if a project went south. In addition, the original version

of this bill allowed for public entities to issue debt to support a P3 and would have allowed for bundling of smaller projects to make larger megaprojects. This last example happened in Pennsylvania recently and local PA contractors have suffered tremendously as a result. Thanks to the work of the P3 task force and UTCA staff almost every single one of the industry’s concerns were addressed in the bill. We would like to thank Assembly Majority Leader Lou Greenwald for his time and efforts to understand the industry’s concerns and to address them in his bill.   The legislature also recently passed the enabling legislation for the NJ Environmental Infrastructure Trust (EIT) and the annual NJDEP/ EIT appropriation bills. UTCA CEO Bob Briant is the Acting Chairman of the EIT and several positive changes were included in these bills. Some of the highlights of the EIT Enabling Act include an extension of loan maturity from 20 to 30 years which will now match the terms found in Federal law. The benefit to consumers is that projects that have useful lives of 30 years or greater will now be able to amortize project construction costs over a longer, more appropriate time table for the people that benefit from these new assets. As a result, annual debt service on project loans will be lower and more affordable and will minimize any potential need to raise service rates to consumers to pay for these projects. Another positive change will allow Municipalities to borrow short-term funds (up to 3 years) from NJEIT during a project’s construction phase at variable rates. Municipalities will be able, for the first time, to borrow funds from the Trust through a line of credit. Similar to, but much more efficient than borrowing through BANs, municipalities will be able to borrow from the NJEIT, and pay interest on, only those funds they need to pay construction expenses when they need Continued on Page 111

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WITHUMSMITH+BROWN CELEBRATES 40 YEARS IN BUSINESS

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Featured Article

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TINO GARCIA UTCA PRESIDENT ELECT

Tino Garcia, right, is pictured with Bob Briant, Jr.

INSURANCE COUNCIL OF NEW JERSEY

  Tino Garcia, UTCA’s president-elect and Executive Vice President of Ferreira Construction, was elected to serve the association at the UTCA June Membership Meeting. He will begin his service as the organization’s highest elected officer at the October Annual Convention at the Borgata Casino in Atlantic City.   Tino Garcia was born in Newark, NJ and was raised in Harrison. He attended Middlesex County College and NJIT, then got his start in construction in 1987 with the firm RBA followed by six year stint with MJ Paquet. In 1995 Tino then became the first full time construction employee for Nelson Ferreira’s company and will be celebrating his 20th year with the firm this coming September 25th. Currently, Tino is in charge of all construction operations for Ferreira Construction. His love of the construction industry was cultivated at an early age by his father who was a laborer with Tilcon for 35 years.   Ferreira Construction has performed many projects in the past two decades including utility installations, road and bridge construction, marine work, building renovations, solar installations and construction management. The company is headquartered in Branchburg, NJ and has satellite offices in New York, California and Florida. American Pile and Foundation LLC, Vanguard Energy Partners LLC and Noveda Technologies are also affiliated companies of the firm.   Tino Garcia has been a member of the UTCA Board of Directors for seven years, currently serves as co-chairman of the Specifications Committee, chairman of the Membership Development Committee and is a member of the Executive Committee, Budget Committee, NJDOT Subcommittee, NJ Transit Subcommittee, and the Parkway/Turnpike/ Port Authority Subcommittee.   Tino and his wife Mary Ann reside in Hillsborough, NJ and are the parents of twin daughters who recently graduated from Hillsborough High School and will both attend Quinnipiac University this September. Gabriella Garcia will be majoring in International Business while her sister Francina Garcia will study Communications and Journalism at this prestigious Connecticut University.

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

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Safety Perspective

MAKING SENSE OF SAFETY By: Ray Master, Construction Risk Partners

  In the forward to Andrew Hopkins book Safety, Culture and Risk, James Reason recalls the statement made by a safety director of a large company - “safety…it’s not rocket science!” You may have heard the same statement. I feel that when people say this they are suggesting that safety and accident prevention are rather simple. “Hey, it’s all common sense” is another popular point of view on safety. I would assert that safety is just the opposite. It is a rather complex phenomena. Consider this: If you were to assemble a large group of rocket scientists, they would all agree on how to launch a rocket successfully. Rocket science is something you can learn and apply. It’s complicated but known. It is something you learn and then do. If you take a similar sized group of safety professionals and ask them how to prevent accidents on a construction project, you will get a large variation in answers with no clear pathway forward. Preventing accidents in construction is a complex, adaptive challenge. It not only involves complicated engineering and technical expertise, but also an intricate network of relationships, goal conflict, human error, legal issues, and social/ psychological concepts like perception and risk. It is something to learn as you do. This article is intended to scratch the surface of current emerging ideas in safety by highlighting some concepts in an attempt to challenge long standing mental modes and worldviews. By challenging our mindset, we open up possibilities for change. In an industry where people continue to die and suffer serious injury, change is long overdue. Managers are Smart; Workers are Stupid “It is only through enforced standardization of methods, enforced adoption of the best implements and working conditions, and enforced cooperation that this faster work can be assured. And the duty of enforcing the adoption of standards and enforcing this cooperation rests with management alone.” (Taylor, 1911)

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To understand “work as done” and improve how things really work, involve those who do the work (Eurocontrol, 2014).   Concepts from Taylor’s Principles of Scientific Management can be found manifest in current safety efforts in many ways. One way is the idea to create the “one best method” to execute work safely. Standardization is seen as a good thing through checklists, procedures and standardized designs. Craftsmanship, local expertise, improvisation, and other expressions of diversity are frowned upon by officials in most operational safety-critical worlds (Dekker, 2015). In present day thinking, what emerges are some interesting concepts. In the construction industry, plans, specifications, contracts and procedure create the world of “work as imagined” a very black and white representation. As those of you who work in the field on the front line know, everything turns gray at the coal face. Project teams and work crews must make sense out of all of it and create “work as done.” The gap between “work as imagined” and “work as done” is in interesting place to stand. One could say, the real work of construction safety occurs in this gap the place where both management and workers must come together and learn their way through safety (i.e., learn it as you do it). Writing procedures on how to work safely certainly adds some value to the challenge of accident prevention. However, having them written by those of us who do not do the work will only result in a certain level of success. Said procedures often show up at the workforce level as unrealistic and unworkable. As a young safety professional fresh out of college, I spent many long days translating government regulation into corporate procedure. I recall writing procedures such as Steel Erection, Electrical Safety and Excavation Safety. I got really good at it and received great feedback. However, I do not recall being asked to or encouraged to talk to or involve iron workers, electricians or heavy equipment Utility and Transportation Contractor, AUGUST 2015


