By John Doherty

Shale gas could soon have a significant impact on energy markets across the globe. Enabled through horizontal drilling and hydraulic fracturing, the production of shale gas already has had a major impact on the energy landscape in North America. Shale accounts for more than one-fourth of domestic gas production, and by the next decade will reach the 50 percent mark, according to PwC and Rice University researchers. In 2011, shale gas was produced at a rate of 553,000 barrels per day. As a result, tens of thousands of new well sites are being developed by oil and gas companies. When it comes to shale production, thousands of repetitive activities and handoffs between functions resemble manufacturing operations as much as they do traditional methods of oil drilling and production. Which enablers can have a significant impact on decision making? Which will drive productivity? For starters, in the new environment, information technology and enterprise systems have been identified as enablers that significantly enhance decision making and drive productivity.

How can oil and gas companies, in partnership with engineering and construction (E&C) firms, determine what is and is not working across the gas value chain? To meet these new challenges, old, reliable business models and traditional approaches to project management may not be the most effective strategies. E&C companies can support their oil and gas clients by helping them navigate through three key developmental steps on the path to successfully bringing shale oil and gas to market. First, organizations can reduce the “drag” by developing a project management model that helps achieve speed and efficiency in shale well development, planning, and execution. The goal is to reduce the organizational and administrative burdens on all of the activities required to efficiently produce shale oil and gas and get the products to market.

With an integrated operating/project management model in place, a company can optimize the “play” by delivering optimal returns through aligning operating expenses, capital investment, and resources across the full portfolio of development and production. Finally, with optimized resources and greater insight into the full portfolio, a company can apply sophisticated analytics to enable better decision making and increase the speed and flexibility in the field and in the market.

So how can E&C firms and oil and gas companies achieve these goals?

1) Listen to the “silent” business, those longstanding projects that may have become de-prioritized in favor of new work. Integrated planning lets development activities be meshed with ongoing work.

2) Consider the context, the factors – whether local climate, geology or regulatory requirements – that can significantly vary by well location.

3) Model the change, ensuring that all stakeholders buy into the geographically distributed, integrated planning approach. E&C firms can model and reinforce the behaviors they expect from stakeholders, clearly articulating the approach and project priorities. PwC's New conventions for unconventional development for the engineering and construction industry discusses shale gas implications for engineering and construction (E&C) companies. The three-part series is a companion to PwC's New conventions for unconventional oil and gas series, which addresses the rapidly evolving management practices within the energy landscape.

John Doherty is advisory lead director of the U.S. engineering and construction sector for PwC and has more than 30 years of management consulting experience. He can be contacted at john.doherty@us.pwc.com.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.

 

 

By Tony Inglese

Concrete is a huge part of homes these days. The good news is that most concrete will continue to harden as it ages. The bad news is that without the proper precautions, the concrete around your home can deteriorate quickly. Many think that this rough material is carefree and durable from everything, but while it is low maintenance, there are certain things that homeowners should do to protect their concrete and increase its longevity.

Clean and Apply Sealer Regularly You need to protect the integrity of the concrete to make it last a lot longer. To do this, apply a sealer to the concrete to protect it from salt, oil spots, and gasoline residue. The harshness of the weather and the amount of vehicle traffic will determine how often this needs to be done. A good rule of thumb is to reseal your driveway, patio, or sidewalk every two years, or whenever it begins to show wear.  If you have concrete inside your home that has a lot of foot traffic, it is especially important to maintain it to prevent wear patterns. You can do this by using sealer, as well as floor wax or polish. Good sealers can be found in hardware stores, or from a concrete material supplier. Power wash the driveway to remove all stains and spots, then apply the sealer. It’s not complicated and has easy to follow directions on the container.

Don’t Wait to Remove Stains or Snow While the sealer does protect the concrete from stains absorbing, it is still smart to remove oil, gasoline, and grease as soon as possible. Pressure wash regularly to help with stain removal and keep your concrete looking sharp. Be careful not to get too close to your driveway when digging in the yard. This can compromise the supporting structure of the concrete. When winter arrives shovel regularly and use a plastic shovel. The key is to prevent the water from seeping into the concrete, freeze and then crack.

