spring 2011 - Associated Subcontractors of Massachusetts

Transcription

THE PROFESSIONAL
FIRST Quarter 2011
A Publication of the Associated Subcontractors of Massachusetts, Inc.
Art
Work of
Hutchins Takes
The Helm
Meet Gilbane’s Newest Director
Teamwork In The Cloud
An Introduction To Collaborative Processing
Tough Times Ahead
The Surety Market In 2011
Celebrating at the
Biennial Gala
THE PROFESSIONAL
Below: J.C. Cannistraro’s recently completed project for Sanofi-Aventis is a
successful BIM case study (page 12). Below left: Meet Gilbane’s new New England
division director, Ryan Hutchins (page 10). Below, right:The latest in member news
and completed projects (page 26).
cover story
16 A Biennial
Dinner Gala
features
04 PRESIDENT’S VIEW
Embracing Change at ASM
06 FINANCIAL
When Banks Won’t Lend
08 TECHNOLOGY
In Collaborative Processing,
Everybody Wins
10 INDUSTRY WHO’S WHO
Gilbane Regional Director
a Familiar Face
12 PROJECT SPOTLIGHT
Where Process Meets Progress:
640 Memorial Drive
departments
ASM celebrated its Biennial Gala at the Museum of Fine Arts
with an exclusive viewing of the new Art of the Americas wing,
constructed almost entirely by ASM members.
14 INSURANCE
Worker’s Compensation
Experience Rating May
Disqualify You from Projects!
20 LEGAL BRIEFS
Mechanic’s Lien
Law Amendments
22 TECHNOLOGY
8 Winning Steps to Remodeling
Your Financial Systems
24 SURETY
The Surety Market –
2011 and Beyond
26 Member News
28 Photo Gallery of ASM Events
The Professional Contractor
3
PRESIDENT’S VIEW
By David G. Cannistraro
Embracing Change at ASM
C
David G. Cannistraro
is executive vice
president at J.C.
Cannistraro LLC
in Watertown. He
was elected president
of ASM at the
association’s Biennial
Dinner Gala in April
at the Museum of Fine
Arts. (See cover story,
page 16). He can be
reached through ASM
at (617) 742-3412 or
by email at president@
associatedsubs.com.
hange is neither good nor bad, it simply is. It
can be greeted with terror or joy: a tantrum
that says ‘I want it the way it was,’ or a dance
that says ‘Look, something new.’”
So says the character Don Draper in my current
favorite TV show, Mad Men. I am not sure our membership would agree with the first part of this philosophy, what with the drastic changes we have seen in
the construction industry in the last few years: tens
of thousands of workers laid off, revenues way down
and profit margins at break-even points or below.
But the sentiment still rings true in that we must either embrace change and evolve ourselves and our
companies to lead it, else we let the changes roll
over us and push us aside into irrelevancy.
Here at ASM, we are no different. We must continue to adapt to this new world and help our members thrive.
We are not resting on our laurels after seeing
our Prompt Pay Act become law; we have already
submitted new legislation to set a 5 percent limit
on retainage and mandate reasonable measures to
have it released timely. We will need your help to
get this passed, so stay tuned!
We have not been satisfied with having the industry’s best group insurance program – which has
returned close to $4 million in dividends to our
members since its inception in 2003 – we are now
actively pursuing the right to offer an all-new health
insurance option for our members. This has the potential to dramatically impact this organization as a
whole and all of our members individually.
We have not settled for just having a great website, informative e-newsletter and high quality magazine; we are now on Twitter and have started using
other social media sites such as LinkedIn. We are
committed to getting the word out in every way possible about the great things this organization has to
offer on a daily basis. To that end, we have hired
our first-ever marketing and communications
manager, so if you haven’t seen or heard about
us much in the media, wait a minute, because you
soon will!
We have not been happy with just giving our
members a free legal hotline and a discount at Staples; we have added a 30 percent discount on Lorman seminars and webinars (which I have used personally several times) and a fleet leasing program
with Enterprise, available only to ASM members.
I have been on the board of directors of ASM for
six years, and it is with great excitement that I now
take the reins as president for the next two years
to help lead this organization to the next level. Although we have been doing more, we have been
doing so with less, so I ask all of you to help us by
spreading the word to other subcontractors and
encouraging them to join us. Our low membership
rates are truly the best value in the industry.
As we embrace the changes that will continue
to come over the next two years, we welcome your
thoughts on how ASM should continue to evolve,
to better serve the subcontractors of Massachusetts.
Please feel free to contact me anytime with your
ideas and suggestions.
s
The Professional Contractor is published quarterly by
The Associated Subcontractors
of Massachusetts, Inc.
One Washington Mall | Fifth Floor | Boston, MA 02108
tel 617-742-3412 | fax 617-742-2331
[email protected] | www.associatedsubs.com
Officers
President: President Elect:
Vice President:
Vice President:
Vice President:
Treasurer:
Past President:
Past President:
David G. Cannistraro J.C. Cannistraro, LLC
Richard R. Fisher Red Wing Construction
Joseph H. Bodio Lan-Tel Communications, Inc.
Steven P. Kenney N.B. Kenney Co.
Gregory A. Porfido Mark Richey Woodworking & Design, Inc.
Russell J. Anderson Southeastern Metal Fabricators, Inc.
Sara A. Stafford Stafford Construction Services, Inc.
Scott H. Packard Chapman Waterproofing Co.
Directors
George A. Allen Sr. | Steven T. Amanti | Clement P. Clare | R. Lindsay Drisko | Roger A. Fuller
William M. Gillespie | Wayne J. Griffin | Robert B. Hutchison | Dana E. Johnston Jr.
Michael S. Kosiver | William J. (Mac) Lynch | Susan Mailman | Erik S. Maseng
James B. Miller | Louis J. Sannella | Nancy H. Salter | Ann T. (Nancy) Shine | Frank J. Smith
Lee C. Sullivan | Carolyn M. Francisco, Counsel | Monica Lawton, CEO
4 First Quarter 2011
The Warren Group
Chairman
CEO & Publisher
President
Group Publisher & Editor in Chief
Timothy M. Warren
Timothy M. Warren Jr.
David B. Lovins
Vincent M. Valvo
Finance & Administration
Dir. of Operations | Controller Jeffrey E. Lewis
Editorial
Custom Publications Editor
Associate Editor
Christina P. O’Neill
Cassidy Norton Murphy
Advertising
Publishing Division Sales Manager
Account Manager
Advertising, Marketing & Events Coordinator
George Chateauneuf
Mark Schultz
Emily Torres
Design & Production
Creative Director
Senior Graphic Designer
Graphic Designer
John Bottini
Scott Ellison
Ellie Aliabadi
©2011 The Warren Group, Inc. and Associated Subcontractors of Massachusetts, Inc All rights reserved. The Warren
Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced in any form or by any
means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system,
without written permission from the publisher.
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FINANCIAL
By William F. Rucci Jr.
When Banks Won’t Lend
Alternative Methods of Financing for Construction Firms
If it’s true that the construction industry is a key part
of the engine that powers the U.S. economy, then it
only stands to reason that access to financing serves
is the motor oil that keeps all the engine parts in
good condition and running smoothly.
T
here are numerous ways to secure financing;
methods run from the traditional to the extremely creative. But the one universal challenge that any construction firm faces – at almost
any stage of growth – is to find the method (or
combination of methods) that fits its own unique
set of goals and circumstances at a particular point
in time.
Factors like company size and maturity, market
niche, credit history, potential for growth and local market conditions all inevitably play into the
equation. Also important is the cost of borrowing
those funds, because rates vary widely from source
to source.
Traditional bank loans have been the go-to
method of financing for hundreds of years, and
they remain the first resource that most firms turn
to for either a short-term line of credit or a longerterm loan.
But while the economy slowly struggles back
to life, banks remain in a stubborn mood. A recent survey conducted by Pepperdine University
showed that even though banks report an increase
in the volume and quality of loan applications, they
continue to turn down the vast majority of them
(74 percent).
To increase your chances of success, it’s best to
build a business relationship with a bank well before you need to ask them for funds. Let the bank
get to know your business, and get to know you as a
credit-worthy customer.
If your bank is unwilling to help, borrowing
from family and friends is often the easiest way to
obtain funds, particularly for start-up entities. Often, the costs of borrowing the money are less than
with other methods.
But intermingling business with personal relationships has its potential drawbacks, which is why
clients who choose this method are advised to set
up the transaction in a formal, business-like manner.
