Best Practices Construction Law : Construction Lawyer & Attorney : Matthew DeVries : Smith Cashion & Orr Law Firm : Green Building & LEED Litigation

The construction industry is one of the hardest hit in this down economy.  From the top to the bottom, from executive to business development and sales to project management, you may find that you have to dust off your resume to look for new opportunities. 

An article by Joann Lubin in the Wall Street Journal yesterday highlighted a networking pro, George Landis, who had to learn some new tricks as his executive job ended last November.  Landis was described as a "deft conventional networker" who once relied on the traditional handshake.  Times are changing ... and Landis realized it.  He agreed to learn networking in the 21st century. Here are the top tips from his informal advisors, as well as a few of my comments:

• Develop a stronger online identity by revamping your resume.  For Landis, this meant changing his work summary from "a seasoned executive" to "I make sick companies significantly better for owners and employees."  From my perspective, it is also good to create an electronic version of your resume that contains hyperlinks to your work experience, notable projects, published articles and speaking gigs. (Here is an example of my electronic resume.)
• Make better use of LinkedIn, a professional networking website.  For Landis, this meant reviving his inactive LinkedIn account.  You may already have hundreds of contacts in your old, dingy address book.  Now's a good time to search those contacts for their online presence.
• Create a more visible personal brand.  For Landis, this meant finding a new way to position himself as a thought leader in business management.  For the construction player, this means finding opportunities to speak and write.  There are local associations like AGC of Middle Tennessee that enjoy new faces at their lunches. You are also bound to find a local educational institution like MTSU that has a concrete management program that always needs guest lecturers. 
• Get a bigger payoff from industry events.  For Landis, this meant joining the Turnaround Management Association and offering to assist in program development.  When you participate in the event organization, your start to become known as a good helper and volunteer.  Your name recognition and reputation builds.

At the executive and business development level, some of these tips may be easier to do than at the project management level.  But I think it comes back to identifying your passion and making that your job.  Former-construction-attorney-turned-marketing-coach Cordell Parvin shares 5 Keys to Success and Fulfillment and the second one is about finding your major definite purpose.  Perhaps your current circumstances allow you to look for new opportunities. And remember, you may be like Landis in your archaic networking ways, but even a pro can learn new tricks.

• Email This
• Print
• Comments
• Trackbacks

You don’t have to click too many times through your channels on your television set without finding a reality television show. There is one for finding the right man, losing weight to the extreme, rebuilding a destitute home in five days, and even eating spiders and beetles.

Earlier this week on the evening news I witnessed a reality show of sorts in the green building arena: an investigative report by a local news station about the construction of the new Music City Center in Nashville, Tennessee.

Location: A demolished building in downtown and a dumping site out of town.

Protagonist: Ben Hall, an investigative reporter from Channel 5.

Antagonist: A local demolition subcontractor involved in the project.

Plot: In a project committed to sustainable and green construction methods, will the subcontractor take the easy way out and simply dispose of the demolition waste rather than carefully pick through the recyclable materials?

Conclusion: See the video for yourself. [Cannot see the video, click here.]

This green building reality show illustrates one of the tensions between sustainable building practices and certified sustainable building practices.  Where a project is simply committed to sustainable building practices, conceivably there is no oversight.  The end product may contain energy-saving features or other green components, but the building methods may not change.

Where a project seeks LEED certification, as does the Music City Center, there should be requisite protections in place to monitor the reuse of recyclable material and the disposal of waste material.  "We're going to try to keep as much out of the landfills by recycling it," said Larry Atema, Senior Project Manager for the Center. ". . . [F]or example, the steel to a steel recycler, the brick to a brick recycler."

So, where did checks and balances fail at the Music City Center?  According to Atema, "It should not have happened. . . . I think what is important at least to us, when we first learned of it, we went out and less than 12 hours later we had the steel picked out of the debris." According to the article, Atema said crews will have to do a better job of sorting. He said that the crews are now looking more closely at what leaves the demolition site.

It will be interesting to follow this project through construction, as well as the LEED certification process, to see whether the Music City Center wins its green building reality show prize.

• Email This
• Print
• Comments (3)
• Trackbacks

For the next couple of weeks, the only thing you will see on our living room television is the Winter Olympics.  Luge...daring!.  Freestyle moguls...awesome!  Snowboard cross...cool!  Figure skating...good time to surf the Internet!