Use Alternative Materials to De-ice The winter is especially harmful for concrete. Water can seep into the concrete and freeze and expand inside it, which will weaken it within. Concrete can be very porous, and chemicals can penetrate and attack the paste, thus affecting the structure of the concrete. Avoid products that contain ammonium nitrates and ammonium sulphates. Rock salt (sodium chloride) will be less harmful but if not washed away can affect grass as well as corrode metal. This is especially significant if your concrete has a metal rebar to support the structure. The first winter after the laying of concrete is the most important. Since the concrete is still young, it is important to avoid de-icers and, if possible, salt as well. Sand is a good alternative to give traction. If you have a steep driveway, take safety precautions and park at the bottom of the hill, or use chains on your tires.

Tony Inglese is the general manager at Enviro-Systems, where he assists with marketing, project management, human resources and company policy.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.
 

By Pauline W. Markey

In recent years, the IRS has increasingly focused on the compliance and enforcement of the misclassification of workers in industries such as construction, where the use of independent contractors is common. The determination of whether a worker is an “employee” or an “independent contractor” has significant financial implications for both the business and its workers. Independent contractors are generally not eligible for unemployment benefits, workers’ compensation benefits or employer contributions to Social Security tax, Medicare tax and federal unemployment tax.

Form SS-8 is a form that may be filed by either a business or its workers to request that the IRS determine the status of the worker as either an employee or an independent contractor for federal employment tax and income tax withholding purposes. In most cases, the form is filed by a former worker seeking unemployment benefits, and businesses tend not to file because the perception is that the IRS will lean towards a conclusion that most workers are employees. If a former worker does file an SS-8, the IRS will offer an opportunity for the business to respond with information relating to the work relationship at hand. After reviewing the information given by both parties, the IRS will issue a determination letter stating whether the worker should be classified as an employee or an independent contractor.

It is important to note that the IRS’s determination will then apply to all workers in that business performing the same or similar services as the worker who filed the SS-8, even though only one worker filed. The SS-8 determination letter, with certain deletions, will also be made public. Because of the broad impact of the IRS’s determination, the receipt of an information request relating to an SS-8 should not be taken lightly, and a business should respond to the IRS’ request with care, deliberation and, if possible, with the guidance of an experienced tax advisor.

A business that receives an adverse SS-8 determination may request that the IRS reconsider its determination, but a court cannot review the determination because it is not considered an IRS audit. Similarly, the business is not entitled to raise certain defenses (such as Section 530 Relief), which may in some instances protect it from retroactive application of employee status for its workers. The Treasury Inspector General for Tax Administration (TIGTA) recently found that a significant number of businesses (from a sample of more than 5,000) that received SS-8 determinations requiring changes to the treatment of workers failed to comply with the IRS’s determination. Based on the recommendations from TIGTA, the IRS is now moving to improve business compliance with SS-8 determination letters, likely through additional business audits. When this does happen, it is important for construction business owners to understand its implications and be as prepared as possible. With one unfortunate response, a business can find itself in the midst of a much larger tax problem.

Pauline W. Markey is a senior tax associate at Fox Rothschild who represents clients in tax controversy and executive compensation issues. For more information concerning this and other worker classification issues, please contact her at (215) 299-5117 or pmarkey@foxrothschild.com. Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.

 

      

By Joanie Ogden

Today’s typical American family is in love with the backyard. It’s a green oasis, a place to play tag football, watch the flowers and the children grow, complain about mowing and enjoy the occasional outdoor barbecue. It can also be a gold mine for contractors who have imagination, eager crews and a little down time between projects.

