Best Practices Construction Law : Construction Lawyer & Attorney : Matthew DeVries : Stites & Harbison Law Firm : Green Building & LEED Litigation

One of my favorite vendors at the CONEXPO / CONAGG show featured the job clock system by ExakTime.  They had a prime corner spot in one of the main exhibit halls and each representative greeted you with a smile from ear to ear.  When I returned from Las Vegas to the real world in Nashville, I was delighted to receive a follow-up email from ExakTime highlighting the following video.  Take a look: 

Although I will probably never need a portable time and attendance system for my 6 kids, I absolutely love this technology! The portable time clock featured above is RUGGED. The software has GPS capability for tracking the location of crews and employees.  Also, the time entries and other information can be imported into your document management and accounting software. Check out some of the sample reports, including employee time cards, executive summaries, location summaries, and cost codes.

So, the real question is: Why is this important?  Any participant on a federal or federally assisted construction project will want to know about the reporting requirements for the federal prevailing wage laws.  AGC has a great book called the Davis-Bacon Compliance Manual, covering all the issues you need to know, but here are a few guidelines :

• You will need to track on-site versus off-site work.  Under the Davis-Bacon Act, prevailing wages are to be paid laborers who are "employed directly upon the site of the work."  There will be a factual and legal analysis about what constitutes the work site or "adjacent" property, but you will need a solution to help track the activities of your workers.
• You will need to track overtime hours.  The Davis-Bacon Act requires overtime payment for all hours worked in excess of 40 hours per workweek.  Again, the time clock and attendance record-keeping will be important for defending wage violations or other payment claims.
• You will need to track certified payroll.  This is the documentation that a contractor is required to complete on a weekly basis for submission to the owner.  The certified payroll form provided by the Department of Labor requires certain information, which can be exported from your time clock solution. 

What other systems have you used to track employee hours and locations?

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It is time for some new running shoes.  In the past month, I attended two major trade shows after speaking to the particular industry association.  First, I was humbled to speak to the Kentucky chapter of USGBC on the ASHRAE 189.1 standards and the International Green Construction Code, as well as some of the top legal risks in green construction.  Afterward, I walked for about three hours through the AIA-CSI Mardi Gras Trade Fair.  Next, I was humbled to speak at the AGC National Convention on social media business development tips and legal risks for contractors.  Afterward, I ran for about 6 hours through the miles-and-miles of exhibits at CONEXPO/CON-AGG. 

As I walked around these two trade shows, I made a few observations about the people, booths and information presented by the companies in attendance. 

• People love giveaways.  This may not seem like a big deal to you or your company after having shelled out thousands of dollars to attend and host a booth at one of these shows.  However, your booth will see a lot more traffic if you have some incentive, enticement or ... let's just say it ... an iPad to give away. 
• Eye contact is important.  Whether you are manning the booth for your company or you are walking the floor trying to decide where to stop, eye contact is the first meaningful connection that you will make.  I cannot tell you how many booths I strutted right past because the person sitting (...not standing...) behind the booth was either reading something, texting on their phone, or simply not paying attention.
• A smile invites a meaningful connection.  Again, no matter which side of the booth you are on, a smile can make all the difference in the world.  As a construction lawyer, I am not sure how much these vendors or suppliers want to chat with me.  In other words, I am not looking to purchase a new excavator or concrete product.  However, it is about making connections with people in the industry.  If I cannot help them, perhaps I can find someone who can help them.  

In the end, trade show connections are kind of like speed-dating.  You may be selling products, services or expertise.  You only have a short amount of time.  Give them a smile ... a genuine introduction ... and make a meaningful connection.

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I am on the board of the Construction Leadership Council of the AGC of Middle Tennessee.  Earlier today, we presented a check to the Ronald McDonald House Charities to help support their great work for sick children and their families in and around Nashville, Tennessee. 