operators. I wonder what those same procedures would look like if I had. Manual Competence   In his 2009 book Shop Class as Soulcraft, Matthew Crawford explores the concept of “manual competence” as he challenges us to reappraise our views of skilled manual labor. In the age of think tanks, consulting firms, and IKEA, craftsmanship seems to be in decline. Shop class is becoming rarer, and our children are told that college is the ticket to an “open future” as a “knowledge worker.” This rejection of craftsmanship wrongly ignores the cognitive, social, and remunerative rewards of skilled manual work, and wrongly assumes that white-collar work always engages the mind. The declining ranks of skilled labor and the constant threat of available trades in construction are obvious and everyday realities in our industry.   When we think about construction work in general, fundamentally it is about craftsmanship (or craftpersonship to acknowledge the contribution of women in the trades). It is said that craftsmanship consists simply in the desire to do something well for its own sake. As a craftsperson, you recognize your work in a world that has been transformed. There is individual agency - the experience of seeing a direct effect of your actions in the world and knowing that these actions are genuinely your own (Crawford, 2009). For this reason, there exists a standard or code in which the workforce live by. Tradesman must reckon with the infallible judgment of reality, where one’s success or failures cannot be interpreted away. There exists an inescapable accountability either the building stands or it does not. For example, if one’s boss questions the work, one can say “its plumb, level and square go check it out.” I feel it is this essence of craftsmanship that we have not tapped into in the work of safety.   Of course, most safety experts suggest “employee participation” as a key ingredient in safety programs. How often do we actually involve the workforce in safety? What level of trust would have to occur to do so? Could we get over our Tayloristic mindset and allow this to occur at a meaningful level?   The bold step here would be to involve actual work crews in the development of safety procedure, risk assessment, incident investigation and change management. The involvement of the workforce would help us to understand and reduce the tension and gap between work as imagined and work as done.   There is a strong belief in the administrative ordering of work to ensure that it is both safe and efficient. This involves not only several layers of line management and supervision but also extensive safety bureaucracies. These instill practices in which accountability for safety is generated chiefly through process, paperwork, audit trails and administrative work all at an increasing distance from the operation. Rather than safety as a practical and ethical responsibility downward, it has become a bureaucratic accountability upward (Dekker, 2014). Where We’re Heading   The best efforts in safety right now are happening inside companies which are viewing safety in the context of complexity, those that are acknowledging the gap between “work as imagined” and “work as done” and those that are honoring the value of field expertise (craft) and the skills necessary to do construction work i.e., critical thinking coupled with physically effort. People are the solution to harness: they are smart, they can think rationally and

solve great problems with their reasoning, their science and their technology. People are not a problem to control unless we only look at it that way. Between managers and workers, we have all the talent necessary to meet the growing challenges the construction industry will need to get itself to the next level of performance in safety. The questions is, do we have the courage to tap into it? After all, it’s not rocket science. About The Author . . .Ray Master is the Director of Loss Prevention & Risk Control Services with Construction Risk Partners. He is accountable for the design and delivery of the firm’s safety consulting service. The offering aspires to challenge conventional thinking in construction safety in providing both safety management system optimization and safety culture/performance enhancement. His 25 years of experience in construction safety span a wide range of industries to include heavy, power, process, high-rise buildings, oil/gas, marine, transportation, hazardous material clean-up and emergency response. Prior employers have included JMJ Associates, Bovis Lend Lease, CH2M Hill, and Stone & Webster Engineering Corporation. He has held adjunct positions at both NYU and Columbia University. He works out of the firm’s New York City office

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Financial Overview

INTEREST RATES. . .

WHERE ARE THEY GOING, WHAT SHOULD YOU DO By: William J. Ruckert, Provident Bank

  The current interest rate environment remains at, or near, alltime lows. While there has been some movement of late, interest rates have remained extraordinarily low since the advent of the Great Recession in 2008. There are many reasons, economic and otherwise, for this phenomenon, and experts continue to postulate when rates will increase.   Will low unemployment figures, higher inflation, sustained GDP growth, or the housing market be the trigger? And let’s not forget about Greece and the economic turmoil in Europe.   There are, however, some things we know for sure. First: sooner or later, interest rates will increase, and the upside is far greater than the downside. Second: as a recent Wall Street Journal article pointed out, the low interest rate environment has not provided the significant capital investment and economic stimulus expected. Third: new home sales remain unsteady despite low rates. Fourth: an increase in rates by the federal government will most assuredly have a negative impact on a tenuous economy.   A historical perspective on interest rates is worthwhile here given the wide swing in rates over the past 35 years. Few remember banking deregulation in the late 70s and early 80s, which caused interest rates to spike as banks fought for deposits with high interest rates; that’s when money market accounts were invented. During that time, the U.S. economy was in turmoil, with the Prime Rate approaching 20%. Believe it or not, business was still being done, companies were growing, and the rates were purposely set that high by the Fed in an attempt to stabilize the economy. Residential mortgage rates were also in double digits. In fact, the rate on my first mortgage was 15%.   Until about 10 years ago, market conditions did correlate with interest rates: Prime tended to be 300 basis points higher than LIBOR, short term rates were lower than long term ones, and the yield curve had an upward slope. Until now. And no one can quite explain what the “new normal” is.

  Banks were caught in a quandary during the period of interest rate volatility, needing to offer customers long-term fixed rates but averse to managing the risk. That risk grew greater as rates declined, borrowers refinanced, and assets moved to competitors. To protect their interests, banks introduced “prepayment penalties,” “makewhole provisions,” and last but not least, “SWAP unwind fees.”   So why is this history lesson relevant? What does it mean for you? Proactive management of interest rate risk is critical to the operation of your business, regardless of the industry you serve. Here’s what you need to know:   Floating rates tend to be lower, at least in the short term, and the principal amortizes more quickly, thereby reducing interest expense. Fixed-rate loans have lower monthly payments, improving cash flow and liquidity. Floating rates are attractive as long as Prime and LIBOR are low, but an increase in these indices will negatively impact your bottom line. Long-term rates are equally attractive, but consider whether you will hold the asset for the length of the loan.   The uncertain trajectory of interest rates makes deciding on the most prudent strategy very difficult. Whether it’s a fixed- or floating-interest rate, short- or long-term loan, there’s inherent risk that requires careful consideration.   But take heart. Hedging your interest rate risk is quite manageable if you take a forward-looking view and your bank provides flexibility. For example, with short-term interest rates so low, it makes sense to have a floating interest rate loan. However, to hedge the risk of an increasing interest rate environment, structure your loan with a fixed-rate conversion feature during its term. Long-term fixed rates are also low, so if you have a significant commitment to a long-term investment, a fixed rate is prudent as rates have far more room in the upside than the downside. Lastly, you can also structure your debt to be split between fixed and floating rates to hedge the risk on both sides. Continued on Page 89

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Job Story

 L

New Prince Concrete Construction Company Is Making South Orange Avenue Safer

ong-considered one of the most dangerous roads in Essex County, South Orange Avenue is undergoing major improvements which are being performed by New Prince Concrete Construction. The project is 100% federally funded and includes widening, elimination of sharp turns and curves, and construction of three bridges for use by pedestrians and horses. Work began in March of 2014 and is expected to be completed in March of 2016.   The following information comes from the Project Summary (prepared by French & Parrello Associates): County Route 510 (South Orange Avenue) through the South Mountain Reservation is owned and operated by the County of Essex. South Orange Avenue is a major transportation link in Essex County extending between the Township of Livingston to the west and the City of Newark to the east. The project limits encompass a 1.46 mile section beginning in the Township of Millburn at the intersection of Brookside Drive/Cherry Lane extending across South Mountain Reservation

through Maplewood and terminating in South Orange Village at the intersection with Harding Drive. The proposed improvements were developed to provide a safe roadway that accommodates current and future traffic demands, meets current design standards, and maintains the scenic integrity of the Reservation by minimizing the impacts to the environment, parkland and cultural resources.