Last night, while watching figure skating surfing the Internet, I stumbled upon this article about the Olympic and Paralympic Village in Vancouver having received the highest certification for sustainable community development from the U.S. Green Building Council.  The LEED Platinum certification was announced Mayor Gregor Robertson on Tuesday morning.  According to the article, the Olympic village is the second development in the world to receive Platinum certification. 

Platinum certification was awarded to the $1-billion, 32 hectare South East False Creek neighbourhood development project based on a variety of factors including its proximity to the downtown core, affordable housing, green buildings and habitat restoration. . . .

“If we want to stand up and make Vancouver the greenest city in the world we are going to need some serious resources and aspirations,” said Roger Bayley, design manager for Merrick Architecture, the architects behind the project. “But I have no doubt that [the Village] is going to be profitable.”
 

The sustainability website inhabitat.com had a great overview of the sustainability features of the Olympic Village almost two years ago.  These included:  solar panels, green roofs, rain water harvesting systems, in-slab hydronic system for heating and cooling of the buildings, and all underground parking.

It is good to see that the Olympic Village attained its goal for LEED certification . . . a Platinum medal in the Olympics of green building.  Local community leaders want to use the Olympic Village as model for sustainable development to help Vancouver become the "greenest city in world."  

The problem? It came at a significant cost.  A $700-million bailout was required from the City in order to finish the construction of the Olympic Village, generating concern for the profitability of future LEED development projects.

The answer? As with many other green building issues, only time will tell.  First, we will have to wait until the end of the Olympics to see how Vancouver transitions Olympic Park into affordable housing for downtown residents.  Next, we will have to watch the performance of the sustainable buildings.  If private development can do it cheaper and faster with the same or comparable performance data, then there may not be the green community development anticipated by local leaders. 

• Email This
• Print
• Comments (1)
• Trackbacks

Earlier this week I attended the AGC of Middle Tennessee's membership lunch.  Everything was right on!   I love chicken ... they served chicken!  I have 5 kids ... the guy next to me had 9 kids!  And I like to follow construction industry trends ... and the speaker loves to follow construction industry trends.

David Wells, a senior equity analyst for Thompson Research Group, spoke about the 2010 economic outlook for the construction industry.  Some key talking points:

• There is no longer a drag on residential construction and we may see some improvement in the upcoming year
• As to non-residential or commercial construction, we have not yet bottomed out ... which may occur mid-late 2010
• Finally, as you can expect, public construction is "the only game in town"

Given the increased investment in public construction, there remains some challenges in this arena.  For example, U.S. government (and other public) borrowing has replaced private borrowing.  This creates a public debt crisis at the federal level, resulting in federal deficit projections of unparalleled amounts.  At the state level, the budget crises stem from the same economic conditions coupled with the requirement to maintain a balanced budget.

This may be new information to some of you.  It is probably old news to many others.  But what does it mean practically?  Here are some of David's concluding recommendations:

1. Take cost cuts now, if necessary.  The uncertainty of work significantly impacts employee productivity.  If you are going to need to make cuts, make them now, and reassure your remaining team that they are part of the team.
2. De-lever your balance sheets.  Use the time now to analyze your debt structures in place and attempt to de-leverage your company as much as possible.
3. Watch out for opportunities.  Weaker companies will be looking for solutions to their problems.  Stronger companies should be on the watch for opportunities to build and expand through acquisition or partnership.

Question: Any recommendations for improving your 2010 economic outlook?

Graph: Council on Foreign Relations

• Email This
• Print
• Comments
• Trackbacks

What did you watch after the Superbowl?  If you are like more than 36 million other viewers, you watched the premiere episode of Undercover Boss . . . a new reality show on CBS that features high level executives who go undercover to interact and work with daily employees.

The premier episode featured Larry O'Donnell, President and Chief Operating Officer of Waste Management, as he worked alongside his employees.  O'Donnell got down to the nitty gritty, cleaning porta-potties, picking up trash at a landfill, sifting cardboard at a recycling plant, and driving on a trash route.  If you saw the interaction between O'Donnell and his employees, you felt the authenticity of the moment.  Whether you call it "good reality television" or a case of "good scripting," there were a number of lessons that can be gleamed from O'Donnell's experience:

