The Publication for Merit Shop Pipeline Contractors AMERICAN PIPELINE CONTRACTORS ASSOCIATION 3rd Quarter 2026 How to Know if Your Leaders Are Ready for the Next Level Payment Clauses: What Every Pipeline Contractor Needs to Know Back in the Game How to Return to Profitability Trump Aims to Eliminate Record Number of Regulations Building America’s Energy Infrastructure: Can Washington Deliver Against the Clock?
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PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2026 5 Building America’s Energy Infrastructure: Can Washington Deliver Against the Clock? 7 By Ben Brubeck The Trump administration and Congress are pursuing policies to accelerate American energy dominance, but the outcome may depend on whether Washington can remove the permitting, regulatory, safety, workforce, and labor barriers that prevent energy infrastructure from being built. But with several weeks off for campaigning and other district work periods around the holidays, Congress is scheduled to be in session just eight weeks through the end of 2026. In short, lawmakers are running out of time to address a growing list of issues critical to America’s voters, the economy, and the merit shop pipeline construction industry. Back in the Game: How to Return to Profitability 17 By Gregg Schoppman, FMI For the better part of the last 10 to 15 years—minus a short disruption from COVID-19—the industry has seen unbridled growth in nearly every sector. Construction organizations seem to have no shortage of opportunities, and revenue growth often resembles a runaway train, accelerating ever northward. But organizations must grow strategically and not simply answer every client demand or proposal. Doing so may be to the detriment of their long-term strategy. There must be a fact-based approach to decision-making that connects to more than just gut feel. Human Resources | By Greg Guidry 10 Leadership | By Andy Patron 12 Contract Law | By John L. Grayson 14 Damage Prevention 21 News Briefs 26 Member News 34 Industry Calendar 37 New APCA Members 37 Advertiser Index 37 Official Publication of the American Pipeline Contractors Association PO Box 638 Churchton, MD 20733 (703) 212-7745 • www.americanpipeline.org ©2026 American Pipeline Contractors Association AMERICAN PIPELINE CONTRACTORS ASSOCIATION 3rd Quarter 2026 Officer Directors Board of Directors Publication Staff Nick Bertram Jomax Construction Co., Inc. Mike Castle, Jr. Castle Paul Cook Sunland Construction, Inc. Scott Coppersmith (Advisory) 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) Troy Construction, LLC Adam Nietsche Pumpco, Inc. Sean Renfro (Advisory) Sunland Construction, Inc. Aaron Simon (Advisory) Troy Construction, LLC Roy Weaver Weaver, LLC Publisher Timothy Wagner Editor Michael Ancell Associate Editor Caroline Ferguson Advertising Sales Stacy Bowdring Information Technology Greg Smela Accounting James Wagner Layout & Design Joseph Wagner Government Affairs Ben Brubeck President Kevin LaBauve WHC Energy Services President-Elect Nick Bruno Bi-Con Services Vice President Chris Jones HardRock Infrastructure Services Secretary/Treasurer Patrick McRae
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PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2026 7 Inside Washington Ben Brubeck Government Affairs Solutions bbrubeck@gasolutions.net (703) 472-7850 Building America’s Energy Infrastructure: Can Washington Deliver Against the Clock? Continued on page 8 The Trump administration and Congress are pursuing policies to accelerate American energy dominance, but the outcome may depend on whether Washington can remove the permitting, regulatory, safety, workforce, and labor barriers that prevent energy infrastructure from being built. When Congress returns to Washington, D.C., after campaigning at home for a month during August recess, they will have less than nine weeks before the midterm elections on November 3. Accounting for another month of campaigning in October and other lame duck district work periods around the holidays, Congress is scheduled to be in session just eight weeks through the end of 2026. In short, lawmakers are running out of time to address a growing list of issues critical to America’s voters, the economy, and the merit shop pipeline construction industry. Permitting Reform Talks Continue For pipeline contractors, few issues are more important than permitting reform. The nation’s growing demand for reliable energy infrastructure cannot be met if projects remain tied up for years in a fragmented federal permitting process. And pipeline contractors have an unusually strong champion in the Senate in Sen. Alan Armstrong (R-Okla.), the former CEO of Williams. Armstrong is something of an accidental senator. Appointed by Oklahoma Gov. Kevin Stitt to fill the seat vacated by now Department of Homeland Security Secretary Markwayne Mullin, Armstrong is prohibited under Oklahoma law from running for the seat in November. That gives him something few lawmakers in Washington have: a very short clock and no reelection campaign to worry about. Armstrong has made permitting reform his signature issue, saying he wants to use his limited time in the Senate to help Congress finally reach a bipartisan agreement. That independence could prove valuable in an issue as politically complicated as permitting reform. Armstrong has argued that reform should not be written solely for pipelines or any single industry, but should make it easier to build the transmission, renewable energy, mining, pipeline, and other infrastructure needed to keep America competitive. In July, he took his case to the Senate floor, declaring that “it’s time to get America building again,” making permitting reform the central focus of his first floor speech. Armstrong’s American Energy and Mineral Infrastructure Act (S. 4944) would strengthen the Federal Energy Regulatory Commission’s role as the lead agency for interstate natural
