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Simpson Strong-Tie Launches Updated Strong-Wall® Shearwall Selector Web App for Construction Project

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Pleasanton, Calif. – Simpson Strong-Tie, the industry leader in engineered structural connectors and building solutions, has launched a new version of the Strong-Wall® Shearwall Selector web application created to help building designers choose shearwall solutions based on up-to-date building code and product information without having to download additional software.

There are two modes for producing engineered solutions that resist design shear:

  •     Optimized In-Plane Shear – Provides the most cost-effective Strong–Wall shearwall solution(s).
  •     Manual In-Plane Shear – Creates solutions with any combination and quantity of Strong-Wall shearwalls.

Through technical analysis, the Strong-Wall Shearwall Selector provides actual drift and uplift values for a wind or seismic design shear load, while also considering simultaneous, vertically applied loads. Based on user input data, the program performs a rigidity analysis to determine the actual distributed shear to each wall in settings involving multiple aligned walls. In cases with walls stacked vertically, the program evaluates cumulative overturning effects to ensure that neither the wall, the anchor bolt, nor the anchorage to the foundation is overstressed.
The latest release now complies with the 2015 International Building Code by providing information on all three Strong-Wall Shearwall types: the Steel Strong-Wall® Shearwall (SSW); the original wood Strong-Wall Shearwall (SW); and the Strong-Wall Wood Shearwall (WSW) – the latest prefabricated wood wall that provides excellent lateral-force resistance and installation flexibility. Users are able to find specific product information based on application, save output files, and upload output files for future designs.

For information, including details on input variables, solution outputs, and screenshots, visit the dedicated Strong-Wall Shearwall Selector post on the Simpson Strong-Tie® Structural Engineering Blog.

About Simpson Strong-Tie Company Inc.
For more than 60 years, Simpson Strong-Tie has dedicated itself to creating structural products that help people build safer, stronger homes and buildings. Considered an industry leader in structural systems research,testing and innovation, Simpson Strong-Tie works closely with construction professionals to provide code-listed, field-tested products and value-engineered solutions. Our engineered structural products and systems are recognized for helping structures resist high winds, hurricanes and seismic forces. They include structural connectors, fasteners, fastening systems, lateral-force- resisting systems, anchors and product solutions for repairing, protecting and strengthening concrete. From product development and testing to training and engineering and field support, Simpson Strong-Tie is committed to helping customers succeed. For more information, visit strongtie.com and follow us on facebook.com/strongtie, twitter.com/strongtie, YouTube and LinkedIn.

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Preserving the History of Historical Buildings and Windows

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“Windows are one of the most important and integral character-defining features of historic buildings,” states the D.C. Historic Preservation Review Board in its publication Window Repair and Replacement Preservation and Design Guidelines.  “They provide a sense of scale, craftsmanship, proportion and architectural styling.”

As such, the primary objective of historic commissions and review boards, not to mention federal and local preservation statutes, is to ensure the existing windows remain intact whenever possible.  For this reason, repair is often recommended over replacement with more modern, double-paned windows that can quickly ruin a building’s character and charm. 

Repairing aging historic windows, however, has limits.  Although glass can be replaced and weather stripping installed, single pane windows do not provide the “air gap” that is the key to the noise reduction and thermal efficiency of the double-pane approach.

Fortunately, an alternative approach preserves the historic and embraces the modern while not altering the original window.  Instead, a unique “second window” is installed on the interior that can be opened or closed like the original.  Unlike storm windows or glazed panels, these “soundproof” windows maximize both exterior noise reduction and thermal efficiency, and are found in historical districts and sites nationwide.

Maintaining Historic Character
Owners of historic properties have good reason to upgrade their windows.  While beautiful, the traditional single pane windows found in historical properties are particularly prone to external noise intrusion.  In addition, the design offers poor thermal insulation properties.

Lawrence Posner sought to preserve the historic 10-foot double hung windows on four of his Victorian cottages, which were certified by the National Park Service.  Yet these picturesque cottages, including one he was living in, were located close to the blaring horns of a railroad. 

“There’s a double set of train tracks between the cottages and the river, and every few feet the trains would blow their horns,” says Posner.  “It was deafening.  I had to wear earplugs to sleep.  There’s nothing like historic double hung windows for aesthetics, but the windows let the racket right in.”

The beauty of Posner’s cottages and their location, Fort Conde Village, a Mobile, Alabama community of unique Victorian properties meticulously restored to their original design, contrasted sharply with the racket of the railroad.  Fort Conde Village, located next to Fort Conde, a pre Revolutionary War fort, is known for its historic details,
from the buildings to the gas lamps that light its cobblestone streets.

For Posner, replacing the historic windows of his cottages was not really an option because he did not want to compromise the aesthetics, and getting approval to do so
from the National Park Service would be difficult, if not impossible.

Posner turned to Soundproof Windows, Inc, a company with expertise engineering windows for some of the most noise sensitive environments in the world, such as recording studios.

The company has created a second, inner soundproofing window not visible from outside the building that is ideal for historic buildings.  The product is custom designed specifically to match – and function – like the original window.  It is also designed to be installed quickly.

The inner window essentially reduces noise from entering on three fronts: the type of materials used to make the pane, the ideal air space between original window and insert, and finally improved, long-lasting seals.  The combination can reduce external noise by up to 95%.

The first noise barrier is laminated glass, which dampens sound vibration much like a finger on a wine glass stops it from ringing when struck.  An inner PVB layer of plastic further dampens sound vibrations.

Air space of 2-4 inches between the existing window and the Soundproof Window also significantly improves noise reduction because it isolates the window frame from external sound vibrations.

Finally, the company places spring-loaded seals in the second window frame.  This puts a constant squeeze on the glass panels, which prevents sound leaks and helps to stop noise from vibrating through the glass. 

When choosing such soundproofed windows for a historic renovation project, the most objective measure of sound reduction is the window’s Sound Transmission Class (STC) rating.  In this rating system, the higher the number the more noise is stopped.  A typical rating for standard windows is 26 to 28, for example.  The acoustic soundproof windows, by comparison, earn a 48 to 54 STC rating.

“The soundproof windows saved my life,” says Posner.  “They would save anybody’s life if they had to deal with that sort of train racket and noise on a daily and nightly basis.” 

Soundproofing the windows of historic buildings can also significantly reduce energy costs.  Adding the inner window provides an additional layer of insulation with better insulation values than the best low-e, argon gas filled double paned window.  This can reduce heat loss by 77% or more for single paned windows.  The added insulation stops unwanted air infiltration around and through window seals, and can reduce the heating-cooling portion of energy bills by 15-30%. 

According to Posner, while he purchased the windows primarily for soundproofing, they also have value in terms of lowering heating and cooling costs.  “The windows have helped to prevent cold drafts from entering and improve insulation and energy efficiency,” he says.  “That’s important to long term comfort as well.”

With an upgrade to the latest soundproof windows, renovators and owners no longer have to settle.  Now they can preserve the historic character of properties while achieving modern comfort.

For more information, contact Soundproof Windows, Inc. at 4673 Aircenter Circle, Reno, NV 89502; call 1-877-438-7843; email sales@soundproofwindows.com; or visit http://www.soundproofwindows.com

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By Del Williams

Del Williams is a technical writer based in Torrance, California.

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Construction Job Growth Surges in February, ABC Says

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WASHINGTON, D.C., March 10 - National construction employment surged in February as the industry added 58,000 seasonally adjusted net new jobs, according to analysis of U.S. Bureau of Labor Statistics data released today by Associated Builders and Contractors (ABC). February's data represents the best month for construction job creation since March 2007. Nonresidential construction added nearly two-thirds of net new construction jobs with 38,500 jobs added for the month.

In absolute terms, nonresidential construction employment growth was led by specialty trade contractors, which collectively added 21,500 net new jobs. The heavy and civil engineering category posted the largest percentage growth with employment growing 1.6 percent for the month.

"Industry surveys indicate that the typical construction firm expects to be busier in 2017 than they were last year, and government data continues to support that optimism," said ABC Chief Economist Anirban Basu. "Over the first two months of 2017, construction has added 98,000 net new jobs, as many as were created over the first nine months of 2016.

"Leading indicators like the Architecture Billings Index have also been upbeat, suggesting that many contractors will encounter abundant bidding opportunities over the next several months," said Basu. "That has likely induced many construction firms to expand their staffing levels and to shore up their workforce.

"As always, the numbers must be interpreted carefully," said Basu "February's weather was unusually mild, which likely translated into less interruption in employment than is typical. Usually, around 311,000 construction workers are sidelined due to weather in February. There was substantially less interruption this year.

"Still, there is reason to believe that construction job gains generated over the past two months are explained by more than unusually warm weather," said Basu "Data suggest there are now more jobseekers looking to participate in the construction sector's ongoing recovery. That has likely helped some construction firms fill jobs openings more quickly over the last two months."

After rising recently, the construction industry unemployment rate fell 0.6 percentage points in February and now stands at 8.8 percent. The national unemployment rate inched down to 4.7 percent in February from 4.8 percent in the previous month. The labor force participation rose once again, this time to 63 percent marking its third highest rate over the past three years. It remains low by longer-term historical standards, however. That said, America's labor market recovery appears to have gained a bit of steam over the past two months, with the employment-to-population ratio achieving its highest level in eight years.

February 2017 Construction Employment

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Nonresidential Construction Spending Slips to Start 2017, ABC Says

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WASHINGTON, D.C., March 1 - Nonresidential construction spending contracted during January, according to analysis of U.S. Census Bureau released today by Associated Builders and Contractors (ABC). Nonresidential spending fell 1.9 percent from December to $698.4 billion on a seasonally adjusted, annualized basis. This represents the first month total nonresidential construction spending dipped below $700 billion since July 2016.

Despite the monthly setback, year-over-year progress remains intact, with nonresidential spending increasing 1.5 percent since January 2016. However, in real terms, that represents virtually nonexistent growth. Private nonresidential spending remained unchanged for the month, while public sector spending plunged 4.7 percent. The greatest loss in spending volume occurred in the public safety, water supply and conservation and development segments.

"The significant loss in public construction spending momentum is hardly novel," said ABC Chief Economist Anirban Basu. "For several years, public funding for construction activity has been flat and erratic. Public budgets remain constrained by underfunded pensions, surging Medicaid expenditures, and other non-infrastructure-related needs.

"The new president's speech on Tuesday night discussed the need for additional infrastructure investment," said Basu. "If the president is able to implement his public-private partnership plan, public construction spending is set to soar. However, there are many obstacles to his plan coming to fruition.

"Private construction spending was also soft in January, but the outlook remains upbeat," said Basu. "Corporate confidence is high, architects became much busier during the period immediately following the presidential election, and capital from banks and other sources should be broadly available to developers during the year ahead."

January 2017 Nonresidential Construction Spending 

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Construction Employment in January Reaches Highest Level Since 2008; Contractors Raise Pay Faster

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Construction employment increased by 36,000 jobs in January to the highest level since November 2008 as employers increased pay in an effort to address a chronic worker shortage, according to an analysis of new government data by the Associated General Contractors of America. The association urged public officials to strengthen training and education programs to prepare more workers for careers in the high-paying construction field.

"This report aligns with what contractors have been telling the association-that the construction industry is still eager to add workers," said Ken Simonson, the association's chief economist. "The employment gains would be even larger if there were enough workers with the right skills available to hire."

Construction employment totaled 6,809,000 in January, an increase of 36,000 from the upwardly revised December total and an increase of 170,000 or 2.6 percent from a year ago. Average hourly earnings in construction increased 3.2 percent over the past year to $28.52 per hour. Hourly earnings in construction are rising faster than the 2.5 percent increase for all private sector workers and are now nearly 10 percent higher than the private sector average of $26.00 per hour, Simonson noted.

In a survey that the association released in January, 73 percent of the 1,281 participating contractors said they planned to add to their headcount in 2017. But an equally high percentage said they were having trouble filling hourly or salaried positions. End-of-month openings in construction have been at 17-year highs, according to recent government data, Simonson added.

Residential construction-comprising residential building and specialty trade contractors-added 20,300 jobs in January and 128,200, or 5.0 percent, compared to a year ago. Nonresidential construction (building, specialty trades, and heavy and civil engineering construction) employment increased by 14,900 employees in January and 41,600 employees, or 1.0 percent, over 12 months.

Association officials noted that both their survey and government data released earlier this week point to continued growth in construction activity and an eagerness by contractors to hire-if they can find qualified workers. The association urged lawmakers and government officials to expand and fund employment and training programs to equip students and workers with the skills needed to become productive construction employees.

"Contractors have the 'help wanted' signs out and are offering good pay and benefits," said Stephen E. Sandherr, the association's chief executive officer. "We need government at all levels to revitalize and better fund programs to educate and train the next generation of construction craft workers."

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Construction Unemployment Rates Improve in 26 States Year-Over-Year, ABC Says

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WASHINGTON, D.C., Jan 31. - December not seasonally adjusted (NSA) construction unemployment rates were down in 26 states and the nation on a year-over-year basis, according to analysis released today by Associated Builders and Contractors (ABC). The rates for two states, Iowa and Wisconsin, were unchanged from December 2015. The national NSA construction unemployment rate of 7.4 percent was down 0.1 percent from a year ago, according to data from the U.S. Bureau of Labor Statistics (BLS).

The national NSA construction unemployment rate has fallen from the previous year's reading every month since October 2010. Since these industry-specific rates are not seasonally adjusted, it is most accurate to evaluate the national and state-level unemployment rates on a year-over-year basis.

"The ongoing year-over-year decline in the national unemployment rate is an indication of the health of the construction job market and its recovery from the deep recession it experienced," said Bernard M. Markstein, Ph.D., president and chief economist of Markstein Advisors, who conducted the analysis for ABC. "However, the growing shortage of skilled construction workers is hindering the ability of the sector to grow with more than 80 percent of Associated Builders and Contractors members reporting a shortage of appropriately skilled labor."

This was the lowest national December NSA construction unemployment rate since December 2006 when the rate was 6.9 percent. Meanwhile, BLS data showed that the industry employed 97,000 more people than in December 2015.

The usual pattern for the change from November to December is an increase in the national NSA construction unemployment rate. Starting in 2000, when the BLS data for this series begins, the December rate has risen every year. This year's 1.7 percent rate increase was no exception.

Only two states-Arizona and Hawaii-posted a decline in their estimated NSA construction unemployment rates from November.

The Top Five States
The states with the lowest estimated NSA construction unemployment rates in order from lowest rate to highest were:

1.    Massachusetts
2.    Colorado
3.    Hawaii
4.    New Hampshire
5.    Virginia

Three states-Colorado, Massachusetts and New Hampshire-were also among the top five in November. Massachusetts posted the lowest construction unemployment rate for the second month in a row at 3.5 percent, its lowest December rate on record. Colorado had the third best monthly change and had the second lowest industry unemployment rate at 3.8 percent. Hawaii was one of only two states with a monthly decline (down 0.7 percent) and climbed from 14th lowest to third with a rate of 4 percent. New Hampshire saw the sixth best year-over-year improvement, with its rate dropping 1.5 percent to 4.7 percent, the fourth lowest rate. Virginia posted the fifth lowest rate at 5.1 percent.

The Bottom Five States
The states with the highest NSA construction unemployment rates in order from lowest to highest rates were:

47.    Alabama and New Mexico
48.    Montana
49.    Illinois and North Dakota
50.    Alaska

Four of these states-Alaska, Alabama, Illinois and New Mexico-were also among the five states with the highest construction unemployment rates in November. Alaska had the highest estimated NSA construction unemployment rate for the fourth month in a row at 16.8 percent. Since the rates are NSA it is t typical for Alaska to be among the highest rates in the nation around this time of year, however, the state has saw a 2.4 percent year-over-year increase in its industry unemployment rate. Illinois and North Dakota had the second highest construction unemployment rate in December-12.8 percent. Illinois' ranking did not change from November while North Dakota had both the biggest year-over-year and monthly jump in its December rate, up 4 percent and 7.7 percent, respectively, dropping its ranking from 16th lowest in November. Montana had the fourth highest rate in December, 11.6 percent and had the second largest monthly increase in the country at five percent. Alabama and New Mexico had the fifth highest construction unemployment rate in December, 11.1 percent. Both states tied for the second highest rate in November and Alabama had the third largest year-over-year increase in its rate, up 1.3 percent.

To better understand the basis for calculating unemployment rates and what they measure, see the article Background on State Construction Unemployment Rates.

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Despite economic uncertainties, healthy outlook for the nonresidential construction market

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Washington, D.C. - January 31, 2017 - With construction spending continuing on an upward trajectory, 2016 can be considered a successful year for the nonresidential building sector.  For the coming year, the American Institute of Architects (AIA) semi-annual Consensus Construction Forecast is projecting growth in overall nonresidential building spending of almost 6%, just below the pace of growth for 2016. The commercial construction sectors - retail, office, and hotel - will continue to lead the building recovery, while industrial construction is projected to see almost no increase this year. For 2018, the institutional construction sectors will generate much of the growth, particularly the large education structures market.

"Though most conditions look favorable, virtually every segment of the design and construction market is reporting that recruiting and retaining qualified staff is a growing issue," said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. "Many workers left the industry during the downturn, and others left the workforce entirely, and rebuilding a competent and productive workforce is a challenge, particularly when the national unemployment rate is below five percent."

You can learn more about the Consensus Construction Forecast here: https://www.aia.org/articles/26666-even-with-uncertainties-looming-healthy-gain

About the AIA Consensus Construction Forecast Panel
The AIA Consensus Construction Forecast Panel is conducted twice a year with the leading nonresidential construction forecasters in the United States including, Dodge Data & Analytics, Wells Fargo Securities, IHS-Global Insight, Moody's economy.com, CMD Group, Associated Builders & Contractors and FMI.  The purpose of the Consensus Construction Forecast Panel is to project business conditions in the construction industry over the coming 12 to 18 months.  The Consensus Construction Forecast Panel has been conducted for 18 years.

About The American Institute of Architects
Founded in 1857, the American Institute of Architects consistently works to create more valuable, healthy, secure, and sustainable buildings, neighborhoods, and communities. Through nearly 300 state and local chapters, the AIA advocates for public policies that promote economic vitality and public wellbeing. Members adhere to a code of ethics and conduct to ensure the highest professional standards. The AIA provides members with tools and resources to assist them in their careers and business as well as engaging civic and government leaders and the public to find solutions to pressing issues facing our communities, institutions, nation and world. Visit www.aia.org.

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Faster Stud Layout with Innovative Spacer Bracers

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Pleasanton, Calif. – Simpson Strong-Tie, the industry leader in engineered structural connectors and building solutions, introduces the SBR and DBR spacer bracers for cold-formed steel construction. Reducing the need for bridging clips, these spacer bracers enable faster stud layout and reduce the overall installed cost of cold-formed steel stud wall construction.

The DBR is used for interior walls to eliminate stud bow and allow for quicker drywall attachment, while the SBR is designed for structural exterior walls. Both products provide bracing along the length of the stud, and for head-of-wall slip conditions. The SBR and DBR are the only spacer bracers that have load data from assembly testing to mitigate risk for specifiers.

Key features of the SBR and DBR spacer bracers include:

  • Patent-pending, precision-engineered pre-punched slots strategically located to enable 12", 16" and 24" on-center stud spacing
  • The SBR accommodates 3-5/8" and 6" studs in thicknesses of 33 mil (20 ga.) through 68 mil (14 ga.)
  • The SBR’s pre-punched holes provide rapid screw installation when spacer-bracer splices are needed for axial load-bearing studs

  • The DBR accommodates 2-1/2", 3-5/8" and 6" studs in thicknesses of 15 mil (25 ga. EQ) through 33 mil (20 ga.)
  • In off-layout or end-of run conditions, the hat-section profiles enable clip attachments to the stud with Simpson Strong-Tie® LSSC or RCA connectors


“The SBR and DBR spacer bracers are a complete solution for laying out studs faster,” said Randy Daudet, cold-formed steel product manager. “They give Designers the confidence they need in specifying the product while keeping costs under control.”

For more information about the SBR and DBR spacer bracers, visit strongtie.com/cfsbracer.

About Simpson Strong-Tie Company Inc.
For more than 60 years, Simpson Strong-Tie has dedicated itself to creating structural products that help people build safer, stronger homes and buildings. Considered an industry leader in structural systems research, testing and innovation, Simpson Strong-Tie works closely with construction professionals to provide code-listed, field-tested products and value-engineered solutions. Our engineered structural products and systems are recognized for helping structures resist high winds, hurricanes and seismic forces. They include structural connectors, fasteners, fastening systems, lateral-force resisting systems, anchors and product solutions for repairing, protecting and strengthening concrete. From product development and testing to training and engineering and field support, Simpson Strong-Tie is committed to helping customers succeed. For more information, visit strongtie.com.

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Solarban 90 glass among 2016 Product Innovation Award winners

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PITTSBURGH, Jan. 25, 2017 – Vitro Architectural Glass (formerly PPG Glass) has earned a 2016 Product Innovation Award and a special citation for industry leadership from Architectural Products magazine.

Vitro Glass received the Product Innovation Award for Solarban® 90 solar control low-emissivity (low-e) glass. Selected in the “Building Envelope” category, Solarban 90 glass is the first new product developed using Vitro Glass’s proprietary quad-silver coating technology.

Engineered to fulfill architect demands for a clear, neutral-reflective glass with exceptional solar control performance, Solarban 90 glass has a solar-heat-gain coefficient (SHGC) of 0.23, visible light transmittance (VLT) of 51 percent and a light-to-solar-gain (LSG) ratio of 2.22 in a standard 1-inch insulating glass unit. Solarban 90 glass also can be joined with Starphire Ultra-Clear™ glass to maximize clarity or coated on performance tinted glasses by Vitro Glass for expanded color selection.

Vitro Glass also earned a special citation for industry leadership from Architectural Products’ jury of 28 architects, interior designers, lighting designers and veteran industry writers for the Vitro Glass Education Center. 

A growing online library of glass technical information, the Vitro Glass Education Center is an objective, user-focused resource for glass and building industry professionals. Content is updated regularly based on the most frequently-asked questions Vitro Glass fields on its website, during sales calls and through its call center.

Referring to the Vitro Glass Education Center, one juror wrote, “It is often difficult to run a business and have time to think of the ancillary tools that might help the community—and tools, at that, which take into consideration contemporary social media and digital practices. Ongoing education is critical, especially in context of the evolving materials and envelope performance expectations. Hats off to [Vitro Glass] for being very proactive.”

Architectural Products’ PIA Awards determine and honor innovation in the development and refinement of building-related products. Jim Crockett, editorial director, Architectural Products, said the 2016 Product Innovation Awards prove that “commercial building manufacturers are committed to, and are working toward, delivering more sustainable products, as well as products that deliver better performance, life and affordability.”To learn more about Solarban 90 glass and other Vitro Glass products, call 1-855-VTRO-GLS (887-6457) or visit www.vitroglazings.com. Click here to visit the Vitro Glass Education Center.

About Vitro Architectural Glass

Vitro Architectural Glass, part of Vitro, S.A.B. de C.V. (BMV:VITROA), is a new organization created from Vitro’s acquisition of PPG’s flat glass business unit. Now the largest company of its kind in the Americas, Vitro Architectural Glass manufactures industry-leading brands such as SOLARBAN®, SUNGATE® and STARPHIRE ULTRA-CLEAR™ glasses at U.S. plants in Carlisle, Pennsylvania; Fresno, California; Salem, Oregon; and Wichita Falls, Texas. The company also operates one of the world’s largest glass research and development facilities in Pittsburgh and four residential glass fabrication plants in Canada. For more information, please visit www.vitroglazings.com.

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How to Crack the Work/Life Balance Dilemma in Your Life

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I started my business five years ago, leaving a comfortable corporate job of many years because I had the insane notion that I too can be independently successful and have the additional personal time. That I could take the vacations I always wanted and have the second home that I saw my employers have and enjoy life the way they seemed to. I knew having my own business would be slow going and hard, however I didn’t know that it would be as difficult as it has been.

Some immediate facts verses myths learned for those who may be considering making the jump…or rather “lies I told myself” in the beginning:

Myth: “I’m tired of working all these hours, late nights and weekends for someone else’s bottom line, it’s time I reduce my hours and go in to business for myself”

Fact: At first, your hours will get worse, much worse. The first few years in my own business I put in 80-hour weeks, working six days a week. It does get better, but not much better until you build your business and decide to make a change. However, when all your efforts go to your own benefit, it does make the long hours a little easier to stomach.

Myth: “My family will understand as I’m doing this for the greater good in the long run.”

Fact: Spouses and children need daily attention. The patient ones may wait and understand, however in today’s instant gratification culture, combined with a loss of the old ideal of work/home roles and responsibilities, the attitude of “I’ll give them attention later” needs to be addressed as a false ideology.

So what is the definition of work/life balance and how can you make it happen? I’d define the balance as simplicity and happiness within your own brain and heart. Not to go all hippie peace and love on you, but it really is this simple: a simple and happy brain and heart allow for a better clarity of mind and soul, which in turn makes you into a productivity machine in the time you set for yourself to do so.

I used to start my day at 5 AM, get up, rush out the door, get to the office, work till 6 or 8 at night, come home, say “Hi”, have a drink(s) and get in about an hour of time in with the family before I passed out from exhaustion, to be repeated the next day. Yuck.

I asked myself “How much money do I need?” I have built this company that is now becoming more successful, so now I can afford the bigger house, the nicer cars, but “Oh, wait a minute, now I have to work even harder to maintain this lifestyle”. What am I doing? I’m losing the one thing I wanted most at the beginning…..more time to exist and be happy.

I needed to make a change immediately. What are my priorities and what is the minimum amount I need financially to make this happen? If I build this big machine, I’m just going to have to keep feeding it and at what cost -- My happiness? Screw that.

So I set out to make some changes…

Saying no to clients means saying yes to yourself. This is the biggest key to unlocking the mystery of the balance that I have found. That money looks great, and it would be great to invest or spend it, but do you absolutely need it? Are you constantly saying “yes” and taking on more work when you really can’t? Are you telling yourself “I’ll figure it out later”? I was -- because I wanted the financial safety net -- and yet it was stressing me out.

The weekend now means the end of the week not the post script. We have all heard of the ideas of leaving work at the office, leaving your phone off once you get home, etc. At first I thought “what kind of insanity is that? I have clients that expect answers and dilemmas that need resolving ASAP”. But did it need to be done ASAP? I started to question this as my wife gave me a loving (but passive aggressive) glance every time I picked up my phone at 9:00 PM or began responding to an email. I knew I had to leave work at work, especially on a Friday, but how?

I had to retrain my clients and myself. I realized I had let my clients, my employees, and technologies train me, and not the other way around. So I began a slow six-month retraining of myself, my clients and my employees. I simply stopped answering emails after 6:00 PM and on the weekends. I left my laptop at the office. At first, there was a huge level of anxiety -- what if my clients thought I was ignoring them and went elsewhere?

I just let it go and told myself “It can all wait” and you know what? It could. Occasionally, I do get the odd comment of “. . . Well so and so is always available no matter what, you used to be too, what happened?” and my response it usually something to the effect of “My family and personal sanity takes precedence above all else. You know I’ll always get the job done for you” and they always back off and mumble some sense of understanding.

Get an office. If you don’t have an office, get one. I don’t mean your dining room or an extra bed room. I mean go rent a small office. I asked around for a few months until I found someone willing to rent me a small office in their larger office for a very affordable price. At first it may seem like you can’t afford the additional cost. At the end of the month, it’s a small drop in the bucket. If you work from home, you really never really leave work.

At home it becomes 11 PM and you can’t sleep so why not go answer a few emails? See how it starts? Leave work at work. Renting an office was a huge shift for me in the ability to get away and focus (without the distractions of home that often slowed me down) and it was a place that allowed me to separate life from work.

Create a spreadsheet. Start a schedule. We are all spreadsheet slaves to some extent, so use this to your advantage. Develop an Excel schedule by half hour, and stick to the routine. I printed out copies and have them on my monitor, in my truck, and at home on the fridge and on my nightstand to remind me to do this and that at that time. At first it seems odd and difficult, but eventually you retrain yourself to stick to a schedule that is healthy. It is no longer a day of “winging it” with what comes across your plate. When we are “winging it” with no plan, we are always busy -- but not with the stuff that makes us happy.

The importance of personal time is huge. I was working so much that my wife said “Please get a hobby.” I took her advice and found several things to occupy my time. It was an excuse to do something with my hands and brain other than work. I took up flying and stained glass work. Two things I never thought I’d want to do and these two things have refocused my negative energies and helped to output positive energy because I felt like I was doing something to reward myself.

Remember the vacations, the extra house I mentioned? I realized it’s not necessarily these things that will make me happy -- but it’s the idea of them that does. And that underlying idea is time to be, for myself and for others, outside of growing a business.

Give yourself time to wakeup in the morning and give yourself time to go to sleep. I went from five hours of sleep a night to eight. I thought eight was a waste and impossible. I found out that your body adjusts surprisingly well when you put forth the effort. Sleep feeds the brain and body. When these are fed you can go to the office and focus well and work with a remarkable, clear and concise speed, which is far better than limping by with no sleep.

People may say “That’s easier said than done.” I think this is a cop out. Start small and simple. Adjust in baby steps. Retrain your clients. Set an early bed time for your phone and laptop. Set time for yourself- at least 3 to 4 hours a day. It’s difficult at first, but by saying “yes” to yourself and “no” to the other things, you will begin to swing the balance in your favor. I’ve never been happier or richer in spirit since I’ve started doing this.

About the Author: Joshua Huck – Owner, Precision Estimating and board member of CERT (Consulting Estimators Round Table)

With over 20 years of commercial, government and residential construction estimating experience, Josh has spent his career estimating projects up to $350MM in value. Having held positions as Chief Estimator and Director of Preconstruction for general contractors across the nation, he has the experience to provide accurate and thorough estimates for all project types and sizes. Josh is a veteran of the US Air Force.

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Dodge Momentum Index Jumps in December

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NEW YORK - January 9, 2017 - The Dodge Momentum Index increased 2.9% in December to 136.7 (2000=100) from its revised November reading of 132.8. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. After trending upward over the course of 2016, the Momentum Index is now at an eight-year high, although still more than 25% below its previous peak reached at the end of 2007. December's gain was due to a 5.7% increase in the commercial component, which more than offset a 1.7% drop in the institutional component. After ending 2015 in a lull, commercial planning intentions posted remarkable strength in 2016, climbing 38% over the year. Meanwhile, institutional planning settled back in 2016, losing 6% after a strong 2015. This suggests that commercial construction activity has more room to grow in 2017 despite being at a more mature phase of its cycle, while planning in the institutional sector has yet to see the benefit of the numerous education-related bond measures passed in recent years.

In December, eight projects entered planning each with a value that exceeded $100 million. For the commercial building sector, the leading projects were a $400 million mixed-use building in Atlanta GA, that will include 640,000 square feet of office space and a hotel, and a $351 million office tower in San Francisco CA. The leading institutional projects were a $140 million renovation to the Quicken Loans Arena in Cleveland OH and a $130 million high school in Sherman TX.

About Dodge Data & Analytics: Dodge Data & Analytics is a technology-driven construction project data, analytics and insights provider. Dodge provides trusted market intelligence that helps construction professionals grow their business, and is redefining and recreating the business tools and processes on which the industry relies. Dodge is creating an integrated platform that unifies and simplifies the design, bid and build process, bringing data on people, projects and products into a single hub for the entire industry, from building product manufacturers to contractors and specialty trades to architects and engineers. The company's products include Dodge Global Network, Dodge PlanRoom, Dodge PipeLine, Dodge SpecShare, Dodge BuildShare, Dodge MarketShare, and the Sweets family of products. To learn more, visit www.construction.com.

Dodge Data & Analytics Media Contact: Ben Gorelick | Spector & Associates, +1-212-943-5858, ben@spectorpr.com

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Nonresidential Spending Thrives in Strong November Spending Report, ABC Says

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WASHINGTON, D.C., Jan. 3 - Nonresidential construction surged in November, according to analysis of U.S. Census Bureau data released today by Associated Builders and Contractors (ABC). Nonresidential spending expanded to $712.4 billion on a seasonally adjusted, annualized rate in November, representing the highest level of spending in eight years.

October's figure was upwardly revised by 1 percent (from $699.7 billion to $706.5 billion), while September's figure was upwardly revised by 0.8 percent (from $701.7 billion to $707.2 billion).  A bit more than half of the 16 subsectors experienced spending increases in November.

"Today's strong spending report contributed to a bright short-term outlook for the commercial and industrial construction sectors," said ABC Chief Economist Anirban Basu. "Nonresidential construction spending is up approximately 5 percent on a year-over-year basis, and momentum should build further.

"With a new presidential administration coming to Washington there is a presumption that the economic dynamics of the near-term future will be markedly different than they have been," said Basu. "If the last few weeks are any indication, the 2017 economy will be associated with tax cuts, more government spending, less financial regulation, faster economic growth, a stronger U.S. dollar, robust stock market performance and greater overall CEO confidence. That should translate into improved construction spending moving forward.

"It should be noted that data for November largely reflect the economic dynamics of the past," said Basu. "Many construction firms have reported that they remain busy but have become concerned that work could dry up in certain markets in 2017 or 2018. This has been due to a combination of factors, including evidence of overbuilding in segments such as lodging and office buildings, even in Tier 1 markets like New York and Miami.

"Some are of course unnerved by prospects for shrinking exports given a stronger U.S. dollar, larger budget deficits and rising interest rates," said Basu. "These are legitimate concerns and may ultimately serve to suppress U.S. economic dynamism. However, for now, the nonresidential construction outlook remains promising. The major source of uncertainty regarding the near-term outlook stems from whether the incoming administration will successfully pass an infrastructure package and how quickly such legislation would translate into stepped-up public construction spending."

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Construction Spending Increases in Nov. as Private and Public Segments Rise for the Month and Year

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Construction spending hit a 10-year high in November with monthly and year-over-year gains in both public and private categories, according to an analysis by the Associated General Contractors of America. Association officials said the November data indicates that the 2017 outlook for construction is favorable even as they cautioned that demand will vary for different types of construction projects.

"These numbers confirm what contractors have been reporting-that there was no let-up in demand last year," said Ken Simonson, the association's chief economist. "Most contractors expect to remain busy in 2017, as well, although there will be a shift in the types of projects that are most active. Office construction is especially hot, while manufacturing and apartment construction are slowing sharply, and public investment is a major question mark."

Construction spending in November totaled $1.182 trillion at a seasonally adjusted annual rate, the highest total since April 2006, Simonson said. He added that the November rate was up 0.9 percent from the month before and up 4.1 percent from the November 2015 level.

Private residential construction spending increased by 1.0 percent between October and November and rose 3.0 percent over the past 12 months. Spending on multifamily residential construction slipped 2.7 percent for the month but was 11 percent higher than in November 2015, while single-family spending climbed 1.8 percent for the month but dipped 0.9 percent from a year earlier.

Private nonresidential construction spending grew by 0.9 percent for the month and 6.4 percent year-over-year. The largest private nonresidential segment in November was power construction (including oil and gas pipelines), which gained 0.5 percent for the month and 1.5 percent over 12 months. The next-largest segment, commercial (retail, warehouse and farm) construction, rose 0.3 percent in November and 12 percent year-over-year. Manufacturing construction decreased 1.1 percent for the month and is down 8.0 percent from a year before. Private office construction spending reached an all-time high, rising 1.9 percent for the month and 31 percent compared with November 2015.

Public construction spending moved up 0.8 percent from October to November and 2.6 percent from the November 2015 rate. However, public totals have been volatile for the past two years, Simonson observed. He cautioned that federal funds for infrastructure remain a weak point and that a number of states are facing new fiscal challenges that may jeopardize investment in infrastructure and public universities.

Association officials said the November spending data offers some early insight into the outlook for construction in 2017. They added that the association will release its annual Construction Hiring and Business Outlook on January 10 which is based on survey results from construction firms across the country. That Outlook offers insights into whether firms plan to hire new employees, which market segments they expect to grow in the coming year and the significant challenges firms expect to face in the coming months.

"Now that construction spending levels are approaching prior peak levels, we want to know whether the industry will continue to expand this year," said Stephen E. Sandherr, the association's chief executive officer. "One factor driving the outlook for 2017 will be whether the new President and Congress can find a way to make needed infrastructure investments, cut regulatory burdens and provide relief for rising health care costs."

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DaVinci Roofscapes® Lowers Product Pricing By Up to 16%

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Enhanced efficiencies at its Kansas facility in 2016 has permitted DaVinci Roofscapes® to lower pricing on the company's most popular roofing products. Price reductions went into effect during the fourth quarter of 2016 and range from 11 percent to 16 percent on several of the company's synthetic shake and slate product lines.

"Adding more workers and line equipment at our plant along with other advances have enabled us to leverage our operational efficiencies and pass the savings on to our distributors," says Ray Rosewall, president and CEO for DaVinci Roofscapes <http://www.davinciroofscapes.com> . "We're going 'outside of the box' by sharing our cost savings to make our composite roofing products even more accessible to roofers and homeowners across the country.

"We're exceptionally conscious of what the market is telling us versus what our competitors are doing. For us, it's all about advancing the growth of our customer's business.

"When DaVinci started manufacturing synthetic roofing tiles about two decades ago they were considered specialty products. Now, thanks to technological advancements our slate and shake tiles are seen more as 'main stream' products. This means we're very comfortable competing against products like slate, real cedar, high end asphalt and other materials. From an aesthetic, performance and cost standpoint synthetic roofing products are very competitive.

"Most importantly, we've heard from distributors, roofers and builders that our products are becoming more preferred to the natural roofing products. People want the expected look of shake and slate, but they want the benefits that a manmade product offers. We've achieved that goal by creating realistic-looking products with exceptional features."

New molds allowed DaVinci to enhance the look of all of its slate profiles in 2016. The thicker, more authentic profiles accurately replicate the quarried look of slate at a cost less than natural slate. Thanks to recent price reductions, pricing for the company's Bellaforté Shake tiles falls below pricing of many real cedar shingles, but with the added benefit of resistance to fire, splitting, curling, mold and algae.

The experienced team members at DaVinci Roofscapes develop and manufacture industry-leading polymer slate and shake roofing systems with an authentic look and superior performance. DaVinci leads the industry in the greatest selection of colors, tile thickness and tile width variety. The company's reliable products have a limited lifetime warranty and are 100 percent recyclable. All DaVinci high-performing roofing products are proudly made in America where the company is a member of the National Association of Home Builders, the National Association of Roofing Contractors, the Cool Roof Rating Council and the U.S. Green Building Council. For information call 1-800-328-4624 or visit www.davinciroofscapes.com

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Construction Unemployment Rates Improve in 33 States Year-Over-Year, ABC Says

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October not seasonally adjusted (NSA) construction unemployment rates were down in 33 states and the nation on a year-over-year basis, according to analysis released today by Associated Builders and Contractors (ABC). The national NSA construction unemployment rate of 5.7 percent was down 0.5 percent from a year ago, according to data from the Bureau of Labor Statistics (BLS).

This was the lowest national October construction unemployment rate since 2006, when it was 4.5 percent. BLS data also reported that the industry employed 175,000 more people than in October 2015.

“October 2016 adds yet another month to the long-running streak of monthly year-over-year rate declines in the national construction unemployment rate that began in October 2010,” said Bernard M. Markstein, Ph.D., president and chief economist of Markstein Advisors, who conducted the analysis for ABC. “These industry-specific unemployment rates are not seasonally adjusted, so it is important to note states’ performance on a year-over-year basis. The improvement from last year in the national unemployment rate as well as in the rates of 33 states is a further indication that the construction job market remains healthy. Further, demand for skilled construction workers is especially strong.”

For October, the historical pattern for change in the national NSA construction unemployment rate from September is for there to be an increase. Starting in 2000, when the BLS data for this series begins, through 2015, the October rate has risen 11 times and fallen five times from September. This year’s increase of 0.5 percent adds a 12th year during which the rate has increased from the month before.

Nonetheless, 15 states posted a decline in their estimated construction unemployment rates from September. Three states—Michigan, Ohio and Utah—had unchanged rates month-over-month. North Dakota’s rate was unchanged from October 2015.

View states ranked by their construction unemployment rate, their year-over-year improvement in construction employment and monthly improvement in construction employment.

View states unemployment rate for all industries.

The Top Five States
The states with the lowest estimated NSA construction unemployment rates in order from lowest rate to highest they were:

1.    North Dakota
2.    Massachusetts
3.    Colorado
4.    Utah
5.    New Hampshire and South Dakota (tied)

Four states—Colorado, Massachusetts, North Dakota and South Dakota—were also among the top five in September. North Dakota had the lowest rate among the states in October at 2.4 percent. Construction employment in the state has been trending down since it peaked in October 2014, but it remains higher than it was prior to 2012. Massachusetts, with a 2.5 percent construction unemployment rate, moved up to the second lowest rate and had both the fourth largest year-over-year decrease (down 2 percent) and the fourth largest monthly decline (down 0.8 percent). Colorado dropped from the lowest rate in September to third lowest rate in October with a 3.1 percent rate, up from 2.4 percent in September and 2.9 percent in October 2015. Utah’s estimated NSA construction unemployment rate held steady at 3.4 percent, moving it from sixth lowest in September to fourth lowest in October. New Hampshire and South Dakota tied for fifth lowest rate in October, both with a 3.6 percent rate, a 0.4 percent drop from September for New Hampshire and a 0.7 percent month-over-month rise for South Dakota.

While only good for the 20th lowest rate, Nevada’s 3.4 percent year-over-year plunge in its construction unemployment rate to 4.9 percent was the largest decrease among the states and marked the state’s lowest October rate since October 2007 when it also stood at 4.9 percent.

The Bottom Five States
The states with the highest NSA construction unemployment rates in order from lowest to highest rates were:

48.    Illinois and Rhode Island (tie)
49.    New Mexico and Pennsylvania (tie)
50.    Alaska

Four of these states—Alaska, New Mexico, Pennsylvania and Rhode Island—were also among the five states with the highest construction unemployment rates in September.

As in September, Alaska had the highest estimated NSA construction unemployment rate in October (13 percent), since these are NSA construction unemployment rates, Alaska’s ranking is not surprising and the state also had the third largest year-over-year rate decrease, down 2.7 percent. New Mexico and Pennsylvania had the second highest construction unemployment rate in October, a year-over-year increase of 0.4 percent for New Mexico and 1 percent—the second largest of any state—for Pennsylvania. Illinois and Rhode Island had the fourth highest rate in October, 8.7 percent. Illinois had the second largest monthly increase among the states, up 1.5 percent while this was Rhode Island’s lowest October rate since 2007, when it was 7 percent.

Read more on ABC's website.

Background

Associated Builders and Contractors (ABC) launched its state-by-state economic analysis in 2015 and also includes Bernard M. Markstein's analysis of construction's contribution to each state's gross domestic product (GDP). Unique to ABC, Markstein's state-level construction unemployment rate estimates are also incorporated in the grading for ABC's Merit Shop Scorecard.

Members of the media may contact leieritz@abc.org to request an interview with Dr. Markstein.

Background on how the data was derived and Markstein's methodology is available on ABC's website.

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Vitro Architectural Glass launches Vitro Certified™ Network

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Vitro Architectural Glass (formerly PPG Glass) has launched the Vitro Certified ™ Network, which retains members, products and services of certified fabricator programs formerly operated by PPG’s flat glass business unit, which Vitro acquired on Oct. 1.

The Vitro Certified Network encompasses three separate programs: Vitro CertifiedFabricators, Vitro Certified Laminators and Vitro Certified Architectural Window Manufacturers. 