Installation of drainage pipe.

Construction of center median.

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  Project Need: The roadway contains a series of substandard curves for the posted speed limit through South Mountain Reservation along with steep vertical grades. Dense brush and tree branches adjoining the roadway obstruct motorist sight distances. Poor and substandard drainage facilities along the roadway have resulted in stormwater entering into the travelway making for difficult braking and potential for hydroplaning. In addition there is no shoulder on the eastbound direction limiting sight distance and discomforting driving conditions, as well as Utility and Transportation Contractor, AUGUST 2015


Demolition of existing pedestrian bridge.

preventing a location for disabled vehicles. Existing parking and turnout areas within the Reservation have limited sight distance for vehicles entering the traffic flow. These deficiencies have attributed to a high number of accidents along the roadway. The existing geometry also does not provide standard accommodations for bicyclists who regularly use the roadway.   Project Design: The Project Design includes the realignment of the roadway centerline to provide a compliant alignment for a 30MPH posted speed. Additional geometric improvements include: • Full-depth Pavement Reconstruction throughout the Project Limits • New Concrete Median Barrier • Construction of Uniform Shoulders on both sides of the roadway • Profile Improvements to Improve Sight Distance   To address the safety of the roadway and function of the travel lanes during storm conditions, the project includes reconstruction of the stormwater management system to include: • New inlet structures that meet NJDOT Bicycle Standards and NJDEP Stormwater Management Systems Best Management Practices • Bio-Retention swales with baffling systems to reduce rates of runoff and provide groundwater recharge

Drainage outfall stabilization to reduce potential for erosion

Major Project Elements: • Widening and deck reconstruction of the culvert over the West Branch of the Rahway River • Construction of Pre-Cast Concrete Arch Structures with Stone Veneers for • Pedestrian/Equine Bridge at the Existing Rail Trail Crossing • Trail Crossing into the Girl Scout Camp • New Retaining Walls to provide embankment stabilization and reduce disturbance impacts with the Reservation • New guide rail and roadside barrier treatments to improve roadside safety • New Traffic Signal Equipment Installations to meet County and ADA Standards at Brookside Drive/Cherry Lane and Glenview Drive • Enhancements to wetlands areas within drainage outfall areas • Installation of enhanced lighting with decorative lighting using the Villager Fixture along the roadway • Extensive Landscaping Planting Program along Roadway and within the Reservation consisting of: • 3,932 Deciduous Trees • 899 Evergreen Trees • 1,160 Deciduous Shrubs • 363 Evergreen Shrubs

Construction of natural stone veneer on Conspan Arch Bridge 2 over South Orange Avenue.

Installation of Conspan Arch Bridge 3 over Rahway River Tributary.

One lane of South Orange Avenue will remain open to traffic at all times during the project. Essex County is receiving $30 million in federal funding for the project. New Prince Concrete Construction Company, located in Hackensack, is the General Contractor. The project also involved extensive tree removal, 12 retaining walls, installation of 10,000 LF of drainage pipe and relocation of 80 utility poles. Subcontractors included: MV Contracting, Pantaleo Electric, Structural Services, Moretrench, J. Fletcher Creamer & Son, National Fence, VIP Contractors and Statewide Striping. Material suppliers for the project included: County Concrete, Eastern Concrete, Tilcon, Braen Supply, Contech, Ft. Miller, Old Castle, Campbell Materials and A & R Concrete Products.

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THE AFFORDABLE CARE ACT: Preparing For Changes In 2016

By: Nancy Damato, Partner, RDA Benefit Services   The Affordable Care Act, or Obamacare, as we know it, has brought many changes to the health insurance industry since it was signed into law in 2010. There are some significant changes coming in 2016, particularly the Employer Reporting mandate and the expansion of the Small Group market. Details regarding these changes are outlined below. EMPLOYER REPORTING UNDER IRS SECTION 6055 & 6056   The IRS has recently released new draft documents of the Employer Reporting forms that need to be used for providing information about the health insurance that an employer offers to its employees who work more than 30 hours a week. Forms 1094B & 1095B are used by small employers with fewer than 50 employees that offer a self-funded health plan. Forms 1094C & 1095C are used by large employers, no matter what type of health plan they offer (fully insured or self-insured plans) and even if they offer no plan currently. Employers are reporting on data for the 2015 calendar year, due in early 2016, and are responsible for reporting on both the union and non-union employees. SMALL GROUP MARKET TO EXPAND TO INCLUDE GROUPS UP TO 100 EMPLOYEES   The definition of a small group under the Affordable Care Act will change to include employers with up to 100 employees. This will impact the health plan choices available to groups of 50 to 100 employees, as well as the way the plans are rated. Many of the carriers are allowing these groups to keep their existing plans, as well as allowing them the flexibility to change their anniversary date in order to stay under their current rating system. Every carrier is handling this a little differently, so it is important to be in touch with your health plan provider regarding your options for 2016. H.S.A. Contribution Limits and Out-of- Pocket Limits for HighDeductible Health Plans

  Contributions and out-of-pocket limits for Health Savings Accounts and High-Deductible Health Plans for 2016 have recently been announced by the IRS: H.S.A. Contributions: Individual—$3,350 (same as 2015) and Family—$6,750 (an increase of $100); High-deductible Health Plan maximum out of pocket amounts: Individual—$6,550 (increase of $100) and Family—$13,100 (increase of $200). 2016 OUT-OF-POCKET MAXIMUM LIMITS IMPACT FAMILY DEDUCTIBLES   The Affordable Care Act requires that all non-grandfathered health plans, including self-funded and fully insured plans, limit the annual out of pocket maximums for essential health benefits. This has a significant impact on high deductible plans, since one person in the family could meet the full family deductible. Under the new guidance, these plans will need to be modified so that a single individual’s out of pocket costs do not exceed the specified maximum, which is $6,850 for 2016. More information will be coming in regards to the modification of current health plan designs for next year. TRANSITIONAL REINSURANCE PROGRAM   Transitional Reinsurance Program was designed to help stabilize premiums for individual market coverage during the first 3 years of the operation of the Health Insurance exchange. This program collects a fee from health insurance carriers and self-insured group health plans. The 2015 rate is $44 per covered individual and the 2016 rate is being reduced to $27 per covered individual. 2016 is the final year for the transitional reinsurance program.   For more information about these changes and to receive updates as they occur, please feel free to contact us to be placed on our mailing list: ndamato@rdabenefits.com or 855-693-0772.

