See Our Collection of Industry Insights

Chad and Matt dive right into the question of the day: Why is growth necessary for construction companies? Growth means many different things, and they start by clarifying that growth doesn’t always mean higher revenues—sometimes, it means developing process and adding stability. Meanwhile, other times, it has everything to do with increasing revenue and profits. Either way, central to the need for growth is the fact that great people want to have something to strive toward; with grow comes opportunity. In the X vs. Y section, Matt and Chad argue about whether you should show your team your org. chart. We hope you enjoy and learn how to grow your business effectively through this month’s episode. Subscribe to be notified when new episodes are released on Spotify, YouTube, Apple Podcasts, or LinkedIn. If you’re looking for more ways to engage with the wider construction community, check out our affiliate podcast, The Morning Huddle Construction Show, hosted by Chad Prinkey, Well Built Construction Consulting and Stacey Holsinger from Steel Toe Communications. Tune in every Tuesday morning at 9 A.M. EST on LinkedIn Live for discussions with A/E/C experts, advancing the construction community. 0:00 What is the "Well-Built" series? 2:00 Check-Ins! 8:55 How do you get started into creating growth for the long term? 16:15 Why is it important to maintain growth? 20:46 How does revenue growth tie into growth for other parts of the business? 28:30 Should we share our future organization chart with our staff? 39:05 What are we reading and what are our biggest takeaways? 42:25: Check us out at Well-Built Consulting.com! Thank you to our sponsors! Well Built Construction Consulting https://www.wellbuiltconsulting.com/ Steel Toe Communications (Digital Marketing for Contractors) https://www.steeltoecommunications.com/ Katz Abosch (Tax, Audits and Accounting) https://www.katzabosch.com/ Lawrence Law (Legal Challenges for Contractors) https://lawrencelawllc.com/ Sandy Spring Bank https://www.sandyspringbank.com/ Genesis AEC (Full Service Architecture, Engineering, Construction in Life Sciences) https://www.genesisaec.com/ Marsh McLennan Agency https://www.marshmma.com/?utm_source=... Construction Links Network: https://constructionlinks.ca/ For additional episodes and information visit: http://www.themorninghuddleconstructionshow.com/ Follow us on LinkedIn: https://www.linkedin.com/company/82318299/admin/dashboard/ Subscribe to our weekly e-newsletter for the latest updates: https://lp.constantcontactpages.com/sl/Ro2QrVt/Themorninghuddlepodcast?__cf_chl_tk=9S8PSaN6zCOUNBhPtHXE.qk8HWtzxNNluBDlsEYhZkg-1726511898-0.0.1.1-8361

In this episode, we’re joined by Scott Arias, CEO of ACE Consulting, and guest host Tom Hughes, VP of Construction Operations at Genesis AEC, to tackle the vital topic of construction scheduling. Scott breaks down the essentials of time impact analysis (TIA), explains the importance of "frag nets," and dives into how the critical path influences scheduling. With real-world examples and actionable advice, Scott makes it easy to understand how accurate scheduling drives productivity and protects your business. 6:57 Introduction Scott Arias 8:25 What is Time Impact Analysis? 12:00 When to Submit Change Order for a Contract Extension 12:45 Example of Contract Extension 14:56 Retrospective Claim Analysis 16:52 As-Built Schedule 17:12 Modeling Perspective: Design Change 18:20 Firm Impact of Overall Project 21:15 What is a “Frag Net?” 23:10 Who has the financial impact and owns the responsibility? 25:19 Need a Basic Understanding to Negotiate a Change Order 28:35 Keep Proper Project Documentation 30:16 A Dozer Costs Money if Its Sitting 34:13 AI Impacting Scheduling 33:30 Tools Used for Time Impact Analysis 36:36 Concept of 3D 37:39 Integration between Primavera and Procore 40:45 Baseline the Schedule 43:40 The Navy Used the Critical Path Method to Construct Submarines 45:30 Marking Up the Schedule Thank You to Our Sponsors: Well Built Construction Consulting https://www.wellbuiltconsulting.com/ Steel Toe Communications (Digital Marketing for Contractors) https://www.steeltoecommunications.com/ Katz Abosch (Tax, Audits and Accounting) https://www.katzabosch.com/ Lawrence Law (Legal Challenges for Contractors) https://lawrencelawllc.com/ Sandy Spring Bank https://www.sandyspringbank.com/ Genesis AEC (Full Service Architecture, Engineering, Construction in Life Sciences) https://www.genesisaec.com/ Marsh McLennan Agency https://www.marshmma.com/?utm_source=... Construction Links Network: https://constructionlinks.ca/ For additional episodes and information visit https://www.themorninghuddleconstructionshow.com/about Subscribe to our weekly e-newsletter for the latest updates. https://lp.constantcontactpages.com/s...

The Well Built Series is a special podcast designed for decision-makers in the construction industry, as well as those aspiring to be leaders. Hosted by Chad Prinkey and Matt Verderamo, this series delves into the best practices perfected by successful contractors. Join us as we explore the “Do’s” and “Don’ts” that transform good companies into truly “Well Built” organizations. Whether you’re an industry veteran or just starting out, this podcast offers valuable insights to enhance your construction journey.

Join us on The Morning Huddle as Jeremie Harrison, Senior Project Manager at Leebcor Services, LLC, and guest host Tom Hughes, Vice President of Genesis AEC, delve into the pressing need for proficient Project Managers (PMs) in construction. Discover how the Project Management Professional (PMP) program provides a transformative solution, equipping PMs with vital expertise in contract language, project scheduling, and construction sequencing. Tune in to explore the impact of skilled PMs on project completion, efficiency, and innovation in the industry.

Join The Morning Huddle for an insightful conversation with Jennifer Todd, President of LMS General Contractors, as she explores the nuances of unconscious bias and its impact on the construction industry. Drawing from her experiences, Jennifer reveals how these underlying attitudes shape the industry, potentially impeding efforts toward inclusivity and diversity. Discover strategies for cultivating a more equitable future in construction as Jennifer uncovers the effects of unconscious bias and shares her insights.

In this episode, join Chuck Rakich, Superintendent Safety Manager at Henley Construction Co., Inc., as he reveals the keys to running projects that meet OSHA standards and cultivate a culture of safety excellence. Chuck passionately emphasizes the transformative power of viewing OSHA inspections as collaborative partnerships rather than dreaded encounters. Tune in as Chuck shares invaluable strategies for establishing a robust safety culture from the highest echelons of management down to the frontline workers, setting your job sites up for unparalleled success. Don't miss out on this episode packed with essential insights that will empower you to navigate OSHA inspections seamlessly and turn them into catalysts for improvement and collaboration.

