The Publication for Merit Shop Pipeline Contractors AMERICAN PIPELINE CONTRACTORS ASSOCIATION 3rd Quarter 2023 Congress Makes Some Progress on Permitting Reform, Mountain Valley Pipeline 2023 APCA Member Directory Beware of Gotcha Provisions in Contracts OSHA Can Burn Employers Not Focused Heat Illness Prevention Creating Operational Excellence through Improving Jobsite Practices and Processes
To do this job right, it takes a special person. Someone willing to wake up every morning, laugh in the face of Lady Luck, and go the distance. Because you know, out in the field with the right team at your back, success is anything but lucky. AmericanAugers.com DON’T GO IT ALONE. ©2023 The Charles Machine Works, Inc. YOU DIDN’T COME THIS FAR TO ONLY COME THIS FAR.
© 2022 Caterpillar. All Rights Reserved. CAT, CATERPILLAR, LET’S DO THE WORK, their respective logos, “Caterpillar Corporate Yellow”, the “Power Edge” and Cat “Modern Hex” trade dress as well as corporate and product identity used herein, are trademarks of Caterpillar and may not be used without permission. MORE POWER. MORE LIFT. SAFER. THE NEW CAT® NEXT GEN EXCAVATORS Caterpillar’s Next Gen Excavators offer new features that enhance safety on the right-of-way. SAFETY HOME. EVERYONE. EVERY DAY. Ask your local Cat dealer for more details or visit www.cat.com
LONGVIEW TRUCK CENTER LONGVIEWTRUCKCENTER.COM 903.753.1933
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2023 5 Officer Directors Official Publication of the American Pipeline Contractors Association Board of Directors Publication Staff PO Box 638 Churchton, MD 20733 (703) 212-7745 • www.americanpipeline.org ©2023 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 Taylor Dacus Troy Construction, LLC Shannon Driver Holloman Corporation Ricky Dyess M.G. Dyess, Inc. John Fluharty (Advisory) Mears Group, Inc. Patrick McRae Primoris Pipeline Adam Nietsche Pumpco, Inc. Sean Renfro Sunland Construction, Inc. Aaron Simon (Advisory) Troy Construction, LLC Publisher Timothy Wagner Editor Michael Ancell Advertising Sales Stacy Bowdring Information Technology Greg Smela Accounting James Wagner Layout & Design Joseph Wagner Government Affairs Jaime Steve Government Affairs Zachary Perconti President Roy Weaver Weaver, LLC President-Elect Kevin LaBauve WHC Energy Services Vice President Nick Bruno Bi-Con Services Secretary/Treasurer Chris Jones HardRock Directional Drilling, LLC AMERICAN PIPELINE CONTRACTORS ASSOCIATION 3rd Quarter 2023 Beware of Gotcha Provisions in Contracts 12 By John Grayson In this article, we focus on contractual clauses that you may not recognize as a problem when the contract is being signed but can become a real problem later. As a litigation attorney who is involved in contract formation, one of my favorite sayings is, “It’s not a problem until it becomes a problem.” Of course by that time, it is too late, and the problem is at your doorstep. Creating Operational Excellence through Improving Jobsite Practices and Processes 15 By Gregg Schoppman In part two of this series, Gregg Schoppman talks about best practices on jobsites or in the field to improve productivity, safety, and customer satisfaction. For many construction firms, the first area they turn to for improvement is the field, since it often seems to be the easiest place to work on efficiencies. Yet, operationally superior organizations know that you must implement the right practices, processes, and people across the organization, including field teams. Inside Washington | By Jaime Steve & Zack Perconti 7 Human Resourses | By Greg Guidry & Karen Tynan 9 News Briefs 18 Member News 22 APCA 2023 Member Directory 25 Industry Calendar 42 New APCA Members 42 Advertiser Index 42
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2023 7 Congress finally granted full approval to the long-delayed 303-mile Mountain Valley Pipeline, which will move natural gas through West Virginia and Virginia. Explicit bi-partisan approval by Congress was supported by the Biden administration and contained within the recently approved Fiscal Responsibility Act of 2023 which resolved a standoff over the nation’s debt ceiling. Shortly after Congress passed the bill and President Biden signed it into law, environmental groups challenged the approval of the pipeline in the courts. The challenge went immediately to the U.S. Supreme Court, which dismissed the case and unanimously approved the Congressionally endorsed go-ahead. Congressional approval of the pipeline was spearheaded by U.S. Senators Joe Manchin (D-W.Va.) and Shelly Moore Capito (R-W.Va.) and was originally part of a deal worked out last year among Senate Democrats involving Manchin’s support for the wide-ranging Inflation Reduction Act of 2022. The short, final leg of the pipeline had been held up by Virginia’s Democratic Senators Mark Warner and Tim Kane, among others. Approval of the Mountain Valley Pipeline was also part of an overall effort to reform the permitting process for largescale energy and infrastructure projects aimed at shortening the often decade-or-more timelines for approval. The new permitting reform law sets shorter timelines for environmental studies required under the National Environmental Policy Act (NEPA). Specifically, it sets a two-year timeline for Environmental Impact Statements and a one-year timeline for Environmental Assessments. The law also consolidates the review process for multi-federal agency projects under one “lead agency” that maintains