Give your lenders paperwork that acknowledges
their loan and the terms of repayment. Make sure
their rate of return is reasonable (this includes
loaning funds to yourself). And give lenders an
“out clause” that allows them to ask for their money
back at any time.
Home equity loans and credit card financing
are two other methods of self-funding. But they
also come with a level of personal risk to the borrower that is often beyond the tolerance of all but
the most seasoned entrepreneurs.
Another alternative to traditional bank funding is government-sponsored grants or loans that
are designed to assist companies with seed capital
or to enhance an existing operation. The federal
government and most states offer financing geared
to growing specific areas of the economy that policymakers believe require nurturing. In most cases,
the interest rates are especially favorable if the
funding leads to job creation.
Unlike a loan, a grant typically does not have to
be repaid. However, there is a significant amount
of research and paperwork involved. Grant programs can be highly competitive, with specific,
detailed formats that need to be followed carefully
when applying.
There are a number of creative methods of financing for larger, stable firms, including assetbased financing, receivables financing, and factoring. While each technique comes with its own
benefits, drawbacks and costs, what ties them together generally is the use of an existing, tangible
asset of the enterprise as collateral for the loan.
Supplier or vendor financing is also a creative
alternative in certain situations where funds are
needed to acquire expensive capital equipment.
Manufacturers and leasing companies will almost
always offer financing, and at interest rates that are
relatively attractive.
Perhaps the most difficult financing path for
owners to take is working with outside investors.
There are many options for accessing funds in this
way, but all of them involve giving up some measure of control of the business. We advise owners
to tread carefully when considering these types of
arrangements.
Equity financing may be the simplest of these
options. Equity is defined as the value of the enterprise, minus what is owed. An owner can raise funds
by selling a portion of this equity, but the buyer will
then be a “partner,” and will have partial control
of the enterprise. This arrangement can work well
between businesses that complement each other.
When the full equity of a business is sold, it is
considered a merger in which the enterprise becomes part of the company that purchased it.
Individual angel investors provide financing to
early-stage companies that demonstrate the potential to offer a better rate of return on the angel’s
money than more traditional investments would.
These individuals may also offer their experience
and contacts to the operation in addition to funding.
But expect to give up some control in return, in
the form of a board position, a formal consulting
role or an ownership stake. The same holds true of
a venture capital firm, which is essentially a group
of investors who have pooled their funds to finance
early-stage, high-risk enterprises with the expectation of a potentially large return on their investment.
Of course, the specific goals and circumstances
of your construction business will dictate whether
any one of the techniques above makes sense. Be
sure to seek the guidance of trusted advisors as you
consider the options. s
Bill Rucci, CPA, MST, is a partner with the Boston area
accounting and business advisory firm Rucci, Bardaro &
Barrett, where he heads the firm’s Construction Business Services
Group. He can be reached at (781) 321-6065 or [email protected].
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7
TECHNOLOGY
By Herb Brownett
In Collaborative Processing,
Everybody Wins
A
s a subcontractor, are you tired of filling out a
different pre-qualification form for every general contractor with essentially the same data?
Tired of having your monthly billings and payments
held up by document issues? If so, read on! The rapid adoption of collaborative technology in the construction industry is going to make your life easier.
In this article, you will learn how and why.
Collaborative solutions utilize web-based technology to automate business processes across organizations and across functions. They are delivered in a
software as a service model for modest fees and do
not require complex implementations or internal IT
support. In construction, this means general contractors and subcontractors can utilize the same database
and software for processes like pre-qualification and
invoicing.
Textura is being adopted by many New England
general contractors, including two regionally-based
national contractors. Chances are you will soon be
using one or both of Textura’s innovative solutions
with some of your general contractor business partners, if you are not already. This article will explain
the technology and how it benefits subcontractors.
Pre-Qualification Management (PQM)
First, we will focus on Textura Pre-qualification
Management (PQM) and how it works. A general
contractor sets up pre-qualification requirements
in an online network that mirrors or enhances their
current practices. This includes information requirements, internal routing of data sets (which manager
gets what) and pre-qualification form templates.
Once set up, general contractors can search for
subcontractors in their own listing or search the entire national network by trade and geography. Targeted subcontractors are sent an email requesting
them to pre-qualify with the general contractor.
Upon joining the network, subcontractors enter their data one time into a secure, private data
Herb Brownett is senior vice president of sales for Textura
Corporation. Textura Corporation has been servicing the
construction industry since 2004 with over 70,000 users across
the country. Brownett can be reached at (484) 574-5974 or
[email protected].
library (which only the subcontractor can access or
see). When the email invitation to pre-qualify with a
specific general contractor is received, the subcontractor can meet the requirements by simply clicking
to automatically populate the general contractor’s
required forms from the data in their library. This
form can then be submitted to the general contractor electronically.
The subcontractor can also use the Textura system to automatically complete pre-qualification
forms for general contractors who are not using the
Textura system. Forms for “non-network” (or off-system) general contractors are readily available in an
industry-wide GC data library available to every Subcontractor. These forms can be printed and mailed
to the general contractor or simply emailed.
Once the form is received by a general contractor
on the Textura system, the subcontractor’s pre-qualification data is routed to the appropriate decisionmaker, who will review the data submitted and assign
a proprietary rating by data set, as well as determine
an overall rating and contract limit. These ratings
are now visible to decision-makers with a few mouse
clicks.
The update process is also automated. Each data
set is assigned a start date and update time frame by
the general contractor: for example, financial information every six months, starting Dec. 31; insurance
information every 12 months, starting March 31; and
so on. This triggers automatic reminder emails to
the subcontractor. Once the subcontractor updates
their data, the applicable manager at the general
contractor automatically is notified by email and can
review and re-rate the data.
For subcontractors, the benefits of pre-qualification management software include:
•• Enter data once to pre-qualify with all GCs
(whether on Textura or not), including: electronic or paper submissions; expiration tracking and
notification; automated update capability; and
private pre-qualification data library.
•• Substantial efficiencies, including prequalifing
with a GC in minutes rather than hours, and
reducing the time to prepare pre-qualification
forms to 15-20 minutes.
•• Market your organization to GCs and owners
around the country.
•• Enjoy better communication with your general
contractor regarding your pre-qualification status.
•• Have a real-time view of your compliance status
and receive automated reminders when your
qualification documents are about to expire.
Construction Payment Management (CPM)
Textura’s invoicing and electronic payment solution, Construction Payment Management (CPM),
sends an email to all participants to initiate the
monthly billing/draw process.
Subcontractors can click on links within the email
to view their schedule of values. They enter requested payment amounts and electronically sign the requests. Properly completed, AIA 702/703’s and/or
custom documents, as well as a properly completed
lien release, are emailed to the general contractor
for review.
Upon approval, the system can automatically
generate the general contractor’s pay application.
The owner, lender or architect can electronically
review the application online if they are on the system, or the application can be printed and mailed.
The system enables the general contractor to disburse funds electronically through the ACH system.
Subcontractors usually have available funds in their
accounts within 24 hours.
The system also tracks document compliance
(signed subcontract, insurance certificate, bonds,
etc.) with automatic reminders to subcontractors.
For subcontractors, the benefits of construction
payment management (CPM) software include:
•• Less risk of payment delay and faster payment.
•• Automated completion of correct project documents and real-time tracking of your compliance
status – you always see your status as the general
contractor sees it, so you can proactively address
any issues.
•• Direct electronic payment from the GC or owner
to your account, resulting in faster payment by
one to two weeks.
•• Saves time through online invoice entry, and lien
wavers submitted with invoice but held in escrow
until the GC’s payment is confirmed.
•• Automated email reminders for each action.
•• Lowers costs by eliminating travel, courier fees,
overnight delivery costs.
•• On-line document storage.
•• Improved GC and subcontractor relationships.
Textura Collaborative Solutions offers advantages
for all parties on a construction project. When people are able to focus on business issues and not paper chasing, contractual risks are averted and money
flows on schedule. Everybody wins! s
9
INDUSTRY WHO’S WHO
By Linda Goodspeed
It’s About Winning Jobs Wisely
Gilbane’s Ryan Hutchins Knows the Territory
T
he new head of Gilbane’s New England division is no stranger to the region, or the company.
Ryan Hutchins, senior vice president and New
England district manager, has spent his entire career at the $4 billion construction management
company, beginning as a co-op student from
Wentworth in 1997. He joined the company full
time the following year, and has spent the last five
years managing the Massachusetts district office.