Traditional leadership programs often overlook the hurdles obstructing women's path to leadership in the construction industry. During this interview, we'll confront these barriers head-on. By identifying the real issues holding women back, we can lay the foundation for genuine transformation.

One of the challenges is the double bind - Women are told to be more assertive and confident if they want to advance to leadership roles. Then they’re reprimanded for being too bossy or called aggressive.

We often hear from well-intentioned men who want to contribute but are unsure how. During this interview, we'll talk about how to shift the burden of change off of women’s shoulders and create a shared responsibility for change across your entire organization. We'll also share evidence-based strategies that you can use to accelerate the path to leadership for the women in your company.

In this episode of The Morning Huddle, explore the role of schedulers, debunk misconceptions, and delve into the necessity of schedules for all projects. Gain insights into software preferences, critical paths, and the complexities of delayed claims. Discover the evolving trend of a proactive scheduling model focused on efficiency, execution, and the challenges subcontractors face with CPM schedules. Uncover the value of a two-week look ahead and pull planning in this concise discussion on construction scheduling intricacies.

In this episode, we dive into the captivating world of Employee Stock Ownership Plans (ESOPs) with our guest, Ben Nichols, President of Harkins Builders, Inc. With over two decades of experience, Ben sheds light on the inner workings of Harkins' ESOP, dispelling myths and highlighting its role as a robust accountability and culture-shaping tool in the construction industry. We explore the tax benefits, recruitment strategies, and value-maximization tactics employed by Harkins, showcasing how being an ESOP isn't just a retirement plan but a key to empowering employees and building lasting wealth. Tune in for an engaging conversation as Ben passionately advocates for broader adoption of the ESOP model and shares Harkins Builders' success story beyond traditional retirement planning.

In this episode, we delve into the fascinating dynamic of semi-rivalry and discord between contractors and engineers. Join us as we explore each profession's crucial roles, uncover the valuable lessons they can glean from one another, and discover how they can unite to drive success as a cohesive team. Our guest, Sol Rosenbaum, owner of SR Engineering and Consulting, is a seasoned mechanical engineer who supports due diligence firms and building owners in the CRE world. The founder of Sol, sets an excellent example for younger engineers by inspiring them through mentorship. Join us as Sol lends his insights to this insightful discussion.

Sadly, too many construction projects fail to meet schedule and budget expectations and more than a few come completely off the rails in every mark in every year. Owners, architects, general contractors, and subcontractors alike retreat to their corners and focus only on protecting their selfish interests. In this episode, construction attorney Michael Wagner joins us to explore what happens to cause a project to become derailed, what behaviors worsen the situation, and what to do if it happens to you.

Great leaders are formed through their experiences. From the interactions they have with bosses, colleagues, and mentors to the education they receive from books and classes, our construction leaders are a product of the development they’ve received. In this episode, Vice President of Construction at Foulger-Pratt, Brett Harton, joins us to share his own leadership development journey and advice for current and future leaders alike on how we can build a better leadership culture in the industry.

A significant number of our field employees do not speak English as their first language. This language barrier has contributed to thousands of injuries and even deaths each year. In this episode, two-time Morning Huddle guest, Oscar Garcia, joins us to discuss how he is using artificial intelligence to breakdown language barriers and create safer job sites for Hispanic workers.

For any business, cash is crucial to health and success. Employees and vendors must be paid, or the whole thing comes to a halt. Contractors, in particular those who must purchase materials for installation, face a high-risk environment dependent on their customers’ timely pay. Scott Peper from Mobilization Funding has a front-row seat to the unique cashflow challenges faced by contractors, and he joins The Morning Huddle to discuss the topic and share strategies for maintaining a healthy cash position.

Most construction companies recognize opportunities to improve their business. Few have a track record of capitalizing on those opportunities and driving positive change. In the fast-paced environment of designing and building, companies become accustomed to their problems and focus on getting their work done instead.

In a first for The Morning Huddle, host Chad Prinkey will become a guest and share his experience driving organizational change as a consultant for the construction industry over the past 15 years. We’ll discuss why companies get stuck and what employees and executives can do to get better today.

America's top-performing contractors in every field have certain things in common. One of those things is a strong culture that allows them to maintain consistent results for customers and employees as they grow. Few contractors have done this more effectively than Ruppert Landscape. With over 2,000 employees across 8 states (and rapidly growing!), Ruppert has built a culture of success.

Our guest, Phil Key, is the President of Ruppert Landscape. He joins us to discuss how Ruppert has built and maintained their culture and why it has worked so far!

Many construction Project Managers have never received an education in their craft. Finding the time to travel to a training facility and sit for hours can be challenging for the average PM. We have so much going on and limited time, but quality professional development creates efficiency and reduces stress. In short, it is always worth investing time in training that will elevate your performance.

Join me, Stacey, and our guest Jim Rogers, a LinkedIn [In]structor who dedicates his time to delivering top-quality, easy-to-attend, online training programs for construction professionals right here on LinkedIn.

$7M in baby boomer businesses will sell by 2030. Many of those will be building contractors. Whether you’re in the market to sell or potentially buy one of these firms, or you simply want to understand the changing ownership landscape of the construction industry, join us for this episode. We have Eric B. Pacifici, Partner with SMB Law with extensive experience with acquisitions joining us for the discussion. He is leading small to mid-sized businesses to get smart about buying and selling in this dynamic market.

If you've ever been a part of a project team that doesn't communicate and where every entity acts selfishly, you may have thought, "there must be a better way." You're not alone with that thought, and you're right. There is.

The Integrated Project Delivery (IPD) method is a teamwork-based approach to construction. Imagine pulling the GC, architect, engineers, and specialty contractors together to work collaboratively throughout preconstruction and construction. Kevin Hollenbeck has experience with real-world applications of IPD and joins us to share his story to help bring more attention to this game-changing approach.

Every contractor needs an accountant, but certain relationships have the potential to become trusted advisors. As a contractor, you may want to be asking more of your accounting provider. Tim was a trusted advisor for several contractors during his time working for an accounting firm. He joins us on The Morning Huddle to share the principles that made his relationships so strong and strategic with his contractor clients, and what contractors can do to find and develop this kind of partnership with their accountant.

Transcript:

‍ ‍

00:11
Speaker 1
All right, it's morning huddle time.

‍ ‍

00:13
Speaker 2
Good morning.

‍ ‍

00:14
Speaker 1
I'm not saying it works. I wish you God speed, Godspeed with all of that. I think that's really nice. You know, I'm not sure what kind of success you're going to have with that today because the world, my friend, has changed.