Glenn Miner, director of construction, Vitro Architectural Glass, said customers who work with members of the Vitro Certified Network will receive the program’s full range of benefits. “We will continue to support and certify the industry’s top fabricators to ensure architects, glazing contractors and general contractors have access to premium Solarban® glass products and Vitro glass services,” he said. “Our customers will also continue to work with the people and products they’ve relied on for years while receiving the added support of a company focused on the glass business.”
Vitro Glass announced in October that it will spend $55 million to construct a new jumbo MSVD (magnetron-sputtered vacuum deposition) coater in the U.S., which will be the largest of its kind in North America. MSVD coaters are used to produce high-performing, energy-efficient low-emissivity (low-e) glasses such Solarban glasses.

The company also is expanding its sales and support staffs to enhance customer service and increasing investment in the Vitro Glass Research and Technology Center in Harmar Township, Pennylvania, one of the world’s largest facilities devoted to advancing glass technology.

Members of the Vitro Certified Network, are supported, audited and certified by Vitro Glass to provide the highest quality fabricated glass products with accelerated turnaround times to meet project-critical deadlines. They also receive advanced training and education in glass-handling, fabrication, packaging and shipping to ensure consistent product color, quality and reliability.

As the exclusive source of high-performance Solarban glass products, Vitro CertifiedFabricators have the ability to accommodate requests for special shapes and configurations. To meet critical delivery demands, Vitro Certified Network members also have access to a range of logistics and supply tools, including the Vitro Concierge Program, a priority glass-supply program for large, complex or high-profile projects.
Vitro Certified Laminators specialize in lamination of Solarban glasses for architectural glass, safety and security glass applications, while Vitro Certified Architectural Window Manufacturers do the same for high-quality commercial windows.

To learn more about the Vitro Certified Network or to find a member in your area, visit www.vitroglazings.com or call 1-855-VTRO-GLS (887-6457).


About Vitro Architectural Glass
Vitro Architectural Glass, part of Vitro, S.A.B. de C.V. (BMV:VITROA), the leading glass manufacturer in Mexico, is a new company created from Vitro’s acquisition of PPG’s flat glass business unit on October 1, 2016. Now the largest company of its kind in the Americas, Vitro Architectural Glass is primarily focused on residential and commercial construction markets and continues to produce industry-leading glass brands such as Solarban®, Sungate® and Starphire Ultra-Clear™ glasses. Vitro S.A.B. de C.V. is headquartered in Monterrey, Mexico and employs more than 3,000 people at 21 manufacturing, fabrication, distribution and research facilities in Canada, Mexico and the the U.S. For more information, please visit www.vitro.com.

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Architecture Billings Index Rebounds After Two Down Months

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After seeing consecutive months of contracting demand for the first time in four years, the Architecture Billings Index (ABI) saw a modest increase demand for design services. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the October ABI score was 50.8, up from the mark of 48.4 in the previous month. This score reflects a slight increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 55.4, down sharply from a reading of 59.4 the previous month.

"There was a collective sense of uncertainty throughout the design and construction industry leading up to the presidential election," said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. "Hopefully we'll get a sense of what direction we will be headed once we get a clearer read on how the new administration's policies might impact the overall economy as well as the construction industry."

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Guardian Glass Brings Views, Comfort to Cancer Center Patients and Staff of St. Charles Cancer

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A Guardian SunGuard® project is racking up the awards, thanks to the collaborative design of ZGF Architects LLP.

Natural light pours into the glazed, two-story lobby of the St. Charles Cancer Center in Bend, Oregon, as well as the floor-to-ceiling windows on the perimeter. Guardian Industries Corp.'s high performance SunGuard AG 50 low-E coating on clear glass helps reduce glare and control solar heat gain, so patients and employees can enjoy the multiple views without elevated indoor temperatures.

"Research shows access to natural light in the healthcare setting helps reduce stress, improve emotional well-being and alleviate pain*," explains Brian Schulz, Commercial Product Manager, Guardian Industries Corp. "Congratulations to ZGF on designing a building that blends beauty, peaceful views and a fully functional healthcare space."

The St. Charles Foundation estimates individuals needing cancer care in the Central Oregon region are expected to increase 50 percent by 2025. The St. Charles Cancer Center is the solution to this growing need for area treatment options. Designed from the ground up by ZGF Architects with patient, family, staff and community input, the 16,000-square-foot facility brings comprehensive cancer prevention, treatment and recovery services under the same roof.

This thoughtful design has led to several honors for ZGF, including:

    World Architecture News Awards Healthcare Winner
    Modern Healthcare Silver Award
    Healthcare Design Showcase Award of Merit
    ENR Northwest Best Projects Best Project in Healthcare
    Interior Design Best of Year Small Healthcare, Finalist
    International Interior Design Association Oregon Chapter Juror's Choice Award

The award-winning facility is oriented toward the southwest, perfectly positioned to capitalize on breathtaking views of the mountains.

With a visible light transmission of 50 percent and a solar heat gain coefficient of 0.33, SunGuard AG 50 glass also assists with glare and solar heat gain management, so patients and employees can enjoy those views without elevated indoor temperatures. The glass performance also contributes to the building's overall energy management. SunGuard AG 50 was fabricated by Oldcastle BuildingEnvelope® and installed by Bend Commercial Glass.

The Guardian SunGuard glass product line for commercial applications offers excellent solar control and a wide variety of colors and performance levels. SunGuard glass products provide innovative, leading solutions for appearance, economics and energy efficiency, and are available through an international network of independent Guardian Select fabricators. For more information, visit guardian.com/commercial.

*The Benefits of Glass, The University of Michigan Taubman College of Architecture and Urban Planning, 2012, Guardian Industries Corp.

About Guardian Industries Corp:
Guardian is a diversified global manufacturing company headquartered in Auburn Hills, Michigan, with leading positions in float glass and fabricated glass products for commercial, residential and transportation applications; automotive trim; and the distribution of building products. Through its research and development centers (Science & Technology Center for glass and Advanced Development Center for automotive), Guardian is at the forefront of innovation. Its automotive trim group, SRG Global, is one of the world's largest manufacturers of advanced, high value coatings on plastics. Guardian, its subsidiaries and affiliates employ 17,000 people and operate facilities throughout North America, Europe, South America, Africa, the Middle East and Asia. Visit www.guardian.com.

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Armstrong® Ceiling Solutions Launches New Global Commercial Website

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With the launch of its new global commercial website in the U.S. and Canada on Oct. 18, Armstrong® Ceiling Solutions now offers customers a new and improved experience that makes it faster and easier to access product inspiration, specification, and installation resources. By the end of the first quarter of 2017, the global website will be available in European and Asia Pacific markets.

The highlight of the new site is the highly visual Global Project Gallery that enables customers to filter, browse and search over 800 projects and nearly 5,000 photos from around the world. Fully optimized for mobile use, the responsive website seamlessly adapts to mobile phones and tablets while maintaining a user-friendly experience.

The new website allows customers to browse products by material and application type, scan product performance features at a glance, and compare product lines. Color, veneer, shape, edge detail, and perforation options are highlighted on each page to make designing easy. Related case studies, project photos, videos, and installation details are easily accessible throughout the site.

In the new Applications section, customers can quickly access A Ceiling for Every Space® online tool, which provides ceiling recommendations for almost any type of space in a commercial project, including special application areas like clean rooms and data centers. In the Technical & Downloads section, customers can find and download technical product information, including installation instructions, data pages, CAD, REVIT®, and SKETCHUP® drawings, as well as EPDs, APDs and other sustainability documentation across the product portfolio.

"With the new global website, customers from around the world will be able to easily access our industry leading ceilings portfolio to find all of the inspiration and product information they need to design, specify and install Armstrong Ceiling Solutions," says Senior Digital Marketing Manager Sally Kresge. "Initial customer feedback on the new site has been fantastic. I'm extremely proud of the new site and am sure it will be a valuable resource for architects, designers, specifiers, contractors, and facility managers."

Designed to reflect the brand theme, "Inspiring Great Spaces," the new Armstrong Commercial Ceiling Solutions website offers inspiring visuals on every page.

To visit the new Armstrong Ceiling Solutions global website, go to www.armstrongceilings.com/commercial

Armstrong World Industries (AWI) is a global leader in the design and manufacture of innovative commercial and residential ceiling, wall, and suspension system solutions. With over 3,700 employees and fiscal 2015 revenues from ceiling operations in excess of $1.2 billion, AWI operates from a global manufacturing network of 24 facilities, including 9 plants dedicated to its WAVE joint venture.

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Construction Unemployment Rates Improve in 32 States Year-Over-Year, ABC Says

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WASHINGTON, D.C., Oct. 31 — September not seasonally adjusted (NSA) construction unemployment rates improved in 32 states and the nation on a year-over-year basis, according to analysis released today by Associated Builders and Contractors (ABC). The national NSA construction unemployment rate of 5.2 percent was 0.3 percent lower than a year ago, according to data from the Bureau of Labor Statistics (BLS).

This was the lowest September construction unemployment rate since 2000, when it was 4.6 percent. BLS data also reported that the industry employed 208,000 more people than in September 2015.

“September 2016 marks the sixth year of uninterrupted monthly year-over-year rate decreases in the national construction unemployment rate that began in October 2010,” said Bernard M. Markstein, Ph.D., president and chief economist of Markstein Advisors, who conducted the analysis for ABC. “These industry-specific unemployment rates are not seasonally adjusted, so it is important to note states’ performance on a year-ago basis. The year-over-year improvement in the national unemployment rate as well as in the rates of 32 states demonstrates the steady improvement in the construction job market over the past year.”

Like August, the historical pattern for change in the national NSA construction unemployment rate from the month before is ambiguous. Starting in 2000, when the BLS data for this series begins, through 2015, the change in the September rate from August has fallen eight times, risen seven times and been unchanged once. This year’s September increase of 0.1 percent adds an eighth year that the rate has risen from August.

Eighteen states did post declines in their estimated construction unemployment rates from August. Five states had unchanged rates.

View states ranked by their construction unemployment rate, their year-over-year improvement in construction employment and monthly improvement in construction employment.

View states unemployment rate for all industries.

The Top Five States
The states with the lowest estimated NSA construction unemployment rates in order from lowest rate to highest they were:

1.    Colorado
2.    South Dakota
3.    Idaho and North Dakota (tie)
5.    Massachusetts

Four states—Colorado, Idaho, Massachusetts and North Dakota—were also among the top five in August. Colorado had the lowest rate among the states in September at 2.4 percent, the state’s lowest September unemployment rate on record. South Dakota, with a 2.9 percent construction unemployment rate, moved up to the second lowest rate in September and also had the second largest year-over-year drop, down 1.3 percent. Idaho and North Dakota tied for the third lowest rate in September with a 3 percent rate, up from fifth lowest and down from the lowest rate in August respectively. Massachusetts tied with South Dakota and Arizona for the biggest year-over-year improvement by shedding 1.3 percent from its construction unemployment rate in posting the fifth lowest rate in September at 3.3 percent rate, also the state’s lowest rate.

Wyoming dropped from the top five in August and experienced the largest monthly and year-over-year jump in its NSA construction unemployment rate—up 2.7 percent and 1.7 percent, respectively—to 5.3 percent.

Meanwhile, Vermont fell from tied with Idaho for fifth lowest in August to tied with Michigan for 13th lowest in September with a 4.3 percent rate. Vermont also had the fourth largest monthly increase, up 1.1 percent from August.

The Bottom Five States
The states with the highest NSA construction unemployment rates in order from lowest to highest rates were:

46.    Alabama
47.    Pennsylvania
48.    Rhode Island
49.    New Mexico
50.    Alaska

All of these states were also among the five states with the highest construction unemployment rates in August.

Alaska, with a 10.1 percent rate, had the highest estimated rate in September and saw the second largest increase from August at 2.5 percent. On a positive note, Alaska’s September 2016 rate was its lowest September rate since 2002. New Mexico had the second highest construction unemployment rate in September, 8.6 percent, although it also had the second largest monthly drop in its rate—down 0.9 percent. Rhode Island had its lowest September construction unemployment rate since 2007, but was still the third highest rate in September at 8.5 percent. Pennsylvania had the fourth highest estimated NSA construction unemployment rate in September, 8.1 percent, and the second largest year-over-year increase among the states, up 1.5 percent. Alabama had the fifth highest estimated construction unemployment rate in September, with a 7.6 percent rate, its second lowest September rate since 2007 (just above 2015’s 7.5 percent).

To better understand the basis for calculating unemployment rates and what they measure, see the article Background on State Construction Unemployment Rates.

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On Center Software President, Cecilia Padilla to Retire; Angelo M. Castelli Named New President

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​THE WOODLANDS, TX, October 21, 2016 – After more than 25 years in construction management and eight years with On Center Software, President Cecilia Padilla has announced her retirement, effective October 28, 2016. During her time as Vice President and President, Padilla has reinvigorated On Center’s focus on construction software that increases efficiency, accuracy, teamwork and ease of use for the spectrum of construction trades. She served on the company’s executive Vision Team, a think tank on the future of construction automation. She introduced the industry’s first cloud-based platform – Oasis Takeoff® and Oasis FieldCenter®.

Padilla has been in construction her entire life, following her father into contracting. She began her career with the Raymond Group, in Orange, California as their first female junior estimator. She became a senior project manager and area manager, in California and Nevada with several multi-million-dollar projects over 12 years. Padilla and her husband moved to Houston and she joined Marek Brothers Systems as a senior project manager, where she was introduced to On Center’s Quick Bid® and On-Screen Takeoff®. ​

“Working with On-Screen Takeoff and Quick Bid together was amazing. I felt that I could make the software tap dance for me. I had the opportunity to try out beta versions of software years before joining the company. I became one of On Center’s greatest fans; I knew the power of software automation,” Padilla explained. ​

In 2008 Padilla was recruited to On Center as Vice President, selected by the company’s founder Leonard Buzz to become his successor after he retired in 2013. ​

“It has been an honor and privilege to work with all of you during the last eight years, I’ve seen your growth as individuals and as a team, and I am confident in the choice I made for my successor, Angelo Castelli.” ​

Angelo M. Castelli becomes On Center President on October 28, 2016. He joined On Center as Sales Manager in 2003 after 10 years as chief estimator and project manager with Western Reserve Interiors of Cleveland, Ohio. He rose through management roles at On Center to Chief Operations Officer most recently. Castelli was instrumental in the creation and deployment of business development and plan room programs. As a direct result, On Center Software is used in over 200 academic institutions as required curriculum for construction management degrees. As member of the Vision Team, he is a great proponent of a cloud-based software platform and the real-time collaboration it brings to construction. ​

“Coming from construction, Cecilia and I share the same passion for what On Center Software does for construction companies. It makes contractors’ jobs easier, and their companies more profitable,” Castelli said. “We are excited for her and look forward to hearing about her global travels during retirement.”

“Our focus has always been to take care of our customers. We receive tremendous satisfaction when contractors tell us how we have helped their businesses. It is at the core of On Center’s culture. You know that Angelo, and every On Center employee, carry that attitude,” Padilla added. “You are an amazing group, and I will miss working with you every day.” ​

About On Center Software, Inc.

​On Center Software is a wholly-owned subsidiary of Roper Technologies (NYSE symbol ROP). Roper designs software and engineered products for construction, health care, transportation, food, energy, water, education, academic research and other niche markets worldwide.

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Further Contraction in Architecture Billings Index

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Washington, DC – October 19, 2016  – For the first time since the summer of 2012, the Architecture Billings Index (ABI) posted consecutive months of a decline in demand for design services.  As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the September ABI score was 48.4, down from the mark of 49.7 in the previous month. This score reflects a decrease in design services (any score above 50 indicates an increase in billings).  The new projects inquiry index was 59.4, down from a reading of 61.8 the previous month.

“This recent backslide should act as a warning signal,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD.  “But this drop-off in demand could be continued hesitancy in the marketplace to move forward on projects until the presidential election is decided. The fact that new work coming into architecture continues to slowly increase suggests that billings will resume their growth in the coming months”

You can view the full press release here: http://new.aia.org/press-releases/20786-further-contraction-in-architecture-billings

Key September ABI highlights:

  •     Regional averages: South (53.4), Midwest (50.1), West (49.5), Northeast (44.0)
  •     Sector index breakdown:  commercial / industrial (50.4), mixed practice (49.8), institutional (49.0), multi-family residential (48.8)
  •     Project inquiries index: 59.4
  •     Design contracts index: 51.4

The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.


About the AIA Architecture Billings Index
The Architecture Billings Index (ABI), produced by the AIA Economics & Market Research Group, is a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction spending activity. The diffusion indexes contained in the full report are derived from a monthly “Work-on-the-Boards” survey that is sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended as compared to the prior month, and the results are then compiled into the ABI.  These monthly results are also seasonally adjusted to allow for comparison to prior months. The monthly ABI index scores are centered around 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline. The regional and sector data are formulated using a three-month moving average. More information on the ABI and the analysis of its relationship to construction activity can be found in the recently released White Paper, Designing the Construction Future: Reviewing the Performance and Extending the Applications of the AIA’s Architecture Billings Index on the AIA web site.

About The American Institute of Architects
Founded in 1857, the American Institute of Architects consistently works to create more valuable, healthy, secure, and sustainable buildings, neighborhoods, and communities. Through nearly 300 state and local chapters, the AIA advocates for public policies that promote economic vitality and public wellbeing. Members adhere to a code of ethics and conduct to ensure the highest professional standards. The AIA provides members with tools and resources to assist them in their careers and business as well as engaging civic and government leaders and the public to find solutions to pressing issues facing our communities, institutions, nation and world. Visit www.aia.org.

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SOLARBAN 90 Glass Available on Performance-Tinted Glasses from Vitro Architectural Glass

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PITTSBURGH, Oct. 13, 2016 – Vitro Architectural Glass (formerly PPG Glass) announced that SOLARBAN® 90 solar control, low-emissivity (low-e) glass is now available on a wide array of performance-tinted glasses, including ATLANTICA®, AZURIA®, PACIFICA®, SOLARBLUE®, SOLARBRONZE®, SOLARGRAY® and SOLEXIA® glasses.

Solarban 90 glass was previously available on clear, STARPHIRE ULTRA-CLEAR™, OPTIBLUE® and OPTIGRAY® glasses.

Glenn T. Miner, director of construction, Vitro Architectural Glass, said the tinted glasses are an ideal complement for Solarban 90 glass. “Solarban 90 glass adds value and versatility to performance tints because they unite color with the coating’s inherent ability to block heat,” he explained. “Architects get the best of both worlds – improved building performance along with a full range of clear, light- and saturated-color glasses to increase their design options.”

Introduced in 2015, Solarban 90 glass utilizes proprietary coating technology to deliver robust solar control and high visible light transmittance (VLT) on clear glass, while providing the color neutrality needed to harmonize with a wide range of performance-tinted glasses.

In a standard 1-inch insulating glass unit (IGU) with clear glass, Solarban 90 glass has a solar-heat-gain coefficient (SHGC) of 0.23, which is a 15 percent improvement over Solarban 70XL glass, the industry’s most widely specified triple-silver-coated solar control, low-e glass. When coated on performance-tinted glasses by Vitro Architectural Glass such as blue-tinted Pacifica glass or Solargray glass, Solarban 90 glass can achieve SHGCs of as low as 0.17 in a 1-inch IGU.

Solarban 90 glass and most Vitro performance-tinted glasses meet requirements of the CRADLE TO CRADLE CERTIFIED™ products program at the Bronze level, which helps architects earn credits in the LEED® green building program for their projects.

To learn more about Solarban 90 glass or to order glass samples or compare performance data, visit www.vitroglazings.com or call 1-888-774-4332.

About Vitro Architectural Glass
Vitro Architectural Glass, part of Vitro, S.A.B. de C.V. (BMV:VITROA), the leading glass manufacturer in Mexico, is a new company created from Vitro’s acquisition of PPG’s flat glass business unit on Oct. 1, 2016. Now the largest company of its kind in the Americas, Vitro Architectural Glass is primarily focused on residential and commercial construction markets and continues to produce industry-leading glass brands such as SOLARBAN®, SUNGATE® and STARPHIRE ULTRA-CLEAR™ glasses. Vitro S.A.B. de C.V. is headquartered in Monterrey, Mexico and employs more than 3,000 people at 21 manufacturing, fabrication, distribution and research facilities in Canada, Mexico and the the U.S. For more information, please visit www.vitro.com.

Starphire Ultra-Clear is a trademark and Atlantica, Azuria, Graylite, Optiblue, Optigray, Pacifica, Solarban, Solarblue, Solarbronze, Solargray, Solexia are former PPG glass trademarks owned by Vitro Flat Glass LLC. The PPG Logo is a registered trademark of PPG Industries Ohio, Inc. Cradle to Cradle Certified is a trademark licensed by the Cradle to Cradle Products Innovation Institute. LEED – an acronym for LEADERSHIP IN ENERGY AND ENVIRONMENTAL DESIGN® – is a registered trademark of the U.S. GREEN BUILDING COUNCIL®.

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Introducing Radius Track Design Assist – Design/Engineering Services for Curved and Complex Surface

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Radius Track, the leader in curved and complex framing solutions, announces design/engineering services to bridge the gap from complexity to constructability.

Architects and Contractors now can be confident that the most complex designs can be accurately and cost-effectively constructed.

Radius Track provides project teams with 20 years of complex framing expertise on a vast array of interior surfaces and exterior envelopes. The company’s expert design team is comprised of architects and contractors – which brings both perspectives to every project and delivers cost-effective constructable solutions while honoring the design intent.

Radius Track offers three Design Assist service levels to deliver the right framing direction at any phase of a project.

Complimentary Design Assist is a free-of-charge collaboration that provides high level framing constructability direction.

Proof of Concept Design Assist develops framing rules and parameters for focus areas of a project.

Fully Engineered Solution Design Assist resolves complex framing conditions for a full project scope.

Although Radius Track Design Assist can be engaged at any phase, project teams see the most benefit when the Radius Track Design Team is engaged at the earliest possible stage. The Design Assist process ensures complex designs are analyzed and validated prior to construction – thereby realizing vision and mitigating risk.

The Radius Track design team’s deep experience with curved and complex surfaces accelerates the engineering processes, while stewarding the design intention. Additionally, the Design Assist process anticipates potential project-wide fabrication and construction issues before they place a project at risk.

Each Design Assist service level follows the same process: 1) Discover, 2) Design, 3) Deliver. And each service level leverages Radius Track precedent projects and applies the learning to the project at hand.

“We strive to provide exactly the right expertise exactly when and how the project team needs it,” said Ryan Rademacher, AIA, Vice President of Design for Radius Track Corporation. “Our team is passionate about setting a project on the right course so that the framing design supports the architect’s vision and delivers a cost-effective constructable solution. We are able to develop and deliver extremely complex geometry with standard commodity materials.”

Beyond providing Design Assist services, Radius Track custom fabricates framing components to provide a complete framing solution. The fully analyzed and approved design is digitally transferred to in-house CNC equipment for precision fabrication. The custom curved framing components are delivered with concise installation instructions. Radius Track provides technical support and the jobsite coordination needed to ensure quality results.

“As we work with architects, general contractors and project teams, our goal is always the same – to help realize their vision and mitigate their risk,” said Bob Krebsbach, President of Radius Track Corporation. “Radius Track delivers on this goal using our proven process beginning with collaborative design all the way through direct digital fabrication. What’s more, we stay with you until the job is done.”

Architects, contractors and project teams who are seeking framing expertise at any stage of a project can visit www.radiustrack.com/design-assist or call 888.872.3487 to schedule a complimentary consultation.

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Construction Spending Holds Steady in August and Is Up by Nearly 5% for the First Eight Months

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Construction spending held steady in August compared to July but is up nearly five percent for the first eight months of the year compared to same period in 2015, according to an analysis by the Associated General Contractors of America. Association officials said the new spending figures indicates that the industry's recovery may be at risk and said new investments in the nation's aging water systems and other infrastructure could help offset declining spending in certain types of private construction.

"While demand for construction remains robust, it is no longer growing like it was earlier this year," said Ken Simonson, the association's chief economist. "There is little doubt that new public-sector investments in our aging infrastructure could help reinvigorate demand for construction."

Construction spending in August totaled $1.142 billion at a seasonally adjusted annual rate, essentially unchanged from the month before, Simonson said. He added that the year-to-date increase of 4.9 percent for January through August 2016, compared with the same months of 2015, shows that demand for construction projects remains relatively robust despite some recent monthly declines. But he cautioned that the month-to-month figures indicate that demand for construction is no longer growing like it was earlier this year.

Private nonresidential construction spending decreased 0.4 percent for the month but is up 4.2 percent year-to-date. The largest private nonresidential segment in August was power construction (including oil and gas pipelines), which declined 1.5 percent for the month but up 2.9 percent year-to-date. The next-largest segment, manufacturing, dropped by 1.4 percent for the month and is down 7.4 percent year-to-date. Commercial (retail, warehouse and farm) construction decreased by 2 percent in August and climbed 6.9 percent year-to-date. Private office construction climbed 2.3 percent for the month and 28 percent year-to-date.

Private residential construction spending dropped by 0.3 percent between July and August 2016, but is up 1.4 percent year-to-date. Spending on multifamily residential construction increased by 2.4 percent for the month and remains up 13.9 percent year-to-date, while single-family spending fell 0.9 percent from July to August and is down 1.5 percent year-to-date.

Public construction spending declined 2 percent from a month before and dropped by 8.8 percent year-to-date. The biggest public segment—highway and street construction—decreased by 2.9 percent for the month and is down 8.3 percent year-to-date. The other major public category—educational construction—fell by 0.4 percent in August and dropped 0.8 percent year-to-date.

Association officials said that the new construction spending figures underscore the need for Congress to pass legislation like the Water Resources Development Act to finance repairs to aging water systems. The said that measure, combined with other needed investments in public infrastructure could help offset declining private sector demand and re-invigorate the construction sector's recovery.

"The construction industry's recovery appears to have hit a plateau," said Stephen E. Sandherr, the association's chief executive officer. "The sector is at the point where new public-sector investments could really help take up the slack being left by declines in some types of private-sector construction activity.

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Chalkline Releases VisiSpecsTM, The Visual Specification System

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Portland, ME, Sept 21, 2016 – Chalkline, Inc. has released the next generation of BIM integrated specifications and documents to the Architectural, Engineering, Construction, and Owner/Developer marketplace. A successful six month Beta Program for both Chalkline and VisiSpecsTM users has resulted in real world usage, collaboration with customers, added features, and user experience enhancements.

The AECO market recognizes the need to better integrate and coordinate their design and construction documents. The resulting higher quality and higher profit projects is obvious to those adopting a BIM methodology, yet the solutions available have not met the need for a variety of reasons. Chalkline founders developed the next generation VisiSpecs solutions to address these needs and the Beta program proved the strategy and functionality is on target for broad based adoption. Client needs identified and included in the VisiSpecs solutions include:

  •     CLOUD BASED DEPLOYMENT IMPROVING IMPLEMENTATION PROCESSES
  •     VISUAL AND DYNAMIC BIM MODEL KEY + DOCUMENT LINKS
  •     MICROSOFT WORD BASED EDITING, PROJECT TREE, AND PUBLISHING
  •     SUPPORT FOR ALL DOCUMENT TYPES AND FORMATS
  •     BIM INTEGRATION AND VERIFICATION TOOLS WITHOUT CHANGING MODELS
  •     ENTIRE PROJECT TEAM COLLABORATION
  •     TRIAL, ADOPTION, AND IMPLEMENTATION MEASURED IN HOURS AND DAYS

The Free Trial of VisiSpecs enables users to quickly integrate their own documents and BIM models without spending money, requiring costly IT resources, or buried in weeks to months learning new tools. Since VisiWordTM is a Microsoft Word Add-In, the integration of customer documents takes just minutes to complete. Users don’t have to learn to use a limited editor or lose their office integration or custom macros and VBA apps they currently use. Since the BIM models, families, and materials do not need to be modified, the integration to existing project models is immediate. The Free Trial lasts 30 days, however users can import their project documents and start integrating to their BIM models typically within hours since modifying their documents or BIM models is not required. Multiple team members can even access and collaborate on projects using the Free Trial.

Deployment of the VisiSpecs solutions is also easy and low cost due to the VisiSpecs Hybrid Cloud solution. Corporate accounts, master libraries, projects, models, and other content are all securely managed in the cloud with user access on demand from the office, home, or while traveling without jumping through IT hoops, punching holes in firewalls, setting up VPNs, or waiting for IT admins to download, install, configure, license, and maintain the typical SQL server applications in the marketplace.

Visit the Chalkline web site and/or contact sales@chalklineinc.com to learn more about the Introductory Discounts up to 40%, promotional month drawings for free licenses, and to get started downloading your Free 30 Day Trial.

About Chalkline, Inc.
Chalkline is the developer of VisiSpecsTM, the next generation suite of applications to visually document, coordinate, and verify the BIM models and project specifications. VisiSpecs is a hybrid cloud solution where it’s desktop and mobile applications store and access the model and specification data on the Company's cloud servers for easy access and collaboration among distributed team members. VisiSpecs is built on the familiar applications already in use resulting in minimal training and setup time. Users can easily integrate their own masters and project documents with the project models to accomplish true BIM integration without learning to use complicated model applications and without a lengthy integration process. And for those that do use the model applications, VisiSpecs provides direct, integrated access to the project specifications and documentation. Autodesk, the Autodesk logo and Revit are registered trademarks or trademarks of Autodesk, Inc., and/or its subsidiaries and/or affiliates in the USA and/or other countries. All other brand names, product names, or trademarks belong to their respective holders. For more information, visit www.chalklineinc.com.

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Architecture Billings Index Slips, Overall Outlook Remains Positive

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For immediate release:
Washington, DC – September 21, 2016 – On the heels of six out of seven months of increasing levels of demand for design services, the Architecture Billings Index (ABI) fell just below the positive mark. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the August ABI score was 49.7, down from the mark of 51.5 in the previous month. This score reflects a decrease in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 61.8, up sharply from a reading of 57.5 the previous month.

“This is only the second month this year where demand for architectural services has declined and it is only by a fraction of a point,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “Given the solid numbers for new design contracts and project inquiries, it doesn’t appear that this is the beginning of a broader downturn in the design and construction industry.”

Key August ABI highlights:

  •     Regional averages: South (55.2), Midwest (52.8), West (49.0), Northeast (44.9)
  •     Sector index breakdown: mixed practice (51.8), multi-family residential (50.9), commercial / industrial (50.8), institutional (50.7)
  •     Project inquiries index: 61.8
  •     Design contracts index: 52.7

The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.

About the AIA Architecture Billings Index
The Architecture Billings Index (ABI), produced by the AIA Economics & Market Research Group, is a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction spending activity. The diffusion indexes contained in the full report are derived from a monthly “Work-on-the-Boards” survey that is sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended as compared to the prior month, and the results are then compiled into the ABI. These monthly results are also seasonally adjusted to allow for comparison to prior months. The monthly ABI index scores are centered around 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline. The regional and sector data are formulated using a three-month moving average. More information on the ABI and the analysis of its relationship to construction activity can be found in the recently released White Paper, Designing the Construction Future: Reviewing the Performance and Extending the Applications of the AIA’s Architecture Billings Index on the AIA web site.

About The American Institute of Architects
Founded in 1857, the American Institute of Architects consistently works to create more valuable, healthy, secure, and sustainable buildings, neighborhoods, and communities. Through nearly 300 state and local chapters, the AIA advocates for public policies that promote economic vitality and public wellbeing. Members adhere to a code of ethics and conduct to ensure the highest professional standards. The AIA provides members with tools and resources to assist them in their careers and business as well as engaging civic and government leaders and the public to find solutions to pressing issues facing our communities, institutions, nation and world. Visit http://www.aia.org.

Contact:
Matt Tinder
202-626-7462
mtinder@aia.org

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Ramtech Completes Permanent Modular Building at Louisiana LNG Terminal Facility

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MANSFIELD, TX (PRWEB) SEPTEMBER 15, 2016
Design-build commercial modular building firm Ramtech Building Systems of Mansfield, Texas, has announced that the company has completed a 16,800 square foot permanent modular office building for Cameron LNG. The new facility is located at Cameron's liquefied natural gas terminal site along the Calcasieu Channel in Hackberry, Louisiana. The design-build project was built using Ramtech's Accelerated Building System (ABS) prefabricated construction method, a proprietary system which allows for the rapid installation of factory-built modules which are a fixed directly onto a conventional concrete slab foundation. The Type V-B blast resistant building features individual private offices that use a glass interior storefront partition system around the perimeter of the interior and a large L-shaped clear span office area for multiple cubicles. There are also two large training and conference rooms, and a separate crew room and locker storage area.

The design criteria required for the modular building to meet a 170 mph Exposure D wind load, Seismic Category A, and .54 psi Blast Overpressure rating placed a unique demand on the building's structural system including using O.S.B. sheathing installed on both sides of the six-inch exterior steel studs. The roof incorporates 2 x 10 wood framing and plywood sheathing supported by open web steel trusses that are attached to structural steel tube columns which were welded to 1” thick steel plates embedded and anchored into a 4,000 psi concrete slab foundation with reinforced grade beams. To accommodate the Gulf Coast areas high humidity while also accounting for the outside air intake requirements for the building's occupants, Ramtech installed Lennox roof mounted HVAC units. The buildings exterior is fully wrapped in standard R-Panel metal siding. Ramtech completed the $3.2 million project in 165 days.

About Ramtech and the Accelerated Building System
Since 1982 Ramtech Building Systems has been providing innovative permanent modular buildings for educational institutions, government agencies, healthcare providers, and Fortune 500 companies throughout the Southern United States. As a design-build construction company, Ramtech offers full in-house design, a manufacturer direct product, and complete site construction services all within a single-source solution. Ramtech's ABS process combines the best of off-site prefabrication and on-site construction techniques in order to produce a building faster and with less cost but identical in the look, functionality and life expectancy of a completely site-built structure. Ramtech accomplishes this by setting factory assembled modular sections complete with attached ceilings and walls - but no floors - directly onto a conventional concrete slab foundation. This allows the concrete slab to become the floor of the structure just like a site-built building. For more information, visit the company's website at http://www.ramtechmodular.com.

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Scope Technologies® Delivers A Robust Estimating Work Management Tool for Contractors

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Scope Technologies® today announced its debut of Work Order tool for ProDocs™ - an industry-leading software that makes generating estimates and producing material orders easier for the Contractor.

Now contractors can transfer real-time aerial measurement report data into real-time work orders in a few clicks, all on the ProDocs platform. Designed to be paired with Scope Technologies' takeoff reports, the Work Order tool will shorten restoration and new construction contractors project timeline. As with Estimates, Work Order introduces an unparalleled level of customization including line items based on materials, conversions and manufacturers. Easy to build templates that can be tailored to feature company logo and color schematics are also a highlight. Additionally, Work Order seamlessly communicates with contractors' distribution channels and talks with retailers for added convenience, ultimately saving the contractor compounded time.

"Contractors have been searching for a cost-effective, time-saving, and above all, easy to use work management platform, and Scope Technologies has responded with Work Order," says Jerod Raisch, CEO of Scope Technologies. "It's versatile in that contractors can make changes instantaneously, and from anywhere, which is not the case with most competitor's platforms."

With construction starts up 15% in 2015 and projected to increase another 6% in 2016, it's no surprise industry-wide trends indicate contractors are evaluating their strategies and streamlining processes to ultimately propel their businesses ahead of competitors. "Simply put, for [Engineering and Construction] companies, the trick is not to delay the adoption of new technologies, but rather to figure out how to use these tools to differentiate themselves from the competition." PWC, Strategy&. (2016, March 14). 2016 Engineering and Construction Industry Trends [Report]. Strategy&. Retrieved September 12, 2016, from http://www.strategyand.pwc.com/reports/2016-engineering-and-construction-industry-trends

"We are continually aiming to streamline the measuring and estimating process, and today we have redefined its efficiency," says Jerod Raisch, CEO of Scope Technologies. "Our platform is a powerhouse of an estimating work management tool, and the best is yet to come. As we are endlessly enhancing our user experience, the addition of the Work Order tool has positioned our clients to have an entire new channel experience."

Check Out ProDocs Work Order Tool

About Scope Technologies
Focused on perpetually streamlining the measuring and estimating process, Scope Technologies delivers a comprehensive suite of measurement reports and project management tools for the contractor, architect, engineer, and insurance adjuster. Scope Technologies' aerial imagery and proprietary software delivers accurate, cost-effective aerial measurement reports that compile essential measurements and images into a 2-page report. Along with its flagship brand, RoofScope®, Scope Technologies provides takeoff reports for Gutters, Siding, Paint, Insulation, and Concrete, and material reports using Blueprints.

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Nationwide Survey Finds Healthy Buildings Becoming a Design Priority for both Architects and Owners

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Nearly three quarters of U.S. architects say the health impacts of buildings are influencing their design decisions. That finding parallels a strong market demand by building owners, with a solid two-thirds surveyed also reporting that health considerations affect how they design and construct buildings.

These findings and others were released today in a ground-breaking new report, “The Drive Toward Healthier Buildings 2016” by Dodge Data & Analytics, in partnership with Delos and the Canada Green Building Council, and with the participation of the American Institute of Architects as a critical research advisor and partner.

The report documents the value and need for more of the research, education, collaboration and outreach efforts that are hallmarks of the AIA’s Design and Health initiative. Since 2013, AIA has invested in expanding the body of knowledge on the connection between design and health, including professional continuing education and the 17-university Design & Health Research Consortium.

“As a society, we spend nearly 87 percent of our time indoors,” said AIA Chief Executive Officer Robert Ivy, FAIA. “Designing and constructing ‘healthy buildings’ is crucial to our own well-being.”

“Working with architects, we can accelerate this need for healthier buildings and improve quality of life across the country,” Ivy said. “This report documents how architects can help clients have a positive effect on human health - through the built environment.”

That positive result includes increasing employee participation and fulfillment, the report found. Sixty-nine percent of owners who measure employee satisfaction and engagement reported improvement in both attributes due to their healthier building investments.

According to the report, the top five healthier building features implemented by architects include:

  • Better lighting/daylighting exposure.
  • Products that enhance thermal comfort.
  • Spaces that enhance social interaction.
  • Enhanced air quality;
  • Products that enhance acoustical comfort.

Use of nearly all of these is expected to grow considerably along with further pioneering approaches like the use of biophilic design features, spaces that enhance tenant mood and opportunities for physical activity, the report found.

“The increased attention to building health impacts is just beginning,” says Stephen A. Jones, Senior Director of Industry Insights at Dodge Data & Analytics. “In a similar way several years ago, companies engaged in green construction because of the demonstrable business and financial benefits they were able to achieve. The findings of this report demonstrate that the focus on buildings that enhance the health and well-being of their occupants is likely to follow a similar trajectory, boosted by those who have committed to sustainability in their organizations.”

Additional highlights from the report include:

  • Most owners are not aware how healthy building investments result in business benefits like leasing rates (52 percent) and asset values (58 percent). However, among those that report an effect, 73 percent report faster rates and 62 percent report higher values.
  • According to architects and interior designers, the top driver for greater investment in healthier buildings is improved public awareness of the health impacts of buildings.
  • Public health professionals report that the most common policies currently in place to support healthier building practices are requirements to avoid the use of hazardous materials in buildings (65 percent). The key policy areas that are currently being considered include incentives that encourage physical activity (47 percent) and requirements for ongoing building air quality measurement (46 percent).
  • Ninety-two percent of public health professionals also report that their institutions are actively conducting research on the influence buildings have on occupant health and well-being.
  • Architects are most aligned with their clients (owners) when it comes to understanding the goals of healthy building investments, as compared to other industry players, recognizing that improved tenant/employee satisfaction and happier and healthier occupants is the primary focus for owners related to their investments.
  • The largest percentage of owners, at 42%, identify that they are very interested in partnering with architects to help increase their ability to implement healthy building practices. While low, it is notably more than the next two highest potential partners – facility managers and educational institutions, both at 31%.

Download the full study “The Drive Toward Healthier Buildings 2016: Tactical Intelligence to Transform Building Design and Construction SmartMarket Report”.

The report also received key support from CBRE, Dewberry and the U.S. Green Building Council, with additional support from Armstrong Ceiling Solutions and the Regenerative Network. Other organizations that participated in the research process include the American Society of Interior Designers, the National Association of Real Estate Investment Managers and the World Green Building Council.

About The American Institute of Architects
Founded in 1857, the American Institute of Architects consistently works to create more valuable, healthy, secure, and sustainable buildings, neighborhoods, and communities. Through nearly 300 state and local chapters, the AIA advocates for public policies that promote economic vitality and public wellbeing. Members adhere to a code of ethics and conduct to ensure the highest professional standards. The AIA provides members with tools and resources to assist them in their careers and business as well as engaging civic and government leaders, and the public to find solutions to pressing issues facing our communities, institutions, nation and world. Visit http://www.aia.org.

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Construction Spending Remains Steady in July and is up by 5.6 Percent Amid Growing Labor Shortages

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Construction spending remained steady in July compared to June but is up by 5.6 percent for the first seven months of the year compared to same period in 2015, according to an analysis by the Associated General Contractors of America. Association officials said the growth in construction spending is occurring as most construction firms report they are having a hard time finding skilled craft workers to keep pace with demand.

"On balance, there is still strong demand for construction, especially for multifamily and private nonresidential structures, while homebuilding continues an uneven recovery," said Ken Simonson, the association's chief economist. "But public investment in infrastructure and educational construction has been tepid."

Construction spending in July totaled $1.153 trillion at a seasonally adjusted annual rate, essentially unchanged from the month before, Simonson said. He added that the year-to-date increase of 5.6 percent for January through July 2016, compared with the same months of 2015, shows demand for construction continues to experience robust growth. He noted that private nonresidential spending reached a record high for the third-straight month at a seasonally adjusted annual rate, while multifamily spending hovered just below the record set in March.

Private nonresidential construction spending increased 1.7 percent for the month and is up 8.6 percent year-to-date. The largest private nonresidential segment in July was power construction (including oil and gas pipelines), which grew 1.1 percent for the month and is up 8.3 percent year-to-date. The next-largest segment, manufacturing, expanded by 3.9 percent for the month but is down 2.7 percent year-to-date. Commercial (retail, warehouse and farm) construction increased by 1.2 percent in July and climbed 10.1 percent year-to-date. Private office construction soared 4.6 percent for the month and 27 percent year-to-date.

Private residential construction spending edged up by 0.3 percent between June and July 2016, and is up 6.6 percent year-to-date. Spending on multifamily residential construction dropped 0.6 percent for the month but remains up 22 percent year-to-date, while single-family spending fell 0.2 percent from June to July but is up 9 percent year-to-date.

Public construction spending declined 3.1 percent from a month before and is now up by only 0.2 percent for the first seven months of 2016 combined. The biggest public segment—highway and street construction—increased by 0.3 percent for the month and is up 2.6 percent year-to-date. The other major public category—educational construction—fell by 8.3 percent in July but gained 4.0 percent for the combined January-July period.

Association officials said that as construction demand continues to expand, many firms report having a hard time finding workers, particularly craft workers, to hire. The association released a survey yesterday that found two-thirds of firms reporting difficulty finding craft workers. Officials said the country needed a series of new measures to help recruit and train new construction workers to keep pace with demand. "As the construction industry continues to expand, firms in many parts of the country are eager to expand their headcount," said Stephen E. Sandherr, the association's chief executive officer. "But without the kind of workforce measures we have been pushing for, our schools will continue to graduate students for careers that don't exist while firms search for workers with skills that aren't taught."