He was named head of the New England region in
October 2010.
“We’ve certainly been through some tough
times,” Hutchins noted. “But over the last three to
four months, there’s been an increase in activity
for specific markets.”
One of those markets is western Massachusetts,
where Gilbane has won more than $600 million in
new projects since September 2010.
“We think there will be slow but steady growth
for 2011 in anticipation that by 2012, ’13, we’ll be
back to where we were five years ago,” Hutchins
said.
Sectors driving the recovery are multi-family
housing, life sciences, higher education and health
care. As the economy gathers steam, Hutchins said
Gilbane does not want to win every job, “just the
Linda Goodspeed is a freelance writer.
ones we can sustain with our existing workforce
and add employees cautiously.”
Since the start of the downturn, Gilbane has reduced its workforce about 10 percent to 2,300 (350
in New England). But the company also used the
recession to make some key hires.
“One of the great things about a company our
size is that we can hire somebody even though we
may not have the right project for that person today. We can hire in anticipation of things to come,”
he said.
The company has several projects in the pipeline,
including a new patient tower for Lowell General
Hospital, a new psychiatric hospital in Worcester,
a new recreation facility for Worcester Polytechnic
Institute, and eight K-12 school projects.
Despite Gilbane’s success in winning bids,
Hutchins said competition remains high and fees
low, making the use of technology more important
than ever.
“All of our projects starting in 2011 will be done
utilizing Building Information Modeling (BIM)
technology,” Hutchins said. “It’s the way the whole
industry is going. You’re either on board or you’re
not, and if you’re not, you will be left behind.”
BIM is a collaborative tool used to finish and
coordinate the design of a building’s systems and
components so they can be pre-fabricated, saving
time and money while enhancing quality. Gilbane
used BIM to build the recent $100 million-Genzyme biological research center in Framingham.
“We drove out several percent in costs on the
job by using BIM,” Hutchins said. “A small handful
of firms are leading the pack with the use of BIM.
We’re one of them.”
Likewise, Hutchins said Gilbane will continue
to lead the industry in the use of Integrated Project Delivery (IPD) practices.
“IPD is taking a concept that’s been integral to
our philosophy and formalizing it,” Hutchins said.
“We see collaboration as the way successful buildings are built. All of our projects are built using a
collaborative process that brings everyone to the
table talking through issues. It has allowed us to
deliver jobs faster.”
While many companies use IPD practices, it is
a formalized, contractual process that is likely to
become more widespread.
One Company
certainly not to the levels before the downturn.
“We’ve done four or five contractual projects
But there is some work out there and there will
the last few years using IPD,” Hutchins said. “More
be more. Now is the time to focus on relationship
RFPs are coming out with IPD requirements.”
building.”
Noting that there have been some subcontracAt Gilbane,
teamwork is one of our core values. In fact, it drives everything we do.
Subs
who want
work
Gilbanewe’ve
needcreated
to go a new
tor defaults during the downturn, Hutchins adAnd because
teamwork
is builttointo
all ofwith
our processes,
through
a
stringent
pre-qualification
process
that
vised subs to price jobs to continue to be profitable,
initiative this year that’s taking collaboration to new levels. Fittingly,
we call this
can
be
found
at
www.ibidpro.com.
and “we will continue to evaluate bids to make sure
movement “One Company.”
“To our partners through these tough times,
that the bid makes sense for the scope of work.”
We’ve spread our roots and grown beyond New England to more than 30 locations
thank
you,” Hutchins said. “We know we’re only as
“Because of the downturn, I think there’s been
nationwide, and each of our teams has developed an independent spirit in their local
good
as
our teams
subs who
for us. Ifzest
it for
wasn’t
for
some underbidding,” Hutchins said. “Everybody
markets. Each of those
has anwork
entrepreneurial
serving
their Gilbane clients,
them,
we
probably
wouldn’t
be
here.”
needs to be patient. The work will be coming,
which is one of the keys to our continued success. We applaud that s
spirit of service, and
we want to demonstrate our support.
How can we provide that support? By equipping all of our employees with innovative
solutions created by their fellow Gilbane peers across the country through our One
Company initiative.
Our primary goal for One Company is to provide added value and outstanding service
to our clients. To that end, we’ll be making it possible for the entire family of Gilbane
locations to share best practices and lessons learned. Through One Company, we’ll
tap our most knowledgeable experts and strongest team members to share their best
lessons with our project teams. And we’ll integrate Gilbane’s market-focused centers of
excellence and comprehensive consulting services into more of our projects. Then, we’ll
watch our clients reap the substantial benefits.
To date, our efforts to leverage Gilbane’s significant expertise have been remarkably
successful and our clients have raved about the results. Want to learn more? Visit
us online at www.gilbaneco.com to see some examples of our One Company
strategy in action.
Like every winning team, we’ve found that there is always room to improve and become
stronger…smarter…better. And we’re committed to being the One Company you’ll need
for your next project.
Photo: (C) CLEMENTS-HOWCROFT, Boston
Mark Richey Woodworking crafts and installs high-end
architectural millwork for corporate, institutional,
Thomas F. Gilbane, Jr.
retail,
restaurant,
and residential clients. Our reputation
Chairman
and CEO
is founded on peak performance and keen attention
to client satisfaction.
ii
www.markrichey.com
11
PROJECT SPOTLIGHT By Tom Palange
Where Process Meets Progress
Construction Technology at Work at 640 Memorial Drive
project at 640 Memorial Drive in Cambridge.
Owner MIT Investment Management Company is set to welcome its high-profile first tenant
in April, and this complex project is already a
case-study on successful BIM execution.
W
hile Sanofi-Aventis was dominating
headlines this winter, construction on
a new laboratory and office facility was
well underway for the pharmaceutical giant’s
newest local office. Watertown-based J.C. Cannistraro, LLC, is the mechanical and fire protection trade contractor on this core and shell
Tom Palange oversees all marketing and public relations
functions for J.C. Cannistraro, LLC, located in Watertown.
He can be reached at (617) 926-0092 or tpalange@
cannistraro.com.
The 640 Memorial Drive story begins with
project planning. Coordination, the construction
schedule, the prefabrication process, on-site rigging and the overall safety of field personnel are
all contingent on the development of a practical
project workflow. At Cannistraro, the construction process begins in the office, not in the field.
Involving the field foreman early is an essential
part of this process. His insight and field expertise
ensures constructability, attention to detail, and a
logistical team approach. When preconstruction
ends and final, construction-ready models are approved, piping components are spooled from the
model to the automatic welding equipment at
Cannistraro’s fabrication facility.
Utilizing prefabrication undoubtedly improves
the efficiency of a project, and also makes for a
safer job site. At 640 Memorial Drive, over 1,000
piping assemblies were modeled, prefabricated
and shipped for just in time delivery to the job site.
In fact, 90 percent of Cannistraro’s scope was prefabricated off-site.
Chiller Installation at 640 Memorial Drive
By Kathleen Fyfe
As is often the case in a restoration project, the installation of new
equipment into an existing structure can require inventiveness and
a clever use of resources, and 640 Memorial Drive was no exception.
Four chillers, weighing approximately 25,000 pounds each, were to be
installed at 640 Memorial Drive through a street‐level opening that
allowed for less than two inches of clearance.
Marr Rigging Company, Inc. was contracted by J.C. Cannistraro
to turn out a workable installation plan for the chillers and other
major equipment that was efficient, safe and practical. The chillers
presented a particular challenge and a number of options were
considered by Leo Manning and Mike Baia of Marr Rigging Company,
together with Roy Reed of J.C. Cannistraro. After a series of planning
meetings, the team elected to roll the chillers into the building
on one‐inch steel rods. Once inside, the chillers were jacked onto
neoprene dollies and were rolled onto a custom‐designed steel ramp
system (see photo at right). They were carefully lowered down to the
basement level by grip hoist. The course of action taken to install the
chillers was highly successful.
Advancements in technology have improved many aspects of the
construction process. However, there remain many instances where
there can be no substitute for good, solid engineering and basic, tried
and true construction methods. The crossroads where the old methods
and new technology intersect, promises to be an exciting one for
construction professionals in the future.
Kathleen Fyfe is marketing director for The Marr Companies, located in South
Boston. She can be reached at (617) 269-7200 or [email protected].