Backyard Bonanza The urge to add “living space” to a home extends to outdoor spaces. Today, that can mean very elaborate outdoor kitchen installations, fireplaces, decks and pavilions. With the added costs of landscaping and maintenance, costs can add up very quickly, but they don’t have to. Many outdoor projects can be completed quickly, add value, increase outdoor enjoyment and, in effect, add a room to the home. As a contractor, if you offer such things as wooden decks, gazebos, serving counters, fire pits, hot tub enclosures, or potting sheds as options, you could boost your bottom line very easily and keep your crew busy between larger projects. These client-pleasing projects can often be completed in a single day or two, and at a cost that makes them appealing to the customer and profitable for you.

Style Considerations Leading the list of popular features for backyard improvements are hot tubs and spas. However, a spa can look a little lonely if it's not attached to a pool and surrounded by lush landscaping. One way to highlight the hot tub is to emphasize its presence. Any sort of structure to enclose the spa itself creates a focal point in a yard — whether the structure is roofed or not depends on personal preference. Part of the appeal of hot tubbing, after all, is to look up at the stars on a cold night. Building a simple hot tub enclosure of unfinished redwood that will weather to a smoky gray over time, with a beamed "roof" open to the sky and the elements, makes perfect sense. Allow ample clearance between the sides of the hot tub and the structure on all sides. Consider adding a bench or two for lounging, and perhaps create a brick or flagstone patio just outside the entrance. Your client can add potted plants, wind chimes and hanging baskets. The object is to keep the design simple, but still appropriate for the neighborhood. New England styles will be very different from New Mexico designs. But, neither requires more than a simple sketch in order to bring it into being.

The Bottom Line Looking at the backyard as an extra room, or even as a getaway destination, is a creative way to gain some space, add value to a home and create a kind of mini-retreat for a busy family. Exterior improvements do not have to be high-budget projects in order to add oodles of charm, and they can often be completed in a matter of days, allowing the family to move right in and enjoy the new addition. It’s your job to let your clients know that you can create an addition to their backyard oasis which will add lasting value and enjoyment. Tell your clients that the dollar to enjoyment ratio is always on the side of enjoyment. When do you start?

Joanie Ogden is a self-taught home decor specialist who enjoys blogging about her projects.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.

By Megan Browning

For owners Leslie and Joel Frieman, transforming a vacant warehouse into a world class fencing facility suited for all ages and abilities required ingenuity and foresight. With tall ceilings and a blank slate, comfort for athletes was one of the Friemans’ key goals when building their school, The Woodlands Fencing Academy.

In order to achieve that comfort, the walls and ceiling were padded with R38 insulation and two 7-and-a-half-ton HVAC systems were installed. “We need to keep it cool because fencers wear so much protective gear,” Facility Manager Kathy Bone said. “When no one is in there, we keep it at 75F. For practice, we like it to be at 72 [to] 73F and for a tournament, I will turn it down to 69 [to] 70F.” To help maintain the necessary temperatures and provide quiet, gentle air movement, a high-volume, low-speed (HVLS) fan was added to complement the AC system. HVLS fans increase air velocity to create a more comfortable environment for occupants, regardless of the space.

In warmer months, these fans improve personal comfort with an evaporative cooling effect — although the fans do not lower the temperature in the space, they can make a person feel up to 10F cooler. As a result, facility managers are able to raise the thermostat setpoint without sacrificing comfort, reducing cooling costs. “We were afraid utility bills would be around $1,000, but with the help of the fan, we have found them to be significantly lower," Bone said. "We are very, very happy.” Not reminiscent of a typical gym, The Woodlands Fencing Academy prides itself on being a functional but sophisticated fencing facility. “The fan makes the building look like a piece of art," Bone adds. "The aesthetics are beautiful and it does its job moving the air to create a comfortable environment.”

Megan Browning is a public relations associate at Big Ass Fans, the preeminent designer and manufacturer of ceiling fans for industrial, agricultural, commercial and residential settings.