‍ ‍

00:27
Speaker 2
Right. A lot of American construction workers, they have completely different.

‍ ‍

00:33
Speaker 3
These awards have a huge, like, criteria that you have to fill out and they usually have a community service or community relations portion, you know, the most.

‍ ‍

00:44
Speaker 2
Productive with a high performance value. And, you know, sometimes it's 11 o' clock at night.

‍ ‍

00:51
Speaker 1
Funny, isn't it? Yeah. Not for me.

‍ ‍

00:54
Speaker 3
Not for me.

‍ ‍

00:55
Speaker 1
At 11 o' clock, I am guaranteed to be snoring. So foreign. It is morning huddle time. I'm Chad Prinke. Thank you so much for joining us. I've got, as always, wonderful producer and co host Stacey Holzinger with me here this morning. Stacy, how are you today?

‍ ‍

01:18
Speaker 3
I'm doing great. Good morning, everybody. Welcome, Tim.

‍ ‍

01:23
Speaker 1
Thank you. Yeah. So today we have Tim Klimchock who he and I got an opportunity to meet just I guess what Tim about a year ago, something along those lines about that. Yep, maybe a little less. But in, you know, Tim and I were similar to Stacy and I actually on a similar life journey of having spent a long time working for somebody and being, you know, put in a position to reconsider that and start working for ourselves. And so Tim has been running his own business here for, you know, the past, I don't know, six months or something along those lines. And, and we'll give you an opportunity to talk a little bit about what it is you're doing with that business.

‍ ‍

02:08
Speaker 1
But you know, when Tim and I were connected, it was just one of those things like sharing the wonderful, exciting, scary challenge of being an entrepreneur. So it's, you're in good company here with Stacy and I. We've been, you know, just over the past two years both on the same journey. So Tim spent better part of, I don't know, 10, 12 years or something like that at Stambon Ness, which is an accounting firm in Pennsylvania up and up in York area. He was the director of the AEC Group in that market and before that was an accountant for another firm for 10 years. So 20 plus years of accounting experience. I'll shut up and let you expand on that. Tim, what else would you add? And what are you doing now?

‍ ‍

02:59
Speaker 2
Excuse me. Thanks, Chad. Appreciate it. Appreciate the opportunity to be here today. Yeah, 20, 24 years in public accounting. This is definitely a new experience this tax season that I don't have 450 returns to sign this year. So it's. It's definitely been a little bit of a transition for me, but having a lot of fun. Had a great experience in public accounting. I think it's a great place to have a career. And I think for me it was this next step of just doing a deeper dive with a smaller group of clients and really getting a little more intimate with things as opposed to kind of hitting it with a shotgun approach, really just focusing on working with five to 10 clients at a time and really trying to add value and do some really cool things.

‍ ‍

03:42
Speaker 2
The name of my firm is Collaborative Advisory Group. Like you said, it's been. It's. I've started about four or five months ago, and things are off to a great start and I'm really enjoying a lot of the stuff I'm doing. And, you know, it's been a lot of fun so far.

‍ ‍

03:56
Speaker 1
Well, it's. I'm already benefiting, you know, and my clients are already benefiting from Tim. I've pulled Tim into a couple of different situations. One that we're in the midst of now. Pretty, pretty exciting to, you know, benefit from your experience and. And expertise on the financial front, really as that, you know, small boutique kind of service where, like you said, you can really be, you know, deep in it and. And extremely helpful. So glad that you're a part of it. I'd also be remiss. I have to. I'm seeing them on the chat. Potentially my best friend in the world is. Is. Is with us this morning is Jason Dixon, who has joined. And Jason's actually the reason that we connected and, you know, there's a Penn State connection there that I find a little off putting as a terp. But I'll.

‍ ‍

04:46
Speaker 1
But I'll struggle through. I'll make it.

‍ ‍

04:49
Speaker 2
I've known Jason since I was 16 years old and he was 18, so that was a couple of years ago, to say the least. Yeah.

‍ ‍

04:55
Speaker 1
That's awesome. That's awesome. All right, well, good. So we're going to get in today to talking about something you have a ton of experience in, which is I'm hoping to kind of educate our audience on. You're really the kind of relationship they should be expecting out of their accounting firm. The vast majority of our audience is contractors. There may be some accounting firms and maybe bankers or other professional service providers who also join us on a regular basis or may be joining us specifically for this episode. And they are probably going to have some good ideas for how to be a better service provider based on this discussion. But I'm hoping that contractors take away something that they can, you know, start to a new standard that they can start to aim for when it comes to establishing partnerships with their accounting firm.

‍ ‍

05:41
Speaker 1
So with that, I'm going to dive in. Stacy, as always, master of ceremonies, help us to get some awesome questions in through our, you know, audience this morning and we'll bring you back with about 10 minutes to go and get some audience questions.

‍ ‍

05:56
Speaker 3
Sounds good.

‍ ‍

05:57
Speaker 1
Thanks. See you in a bit. All right, so. So, Tim, let's go. Let's start with a crash course 101. I know this is, you know, maybe even pre 101, but I'm going to ask because I think it helps to set the stage, talk a little bit about just inside a construction company, what their finance and accounting makeup really needs to be and how they, you know, what they're trying to accomplish. Just talk about the goal of that financial silo inside a construction company, like leaving the accounting for a minute. Just what's the goal of the accounting silo or the financial silo inside?

‍ ‍

06:36
Speaker 2
Well, like everything in account, we always joke. Well, it depends and I think a lot of it depends on the size and the complexity of the company. You know, I think there's some differences between general contractors and specialty contractors, for sure. But, you know, a lot of times you're going to see someone in this controller, CFO type role that has the ultimate oversight responsibility of the company's financial operations. My personal definition has always been the controller is more focused on looking at the past and summarizing the past, where a CFO is really more forward looking and looking at the future. However, I do see in my experience a lot of times where that person, you know, again, depending on the size of the company, can't afford both functions or it doesn't make sense to have both that.

‍ ‍

07:21
Speaker 2
That controller slash, cfo, regardless of their title, has the responsibility of doing both of those things. And then to that point, obviously segregation of duties and making sure you have controls in place amongst the different people underneath those folks is important too. A lot of people have somebody separate for billing and then have another person on the payable side. Again, depending on size, somebody might be doing both of those functions. But ideally you want to make sure that there's this segregation of duties, as we say in the accounting world, that, you know, make sure that the checks and balances are in place. And some. There's always somebody reviewing somebody else's work. So. And then when it comes to construction specifically, then someone has to really take ownership of the WIP schedule and job cost and revenue recognition and everything that goes with that.