With tenant space scheduled to be occupied in
a matter of months, the biggest challenge to the
640 Memorial Drive project team was the schedule. From the demolition of existing conditions
to the turnover of the new building, the construction phase allowed for just over six months of work.
Early collaboration with the project’s general contractor, Turner Construction, and architect, KlingStubbins, gave Cannistraro the opportunity to add
its BIM expertise and trade contractor means and
methods into the equation. BIM enables careful
examination of all of the details required for constructability, thereby allowing the team to prioritize work flows and eliminate inefficiencies on-site.
One specific example is the rigging and installation
plan used for sequencing the chillers. The logistics
involved with safely maneuvering and installing
four chillers into the basement required careful
pre-task planning and the use of specially-designed
rails (see sidebar).
In addition to the use of BIM and prefabrication,
the 640 Memorial Drive project was another opportunity for Cannistraro to implement lean methods
into the construction process. Field personnel utilized total station technology to automatically lay
out hanger and sleeve locations in less than half the
time it normally takes for hand measurement. Using the “Last Planner” system, Cannistraro took an
extended construction schedule and compressed
it to daily task plans. This short-interval planning
technique helped facilitate the delivery of prefabricated assemblies, manage workloads, increase onsite productivity and provide accurate snapshots of
progress at any given point in time.
For years industry experts have forecasted that
technology would soon change the way AEC professionals deliver construction projects. The 640
Memorial Drive project illustrates how today’s
leading builders grow and adapt to construction
technology in order to deliver efficient, practical
21st-century buildings. s
Opposite page: This 3D model for 640 Memorial Drive shows the chilled water return
header as it will appear in the field.
Above: The chilled water return header is prefabricated and delivered to the site.
Below left: Chillers are rigged into the basement mechanical room at 640 Memorial
Drive (see sidebar).
Below right: Cannistraro foremen use the Total Station Layout system in the field.
13
Insurance
By Bernard K. Quinlan
Worker’s Compensation Experience
Rating May Disqualify You from Projects!
A
Massachusetts employer whose workers’ compensation premium averages $5,500 annually
is subject to two experience rating factors: experience modification and all risk adjustment program (ARAP). These actuarially calculated factors
are benchmarks that measure a contractor’s loss
history against the experience of other contractors
engaged in the same trade(s) and operating in the
same state(s). Contractors with better than average
experience earn a premium credit, while contractors with worse than average loss history incur a premium penalty. A favorable experience modification
indicates that the contractor strives to provide a safe
work site.
incurred losses during the experience period, and
a 20 percent additional premium is charged by the
insurer.
Experience Modification
The experience modification is based on a
firm’s payroll and losses during a three-year experience period. The experience period does not include the most recent policy period. For example,
if an employer’s policy anniversary date is Jan. 1,
the experience modification effective Jan. 1, 2011,
is based on payroll and losses for the 2009, 2008
and 2007 policies. Thus, a claim that occurred in
December 2010 does not affect an employer’s premium on Jan. 1, 2011.
The experience modification calculation is
more negatively impacted by claim frequency than
severity. In fact, claims exceeding $5,000 in value
are limited, and only a portion of the actual claim is
included in the calculation of the experience modification. The claim data includes paid amounts for
both ongoing and closed claims, and reserves for
future payments expected on active claims.
A 1.00 experience modification is average, and
has no impact on a contractor’s premium. A .92
experience modification indicates that the contractor’s loss experience is better than average, and results in an 8 percent premium credit. A 1.20 experience modification indicates that the contractor has
Impacts on a Subcontractor’s Ability to Secure Work
A debit experience modification and/or ARAP
surcharge will negatively impact a contractor’s ability to be price-competitive. Additionally, general
contractors and owners sometimes use experience
ratings as a bid qualification! General contractors
may exclude subcontractors whose experience
modification exceeds some arbitrary benchmark
(i.e. 1.00 or 1.10). Given the choice between a subcontractor who demonstrates better than average
loss history, and a subcontractor who has earned
a debit (greater than 1.00) experience modification, the GC may elect to go with the “safer”
subcontractor.
Bernie Quinlan, CPCU, CIC, CRM, is a principal with
Sullivan Group in Needham. He can be reached at (781) 5141331 or [email protected].
ARAP
ARAP is calculated in conjunction with an employer’s experience modification and applies only
on a surcharge basis. ARAP penalizes claim severity,
as opposed to frequency. An ARAP surcharge can
range from 1.01 to 1.25 maximum and may compound the impact of the experience modification.
That is, a 1.20 experience modification combined
with a 1.25 ARAP surcharge results in a 50 percent
premium increase (1.20 x 1.25 = 1.50).
What to Do?
First and foremost, prevent accidents from happening! Work with your insurance company loss
prevention representatives, as well as your own
project managers and foremen to provide the safest
possible workplace.
Work with your insurer and agent to manage
claims that do occur. Do not assume that claims are
being handled in the most efficient manner. Appropriate medical care with the goal of returning an
injured employee to work, even on modified duty,
will mitigate the impact of claims on the experience
modification and ARAP.
Do not assume that the experience rating calculations are calculated correctly! There are many
opportunities for errors in the data submitted by insurance companies to the
Workers’ Compensation Rating and Inspection Bureau of Massachusetts (for
employers working only in the state) and
to the National Council on Compensation Insurance (NCCI) for employers
working in multiple states. Therefore,
review the experience rating calculations with your agent and consider the
following:
•• Are payrolls and classifications
correct?
•• Has all data for the proper
experience period been included?
•• Is the claim data accurate?
•• Have any claims been closed during
the six-month period prior to the
effective date of the experience
modification/ARAP? If so, you may
be able to revise the claim value if it
works to your benefit.
•• Have you worked on wrap-up
projects? If so, check the accuracy of
payroll/claim data very carefully.
•• Is there common ownership with
other entities? If so, combining
the rating of the entities may be
beneficial.
•• Has there been a change in
ownership accompanied by a change
in operations resulting in workers’
compensation reclassification? If
so, this might affect the inclusion/
exclusion of prior experience.
•• To avoid surprises, ask your agent
to forecast upcoming experience
modifications/ARAP surcharges.
We know there’s more on your mind
than the safety of a building alone.
Construction is a business where risk is around every corner. You need
an insurance company that understands that. Not just from an insurer’s
perspective, but from yours. Acadia. We’re closer to your business. Visit
acadiainsurance.com or contact your local independent agent for more
information about the ASM Safety Group and Dividend potential.
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A workers’ compensation experience
rating not only affects a contractor’s cost
of doing business, it may also impact his
ability to get business. Pay attention to
this important industry benchmark. s
12/16/10 3:53 PM
pavflrs_pc_thirdpg_3-11.indd 1
3/16/11 5:08:54 PM
15
Art
Work of
Members Celebrating at
the Biennial Dinner Gala
On April 5, 2011, over 250 members and
guests gathered at the Museum of Fine Arts in
Boston for an enchanting evening of tributes,
distinguished guests and an exclusive viewing
of the all-new Art of the Americas wing.
This was the first event to be hosted by a construction
organization in the new wing, which was constructed almost
entirely by ASM members. The event also honored Edwin
Fremder, recipient of the Joseph M. Corwin Lifetime Achievement Award (see story, page 18). A special thank-you to the
event’s sponsors, listed on page 19.
The evening also introduced ASM’s newly elected board of
directors and officers. David G. Cannistraro, vice president of
1
J.C. Cannistraro of Watertown, was elected as the association’s president, succeeding Sara A. Stafford of Stafford Construction Services. David acknowledged the successes the
association achieved under Sara’s leadership and pledged his
commitment to strong leadership, increased recognition for
the association and continued efforts toward building ASM’s
membership.
Richard R. Fisher of Red Wing Construction was elected as
president-elect, while two new vice presidents were elected,
including Joseph H. Bodio of Lan-Tel Communications, Inc.
and Steven P. Kenney of N.B. Kenney Co. They will join
returning vice president Gregory A. Porfido of Mark Richey
Woodworking & Design, Inc. Rounding out the officer slate
are Russell J. Anderson, Southeastern Metal Fabricators, Inc.,
serving as treasurer, and Sara A. Stafford, Stafford Construction Services, Inc. and Scott H. Packard, Chapman Waterproofing, Co., returning as past presidents. In addition, 19
other members will sit on this new board for a two-year term,
until the next Biennial Dinner in 2013 (see sidebar, page 19).
7
2
8
1
2
3
3
4
5
6
7
8
9
10
Having a good time – ENE Systems and friends.