Contact http://www.agc.org for more information

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The Howard Hughes Corporation Selects DESTINI Estimator to Increase Speed and Collaboration

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Beck Technology, leading software and service firm for the commercial construction industry, announced The Howard Hughes Corporation (HHC) has selected DESTINI® Estimator software to provide intelligent estimating technology for more than 150 estimators and team members through an enterprise licensing deal. The three-year software agreement includes custom development to add functionality within DESTINI Estimator to enhance specific HHC historic cost workflow.

The developer and operator conducted a thorough evaluation of estimating solutions prior to selecting Beck Technology’s product. The analytics in DESTINI Estimator’s comparison functionality provided HHC with a level of insight into projects previously not available and that HHC felt no other software provided.

HHC already relies on the DESTINI Profiler software to quickly conceptualize and manipulate concepts internally in the early stages of projects, even before an architect is on board. Katie Willis, director of preconstruction and estimating for The Howard Hughes Corporation, noted recently that “DESTINI Profiler is a game changer for us to communicate and speed up the design process. Additionally, the Beck Technology team has been great to work with and helpful in allowing us to gain access and knowledge of the software.”

HHC owns, manages, and develops commercial, residential, and mixed-use real estate throughout the U.S. The company is comprised of master planned communities, operating properties, development opportunities, and other assets spanning 16 states and with more than 1,100 employees.

“We are thrilled and honored that The Howard Hughes Corporation has chosen to implement DESTINI Estimator and extend its relationship with Beck Technology,” said Stewart Carroll, Beck Technology’s COO. “HHC’s core values of collaboration, speed, excellence, and innovation perfectly complement our values and mandate for our software.”

Key features of the DESTINI Estimator platform include:

    2D and 3D takeoff views
    Autodesk Navisworks® integration
    Model comparison views and Microsoft Excel imports


ABOUT DESTINI SUITE
The innovation behind Beck Technology stems from DESTINI: design estimation integration initiative. DESTINI Profiler and DESTINI Estimator share a common cost database schema, allowing companies to manage a single database platform for both conceptual and detailed estimating. DESTINI Profiler outputs can be opened in DESTINI Estimator and form the basis of the downstream estimating process. Alternatively, DESTINI Estimator can be used from the beginning of the project through project completion.

ABOUT BECK TECHNOLOGY
Beck Technology empowers the AEC industry to make smarter choices through innovative software solutions and expert consulting. The technology provides integrated costing, transparency, and collaboration and improves estimating speed and accuracy. DESTINI Profiler software, a decision-making and modeling tool, is used by 40 percent of the ENR Top 400 General Contractors, and DESTINI Estimator software is the only purpose-built platform created exclusively for architects, owners, and developers.

Visit www.beck-technology.com, call 888-835-7778, or follow @BeckTechnology.

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Fabral Expands Powerseam Product Line

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Fabral continues to deliver on its commitment to support customer success with the addition of a new metal structural standing seam panel system. Effective September 1, 2016, the new architectural Powerseam II profile will be available through the company's Gridley, IL, Lancaster, PA and St. Joseph, MN manufacturing facilities.

As with the existing Powerseam profile, Powerseam II is a mechanically seamed structural standing seam roof panel system that can be bent, curved and tapered. Powerseam II will be offered in .032" Aluminum and 26, 24, and 22 Gauge Steel. Stiffening ribs and shadow lines are available.

Fabral Powerseam panel systems provide an ideal architectural and functional fit for education and sports environments. While Powerseam II can be fabricated in the factory, mobile rollforming equipment will also allow onsite field-forming for projects requiring a long-length panel system. Powerseam II panels will be available in Fabral's full architectural color palette. Custom colors will be available upon request subject to common industry minimums.

Fabral's Powerseam know-how and experience have been used on complex projects such as the Easton Archery Center of Excellence, in Chula Vista, CA. This state-of-the-art, 43,800 square foot facility's roof system allows controlled thermal expansion through 260 feet long field-formed Powerseam panels that attach to the roof's curved substructure. The same fabrication and engineering expertise will be used with the company's Powerseam II profile.

About Fabral
Lancaster, PA-based Fabral is the premier supplier of metal roofing and wall panels for architectural, commercial, post frame, industrial, transportation, and agricultural applications. Founded in 1967, Fabral has been widely recognized as the benchmark leader for nearly 50 years. Specified by leading firms worldwide, Fabral products have been used in projects ranging from the United Nations General Assembly Dome and the US Olympic Training Center Archery Building to Lady Bird Johnson Middle School, the largest net zero school in the United States. The company's deep engineering expertise, industry-leading customer service and quality product offering have elevated the Fabral to become the post frame provider of choice. Fabral is a division of Euramax International, Inc., a global producer of aluminum, steel, vinyl, copper and fiberglass products for original equipment manufacturers, distributors, contractors and home centers worldwide. To learn more, visit www.fabral.com

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Re-Engineered Subfloor Screw Offers Faster Installation

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Pleasanton, Calif. – Simpson Strong-Tie, the industry leader in engineered structural connectors and building solutions, now offers a new re-engineered subfloor screw that increases installation speed and reduces driving force. The new Strong-Drive® WSV Subfloor screw has been developed for fastening subfloor and sheathing using the Quik Drive® auto-feed screw driving system.

The WSV screw features a redesigned tip and thread pattern that provides up to 25 percent less torque, resulting in a faster driving screw. It includes a deep-recessed, 6-lobed ribbed head that delivers cleaner countersinking and more secure bit retention for fewer camouts.

“Our new WSV screw is faster and easier to install and provides better holding power than pneumatic fasteners or hand-driven nails,” says Dr. Ed Sutt, Vice President, Fastening Systems, Simpson Strong-Tie. “As a result, it reduces the gaps between the joist and subfloor that cause floor squeaks.”

For more information about the WSV Subfloor screw, visit strongtie.com/wsv.

About Simpson Strong-Tie Company Inc.
For 60 years, Simpson Strong-Tie has focused on creating structural products that help people build safer and stronger homes and buildings. Considered a leader in structural systems research, testing and innovation, Simpson Strong-Tie works closely with industry professionals to provide code-listed, field-tested products and value-engineered solutions. Its structural products are recognized for helping structures resist high winds, hurricanes and seismic forces. The company’s extensive product offering includes engineered structural connectors, fasteners, fastening systems, lateral-force resisting systems, anchors and products that repair, protect and strengthen concrete. From product development and testing to training and engineering and field support, Simpson Strong-Tie is committed to helping customers succeed. For more information, visit strongtie.com and follow us on facebook.com/strongtie, twitter.com/strongtie, YouTube and LinkedIn.

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Bluebeam Expands Global Offerings and Strengthens Collaborative Capabilities

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Pasadena, CA (August 23, 2016) Bluebeam® Inc., leading developer of PDF-based annotation and collaboration solutions for the architectural, engineering and construction (AEC) and oil and gas industries, proudly announces the expansion of its global offerings. A new agreement with Korean software reseller and service company Linetek System will bring the Windows version of Bluebeam Revu® to the Korean market as a local language product, expanding the availability of Bluebeam Revu’s flagship desktop version to thirteen languages worldwide. In addition, Bluebeam Revu Mac, introduced in English earlier this year, now includes Swedish and German language versions with the release of Revu Mac 1.5.

“Working across platforms, time zones and even international borders has the potential to unleash profound change,” says Richard Lee, Bluebeam President and CEO. “We’re excited that Bluebeam Revu, Revu Mac and Studio Prime continue to grow as our global community of users grows. By combining industry-standard formats with advanced collaboration tools, professionals around the world are able to work more efficiently, expedite communication, and improve the overall quality of their deliverables.”

The recent releases of Revu 2016.5, Revu Mac 1.5 and Studio Prime™ add productivity and collaboration enhancements for professionals who work in the most document-intensive industries around the globe. New features introduced in Revu 2016.5 include:

  • Compatibility with Revit 2017 and Navisworks 2017, streamlining architectural workflows
  • Revit Properties to Tags export functionality, saving hours of work with simple, automated sheet-tagging for Sets

In addition to localized German and Swedish versions, recently released Revu Mac 1.5 enhancements include:

  • Automated headers and footers, leveraging document metadata to automatically insert key information across multiple pages in a single document
  • Capture, adding the ability to embed images and videos into a markup and click through them in a pop-up viewer

The latest enhancements to Studio Prime, the subscription option in the Bluebeam Studio Platform that offers additional administrative functionality and the Studio API, include:

  • Watched folders for automating source-file-to-PDF conversion and document manipulation for a large volume of end users

Revu 2016.5, Revu Mac 1.5 and Studio Prime are available now at Bluebeam.com and through our worldwide reseller network.

Following the success of the recent Bluebeam eXtreme Conference in San Diego, California, the eXtreme Conference is heading to Europe with one-day conferences in Stockholm, Sweden, on September 26 and London, England, on September 29. The eXtreme Conference is a user-focused and customer-driven event featuring Revu training, industry panels, case study presentations, guest speakers and networking opportunities. Registration for the Stockholm and London events is now open.

About Bluebeam, Inc.
Bluebeam’s innovative desktop, mobile and cloud solutions push the limits of digital collaboration to enable professionals, who work in the most document-intensive industries, to do what they do, better. Bluebeam's award-winning PDF solutions are used by the world’s top architectural, engineering and construction firms, oil and gas companies, manufacturers, government agencies and municipalities to reduce paper usage by more than 85% and to increase productivity by over 60%. The Bluebeam Account Services team and global reseller network have been solving customer challenges in over 100 countries for more than a decade. Visit www.bluebeam.com for more on why Bluebeam is changing the status quo and setting a new standard. Bluebeam, Inc. is part of the Nemetschek Group.

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July Construction Starts Slip 2 Percent

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NEW YORK - August 19, 2016 - At a seasonally adjusted annual rate of $586.3 billion, new construction starts in July fell 2% from the previous month, according to Dodge Data & Analytics. A steep drop by electric utilities pulled down the nonbuilding construction sector, which in turn contributed to the slight decline for total construction starts. On the plus side, moderate improvement was reported for nonresidential building, helped by greater activity for its commercial building and manufacturing plant segments, while residential building benefitted from a stronger pace by multifamily housing. During the first seven months of 2016, total construction starts on an unadjusted basis were $372.2 billion, down 11% from the same period a year ago. The January-July period of 2015 had featured 13 very large projects valued at $1.0 billion or more, including a $9.0 billion liquefied natural gas export terminal in Texas, an $8.5 billion petrochemical plant in Louisiana, and two massive office towers in New York NY with a combined construction start cost of $3.7 billion. In contrast, the January-July period of 2016 included only four projects valued at $1.0 billion or more. Excluding these exceptionally large projects from the comparison leads to a smaller 4% decline for total construction starts year-to-date.

The July data lowered the Dodge Index to 124 (2000=100), down from 126 in June. After the improved pace reported during the first three months of 2016, the construction start statistics showed an up-and-down pattern during the April-June period, and June’s 7% slide has now been followed by the 2% drop in July. “While the loss of momentum for total construction starts in June and July may raise some concern about the overall health of the construction industry, it’s useful to keep in mind that the recent declines were tied to two segments, public works and electric utilities, that are prone to volatility on a month-to-month basis,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “June’s retreat for total construction reflected a pullback by public works after a strong performance in May, and July’s retreat for total construction reflected a subdued amount of electric utility starts for that month. At the same time, nonresidential building was able to register moderate growth in June and July, while residential building can be viewed as essentially stable when taking the average of June and July.”

Murray continued, “The year-to-date comparisons so far in 2016 have been skewed by the number of exceptionally large projects that reached the construction start stage during the first half of 2015. There were fewer such projects during the second half of 2015, which should help the year-to-date comparisons as 2016 proceeds. It’s true that the July statistics showed only slight improvement with the year-to-date comparisons, but that improvement should become greater with the August and September construction start reports. This is due to the fact that last year August and September witnessed a broader slowdown for construction starts, as investment grew more cautious given concerns about the global economy and the continued drop in energy prices. This year the uncertainty related to energy prices has diminished, with the price of oil hovering in the range of $40 to $50 per barrel. Admittedly though, this year has a new element of uncertainty with regard to the upcoming November elections, which conceivably could dampen some investment in the very near term.”

Nonbuilding construction in July plunged 17% to $121.7 billion (annual rate). The electric utility and gas plant category fell 56% in July, while public works as a group was unchanged from the previous month. July’s steep drop for electric utilities and gas plants reflected the comparison to June’s elevated amount, which included three huge natural gas-fired power plants located in Tennessee ($975 million), New York ($900 million), and New Jersey ($600 million). In contrast, the power plant projects that were entered as July starts were generally smaller in scale than what was reported in June, as July’s largest power plant projects were a $385 million solar power facility in California and three wind farms located in California ($300 million), North Dakota ($250 million), and Minnesota ($135 million). The public works group in July showed a mixed performance by category. On the plus side, sewer construction jumped 86%, supported by the start of the $415 million EchoWater biological nutrient removal project in California. Water supply construction advanced 48%, lifted by the start of four water main projects totaling $376 million in Chicago IL. On the negative side, decreased activity was reported in July for highways and bridges, down 8%; river/harbor development, down 8%; and miscellaneous public works (site work, rail projects, pipelines, etc.), down 29%.

Nonresidential building, at $187.9 billion (annual rate), grew 4% in July following its 7% gain in June. The commercial building group advanced 3%, with much of the lift coming from a 20% jump for office construction. Large office building projects that reached groundbreaking in July were the following – a $400 million data center in Grand Rapids MI, a $133 million office building in Dallas TX, and the $100 million Comcast office building at Sun Trust Park in Atlanta GA. During the first seven months of 2016, the top five metropolitan areas ranked by the dollar amount of office construction starts were – New York NY, Washington DC, Dallas-Ft. Worth TX, Atlanta GA, and San Francisco CA. Store construction in July improved 3%, helped by the start of the $50 million Simon Premium Outlet Mall in Norfolk VA. New warehouse starts in July slipped 6% and a 14% drop was reported for hotels, although July did include the start of the $100 million Maryland Live Casino Hotel in Hanover MD and the $100 million renovation of the Phoenician Resort in Scottsdale AZ. The manufacturing building category increased 89% in July after a weak June, lifted by the start of a $350 million pharmaceutical research facility in East Windsor NJ and a $154 million plant for an automotive systems supplier in Cottondale AL.

The institutional side of the nonresidential building market eased back 1% in July. Reduced activity was reported for educational facilities, down 5%, although July did include the start of a $150 million computer science building at the University of Maryland in College Park MD, a $130 million high school in Pinole CA, and a $129 million high school in Secaucus NJ. Healthcare facilities also showed reduced activity in July, slipping 4%, despite the start of a $250 million critical care facility in Tallahassee FL and the $239 million Bayhealth medical campus in Milford DE. The smaller institutional categories witnessed gains in July, with public buildings up 5%, churches up 8%, amusement and recreational facilities up 11%, and transportation terminals up 11%. The transportation terminal category was boosted by the $295 million Terminal 1 Concourse A and connector bridge addition at Ft. Lauderdale-Hollywood International Airport in Ft. Lauderdale FL.

Residential building in July increased 3% to $276.7 billion (annual rate), rebounding after the 3% decline reported in June. Multifamily housing provided the upward push, rising 9%. July included eight multifamily projects valued at $100 million or more, led by the $485 million Brickell Flatiron high-rise in Miami FL, a $275 million apartment high-rise in Chicago IL, and a $250 million luxury condominium high-rise in New York NY. During the first seven months of 2016, the top five metropolitan areas ranked by the dollar amount of new multifamily starts were – New York NY, Miami FL, Chicago IL, Los Angeles CA, and Boston MA. The New York NY share of the national dollar amount of multifamily starts was 22% so far in 2016, down slightly from the 26% share for the full year 2015. Single family housing in July increased 1%, basically extending the plateau present during the first half of 2016. The regional pattern for single family housing in July showed increases in three regions – the Northeast, up 8%; the West, up 6%; and the South Atlantic, up 2%; while declines were reported in the Midwest, down 2%; and the South Central, down 5%.

The 11% decline for total construction starts on an unadjusted basis during the January-July period of 2016 was due to diminished activity for both nonbuilding construction and nonresidential building from their heightened levels of a year ago. Nonbuilding construction dropped 21% year-to-date, with public works down 14% and electric utilities/gas plants down 33%. Nonresidential building dropped 18% year-to-date, with commercial building down 7%, institutional building down 12%, and manufacturing building down 66%. Residential building was the one major sector to show a year-to-date increase, rising 2% with single family housing up 7% while multifamily housing retreated 9%. By geography, total construction starts during the first seven months of 2016 revealed this pattern relative to a year ago – the South Central, down 31%; the Northeast, down 16%; the West, down 2%; the South Atlantic, down 1%; and the Midwest, up 3%.

July 2016 Construction Starts

About Dodge Data & Analytics: Dodge Data & Analytics is a technology-driven construction project data, analytics and insights provider. Dodge provides trusted market intelligence that helps construction professionals grow their business, and is redefining and recreating the business tools and processes on which the industry relies. Dodge is creating an integrated platform that unifies and simplifies the design, bid and build process, bringing data on people, projects and products into a single hub for the entire industry, from building product manufacturers to contractors and specialty trades to architects and engineers. The company’s products include Dodge Global Network, Dodge SpecShare, Dodge BuildShare, Dodge MarketShare, and the ConstructionPoints and Sweets family of products. To learn more, visit www.construction.com.

Media Contact: Benjamin Gorelick | Spector & Associates +1-212-943-5858, ben@spectorpr.com

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The Terry Thomas, first building with SOLARBAN 70XL glass, remains model of performance

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PITTSBURGH, Aug. 11, 2016 – When The Terry Thomas, Seattle, opened in 2008 as the first major office building to feature SOLARBAN® 70XL glass by PPG, it earned numerous accolades for design and energy performance, including recognition as an American Institute of Architects (AIA) Committee on the Environment (COTE) “Top Ten” green building project in 2009.

Today, 10 years after its debut at the Greenbuild International Conference and Expo 2006, Solarban 70XL glass remains the industry’s highest-performing triple-silver-coated, solar control low-emissivity (low-e) glass. With visible light transmittance (VLT) of 64 percent and a solar-heat-gain coefficient (SHGC) of 0.27 in a standard 1-inch insulating glass unit (IGU), Solarban 70XL glass has a light-to-solar gain (LSG) ratio of 2.37 that is still among the highest in the industry.

Similarly, The Terry Thomas continues to serve as a model that Weber Thompson - the architectural firm that designed the building as its headquarters - uses to show clients the potential for daylighting office space.

“By offering good natural daylighting through the storefront glazing, we reduced dependence on overhead lighting and overall electricity use,” explained founding principal Scott Thompson, who designed the building with his partners and staff. “With a good U-factor and SHGC, [Solarban 70XL glass] also reduced the chance that the space will overheat, which is very important in our naturally cooled space.”

Since being introduced, Solarban 70XL glass has been specified by architects to increase daylighting and reduce energy costs in hundreds of buildings, including many such as The Terry Thomas that have earned certification through the LEED® green building program. Initial energy modeling conducted in 2006 showed that using Solarban 70XL glass instead of double-silver-coated, solar control low-e glass in a prototypical 8-story office building could reduce cooling equipment requirements by up to 26 percent, and cut overall cooling costs by 3 to 5 percent annually. Through the years, the triple-silver coating technology has been refined for application to a wide variety of clear, ultra-clear and tinted solar control low-e glasses available from PPG.

For more information about the 10th anniversary of Solarban 70XL glass, or to learn more about PPG’s proprietary triple-silver coating technology, visit www.ppgideascapes.com or call 1-888-PPG-IDEA (774-4332).

Solarban is a registered trademark of PPG Industries Ohio, Inc. LEED – an acronym for LEADERSHIP IN ENERGY AND ENVIRONMENTAL DESIGN® – is a registered trademark of the U.S. GREEN BUILDING COUNCIL®. 

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An Accurate Budget Estimate is the First Line of Defense Against Cost Overruns

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By Rory Woolsey, CEP

On Bell Rock off the coast of Angus, Scotland, sits the world’s oldest surviving lighthouse. This 116-foot-tall granite structure was built by Robert Stevenson. Construction on the project began in 1807, and it was completed and functioning by February 1811, making the construction duration around five years. The cost exceeded the original budget estimate by 60%.

Just another example of a public-funded project exceeding budgets of time and money?

Did I mention that the Bell Rock is a treacherous sea-washed submerged reef, located 15 miles off the coast, and the base of the lighthouse is 12 feet underwater at high tide and four feet above water at low tide? Did I neglect to inform you that, during construction, the rock was hammered with brutal storms five months out of the year and labor shortages were ongoing due to a war with France? Compounding these issues, the granite specified for this project was not native to the area and had to be brought in by wagon at a premium expense.

Context Matters: The engineer’s plans and specifications were well defined for the Bell Rock Lighthouse. The baseline budget was established. The project was seemingly straightforward when viewed from the two-dimensional form of the Architect/Engineer (A/E) plans and specifications. The budgetary estimating lessons learned here are not too different from those that continue to frustrate facility managers today. The accurate estimating of construction goes well beyond the project drawings (things always seem to connect together neatly on drawings) and must include an accounting of the realities of the environment where the project is constructed. The fact is: project context matters!

Most facility renovation projects are not dealing with high tides and treacherous storms. Just the same, facilities budget estimators must account for the challenges (and the resultant costs) of building around site-specific issues such as ongoing operations, aging buildings, environmental issues, matching existing construction, noise limitations, the weather, access and egress to the site, time constraints, unrealistic demands by the client, the availability of labor, and phased construction. Whew! In most facilities, the reality of the context where a project is built has a considerable impact on the budgetary estimate … beyond plans and specifications. To ignore the context scope is to eventually face the angst of project cost overruns. It is inevitable: Actual costs will overrun budgeted costs if the baseline budget is incorrect to begin with.

Busting Budgets: The consternation caused by the busting of a project budget is common in the challenging environments of renovation projects, and Bell Rock was exceptionally challenging. The consequences of overruns are painful in that getting the additional funding required to finish a project is not always an easy task. Explaining overruns is a tough position to be in. The fact is one of the most common causes for overrunning a budget is with the budget itself. If you start a project with a wrong baseline for the cost (or time), then you already set the project for failure. The first line of defense against budgetary overruns is to begin a project with an accurate, realistic budget from which the actual costs will be measured. Poor construction budgeting results in project cost overruns.

Getting Budgets Right: The actual cost of a project is eventually known after a project is completed and all the costs are reconciled. An estimate is a prediction or projection of what that actual cost will be. Therefore, to budget a project accurately, it is necessary, in the estimating process, to build the project before the project is built. In other words, you must predict the resultant cost by building it before you build it. This is great advice for estimating any facilities renovation project. This is why some of the best estimators I have ever worked with are those individuals who come from the field. Knowing construction and the means and methods for executing work in a field environment is very important to the process. An accurate budget estimate is one that captures the realities of the true scope of work of the project. Construction estimation – at its core – is not a cost book or a calculator (they have their roles), but all the parts, pieces, specifications, quality, site conditions, labor, equipment, and materials that make up the scope of work. Show me a poor budgetary estimate and I will show you poorly-identified project scope of work.

Capturing Scope: Architects and engineers define scope well in plans and specifications, but for construction estimating, this scope is not complete enough. Successful contractors will tell you that construction scoping for estimating purposes (as with scheduling) goes well beyond the A/E scope, and includes field-specific realities or the context scope. I recall a context issue at an old VA hospital, where the roofing contractor was hot mopping a replacement of a built-up roofing system. One hour into the day, the project was shut down because the smell of hot asphalt filled the hospital from the intake roof venting. The contractor had to extend all intake hoods up off the deck before the work could continue. Context scope matters.

Beyond the context scope, the estimator needs to account for the means and methods used in the execution of the work. How will the work go together in the environment that the contractor will work in? What equipment and labor power will be used to complete the tasks? The answers to these questions will influence the overall cost of the project. The best estimators will think like a contractor and mentally build the project many times before the project is actually built. The informed budgetary estimator knows construction well, and is able to identify and capture the A/E, context, and execution scope in the process of estimating the projected construction cost of a project.

With limited funds and many facility needs, sometimes Owners will mistakenly stop short in budgeting a job with just the A/E scope of work captured. This is wishful thinking. It is better to accept the actual cost of a project than have to deal with the shock of a “higher than expected” estimate and the headache of cost overruns. As facilities managers and estimators, it is not our job to tell the Owner what they want to hear, but to identify the real cost of the project from the beginning, in the budget estimate. This requires thinking beyond the A/E scope of a project, and capturing, quantifying, and pricing all the real scope of work in the project. Accurate budgeting of our facilities projects is a big step to eliminating project cost overruns. The complete scope of work to be priced is A/E, context, and execution scope.

About the author: Rory Woolsey, CPE has worked in Management and Engineering for the construction industry for 33 years, starting as a construction laborer in Billings, Montana, in 1972. He has since held positions as a field engineer, project manager, MIS manager, testing laboratory manager, estimator, senior editor, designer, structural engineer, and general contractor. He is currently the President of The Wool-Zee Company, Inc., construction consultants. Rory is currently an Accounts Manager for the Gordian Group, the parent company to RS Means. Mr. Woolsey has also held positions with some of the leaders in the construction industry, such as Bechtel, H.J. Kaiser Constructors, and the R.S. Means Company, and has worked on projects ranging from heavy, military, industrial, commercial, and residential. He has given over 7,000 classroom hours of instruction nationally to architects, engineers, contractors, and facility managers on topics of project management, CPM scheduling, construction estimating, facility maintenance, partnering, and leadership. Rory is a Certified Estimating Professional (CEP) through AACE International.

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It’s Time to Level the Playing Field in Construction

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By: Rifka Malik, CPESC

The design engineer releases drawings. The land owner wants to know how much it will cost to develop the idea or plan. How does the land owner accomplish this? Will they hire an estimator? Do they have their own on-staff estimators? Or do they have a better plan? And is this “better plan” really better, or does it just shift the burden of determining the cost to the general contractors and their subcontractors?

The engineers or developers release plans for “pricing.” They ask ABC Corp to bid on the project. The bidder receives large volumes of paper, but no quantity survey. It is up to them to survey the drawings and is implied that the quantity survey is part of the bidding process. But is it? And more importantly, should it be?

You can see that there are a lot of questions. And I propose to answer them to your satisfaction. As an independent estimating consultant, I often approach engineers, designers, and owners to discuss the value that I potentially bring to their project. A common response is: “Why would I hire you to do the same work that the bidders provide for free?” Many already know why, but, surprisingly, many don’t. So, I will do my part of leveling the playing field, and explain this mystery.

Contractors and subcontractors spend a lot of time and money to develop their bids. Whether they have their own in-house estimator or hire a consultant, they still bear the cost; the quantity survey is the larger portion of that cost. Naturally, every smart business person will pick and choose what they want to invest in. Your project will not be on every contractor’s list. You will not get as many bids as you would like, and you may not get any bids from the companies you want to work with. These companies may either bid on projects that have quantities provided by the owner or engineer, or choose to invest their estimating time and dollars elsewhere.

Including a quantity survey as part of the bid package provides another benefit to the project owner. It keeps things clean and simple—leveling the playing field. The construction world can get quite a bit murky, and the quantities arena is a breeding ground for that murkiness (a.k.a., change orders). I have seen many project managers attempting to make heads and tails out of several quotes for the same scope of work—without success. If the quantities are not identical, then the playing field is not level. The confusion will lead to a change order or two (or three) down the road. Trust me on that. And if you believe in holding companies to their mistakes, then we need to have a longer discussion about that some other time.

I often get call backs from clients when the construction manager asked why their quantities are different from the other bidders’. The construction manager implies that my client must figure out a way to make his quantities match those of the other guys. After verifying that the numbers are accurate, I sometimes wonder if the other guys are told the same thing—and where that leads.

There are many possibilities as to why the other bidders have different numbers. Sometimes it’s simply because all the other bidders are taking their quantities from the same local material supply house, whose estimator did a rough take-off as a service to the client. They aren’t really bothered by the “roughness” of the take-off, as they get paid for every bit of material that leaves their yard. That is just one example. But when the sun sets, who pays for the discrepancies?

Let’s examine another facet of this argument. “Is it fair?”

Since my specialty is sitework and civil estimating, I commonly get a civil design with a geological study and report, and the soil borings to go with it.  The site contractor is requested to find out how much rock (or other unsuitable material) will be generated by the design. Although I’m happy to provide the study to any client who requests it, I fail to understand how that responsibility has been shifted solely to the contractor hoping to get the job.

What is most intriguing is how the land owner or design engineer accepts the information provided by the site contractor as valid, without knowing the skills of the estimator behind it. If a site contractor is capable of breaking and excavating rock, are they also capable of assessing how much rock there will be on the site, and its impact on the engineer’s design?

It’s essential that the project owner be aware of the true cost of developing their plan. This information is best provided by a qualified, professional estimator who has no bias in either direction. A project owner does not need to have an estimator on his payroll to do it the right way – the consulting estimator is the best choice for this reason. Try it – you will never want to do it any other way!

About the author: Rifka Malik, CPESC, is the President of Sitework Estimating Services, Inc. and a board member of CERT, the Consulting Estimators Round Table.

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How Brand Marketing can Boost Your Firm’s Marketing ROI and Visibility

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By Sylvia S. Montgomery, MBA, CPSM

While brand marketing is far from a new concept, it’s undergone quite an evolution in the last several years. Prior to 1978, having a strong brand and building a positive reputation relied on word of mouth. Eventually, print ads and sponsorships gained some traction, but were hampered by their lack of sufficient ability to track their return on investment (ROI).

Fast forward to the past decade, when the digital revolution caused brand marketing to take on a whole new persona. Now it’s not only multi-faceted, it’s also measurable.

Today’s consumers are highly sophisticated. They expect answers to their questions with just a few keyboard clicks. They insist on much more transparency prior to selecting a services provider. Luckily, digital brand marketing allows firms to establish and enhance their brand and amplify their value, so prospects can experience greater relevance.

Here are three tips for using brand marketing to boost your firm’s marketing ROI and visibility in today’s highly competitive digital marketplace.

1. Create a Solid Strategy

Having a strong brand-building strategy begins with defining your target audience. When you have a clear understanding of your audience, where they spend their time, and what they’re looking for, you can create messaging that speaks to their needs, and position your firm as the solution to their problems.

Typically, most firms think about their target audience in terms of market sectors—such as healthcare, education, or commercial. However, a more impactful approach to identifying audiences is often the role of those audiences targeted. For example, your firm may have strong relationships with the middle management levels of existing clients, yet lack strong connections with C-suite or decision makers. Each of those roles responds to different triggers during the vetting and selection of a services provider.

By taking the time to understand your prospects, your firm can build a brand that connects you with the right audience, which helps to ensure the time you’re putting into nurturing leads is well spent. However, creating a solid brand strategy doesn’t stop there—it’s also about setting your firm apart from the competition.

Discovering meaningful differentiators has become increasingly more important in the digital age. The shift to online marketing has widened the playing field by minimizing geographical limitations. Buyers of professional services no longer feel the pinch to hire locally, even if the expertise and talent are there. Instead, the primary motivator is to seek out the best provider. The development of this new competitive marketplace has created a demand for firms to stand out and establish their expertise in a particular service or skill. Building your brand strategy around a key differentiator for your firm is a crucial element in maximizing your visibility.

2. Go Beyond Traditional Marketing

Even though online tactics have taken the advertising and marketing worlds by storm, offline tactics still play an important role. In fact, using the two approaches in tandem can allow your firm to reach your target audience even more effectively.

For every offline tactic, there is an equal—and often, better—online tactic. While a speaking engagement is still important, combining that face-to-face strategy with hosting an online webinar brings even more visibility to your firm. The same goes for publishing in print publications and publishing online—the two approaches are stronger together. See Figure 1 on the previous page for more examples of how online advertising can give traditional advertising a boost.

Just remember: Different channels work better for connecting with different audiences, depending on the goal at hand. The key to successfully going beyond traditional marketing is being able to identify the best channel for the best situation.

3. Build Your Expertise

Buyers want to hire firms that are experts in their fields. One of the most effective ways to build your firm’s expertise—and, in turn, your reputation, visibility, growth, and profit—is by promoting your goto staff as something we at Hinge call Visible ExpertsSM.

Visible Experts are those individuals with strong expertise in a particular niche that attain the visibility required to reach critical mass and to become widely known for their mastery of a topic.

In order to understand the impact of Visible Experts on their firms, we conducted extensive research and interviews with Visible Experts and buyers of professional services. We found that even those expert individuals with the lowest level of visibility had a substantial impact on their firm’s ability to build a strong brand, experience growth, and attract new leads. Perhaps most notable, we discovered that Visible Experts were able to command higher billing rates—with buyers being willing to pay up to 13 times more for the highest level Visible Expert.

Building your brand by establishing expertise is one proven effective way to get results and attract better clients and partners. The bottom line is: Accidental marketing does not work. Instead, intentional marketing that leverages the combined strengths of online and offline strategies is essential to connecting with the right target audiences. Utilizing these brand-building strategies and promotional channels is the best way to boost your marketing ROI and increase the visibility of your firm.

About the author: Sylvia S. Montgomery, MBA, CPSM, has over twenty years experience delivering marketing, branding, and strategy to her clients in the A/E/C industry. She provides a complement to the broad-range view and the narrow focus areas of the industry through frequent outreach to many key stakeholders and thought leaders.

About the Society for Marketing Professional Services
The Society for Marketing Professional Services (SMPS) is the only marketing association offering A/E/C professionals the network, knowledge, and training to build business. SMPS offers members professional development, leadership opportunities, and marketing resources to advance their careers. SMPS represents a dynamic network of 6,300+ marketing and business development professionals ranging from architectural, engineering, planning, interior design, construction, and specialty consulting firms. The Society and its chapters benefit from the support of 3,650 design and building firms, encompassing 80% of the Engineering News-Record Top 500 Design Firms and Top 400 Contractors. Learn more about SMPS at www.smps.org.

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Mediation: The Hidden Weapon in Your Litigation Toolbox

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By Seth Smiley

When you think about winning a lawsuit, it can play out like some scene from a famous movie. You might picture a long, heated court battle, complete with dramatic testimony and plot- twisting admissions that climaxes with a nail-biting announcement by the jury of your victory in the case!.
But, in reality, most lawsuits are settled well before trial.

Given this fact, your legal toolbox needs to have a sharp and ready instrument that can get the job done: mediation. Why should you consider this form of alternative dispute resolution over the more traditional and familiar track of litigation? Here at Wolfe Law, we frequently help clients answer this question, and more.

“The True Objective of War is Peace” – Sun Tzu, The Art of War

Unlike the adversarial nature of litigation, mediation allows you to settle a dispute using a neutral, third-party called “a mediator.” The mediator’s goal is to bring you and the other party to an agreed- upon settlement in an amicable and non-litigious manner. You should always consider mediation as a legal option because of the following benefits.:
• Cost
• Procedure
• Relationship

Cost - Unsurprisingly, the most important and determining factor for many of our clients is cost. We encourage our clients to consider that, in addition to attorney bills, parties may need to cover the costs of court hearings, experts and trial, and perhaps even a settlement fee. Even cases that end in settlement have often already racked up hefty fees in the pre-trial discovery process. These are funds coming either directly out of your pocket or those pockets that could have been directed to your future compensation.

Luckily, parties in a disagreement have more control over the costs associated with mediation. The only cost ordinarily associated with mediation is the mediator’s hourly rate, which is usually equally divided between the parties. As meditation generally only lasts a few days, this may result in significant savings over a long, drawn- out trial.

Procedure – Litigation can be logistically challenging. For instance, when at court, your claim may drag on for months or even years, whereas in meditation, you and your adversary will determine the timing. Additionally, in litigation, most of the information submitted to the court will be incorporated into the public record, whereas in mediation, almost all information remains confidential. Furthermore, in litigation, a judge or jury will decide the ultimate solution to your claim, whereas in mediation, you and your adversary --, in conjunction with your mediator --, will have the opportunity to communicate and negotiate your terms. Remember: – Iif mediation fails, you can always head to court later.

Relationship – Whereas litigation is an adversarial process, mediation is usually a peaceful and friendly one. Though some people excel in conflict, most find the litigation process rather stressful. Mediation can serve as a platform for dispute resolution that will avoid the hostile and adversary nature of litigation. In cases between family members, for example, damaging a healthy relationship can be socially and emotionally devastating. Additionally, many of our cases involve companies that may want to pursue future business opportunities together.

The Right Lawyer Can Make All the Difference in Mediation
Though mediation can reap many rewards, it may not be the right course for you for a variety of reasons, and. Mediation may not provide you with the ultimate result that you initially desired. Furthermore, great caution must be taken when picking a mediator. An unqualified or unreliable mediator can lead to disastrous results. On the treacherous road to recovery, consulting a law firm with the right experience is critical.

This article was reprinted with permission from the Wolfe Law’s Legal Blog. You can access more articles like this by going to http://www.wolfelaw.com/blog/
You can view the original article by going here: http://www.wolfelaw.com/2015/08/mediation-the-hidden-weapon-in-your-litigation-toolbox/

About the Author:
Seth Smiley is an attorney licensed to practice in Louisiana and California. He is the managing partner at Wolfe Law Group.

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Drone Use in Construction Expected to Increase in 2016

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By Paul Levin

Introduction

A survey report released by WPL Publishing Co. in February 2016 shows interest in drone use on construction projects growing rapidly from 2014 to 2015. 

As expected, the most popular use is aerial photography for marketing and project documentation. The year 2015 was a transitional year for drones for several reasons: major drone technology improvements, widespread access to sales and service, and the granting of exemptions allowing commercial use in the national airspace. If 2015 was a transitional year, 2016 is expected to be a breakout year.  Read on to find out what the fuss is all about and how drones may be in your future.

Drone Technology

Most drones, also known as unmanned aerial vehicles (UAV) or unmanned aerial systems (UAS), are built in a “quadcopter” format comprised of four rotors.  They are typically controlled by a hand-held radio transmitter, but some can be controlled by a smartphone or tablet. 

Almost all drones are capable of carrying a tiny camera to either capture photos or videos, as well as a camera that can transmit live video feed, known as “first person view.” More sophisticated drones carry higher quality cameras that can also transmit a live video feed.  However, the camera is not always pointed in the direction in which the drone is flying.  

A category of drones that have become very popular is the “prosumer” drone.  Popularized by Chinese manufacturer DJI, the Phantom series of drones is capable of carrying a 1080P high-definition (HD) camera, either of its own brand or the popular GoPro camera. The camera is typically mounted on a 3D “gimbal” that stabilizes the camera while the drone is flying, or, if in a hover, making constant corrections to offset the effects of wind.

Technological improvements for drones in 2015 included: improved controls, better performance, longer flying time, enhanced camera quality, and improvements in live-feed video capabilities.

Another Chinese company, Yuneec, recently introduced its very capable “Typhoon” quadcopter, which has a built-in 7” screen for live-view (DJI relies on the user supplying an IOS or Android device).  And American manufacturer 3DR introduced its “Solo” drone, with advanced flight controls and direct access to GoPro camera functions, as well as other features aimed at getting first-class photos. 

All three of the brands mentioned above became available in “big box” stores, traditional hobby shops, and drone specialty stores in 2015.  Improved availability has also been a factor in the increased use of drones.

The technology improvements in 2016 are even more impressive. Retractable landing gear was introduced in 2015 on the DJI “Inspire” model, prompting other drone manufacturers, including Yuneec, to offer retractable landing gear. This feature provides the capability for the camera to have a full 360-degree field of view without obstruction.  Also coming from Yuneec and others is collision avoidance capability, most likely using Intel’s RealSense technology. Finally, expect to see more flight control capability to reduce flyaways and other problems due to operator error, such as geo-fencing to set boundaries that limit where the drone can fly. 

The Construction Use Cases

As noted in the introduction, aerial photography is the main reason for construction companies to use a drone. The no-brainer application is for those companies that already employ a helicopter service to take photos; using a drone is more convenient, less costly, safer, and provides higher quality photos.

On projects that rely on helicopters, the cost/benefit of using a drone is obvious: helicopters are expensive and risky.  In addition, according to the Jacksonville District of the U.S. Army Corps of Engineers, “The UAV program provides high resolution aerial imagery, on demand. The images are much higher resolution than traditional aerial photography.” 

The survey mentioned earlier found 76% of operators using drones on a construction project use them for tracking job progress. The advantage of using a drone for this purpose is that, from start to finish, the drone can capture unobstructed views from one or more aerial vantage points.  The drone can be programmed to take the same photos each time it flies in order to demonstrate progress from one period to another, or to build a time-lapse history of a project. This first-hand knowledge is key to the construction manager staying on top of all activities.

The second most popular use, at 66%, is photos for marketing.  This category includes:
• pre-construction photos for estimating and developing proposals
• aerial photography of completed projects for the purpose of showing properties in attractive perspectives or to create dramatic videos
• for multi-story new construction projects, taking photos from different floors and directions to show prospective tenants the views they will see when the project is complete
• working with clients to view existing buildings or new projects to make design decisions on building locations, landscaping, and renovations

Other uses for drones include inspection of areas not readily accessible, for logistics and production planning during construction. Drones can also be used for safety review and monitoring, for surveillance, for mapping and surveying, and for laser scanning in order to develop building information models (BIM). 

One use not yet seen is for transporting materials.  It is foreseeable that one day drones can be used to save money in transporting small payloads of parts, supplies, and materials on high-rise projects and on vertical construction. 

The Elephant in the Room – The FAA

What is preventing more widespread use of drones in construction, as well as real estate, farming, and other industries, is the Federal Aviation Administration (FAA).  Current FAA regulations prohibit the use of drones for commercial applications.  Individuals are required to apply for a “333” exemption. 

By law, any aircraft operation in the national airspace requires a certified and registered aircraft, a licensed pilot, and operational approval. Section 333 of the FAA Modernization and Reform Act of 2012 (FMRA) grants the Secretary of Transportation the authority to determine whether an airworthiness certificate is required for a UAS to operate safely in the National Airspace System (NAS).

Many users, however, are loosely interpreting the FAA regulations. Some are saying that if they fly a drone on private property, take pictures only for personal use, remain under the 400’ ceiling, and are not charging for the services, then that is not commercial use, and falls into the “hobbyist” category. This is a risky proposition and violators can receive hefty fines. A number of the respondents have expressed concern about the FAA requirements and have ceased or limited the operations of drones on construction sites until such time the FAA issues new regulations. 

FAA Proposed Rules

In early 2015, the FAA issued “proposed rules” for public comment.  Under the proposed rule, the person actually flying a small UAS would be an “operator.” An operator would have to be at least 17 years old, pass an aeronautical knowledge test, and obtain an FAA UAS operator certificate. To maintain certification, the operator would have to pass the FAA knowledge tests every 24 months. A small UAS operator would not need any further private pilot certifications (i.e., a private pilot license or medical rating). The new regulations are expected to be released by summer of 2016.

FAA 333 Exemption Status

While the public awaits the FAA’s proposed new rules easing restrictions on using drones, the number of construction companies applying for and receiving FAA’s “333” exemptions under the current regulations continues to rise. The fact that this exemption requires the operator to have a pilot’s license demonstrates that the value from using drones is worth the trouble and cost.

To date, more than 3,300 exemptions have been issued.  Based on a search at the FAA website, more than 440 exemptions were issued for the express purpose of use on a construction project. The applicants included construction firms, utilities, or industry service providers. This includes those specifically offering mapping, surveying, imaging, engineering, geospatial analysis, multi-spectral imagery, photogrammetry services, and data collection and inspection for construction. The same search found that, for more than 1,000 of the approved exemption requests, a full 33% mentioned “inspection” as a stated use. 

It’s clear that drones are clearly providing beneficial use on construction projects, particularly for surveying, mapping, inspection, and aerial photography. In the U.S., at the time of this report, the FAA rules on commercial applications are clearly holding back more widespread use. 

