The Builder July 2012, Volume 16, Issue 2

AGC, FMI Provide View Of Current State Of Business

Development In Construction Page 9

Government Relations Committee Update

Page 10

A Builders Association Publication

The Builders Scholarship Foundation celebrates 10 years of providing help to deserving students majoring in Construction Management and Construction Engineering. Find out more about the Builders Foundation Golf Outing, this year’s scholarship winners and what you can do to contribute to a great cause on page 2.

The Drive For The Drive For LeadershipLeadership

Paving The Path To Construction Careers

Education

2012 Builders Foundation Scholarship winners (from top): Laurie DeHaan; Mitchell Erickson; Jeffrey Pizzolato; Timothy Van Hiel; Stipo Zeba.

Builders Scholarship Foundation Selects Five Recipents For 2012

There’ll a little bit more money in the pockets of fi ve excellent students with an eye on a future in construction, thanks to the Builders Scholarship Foundation.The Scholarship Foundation Board recently awarded fi ve more $3,000, annually renewable awards to fi ve construction-related majors from the Chicago area. This year’s crop of honorees brings the total number of scholarships awarded by the Foundation to 38. Since its inception in 2003, the Foundation has given over $200,000 in tuition help to Chicagoland students.

A bit more about this year’s winners:

Laurie DeHaanUniversity of Illinois

A junior Civil & Environmental Engineering major, Laurie spent last summer working at Lincoln Park’s 2520 Building as a Project Intern for Walsh Construction Company. The Hinsdale Central graduate carries a 3.59 GPA, is active in the Society of Women Engineers and Engineers Without Borders, and was an integral part of a team that traveled to Cameroon for 25 days to implement a clean water system with a village of 1,500.

“By traveling to Cameroon, the necessities of life were made obvious,” DeHaan said. “We all need the same things; we need clean water, we need food, we need safety, we need companionship. Language, income and background do not change any of that.

“This is something everyone knows, but something I am grateful to say I have experienced through my participation in

Engineers Without Borders.” Mitchell EricksonPurdue University

A Marian Catholic High School graduate, Mitchell is a sophomore Construction Management major and a member of Purdue’s track and fi eld team. He worked last summer in the Design and Construction offi ce for University of Arkansas Medical Services in Little Rock and has also worked for Crothall Services Group of Hialeah, Florida and College Works Painting of Chicago Heights.

Erickson won the state pole vault championship in 2007. He maintains a 3.0 GPA at Purdue.

“Mitchell impressed me with his eagerness to develop his construction skills,” said Gary Strack, Senior Project Manager for Nabholz Construction Services, who supervised Mitchell last year in Arkansas. “He worked with me as an intern during the planning and budgeting phase of a very complicated surgery renovation, as well as worked on takeoff for another project that we were pricing at that time.

“He impressed me with the skills he has already developed, but was always asking questions in order to learn more. These are the type of people we need in our industry: those that want to learn.”

Jeffrey PizzolatoIllinois State University

Jeffrey is the fi rst Builders Foundation Scholarship winner from Illinois State and is a Construction Management major with a 3.19 GPA. Pizzolato is a member of the

2

Education

Construction Management Student Association, volunteers for the United Methodist Church and has done labor and framing work for the last four years at Krohn Construction in New Lenox. The Lincoln Way Central High School graduate also completed coursework at Joliet Junior College.

He lists his most memorable work for Krohn as a non-profi t job – a roofi ng project for a school.

“It was a small school that had been part of my hometown of New Lenox since it had been established,” he said. “It felt great to give back to the community that has helped me out so much. The overall feeling was very rewarding and I will remember that little bit of community service for the rest of my life. It made me want to participate in more events like that.”

Timothy Van HielIowa State University

Timothy has posted a 3.25 GPA majoring in Civil & Construction Engineering. The sophomore worked as a laborer the past two summers for JSL Masonry Restoration of Franklin Park. He is Vice President of Iowa State’s chapter of the Design-Build Institute of America, and active in the AGC of America student chapter activities. As a part of the AGC student chapter, he spent six days helping reconstruct and remodel homes impacted by the 2008 fl ood in Cedar Rapids, Iowa.

“Tim continues to show interest, growth and development and possesses qualities that can make him a future leader in the industry,” said JSL General Manager Mark LaRose, for whom Timothy worked on St. James Episcopal Church, Our Lady of Mercy Church and a GSA Federal Building.

“Tim has the ability to work with minimal supervision, with accuracy. He handled his responsibilities extremely well, showed good judgment and had a positive attitude. Tim displayed a lot of excitement, initiative and interest in our trade.”

Stipo ZebaValparaiso University

The fi rst Scholarship Foundation winner from Valparaiso

University, Zeba is a Civil Engineering major with a 3.25 GPA. Stipo is a member of the American Society of Civil Engineers and a junior on the Valparaiso soccer team, having appeared in eight matches and scored his fi rst varsity collegiate goal during the 2011 season.

