By Jenna Puckett

Construction projects are notorious for finishing over budget, past schedule and outside of the agreed scope. Let’s look at a few ways project management software can help overcome common hurdles that stand in the way of successful, on-time projects.

Improved Job Costing

All construction projects have one thing in common: they each begin with an estimate. Calculating a labor and materials estimate is complex, but the hard work doesn’t end there. That estimate turns into a budget, and throughout a project, all costs must be continually measured, recorded, and compared to the original budget. Job cost management is a critical component that ensures projects remain within budget. Good project management software will provide real-time material and labor data so you can easily identify and monitor job costs as they occur. Being able to track and react to problems immediately— rather than in hindsight— will keep your project from drifting into the red. Once a project is completed, you can use the data to estimate the cost of similar projects in the future. Accurate projections and increased budget visibility are win-wins for construction operations.

Streamlined Document Management

Proposals, blueprints, permits, change orders, and more - the paper mountain that a construction project can create sometimes rivals the actual structures being built. From RFIs to receipts, using multiple databases — or no database at all —  to store documents is problematic. Lack of electronic document management creates duplicate data entry, omitted information, and risk of misplacing critical papers. A single project management platform that stores all construction documents and paperwork enables easy information sharing and retrieval. Paper files can be scanned and uploaded as well, which helps keep important information for each job-site in one place. For example, if you keep your data in a cloud-based storage system, your colleagues can retrieve files in an instant and collaborate in real-time.

Transparent Timelines

Scheduling is the backbone of a successful project. It’s essential to have a project management system that can be tailored to your workflow and accommodate all the teams and suppliers involved. After your project is mapped out, a good system will allow you to save the schedule as a template, adjust it based on results, and reuse it for future projects. Two visual tools that help you plan and assess your project schedule are Gantt charts and Kanban boards. Gantt charts use a familiar timeline view to map major tasks and milestones, as well as indicate which tasks are interconnected or dependent. This chronological depiction offers a high level view of tasks, so you can monitor each initiative's progress and pinpoint bottlenecks. For a more granular view, use Kanban boards to delegate responsibilities linked to major goals and milestones. Construction managers can use these tools to monitor resources and deadlines, as well as stay informed of progress and anticipate any necessary schedule adjustments. Project management software helps automate tasks and creates a central location for up to date project information. This increases transparency, efficiency, and ultimately, project success. If your company is struggling to meet project goals and requirements, then it’s time to embrace technology that meets your business needs.

Jenna Puckett is a junior technology analyst at TechnologyAdvice. She covers topics related to gamification, employee performance and other emerging tech trends. Connect with her on LinkedIn.  

Have an idea for a guest blog for Construction Today? Contact [email protected] or [email protected].

By Robert Preville

Renting equipment is a routine practice in construction. As a matter of fact, it’s so routine it adds an estimated $25 billion per year to the economy. Typically, it’s the needs of the job that dictate the equipment requirement - at least that’s the approach most contractors take. Some contractors even choose to pass on certain project opportunities because they don’t think they’re properly equipped. What if contractors started thinking differently, proactively and creatively? What if instead of waiting for a need to arise before considering equipment rental as an option, contractors started thinking of how renting different types of equipment could create new demand and new customers for their businesses? Equipment rental can be so much more than a reactive requirement to fulfilling a specific need. Because you can rent virtually any piece of equipment that exists, you essentially have every piece of equipment you could ever need, for any job, already in your equipment inventory. Plus, the part of your inexhaustible inventory that is considered “rental” offers other advantages:

  • Rentals don’t require the large capital investment that buying and maintaining equipment does.
  • Renting enables access to equipment without putting a strain on cash flow.
  • Rentals don’t depreciate (at least not from the renter’s perspective).
  • Renting provides the flexibility to choose different models, sizes and capacities based on individual job specifications.
  • Renting eliminates outdated equipment and offers access to the latest models outfitted with the newest technologies.
  • Rental costs can frequently be passed on to end clients and even marked up for additional profit.