By Geoffrey Hall 

Construction is a high-hazard industry and field management is the first line of defense in mitigating the risks of on-site accidents. As on-site personnel oversee the day-to-day activities of a project, they monitor and regulate the implementation of safety precautions prior to building. Direct vision of many potential safety issues gives field managers the task of managing the workers they supervise as well as the subcontractors that are brought on for each project.

Safety isn’t simply common sense. Weekly meetings among field management personnel should be established to discuss production-related topics. These topics include a review of any accidents, near misses or safety lapses, as well as safety concerns related to the coming work. This message should then be relayed to the workers at weekly toolbox safety talks; this is a common way to remind workers about safety procedures and a useful method of addressing these concerns. It’s increasingly common for language barriers to exist on the job site.

Communicating to a diverse workforce, whose primary language may not be English, is a serious challenge for the industry. This is specifically true for the on-site field managers, charged with supervising these workers each and every day. Where English may not be the commonly understood language, construction firms must effectively communicate safety and operations expectations. Effective communication can directly help prevent lapses in safety protocol. For example, despite full compliance with OSHA regulations, falls still occur and remain a leading cause of on-site injuries. This reality requires more aggressive communication approaches between workers and their supervisors.

Companies should begin with the mindset that accidents are not inevitable. In the event that an accident occurs, field managers must review all of the facts and circumstances to identify root causes so that corrective action can be taken to prevent future incidents. The same attention should be paid to near misses that could have been serious accidents. Regular accident review meetings between field managers and executives send a clear message that safety should be paramount. Safety is a job that never ends. The construction industry is continually adopting new operational methods, training workers on new equipment and installing new machinery.

In a proactive safety culture, the field managers must continually adapt to the new ways that workers are performing their jobs. At the end of the day, every company wants every worker, planner and manager to go home safely at night. To achieve this important goal, construction companies must incorporate a culture of safety, from top to bottom.

Geoffrey Hall is senior vice president, ACE Construction. Based in New York City,  Hall is responsible for leading the domestic underwriting strategies of ACE USA’s Primary Construction Casualty Group of ACE’s Casualty Risk Division. Hall manages a countrywide team of more than 150 construction professionals dedicated to addressing the unique insurance needs of builders and contractors. He has more than 25 years of diverse experience in the insurance industry.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.

By Harvey Katz

Many engineering and construction firm owners will be retiring in large numbers in the coming years. Those whose children don’t want the family business face a dilemma. With more “baby-boomer” sellers than buyers, buyers are likely to be highly selective and very parsimonious.

Employee Stock Ownership Plans (ESOPs) are a viable business succession alternative. In concept, sale to an ESOP is simple. Instead of selling to a third party, the owner sells to a trust established and operated by the firm for the benefit of its employees. To finance the purchase, the ESOP borrows from a bank or the business owner himself. The shares of the business are collateral for the loan. As the business operates, it makes contributions to the ESOP until the loan is repaid. Otherwise, the ESOP operates like a 401(k) or profit sharing plan, except that it invests in employer stock. While ESOPs cover all full-time, non-union employees, they never directly own company shares, have access to the company's finances or have a say in day-to-day decisions. Nevertheless, ESOPs are powerful productivity incentives, as employees view themselves as part owners. There are substantial tax incentives to owners who sell to ESOPs and companies that operate as ESOPs. Usually, the owner can avoid payment of capital gains tax otherwise payable upon the sale of the business. In addition, both principal and interest on the loan to purchase the company are repaid with pre-tax dollars. More importantly, once the ESOP acquires 100 percent of the firm, it can elect Subchapter S status, allowing it to pass through profits to its tax-exempt ESOP shareholder and operate as a tax-free company.  