the proceedings in a single document to avoid duplicative and extraneous work. The new law even limits the number of pages of these environmental reviews. One important item that did not make it into the final bill was “judicial review,” or the ability of citizens to sue agencies for not meeting the new shortened deadlines. Another provision left out of the law would have made it easier to build interstate electric transmission lines aimed mostly at promoting development of renewable energy sources like wind and solar. Both provisions continue under discussion INSIDE WASHINGTON Zack Perconti APCA Government Affairs Representative zperconti@americanpipeline.org (703) 677-6049 Jaime Steve APCA Government Affairs Representative jsteve@americanpipeline.org (202) 841-5493 Continued on page 8 Congress Makes Some Progress on Permitting Reform, Mountain Valley Pipeline
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2023 8 by Republicans and Democrats interested in adding further permitting reform provisions into law. PHMSA Reauthorization Moving Ahead Later This Year As Congress looks at updating the Pipeline and Hazardous Materials Safety Administration (PHMSA) law, APCA has been working with House and Senate Committees to include pipeline anti-sabotage provisions. Under current law, the PHMSA agency’s authority to act expires on September 30. A key section of the House bill would expand the scope of federal criminal penalties for attacks on pipeline infrastructure. The provision, based on similar state legislation, would fill gaps in current law limited to “damaging and destroying” interstate pipelines with additional measures covering disruption of service and attacks on construction sites. APCA has also supported the creation of a new Geospatial Information System (GIS) mapping pilot program in the PHMSA reauthorization bill, which is aimed at drastically reducing damages to both legacy (previously constructed) and newly constructed underground infrastructure systems. The $10 million over three years sought for this pilot program would focus on at least four locations. Establishing such an effort would lead to fewer damages, significant cost savings, and longer asset life while also improving public safety and protection of personal property. Capitalizing mapping activities and related resources can significantly benefit companies and incentivize the acceleration of developing this important resource. Because this work is extending the life and usefulness of an asset, related investments and work may be capitalized, including software developed and used for GIS mapping. The as-built process (locating facilities in relation to capital construction projects) may also be capitalized. An accurate and up-to-date mapping system will facilitate timelier locates, fewer damages, and a more efficient damage prevention system overall. It is important to note that underground utility operators that are subject to state regulatory oversight must have rates approved by the entity’s authorized regulatory body. Such regulatory bodies may or may not approve an operator’s request for capital funding of such activities. Information collected from the mapping projects would be available to one-call systems in partnership with the Common Ground Alliance. Lastly, to encourage broader deployment of this technology, utilities may capitalize, or place in the rate-base, all activities tied to GIS mapping of both new and previously constructed assets, including software development, system locating costs, and legacy structures. Further action may take place in September when the pipeline subcommittee of the House of Transportation and Infrastructure Committee is expected to vote out a PHMSA reauthorization bill. Key House Committee Approves Fair and Open Competition Act In July the House of Representatives Committee on Oversight and Accountability passed the Fair and Open Competition Act (FOCA), H.R. 1209, aimed at protecting contractors engaged in federal and federally assisted project from having to enter into anti-competitive and inflationary Project Labor Agreements (PLAs) with unions. Ahead of the committee vote, APCA joined a coalition letter—headed by the Associated Building Contractors (ABC—with 26 construction and business organizations in support of the FOCA legislation. The House FOCA bill was introduced by committee chairman James Comer (R-Ky.). Sen. Todd Young (R-Ind.) is the author of a similar bill (S. 537) in the U.S. Senate. The FOCA bill is aimed at overturning the Biden administration’s February 2022 Executive Order #14063 requiring federal general contractors and subcontractors to enter into PLAs as a condition of winning a contract to perform services on any federal construction project worth $35 million or more. PLA mandates discourage experienced contractors and the 88.3 percent of the U.S. private construction workforce that chooses not to join a union from competing to win taxpayer-funded contracts to rebuild America’s infrastructure. FOCA is likely to be taken up by the full House of Representatives in the Fall and stands a good chance of being passed. However, prospects of passage in the Democrat-controlled U.S. Senate are dim. 7 Inside Washington Continued from page 7 PLA mandates discourage experienced contractors and the 88.3 percent of the U.S. private construction workforce that chooses not to join a union from competing to win taxpayer-funded contracts to rebuild America’s infrastructure.
