Finally.

It’s been almost two years since I’ve seen any sign of normal construction around my home town. Over the last few weeks, I’ve seen a handful of sites being cleared, pads being prepared, steel going up.

Finally.

Non-residential construction was off by 43% in 2011 in my home town of Kansas City. Total construction spending in 2010 had held fairly well by contract value due to a large federal contract that had been budgeted prior to the 2009 downturn. We also had several highway projects that were continuing to roll along as they were funded as multi-year projects.

What that means is the health of the construction economy was somewhat misleading. Driving around town was  a much better indicator of the implosion of work. Several sites were laying dormant after their initial site work had been completed.

Finally, signs of regular commercial construction have begun to spring up. Let’s hope this is the beginning of a long uptrend.

You’ve just gotta love those insurance companies. A few years ago a hail storm blew through my neighborhood. Most of the houses received new roofs. My insurance company told me mine was fine. Well, not really fine. It wasn’t damaged enough to qualify for much repair. However, bless their sweet hearts, they did decide I would need to replace it by the beginning of this year or they were going to drop my coverage.

That set off a round of meeting roofers, checking them out, selecting one, and working with him to arrive at the right choice of shingles. The company did an amazing job. Sent out two large crews and knocked out my house in a touch over one day.

The crew was very well organized, took the roof off in a manner that avoided any damage to our gutters and landscaping. And that brings me to my point. The owner who sold the job, was great at explaining all the roof’s features, etc. What he didn’t mention, or at least stress, were the items my wife and I were most concerned about such as the yard,  landscaping, and speed of installation.  Frankly, we wouldn’t let any contractor work on the house if we weren’t convinced they knew how to install the roof properly to avoid water damage over the long haul.

Guy and I see this sales behavior frequently. Salesmen not being in touch with their client’s true concerns and priorities. If you want to close more sales at higher margins, figure out what fears rattle your customers the most and explain how you are going to prevent those issues from arising. It is a sure fire formula for sales success.

It’s not to late to attend Pavement Live. This new concept for asphalt maintenance and paving contractors includes 10 live demonstrations, conferences and an exhibit hall with the latest equipment. I am proud to be delivering five presentations starting on Wednesday thru Saturday. Their will be an array of industry experts conducting many different classes.

I will be teaching the following classes at this year’s event:

Wednesday, November 30  9:00am – Noon

W4 Developing a Hands-on Strategic Plan for Pavement Maintenance Contractors

Wednesday, November 30  3:00pm – 4:30pm

A5 Repeat Sales: The Secret to Long-term Success

Thursday, December 1   8:00am – 9:30am

B10 Increasing Efficiency in the Field

Thursday, December 1  10:00am – 11:30am

B14 Profitable Pavement Maintenance Job Costing

Saturday, December 3   8:00am – 9:30am

D25 Gotcha! Attitude is Everything in Sales

Complete details are available at www.PavementLIVE.com or by calling 800-827-8009. I’m looking forward to seeing you!

I look forward to seeing you there!

Guy

Have you read our newsletter this week? Ron wrote about how the relationship between engineers, general contractors and subcontractors have dramaticaly changed over the lst several years. I consider it A MUST READ!

If you haven’t signed up for our free newsletter what are you waiting for? It is Free with no strings attached!

The following was penned by Danielle Rodabaugh of www.SuretyBonds.com.

New contractors have a plethora of regulations to learn about in a short time, and oftentimes they’re left to sort through them on their own. The use of surety bonds in the construction industry is one such regulation. There are many things every contractor should understand about surety bonds in the construction industry, but here are the five most crucial.

1) Government agencies require different surety bond types to protect consumer interests.

The basic idea behind contractor bonding is to protect project owners from financial loss due to a contractor’s inability to complete a project and/or follow industry regulations. Contract bond requirements help regulate the industry, reduce fraud and keep financially unstable contractors out of the market.

Although there are a number of specific surety bond types out there,  government agencies typically make use of three major ones when it comes to the construction industry.

• Bid bonds guarantee a contractor won’t increase the initial price of the bid submitted to the project owner. If a contractor should try to raise the price of the bid later on, then the project owner can make a claim on the bond.
• Payment bonds guarantee a contractor will pay for all materials and subcontractors used on a project. If a material or labor provider should remain unpaid after a project is completed, the business can make a claim on the bond to gain reparation.
• Performance bonds guarantee a certain quality of work will be completed. If a contractor should fail to meet a contract’s stipulations such as deadlines, then the project owner can make a claim on the bond to recover losses.

2) Contractor bonds should not be confused with insurance policies.

Although surety bonds are categorized as a type of insurance, contractors should understand that contract bonds and insurance policies are two entirely different products. The two are essentially different in that insurance policies generally protect policyholders (i.e. contractors) whereas surety bonds generally protect the bond’s obligee, which is typically the project owner. As noted earlier, though, payment bonds protect contractors who have been subcontracted by a prime contractor.