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2026 8 Inside Washington Continued from page 7 gas pipeline and LNG projects while addressing issues involving the Clean Water Act, National Environmental Policy Act, and litigation that can contribute to lengthy project delays. Other proposals, including Sen. John Barrasso’s (R-Wyo.) Let America Build Act and Sen. Dave McCormick’s (R-Pa.) Unlock American Energy and Jobs Act, also seek to reduce regulatory barriers and accelerate energy infrastructure development. Bipartisan permitting reform legislation negotiations between leaders of the Senate’s Environment and Public Works Committee and Energy and Natural Resources Committee will continue in September. While progress has been made, significant differences remain over issues including judicial review, environmental laws, and the role of federal and state agencies. The House advanced a bipartisan package of permitting reforms this Congress and is patiently waiting for the Senate to get their bill over the finish line before the end of the year. With a crowded fall agenda and Democratic lawmakers calculating the political consequences of delivering a win for the incumbent party ahead of the midterm elections, it is easy to see how a deal might fall through. APCA will continue advocating for a permitting system that provides appropriate environmental and public protections while giving project sponsors and contractors a predictable, timely path from approval to construction. Permitting reform is key to unlocking new investment and construction opportunities for APCA members and their skilled workforces. Every unnecessary delay in approving a pipeline or energy infrastructure project can delay construction, increase costs, create uncertainty for contractors, and ultimately postpone the delivery of energy to American consumers. Pipeline Safety Legislation Moves Forward After years without a new pipeline safety authorization law, Congress is finally moving toward reauthorizing the federal pipeline safety program. The Senate unanimously passed the PIPELINE Safety Act of 2025 (S. 2975) in April, and on July 21, the House Energy and Commerce Committee advanced the Pipeline Safety Authorization Act of 2026 (H.R. 9338) by a bipartisan 41-8 vote. The House bill would reauthorize PHMSA’s pipeline safety programs through fiscal year 2031. This is significant because Congress last reauthorized PHMSA through the PIPES Act of 2020, which authorized the program only through FY2023. Although Congress has continued funding PHMSA through the annual appropriations process, the agency has been operating without a current statutory reauthorization for roughly three years. The committee’s vote is an important step forward after the legislation faced uncertainty earlier this summer. APCA and the Common Ground Alliance’s Damage Prevention Action Center advocated for the successful inclusion of a provision that directs federal grants to incentivize states to adopt effective damage prevention policies, accurate utility locating, and other best practices that reduce excavation damage and improve project safety. The bill needs a House floor vote and then House and Senate conference committee negotiations to reconcile it with the Senate’s version of the bill. APCA will be pushing hard to get the bill over the finish line as it represents an important opportunity to strengthen pipeline safety and underground utility damage prevention while ensuring that PHMSA has the resources and authorities necessary to carry out its mission. Labor Policy Battles Heat Up APCA’s government affairs team spent considerable time on labor policy this summer. Following a significant lobbying campaign led by the Coalition for a Democratic Workplace (CDW), the House passed the APCA-opposed Faster Labor Contracts Act (FLCA, H.R. 5408) on June 9 by a vote of 230-193, with 20 Republicans joining all voting Democrats in support. The FLCA is a top priority of labor unions because it would accelerate the timeline for employers and unions to negotiate a first contract following a union organizing victory. Critics are concerned that the legislation could ultimately allow third-party arbitrators to impose a contract on an employer if the parties fail to reach an agreement. The Senate is now the key battleground in the FLCA fight. APCA and CDW member lobbyists are meeting with key Senate offices in opposition to the bill, while APCA’s grassroots campaign is urging lawmakers to oppose the Senate version of the FLCA (S. 844) introduced by Sen. Josh Hawley (R-Mo.). The issue comes down to a basic principle: employers and employees—not government-appointed arbitrators—should determine the terms of private-sector collective bargaining agreements. The bipartisan support for the FLCA demonstrates an emerging political coalition consisting of a handful of congressional Republicans and all Democrats advancing a pro-labor union agenda at the expense of workers and businesses who wish to remain union-free. Continued engagement by APCA and its members is especially important following recent National Labor Relations Board (NLRB) decisions by Biden-appointed board members that make it much easier for unions to win workplace elections. However, a new Republican majority at the NLRB is
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2026 9 expected to shift labor law enforcement in a more employer-friendly direction following the U.S. Senate’s August 7 confirmation of Democrat David Prouty to a second term and APCA-supported nominee James Macy. Their confirmation delivers Republican appointees a 3-1 majority until at least December 2027, restores the board’s functional quorum, and enables it to address its backlog and reconsider several controversial Biden-era decisions that overturned long-standing precedents affecting employers and union organizing in the workplace. In additional positive labor and employment news, President Trump nominated Acting Department of Labor (DOL) Secretary Keith Sonderling on July 13 to serve as the new DOL Secretary. Sonderling’s nomination followed the departure of scandal-ridden and labor-friendly Lori ChavezDeRemer, a one-term Republican congresswoman from Oregon with close ties to Teamsters President Sean O’Brien. The Senate HELP Committee approved Sonderling’s nomination by a 12-11 party line vote on July 30, and he is likely to be confirmed by the full Senate after August recess with strong support from APCA and the business community. Sonderling is widely regarded as a capable administrative leader with deep policy expertise on DOL matters. Sonderling oversees federal grants, rulemaking, and policy priorities with significant implications for APCA members on issues ranging from apprenticeship and workforce development to OSHA enforcement, retirement, Davis-Bacon Act prevailing wage, and other labor and employment regulations. Under his leadership, the DOL proposed regulations on worker classification, joint-employer standards, and overtime that restore regulations from the first Trump administration that the Biden administration