The Publication for Merit Shop Pipeline Contractors AMERICAN PIPELINE CONTRACTORS ASSOCIATION 3rd Quarter 2022 Trading on Excellence: The Value of Talented Field Leaders Congress Working on Pipeline Permitting “Side Deal” 2022 APCA Membership Directory & Buyers Guide CDW Issues Report on the Dangers of Online Voting in Union Elections Freedom To Contract —Not So Fast!
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PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2022 5 Officer Directors Of f i c ial Publ i cat ion of the Amer i can Pipel ine Cont rac tors Assoc iat ion Board of Directors Publication Staff PO Box 638 Churchton, MD 20733 (703) 212-7745 • www.americanpipeline.org ©2022 American Pipeline Contractors Association Nick Bertram Jomax Construction Co., Inc. Mike Castle, Jr. Castle Scott Coppersmith Mears Group, Inc. David Dacus (Advisory) Troy Construction, LLC Ricky Dyess M.G. Dyess, Inc. John Fluharty (Advisory) Mears Group, Inc. Chris Jones HardRock Directional Drilling, LLC Patrick McRae Primoris Pipeline Sean Renfro Sunland Construction, Inc. Aaron Simon (Advisory) Troy Construction, LLC Publisher TimothyWagner Editor Michael Ancell Advertising Sales Stacy Bowdring Information Technology Greg Smela Accounting James Wagner Layout & Design JosephWagner Government Affairs Jaime Steve Government Affairs Zachary Perconti President Taylor Dacus Troy Construction, LLC 1st Vice President RoyWeaver Weaver, LLC 2nd Vice President Kevin LaBauve WHC Energy Services Treasurer Nick Bruno Bi-Con Services AMERICAN PIPELINE CONTRACTORS ASSOCIATION New EEOC Guidance: Business Necessity of COVID-19 Screening Testing No Longer Presumed 10 By Greg Guidry Just when we thought COVID-19 was going away, it makes another appearance in the form of Omicron BA.5. And unfortunately, federal labor agencies keep shifting their opinions on what employers should do. On July 12, the EEOC updated its position in light of the evolving nature of the COVID-19 pandemic. Now employers are required to “assess whether current pandemic circumstances and individual workplace circumstances justify viral screening testing.” Trading on Excellence: The Value of Talented Field Leaders 15 By Ethan Cowles, FMI World-class construction firms understand the value of focusing on those working in the field and of inverting their organizational pyramid so that field supervisors, superintendents, and project managers are prioritized instead of executives. This puts the organizational emphasis on individuals who are out in the field every day planning projects, setting goals, ensuring safety protocols are followed, training up-and-comers, boosting morale, managing risk, and demonstrating best practices. The livelihood of their companies depends on these individuals’ day-to-day work. APCA Membership Directory & Buyers Guide 29 Inside Washington | By Jaime Steve & Zack Perconti 7 Contract Law | By John Grayson 12 News Briefs 19 APCA Member News 26 Industry Calendar 46 New APCA Members 46 Advertiser Index 46 3rd Quarter 2022
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PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2022 7 INSIDE WASHINGTON Working to protect and grow the businesses of APCA members is a privilege, and we greatly appreciate your trust in us. We are constantly on the lookout for legislation and regulation that might threaten your businesses as well as activities that will help grow your businesses and provide America with the infrastructure needed to deliver critical energy across the country. This article will discuss some key issues we are working on in Washington, D.C., including the possibility of beneficial pipeline permitting reform, detrimental methane fees, and another White House push for controversial project labor agreements. Pipeline Permitting “Side Deal” Recent congressional passage of the so-called Inflation Reduction Act—a wide-ranging climate, energy, and health care package—happened in part because of an agreement in Congress to tackle pipeline permitting reform in a separate “side deal” or follow-on bill. The deal was struck between Sen. Joe Manchin (D-W.Va.), Democratic congressional leadership, and the Biden administration. Original efforts to include pipeline permitting reform in the Inflation Reduction Act (IRA) were ruled “out of order” because they did not have a direct impact on the federal budget, a requirement under the complicated reconciliation process used to pass the IRA law. A key part of the side deal is an agreement to expedite the long-delayed Mountain Valley Pipeline project to transport shale gas from West Virginia to Virginia. When the IRA bill was approved, Manchin said that Biden, Senate Majority Leader Chuck Schumer (D-N.Y.), and House Speaker Nancy Pelosi (D-Calif.) had “committed to advancing” a permitting reform bill that would make it easier for developers to override environmental objections when building pipelines, natural gas export facilities, and other energy infrastructure. As this agreement falls outside of the complex Senate rules used to pass the IRA bill with votes from only Democrats, passing a permitting reform bill will require at least 10 Senate Republicans to also support the measure. There is no hard deadline for passing the emerging pipeline bill, so it is possible that this effort continues into next year. APCA did not support passage of the IRA. We opposed the increase in taxes, including provisions for a methane tax, Congress Working on Pipeline Permitting “Side Deal” By Zack Perconti & Jaime Steve Zach Perconti APCA Government Affairs Representative email@example.com (703) 677-6049 Jaime Steve APCA Government Affairs Representative firstname.lastname@example.org (202) 841-5493 InsideWashington continued on page 8