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INTRODUCING PAUL FADER, UTCA’S NEW LEGAL COUNSEL   Last Fall, following the retirement of Steve Brawer as association attorney, the UTCA Board of Directors began interviewing potential candidates to succeed Mr. Brawer. The individual selected would have very big shoes to fill since Steve served the association for many years and was successful in numerous important legal cases for the construction industry. Following a thorough process, the association’s Officers and Directors announced that Paul T. Fader of the firm Florio Perrucci Steinhardt & Fader was selected as the new Legal Counsel for UTCA.   Paul Fader is a member of the Executive Committee, and Chair of the government, regulatory affairs and lobbying practice group at his firm. Paul represents numerous public and private clients, concentrating his practice in the areas of governmental affairs, redevelopment, real estate and land use law, and construction and public contracting law.   Prior to joining the firm, Paul served as Chief Counsel to New Jersey Governors Richard J. Codey and James E. McGreevey, where he provided legal counsel to the Governor of the State of New Jersey on issues involving all aspects of state government. Before serving as Chief Counsel, Paul served as Deputy Chief Counsel and Director of the Authorities Unit in the Office of Governor James E. McGreevey. The Authorities Unit oversees the state’s 43 independent authorities, boards and commissions, which include the Port Authority of New York and New Jersey, the New Jersey Sports and Exposition Authority, the New Jersey Casino Reinvestment and Development Authority and the New Jersey Economic Development Authority. As Director of the Authorities Unit, Paul was responsible for over 44,000 employees and an annual aggregate revenue stream of more than $14 billion. Paul’s leadership was instrumental in the consolidation of the New Jersey Turnpike and the Garden State Parkway Authorities.   From 2003 to 2005, Paul served as a member of the Board of Directors of the New Jersey Transit Corporation, the New Jersey Schools Construction Corporation, the Capital City Redevelopment Authority, the North Jersey Transportation Planning Authority and the Delaware Valley Regional Planning Commission. Paul has made

Members of the Construction Practice of the firm are, seated left to right, Brian Tipton and Paul Fader. Standing left to right are Alvaro Hasani, Adrienne Isacoff and Louis Cappelli.

a significant commitment to public service throughout his career including serving two consecutive terms as Mayor of the City of Englewood.   Paul was a member of GovernorElect James E. McGreevey’s transition team and served on United States Senators Jon Corzine and Robert G . To r r i c e l l i ’s Federal Judicial Nominating Committee for the Federal District Court for the State of New Jersey. He was also a delegate for President William Jefferson Clinton to the 1996 Democratic National Convention. In 2012, Paul was elected as a delegate for President Barack Obama to the 2012 Democratic National Convention.   The law firm was first established in 1996 as Florio & Perrucci by Governor James Florio and Michael Perrucci. In 2005, they were joined by Douglas J. Steinhardt, a New Jersey mayor and leader in the New Jersey Republican Party, with Paul Fader coming on board a year later. The firm provides a vast variety of legal services to its clients. Its practice areas range from real estate, defense, education, corporate and business, banking and of course construction.   Florio Perrucci Steinhardt & Fader provides construction services in such areas as bidder qualification analysis, contract preparation and negotiation, proposal preparation, bonding issues, bid disputes, claim preparation/negotiation/litigation, change-order negotiations, arbitration, mediation and appeals.   The construction division attorneys are experienced and knowledgeable on New Jersey’s Construction Lien Law (successor to New Jersey’s Mechanics’ Lien Law), Municipal Mechanics’ Lien Law, Public Works Bond Act, Trust Fund Act, Contractual Liability Act, Pay-to-Play restrictions, Prevailing Wage Act, Project Labor Agreement Legislation, and New Jersey statutes and regulations pertaining to procurement by state and local agencies and applicable case law. The firm’s home office is in Rochelle Park with additional offices in Phillipsburg, Cherry Hill, New York City and Bethlehem, PA.   Paul Fader is a graduate of William Paterson University and Rutgers University Law School. He and his wife Jill Morgan Fader are the parents of sons Jack and Lucas and daughters Morgan and Sydney. In 1998 Paul and Jill founded the Walk For Awareness: Our Fight Against Breast Cancer. This 5K walk is held every October to raise breast cancer awareness. The walk has raised more than $1.5 million to date.   UTCA is proud to welcome Paul Fader to the team.

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The Mount Group of Companies

Mount Construction Co., Inc. Mount Materials, LLC Harleysville Materials, LLC Mount Charitable Foundation

www.MountConstruction.com • 856-768-8493

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Labor Relations

IF YOU DIDN’T THINK IT WAS IMPORTANT BEFORE...IT REALLY IS TIME TO REVISIT THE ISSUE OF MISCLASSIFYING EMPLOYEES AS INDEPENDENT CONTRACTORS By: Jill Tobia, Esq., Tobia & Sorger

  Earlier this year, this column encouraged UTCA Contractors to revisit their independent contractor relationships in light of the fact that the New Jersey Department of Labor (“NJDOL”) had established a task force specifically devoted to ensuring that workers are classified properly and the New Jersey Supreme Court had also endorsed a test that favors the finding of employee status. Now, as if to make absolutely sure that employers understand the continuing importance of this issue, the United States Department of Labor (“USDOL”) has issued guidance to employers for evaluating independent contractor versus employee classifications under the Fair Labor Standards Act (“FLSA”). Not surprisingly, the USDOL’s guidance heavily favors the finding that most workers are employees under the FLSA. The USDOL’s strong presumption in favor of employee classifications will undoubtedly bolster the enforcement actions of state agencies, as well as those of the IRS, against misclassifications by employers. Accordingly, if UTCA Contractors haven’t done so before, they definitely need to re-evaluate their independent contractor relationships in order to determine compliance with the law. USDOL’s Analysis:   Over the years, the USDOL has developed an “economic realities” test, which focuses on whether the worker is economically dependent on the employer or is in fact in business for him/herself in order to determine the classification of employees versus independent contractors. In its guidance, the USDOL notes that the FLSA defines “employ” as “to suffer or permit work,” which definition encompasses more workers as employees. Accordingly, the USDOL