changed to increase unionization. Federal Assistance Regulation of Concern On May 29, the Office of Management and Budget (OMB) proposed sweeping changes to the government-wide regulations governing federal financial assistance, including grants and cooperative agreements. OMB said the proposed Regulation for Federal Financial Assistance would improve transparency, accountability, and oversight while reducing recipient burdens. APCA is concerned that controversial changes to these rules could create significant risks for discretionary federal infrastructure grant programs. APCA joined the Power and Communication Contractors Association and the Independent Electrical Contractors on a July 13 comment letter urging OMB to preserve flexibility and avoid creating new policy and requirements that could complicate, delay, and cancel federally funded infrastructure projects and workforce development grants. DOL and Private Sector Investments Address Skilled Trades Labor Shortage America’s infrastructure ambitions will ultimately depend on whether the country has enough skilled workers to build it. Stakeholders addressing the construction industry’s skilled labor shortage—pegged at 349,000 net new workers in 2026—celebrated the federal government’s recent significant investments in America’s skilled trades workforce. On July 7, the DOL announced nearly $162 million in performance-based incentive grants to expand registered apprenticeship in industries considered critical to America’s economic and national security priorities. At least 85 percent of each award is expected to flow directly to eligible apprenticeship sponsors, with applications for incentive funds expected to begin in the fall. The federal grants come on the heels of more than $500 million worth of workforce development investments announced by private industry, like the BlackRock Foundation, Bloomberg Philanthropies, and data center leaders Meta, Google, Oracle, and other construction industry suppliers and retail brands. Exacerbated by the white-hot U.S. data center construction spending at an annualized rate of $50.7 billion, Wall Street knows that America’s skilled trades are a significant constraint on capital. Likewise, the Trump administration recognizes that a lack of electricians, welders, and other skilled trades will hinder American energy, manufacturing, defense, and AI dominance. Busy Fall and Midterm Elections Test Washington The coming months will test whether Washington can translate the administration’s ambitious energy agenda into projects that actually get built. Congress has the opportunity to advance permitting reform, complete a longoverdue PHMSA reauthorization, and prevent new labor and regulatory policies from creating additional barriers to pipeline construction activity. Consider attending APCA’s Mid-Year Meeting at the Broadmoor in Colorado Springs, October 14-16, where attendees will receive updates on APCA’s policy priorities, advocacy activities, and hear the latest insights on the midterm elections. 7
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2026 10 On July 4, the Trump administration released its 2026 Regulatory Plan and the Unified Agenda of Federal Regulatory and Deregulatory Actions, identifying 702 existing rules slated for elimination! This is a record for a single, semiannual plan and nearly double the number eliminated in President Donald Trump’s first term. This would be in addition to the 752 regulatory cuts already finalized since October 1, 2025. Whether any of our APCA members are federal contractors or not, the proposed changes include favorable ones for all pipeline contractors as employers covered by Title VII. The Spring 2026 deregulation plan incorporates, for the first time, the regulatory plans of independent agencies, now subject to White House coordination following the U.S. Supreme Court’s June 29, 2026, decision expanding presidential removal power. Among the 702 targeted rules are environmental review requirements for energy projects, energy efficiency standards, rules that promote diversity, equity, and inclusion (DEI), and specific deregulatory actions relevant to the federal contracting community. Quick Hits • The deregulatory actions include the rescission of Executive Order (EO) 11246’s implementing regulations, the elimination of the U.S. Equal Employment Opportunity Commission’s (EEOC) disparate-impact standard, and the proposed rescission of EEO-1 reporting requirements. • Federal contractors’ obligations under Section 503 of the Rehabilitation Act and the Vietnam Era Veterans Readjustment Assistant Act (VEVRAA) remain intact despite the rescission of EO 11246 and the proposed defunding of the Office of Federal Contract Compliance Programs (OFCCP). • The EEOC’s proposed rescission of EEO-1 reporting is still undergoing review by the Office of Information and Regulatory Affairs (OIRA) (expected through mid-August 2026), and existing filing obligations remain in force until rulemaking is complete. • These deregulatory actions occur alongside new compliance requirements, including EO 14398’s mandatory DEI contract clause (FAR 52.222-90), which had to be incorporated into existing contracts by July 24, 2026. Of particular note to federal contractors, the following deregulatory actions are in the crosshairs of the Unified Agenda. Rescission of OFCCP’s EO 11246 Implementing Regulations Among the 702 deregulatory actions is the U.S. Department of Labor’s proposed rescission of all regulations implementing EO 11246, the long-standing framework that required federal contractors to maintain affirmative action programs and comply with related nondiscrimination obligations. EO 11246 was revoked by President Trump on January 21, 2025, by EO 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” OFCCP published a proposed rule on July 1, 2025, to rescind the implementing regulations at 41 C.F.R. Parts 60-1, 60-2, 60-3, 60-4, 60-20, 60-30, 60-40, 60-50, and 60-999. Although a final rule has not yet been issued, the Unified Agenda confirms this rescission remains a priority. Contractors should note that implementing regulations for EO 11246 are separate and apart from those existing legal obligations under Section 503 of the Rehabilitation Act and VEVRAA. Although certain changes have also been proposed for the implementing regulations of Section 503 and VEVRAA, existing obligations remain unaffected until proposals are finalized, such as the annual preparation of affirmative action programs for individuals with disabilities and protected veterans. Human Resources Greg Guidry Ogletree Deakins Nash Smoak & Stewart greg.guidry@ogletree.com (337) 769-6583 Trump Aims to Eliminate Record Number of Regulations