3) Contractor bonds act as legally binding contracts.

Each contractor bond that’s issued legally binds together three parties.

• A contractor purchases a surety bond as a guarantee that work on a project will be performed according to the project’s contract.
• An obligee requires a surety bond to protect the investments made in a project. A government agency such as a state’s contractor licensing board often acts as the bond’s obligee.
• A surety executes the bond by providing a financial guarantee of the contractor’s ability to complete work on the project.

4) Contractors undergo a thorough background check before they can get surety bonds.

Before contractors can purchase a surety bond, they must go through an application process. The exact process will vary depending on the surety provider, but it oftentimes includes a review of the applicant’s credit score and other financial records. Contractors with poor credit usually pay a significantly higher price for their bonds because sureties take a greater risk in backing the work of a financially unstable principal.

5) Contractors should look for the surety that will best serve their needs.

As with any major purchase, the decision to buy a surety bond should be carefully researched. Contractors should always verify the reputation of any surety provider they plan to work with. The agency should be able to explain all material clearly while also being well-versed in local, state and national market conditions, as laws and regulations change frequently. Experienced surety specialists have a thorough knowledge of the industry and also provide great service to their clients.

This article was provided by SuretyBonds.com, a nationwide surety bond producer that aims to help contractors understand the legal aspects of surety bonds and the bonding process.

You can reach Danielle at darodabaught@suretybonds.com.

A news bulletin from ABC just arrived in my Inbox. Definitely thought it was worth sharing…

According to media reports, Associated Builders and Contractors member John King, president and CEO of King Electric in Toledo, Ohio, was shot in the arm the evening of Aug. 10 when he surprised a man trying to slash the tires on his vehicle outside his home. The word “scab” was also written on the side of his car. When King stepped out of the front door, the man turned and fired a shot, hitting him in the arm. The individual then fled.  

ABC abhors any type of violence and malicious destruction of property and believes that every effort needs to be made to bring an end to such criminal activity.   

A reward is being offered for the arrest and conviction of the criminal.  

In addition, ABC has been working with a wide variety of media outlets on this story and so far it has appeared on Glenn Beck’s radio program and the Fox News Channel program “Your World with Neil Cavuto.” In addition, WTOL Channel 11 in Toledo covered the incident.

This is ridiculous. Violence and property destruction are never justified. As an industry, we should have moved beyond this decades ago.

Guy and I are neither pro nor con unionization. Some contractors should be union and others shouldn’t. It completely depends on the market, target customer, and quality of the local labor pool.

Our local ABC chapter was kind enough to let me put on a short seminar on estimating. The presentation went well. We obviously hit a nerve as verified by the feedback and the request for a more detailed workshop.

Estimating is a great topic as it forces several related topics to be discussed such as:

• Overhead allocation
• Job costing
• Tracking labor productivity
• Software
• Pricing

If you don’t have a firm grip and complete mastery of those systems, your estimating is not going to be accurate. Sloppy or lazy estimating technique leads to blown bids and the landing of undesirable work. If you are not 100% sure you’ve got these things under control give us a call. We are experts at putting them in place.

Guy and I receive dozens of emails weekly from people wanting us to blog about their products and services. Most are a complete misfit for our readership. Every now and then one arrives that is relevant information for contractors. Such is the case today. Follow the link below to a blog post on another site that lists 30 construction related apps for iPhones and iPads. Some are kind of lame. Many are potential times savers.

Click Here

http://www.constructionmanagementdegree.com/30-incredible-iphone-and-ipad-apps-for-contractors-and-home-renovators/

We are sharing some tips on how to identify and conquer fatigue. Let us know if this helps you.

Ron and Guy

You probably have noticed that economic forecasts are about as reliable as weather forecasts. Maybe even less so. With that said, I thought you might appreciate hearing the thoughts of a couple of sources I have.

The other day, an email arrived in my Inbox from the Associated Builders and Contractors. ABC’s chief economist Anirban Basu is predicting the construction economy’s recovery may be two years away. Non-residential construction recovery (e.g. commercial) may be even further out. He listed healthcare as one of the segments that should be growing in the next twelve months. He listed hospitals, health centers, and clinics as specific building types that should see action.

The ABC commercial building forecast is a little more pessimistic than what my real estate resources are forecasting. The commercial real estate world follows a predictable cycle which is basically circular. Occupancy rates bottom out when lease rates bottom out. Then the lease rates start to recover followed by occupancy rates. That eventually leads to construction of new buildings for office and retail use.
The good news? Lease rates are starting to recover.

Keep an eye on the employment numbers. They are the leading indicator of a recovery in commercial construction (and also have a significant impact on residential construction and the remodeling industry).

There is a direct connection between employment levels and commercial real estate occupancy. The commercial construction industry has suffered more from high unemployment than it has from tightened lending.