‍ ‍

08:10
Speaker 2
That's the biggest thing that's unique about contractors is that whip schedule and having a whip schedule that makes sense, that you're tracking your job costs, that you're recognizing revenue and just getting everybody on the same page. And that controller, CFO person really should be the liaison between the project managers and the estimators and ultimately with the owners.

‍ ‍

08:33
Speaker 1
Awesome. I love it. I, I like that idea of the control, pardon me, of the controller being this liaison between the departments tying together the financial picture of the business. So great. I think that's a great picture. Now layer in the 101 level of where the accountant fits into the mix. So do I need to hire an accounting firm or can I, you know, why am I hiring an accounting firm as a contractor and what fundamental role or traditional role am I really looking for that accounting firm to provide?

‍ ‍

09:10
Speaker 2
I think from a traditional perspective, you know, everybody thinks there's really two pieces of the puzzle. You have your financial statement side and you have your tax return side. And as everybody knows, tax returns need to be filed, whether it's for the company and then ultimately for the owners. And a lot of times the CPA firm takes that role of being the tax preparer. And hopefully there's some tax planning involved with that before year end. And then there's the regulatory compliance of filing the returns that you need to, both at the federal level and for most people, multi state level. The financial statement side is really driven by the surety companies and the banks. And there's three types of financial statements.

‍ ‍

09:47
Speaker 2
There's compilations, reviews and audits, depending on, you know, what you're borrowing, depending on what the size of your company is, that's really going to drive the type of financial statement. And it's really three different levels of service that the accounting firm steps into. And think of it as just a verification of your internal numbers and helping you get your numbers in line. And then ultimately we sign off on a report that says that we've either compiled, reviewed, or audited these numbers. And there definitely is different stages and obviously there's different cost levels for all those things as well, based on the amount of effort that, you know, the traditional CPA is going to have in that.

‍ ‍

10:25
Speaker 1
Yep. All right. Good, that totally makes sense. So I look at that as. Tell me if I'm wrong in the way that I'm thinking of this, but I always think of that as kind of the, that's the price of entry for an accounting firm, like. Right. Meaning you better have the ability to handle tax and financial statements perfectly like that. That's the expectation. It's the minimum threshold. And, and you know, in your experience be, you know, obviously you're not in any way, I will say this for you are not in any way talking about your previous employer or throwing anybody under the bus. Right? Like that's not what I'm asking you to do. But what I am asking you is, you know, in your broad and you know, 20 plus year experience as a CPA serving contractors, how many CPAs are failing?

‍ ‍

11:22
Speaker 1
What percentage do you think are failing to meet, you know, that level? That standard of these things have to be tight.

‍ ‍

11:30
Speaker 2
I think, you know, I think they're. And one of the biggest challenges in the business development area for accounting firms is there really are a lot of good construction accounting firms out there, my previous firm included. They're every region, everywhere across the country. There's a lot of CPA firms that pick construction as a niche and you know that they're really focused on it. But then there are some other firms out there perhaps that we used to joke about it as. And construction. So a CPA firm and it's something, you know, for your listeners to think about is, you know, looking at the whole picture of what this CPA firm does in the construction area.

‍ ‍

12:05
Speaker 2
So the end construction thing is you'll see on their website that we do nonprofits, we do manufacturing and governmental stuff, we do distribution, maybe we doctor's practices and construction will be at the end. And it's like, you know, I think that's really where the differentiator can be, is that you avoid those firms that are the end construction. And how do you do that? I think part of it is, you know, making sure that you're looking at the relationship with the cpa. Do you know these people, Are there people at your, whatever trade organizations that you're involved with, whether it's ABC or cfma, you know, not to promote any specific organization. But do you see these people pushing thought leadership out there? Are they, are they going out of their way to, you know, push webinars out there and content?

‍ ‍

12:52
Speaker 2
Are they sending you frequent emails? Hey, this is what's going on specific to your Industry, those sorts of things are the things to really target on. But that, but it is a challenge because there really are, you know, I could sit here and name you 10 to 15 firms, say in the Baltimore region and up here in south central Pennsylvania that I think are good quality firms. I know a lot of people at these firms and there's a lot of people that are doing good work. So that's really where you get into the next part is what extra value add stuff can these people bring to you? Right.

‍ ‍

13:24
Speaker 1
Yeah. So. And that's so. So if I'm hearing you right, the likelihood that one of these highly qualified construction. Construction accounting groups is missing the mark on the cost of entry, on the tax preparation the, the likelihood that one of them is. Is dropping the ball in that area relatively low.

‍ ‍

13:49
Speaker 2
Relatively low. Yeah, I mean there's, yeah, there's certain people obviously can better than others, but I think that there's a lot to choose from in the marketplace. There's some people that dabble in it that shouldn't be dabbling in it because there are some very specific things with construction accounting that are very unique.

‍ ‍

14:04
Speaker 1
You know, let's jump into that for a minute. I'm interested in just it like, you know, what makes construction unique for an accounting firm that would make it something that the. And construction guys maybe shouldn't be dabbling.

‍ ‍

14:19
Speaker 2
I, I think it's totally the whip schedule and folk, you know, the whole. Everything about the whip schedule, whether it's revenue recognition, whether it's cost, you know, accumulation, you know, whether it's, you know, estimating, you know, and everything about project management, you know, the fact that you're not like anybody that would focus on a manufacturing operation, let's say, let's not pick on the manufacturers out there. But, you know, there are certain things that are consistent and very repetitive with manufacturing a product. As we all know, construction is definitely not that way in a lot of respects. So the fact that there's uniqueness, the fact that you're building a unique product every time really takes a lot more oversight.

‍ ‍

14:58
Speaker 2
And just the whole, that you have this system now, project managers and estimators and a bunch of people looking at these things, because it's not exactly the same thing every, you know, every single time. So it's really about, you know, what estimates are you using moving forward, you know, over under billings. And like there's just, you know, a lot of that stuff comes into play, you know, Manufacturer might just be worried about receivables, but we have this unbilled receivable, the under billing that we have to worry about too. So there's just unique things. It's something, you know, I, as we joked about before, I think, you know, I've been doing this for 25 years and I think I know what I'm doing now.

‍ ‍

15:33
Speaker 2
But I think back to different in parts of my career where it's sort of like, wait a minute, like you thought you got it, but it's like, wait a minute. I didn't understand when I first started what this meant.