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2022 8 Inside Washington Continued from page 7 and we opposed the increase in spending. We are also concerned that many of the “energy-friendly” promises made to Manchin were not included in the actual bill. And as always, we’re paying close attention to ascertain the level of preference given to unions. However, we are cautiously optimistic about the follow-on bill aimed at providing pipeline permitting reform. We will work with our allies in Congress to help produce an effective permitting reform bill that would allow more projects to gain approval and speed project timelines. We will be reaching out to APCA members and others in our network via Muster to weigh in on this legislation when more is known about it. Please join us in raising our voices. It is also important to remember that this is a federal reform bill and that many of the permitting issues we face are at state and local levels. Methane Reduction Incentives and Penalties in the IRA On the climate front, the far-ranging IRA law provides $1.5 billion in rewards for cutting methane emissions, however it imposes an increasing fee on excess methane leaking from oil and gas wells, pipelines, and other infrastructure. To secure Manchin’s support for this provision, Democratic leaders pledged to mandate new oil and gas leasing in the Gulf of Mexico and off the coast of Alaska. The IRA’s Methane Emission Reduction Program imposes a first-time federal fee on methane emissions. In general, covered facilities that emit 25,000 metric tons carbon dioxide equivalent (CO2e) or more per year will be required to pay for “excess” methane emissions, with the fee starting at $900 per metric ton in 2024 and increasing to $1,500 per metric ton by 2026. The Congressional Budget Office estimates that the methane fee will generate gross revenue of approximately $1.1 billion in fiscal year 2026 and peak at approximately $1.9 billion in fiscal year 2028. The Methane Emission Reduction Program builds on the Environmental Protection Agency’s existing Greenhouse Gas Reporting Program (GHGRP). Approximately 8,000 petroleum and natural gas facilities are required to report their annual emissions under the GHGRP; however, the IRA excludes certain facilities covered by the GHGRP, including local natural gas distribution facilities. The following facilities covered by the GHGRP are subject to the IRA’s methane fee: • Offshore petroleum and natural gas production, • Onshore petroleum and natural gas production, • Onshore natural gas processing, • Onshore natural gas transmission compression, • Underground natural gas storage, • Liquefied natural gas storage, • Liquefied natural gas import and export equipment, • Onshore petroleum and natural gas gathering and boosting, and • Onshore natural gas transmission pipelines. The calculation of the methane fee is determined by 1) the facility’s reported emissions under the GHGRP and 2) an emissions threshold that varies by facility type: • For offshore and onshore petroleum and natural gas production facilities, the fee applies to the number of reported tons of methane that exceed (i) 0.2 percent of the natural gas sent to sale from the facility or (ii) if the facility sent no natural gas to sale, 10 million metric tons of methane per 1 million barrels of oil sent to sale from the facility. • For nonproduction petroleum and natural gas facilities, such as gathering and boosting facilities, the fee applies to methane emissions that exceed 0.05 percent of the natural gas sent for sale from or through the facility. • For natural gas transmission facilities, the fee applies to methane emissions that exceed 0.11 percent of the natural gas sent for sale from or through the facility. Facilities under common ownership or control may net emissions to account for facility emissions that are below the applicable thresholds within and across applicable segments. In addition, the IRA provides a conditional exemption for facilities that are subject to, and in compliance with, applicable methane regulations. While, to date, no such regulations have been finalized, the EPA proposed applicable standards in November 2021: “Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review.” The IRA allows for an exemption from the emissions fee if future, final EPA regulations addressing methane emissions 1) are in effect in all states and 2) would “result in equivalent or greater emissions reductions as would be achieved” by the November 2021 proposed rule. Finally, the IRA includes supplemental appropriations of $850 million to EPA to provide grants, rebates, loans, and other assistance to facilities subject to the methane charge for a range of objectives, including “improving and deploying industrial equipment and processes” that reduce methane emission, and $700 million for “marginal conventional wells” for the same purposes. White House Renews Push for Mandatory PLAs on Federal Contracts The Biden administration, on August 19, proposed a rule (Federal Acquisition Regulation: Use of Project Labor Agreements for Federal Construction Projects) that would make project labor agreements mandatory for federally funded