New president Dave Cannistraro arrives at the MFA with his
wife, Dira, and guests.
Board member Mike Kosiver, second from left, and guests.
Edwin J. Fremder, Esq., receives the Joseph M. Corwin LifetimeAchievement Award, presented by Dave Cannistraro.
PHCC Delegation – Hugh Kelleher, John Cannistraro and his
wife, with new ASM board member Nancy Shine.
The Lynches from Enterprise Equipment and Guarraccinos
from JM Electrical take time out for the camera.
Gallery stroll – ASM members view the masterpieces on display in the new Art of the Americas galleries.
Andy Baer Jazz Quartet entertains at the reception.
ASM vice president Greg Porfido and Mark Richey of Mark
Richey Woodworking & Design.
Board members Joe Bodio and Frank Smith with member
Carli Wigdor, center, and guests.
4
5
9
6
10
17
Edwin J. Fremder, Esq.
Receives Distinguished Joseph M. Corwin
Lifetime Achievement Award
W
ith a law degree from Case
Western Reserve, Ed Fremder
moved to Boston in 1977 and
joined the law firm of Corwin & Corwin.
Knowing nothing about construction at
the start, he quickly became one of the
most respected construction lawyers in
the state. Over the course of 33 years,
he has represented subcontractors in
hundreds of cases, in and out of court, winning good outcomes
through his characteristic preparation, persistence and
passion.
For more than half that time, he has also served as counsel
to the Associated Subcontractors of Massachusetts, following
in the footsteps of the firm’s founders, Joe and Sally Corwin.
As counsel he advised ASM leaders on a broad range of legal
issues, and represented ASM on Beacon Hill. Over the years,
he testified at hundreds of legislative hearings, wrote countless
letters in support or opposition to legislative proposals, and
worked with board and staff to formulate ASM’s legislative
strategy. In the process he helped ASM earn a reputation for
reliability and credibility among legislators, contractors and
ASM members alike.
Ed was instrumental in helping ASM defeat bills to repeal
the filed sub bid law, and played a key role in crafting the
landmark Construction Reform Law of 2004. He also helped
lay the groundwork for ASM’s crowning achievement – the
2010 Prompt Pay law.
In retrospect, Ed proudly reflects on his role as counsel
not as a job, but as an honor. Throughout the years, he has
remained committed to the philosophy set by Joe and Sally
Corwin over 50 years ago, that the firm and the association exist
to protect the rights of subcontractors – from the little guys to
the big players. He echoes the sentiment of Sally Corwin, who
firmly believed, “there is never a time when you don’t have
time” to address the issues faced by subcontractors.
To Ed, representing ASM was like having 300 additional
clients; it was about fighting the battle for them every day, and
not letting them down. And he never has.
In recognition of his years of service, ASM is proud to
present Ed Fremder with the prestigious Joseph M. Corwin
Lifetime Achievement Award. This award was created in
honor of its first recipient, who has often been called the
father of construction law in Massachusetts. Awarded only six
times in 16 years, it is presented to individuals who have shown
leadership and dedication to the Associated Subcontractors
of Massachusetts and the subcontracting industry.
1
2
3
4
1
2
3
4
Changing of the guard – new president Dave Cannistraro
expresses appreciation to outgoing president Sara Stafford.
ASM’s new vice president, Steve Kenney, with award recipient Ed Fremder and wife Linda Corwin.
A formal portrait of Kenneth Castellucci & Associates, which
did all the stonework for the new wing, and all of the old
wings, as well.
New board member Nancy Salter, center, with her team from
Frontline.
Newly-Elected ASM Board of Directors,
Serving Through 2013
Officers
David G. Cannistraro
J.C. Cannistraro, LLC
President
Richard R. Fisher
Red Wing Construction
President Elect
Joseph H. Bodio
Lan-Tel Communications, Inc.
Vice President
Steven P. Kenney
N.B. Kenney Co.
Vice President
Gregory A. Porfido
Mark Richey Woodworking
& Design, Inc.
Vice President
Russell J. Anderson
Southeastern Metal Fabricators, Inc.
Treasurer
Sara A. Stafford
Stafford Constructions Services, Inc.
Past President
Scott H. Packard
Chapman Waterproofing Co.
Past President
Directors
George A. Allen, Sr.
Archer Corporation
Steven T. Amanti
E. Amanti & Sons, Inc.
Clement P. Clare
Xcel Fire Protection, Inc.
R. Lindsay Drisko
ENE Systems, Inc.
Roger A. Fuller
R & R Window Contractors, Inc.
William M. Gillespie
Robert W. Irvine & Sons, Inc.
Wayne J. Griffin
Wayne J. Griffin Electric, Inc.
Robert B. Hutchison
The Cheviot Corporation
Dana E. Johnston, Jr.
Fall River Electrical Associates Co., Inc.
Michael S. Kosiver
Lockheed Window Corp.
William J. (Mac) Lynch
William F. Lynch Co., Inc.
Susan Mailman
Coghlin Electrical Contractors
Erik S. Maseng
Viking Controls, Inc.
James B. Miller
Salem Glass Company
Louis J. Sannella
McGladrey & Pullen LLP
Nancy H. Salter
Frontline, Inc.
Ann T. (Nancy) Shine
JF Shine Mechanical, Inc.
Frank J. Smith
Eastern Insurance Construction
Division
Lee C. Sullivan
A & A Window Products Inc.
Carolyn M. Francisco, Counsel
Corwin & Corwin LLP
Monica Lawton, CEO
ASM
Biennial Sponsors
The Copley
J.C. Cannistraro, LLC
Acadia Insurance Company and
Berkley Surety
Cross Insurance Wakefield
Stafford Construction Services
The Sargent
Corwin & Corwin LLP
The Homer
The Cheviot Corp.
Eastern Insurance
Enterprise Equipment Co.
The Cassatt
DiTullio Insurance Agency Inc.
JM Electrical Co., Inc.
LAN-TEL Communications
Lemoi Erectors, Inc.
McGladrey & Pullen, LLP
Sullivan Group
William F. Lynch Co.
Viking Controls
The Hopper
J.F. Shine Mechanical
N.B. Kenney Co.
NECA/National Electrical
Contractors Association,
Greater Boston Chapter
Plumbing, Heating, Cooling
Contractors Association of
Greater Boston
Salem Glass Company
Southeastern Metal Fabricators
The Wyeth
Delaney & Associates
ENE Systems, Inc.
M.L. McDonald Sales Co.
19
LEGAL BRIEFS
By John M. Curran
Mechanic’s Lien Law Amendments
New Lien Rights for Design Professionals
T
he Massachusetts mechanic’s lien statute, M.G.L.
c.254, has long provided payment security to
contractors, subcontractors, suppliers and laborers who furnish labor and/or materials to private
construction projects in Massachusetts. Historically,
design professionals rendering services to these very
same construction projects were not afforded any
lien rights under the statute. However, on Jan, 5,
Gov. Deval Patrick signed and approved c.424 of the
Acts of 2010 amending the lien law and extending
mechanic’s lien coverage to design professionals and
those who provide professional services to design
John Curran is a partner at Corwin & Corwin LLP, one of the
oldest law firms in New England, dedicated solely to construction
law, and counsel to ASM since 1950. He can be reached at (617)
742-3420 or [email protected].
professionals. This amendment goes into effect on
July 1, 2011.
Design professionals are defined by the statute
as an architect, professional engineer, licensed site
professional or land surveyor who is licensed or registered as such in the commonwealth. Corporations
and partnerships practicing these design professions
are similarly included in the statutory definition. In
the traditional construction delivery method where
the contractor and design professional both independently work directly for the owner, lien protection is now available to design professionals provided
they have a written contract with the project owner or
the owner’s representative on a private construction
project. Similarly, persons who furnish professional
services to or under the supervision or control of
such a design professional are entitled to a mechanic’s lien. (The statute defines “professional services”
Determined and Proud
The Rashi School
Dedham, MA
Photo Credit:
Robert Umenhofer
We are determined to do our best,
on every aspect of every job, and
take pride in the results. This
commitment to quality is what
drives the Griffin team as we
continually work to earn our
clients’ recognition and respect.