• A company's success depends largely ( ...if not entirely... ) upon its people.  While this may be common sense, many company leaders do not realize how far down the ladder this principle applies ... all the way down to the bottom man or woman.  If there is a friction between your hourly employees and your middle management, that friction may never be realized by upper management.   
• No matter what level on the company ladder, innovation and hard work should be rewarded.  O'Donnell saw this in an employee named Jaclyn, who was a paid-by-the-hour administrative assistant.  Jaclyn also acted as an office manager, scale operator, and scale supervisor, and accountant for accounts payable, accounts receivable, and payroll.  Ultimately, O'Donnell promoted Jaclyn to supervisor, placed her on salary status and made her position bonus eligible.
• Work policies enacted by management should be reviewed for effectiveness and acceptability.  Some of best decisions made from above have the best intentions for the best results.  However, management decisions can achieve an opposite result if not carefully enacted.  For example, O'Donnell heard complaints from an employee who was docked pay for two minutes for every one minute they were late clocking into work.  Wanna know the kicker?  O'Donnell was the one pushing for increased productivity from WM employees.

Question: Did you identify any other "lessons learned" from the undercover boss of Waste Management?

• Email This
• Print
• Comments (4)
• Trackbacks

I wonder who that sad little scrap of paper is?  Do you know?  Oh, yeah, he's just a bill ... he's just a bill on capitol hill.

You knew that Nashville was the Music City, right? Reminiscent of the "Schoolhouse Rocks" days, last night I attended the kick off dinner for the AGC of Tennessee’s “Day on the Hill”… an event where AGC members attend hearings and meet with state senators and representatives about various bills relating to the construction industry in the state of Tennessee. Although there are reported to be more than 1300 bills introduced for consideration by the General Assembly in the 2010 regular session, approximately 15-20 of those impact or affect the construction industry in some manner. The top five bills for which the AGC of Tennessee has stated their position include the following:

• Worker's Compensation Insurance Reform. There have been a number of bills introduced in the session of the General Assembly regarding the issue of subcontractors not having workers compensation insurance coverage. I previously blogged about Public Chapter 1041, who's implementation date was recently deferred until March 28, 2011.  The law would have required all contractors to obtain workers compensation coverage, even on themselves if they were sole proprietors. Rather than taking a position on the individual bills that were introduced in this session, the AGC of Tennessee suggests that any legislation proposed on this issue consider the following recommendations:

1. Allow up to three officers of a company to “opt out” from being required to have coverage;
2. Require the filing of an affidavit with the Department of Labor that specifically names the individuals who have opted out of coverage;
3. Proof of at least 10% ownership;
4. Submission of a federal employer identification number with any filing;
5. An acknowledgment of a waiver of all rights of recovery, including workers compensation and tort claims, if the opt out individual is injured on the job; and
6. A provision that any individual who opts and files a claim would be guilty of fraud.

• Drug Free Workplace.  This legislation was first introduced by 2008 by the AGC of Tennessee. SB 1524 and HB 1604 make certain changes for denying workers compensation claims involving drugs or alcohol. By changing the burden of proof by the injured employee from a “preponderance of evidence” to “clear and convincing” evidence. This legal language change would make it more difficult for the employee to prove that drugs did not contribute to the cause of the accident. AGC of Tennessee strongly supports this change to the current legislation.
• Listing of Masonry Contractors. SB 2722 and HB 2794 requires information concerning those bidding for masonry contractor work be included on the outside of the envelope containing a bid, in addition to those contractors currently required to be listed. AGC of Tennessee strongly opposes this legislation, consistent with the position taken by the Tennessee Board for Licensing Contractors. Currently, masonry contractors are not required to have a license in Tennessee. Adding this requirement to current legislation as suggested by the AGC, would be put an additional burden on the general contractors bidding a project.
• Electronic Bidding. SB 3607 and HB 3158 revise the current requirements concerning information that must be contained on the outside of the envelope containing a bid to also require the same information be included in an electronic bid. AGC of Tennessee strongly supports this legislation because it brings the bid process into the electronic technological arena.
• Local Bid Preferences. AGC of Tennessee strongly supports SB 3607 and HB 3160, which clarifies that the only bid preferences that are permissible in public construction projects of local governments are those created by the General Assembly by general law. This legislation is intended to prevent local jurisdictions and governments from creating special bidding rules for construction projects.

Although there are numerous other bills before the General Assembly, these are the main ones being discussed by AGC members this morning at the “Day on the Hill” program. 

I once worked as a staff member on Capitol Hill more than 15 years ago and I truly miss being involved in the legislative process.  Whether you support or oppose any of the above measures, the real lesson is to get involved to help shape the laws that can (and will) affect your business.

