Construction Equipment Owner

Today marks the first ever World Green Building Day. The declaration was made by the World Green Building Council in an effort to bring together green building councils from around the world. In honor of the day, I put together a list of a few “building green with concrete” links for you to peruse:

• The U.S. Green Building Council
• The Portland Cement Association’s (PCA) ConcreteThinker.com
• Green buildings case studies from the Portland Cement Association (PCA)
• The Sustainability page from the National Ready Mixed Concrete Association (NRMCA)

And here are some articles from the pages of Concrete Contractor that look at building green with concrete:

• “Pervious Concrete: How to Place and Cure”
• “The Cincinnati Zoo Focuses on Improving Its Environmental Impact”
• “Go White to Go Green”
• “Going Green in the Residential Market”
• “Taking a ‘LEED’ in Wisconsin”
• “Making Greener Choices”

There’s billions of dollars allocated for construction projects in the American Recovery and Reinvestment Act that have yet to be let. This should not be news to you by now. But what might not be readily apparent for those new to this type of work is that contractors that bid on government-funded projects are subject to prevailing wage provisions that are often based on a union scale.

Some contractors choose to pay the fringe benefit portion of the prevailing wage as additional cash wages as one way to comply with the law. But, allocating the fringe amount to a bona fide benefit plan results in savings for both the employer and employees because a portion of these monies are not subject to payroll taxes and workers compensation insurance.

On top of this, it’s low-bid gets the job project award system. So your business needs to be able to bid more effectively and comply with government regulations. One group that has been assisting contractors compete in the government marketplace for years is the Fringe Benefit Group (FBG). So the Construction Business Podcast is bringing on Adam Bonsky, executive vice president of government markets for FBG to talk about what contractors need to know in order to be eligible for the billions in ARRA funds.

Guest: Adam Bonsky
Contact: abonsky@fibi.com
Links: www.fringebenefitgroup.com, www.thecontractorsplan.com

 Fulfilling the Fringe Benefit Components of ARRA Bid Requirements [15:08m]: Play Now | Play in Popup | Download (207)

Want to help the environment and maybe help construct a new type of pavement? Well, have a beer or soft drink, then send your empty bottle to Presto Geosystems as they can use it. (Actually, just recycle the bottles and Presto Geosystems will buy them from your recycler.) The Wisconsin company has developed a process to use recycled glass in a new type of pavement called FilterPave that contains 40% voids the company says trap pollutants and water – all while using up between 70 and 90 recycled glass bottles per square foot.The bottles are recycled and the glass is ground smooth into pebbles, then it can be used on parking lots, driveways, and walkways. (Morton Arboretum in Lisle, IL, recently used the recycled glass product on a paved walkway.) The material also can be used in different colors.

What’s on the mind of other contractors? How do they feel about the ARRA? What’s the construction market looking from those who are in the middle of it? These questions and more are covered in FMI’s Nonresidential Construction Index Report 3Q 2009.

To discuss the trends uncovered in the report and outlook for the construction market, Phil Warner of FMI joins the Construction Business Podcast. Listen as Warner gives his analysis of the feedback from the panelists and talks about what the recent findings forecast for the construction industry.

Guest: Phil Warner
Contact: pwarner@fminet.com
Link: www.fminet.com

 Nonresidential Construction Index 3Q 2009 [11:12m]: Play Now | Play in Popup | Download (124)

The term “industrial design” is something I never thought much about until the summer of 2009. That’s when I attended the graduation ceremonies at the School of the Art Institute of Chicago and listened to a few highly influential commencement speakers including Renzo Piano — the Italian architect who designed the Modern Wing at the Art Institute of Chicago. The speaker who captured my interest the most, however, was industrial designer Charles A. Harrison II. Mr. Harrison designed lawn mowers, sewing machines and garbage cans during his career at Sears, Roebuck and Company. He also redesigned the View-Master – the childhood toy EVERYONE has fond memories of.