Corporate Headquarters:
116 Hopping Brook Road
Holliston, MA 01746
(508) 429-8830
Regional Offices:
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MA Lic A8999
www.waynejgriffinelectric.com
to include: programming; planning; surveying; site investigation; analysis; assessment; design; preparation of drawings
and specifications; and construction administrative services.) Such professional
service providers may file liens as long
as: they have written subcontracts with
design professionals who, themselves, are
entitled to a lien; and their engagement
has been approved in writing by the owner or an authorized representative.
In the design-build context, design
professionals working with or for a contractor or subcontractor are entitled to a
lien provided such “professional services”
were rendered pursuant to a written contract. Like contractors, subcontractors
and suppliers, all design professionals
and professional service providers must
strictly comply with the timing and procedural requirements for filing and enforcing a lien.
The only meaningful distinction between the contractor/subcontractor/
supplier lien and the design professional lien is the order in which competing valid liens are satisfied on a traditionally-delivered project where the
design professional and contractor each
work directly and independently for the
owner. The recent amendments do not
disturb the long-standing rule that all
contractor, subcontractor and supplier
lien claimants, regardless of the order in
which their liens are filed, share on a pro
rata basis should there be a sale of the
property and the proceeds from the sale
are insufficient to satisfy all the liens in
full. As amended, the statute specifically
provides that the liens of design professionals on traditionally-delivered projects
shall be paid only after payment in full of
the claims of other lien creditors. Therefore, in the event of a sale of the property
and competing liens, the design professional’s lien on a traditionally-delivered
project takes a back seat to that of the
contractor, subcontractor and supplier
and is only satisfied if the other non-design professional liens have been paid in
full. On a design-build project, a design
professional working for a contractor or
a subcontractor is entitled to be included
in the pro rata distribution amongst the
contractors, subcontractors and suppliers
and does not have to wait until all other
liens are satisfied in full.
s
21
Technology
By Chris Goguen and Gail Severt
8 Winning Steps to Remodeling
Your Financial Systems
A
rriving at the conclusion that your financial
software needs to be updated brings mixed
emotions. Changing financial application software can be inconvenient and time consuming –
not to mention costly. However, in the long run, it
is in the best interest of your organization to move
to a platform that is technologically up to date and
provides a 360-degree view of your business. Newer
systems offer faster and easier access to data, which
will improve your response time to problems. Decreasing the redundancy of data collection, streamlining processes and reducing the transfer of paper
Avoid major deviations from the original
software architecture. Modifications will cost
you money now, as well as each time you
upgrade the system.
will improve productivity and increase efficiency.
The centralized process of transactions in one system will allow for real-time view of information. We
live in a complex world – your software should support this new paradigm.
The following eight steps outline what you need
to do in order to prepare for a system upgrade:
1. Get consensus. Confirm that all of the departments that would be disrupted by the new system
implementation are in agreement that the change
is a good idea. If they are not on board with the
project, there is a high probability that the project
will fail.
Chris Goguen is a director at McGladrey, and Gail Severt is a
consultant for McGladrey in Boston. Goguen can be reached
at [email protected] and Severt can be reached at
[email protected], or contact McGladrey at (617)
912-9000.
2. Clean house. Take the time to sift through
all reports that are processed each month, quarter
or year to determine their usefulness. Next, take a
look at your routine. Do some of your processes follow a certain pattern due to limitations within the
current system? Are they outdated? Take an aerial
view of your processes to determine their relevance.
Lastly, sort through the master files and mark vendors, customers or items that are obsolete – you
don’t want to bring outdated data into your new
system.
3. Design. Now that you have buy-in from the
employees who will be using the new system and
you have cleaned up your monthly, quarterly and
yearly reports, you can decide what it is you want
from your new system. You can also decide which
of your existing list reports, data inquiries and processes should be included in the new system. Take
this time to recognize that technology has grown
exponentially since you implemented your current
application. What new software features should you
take advantage of? What features are missing from
your current software that you would like to see
in your new software? In addition, create a list of
those features that are nice to have, but you can live
without. Even if you decide not to implement those
features in phase one of the project, you should be
aware of future needs so that the new design can
accommodate them.
4. Research. Before you contact a software vendor, you should do some homework. What systems
are other companies in your industry using? What
systems are available? The internet is a good place to
begin your exploration. There are software packages that cater to specific industries such as construction, non-profit, or process manufacturing. However, there are other applications known as enterprise
resource planning (ERP) software solutions which
address the core functions of a business. These
types of systems are heavily weighted to the finance
end of the house such as general ledger, accounts
payable, accounts receivable and cash management.
Many ERP applications also have a strong secondary function in areas such as project accounting or
manufacturing. The choice you make depends on
the specific needs of your company. In addition to
researching the application options, carefully evaluate the service providers available. It is important to
choose a service provider who can help you at all
phases of the implementation and effectively guide
your organization through strategic challenges.
5. Blueprint. Outline and document your requirements and processes. The structure of any
implementation is determined by the processes and
data required by your company. You gathered information during the design phase of the project; it
is important to record those discussions in writing.
The documentation process can have a significant
impact on the outcome of the implementation. New
software will magnify the quality of your processes.
Good processes are made better, and bad processes
are made worse. If you forgo the cost of creating the
blueprints and decide to improvise, you will end up
with a poorly constructed software application.
6. Interview. Once you have decided on software applications that appear to fit your business
requirements, invite the software vendors in for an
interview and demonstration. Share the information that you accumulated in your design phase.
A good salesperson will take this information and
create a demonstration tailored to your company.
Focus on the functionality of the software but also
the competency of the consulting practice. It is the
SullGroupTPC 1/29/09 3:49 PM Page 1
consultant’s job to understand your needs and to
ensure that they are factored into the design of the
implementation. You are looking for a consultant
who will listen and give you options around the best
course of action.
At this point, you have selected the software and
the consulting team. Here are a few additional suggestions to ensure a positive outcome:
7. Stay involved. It is imperative that you stay
involved with the project through implementation.
Someone within your organization should take
ownership of the installation. As the point person,
he or she should understand the system set-up,
transaction flow, data structure and reporting capabilities as well as coordinate the needs of all of
the departments affected by the implementation.
A department may make a request that conflicts
with the needs of another department. Funneling
requests through this central person will minimize
these conflicts.
8. Budget. You will spend more than you budgeted for if you a) don’t have enough resources to
assist with the implementation; b) are swayed by incremental additions; or c) are unprepared.
Be sure to allocate the appropriate time and resources to the project. Schedule the implementation
Insurance Relationships:
continued on page 29
BUILT TO LAST
Risk Management • Employee Benefits • Property & Casualty Insurance • Bonding • Financial Services
Many of our clients in the commercial building industry have been with us for decades...
Risk Management...more than just Insurance.
Work with an Owner.
Sullivan Group professionals will assist your company
with contractual risk transfer, selection of appropriate
deductible and retention levels, claims management,
and loss control.
Our 20
18 principals directly service the risk management
and insurance needs of our clients.
Access to Markets.
Sullivan Group enjoys strong relationships with all of the
major underwriters servicing the construction industry.
1.800.649.1553
•
www.sullivangroup.com
One Chestnut Place • Worcester, MA • 01608-2804 • 508-791-2241
72 River Park • Needham Heights, MA • 02494-2631 • 781-449-8323
23
SURETY By Jeff Hendricks, Paul Healy and Tony Pirri
The Surety Market – 2011 and Beyond
Seeing the road ahead is easy.
Navigating the conditions is a challenge!
I
n today’s market, more project opportunities require subcontractors to provide a bond, but many
subcontractors do not have access to a surety facility. For those who do have access, we expect the
market conditions to deteriorate in the near future,
which may impact their ability to bid jobs. This article provides an overview of the surety market and
suggests some steps to help subcontractors better
position their businesses to ensure the availability of
bonding.
Forecasting the state of the surety market is not
difficult when one understands the conditions which
affect surety companies, including the overall state
of the global economy, the construction economy,
the political climate, the insurance companies’ performance and specific surety line results.
Economy
The market for jobs, consumer confidence, real
estate and private investment has been constrained
over the last two years. The most optimistic view is
that 2011 will be flat. There are still concerns about
a stalled economy involving slow job growth and a
long workout of mortgage problems. Private sector
investment has not gained the hoped-for momentum from the government stimulus spending and
the much-hyped “shovel-ready” projects. We do not
see the leading indicators of projects in the pipelines
suggesting a robust market recovery anytime soon.
At best, there is a flat market for public construction, while private spending will remain soft with a
few encouraging pockets (e.g., health care and education), but with the continued drag of residential.