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2026 11 EEOC Deregulatory Actions The Unified Agenda includes several significant EEOC deregulatory actions. First, the EEOC plans to eliminate the long-standing “disparate impact” standard in proving racial discrimination. This follows EO 14281, which directed agencies to “deprioritize” disparate impact claims. The EEOC has already directed the dismissal of pending disparate impact complaints. For federal contractors, this should mean enforcement scrutiny focused exclusively on intentional disparate treatment, though private parties may still attempt to bring disparate impact claims under Title VII. Second, the EEOC proposes to rescind federal EEO reporting and recordkeeping obligations, including the EEO-1 reporting framework. On May 14, 2026, the EEOC submitted to OIRA a proposal to rescind reporting obligations related to Title VII, the Americans with Disabilities Act (ADA), the Genetic Information Nondiscrimination Act, and the Pregnant Workers Fairness Act. The rescission of EO 11246 already eliminated the lower fifty-employee EEO-1 filing threshold for federal contractors. However, until formal rulemaking is complete (the 90-day OIRA review runs through approximately mid-August 2026), existing obligations remain in force, and contractors should prepare to file if the EEOC opens a 2026 filing window. Third, on July 6, 2026, the EEOC submitted a final interpretive rule to rescind 29 C.F.R. Part 1608 governing voluntary affirmative action plans. The aim of this would be to remove longstanding guidance on permissible voluntary affirmative action in employment, potentially increasing legal uncertainty for contractors that maintained such programs under the prior framework. DEI-Promoting Regulations The Unified Agenda specifically targets rules that promote diversity, equity, and inclusion. While EO 14398, “Addressing DEI Discrimination by Federal Contractors” (discussed below), represents a new regulatory requirement, the Unified Agenda’s deregulatory side seeks to remove older rules across multiple agencies that previously encouraged or mandated DEI-related compliance. For federal contractors, this creates a potentially difficult dynamic to navigate: legacy DEI-promoting regulations (now being removed) versus new prohibitions on “racially discriminatory DEI activities” (now being imposed). The Broader Context for Federal Contractors The deregulatory actions sit within a broader landscape of regulatory change affecting federal contractors. Key concurrent developments include: • EO 14398’s mandatory DEI contract clause (FAR 52.22290), which prohibits “racially discriminatory DEI activities,” must be incorporated into existing contracts by July 24, 2026; • The proposed defunding of OFCCP in the FY 2027 budget (though Congress ignored a similar proposal in FY 2026 and instead preserved $101 million in funding, along with keeping Section 503/VEVRAA obligations intact); • The FY 2026 National Defense Authorization Act’s increase of the certified cost or pricing data threshold to $10 million for defense contracts entered after June 30, 2026, with cost accounting standards (CAS) applicability thresholds potentially rising to $35 million; and • The ongoing “Revolutionary FAR Overhaul” eliminating a substantial number of provisions. Collectively, these developments represent a fundamental realignment of the federal contractor compliance environment. Considerations for Federal Contractors and Subcontractors Federal contractors and subcontractors are navigating one of the most consequential periods of procurement reform in decades. The combination of the Revolutionary FAR Overhaul, an intense focus on anti-DEI and anti-discrimination obligations, increased cost and pricing thresholds, proposed OFCCP restructuring, and shifting enforcement priorities throughout various federal agencies creates both compliance risks and potential competitive advantages for contractors that adapt quickly. Contractors may consider reviewing their existing compliance playbooks, proposal templates, and subcontracting policies in light of the FAR restructuring and renumbering. It may be prudent to assess the impact of EO 14398 on internal DEI programs and subcontractor flow-down provisions, particularly in advance of the July 24, 2026, deadline for bilateral modifications to existing contracts. Defense contractors can evaluate the implications of raised CAS and certified cost or pricing data thresholds for their business models and accounting systems. All contractors should also keep a close eye on existing and potentially changing statutory and regulatory obligations, including ensuring continued compliance until and unless final rules or changes are implemented. 7
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2026 12 During the past few years, I have evaluated and coached a lot of leaders. I don’t know how it happened. It was never a part of my plan to provide leadership coaching. It sure is now. I’ve learned a few things that I’d like to share with you. I remember my first request for “coaching.” It all started with a friendly conversation. The CEO of a large contractor reminded me of an interaction we had some 20 years earlier. He recalled an observation I had made about one of his sons, an emerging leader in the company. I suggested an approach with him, and years later it turned out to be effective. Back then (and still today), I used some assessments as a starting point. So, my observations were formed by a synthesis of data and intuition. I remember thinking that this son’s leadership strengths and weaknesses were pretty obvious, to me. I didn’t understand how they weren’t so obvious to his dad. This speaks to the value (and objectivity) of an outside perspective and some validated assessments. Learning Through “Osmosis” As a consultant, my job allows me to spend a lot of time with leaders, so I have learned and know things through “osmosis.” Kind of like Sunday afternoon dinners at the Manning household. The Manning brothers (Peyton and Eli) became great quarterbacks, in large part from hanging around the other great quarterbacks in the family (also including their father, Archie). They learned things just talking about football around the dining room table. So, they knew things intuitively that other quarterbacks