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2022 9 construction projects of $35 million or more. APCA opposes PLAs because they needlessly increase costs and unfairly limit competition by quality merit-shop contractors and their employees, who comprise 87.4 percent of the private U.S. construction industry workforce, according to the most recent U.S. Bureau of Labor Statistics data. Ultimately, PLAs exclude nearly 9 out of 10 construction industry workers from the middle-class jobs and benefits created by government investment in infrastructure via the Infrastructure Investment and Jobs Act of 2021 and other measures passed by Congress that fund public works contracts. For example, a PLA typically requires companies to agree to recognize unions as the representatives of their employees on that job, use the union hiring hall to obtain most or all construction labor, exclusively hire apprentices from union programs, follow union work rules, and pay into union benefit and multiemployer pension plans. This forces employers whose workers have freely made the choice not to join a union to pay “double benefits” into their existing employee benefit plans and union plans and places these qualified firms at a significant competitive disadvantage. In addition, research suggests that the few nonunion employees permitted to work on a PLA jobsite lose 34 percent of wages and benefits unless they pay union dues and/or join a union and meet benefits plan vesting schedules. In short, these anti-competitive provisions in typical PLAs promote wage theft, eliminate employee choice for union representation, and make it extremely difficult for many nonunion and typically small, minority- or women-owned firms to win public works contracts subject to anti-competitive PLAs. When mandated by government agencies, PLAs can also supersede and interfere with existing collective bargaining agreements that contractors have already negotiated with various unions and prevent firms from using labor from certain unions. As the three issues discussed above—pipeline permitting reform, methane fees, and project labor agreements—all affect your business’s growth, rest assured that we are looking out for you and will be asking all APCA members to make their voices heard in Washington, D.C., through our online Muster campaigns and direct conversations with your members of Congress. 7
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2022 10 Just when we thought COVID-19 was going away, it makes another appearance in the form of Omicron BA.5. And unfortunately, federal labor agencies keep shifting their opinions on what employers should do. At the outset of the COVID-19 pandemic, the U.S. Equal Employment Opportunity Commission (EEOC) took the position that the Americans with Disabilities Act (ADA) standard for conducting medical examinations (job-related and consistent with business necessity) was always met for COVID-19 viral screening testing. On July 12, the EEOC updated its position (www.eeoc.gov/wysk/what-you-should-know-aboutcovid-19-and-ada-rehabilitation-act-and-other-eeo-laws) in light of the evolving nature of the COVID-19 pandemic. Now employers are required to “assess whether current pandemic circumstances and individual workplace circumstances justify viral screening testing.” The EEOC made it clear that this new update is not a pronouncement on whether “testing is or is not warranted.” Instead, the new update allows employers to make their own assessments, given the evolving nature of the pandemic, to determine whether testing is consistent with the requirements of the ADA. The EEOC has given several possible considerations for employers evaluating the business necessity of viral testing, including: • Level of community transmission, • Vaccination status of employees, • Accuracy and speed of the various types of COVID-19 viral tests, • Likelihood of breakthrough infections in those up to date on vaccinations, • Possible severity of illness and ease of transmissibility of the current variant or variants, • Type of contacts employees may have with others in the workplace or elsewhere (e.g., contact with medically vulnerable individuals), and • Potential impact on operations if an employee enters the workplace with COVID-19. The EEOC directs employers to check the latest U.S. Centers for Disease Control and Prevention guidance to determine whether viral screening testing is appropriate for the employees who will be tested. It is important to note that any testing must be viral, as the EEOC continues to forbid antibody testing. The EEOC also modified its guidance for employers’ requirements of an employee returning to work after a COVID-19 infection. The EEOC continues to allow an employer to require a doctor’s note certifying it is safe for an employee to return (no risk of transmission) and that the employee is able to perform the job duties. The EEOC notes that COVID-19 is not always a disability, so such an inquiry might not be a disability-related inquiry; if it were, however, “it would be justified” because it would be consistent with the business necessity standard, as it would be “related to the possibility of transmission and/or related to [the] employer’s objective concern about the employee’s ability to resume working.” The EEOC now also states that employers may, as an alternative, simply follow CDC guidance to determine whether it is safe for an employee to return. HUMAN RESOURCES Greg Guidry Ogletree Deakins Nash Smoak & Stewart email@example.com (337) 769-6583 New EEOC Guidance: Business Necessity of COVID-19 Screening Testing No Longer Presumed The new update allows employers to make their own assessments, given the evolving nature of the pandemic, to determine whether testing is consistent with the requirements of the ADA.