As I drove back to the office, I thought about the importance of helping others ... and specifically the impact of giving to others.  I recently heard a Jewish reading about giving:

THERE ARE eight degrees in the giving of Tsedakah, each one higher than the next:

to give grudgingly, reluctantly, or with regret;

to give less than one should, but with grace;

to give what one should, but only after being asked;

to give before one is asked;

to give without knowing who will receive it, although the recipient
knows the identity of the giver;

to give without making known one’s identity;

to give so that neither giver nor receiver knows the identity of the other;

to help another to become self-supporting, by means of a gift, a loan,
or by finding employment for the one in need.
 

Contractors are giving at every level.  Last night, Hardaway Construction and LP Building Products won the AGC of Middle Tennessee's Community Outreach award for their participation in the construction of Lighthouse Christian School featured on Extreme Home Makeover. In addition, AGC's Operation Opening Doors is helping renovate a home for a Las Vegas family struggling with medical issues.  

So, at which level are you or your company giving? 

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Last week, Jim Gray (chief executive of Gray Construction) flew to New York for a round of meetings.  As reported in the New York Times, it was Gray's newly acquired title as Mayor of Lexington, Kentucky that prompted his visit to New York to chat with Mayor Bloomberg.  Contractors and politics ... what can we learn from this duo?

There are significant similarities between the successful construction executive and the local politician.  Consider the NY Times' job description of the mayor:

. . . to oversee the police, fire and school departments, and to make sure the potholes are filled, the snow is removed and the budget is balanced. An energetic mayor can create jobs far more directly than the federal government — by helping lure new industry to town, or giving companies tax breaks to help them expand. He or she can push for new development — and then, with any luck, preside over the ribbon-cutting when the development is complete. It is probably the most hands-on job you can have in government, and the one where you can most easily see the fruits of your labor.

A successful construction executive, who is involved in all aspects of the company and its projects, has similar traits.  In the end, it is about being a "customer focused" leader — whether you a talking about mayor or chief executive officer. 

But you don't have to run for office to be involved politics.  It is equally important to follow the legislative trends, which you can do through industry groups like the Associated General Contractors of America or the American Road and Transportation Builders of America.   For example, earlier this year the Florida legislature attempted to raid the Transportation Trust Fund to pay for general expenditures.

Enter the contractor into the political process ... Bob Burleson of the Florida Transportation Builders’ Association (FTBA) recognized that the proposed raid would only push the real budget problems into the future, while freezing new transportation projects and eliminating tens of thousands of jobs in the present. An FTBA rally drew hundreds of protestors to Florida’s Capitol. This message came through loud and clear in Tallahassee: Governor Charlie Crist prevented the raid with a veto.

So, whether you are seeking govern a city with sound business experience like Jim Gray or seeking to defeat bad policies and legislation like Bob Burleson ... get involved!

Image: wallyg

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There's a time in every blogger's life where you simply have to grab your login information by the boot straps, step up to the blogosphere plate, and give a shout-out to another organization's event, such as: 

The Tennessee Builders' Ball brings together industry organizations to solidify support of the designs, Real Estate and Construction Industries, all while raising funds for the ACE Mentor Program of Tennessee.  If you are not signed up or if you have any questions, please send Kelly Dando an email.

In addition to supporting a great cause, the event is a great opportunity to network with other players in the construction and real estate development industries.  Here is a list of participants signed up so far:

RC Mathews * Stites & Harbison PLLC * MJ Harris * Gresham, Smith and Partners * Rock City Construction Co., Inc. * Lewis King Krieg & Waldrop, P.C. * AGC of TN, Middle TN Branch * AGC of East TN * Crowe Horwath LLP * Skanska * The Parent Company * PBG Builders, Inc. * RJ Griffin & Company * Orion Building Corporation * URS * PSI * Thomas, Miller & Partners, PLLC * Tuck-Hinton Architects * Burns Cooley Dennis Inc. * T. W. Frierson Contractor, Inc. * Barge Waggoner Sumner & Cannon * Earl Swensson Associates * supportive desiGN llc * MCDR Construction, LLC * Heery International * Reynolds & Reynolds Janitorial Services, Inc. * DevMar Products, LLC * Builders Exchange of Tennessee * WASCO INCORPORATED * HCA * Vanderbilt University * J&S Construction * ACE Mentor Program of America * Design & Survey Concepts, LLC * Balfour Beatty Construction * TN AGC CompTrust

Are you going to be added to this list? 