had to learn the hard way. In a similar way, I have learned about the qualities that define a good leader just from hanging out with good leaders (and some bad ones). Fast forward to a few years ago. The “son” in my story is now the president of that company. He asked me to help some of his leadership team who were at risk of derailing. These leaders had a lot of potential, but they had some gaps preventing them from getting to the next level. This president wanted me to work with them to see if they could develop into the leaders the company wanted and needed. I was off and running, coaching leaders. This got me thinking: How can you tell when a leader is ready for the next level? What should you look for? What are the qualities of a leader who is ready for the next level? Assessments help provide some objectivity to the process, but it remains a mix of data and intuition. The intuition part is a little more subjective. So, I have identified ten indicators (qualities to look for) to help you identify when leaders are ready for the next level. Successful leaders need to display these competencies, preferably before they are elevated to their executive role. The coaching happens around these qualities. We then work together to build capability when we can or to build a team around the leader when we can’t. Let’s divide the competencies into four buckets: • Performance and results • People and influence • Mindset and adaptability • Character and judgement The most effective promotion processes evaluate these indicators using multiple data sources. I’ve used performance reviews, 360 feedback, observed behavior (in stretch roles), and structured leadership assessments (like the Hogan Leadership Assessment, for example). You should trust your gut (it’s your second brain) but always verify it. Performance and Results 1. Consistent delivery (beyond their role): Leaders exceed expectations in their current position and already operate at the next level; they take on stretch assignments successfully. 2. Business impact: They drive measurable outcomes, increased revenue, better productivity, and employee retention. People and Influence 3. Ability to develop others: Leaders actively coach, mentor, and elevate their team. Strong leaders leave a trail of promoted people behind them. 4. Influence without authority: They build trust across functions and levels, getting buy-in and alignment even when they don’t have formal power. Leadership Development How to Know if Your Leaders Are Ready for the Next Level By Andy Patron
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2026 13 5. Team performance under their leadership: Their direct reports consistently perform well, stay engaged, and don’t leave the company. Mindset and Adaptability 6. Learning agility: Leaders adapt quickly to new challenges, seek feedback, and visibly grow from setbacks rather than repeating mistakes. 7. Strategic thinking: They connect dayto-day work to broader, longer-term business goals, anticipate problems, and think beyond their immediate function. They can look forward 3-5 years. 8. Comfort with ambiguity: They make sound decisions with incomplete information and remain effective when circumstances shift. Character and Judgment 9. Integrity and values align: Leaders model the organization’s values under pressure, not just when it’s convenient. You can trust them to do the right thing. 10. Self-awareness and coachability: They know their strengths and blind spots, are emotionally intelligent, actively seek development, and respond constructively to feedback. Think about your next tier of leadership, especially those at the executive level. If they are exhibiting these ten qualities consistently, you are in good shape. When they have gaps or are missing some of these indicators, well, coaching can help (with a caveat). Some of these indicators will require some system and process to support them. For example, to track results, you must have an effective project tracking and forecasting capability. Most of these qualities fall under the umbrella of “culture and values.” If your “leader” isn’t in alignment, they won’t be a good fit, even with coaching. Key Questions Finally, there are two important questions you should get answered before you invest in coaching: 1) Do they know that they have leadership gaps that limit their effectiveness or promotability? and 2) Do they want to change and develop themselves to mitigate or remove their gaps? If they answer “no” to either (or both), coaching will be a waste of effort, in my experience. When the answers are “yes,” there is a great opportunity to advance a talented person into an effective and successful leadership role. It can be very rewarding all the way around when it works. 7
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2026 14 Contract Law Payment Clauses: What Every Pipeline Contractor Needs to Know Consider the following scenario: a pipeline general contractor has just completed 40 miles of construction across three counties. Subcontractors are seeking payment. The owner has gone quiet on a disputed change order for a segment completed months earlier, and the general contractor finds itself squeezed in the middle of the payment chain. The determination of whether that risk can be passed downstream or must be absorbed by the general contractor itself often turns on a single word buried in the subcontract: “when” versus “if.” The pipeline general contractor sits at the center of the payment chain. Funds are collected from the owner in stages tied to completed segments, tie-ins, hydrostatic testing, and other common milestones, and those same funds are used to pay grading, welding, pipelaying, and coating subcontractors. The drafting language of subcontract payment clauses determines how much of the owner’s nonpayment risk remains with the general contractor and how much is shifted to subcontractors—and whether that shift will actually hold up if challenged. Two Clauses: One Word Apart, Worlds Apart in Effect A pay-when-paid clause is a contractual timing provision. Pay-when-paid clauses permit general contractors to pay subcontractors within a reasonable period after receiving payment from the owner. Pay-when-paid clauses do not excuse payment altogether if the owner never comes through. A typical example of a pay-when-paid clause reads as follows: “Contractor shall pay Subcontractor within thirty (30) days of Contractor’s receipt of payment from Owner for the applicable pipeline segment.” Under this type of