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firmly states that the factors of the “economic realities” test must be viewed in light of this broad definition of employee. The following questions, therefore, must all be answered with the above in mind: - Is the Work an Integral Part of the Employer’s Business? - Does the Worker’s Managerial Skill Affect the Worker’s Opportunity for Profit or Loss? - How Does the Worker’s Relative Investment Compare to the Employer’s Investment? - Does the Work Performed Require Special Skill and Initiative? - Is the Relationship between the Worker and the Employer Permanent or Indefinite? - What is the Nature and Degree of the Employer’s Control? - Is the Worker A Truly Independent Business or Is He/She Economically Dependent on the Employer?   The USDOL’s guidance addresses the above questions in light of the FLSA’s broad definition of employ and provides specific examples, most of which favor the finding of an “employee” as opposed to an “independent contractor.” Advice for UTCA Contractors:   While true independent contracting relationships can provide significant advantages to both the worker and the business, UTCA Contractors must be mindful that some employers intentionally misclassify workers as a means to cut costs and avoid compliance with labor laws. In addition to depriving the worker of valuable workplace protections such as minimum wage, overtime compen-

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sation, unemployment insurance and workers’ compensation, misclassification also results in lower tax revenue for the government and an uneven playing field for employers who properly classify their workers. Accordingly, it is imperative that all UTCA contractors examine their independent contractor relationships to ensure that these relationships comply with the law. An internal audit with the help of legal counsel can prepare the employer for a classification inquiry. With governmental enforcement efforts in the construction industry continuing to rise, it is likely that the majority of UTCA Contractors will be impacted by a random audit (NJDOL, IRS and/or USDOL) addressing this misclassification issue. However, with a proactive and informed approach, UTCA contractors can avoid costly investigations by examining and documenting their independent contractor relationships before they are questioned.

Continued from Page 59   These are just a few options at your disposal to manage interest rate risk, which should not be taken lightly. As I mentioned, rates can easily rise into the double digits, and it wasn’t that long ago that they were there. Consider the effects of a higher interest rate environment on your company’s finances and work with your bank to manage the risk.   Large and small banks alike have the tools to help, and you should maintain an active, open dialogue with your banker regarding the impact on your company. After all, managing interest rate risk is certainly in your best interest. 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.

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EXCAVATORS, BACKHOES AND CRANES, OH MY! By: Carl Bloomfield & Shane Riccio, The Graham Company   How can you better protect some of the largest assets and investments that you have? To answer this question, let’s talk through a scenario; ABC Constructors is a heavy highway/civil contractor that won a $50,000,000 job to build a bridge that will cross over a medium size river. To build this bridge, and to continue operations at other jobsites, ABC Constructors will be renting a crane valued at over $750,000. The crane will be sitting on a work barge in the river throughout the majority of the project. The subcontractors hired to perform some of the work being done on the project will likely need to use the crane occasionally. ABC Constructors has previously built many bridges, but it has been a few years since it has worked from a barge, and because of its extensive fleet of cranes, it has not rented one recently. Even with these circumstances, everything on the surface seems okay, however, when digging into the Contractor’s Equipment Policy the following issues can be identified: Waterborne Exclusion   Most standard Contractor’s Equipment Policies available in the insurance marketplace today exclude coverage for equipment while it is waterborne. Most insurance companies are willing to delete this exclusion, but will want to know how often work is performed from the water and what types of equipment would be exposed. Property Leased, Loaned or Rented “To” Others Exclusion   A Contractor’s Equipment Policy excludes coverage for property while loaned, leased or rented to others. There may be situations where equipment is leased or loaned to another contractor but in all these situations, a loss to the equipment would not be covered. To make this situation more challenging, the subcontractor to whom the equipment is leased or loaned will likely not have coverage under their own General Liability Policy because of the Personal Property Exclusion in the standard GL policy.

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Equipment Leased or Rented “From” Others Limitation   A Contractor’s Equipment Policy may provide coverage for leased and rented equipment with a small sublimit of $150,000, but that is not nearly enough to replace a rented crane if it were a total loss. Further, equipment “borrowed” from others is typically omitted from this coverage sublimit. It is not uncommon, if only for a few minutes, to borrow another contractor’s equipment on the job. Therefore, it is important that the limit provided for this coverage be greater than the most expensive piece of equipment that a contractor may lease, rent or borrow for a job. In addition, some insurance markets provide a lower limit for this particular coverage for cranes than they do for other types of equipment such as excavators or backhoes. The limit for this coverage needs to be monitored closely to avoid an underinsured situation in the event of a total loss to a leased, rented or borrowed piece of equipment. Rental Expense Coverage for Damaged Equipment Coverage Omission The standard Contractor’s Equipment Policy does not provide coverage for the rental expense incurred in the following two situations: 1. A piece of Owned, Leased or Rented Equipment is damaged and the contractor incurs additional expense for a replacement piece of equipment; or 2. A piece of Leased Equipment is damaged and the lease requires continuation of lease payment until the damaged piece of equipment is repaired. Fortunately, coverage is typically available for each of these two scenarios if your broker just asks.

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Overload Exclusion   As a result of numerous crane accidents in recent years, Overload Exclusions on Contractor’s Equipment Policies have gained popularity. This exclusion would eliminate coverage for equipment if the loss or damage is caused by the weight of a load exceeding the registered lifting capacity of a piece of equipment. This exclusion should be deleted from your policy.   Let’s take a look at another common scenario; ABC Paving won a $20,000,000 job to pave a strip of highway on the New Jersey Turnpike. Part of its estimate in preparation for the winning bid took into account the fact that ABC Paving owns an asphalt plant 10 miles away from the job site. The cost of manufacturing and hauling its own asphalt such a short distance was a key factor in ABC Paving winning the job. What if a few days into the project, a fire at the asphalt plant shuts down that operation for eight months? It is preferred that asphalt plants be covered on a Contractor’s Equipment Policy instead of a Property Policy because a standard Contractor’s Equipment Policy provides broader protection than a standard Property Policy. However, a few key coverage grants should be negotiated into the Contractor’s Equipment Policy to provide protection in this scenario: Contractor’s Equipment Business Income Coverage   A Contractor’s Equipment Policy should be enhanced to provide coverage for loss of business income for damage to contractor’s

equipment such as an asphalt plant. If a contractor’s owned asphalt plant is shut down and there are other clients beyond that of the contracting business, then the contractor will need this coverage to reimburse lost business. Extra Expense Coverage Omission   The Contractor’s Equipment Policy should be enhanced to provide Extra Expense Coverage for the contracting business as a result of having to purchase asphalt from another provider that may be a further distance to the job site. Any additional costs to keep the project on schedule would be covered as it relates to the asphalt plant fire.   When you purchase insurance, you purchase the promise to pay a claim via a contract called the policy. That’s why when reviewing the terms, conditions and exclusions within your Contractor’s Equipment Policy, look for some of the key enhancements discussed above and make sure they are negotiated during the underwriting process. If not, an uncovered loss can cause large out of pocket payments and turn a successful, timely and profitable job into a painful loss. 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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The Pipeline