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2023 9 Pipeline construction contractors, subcontractors, and their employees are very familiar with heat issues on pipeline and related projects, but record-breaking temperatures this summer have increased the focus on what employers must do to protect workers from heat illness. In a July 27 press conference at the White House, President Biden said that extreme heat is costing the U.S. $100 billion a year and that “the number-one weather-related killer is heat.” He also announced that he had asked the Department of Labor to issue a hazard alert reaffirming that workers have heat-related protections under federal law, and he warned states that aren’t protecting workers that he will be calling them out. He specifically mentioned construction workers “who literally risk their lives working all day in blazing heat, and in some places don’t even have the right to take a water break—that’s outrageous.” Given this unprecedented attention to the heat issue in America, this article will outline some of the recent and not-so-recent developments on heat illness prevention in the workplace. Federal OSHA Developments Per President Biden’s request, on July 27, federal OSHA issued a two-page Hazard Alert outlining employer responsibilities and reminding employers that the 2022 National Emphasis Program on heat illness remains in effect. It first reminds employers that “extreme heat can be deadly to workers” and that the U.S. is on track for the hottest summer on record. The Hazard Alert includes an outline of employer responsibilities: • It’s the law! Employers have a duty to protect workers against heat. Employers have a legal and moral responsibility not to assign work in high-heat conditions without protections in place for workers, where they could be literally worked to death. This is true, even in Texas, despite its recent law limiting local ordinances on heat illness protections. • At a minimum, employers should provide adequate cool water, rest breaks, and shade or a cool rest area for employees. • Give new or returning employees the chance to gradually acclimate (or become used to working in hot temperatures), to be trained and plan for emergencies, and to monitor for heat signs/ symptoms. • Train employees on heat illness prevention, signs of heat illness, and how to act immediately if they or another employee appears to be suffering from a heat-related illness. The alert also outlines worker rights and OSHA’s plan for stepped-up federal enforcement. It refers employers and workers to resources available at osha. gov/heat. As a follow up to the Hazard Alert, DOL issued another heat illness update on July 31, The Heat Source. In addition to referring to its Hazard Alert, it also announced some new resources for heat illness prevention: • A downloadable sticker entitled “Don’t Wait…HYDRATE” that can be given to workers, placed around the workplace, including on hard hats, and in break areas to encourage drinking cool water. • A Heat Illness Illustrated Fact Sheet that shows how heat illness can be prevented and actions to take when workers HUMAN RESOURCES Greg Guidry Ogletree Deakins Nash Smoak & Stewart greg.guidry@ogletree.com (337) 769-6583 Continued on page 10 OSHA Can Burn Employers Not Focused Heat Illness Prevention By Greg Guidry & Karen Tynan Karen Tynan Ogletree Deakins Nash Smoak & Stewart karen.tynan@ogletree.com
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2023 10 experience symptoms • A chart showing different color urine samples that indicate different levels of hydration from “well-hydrated” to “severely dehydrated” that can be posted in the workplace. From a legal standpoint, federal OSHA does not have a heat-illness-specific regulation but does seek to enforce employee protections using the general duty clause. Federal OSHA’s position is that under the General Duty Clause, Section 5(a)(1) of the Occupational Safety and Health Act of 1970, employers are required to provide their employees with a place of employment that “is free from recognized hazards that are causing or likely to cause death or serious harm to employees.” The courts have interpreted OSHA’s general duty clause to mean that an employer has a legal obligation to provide a workplace free of conditions or activities that either the employer or industry recognizes as hazardous and that cause, or are likely to cause, death or serious physical harm to employees when there is a feasible method to abate the hazard. This includes heat-related hazards that are likely to cause death or serious bodily harm. On October 27, 2021, federal OSHA published an Advance Notice of Proposed Rulemaking (ANPRM) for Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings in the Federal Register. With this publication, OSHA began the rulemaking process to consider a heat-specific workplace standard. Recently, Federal OSHA initiated the Small Business Regulatory Enforcement Fairness Act (SBREFA) process on June 20. This next step in the rulemaking process will include the convening of a Small Business Advocacy Review panel to gain input from small entity representatives on the potential impacts of a heat-specific standard. More information on the Heat Injury and Illness SBREFA can be found at www.osha.gov/heat/sbrefa. For those employers operating in federal OSHA jurisdictions, the heat-illness-prevention best practices can include a myriad of possibilities depending on the industry, the type of work, and exposure to heat. Examples of effective heat-illness-prevention program elements include access to water, access to shade, training for heat illness awareness and responding to heat illness, and effective supervision of workers to respond to emergencies or other heat illness issues. Heat illness publications and training materials are available on OSHA’s website. If OSHA shows up for a heat-related inspection, APCA members might expect the following: • A review of OSHA 300 logs and 301 incident reports for evidence of heat-related illnesses Human Resources Continued from page 9
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2023 11 • A review of records of heat-related emergency room visits or ambulance transports • Interviews with workers for symptoms of headache, dizziness, fainting, dehydration, or other indicia of heat-related illness • Documentation of the existence of conditions, such as high temperature, that cause the heat-related hazards • A determination of whether the employer has a heat illness and injury program, including whether » the employer has a written program » the employer monitors temperature and worker exertion » there is unlimited cool water easily accessible to workers » there are required breaks for hydration » there are scheduled rest breaks » workers have access to a shaded area » new and returning workers are provided time for acclimatization » a “buddy” system is in place on hot days » work in scheduled to avoid hot parts of the day » job rotation is used to limit heat exposures » employees are trained in the importance of hydration, heat illness signs, first aid, and summoning of emergency personnel » the employer has utilized some of the recently issued resources discussed above (stickers, fact sheet, and urine color poster) State