clause, the obligation to pay generally remains intact; the owner’s payment merely sets a deadline rather than a condition to payment ever becoming due. A pay-if-paid clause functions differently from a pay-whenpaid clause. When drafted correctly, pay-if-paid clauses make the owner’s payment a true condition precedent to the general contractor’s obligation to pay the subcontractor. This means that if the owner never pays, the general contractor may never owe payment for that work. A representative example of a pay-if-paid clause is as follows: “Contractor’s receipt of payment from Owner for Work performed on a pipeline segment is a condition precedent to Contractor’s obligation to pay Subcontractor for that Work. Subcontractor expressly assumes the risk of Owner’s nonpayment, and the subcontract price includes that risk.” This type of clause can meaningfully protect a general contractor’s cash flow when an owner is slow to pay, insolvent, or disputing payment. However, it functions as intended only if drafted correctly, and courts do not make this easy. Drafter Must Clearly State Intent For a clause to provide true pay-if-paid protection, the burden falls on the drafter to state that intent clearly in the contract documents. Courts in multiple jurisdictions have held that ambiguous pay-when-paid language will be read as a timing provision rather than a true condition precedent. Generally, to be enforceable, the contract language shifting that risk “downstream” must be clear and unambiguous, and the burden of that clear drafting falls on the general contractor. Enforceable pay-if-paid contract terms must typically expressly identify the owner’s payment as a “condition precedent,” state that the subcontractor “assumes the risk” of the owner’s nonpayment, and in some cases incorporate related conditions, such as owner or engineer acceptance of the work. Vague “when paid” language is generally insufficient, John L. Grayson Cokinos | Young jgrayson@cokinoslaw.com (713) 535-5573
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2026 15 and ambiguous clauses are likely to be read against the drafter and enforced as pay-when-paid regardless of the parties’ original intent. The Business Tradeoffs Involved Choosing a pay-if-paid structure is not without cost. While they can shield the general contractor from an owner’s nonpayment or insolvency, such clauses are disfavored or restricted in some jurisdictions, meaning a clause relied upon for protection on one project may prove unenforceable on another. Such clauses can also make subcontracts less attractive to bid. Subcontractors who understand the risk being shifted to them may price that risk into their bids or decline the work altogether, which can affect the general contractor’s competitiveness and bonding capacity on future pipeline projects. Pay-when-paid clauses are generally easier to enforce and are viewed as more equitable, but they do not fully insulate the general contractor from an owner’s payment delays. The general contractor may still be required to pay subcontractors out of pocket while pursuing amounts owed by the owner. In either case, subcontract payment terms should be coordinated with the general contractor’s own prime contract with the owner. A mismatch, in which subcontractors are owed payment on a faster timeline than the owner is contractually required to pay the general contractor, can create a cash-flow gap that no clause can resolve after the fact. (See last quarter’s article on flow-down provisions.) Always Consider Jurisdictional Variation Because pipeline routes frequently cross state lines, the law governing payment clauses can vary considerably from one project to the next. Some states enforce clearly drafted payif-paid clauses largely as written, while others have enacted statutes that specifically define and restrict their use, or otherwise disfavor and strictly construe such provisions as a matter of case law. In certain states, even a validly drafted pay-if-paid clause may be rendered unenforceable if the owner’s nonpayment is ultimately attributable to the general contractor’s own performance failures, such as unresolved punch-list items or incomplete closeout documentation. Other jurisdictions closely scrutinize these clauses for clarity and will default to a pay-when-paid interpretation whenever the language leaves room for doubt. A standard subcontract template drafted with one jurisdiction’s law in mind may not provide the anticipated protection on a project governed by different law. Drafting Considerations Before adopting a standard payment clause across pipeline contracts, the general contractor should be clear about the objective. Where meaningful protection from an owner’s nonpayment is the goal, precise condition-precedent language is necessary, and subcontractors can reasonably be expected to negotiate in response, which is a fair tradeoff for shifting substantial risk onto them. Where preserving smoother subcontractor relationships and more competitive bids is the priority, a pay-when-paid clause with a firm outside payment deadline may be preferable, though it leaves the general contractor exposed to timing delays. In either case, the governing law provision should be reviewed, and payment terms should be checked for consistency with amounts owed to the general contractor under the prime contract. Payment clauses of this nature are not boilerplate to be overlooked; they shape how much risk a general contractor or subcontractor carries on every segment of a pipeline project. The prudent pipeline contractor will confer with experienced legal counsel when examining and negotiating these payment provisions before a subcontract is signed. 7