A Morton West High School graduate, Stipo worked for the City of Rockford Public Works’ Engineering Division during the summer of 2011.

“I was faced with the challenge of a heavy school workload and playing soccer daily,” said Zeba, who helped Morton West place fourth in the state his sophomore year. “I didn’t want to just coast with any degree. I wanted to challenge myself to excel and push myself to a degree that would benefi t me and make me happy at the same time.

“I am interested in a construction industry career because I love the idea of building something from scratch and knowing that it will benefi t people in the future. I know that I would be happy in a profession that allows me to take advantage of my critical thinking and engineering skills while also having to fi nd solutions quickly on the spot.”

Past winners of Builders Scholarship Foundation awards have returned to the area to hold Project Manager, Project Engineer and Estimator positions at many Chicagoland construction industry fi rms, including:

Bovis Lend LeaseCiorba GroupCurran ContractingEverest ExcavatingExecutive Construction, Inc.Leopardo Companies, Inc.Path ConstructionPepper Construction Company Ryan Companies US, Inc.W.E. O’Neil Construction Company

••••••••••

Lifting Future Construction Leaders

3

Legal

The Challenges Posed By Electronic Information In Construction Disputes

BY GREGORY R. MEEDER and LIVYA HEITHAUS

Holland & Knight LLP

Arbitration and mediation, two forms of alternative dispute resolution (ADR), are popular forums in which to resolve commercial and construction disputes because ADR is considered less expensive, faster and more effi cient than court litigation.

In recent years, however, ADR – specifi cally arbitration – has been criticized as becoming no different than court litigation due greatly in part to extensive and costly discovery. Much of the escalated expense associated with discovery is attributable to the growing use, management and discoverability of electronically stored information (ESI). ESI is generally considered e-mail, Web pages, word processing fi les, databases, codes and algorithms, metadata, computer programs or any other kind of data that can be stored on a computer, BlackBerry, or other personal digital assistant.

This article discusses the impending ESI crisis in arbitration and how ADR can help contain ESI discovery in arbitration by managing ESI with specifi c guidelines and rules.

ESI CrisisThe use of computer-driven technology

and tools recently exploded in the

construction industry and commercial arena. Construction disputes, for example, have historically been document intensive because they involve multiple parties, facts developing over one or more construction seasons and thousands of documents spread among developers, architects, engineers, general contractors, subcontractors and suppliers. Construction fi rms are now turning to tablet devices and related applications to develop and manage construction projects.

Rapid communication among remote industry segments now takes place over personal digital devices and Web conferences rather than in person. Advanced design modeling systems, such as building information modeling, is now widely used to identify construction challenges before the project hits the ground. All of these technological advances, which lead to stored electronic media, create a vast amount of ESI that may be discoverable during dispute resolution.

Most parties about to embark on litigation are not ready to manage the expanse of ESI that may be related to the underlying dispute. It may be necessary to hire an outside consultant to locate, gather, store and produce the ESI in order to comply with the Federal Rules of Civil Procedure or, alternately, state rules of civil procedure.

The parties must also engage attorneys to conduct a lengthy and costly privilege

review of all ESI to ensure that attorney-client privilege and work product protections are not waived during production. Although “claw back” agreements, which require parties to return privileged information produced through inadvertent disclosure may alleviate the fear of waiver, it is imperative, nonetheless, that all material be reviewed to avoid providing an opposing party with even a glimpse of protected information. Furthermore, depending on the format of the ESI produced by the opposing party, a party may incur further expenses to convert the ESI into a useable format so that it can be reviewed by attorneys and parties.

If left unmanaged, electronic discovery issues will likely have unintended and a potentially disastrous impact on the cost of arbitration or litigation. Notably, failure to produce all discoverable ESI could result in sanctions ranging from attorney fees and costs to adverse inference jury instructions or a default judgment. See FRCP 37; U.S. v. Philip Morris USA, Inc. 327 F.Supp.2d 21 (D.D.C. 2004) (fi ning the defendant $2.5 million for destroying potentially discoverable e-mails two years after the entry of a preservation order and barred from presenting witnesses at trial who had failed to retain and preserve relevant records).

Flexibility to Reduce BurdensMost ADR forums have developed

igitaliscoveryD

4

Legal

electronic discovery guidelines and rules to assist parties, attorneys and neutrals in dealing with requests for ESI, while also maintaining the goals associated with arbitration. Unless otherwise specifi ed in an agreement to arbitrate, judicial rules of procedure do not apply to arbitrations. Arbitrations can therefore be a welcome option to parties with commercial or construction disputes if they are looking to resolve matters involving signifi cant amounts of ESI in an economical fashion.