While some contractors are complying by obtaining an FAA exemption or using service providers, others are flying drones at their own risk. For those on projects located on remote sites or otherwise not readily accessible or visible to the public, drone use is considered less risky. Assuming the proposed FAA rules will loosen up the restrictions, construction professionals who anticipate wanting to use drones are encouraged to obtain one and practice in open areas in compliance with FAA regulations. 

In the interim, consider hiring a service provider. In March 2016, WPL Publishing Co. will unveil its online Drone Services & Equipment Directory for the construction industry, with the purpose of helping A/E/C professionals locate service providers to assist them with their drone needs. 

Visit ConstructionProNet.com and sign up for the free newsletter to receive updates on the directory and ongoing news on drones in construction.

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Eight Things You Need to know About New Construction Arbitration Rules

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By Garret Murai,

I just finished a construction arbitration this past week. Coincidentally, on July 1, 2015, tThe American Arbitration Association (“AAA”) just implemented their newly revised Construction Industry Arbitration and Mediation Procedures.

I’m not a big fan of arbitration, which, from my experience, doesn’t deliver on its promise of better, faster, or cheaper, and ends up being pretty much the same thing as trial without the benefit of discovery, the rules of evidence, or appeal ability.

The AAA is trying to change all of that though, and announced in a news release announced that its new “Rules” directly address preferences of users for a more streamlined, cost-effective, and tightly managed arbitration process that avoids the high costs of litigation.” This makes you wonder whether they had to survey their “users” to come to this realization. But I digress.

With the AAA’s new Rules come eight new changes, as follows:
1. Fast Track Procedures: Newly revised Rule F-1 now applies to two-party cases where no party’s claim or counterclaim exceeds $100,000. Under old Rule F-1 the monetary cap was $75,000.

2. Consolidation and Joinder: Newly revised Rule R-7 now requires that requests for consolidation (of other arbitrations) or joinder (of parties) be submitted prior to the appointment of an arbitrator, or within 90 days of the date that the AAA determines that all administrative filing requirements have been satisfied, whichever is later.  Under old Rule R-7 there was no deadline for requests for consolidation or joinder.

3. Preliminary Management Hearing: Newly revised Rule R-23 provides that the timing of a preliminary management hearing is “[a]t the discretion of the arbitrator” although it “should be scheduled as soon as practicable after the arbitrary has been appointed,” and provides that at the hearing “the parties and arbitrator should be prepared to discuss and establish a procedure for the conduct of the arbitration” and refers to new Rules P-1 (General) and P-2 (Checklist) for specific issues to be considered. New Rules P-1 and P-2 modify the issues to be considered under old Rule R-23.

4. Emergency Measures of Protection: New Rule R-39 allows a party to apply for emergency relief, such as a temporary restraining order. It requires the AAA to appoint a single emergency arbitrator within one business day of receipt of the application, and requires the emergency arbitrator to establish a schedule for consideration of the arbitrator within two business days of appointment.

5. Pre-Hearing Exchange and Production of Information: Newly revised Rule R-24 provides that an arbitrator “on application of a party or on the arbitrator’s own initiative” may:
(a) Require the parties to exchange documents on which they intend to rely at the hearing.
(b) Require the parties to update their exchanges as such documents become known to them.
(c) Require the parties, in response to reasonable document requests, to make their documents available to the other party.
(d) Require the parties, when documents are maintained in electronic form, to make such documents available in the form most convenient and economical for the party producing those documents unless the arbitrator orders otherwise.

Old Rule R-24 simply provided that at the request of any party or at the discretion of the arbitrator, the arbitrator could direct the production of documents and other information and the identification of any witnesses to be called.
6. Mediation: Newly revised Rule R-10 provides that, in all cases where a claim or counterclaim exceeds $100,000, the parties shall mediate their dispute, subject to a party’s ability to “opt out” of mediation unless their agreement requires mandatory mediation. Under old Rule R-10 mediation was voluntary by the parties.

7. Dispositive Motions: New Rule R-34 permits an arbitrator, upon prior written application, to consider motions that dispose all or part of a claim, or narrow the issues in a case.

8. Sanctions: New Rule R-60 permits an arbitrator, upon a party’s request, to order appropriate sanctions if a party fails to comply with its obligations under the Rules or with an order of the arbitrator.

About the Author:
Garret Murai is an attorney for Wendel, Rosen, Black & Dean LLP. He has been recognized as a Super Lawyer and Rising Star in the area of Construction Litigation, and is the founder and Editor of the California Construction Law Blog, providing an informative yet wry look at construction law in California.

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Copyrights in Architectural Drawings: Courts make it Tougher

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By Werner Sabo & Shawn Goodman

In the past few years, some courts have made it increasingly difficult for architects to win copyright infringement claims. There appears to be skepticism about what is original and, therefore, what is entitled to protection.

To review, a work is given copyright protection from the moment it is put into a tangible form. For instance, when the architect draws some lines on a piece of paper, this expression is automatically given copyright protection. An idea is not given copyright protection until it is put into a tangible form, such as a drawing. The drawing is the expression of the idea and is given copyright protection by the Copyright Act, unless the drawing is not original. If the architect merely sketches what someone else has already drawn, the element of originality is missing and there is no protection.

One of the elements of a copyright infringement action is “copying.” If you have not copied someone’s work, you have not infringed. Since direct copying is often difficult to prove, courts have come up with a method of proof that consists of two elements: access and substantial similarity. To have a chance of prevailing, you must show that the alleged person had access to your work (i.e. the accused’s client was also your client and had copies of your drawings), and you must demonstrate that the work is substantially similar to yours. Of course, substantial similarity is subjective. Courts have recently made this a much more difficult problem.

A case in point is Nova Design v. Grace Hotels. The plaintiff was an architect who had designed a Holiday Inn Express. The owner and architect had a falling out and the owner hired another architect to complete the project. The original architect sued the owner and others for copyright infringement. The trial court granted summary judgment to the owner and the appellate court affirmed.

The problem with the architect’s claim was the failure to identify what was original in the drawings and, thus, protectable under copyright law. The design was based on prototype drawings prepared by Holiday Inn. Those drawings, of course, did not belong to this architect. He could claim that elements of his drawings were original to him, but even then there are limits:
• For instance, the architect added an additional floor to the prototype. The court did not find this to be original and did not deserve copyright protection.
• Other elements claimed to be original were from requests of the owner accompanied by graphic designs. The court did not find creative element to these features.

Since the aspects of this architect’s designs that went beyond the prototype were not sufficiently original to qualify for copyright protection, the claim for copyright infringement failed.

In another case, Zalewski v. Cicero Builders, an architect sued for copyright infringement, asserting he had created and licensed various designs for colonial homes to two construction companies, but the designs were infringed upon when contractors used them after the license expired. The architect alleged the defendants, using other architects to create infringing designs, had copied the overall size, shape, and silhouette of his designs, as well as the placement of rooms, windows, doors, closets, stairs, and other architectural features. The trial court granted judgment in favor of the defendants and an appeal followed.

To find infringement, the appellate court explained, there must be wrongful copying. Not every portion or aspect of a copyrighted work is given copyright law protection. Copying those aspects of a work is not wrongful. In this case, the defendants copied only the unprotected elements of the architect’s designs. The court conducted a lengthy examination of the design and explained why most of the elements deserved no copyright protection. For instance, many of the similarities between the plans are a function of consumer expectations and standard house design generally. Since the design was for a colonial home, most of the elements are features of all colonial homes, such as the placement of the front door in the middle of the house.

The court also stated “plaintiff makes no attempt to distinguish those aspects of his designs that were original to him from those dictated by the form in which he worked.” It further stated, although the plaintiff had undoubtedly spent many hours on his designs, as long as the plaintiff adhered to a pre-existing style, his original contribution was “slight—his copyright was thin.” The court thus set a high standard for proving such a copyright infringement case.

While other courts might make it less difficult for architects to prove copyright infringement, there are some lessons to be learned from these cases. First, proving infringement where the design is of a “standard” house may be extremely difficult, and filing such a suit should be undertaken only after very careful consideration. If, on the other hand, the design is novel or even unique, it would likely be much easier to convince a court an infringement has taken place. There must be an extensive and thorough analysis of what can be considered original and which of those original elements were copied or copied and modified.

This list of similarities and differences must then be viewed as one of these courts might view it before a decision is made to bring a copyright action. It is likely that future courts will expand on these decisions and a definite trend will be established, either favoring copyright protection for architects or gutting such protection to a significant degree.

About the Authors:
Werner Sabo, FAIA, FALA, is an architect, attorney, and partner at the Chicago law firm Sabo & Zahn. He is the author of Legal Guide to AIA Documents, now in its fifth edition, published by Wolters Kluwer. Sabo can be reached at wsabo@sabozahn.com.
Shawn Goodman is an attorney at Sabo & Zahn. He can be reached at sgoodman@sabozahn.com.

This article was originally published in ConstructionAttorneyBlog. You can access the blog and more articles like this by going to www.constructionattorneyblog.com

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Filing a Mechanics Lien: the Step-By-Step Guide to Getting Paid in the Construction Industry

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How can people in the construction or building supply industries secure their accounts and virtually guarantee their companies will get paid on every project?
By filing a mechanics lien claim. These lien instruments can make all the difference between solvency and bankruptcy, which now begs a critical question: How do you file a mechanics lien claim?  Here are some step-by-step instructions.

Step 1:  Figure Out Your Deadline and Give Yourself Time
Delays in receiving payment on a construction project can be caused by any number of common reasons, such as project delays, contractual pay-when-paid clauses, misappropriation of funds, and more. It is sometimes tempting to put off filing your mechanics lien claim until these issues resolve themselves, especially if your customer is promising future payment.
Understand that you only have a limited amount of time to file your lien claim.  Know exactly where this deadline falls on your calendar, and give yourself enough time to get the claim filed.

Discovering your mechanics lien filing deadline is easy.  Deadlines and rules vary by state. You can find the rules for your state at http://www.zlien.com/mechanics-lien/resources-and-faqs/
Giving yourself extra time to file your lien claim is critical, because a lot can go wrong in the filing process. You can find a few examples at: http://www.zlien.com/articles/3-things-that-go-wrong-when-you-try-to-file-a-mechanics-lien-at-the-last-minute/ You don’t want to miss your deadline because of a technicality or recorder delay.

Step 2: Get a Good Mechanics Lien Form and Fill It Out Completely
The next step is the most obvious one: draft your mechanics lien claim. While a necessary step in the process, it is certainly not an easy one.
First, you’ll need a mechanics lien form. There is no such thing as a universal mechanics lien form; be very concerned if you find a lien form on the internet that purports to apply to multiple states or any state. The correct form will vary significantly state-by-state, and may even vary depending on the type of project you’re furnishing to and your role in the project.

Having a blank form is only the first step. The second step is getting the form filled out completely and accurately.
Mechanics lien claims must be filled out exactly right.  One of the most common mistakes is that the lien claimant fails to properly identify itself (yes, really) as a sole proprietor, or as an owner doing business as a DBA. Another common mistake is to fail to properly identify the project jobsite with a legal property description.

Here’s an incomplete list of mistakes that can lead a country recorder to reject your lien:
• Page margins
• Font size and type
• Placement of specific text on the page
• Incorrect legal description
• Minor typo
• Insufficient legal fees (of less than $1)
• Incorrect payment type (business checks, attorney checks, money orders)
• Special requirements for the first page of the document are missing

Step 3: File Your Claim
Every mechanics lien claim must be filed with a recording or clerk office. Regardless of when you finish drafting or serving your lien claim, the date of actual filing is the date that dictates whether your claim is filed on time or not.

Bringing your lien claim document to the recorder and paying a filing fee is fairly easy, but you’ll want to be careful that you bring your claim to the correct recorder.  Make sure you don’t file a claim in the incorrect county or with the wrong recording office.
Also, each county recorder has its own unique requirements for font sizes, margins, paper sizes, and even things like how the lien can be delivered to them. 

Step 4: Serve Your Lien and Monitor Foreclosure Deadline
You’re almost done!  After your mechanics lien is prepared and recorded, you’ll need to get the claim served on the property owner.  Don’t delay – this service requirement may have to transpire within a timeframe of as little as 5 or 10 days.

Most states allow you to serve the property owner via U.S. Certified Mail. Other states (like Pennsylvania, for example) require personal service by county sheriff, who may take their own sweet time.

Once your mechanics lien is filed and served, it’s completely done – but beware, the lien claim will not last forever.  You’ll want to monitor the mechanics lien foreclosure deadline and make sure you either get paid or take further foreclosure action before the lien expires.
Want to have your mechanics lien filed correctly? Zlein can provide the help you need:
http://www.zlien.com/articles/file-a-mechanics-lien-how-it-works-with-zlien/

Zlien provides software and services to help building material supply and construction companies reduce their credit risk and default receivables through the management of mechanics lien and bond claim compliance. You can connect with Zlien on Twitter, LinkedIn and Google+.
This article provided by Funding Gates, maker of the #1 AR management app for QuickBooks and Xero users"

About the Author:
Scott Wolfe Jr. is the CEO of Zlien and the founding author of the Lien Blog, a leading online publication about liens, security instruments and getting paid on every account. Scott is also a licensed attorney in six states with extensive experience in corporate credit management and collections law, with a specific emphasis on utilizing mechanic liens, UCC filings and other security instruments to protect and manage receivables. You can connect with him via Twitter, LinkedIn and Google+.
- See more at: http://blog.fundinggates.com/2013/02/filing-a-mechanics-lien-the-step-by-step-guide-to-getting-paid-in-the-construction-industry/#sthash.qEei9OFb.dpuf

"Funding Gates, maker of the #1 AR management app for QuickBooks and Xero users"

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Achieving Profit from Lump Sum Projects

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Lump sum work is commonly available for the most competitive contractors, both in design-bid-build and design-build delivery models.  The formula for a contractor to earn profits through lump sum work can be boiled down to a ten-step formula.  The first five steps occur up to the point of bidding.  The last five take the project from award across the finish line to completion. 
Here they are:

1. Smart Project Selection
It should go without saying that picking the right projects to chase is the first step on the road to project profit.  Suffice it to say that if you pursue projects where the level of competition is manageable and your firm has competitive advantages, your chance of award and ultimate profitability go up dramatically.

2. Competitive Subcontractor Selection
Many contractors rely heavily or exclusively on subcontractors to perform construction trade work.  It is essential to get good competitive pricing and performance from subs if you hope to get low on bid day and deliver a profitable project outcome.  Here are some tips that help achieve that goal:
• Identify enough of the right subs.  For each category of trade work on which you are taking competitive bids, you ideally need three or more qualified subs in the relevant geography that are experienced in that market niche, have completed projects of that size, and that have both the capacity and interest in bidding. 
• Get acquainted early.  Don’t wait until the construction documents are on the street to meet the subcontractors you will need.  Visit each other’s offices, and consider a meal or social event together.  Perhaps the strongest way of building relationships is to enter the market and start taking subcontractor bids. 
• Prequalify the subs.  In many markets it is now common that prime contractors will prequalify their subs.  This usually begins with a questionnaire to which a sub responds with various types of information, such as:
◦ Identifying and contact information
◦ Licensing
◦ Geographic range of work
◦ Types of work that the firm performs (often by CSI classification)
◦ Minority/Disadvantaged business status
◦ Safety record
◦ Financial information
◦ Bank, surety, and other references

The prequalification can be done solely by the contractor or with assistance from a contracted third party.  Software solutions for help in managing the prequalification process are now available.
• Work collaboratively.  If preconstruction services are involved, get help from the sub in providing them.  Sometimes a sub will give free or discounted services in the way of conceptual estimating or design-assist in the hopes of getting the eventual award.
• Write careful scopes.  When you define the scope on which the sub will be basing its price, be thorough and clear. 
• Push for favorable pricing.  You need to get low numbers from the subs.  Emphasize in communications the importance of getting low.  Get commitment from the sub that getting low is key, and they will give you pricing at least as favorable as that which it offers to other prime contractors.  Consider asking key subs to bid exclusively for your team. 
• Handle the bidding process fairly.  If you are conducting a competitive bidding process among subcontractors, respect the subs’ interest in making that process even-handed. 
• Use subcontract forms that are tough but fair.  There are reasonable standard forms of subcontract available for purchase, including those published by AIA and ConsensusDocs. For design-build work, look at DBIA forms.  Using these forms can be helpful in assuring a subcontractor that the general contractor is committed to being reasonable, and there is no need to scour the standard published terms for “gotcha” provisions.  Most general contractors, however, tend to use their own forms. 
• Pay promptly when due.  For most subcontractors, the prompt receipt of payment when due is a key ingredient of trust, and adds to their willingness to work with a prime contractor again.  Know the payment rules and expectations for the jurisdiction in which you are working.
• Administer subcontracts fairly.  For example, if scope changes are made, the subcontractor is entitled to an equitable adjustment in price and possibly time.  Sometimes, particularly in design-build projects, these change orders can be merited irrespective of whether there will be a recovery from the owner. 
• Reward capability.  Some subs do barely enough to get by; others invest in equipment, systems, and personnel so that they can perform at an impressively high level. 
• Reward loyalty.  Subs that stick with you in tough times and stretch to make things work on a tough project are a tremendous asset.  Recognize and cultivate the strategic trust relationship with such firms. 

3. Sound Estimating for the Full Project Cost
We have talked about how to encourage favorable pricing from your subcontractors, which may well account for the major share of the bid price.  In every case, however, there are other costs which need to be estimated, beyond just adding up the low sub quotes.  Sound estimating practices and judgments are needed, and here are some pointers for how to get there:
• Use a consistent system.  Estimating benefits greatly from an organized, thorough approach. Ideally, all estimators in the company should use the same forms, templates, and processes. 
• Identify the gaps.  Estimators should be alert to identify costs that are “between the lines,” that is, costs for elements that are implicit in the design and necessary to achieve the specified outcome even though not specifically enumerated in the bid documents. 
• Develop a cost database.  Detailed records of what prior, similar projects actually cost is very helpful to effective estimating.  Yet, reliable records of such costs are difficult to come by.  A company that builds its own database of such costs over time can have tremendous advantages in reliability and confidence with respect to future estimates.  Ideally, such a database includes not only the overall cost of the project, but also cost details for various project components. 
• Consult industry references.  There are various industry reference guides that help in developing price estimates.  Resources available through the BNi Building News publishing house include RS Means cost data and Sweets Cost Guides.
• Use technology.  At one time, estimators needed to study paper drawings to take off quantities and record the results on paper.  The advent of spreadsheet software, such as Excel, offered advantages, but today’s technology can benefit estimators much further still. 
• Seek out the needed expertise.  The effectiveness of an estimate is much enhanced by receiving expert input.  An experienced estimator may not need much help to price a conventional spread footing or framing system, but for complex or unusual project elements, outside pricing help should be sought, particularly from subcontractors or suppliers that specialize in that type of item.  • Know the project requirements.  Read the plans, specs, and other front-end documents and study them at a level of detail. 

4. Clever Cost-Reduction Strategies
On DBB work, getting low on bid day may depend on coming up with a cost-effective plan, better than what the competitors contemplate, for executing the project.  Of course, you need to be sure you can make it work … 

5. Prescient Fee-Setting
Contracting has always been a very competitive business and, in the tough economy of recent years, it has been even more so.  That makes consideration of the fee all the more important.  The trick is to set the fee at a level that allows you to win the price competition while still making at least a reasonable profit.  Unfortunately, the competitive bidding system does not always lead to reasonable profit.  If there is a lot of competition for a job, some firms may bid below your cost – possibly even below their own cost.  Thus, if you put a reasonable profit on the work, or even a meager profit, you still may not be the low bidder.

Short of illegal collusion, there is no way to know for sure what competitors will bid.  Maintaining data from prior bids can be helpful, nevertheless.  Assuming you have access to the bid results, as in the case of most public work, calculate the markup that each of the other competitors included in their bids.  You won’t know for sure that their base cost estimate was the same as yours, but doing the calculation based on that assumption is better than not evaluating the data at all.

There are many factors for determining what fee to put on a lump sum project.  Here are some of them:
• The size of the project - as a gross generalization, smaller projects need higher margins to be worth the effort.  Particularly large projects may have higher margins, however, if there are relatively few competitors able to handle a job of that size.
• The level of risk in the project - this would include all different varieties of risk, including:
◦ project complexity
◦ aggressiveness of schedule
◦ unusual technical or safety challenges
◦ severity of liquidated damages or other contract remedies
• The availability of staff and other resources to perform the project.
• The strategic importance of this particular customer, whether as a new customer or as a source of continuing business.
• The anticipated level of competition, including the number of competitors, the expected aggressiveness of their pricing, and the strength of your firm relative to the competition on any non-price evaluation factors.
• Whether this project involves a customer, geography, or niche that is relatively new for your firm.
• How well your firm has been doing in acquiring work in the current period sufficient to meet your business plan.
• The tightness of the estimate, and what contingency (if any) it includes.
• The company and business unit financial targets.

6. Effective Project Cost Management
Essentially everything else that the contractor’s project team does to bring in a profitable lump sum project can be covered under one point: effective project cost management.  Here are some of the key ingredients:
• Design and pre-construction.  Under traditional delivery, there is no pre-construction period for the lump sum contractor.  In design-build, however, there can be a lump sum award followed by a design and pre-construction phase.  The design-builder should implement effective cost management strategies during this phase.  Most importantly, the design-builder should adopt a design-to-cost methodology.  This means setting cost targets for specific elements of the design and tracking the progress of the design. 
• Buy-out.  Frequently, a major share of the project cost is incurred paying subcontractors.  While the subcontractor pricing may already be established to some extent by bids that were received before project award, the buy-out process may present opportunities to enhance profitability.  Often this involves adjusting the scope that is proposed for award to a given subcontractor so as to reduce cost overall. 
• Cost budgeting and tracking.  The estimate which takes place prior to setting the lump sum price must transition, after award, to a project budget.  Reports should be generated at least monthly reflecting the status of each project element relative to budget. 
• Cost control.  It is one thing to monitor costs compared to budget by studying a budget variance report and understanding the trends that it depicts; but another thing altogether to control costs.  With subcontracts, this means keeping to a minimum the circumstances in which subcontractors will receive extra payments unless a corresponding change order has been received from the owner. 
• Schedule management.  If sequencing and scheduling of the work is done thoughtfully, it can lead to cost savings.  If the job can finish early, that means lower general conditions costs.  Conversely, inefficient scheduling leads to stacking of trades or other conflicts. 

7. Productive Field Operations
For a contractor self-performing work, productivity is critical.  The estimator can come up with a great production rate which the trades are able to achieve … in theory.  Whether they actually meet or beat the budgeted rate depends on many factors, including the following:
• Labor force.  There are many factors that can influence labor force motivation and productivity.  Unions often claim to have better training, and some of the union trade workers can be excellent, but training and skill can and does, of course, vary significantly from worker to worker. 
• Working conditions.  Productivity can be heavily influenced by working hours, weather, and interference from other trades. 
• Supervision.  Some foremen and superintendents have the “right stuff” to achieve productive work by the trades; others don’t. 
• Quality and rework.  If the work is done right the first time, it is remarkable how much better the productivity becomes. 
• Resources and decisions.  Work is often delayed due to unavailability of materials or other supporting resources.  Placing orders early enough for long-lead-time items is critical.  Having the right equipment to do the job is also a key factor in achieving productivity and quality. 

8. Leveraging Change Orders
It is conventional wisdom that contractors must bid narrow margins to win the work initially, but then they get rich on the change orders.  It is far too common for contractors to find that they lose money on changes.  A disciplined approach to change management is therefore important if the contractor is to at least hold its ground and potentially have an opportunity to enhance the fee.

9. Prudent Cash Flow Management
Even if a project will be theoretically profitable by the time it is done, firms must be mindful of whether a project will generate enough cash to pay for itself as it goes along.  If not, the business must be ready to supply cash as needed to pay the bills as they arrive, and keep the project moving along toward the pot full of profit at the end of the rainbow.
Accordingly, it is smart for a contractor to create a cash flow forecast for each major project.  Here are the key variables that affect the cash flow for a given project:
• Billing terms.  The contract typically defines how and when the contractor is entitled to bill. 
• Retainage.  Often the contract will entitle the owner to hold back a percentage of the billings submitted by the prime contractor.  Commonly this is 5 or 10% starting at the beginning of the job.
• Labor.  Payment for labor can be one of the largest and quickest components of cash out-flow. 
• Materials.  When materials or equipment are purchased for a project, the vendor’s policy will determine when the cash payment must be disbursed. 
• Subcontracts.  Prime contractors can normally ease their cash flow challenges by subcontracting in lieu of self-performing.  It is typical that the subcontractor will accept at least “pay when paid” terms, meaning that the prime contractor will not pay the sub until the owner pays the prime. 
• Change orders.  In theory, change order documentation is fully executed before the contractor does the associated work.  As noted above, the reality is often quite different, with work proceeding on a “handshake” or some other kind of written or non-written approval (or no approval at all!) with pricing to be established later.  Contractors usually cannot bill for change orders until the paperwork is completed.  That may, therefore, delay the receipt of cash for many months after the change order work was actually done.
• Disputes.  If the contractor disagrees with the owner over an issue in the field, it may have little practical alternative but to do the work and pursue relief under the contractual disputes process. 

10. Avoidance of Major Risks
As noted, lump sum work is very competitive.  If the fee on a good job is only a few percentage points, then it doesn’t take much of a hiccup to wipe out that fee and put the project’s profit into negative territory.  In fact, it has been my experience that one bad job can wipe out the fees associated with ten or more normal, good jobs.  Thus, a critical success factor for lump sum work is the ability to avoid major risks.

This is an excerpt from the book, “Profit Risk and Leadership”, the definitive reference for anyone who leads or does business with a 21st century construction firm. In this book, Tom Porter shares practical solutions that have been proven to work in the real world of today’s construction industry. Find out more about “Profit, Risk and Leadership” at www.bnibooks.com.

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Determining Overhead and Profit Margins in Construction

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By Diane Dennis, The Contractor’s Group

The essential first step before starting any construction estimate is to determine your overhead and profit margins. Entire books have been written on this simple but essential procedure. So pay attention, as overhead and profit margins can make or break your construction business.

Determining profit is fairly easy because it is a percentage of the overall cost of the job. Determining your overhead, on the other hand, can be a bit trickier, so let's start there.

Basically, overhead is what it will cost you to run your business. Supplies, time spent doing takeoffs and bidding projects, postage, electricity, etc., all fall under overhead.

Every business has at least some overhead, and a business will not survive if the overhead is not included or is not figured as accurately as possible. (If you don't have money to buy paper you can't write up proposals. If you don't have electricity you can't use your computer or turn on your lights. And so on...)
Going on the assumption that you'll be performing your own work for right now (overhead when using employees is discussed further down), to get an idea of how to calculate the overhead figure, first you need to decide what the hourly wage is that you'll be paying yourself. (Hint: pay yourself at least what you would pay an employee, because you went into business to make money, not to give away your own personal expert labor, for free!)

$20.00 per hour x 40.00 hours per week =$800.00 wages per week

$800.00 wages per week x 4.3 weeks per month =$3,440.00 wages per month

Okay, once you have applied your hourly wageand come up with the total wages per month, then you need to figure out how much it is going to cost your company to pay out that wage, in this case, $3,440.00 per month.


Using sample expenses on a monthly basis, Table Three contains expenses that might be part of your overhead and Table Four shows you what the overhead percentage would be:

$ 15.00 supplies +
$215.00 cell phone +
$250.00 gasoline +
$ 50.00 plan room +
$125.00 liability ins. =
________________________________________$655.00 monthly expenses

$655.00 monthly exp. ÷
$3,440.00 monthly wages =
________________________________________19.00% overhead


Please keep in mind that the numbers provided in all tables are for illustrative purposes only. To arrive at your correct figures, you will need to put your own numbers in place of the examples (as well as add any expenses that you have that are not listed, i.e, warehouse rental, bookkeeping fees, time spent working up estimates and proposals for projects, etc. Make sure you include everything).

Using the above examples, you would have an overhead of approximately 19% of every one of your labor dollars (.19¢ on every dollar). Now, assuming you've already figured out how much material and labor you need for the project you're bidding, you add together your material expenses for the job, your labor expenses for the job, and your overhead, in this case the overhead would be 19% of the labor dollars.

Now we get to figure out your profit margin...
A good starting point would be to attempt to profit $100 per day.
So, if your project will take three days for you to complete, then you want to add on $300 profit. If your project will take five days, then you want to add on $500 profit.

This will be somewhat of a hit and miss until you have been the winning bidder on at least a few projects – which means that $100 per day may not be the appropriate number for your trade.

To figure out what your profit percentage is on each job, divide your profit number by the sum of the material, labor and overhead costs. This number is the percentage of profit you have figured into the job.

Average out your profit percentage, based on the winning bids, and average them out (add the profits of the winning bids together and then divide the answer by the number of winning bids); Use that average percentage for your next round of bidding. Continue on in this manner until you find the right numbers.
When you are not the winning bidder, make every attempt to find out what the winning bid dollar amount was and then go back to your bid to see if you could have submitted that lower price while still making a profit on the job. This is how you fine-tune your numbers to become more competitive in your bids.

Something to watch out for while comparing your bid amount to the winning bid amount: Sometimes a subcontractor will “buy” a job by submitting a very low number (possibly a bid with absolutely no profit). The sub hopes that by “buying” a job, he can show the general contractor what he can do, so that the general will use him on the next project -- but at higher prices.

Be careful, because if you compare your bid to one of those types of bids, you could obviously end up in trouble on a project by bidding it too low.
Also, if you decide to try to “buy” a job by not charging any profit, you could end up in trouble if your labor and/or material goes over, because you have no profit on the job to absorb the overages. That means if your job goes over, you will pay money out of your pocket just to finish the project. Not a very good way to stay in business.

Employees
When hiring an employee to do your field-work (while you stay in the office), you'll want to have as close to 40 hours as possible for your new employee. Since you're planning on working in the office now, you'll need to include your salary in the overhead expenses.

Because your employee will be doing the installing, you'll be paying him the labor money that you would have been paying yourself if you had been doing the work yourself. That means that all of a sudden you aren't collecting a paycheck.

But you need money to live too, right? That's why you add your salary to the overhead list, to make sure you collect enough on each job so that you get paid too, but … keep in mind that, once you add your salary to the overhead list, your overhead percentage will literally skyrocket, which will force you to raise your bids. Depending on how much you need per month to live on, you could easily price yourself right out of the market and not win a single job.

Let's use the example above, with your employee grossing $3,440.00 per month. Now, let's say that you need $4,000 per month, clear, just to keep your bills paid and your family healthy and happy.

Look at what the overhead percentage would now be :

$15.00 supplies $4,655.00 monthly exp. ÷$3,440.00 monthly wage =
________________________________________135% overhead

$215.00 cell phone

$250.00 gasoline
$50.00 plan room
$125.00 liability insurance
$4,000.00  your wage
________________________________________
$4,655.00 monthly total


135%! Well, that's not going to work; you won't win any jobs with that overhead. That's basically equivalent to figuring up the job and then doubling the labor on it. If your competitor bids it at 100 hours and you bid it at 200 hours, guess who's going to get the job?

Looks like you either better seriously cut back on your living expenses or hire another employee!
But wait ... if you hire another employee but don't increase your work load, you've got two employees but only enough work to keep each busy half a week. Two half weeks equal up to one full week, so you're right back where you started, $3,440 in wages (only difference is it's split between two employees now) + 135% overhead.

At this point, it becomes evident that you have to increase your work load at a faster pace than you hire employees. If your employee is getting 40 hours per week, and then you cut your employee's hours in half because you bring on a second employee, chances are soon you won't have any employees (or any groceries for your table).

You've got to have the work available before you hire your next employee. This is where "growing is painful" comes in.
You have to do the extra work until there's enough to keep a second employee busy. Remember when you were "swinging hammers by day and wielding pens by night?

Guess what? Better put your pen down and go find your hammer.

This means you're back to working in the field during the day and working in the office in the evening. You can't bring the next employee on without having a full 40 hours for him (or at least very close to it); otherwise, he'll just go to work for someone else who does have the 40 hours. Or, he'll jump back and forth from company to company and when you really need him he'll already be "committed to someone else", leaving you high and dry when you need him.

Once you've got enough work for two guys, hire your second employee and then get to work putting more jobs on your board. Let's take a look at what your numbers look like when you've got two employees, making the same wage

$15.00
$215.00
$250.00
$50.00
$125.00
$4,000.00
________________________________________$4,655.00
supplies
cell phone
gasoline
plan room
liability ins.
your wage


monthly total
$4,655.00 monthly exp. ÷
$3,440.00 monthly wage +
$3,440.00 monthly wage
________________________________________68% overhead

As you can see, hiring two employees makes a huge difference in the overhead percentage. That's because now your overhead expenses are figured on 80 labor hours instead of 40.

I’m betting that you won't win a whole lot of jobs at a 68% overhead either. So now you'll need to keep your two guys working while you work at building the volume … again.

You'll have to do that work until there's enough to keep a third guy busy 40 hours per week.

So, unless you've got an unlimited bankroll somewhere (and if you do, then what the heck are you doing in construction?) you can see how difficult it can be to build your business.

You can do it, but you've got to be committed.

I still end up burning the midnight oil sometimes...

About the author:
Diane Dennis runs the website: www.thecontractorsgroup.com that provides construction forms, newsletters, and tax tips for contractors.
If you’d like to subscribe to her free newsletter please click here.

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Bad Faith Contracting

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Nearly every state requires notices and disclosures in construction contracts, especially residential contracts. The requirements vary from state to state; but most states require at least several of the following:

• A signed and dated written contract
• Contractor license or registration number
• Date when work will start and be finished
• Payment schedule
• Mechanics’ lien warning
• A statement about insurance or bonding
• Three-day right to cancel

What happens if your contract omits one of these notices and disclosures? In most states, that’s an invalid contract. It’s enforceable against the contractor but almost certainly not binding on the owner. A recent Connecticut court decision makes the point: Aqua-Scapes sued Mason to collect final payment on a pool job. Mason refused to pay, claiming the contract didn’t comply with Connecticut law. The court (2014 Conn. Super. LEXIS 3819) ruled for Mason:

"There is nothing dishonest or sinister about homeowners proceeding on the assumption that there is a valid contract, enforcing its provisions, and later, in defense to a suit by the contractor, in learning that the contract is invalid, then exercising their right to repudiate it."

It’s easy to make Aqua-Scapes’ mistake in a construction contract. What’s required by state law can vary with the contract price, the type of work (residential, commercial or insured loss), where the contract was signed (on site or in an office), the number of payments, when payments are due, and even the age of the owner. In the Aqua-Scapes case, the contract was void because it:
• Omitted the contractor’s registration number
• Wasn’t signed by the owner (the owner gave his OK by email)
• Didn’t include starting and completion dates
• Omitted a notice of the owner’s right to cancel
Take this as black letter law: If your contract is a dud, the owner wins every dispute. In most states, you’ll have to jump through legal hoops to collect anything the owner doesn’t want to pay.

Bad Faith Contracts
Now go one step further. Suppose the owner spots a defect in your contract right from the start -- something required by state law simply isn’t there. The owner knows you’ll have no right to collect if there’s a dispute. But the owner signs anyhow, saying nothing about the defect – in effect, laying a trap. Heads, the owner wins. Tails, you flip again.

Oops! That owner has given the contractor what’s called a bad faith defense. The owner knew the contractor had no right to collect and went ahead anyhow. That’s bad faith. But proving it won’t be easy. As quoted in the Aqua-Scapes decision:

“Bad faith of a nature to preclude enforcement of [The Home Improvement Act] must involve ‘actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive’.”

Aqua-Scapes couldn’t meet that challenge. You shouldn’t have to. There’s a better way. Use contracts that comply precisely with the law in your state, no matter the type of job.

This article courtesy of Gary W. Moselle, a California attorney specializing in state-specific construction contracts. Gary has written a state-specific contract writing software program called Construction Contract Writer, and maintains a blog on construction contract law at: http://www.garywmoselle.blogspot.com
Disclaimer: Nothing in this article should be interpreted as a substitute for professional advice from an attorney practicing in your community. Only local counsel can appreciate the business and legal environment under which a construction contract is drafted, negotiated and executed.

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Construction Management: It Don’t Come Easy!

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Rory M. Woolsey, MBA

Construction management in a nutshell is the planning, organizing, implementing and controlling of a project’s time, costs, resources and cash flow. Construction projects are made up of hundreds of interdependent tasks that have a specific order that in which they must occur. Success in construction management begins with a well thought out plan for the unfolding of events. The secret to a good plan for construction? Build it before you build it. Without first a good plan, all else that comes after is chaos.

After establishing a good project “plan” is the organization of that plan into tools that can be used to implement the for project implementation. Examples of project organizing tools are budgets, schedules, cash flow diagrams, manning charts and resource schedules. The secret of success here is that they must be realistic. Unrealistic tools tied to an unrealistic game plan is a sure way for construction project failure. Successful construction management always starts with a realistically organized plan.

The organized tools, tied to a realistic plan, are used to implement the successful construction project. These tools are the sheets of music that each member of the construction team will play from. Each member contributes to the harmony or discord of the total project.

The other secret to success here is having the right team in place to implement the project. The “right” team is one that is operating in sync with the other members and the organized plan. Leadership is key to the success in the implementing of a construction project.

Construction projects never unfold exactly how they are planned; this is a given!  Success in construction management allows for deviation from an organized plan as it is being implemented. This involves the timely revisions to the project plan, updating the tools accordingly, and then implementing the changes without missing a beat in the orchestration of the project. Here, again, leadership is key, and competent  construction project leadership comes with experience.

Successful construction management does not just happen. Any construction project failures, the results of which are overrun budgets, costly court battles, project completion delays and poor project quality, could have been avoided if time and effort were put into these principles of successful construction management. It don't come easy!

Rory Woolsey, CEP, has worked in Management and Engineering for the construction industry for 33 years, starting as a construction laborer in Billings, Montana, in 1972.

He has since held positions as a field engineer, project manager, MIS manager, testing laboratory manager, estimator, senior editor, designer, structural engineer, and general contractor. He was the President of The Wool-Zee Company, Inc., construction consultants for 20 years. Rory is currently an Accounts Manager for the Gordian Group, the parent company to RS Means.

Mr. Woolsey has also held positions with some of the leaders in the construction industry, such as Bechtel, H.J. Kaiser Constructors, and the R.S. Means Company, and has worked on projects ranging from heavy, military, industrial, commercial and residential.
He has given over 7,000 classroom hours of instruction nationally to architects, engineers, contractors, and facility managers on topics of project management, CPM scheduling, construction estimating, facility maintenance, partnering, and leadership. Rory is a Certified Estimating Professional (CEP) through AACE International.

This article was taken from a post on his blog by permission:
woolseyestimating.blogspot.com

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Nine Necessary Numbers You Need To Know in Construction!

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Nine Necessary Numbers You Need To Know!

by George Hedley -- Hardhat BIZSCHOOL

When I ask construction business owners and managers, “Why are you in business?” they usually answer, “To make a profit.” When I then ask, “How much profit do you make?” most don’t really know. This tells me that a majority of construction business owners and managers don’t focus on what counts most: their numbers. Business owners and managers spend their time getting jobs built and then hope the bottom-line numbers work out. Often, these hardworking people don’t like to be bothered with the numbers, and pass them off to a bookkeeper or spouse to handle, manage and worry about.

I have been a general contractor since 1977, worked with hundreds of subcontractors, and presented keynote speeches and seminars to tens of thousands of construction business owners and managers. The sad truth is only one out of twenty business owners will ever become financially independent. And even worse, one out of eight construction businesses fail every year. Why? The top three reasons for failure include not enough profit, too little equity, and slow collections. See the pattern? Minding the storehouse, watching the numbers, or lack of it!

Only 1 out of five will thrive!
You don’t want a business that struggles, doesn’t make enough money, or fails. I’m sure your goal isn’t just to stay busy and create enough revenue to pay your bills. But this is normal in the construction business as owners focus on the wrong things everyday. If you watch 95 out of 100 general contractors, builders or subcontractors, and follow their progress for 10 to 20 years, you’ll hear the same story over and over:

- They work too hard for their effort and risk.
- They never make big money.
- They never have any money left over to invest.
- They never get out of debt.
- They can’t stop working because they need the money to live on.

Out of every 100 construction business owners at age 65:

- Only 1 will be independently wealthy.
- 4 will be financially secure.
- 24 will still be working because they have to.
- 31 will be dead.
- 40 will be completely broke, and need social security to make ends meet.

It seems as if business owners hope their efforts will eventually make them wealthy or give them financial freedom. But the odds they hit a jackpot, win the lottery, or inherit a fortune to create wealth are better than continuing to run their businesses the way they currently do. Construction business owners deserve better. But it takes a plan and a focus on the necessary numbers that keeps you headed in the right direction. The following is a list of nine necessary financial numbers you must know, track and review on an ongoing weekly and monthly basis. Even if you hate numbers!

1. Know your profit numbers
Are you hitting your profit goals? Do you even know what your profit target is or should be? How do you determine your net profit mark-up? I conducted a survey of over 2,500 construction business owners and managers, and discovered less than 40% of all companies had specific written net profit targets they shoot for. According to the Construction Financial Management Association (cfma.org), the average pre-tax net profit is between 1.4 and 2.4% for general contractors, and 2.2 to 3.5% for subcontractors. To me, this stinks. It’s not enough profit for the risk contractors take.

Contractors and subcontractors get in the rut of providing the same services as their competition to the same customers year after year. Contractors generally offer the minimum per plans and specifications, and do the same scope of work as their competitors. This forces them to compete on price against other competent contractors and, thus, diminishes their opportunity to make a good or above average profit margin. How often do you offer extra services or provide added value to your customer or project which increases your net profit margin 50%? What is your game plan for maximizing your bottom-line and getting more than the average competitive markup?

Every year, sit down with your management team and decide how much gross and net profit you want to make. To determine the number you want to hit, look at your equity or net worth in your company. Look at your projected overhead for the upcoming year. Look at the risk you take to operate your business. Then determine how much net profit you want to make in total dollars and track your progress monthly.

2. Know your equity numbers
Equity or net worth is the actual value of your company, not including the intrinsic value. It’s the sum of your total assets minus your total liabilities. It’s found on the bottom of your balance sheet or financial statement. One of every construction business owner’s top priorities is to grow the net worth of their company. If the company doesn’t grow in value, the company can’t go out and do more work, increase their bonding capacity, or grow in size. Over 80% of all construction business owners don’t know what their company is worth.

Only after you know what the investment in your company is can you determine your return on investment goals for net profit. I recommend construction companies shoot for a minimum net profit of at least 15% return on total equity or investment. Additionally, I recommend companies aim at a 25% return on equity as an excellent profit target. For example, to determine your net profit goal:
Company equity  $400,000
Net profit goal @ 25% $100,000

3. Know your overhead numbers
Making a net profit starts with knowing how much money you need to earn and collect to cover your fixed cost of doing business -- also known as overhead. In my survey, I discovered only 30% of contractors actually know their overhead budget for the year. This is unacceptable. This makes me think these business owners don’t know or care what it takes to keep their company open. At the beginning of every year, calculate your annual overhead expenses you anticipate spending to keep your company open and running. This number is a must know. Then track it every month to make sure your actual expenses do not exceed your overhead budget.