Actions on Heat Illness For those employers operating in State Plan jurisdictions, California leads the way with a rigorous and enforced regulation. California’s heat illness regulations include requirements for: • Acclimatization must allow the temporary adaptation of the worker’s body to work in heat that occurs gradually considering that acclimation peaks in most people within four to fourteen days of regular work. • Workers must have access to shade, which can include vehicles if the air conditioning is running. • Access to water thath must be fresh, pure, suitably cool, and provided to the employee free of charge. The water needs to be as close as practicable to the workers. • Emergency-response procedures must be effective and Pipelayers Flat Bed Tractors Padding Machines Bending Machines Excavators Trenchers Dozers For Rentals And Supplies Visit CrossCountryIS.com Or Call 1-855-955-CCIS (2247) SUPPLIES INCLUDE: Abrasive & Cutting Tools > Environmental > Safety Products > Valves, Fasteners & Fittings > Lifting & Rigging > Pigging Products > Pipe Testing Equipment > and Much More EQUIPMENT RENTALS INCLUDE: Motor Graders Continued on page 13
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2023 12 In this article, we focus on contractual clauses that you may not recognize as a problem when the contract is being signed but can become a real problem later. As a litigation attorney who is involved in contract formation, one of my favorite sayings is, “It’s not a problem until it becomes a problem.” Of course by that time, it is too late, and the problem is at your doorstep. We all know that a contract is all about allocation of risk. You cannot eliminate all risk with every contract, but the prudent contractor and counsel can see and avoid a few potentially problematic provisions. The reality is that this industry is more competitive than ever and owners often have smart and clever attorneys who are constantly looking for ways to stack the deck in the owner’s favor. The Same...Only Different It is easy to become complacent and assume certain familiar provisions are the same from one contract to another, but consider this excerpt from a contract we recently saw: 6.4. Change Orders. Change Orders agreed pursuant to Sections 6.1.ii or 6.2.iii by the Parties, and unilateral Change Orders entered into pursuant to Sections 6.1.iii or 6.2.iv on a time and materials basis and which the Parties have subsequently agreed upon the effect of such unilateral Change Order and executed a superseding and mutually agreed upon Change Order as provided in Sections 6.1.ii or 6.2.iii shall constitute a full and final settlement and accord and satisfaction of all effects of the change as described in the Change Order upon the Changed Criteria and shall be deemed to compensate Contractor fully for such change. Accordingly, Contractor expressly waives and releases any and all right to make a claim or demand or to take any action or proceeding against Owner for any other consequences arising out of, relating to, or resulting from such change reflected in such Change Order, whether the consequences resulted directly or indirectly from such change reflected in such Change Order, including any claims or demands that any Change Order or number of Change Orders, individually or in the aggregate, have impacted the unchanged work. (Emphasis added.) Then consider that the contract likely requires notice of a circumstance causing the need for a change to be given to the owner within seven days and then, within seven more days, the contractor must submit the completed change order with detailed cost figures and backup. So, within fourteen days, you have to submit a completed change order with final cost figures. Finally, see the definition of “delay” and notice the sweeping breadth of the definition of delay when used in a change order: 6.9 Delay. For the purposes of Article 6, the term “delay” shall include hindrances, disruptions or obstructions, or any other similar term in the industry and the resulting impact from such hindrances, disruptions or obstructions, including inefficiency, impact, ripple or lost production. Unless your project goes without any issues at all, these sections can present big problems. If, as often happens, the owner does, or fails to do, something that impedes your ability to advance the project as you had planned and bid, you might need a change order to cover your delays and/or inability to efficiently work. But notice the underlined language in the above paragraph, specifically the part that says “...shall constitute a full and final settlement and accord and satisfaction of all effects of the change....” This means exactly what it says. Anything that is affected by the event leading to the change order will be covered by whatever compensation the change order provides. This is an attempt by the owner to capture (and limit) any and all damages the contractor could possibly claim as a result of the event giving rise to the change order. If you know the full extent of your damage, this is not a problem. But, if at the time of the change order, you are not certain as to the full extent of the damages that need to be addressed in the change order, the language of this paragraph fully forecloses any opportunity to ever come back and seek more compensation. CONTRACT LAW John L. Grayson Cokinos | Young jgrayson@cokinoslaw.com (713) 535-5573 Beware of Gotcha Provisions
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2023 13 Another problem with this language is the part that says the change is a settlement and accord and satisfaction. This is a technical legal argument, but a party cannot release a claim he does not know about, nor can a party reach an accord and satisfaction if the claim is not adequately defined. Whenever possible, we should try to avoid being put in this box. This same issue arises in the next sentence of this section that says, “...contractor expressly waives and releases any and all right to make a claim or demand or to take any action or proceeding against the owner for any other consequences arising out of relating to or resulting from such change.” Once again, this language is written to specifically wrap up and completely release and waive any claims the contractor may have arising from the event necessitating the change order. This might not be a problem if you know the full extent of your damage that must be compensated, but what if you don’t? With this language, the owner will take the position that once the change order is done, you are foreclosed from seeking any additional compensation. If you have an ongoing impact caused by some event and you don’t know when it’s going to end, this language can be a major problem. What to Do? The prudent contractor and his/her counsel will recognize this potential problem and propose alternative language to preserve the right to come back for more if necessary. Language like that cited above that tries to fully encapsulate and limit the damage or the extent of the claim can be modified to allow for future compensation due to the same event covered in the original change order. Phrases to consider inserting into this section include: “known to the Parties as of the date of the change order” or “reasonably known to the