Arbitrations provide parties with the fl exibility to craft discovery agreements, on their own and with the assistance of ADR neutrals, limiting the breadth of ESI to be exchanged during and prior to the evidentiary hearing. It is benefi cial to provide limits on discovery, specifi cally ESI, from the outset by including a discovery provision or agreement in the ADR clause of a contract.

When drafting the discovery provision, parties should consider the following:

Nature of the dispute ADR forum and its ESI discovery rules“Claw back:” agreementsData from which ESI is producedRecord production formatBalancing discovery burdens through cost shifting Defi ning limits on penalties and sanctions

Once the dispute is fi led, parties may want to supplement the discovery agreement to address:

Scope and breadth of productionLimits on custodiansNegotiated search terms

•••••••

•••

Predictive codingProduction deadlines

ConclusionIt is advantageous for parties to establish ADR agreements before

there is a controversy. Limiting the scope of electronic discovery through arbitration agreements and the rules and guidelines provided by the various ADR tribunals, fosters the following:

Lower cost dispute resolutionDecreased burdens in producing ESIComprehensive and focused discovery resultsEffi cient use of parties’ timeLess barriers to document reviewESI produced in a useable formatQuicker dispute resolutionAvoiding costs that surpass goals and value of the disputeSimplifying steps to help keep ESI confi dential.

Pursuing a claim through ADR with well-defi ned limits on the scope of ESI enables parties, attorneys and neutrals to better manage the exchange of information during arbitration and reach a resolution in a more effi cient and cost-effective manner.

This article oiginally appeared in the Chicago Daily Law Bulletin.

Gregory Meeder is a Partner in the Construction Industry Practice Group and the leader of Holland & Knight’s regional practice group in the Midwest. Livya Heithaus is a Senior Associate in the Construction Industry Practice Group.

••

•••••••••

igitaliscovery

Be a part of the third issue of our bi-annual magazine, Building Chicago, published this fall, which will examine the legal issues facing owners,

developers and contractors in Chicagoland.

Visit www.bldrs.org for more on how to advertise, or contact Andy Cole at 847-318-8585 to find out more about

a publication that reaches over 1,500 real estate and construction industry professionals.

5

Stories Of Strong Safety

Member MilestonesAssociation

(From top) Zurich North America’s Dan Murphy delivers his keynote presentation on risk management; Jason Lammertin of Solid Platforms accepts a Safety Excellence Award, presented by Builders Association Chairman Ben Johnston of James McHugh Construction Company; OSHA Regional Director Diane Turek congratulates the winners.

Over 30 years in the construction insurance fi eld gave Dan Murphy plenty of tales to tell. They weren’t all happy stories, but they served a purpose when it came to illustrating what a strong safety program can mean to a contractor.

Murphy, the former Vice President of Construction Services at Zurich North America Insurance, was the keynote speaker at the Builders Association’s Spring Meeting in May at the Hyatt Rosemont. Through a number of anecdotes and statistics, he demonstrated the human side of safety. While a strong safety record means lower insurance premiums for any business, he pointed out what he feels is a greater reason for a focus on safety - it’s the right way to treat people.

For over a century, the Builders Association has been a leading force for construction safety in Chicagoland. One main component has been the recognition of member companies with outstanding safety performance, and we were proud to recognize them again with our 14th Annual Builders Association Safety Awards at the meeting.

Tyler Lane Construction has won a Builders Association Safety Award in every year of the program, and Solid Platforms, Inc. earned Best In Class recognition for companies with over 500,000 work hours for the second year in a row.

United States Alliance Fire Protection was recognized for Most Improved Safety in 2011. Other Best In Class winners included Case Foundation Company (250,001-500,000 hours), Hard Rock Concrete Cutters, Inc. (70,001-250,000 hours) and W.B. Olson, Inc. (Under 70,000 hours).

The complete list of Safety Recognition

Award winners for their 2011 numbers: Bernhard Woodwork Ltd. Case Foundation Company Custom Contracting DLZ Industrial Surveying, Inc. The George Sollitt Construction Company Glenn H. Johnson Construction Co. Hard Rock Concrete Cutters, Inc. The Lombard Company McShane Construction Company Pepper Construction Company Ryan Companies US, Inc. Solid Platforms, Inc. Tyler Lane Construction United States Alliance Fire Protection W.B. Olson, Inc. Wm. J. Scown Building Company

Three companies were also recognized for safety achievements through AGC of America honors, including: Tyler Lane Construction; Valenti Builders, Inc.; and W.B. Olson, Inc.

Other speakers were Builders Association President Al Leitschuh, Association Chairman Ben Johnston (James McHugh Construction Company), Safety Committee Chairman Dan Ruane (W.E. O’Neil Construction Company) and OSHA North Region Director Diane Turek.