Another profit target I recommend contractors to aim for is return on total annual overhead. At the beginning of each year, determine your annual overhead expenses. Overhead expenses are an investment in your future, in hopes of getting a return. Subcontractors should shoot for a pre-tax net profit return on their annual overhead expenses of 20% to 40%, and general contractors should shoot for 25% to 50%. For example, to determine your return on overhead expenses goal:
Annual projected overhead $500,000
Net profit goal @ 40% $200,000

4. Know your sales numbers
True or false? Only 23% of construction company owners know or track their annual sales or volume goals?  Do you know your sales numbers or targets? How often do you track them and what do you do every month to keep them on target? (By the way, the answer is true.)

In the financial examples above, the company owner knows they must make a minimum of $500,000 to recover their overhead expenses plus shoot for $100,000 to $200,000 net profit. This is their gross profit (overhead and profit) goal. From these numbers, they can then determine how much work they need to perform at the mark-up and gross profit rate they can get in their marketplace to hit the numbers they want to achieve. Divide your total gross profit goal by the gross profit percentage you can get in the marketplace in which you compete to determine the volume you need in order to hit your numbers. (Note: gross profit and markup are not the same number.) An example on how to calculate the sales you need at the gross profit you can get:
Overhead   $   500,000
Net profit goal @ 40% $   200,000
Gross profit (OH & P) goal $   700,000
Average OH & P markup           25%
Average gross profit           20%    
Total sales volume needed $3,500,000

Now you know how much total sales you need at an attainable mark-up rate to achieve your numbers. Next, track your sales numbers monthly to make sure you are on target to hit your annual sales, overhead and profit goals. Unfortunately, only the top 19% of contractors and subcontractors set specific overhead, profit, and sales targets for the year and then track their progress monthly. As a result, only the top contractors can make necessary adjustments to their estimating and bidding strategy, customer selection, project management and field operations as the need arises.

5. Know your job cost numbers
Before you can bid a job, you’ve got to know exactly what it will cost to build. The purpose of every estimate is to create an accurate budget of what the job will cost. 81% of all contractors do not know exactly what their accurate labor and burden rate or fringes cost for each of their field employees. This creates inaccurate bids and estimates for the biggest part of any job -- labor. In addition, most don’t really know what their equipment costs them annually to own, or how much they should charge per hour when it is used on the job.

Stop everything and sit down with your accounting manager. Get an accurate accounting of what every employee and piece of equipment you own costs you annually. For your labor cost, include all taxes, insurance, worker’s compensation costs, health insurance, vacation, union dues, overtime, small tools, training, pension, profit sharing, and any other benefits you provide. For your equipment cost, include the purchase cost, finance and interest, payments, insurance, maintenance, tires, gas, and repairs for each piece of equipment. Now you really know what it costs for labor and equipment.

Next, you must have an accounting system and software to track your actual job costs. It should create accurate reports of your field operation and work performed costs to install by cost code or work task. From these printouts, you can verify the numbers you use for estimating new projects are accurate. If you don’t know what it costs to build, it is next to impossible to ever make any money.

6. Know your contract numbers
Top construction business owners know their contract numbers. These include closed jobs and current jobs in progress. They review how well they did on past jobs and how well they’re doing on current jobs. To manage your numbers, you should have a report listing out all of your completed and current projects using the example below every month:

Completed Contracts Report
Job name   ABC Project
Start date   June 1
Project Manager  Dave
Superintendent  Bill
Foreman   Sam
Contract amount  $1,000,000
Bid gross profit mark-up $   200,000
Actual gross profit  $   150,000

Current Projects (Work In Progress) Report
Job name   XYZ Project
Contract amount  $2,000,000
Bid gross profit  $   300,000   
Estimated final cost  $1,650,000
Estimated final gross profit $   350,000
Variance   $     50,000

Costs to date   $825,000
Percent complete  50% 
Profit to date   $175,000
Amount earned to date $1,000,000
Amount billed   $900,000
Estimate cost to complete $ 825,000
Contract balance  $1,100,000

7. Know your receivable numbers
You can’t make any money unless you collect what you’re owed. Doing work is fun, but putting money in the bank is even more fun. I know it isn’t your favorite job to call deadbeat customers and ask for money. Stay focused on collecting what’s owed by getting an updated weekly account receivable aging report every Monday to review.

Weekly Account Receivable Aging Report
Accounts     Total Due  30 Days     60 Days  Retention
Project #1     $ 70,000   $35,000    $15,000     
Project #2     $ 45,000   $50,000    $25,000    
Project #3     $ 65,000   $55,000
Total Due     $180,000  $85,000     $95,000

8. Know your liability numbers
To keep your eye on the ball, you’ve got to know what your liabilities and debt include. Create a report listing out all of your debts, liabilities and large balloon or one time payments due in the near future.


Liability & Debt Report    Amount     Payments  Terms  Due Date
Line of credit 
    Line of credit drawn
    Other credit loans:
Equipment loans
Future tax payments
Real estate loans

9. Know your cash numbers
Cash is king and the life blood of your business. You need to know what you’ve got to work with in order to make good decisions. Get a report of your cash position every week and include the following items:
      Weekly Cash Report
Bank deposits
Cash in bank - Checking
   - Payroll account
   - Savings
Weekly payroll cost
Weekly equipment cost
Weekly overhead costs
Investments - Liquid & long term

Know your nine numbers
Doing great work doesn’t really matter unless you make it your priority to always make a profit. Don’t delegate or ignore the most important part of your business. Follow these nine necessary numbers and stay on track towards becoming one of the top contractors in your market. Every week, take at least one hour to review these financial figures with your key management team and accounting manager. This small investment of time will give you a much better return than going out to the jobsite one more time to remind your foreman what to do. E-mail GH@HardhatPresentations.com to receive a FREE copy of “Everything Contractors Know About Making A Profit!”

ABOUT THE AUTHOR
George Hedley works with contractors to build profitable growing companies. He is a professional construction business coach, popular speaker and best-selling author of “Get Your Construction Business to Grow & Profit!” available at his online bookstore at http://www.HardhatPresentations.com. ; To sign-up for his free e-newsletter, be part of a BIZCOACH program, or get a discount coupon for online classes at http://www.HardhatBizSchool.com, e-mail GH@HardhatPresentations.com

This article courtesy of the American Society of Professional Estimators, which serves construction estimators by providing education, fellowship, and an opportunity for professional development. For more information, visit http://www.aspenational.org

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Designing Within the Budget ̶ a Shared Responsibility

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(Excerpted from the Guide to Successful Construction)

It is a traumatic experience for owner and architect alike when a construction project is priced and the lowest responsible bid exceeds the available funds.
This usually means the project will have to be redesigned to a lower quality or a reduced size. Sometimes it will result in a canceled project and much disappointment, and sometimes will have legal repercussions. And it is quite common for the owner to hold the architect entirely responsible for the whole unfortunate situation.

However, it is very difficult for an architect to design within a stated budget without the active cooperation of the owner.

The Overall Budget
The owner is required to establish and update an overall budget for the project, including the construction cost, the owner's other costs, and reasonable contingencies related to all of these costs.

Architects should insist that owners comply in full with this provision. It will help minimize misunderstandings as to which elements are included in the architect's design budget and which are not. Owners often do not realize the magnitude of related and incidental costs and their impact on the total budget. The actual building cost can be (and often is) less than 50 percent of the overall budget, including land costs.

Some of these costs will be known or already have been incurred (such as land acquisition costs). All other anticipated costs will have to be estimated. If the owner does not have the means to estimate the remainder of the costs, consultation should be sought with a knowledgeable building contractor, real estate appraiser, or building cost estimator.

Some of the information will be obtainable by consulting the owner's insurance advisor, banker, accountant, and/or lawyer. Many architects maintain a file of current construction costs, such as those published by Building News, to assist their clients in preparation of their overall budgets.
After reviewing the owner's overall budget form, it is obvious that architectural design should not be commenced before the overall budget is fairly well developed, the total determined, and it is approved by the owner.

If the overall budget is comprehensively considered before any funds are committed, it would still be possible to make beneficial adjustments to the individual components as a value engineering technique and for controlling the total cost. As time passes, and more funds have been committed to specific items, it becomes less possible to make effective and acceptable adjustments.

The Owner's Program. The budget depends on and is an expression of the owner's program, and the responsible design process starts with the owner's program. A program is a detailed word description of needs, wants, and aspirations as perceived by the owner.
Many of the budget items cannot be realistically estimated before the program is finalized. A number of assumptions will have to be made in estimating the quantity, quality, and current prices of the various budget line items. The estimate should be checked for completeness, adding supplementary items, as appropriate, for a specific project.

Every line item should be analyzed as carefully as possible, multiplying quantities by unit costs where applicable. When estimating, it is better to make errors on the high side, but excessive errors will yield a distorted picture and possibly a discouraged owner and an aborted project. An erroneously high estimate will demand cutbacks in scope and other economies, which will later be regretted when the true costs are known and it is too late to revise the project.
The Overall Time Schedule. The owner should also prepare a provisional time schedule compatible with the program and budget. This is different from the contractor's construction schedule. It should state the key dates for starting and ending each of the major events, such as financing, design, bidding, construction, and completion.

Reasonable time allowances should be included at all stages for reviews and approvals by financiers, government, and owner.
The program, budget, and time schedule, all prepared by the owner, should be presented to the architect for evaluation each in terms of the other.  It is only after the balancing of these three documents to the mutual satisfaction of owner and architect that attention should be turned to commencement of architectural design.

Complying with the Client's Program
This program can be communicated to the architect in writing or orally in face-to-face discussions. Usually, the client's preliminary concepts will have to be interpreted by the architect and the program reorganized to make it understandable and workable. The architect will commit the program to writing and will add in the necessary realistic adjuncts, such as spaces for structural elements, circulation, and environmental systems, always with due regard to convenient arrangement. The owner can then review and confirm the architect's reiteration and suggest further program adjustments, if necessary.

After further refinement and the owner's final approval, the search for a specific design solution can then proceed. To go ahead with design studies before confirmation of the program will be wasteful and premature. The skilled architect will soon know whether or not the program is capable of being developed into a practical design solution. If it cannot, the program must be adjusted accordingly.

The resulting project design would not be acceptable to most clients if it fell short of program compliance in any material respect. In the real world, designs that do not substantially comply with the program never get built.

Designing to a Budget
The program is always subservient to the budget. All building projects have budgetary restraints, most extremely stringent, while a few others may be more liberal. In either case, however, the design proposal must reflect a project of appropriate size and quality to remain within the imposed budgetary limitations.
Some budgets are arbitrarily established based on available funds. Often, the budget is insufficient to produce the desired program. It seems to be human nature to want more than one can afford. Budgets for business- or revenue-producing buildings are limited to a definite economic relationship with projected income market conditions prevailing at the time in the same geographical vicinity.

Designing an awe-inspiring building that is beyond the financial means of the client is a futile exercise, and disappointing to designer and owner alike. This increase in the budget would not knowingly be tolerated by most clients, and they would simply find a more suitable architect. Apparent inability to design within budget would mark a design professional as incompetent.

Measuring Quantity and Quality
Quantity is an expression of the size of the building, and is usually expressed in square feet.
Quality is determined by richness, intensity of application, and complexity and is normally expressed in terms of unit cost, reduced to dollars per square foot.

Relating the Program to the Budget Price
The program requirements must be summarized and reduced to a definite size or quality of construction. Obviously, if the building area is larger, it will cost more, and conversely, will cost less when the building area is reduced.

The other co-equal factor in the price equation is the quality of the construction. It is self-evident that higher quality will cost more than lower quality. The measure of quality is affected by various characteristics of the proposed construction.

The relative richness of materials, such as using marble instead of laminated plastic or rare hardwoods instead of common softwoods, will raise the quality and the price.

A higher intensity of use of materials and equipment is another measure of quality. Two drinking fountains will cost more than one. Kitchens, laboratories, and toilet rooms, abundant in wiring, piping, and equipment, cost more than storage areas, offices, and meeting rooms. Highly compartmented plans will always cost more than the same area subdivided into fewer spaces.

Building complexity is another measure of quality. More complicated structural and environmental systems will cost more than simpler systems and equipment. Unusual building shapes, extravagant volumes, and innovative concepts are usually priced higher by the building industry, which achieves higher production rates and lower costs with conventional construction.

So, you can see that a realistic program must always take into account quantity and quality, the two conclusive factors which determine the price.

The Building Portion of the Budget
The budget price is a function of the program. Clearly, the quantity (square feet) multiplied by the quality (dollars per square foot) will be the cost of construction (in dollars). The client decides the program and determines the budget. It is up to the designer to monitor these decisions so that an appropriate design may be conceived. The objective is to produce a design that, when evaluated by competent contractors, will cost no more and no less than the budget price, give or take a reasonable tolerance for estimating error and unexpected variations in conditions.

Evaluation of Budget and Cost of the Work
After the project requirements have been sufficiently identified, the architect is required to prepare a preliminary estimate of the cost of the work. The estimate may be based on area, volume, unit cost, or similar conceptual estimating techniques. As the design progresses through the various stages of the design process, the architect must update and refine the preliminary estimate. The architect notifies the owner at any stage that the cost estimate has been adjusted to reflect changes in program requirements or market conditions.

If at any time the estimate is in excess of the updated owner's budget, the architect must notify the owner and make recommendations to adjust the project size, quality, or budget. The owner is required to cooperate in this process.
To avoid trauma, misunderstandings and lawsuits, it is imperative for an architect to design within the stated budget and encourage the active cooperation of the owner in the process.

This article has been excerpted from “The Guide to Successful Construction” by Arthur F. O'Leary, FAIA. This unique book shows how to avoid lawsuits and other problems by explaining exactly what the architect's and contractor's roles are during the construction phase of a project - as well as the responsibilities of owners, developers, and construction attorneys.

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BIM+LEAN+INTEGRATION = INDUSTRY REVOLUTION

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By Stewart Carroll

There has been a lot of industry press over the past few years about building information modeling (BIM) and integrated project delivery (IPD). Other trends, such as sustainable design and lean construction, also seem to be getting quite a lot of coverage. Although the A/E/C industry is notoriously slow to adopt change, these converging trends offer forward-thinking firms enormous value -- and could lead to a revolution in the construction industry.

The sequential nature of the design-bid-build process goes like this: the architect develops a concept at the initial phase of the project and provides the owner with a guess at the design (after all, they typically have not even been hired at this point), a guess at the cost (usually based on a simple $/SF or merely the cost of their last project), and a guess at the schedule (typically with no general contractor involvement).

Based on these guesses, the owner/developer will establish financing and pull the trigger on moving forward. Not until months down the line will a general contractor provide pricing, based on subcontractor input, which in my experience is (nine times out of 10) dramatically different from the guesses at the beginning of the project, resulting in value engineering.

It has always amazed me that we use the term “value engineering” since, in this traditional approach, there is no value provided and no engineering processes followed. Instead, value engineering becomes an exercise of cost reduction and, in reality, results in taking out all the valuable elements -- such as energy-efficient glass and HVAC systems -- in order to reduce cost. Overall, it’s the consensus that this methodology provides the least value and the greatest cost. So why is it still the most dominant delivery model?

Cross-Disciplinary Knowledge and the Domino Effect
At the heart of the traditional design-bid-build process are contractual barriers that prevent cross-disciplinary transfer of knowledge. When a change is made to the design, the effect of the change on the entire project is unknown until downstream, when it’s too late and costs the owner the most money.

It’s hard to attend an industry conference without seeing the now infamous MacLeamy curve. MacLeamy’s graph points out the obvious: Change is easiest with the least amount of cost at the front end of a project, and most difficult and costly downstream. So how does the A/E/C industry pull cross-disciplinary knowledge to the front of the process? The answer is a contractual methodology that not only facilitates integration, but requires it.

At the heart of integration is a simple notion: If two practitioners or groups collaborate, they are able to achieve more than they can individually. When applied to the A/E/C universe, this makes a lot of sense, as our facilities and capital projects are complex, and no one knows everything about the entire project, not even the designer.

The domino effect of making a decision is so complex that the only way to know the entire result is to collaborate. After all, simply changing the width of a bay, for instance, does not merely affect the structure. It may impact the width of the glass applied to the bay, which may in turn affect the energy load of the building, which may in turn affect the HVAC and electrical infrastructure in the building, which in turn may affect the size of the mechanical and electrical rooms, etc. Do you see where I’m going with this?

There is a domino effect associated with change. In order to provide owners with the highest quality, lowest cost, and shortest schedule, this effect needs to be understood and studied. Integration of knowledge and work practices provides the vehicle to achieve this.

IPD, BIM, and Lean Methodology
IPD is a contractual delivery model that has been catching the interest of many in the A/E/C industry. The basic premise behind IPD is to remove the artificial barriers our industry has put in place over the years that were intended to reduce practitioner risk.

But, ultimately, this has reduced the quality of our deliverables, stifled innovation, and increased cost and schedules. Both the Associated General Contractors of America (AGC) and The American Institute of Architects (AIA) have their own forms of IPD contracts that work differently, but both have the same net effect: they remove the barriers between the disciplines, promote and foster collaboration, share the risk and rewards associated with innovation, and ultimately provide a contractual framework for delivering better, faster, and less costly capital projects.

Some general contractors have been applying lean construction techniques and approaches for a number of years. The premise behind lean is to improve the project delivery process by applying standardized processes to non-standardized problems. Most people seem to think of lean as reduction of job site waste -- which is important -- but only one facet of the entire lean construction methodology.

When applied more broadly to the entire design and construction process, lean principles provide a framework for reengineering our traditionally inefficient processes. In this broader context, lean principles apply a project-based production management approach in the entire design, engineering, and construction practices of capital facilities. Lean becomes the framework around which an integrated team can work towards a cost-effective and sustainable project.

DPR Construction published an article where it applied the lean methodology of target value design. In this article, DPR combined IPD, BIM, and lean methodologies. Due to a high degree of integration and collaboration, via BIM-enabled estimating, DPR established realistic budget targets that were continually checked against as the design matured. In such a delivery model, the firm was able to get buy-in from all team members early in the project’s life to establish realistic targets, and then, through benchmarking, was able to continuously check the design.

On a recent project I was involved in, the design firm followed a similar methodology to DPR, but went much further. It developed a matrix of criteria that were of importance to the owner. Owner values included cost, disruption to the site (the site was several hundred acres with over 18,000 native trees), walking distance from one side of the master plan to the other, natural light levels across the entire occupied master plan, visibility of a central design element across the entire master plan, and the like. The design firm then worked with the owner to weigh these evaluation criteria so that they clearly captured the owner’s goals.

The design firm surrounded itself with cross-disciplinary consultants who collaborated with the design firm to study four master plans consisting of several buildings. For each building studied, it reviewed seven building schemes, each with varying numbers of bays, floors, structural systems, HVAC systems, etc. Each scheme, along with various options, was then measured and evaluated against the weighted owner criteria.

It is my belief that we will start to see more and more projects that prove a new age is upon us in the A/E/C industry. IPD, lean methodology, and BIM have each independently started to have a major impact on our industry, but the real revolution will occur when companies adopt a contractual relationship, like IPD, that fosters and promotes integration across disciplines; applies target-based princi¬ples from lean to establish realistic sustainable, cost, and schedule targets; and then uses BIM to analyze and continuously measure and track the design relative to these targets from concept through completion of construction and into facilities management.


About the Society for Marketing Professional Services
The Society for Marketing Professional Services (SMPS) is the only marketing association offering A/E/C professionals the network, knowledge, and training to build business. SMPS offers members professional development, leadership opportunities, and marketing resources to advance their careers. SMPS represents a dynamic network of 6,300+ marketing and business development professionals from architectural, engineering, planning, interior design, construction, and specialty consulting firms. The Society and its chapters benefit from the support of 3,650 design and building firms, encompassing 80% of the Engineering News-Record Top 500 Design Firms and Top 400 Contractors. Learn more about SMPS at www.smps.org.

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How to Accurately Recognize Revenue from the Project Accounting

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(Excerpted from Profit, Risk and Leadership)

Insight about how one derives profit from a construction business should be grounded in an understanding of how one handles the project accounting.  It’s a fundamental characteristic of construction business that revenues, and thus profits, are derived from projects (which we may also call “jobs”). 
In a simple sense, one begins with the revenue from a given project and then deducts the job-chargeable costs.  The difference is the gross profit contributed to the business by the project.  We call it “gross” profit because it is not pure profit for the company.  Some portion of the gross profit from the company’s various jobs must be applied to pay other company costs that are not job-chargeable.  For the most part, these are overhead costs -- which may include office expenses, rent, etc.  Accordingly, sometimes gross profit is referred to as “overhead and profit.”

Another term commonly used for gross profit is “fee.”  In this sensecontext, the fee is what remains of the project revenue after all job-charged costs are paid.  Be aware that in the construction industry, the term “fee” is not always used this way.  For example, it is conventional traditional that an architect’s “fee” will be much more than just profit and overhead; it needs to cover the cost of the architect’s staff people performing the design work.  In this article, I will normally use the word “fee” to mean gross profit; I will try to be clear about the times when it is used in a difference sense.

Thus, our starting point for construction project accounting begins with this basic formula:
Project Revenue  Less: (Project Cost)  Equals: Project Fee

We will now dissect this formula by considering each of the three elements more closely.

Revenue Recognition
The term “revenue recognition” refers to the question of when an accounting system will recognize that project revenue has been earned by the construction business.  In theory, there are various options:
• One method could be to recognize the revenue when the owner actually pays the bill.  This method would be considered the “cash basis.”
• Another method could be to recognize the revenue when the bill is sent to the owner.  This would be considered an “accrual basis” method.
• Yet another method could be to wait until the end of the project and then recognize the project revenue all at once.  This is the “completed project” method.
In fact, most construction firms use none of these, but, instead, recognize revenue based on what is called the “percentage of completion” method. 

Here is how it works:
1. Determine the final revenue that is expected from the project --  the (“contract value”Contract Value),  -- which often consists of the original contract price (if lump sum) plus approved change orders.  (If the company so elects, it might also include pending change orders that are expected to be approved.)  Under the GMP basis of reimbursement, the anticipated final revenue could possibly be less than the GMP amount, if savings are expected.

2. Determine the project’s Estimated Cost at Completion (ECAC), which is a forecast of what the total job-chargeable costs will be at the end of the project.  That estimate should include the expected cost of approved change orders that are included in the projected revenue.  If the company’s policy is to include pending change orders in the estimate of revenue, include the cost for such pending change orders in the ECAC in a corresponding waymanner.

3. Divide the project costs incurred to date (determined on the accrual basis) by the ECAC to determine a percentage of completion.

4. Multiply the contract value (Sstep 1) by the percentage of completion (Sstep 3) to determine the earned revenue to date.  This is the amount of revenue that will be recognized in the company’s accounting records.
When using this percentage of completion method, the amount billed to the owner at any point is likely to be different from the amount of revenue recognized in the company’s accounting records.  This difference is considered “underbilling” or “overbilling.”  An underbilling, also called “cost and anticipated profits in excess of billings,” means that the percentage of completion method arrives at a higher amount of earned revenue than what has actually been billed to the owner.  This underbilling is carried on a construction firm’s balance sheet as an asset, on the theory that the company has already done work for which it will have a future right to payment.  Even though it is anthey are assets, chronic or excessive underbillings can be a signal harbinger of problems.  Perhaps too much work is being done on unapproved change orders, or perhaps there is a cost overrun not yet reflected in the ECAC.

An overbilling, also called “billings in excess of cost and anticipated profits,” means that the billing to the owner is higher than the amount of revenue recognized according to the percentage of completion method.  While the term “overbilling” may seem to connote that something improper is taking place, – that is not the meaning of the term.  As used in this context, “overbilling” simply reflects a difference in accounting methods. 

Construction firms carry overbillings on their balance sheet as a liability, in the sense that they still owe the owner performance of work that was previously billed.  While underbillings can be indicative of project problems, it does not follow that overbillings are always a good thing for the contractor.  Without proper planning, overbillings can lead to a cash flow squeeze in the later stages of a project.  Because some of the billing took place early, the payments down the stretch may end up less than the costs of completing the work.

When using the percentage of completion method, the validity of a company’s reported revenue depends heavily on how accurately the company has calculated the ECAC.  The company must, therefore, take pains to update the ECAC information for each project accurately and frequently – at least quarterly and preferably even monthly (especially if there is a reason to believe that significant changes are likely). This is the key to accurate cost accounting.

This is an excerpt from the book, “Profit Risk and Leadership”, the definitive reference for anyone who leads or does business with a 21st century construction firm. In this book, Tom Porter shares practical solutions that have been proven to work in the real world of today’s construction industry. Find out more about “Profit, Risk and Leadership” at www.bnibooks.com.

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Fourteen Construction Apps for Project Managers in 2015

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 Apple’s App Store recently topped 1 million apps, with approximately 25,000 new apps being added every day, or one every 3.5 seconds. For construction, the store has more than 10,000 good and not-so-good tools available to help project managers be more effective and efficient on the job. With so many options, finding the right one for you can be a task in itself. To help you get a jump on your app search, here are 14 you should consider downloading in 2015.

1. Archipad Lite
A version of Archipad software made for the iPad, this free app allows project managers to create and send punch lists, reports, and drawings with specific locations for items. It also “learns” to autocomplete entries based on familiar phrases you use. Archipad Lite automatically formats information, eliminating time-consuming steps to ensure your information is conveyed in a neat, concise way.

2. iAuditor: Safety Audit and Checklist
Do paperless safety checks and inspections for free. Edit, sign-off and approve, then email completed audits in PDF or Microsoft Word formats. The iAuditor has more than 12,000 inspection templates. These forms can be tweaked to create your own safety audit checklist, complete with scoring and weighting factors.

3. PunchLists
PunchLists gathers construction site managers’ notes, photos, and lists into an email-ready format. These lists can be sent on the fly from anywhere and shared with others associated with a project, including engineers and architects.

4. Aconex Field
Available for both iOS and Android devices, this time- and cost-saving app allows project managers to photograph and send inspection issue reports to relevant parties. Tasks can be assigned and updated in real time, as can re-inspections, once issues have been resolved.

5. TaskTrak
Made with lean construction in mind, TaskTrak eliminates the need for spreadsheets while increasing productivity. TaskTrak can be used in areas where cell phone reception is not available. The app allows site managers to view upcoming project milestones, see what percentage of the project has been completed, and compile an activity log and reports with photos attached. Daily reports can even be sent in English or Spanish.

6. SnagR
This visual site inspection app allows project managers to pinpoint defects during inspection by taking a photo and plotting the defect on drawings with the mere touch of a button. This important info is then sent to appropriate members of the project for the necessary action. Audit trails are time-stamped by the person who sends the info, for greater accountability.

7. Site Diary
Available for iPhone and iPad, Site Diary allows project managers to keep a daily log of project activity, including status updates, project incidents, and weather information to account for any undue project delays. Photos can be added to updates and Site Diary can generate log reports in either PDF or .CSV formats.

8. ProjectWise Explorer Mobile
If you are already using Bentley’s ProjectWise software, this mobile iPad version allows site managers to send work packages and notations directly from the project site. Files can be shared with others and even exported back to your desktop computer, synching up valuable information and saving time.

9. Measuring
Afanche Technologies, Inc. came up with this simple iPhone and iPad app that allows construction pros to take free form measurements of large, irregularly-shaped areas. Find out how long and how wide a project site is simply by using a photo or satellite view of the area and drawing around it with your finger.

10. Concrete Design
This Android app allows project managers to calculate how much concrete is needed for a particular project. The app can also help construction pros evaluate how much reinforcement is required, and to check beam dimensions, cracking, and compression zones. (Yes, it’s not for iOS, but still worth a mention.)

11. LEEDer Checklist
Use this app to create a checklist for new green projects or renovations. Simply enter relevant information to each checklist and it will tell you how “green” your project is and what level of LEED accreditation it meets.

12. Evernote
Sync notes, research, memos, and photos across multiple mobile devices or desktop devices. Project managers can compile information from multiple sources in one place and then share with colleagues.

13. TurboScan
Transform your iPhone into a multi-page scanner. Notes, project plans, blueprints, and more can be scanned quickly, clearly, and easily, packaging them into neat PDF or JPEG files. These files can then be emailed or uploaded to other productivity-enhancing apps like Evernote.

14. A Estimate All Pro
Estimate all facets of a project with this Android app, including concrete, electrical, lumber, and other supplies. The app also allows you to account for taxes on specific supplies to give a more accurate total for a project. (Again, Android, and a good tool for all.)

This article courtesy of Jeff Dusing from the Modspace blog at http://wwwblog.modspace.com. Modspace is the leading provider of temporary and permanent modular buildings. Find out more at http://www.modspace.com

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The Costs of Avoiding Mobile Technology

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Warning: This story is based on actual events.

While on a large job site marking off and photographing completed punch list items on his tablet, the project manager (PM) is interrupted by a video call from a foreman in another area of the site. It appears that a large object is obstructing the planned path for the access road, and the foreman advises the Project Manager of the impending delay. The Project Manager reviews the issue with the foreman, studies the blueprints on his tablet, and alters the path of the access road, noting the change on the blueprints. Meanwhile, workers are clocking in and out on a bank of android tablets set up in the back of a truck at the edge of the site, adjacent to the day’s work. Their time is recorded immediately and sent to the cloud for back office administration.

With the Project Manager having completed his review of the punch list items, a notification of the finished punch lists items is sent to the owner. The owner reviews the list and accompanying photographs in his office, and approves the completed items with a digital signature.  At the end of the day, the telematics units in each piece of heavy equipment transmit the day’s usage and other readings to the cloud. The foreman has reviewed time the time for the crew and has recorded the field units put in place, all using his iPhone.

Just before dinner, the Project Manager reviews the Daily Owner’s Report showing percent complete, labor hours, equipment usage, and the daily log summary.  Approving the hours from his tablet, he sends the report via automatic routing to the owner, who reviews it and digitally signs it while heading out of town on an airplane. The construction business’ software sends a notification of the approval to the PM, generates an invoice automatically, and transmits it to the owner’s purchasing department for payment.

The Project Manager reviews the WIP analytics, sees that the project is under budget and ahead of schedule. With peace of mind, he shuts off his tablet and calls it a productive day.

Inspiration or Frustration?
Does this story sound familiar? If not,  hopefully you’ll find it as a source of inspiration … or frustration because you’re limited with your current programs, wasting time, and not investing in the essential technology to move your business forward for best profitability. More contractors (think of your competitors) are leveraging contemporary construction software and mobile technology to effectively collaborate, speed processes, increase cash flow, minimize risk, improve productivity, and deliver successful projects with satisfied clients for best profitability.

When you’ve realized it’s time that your business reaps the benefits of being mobile, you will want to invest in technology that allows you to accomplish a variety of tasks, including:
• Timely collection and analysis of accurate labor hours, equipment usage, and production units
• Video calls to more effectivelyillustrate problems and discuss solutions quickly and interactively
• Telematics for automated equipment usage and readings collection
• Mobile tablets used as time clocks set up near the work, rather enabling workers to clock in withoutthan having to go to the trailer to clock in
• Review and approve documents in the field
• Interaction with the owner for faster payment
• Collecting, documenting, and approving punch lists
• Job site webcams, and using them to keep track of the job
• Capture photos to document job percent complete

How will you turn the page in your business? It’s an exciting time to incorporate leading technology that empowers your workforce (-- your most valuable asset)  -- and improves your competitive pace, which is ( essential for success and growth).

About the Author
Barry Frangipane is Mobile Product Manager at Viewpoint. Viewpoint is a recognized leader in meeting the collaborative and information needs of the AEC industry, and providing construction-specific software addressing all points of the construction lifecycle from preconstruction to building maintenance. For more information on Viewpoint, visit http://www.viewpoint.com.

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Construction Employment Increases in 228 out of 358 Metro Areas

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Construction employment Increased in 228 out of 358 Metro Areas between June 2015 and June 2016 as firms struggled to find qualified workers. Anaheim-Santa Ana-Irvine, CAand Kokomo, IN were the top gainers; the biggest losers were Bloomington, IL and Houston-The Woodlands-Sugar Land, TX.

Construction employment increased in 228 out of 358 metro areas, was unchanged in 48 and declined in 82 between June 2015 and June 2016, according to a new analysis of federal employment data released today by the Associated General Contractors of America. Association officials urged Congress to act on legislation to reform and increase federal funding for career and technical education to encourage more high school students to pursue high-paying careers in construction.

"Contractors are adding employees in most parts of the country, while construction job losses are primarily in areas that are most affected by the steep decline in oil and gas drilling," said Ken Simonson, the association's chief economist, adding that construction employment hit new peak levels in 32 metro areas. "However, increases in construction employment are becoming less widespread as more contractors run into difficulty finding qualified workers."

Anaheim-Santa Ana-Irvine, Calif. added the most construction jobs during the past year (12,500 jobs, 14 percent). Other metro areas adding a large number of construction jobs include Denver-Aurora-Lakewood, Colo. (10,700 jobs, 11 percent); Phoenix-Mesa-Scottsdale, Ariz. (9,900 jobs, 10 percent); and rlando-Kissimmee-Sanford, Fla. (9,500 jobs, 16 percent). The largest percentage gains occurred in Kokomo, Ind. (20 percent, 200 jobs); Boise City, Idaho (19 percent, 3,600 jobs); Brockton-Bridgewater-Eastern, Mass. (17 percent, 800 jobs) and Danville, Ill. (17 percent, 100 jobs).

The largest job losses from June 2015 to June 2016 were in Houston-The Woodlands-Sugar Land, Texas (-3,300 jobs, -2 percent), followed by Midland, Texas (-1,400 jobs, -5 percent); Odessa, Texas (-1,300 jobs, -8 percent); and New Orleans-Metairie, La. (-1,200 jobs, -4 percent). The largest percentage declines for the past year were in Bloomington, Ill. (-19 percent, -600 jobs); Rocky Mount, N.C. (-13 percent, -300 jobs); Anniston-Oxford-Jacksonville, Ala. (-11 percent, -100 jobs) and Grants Pass, Ore. (-11 percent, -100 jobs).

Association officials said the latest employment figures underscore the need to reinvigorate high school-level training programs to encourage more students to pursue construction careers. They added that the House Education and Workforce Committee has passed legislation that includes many of the reforms, and some of the funding increases, the association has called for to rebuild the once vocational education system in this country. They urged members of the House and Senate to pass the measure as quickly as possible.

"It makes no sense that there are thousands of young people who can't find a job while we have hundreds of members who can't find enough workers," said Stephen E. Sandherr, the association's chief executive officer. "Congress can help fix this mismatch by passing legislation that makes it easier for schools to prepare students with the skills they need to find high-paying jobs in careers like construction."

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11 Must-Haves for Transformative Growth in 2015

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By Susan Milne

For marketing professionals working in small to mid-sized firms, the pressure is on to attract new business. In response, Architectural Engineering firms across the country are scrambling for growth, using every digital tool at their disposal.

Most A/E purchasing decisions are based on risk management. Buyers are looking for the right team to deliver the best value for their investment. My experience with principals of A/E firms, however, tells a different story. They believe most purchasing decisions are made on talent, and marketing professionals are left to bridge the gap.

Based on analysis of firms that were able to achieve significant, transformative growth that changed their business in terms of people, projects, and profits, evidence has shown that a firm seeking growth must have the following:

1. A good economic climate. Growth comes more easily when economic conditions are favorable—and they happen to be particularly conducive to growth at present. U.S. architects are enjoying the fastest growth in billings for their work on a range of residential and commercial construction projects since before the recession, and expect continued growth in coming months.

2. Internal alignment. A house divided is no house at all. Every single person in your company should be able to articulate your firm’s goals and brand differentiation. Most importantly, his or her behavior should align with your company culture. When you’ve achieved internal alignment, you won’t have to tell anyone—they’ll know it.

3. Tangible goals. Can you expound upon your firm’s 10-year plan? 5-year plan? 3-year plan? If your principals can’t answer questions regarding the planned future of your company, it’s time to place some visible goalposts.

4. Differentiation. Most principals believe their firm’s differences are obvious to buyers. But are they really? Visit 10 web sites of companies like yours, putting yourself in the shoes of a potential client. Notice how everybody’s saying the same thing? Make your firm stand out by focusing on evidence-based design, and build case studies around it. Make your value obvious to your clients.

5. Thought leadership. Your thought leadership should be focused around your area of expertise. Don’t be afraid to build an empowered staff of bloggers, writers, speakers, and tweeters—that’s how business is done. Make everyone on your staff a brand evangelist. As an added bonus, thought leadership and a unique culture attract talent.

6. Marketing leadership. Your Chief Marketing Officer and Chief Financial Officer should have equal weight. Surprised? Don’t be. Marketing and new business go hand in hand. Too often, principals miss or ignore this correlation and fail to give the marketing position the power or respect that it deserves.

7. Funded marketing. Provide your marketing leader with a budget for execution. If you don’t have the resources for both the marketing and the financial leader, find an agency to work with until you do. If you want a strong brand, you have to put your resources where your mouth is.

8. Rock-solid brand architecture. Multiple profit centers within your firm call for multiple brands to work seamlessly within the overarching structure. If you can’t articulate how your brands work together, how can your client?

9. Self-evaluation. Hire a neutral third party and get feedback from employees and clients alike. Do this whether or not you were awarded the job. If you weren’t asked to participate in a request for proposal, find out why. Be fearless and objective in your self-evaluation.

10. Analytics. Marketing should be measurable. What are the metrics that prove you are on the path to achieving your goals? Number of web site hits? Speaking engagement requests? Customer relationship management list growth? Pick three to five metrics and track them.

11. A confident RFP approach. The request for proposal process starts long before the ask and doesn’t end after the structure is built. Each brand touch point helps to position your firm in a potential client’s consider¬ation set and reinforces to existing clients that they’ve made the right choice.  If steps 1 through 10 are done properly, the RFP will take care of itself.

At the end of the day, the power of the tools at our disposal is only as good as the message they convey. Buyers are savvier than ever, and the hard truth is this: You can’t afford to look like everyone else.

To achieve growth, you need more than an empowered marketing team—you need to align your firm from the inside out.

About the Author:
SUSAN MILNE is founder and principal of Epiphany Studio in Richmond, VA, a brand firm that focuses on helping A/E/C firms get awarded better projects and more often. Milne's work has been recognized in national award-winning competitions and collected by the Cooper-Hewitt National Design Museum. Reach her at susan@epiphany-studio.com.

About the Society for Marketing Professional Services:
The Society for Marketing Professional Services (SMPS) is the only marketing association offering A/E/C professionals the network, knowledge, and training to build business. SMPS offers members professional development, leadership opportunities, and marketing resources to advance their careers. SMPS represents a dynamic network of 6,300+ marketing and business development professionals from architectural, engineering, planning, interior design, construction, and specialty consulting firms. The Society and its chapters benefit from the support of 3,650 design and building firms, encompassing 80% of the Engineering News-Record Top 500 Design Firms and Top 400 Contractors. Learn more about SMPS at www.smps.org.

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Should Bidders Be Allowed to Sue Each Other?

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By Bruce Jervis


Bid protests are an inherent part of the competitive bidding process. A disappointed, second-low bidder seeks to displace the low bidder by challenging the sufficiency or responsiveness of its bid. This is generally a matter between the bidders and the public project owner. On rare occasions, however, bidders actually sue each other.

A California court recently allowed two disappointed bidders to sue the winner of multiple public works contracts for “intentional interference with a prospective economic advantage.” The plaintiffs alleged the defendant underbid them only by paying its workers less than the mandatory prevailing wage rates. The plaintiffs didn’t file bid protests at the times of contract award, but they claimed they didn’t become aware of the alleged misconduct until much later.

A private lawsuit between competing bidders is rather different from an administrative bid protest filed with public authorities. Is it wise to allow this type of litigation? Does it add yet another pitfall to the low-margin, high-risk realm of public construction contracting? Your opinion is welcomed.


Comments from Readers


“I have no problem bidding small NY prevailing rate or non-prevailing rate jobs. The problem I have run into, on several occasions, is that small municipalities or small fire districts do not properly inform small local contractors (who might be inexperienced in the myriad of prevailing rate rules) of the requirement to pay prevailing rate in the bid documents. On several occasions, I have had to contend with local officials responsible for letting out small construction projects who did not know that their small construction project was subject to NY Labor Law 220 or the local official outright rejecting the requirement.
“I would never make trouble for a fellow contractor, but I have, on several occasions, complained to the NYS Labor Department Bureau of Public works at the beginning of the bidding process about local officials who did not properly inform prospective bidders of the prevailing rate requirements. On some occasions, this led to the rebidding of the project and on other occasions this led to a prompt bid addendum.
“Also, bidding small jobs where there isn't a pre-bid meeting to ask questions or questions are answered randomly to one or another bidder and not all bidders are provided with the same information is very problematic. I have seen this happen (and complained) on both small prevailing rate jobs and small jobs for non-profits (i.e., Habitat, Churches, etc.).
“Competition is the American way. I enjoy competition. What bothers me is when all of the bidders are not bidding the exact same plans, specifications, rules, etc.”

________________________________________


“If the stated facts are true, prosecution for fraud is indicated, as a contract was signed mandating the minimum wages. Also, why was the contracting office not doing due diligence in their Davis Bacon wage surveillance program they are mandated to do? They should be party to the lawsuit also, especially if they can be proven to be derelict in their duties. When the government does not do its job, then legal action in the courts is the only redress an honest and aggrieved contractor has left.”

________________________________________


“The real contractor with ethics would never try to unseat the LOW bidder. Then again there are a lot of whores (CONTRACTORS) out there that would do something like that.”

________________________________________


“When the government does not do its job, the government should pay the low bidder the money, if the low bidder can prove that the government didn't do its job.”

________________________________________


This article courtesy of Steve Rizer and Bruce Jervis, editors of the highly acclaimed “Construction Pro Network” that offers updates and insights into the changes in the construction industry.
You can view a sample by clicking here: http://www.constructionpronet.com/default.aspx

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On Second Thought -Value Engineering and BIM

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By Matthew Sulhoff
Implementation Manager, Assemble Systems
matthew.sulhoff@assemblesystems.com

Aside from “time sheet,” the two most hated words in the design and construction world are “value engineering.” By simply adding capital letters, we end up with “Value Engineering,” and now it is an accepted, formal part of the building process.  Further, by abbreviating to “VE,” it is now expected as part of the process.  Because VE is expected at some point in the project, we accept the notion of taking perfectly good design and spending time and money to undo that work, all under the guise of saving time and money.

So we spend time and money, on top of the original expenditure of time and money, all in the name of saving time and money. Resources are spent on taking all the good design elements (typically perceived as expensive) and replacing them with materials that may be lacking in quality.

In honest, blunt terms, VE really says, “We made decisions, as a team, using a gut check and napkin math, and now have to go back and make the decisions/choices we should have made in the first place.” Of course, to prevent VE entirely, you have to run a collaborative project that involves all stakeholders early in the design process, and have a firm grasp on how to fully utilize BIM (building information modeling) for better project predictability. The combination of team collaboration and successful BIM implementation yields a better design and results in data-driven decisions earlier in the process, thus delivering a better building - on time and on budget.

How Can BIM Help?

Interestingly enough, the genesis of BIM was first published in 1732 by Thomas Fuller. While it has been a philosophy for much longer, that was the first time it was published.

“A stitch in time saves nine.”

That’s BIM:  building a data-rich model that allows for crucial early decisions to be made properly, resulting in a better building.

Since full utilization of BIM to the point of eliminating VE and RFI (request for information) is not typical, what can we do? Well, we have to find ways of utilizing the power of BIM to get rid of as much of the old inefficient processes as possible. How do we do that?

First, use what you can. While there is a distinct difference between a design model and a construction model, there are enough similarities that everyone across the project team can glean enormous value. Walls, doors, windows, rooms; every architect uses these tools when designing in BIM. They simply have to, because the owner wants to see floor plans, and every floor plan includes walls, doors, windows, and rooms. 

Is it schematic? Positively.

Is it finished? No.