Protection starts here
Public spending is expected to decline in
2012 as public fiscal restraint takes hold.
The recent elections shifted political sentiment toward less public financial intervention.
The value of put-in-place construction,
according to the U.S. Census Bureau in
2006, was $1.2 trillion. The current estimate for 2010 is $802 billion, down
$400 billion. Residential has led the way
down from $647 billion in 2006 to the
current estimate of $229 billion, a drop
of 64 percent. Over that same period,
public spending has actually increased
from $255 billion to $320 billion, up $65
billion. Federal construction spending
increased from $16.5 billion in 2006 to
just over $30 billion in late 2010. This
is a reflection of government stimulus
spending, and is evident in several surety
companies reporting growth in their top
line in 2010, as virtually all public jobs
are bonded by law. Construction unemployment, however, primarily impacted
by what has happened in the residential
sector, remains stubborn at 18.8 percent,
and here.
DeSanctis Insurance Agency
Serving the Bonding and Insurance needs of the
N.E. construction industry for over 35 years.
Ad a m De Sa n c t i s Gre g o r y Ju w a Ja m e s A xo n
Mi c h a e l Ca rn e y Wi l d e r Pa rk s Mi c h a e l Gi l b e r t
Br y a n Ju w a Da v i d B o u t i e t t e Pa u l Pa t a l a n o Dick Caruso
DeSanctis Insurance Agency, Inc.
36 Cummings Park
Woburn, MA 01801 (781) 935-8480 www.desanctisins.com
continued on page 30
ASM Membership
What’s
in it
for you?
Who we are
The Associated Subcontractors of Massachusetts (ASM)
is a non-profit trade association representing subcontractors,
suppliers and service providers across the Commonwealth.
Established in 1950, we are the only organization that addresses
the business objectives of all subcontractors, including union
and open-shop. We provide the best legislative advocacy, legal
resources, education, networking and news and information to
our more than 400 members.
How we add Value
• Be the first to learn about important legal and legislative
policies that impact your business – and benefit from one
of the most effective lobbying teams on Beacon Hill.
• Attend top-rated seminars addressing industry related
trends, changes and regulations.
Associated Subcontractors of
Massachusetts, Inc.
One Washington Mall, 5th floor
Boston, MA 02108
(617) 742-3412 | www.associatedsubs.com
• Receive important information and news
delivered to you in a variety of formats.
• Get noticed with complimentary promotional
opportunities in The Professional Contractor.
• Reputation – ASM has rapidly earned a reputation
for “getting things done” within the subcontractor,
general contractor and legislative circles.
Become a Leader – Join Today
Be part of the most recognizable and respected subcontractor
organization in the Commonwealth and enjoy the many benefits
that membership has to offer. Feel the pride of being part of an
organization dedicated to subcontractors and their businesses.
25
Member News
Archer Corporation (Malden) is pleased to announce that company founder, principal and treasurer
George Allen will be the recipient of the Volpe-Eagan Construction Safety Award presented by The
Construction Institute (TCI). Archer Corporation, known for providing quality interior construction
services, combines “new world technology” with “old world craftsmanship” and works for some of the
most prestigious owners in the area. Allen has overseen his company’s exemplary safety program for
40 years and holds several OSHA instructor certifications. He is also trustee of the Boston Carpenters
Apprenticeship & Training Fund (BCATF) and is an avid promoter of safety training programs for all
Boston-area carpenter apprentices and journeypersons. Allen also serves on the ASM board of directors.
The Volpe-Eagan Safety Awards are conferred in honor of Patrick Volpe and Edward F. Eagan, both
pioneers in promoting health and safety in the construction industry.
DePaoli Mosaic Company (Randolph) is pleased to announce that, under the leadership of Leslie
Morgan Carrio, the company has been certified by the Commonwealth of Massachusetts’ Supplier Diversity Office (formerly SOMWBA) as a WBE/DBE Terrazzo and Seamless Flooring contractor. DePaoli
Mosaic Company has been installing Terrazzo throughout New England since 1890.
Eastern Insurance Group, LLC (Natick) announced the appointment of Peter K. Brockway, ARM,
CIC, as senior vice president. Brockway joins Eastern Insurance after spending 35 years working at
Liberty Mutual, where he was a senior account executive in its national sales department and was a
member of Liberty’s Hall of Fame. “Eastern Insurance is excited to welcome Peter to our team,” said
Hope Aldrich, president and CEO of Eastern Insurance. “Peter brings a wealth of experience to Eastern
Insurance from working in a variety of insurance fields for many years.”
Longden Company, Inc. (Hudson) recently completed the installation
of 2,500 square feet of Tate raised access flooring for Genzyme’s tiered
lecture hall in Cambridge. The underfloor cavity was used for cable management and as a plenum, distributing supply air through the perforated
fascia plate. While access floors have been traditionally used in data centers, server rooms and general office areas, they also have use in non-traditional spaces such as auditoriums, classrooms and libraries. Longden has
completed similar tiered flooring projects for Wellington Management and Dartmouth College, and is
constructing tiered flooring at North Shore Community College and Harvard University.
McGladrey (Boston) announced that seven nonprofits were presented with over $70,000 from the 2010
McGladrey Culinary Challenge for Charity. The Culinary Challenge, hosted in December, paired seven
charitable organizations with renowned Boston-area chefs and media personalities as celebrity sous
chefs. It was attended by more than 700 guests and executive leaders of the seven charities. Each of the
participating nonprofits received $8,800 from the McGladrey Foundation. As first place winner of the
Culinary Challenge, Morgan Memorial Goodwill Industries received an additional $7,500 and as second
place winner, The Genesis Fund received an additional $2,500.
United Solutions Inc. (Marlborough) has hired Douglas Lewanda to fortify its commitment to provide software solutions for construction, property management and service businesses throughout New
England. Lewanda will provide training and customization services for Sage Timberline Office software,
an integrated suite of products used to manage all financial and project management functions of a
construction company. Lewanda has a background providing CFO/controller and consulting services
to small construction businesses across the Northeast.
Pavilion Floors (Woburn) recently announced that it was
the recipient of the Best in Class Safety Award from the DanaFarber Cancer Institute in Boston. Pavilion received the
award for its stellar safety record when working with Walsh
Brothers, Inc. on the Yawkey Center for Cancer Care. This
275,000 square foot project rises 14 stories on the Dana-Farber campus and greatly expands their patient care capabilities. The award recognizes Pavilion’s commitment to safety
and environmental issues.
Floors installed by Pavilion at the
Yawkey Center for Cancer Care.
Left: The Vermont Department
of Public Safety’s new forensic
laboratory.
Right: The new five-story residence
hall at Salem State University.
Wayne J. Griffin Electric, Inc. (Holliston) is proud to have worked on the recently completed Orange
Hall at Salem State University. The new five-story residence hall includes a dining facility and kitchen,
several common area lounges, fitness, laundry, game and conference rooms, as well as graduate and faculty apartments. Griffin Electric was responsible for installing the entire electrical distribution system,
which included installation of lighting controls that utilized daylight harvesting and dimming systems
to assist in the achievement of LEED Gold certification. In Waterbury, VT, the Griffin team provided
all power, fire alarm, lighting and security systems for the Vermont Department of Public Safety’s new
forensics laboratory, a 31,500-square foot, three-story structure which opened last fall.
Left: Workers atop the Statehouse.
Right: Everett High School.
Greenwood Industries Inc. (Millbury) recently completed the entire re-roofing of the Massachusetts
Statehouse (left) – a two-year project completed under budget and sooner than expected. For years,
water leaking through the roof was collected in buckets. Now, thanks to new copper sheathing and specialty PVC roofing, the roof is watertight, the Statehouse is dry, and the buckets have been put away. The
Statehouse project topped off a successful year that earned the company its fourth appearance on Inc.
magazine’s list of 5,000 fastest-growing private companies. Founded in 1992 and now under the leadership of Douglas Klein, the company has worked on many high-profile projects and has been named by
Firestone as a master contractor for 2011. Other recent projects include Everett High School (right)
and GTech in Providence.
s
27
Photo Gallery – ASM Events
Projects in the Pipeline, Jan. 20
1 Panelists for the program: From left, Michael
Lambert and Michael McKimmey of Division
of Capital Asset Management (DCAM); John
Jumpe of Mass. School Building Authority
(MSBA); Edward Adelman of Mass. State
College Building Authority (MSCBA); and
Brenda McKenzie of the Boston
Redevelopment Authority.