By: Dennis Hart, Director Of Utility Operations   This is the first column I will be writing focusing on Utility and Environmental issues of concern to UTCA members. If there are topics you would like discussed please let me know at dennis@ utcanj.org. Dennis Hart

City of Trenton water treatment plant failed and the city was without water for 10 days. City government and most of Mercer County government offices where shut down. Schools in Trenton, Ewing, Lawrence and Hamilton Townships could not open. Emergency supplies for firefighting were delivered over bridges via firehoses Water Resources from Morrisville, Pennsylvania. A major system failure could put   In 2002, I discovered what the most popular religion is in New us right back into this situation but if we act now we can avoid this Jersey. It’s not Catholicism or Judaism or Islam. As the appointed type of crisis. “State Drought Czar” I quickly found out that lawn watering is   Now is the time for us to examine our water supply and our the number one religion in New Jersey, with washing your car as physical and management delivery systems and set a course for the a close second. As I watch our fellow Americans in California and long term benefit of our state, our environment and our economy. Arizona deal with a drought, which has lasted more than 6 years, This examination must include the following: and follow the demands for release of the New Jersey State Water ·  Water conservation measures including the reuse of treated  Supply Master plan I can’t help but think about how we, as a State, wastewater effluent need to be implemented in a vigorous manner. have wasted the past 13 years. ·  New water supply and storage projects need to be planned and   New Jersey is a water state. Not only does our average annual constructed. The last major supply projects completed in New  rainfall exceed that of Seattle but we are also heavily dependent on Jersey were the very successful Manasquan Reservoir, but it is  water. Yet, we have done little in decades to recognize, plan and relatively small and was completed over 35 years ago, and the    build for our future. This has been a failure of not only democrats Tri-County Water Supply Pipeline. and republicans but us citizens as well. Due to our fragile water ·  The interconnections between our various systems are vital and supply system we can experience a supply drought relatively quickly. need to be evaluated and upgraded. In particular, the connection When our next drought hits I can easily predict the reaction to it. between the City of Newark system and the system in Central New Our citizens’ first reaction, like fighting siblings, will be to demand Jersey need immediate action. that all golf courses not be able to water their fairways if the public is ·  The extremely complicated political and administrative systems  not able to water their lawns. Ignoring the fact that golf courses are we have created to manage our water supplies have to be changed  a business like any other water dependent business such as Anheuser if we are to provide a safe and adequate supply of water. Busch or a pharmaceutical plant. This will be quickly followed by legislative hearings demanding to know what has been done by the   During the 2002 drought the NJDEP hotline room handled state since the last drought. But a lack of rain or snowfall is only thousands of calls each day from citizens asking for interpretations one cause of a water supply problem. Due to the age and dilapidated of the drought restrictions. If we don’t act now we will be right condition of our water infrastructure we are vulnerable to a major back in the same position again with little to do but manage day to water main, pump station or interconnection rupture which could day issues, pray for rain and answer questions such as my favorite cripple portions of our state for a long time. In August of 1975 the one we received: “Can I water my lawn? No! Can I wash my car? Utility and Transportation Contractor, AUGUST 2015     103


No! Can I give my dog a bath? Of course you can give your dog a bath. Can I give my dog a bath while he is standing on top of my car which is parked on our lawn?” This article was originally published at www.njspotlight.com Air Resources   On June 15, 2015 the Association issued a Construction Advisory alerting the membership to an NJDEP enforcement initiative designed to investigate and enforce the 3-minute construction vehicle idling policy. Please visit the Association’s website www. UTCANJ.org for details on this initiative and the advisory. The UTCA continues to meet with NJDEP on issues related to emissions from construction vehicles and will be discussing the matter in detail in future columns. NJ Turnpike Authority Insurance Requirements   As a result of concerns raised by UTCA and its members, the NJ Turnpike Authority has agreed to modify recent changes to

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their insurance requirements for contractors and subcontractors working on Turnpike projects. Contractors will be required to have Automobile Insurance amounts of $2 million primary and $3 million of excess insurance and General Liability coverage of $2 million primary and $3 million of excess insurance. The subcontractor tier will require that subcontractors have Automobile Liability of $1 million primary limits and $1 million of excess insurance. In addition, the Authority will require contractors to provide proof of insurance for all subcontractors. Please visit the Association website for a copy of the June 4, 2015 advisory. The Association would like to thank George Harms Construction Company and the C&H Agency for their work on this issue.   Dennis Hart focuses on utility and environmental issues for the UTCA. He is a former Assistant Commissioner of the New Jersey Department of Environmental Protection and was the Executive Director of the New Jersey Environmental Infrastructure Trust.

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GOLF OUTING TO BENEFIT BRAIN TUMOR CENTER SCHEDULED FOR OCTOBER

UTCA Has Provided Assistance Since The Beginning  

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n October of this year, the tenth Annual David S. Zocchi Memorial Golf outing will take place. The outing was started in 2006 in honor of Dave Zocchi, a childhood friend of UTCANJ CEO Bob Briant, Jr. For nearly six years Dave battled brain cancer with grace and courage. He and his wife traveled the country to find the best care available. “Dave was a close childhood friend. He faced his illness with such courage and dignity.  I miss him dearly,” said Briant.   Two weeks after his passing his wife, Judy was offered the opportunity to partner with Dr. Sumul Raval, a top neuro-oncologist, to open a brain tumor center at Monmouth Medical Center in Long Branch. He would build the medical program and she would raise

Juan and Marta Gutierrez, right, are pictured at the Golf Outing to benefit the Brain Tumor Center at Monmouth Medical Center.

the funds to build the facility and family support programs. The center would be named for David. Understanding the difficult journey when a person is diagnosed with a brain tumor, Judy felt strongly there needed to be a place that could serve families locally. She called Bobby and asked for his help. Without hesitation he said yes. Bobby appealed to the UTCA membership to help make the dream of a center that would bring cutting edge care to brain tumor patients in their own community. Many members stepped up that first year and they continue to play in the outing ten years later. Juan Gutierrez, Chairman of the Board, Northeast Remsco Construction, has supported the outing personally and professionally every year. “With cancer being so preeminently pernicious in these times, having a brain tumor treatment center nearby is a necessary healthcare benefit to the Monmouth County community.   The outing is held each year at Manasquan River Golf Club on the first Monday of October. “Having the golf outing at the premier golf club on the Jersey Shore is a treat like no other. The gifts are always outstanding and the food superb.” Gutierrez comments. Some of the other UTCA members that have participated regularly over the years include CIS, Doka, Garden State Precast, EIC Associates, J. Fletcher Creamer & Son, the Earle Companies and many more.   “I am so grateful for the UTCANJ member support. It is so nice to see the guys coming back each year to help me support the families in our community who are faced with a major life-changing situation. I am especially grateful to Bobby Briant and Mike DeVito who always take the time to help me make this happen each year.” Judy Zocchi says. “I hope to see our UTCA friends again this year for our special tenth anniversary outing, and a few new smiling faces! “ The Outing this year is October 5, 2015 at Manasquan River Golf Club. For reservations go to www.zocchigolf.org.   The David S Zocchi Brain Tumor Center is located at Monmouth Medical Center in Long Branch NJ.