Is it useful? Absolutely.

Even an early schematic plan can offer great value. Understanding the spatial arrangement of rooms and the building mass allows for team members to analyze the design for everything from fire exits and potentially expensive site constraints to preliminary quantification, budgeting, and a basis for tracking design trends.

A significant benefit of BIM is trending. Trending is impossible without BIM and an easy, smart reporting tool. Never before have we had the ability to track quantities in near real time. Publishing the model on a weekly basis allows the pre-construction group to update material schedules and cost estimates as the design progresses. Each one of those weekly data points is reported through graphs, and the rest of the team is able to follow trends through the design phase, which is when the majority of cost-implicating decisions are made.

Trend reports keep running totals on pretty much anything on a BIM project.  I’ve seen general contractors watch key material quantities, such as concrete and steel, and compare them to initial budget baselines. Architects can use trend reporting to monitor space and area ratios to ensure they satisfy the program during schematic design. Construction managers can utilize trend reports to identify spikes in quantities or costs and address the issue at the point of design. All of these scenarios mean that better decisions are occurring much earlier in the project, helping us to avoid VE down the road.

Additional Benefits of BIM

Better BIM earlier in a project also allows for more thorough review of the constructability of the building by extracting quantities from the model. Currently, most of the energy expended by pre-construction teams is in counting and quantifying to help determine a cost. This is neither productive nor helpful. 

While it is true that project cost is the measurement on which the owner bases their opinion, it is only one component of the true constructability of the building. You see, the same thing can cost more or less based on the context within the building. An understanding of the challenges of actually building the building has a direct impact on the cost. This only comes as the result of analyzing the building and all the associated data. Here’s where this comes together. If the pre-construction team is using up all its allotted time on tracing and counting, they don’t have the opportunity to analyze the data to gain the deeper understanding necessary when offering suggestions for a more economical building solution.

A seasoned estimator looks for irregularities to refine selections and increase economy of scale, instead of spending the majority of their time counting objects and tracing lines.  Buying 100 of the same doors is cheaper in the long run than buying 90 of one kind and 10 of another … even if those 10 doors are slightly less expensive in unit cost. With one door type, you have one detail and one item to track on the construction site; adding a second type doubles that effort and adds to the overall cost. 

Through BIM and rapid quantification tools, you can spend your time understanding the building, understanding the data, and offering suggestions at the point of design - where the ideas will have the greatest impact on the overall project. This means less work to undo during the VE phase. Simply leveraging and extending BIM early and often means that the decisions of your team will be accurate, saving the project time and money.

The Best of Both Worlds:  Better VE through BIM

You might say, “None of my projects afford early collaboration and, regardless of using BIM, I have to go through a VE phase. How do I use BIM to help with VE?”

Simple. The same methods and techniques for rapid quantity extraction can work for VE as well. Imagine a collaboration meeting where all the decision makers from the various trades and disciplines get together and analyze the building for VE opportunities. On a screen, you have model data management software, such as Assemble, pulling quantities, filtering through the building, and helping the group to visualize the context around the items in question. The quantities are instantly verified, then plugged into the estimate, and the budgetary effect is realized in real time.

VE can be a thing of the past.  All it takes is for a collaborative team to share information and expertise with the common goal of a better building.  We all, as a collective industry, need to make the decision to let go of “how we’ve always done it” and embrace the power and potential of BIM.

Just imagine what it would be like to only make a decision once…

About Assemble Systems
Headquartered in Houston, TX, Assemble Systems is a model-based data management software company. Its flagship product, Assemble, is a cloud-based platform allowing AEC firms to leverage BIM data for increased project insight, advanced project collaboration and data-driven decision making. For more information, visit http://www.assemblesystems.com.

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Why a Board of Directors?

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By Michael Mangum


At age 33, I was named president of the family business. Despite having spent a lifetime in its shadow, I was ill-equipped to assume the mantle of leadership placed upon my shoulders. An engineering degree helped, but the 10 or so years post-graduation had been too comfortable — all spent in a virtual work cocoon where my last name was displayed on all the equipment and everyone knew I was the boss’ son. It was also largely devoid of the “school of hard knocks” lessons that ready a young leader for life’s larger challenges.

Where should I turn for help? Although I knew my father would disagree, I considered an outside board of directors. As much as I loved and respected my father, he was from the old school of pulling oneself up by his bootstraps. Dad had wrestled the business away from other family members and navigated the uncertainty of an emerging industry — construction of the Eisenhower-inspired interstate highway system — all while flying solo. He grew the firm from a sole proprietorship on the brink of failure to a thriving, market-leading concern.

Dad was a second-generation leader who displayed many founder tendencies; he was dynamic, driven and decisive. My dad led by force of character and attracted people with his charismatic style. A board of directors that would hold one accountable for performance was antithetical to all that he longed for over the years: business independence.

Admitting that I needed help felt like an admission of failure. Still, the alternative seemed far worse and was certainly fraught with far greater risk. The stakes were simply too high to deny the truth — I desperately needed outside assistance.

Part of my resolve came from my emerging worldview. Even in my relative inexperience, I saw synergy emerge when teams focused on achieving a common objective. Good ideas from one were often further developed by another. Yet, in the context of the family business and my limited experience, what did I know? At the end of my introspection, I came to the conclusion that it was unlikely my worldview would have changed — even with Dad’s experience. We had different models of what it meant to be a leader.

Fortunately, I had an ally in my brother, Chris, who shared my perspective. Because our organization needed a moderating influence to alter the prevailing family dynamic of looking inward for solutions, an outside board was essential.

Finding the Answer
If someone had asked us at that time why a board of directors, I suspect the answer would have been that we simply felt it was the right thing to do. I do not recall a clear rationale beyond a sense that boards were what smart companies embraced. Both Chris and I had board experience. We liked the collaborative dynamic and realized that it well suited our styles. While these hunches proved true in our case, the realized benefits far outstripped the perceived benefits.
Our board made me a better president in multiple ways. The clearly-defined dates on the calendar drove accountability. If a contractor was one minute past the 10:00 a.m. deadline, the bid was rejected. The last thing I wanted to do was to show up unprepared for a board meeting. Our directors were sacrificing time away from their own businesses, so I wanted to use those minutes wisely. Oftentimes, the board asked management to research a given situation and to deliver a report at the next meeting. We often lacked the organizational discipline for that type of robust analysis. Hence, the board made us better and drove us to achieve a higher standard of excellence and discipline.

As odd as it may sound, minutes of board meetings proved particularly helpful. Just the process of reviewing them post-meeting and knowing that they would be seen again at the next quarterly meeting helped keep our attention focused on the matters deemed most important. I also found that circulating board minutes to executive leadership helped shorten conversations about the status of the various tasks assigned at the previous board meeting. Rarely did we debate whether this matter was worthy of our attention and never did we discuss the time frame for its completion. The answer was always clear: prior to the next board meeting.

Wanted: More Accountability
Appreciation for the importance of greater accountability and discipline is now common in public corporation governance. For example, the Office of the Comptroller of the Currency proposed new risk standards to bring greater stability to the U.S. financial sector. Driven by a desire to avoid a repeat of the near meltdown in the fall of 2008, the board and CEO decided that the organization must have a suitable risk management framework in place. Further, it must assure the existence of a culture that adequately mitigates risk exposures. Responsibility for these measures extends personally to directors and the CEO, potentially resulting in their removal if adequate risk control measures are not taken. While this might feel excessive for closely-held concerns, it underscores how driving accountability deeper into the organization will likely lower risk, which, in turn, will likely result in improved performance.

I would often ask senior leaders in our business to present a given topic to the board, which was comprised of numerous high-profile directors who each made a strong impression on our team. Usually, all it took was a comment that a certain director was expecting a full report on this matter at the next meeting to rivet everyone’s attention.

Overwhelmingly Positive Results
For many years, there was no objective research supporting the notion that the presence of outside directors working together on a high-performing board actually generated value for the business. However, a recent study completed by Ronald Anderson and David Reeb found that firms having independent directors balancing the family influence created higher shareholder value as well as greater EBITDA. Conversely, companies where the founding family overwhelmed outside directors achieved significantly lower returns.

A well-functioning board can also be an outstanding tool when posing the hard questions to a management team. The members’ experiences are unique and differ from those of company employees. As such, their questions tend to spur greater depth of thought. The saying, “Familiarity breeds contempt,” is at work in situations like this. From time to time, management teams struggle to ask each other the most sensitive (and often most important) questions. The independence of a director makes it easier to ask the hard questions. Further, management is often more open to receiving and answering those tough questions when they are posed by an outsider. I have seen directors earn their fees many times over just by asking a particularly penetrating and insightful question.

A Resource for Understanding
A diverse board brings with it a wide set of life experiences, values and beliefs. Even social interaction between executives and directors invariably leads to an increase of one’s comfort zone. Soon, possibilities seem more numerous. Smart, successful leaders tend to have that type of impact when stepping into a new environment; they respectfully challenge the status quo. And well-chosen outside directors certainly fit that bill.

Consider this case in point: One of the most important factors for a contractor is having a clear, accurate and timely picture of a given project’s financial status. At my former firm, we closed the books about six weeks after a given month end — far too late to glean any meaningful intelligence as to how best to improve an in-progress job. This practice led to a lengthy board conversation. One director shared his experiences with multibillion-dollar companies that report earnings within a week of month end. This dramatically changed our perspective about what was possible relative to early financial reporting. It ultimately led to implementation of daily profit and loss tracking. In this instance, we did not know what we didn’t know — a potentially fatal business flaw. Fresh perspective, offered in an atmosphere of mutual trust and respect, resulted in positive change.

Measuring the Benefits
Every season for every business brings a unique set of challenges. Proactively assembled boards bring the added benefit of a diverse set of skills tailored to meet the present and future needs of the business. Our process started by making a list of the most compelling strategic issues lurking on the horizon — plus an assessment of our internal abilities. A comparison of the two revealed our most pressing needs. Not surprisingly, management succession emerged as a top issue. To help address that challenge, we recruited one director who had both lived through a generational transition in a closely-held firm and who was roughly midway in age between our two generations.

Ideally, an awareness of the need for skills above and beyond those currently residing in the organization drives the director selection process. Forward-thinking owners and managers often conduct a skills inventory, cataloging the critical talents necessary to help guide the business in the coming years. When compared to the skills inventory of the management team, such an inventory can help craft the profile of an ideal director candidate for presentation in a board prospectus.

A properly focused board ensures that both management and ownership break out of the project-oriented paradigm and begin to ask different questions. An example that sticks out in my mind was back in the late 90s, when we made the decision to launch a dot-com venture. We brought the plan to the board members, which (to their credit) they rejected on the spot. They were respectful, yet perfectly clear that our approach did not adequately protect the existing business, potentially putting far greater corporate equity at risk than the direct investment dollars.

Disappointed but appreciative, we overhauled the business model and later received the board’s full support. We went on to raise over $3 million from outside parties, only to see the venture later sold for a fraction of its original investment. Absent board oversight, we would have utilized the original plan, shouldering the full loss and putting the legacy business in peril. This one instance of drawing our focus to the strategic risks more than covered all the time and money spent on the board.

Asking for Help
It is hard to ask for help — at least I know it was for me. When I speak with leaders in the construction industry, many are fearful of allowing a board of outside directors to “peek under the tent” of their life’s work. Some cannot fathom relinquishing control — even while still owning 100% of the equity. Others feel little sense of urgency. “We’ve made it this far. Why change?” Yet the most frequent reason I hear is that they never seriously evaluated the benefits and costs of an independent, outside board of directors.

Active boards are neither a panacea nor a good fit in every situation. They require a great deal of time, energy and money in order to deliver a positive return. Success is uncertain. However, the possibility they represent is simply too great an opportunity to ignore. Ownership, in concert with management, should make an intentional decision whether or not to empower an outside board.

Whatever the decision, make it after due consideration and serious reflection. Take solace in knowing others have wrestled with the same question. Seek out peers who have experience working with outside boards. Ask them what has and what has not worked well.

After nearly 10 years of seeing the many benefits of a great board, I am convinced the balance of risk versus reward tilts heavily towards reward. We spent hundreds of thousands of dollars but reaped returns with an extra comma. While the stakes are high, the payoff is higher.

Michael Mangum is a senior consultant with FMI Corporation. Mangum’s industry experience spans 35 years, including CEO of former Raleigh-based construction company, C.C. Mangum, Inc. He is a past chairman of the National Asphalt Pavement Association and, for more than a decade, led its initiatives on worker health and safety. Engineering News-Record has named Mangum one of its 21st century leaders in the transportation industry. He can be reached at 919.785.9219 or via email at mmangum@fminet.com.

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Just Trust Me and the Contract!

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By Rory Woolsey

For contractors, and those of us working with contractors, this discussion of trust is very relevant -- particularly in the current competitive market. For example, Job Order Contracting has a strong partnering component that thrives when founded with trust. When the trust goes away, so does the contract!

Transitions: All American businesses are in transition. They now operate in an environment of global competition, rapidly-changing technology, and more demanding consumers. In the scramble to be more competitive, businesses are re-engineering, reorganizing, downsizing, and outsourcing. The question is: How are contractors impacted by these changes and what actions can they take to be more competitive and thrive (or just survive) in the current economy?

Low Bid; Best Bid: Historically, facility managers have had their hands tied with acquisition regulations that required the award of projects to the lowest bidding contractor. This has typically been the case with publicly-funded projects. Too often, the low bid winner would prove to be the contractor that also made the most mistakes in their bid. Then there are also the stories of the low bidder capitalizing on imperfect design documents with change orders as the project unfolds.

It’s true: A selection process that ignores a contractor's past performance and awards contracts only on the basis of low bid is flawed. Experienced contractors have seen the "after the fact" failings of the low bidder and they would agree; low bid is not necessarily best bid!

Trends in Acquisition: Today, contractors are being evaluated with a greater consideration of their past performance, records of quality, safety, integrity, on-time delivery, and team resumes. These points are being critiqued and quantified for a fair evaluation. This is a good trend.

This being the case, the most valuable asset any contractor can have is its reputation of positive past performance and business practices. Building a trust relationship with customers through a proven track record is essential. The single best strategy a contractor can employ to improve business volume and profitability is to invest in the asset of trust.

Building Trust: So how do you go about building a high-trust business organization? You could just say that you are "trustworthy," and even profess it on the company letterhead....this tactic has been tried. The fact is that it’s not enough to say it and read it; you have to be it and do it. In order to earn the trust of people and companies outside the company, your company must be trustworthy internally.

In organizations that don’t operate from a position of trust, their operations bog down with bureaucratic and inefficient rules and regulations, policies and procedures. An organization that puts trust at the forefront reduces social friction and encourages creativity and the sharing of ideas and knowledge. At the core of trust is the competence and character of the company and the people it is made up of. Investing in the competence and character of the individuals that make up an organization is an investment in trust. This is a simple premise that can have a powerful impact on the bottom line.

Investing in Competence: Investing in competence in an organization is a key component to building trust. Competence is an individual’s level of qualifications, skill, and ability to function at a task or job. A workforce lacking competence would not foster trust with peers, subordinates, or with customers. To put it another way: would you allow an inexperienced steel worker to install critical structural pieces for an elementary school project? Certainly not; trust would be limited.

There is much to be said for in-house training programs that keep the communication open on the latest technologies, methods, systems and practices. Investing in education with the rank and file is an investment in the organization's competence in the marketplace.

Likewise, investing in the human resource systems for screening and hiring construction people is also an investment in competence. Hiring practices are critical. Continuing to populate the workforce with marginally competent people will never nurture a culture of trust. The competence of the workforce is an asset of the organization that should be maintained and upgraded.   

Character"istics": Character is equally important to building trust in organizations, although it is more difficult to measure and quantify. An individual’s character and the collective character of the organization are revealed with time and trials in the workplace. We have all experienced people and organizations with untrustworthy character "istics" such as impatience, duplicity, dishonesty and ingratitude. These are the opposites of the "istics" that should be nurtured and encouraged -- such as patience with customers, honesty, integrity, perseverance and contribution. It is in this fashion that trust is built, along with a competent workforce. The rank and file will follow if it is clear that these "istics" are not to be compromised at any level of the company. Eventually they will become an obvious part of the culture.

Just Trust Me: An organization's workforce is its most valuable asset for continued health and profitability. Trust strengthens the company, the workforce and its relationship with the customer. Social friction is the result of a culture lacking trust. When a company turns this around, and maintains trust in all aspects, this friction will be minimized. And you’ll notice that the overall efficiency and effectiveness of systems and processes has increased.

Contractors can see marked improvements in work volume and profitability by investing in the competence and character of the company. Trust resulting from competence and character will lead to the building of a trustworthy organization!

Rory Woolsey, CEP, has worked in Management and Engineering for the construction industry for 33 years, starting as a construction laborer in Billings, Montana, in 1972.

He has since held positions as a field engineer, project manager, MIS manager, testing laboratory manager, estimator, senior editor, designer, structural engineer, and general contractor. He was the President of The Wool-Zee Company, Inc., construction consultants for 20 years. Rory is currently an Accounts Manager for the Gordian Group, the parent company to RS Means.

Mr. Woolsey has also held positions with some of the leaders in the construction industry, such as Bechtel, H.J. Kaiser Constructors, and the R.S. Means Company, and has worked on projects ranging from heavy, military, industrial, commercial and residential.

He has given over 7,000 classroom hours of instruction nationally to architects, engineers, contractors, and facility managers on topics of project management, CPM scheduling, construction estimating, facility maintenance, partnering, and leadership. Rory is a Certified Estimating Professional (CEP) through AACE International.

This article was taken from a post on his blog by permission:
woolseyestimating.blogspot.com

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“Why Doesn’t My Architect Care?”

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The reality today is that capital projects are often driven by money, not architecture. Owners and developers are looking for great creative designs with excellent function. However, the most important factors in most capital projects are profit, revenue, and/or cost.

Traditional delivery models separate the activities of architects and general contractors. Early project decisions are often made independently and then, due to limitations on time and money, very little information other than a simple site plan, a building plan, and perhaps one or two elevations are communicated to the general contractor for costing purposes. As a result of the limited interaction and limited information, the individual estimator is making assumptions about the project that substantially impact the quality, scope, cost, and schedule of the project. Information related to a project financial performance in the form of project proforma relies on information from both parties in the form of project gross area, site and building costs, and project duration. Decisions about the viability of the project inherently have misaligned and misunderstood project information. Where once upon a time overinflated costs would make up for scope misalignments, today’s pressure on the estimator to make the number as tight as possible often means that once the number goes into the proforma the budget is what the budget is.

As the design progresses the architect develops highly creative solutions and often wows the project owner with their solutions. Somewhere downstream, when the design solidifies, the general contractor will re-estimate the project at which point more detailed and defined quantities and specs are used to build an updated estimate. It’s only at this point that the problem introduced months earlier into the proforma - the budget not aligning with the anticipated quality and scope become apparent. At this time the finger of blame is pointed in all directions but often the owner points the finger at the architect and asks “Why doesn’t my architect care?” Obviously the problem is neither the architect nor the general contractor but rather the process.

New forms of delivery are intended to remove this problem by engaging the general contractor and architect early in a collaborative form of delivery; Design Build, IPD and even CM at Risk have been used to solve this problem.  These methods of delivery have the ability to enable collaboration but are more often than not contracts of law rather than rules of engagement and none of these by their sheer nature solves the problem described in this article. The solution is to redesign the process, not the contract.  The process should engage the owner, the architect, and the general contractor at the earliest phase of the project to understand the owner’s goals, financial constraints, timeline, and expected quality and scope. The team should collaboratively work on developing not one but multiple solutions. Each solution should not focus only on form or function but engage the entire group in a discussion around cost and schedule. Where difficulties arise the team should jointly solve the challenge and agree on solutions before any scope, cost, or time is used in the project proforma.

A project that implemented this methodology was the Methodist Mansfield Medical Center project in Mansfield, Texas. Denton Wilson, Vice President of Design and Construction for Methodist Hospitals, recognized that the contract was not the most important part but rather the process of engagement and collaboration of the owner, architect, and general contractor. The medical center project had a three phase team selection process: request for qualifications, request for proposal, and request for collaboration.  The first two phases (RFQ and RFP) were typical of a CM at Risk project pursuit.  The request for collaboration (RFC) was a two-week process that gave the top two ranked general contractors in the selection process access to the owner, architect, MEP engineer, and structural engineer. 

The RFC was an intense process allowing the general contractor to dive into the project, work with the team, bounce ideas and solutions around the table, and formulate a plan to approach the project.  At the end of the two-week phase, the owner, architect, MEP engineer, and structural engineer gathered to make their decision on which general contractor would be selected to work on the project.  This extra step in the selection process allowed the entire team to be confident with whom they are working with and get a jump start on the building process.  It also allowed for a greater understanding of scope, risk, and responsibility that is shared by the team.

The project team also implemented Target Value Design through the RFC process.  Through the team’s collaboration they were able to develop a conceptual estimate with the architect sitting at the decision table.  Discussions were not about finger pointing but more of a conversation of what the project would entail to meet the owner’s goal of their building while being mindful as to what each expert brought to the project. 

John Reich, Preconstruction Manager of Healthcare at The Beck Group said, “One of the keys as we go through the design process is to move all value engineering and rework from where it is traditionally done downstream of a project, to the very front end.”  Decisions were made for the overall project’s betterment.

Doing away with the blame game and encouraging cooperation leads to better projects and, in a bigger picture, industry.  Having an owner place priority on collaboration ensures that they are receiving the best their budget can afford while reducing scope creep and unforeseen value engineering.  Going beyond the black and white of contracts to incorporate collaboration delivers an ethical built environment that is better for our communities. 

About the Author:
Stewart Carroll is Chief Operating Officer of Beck Technology, developers of DProfiler BIM software, based in Dallas. He has been a lead A/E/C technologist for over a decade and continually speaks on the integration of cost and scoping technologies to owners and developers. He can be reached at 214-303-6200, stewartcarroll@beck-technology.com, or on LinkedIn www.linkedin.com/in/stewartacarroll.

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Project Evaluation– A Practical Checklist for Bidding

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When bidding, always use company guidelines established to prioritize estimating time and expense to those projects that offer the highest potential profit. In this checklist you'll find examples of some items that should be given consideration whenever bidding a new project - no matter how large or how small:

(  )   Type of construction

(  )    Project location

(  )   Construction schedule

(  )   Time frame

(  )   Financial ability

(  )   Bonding requirements

Management should develop estimating and bidding policies with guidelines for rating potential projects.  Criteria could include:

(  )   Projects must yield a predetermined minimum profit.

(  )  There should be an optimum number of bidders.

(  )   The project is within the geographic target area.

(  )   Current negotiated work that generates an estimate/bid project.

(  )   Projects with reasonable opportunities for future negotiated work.

(  )   Any project that will enhance the company’s market position.

(  )   Must have available management team with skills in project type.

Develop policies in concert with the company’s business plan and corporate goals. Positively defined policies reduce emotionalism that may exist in project evaluation. Develop these policies so answers to questions will determine whether it is in the best interest of the company to estimate or bid the project.

Include these questions when developing policy:

(  )   Who is the owner?

(  )   Is there prior experience with owner?

(  )   Is the project federally funded, thereby requiring Davis-Bacon wage controls?

(  )   Is the project publicly funded, thereby requiring State Prevailing Wage Controls?

(  )   Is it necessary to employ a project manager or superintendent, or is the current staff capable of managing the work?

(  )   Is the project for an existing client?

(  )   What are the prospects for negotiated repeat business?

(  )   Can the anticipated project generate enough margin/profit to warrant company involvement?

(  )   How will the owner fund the project?

(  )   Is funding through appropriations via Congress, state legislature, city council, board of supervisors, fund control or letters of credit?

(  )   Who is the architect and what is the company’s prior experience with them?

(  )   Location of project and if there are requirements for apprenticeship or union labor.

(  )   When will the project commence?

(  )   Are there enough company assets to serve as internal “banker,” or is short-term financial capital required?

(  )   Are performance/payment bonds required? If so, is there sufficient capacity?

(  )   Are there other bidders? If so, do the other bidders have a similar company make-up, structure, volume, and project management approach? If not, does the difference improve or diminish the chance of being the successful bidder?

(  )   What is the chance for enhanced margins or profit through scope additions?

(  )   Does the scope of work require performance by a prime/general contractor, or does it require a subcontractor acting as prime contractor, or possibly a subcontractor to a prime/general contractor?

Estimate Due Date/Bid Due Date

When there is a decision that the project falls within the guidelines of company policy, make a determination to bid this project at this particular time.

 

This checklist excerpted from the Ninth Edition of Standard Estimating Practice, written by the American Society of Professional Estimators. This unique manual of professional practice provides a step-by-step blueprint for developing accurate and clearly documented cost estimates. Available at BNi Books at www.bnibooks.com


 

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The Benefits of Real-Time Financial Data

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By Josh Newland, Product Manager, Procore

As project management and related administrative tasks move to computerized platforms, significant savings can be realized through a more immediate and frictionless transfer of information. For the most part, these platforms arose as a natural outgrowth of existing knowledge storage––that is, scheduling software was developed for schedulers, estimating software was developed for estimators, and accounting software was developed for accountants.

Time spent processing information is one of the biggest drains on efficiency during a typical construction project. The traditional flow of events gets bogged downin correspondence, repeated data entry, and waiting for key players to review documents and reports. Expediting these tasks and improving their response time is one of the best ways to control project scheduling and costs.

A logical first step is to improve knowledge transfer between departments, enhancing -- even further -- the continual flow of information. Gradually, a greater number of team members are gaining access to a greater amount of information. Getting it at the moment they need it reduces costly delays and miscommunications. Hundreds of individual data categories can feed into the overall project management and/or job cost account. Aggregating and interpreting project data, including financial data, is an essential component of real-time project management.

It’s particularly important that project team members understand the specific ways in which financial information can improve overall project management and performance. A serious amount of value engineering and cost savings can be accomplished during a project’s planning and design stage. However, once construction is underway, the goal is to stick as closely as possible to the schedule and design details as they have already been established. Why is this? Because any deviation has the potential to cause delays.

Unfortunately, late-stage changes and miscommunications tend to have a domino effect: things can quickly crescendo out of control. It is best, therefore, if real-time tracking and data input, facilitated by user-friendly software and mobile devices, can be leveraged to promote adherence to the approved drawings and the construction schedule.This will also enable quick course correction when things go wrong. There is no need to wait for the end-of-month forecasting efforts to glean project insights… they are available whenever the software is logged into, without the need to manually put together separate data sources to see the full picture as it exists in real time.

Using the Tools to Maximize Efficiency
Some of the most appreciablebenefits of using management and accounting software are actually automatic byproducts of the systems. Email chains are automatically preserved and filed, keeping a paper trail at everyone’s fingertips. Routing and approvals are improved throughout the organization, thus positively impactingturnaround time and reducing miscommunication. Perhaps the most significant factor is that, when individual team members see numbers in real time, they can instantly form a comprehensive sense of a job’s status. Some potential problems can be staved off completely just by having information -- before it is even known to be needed.

Integrated systems can significantly reduce the administration burden of routine tasks, and as a result, increase profitability and the volume of work that can be handled. One example is in the labor tracking and payroll process. Employee time can be submitted in the field via phone or tablet. It’s possible to collect union dues, track overtime, get time approval and produce certified payroll reports without manually entering the information in separate software or having to collect and process paper documents. The payroll data can, in turn, populate other databases, such as tax or federal forms. Administrative tasks such as direct deposit and address changes also become simplified.

In addition to labor tracking, inventory control can be streamlined and optimized. Current systems allow for field data collection of equipment and materials information: What has arrived on-site? Is there more (or less) on hand than is needed? Knowing what is available, and where it is stored, can help keep supply amounts close to actual demands, controlling costs without causing delays due to emergency re-orders. Integrated accounting data facilitates quicker billing, thereby improving cash flow. And maintaining more detailed accounts of how materials and equipment have been moved between jobsites also results in better billing accuracy.

Tracking of subcontractor contracts, change orders and payments are improved and collected in a single location. No longer are time and energy lost to troubleshooting details on subcontractor and vendor compliance issues. Having immediate access to forms and paperwork allows for tracking and automation of compliance status on insurance, lien waivers, etc. In addition, timely email notifications of non-compliance can enable swift action, such as blocking payment.

Before the availability of collaborative software, there were real trade-offs involved in taking the time to manually update multiple separate reports and tracking down just the right folder or form in which to update a single fact or figure. The time lost when making such tiny updates to the system could easily seem to outweigh any benefits of doing so. Nevertheless, often those small omissions did lead to significant work stoppages or add up to greater losses than would have seemed likely when considering the unreported data points individually.

Historically, mistakes and inaccuracies have exacted heavy tolls in terms of job performance and profitability. However, having a single data entry update across multiple platforms, in real time, prevents errors and duplication. Easy access to cost information can also alert personnel to possible problem areas. For example, costs that are unexpected or don’t match the original estimate may be a red flag for a systemic problem. When personnel are able to easily compare related data, these issues can be spotted early.

Companies have come to rely on databases for generating an endless number of reports that guide future business decisions. Improving database accuracy by capturing data as a project progresses can enhance a company’s performance on future tasks as diverse as forecasting and estimating to equipment maintenance and replacement.

It is no longer the case that real-time financial data is just for the accountants back in the office. Having project managers and other jobsite personnel tap into the same system can have a number of advantages––ones that have very visible and immediate payoffs.

Josh Newland is Product Manager of Procore, a cloud-based construction management software application that strives to make your project management effortless, one task at a time. Find out more at www.procore.com

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Make sure you know the risks in the “total cost” theory of damages litigation

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In many instances, contractors assert litigation claims against the general contractor or owner using the “total cost” theory of damages. 

This method of damage calculation is often preferred by contractors, as it is an easier method of proving up damages. The contractor does not have to tie each damage calculation to specific acts or omissions by the defendant; a total cost calculation is simply the total cost incurred minus the bid amount. 

While this method is easier and usually results in a larger damage calculation (because it captures more costs), this method of damages is not preferred by the courts in California. 

The use of the total cost method may reflect:
• lack of proper project documentation or recordkeeping by the contractor
• a lack of proper project management by the contractor
• or a lack of sufficient knowledge of the contractor as to the risks involved in presenting a total cost claim.

If you’re a contractor planning to assert a total cost claim, make sure you know the stringent requirements that you must meet in order to qualify for this type of claim  . Understand that, if you can’t meet those requirements and prove your claim, you stand to potentially recover no part of your claim. 

You should also be prepared to employ an expert construction cost consultant to verify and certify the key requirements of a total cost claim.  Failure to employ a qualified expert greatly reduces your chances of success in justifying the total cost claims made.

The evidentiary proof for a total cost claim is significantly less than an actual cost claim.

An actual cost claim involves the presentation of specific breaches of contract by the defendant (usually the owner or general contractor), with direct ties to labor, material, or equipment costs incurred by the plaintiff (usually a general contractor or subcontractor) on the project. 

Evidence usually involves project documents identifying decisions made by, or direction given by, a contractor or owner to the plaintiff.  The plaintiff also normallyprovides daily work tickets and/or other supporting documents that evidence specific costs incurred by the plaintiff on the days and work items involved with the acts or omissions of the defendant.  This evidence allows for a direct evaluation of whether the defendant’s acts or omissions actually caused the damages, and whether the costs are justified for those acts. 

On the other hand, a total cost claim simply requires a contractor to assemble all costs heincurred on the project -- and then subtract hisbid value -- to determine the difference in value which heasserts as hisclaim in the litigation.  The contractor, in this instance, can simply assemble all hisjob costs, either through hisjob cost report or bills hehas incurred on the project.  There is no requirement that any of the costs incurred be tied to any specific act, omission, or breach of contract by the defendant.  It is for this reason that many plaintiffs attempt to use the total cost theory.  However good this sounds, there are significant legal hurdles that must be met by any contractor using the total cost theory, which, if not met, will potentially cause all of the contractor’s claims sought within the total cost claim to be dismissed or greatly reduced.

Total Cost Claims are Disfavored in California

The law requires a contractor, as a prerequisite to obtaining recovery for alleged additional work, to prove hisdamages through the “actual cost method” and expressly disfavors the use of “total cost” or “modified total cost” theories. 

The California Supreme Court, in Amelco Electric v. City of Thousand Oaks, noted that the “total cost theory has never been favored,” but rather “tolerated only when no other mode was available.”

A contractor must pass each part of a four-part test before that contractor can use the total cost method.

The trial court must first determine that the plaintiff can show that:
(1) proving the actual damages is impracticable
(2) the defendant, and no one else, was responsible for the alleged added costs
(3) plaintiff’s bid was reasonable
(4) plaintiff’s actual costs were reasonable

If allowed by the court, the plaintiff must provide evidence supporting each of these four tests to support a total cost claim.  If any of the tests is not proven, then the entire total cost claim can potentially be dismissed.

The first test required of any plaintiff is perhaps the most difficult to meet.  The contractor must show that it was impracticable to prove actual damages incurred.  Normally, a contractor tracks actual labor, equipment and material costs on a daily basis via daily work reports or other similar job reporting records.  In these types of records, it is possible to identify the work tasks that were performed on a daily basis, as well as the labor and equipment expended in that work. 

Courts have held that any failure on the contractor’s part “to maintain accurate cost records during performance” supports the rejection of a total cost claim in light of the contractor’s ability to properly track costs. Thus, the contractor will have to show that the claims were not segregateable from its overall costs.  Veteran cost consultant Ted Scott, of Secretariat International, is of the opinion that “any prudent contractor should be tracking costs on a day-by-day, and work- element- by-work-element basis, and thus it is extremely difficult to justify that it is impracticable to identify actual costs for any claim.” 

In some instances, contractors look to total cost claims because their project records lack detail as to what work was being performed and what costs were attributable to specific work tasks.  Also, some contractors no longer have access or support from the personnel that were involved on the project, making it more difficult to tie actual costs to breaches by the defendant.  However, employing an expert to comb through the contractor’s records and also the general contractor’s or owner’s project records may yield sufficient documentation to support actual cost claims, without the risk of a total cost claim.

Having passed the first test, it’s not uncommon for plaintiffs to overlook or improperly justify the second test, (consisting of proving that all costs asserted were the sole responsibility of the defendant).  Contractors must be able to show that none of the costs are attributable to their own mistakes, inefficiencies, or subcontractor defects.  In most instances, mistakes or inefficiencies occur due to the contractor’s own forces or the acts of the contractor’s subcontractors or suppliers.  The only way to properly get around these difficulties is for the contractor to use a “modified total cost claim” that removes any costs due to other entities (subs, suppliers, etc.) from the claimed amount.Take it from me, this is the prudent approach to take when using a total cost method of calculating damages.  Keep in mind, however where it can be shown that the contractor has included costs for which he is responsible, the entire claim can be dismissed by the court. 

In rare instances, California courts have allowed the “jury verdict” method of awarding a percentage of the contractor’s total cost claim rather than dismissing the entire claim. These jury verdicts typically take place when all claim costs are not directly supported by evidence of a contractual breach.  In these instances, the court determined that the claim was such that “accurate assessments of costs ‘as planned’ are difficult, if not impossible to ascertain,” and that precise allocation of portions of claims were no more valid than a reasonable allocation of total costs by the court in determining an appropriate award. 
It should be noted that these jury verdicts are rare instances involving complex construction disputes, and where it was deemed impossible to determine actual costs for specific breaches of contract.  In most instances, contractors will not meet this standard, and thus should not rely on the assumption that the court will use the “jury verdict” method.

The third test   that the contractor’s bid was reasonable is also often overlooked within contractor’s proof.  Depending on the contractor’s experience in the type of work that is the subject of the litigation, the contractor may not be able to certify that his bid was reasonable.  Normally, who ever supports this test must have sufficient experience to support a conclusion of reasonableness.  Again, this can require the testimony of an expert in support of the claim.  Also, where it can be shown that the contractor had any significant under-pricing on his bid, it will be difficult to show the bid was reasonable, and the entire claim may be subject to either being discounted or dismissed.

Lastly, the contractor must show that all costs asserted in his total cost claim are reasonable.  Thus, where the contractor fails to mitigate hiscosts or fails to perform the work with reasonable efficiency, it will be difficult to meet this element.  Defendants normally attack this element by showing specific instances where the contractor’s workers madeimproper assumptions or were not reasonably efficient, as compared to industry norms. 

As you can see, there are many ways to attack total cost claims via the required elements.  In a lot ofinstances, contractors who have limited staff and below-standard documentation turn to the total cost method.  It appears that contractors look to the cheaper preparation costs of the claims and the minimal impact to their own staff -- as well as the higher claim amounts -- as the reasons for choosing the total cost method. 

It also seemsthat contractors lack complete understanding as to the significant hurdles theymust clear in order to succeed with a total cost claim.  Therefore, contractors should seek legal counsel from those with experience in construction litigation, and have an in-depth discussion with that counsel regarding the risks versuspotential rewards before proceeding with a total cost claim in California.  Failing to follow this path can create unrealistic expectations on the part of contractors as far as potential recovery in litigation. 

While this is not an exhaustive discussion on the topic of total cost claims, hopefully it provides sufficient information to create a proper dialogue regarding damage calculations prior to filing suit.  Only through informed decisions can a party make proper choices for litigation, and avoid outcomes that are widely divergent from their expectations.

John H. Conrad Esq. is an associate at Gibbs, Giden, Locher, Turner, Senet & Wittbrodt LLP.  Mr. Conrad was been involved in all aspectsof the construction industry for over 20 years prior to becoming an attorney.  His experience was both as a licensed Civil Engineer and as a design/build contractor.  He can be reached at jconrad@gibbsgiden.com

The content contained herein is published online by Gibbs Giden Locher Turner Senet & Wittbrodt LLP ("Gibbs Giden") for informational purposes only, may not reflect the most current legal developments, verdicts or settlements, and does not constitute legal advice. Do not act on the information contained herein without seeking the advice of licensed counsel. For specific questions about any of the content discussed herein or any of the content posted to this website, please contact the article attorney author or send an email to info@gibbsgiden.com. The transmission of information on this, the Gibbs Giden website, or any transmission or exchange of information over the Internet, or by any of the included links, is not intended to create, and does not constitute, an attorney-client relationship. For a complete description of the terms of use of this website, please see the Legal Notices section at http://www.ggltsw.com/ggltsw-legal. This publication may not be reproduced or used in whole or in part without written consent of the firm.
Copyright 2014 Gibbs Giden Locher Turner Senet & Wittbrodt LLP ©

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Estimating Spreadsheet Best Practices – Use of Multiple Sheets and Tabs

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We’re going to look at several actual estimating spreadsheets and see what we can discern as possible best practices. We’ll do this by examining estimating templates used by various public agencies and posted on their websites for public use. Links to the templates will be included for your use. First, we’ll talk about the use of multiple sheet “tabs” for organizational purposes.

Three Sheets Every Estimate Should Contain
In a spreadsheet program like Excel, a single spreadsheet file may contain multiple sheets. In Excel, each sheet has a tab to facilitate accessing the sheet. You can label the tabs to identify the contents of the sheets, and can color code them, and make them hidden and/or protected. For the purpose of a construction estimate, a common practice is to use two or more tabs in a single spreadsheet file to organize different parts of the estimate. In our first sample, from the British Columbia Ministry of Transportation and Infrastructure, there are three tabs:
• Project Worksheet
• Assumptions Worksheet
• Cost Element Worksheet
Let’s take a look at why these three sections represent the three primary tabs every estimate spreadsheet should have.

Project Summary Tab
Every estimate should have a separate tab that serves as a project overview and estimate summary. Information on the summary worksheet should include project description, location, scope summary, project number, RFP date, RFP number, RFP amendment number(if applicable), bid date/time, owner information, general contractor information if this is a subcontractor estimate, estimate status, person in charge of the estimate and, of course, the total estimate amount. Depending on whether the estimate is being prepared by an owner, architect, contractor, construction manager or subcontractor, there will be differing degrees and types of information needed on the summary.

Commentary and Assumptions Tab
This worksheet can serve as a checklist of things to prepare, perform or consider during the course of developing the estimate. Owners will have a different set of considerations, including property acquisition and design costs, than the contractor bidding on the construction portion of a specific project. Having a template, which can be updated and refined with use, helps develop consistency and completeness in construction estimates, and is the first step in contractors developing their own internal “knowledgebase” for use by other (and future) employees.

Estimate Details Tab
This worksheet is the workhorse of the estimate. It will include takeoff quantities, unit costs of labor and material, support costs, and overhead and profit. In the case of our example, which is set up for an owner, the line-item costs are input as a lump sum (and color coded in blue). Project management, planning and design costs are automatically calculated as a percentage of one or more of the direct costs. This worksheet also includes a column to add a contingency amount for each line item.
The three major tabs that every spreadsheet-based estimate should have are:
• Project Summary Tab
• Commentary and Assumptions Tab
• Estimate Details Tab

These three worksheets provide the contractor with a consistent way to organize an estimate, easily find information, and document pertinent information discoveredover the course of producing the estimate. In addition, there are a number of other tabs a contractor might consider adding, depending on the nature of work and complexity of the estimated projects. We also offer a few additional tabs you may want to use when producing an estimate.

Estimate Calculations The contractor can maintain calculations in the Estimate Details tab, or elect to keep all calculations in a separate tab. Typically, this might include various elements of work that may be needed for a single bid line item. It could also include labor productivity calculations, disposable materials and supplies, support items such as scaffolding and cranes, etc.

Estimate Details “Sub-tabs” For contractors preparing their own estimate for various divisions of work, such as HVAC, electrical and plumbing, keeping separate tabs for each division, or trade, can aid organization of data, as well as facilitate multiple people working on the same estimate.

Request for Clarifications and Pre-Bid Records A separate tab is a good place to jot notes about items that need further clarification from the owner, as well as other data pertinent to preparing an estimate, such as information provided at pre-bid meetings and RFP amendments. This might also be a place to include photos and other notes from pre-bid site visits.

Bid Submission Checklist While the Summary or Assumptions tab may have this information on small projects, it could be useful to have a checklist for submission of a final bid package, including a list of all documents that need to be signed, small business and diversity requirements, bonds, and other information required by the owner.

Bid Results It is always a good idea to record the results of the final bid right in the work sheet. This is particularly useful for unit price contracts, as it gives a range of the cost expectations of competitors.

Contract Performance If you win the bid, this tab represents the “as-built” estimate for the project. Variances from the bid can be easily calculated to help future accuracy, and notes can be added for aid with future estimates.

The above tab recommendations are not meant to be exhaustive, and you probably have your own preferred way of keeping spreadsheets. There are a number of other tabs that owners or contractors might consider adding to an estimate. The primary takeaway from this article is that developingand working with a template to perform an estimate is a best practice -- no matter what the title and content of the various worksheets used. Starting each estimate from scratch is a formula for errors and omissions.

This article courtesy of Steve Rizer and Bruce Jervis, editors of the highly acclaimed “Construction Pro Network” that offers updates and insights into the changes in the construction industry.
You can view a sample by clicking here:
http://www.constructionpronet.com/default.aspx

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The Contractor’s Guide to Estimating Software What to Look For (and Look Out For!)

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One thing is certain: in small to mid-sized construction businesses today, your ability to present your customer (or prospective customer) with a timely, accurate estimate or bid can often seal the deal and land you the job.

As a contractor, you need to know what to look for (and look out for!) when shopping for estimating software. We’re equipping you with this guide to clear the clutter of information surrounding the sales force automation software currently available, and give you the right questions to ask to find a flexible, easy-to-implement, revenue-boosting solution right for your organization and its sales force.