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Just a few days ago I wrote about how, like the World Cup soccer games, BIM presented a lot of excitement for many proponents. Turning to another competitive analogy, there continues to be many in the construction industry who simply refuse to go "all-in" with their poker chips.  According to a recent McGraw-Hill Construction report, I may be wrong.  The report concludes that half the industry is behind BIM technology.

The SmartMarket report is titled The Business Value of BIM: Getting Building Information Modeling to the Bottom Line, and was produced with Autodesk and 26 other industry players like HOK, Turner, PB, US Army Corp of Engineers, AIA, DBIA, AGC, SMACNA and others.

The purpose of the survey and report was to find "who's using BIM" and "where are they getting the real business value?" After surveying thousands of AEC participants, here are some key findings:

• Almost 50% of the industry is now using BIM.
• All BIM users plan significant increases in their use.
• The majority of users are experiences real business benefits directly attributable to BIM.

The 52-page report is packed with very detailed findings on numerous issues, such as using BIM to gain a competitive advantage, increasing productivity and investing in your team.  Another interesting finding was that two-thirds of the non-users say that concerns about legal liability have little to no impact on their consideration of BIM.  

What are some key recommendations? For beginners, the value of BIM is on the horizon.  In other words, new users see limited value at the start, but additional opportunities materialize with experience.  For non-users, do not delay your decision to embrace technology.  According to the report, "BIM users are seeing positive returns today and expect those benefits to grow over time." For owners, the lesson is to take charge and demand that your design team use BIM.

What did the report conclude?  While the preliminary findings focused on who is using BIM, the real focus addressed the overall value proposition of BIM.  In this environment, the pressing question for AEC players is whether the return on investment is real.  Among others, here are some key finding about ROI: (1) most users see a positive ROI in their use of BIM; (2) those returns tended to improve with experience; and (3) owners and contractors see the highest returns on BIM.

If you have time, the report is definitely worth a read.  It also contains a number of case studies that provide great illustrative examples of the business value of BIM.

Image: Jam Adams

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The Obama administration is scheduled to issue a final rule today that allows federal agencies to require public contractors to use public labor agreements (PLA) on large public construction projects. PLAs are collective bargaining agreements that establish the terms and conditions of employment for a specific construction project.  They have been used on private jobs, as well as state and local projects, including the construction of schools, hospitals, roads, bridges, power plants and airports.  The rule was first issued as Executive Order 13502 (pdf) "Use of Project Labor Agreements for Federal Construction Projects." The final rule due out today implements the Executive Order. 

What are the benefits of PLAs? According to Jared Bernstein, a White House economist who writes at the Middle Class Task Force Blog, PLAs provide "structure and stability" to large construction projects:

PLAs also help ensure compliance with laws and regulations governing workplace safety and health, equal employment opportunity and labor and employment standards. The coordination achieved through PLAs can significantly enhance the economy and efficiency of Federal Construction projects.

Bernstein reported that as of last summer, 21 out of 25 major Department of Energy construction projects were (or slated to be) covered by PLAs.

Sounds good for the construction industry, right?  Not according to a number of critics, including Rep. John Kline (R-MN), the U.S. House Education and Labor Committee’s senior Republican member, who warned that the new rule "will reduce competition and drive up costs for taxpayers."  Kline pointed to the U.S. Department of Labor’s decision last year to cancel a Job Corps Center construction project in New Hampshire as evidence of the dangers PLAs pose to federal job creation and project efficiency. The New Hampshire project was canceled after a local contractor raised a legal challenge to the project's PLA requirement, arguing it was discriminatory and would disqualify most contractors in the state.

Other critics, such as the Workforce Fairness Institute, suggest that the rule forces small businesses "to adhere to costly and non-competitive schemes, [which] will only result in lost jobs."  According to Katie Packer, executive director of WFI, “[e]nding fair and open bidding for federal contract work will disqualify employers from competing and increase the costs of projects just as our nation’s debt skyrockets."