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2022 11 Key Takeaways Employers may want to consider examining any mandatory screening testing program to determine whether it is consistent with business necessity. In addition, employers may want to continue to monitor the ever-changing guidance from the CDC, as well as state and local health departments, when reviewing their COVID-19 screening and response protocols. Employers may also want to keep records of the changing guidance, as this will allow them to demonstrate reliance on these changes for any future challenges to their COVID-19 policies. Practical Tips for Effective Disciplinary Documentation It is a reality that lack of documentation or poor documentation by supervisors of poor performance or misconduct by employees they supervise will make it difficult to successfully defend a claim, charge, or lawsuit after a termination occurs. The old adage “If you didn’t document it, it didn’t happen” rings true in today’s litigious environment. The following checklist lists some practical considerations and issues to consider and train your supervisors on. 1. It is critical that an employee’s overall disciplinary record, as well as the record of the particular incident giving rise to a discharge, be carefully documented. 2. At a bare minimum, proper documentation requires that all instances of corrective counseling, verbal or written warnings, suspensions, or other disciplinary action be recorded in the employee’s file, or in a supervisor’s or human resources file kept on the employee. If you store these matters electronically, ensure that they are secure in case of cyber attacks or technology disruptions. Take precautions to keep personnel files and disciplinary documentation in secure places so that they can’t be destroyed by the subject employees. 3. When discipline is necessary, the file should contain the following: a. A succinct description of the incident giving rise to the disciplinary action. JUST THE FACTS. b. A listing of the individuals who witnessed the incident, and in discharge cases their signed statements. c. A description of the investigative procedures that were followed prior to imposing discipline. d. The originals of any physical evidence that might be involved. e. A complete statement of the employee’s version of the relevant facts when differences exist. f. Precise records of any remedial efforts or conferences that precede a termination decision. 4. Records should be specific as to time, date, location, and names. A good employment document usually includes the following elements: a. The date the document was written. b. A title of the document, e.g., written warning, performance evaluation, notice of termination. c. Specific details of the events leading to the documentation. d. A place for the supervisor to sign and date, reflecting that it was explained to the employee. e. A place for the employee to sign and date, reflecting that it was received by the employee. f. A place for the employee to comment. 5. When warnings are given, the employees should be asked to sign the warning. If the employee refuses, it should be noted on the face of the form and signed by the individual who gave the warning and witnessed the employee’s refusal to sign. 6. Warnings should specify the prospect of future disciplinary action in the event that behavior or performance problems remain uncorrected. When appropriate, the exact nature of future disciplinary action should be specified. [BOLD] Give a directive, and identify consequences for failure to meet the directive. [BOLD] 7. Documents should contain only objective facts and conclusions. a. Avoid the use of emotionally charged or judgmental words. E.g., thief, fool, idiot. b. Avoid injections of personal opinion. c. Avoid any racial or ethnic references 8. Make sure your documents tell the truth about the reasons for disciplinary action or termination. False reasons can get you in big trouble, particularly when in writing. 9. Your file is not your junk drawer. Though drafts are appropriate, only keep what you want to be the “official record.” You cannot destroy or screen documents once a claim arises, so destroy preliminary drafts, random notes, or anything else that you haven’t given appropriate consideration as a worthy employment record. 10. Remember the ultimate audience. Your records may be reviewed by a federal investigator, judge, or jury. Write clearly and avoid unnecessary technical jargon. 7
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2022 12 CONTRACT LAW Freedom to contract however we please is considered a cherished right. Sophisticated parties to a business deal should be able to contractually agree to whatever terms they want. However, when that “right” is abused or improperly exploited, problems can arise. Because the high-stakes and high-pressure business of pipeline and infrastructure construction is so competitive, contractors may sometimes think that abusive contractual provisions are just a cost of doing business. Starting with this article, I will briefly discuss a few specific contract clauses we might assume are fair game but, in reality, can be modified in negotiation or have been limited, restricted, or deemed unenforceable by law. In our zeal to win a project, we should not accept anything that is illegal, an overreach, or an unreasonable shifting of risk. Risk Allocation or Risk Transfer? Regardless of its length or complexity, a contract is basically a mechanism to allocate risks, of which there are plenty. Certain risks are better borne by one party than the other, and the economic theory of risk allocation dictates that specific risks should be borne by the party best equipped or able to avoid, limit, or control that risk. It is entirely appropriate for the party best positioned to carry a specific risk to undertake that risk in the contract. But, in pipelining, it is not uncommon for the owner to overreach and try to push too much risk over onto the contractor. This is risk transfer, not reasonable or fair risk allocation. Common ways owners attempt to push excessive risk over onto the contractor include indemnity clauses, no damage for delay clauses, onerous change order language, manipulation of the applicable standard of care, and unusual or onerous contractual definitions. Some of these are restricted or controlled by express statutes, some by court-established law, and some can be addressed by negotiation. The important point is to recognize and understand them so you are not taken advantage of and accept more risk than necessary. Indemnity Clauses Contractual indemnity clauses have been the subject of controversy, litigation, and legislation for decades. Contracting parties have gotten more creative and aggressive in this area, prompting legislatures in many states to step in. Some 40 states have laws restricting these clauses in one way or the other. Texas adopted its own anti-indemnity law 10 years ago. While most states restrict, modify, or prohibit certain types of indemnity provisions in construction contracts, the rules as to the enforceability of such clauses vary significantly from state-to-state. Generally speaking, indemnity clauses can be broken down into three distinct categories: 1. Limited form: The limited form indemnity clause makes the contractor liable for damages “to the extent” the damages were caused by the contractor. Essentially, this means, “I’ll pay for my negligence, but you pay for yours.” The contractor is required to indemnify the owner only for the portion of damages resulting from the contractor’s fault or negligence. The contractor is not required to indemnify the owner “to the extent” damages are caused by someone outside the contractor’s control. 