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PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2026 17 Continued on page 18 Back in the Game How to Return to Profitability By Gregg Schoppman, FMI Construction demonstrates the ultimate comparison. Will it be gluttony or starvation? For the better part of the last 10 to 15 years—minus a short disruption from COVID-19—the industry has seen unbridled growth in nearly every sector. Construction organizations seem to have no shortage of opportunities, and revenue growth often resembles a runaway train, accelerating ever northward. Reflecting on recessionary times makes most leaders sick and seem desperate. Additionally, for at least the past four decades, leaders have opined about the lack of talent facing the industry, with countless studies describing the overall lack of trades, supervision, and management personnel. Organizations must grow strategically and not simply answer every client demand or proposal. Doing so may be to the detriment of your long-term strategy. There must be a fact-based approach to decision-making that connects to more than just gut-feel. There are many correlations that show how a sharp increase in volume often has a deleterious effect on profitability. For instance, consider the following hypothetical case study that provides a broad framework of year-over-year growth when compared with profitability. The situation illustrated here is extremely common in today’s world. Clients are flush with capital expenditure dollars and often supply construction organizations—general contractors and trade contractors alike—with more than enough opportunities to keep them busy. However, the “governor switch” (or guardrails) for many construction firms is the ability to staff projects with the appropriate level of supervision as well as craftspeople. An interesting phenomenon occurs at this point: Many contractors will begin to price discriminate by increasing their bids, almost to deter a client from pursuing a project. Contractors commonly believe that if they’re honest with a client about capabilities (or lack thereof), there may not be future opportunities. Along the lines of: “If we say no to them today, they’ll remove us from their bid lists. Plus, we’ve been chasing [INSERT CLIENT HERE] for X years....” But then when the deterrent fails, our contractor is left with the dubious challenge of building more, with fewer resources. The Cost of Rapid Expansion That said, it’s a bit myopic to examine this case by looking only at lost profitability. On page 18 is an illustration of how our hypothetical firm might have addressed the management personnel ranks. As shown on page 18 the organization managed to grow in lockstep, expanding its teams as projects were added. Furthermore, this hypothetical organization didn’t have codified parameters within which to govern the management and supervision of projects. Put another way, new team members were added as “free agents,” bringing whatever set of best
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2026 18 practices they had observed at their previous employer. Sure, they may have had newer software programs, but these tools weren’t utilized consistently. Additionally, the screening of new personnel was viewed through a lens of “right fit now” versus “right fit for the long term.” Using a sports analogy, personnel were inserted regardless of capabilities, with a “next person up” mentality. Building a Sustainable Workforce One important distinction is that a sports team generally has bench depth. In professional football there are likely three quarterbacks, with two of them representing the backup and junior understudy. Comparatively, construction organizations—particularly the hypothetical firm in our example— have no bench strength. Of course, the first argument is that a professional sports team has a substantial payroll compared to most construction organizations, which would be a fair characterization. Additionally, there are likely support team members such as project engineers, foremen, and assistants who are also supervising and managing people. The firm in our example did have a small group of newer team members. However, this junior corps was hired reactively and immediately dropped on-site to fulfill project needs. Consequently, internal project team attrition was high, exacerbating a fragile personnel situation. Common descriptions of the firm’s current state: • “If we lose [INSERT PERSON HERE], we’re in trouble. They were going to run [INSERT PROJECT HERE].” • “Everyone you work with does it slightly differently, which creates a challenge when we have to shift personnel around. You’ll spend half your time relearning project management 101 with your manager or superintendent.” • “We throw people to the fire/wolves/deep end of the pool. Throwing them into the fire doesn’t seem right, but we have no choice.” • “Our client loves [INSERT PERSON HERE]. Unfortunately, we’re worried that [INSERT PERSON HERE] is a flight risk. When they leave, so does that revenue.” Remember that if an organization isn’t focused on creating a stable environment for its most critical asset, it’s building on a fragile house of cards. Still, there’s a lot to be said for how our example organization has approached strategic growth. Consider the following: • Build internally and then grow. In a classic portrayal of “the tail wagging the dog,” our case study demonstrates a willingness to add volume and then add staff reactively. Comparatively, what if the firm had cultivated among staff a willingness to absorb cost or at least spread the cost of additional personnel over a longer period? Personnel could have been added with the intention to grow and to prioritize the development of those individuals. For example, recognizing the cost of a project manager (say, $100,000) over time while consciously developing that individual versus parachuting in a new associate who might make a costly mistake with a project or critical client, possibly accounting for over $100,000 in expenses. There are certainly no guarantees, and there are situations in which free agency has benefited a firm. However, it’s highly probable that a misdirected hire will end up costing a firm, with little or nothing to show for it. • Create discipline around decision making. What if our hypothetical organization had built with discipline? For instance, what if growth decisions were made using analytical tools that weighed factors such as current backlog, current staffing, profitability probability, etc.? Go/no-go decision making shouldn’t serve as the only mechanism by which a firm decides to chase opportunities. They should adopt a fact-based decision-making process that accounts for internal variables that can help firms grow profitably. It is safe to assume that clients or project owners will be disappointed when a firm opts out of a bid or proposal. However, it is also likely that they will express gratitude for not setting up a project for failure by not being able to meet expectations or causing undue stress to said customer in the long term. • Build the correct firm-wide model of operations. It is imperative that firms have a consistent and proactive operational model. This is not to be confused with Return to Profitability Continued from page 17