So, knowing that your inventory theoretically includes ALL equipment, ask yourself these proactive questions:

  • Have we turned down bids and jobs because we didn’t think we had the right equipment?
  • How could we expand our services, our customer base and the projects we take on simply by renting some equipment that we don’t currently own?
  • Have we ever looked through a catalog of equipment categories to generate creative ideas about how we could leverage certain equipment that we’ve never really considered before?
  • What are some lucrative project areas that we’ve never engaged in before that we could test out now by renting some equipment?

Obviously, renting is not always a better alternative than buying. However, I am certain that many construction companies and contractors underestimate and underutilize the power of equipment rental. I challenge readers to get creative and think of at least one way to expand your current construction services by renting a not-so-obvious piece of equipment.

Robert Preville is a serial entrepreneur and active angel investor via IMAF Cape Fear in Wilmington, N.C. He is the co-owner of the Greater Wilmington Business Journal and the co-founder and CEO of KWIPPED, an online B2B equipment rental marketplace. Prior to KWIPPED, Preville founded and sold, a world-class provider of test and measurement equipment that ranked #800 on the INC 5000 fastest growing companies list. Prior to that, he was the founding employee and Vice President of Sales for, the leading online manufacturing marketplace and a portfolio company of Jeff Bezos's Bezos Expeditions.

Have an idea for a guest blog for Construction Today? Contact [email protected] or [email protected].



By Robert Weitz

Before demolishing a wall, ceiling, or structure, a savvy contractor will order asbestos and lead testing to make sure that demolition won’t spread those toxins into the air. But what happens if you break through the surface and you uncover what looks like widespread mold?  What should you do? The answer is simple: STOP! Even if you’ve set up some type of protective barrier, such as a plastic containment area or even a temporary wall structure, you can’t keep mold spores from spreading.

A disturbed area of mold less than one square inch can generate millions of mold spores into the air. If you continue demolition, you potentially endanger the health of your employees and your client, and risk contaminating the entire structure. Airborne mold spores can cause individuals to cough, sneeze, or worse, and mold spores will exacerbate or can even lead to asthma or other serious respiratory conditions. Continuing demolition work when mold is suspected is a risk no contractor should take.

What to Do

At the first sign of what could be mold, stop demolition and call in a certified mold inspector to investigate. The inspector can identity the type of mold growing, tell you if the mold is toxic or allergen, measure the amount of mold in the air and recommend how a remediation company can eliminate the mold problem. (Note: hire two separate companies to perform the inspection and remediate the mold. There’s a clear conflict of interest when one company does both.)

Most likely, the mold inspector will recommend establishing proper containment and negative air pressure to reduce the chance that mold spores will migrate to unaffected areas of the worksite. The inspector also typically will recommend using biocides and antimicrobials to treat and seal any staining to help ensure everyone’s safety. Once the remediation firm removes the mold and cleans the area, ask your environmental testing firm to return for a final inspection and sampling. It typically takes fewer than seven to between 10 to 14 days to complete the initial inspection, remediation and final inspection.

Although the process may cause a slight delay in your project, the extra effort to use professionals protects you and all parties involved in the construction process. It’s never worthwhile to take shortcuts when health and safety are at stake.

Robert Weitz is a certified microbial investigator and principal at RTK Environmental Group, a leading environmental testing and consulting firm serving the Northeast and Mid-Atlantic states. For more than 25 years, Mr. Weitz has helped residential and commercial property owners address serious environmental hazards such as mold, lead, asbestos, water, soil, radon, and indoor air quality. 

Have an idea for a guest blog for Construction Today? Contact [email protected] or [email protected].



By David Nour

In the July/August 2014 issue of Construction Today, Alan Dorich wrote, “If there is any area in U.S. construction where there is room for improvement, it’s our infrastructure.” He was talking about roads and bridges, but there is a deeper message here: There may be room for improvement in your strategic relationship infrastructure.