Finally, groups like the Associated General Contractors of America flatly oppose any government mandated labor agreement, primarily because they negatively impact small companies, non-union companies, and disadvantaged businesses who frequently become excluded from contracting opportunities by such agreements.

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On December 24, 2009, the United States Senate voted to pass its own version of the health care package.  You have probably heard cries about the length of the bill (1,990 pages).  You have probably heard the cries about the costs.  But have you heard about an amendment that may significantly affect the construction industry?

According to a letter from the Associated General Contractors of America to Senator Mitch McConnell (pdf), the bill is non-workable and unnecessarily targets the construction industry.  The AGC opposes the health care package because of the complexity of the plan, the cost-shifting (rather than the cost- reductions), and the likelihood that it will increase insurance costs for those construction businesses that provide insurance to their employees.

Even worse, according to the AGC, is an amendment drafted by Senator Jeff Merkley (D-Or) and inserted into the bill by Majority Leader Harry Reid (D-Nev.) that would exempt the construction industry from the small business exemption that was included in the original bill.  According to another letter from the AGC to Senator McConnell (pdf), this would cripple small construction businesses:

For all other industries, H.R. 3590, exempts employers with fewer than 50 employees from the fines levied on those who cannot afford to provide their employees with the federal minimum standard of health insurance. However, the Manager’s Amendment alters the exemption so that it singles out small businesses in construction for special punishment by applying the exemption to only those firms with fewer than five employees in the construction industry. . . . The 50 employee threshold was meant to exempt smaller firms, [and] this amendment will unfairly punish small construction contractors.

There remains considerable debate about the effectiveness of the health care package.  The introduction and consideration of the Merkley amendment is a reminder for all industries to do your homework as Congress enacts laws that may affect, both directly and indirectly, your company.

Photo: Flickr | pixelle54

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Two months ago I reported about a new "just holding hands" partnership between Associated General Contractors (AGC) and the Associated Builders and Contractors (ABC) in Tennessee.  Although not a partnership, AGC established a task force in early 1999 with members from AGC,  the American Subcontractors Association (ASA) and the Associated Specialty Contractors (ASC).  Last week, the powerhouse group released its updated Guide to Construction Financing: Second Edition (pdf).

The 26-page publication explains the construction financing process while addressing both the opportunities and pitfalls for the contractor.  According to the AGC, it is "intended to serve as a reference to get contractors thinking about the risks associated with project financing."  

How does the contractor get involved in construction financing?  Easy.  It is not unreasonable to come across the contractor who, looking to expand its business, agrees to reduce its fee for an interest in the project.  Nor is it unreasonable to find the developer who goes into default and the bank takes over the project, ordering the contractor back to work.  Or what about the contractor who decides to change the project delivery method to Construction Management At-Risk and consequently helps the owner get financing?  In each of these examples, the contractor becomes entangled in the construction financing process.

The Guide is a must-read for contractors.  Some of the best practices for contractors include:

• Know your owner-developer and the structure of their organization
• Review the "pay when paid" or "pay if paid" laws in the states you are conducting business.  (For a fee, there is a AGC State Law Matrix that outlines this information.)
• Be aware of "creative financing" practices
• Be cautious of an owner's request for upfront deposits or "investments" in the the project
• Know and understand the default terms of the loan documents
• Perform title and lien searches at the onset and periodically throughout the project

Finally, some of the red flags that you should be worried about include: incomplete plans and specifications; owner caused delays at the front end; payment slow-down or defaults; inexperienced owners; change in lender involvement; and abnormal invoicing requests.

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I received an email this morning with the following warning: "The following message is intended for construction audiences only. Do NOT watch this clip alone or in the dark. Please wait 30-minutes after eating before watching this clip. DO forward this video on to a friend or colleague."
 