2. Intermediate form: Under an intermediate form indemnity clause, the contractor promises to indemnify the owner for a loss, in whole or in part, except a loss caused by the owner’s “sole negligence.” Even if the owner is 99 percent at fault but is not at fault for the entire loss, the indemnity provision is triggered, and the contractor is on the hook for all of the loss. On the other hand, if the owner is 100 percent at fault for the loss, the contractor is relieved of any indemnity obligation. 3. Broad form: The most extreme form of indemnity is broad form indemnity, pursuant to which the contractor agrees to indemnify the owner for any cost, any damage, or any liability, regardless of who is at fault. This includes losses caused by the owner. This broad form indemnity is so unfair Freedom To Contract —Not So Fast! By John L. Grayson John L. Grayson Cokinos | Young firstname.lastname@example.org (713) 535-5573
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2022 13 that at least 39 states have enacted anti-indemnity statutes rendering this type of indemnity void as a matter of public policy. Texas is among these states. Even so, we still see some owners include this kind of clause in the contract. Because laws affecting indemnity provisions vary from state to state, it is vital that the contractor scrutinize the contract and any indemnity provisions to make sure the owner is not attempting to improperly transfer too much risk over to the contractor. Fortunately, many states’ laws hold an excessive or inappropriate indemnity clause to be legally unenforceable even if it is in the contract. While this does provide some relief for the unwary, it is much better to address the indemnity clause during the negotiation phase and clearly define the limits and parameters of the obligation the contractor is undertaking. No Damage for Delay Clauses Delay is a common risk that construction contracts attempt to allocate. Allocation of delay risk typically considers responsibility for the delay. While the construction contract can describe the parties’ relative duties and obligations, there are also certain implied duties and obligations, such as the duty to cooperate and not hinder the performance of other contracting parties. If the owner does not perform its duties and obligations, such as obtaining right-of-way or necessary permits, in a timely manner, the contractor’s performance can be delayed causing the contractor to incur increased time-related costs. Owners often seek to include “no damages for delay” clauses in their contracts to try and shift responsibility for those delays back over to the contractor. The no damages for delay clause attempts to prevent a contractor from receiving damages related to the extra time and money he or she was caused to spend on the project even if the delay was caused by the owner. The no damages for delay clause applies to delays that affect the contractor’s cost of performance. They often provide that the contractor is only entitled to a time extension for delays to its work. Clearly the intent of the no damages for delay clause is to allocate the financial risk of delay back to the contractor. While not as common as indemnity clauses, the no damage for delay clause can have a powerful effect on the contractor, and therefore, these clauses must be avoided if possible. However, even if they cannot be avoided and must be in your contract, there are important and valuable exceptions to the enforceability of such a clause under certain circumstances. While the exceptions to these clauses vary from state to state, they do have some characteristics in common. Generally, the owner will not be excused for paying delay damages if he or she was the cause of the delay. Recently, the Texas Supreme Court articulated five exceptions to the enforceability of no delay damages provisions and held that, as a matter of public policy, such provisions cannot be enforced, regardless of what the contract says, if the delay resulted from the owners deliberate, intentional, and wrongful conduct that may include instances where an owner’s decisions result in the increased delay. The court cited generally recognized exceptions to the enforceability of such a clause and said such exceptions may include fraud or other bad faith and other active interference or wrongful conduct by the owner, such as arbitrary or capricious acts. This case, referred to as Zachry Construction Corporation v. Port of Houston Authority, is a recent major departure from the traditional deference Texas courts have historically given to the parties’ freedom to contract however they see fit. The bottom line as to no damage for delay clauses is, if you have such a clause in your contract and your project suffers delays that cost you money, all may not be lost if you can establish facts to meet one of the exceptions. Establishing one of the exceptions is a fact-intensive exercise, and the bar is set quite high. Good documentation of the delay and the cause(s) is key. Indemnity and no damage for delay clauses are common and well known in this industry as tools owners use to shift risk to the contractor. It is, therefore, important to identify them, understand them, and consider ways to either avoid them or make them work for you. In future articles, I will address other risk shifting clauses owners like to use. I am looking forward to seeing many of you in New Orleans in October at the APCA Mid-Year Meeting. If you have any questions, I am here to help. 7 No stranger to a construction site, John Grayson worked his way through college as a laborer, equipment operator, and pouring concrete in the Houston area. Upon graduation from Baylor University School of Law, Grayson went to work defending major aircraft manufacturers and industrial equipment suppliers in several high-stakes cases. For 39 years, he has concentrated on major, complex litigation. The breadth and sophistication of Grayson’s experience are unequaled as evidenced by his recognition by Best Lawyers in America in three categories. Grayson’s work has taken him from coast to coast and to many foreign countries. His clients include owners, developers, general contractors, energy contractors, ammunition manufacturers, utilities, and fiber optic companies in trials and arbitrations. In addition to his training as a Mediator, Grayson is a Panelist with the American Arbitration Association (AAA) for Construction Disputes.