‍ ‍

15:43
Speaker 1
So yeah, it's, if that doesn't happen, you haven't been growing, you know, but the key is to remain humble today, knowing that 10 years from now you're going to look back and be like, man, I was an idiot. So that's, that is the key, you know, you do your best and you stay humble. So that's extremely helpful. And I think if I get then past the barrier to entry and I think, okay, I'm working with an accounting firm that clearly understands wip, that understands over and under billings, that has the ability to look at my, you know, financial silo and really make not just heads or tails of it, but have the ability to understand the nuances very quickly and add value in the, in that form.

‍ ‍

16:36
Speaker 1
Like if something's not working internally in the way that you're logging or tracking or you know, cost codes or whatever, that your accounting firm would have the ability to pop their head in and say, hey guys, I'm noticing some stuff that needs to be sorted out. And, and if they don't have, if they're and construction guy, they're probably not going to have that. And, but if they have that construction background, they're going to be able to see it quickly, they're going to be.

‍ ‍

17:00
Speaker 2
Able to resolve it.

‍ ‍

17:00
Speaker 1
That's very useful. Let's talk about the value add where so if you've got this group of 10 to 15, you know, in any given region, qualified capable construction accounting firms, how do I pick which one to really use at that point and what, you know, what criteria should I be overlaying to consider who's adding more value?

‍ ‍

17:25
Speaker 2
Well, I think once you get through that initial scrub of saying, okay, these are the qualified contractors, construction CPA firms, then I, I see the next step is really being, okay, what else do they bring to the table like we talked about before, how are they involved in the trade associations that you belong to? Do you know who their other clients are? You know, get an understanding of what other companies are they working with? And, you know, another thing I've had come up on occasion is on a rare occasion it might be they're working with a competitor that you might not appreciate. The fact that your CPA is your direct competitor who maybe you don't get along with is, you know, we don't want to make sure that we're, you know, there's a confidentiality piece to our business. But there is that perception.

‍ ‍

18:10
Speaker 2
If you, if you do too much work with one particular company, there might be, you know, a risk of, you know, that some people are focused on that. Very few, but I have seen that before happen. But, you know, I think it's really about, you know, focusing on those value add things that they can bring to the table in terms of what associations are they involved with? Are they pushing thought leadership out there? What ideas are they bringing to the table? Are they ask, you know, some things I was thinking about or, you know, are they, you know, what would be wrong with asking your CPA asking you to go on a job site visit? Let me see boots on the ground. Let me see your actual process in the field. Let me understand your whole process from estimating to project management.

‍ ‍

18:55
Speaker 2
You know, inviting your CPA potentially to come to a project manager meeting and just sit there as a fly on the wall just to observe, just so that they, because there's only so much that person can do. It's based on what you're telling them ultimately. So it's, you know, them seeing it live and really seeing behind the curtain a little bit really will help add, give them the opportunity to add that extra value, for sure.

‍ ‍

19:20
Speaker 1
Love it. I love it. You know, it's so the. Mike, My business, believe it or not, is not podcasts. I, I, this is for fun. But, you know, in my business as a strategic consultant, I'm sorry to say that I can probably count one hand the number of times that a client has really connected me with their accounting firm or that their accounting firm has reached out to me and said we should really be, you know, on the same page. In the small handful of times that has happened, these are extremely strategically valuable relationships that those people have. Right. Like they're telling me they're giving me insights into the numbers, if that. So if that client hires me to help them to go from 5% net to 12% net over the next, you know, three years.

‍ ‍

20:20
Speaker 1
And that's the focus, is to drive up that net profit. Having a real strategic accountant. I mean, it's like a, it's like an easy button for me figuring out what needs to occur. Because they have such incredible insight into the, the things that are keeping them from being able to get to their goals. And whether it's people or lack of processes or, you know, markets or lack of technologies, all those things. You know, I'm hearing you say, if you have a relationship with an accountant who is willing to climb inside your business and not just stay on the outside, but actually climb inside your business a little bit and understand how you're operating, they have the ability to add so much more value and really be a consultant and an advisor.

‍ ‍

21:06
Speaker 2
Yeah, it's really about that advisor piece. The fact, like you mentioned the IT side of things, that's another area that can be incredible. And the CPA can play a role in that, too. If you read the trade publications out there's so much technology stuff going on in construction, there's that an owner has to be overwhelmed by, like, where do you even begin? Like, I can only imagine being in your shoes. It's like, okay, what do I invest in? What's not a waste of money you're getting, you know, getting a lot of that comes from the trade associations that, you know, are helping to push some of these things too. But, you know, there's so many ads out there, like, just to weed through that process.

‍ ‍

21:41
Speaker 2
You know, I think the cpa, again, is that trusted advisor can play a role in that if you let them. But again, you have to be willing to open up and show the person what you're looking. Well, this is the help that I need. And if there's a good, caring relationship there. Because that's the other biggest part, too. I'm not saying you have to best friends with your CPA and CPAs. Typical accountants aren't cool people is what most people think. But we can. So it's sort of like, you know, build that relationship, like, understand who. And here's the other part, too, that I didn't mention is I, I, years ago, I, I came up with this idea of just who do you want to meet? You know, I was doing almost 100% of my work for architects, engineers and contractors.

‍ ‍

22:22
Speaker 2
It's been like this for a long time. I'm in a position to make referrals, too. You know, if you have a good CPA and I know you're not thinking of an accountant like this, but, you know, there's opportunities where if you want to meet somebody, maybe I know how to get to that person and can help facilitate an introduction. That's been the part that I've enjoyed.

‍ ‍

22:39
Speaker 1
The second part I would add too.

‍ ‍

22:41
Speaker 2
Is, you know, a CPA that's involved with some of your. If you're a GC that's involved with some of your specialty contractors. One of the things I like about being involved regionally is that I know what's going on about a lot of projects. I know developers, I know the gcs. I know what I hear things of what projects are going where. And a lot of times when you meet with. A lot of times when I'm sitting down with a client for the first time in a while, the coolest part for me was that people would ask, so, Tim, what are you hearing out there? There? Like they, that was the pause and they wanted to hear. And I'm sure you get this too, Chad.

‍ ‍

23:15
Speaker 2
It's sort of like you just have a pulse on things that they don't see because they're so focused and working in their little silo, let's say, for, you know, and they don't get the chance to talk to people sometimes because they're so busy with the office stuff. But you're a guy and I'm a guy that's out there, so they actually like that feedback. What are you hearing from your banker friends? And, you know, what are you hearing? What's going on with legal issues out there, HR issues, all these things. And it's just you have all these resources available to really help people. And a lot of accountants don't want to take that step because it's out of their comfort zone. But a lot of them do.