The Builders Association also thanks our sponsors for this event:

Premier Sponsor Cement Masons Local 502Premier Sponsor Pepper Construction CompanySupporting Sponsor Bryce Downey & Lenkov LLCSupporting Sponsor CSI 3000

•••••

•••••••••

••

•

•

•

•

Safety

6

The Builders Association is pleased to welcome the following companies. When selecting a contractor or service provider, please consider selecting a business who has already demonstrated its commitment to Chicagoland’s construction industry as a whole by joining the Builders Association.

Ascher Bros. Co., Inc.3033 West Fletcher Street

Chicago, IL 60618Ralph Larson, Project Manager

773-588-0001; www.ascherbrothers.com

Ascher Brothers is one of the country’s largest painting and wallcovering contractors. Every day we strive to maintain the highest standards or both quality and service. We believe that effort is what distinguishes us from the competition. Our union employees are instilled with that philosophy. We spare nothing in order to keep our customers proud they hired Ascher Brothers.

AT Mechanical, LLC9335 W. Belmont Avenue, SW Suite

Franklin Park, IL 60131Alex Tompsidis, President

847-671-7940; www.atmechanical.com

AT Mechanical is a full service HVAC Contractor and mechanical service provider. We have completed over 70 million dollars worth of mechanical construction since opening in 2004.

Eitel Heinemann Mechanical Services1475 Busch Parkway

Buffalo Grove, IL 60089David Eitel, President

847-279-3930; www.ehms-inc.net

Eitel Heinemann Mechanical Services is a full service mechanical HVAC contractor for commercial, industrial and institutional buildings in the Chicago metropolitan area. We specialize in sheet metal, piping, temperature controls, service, repair and design, serving buildings and people since 2004.

Hill Mechanical Corporation11045 Gage Avenue

Franklin Park, IL 60131James Hill, Vice President

847-451-5004; www.hillgrp.com

Hill Mechanical Corporation self-performs piping, medical gas piping, piping pre-fabrication, plumbing, plumbing pre-fabrication, ventilation (including stainless steel and welded black carbon steel) sheet metal fabrication, hydronic/air test & balance, start-up, commissioning, HVAC - Plumbing service and three-dimensional CAD drawings.

Kelso Burnett Co.5200 Newport Drive

Rolling Meadows, IL 60008Stefan Lopata, EVP/COO

847-259-0720; www.kelso-burnett.comServing Illinois since 1908, Kelso-Burnett’s uncompromised commitment to excellence and innovation has helped us grow into one of the oldest and largest full-service electrical, communications & life safety contractors in the region. We are an employee-owned company that combines advanced technologies with superior workmanship to provide the highest-quality design, construction and project management available in the electrical contracting industry.

Kole Construction Company, Inc.1235 Naperville DriveRomeoville, IL 60446

Steve Cox, Chief Estimator/Sales Manager630-378-2006; www.koleconstruction.com

Kole Construction is a Division 6, 7 & 9 fi nishing contractor founded in 1988. We specialize in metal stud framing, thermal & sound insulation, gypsum drywall, rough & fi nish carpentry, GRG shapes and EIFS/plastering. We exceed our customers expectations from offi ce/warehouse build-outs to complex restorations, high-rise residential, tenant build-outs, high-end retail and more.

O’Connor Contractors, Inc.4190 W. 123rd Street

Alsip, IL 60803Jim O’Connor, President

708-389-7246; www.oconnorconcrete.comO’Connor is a commercial and industrial concrete contractor, performing all concrete sitework including pavement, building foundation and slab on grade.

Omega Demolition Corporation31 W. Spaulding Road

Elgin, IL 60120Charles Gerage, President

630-837-3000; www.omega-demolition.comOmega Demolition specializes in building demolition, bride demolition, underwater demolition, elevated superstructure demolition, on-site concrete crushing, structural steel removal, asbestos abatement, environmental/hazardous removal, dynamic compaction, and implosion on a nationwide basis.

Roy Zenere Trucking & Excavating, Inc.317 East Margaret Street

Thornton, IL 60476Josh Zenere, Vice President

708-877-9306; www.zenerecompanies.comFor over 50 years, Zenere Companies has performed quality work in excavation, earthwork, site preparation, demolition, trucking and landscaping. In a demanding and complex industry we deliver with practical experience, peerless expertise and superior value.

Association NewsNew Members

7

The team from Tyler Lane Construction accepts its Construction Safety Excellence Award from AGC of America offi cials during the AGC’s Annual Convention in Hawaii.

Member Milestones

W.E. O’Neil Construction Company made use of web-based mobile productivity software to complete the University of Chicago’s new hospital pavilion. The company is also preparing for a move this fall to its new location: 1245 W. Washington Blvd. in Chicago.