A couple of my observations about AGC's campaign for its annual convention:

1. This is very smart.  When I usually receive mass email alerts and messages, I put them in a "review later" folder and come back to them later in the week.  Not this one.  It caught my attention and I immediately clicked through the links.
2. This is very timely.  Sending this particular message during the week of halloween was ingenious.  Although the AGC Annual Convention is not for another five months, the message was tailored for the season and I am sure we can expect similar treats over the next coming months.
3. This is very exciting.  What AGC did here was step out of the cookie cutter approach to marketing.  It's a sign of the construction industry embracing Social Media and using technology in new ways.  Kudos, AGC!

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As a father of five children, I have fully prepared myself for "the" talk.  Already, I have discussed the various scenarios with my daughter about dating, courtship and marriage.  According to this eleven-year-old Princess, the line in the sand of appropriateness ... is ... "just holding hands."  (Whew!)

Last week, the two primary construction industry groups in Tennessee—the Associated General Contractors (AGC) and the Associated Builders and Contractors (ABC)—began holding hands.  At the 2009 State AGC Convention in Nashville, leaders announced a new partnership between the state AGC and ABC organizations.  According to Ed Baldwin, President of AGC of Tennessee, "both groups have recognized the importance of partnering as a positive means to achieve excellence in construction and better represent the entire industry." 

The "holding hands" venture has been officially reduced to writing in a "Cooperation Statement" approved by leaders of both industry groups.  According to the statement, the groups have agreed to the following measures:

1. Provide a forum to identify and discuss common areas;
2. Endeavor to build trust and respect between the two groups; and
3. Attempt to avoid surprises in their cooperative efforts.

In response to my inquiry, Dan Brodbeck, President of ABC of Tennessee, said, "Our group is excited about the cooperation agreement with AGC.  We look forward to opening the lines of communication with our partner to address those construction concerns that each of our members currently face." 

Is there any precedence for such a cooperative agreement?  Actually, these two organizations have done more than hold hands, kissed and dated ... they got "hitched" in two states.  In 1994, the Arizona chapters of ABC and AGC merged to form a joint venture called the Arizona Builders Alliance.  More recently, TEXO: The Construction Association was formed in October 2008 as a result of a merger between North/East Chapter of the AGC of Texas and the ABC North Texas.

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In this day and age of Biggest Loser, South Beach Diet, and the latest fitness craze highlighted by Oprah, I find myself more and more conscious about my eating habits. In fact, if you promise not to tell anyone, we have a little fitness competition within our own law firm starring four fatties. Although I have not been faithful to my own fitness regime (…again, please keep that a secret…), I have found myself diving into a new set of suits in my wardrobe. Herein lies today’s topic…the matter of perspective.

You see, according the average observer, my somewhat strained belt buckle and 1-inch-shy-of-buttoning jacket are signs of an outgrown suit. But little does that average observer know is two months ago I would not have been able to attempt the acrobats of wearing this suit to work. This is one of many suits from 10 years ago! Give me two more months and the pants will be sliding on with room to grow.  You see, that average observer has a different perspective than my family who has never seen me in these suits.

I view a lot of the challenges in the green building industry as emanating from a matter of perspective. There are countless resources available on the web about the legal risks associated with green building—just look at some of the green sites on the sidebar ( -----> ). However, as you scroll through some of those posts on green building, the tone of each writing evidences the perspective of each author. In the same fashion, a green building seminar given to construction attorneys is entirely different than a green building seminar given to owners, design professionals and engineers.

Stated differently, the parties’ expectations about the benefits of a green design will result in disputes. As noted by Frank Musica at the 2007 AIA Convention, these are often “unrealistic expectations” of the owner-developer that place significant risks on the architect. But Frank was presenting to a bunch of architects. What if the talk was given by Professor Thomas E. Glavinich at an annual AGC convention, who defines "the green contractor"?  (... If you look closely, Frank was there, too. Frank is everywhere ...)

Do you understand the potential disputes caused by the parties’ perspective? So long as each party maintains a different perspective on the particular issue, then disagreement will run the project performance. But if the parties are able to clearly and accurately reduce their reasonable expectations to a writing … a contract … then perhaps the perspective they will share is one of success.

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