Another more practical advantage is that unlike a third-party buyer, an ESOP will rarely back out at the eleventh hour. Sale to an ESOP also requires much less disruption of business and the owner can sell shares gradually, relinquishing control at a time of his or her choosing. Third parties usually demand complete control from day one. Additionally, any additional cost of structuring a sale to an ESOP is easily outstripped by the tax savings. ESOPs are also useful if only some of the owner’s children want to participate in the business. Giving stock to children who don’t participate in the business is likely to cause strife among siblings. The ESOP can purchase the stock of non-participating children for cash. Here's when to consider an ESOP:

  • Firm is worth $2 million, or with profits of $400,000 a year;
  • Firm has a recent history of profitability and/or strong prospects of future profitability;
  • There are two to three individuals capable of assuming a lead management role in the next five years;
  • Firm is a corporation or capable of being converted into one.

Other helpful, but not essential, factors:

  • Current owners want to gradually transition out;
  • Owners want to reward employees for their service;
  • Employees are likely to be incentivized by ownership in the company.

Harvey Katz is co-chair of Fox Rothschild’s Employee Benefits & Compensation Practice. For more information, please contact him at 212.878.7976 or hkatz@foxrothschild.com.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.

By Alexandra Turner

On average, remodeling a bathroom reels in potential homebuyers and recoups 62 percent of the remodel cost, U.S. News and World Report notes. Bathrooms date fairly quickly, and a well-done remodel preserves the good bones of your bathroom while replacing outdated elements with modern ones. If you've completed some DIY projects before, you'll be able to tackle much of your bathroom remodel yourself, but there are some tasks that require professional assistance.

Must-do items

Prioritize your to-do list based on your budget and these must-do items. While a complete remodel may be ideal, tackling just some of these must-do items can increase your home's attractiveness and resale price, according to U.S. News and World Report.

  • Get the floor in good shape – If your bathroom floor is outdated or looks old, replacing it is a must.
  • Update fixtures – Replacing the shower head and faucet handles helps modernize your bathroom.
  • Replace the toilet – Replace your old toilet with a low-flow model to begin saving money instantly and update the room.
  • Add fresh paint – A fresh coat of paint in a neutral color gives any room a nice look, especially the bathroom.

What to DIY

If you have some experience with DIY updates, you'll be able to tackle these items yourself. Find any supplies at your local home improvement store.

  • Replacing the toilet – With half a day's work and a little heavy lifting, you can replace your toilet. Turn the shutoff valve, then drain the toilet bowl and tank. Disconnect the supply line, then disconnect the toilet tank from the bowl. Remove the toilet and replace it with the new one by working the process in reverse. If you have a weak back, call a plumber for this one.
  • Updating fixtures – Unscrew your shower head and replace it with a new one. Consider a low-flow shower head as an eco-friendly move.
  • Painting – Clean the walls with a bleach solution before you paint. Tape off the ceiling and floor, or around any fixtures. Apply a primer and up to two coats of paint, letting the walls dry in between each coat.
  • Replacing the medicine and linen cabinets – Freestanding cabinets can be removed and replaced, while built-ins must be demolished first. Take apart the old cabinet, then mount your new cabinet against the wall by drilling screws into wall studs. Select screws that will support the cabinet's weight when loaded with towels, toiletries and cleaning supplies. Pre-assembled medicine cabinets are easy to mount on the wall.

What to trust to experts

Bathroom repairs that require re-plumbing or re-wiring the room are best left to the experts, design spokesperson Deborah Burnett notes at DIYNetwork. These include replacing the tub or shower, updating the shower tile or the bathroom floor, updating the bathroom lighting, adding floor heating or moving the water and drain lines. As MSN notes, hiring contractors can be expensive, but making mistakes in electric, plumbing and general contractor work is far costlier in the long run. Click here for remodeling contractors in your area. An expert contractor will be well worth his fee by improving your home's value through needed bathroom updates.

Alexandra Turner is an interior designer and space planning expert who enjoys blogging about her profession.
Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.
 

By Geoffrey Hall

Safety on the job site begins in the executive suite. To have a real influence on workers, safety must become a core value of each construction organization. Chief executives should instill in every level of management that the responsibility for safety lies with them. Senior executives need to lead by example taking an active and visible role in the implementation and execution of the safety culture. Because every project is built on paper first, safety begins with pre-planning. As executives begin the process of planning a project, safety should be incorporated into all stages of development. All exposures should be identified and addressed in pre-planning stages and controls to mitigate risk exposures should be built into the safety plan.