Five Builders Association members were named in Engineering News-Record’s list of Top 100 Design-Build and Construction Mangaement-at-Risk Firms. Clark Construction Group was named on both lists, Ryan Companies US, Inc. and McShane Construction Company were named among top design-build groups and Pepper Construction Company and W.E. O’Neil Construction Company were honored on the Construction Management list.

McShane Construction Company has been awarded the 89,630 square-foot Oakwood Shores Terrace Apartments and Mercy Medical Center. This Chicago Housing Authority project in the Bronzeville neighborhood will incorporate 48 apartment units in the Oakwood Shores project. Mercy Hospital and Medical Center will occupy the fi rst two fl oors of a building, with additional apartment units on varying size on fl oors three through six.

Ragnar Benson Construction was honored by ASA Chicago as Outstanding General Contractor of the Year. Individual honorees included Ragnar Benson’s Philip Williams (Outstanding Estimator), Pepper Construction Company’s Jim Manning (Outstanding General Superintendent) and

In Memoriam

8

John Francis Aberson passed away at the age of 82 on Saturday, Feb. 25, 2012. A recent resident of Tequesta, FL and Lincolnshire, IL, Aberson was born Oct. 17, 1929 in Chicago. Aberson is a United States Navy veteran who graduated from Northwestern University before becoming an owner of Gerhardt F. Meyne Co. He also served as Chairman of Builders Association in 1988 before retiring.

Aberson is survived by his wife, Patricia A. Aberson; one daughter, Martha (Mike) Mason; two sons, Dan Aberson and David (Woody) Aberson; and seven grandchildren, Emily, David Jr., Maxwell, John, Rebecca, Elizabeth, and Nicole.

McShane Construction Company’s Susan Uhlarik (Outstanding Project Manager).

Three Builders Association member companies were honored with 2012 Merit Awards by the Chicago Building Congress. Bulley & Andrews, LLC was the General Contractor for Old Town School of Folk Music, a 27,000 square-foot project that included music classrooms, dance studio space and a performance hall. The Old Town School of Folk Music project won a Merit Award for projects under $15 million. McShane Construction Company’s Hairpin Lofts and Arts Center won for Rehab Construction and Lombard Architectural Precast’s work at Teen Living Programs Belfort House took home an award in the Charitable Projects Category.

Bulley & Andrews, LLC was recognized for another project as well, as the University of Chicago’s Midway Crossing was a Finalist in the Infrastructure Construction category. Congratulations to them and all other companies with nominated projects:

W.B. Olson, Inc., for Ravinia Underpass (Infrastructure) and Waukegan Outdoor Sports Complex (New Construction-Suburbs)AT Mechanical, for distribution centers for 3M and University Park (both Infrastructure)Tyler Lane Construction, for Hammond Water Treatment Plant (Infrastructure)Opus North Corporation, for Devry, Inc. (Interior Buildout) W.E. O’Neil Construction, for Block 37 Retail (New Construction-Chicago) Case Foundation Company, for Mansueto Library at University of Chicago (New Construction-Chicago) Pepper Construction Company, for Rivers Casino (New Construction-Suburbs)

Forward company news to Andy Cole at acole@bldrs.org.

•

•

•

•

•

•

•

Member Milestones

Developing StoryAGC, FMI Provide View Of Current State Of Business Development In Construction

AGC News

BETHANY HARVEY

What exactly does “recovery” look like for the construction industry as a whole, and what impact will it have on your business practices?

The AGC of America and FMI Management Consultants surveyed 305 contractors and subcontractors of various sizes, market sectors, and regions about their business development practices. For the purposes of the survey, business development was defi ned as the strategic integration of marketing, sales, and customer service, including meeting customer needs more effectively than the competition.

Results show a number of trend changes resulting from a diffi cult economic climate. For instance, more fi rms are willing to put a percentage of their funds toward business development and to take the time to invent and execute business development plans. Survey results showed that fi rms that had no business development staff were more likely to experience net loss than those who hired business development specialists.

Additionally, fi rms that sought qualifi cations-based work or negotiated work rather than lump-sum work typically spent more time and money on targeting and winning work and were also more profi table.

Furthermore, the report reveals that fi rms should put signifi cant effort into encouraging customers to do business with them in the future. The most profi table fi rms were those with increased revenue coming from repeat business. Survey numbers indicated that the most successful fi rms typically named reputation or relationship as their competitive advantage as opposed to price.

In addition to releasing the fi ndings of the survey, the AGC of America is also presenting a webinar based on the data from survey responses, to be held July 26. View the entire Business Development Report at www.bldrs.org or go to www.agc.org to register for the webinar.

The AGC of America held its fi rst-ever Contractors Environmental Conference on June 7-8 in the Washington, D.C. area. Approximately 100 participants learned from industry experts, peers and regulators the latest strategies for maintaining compliance, improving effi ciencies, exploring new markets and being competitive in today’s environment.