‍ ‍

23:48
Speaker 2
And those are the ones that you really want to focus on is finding people that can, you know, help. Help make those connections for you.

‍ ‍

23:54
Speaker 1
Makes total sense. So, so I, I'm. I want to provide a quick summary.

‍ ‍

23:58
Speaker 2
And, and I'm, I'll.

‍ ‍

23:59
Speaker 1
I'm going to bring Stacy back because I will have some questions that she'll pose to us here. But quick summary of my takeaways is three categories of value add. The first category is business advisory. That is that your accounting relationship, having a deeper understanding for your unique business, the people in your business and being able to help beyond just a dollars and cents standpoint. But to point it maybe the drivers of the dollars and cents outcomes and give you Some advice and support from a business advisory standpoint. That's number one. Number two is, I would say relationships and, you know, they're being plugged in a complimentary space and having the ability to connect people, bring people who should be collaborating or doing business together, directly pulling those folks together. And, you know, that's probably a relatively rare trait for an accountant.

‍ ‍

25:17
Speaker 1
You know, not that they're not cool, Tim. I think they're cool, but they're not necessarily the most social people in the world, necessarily. Right. Like, there's a. There's a tendency for those, for people who are involved in high detail work to not be socially oriented and external. So that would be. The second category is the relationships they can bring to the table. And then the third category would be market intelligence is that their ability to provide useful data about things that are happening in and around the market. Big projects that might be moving forward, turnover trends and what we're seeing in terms of employees leaving or in terms of materials pricing or in terms of. Right.

‍ ‍

26:08
Speaker 1
All this different type of insight that somebody would be getting from just simply being immersed, plugged into the market gives them the ability to add value from a market intelligence standpoint. So advisory relationships, market intelligence. Add that to your selection criteria for accounting, in addition to ensuring that they have a strong deep construction practice, because if they don't, they're really not going to be able to provide any of these three things in any meaningful way anyway.

‍ ‍

26:41
Speaker 2
Right. So it's a matter of just getting started. You know, set up quarterly meetings with your accountant. Let them come out. Let's, you know, have a conversation with them and just get the ball rolling with this. If it's a new relationship or an existing relationship, it's. I think people just weren't thinking of it in these terms that it's. It's okay to have a conversation and get that. That accountant to open up a little bit, because there's a lot of value there for the people that specialize in this work. It's just a matter of. Sometimes you have to ask them to get the ball rolling a little bit.

‍ ‍

27:11
Speaker 1
That's all. Love it. Love it. Good stuff. All right, Stacy, we probably have a few questions before we have to jump off with Tim today.

‍ ‍

27:21
Speaker 3
Yeah. Eric just posed a question. What's the best way to find one of these unicorn CPAs that are willing to climb into your business with you and have these three things?

‍ ‍

27:32
Speaker 1
Yeah. Is there like a. Is there like a cpa, A unicorn CPA detector that we can.

‍ ‍

27:37
Speaker 2
Yeah, I love that I use that term unicorn a lot. So I love that. So I think that, you know, if you're not getting that from your existing accountant and you think they're. That that ability is in that person, you should ask them. It's like, okay, this is what I'm looking for this relationship to be. But you know what I had said, I think at the. Be sort of toward the beginning of the presentation here, you know, look for people that. I almost feel like when I was meeting with clients, it's almost like I'm. There's. There's an initial presentation. It's almost like I feel like I'm on a stage when I'm talking with people.

‍ ‍

28:11
Speaker 2
And so that makes me think, you know, anybody who's willing to do a formal presentation for your trade associations, that's someone that's used to sharing and is open, you know, that might be a way to look at it. You know, people that are actually pushing that thought leadership out there and doing presentations, that might be someone that. Again, I, I don't feel like I'm on a stage necessarily when I'm with clients, but I feel like I need to have my thoughts together to present ideas to them when, hey, Tim, what are you seeing out there? That market intelligence stuff. That's me being on when I'm with these people and then, you know, being engaged and dynamic. So that might be one way to find that person. You know, you know, I definitely, I, I.

‍ ‍

28:52
Speaker 2
Not to plug any specific trade organization, but you know, see, with this type of work, CFMA is a big one. Construction Financial Management association, national organization that has local chapters. There's a designation that I have called a ccifp, a Certified Construction Industry Financial Professional. I think that's a good way to find somebody too is focusing on that because there's continuing on top of taking an initial exam to get the certification, there's continuing education requirements that are specific to construction accounting that have to happen that you have to report every three years. So that's another piece of the puzzle too as you're trying to weed those out with looking for somebody that specializes. That's awesome.

‍ ‍

29:36
Speaker 1
Yeah, that's a. It's a good litmus test to check real capability set in the industry is if they have a ccifp. I think that's great. I. One of the things I want to piggyback on or build on that I think you hit the nail on the head with was just right at the very outset. Tell these people the criteria, whether it's your existing CPA or whether you're shopping for a cpa, tell them that this is a part of the criteria and that it's a part of the expectation and ask them to demonstrate to you how they have the ability to do that. If they, if they struggle and they're scrambling to try to figure out how to present it to you, they probably aren't strong doing that.

‍ ‍

30:21
Speaker 1
If, if they're able to give you example after story after story and you know, situations, then it really works. It makes me actually think of a long time general contractor client of mine that I remember it was probably 10 years ago or eight years ago. They said to, they conducted a search process and they told their cpa, we're looking for you to be strategic, specifically in the area of relationships. We're looking for a CPA who can make connections and introductions in the developer community. They hired one that said they could do that and a year later they did. They, they went through and they said, look, you didn't do that, you're fired. We're moving on to the next one. And they ended up finding a, a really strong long term partner that way. So that's the other aspect of it.

‍ ‍

31:08
Speaker 1
I know it's uncomfortable, but you have to be willing to make a change. Even though you totally like your accountant and they haven't done anything wrong. The question to your point, Tim, it's like there's a lot of qualified people and that's not going to necessarily be your barrier. It's, you're not going to necessarily struggle to find, you know, strong qualified accounting firms in construction. What you are going to struggle to find are people who are committed to providing this level of service.

‍ ‍

31:37
Speaker 2
Right? Yeah, it makes sense if you think about it that you know, one, when they come in, we have a specific assignment that we have to get through those formal financial statements and tax returns. So it's really easy to focus on the production side of things and getting those deliverables done. It's that extra part that I think just gets lost sometimes. But frankly that's the part, that's the fun part. The part I've realized it isn't doing the financial statements. I mean, I did that for a long time. Tax returns for a long time. The fun part is really building these relationships with people, getting to know them, taking them to lunch, you know, maybe you play golf with them, go to a ball game with them, spend time with these people so that you get the opportunity to really, you know, build that relationship.