Contractor on the date of the change order.” Most contracts also prescribe a change order form. Be sure to examine the language of that form to be sure problematic phrases didn’t find their way into it. Finally, always read the fine print in the change order you actually execute for any of the same issues. In closing, every contract should fairly allocate risk. Relatively minor adjustments to the provisions discussed above are a good way to avoid a serious GOTCHA and make things more fair. 7 Provider of Launchers and Receivers for all Pipe Diameters Our Rentals Include: • Pig Launcher Rentals (4”-48”) • Pig Receiver Rentals (4”-48”) • Pig Sales • Valve Rentals 713-906-0271 candacetcrentals17@gmail.com tedbtcrentals@gmail.com www.tcrentalsinc.com P.O. Box 1688 • Tomball, TX 77377 include communications with employees and a plan to respond to heat illness, including first-aid measures and emergency medical services. • Training for supervisors and workers. • The written heat-illness plan must be in writing in both English and the language understood by the majority of the employees and made available at the worksite. • High-heat procedures must be followed when temperatures reach 95 degrees for agriculture, construction, landscaping, and oil and gas extraction as well as some transportation workers. California takes an aggressive approach on enforcement and during high-heat events actively performs targeted inspections. Cal/OSHA typically issues heat illness citations as “serious” with maximum penalties, and the most frequently cited employer failure is access to cool drinking water. The most recent targeted inspections began on July 12, focusing on construction, agriculture, landscaping, and warehouse industries. Oregon, Washington, and Minnesota also have heat illness regulations, and Nevada is currently contemplating adopting a heat-illness standard. Given President Biden’s recent comments regarding state inaction on this issue, we may see more activity at the state level. Be prepared. 7 Human Resources Continued from page 11
YAKACCESS.COM/PIPE The right solution. In the right place. At the right time. Learn about our approach to complete access planning by visiting ACCESS PLANNING • LAND CLEARING MAT ROADS • SITEWORK • RESTORATION COMPLETE PIPELINE ACCESS SOLUTIONS
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2023 15 Editor’s Note: In the first article about the best practices that define operationally superior organizations (in our Q1 issue), Gregg discussed preconstruction and the importance of reviewing processes even when companies are profitable. In this second part of the series, he talks about best practices on jobsites or in the field to improve productivity, safety, and customer satisfaction. For many engineering and construction (E&C) firms, the first area they turn to for improvement is the field, since it often seems to be the easiest place to work on efficiencies. Yet, operationally superior organizations know that you must implement the right practices, processes, and people across the organization, including field teams. Many companies don’t truly understand what it means to be an operationally superior field organization. For example, many measure success on the result. They’ll judge a superintendent or field leader on whether a project is finished ahead of schedule, safely and/or ahead of budget. What they don’t always realize is that just because no one was injured on the jobsite doesn’t mean that the interim processes went smoothly. By evaluating only the result, E&C firms miss out on an opportunity to achieve overall operational excellence. Evolution of Collaboration Busy, fast-paced construction sites may include hundreds of workers and a team of field leaders who manage logistics, safety, costs, and other functions. Planning, including budgets, resources, and scheduling, is critical. The best field leaders are those who serve not only as the nexus within all these arenas but also, more importantly, as the driver of true collaboration across a project. Whether a firm is a trade contractor that self-performs work, a general contractor that brokers all the trades, or even a combination of the two, a successful field leader is proactively pushing collaboration and thinking ahead. Every project has a strong, realistic budget that begins with the project manager and field leader reworking the estimate Continued on page 16 Creating Operational Excellence through Improving Jobsite Practices and Processes By Gregg Schoppman
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2023 16 for the project and assigning budget codes with the way it will be built in the field. This is important because you can’t have consistency and operational excellence without buy-in from the field. If a supervisor gets a budget and instantly knows that the task can’t be completed for that amount of money, he must be able to discuss it in advance (versus addressing it after the fact). To be clear, the contract amount is established. The purpose of this phase is to create a budget that the field leader believes in. If the project goes over budget, it was likely always going to. However, if the field leaders are encouraged to recognize and identify issues early, they can help produce better overall job outcomes. So rather than having the budget quickly approved in the preconstruction phase, companies that take the time to carefully review them can get an idea of overruns or underruns and come up with a plan for addressing them early. A stop-gap measure, early detection of budget problems correlates directly with improved collaboration and strategic planning on projects of all sizes. This, in turn, continues that evolution of collaboration from preconstruction right out to the field manager level. Everyone wins when this happens. It Pays to Plan Another important part of collaboration is planning. Operationally superior field leaders plan a minimum of a week ahead, using some sort of planning tool. These tools manage resources like labor, materials, and equipment, plus the activities of any trade partners. Industry tools such as short-interval planning, lean last planners, and pull planning are examples of best in class. The operative word in all of this is planning. There are also countless scheduling tools; but this is not about creating a critical path schedule, but thinking ahead and developing a proactive strategy. When field leaders have a tool they can use consistently, they can lay the foundation for steady and predictable work. The tool should also be made accessible to leaders of subcontracting firms who can use it to communicate with the general contractor and, if applicable, with each other. This tool should be used regularly across the organization and by all stakeholders. When projects are planned, everyone is working from the same playbook, field leaders know they have two-way communications with the head office, and construction projects run more smoothly. For operationally superior organizations, reactive, emergency calls to a central warehouse, shop, yard, etc., are truly nonexistent except for unforeseen conditions. This is an important point for field leaders and supervisors who treat their companies’ warehouses and yards like convenience stores, when they should be