In a study by Software Advice made up of 385 participants -- over 78 percent of which happened to be small companies of 20 employees or less -- 67 percent were still using “non-specialized methods” of managing contacts and tracking leads. In other words, spreadsheets and email clients are being used for most of the work, while a shockingly large 22 percent of companies are admittedly doing nothing to aid their business’s efficiency in tracking lead generation and making sales.

We’re quite familiar with small to mid-sized contractors who are facing the challenge of implementing streamlined, sales-friendly software to aid customer relationships. We communicate regularly with companies who currently have no systems in place, keep pen and paper notebooks, populate extensive -- but inconsistent -- spreadsheets, or simply find themselves frustrated daily by oversized enterprise customer relationship management (CRM) systems that don’t fit their business. And amongst these companies, we’ve identified a common problem at the root of it all: small to mid-sized contractors simply don’t know what to begin to look for when they start shopping for software.

In fact, too many contractors got burned because they chose estimating software that doesn’t really address their needs, solve their problems, and help them make more money. They follow the path of self-proclaimed “best-in-class” solutions that
just aren’t flexible enough for their business, or they get overwhelmed by the uncertainty, simply do nothing, and head back to their spreadsheets.

The Search for Estimating Software

Let’s clearly state the shared goal of those evaluating estimating software: contractors are looking for systems to help them run their businesses more efficiently. The residual benefits of a more effective business are extensive. They include, but certainly aren’t limited to, a happier sales force with greater productivity and retention, more satisfied customers ready to buy, and an increased ability to quote more work, thereby bringing in greater revenues.

In data supplied by Software Advice, 76 percent of more than 5,200 smallto mid-sized businesses shop for estimating software to aid in sales automation, easing the burden placed on the sales force and increasing efficiency in the office as a whole.
Said simply, all research data and responses regarding why smallto mid-sized businesses desire some sort of software comes down to improving the sales process, better nurturing leads, and, as a result, generating more revenues.

But, when it comes time to shop, they’ve yet to prepare themselves to ask the right questions to make sure they don’t fall down the rabbit hole. That’s why we’ve compiled the most important things to consider to be sure you’re getting the best solution for your business.

Four Key Elements to Evaluating Estimating Software:
We’ve identified four key components in evaluating a software system that will help your business increase efficiency and make more money. These include:

1. Ease of use
2. Increased efficiency
3. Boost in sales
4. Price points

In the following sections, we’ll expand upon each of these elements, and arm you with simple-to-follow worksheets, along with the right questions to ask and information to gather, as you embark upon your exploration for the right estimating software for your business.


Key Element #1: Ease of Use

The first element is obvious, yet also likely the most overlooked. Usability has to be top of mind when shopping for estimating software, because, quite simply, if it’s not easy to
use for your least tech-savvy salesperson who suffers from fat finger syndrome, it’s not going to help him or her sell more jobs, because they’re not likely to use it.

Implementation time for a new piece of software is a good indicator of its ease of use. Remember, all time spent actually implementing the system and getting your staff trained presents an opportunity cost. The longer it takes to integrate the system into your business, the greater the adoption risk that exists.

Software that takes months to implement, and promises “Success Coaches”, “Business Coaches”, “Dedicated Support Teams”, “Implementation Specialists”, and any other form of “super team” ready to help you implement the software(even at no cost), probably means it’s a whole lot of trouble. If you need an outside IT team to step in and assist with technical specs just to get the software up and running, it’s probably not the easiest software to use.

You can also get a great idea of usability from the level of support the system offers. Oftentimes, if you have to pay for support, it’s probably because the software is complicated and the company who created it has to charge for the hours spent helping users, or otherwise risk losing money.

If you can easily get in touch with customer support for the software via phone, email, or online chat --and it’s free -- you can rest assured that the company feels quite certain its product is so usable that their support will hardly be needed.

For all sales people, usability is critical to adoption of new technology. If it’s not easier to use than their trusted spreadsheets or pen and paper, it’s likely they’ll lack interest in learning it. Ease of use means making their life easier, not adding another hurdle to the sales process.

Key Element #2: Increased Efficiency

As mentioned, the top sought-after outcome of purchasing construction estimating software is increased efficiency.

Some of the most important aspects of efficiency in contractor sales include document storage, collaboration features and aces, and mobile sales enablement. Let’s explore
each of these further.

When it comes to generating proposals and making a sale, document storage is incredibly important to turnaround time and accuracy. When you have a customer who’s eager for a quote, you most certainly do not want to be hunting down pricing documents, materials lists, or proposal templates. Stop the chase, and make sure that your new estimating software has a document library that’s easy to organize, easy to update and maintain, and accessible at the tap of a digital button.

Now, if software improves each sales team member’s efficiency individually, you’ve only satisfied half of the equation. Team members must also be able to effectively collaborate with other team members, as well as those back in the office. Access to the document library should be readily available, and its mode of storage should foster collaboration so that team members can see updates, coordinate changes, and eliminate back and forth communication and overlap of work.

A huge piece of access and collaboration in increasing efficiency is the ability to take your software and use it anywhere -- from tablets and phones, in the field or in a coffee shop. This is referred to as “mobile sales enablement”, and it’s important to understand that mobile applications for estimating software are not created equal.

While 96 percent of business owners shop for a cloud-based solution rather than an on-premise system, they fail to realize that many “mobile” solutions do not allow you to access documents or generate quotes while offline, putting your team at risk of being on site and unable to deliver a quote because they don’t have mobile service, Wi-Fi, or a reliable air card. It’s important to understand just how mobile your new software is --and its limitations.

Key Element #3: Boost in Sales

While the number one goal in purchasing contractor estimating software is increased efficiency, it’s undoubtedly because of its residual effects, perhaps the most important
of which is increasing revenues and watching the bottom line rise.

CRM thought leader Paul Grenberg says it best: “In their early days, CRM systems were really good at creating operational efficiencies. They still do this today, but now it’s also
about how effective they can make each interaction in terms of actually growing revenue -- not just cutting costs.”

In addition to allowing your sales team to quote more work, contractor estimating software should have capabilities that allow them to better impress customers and more easily close the sale. This should be apparent from the first impression.
Keep in mind that we live in an experience-driven economy, where customers have come to simply expect great customer service. Beyond that expectation, they crave differentiation, and in more than snazzy uniforms and beautifully-wrapped service trucks. Your new estimating software should give you this edge, so that you can impress with clean, helpful technology from the very first customer interaction. Tech impresses prospects, from young, millennial entrepreneurs to experienced, Baby Boomer business owners.

Once you’ve made a good first impression, your new estimating software has to be able to help your sales team close the deal. The software should be capable of generating professional, customized quotes with your logo, slogans, terms and conditions, and product photos. Customizable formats and templates that streamline work are important in delivering a polished, professional estimate.

Easy configuration of quotes and templates play in to the next key to boosting sales:
decreasing turn-around time on quote delivery.

Once a quote is requested, each second that passes gives the customer more time to cast doubts, second guess themselves, or find another provider. Your estimating software should streamline the sales process, eliminate all unnecessary steps, and reduce the amount of time needed to actually deliver.

Time is a limited commodity.
Good estimating software will eliminate backlogs and deliver professional, polished, and customized quotes quickly so that you can keep your pipeline full and flowing,
guaranteeing an increase in sales and revenues.

Key Element #4: Price Points

Naturally, a huge element of new software is cost. Every business, no matter what size, has different budget parameters, which means the cost of estimating software is flexible. There’s no “good” or “bad” price. Instead, we’d like to point out the following key considerations as you evaluate software based on price points.

The first consideration is support. As mentioned before, the cost of support can be an eye-opening indicator of ease of use, but the cost of support is also imperative to determining value. If consistent support is needed to use the software, it must be readily available and affordable to your company.

In addition, if you’ll require any outside help to implement the system --whether
from the software company or from a third-party consultant --you’ll want to price that out ahead of time and add it on to the overall price of the software, since it cannot be used without it.

Opportunity costs
These are also important to consider in price points. Software implementation that allows your organization to conduct “business as usual” while setting up, training and migrating to the new system is key. If, on the other hand, software implementation requires any downtime in your systems or training for staff, remember to consider the time your resources are disrupted from their main task.

What does it really cost?
Next, consider your current sales process. If the software promises to streamline sales, evaluate exactly which steps of your sales and estimating processes it will eliminate. The time, and therefore money, saved by getting rid of those steps should exceed the price you’ll pay for the software.

And finally, since we’re talking bottom line, what it really comes down to when evaluating price is: This software should empower your team to create more estimates in less time, thereby helping them close more sales, increase close rates,
and increase the overall sales cycle to garner more revenues.

Chose the Right Estimating Software for Your Business
The research process for new estimating software should not be overwhelming, confusing, or lengthy. These checklists should help you break through the clutter to find estimating software that provides a solution that fits your business and that can be implemented quickly, so that you can realize benefits immediately.

This article previously appeared on the JobFLEX blog. Job Flex provides the easiest-to-use quote app that makes contractors more money. For more information on how JobFLEX can help contractors streamline their sales systems and scale their business growth, visit http://www.job-flex.com/demo or speak to a Product Expert by calling 855.354.3539.

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Contractors with a Job Costing Library Have a Competitive Advantage

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By Randall DeHart, Fasteasyacounting.com

Every contractor has a Job Costing Library. Some keep it in their head, some keep it on paper with names like completed jobs, bids, estimates. Others keep it in their QuickBooks for Contractors software records. Still other contractors rely on places like RS Means or BNi Building News for comprehensive databases of construction costs. These are similar to the "Flat Rate Books" used by car repair shops for decades.

These types of books can come in handy when submitting a bid on work that you’ve never handled before; work that you have no historical records of your own to rely on for costs. No cost from a cost book will ever be as accurate as your own costs for a similar job. Of course, no two jobs are entirely alike, but if you’re careful you can price in variables and add contingency to cover the differences.

A tiny fraction of contractors understand the true value of a customized cost library and invest the time, energy and resources to build and maintain one. Having done several, I can tell you it is a painful, arduous task – but well worth it.

Your construction company's job costing library is like a treasure box
Building a costing library is an arduous task, which is why so few contractors ever do it - even though the results are more valuable than a treasure box full of gold and jewels. A job costing library can turn a regular construction company into a perpetual money machine.

"If You Know the Answers, the Questions Will Not Bother You" – Randalism

Building this costing library will show you which jobs are your company’s real money makers. Each company is different, and it’s only by scouring your own records that you’ll find this bit of knowledge.

Knowing in advance which jobs have the highest probability of success and profit for your company, before getting involved, moves the journey of your construction company from an unpredictable roller coaster ride full of terrifying ups and downs to a peaceful merry-go-round. Just bid correctly, do good work, and the money will keep flowing in.

The key to a useful bid is having accurate job costs. Your estimator needs access to your company’s past job histories to accurately calculate the complete construction costs so he can apply those costs to future jobs – like the one he’s trying to estimate.

Contractors with annual sales volume under $5,000,000 are not likely to have a $100,000+ a year professional estimator on staff, so do not expect them to be 100% accurate.
The key is to get the final job costs as close as possible to the project estimate and budget. The only differences between your bid and the finished project should be overhead and profit.

Job Costing Process Minimum Requirements:
• Time cards that have spaces for job name and cost codes
• Labor burden rate (provided by your bookkeeper)
• Heavy equipment job allocation rates
• Job costing and job profitability reports

Job Costing Library Minimum Requirements:
1. Construction bookkeeping services system with QuickBooks setup to properly allocate transactions into direct construction costs, indirect construction costs, overhead and other costs.
2. Job costing reporting system based on one of these four foundations: account based,item based,schedule-of-values based or work-in-progress based (W.I.P.) It will depend on your particular construction company and themarkets you serve.
3. Professional construction bookkeepers and accountants to maintain the construction bookkeeping system … and I don't mean the secretary who does everything including the bookkeeping!
4. The people responsible for purchasing labor, material, other costs and subcontractors to code every receipt with the correct job name and cost code.

The Fast Easy Way
Outsource the Hard Part and Keep the Easy Part
Your bookkeeper should have #1, #2 and #3 in place already and all you have to do is #4. At fasteasyaccounting.com we have processes to train you and your staff.
You are a contractor; you deserve to be wealthy because you bring value to other people's lives!
Now let us bring value to your life!

About The Author:
Randal DeHart, PMP, QPA is the co-founder of Business Consulting and Accounting in Lynnwood Washington. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, QuickBooks for Contractors Expert and Xero Accounting Specialist. This combination of experience and skill sets provides a unique perspective which allows him to see the world through the eyes of a contractor, Project Manager, Accountant and construction accountant. This understanding is what sets him apart from other Intuit ProAdvisors and Xero accountants, to the benefit of all of the construction contractors he serves across the USA. Visit http://www.fasteasyaccounting.com/randal-dehart/ to learn more.
Our Co-Founder Randal DeHart - Is a Certified PMP (Project Management Professional) with several years of construction project management experience. His expertise is construction accounting systems engineering and process development. His exhaustive study of several leading experts, including the work of Dr. W. Edward Deming, Michael Gerber, Walter A. Shewhart, James Lewis and dozens of others, was the foundation upon which our Construction Bookkeeping System is based, and continues to evolve and improve. Check out our Contractor Success Map Podcast on iTunes and Follow Randal on Google+

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What they Don’t Tell You About the Digital Quoting Evolution in Construction

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Oh, the places we can go now when it comes to generating proposals, estimates, and quotes for our clients! Quoting has evolved quite a bit from pen and paper to fax machines and cover letters. Today, we are so much better equipped to delight our customers from the moment we meet them on-site. But, in many cases, even the most modern, cutting-edge contractors are missing one huge piece of the puzzle -- the piece that most mobile apps and cloud-based estimating systems fail to tell you.
At first, the Internet revolutionized the way in which we communicated with our clients, and how much research went into getting to know the customer beforehand. But we still relied heavily on travel, spreadsheets, and print outs in order to provide an accurate quote. These were time consuming, but standard, ways of doing business.

Evolution of software
Then cloud computing became all the rage. And with it, the evolution of software that lives in the cloud. We speak about this in the present tense -- because the cloud is still “where it’s at”. In fact, many estimating software companies continue to build their systems on the cloud, devising software that stores, performs, and produces with just a Wifi connection. Log into the portal, create your estimates from your computer, and you can officially upgrade your title to “Tech Savvy Sales Specialist.”

Ah -- but this title still requires a desk, and a computer. So there was only way to advance: mobile applications! Now, your sales force is empowered with access from mobile devices to their cloud estimating software. Contractors jumped into the mobile app game head first, and rightly so.

Mobile app quoting
There is just one small, tiny -- but critical -- issue with mobile apps and cloud-based software.

Accessing your files from anywhere is “a dream come true,” until you figure out that the apps themselves can’t produce an estimate without an Internet connection. Unfortunately, there just isn’t enough bandwidth in the United States to handle the mass connectivity demand we put on our wireless networks.
So this is what it sounds like when you’re on site with a customer: “Mind sharing your Wifi password [insert potential client name here]? I can’t deliver the quote without a connection.”

Best case scenario is your customer shares his password with you. Worst case, you’re in the field and data/Wifi is simply not an option. Even your pricey air card can’t connect. Suddenly you’re looking for the nearest Starbucks to get a connection.

Because the truth these days is this: if you can’t create a quote on site, in a flash, an estimating app is virtually useless when it comes to streamlining the sales process and helping you close more sales faster. You are out to impress your customers and cinch the sale, aren’t you?

Ask the right questions when you buy and avoid later embarrassment
While you might be able to find some pretty entertaining (and addicting) offline-capable games to keep your kids quiet on the next “are we there yet?” road trip, you hardly want to rely on faith in getting your next Wifi connection when you’re trying hard to make a sale in the field.

To prevent getting burned by mobile apps and cloud-based solutions that truly just aren’t mobile, start by asking these questions about functionality when you buy:
1. Can the app create quotes offline? Get right to the heart of the matter from the start. If the answer is ”no”, it’s time to walk.
2. While in offline mode, can the estimate creator pull my labor and material pricing? Okay, so you promise a good connection – but in the off chance that I don’t have one, can I still get access to the materials I need to provide an accurate estimate?
3. If so, how does it pull them? Is it storing my pricing data on the device? Or will I still be relying on some kind of online connection to grab what I need?
4. What CAN’T the app do when it’s not connected to the Internet? Enough beating around the bush -- just tell me what I’ll be missing when I could be clinching the sale.
The truly mobile app

When it comes down to it, the only way to be sure that your mobile app truly makes your sales force mobile is by confirming that your people have what they need, when they need it -- whether they’re in the middle of a Wifi-enabled city or a middle-of-nowhere cornfield.

This article courtesy of JobFLEX, the easiest-to-use quote app that makes contractors more money. For more information on how JobFLEX can help contractors close more sales with faster quoting tools, go to www.JobFLEX.com, or by calling 855-354-3539

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A Builder’s Perspective - Obama’s Plan for Executive Order on Immigration Reflects Reality

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By Stan Marek

Now that the election is over, political news has quickly become dominated by the impending immigration showdown between President Barack Obama and the Republicans on Capitol Hill. In my opinion as an employer, the president's intent to use an executive order to extend legal status to millions of undocumented people in our country is simply misunderstood. To the tea party, it is amnesty. To the faith community, it represents compassion. As a practical matter, it's just a reflection of reality.

Two years ago, in the face of congressional inaction, Obama created the Deferred Action for Childhood Arrivals, or DACA, which has become commonly known as the administrative DREAM Act. This gave foreign-born children who illegally entered the country before their 18th birthday an opportunity to seek legal status, granting them the right to work. But it wasn't just given out like candy, as some suggest. These young people, who were brought here through no fault of their own, had to pass a criminal background check, pay $485, and the whole process has to be repeated every two years.

These immigrants cannot vote or receive welfare. They're not entitled to anything. Just the opposite. What they have now is a responsibility to prove they're determined to be productive members of our society by working for a living. We already have a tremendous investment in these children who were educated in our public schools. When we strip emotion from the debate, it's plain to see the president was exercising common sense when he used his executive authority. I have no doubt Obama would have preferred that Congress pass comprehensive legislation, but it didn't happen before the Nov. 4 election, and there is no reason to believe it will happen now.

I was fortunate to be asked to visit the White House a few weeks ago to meet with the president's advisers on immigration reform. Employers like me from all over America were there. The first thing his staff said was that Obama would much rather have the House vote on the immigration bill passed with broad bipartisan support in the Senate about a year ago. While not perfect, it is a good bill that would do the job. But House Speaker John Boehner, hemmed in by the tea party wing of his caucus, has not allowed for a vote. There is a working majority in the House that would pass it now, but there has not been a chance for lawmakers to stand up and be counted.

Immigrants who are in the country without documents should work and pay taxes like the rest of us. Why would anyone who calls himself "conservative" be opposed to ensuring immigrants aren't given a free ride? The U.S. Department of Homeland Security estimates an executive order extending DACA to the parents of children and young adults who qualify for the program could affect more than 5 million people. It's not amnesty. It is a sensible program aimed at identifying people and taxing them for working in the United States. That's the kind of border security we need.

Many of these immigrants unlawfully in the U.S. have been in our country for decades. They're an integral part of our society. They cut our lawns, build our houses, care for our children, cook our food, and more. There are an estimated 600,000 undocumented immigrants in the greater Houston area. That's an educated guess. Who really knows how many there are? We can start to figure out that number by identifying them under the program Obama is contemplating.
One day, Congress will have the courage to pass an immigration bill. That would eliminate the need for an executive order. Until that day comes, the president's plan is the most pragmatic way to begin to solve our immigration problem.

This article previously appeared in the Houston Chronicle and is re-published here by permission.
Stan Marek is president and CEO of the Marek Family of Companies, a Houston-based construction firm with operations all over Texas and the Southeastern U.S.

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Are You a Contractor Overpaying on Payroll?

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By Kelly Bistriceanu


These days you won’t find a contractor using inefficient tools on the jobsite. For instance, would today’s contractor use the hammer or the nail gun?  No question.
While every contractor recognizes the flaws of using inefficient tools, they may still be losing money due to inefficient payroll tools and processes.

According to the American Payroll Association (APA), construction companies can save 2% of gross payroll costs each year if they automate their time and attendance.  Additionally, the increase in payroll accuracy saves an estimated 10% in tax obligations (Social Security, Medicare, Workers’ Comp), paid on top of the hourly rate per employee.

Let’s put a number on those savings: a construction company, with eight employees paid $15/hour, will save close to $5,000 a year. That’s money in your pocket.
So how does a contractor start saving on payroll? It’s classified. I could tell you, but then I’d have to kill you.

Just kidding. Really, start with automating employee time cards.

There are inexpensive and simple mobile time cards that will save you money on payroll, and eliminate errors caused by shoddy handwriting and manual time entry.
Integrate with payroll software (resulting in bookkeeper happy dances, everywhere). This method stands the test of time against audits and employee labor disputes.

Automating time tracking is a walk in the park, providing:
• Mobile time cards are available on devices your employees already use (cell phones, smartphones, tablets, laptops, and more)
• Accurate times (no more rounding or guessing)
• Insight into who’s working, where, and on what
• Detailed time logs protecting against audits and disputes
• Real-time tracking preventing the dog-ate-my-time-card excuse
• Crew App - where a supervisor can clock employees or entire crews in or out with a few taps on their smartphone.

“I would spend, on average, 4 hours per week using my old time reporting software to submit time for my 79 contractors... The first time I used TSheets it took 15 minutes!!!” Jay Grover, happy customer

Back at home base, employee and project hours are visible in real-time, overtime alerts have been set (saving even more money), invoicing is immediate, and job costing more accurate and profitable. And that’s just the beginning.

According to accounting, payroll and tax experts, there are up to 35 actions necessary on a weekly, monthly and quarterly basis in order to run payroll manually.  Yep, it’s “goodness gracious great balls of fire” for your bookkeeper.

With automated time cards, a time tracker that integrates with your payroll software, like QuickBooks, can reduce your payroll steps to an average of three steps instead of 35.

Building efficiency and profitability on the jobsite can sometimes be a struggle. Automating time tracking and payroll can be an easy way to save a bucket load of time and money. Your employees, supervisors and bookkeeper will thank you.

So, like the modern contractor using the most efficient tool on the job, you can start saving today with more efficient business tools in keeping track of payroll.

By Kelly Bistriceanu, Marketing Programs Manager at TSheets.Com

T-Sheets.com is the top-rated app in the entire Intuit ecosystem (thanks to a lot of great customers). It helps contractors automate their timecards and simplify the time spent tracking and managing employee times for payroll and invoicing. This article courtesy of the blog at fasteasyaccounting.com - where smart contractors outsource their accounting needs.

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It’s a Hard, Hard, Hard (Bid) World

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It’s a Hard, Hard, Hard (Bid) World
 

By Mike Clancy

Many construction firms today face the daunting prospect of bidding on insufficiently defined plans and specifications against a large number of other firms. In 2008, the nonresidential market peaked at $715 billion put in place, with roughly one-third in areas where lump sum is the usual, or most frequent, delivery method. Firms that developed strong customer and subcontractor relationships to participate in this negotiated market may find themselves ill-equipped to be competitive in today’s bid environment. However, by refocusing on the “why” of hard bidding, firms can identify the strategic and tactical “how” actions that will allow for a greater level of confidence and success in procuring lump-sum work.

Why do we Bid?
It may seem obvious that contractors bid work in order to get work. When asking estimators, “What is your job?” the responses are most often focused on one of the inputs of their job, such as: to bid work or prepare quantity takeoffs, or manage the subcontractor outreach and communication efforts. However, the right answer is:  to help his firm acquire profitable work.

This estimating mind-set drives behaviors that have a direct and obvious impact on the success of the bidding effort and, by extension, the overall success of the firm.

Estimators who believe their job in the organization is to bid work will do exactly that. The more jobs these estimators bid, the more work the firm will get. Therefore, why not bid every job? Estimators who believe their job is to get work will only bid those key opportunities where the firm receives an advantage. These estimators will seem less efficient than their bid-work colleagues because they will spend more time developing fewer bids. However, the get-work estimators will be much more successful in bringing profitable jobs to their firms. (See Exhibit 1.)

Bid-work estimators will submit a bid and, after seeing the results of the bid opening, will move on to the next one. These estimators will probably celebrate an apparent low result or may commiserate over one that got away, but will not spend much time looking back. Get-work estimators will be surprised and angry when their bid is not the lowest at opening. Get-work estimators will immediately start digging into all available information, looking into their assumptions, trying to identify the approach taken by the low bidder to ensure they do not lose the same way again.

If a company has bid-work estimators, the good news is that, as with most learned behaviors, this too can be changed through training and motivation; providing a best-practices estimating framework within which to operate is an important first step.

Best-in-Class: the 5-S Estimating Model

There are five key attributes and behaviors of top-performing construction companies. (See Exhibit 2.)

Strategy and Alignment
A best-of-breed firm will align its estimating strategy with its overall corporate strategic direction. The firm has a clearly defined marketing message, and it will not pursue work outside its area of strategic focus. A contractor with a best-practices approach to estimating will:

• have a structured project selection process that allows for effective deployment of estimating resources
• develop specific project-win strategies for key opportunities that define a competitive advantage

A project-win strategy can be as simple as identifying the critical trade contractor and ensuring that no other bidder is lower for that scope, or as complex as developing a schedule and staging plan that allows for one less mobilization and demobilization for certain trades, thereby driving down the cost.

Structure and People
Top firms will have skilled estimators working within a collaborative, team-based structure. The estimators will have a high level of business acumen, negotiating and selling skills, and technical knowledge about the divisions in which they specialize. Bear in mind that the goal should be the acquisition of profitable work --incentives that drive behaviors to acquire work without regard to profitability lead to disaster. The estimating manager has the ability to effectively motivate, lead and develop the team. The logistics of the department facilitate teamwork and allow for smooth transitions of work product between team members.

Standard Processes
Best-in-class contractors will standardize estimating processes to build consistency and focus on value-adding activities. Estimators will conduct detailed takeoffs for all critical scope divisions, using an internally maintained and detailed cost-history database. The company will conduct a post-bid analysis on a mix of jobs to collect lessons learned. A contractor with a best-practices approach to estimating will have a clearly defined mark-up strategy based on risk, number of bidders, type of work, etc., and will conduct research on competing bidders to identify sources of advantage.

Systems and Technology
Companies with a first-class estimating function leverage existing technology resources to enhance the their effectiveness. All estimators use a consistent set of forms and spreadsheets and have a clear understanding of which functions need to integrate with estimating, and technology eases that integration.

The most common mistake contracting firms make is to over-purchase and under-implement. A strong tendency exists in this industry to expect a direct from-the-box solution, rather than one that requires extensive modification and training. As a rule, estimating software takes between 60 and 90 days to install, modify and build databases and assemblies. After installation, another 60 to 90 days is typically required for complete implementation. Shortening either the installation or implementation time leads to an estimating software package that is less effective and more difficult for the estimators to use.

Subcontractor and Vendor Relationships
Best-in-class contractors will use subcontractor and vendor relationships as a source of competitive advantage on bid day. The estimating department keeps a ranking of subcontractors by trade, based on price, field coordination and responsiveness. Estimators then consistently seek to upgrade the subcontractor corps using a defined outreach program to identify and add new industry partners. These estimators need to be skilled at negotiating subcontractor and vendor pricing, while maintaining high standards of ethics and avoiding even the appearance of bid shopping or other improprieties.

Subcontractor pricing is of high importance to all general contractors and construction managers. One $100 million general contractor saw the evidence of this truism when its bid day competitiveness was evaluated based on subcontractor participation. The old rule of thumb held that three bids per trade was sufficient subcontractor coverage. However, analysis found that, when this firm had more than six bidders per trade, its average bid was within 4.5% of the low bid. Conversely, when it had fewer than five bidders per trade, the firm averaged 19.2% variation from the low bid. (See Exhibit 3.) This expected correlation was consistent across project type and client, and led the firm to enhance its subcontractor outreach efforts.

Knowing the True Cost is Always an Advantage
Estimating at its core is about coming as close as possible to the true cost of the work in an effort to secure profitable projects. If a firm lacks a best-practices estimating approach, a thorough review of the estimating strategy, structure, people and processes will help identify areas for improvement. Investing the time and money to improve your estimating function will allow you to compete more effectively in today’s hypercompetitive bid market.

Mike Clancy is a principal with FMI. He works with companies across the country to help them leverage their unique organizational resources and capabilities to build competitive advantage. He can be reached by phone at 713.936.4945, or by email at mclancy@fminet.com.

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Contractors Making Points with Construction Call-Backs

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You finished the job last week. This week you get a call from the owner:

The floor squeaks -- or a door or windows doesn’t close quite right -- or there’s a wet spot on the ceiling -- or a pipe in the basement is leaking.

If you’ve been in construction for a while, you could add more examples to my list. So what should you do when you get a call-back? I’ve got a suggestion -- a suggestion that could save both your reputation and some grief.

Most contractors take responsibility for obvious defects in materials and workmanship. That’s an easy choice. It’s the law in most states. It’s also what your clients expect. We live in an economy where vendors make refunds on merchandise that doesn’t live up to expectations. That’s simply good business. Contractors don’t have to make refunds. But they have the same obligation to meet expectations.

Call-backs vs. Warranties
The essence of a call-back is that something isn’t working as expected. In that light, a call-back is an extension of the construction process. Many call-backs are items that could have been discovered with a more thorough final inspection.

The essence of a warranty claim is the right to collect money damages. That’s not where you want to be. Call-backs aren’t about money. The owner just wants your crew to check the problem and make it right. That’s perfectly reasonable. You did the work and probably know best what’s needed. Your cost of making repairs is likely much less than hiring another contractor to do the work. And there are other advantages. Doing the right thing earns the owner’s confidence. That builds your reputation. It’s also an opportunity to sell more work.

Set Limits in the Contract
But it’s reasonable to set limits. For example, you’re not liable for call-backs forever. The call-back period could be 30 days or 60 days. On a larger job, the call-back period could be the time between substantial completion (when you write the punch list) and final completion (when the punch list has been worked off).

If the first call-back doesn’t correct the problem, will you make a second call-back on the same problem? If so, does a new call-back period begin running after the second call-back?

Other generally accepted rules on call-backs:
• An owner who doesn’t give notice of a defect within the call-back period waives the right to repair or replacement.
• You have the right to test and inspect any claimed defect during the call-back period.
• You have the right to an opinion from an independent expert before beginning repairs.
• The call-back period starts early on any part of the work an owner occupies early.
• Exclude from call-back protection anything covered by a manufacturer’s warranty.

If your contracts don’t cover call-backs and specify reasonable call-back limits, you’ve set the stage for a serious dispute. The best way to protect yourself: is to make sure it’s in the contract.

This article courtesy of Gary W. Moselle, a California attorney specializing in state-specific construction contracts. Gary has written a state-specific contract writing software program called Construction Contract Writer, and maintains a blog on construction contract law at: www..http://garywmoselle.blogspot.com

Disclaimer: Nothing in this article should be interpreted as a substitute for professional advice from an attorney practicing in your community. Only local counsel can appreciate the business and legal environment under which a construction contract is drafted, negotiated and executed.

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Definitive Construction Safety Issues

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Definitive Construction Safety Issues

(Excerpted from Profit, Risk & Leadership by Tom Porter)

Following are some of the particular safety issues that I find to be most important or challenging:

 FallsFalls.  Falls are far and away the most common source of serious construction injuries.  Meticulous attention to preventing fall hazards is likely to achieve the largest payoff in improved safety results.  Measures to consider include:

Establish and enforce a universal six-foot fall protection standard6-foot fall protection standard.  Government regulations require fall protection systems, such as guardrails or tie-off, in many situations where the soles of the worker’s boots are elevated six feet or more above grade.  The regulations allow certain exceptions, which may be relied on by trades such as roofers and ironworkers, but try to minimize those exceptions.  With proper lead time and planning, I expect any operation can incorporate effective fall protection engineering controls.  (Be sure subcontractors know your policy on this when they bid.)

Ladder safetyLadder safety tends to fall outside the six-foot regime.  Be strict about requiring ladders to be set up and used properly and secured in place.  Avoid or eliminate wooden ladders, which can rot, and aluminum ladders, which conduct electricity; fiberglass remains safer.

Don’t ignore elevations less than six feet.  I was involved in the investigation of a fall from a buck scaffold, less than six feet.  The mason landed against the sharp corner of a load of bricks, and the impact proved fatal.

Don’t minimize the importance of removing slip and trip hazards.  Even without an elevation, slip-and-fall injuries can have devastating consequences, particularly if a closed-head injury is involved.  An extra bag of ice-melting material or traction sand is a lot less expensive than a workers’ compensation injury.

 Eye protectionEye protection.  I have a story to tell.  I was involved in the investigation of an incident involving a large press machine in an industrial plant.  Millwrights were using acetylene torches to heat large bolts so they could remove them to do maintenance.  This procedure had been directed by a third-party consultant who was supposed to be an expert on this press machine.  Unbeknownst to all, some of the unoxidized acetylene had been accumulating in a cavity in the press.  Another member of the work crew was walking on the plant floor, more than 30 feet from the press, when the explosion occurred.  A ball of fire erupted from the press and badly burned the side of his face.  Thankfully, he was wearing safety glasses (including side protection) that were required under the project’s 100% eye protection policy.  Under typical OSHA regulationsOSHA regulations, he would not have needed them, because he was not at that moment engaged in an operation with a foreseeable risk of eye injury.  The shape of the burns around the outside of his glasses – giving him somewhat the appearance of a raccoon — offered a powerful testament to the wisdom of the 100% policy.  I am convinced that, without them, he would have lost his vision.

 HardhatsHardhats.  Most well-run companies have by now grasped the importance of universal hardhat use.  Occasionally a hard-headed worker will still not “get it” and stubbornly resist wearing the hardhat on a 100% basis.  Give a warning and then, the second time, send that worker on his way.  (The use of “his” in the previous sentence is not an unintended use of sexist language; I am saying that in most cases someone that hard-headed is likely to be a man!)

 AsbestosAsbestos.  Disease from asbestos exposure has been a scourge for our industrial society.  After a latency period (which may last several decades), the consequences are often fatal.  Further, a very small amount can be sufficient to bring on the disease; no safe exposure levels have been established.  Aside from the health effects, the financial consequences have been devastating for many firms involved with asbestos products or operations.  It is not unusual to see lawsuits brought 30 years or more after an alleged exposure, and conventional insurance policies today will exclude coverage for pollution risks, including asbestos claims.  Thus, a construction firm cannot be too careful about asbestos hazards.  The best policy for most firms is to have no involvement whatsoever with asbestos work.  Let the owner hire someone else with the necessary specialized experience and insurance.  If asbestos is encountered unexpectedly, stop and get everyone out of the area at once.  Keep thorough records of your proper response to an asbestos situation, and plan to keep those records at least 50 years.

 Hazardous materialsHazardous materials.  Aside from asbestos, there are a lot of other hazardous materials that one can run into during construction operations.  Much of what I said about asbestos applies more generally to the broader category.  Remediation workRemediation work must be done by firms with the requisite licensing, experience, and insurance.  Be very careful about disposal of hazardous materials away from the jobsite.  Assure you maintain for at least 50 years the manifests and other documentation establishing that the disposal was lawfully done at a suitable hazardous material landfill.

 Substance abuseSubstance abuse.  Employees who are drunk or high, of course, have no place on a jobsite.  Given the prevalence in our society of alcohol and drug use, establishing and enforcing an effective policy is both important and difficult.  Initiate strong policies, including writing them into union agreements.  Have an effective testing program which, hopefully, includes tests pre-employment, for cause, post-accident, and other random checks.  Set the right tone by including senior-level personnel, not just the trade workers.  Be clear about the policies at office parties or other business entertaining.

 VehiclesVehicles.  Driving on company business, whether in a company-owned vehicle or otherwise, is a major source of serious safety incidents.  Policies requiring use of seat belts ought to be a given; policies should also be considered that prohibit texting or emailing while driving, as well as prohibiting other similar distractions.  Some companies use more intensive vehicle safety programs, including driving record checks, or defensive driving instruction programs.

 WeaponsWeapons.  A policy against violence is essential.  The subject of weapons in the workplace is more difficult given the widely divergent views on whether carrying a gun makes one more safe or less safe.  For example, various states have implemented laws regarding open carry and/or concealed weapon permitting.  My best advice is to have a clear policy that fits the culture of your company and the applicable laws.  Be very strict, even on a first offense, if someone uses a weapon or makes threats in a way inconsistent with the policy.  Keep in mind, too, that a normal construction site has any number of tools that can quickly become weapons when used with the wrong intent.

To conclude, remember that safety improvement is about both measuring performance and motivating people.  Safety leader David JacksonJackson, David  from Fluor sums it up well, as follows:

·         Even the most elegant charts and analysis will not cause something to happen.

·         Decisions and implementation made without data are likely to fail.

·         We must integrate Technology and Psychology.

This is an excerpt from the book, “Profit, Risk & Leadership”, the definitive reference for anyone who leads or does business with a 21st century construction firm. In this book, Tom Porter shares practical solutions that have been proven to work in the real world of today’s construction industry. Find out more about “Profit, Risk & Leadership”, at www.bnibooks.com

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New OSHA Reporting Rules go into Effect January 1, 2015

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By Jim Kollaer

On September 11, 2014, OSHA released new reporting rules for workers injured on projects that fall (no pun intended) under federal OSHA jurisdiction.  The new record keeping rules will go into effect on January 1, 2015.  These rules will likely impact a number of contractors and subs that were operating under the old rules or skirting the rules entirely.

The new reporting rules require that employers notify OSHA when an employee is killed on the job or suffers a work-related hospitalization, amputation or loss of an eye.  The American Subcontractors Association newsletter reoprted reported that, “The rule tightens the reporting rules significantly.  The current rules required employers to report work- related fatalities or in-patient hospitalizations for three or more employees.”  Reporting of single- person hospitalizations, amputations or loss of an eye were was not required under the existing rules, but that will change as of January 1, 2015.

Now At that time, any single severe injury, illness or death requires the employer to notify OSHA.  Timing has changed as well under the new rule.  Fatalities must be reported within eight hours, while severe injuries, illnesses, amputations and eye loss must be reported to OSHA within 24 hours.

According to OSHA, “All employers covered by the Occupational Safety and Health Act, even those who are exempt from maintaining injury and illness records, are required to comply with OSHA's new severe injury and illness reporting requirements.  To assist employers in fulfilling these requirements, OSHA is developing a Web portal for employers to report incidents electronically, in addition to the phone reporting options.”

Reports can be made to OSHA by:
1. Calling OSHA’s free and confidential number at 1-800-321-OSHA (6742).
2. Calling your closest Area Office during normal business hours.
3. Using the new online form that will soon be available.

Only fatalities occurring within 30 days of the work-related incident must be reported to OSHA. Further, for an in-patient hospitalization, amputation or loss of an eye, these incidents must be reported to OSHA only if they occur within 24 hours of the work-related incident.

One of our concerns is this statement.  “The new rule maintains the exemption for any employer with 10 or fewer employees, regardless of their industry classification, from the requirement to routinely keep records of worker injuries and illnesses.”

Based on our work on misclassification and the current process where contract workers injured on construction projects are being dumped on the Emergency Room doorsteps, that exemption does two things: first, it encourages more companies to misclassify, and secondly, it shifts more of the burden to those companies who report and comply with the rules and laws.

Jim Kollaer is Managing Director of Kollaer Advisors, LLC, of Houston, TX. Jim writes about the construction industry from his background as an architect, real estate broker, strategic consultant and executive coach. You can read his blog at http://www.constructioncitizen.com. You can contact him at jim@kollaeradvisors.com.

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Legalized Marijuana: Implications for the Construction Workplace - A New Webinar from the AGC

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It's hard to believe, but the construction worksite is changing in many ways.

According to federal law, marijuana is an illegal drug, yet 20 states and the District of Columbia have decriminalized its use for medicinal purposes, and both Washington and Colorado have decriminalized it for recreational use. This trend is sure to spread throughout the country. American General Contractors is putting on a webinar to help construction companies gain a better understanding of how such laws affect your company's HR policies and practices.

Get answers to pressing questions like:

  • Are employers required to accommodate the use, possession or sale of marijuana on the jobsite in these states?
  • What changes, if any, should companies make to their drug testing policies?
  • What legal rights do employers have to sanction employees who use marijuana off-the-clock?
  • How can federal construction contractors comply with federal drug-free workplace laws without running afoul of state law?
  • What are the safety implications, and how can employers protect workers on the jobsite?

Taught by Colorado labor and employment attorney Glenn Schlabs will try and help contractors avoid the legal pitfalls of compliance and Shannon Rowley, HR executive for AGC member-company MWH Global, as she shares best practices for policy implementation and communicating with employees. Click here to find out more.

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Construction Employment Increases in 39 States from a Year Ago

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Nevada Has Largest 12-Month Percentage Gain and Florida Adds Largest Number of Jobs, As New Jersey Experiences Deepest Losses; Delaware and Virginia Top One-Month Lists, While California, Nebraska Lag


Construction firms added jobs in 39 states from July 2013 to July 2014 and in 34 states from June to July, according to an analysis today of Labor Department data by the Associated General Contractors of America. Association officials said the employment gains are good news, but that the pipeline of skilled craft workers, supervisors and other employees appears to be emptying rapidly.

"The overall trend in construction employment has been very consistent in 2014, with more than three-fourths of states adding jobs each month on a year-over-year basis," said Ken Simonson, the association's chief economist. "However, growing numbers of contractors say they are having trouble finding skilled workers or subcontractors that can supply such workers."

Nevada experienced the largest percentage increase in construction employment between July 2013 and July 2014 (13.4 percent, 7,500 construction jobs), followed by Delaware (13.3 percent, 2,600 jobs) and Florida (11.1 percent, 40,600 jobs). Florida again led all states in the number of construction jobs added in the latest 12 months, followed by Texas (23,600 jobs, 3.8 percent) and California (22,600 jobs, 3.6 percent).

The District of Columbia and 11 states shed construction jobs during the past twelve months, with New Jersey again losing the highest percentage and total (-6.5 percent, -8,900 jobs). Other states that lost a high percentage of jobs include West Virginia (-5.8 percent, -2,000 jobs), Mississippi (-5.6 percent, -2,900 jobs) and Arizona (-4.8 percent, -5,900 jobs). Arizona lost the second-highest number of construction jobs during the year, followed by Mississippi, then West Virginia.

Delaware had the largest percentage gain (5.7 percent, 1,200 jobs) among the 34 states that added construction workers to payrolls between June and July. Other states adding large percentages of workers in the month included Alabama (4.9 percent, 3,800 jobs), Kentucky (3.4 percent, 2,200 jobs), New Mexico (3.1 percent, 1,200 jobs), and Virginia (2.6 percent, 4,700 jobs). Virginia added the most workers during the month, followed by Florida (4,400 jobs, 1.1 percent), Texas (4,000 jobs, 0.6 percent) and Alabama.

Fifteen states and D.C. lost construction jobs between June and July, while construction employment was unchanged in Rhode Island. California lost the most construction jobs during the month (-6,400 jobs, -1.0 percent). Other states with large monthly declines in total construction employment included New York (-3,500 jobs, -1.1 percent), Georgia (-1,500 jobs, -1.0 percent), Nebraska (-1,400 jobs, -3.0 percent) and Kansas (-1,100 jobs, -1.8 percent). Nebraska had the highest monthly percentage decline, followed by West Virginia (-1.8 percent, -600 jobs) and Kansas.

Association officials said it is encouraging that a large majority of states added construction jobs for the year and the month. However, they cautioned that construction firms in many parts of the country appear to be experiencing varying amounts of labor shortages. They said that while worker shortages appear most severe in fast-growing states like Colorado and Texas, there is still time for elected officials to act on the association's workforce development suggestions before shortages become more widespread.