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PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2022 15 When engineering and construction (E&C) firms think about leadership development, the focus naturally goes to C-suite and business development teams. While those managers are a critical part of a firm’s ultimate success, companies often neglect to develop on-site leaders who are ensuring projects are completed to exacting standards, on time, and on budget. World-class construction firms understand the value of focusing on those working in the field and of inverting their organizational pyramid so that field supervisors, superintendents, and project managers are prioritized instead of executives (Exhibit 1). This puts the organizational emphasis on individuals who are out in the field every day planning projects, setting goals, ensuring safety protocols are followed, training up-and-comers, boosting morale, managing risk, and demonstrating best practices. The livelihood of their companies depends on these individuals’ day-to-day work. Finding and Keeping Good Field Leaders There are two major challenges to finding and keeping good field leaders. The first is the construction talent shortage. Labor shortages were the second most common cause cited for project delays in the 2022 AGC/FMI Surety Bonding and Construction Risk Management Study, and in-house staffing capabilities were identified as a major determinant for project Trading on Excellence The Value of Talented Field Leaders By Ethan Cowles, FMI Continued on page 16
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2022 16 go/no-go decisions. Field supervisors, project managers, and superintendents represent an outsized slice of the struggle to attract and retain talented people. Of the CEOs surveyed for the second quarter 2022 Construction Industry Round Table (CIRT), nearly twothirds (63 percent) reported difficulties finding field managers. Twenty-nine percent said they were experiencing high turnover in their management field staffs. The second challenge among field leaders is the trend toward being asked to do too much too soon. FMI Project Manager Academy data indicates that overwork and a lack of skills training and career support are huge issues in construction. Research shows that stress and burnout are more pervasive among less experienced construction workers and that professional development is the antidote. Most firms recognize the importance of talent development, but many of them overlook the need for field staff to hone their business skills. Almost all CIRT members teach leadership and managerial skills, but only a third put a focus on business acumen. Field supervisors are in a position of leadership and need experience and training to plan projects, prevent rework, and keep crews productive. Both formalized skills training and systemic processes that foster learnings have an outsized impact on project performance. Here we identify key opportunities to help field leaders take operations to the next level. Pre-Planning Involvement Often, field supervisors only come into the office when they are between projects. When the backlog is full, they are out on the jobsite. This is a missed opportunity because when field leaders are involved in project planning, they become project managers and can assess the logistics of mobilization and document what they need based on the scope of work. Once they have been brought into the loop with the general contractor, field supervisors can visit the jobsite and consider their manpower, tools, equipment, materials, and additional information needs. Those needs can then be procured by project managers, superintendents, and purchasing teams. On early visits to the jobsite, field supervisors should consider: • Access to site for delivery trucks and machinery. • Traffic patterns, school zones, foot traffic, and neighborhood particulars. • Utility locations, locates, and overhead restrictions. • Locations for parking and portable toilets. • Location and size of laydown yards. • Status of project: Is it/will it be ready to mobilize, etc.? Following the site visit, a field leader should: • Create a list of tools and equipment needed. • Set out the first set of goals and short-interval plans. What do we need to be productive for day one, hour one? • Provide input/confirmation on budget and schedule. • List any questions or concerns to be answered prior to mobilization. FMI’s research shows that early involvement by field supervisors lifts productivity, profitability, and overall project success. Field leaders with budget management, performance tracking, mentoring, time management, and other project management training can do a better job of lifting overall performance. Case Study A mechanical contractor was feverishly putting together its final numbers for a bid. Minutes before the deadline, it successfully submitted the numbers. Soon the company was notified that it had won the job, with a lot of money left on the table. Instantly, the company began to suspect it missed something. As it reviewed the data, the contractor found a row of numbers were left out of the spreadsheet’s formula sum. About 15 percent of the project’s labor, equipment, and material was not included in the final numbers. The company decided to go forward with the project anyway. Knowing what it had missed, the company added back the needed budget dollars and hours before it handed the project over to the field. “Look, we had an estimating bust on this project. We added the needed dollars and hours into the budget once we found the mistake. We want to hold you accountable for a realistic budget. We know that we will be losing money on this project if we cannot make up for the bust with increased productivity.” Results The field staff knew the labor budget given to them was accurate and that they had an opportunity to help the company perform in a tough situation. With the support, hard work, and some great ideas from the field, the project ended up almost breaking even. Compared with the original budgeted loss, this was seen as a huge victory. The field knew where they were being held accountable and where the office would be held accountable. Overall, morale and trust were built up rather than destroyed through the experience. Trading on Excellence Continued from page 15