‍ ‍

32:18
Speaker 2
And just understand who they are. And then when it is time and you're working your 80th hour of tax season and you have to work another two hours to get something done, there's a different feeling. If you care about that person and that relationships there, it's like, okay, I'm going to find a way to get this done because I know they need this and expect this from me.

‍ ‍

32:35
Speaker 1
I love it. I think that's right, Stacy. I think we could probably squeeze in.

‍ ‍

32:39
Speaker 3
One additional say, with that being said, can you share us or illustrate any ideal relationships or stories with any of your clients?

‍ ‍

32:49
Speaker 2
I, I think, you know, I, I, as I said, finding ways to put people together, that's the part that I've enjoyed. And a lot of, one of the things I'm known for, I guess, is building those relationships and, you know, finding opportunities to put this architect together with this general contractor or putting this engineering firm together with this art. An architect, you know, finding ways to make those connections. And, and the guilty pleasure of this is if I actually go to the lunch and you make the connection, I just sit there, Believe it or not, I talk all the time, but believe it or not, sometimes I actually just sit and listen. And that's again, part of me building my intelligence level and just understanding their industry even better. So that's where, you know, finding opportunities like that, like, that's the cool part.

‍ ‍

33:31
Speaker 2
If you know, the people, when people say thank you because you went out of your way to create business for them, you know, that was part. I wasn't expecting to happen on my CPA accountant journey, but that's been some of the best. Yes, I can save you money. I can help with strategy. We'll save you taxes. Will present things great for the bonding company and the bank for you, all those things, but that's, that should already be a given. What else can you really bring to the table? And really, that's the fun part where you really add value and make and people say thank you. That's been, that's been the best thing for me.

‍ ‍

34:02
Speaker 1
That's awesome.

‍ ‍

34:03
Speaker 2
I love it.

‍ ‍

34:03
Speaker 1
And I think it may be, if you're a professional service provider and you're watching or listening to this episode, one of the takeaways I would have, if I were you, would becoming fascinated by, excited by the idea of being more of a connector. I think to the extent that you do that, you have made yourself irreplaceable as a service provider. Assuming you're providing a really strong tax and financial statements, you know, service, then you have this differentiator that protects you long term. And I'll just quickly ask Tim, in your 25 years, when being a CPA, did you have a pretty good client retention rate? Yeah.

‍ ‍

35:00
Speaker 2
Yeah. I used to joke, I said to a client one time, how hard would it be for you to fire me? And he said it'd be next to impossible because I'd have to tell so many people because you're part of that network. So that's. So if the CPAs out there that are listening, it's like, that would. That'd be my one piece of advice here. It's good for retention here. If you find those extra things in the event something doesn't go right or there's a miscommunication of something, that capital that you're building up with that client, and this can be applicable to the bankers out there and illegal and any other professional service that's servicing the industry. You know, the whole point of this is we're building up capital, but mistakes do happen, and miscommunications do happen.

‍ ‍

35:38
Speaker 2
This is how you build up that capital with people to really, you know, build that relationship so that when those things happen, it can weather that storm that happens once in a while.

‍ ‍

35:47
Speaker 1
Yeah, of course. Yeah. Because we're human and service providers, and in a service business, things happen. So there's.

‍ ‍

35:53
Speaker 2
There's.

‍ ‍

35:53
Speaker 1
There's no doubt. Tim, this has been a lot of fun. Thank you so much for. For joining us for the morning huddle. Do you have any parting words?

‍ ‍

36:02
Speaker 2
No, I think. I think this was great. You know, I appreciate the opportunity to be on the podcast. A lot of great topics that you guys have going, and look forward to the next one. Absolutely.

‍ ‍

36:12
Speaker 1
Thanks. Please do. Yeah. Continue to. Continue to spread the word. Join us and we'll, you know, maybe. Maybe episode 84 will bring you back. Or episode 41. Right. Stacy's like, I can't believe we're gonna do more of it. We're going to do that many episodes. Yeah, it's freaking. Yeah, I know. It's all right. Thank you so much, Tim. Stacey, we have a little bit of cleanup to do. Let's talk about next week. So first things first.

‍ ‍

36:40
Speaker 2
Next.

‍ ‍

36:40
Speaker 1
Next week, you tell me Women in Construction Week is not next week. It's the following. Is that right?

‍ ‍

36:46
Speaker 3
Correct. So we're ahead of the head of the game, and we're going to be talking about workwear for women, shoes, clothes, and careers. We have Three guests on next week. So it's kind of like a panel lineup. I actually just bought Juno boots from one of our guests. I have not worn them yet. I'm going to test them out on Friday. I'm going out to a job site. So I'm excited for that. But her shoes are, they're beautiful. So we'll get to talk about all that fun stuff.

‍ ‍

37:17
Speaker 1
I'm psyched. I'll be. This will be a moment. I'm again, you know, we talk about it a lot, but there are these opportunities to learn that I feel so fortunate to have with all these guests that come on, we just get to ask them really cool questions. And I don't know if you notice, I, it's. I literally am filling up pages full of notes for me, you know, when I'm having these conversations. And I look forward to doing that again next week. A three person panel. Women in Construction to ring in Women in Construction Week. A little ahead of schedule, which will be great as always, I think. You know, guys, the mailing list, it continues to grow every week. Please share your email with Stacy H. Steeltocom.com and she will get you set up so that you're receiving a weekly email.

‍ ‍

38:07
Speaker 1
And it's very easy to register as well as follow up with the previous week's episode. If you didn't catch it live. You'll have all the links and all that type of stuff. We stream live on LinkedIn, YouTube and Facebook, but we're also on Apple podcasts, Spotify and of course recorded on YouTube. I continue to hear from people who are listening to us driving down the road. That's how I take in my podcast. So as much as we wish you were here live, you know, please, if you're a listen and driving type of person and this time slot isn't perfect for you, make sure that you find that and tell a friend, please spread the word. We're trying to, we're trying to, you know, make the biggest possible impact in, you know, creating this platform for positive change in the building industry.

‍ ‍

38:56
Speaker 1
Stacy, are we ready to announce a certain. We can, yay, talk about it.

‍ ‍

39:02
Speaker 3
Nawic. So national association of Women in Construction. Chad is going to be. Well, Chad and I will be attending this spring forum. Do you have the date for that?

‍ ‍

39:14
Speaker 1
I do, yeah. It is May 5th and 6th. It's a two day event. May, Friday, May 5th and Saturday, May 6th.