• Email This
• Print
• Comments (1)
• Trackbacks

As you may know, the Nashville Metro Council recently passed the $585 million financing package for construction of the new Music City Convention Center.  As reported by the Tennessean this morning, discussions have now turned to project management and how to control the costs.

When asked about what areas would incur the most cost overruns, two divergent opinions emerged:

• Marty Dickens, Chairman of the Metro Convention Center Authority, said, "All of 'em."
• Larry Atema, CEO of Commonwealth Development Group and the owner's representative on this project, responded: "There aren't going to be any."

Who's right?  I am not sure either opinion is completely correct.  Cost overruns can occur when the contractor justifies any reasonable change order, whether it is the result of an owner-directed change request, a change in available materials, a change due to design conflicts, or an unanticipated delay in the work.  While there may be cost-savings built into the project's estimate, these can be rare on a sizeable project like the convention center. Add to the mix the multitude of players involved in the financing package: mortgage bankers, accountants, and cost engineers.  

To say that every trade or scope of construction will incur a cost overrun simply ignores the fact that there is a contractual guaranteed maximum price.  Additionally, there are a number of reputable, downright excellent contractors involved in this project who will do whatever is necessary to stay on budget.  Sure, there will always be the few participants trying to make an extra buck or two through change orders.  But that should not be the expectation.

On the other hand, to say that "there aren't going to be any" cost overruns may be simply a case of project management optimism.  Indeed, Atema recognizes that "[d]evelopment and construction is an imperfect process."  Atema continues: "The key is the ability to manage those imperfections." 

Image: Music City Center

• Email This
• Print
• Comments (3)
• Trackbacks

Okay, so you think I went to San Francisco just to get some good eats.  Not true.  I also went for the program.  The panel of speakers at the the mid-winter conference of the ABA's Forum on the Construction Industry was packed with some great government contracting professionals. 

To me, some of the best words of wisdom came from the Honorable Steven Reed, a former judge of the Armed Services Board of Contract Appeals who now practices in the Washington, DC office of Smith, Currie & Hancock LLP.

Judge Reed's talk focused on the alternative dispute resolution process and, more specifically, "... the practical side of developing the contractor’s story in support of a claim."   Some of Judge Reed's best tips:

• The big picture: Contractors must anticipate the possibility (if not the probability) of disputed matters. Prevention and preparation are essential to a favorable outcome.
• Documentation: "Daily reports are generally required under Federal contract.  They "should contain facts ... not feelings or emotions." (Don't call the project manager a "jerk" in the project documents, even if he is one.)  Rather, use the daily report as an "opportunity to create a comprehensive record of performance." 
• Claim proof:  "Your contractor client will absolutely need its bid papers for evidence in claim against Government."  It's a no-brainer, but you need a good document management process in place.  
• Dispute forum:  Picking a forum for resolving your dispute is strategic.  For example, a decision from the Board of Contract Appeals will be "predictable" and the process is more "stable" while the Court of Federal Claims will be more "rule bound."  The forum is also important because the Court has certain jurisdiction over fraud claims, while the Boards do not.

Judge Reed concluded his written presentation with sound advice: "Contractors need to be educated, prepared, aware, and well-represented." 

• Email This
• Print
• Comments
• Trackbacks

I am in San Francisco this week for the MidWinter Conference of the American Bar Association Forum on the Construction Industry.  The topic this year is "Government Construction Contracting" and I will be tweeting under the hashtag #ABAConstruct.

In news relevant to Federal contractors, construction industry players and Californians, the San Francisco Business Times reported yesterday on the approval of a $171 billion federal loan for the construction of a new transit center in San Francisco.  The loan is earmarked to pay for ramps to the Bay Bridge, a bus storage facility and the design of underground transit facility.  Good for the construction industry in California.  Other states are supposed to get some of the $8 billion set aside by the Obama administration for high-speed rail.

What can we learn from this report?  Almost every "construction news" feed that I follow includes some news article about the sustained decline in construction jobs.  There are also many reports about the stagnant hold on residential building.  Here's what I think:

• Federal and state projects will continue to represent the primary areas of growth within the construction industry for 2010.
• As those projects are the only ones available, there will continue to be increased competition for the limited work.
• There will continue to be an increase in bid protests and disputes arising out of these projects.

What do you foresee? 

• Email This
• Print
• Comments
• Trackbacks