2 ASM members at a Jan. 20 seminar listen as
panelists review billions of dollars in public
and private work on the horizon.
1
6
2
7
3
8
4
9
5
10
ASM Safety Roundtable, Feb. 15
3 Eric Stalmon of Marr Scaffolding reviews
new OSHA crane and derrick rules.
4 Jean Manoli of the Mass. Division of
Occupational Safety alerts members to
changes and new enforcement initiatives at
OSHA.
5 Members listen intently, reflecting the
seriousness of the issues under discussion.
Economic Outlook Dinner Meeting, Feb. 9
6 Members reconnect and recharge.
7 Speaker Mark Vitner of Wells Fargo shares
his economic forecast for 2011, locally and
nationwide.
8 Attendees listen for clues to an economic
rebound.
“Public Bidding 101” seminar, March 2
9 Attorneys Joe Pisarri and Charles Ahern of
Corwin & Corwin cover the basics of public
bidding and traps for the unwary.
10 Attendees get a crash course in public
bidding.
THE PROFESSIONAL
8 Winning Steps
continued from 23
so that it does not conflict with any major
events like year-end, the busy part of the
sales season, or other major initiatives.
The project should be a priority for those
involved, as well as for management.
As for the incremental costs, evaluate
the purpose and return of the expenditure. It might be worthwhile to expend a
little extra money to implement imbedded
workflow and alerts – in the long run it will
save time and money. However, avoid major deviations from the original software
architecture. Modifications will cost you
money now, as well as each time you upgrade the system. The new system will offer
the ability to collect all kinds of data about
different types of transactions. Remember,
this comes with a cost; someone has to input the information correctly for the data
to have meaning.
Lastly, being unprepared can set a
project back and escalate costs. Business
processes and needs should be vetted well
before the selection of the software. It is
costly to make major changes in design after implementation has commenced.
If an update to your company’s financial software is carried out correctly, the
result can be an exceptional return on
investment. It is important to keep these
valuable steps in mind when you remodel
your financial system. New, advanced and
updated systems can provide quick and
easy access to essential data, streamlined
processes and be a substantial business decision for a growing organization. Always
keep in mind the preparation, research
and design work that must be performed –
your company’s data is the core of your
business operations. s
Do You and Your Accounting
Firm Have the Same Goals?
Your accounting firm should be working with you to build a sustainable, successful business. They should understand the unique nature
of the construction industry and how to plan for uncertain market
trends. You should feel comfortable that they are large enough to
handle anything that relates to the financial health of your business,
but small enough to deliver great service.
We are Rucci, Bardaro & Barrett, PC, the right size
accounting firm for construction businesses that need
much more than bookkeeping and a lot less than an
army of consultants.
To find out if we are the right size for your
construction business, call us at 781-321-6065,
or go to our website at www.rb-b.com.
Certified Public Accountants and Business Advisors
THE RIGHT SIZE ACCOUNTING FIRM
A MEMBER OF RUSSELL BEDFORD INTERNATIONAL WITH
AFFILIATED OFFICES WORLDWIDE
MEMBER OF THE
FORUM OF FIRMS
Reach general contractors, subcontractors, builders, developers,
building owners, designers, engineers, suppliers, and other major
players in the commercial, industrial, and residential areas.
Attract new customers through The Professional Contractor.
CALL NOW to reserve advertising space
call 617.896.5344 or e-mail
[email protected]
29
The Surety Market
continued from 27
down only slightly from 19.4 percent a year ago, according to the Bureau of Labor Statistics.
The Markets
Surety is an important niche business within the
largest U.S. property and casualty insurance companies. The surety top line has been around $5 billion
the last few years, as compared to the overall P&C
insurance industry top line of approximately $420
billion, which comparatively equates to a little more
than 1 percent. While small from a top line perspective, it has been highly profitable over the last several
years, with low loss ratios (premium/loss payments).
The top 10 surety companies write 65 percent of
the industry premiums, so it is a fairly concentrated
market. We predict losses ratios will increase in late
2011 and into 2012/13, with a tripling of the loss ratio from the current high teens to the mid-50s as a
distinct possibility over the next few years.
Surety losses are the result of contractor default,
and unsurprisingly, the industry expects default
rates to be highest among smaller contractors and
specialty trades. Greater underwriting scrutiny will
focus on contractors with shorter duration backlogs
who may have been forced to consider lower margin
work or work in new territories or sectors; for example, subcontractors who focused solely on private
and/or residential projects and are now competing
for public work as well.
Underwriting and Capacity
Surety companies are focused on contractual
terms governing liabilities. They are also very focused on subcontractor exposures, pre-qualification
and risk management of the default risk. Many are
requiring subcontractors to secure bonding or have
other techniques deployed, such as joint checks, retainage and other traditional tools. Financing of private jobs is also receiving extra scrutiny.
There is plenty of capacity. Reinsurers have also
had good experience, and reinsurance is readily
available. In the last surety hard market of the early
2000s there was a call for co-surety after capacity exceeded $250 million. Now several markets are willing to extend credit capacity of $750 million or more
alone, and explore co-surety capacity in the $2 to $3
billion range. We have also seen risk appetite grow
among the largest surety companies. New capacity is
Willis is a leader in the construction broker industry with more than 60 offices in North America,
offering expertise to the construction industry locally, nationally and globally. Contact Jeff Hendricks at
[email protected] or (617) 351-7575; Paul Healy at [email protected] or (860) 841-4427;
and Tony Pirri at [email protected] or (617) 351-7578.
entering the market in 2011. The key is positioning
your company to grow (and survive in some cases) in
order to compete for needed surety capacity.
A Few Survival Tips
•• Over-communicate with your underwriters and
brokers.
•• Be realistic about revenue and margin opportunity, and manage overhead.
•• Carefully approach new markets, including Federal work and other states or sectors.
•• Do not get backed into accepting work too cheap
or terms too onerous – a bad job has a long life
and high cost.
•• Work with professionals – brokers, bankers, CPAs,
lawyers and sureties – this is not a market for the
inexperienced.
•• Be open to acquisition opportunities – now may
be a good time to capitalize on advancement of
long term goals.
Managing Down the Road
Inevitably, surety losses will increase. It is also
quite normal, based on prior economic cycles, for
surety losses to lag behind the worst economic points
by three to four years. It takes time for aggressive bids
(has anyone heard someone say “their bid was below
our costs?”) to turn into losing jobs and impact cash
flow, balance sheets and income statements. The
growth years in the mid-2000s provided the opportunity for many balance sheets to build strong reserves.
It will take some time before losses eat away at the equity and draw sureties into the picture. It is also clear
that revenue opportunities with acceptable margins
will be fewer. Organizations need to adjust structure
and strategy accordingly. Net income, which bolsters
balance sheets, will be considerably less compared to
the recent years of “record” reporting. This does not
mean that good organizations, which plan accordingly, will not survive and come out stronger.
We also expect to see acquisition opportunities,
since those with short-term goals will not want to wait
for the market to properly rebound, and those with
capital and longer-term horizons will see chances to
get into good businesses and markets. Large multinational firms have been quite active in the U.S. market, looking at acquisitions and positioning for possible growth in the public-private partnership model,
which is more common outside of the U.S.
Subcontracting companies today would be well
advised to work closely with their surety advisers to
manage the current market and be well positioned
for future opportunities.
s
General Contractors · Trade Contractors · Homebuilders · Specialty Contractors · Surety
BUILDING
CONSTRUCTION
DIVISION
A RISK PLAN THAT’S
RIGHT FOR YOU.
Your business is unique. Before creating an
insurance solution for you, we work hard
to understand your needs. As one of the
largest independent insurance agencies
in New England, we have unrivaled access
to regional and national carriers. This
enables us to design the most competitive
and comprehensive insurance program for
you. You get insurance that’s right for your
business, and only your business.
insurance
Eastern Insurance Group LLC is a wholly
owned subsidiary of Eastern Bank.
8 0 0 -3 3 3 -72 3 4
w w w. e a s t e r n i n s u r a n c e . c o m
Mazonson LLC
Helping You Build Your Future
Proud Sponsor
ASM / Acadia Insurance Program
Mazonson LLC
MANAGING RISK. EMPOWERING GROWTH.
701 Edgewater Drive, Suite 230
Wakefield, MA 01880-6236
800.531.5211
www.mazonson.com

spring 2011 - Associated Subcontractors of Massachusetts

Transcription

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