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2022 17 Skills Training and Mentorship Previous generations of field leaders learned through on-site experience and may not have formal training. That means that the knowledge passed on to up-and-coming leaders is limited. Now, with a shortage of experienced field leaders, people are being asked to lead or make decisions without the experience or supervision they may have had in the past. As we know, training helps with talent retention as well as the bottom line of a project. So what can be done? Start by assessing your employees’ skills and competencies. Define the minimum requirements for roles and what is needed to meet or exceed those expectations. Next, make sure you can measure these skills, and if someone is found lacking, offer resources to support them. Creating a learning lab for younger project managers exposes them to complex projects and operations. This builds confidence and can reduce the risk of burnout. Formal mentoring arrangements enable knowledge transfer and—as they gain proficiency and experience—ultimately allow more staff members to take ownership of projects. Mentoring can also serve as a crucial part of succession planning at different levels. However, the lack of formal training programs in the past means that senior leaders may not be skilled at teaching inexperienced workers. This can be addressed with leadership training for those with valuable job knowledge and ongoing skills training as people progress in the field. Project Tracking Project performance is measured by daily job achievements and whether teams are keeping up with the schedule and budget or not. If field leaders don’t know where a project stands or how it’s performing, then no one else will either. Crews and their supervisors need to see on a weekly basis how they’re measuring compared to the budget. Goal setting is a tool that can provide accountability for crews and help field leaders develop instincts about how best to maximize performance. Leaders should consider the daily jobsite conditions, their staffing, individuals’ skills, where the material is located, whether the area is ready for them, and what scopes of work will be executed. Using that information, they can develop a written production goal for that day. This creates buy-in from the team. At the end of the day, taking time to ask questions about what went well and what needs improvement hones the team’s understanding of the job and helps even inexperienced tradespeople to think strategically. Then, on a weekly basis, teams need to know how they are performing against the budget. This is where formal project tracking can be a powerful tool for foremen. The simplest and most effective way to track performance is with an earned value graph (Exhibit 2) containing cost codes, budgeted hours, budgeted number of units, and then actual hours and units installed. This will provide a clear and comprehensive picture of risk and progress against the budget. Color-coded graphs can make this information especially vivid. A few other rules to follow include: • Keep it visual. Graphical information is easier and faster to process and understand than written reports. • Make it timely. Be sure to update information and numbers regularly. • Be concise. Anyone looking at the information should be able to understand what it is saying in 15 seconds or less. • Think simplicity. Make sure the key information is at the forefront and save projections, averages, and trends for after the job is completed. Continued on page 18 Provider of Launchers and Receivers for all Pipe Diameters Our Rentals Include: • Pig Launcher Rentals (4”-48”) • Pig Receiver Rentals (4”-48”) • Valve Rentals 713-906-0271 email@example.com firstname.lastname@example.org www.tcrentalsinc.com P.O. Box 1688 • Tomball, TX 77377 c . . ll,
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2022 18 Invest in Field Leaders or Risk Losing Them Field leaders, supervisors, and project managers understand projects better than anyone else. The view from the corporate box simply doesn’t capture the complexity of what’s happening on the ground. No matter how finely tuned the communication channels, no one knows where a project stands unless someone out in the field is tracking its performance. Field leaders touch almost all aspects of a job and shoulder a significant share of project risk. They are at risk of burnout, being poached, and/or leaving the industry. Investing in their skills isn’t just a project imperative; it can help you win the game. Companies that invest in field supervisors can lower business risk by building a deep pipeline of strong talent, enhance their ability to execute on project, increase employee engagement and organizational loyalty, and improve field leaders’ ability to take on greater responsibility. Only then can individuals reach their peak potential as leaders, understand their leadership effectiveness through feedback and coaching, and learn how to improve their leadership performance. 7 As a partner at FMI, Ethan Cowles frequently writes and speaks on topics pertaining to construction operations and has earned an industry reputation for helping contractors focus on making the field successful while positively affecting margins. He also serves as the director of FMI’s Project Manager Academy. Before joining FMI, Ethan spent many years working his way up the construction ranks and held jobs as a carpenter, foreman, superintendent, and project manager. During this time, he managed projects ranging from quick-turn tenant improvement projects to large land development projects. Ethan is a former United States Marine heavy equipment operator and veteran of Operation Iraqi Freedom. About FMI. For more than 60 years, FMI has been a leading management consulting and investment banking firm dedicated exclusively to engineering and construction, infrastructure, and the built environment. FMI serves all sectors of the industry as a trusted advisor. More than six decades of context, connections, and insights lead to transformational outcomes for clients and the industry. FMI helps you build your foundation for tomorrow and optimize your business for today. Industry Focus. Powerful Results. For more information, visit www.fminet.com. Trading on Excellence Continued from page 17
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2022 19 NEWS BRIEFS CDW Issues Report on the Dangers of Online Voting in Union Representation Elections In July, the Coalition for a Democratic Workplace, composed of more than 400 major business and trade organizations, released a new report, Online Voting in Union Representation Elections: The Latest Attempt to Eliminate Workers’ Right to Secret Ballots, which highlights the dangers of implementing online voting in union representation elections and calls on Congress to reject a provision in the House appropriations bill for the Departments of Labor, Health and Human Services, Education, and Related Agencies that requires that the NLRB to implement a system to conduct union representation elections electronically. CDW Chair Kristen Swearingen issued the following statement: “The provision included in the Labor HHS appropriations bill is the latest attempt in a two-decade-long effort by unions and their allies in government to eliminate secret ballots in union representation elections. Secret ballots are a fundamental right in any democracy and provide voters with the ability to