The Friday March 22 edition of the Wall Street Journal contained a nice surprise for us. The front page of the Marketplace section had the following headline “Plywood Becomes Hot Item as Housing Market Recovers”. What a breath of fresh air.

Not be a political but I lean toward skepticism regarding official government statistics. The WSJ article and mention of potential plywood shortages in the near term was the first legitimate sign of a housing recovery I’ve come across.

We need the housing market to recover. It is starting. Next we need the job market to recover. The commercial real estate market is not going to heat up significantly until employment gets going and more companies need office space.

We have a long ways to go but the sun is finally starting to break through.

Note from Ron: We have a guest posting today. The post is not a sales piece however I believe they offer a great service.

Healthcare reform is here to stay. The short answer to “Does healthcare reform apply to me?” is: YES.
Large Employers: Employers with 50 or more full-time equivalent employees are required to provide health insurance for their workers or face fines (which can range from $2,000-3,000 per employee)beginning in 2014.
Small Employers: On prevailing wage jobs, large contractors with the mandate for coverage will have a lower payroll burden than small contractors because they are using the fringe to pay for health insurance. And don’t overlook the importance of attracting and retaining talented workers – they will be looking for jobs which provide health insurance.
Individuals: All individuals are required to have health insurance beginning in 2014. Those who do not will face penalties which will be included on their income tax returns.
Plus, providing benefits to your employees is the right thing to do. Coverage provided with fringe dollars is paid with pre-tax money and employees who are not covered at work must be underwritten on their own and pay potentially higher rates with their after tax dollars. You have fringe dollars specifically earmarked to provide benefits and significant payroll and insurance costs savings when you do.
You have just over a year to get into compliance with PPACA (also called the Affordable Care Act or ACA). The good news? As a government contractor working on prevailing wage jobs, the funds to cover providing health insurance for your workers are already there – included in the wage determinations!  In addition to avoiding penalties, when you use the fringe portion of the prevailing wage to provide benefits like retirement plans or health insurance for your employees, these dollars are not subject to payroll burden. This can result in significant savings over the life of a project.
Some contractors may believe the fringe to be “the employee’s money” but this is not so!  The fringe is an employer contribution; therefore, the employer is in the driver’s seat when it comes to deciding how to allocate it. Letting employees know that the decision to use the fringe for health insurance is a healthcare reform requirement may ease their objections to not receiving the fringe as cash.
There is no doubt that the ACA and all of its new regulations add a whole new level of complexity for government contractors who already have to worry about prevailing wage laws. Paying fines in addition to the expense of paying fringes as additional cash wages is a double hit on your bottom line. Can you afford to take that hit? If other bidders are benefiting from savings on payroll burden and you’re not, will your bids be competitive?

Contractors can no longer afford to wait on implementing the new mandates. It’s time to start figuring out how to price in the additional costs for bids you have already won and those you are bidding on right now. What if your company currently has less than 50 full-time employees, but the project you just won will take it over 50?  Now what?  There are many, many questions around implementing the ACA. Fortunately, The Contractors Plan, powered by Fringe Benefit Group (an ABC Business Partner), is prepared to help government contractors understand the new legislation and how to comply with the multitude of new requirements. Fringe Benefit Group has specialized in providing quality benefits for prevailing wage workers for more than 30 years and we are fully prepared to help contactors navigate the maze of health care reform.

About the author:

John G. Allen, CRPS, is a regional vice president for Fringe Benefit Group, which has been helping government contractors design and administer fringe benefit programs since 1983.  He can be reached at 800-635-6912 or jallen@fibi.com.

One of my clients broke some exciting news to me the other day. She had discovered Excel’s pivot table feature. She was just amazed how quickly she could pull together answers to questions her yard man had regarding the number of days their equipment was in the field. Her mind was exploding with the different job costing, pricing, and financial analyses she would be able to perform. I assured her that her company’s bottom line would benefit greatly from her new hobby.