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Accounting Corner

NAVIGATING THE IRS APPEALS PROCESS By: Adriane Shaffer, CPA, McGuigan Tombs & Company

  Federal tax audits can be stressful by themselves, but they become   2. A statement that you want to appeal the IRS findings to the even more taxing, pun intended, when an auditor hands you an Appeals Office. adjustment, resulting in additional tax due. If you disagree with   3. A copy of the letter showing the proposed changes and findings the adjustment and all efforts to argue your position with the IRS you don’t agree with. examiner have been exhausted, there is still an opportunity to argue   4. The tax periods or years involved. your position through the IRS appeals process. IRS Publication 5   5. A list of the changes that you don’t agree with and why you provides a great overview of your appeal rights and how to prepare don’t agree. a formal protest. The process begins once you receive the auditor’s   6. The facts supporting your position on any issue that you don’t agree with. ruling along with what is commonly referred to as the “30 day letter.”   7. The law or authority, if any, on which you are relying.   Before you decide if you should appeal the adjustment, consider   8. You must sign the written protest, stating that it is true, under the following: penalties of perjury as follows:   1. If you believe the adjustment was arrived at based on a “Under the penalties of perjury, I declare that I misinterpretation of the law, be sure to check all related IRS examined the facts stated in this protest, including publications and any court cases that may or may not support the any accompanying documents, and, to the best of position you took on the originally filed tax return. my knowledge and belief, they are true, correct, and complete.”   2. If you believe the adjustment was arrived at based on a misunderstanding of the facts, you must be prepared to clarify and   If you wish to have a representative (attorney, CPA or enrolled support the position you took on the originally filed tax return by agent) prepare your formal protest, you must also provide a completed power of attorney (Form 2848). If your representative providing additional records or other evidence.   Once you have considered the above and determine the prepares and signs the protest for you, he or she must substitute a declaration stating: adjustment is worthy of an appeal, you must file your written   1. That he or she submitted the protest and accompanying formal appeal within 30 days of the date of the auditor’s ruling, documents and except for those protests that qualify for the small case request   2. Whether he or she knows personally that the facts stated in the procedure (total adjustments equal less than $25,000). A small case protest and accompanying documents are true and correct. request to Appeals can be made by sending a letter requesting their   After the formal protest has been sent in accordance with the consideration, indicating the changes you don’t agree with and the IRS Examiner’s ruling letter received, a representative from the reasons why you don’t agree. IRS Publication 5 indicates that a Appeals Office, which is independent from the IRS examiner that performed the audit, will contact you or your representative to formal written protest must include the following 1:   1. Your name, address and a daytime telephone number. 110     Utility and Transportation Contractor, AUGUST 2015


arrange a conference at a convenient time and place. The response time is generally within 90 days. It is imperative that you provide as much information as possible at this conference in order to speed up the process of your appeal.   The Appeals Officer assigned to your case is required to take an independent and objective approach to the issue at hand. Internal Revenue Manual excerpt 8.1.1.1 indicates that the Appeals mission is to resolve tax controversies, without litigation, on a basis which is fair and impartial to both the government and the taxpayer and in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the Service2. The Appeals Officer will schedule a preconference with the IRS examiner and the taxpayer prior to the actual appeals conference where the examiner will have the opportunity to make any further statements regarding the issue. After this preconference, the Appeals Officer will not have any further contact with the IRS examiner unless any new issues arise. If any new issues arise, the case will be returned to the IRS examiner. Once again, it is important that the written formal protest include facts in a clear and concise manner which supports your position. This is your opportunity to refute an IRS agent’s proposed adjustment provided on Form 886-A. It may benefit you to hire a taxpayer representative that can perform this task on your behalf, especially in the case of a large tax adjustment. Most differences are settled at the Appeals Office level.   If you are not able to settle your protest at the Appeals Office level, there is still an opportunity to take your case to the United States Tax Court, the United States Court of Federal Claims, or a United States District Court. At this point, it would be wise to consider the value of the several court costs, including attorney and other representative fees, you would incur upon filing this case with the courts as compared to the tax on the adjustment itself. You would also be required to satisfy certain procedural and jurisdictional requirements under each type of court.   In conclusion, the IRS appeals process can work in your favor if the guidelines presented by the IRS are followed and you are able to present a well written formal protest, which provides a convincing argument to the IRS examiner’s findings.

Continued from Page 33 them. Each Construction Loan will be rolled over into a long-term NJEIT loan upon completion of construction. This will reduce interest expenses during construction significantly as Municipalities will not be paying interest on borrowed funds that are not being utilized, savings that will reduce costs to rate payers. Finally, private negotiated sales for short-term funding (S-T) programs only, in conjunction with the Construction Loan Program described in the preceding point, will allow the Trust to borrow short-term funds from private banks to fund and implement the cost-saving, line of credit lending program. The EIT is already a wildly successful program for funding utility based infrastructure work. UTCA was very pleased to have worked with EIT staff and the Legislature to help make a great program even greater.   Finally, I would like to encourage everyone to attend the UTCA’s annual convention this year from October 1-4 at the Borgata Hotel & Casino. Specifically, on Friday, October 2nd, the UTCA PAC Auction/President’s Reception is shaping up to be the best and most entertaining yet. We have secured professional comedian Jeff Norris, a Comedy Central regular who has been in several major motion pictures and appeared in HBO’s Boardwalk Empire, to be this year’s live auctioneer. We are also inviting several prestigious political guests to attend the event which will prove to be a who’s who of our industry and NJ’s political scene. Without your generous support of the UTCA Constructors for Good Government PAC, our voice would not be as strong as it is in Trenton. Thank you for your continued support of the PAC and we hope to see you in October at the Convention.

1 IRS Publication 5 (Rev. 01-1999), Catalog Number 460741 2 I.R.M. 8.1.1.1(1) (02-10-12)

Continued from Page 15 of the Form for each employee, but rather Judge Kenny stated that a contractor with multi-craft workers could comply with the requirement by simply filling out multiple forms for each worker at the beginning of the project covering all the crafts that the contractor anticipates the worker may perform.   The Court’s ruling in this case rests upon and reinforces the fundamental principle that, under the Local Public Contract Law, bidding specifications must promote a free, open and unfettered competitive process that maximizes the number of qualified bidders.   Nonetheless, the County filed an appeal which will place these issues squarely before a New Jersey Appellate Court with the authority to issue an opinion that will bind all lower courts in the State of New Jersey. Once again, the very purpose of the Local Public Contracts Law to provide free, open and fair competition in the bidding process will be front and center in the Appellate Division. Stay tuned. The information contained herein is for informational purposes only as a service to the public, and is not legal advice or a substitute for legal counsel, nor does it constitute advertising or a solicitation.