The event began with a pre-conference “regulatory fl y-in” of the Environmental Forum Steering Committee members to meet with U.S. Environmental Protection Agency and U.S. Army Corps of Engineers program offi ces on June 6.

Conference session topics ran the gamut of issues from environmental compliance to beyond compliance initiatives that help improve the bottom line and demonstrate leadership. Speakers included U.S. Environmental Protection Agency experts on stormwater runoff, lead paint and oil spill planning; green building specialists from the U.S. Green Building Council and International Code Council; senior-level executives from the Diesel Technology Forum, Caterpillar, Inc., and Waste Management; as well as prominent environmental professionals from peer companies, law fi rms, consultant groups, and insurance companies.

Based on the overwhelmingly positive feedback, the AGC is already planning future Contractors Environmental Conferences.

Green Green SceneScene

9

Much Ado About NothingBA Lobbyist Doesn’t Think We’ve Heard The Last Of House Bill 3636

Government Relations

BETHANY HARVEY

Many contractors may already be much too familiar with Cypress Creek, the Supreme Court decision that went into effect in February 2011 and overwrote sections of the long-held Illinois Mechanics Lien Act. For the Builders Association Government Relations Committee, no other legislative bill is proving to be as crucial to the construction industry as HB 3636, which would reverse Cypress Creek while restoring the Illinois Mechanics Lien Act.

“This year, the number one thing that would have had the biggest impact [on the construction industry] is HB 3636,” says Jeff Glass of Capitol Consulting Group, who serves as the Government Relations Committee’s lobbyist.

As mentioned in the May 24 Builder Blast, Cypress Creek changed the terms in the Illinois Mechanics Lien Act regarding payments to contractors and lenders in mechanics lien foreclosures. Because of Cypress Creek, funds that were formerly shared between lenders and mechanics lien claimants are now given primarily to lenders while contractors, subcontractors, and other lien claimants can no longer receive the funds they relied on while the Illinois Mechanics Lien Act was in effect.

“[Cypress Creek] has a dampening effect on contractors considering new projects,” says Dan Dorfman of Harris Winick, LLP, an attorney on the Government Relations Committee. “It has a very negative effect on the construction industry.”

The Builders Association strongly supports HB 3636, as it would provide many Builders Association members with the payment they need when properties they have worked on go into foreclosure. The Government Relations Committee has made following the bill a priority, especially during the spring when the house was expected to vote on the bill in the legislative session.

“It had a lot of false starts in May,” Glass says. “But it didn’t turn out to be true.”

By the end of the month, it became clear that the bill would not yet be voted on because legislators became preoccupied with budgeting and decisions regarding Medicaid and pension plans for state workers.

Finding a compromise regarding HB 3636 and Cypress Creek has been diffi cult, especially since banks are typically opposed to the bill. While Cypress Creek left mechanics lien claimants with less control over their own projects, it gave banks priority of both the value of foreclosed land and the value of most improvements made on foreclosed land.

House members want to hold summer meetings to negotiate with banks with the hopes of coming to an agreement or compromise. But Glass is doubtful that these meetings will lead to any signifi cant progress.

“I wouldn’t expect any action until the last week of November,

at the earliest,” Glass says.Meanwhile, the Builders Association Government Relations

Committee will continue to follow the bill and keep members up to date on its progress.

“It’s not over yet,” says Stephen Olson of W.B. Olson, Inc., who is chair of the Government Relations Committee. “We’re partnering with other businesses, other construction groups to monitor it.”

Olson says that he and other members of The Government Relations Committee primarily work to block bills that could harm construction companies and their workers, and to support those that have the industry’s best interests in mind. The Government Relations Committee relies on donations to the Political Action Committee, which funds efforts to monitor legislation concerning the construction industry. Other committee members include Dennis Garlick of W.E. O’Neil Construction Company and Scot Pepper of The Pepper Companies.

2012 Sponsors

Interested in the benefits of our Sponsortunities Program? View our brochure online or contact

Stacey Kelly at skelly@bldrs.org.

Double Diamond

Diamond

10

Labor

BY ANDY COLE

Any piece of paper with your signature and your company’s name on it carries a tremendous amount of weight. If you’re work-ing on a project at the federal, state or city level, that weight could come in the form of a lot of cash if you aren’t careful.

The False Claims Act has been protecting the government from business fraud since the days of Abraham Lincoln, but a recent aggressive increase in fi nes and application of federal law when it comes to meeting quotas for minority and women-owned busi-nesses on federal projects has caught the attention of experts. Close to 30 states – including Illinois – have similar provisions for state projects. Throw in the City of Chicago’s well publicized requirements, and it’s easy to see how the importance of honest paperwork escalates.