That infrastructure is precisely what you need to stay relevant to your best clients, suppliers, and employees. Aging roads and bridges need to be maintained. Likewise, your strategic relationships need regular maintenance. On-ramps allow new strategic relationships to form. Are you making time to get to know new people? Your current contacts won’t stay current if you don’t communicate regularly. Are you building bridges by offering relevant information or connections? This will lead to pivotal contacts, people well-situated to make introductions that help you achieve you goals.

Your past contacts include people for whom you are simply no longer relevant. Can you be of mutual benefit today? If not, it’s time to build an off-ramp and let them go — politely, of course. To maintain a relevant competitive advantage, prioritize maintaining the “rural roads” at the far edges of your strategic relationship network. These are your infrastructure for sensing inflection points occurring far from your home market.

The North American construction industry needs to be aware of innovations and market trends around the world. How does your organization gather intelligence? Relationships are the single most important off-balance sheet any company owns. It is up to you to make time to maintain your relationship capital. Are you creating a culture and expectation within your organization that others will maintain your relationship infrastructure as well?

Consider holding a discussion in your next senior leaders meeting about relationship development. It’s not hard for anyone who’s read financial statements to grasp the fundamental economic insight that you cannot invest or leverage capital until you have accumulated it through deposits. Hopefully the U.S. Congress and the Obama administration will find the will to improve the U.S. transportation infrastructure, leading to new contracts for the construction industry. In the meantime, will you find the will to stay relevant to your clients, suppliers, and employees, by improving your strategic relationship infrastructure?


1. To maintain relevance, build “roads and bridges” that connect you with mutually beneficial relationships. 2. Leverage the relationships at the edge of your network for sensing trends outside your home market. 3. Create a culture in your organization in which relationships are recognized as a strategic asset.

David Nour is an enterprise growth strategist and the thought leader on Relationship Economics® —the quantifiable value of business relationships. He is the author of several books including the best selling Relationship Economics— Revised (Wiley), ConnectAbility (McGraw-Hill), The Entrepreneur’s Guide to Raising Capital (Praeger) and Return on Impact—Leadership Strategies for the age of Connected Relationships (ASAE). Learn more at David may be reached at [email protected].

Have an idea for a guest blog for Construction Today? Contact [email protected] or [email protected].        


By David Nour

“The No. 1 reason why contractors do not get jobs is because they neglect to follow up and ask for the order,” wrote Rich Fineman in “Selling Your Company”. Why do so many in the construction industry miss that crucial step? I believe it is because so many people lack confidence in themselves. Before you can convince anyone else that you can improve their condition, you have to believe it yourself. Fundamentally, the first sale is to yourself.

To close more construction bids, we need to shift from selling (which most of us hate, which is why we so often neglect to follow up and ask for the order) to helping our prospects buy. It’s much easier to feel confident asking for the sale if you believe that you can be a trusted advisor to the potential buyer. That means you must prioritize selflessness over self-interest. Help your potential buyer consider all options and choose the one that offers the most promise, even if it isn’t yours.

To do that, you need to understand the customer’s journey. The purchase process begins with needs recognition, triggered by a stimulus. In the construction trades that might be anything from a town’s tired retail district to a developer’s plans for a new office complex. A buyer seeks out information, evaluates alternatives, makes a purchase decision and then experiences either satisfaction or dissatisfaction. As a trusted advisor with specialized industry expertise, you are ideally positioned to help the buyer on this journey.

It’s not hard to make a follow-up call when you believe that your primary job is to improve your customer’s condition, without regard for whether your firm gets the thumbs-up or not. In my executive coaching, within the construction industry as well as in other fields, I’m seeing too many issues with low self-worth, and its hobbling otherwise effective, intelligent people. Do you genuinely believe that you can improve your prospective customers’ condition? then you’ve made that first sale — to yourself. Now you’re ready to take a trusted advisor stance and make follow-up calls, confident in your capabilities but ready to sacrifice any one sale in order to win a bigger asset — a mutually beneficial relationship you can nurture into future opportunities.