tapped only during emergencies. Rather than stopping by a warehouse to pick up materials, supervisors should plan and only use the shop when unforeseen issue arises (e.g., someone hits a water line while digging and needs a sump pump quickly). After weekly schedules are made, operationally superior companies also plan daily with a focus on production targets and real-time job hazard analyses. Much like the earlier budgeting advice, these activities should be conducted collaboratively across the office, field leaders, and crew. Financial Acumen Field managers at operationally superior E&C companies are intimately familiar with the budget for all costs, including vendors, trade contractors, self-performance areas, and general conditions. They always know what’s going on and can intervene at any point where they see a potential problem. They have a deep understanding of the general conditions, burn rate, utilization, and other metrics that go into the financial side of project management. Historically, there has been a mindset that the financial perspective of the project was the sole province of the project manager. However, bestof-class organizations realize that you cannot expect strong financial performance when your primary project driver is removed, disconnected, or disinterested in the financials. Field supervisors understand the difference between cost and margin. If the total price of the project is reduced to meet a customer’s budget, costs are not arbitrarily slashed. Methods and means are examined for cost efficiencies, but margin is also adjusted to portray reality. If the margin is set at 10 percent, for example, field leaders are ultimately going to influence whatever gain the contractor makes on the project. Margins can be improved by getting the best productivity and yields out of their existing materials, improving general project conditions, or utilizing equipment better. Quality Assurance Versus Quality Control At leading E&C companies, field leaders also understand the difference between quality assurance and quality control and make that one of their key priorities. Quality assurance is the standard for how work is put in place. It is the playbook that the organization follows every time to create a quality product. Quality control is the testing component that assures the guidelines and end results meet those standards and jobs Operational Excellence Continued from page 15
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2023 17 are being continually monitored. However, if a field leader focuses solely on quality control, he or she is largely playing defense and reacting to conditions as they arise. Superior field leaders focus on driving quality every day. They have adopted the phrase “punch as you go,” which becomes the mantra for not leaving miniscule items to build until the end of the project. Quality assurance requires a strong company philosophy, combined with a strong individual mindset. Overcoming Obstacles Planning and scheduling are both important for leading organizations. All projects should have a baseline schedule, and that schedule should be updated by the project teams on a regular frequency. Using basic software tools like Microsoft Project, for example, companies can get their labor-intensive contractors and subcontractors on a common platform and adhering to the schedule. Any project’s issues and challenges (i.e., weather, delays, shipments, etc.) should also be presented on the schedule to reflect the reality of the jobsite conditions. For example, if it’s raining or if the jobsite is temporarily flooded, then the schedule should reflect the reality of the project in real time so that everyone can adjust accordingly. This also helps when presenting proof to project owners, who may not always understand why a delay happened. Too often, projects that are met with massive issues, such as claims, design issues, delays, etc., do not reflect those on the schedule, only to be met with legal hurdles. Field leaders understand how to portray realism to protect the firm. Worry More About Dirty Than Dirt Construction is obviously a dirty activity; yet operationally superior organizations understand the difference between cluttered, trashed, and dangerous versus typical day-to-day operations. In operationally superior companies, jobsites are clean, maintained, and well organized—each trade is held accountable for its own waste cleanup, and adherence is monitored daily. The jobsite that’s strewn with debris and litter is not only unsightly but also dangerous and a huge liability and safety concern. Not to mention, you eventually must clean everything anyway, so why not clean daily to avoid a massive effort at the end of the project? Once again, punching as you go means more than just repairing drywall and damaged concrete. Cleanliness is the hallmark of safety, productivity and field leaders who know how to get work done. Managing Changes Change is inevitable. No job adheres directly to plans, thus change orders, which can be a challenge to manage and communicate across an organization. Change orders have a defined structure and adhere to a checklist that guarantees items, such as where a change is located. There is also back-up support for the change, and breakdowns of costs are all included to avoid needless delays in processing. It’s also important for change orders to be processed quickly and approved to avoid project delays. In the best companies, change orders do not linger—escalation of older change orders ensures action is taken sooner rather than later. These changes orders should have a series of gates, or specific deadlines and procedures, that ensure timely approval and payment. Best-in-class field leaders manage change proactively and ensure that all aspects of those changes—schedules, deliveries, coordination, etc.—are integrated and communicated to all stakeholders. The project or operations manager should review, approve, or reject these change orders and ensure that the project owner also agrees. Productivity Counts A final area that most of the leading E&C companies stand out on is with their focus on productivity. They’re hyperaware of the connection between efficiency and labor productivity, and they take steps to maximize both in the safest and most logical manner possible. They also know that there’s a difference between productivity (the productive effort’s efficiency, as measured in terms of the rate of output per unit of input) and production (the total output), and they understand which one most favorably impacts their profitability. In most situations, it’s productivity—and not the production itself—that delivers the best project outcomes. So, while customers care the most about output and don’t really care how much labor it takes to get the job done, top-performing, labor-intensive companies are hyperfocused on productivity; that’s where the money is made. By following the best practices outlined in this article, E&C companies can carve out a successful path to becoming operationally superior organizations. 7 Gregg Schoppman leads FMI’s Operations consulting practice and specializes in productivity and project management for general and trade contractors across the country. He can be reached at gregg.schoppman@fmicorp.com.