Having a hand in the View-Master is pretty cool. But it’s easy to skim over the importance of lawn mowers and garbage cans and how Mr. Harrison’s visions touch people’s lives. One image from a slideshow of Mr. Harrison’s designs that really stuck out for me was a photo of a Sears-brand riding lawnmower. I could instantly see my grandpa riding that mower on a cool summer evening. And maybe my sewing machine and garbage can were designed by Mr. Harrison, or derived from one of his designs. It’s fascinating to think about an industrial designer’s ability to make everyday, utilitarian tools look good.

All these thoughts I had after hearing Mr. Harrison speak in May came rushing back to me when I saw the press release announcing Doosan Infracore’s Best of the Best Award at the 2009 RedDot Design Award Show for the futuristic concept excavator “CX.” Looking at the image gives you a sneak peek at the future — an idea of what your construction site might look like in 10 or 20 years. And it feels good to know there are talented people out there designing our everyday tools with a little inspiration and style.

Most people would think there’s little relationship between “pavement” and “pizza” — other than the “Ps” — and they would be correct. But is there a similarity between a pizza business and a pavement business? Could be.

Sunday’s Chicago Tribune did an interesting article on Great Lake, a small (a very small) pizza place in Chicago. The place only has 14 seats, is open four days a week for only a few hours each day, and all the pizzas are made by hand (leisurely by hand) by co-owner Nick Lessins. His wife, Lydia Esparza, handles the counter and takes the orders… and you wouldn’t believe how many orders there are. Most days there is a 4-hour wait for a seat and a 2-hour wait for a carry-out pizza. Oh, and Great Lake only makes three kinds of pizza each day, determined by Lessins each morning when he heads out searching for ingredients for the day.

Still not sounding like a pavement business? Okay. But consider this: Great Lake does what it’s good at, does what it wants to do, has identified a market to serve, and is the type of business the owners want to operate. And it’s successful. Not only do the long waits hint at the quality of the pizza, but Great Lake has been named the best pizza in the country by a number of magazines and polls, and the couple has been encouraged to expand, add locations, add staff, hire a PR firm, and in general to become a bigger business.

But Lessins and Esparza aren’t interested. They know what they’re good at and they know what they want. They want to run the type of business they have, the type of business they’re good at, and they want to be able to spend time at home with their dog and their newspaper. So by knowing what they want and doing a good job at what their customers want they’ve got people from throughout the country beating a path to their door — and standing in line waiting for the product they provide.

The Great Lake approach sounds an awful lot like many contractors I’ve talked with in this industry, and it sounds like an approach many contractors are encouraged to pursue: Know your market, do a very good job, serve your customers, (though Great Lake has some disgruntled ones but even their take on that is worth taking a look at), and know what kind of business you want to operate.

No matter how you slice it (there’s an ongoing debate in Chicago about triangle-cut vs. square-cut pizza) business is business — not that I’d want Great Lake to sealcoat my parking lot or XYZ Contractor to make my pie.

Last week I passed along some numbers from manufacturers and material producers I’ve been talking with — this week it’s the contractors’ turn.

Not surprisingly most contractors I talk with report business in decline and tough competition — both of which lead to tighter margins. That’s pretty much what we’ve been hearing all year. Here are a few comments:

* “Our business is down 7%,” says one southern sweeping contractor. “The good news is the decline is all cutbacks in service, not cutbacks in price. I can get the service back I can’t get the price back.”

* “We are actually down about 9%,” says an East Coast sweeper, adding that there still has been a nice upside to his business this year. “Our maintenance division has been doing very well. I have had only one red month this year (and I know exactly why it happened) so overall it’s steady as she goes. What I have been telling other folks is ‘We are working twice as hard to break even.’”