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THE COST OF SOUND SAFETY In addition to being human tragedies, work zone fatalities and injuries divert more than $1 billion annually from transportation construction. By: Brad Sant, ARTBA SVP of Safety & Education   Two roadway construction or maintenance workers are killed on the job every week. Another 10 workers are injured every day. These figures, based on annual averages, tend to increase during the busy warm-weather building and repair season. But such fatalities and injuries are tragic no matter when they occur, especially for the victims’ families and co-workers.   These incidents should not just be looked at as “statistics,” but as people. Here are a few examples from this year, according to news reports.   ·  Fifty-year-old David L. Ridzon, a public works employee in Tolland, Connecticut, was killed in March when one of his co-workers backed over him with a dump truck as he repaired potholes.   ·  A few weeks later, Ronald Paul Raiche Jr., a 47-year-old Nevada Department of Transportation worker, was struck and killed by a commercial truck while repairing cracks on Interstate 80 between Elko and Reno.   ·  In April, 28-year-old Jared Overfield was crushed to death when a huge pipe rolled down a hillside at the Highway 101 widening project he was working at near Petaluma, California.   These are just a few of the many workers who went to the job site one morning, but did not return to their families at the end of the day. Real people, real suffering, real sadness.   Deaths and injuries in the transportation construction industry also cost a lot of money, more than $1.2 billion annually. That’s based on data from the U.S. National Institutes of Health, which estimates each death in the construction industry costs $4 million in direct and indirect expenses; each injury resulting in lost work days costs $42,000.1 As noted above, each year approximately 100 workers in our industry are killed, and 20,000 more are injured. The Occupational Safety and Health Administration recently put the cost of each worker fatality at $8.7 million (value of statistical life) and each injury at $62,000.   Any way you add it up, billions of dollars are being diverted from the highway, bridge and public transit construction industry as the result of these accidents. These staggering costs include “hidden” economic consequences that should be understood so they can be controlled. Understanding the Real Cost of an Incident   Due to the highly personal and emotional nature of occupational deaths and injuries, it can be difficult to talk about such incidents in terms of dollars. That can seem cold and calculating. But business managers need to understand that correlation in order to justify a solid investment in time and capital to improve their safety performance. It follows the old axiom that performance improves when it is measured and reported.   The measurement of death and injury costs should be considered both in terms of direct and indirect costs. For example, direct costs include workers’ compensation payments, medical expenses, and costs for legal services. Indirect costs might include training replacement employees, accident investigation and implementation of corrective measures, lost productivity, repairs of damaged 114

equipment and property, and costs associated with lower employee morale and absenteeism. (Though not a part of occupational safety risks, it is important to note that other, more damaging long-term costs may arise due to an inadequate safety program. This includes exposure to legal liabilities and tort action, especially if a member of the public, rather than an employee, is injured in an accident on your work site.)   When measuring the costs of workplace incidents, the “iceberg” effect comes into play, meaning the direct costs we anticipate and easily measure are only a small portion of the real cost. These indirect or hidden costs are most dangerous because business managers may fail to see them. Our traditional accounting systems were not designed to recognize indirect costs resulting from accidents (or savings from avoiding them), so they are usually included as expenses to overhead.   In fact, it is difficult to realize a correlation with safety performance because the main considerations for efficient construction projects are typically scope, time and budget. Some managers think only in these parameters. Newer considerations like quality, safety and health, social responsibility, and environmental concerns are often overlooked by contractors, especially in small to mid-sized firms.   To better integrate safety management into the company economic profile, it should be viewed in terms of corporate values. The American Society for Safety Engineers recommends weighing safety performance against nine criteria, including profitability and productivity.   In the transportation construction arena, a company’s safety record is most often a key determinant when awarding contracts based on “best value” as opposed to lowest bid. In other words, if a company has a poor safety record, it will be increasingly difficult to compete for work in the changing world of value-based contracting. Profit Margins and Cost Another key consideration when measuring the real expense of work place incidents is the cost-to-profit ratio, or profit margin. Consider a relatively small “inexpensive” incident. Let’s say a dump truck approaching a paving machine to unload accidently backs into a highway worker. In our example, the worker is not killed, but suffers a broken leg. The worker is taken to the hospital where the leg is reset and placed in a cast. He or she is expected to make a full recovery, but will not be able to return to work on regular duty for five or six weeks. Here are some ways the costs add up:

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·  Work is stopped temporarily as the accident is assessed and the worker is treated and taken to the hospital. As an employer, you continue to pay all the employees on the site while no work is taking place. Even one or two hours of lost work for an entire crew and equipment will accrue costs fairly quickly.   ·  There is additional lost time for the injured worker and at least one other employee who accompanies him/her to the hospital.   ·  Paperwork to document the injury must be completed.   ·  The worker will be paid workers’ compensation or for temporary, restricted duty.   · There may be time/cost consequences to your schedule.   · There may be consequences with your insurance modification rate.   · There will be costs associated with the medical treatment and follow-up.   · Another worker will need to be hired and perhaps trained to replace the injured worker. Let’s say such an accident costs the $42,000 estimated by the National Institutes of Health. That’s an unwelcome expense, to be sure, but one that a healthy business should be able to absorb, right?

Recall this is a paving job, an industry that typically operates on a six percent profit margin. The company in our example would have to generate $700,000 in gross revenue to pay for this “inexpensive” accident. That is hardly insubstantial, and the revenue requirement gets even higher using OSHA’s estimate of injury expense, or to cover an accident involving multiple workers that costs even more. The bottom line is simply this: a good safety program is a profit center. Creating a good safety culture and programs will pay long-term dividends while avoiding the costs of workplace deaths and injuries. As transportation owners place a greater emphasis on company safety performance when awarding work, only those employers who carefully manage that aspect of their business are likely to remain in operation in the next five to 10 years.

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Costs of Occupational Injuries in Construction in the United States, Accid Anal Prev.

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2007 November ; 39(6): 12581266. Geetha M. Waehrer, Ph.D., Xiuwen S. Dong, DrPH, Ted Miller, Ph.D., Elizabeth Haile, MPH, and Yurong Men, MS

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IATION SOC AS RS

UTILITY & TR AN S

ON CONTR ATI AC RT TO O P

ANNIVERSARY

CONGRATULATIONS UTCA

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Learn first hand how Foley, Inc. will respond to your needs with innovative solutions and create an experience for you that will make you a Foley, Inc. customer for life.

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