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2023 18 NLRB Expands Authority to Force Union on Employees Without Election On August 25, the National Labor Relations Board issued its decision in Cemex Construction Materials Pacific (372 NLRB No. 130), imposing a new framework that greatly expands the board’s ability to impose unions on employees without a secret ballot election. The board’s decision reverses a half-century of NLRB precedent and is at odds with long-standing Supreme Court rulings. The board also made this major policy change without soliciting input from the public via comment or amicus briefs and rejected the Coalition for a Democratic Workplace’s request to allow for amicus briefs. “The board’s decision to force unions on employees without an election is contrary to the law and the fundamentals of workplace democracy,” CDW Chair Kristen Swearingen said. “Employees deserve the right to decide whether or not they want union representation through a secret ballot election. The board should be protecting this right and doing everything in its power to promote employee participation in elections—not forcing unions on employees based on unreliable authorization cards. The board decision overrules precedent that has stood for over half a century and been upheld by the U.S. Supreme Court. As dissenting member [Marvin] Kaplan explained, the new standard will have ‘the primary effect of negating the rights of current employees rather than furthering them’ and therefore ‘defeats, rather than effectuates, the policies of the [Act].’ “Not only is CDW disappointed in the ruling, but we’re disappointed that the board chose to move forward with such a fundamental change to labor law without seeking input from stakeholders. This is more concerning given that CDW and others specifically called on the board to invite amicus briefs in the case. The regulated community should have had an opportunity to express their concerns before such a radical change to policy was made.” U.S. Chamber of Commerce Senior Vice President of the Employment Policy Division Glenn Spencer said, “The Cemex decision is breathtaking in its repudiation of the text of the National Labor Relations Act, extensive court rulings, and more than five decades of National Labor Relations Board precedent. It will result in fundamental and repeated denials of workers’ right to make a free and fair choice about unions using private ballot elections. Congress has repeatedly rejected mandating card check organizing. Yet the NLRB imposes it with the stroke of a pen. The chamber will continue to oppose efforts by this board to undercut the rights of workers and employers.” 7 DOL Issues Final Rule on Changes to Davis-Bacon Requirements In August, the U.S. Department of Labor has issued a final rule, Updating the Davis-Bacon and Related Acts Regulations, which will make comprehensive revisions to the Act and related regulations that apply to federal and federally assisted construction projects funded by taxpayers. The voluminous DOL final rewrite comes some 40 years since the last changes were adopted to Davis-Bacon Act requirements. The final version details scores of significant proposed new rules (e.g., prevailing wage matters, wage determinations, and even critically important changes to definitions, such as site of work, prime contractors, and even the word agencies), many of which will be NEWS BRIEFS
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2023 19 likely targets for litigation. Due in part to the massive nature of the final rule, the DOL has published a chart comparing the old and new Davis-Bacon regulations at www.dol.gov/ agencies/whd/government-contracts/ construction/rulemaking-davis-bacon/ dba-comparison-charts and provided other resources at www.dol.gov/agencies/whd/government-contracts/construction/rulemaking-davis-bacon. Both the proposed rule and now the final version have run into bipartisan opposition or resistance on both the House side (House Education and Workforce Committee) and the Senate side (HELP Committee), mostly on the grounds with adding costs to infrastructure projects in a time of inflationary pressure. Many expect additional industry and likely state/local lawmakers and other public officials will join this pushback now that the final rule has been issued. The 1931 Davis-Bacon Act and related regulations require contractors and subcontractors that perform work on federal and federally funded construction projects of $2,000 or more to pay a government-determined prevailing wage and benefit rate on an hourly basis to on-site construction workers. According to the DOL rulemaking, the Davis-Bacon Act and 71 active Related Acts collectively apply to an estimated $217 billion in federal and federally assisted construction spending per year—about 63 percent of all government construction put in place—and provide government-determined wage rates for an estimated 1.2 million U.S. construction workers. The Congressional Budget Office estimates that repealing the 1930s-era Davis-Bacon Act would save the federal government $24.3 billion in spending between 2023 and 2032. A May 2022 study found that the Davis-Bacon Act costs taxpayers an extra $21 billion a year, increasing the price tag of construction projects by at least 7.2 percent and inflating construction workforce wages by 20.2 percent compared to local market averages if the DOL calculated prevailing wages using modern and scientific methodology via the U.S. Bureau of Labor Statistics. 