Additionally, all firms should establish a safety committee prior to building. This committee will be composed of upper management, risk managers, safety directors, and operational staff, striving to continually discuss and review safety performance. Planning for safety is a continually evolving process and chief executives should utilize all resources in order to mitigate the risk of safety complications. Hiring on-site safety managers for projects of all sizes can prove to be beneficial in the long run, despite what may be perceived as high upfront costs. A safety manager can help continually review and enhance the efforts made by everyone on site. Risk management experts and insurers may bring a new set of eyes to a project and can help identify concerns or problem areas that may be otherwise overlooked. This may occur because the company is focusing on major hazards but overlooking lesser ones.

For every construction project, senior executives should thoroughly outline a strong safety plan prior to construction, establish a safety committee that can oversee the project and work with outside resources. By taking these proactive approaches to creating a safety culture, construction companies can save lives, reduce accidents and lower the costs associated with injuries and delays. A strong safety culture helps to manage not only incurred costs through accidents but also the saves the company expenses it would have to bear itself.

Geoffrey Hall is senior vice president of ACE USA's construction group.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.

By Mark Jones

The real estate development and construction industry is no stranger to volatility.  Managing a large-scale construction or renovation project can be daunting for any company, especially when building in a different country. Navigating the various processes, government regulations and construction trade differences inherent to specific countries can pose significant roadblocks for companies as they embark on global projects spanning many markets.

In order to remain competitive in the marketplace, there are opportunities to deploy project management expertise outside the comfort zone of your own country or region. Here are some best practices and guidelines to successfully overcome the challenges posed by cross-cultural expansion and development.

Define Goals, Objectives and Roles Upfront –  The clients’ goals and objectives and the project manager’s role must be clearly defined up-front to ensure alignment and avoid conflict during the project. Client preferences and protocols vary depending on the region. Some are most interested in cost management, while others would benefit from strategic guidance and a holistic approach to managing the full project. It is also crucial to reconcile nuances of terminology during negotiation discussions to ensure that everyone is speaking the same language. Regional distinctions between North America, Europe and the UK can dramatically impact the outcome of the entire project. Something as simple as the definition or spelling of a word may seem of little consequence, but there are variations to even the most fundamental terminology and meanings can easily be confused across geographies.

Master the Construction Trade Differences, Such as Unionization – One major factor that continues to pose a challenge is unionization. The construction industry is significantly more unionized in North America than in the U.K., and project managers will not only need to know how to manage construction teams but also how to work with the union representatives. To have a better understanding of the local practice and customs, attending local construction associations’ information sessions can be crucial in understanding local rules and processes. The local unions themselves are helpful when negotiating pricing and tendering rules and the major contracting organizations that have union alignments can be helpful knowledge pools too. Most of all, a good project manager will need to be skillful in getting the required local union rules to work within the context of the overall project, budget and schedule.

Understand the Governmental Rules and Regulations – It is essential for project managers to have comprehensive knowledge of the legal, contractual, health and safety regulations of the region or locality. Local regulations and legal practices will guide the project manager when considering specific processes. Health and safety regulations can differ drastically across markets with developing countries having less stringent health and safety regulations than developed regions. Understanding funding sources, banking legislation, loan requirements and federal and state legislation cycles are all very important to getting projects delivered.

Mark Jones has 19 years of experience within the construction sector with clients in the institutional, infrastructure, mining, hi-tech, and commercial sectors.  He is currently a director for Turner & Townsend based in Toronto, Canada.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.

Current Issue

Check out our latest Edition!

 

alan jim blog ct

Contact Us

Construction Today Magazine
150 N. Michigan Ave., Suite 900
Chicago, IL 60601

  312.676.1100
  312.676.1101

Click here for a full list of contacts.

Latest Edition

Spread The Love

Back To Top