vote their conscience without influence from others, but if unions get their way and this provision is passed into law, workers will be forced to vote for or against union representation with union organizers and coworkers standing over their shoulders, pressuring them to support the union. Eliminating secret ballots would be a gross violation of workers’ privacy. “Electronic voting is a system ripe for coercion, intimidation, and harassment. It violates workers’ privacy and makes it impossible for the NLRB to safeguard the election. Moreover, as the report notes, the National Mediation Board, several states, and various foreign countries have all shelved online voting programs because of costs and cybersecurity concerns. For these reasons, the Supreme Court, other federal courts, and the NLRB itself have all recognized that secret ballots are the best method for determining the will of the workers. “CDW’s new report highlights the dangers of implementing electronic voting and how unsuitable electronic voting would be for union representation elections. Our report proves secret ballot elections are the best method for protecting workers’ freedom to join or refrain from joining a union.” 7 Rise in Trench-Related Fatalities Spurs Enhanced Nationwide Enforcement, Additional Oversight In 2022’s first six months, 22 workers have fallen victim to the deadly hazards present in trenching and excavation work, surpassing 15 in all of 2021 and prompting the Occupational Safety and Health Administration (OSHA) to launch enhanced enforcement initiatives to protect workers from known industry hazards. To stress the dangers of disregarding federal workplace safety requirements for trenching and excavation work, OSHA enforcement staff will consider every available tool at the agency’s disposal. These actions will place additional emphasis on how agency officials evaluate penalties for trenching and excavation related incidents, including criminal referrals for federal or state prosecution to hold employers and others accountable when their actions or inactions kill workers or put their lives at risk. In keeping with its National Emphasis Program for excavations, OSHA compliance officers will perform more than 1,000 trench inspections nationwide where they may stop by, News Briefs continued on page 20
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2022 20 and inspect, any excavation site during their daily duties. “The Occupational Safety and Health Administration is calling on all employers engaged in trenching and excavation activities to act immediately to ensure that required protections are fully in place every single time their employees step down into or work near a trench,” said Assistant Secretary for Occupational Safety and Health Doug Parker. “In a matter of seconds, workers can be crushed and buried under thousands of pounds of soil and rocks in an unsafe trench. The alarming increase in the number of workers needlessly dying and suffering serious injuries in trenching incidents must be stopped.” “Every one of these tragedies could have been prevented had employers complied with OSHA standards,” Parker said. “There simply is no excuse for ignoring safety requirements to prevent trench collapses and cave-ins, and leaving families, friends, and co-workers to grieve when the solutions are so well-understood.” A recent incident in central Texas highlights the dangers of trenching and an impetus for OSHA’s action. On June 28, two workers, aged 20 and 39, suffered fatal injuries in Jarrell, Texas, when the unprotected trench more than 20-feet deep collapsed upon them as they worked. Trench shields, which could have saved their lives, sat unused beside the excavation. Trenching and excavation operations require protective systems and inspections before workers can enter. When employers fail to install trench protection systems or properly inspect the trench, workers are exposed to serious hazards, including risk of being buried under thousands of pounds of soil. By some estimates, a cubic yard of soil can weigh as much as 3,000 pounds, equal to that of a compact car. States that operate their own Occupational Safety and Health plan have similar emphasis programs in place, and OSHA also encourages those states to consider additional measures, including criminal referrals for federal or state prosecution for trenching-related incidents. Trenching standards require protective systems on trenches deeper than 5 feet and soil and other materials kept at least 2 feet from the edge of a trench. Additionally, trenches must be inspected by a knowledgeable person, be free of standing water and atmospheric hazards, and have a safe means of entering and exiting prior to allowing a worker to enter. “OSHA stands ready to assist any employer who needs help to comply with our trenching and excavation requirements,” Parker said. “We will conduct outreach programs, including safety summits, in all of our ten regions to help ensure any employer who wants assistance gets it. The stakes are too important.” OSHA’s On-Site Consultation Program, a free and confidential health and safety consulting program for small- and medium-sized businesses, will help employers develop strategic approaches for addressing trench-related illnesses and injuries in workplaces. OSHA’s trenching and excavation webpage (www.osha. gov/trenching-excavation) provides additional information on trenching hazards and solutions, including a safety video. 7 CGA Technology Report Identifies Emerging Damage Prevention Technologies In July, the Common Ground Alliance (CGA) published its fifth annual Technology Report, Technology Advancements and Gaps in Underground Safety 2022, which serves as a record of progress in technology for the damage prevention industry, as well as a source of inspiration for new applications of existing technologies and the development of new technologies. Produced by CGA’s Technology Committee, the report seeks to raise the level of industry knowledge by sharing emerging technologies that address persistent challenges in the damage prevention system. The report details case studies of damage prevention technologies submitted by stakeholders, the barriers to the widespread adoption of new technologies, and the opportunities for technology development across the damage prevention process. CGA is also launching a new searchable Technology Hub that will provide stakeholders with easy access to all damage prevention technology case studies, including the ability to filter by stakeholder group and technology. The hub also features a collection form for the easy submission of new case studies and will continue to be updated as additional studies are approved for publication. “The technology case studies highlighted in this year’s report are just some examples of the innovations being adopted by our industry, which showcase News Briefs Continued from page 19