Co-Managing Partner Steven M. Charney of Peckar and Abramson has presented to large groups of AGC of America chap-ter leaders and contractors on both the False Claims Act and the risks of “green” building. While digging through requirements in federal regulations is anything but simple, there’s a simple mes-sage when it comes to contractors on those projects: Know exactly what the fi rms you’re working with are doing, and document ev-erything correctly.

“If there’s a mistake on the percentage you hired and you’ve signed that piece of paper, a regulator can come to you and say ‘you can buy your way out of this, or we’re going to prosecute or de-bar you,’” Charney said. “You have to answer, and the fi nes are a huge amount of money. I’ve seen fi nes levied anywhere up to $20 million.

“The reality is, one way or another, your business can be devas-tated by just being looked at for this. It’s not so much the regula-tions themselves. It’s the way regulators are handling this.”

If a contractor submits a claim that it has reason to believe vio-lates these requirements, it is subject to penalties. Signing some-thing that states your company achieved proper compliance can come back to trip up a general contractor if they neglect to deduct from that percentage the payroll value of any workers or equip-ment lent to the specialty contractor to complete the job.

The regulations are in place to limit fraud and make smaller fi rms grow and become strong so they can continue to work on federal projects. While the law has changed some in recent years, Charney sees a big difference in the way the law is being applied, and says it will take a different mindset from the contracting com-munity to deal with it.

One of the diffi culties Charney has noticed is that contractors misunderstand how agreements between companies or municipali-ties fi t or do not fi t into federal regulations. Even if a contractor

is working in what is a federally sanctioned mentorship program with a smaller company, or the speciality contractors it hires are approved for MBE/WBE work by a level of government, it doesn’t guarantee compliance.

“You can’t rely on an approved mentorship program alone,” Charney said. “What you put your name on will be scrutinized.”

One contractor Charney cited as an example was levied with a $2.5 million fi ne. The press release from the Department of Trans-portation stipulated that the fi ned company was using a certifi ed MBE and was working in an approved mentorship program. The DOT believed, however, that the specialty contractor was not per-forming the required amount of work unassisted.

“If you put a few guys from your business on the part of the project that other contractor’s business is doing, regulators can say that’s a violation of what you’ve signed,” he said. “What they’re looking at is the actual percentage of compliance, whether or not the subcontractor is serving a commercially useful function with-out being assisted.”

If contractors can’t meet the goals, Charney encourages them to face reality as opposed to reporting a false percentage or trying to make something happen that can’t happen.

“Contractors have to be very careful when determining exactly what percentage to write down,” Charney said. “They need to have a well-designed program for meeting this goals and for proving that they’re exercising good faith efforts to meet those goals.”

Contact Denise Herdrich at the Builders Association for more on any labor issue, and make use of the Builders Association’s free legal hotline, which gives you access to a free 20-minute consulta-tion with a lawyer in the Association. Look for more on the False Claims Act as it deals with state projects in future issues of The Builder.

Be Certain When You SignConsequences Ramping Up For Those Who File False Claims

Operators Allocations, Other Trades Updated

View the revised allocations for Operating Engineers Local 150, effective June 1 of this year. They include an allocation of $13.45 to health and welfare funds for all Operators, $9.55 to the pension fund for those under the MARBA Building agreement and $8 to the pension fund for apprentices.

View the Labor section of www.bldrs.org for more information on this and any other trade, including a comprehensive comparison of year-by-year wages and allocations for nearly every local trade union.

11

Source: Ken Simonson, Chief Economist, AGC of America, simonsonk@agc.org, from Prof. Stephen Fuller, George Mason University (investment); Census Bureau (spending); Reed Construction Data (starts); Bureau of Labor Statistics (jobs, pay); Small Business Administration (small business)

The Economic Impact of Construction in the United States and Illinois Economic Impact of Investment in Nonresidential Construction:

An additional $1 billion invested in nonresidential construction would add $3.4 billion to Gross Domestic Product (GDP), $1.1 billion to personal earnings and create or sustain 28,500 jobs. o About one-third (9,700) of these jobs would be on-site

construction jobs. o About one-sixth (4,600) of the jobs would be indirect jobs

from supplying construction materials and services. Most jobs would be in-state, depending on the project and the mix of in-state suppliers.

o About half (14,300) of the jobs would be induced jobs created when the construction and supplier workers and owners spend their additional incomes. These jobs would be a mix of in-state and out-of-state jobs. Conversely, investments elsewhere would support some indirect and induced jobs in the state.

Nonresidential Construction Spending: Nonresidential spending in the U.S. in 2010 totaled $555 billion ($293 billion public, $262 billion private). Private nonresidential spending in Illinois totaled $7.9 billion in 2010. (Public spending is not available by state.) Nonresidential starts in Illinois totaled $13.1 billion in 2010 and $8.4 billion in 2011, according to Reed Construction Data.