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2026 19 Continued on page 20 “personalities” or “management styles;” rather, it’s a methodology for preconstruction strategy, resource use, change order management structure, financial acumen, project execution at the conclusion of projects, etc. One of the best ways to gauge operational consistency is to ask the team, “How many different meeting agendas do our project managers and superintendents have for [INSERT MEETING HERE]?” If leadership hears, “Well, it depends on who you work with,” it’s likely time to consider refining the operational playbook. • Build institutional training and rigor. Firms must have a system for introducing and training teams on the Brand X Way of Doing Things, and there must be discipline around managing that system to drive firm-wide adoption. This is not only to create internal accountability but also to drive people to do things correctly. For instance, firms that design effective onboarding practices that are longer than a single day are more likely to see buy-in to the institutional model, leading to long-term success. Ultimately, one great question that every leader should ask themselves is this: If you hired a new team member today, would they simply represent a new project that your firm could take on, or do they represent future bench strength? Put another way, does posting on social media for a new superintendent backfill an already depleted roster? Many firms are running a deficit rather than creating an internal surplus of talent. The Discipline of Operational Excellence Consider again our case study example. Let’s say that in the past year—the year in which the firm regained profitability— there was an internal shift toward the aforementioned discipline. Rather than add volume, the firm strategically committed to both less volume and greater operational discipline. By taking this approach, the firm experienced several benefits. • Quality NOT Quantity: Rather than chasing every opportunity, they increased the profitability of the right opportunities. • Risk Profile: Making less money on more volume is a risky proposition. In what’s regarded as one of the riskiest industries in the world, making more money on less INFRASTRUCTURE SOLUTIONS Your Complete Source for Pipeline Equipment VISIT PSSINFRASTRUCTURE.COM
PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2026 20 volume is the only strategic decision. • The Brand X Way: By establishing a replicable model, this organization was able to identify the levers of success, enabling greater control in their projects. • Magnet for Talent: Brand X was able to reestablish itself within its market as a top employer, much better than the “people mill” it had previously been tagged as. • Client Loyalty: No client likes to be told no, but this organization was able to creatively sell itself better for long-term opportunities rather than resemble a bobblehead doll and accepting everything that came its way, only to underperform. Strategic Growth for Lasting Profitability Lastly, for our case study, let’s look at the impact of management and supervisory personnel on overall profitability. What if this were to also include a component of self-performing labor? For instance, what if each superintendent were also responsible for three to five foremen that may lead crews of labor or fleets of equipment? This would add a layer of complexity as illustrated in the graph below. As the firm’s revenue increased over a six-year span, there was a precipitous drop in overall productivity across the major labor codes the firm uses. Many organizations would’ve chalked this up to an estimating error or contributed the decline to some external factor like the weather or permitting. There are often many factors involved, but there is another more insidious series of factors in play. As an example, a project was bid at an astounding 51 percent gross margin! The primary factor for the high bid-day margin was the lack of resources to complete the work. So, rather than disappoint the client, an exceptionally high price was floated in an effort to “scare off the client.” Rather than scaring them off, the client accepts the high-priced proposal, much to the chagrin of the contractor. Fast-forwarding to the conclusion of the project, the final gross margin was 11.2 percent, with an overhead of 9.5 percent. The 40 percent+ write-down would end up being attributed to crew shuffling, lack of adequate supervision focus, zero planning, and an inherent belief that the firm had “enough padding” in their bid. However, what if a catastrophic accident had occurred, all to make a meager 1.5 net margin? Would it have been worth it then? Additionally, what was the impact on customer satisfaction and confidence as the company saw underwhelming performance day in and day out? Of course, if every firm could know its revenue in advance and if the market were to participate as planned, this would all make for an easy endeavor in strategic planning and forecasting. Returning to profitability, however, may mean a return to realism with regard to a firm’s strategy, marketing, talent development, and operations. And creating bench strength is more than simply having one extra manager on deck. Rather, it’s a strategic push to develop the correct foundation to build successfully for the long haul. 7 Gregg Schoppman leads FMI’s operations consulting practice, and he has been a featured instructor in FMI’s Project Manager Academy and regularly trains at all levels of construction, from foreman to CEO. He specializes in productivity and project management for general and trade contractors across the country. He also facilitates strategic planning and evaluation services focused on organizational transformation. Gregg was named one of the Top 25 Consultants in the World in 2014 by Consulting Magazine and is the recipient of the Association of Management Consulting Firms’ High Five Award for consulting excellence in 2013. He can be reached at gregg. schoppman@fmicorp.com. FMI is singularly focused on creating a better future for the built environment. FMI is industry-specialized and relationship-driven with a proven long-term commitment to creating exceptional outcomes for its clients. Thousands of clients around the world trust FMI to help solve their most pressing challenges, capitalize on their most promising opportunities, and gain insight into current issues and emerging industry trends. Return to Profitability Continued from page 19
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