Takeaways 1. To close more construction bids, paradoxically, you must your potential buyer consider all options and choose the best fit, even if it isn’t yours. 2. Offering your insights as a trusted advisor with specialized industry expertise, who understands their customer journey. 3. The real goal of follow-up is a mutually beneficial relationship leading to future opportunities, not one sale.

David Nour is an enterprise growth strategist and the thought leader on Relationship Economics® — the quantifiable value of business relationships. He is the author of several books including the best selling Relationship Economics — Revised (Wiley), ConnectAbility (McGraw-Hill), The Entrepreneur’s Guide to Raising Capital (Praeger) and Return on Impact — Leadership Strategies for the age of Connected Relationships (ASAE). Learn more at

Have an idea for a guest blog for Construction Today? Contact [email protected] or [email protected].    


By Jennifer Friedman

Annual report season is here and deadlines are just around the corner. For corporations formed in Delaware, annual reports needed to be filed by March 1, and many other states have filing deadlines in April-June.  Are you prepared to file your annual report? Most states require incorporated businesses and limited liability companies (LLCs) to file an annual report. It is imperative to file correctly and on time in order to maintain good standing and avoid fees or more severe repercussions.

Annual Report Requirements

The key elements of an annual report are:

  • The business entity’s legal name;
  • The principal office address;
  • The registered agent’s name and address; and
  • The names and business addresses of the officers, directors and managers

Tips For Filing Annual Reports

  • Track the filing deadlines for all of your active corporations / LLCs.
  • Deadlines vary depending on which state you are filing with so it is imperative to track the dates and renewal periods.
  • Prepare the annual reports.
  • Since the specifics vary from state to state, it is important to pay attention to required information for each of the reports.
  • File the completed documents with the state.

Each state has its own annual report guidelines so you must check the specifics with the state you in which you incorporated your company. If you own a construction business that operates in several states, you will have to file a separate report in the formation state and each state where the company has qualified to do business as a foreign company. If you are overwhelmed with the thought of running your company and handling detail-sensitive documents such as an annual report, consider a professional registered agent who may be able to assist you in preparing your annual report the right way.

Consequences of Not Submitting a Proper Annual Report

To facilitate on-time filing, states take disciplinary action on the companies that do not file correctly or by the deadline. Businesses that file after the deadline must pay a late fee, in addition to the original annual report fee. Failure to file an annual report altogether can result in the Secretary of State dissolving your company or a revocation of the business entity in the state records. If this were to transpire, your company would have to cease all construction work, losing out on bids and business. And, you may become personal liable for business debts and judgments incurred during this time.

While it is usually possible to be reinstated, this is not a certainty and can occur only after you submit your annual report would your business be reinstated. Annual reports may seem like a hassle but they serve the important purpose of keeping your company on record with the necessary government agencies. By filing early and well ahead of the deadline, you are setting your construction business up for a prosperous year with less worry and more opportunities.

Jennifer Friedman is the CMO of the small business segment of CT, a Wolters Kluwer Company, which provides legal compliance solutions to small businesses. In this role, Jennifer directs all activities related to digital marketing and advertising to help build the brand through innovation, partnerships, and enhancing the customer experience.

Have an idea for a guest blog for Construction Today? Contact [email protected] or [email protected].



By Alexander Ruggie

Marketing is critical in any business, but especially so in the construction trade where it’s still possible to be a blue collar entrepreneur competing against the likes of massive McMansion builders and cookie-cutter tract housing projects. Construction professionals in smaller to mid-sized companies, or even one-man operations using effective SEO marketing strategies can still compete with the bigger players or even dominate niche markets that aren’t cost effective for larger companies to target.