* On the other side of the country a western pavement maintenance contractor reports that sales for the first quarter were down over 2008 but that April sales jumped and May sales jumped even more. June sales for this contractor dropped from 2008 but July sales in 2009 skyrocketed. So it’s been an interesting year made even more interesting by where the sales came from. This contractor notes that in 2008 sealcoating, cracksealing, and pavement marking lead they way accounting for almost 55% of sales. This year, however, HMA overlays dominate the work, and a recently added service, sweeping (primarily for construction sites) also plays a role, accounting for almost 9% of 2009 sales.

“This year the 2-in. overlay, 1 1/2-in. overlay, remove & replace, rotomilling and about 90% of the patching has been subcontracted out. Last year they were subbed as well, however we did 90% of the patching our self and only subbed out around 10%. We have had excellent luck with subcontracting this year, its honestly amazing,” the contractor told me. “Our sweeping is a new service that’s only a year old (accounting for less than 3% of 2008 sales). It has helped cover some of the other lower numbers and has been a consistent source of revenue. Almost all the sweeping (90%) is contracted following a large road slurry company around and only 10% or less is doing one weekly account or our own work.”

Respond to this blog and let me and other Roundabout readers know how your business is doing and what you think the rest of your season likes like. I’m hoping for dry weather and a long, long time before winter sets in.

This is precisely what one Skyline Construction Inc. of San Fransisco is doing. Ok, there are a couple of limitations to this, but basically it boils down to the following: Select employees of the company chose their own salary from a selected range. Then here is where it gets interesting. Those who chose a lower salary had an opportunity to receive a larger bonus at the end of the year if the company turned a profit.

Of the 15 employees who were offered to set their own salary, 12 decided to go on the lower end and roll the dice on earning a larger bonus at the end of the year - bonus amount was not disclosed, but the employees who chose the lower up-front wages reported being happy with their decisions.

The result? Skyline’s revenue grew from $42 million in 2004 to $76 million last year.

One belief for why this is so far has been a successful venture is that when employees are more directly in charge of their compensation they will be additionally motivated and more likely to produce profitable results because as the business succeeds so does their monetary return.

August seems to be a month where I’m talking to an awful lot of contractors and manufacturers, and without giving away any company names or locations, here’s some of what I’ve been hearing from manufacturers:

* One sealer producer says sales are down about 5% from 2008. A small percentage of that can be attributed to the economy but almost all of the decline is more likely the result of poor weather which has put customers way behind in getting their work done. So here’s hoping for an extra long season with a nice long Indian Summer.

* Another material producer says sales through June were up 30% — maybe you want to read that again to make sure you got it right. That’s a huge number in any economy but especially in this one. Some of that is attributed to the federal government’s stimulus package which has opened the door to short-term maintenance projects that can get started and completed so public agencies don’t have to commit long-term dollars to them.

* Not surprisingly, equipment sales are lagging, and that’s particularly true of the larger, more expensive units. Manufacturers are seeing some sales in less-expensive equipment but big pieces are a harder sell…plus, contractor are encountering issues obtaining credit despite the fact they might have a very solid credit history. This seems to be in line with what most manufacturers were anticipating for 2009.

If you’re a manufacturer feel free to let us know how your season is going — you can do it without letting us know who you are.

Next week I’ll report on what contractors are saying.

The up again, down again stimulus news hit a pretty high note today in a newsfeed item that came across the wire - Stimulus Work on the Cusp of Revving up the Economy: “ProPublica asked members of its reporting network to find out if states had advertised the projects, awarded contracts or actually started construction work. While about 30 percent of the projects in the sample had broken ground by mid-summer, at least 66 percent had a contract and 76 percent had been put out to bid - suggesting an impending gusher of stimulus work in late summer and early fall.”

In addition to news items, ProPublica has a pretty good site that breaks down stimulus funding in a variety of ways: http://www.propublica.org/ion/stimulus/item/our-stimulus-spot-check-summer-wave-of-projects-nears-crest-817

Another Stimulus Work Search Tool from JW Surety Bond Consultants