7 U.S. Chamber Video Series ‘Common Grounds’ Discusses Urgent Need to Reform Permitting Process On August 9, the U.S. Chamber of Commerce relaunched its bipartisan video series Common Grounds, which convenes one Republican leader and one Democratic leader over a cup of coffee to explore important issues or challenges facing the business community and the nation. During this episode, Rep. Scott Peters (D-Calif.) and Rep. John Curtis (R-Utah) sat down for a chat with U.S. Chamber Senior Vice President of Government Affairs Evan Jenkins. Together, they discussed the necessity of reforming America’s permitting process and the benefits it can have on the nation’s strength and competitiveness. Large improvement projects and infrastructure investments are imperative to moving the nation’s economy forward. These projects span from highway and bridge improvement to safe drinking water and expanded broadband access. However, none of these improvements can be made without the permitting process, which in its antiquated state, tends to delay projects for extended periods. “This can’t be business as usual; business as usual takes too long,” Curtis said during the conversation. “I love to see a warp-speed permitting reform developed. And I think we could find some common ground about not even changing any rules, but just moving things through quicker.... To the extent that Republicans can be realistic [and] Democrats can be realistic, there is a lot of common ground ahead for us.” “This is the unusual case where you have got to make the problem bigger,” Peters said. “There’s so many different people who want permit reform for a particular purpose, it almost seems like a bill that takes care of everyone has got the best chance of passing.... We have to be open to really trying to put something together that gets broad support because we’ve dealt with the issue in a really broad way.” Earlier this year, the U.S. Chamber launched the Permit America to Build campaign, which brought together over 350 organizations, representing every sector of our economy and corner of the country, to encourage Congress to pass meaningful, durable permitting reform legislation. See the video at www.uschamber.com/on-demand/common-grounds. 7 Continued on page 20
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2023 20 New Poll: Voters Support Producing More American Energy The American Petroleum Institute (API) recently released new polling conducted by Morning Consult showing that 90 percent of voters agree that natural gas and oil play an important role in strengthening the U.S. economy. The polling further shows that an overwhelming majority of voters believe lawmakers should consider the economic importance of these resources when assessing new energy policies and regulations. “American voters understand and support the critical role the natural gas and oil industry plays in powering our nation’s economy,” API President and CEO Mike Sommers said. “Americans also recognize the need for policies and regulations that encourage investment and enable development to sustain the industry’s growing economic contributions. It’s time for Congress and the administration to build on recent momentum and continue to drive improvements to our permitting process that enable American energy to serve as a foundation for long-term economic growth and energy security.” The Morning Consult polling found: • 88 percent of voters believe it is important to produce natural gas and oil here in the U.S. • 90 percent of voters believe producing natural gas and oil in America strengthens the U.S. economy. • 83 percent of voters agree that the government should consider economic data when developing regulations that would affect development of the country’s energy infrastructure. • 88 percent of voters believe that producing natural gas and oil from here in the U.S. can help lower energy costs for American consumers and small businesses. • 85 percent agree that producing natural gas and oil here in the U.S. helps make our country more secure against actions by countries such as China and Russia. • 80 percent support increased development of the country’s energy infrastructure. The poll follows a recent study on the growing economic contributions of America’s natural gas and oil industry in all 50 states, including investment in America ranging from taxes and workforce wages paid to indirect and induced jobs in retail, manufacturing, agriculture, and other sectors throughout the energy supply chain. The study, commissioned by API and prepared by PricewaterhouseCoopers, showed that the industry supported 10.8 million jobs and contributed nearly $1.8 trillion to the U.S. economy in 2021. 7 DOE Announces Natural Gas Is 3.3 Times More Affordable Than Electricity The U.S. Department of Energy (DOE) announced on August 28 that natural gas is 3.3 times more affordable than electricity and significantly more affordable than several other residential energy sources for the same amount of energy delivered. The 2023 Representative Average Unit Costs of Five Residential Energy Sources says: Natural Gas: $13.97 No. 2 Heating Oil: $28.36 Propane: $32.62 Kerosene: $33.52 Electricity: $46.19 (Costs in Dollars per Million British Thermal Units) Source: U.S. Department of Energy Representative Average Unit Costs of Energy for Five Residential Energy Sources “America’s natural gas is critical to American and global energy security,” said American Gas Association (AGA) President and CEO Karen Harbert. “DOE’s analysis confirms the very clear and substantial cost-advantage of natural gas. Our nation’s domestic abundance of natural gas means American customers pay a fraction of what customers pay for other energy sources here at home and see significant savings compared to energy costs globally. Our industry invests $91 million every day to ensure our vast modern delivery infraNews Briefs Continued from page 19
www.americanpipeline.orgRkJQdWJsaXNoZXIy MjE3MDU=