For those just starting out in the trade, there is the usual hurdle of battling all others in the area for the same jobs, but reaching that audience is easier than ever. The days of placing a photo ad in the yellow pages and naming your company “AAA Contracting” to get prime placement in the front of the alphabetically oriented construction section are long gone, and while that may scare some more traditional operations, it should be seen as a boon to those with any computer skills at all.

Even two-finger typists can still create and execute an effective social media campaign, Outbrain or Taboola ad that places them right in front of their potential customers. Individuals or companies who desire to reach their audience with more resonance and authority would do well to hire an SEO marketing firm to reach out to their demographic for them. This allows the same differentiation of labor that a foreman would use on a job site to get the most out of his crew.

In the same vein that you wouldn’t have a roofer take on plumbing jobs, the office administrative assistant shouldn’t be tapped for the company’s marketing efforts. To accomplish the greatest number of priorities in the shortest amount of time with the least expense, it is crucial to hire these services out to the professionals trained to do them. Search engine optimization (SEO) sounds like a heady term, but in reality it is just a descriptor for the act of adjusting a websites parameters, structure and content to better place it in the market.

Successful SEO campaigns can elevate an individual or company’s website from obscurity in the past-page-one netherworld of Google to prime placement right next to other major players in the business. Localizing SEO strategies can also do wonders for smaller construction outfits by increasing their presence in smaller communities. This may seem like a backwards strategy to some, but in reality being the top search result in many various low population areas may yield more jobs than being a sidelined player in bigger communities where a company may not even get the opportunity to bid on a project due to lack of exposure.

Many more traditional companies may view simply having a website in general as the extent of their needs in the online world, but as consumers go deeper and deeper into the digital realm for all of their needs it is becoming equally imperative for businesses to work in concert with this approach. Additionally, many websites built before the onset of the smart phone revolution may be doing more harm than good when consumers search for those services with their phones.

If sites aren’t optimized for mobile devices they end up lagging in loading times and many other problems that instantly turn consumers off. Making it easy for a potential customer to access the information about your company is absolutely critical to compete in the mobile marketplace. All indicators point to a steady increase in searches done with smart phones and when a potential customer reaches a company site that isn’t optimized for their device it almost becomes self-inflicted negative advertising for that company with consumers who have come to expect information instantaneously, and it may even taint your image with this audience en masse.

A construction business, like all others, requires marketing to be successful, and while it may be initially challenging to position a company online, the cost of not doing so is far greater.

Alexander Ruggie is the public relations director for 911 Restoration, a home restoration company that specializes in disaster recovery and water damage solutions.

Have an idea for a guest blog for Construction Today? Contact [email protected] or [email protected].



By Art Valentz

These days, green construction is rapidly becoming the new normal. By 2012, an estimated 48 percent of US commercial projects had already incorporated green building practices. That percentage continues to rise as existing projects prove the financial, environmental, and social advantages of going green.

Why Roofs Matter in Green Construction

Roof design is critical to optimizing building performance. Not only does the roof cover the entire building footprint, but direct radiation to space results in approximately 15 percent more heat loss through the roof than through other parts of the building envelope. Roofing can also affect water quality and conservation, albedo effect and heat island mitigation, and urban aesthetics. There are many sustainable roofing options on the market today, each with their pros and cons. Here are a few:

  • Living roofs – Literally green, living roofs utilize live plants as roofing material. Proponents of living roofs cite many benefits, including energy savings, creating a wildlife habitat, improved water and air quality, noise and fire protection and even reduction of EMF radiation. However, they can be quite expensive to install and must be properly engineered for structural rooftop pipe and equipment stability and water management.
  • Cool roofs – A “cool” roof is any roof that has high solar reflectance. Cool roofing materials range from light-colored metal roofs to coatings sprayed onto a new or existing roof. Cool roofs can reduce roof temperatures by up to 60°F on hot summer days compared to conventional roofing materials. This can significantly reduce cooling costs and even reduce the urban “heat island” effect in the building’s proximity. Many cool roofing options are quite affordable. Most are compatible with standard rooftop support systems, and, like living roofs, they can help a project earn LEED points for solar reflectance. Cool roofing technologies provide the greatest payback in hot, sunny climates in the south and southeast part of the country.
  • Solar roofing – While solar panels are still the most popular solar option, advances in thin film solar technology are making integrated solar roofing a viable option for certain applications. Solar-integrated shingles and other thin roofing materials offer built-in electricity generation without the bulky appearance of panels. These systems can be pricey, however, and require full sun for optimal payback. Shade from phone wires and rooftop protrusions such as HVAC equipment can seriously impair performance, so be sure to analyze the site thoroughly before investing.
  • Metal roofs – Metal roofs last for decades and can easily be recycled when their work is done. They are also ideal for integration with rainwater collection and solar panels, and can be manufactured as cool roofs, too. However, the upfront cost can be high, and they can be noisy during rainfall. Keep in mind, too, that metal has a high coefficient of expansion. Care must be taken to allow for this during installation of the roof and rooftop equipment.

In addition to their environmental and financial benefits, these roofing systems can help buildings meet standards for LEED and other popular green building certifications, as well as meet tightened federal energy efficiency standards for new construction. No matter what your next project, be sure to find a green roofing material to fit the bill!

Art Valentz is the founder and CEO of PHP Systems/Design. With over 24 years of experience in rooftop support systems, he is well known for his industry leading research, design, testing, and engineering practices. When he is not on the rooftop, Art enjoys supporting the Wounded Warriors Project and fishing with his family.

Have an idea for a guest blog for Construction Today? Contact [email protected] or [email protected].


By Tom Leach

As March 15 quickly approaches, tax filing obligations and end-of-year financial decisions are top of mind for contractors. They’ve likely heard about the IRS’ new repair regulation rules for capitalizing or expensing property since these rules have serious financial implications for the construction industry due to the large amount of repairs.

To expense, or not to expense?

In maximizing the potential tax benefits of the new rules moving forward, contractors need to understand a few key points. One of the primary provisions of the new rules focuses on the safe harbor to eliminate the grey area around whether the IRS will agree with a business owner’s treatment of expensing or capitalizing certain equipment purchases. The IRS has set two separate “de minimis” thresholds. If a policy on capitalization aligns with whichever threshold applies, the IRS won’t challenge the decision to expense or capitalize. For businesses that have one of the following, they can use the threshold of $5,000 per unit of property (if none applies, the threshold totals $500):

  • Financial statement filed with the SEC
  • Financial statements audited by a CPA
  • Financial statement – other than a tax return – required by a federal or state agency

Contractors can also determine their capitalization policy annually under the new regulations. This means their policy might state that they will expense all equipment purchases under $5,000 in the current year, but in the following year they could set the bar at $2,500. This flexibility seems like good news overall, but contractors must exercise caution. To qualify for this safe harbor treatment, they must treat items the same way on their books as they do on their tax return.

Don’t ignore the financial statements 

While most contractors view the latest regulations as a way to possibly reduce their tax burden, many fail to see the potentially negative impact on their financial statements. For example, let’s say a business owner sets a policy at $5,000. Then, the owner decides to replace 1,500 items (computers, tools, parts, etc.) that cost around $3,500 each. On one hand, the owner can write off $5.2 million of equipment in one year. But on the other hand, that owner just reduced the net income for the year by $5.2 million that he or she otherwise would have likely written off over at least a five year period. This could result in numerous negative repercussions, including:

  • Contractors could unintentionally violate their loan covenants, such as the debt-to-equity ratio, debt service coverage, etc.
  • Auditors may not give a ‘clean opinion’ on the contractor’s financial statements.
  • Changing the policy annually could create consistency concerns and negatively affect an auditor’s opinion. In addition, loan covenants may require an unmodified/clean opinion.
  • Stakeholders may not understand why the operations results for the year don’t align with expectations.
  • Contractors face a potential long-term reduction of the sales value of the business due to the reduced equity and equipment investment on the balance sheet.