"We are at real risk of going from a situation where firms couldn't hire because there wasn't enough demand to firms not being able to hire because there aren't enough qualified workers," said Stephen E. Sandherr, the association's chief executive officer.

Article Courtesy of American General Contractors - AGC serves our nation's construction professionals by promoting the skill, integrity and responsibility of those who build America.

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Green Homes Show Growth in a Recovering Market

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Residential construction is a key engine behind economic growth in the United States. According to McGraw Hill Construction’s Dodge Construction Market Forecast, single and multifamily housing projects account for about 45% of the value of all construction projects started in the United States in 2014. With that market forecasted to grow rapidly in coming years, the green activity and drivers in the market are critical. The new SmartMarket Report of the single and multifamily builder and remodeler community released today by McGraw Hill Construction (http://www.construction.com/) contains this critical intelligence.

The report, “Green Multifamily & Single Family Homes: Growth in a Recovering Market,” surveys builder and remodeler members of the National Association of Home Builders and reveals the evolution of green building for single family homes from boom to bust to recovery through comparisons with previous studies from 2006 to 2011, and includes new data on multifamily housing to provide a comprehensive review of the sector.

According to the latest study:

  • 62% of firms building new single family homes report that they are doing more than 15% of their projects green. By 2018, 84% of them expect this level of green activity.
  •  54% of firms building new multifamily projects report that they are doing more than 15% of their projects green. There is also growth expected—with 79% reporting the same level of activity anticipated by 2018.
  •  In the single family market, the most striking shift is in those firms dedicated to green building (doing more than 90% of their projects green). That percentage is already at 19%, and by 2018, it is expected to double (to 38%).

The study finds that builders and remodelers in both the single family and multifamily sectors report that the market is recognizing the value of green: 73% of single family builders (up from 61% since the last report) and 68% of multifamily builders say consumers will pay more for green homes.

“Greater consumer interest in green homes has contributed to the ongoing growth, leading us to anticipate that by 2016, the green single family housing market alone will represent approximately 26% to 33% of the market, translating to an $80 billion to $101 billion opportunity based on current forecasts.

The findings also suggest that lenders and appraisers may be starting to recognize the value of green homes, making it a factor that could help encourage the market to grow if there is more widespread awareness across the U.S.,” said Harvey Bernstein, vice president, Industry Insights and Alliances for McGraw Hill Construction.

The study also examines the triggers for green building activity. “This new study demonstrates phenomenal growth in green building, with more builders engaging in sustainable building practices than ever before,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, DE. “While growth in green in the single family market is driven more by high quality and customer demand, the multifamily market is more driven by cost factors such as the availability of government or utility incentives, as well as enhancing their competitive position and corporate image. All are compelling reasons for the industry to engage with this continuously growing market.”

The SmartMarket Report also reveals a vigorous and growing renewables market in the residential sector. 65% of the respondents – both single family and multifamily – currently use renewables on at least some of their projects, and the percentage that incorporate them in all of their projects is expected to grow from 8% in 2013 to 20% by 2016.

“Green Multifamily &Single Family Homes: Growth in a Recovering Market” was produced by McGraw Hill Construction in partnership with the NationalAssociation of Home Builders, with the support of Waste Management and Menck Windows.

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Strong Senate Support for Highway and Transit Bill Shows How Measure Should Pass

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Top Construction Official Calls for Swift Passage of Vital Infrastructure Measure, Urges Congress to Fix Highway Funding Shortfall Before Billions in Projects Are Halted This Summer

The chief executive officer of the Associated General Contractors of America, Stephen E. Sandherr, issues the following statement in response to the passage of a surface transportation measure today by the members of the Senate Environment & Public Works Committee:

"The fact that a new highway and transit bill proposed by Senators Vitter and Boxer received the bipartisan backing of the Senate Environment & Public Works Committee shows members of both parties understand the value of investing in our aging surface transportation systems. This bill will make it significantly easier for state and local transportation officials to plan for and fund projects to rebuild bridges, repair roads and improve transit options. More important, it continues the work started in the prior transportation law of streamlining the federal review process so new projects can be reviewed and approved within a more reasonable time frame.”

"Senators and representatives from both parties should follow the Committee's lead and swiftly pass this vital economic measure before the current legislation expires at the end of September. They also must act now to keep the federal Highway Trust Fund solvent for years to come. As our national highway system ages and many roads and bridges exceed their life span, members of Congress need to figure out how we are going to cover the growing costs of maintaining and expanding these critical public assets. If we don't, too many businesses and commuters will be forced to bear the cost of more traffic delays, crashes and vehicle repairs as billions of dollars worth of construction projects come to a halt this summer.”

"That is why the members of the Associated General Contractors of America will continue to participate in the Hardhats for Highways campaign that is designed to educate members of Congress about the many local economic benefits of investing in our roads, bridges and transit systems. To date, construction workers and owners participating in this campaign have sent nearly 6,000 messages to 406 members of Congress urging their support for a new surface transportation bill and new revenues for the Highway Trust Fund. We will continue to make our case across the country and in D.C. until we have sustainable, robust funding in place and a new federal transportation law enacted."

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45% of Highway Contractors Had Vehicles Crash Into Their Construction Work Zones During Past Year

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"There is little margin for error when you work within a few inches of thousands of fast-moving vehicles," said Tom Case, the chair of the association’s national highway and transportation division and senior vice president of Watsonville, Calif.-based Granite Construction. “As the data makes clear, not enough drivers are slowing down and staying alert near work sites.”

Case said that 43 percent of contractors reported that motor vehicle operators or passengers were injured during work zone crashes this past year, and 16 percent were killed in those crashes. While they are less likely to kill construction workers, highway work zone crashes do pose a significant risk for people in hard hats, Case added. He noted that more than 20 percent of work zone crashes injure construction workers, and 6 percent of those crashes kill them.

Work zone crashes also have a pronounced impact on construction schedules and costs, Case said. He noted that 25 percent of contractors reported that work zone crashes during the past year have forced them to temporarily shut down construction activity. Those delays were often lengthy, as 38 percent of those project shutdowns lasted two or more days.

Association officials said that 67 percent of contractors nationwide feel that tougher laws, fines and legal penalties for moving violations in work zones would reduce injuries and fatalities. In addition, 74 percent of contractors said that an increased use of concrete barriers will help reduce injuries and fatalities. And 66 percent of contractors nationwide agree that more frequent safety training for workers could help. They added that many firms and the association have crafted these types of highway safety programs.

But Case suggested that the best way to improve safety was for motorists to be more careful while driving through highway work zones. "Ensuring proper work zone safety starts and ends with cautious drivers," Case said.

The work zone safety study was based on a nationwide survey of highway construction firms conducted by the association in March this year. More than 400 contractors completed the survey nationwide, while a large enough sample of contractors in six states completed the survey to allow for state-specific results.

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Contractors Add Jobs in March to Hit Highest Level Since June 2009

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Residential and nonresidential employment both increase but ongoing exodus of experienced workers raises urgency of strengthening public measures to attract and train workers.

Construction employers added 19,000 workers to payrolls in March, bringing industry employment to the highest level since June 2009, while the industry's unemployment rate dropped to the lowest March level in seven years, according to an analysis of new government data by the Associated General Contractors of America. Association officials warned that the pool of available workers is declining rapidly, raising the prospects for significant labor shortages if demand continues to expand.

"The rate of construction hiring continues to outrun job growth in the overall economy for the past year," said Ken Simonson, the association's chief economist. "Furthermore, the pickup has been well balanced, as both nonresidential and residential construction segments added workers last month and over the past 12 months."

"Although most construction employers who need workers have been able to find them so far, increasing numbers of contractors say they are having difficulty hiring," Simonson warned. "Last month, the number of unemployed former construction workers fell to the lowest March level since 2007. More of these experienced workers are leaving the industry than are rejoining it."

The unemployment rate for workers actively looking for jobs and last employed in construction declined from 14.7 percent a year earlier to 11.3 percent last month. Simonson noted that the unemployment rate for construction workers had fallen by more than half since March 2010, when it reached 24.9 percent. During that time, the number of unemployed workers who last worked in construction declined by 1.3 million, but industry employment increased by only 445,000.

"Based on projects that have been announced in recent months, contractors are likely to be seeking workers for many types of construction in most parts of the country this spring," Simonson added. "Multifamily, manufacturing, and oil and gas-related facilities will generate particularly strong demand for workers. It will be a challenge to fill all the openings."

Association officials said that one reason the industry is likely to face labor shortages is because of the declining number of secondary-level construction training programs. They urged federal, state and local officials to take steps designed to make it easier for schools, construction firms and local trade associations to establish new training programs for future construction workers.

"If elected and appointed officials don't act soon to improve the quantity and quality of training opportunities for future workers, many firms are going to have a hard time keeping up with demand," said Stephen E. Sandherr, the association's chief executive officer. "The last thing the economy needs is to have labor shortages undermine the construction industry's long hoped-for recovery."

With over 30,000 member firms, AGC of America is the leading association for the construction industry. AGC provides a full range of services satisfying the needs and concerns of its members, thereby improving the quality of construction and protecting the public interest.

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Construction Revs Up - But Not on all Cylinders

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The latest reports from AGC on construction employment and spending were encouraging. Industry employment climbed by 15,000, seasonally adjusted, in February to the highest level since June 2009. Spending in January hit the highest seasonally adjusted annual rate since March 2009 and rose 9.3 percent over the past year, the fastest rate of growth since May 2006.

Moreover, the gains were widespread. In the latest 12 months, overall construction employment climbed 2.6 percent, with residential construction employers (residential building and specialty trade contractors) adding 4.8 percent to their head counts and nonresidential employers (nonresidential building, specialty trades, and heavy and civil engineering construction) adding 1.4 percent. Private residential spending soared 15 percent over the year-ago month; private nonresidential, 9.7 percent; and public construction, 2.5 percent.

For 2014 as a whole, there is a good chance private nonresidential spending will continue to grow at nearly a double-digit rate. That would be a substantial improvement over the 0.5 percent contraction recorded from 2012 to 2013. But residential construction spending growth is likely to cool from the 18 percent rate in 2013 to 10 percent or less. Public construction was down 2.6 percent from 2012 to 2013 and may shrink by nearly as much again in 2014. Total construction spending, therefore, is most likely headed for growth of 6 to 10 percent, up modestly from the 4.9 percent rate last year.

The biggest turnaround should be in power and energy construction, which covers construction in oil and gas fields and pipelines as well as conventional and renewable power generation, transmission and distribution. Shale-related drilling will continue to expand, adding to demand for pipelines, plants to supply pipes and oilfield machinery and downstream facilities. “Downstream” encompasses several construction segments and includes tank farms, petrochemical plants, export terminals for liquefied natural gas (LNG), gas-fired power plants, and fueling stations for LNG and compressed natural gas-powered vehicles.

Private nonresidential spending should also see growth in other manufacturing plants, warehouses, hotels and railroad construction. But the large and once-active markets for office, retail and hospital construction are likely to remain weak.

The largest public category—highways and streets—should remain above 2013 levels through the first half of this year. But it may plunge by yearend, unless Congress can pass a timely extension of the current federal-aid highway and transit funding bill, known as MAP-21, which will expire on September 30. Education construction—the second-largest public category—slumped 8 percent last year. It is likely to be flat, at best, in 2014. Other public segments will also experience flat or shrinking budgets.

The major driver of private residential construction—single-family homebuilding—has slowed somewhat from its 28 percent expansion in 2014. Multifamily construction has likewise throttled back from its 44 percent growth rate in 2013. But multifamily has much better prospects of maintaining a double-digit rate of increase than does single-family, which may stall later this year.

With over 30,000 member firms, AGC of America is the leading association for the construction industry. AGC provides a full range of services satisfying the needs and concerns of its members, thereby improving the quality of construction and protecting the public interest.

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Construction Industry adds 15,000 Jobs in February - Highest Level Since June 2009

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Construction employers added 15,000 workers to payrolls in February despite harsh winter working conditions, raising industry employment to the highest level since June 2009, according to an analysis of new government data by the Associated General Contractors of America.  However, association officials noted that as the industry adds jobs many firms report they are already having a hard time finding skilled workers.

"The rate of construction hiring has outpaced job growth in the overall economy for the past year,” said Ken Simonson, the association's chief economist. "During that time, all construction segments have added workers."

Construction employment totaled 5,941,000 in February, the highest total in 4-1/2 years and an increase of 152,000 or 2.6 percent from a year earlier, whereas total nonfarm employment rose by 1.6 percent over that span, Simonson noted.  Among industry segments, residential construction employers led the way with the addition of 1,700 workers in February and 101,200 (4.8 percent) over 12 months. Nonresidential construction added 12,700 employees since January and 50,600 (1.4 percent) since February 2013.

"While demand for construction employees is rising at a healthy clip, workers are still leaving the industry faster than they are being hired, a dynamic that may result in widespread worker shortages in the near future," Simonson warned. "In the past four years, nearly a million experienced workers have left the industry for jobs in other sectors, retirement or school. They are no longer available for immediate recall to construction jobs."

"Because persistently severe winter weather delayed many projects in the past few months, contractors are likely to be posting 'help wanted' signs on even more jobsites this spring," Simonson added. "Multifamily, manufacturing, and oil and gas-related facilities will generate particularly strong demand for workers. Contractors in many regions and specialties may have trouble finding the employees they’ll need."

Association officials noted that two-thirds of construction firms responding to a recent survey reported having a hard time finding enough qualified workers to fill vacant positions.  They urged federal, state and local officials to enact measures outlined in the association’s recently released Workforce Development Plan that will make it easier for schools, firms and local construction associations to establish training programs.

"Unless we find a way to get more students to consider and train for careers in construction, many firms will get to a point where they don’t have enough workers to keep pace with demand," said Stephen E. Sandherr, the association’s chief executive officer. "The last thing the hard-hit construction industry needs is to be unable to take advantage of increasing demand because of the decreasing supply of available workers."

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Construction Spending Increased by 5.9 Percent Between November 2012 and 2013

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Total construction spending increased between October and November and for the year amid growing private-sector demand, according to an analysis of new Census Bureau data by the Associated General Contractors of America. Association officials noted, however, that the spending levels were held back by declining public sector investments for both the month and the year.

"The nonresidential construction spending figures are even more positive than they appear, with most categories now positive year-over year," said Ken Simonson, the association's chief economist. "The outlook appears favorable for many types of private nonresidential and multifamily construction, but remains flat or negative for public spending."

Construction put in place totaled $934 billion in November, rising 1.0 percent since October and up 5.9 percent since November 2012. Private residential construction spending increased by 1.9 percent in November and jumped 17 percent from a year earlier. Private nonresidential spending climbed 2.7 percent for the month and 1.0 percent year-over-year. Public construction spending dropped 1.8 percent for the month and 0.2 percent over 12 months.

Over the past 12 months, the biggest jump in construction spending has occurred in new multifamily construction, which rose 0.9 percent for the month and 36 percent year-over-year. The lodging sector recorded the second highest annual gain, with spending rising 32.7 percent for the year and 0.3 percent for the month. Spending on communications facilities experienced the largest monthly increase, jumping 11.2 percent in November, although it is still down 10.5 percent for the year.

The largest private nonresidential category, power construction—which includes oil and gas field and pipeline projects as well as power plants, renewable power and transmission lines—increased by 3.3 percent in November but is actually down 24.2 percent for the year. Simonson noted, however, that there was a surge in power construction during the last quarter of 2012 as contractors rushed to finish wind projects before the expected expiration of the wind production tax credit at the end of 2012. Those credits were extended for projects that broke ground by the end of 2013, explaining the more recent surge. "Both the electricity and oil and gas components of power construction should do well in 2014," he added.

Highway and street construction, the largest public category, declined by 0.4 percent in November but is up 4.6 percent compared to a year ago, Simonson noted. The next largest public niche, educational construction, increased by 1.1 percent for the month but was unchanged for the year, he added.

Association officials noted that the spending figures would have been even better had it not been for the public sector declines. They urged Congress and the administration to work together in 2014 to pass vital transportation and other infrastructure legislation. "Finding new ways to fund repairs to our aging infrastructure will help the construction industry grow and boost our broader economy," said Stephen E. Sandherr, the association’s chief executive officer.

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Multi-Family Construction Weakens

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The Multifamily Production Index (MPI), released today by the National Association of Home Builders (NAHB), showed a slight weakening as the index declined four points to 50 in the fourth quarter of 2013. It is, however, the eighth consecutive reading of 50 or above.

The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry's perception of vacancies, dropped two points to 38, with lower numbers indicating fewer vacancies. After peaking at 70 in the second quarter of 2009, the MVI improved consistently through 2010 and has been fairly stable since 2011.

“Multifamily developers are still seeing demand for apartments, as the MVI shows,” said W. Dean Henry, CEO of Legacy Partners Residential in Foster City, Calif., and chairman of NAHB’s Multifamily Leadership Board. “However, the cost and availability of labor is putting pressure on the ability to bring new units online.”

“This quarter’s MPI results are in line with NAHB’s forecast that calls for increased production of new apartments in 2014, but at a slower pace than last year,” said NAHB Chief Economist David Crowe. “The results are also in line with recent downturns in other economic indicators, due to unusually severe weather in parts of the country that disrupted supply chains and affected confidence in several sectors of the economy.”

Historically, the MPI and MVI have performed well as leading indicators of U.S. Census figures for multifamily starts and vacancy rates, providing information on likely movement in the Census figures one to three quarters in advance.

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Minimum Wage for Direct Federal Contractors Now $10.10 Per Hour

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On Feb. 12, President Obama signed an executive order that raises the minimum wage for direct federal contractors to $10.10 per hour.  Federally assisted contracts are not affected.  The new mandate affects contracts entered into on or after Jan. 1, 2015.Minimum

The order also mandates that the Secretary of Labor determine a new minimum wage for federal contractors in 2016, and each year thereafter, based on the annual percentage increase in the Consumer Price Index (CPI) for urban wage and clerical workers. If the annual CPI percentage decreases, the minimum hourly wage rate will not decrease.  Under this scenario, the president essentially places the minimum wage on auto-pilot without consideration for business conditions in 2016 and beyond.

How will this mandate work under federal, state and local prevailing wage laws? The order notes that it will not excuse noncompliance with such laws that have a higher minimum wage than that established in the order. However, it does not address what will happen when the order’s minimum wage is above either federal, state or local laws’ prevailing wage. It also does not shed light on how contracts issued under a pre-2015 multiple award contract will be impacted.

The executive order instructs the Secretary of Labor to issue regulations implementing this mandate by Oct. 1, 2014. Within 60 days of that, the Federal Acquisition Regulation (FAR) Council must issue regulations in the FAR to provide for inclusion of the minimum wage contract clause in direct federal solicitations and contracts.

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Gypsum up 7%, diesel dips 2% as Construction Materials Rise by 0.6% in January

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Prices for materials used in construction and for nonresidential building construction both increased more than overall prices for in January, according to a new analysis of retooled federal data on producer prices released today by the Associated General Contractors of America.  As a result, margins remain very tight for most construction firms even as private-sector demand for construction continues to grow.

"Although contractors on average were able to raise bid prices in line with materials cost increases, the results varied widely by commodity, building type and specialty trade," said Ken Simonson, the association’s chief economist. "Several key construction materials, or 'processed goods,' experienced substantial price increases that in many cases exceeded what contractors could pass on last month. It will take a few more months to see if these costs increases are sustained—putting a squeeze on contractors' margins—or a one-time blip.”

Simonson said the overall producer price index for inputs to construction rose 0.6 percent in January, propelled by a one-month jump of 7.4 percent in the index for gypsum products; followed by lumber and plywood, 2.4 percent; cement, 2.0 percent; insulation materials, 1.5 percent; and copper and steel products, 1.2 percent each. He noted that the impact of these price hikes would have been worse if not for declines in the price indexes for diesel fuel of 1.9 percent; flat glass, -0.6 percent; and architectural coatings such as paint, -0.3 percent.

A new set of "final demand" indexes breaks out how much private and public owners are paying for the differing mix of nonresidential buildings they buy, Simonson pointed out. In January, the index for “construction for private capital investment” climbed 0.6 percent while the index for "construction government" rose 0.8 percent. The combined index for final demand for construction rose 0.6 percent, more than the goods and services components of overall final demand, which increased 0.4 percent. 

The price increases varied by building and subcontractor type, the economist said. The index for new school building construction rose the most, 1.0 percent; followed by office construction, 0.6 percent; industrial buildings, 0.5 percent; health care buildings, 0.4 percent; and warehouses, 0.3 percent. The index for new, repair and maintenance work on nonresidential buildings by plumbing contractors climbed 1.1 percent in January; the index for roofing contractors rose 0.7 percent; and the index for concrete contractors increased 0.4 percent. In contrast, the index for electrical contractors was unchanged.

Association officials said the fact margins remain tight signals that demand has yet to outstrip contractors’ capacity to perform work in most parts of the country.  They added that many firms report competition remains fierce for many projects and that it will take more sustained growth in demand before firms are able to significantly increase what they charge.

“Despite growing construction employment and increasing private-sector demand for construction, market conditions remain quite tough for most firms,” said Stephen E. Sandherr, the association’s chief executive officer.  "Getting Congress to act on vital infrastructure measures like federal transportation and water resources bills will help improve market conditions for many construction employers."

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Construction Industry Adds 48,000 Jobs in January Despite Severe Weather

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Rising Concern about Availability of Workers to Meet Accelerating Demand in 2014

Construction employment jumped by the largest monthly amount in nearly seven years in January, bringing industry employment to the highest level since July 2009, according to an analysis of new government data by the Associated General Contractors of America. Association officials noted that, at the current rate of growth, it would not take long before many firms begin having difficulty finding enough skilled workers to meet demand.

“Despite a second month of unusually severe weather in much of the nation, contractors more than offset the job losses that occurred in December,” said Ken Simonson, the association's chief economist. “All segments of the industry added workers for the month, and the sector has increased employment at nearly double the all-industry rate in the past 12 months.”

Construction employment totaled 5,922,000 in January, the highest total in 4-1/2 years and an increase of 48,000 from a month earlier—the largest one-month gain since April 2007, Simonson noted. For the year, construction employment rose by 179,000 or 3.1 percent, compared with an increase of 1.7 percent for total nonfarm payroll employment. Nonresidential construction firms added 31,300 new jobs in January and 57,100 (1.6 percent) over 12 months while residential firms added 16,800 jobs for the month and 121,400 (5.8 percent) over the year.


He said the result is in line with an AGC survey last month that found many contractors report difficulty finding skilled workers.

“Construction demand for workers is likely to accelerate in 2014 as more projects relating to oil and gas, manufacturing, warehouse and hotel construction break ground while demand for residential work—especially apartments—remains strong,” Simonson said. “It will be a challenge for contractors in many regions and specialties to find enough employees to perform the work ahead.”


Association officials called on federal, state and local leaders to take steps to make it easier for school districts, firms and local construction associations to put in place training programs to prepare future construction workers. They added that they were finalizing a workforce development plan that identifies specific steps elected officials can take to improve the quality and quantity of career and technical training programs, especially at the secondary school level.


“Encouraging as it is to see firms adding jobs, there just aren’t that many construction workers in many parts of the country waiting to get called back to work,” said Stephen E. Sandherr, the association’s chief executive officer. “Unless we act soon, many firms will be forced to delay projects as they scramble to find enough qualified workers to meet demand.”


With over 30,000 member firms, AGC of America is the leading association for the construction industry. AGC provides a full range of services satisfying the needs and concerns of its members, thereby improving the quality of construction and protecting the public interest.

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AGC Comments on EPA’s Draft Lead Survey for Building Contractors

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The U.S. Environmental Protection Agency (EPA) plans to survey general contractors regarding their recent renovation, repair and painting (RRP) activities in public- and private-sector commercial buildings.  AGC worked with the “Commercial Properties Coalition” to provide comments on the scope and clarity of the questions included in EPA’s draft Information Collection Request (ICR), as well as its underlying assumptions and burden/cost estimates. EPA admittedly needs more data on whether or not RRP activities in buildings expose the public to lead-based paint (LBP) dust. EPA must first determine that such activities create lead paint "hazards," before the agency has the legal authority to write additional rules that would apply to building contractors.

AGC’s comments focus on the following:

  •      The survey, as drafted, would not produce useful information because it would collect baseline data on RRP activities and work practices disconnected from whether "dangerous levels of lead” exist in the commercial real estate stock.  AGC has recommended that EPA restructure the survey to begin with a question on whether a property is known to contain lead paint; if the response indicates the answer is no, the survey should be terminated.

    

  •     EPA should minimize the response burden on the public by first gathering information through outreach and coordination with federal government building owners and managers.

   

  •     The draft survey is not likely to produce "statistically valid” data or data that is representative of standard industry practices. EPA should improve upon its sampling techniques and questionnaire instruments in order to generate data of “practical utility."

If EPA receives approval from the White House Office of Management and Budget to proceed with the survey, it could be sent to construction companies as early as this spring. The respondents to the survey would be selected at random; participation would be voluntary.

The current federal lead-paint rules mandate training, lead-safe practices and certification for contractors working in pre-1978 target housing and child-occupied buildings. EPA has until July 1, 2015, to decide whether to propose new, expanded requirements – per a legal settlement with environmental and health organizations. If it proceeds, the agency has until Dec. 31, 2016, to publish a final rule.

For several years, AGC has participated in EPA’s process to consider new lead paint rules. In 2013, AGC submitted lengthy written comments to EPA and provided a statement at a public hearing last summer.  AGC maintains Occupational Safety and Health Administration rules are adequate measures to control lead exposures in public and commercial buildings with lead-based paint.

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Demand for Multifamily Housing will Continue to Rise in 2014 and Beyond

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Strong demand for apartments will increase over the next several years, said panelists during a press conference at the National Association of Home Builders (NAHB) International Builders’ Show (IBS) in Las Vegas. And while multifamily construction continues to be strong, NAHB does expect the speed to decrease as sustainable levels are reached in 2015 or 2016.

"The multifamily market has rebounded significantly from its trough in 2009 at 82,000 multifamily housing starts to 340,000 in 2013," said NAHB Chief Economist David Crowe. "NAHB is forecasting 363,000 multifamily housing starts in 2015, which is above the previous longer term average of 340,000 as more young adults prefer renting."

The strong performance in multifamily comes from three sources, explained Crowe. "First, during the collapse, production of multifamily housing had significantly decreased, so part of the resurgence in 2011 was just catching up with a more normal flow. Second, the strong demand for apartments is being fed by a rising demographic of echo boomers that will continue to grow in size as we absorb people born after 1980. Third, young adults who might have otherwise chosen homeownership, and some older adults as well, are hampered by a variety of issues, such as unusually tight underwriting standards for mortgages, lower credit scores because of the slow employment market and lower entry salaries. As a result, the share of households that rent rather than own has increased steadily since 2004 and will likely continue until jobs are more secure, mortgages more accessible and careers more stable."

Many markets have regained their footing and are producing at least as many multifamily units as they did during the relatively stable period between 1996 and 2006. "The multifamily market has come a long way since the collapse,” said panelist Guy K. Hays, president of Legacy Partners Residential Inc. in Foster City, Calif. "Overall, supply and demand are in balance, and in most markets there is a need for the continued production of new units."

While both panelists are optimistic about the future of the multifamily housing market, there are still challenges that face the industry such as the availability of labor and rising cost of some building materials. But demand for apartments is strong enough for developers to proceed in most markets, the panelists noted.

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BIM Goes Completely Virtual With New Rift Glasses

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BIM visualization technology has advanced to the point where designers, engineers, contractors, and building owners can become so immersed in the virtual building model that they feel as if they’re actually there.

Almost three decades before Building Information Modeling (BIM) would go mainstream, the term “Virtual Building” was used in the earliest implementation of BIM through Graphisoft’s ArchiCAD debut in 1987.

Since then, the concept hasn’t changed, but visualization technology has advanced to the point where designers, engineers, contractors, and building owners can become so immersed in the virtual building model that they feel as if they’re actually there. Combined with the visualization services offered by Arch Virtual, technologies like the Unity3D game engine and the new $300 Oculus Rift virtual reality headset are making it possible.

“The first thing people do when they put on the Rift is to reach out trying to touch the walls or furniture they see in the virtual model, even it doesn’t really exist,” said Jon Brouchoud, owner of Arch Virtual. “It’s an almost involuntary reaction, which I think that says a lot about how immersed they are. They really do feel as if they’re occupying a completely different place.”

The possibilities for design and visualization are endless. For their recently completed River Home project in northern Europe, the client provided an ArchiCAD BIM file, which was converted into the Unity3D game engine and published into an Oculus Rift application. The client used the virtual model as part of their schematic design development process to get a sense of how the space was shaping up, the relationships between different rooms, and the views to the adjacent river and lakes.

“Once our clients experience their project in virtual reality, they’re immediately hooked. Traditional illustration techniques just aren’t the same,” said Brouchoud.

While most assume virtual reality is an expensive upgrade, contractors, real estate developers and architects are actually finding they can actually save money by commissioning a real-time virtual model vs. traditional architectural illustrations.

“Not only do our clients receive the virtual reality model they can embed in their website, along with an Oculus Rift-compatible application, we can also generate a limitless number of screenshots (like the ones shown in this article) as well as animation that can be uploaded to YouTube to help promote the project, said Brouchoud.

“Virtual reality is the next natural step for BIM. We’re building bridges between VR and CAD / BIM software, and looking forward to the day when virtual reality can seamlessly blend into the design process, ultimately improving architecture and the built environment.“

About Arch Virtual: Arch Virtual provides 3D and virtual reality environments for use in visualization, simulation, marketing for clients located around the world. For more information, visit http://www.archvirtual.com

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Construction Spending Increased by 5.9 Percent Between November 2012 and 2013

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Total construction spending increased between October and November and for the year amid growing private-sector demand, according to an analysis of new Census Bureau data by the Associated General Contractors of America. Association officials noted, however, that the spending levels were held back by declining public sector investments for both the month and the year.

"The nonresidential construction spending figures are even more positive than they appear, with most categories now positive year-over year," said Ken Simonson, the association's chief economist. "The outlook appears favorable for many types of private nonresidential and multifamily construction, but remains flat or negative for public spending."

Construction put in place totaled $934 billion in November, rising 1.0 percent since October and up 5.9 percent since November 2012. Private residential construction spending increased by 1.9 percent in November and jumped 17 percent from a year earlier. Private nonresidential spending climbed 2.7 percent for the month and 1.0 percent year-over-year. Public construction spending dropped 1.8 percent for the month and 0.2 percent over 12 months.

Over the past 12 months, the biggest jump in construction spending has occurred in new multifamily construction, which rose 0.9 percent for the month and 36 percent year-over-year. The lodging sector recorded the second highest annual gain, with spending rising 32.7 percent for the year and 0.3 percent for the month. Spending on communications facilities experienced the largest monthly increase, jumping 11.2 percent in November, although it is still down 10.5 percent for the year.

The largest private nonresidential category, power construction—which includes oil and gas field and pipeline projects as well as power plants, renewable power and transmission lines—increased by 3.3 percent in November but is actually down 24.2 percent for the year. Simonson noted, however, that there was a surge in power construction during the last quarter of 2012 as contractors rushed to finish wind projects before the expected expiration of the wind production tax credit at the end of 2012. Those credits were extended for projects that broke ground by the end of 2013, explaining the more recent surge. “Both the electricity and oil and gas components of power construction should do well in 2014,” he added.

Highway and street construction, the largest public category, declined by 0.4 percent in November but is up 4.6 percent compared to a year ago, Simonson noted. The next largest public niche, educational construction, increased by 1.1 percent for the month but was unchanged for the year, he added.

Association officials noted that the spending figures would have been even better had it not been for the public sector declines. They urged Congress and the administration to work together in 2014 to pass vital transportation and other infrastructure legislation. “Finding new ways to fund repairs to our aging infrastructure will help the construction industry grow and boost our broader economy,” said Stephen E. Sandherr, the association’s chief executive officer.

This article courtesy of the American General Contractors. With over 30,000 member firms, AGC of America is the leading association for the construction industry. AGC provides a full range of services satisfying the needs and concerns of its members, thereby improving the quality of construction and protecting the public interest.

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Construction Employment Increases in 39 States from a Year Ago

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Mississippi and California Rack up the Largest 12-Month Gains, Montana and Ohio Have Biggest Declines; Indiana and California Top Monthly Rankings, While Kentucky and Arizona Shed the Most Jobs in November

Construction firms added jobs in 39 states over the past 12 months, while employment nearly stabilized in the remainder, according to an analysis released by the Associated General Contractors of America of Labor Department data. Association officials cautioned that the industry’s recovery was still relatively fragile, noting that a number of states experiencing large annual gains lost jobs during the past month.

“The widespread job gains seen in most states for the past few months continued in November, while no state recorded a year-over-year loss of more than 4 percent,” said Ken Simonson, the association’s chief economist. “But progress remains fragile, with some states having results in the latest month that diverge sharply from their year-over-year outcomes.” He added that every state remains below its previous construction employment peak.

Mississippi led all states with a 17 percent rise (8,000 jobs) in construction employment between November 2012 and November 2013. Yet the state ranked 49th out of 50 states plus D.C. between October and November, with a loss of 2.3 percent or 1,300 construction jobs. Conversely, Indiana topped the monthly rankings, adding 4.8 percent (5,400 construction jobs), but lost 3.4 percent (-4,100 jobs) over 12 months. Only Montana (-4.0 percent, -900 jobs) and D.C. (-3.7 percent, -500 jobs) had steeper 12-month declines, Simonson pointed out.

States with strong 12-month percentage gains besides Mississippi included Connecticut (11 percent, 5,600 jobs), Missouri (9.8 percent, 10,100 jobs) and Georgia (9.5 percent, 13,200 jobs). California added the most jobs over the year (31,500, 5.2 percent), followed by Florida (24,300, 7.0 percent), Texas (13,300, 2.2 percent), Georgia and Missouri.

A total of 10 states plus D.C. shed construction jobs between November 2012 and November 2013, while employment was constant in Delaware. The largest number of losses occurred in Ohio (-5,200, -2.9 percent), followed by Indiana, Alabama (-2,500, -3.2 percent) and North Carolina (-2,500, -1.5 percent).

For the month, 30 states added construction jobs, 16 lost jobs, and employment held steady in four states plus D.C. In addition to Indiana, the steepest one-month gains occurred in New Hampshire (3.5 percent, 800 jobs) and Alaska (3.4 percent, 600 jobs). California added the most construction jobs in November (6,600, 1.1 percent), followed by Illinois (6,100, 3.3 percent) and Indiana. The steepest losses for the month occurred in Kentucky (-3.1 percent, -2,100 jobs), Louisiana (-2.6 percent, -3,700 jobs) and Mississippi. Louisiana lost the most jobs over the month, followed by Ohio (-3,600, -2.1 percent) and New York (-2,900, -0.9 percent).

Association officials noted that the job gains occurred following an unusual spike in public construction spending experienced in October that masked softening private sector demand.  They cautioned that as public spending declines, construction employment is likely to weaken in many parts of the country.  As a result, they urged Congress and the Obama administration to finalize water resources legislation and to act swiftly next year to renew long-term highway and transit legislation.

“At this point, it is hard to predict whether construction employment will continue to expand in many states next year,” said Stephen E. Sandherr, the association’s chief executive officer. “Passing vital infrastructure measures will help protect construction employers from any softening in private sector demand, while giving the economy a needed boost.”

This story courtesy of American General Contractors. With over 30,000 member firms, AGC of America is the leading association for the construction industry. AGC provides a full range of services satisfying the needs and concerns of its members, thereby improving the quality of construction and protecting the public interest.

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Industry Adds 178,000 Jobs During the Past 12 Months As Construction Spending Hit Four-Year High

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Industry Adds 178,000 Jobs During the Past 12 Months As Construction Spending Hit Four-Year High in October, But Construction Employment Remains Nearly 1.9 Million Below April 2006 Peak Level

Construction employers added 17,000 jobs in November as the sector’s employment hit the highest level since August 2009, and the industry unemployment rate fell to 8.6 percent, according to an analysis of new government data by the Associated General Contractors of America. Association officials noted that the new employment figures come as construction spending levels hit a four-year high in October.

“While these new employment figures are very encouraging, growth remains uneven by segment, region and time period,” said Ken Simonson, the association's chief economist. “There are likely to be continuing variations in growth between homebuilding, private nonresidential and public sector.”

Construction employment totaled 5,851,000 in November, an increase of 178,000 from a year earlier, Simonson noted. But while employment grew by 3.1 percent during the past year, construction employment remains nearly 1.9 million below the sector’s April 2006 peak. Meanwhile, the unemployment rate for workers actively looking for jobs and last employed in construction declined from 12.2 percent in November 2012 to 8.6 percent last month.

Nonresidential construction firms added 7,900 new jobs in November while residential firms added 8,400 jobs. While every segment of the construction industry added jobs in November, heavy and civil engineering firms – which are most likely to perform federal construction work – added the least amount, only 200 jobs. Meanwhile residential specialty trade contractors added the most new jobs during the past month, 7,100.

The number of unemployed construction workers dropped from 988,000 in November 2012 to 706,000 in November 2013, a decline of 282,000. Yet the industry added only 178,000 new jobs during the same timeframe. Many unemployed construction workers appear to be leaving the sector’s workforce, either for jobs in other industries or to retire, Simonson noted. He added that the shrinking pool of available construction workers may be one reason so many firms report having a hard time finding qualified workers.

Association officials said that the new employment figures highlight a number of challenges facing the industry. As the sector expands, more firms are likely to struggle to find qualified workers amid declining investments in secondary career and technical education programs. In addition, the heavy and civil engineering construction sector continues to struggle amid uncertainty about federal investments in infrastructure and other construction programs.

“Many contractors are wondering if the sector will continue to expand and, if it does, how they are going to find enough qualified workers,” said Stephen E. Sandherr, the association’s chief executive officer. “Investing in infrastructure projects will help the industry continue to grow while encouraging more secondary students to pursue career and technical training will help make sure those new jobs get filled.”

This news courtesy of AGC. With over 30,000 member firms, AGC of America is the leading association for the construction industry. AGC provides a full range of services satisfying the needs and concerns of its members, thereby improving the quality of construction and protecting the public interest.

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Strong Multifamily Sector Pushes Building Permits Above 1 Million in October

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Issuance of new building permits rose 6.2 percent to a seasonally adjusted annual rate of 1.034 million units in October due primarily to a double-digit increase on the multifamily side, the U.S. Census Bureau reported today.

This follows a 5.2 percent increase in permit issuance in September to 974,000 units.

Census figures for nationwide housing starts for September and October have been delayed until Dec. 18 as a result of last month’s partial government shutdown.

“Despite the recent government shutdown, builders feel a housing recovery is still under way,” said Rick Judson, chairman of the National Association (NAHB) and a home builder from Charlotte, N.C. “However, this fragile recovery still faces a number of challenges, including uncertainty in Washington, tight credit conditions for home buyers and limited availability of labor and lots.”

“Permits are often a harbinger of future housing activity and the strong showing in the multifamily sector along with stable numbers on the single-family side bode well for a continuing, gradual upturn in housing over the coming months,” said NAHB senior economist Robert Denk. “But consumer and builder confidence could be seriously undermined unless policymakers make progress over looming budget, tax and economic policy issues in the weeks and months ahead.”

Multifamily permit issuance rose 15.3 percent to 414,000 units in October while the single-family side posted a 0.8 percent gain to 620,000 units.

Regionally, permits issuance in October held steady at 101,000 units in the Northeast and rose 15.4 percent in the West and 9.4 percent in the South. The Midwest posted a 9.6 percent decline.

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Construction Employers Add 11,000 Jobs in October

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Construction employment hit a 50-month high as employers added 11,000 jobs in October, the fifth consecutive month of sector job gains, and the industry unemployment rate fell to 9 percent, according to an analysis of new government data by the Associated General Contractors of America. Association officials said that the new employment figures indicate there was little nationwide short-term impact from the federal government shutdown and cautioned that skilled worker shortages are likely to grow as the industry continues to expand.

“After some very dramatic declines and years of sluggish growth, the construction industry is slowly adding jobs,” said Ken Simonson, the association's chief economist. “The federal government shutdown did not appear to have undermined construction job growth in the short term probably because it did not significantly impact projects that were already underway.”

Construction employment totaled 5,834,000 in October, an increase of 185,000 from a year earlier, and is now at the highest level since August 2009. Simonson noted that the October increase was the fifth consecutive month of construction job growth. Meanwhile, the unemployment rate for workers actively looking for jobs and last employed in construction declined from 11.4 percent in October 2012 to 9 percent last month.

Nonresidential construction firms added 6,600 new jobs in October while residential firms added 4,800 jobs. Within the nonresidential sector, heavy and civil engineering firms – which are most likely to perform federal construction work – added only 200 jobs. The modest increase for that sector was likely caused by declining public sector demand and not the federal shutdown, Simonson noted.

As the industry continues to add new jobs, many firms report they are having a hard time finding qualified workers to fill key positions. The number of unemployed construction workers has declined at a faster rate than the industry has added jobs as laid-off workers either retire or found work in other sectors. During the past three years, the number of unemployed construction workers has declined by 712,000 while construction firms have added 323,000 new jobs, the association’s chief economist said.

Association officials said another reason construction employers were worried about finding enough qualified workers is the limited number of career and technical education and training programs that exist. They noted that many school districts have eliminated vocational education programs, during the past several decades. They said they were preparing a series of proposals to increase the number of career and technical education and training opportunities that they will release later this year.

“While we have a long way to go before construction employment hits pre-recession levels, we need to take steps now to keep up with growing demand,” said Stephen E. Sandherr, the association’s chief executive officer. “The last thing we want is for the lack of qualified workers to undermine the sector’s recovery.”

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74% of Construction Firms Report Having Trouble Finding Qualified Workers

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Nationwide Survey Finds Most Firms Worry There Are Not Enough Craft Workers Available to Meet Growing Demand for Construction as Officials Call for Immigration and Education Reform to Help

Nearly three-fourths of construction firms across the country report they are having trouble finding qualified craft workers to fill key spots amid concerns that labor shortages will only get worse, according to the results of an industry-wide survey released today by the Associated General Contractors of America. Association officials called for immigration and education reform measures to help avoid worker shortages.

“Many construction firms are already having a hard time finding qualified workers and expect construction labor shortages will only get worse,” said Stephen E. Sandherr, chief executive officer of the Associated General Contractors of America. “We need to take short- and long-term steps to make sure there are enough workers to meet future demand and avoid the costly construction delays that would come with labor shortages.”

Of the 74 percent of responding firms that are having a hard time finding qualified craft workers, the most frequently reported difficulties are in filling such onsite construction jobs as carpenters, equipment operators and laborers, Sandherr said. Fifty-three percent are having a hard time filling professional positions – especially project supervisors, estimators and engineers.

The association official added that most firms expect labor shortages will continue and get worse for the next year. Eighty-six percent of respondents said they expect it will remain difficult or get harder to find qualified craft workers while 72 percent say the market for professional positions will remain hard or get worse. Seventy-four percent of respondents report there are not enough qualified craft workers available to meet future demand while 49 percent said there weren’t enough construction professionals available, he added.

Sandherr said that many firms report they are taking steps to prepare future construction workers. He noted that 48 percent of responding firms are mentoring future craft workers, 38 percent are participating in career fairs and 33 percent are supporting high school-level construction skills academies. In addition, 47 percent of responding firms are offering internships for construction professionals.

Sandherr cautioned that more needs to be done to address labor shortages. He said Congress needs to jettison arbitrary caps on construction workers that were included in immigration reform the Senate passed earlier this year. “Lifting those restrictions will go a long way to ensuring construction jobs left vacant by domestic labor shortages go to workers who are in the country legally.”

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