If you don’t know and use Excel, learn it. There is no more valuable tool for running a business than Excel. It is essential for job cost analysis, pricing analysis, production trending, and financial analysis. It is great for budgeting. It works pretty well for scheduling.

If you rely on your accounting system’s reports for these tasks you are making a mistake. Accounting systems simply can’t manage and slice and dice data like Excel.

The two most useful features of Excel are graphs and pivot tables. Until you see what pivot tables can do you don’t know what you’re missing. Take a few minutes, hop onto www.YouTube.com and search for Excel Pivot Tables.  Watch a handful of video samples. You’ll be amazed at the things it can do for you.

Do yourself a BIG favor. Learn how to use Excel.  You can thank me later.

Look in the mirror. Ask the person staring back at you “Am I controlling my profitability or are my clients and competition controlling it?”

Your answer reveals the likelihood of reaching your desired financial and personal goals. If you approach your business with confidence, commitment, and determination to control the profitability of the projects you choose to work on then you will in all likelihood be successful and profitable. If you believe that you have to take what is given to you, that you have to compete against under-priced competition and work for disorganized clients then you’re going to end up scraping out a living…at best.

Unfortunately, we rarely meet a contractor who believes, truly believes, that he controls his destiny.  Most contractors feel that they have to accept the low-price take-it-or-leave-it offers their clients extend. They feel they have to accept the poor sequencing and never-ending hurry up and wait demands placed on their field crews by the onsite project leadership.

You don’t have to be passive. If you step up, stand your ground, push back, learn to sell, and know when to walk away from poor opportunities you can make a lot of money in the construction industry.  If not, your business’ end is just as certain as death and taxes.

I’m late getting the word out on this service. John Allen of the Fringe Benefit Group reached out to us in September to bring what turns out to be a great service to our attention. John even flew into town to meet in person to show me The Contractors Plan (www.TheContractorsPlan.com).

The Fringe Benefit Group offers a benefits plan for prevailing wage workers. Among other things their plan should help you reduce payroll burden, offer better medical benefits to your workers, simplify recordkeeping and administration, and most importantly keep you in compliance with the labor department, IRS, and state agencies.

If you happen to be a non-union contractor who does a significant volume of prevailing wage work you should reach out to John and get the low down on John’s service.  You can reach John at (512) 663-0709 or jalllen@fibi.com.

It’s the time of year again when contractors realize they have worked their butts off all year for little or no profit. How do I know this? The calls start rolling in.

Late December / early January the tire kickers come out in force calling about our coaching services. They tell us their tales of woe and politely, cautiously ask if we can help.  We can almost always help if they didn’t wait too late. Sometimes they have. Usually the caller just can’t bring himself to spend a few thousand dollars getting his business squared up.

I’ve never understood why contractors have such a hard time admitting to themselves they might need outside assistance with their business. Small business owners in almost every other industry reach out for help. There’s something in the hearts and minds of contractors that makes them hesitant to retain help. Why are they so resistant?

Professional coaching and consulting is almost always a small investment in light of the material, labor, and marketing costs their business suffers. The small investment observation is based on the assumption that a contractor doesn’t go with a consulting firm that is going to get into his pocket for $30K or $40K in a couple of months. There are a few of those consultants out there and they need to be avoided like the plague.

Most coaches and consultants are going to run between $7K and $20K for a year’s worth of hands-on assistance. Everyone of them, if they are remotely decent at helping contractors, will impact your bottom line by at least twice that much just with a couple of recommendations regarding the work you take, avoid, or successfully recover through a difficult change order. Everything else they help you with throughout the year will be gravy…yet highly valuable.

If you’re not happy with your bottom line and haven’t been for more than a couple of years it’s time to get help. Whether it is with us or another industry expert. Get help. Don’t keep rolling your thumbs while your business chokes to death on low profit and slow pay. Take action. Get help.

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.

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.