Bottom line, it’s easy to get blindsided by focusing solely on the tax planning opportunities associated with these new regulations, but it’s critical that contractors consider the effect on the financial statements. If they don’t, they’ll run into numerous unexpected – and often unpleasant – surprises.

Tom Leach, CPA, is the partner-in-charge of Sikich LLP’s Decatur, Ill., office and has more than 29 years of experience serving clients in a variety of industries. He has worked with both commercial and local governmental audit clients and has also supervised audits of large State of Illinois agencies. Contact him at [email protected].

Have an idea for a guest blog for Construction Today? Contact [email protected] or [email protected].



By Kristin Jones and Michael Schwartz

The latest enforcement trend in disadvantaged business enterprise (DBE) fraud focuses on suppliers.  Federal and state investigations are increasingly looking at pass-through arrangements where a DBE supplier performs no commercially useful function and only lends its name to the transaction so that DBE credits can be obtained. These cases should raise concerns not only for the contractors that benefit from DBE credits and the DBEs who act as pass-throughs, but also for legitimate non-DBE suppliers, which may be subject to criminal or civil liability for participating in such arrangements.

In a typical pass-through arrangement, a non-DBE supplier negotiates a subcontract for materials with a contractor bidding for a government job.  After the contractor wins the job, it informs the supplier that a DBE needs to be used on the project.  A “certified” DBE supplier is located and executes the subcontract, purchasing the materials from the non-DBE supplier, which are then delivered directly to the job site.  The contractor pays the DBE supplier, which then remits payment to the non-DBE supplier after subtracting its own percentage fee. 

The DBE supplier’s role is confined to acting as a middleman, passing invoices between the legitimate non-DBE supplier and the contractor. Recent federal criminal cases in the Northern District of Illinois and the Southern District of New York charged sham DBE suppliers for their roles in pass-through arrangements.  Although neither case ultimately indicted the non-DBE suppliers, both cases investigated them as potential co-conspirators, and other similar investigations are ongoing at the federal, state and local level in other jurisdictions. Legitimate non-DBE suppliers may also be implicated in federal civil cases brought under the False Claims Act or in state and local fraud actions, which are increasingly focusing on suppliers.

So what should a supplier do if asked to use a DBE supplier on a project? 

First, suppliers should understand the rules governing DBE programs.  A fundamental rule of every DBE program is that the DBE must perform a “commercially useful function.” According to Department of Transportation regulations, a commercially useful function means that the DBE “is responsible for execution of the work of the contract and is carrying out its responsibilities by actually performing, managing, and supervising the work involved.” It is not enough for the DBE to participate in a transaction in name only. To make sure a transaction complies with the applicable rules, suppliers should conduct some basic due diligence. 

Ask the contractor or the DBE what commercially useful function the DBE will be performing and if the transaction complies with DBE regulations. If they cannot provide satisfactory answers, the supplier should not participate.  Suppliers should also keep in mind that they may still be found liable even if they claim to be ignorant of the fraud or the DBE supplier is “certified” as a DBE by a government agency. By conducting simple due diligence and strengthening internal DBE compliance programs, legitimate suppliers will be able to better protect themselves in this heightened enforcement environment. For more information on these issues, read a full analysis at Pepper Hamilton.

Kristin H. Jones is a partner in the white collar litigation and investigations practice group of Pepper Hamilton LLP, resident in the Philadelphia office. Ms. Jones specializes in civil and white collar criminal cases arising out of allegations of fraud, false statements and bad faith. Michael A. Schwartz is a partner and co-chair of the litigation and dispute resolution department of Pepper Hamilton LLP, resident in the Philadelphia office. He is a member of the firm’s white collar litigation and investigations and media and communications practice groups. Mr. Schwartz focuses his practice in the areas of criminal defense and counseling, internal corporate investigations, corporate compliance programs, and First Amendment matters.

Have an idea for a guest blog for Construction Today? Contact [email protected] or [email protected].


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