Construction Employment (Seasonally Adjusted): Construction (residential + nonresidential) employed 5.6 million workers in February 2012, an increase of 69,000 (1.3%) from February 2011 and a decrease of 2.2 million (28%) from April 2006 when U.S. construction employment peaked. Construction employment in Illinois in February totaled 195,700, a decrease of 2.1% from February 2011 and a decrease of 30% from the state’s peak in October 2002.

Construction Industry Pay: In 2010, annual pay of all construction workers in the United States averaged $49,588, 7% more than the average for all private sector employees. Construction workers’ pay in Illinois averaged $58,926, 19% more than all private sector employees in the state.

Small Business: The United States had 713,000 construction firms in 2009, of which 92% employed fewer than 20 workers. Illinois had 29,800 construction firms in 2009, of which 93% were small (<20 employees).

Empl. Change by Metro (not seasonally adjusted) Rank (out of 337) Metro area or division 2/10-2/11

Statewide (Construction only) -4% Statewide* (Const/mining/logging) -3% Bloomington-Normal* 10% 36 Champaign-Urbana* 0% 172 Chicago-Joliet-Naperville, Div. -5% 277 Danville* 0% 172 Davenport-Moline-Rock Island, IA-IL* -1% 222 Decatur* -3% 243 Kankakee-Bradley* 0% 172 Lake County-Kenosha County, IL-WI Div. 9% 42 Peoria* 5% 95 Rockford* 5% 95 Springfield* 11% 30 St. Louis, MO-IL* -7% 290 *The Bureau of Labor Statistics reports employment for construction, mining and logging combined for metro areas in which mining and logging have few employers. To allow comparisons between states and their metros, the table shows combined employment change for these metros. Not seasonally adjusted statewide data is shown for both construction-only and combined employment change.

Jul. '96

0

2,000

4,000

6,000

8,000

1990 1995 2000 2005 2010

In th

ousa

nds

U.S Construction Employment, 1/90-2/12 (seasonally adjusted; shading = recessions)

0

75

150

225

300

1990 1995 2000 2005 2010

In th

ousa

nds

Illinois Construction Employment, 1/90-2/12 (seasonally adjusted; shading = recessions)

-20%

-15%

-10%

-5%

0%

5%

2008 2009 2010 2011 2012

12-m

onth

% c

hang

e

Construction Employment Change from Year Ago 1/08-2/12 (seasonally adjusted)

U.S. 1.3%

Illinois -2.1% 41 out of 51

12

Bringing Surety ConcernsTo The Forefront

Join us for our Fall Meeting to learn about recent changes in the construction surety industry and how they might impact your business. Our cocktail networking session begins at noon, giving you the chance to relax and make contacts with individuals from Chicagoland’s best industry firms before lunch and the program beginning at 1 p.m.

Keynote speaker Bob Raney, Chief Underwriting Officer of the National Account Unit for Travelers Bond and Financial Products, will provide guidance on how to react to changes in the construction surety industry. He is a graduate of Wake Forest University who also holds an MBA from University of North Carolina at Charlotte. He has 20 years experience in professional surety and has spoken about the industry at numerous national events for a variety of national contractor organizations.

To register for or sponsor this event, fax completed forms to 847-318-8586 or visit www.bldrs.org.

Bob Raney

Questions about registration or sponsorship? ContactStacey Kelly at skelly@bldrs.org

2012 Fall MeetingWednesday, Sept. 18, 2012

Noon – 3 p.m.Hyatt Rosemont,

6350 N. River Road

13

14

15

The Builder is published periodically by the Builders Association, a trade association of commercial, industrial and institutional contractors and affi liated industry fi rms dedicated to quality construction in Chicagoland.

2012 Board Of Directors Vice Chairman

Jimmy AkintondeUjamaa Construction, Inc.

TreasurerJeff Raday

McShane Construction Company

Past ChairmanHoward Strong

The George Sollitt Construction Company

Ken Egidi Pepper Construction Company

Mike Mozal Joseph J. Duffy Company

Matt SprenzelInstallation Specialists, Inc.

Brad SwabackJust Rite Acoustics, Inc.

Ray WojkovichBulley & Andrews, LLC

ChairmanBen Johnston

James McHugh Construction Company

2012 Builders Association Staff

President Al Leitschuh

Labor & Membership DirectorDenise Herdrich

Communications Manager Andy Cole

Project ManagerStacey Kelly

Offi ce Coordinator Patty Heier

Communications Intern Bethany Harvey

Builders Association8430 West Bryn Mawr Ave.

Suite 710Chicago, IL 60631

About Us

Phone: 847-318-8585Fax: 847-318-8586

www.bldrs.org

16