‍ ‍

39:23
Speaker 3
So we're gonna do our first live podcast event with a panel there so we'll get more details of the time and when to tune in and all that fun stuff. But we're excited for that.

‍ ‍

39:35
Speaker 1
That should be sufficiently nerve wracking.

‍ ‍

39:37
Speaker 3
Yeah, we'll see how that goes with the noise and all that stuff.

‍ ‍

39:43
Speaker 1
Yeah, totally. But it's going to be, you know what I'm really excited about is to bring attention to NAWAK and to have an opportunity to learn more about what they're doing and spread the word there. I'm actually going to be giving a keynote presentation On Saturday the 6th, first thing in the morning. It's going to be about driving change from within your organization, regardless of your role in an organization and in doing so in a male dominated environment with some sort of, you know, advice for gaining buy in and traction on ideas. So I sincerely hope that if that is something of interest to you will sign up for the NAWIC conference which I believe is going to sell out.

‍ ‍

40:28
Speaker 1
I think they're going to have somewhere around 150 to 200 attendees and you know, early indications are that they will run out of those. So check out nawic. We'll have more information that we'll send out in the newsletter with register registration links and all that type of stuff to help them to spread their word and help our members to take up those seats before they go away. So. All right, that's it, Stacy. I'm gonna stop with the talking and we'll transition into next week. I can't wait to see everybody again soon. Stacey, anything to say before we part?

‍ ‍

41:02
Speaker 3
Nope. I'll see you guys all next week. Have a wonderful day.

‍ ‍

41:06
Speaker 2
Thanks.

‍ ‍

41:06
Speaker 1
See you too.

‍ ‍

There’s a demand for qualified leaders in the construction industry, and our guest for this episode has dedicated herself to meeting that demand by unleashing the potential of women in leadership positions. Mentors guide up-and-coming professionals, using their experience to help develop a (usually younger) mentee. Sponsors, on the other hand, advocate on behalf of their mentees and help them advance in their careers by being proactive with those in positions of power. In this episode, we learn how to be an effective sponsor for up-and-coming leaders in the construction industry to help eliminate the leadership shortage.

Transcript:

‍ ‍

00:08
Speaker 1
All right, it's morning huddle time. Good morning. I'm not saying it works. I wish you, Godspeed with all of that. I think that's really nice. You know, I'm not sure what kind of success you're gonna have with that today, because the world, my friend, has changed. Right? Latin American construction workers, they have different needs.

‍ ‍

00:28
Speaker 2
They have completely different.

‍ ‍

00:30
Speaker 3
These awards have a huge, like, criteria that you have to fill out. And they usually have a community service or community relations portion, you know, the.

‍ ‍

00:40
Speaker 2
Most productive with a high performance value. And, you know, sometimes it's 11 o' clock at night.

‍ ‍

00:48
Speaker 1
Funny, isn't? Yeah, not for me.

‍ ‍

00:51
Speaker 2
Not for me.

‍ ‍

00:52
Speaker 1
At 11 o', clock, I am guaranteed to be snoring. So foreign. Good morning. It's morning huddle time. We're here for season four. I am psyched. We've got three months of amazing guests that Stacy helped us to hook up with I. Her, I guess just her charm. She's. She's incredible at getting people to agree to come hang out with us. It's so wonderful that we have today Andrea Jansen, who's joining us from Ambition Theory. And Andrea, how are you today?

‍ ‍

01:30
Speaker 2
Oh, I am fantastic. Thank you so much for inviting me onto the morning huddle.

‍ ‍

01:35
Speaker 1
Yeah, we are so glad to have you. You're very welcome. And Stacy, how are you?

‍ ‍

01:40
Speaker 3
I'm doing great. I'm really excited about today's topic. I'm super passionate about mentorship and sponsorship, and I can't wait to hear what you have to say, especially, you know, people first joining the industry and navigating that in their careers and all that stuff and how they can get help and guidance throughout their careers.

‍ ‍

01:59
Speaker 2
So it's going to be great.

‍ ‍

02:01
Speaker 1
Agreed. I'm fired up. I'm also, I'm sitting here thinking, like, I can't believe that it's been already nine or ten weeks or something like that since were last on. Usually we take 8 off, but this time I think we took 9 or 10 off. And I was really getting used to having nothing going on Tuesday mornings. So. But no, I'm, so I'm. I'm really excited to be back in action. This feels more normal to me to have this going on every week. So Stacy is, as always, going to lead the conversation on the live chat. For those of you who are joining us live, if you are not joining us live. Thank you. Think about joining us live next time if you're in a position to do so. It's 9:00am Eastern here on LinkedIn Live. And then, of course, we're getting Stacy.

‍ ‍

02:55
Speaker 1
We have so many people downloading on Apple and Spotify now. I keep watching those statistics. They're going through the roof. It's really exciting to watch people joining us that way. But I do miss having so many people joining us in person. I want, I want more people in person.

‍ ‍

03:11
Speaker 2
Yeah, definitely.

‍ ‍

03:12
Speaker 1
You know, it's, it brings a lot to the Q and A. But look forward to the Q and A here in, you know, 20 minutes or so. And I'm going to jump right in with Andrea if that's good with you. Stacy, we'll see you in a bit.

‍ ‍

03:24
Speaker 2
Sounds good.

‍ ‍

03:25
Speaker 1
See you. Thanks. All right, Andrea, let's get to the business of talking about sponsorship and mentorship and what it's all about. And I think I'm, you know, embarrassed to admit that, you know, it wasn't until we had you, Stacy said, you know, hey, we've got Andrea joining us for this that I started looking into this and thought, oh, man, I wasn't really sure of the difference myself. So tell us a little bit about what mentorship is, what sponsorship is, how they really differ.

‍ ‍

03:52
Speaker 2
So don't feel bad about not knowing the difference. Most people don't know the difference. And actually, most people use the word mentorship to describe both mentorship and sponsorship. So we don't really say the word sponsorship out loud, and we don't necessarily need to. And I'll explain the difference. And I want to say thank you for inviting me to talk about this topic because this is my absolute favorite topic to teach about. And it's the topic if people, if women in the construction industry or companies that want to get more women into leadership positions, if they implement one thing, this is the thing that's going to get them the results the fastest. So I'm so excited to talk about this today.

‍ ‍

04:32
Speaker 2
So I don't know about you, but for my whole career, ever since I was probably a teenager, people said you need to find a mentor if you want to be successful. And so I did, like most people, and I spent hours just talking to people about what it takes to be successful, how they became successful. And to be honest, after a while, I was kind of like hitting my head against the wall because it wasn't working. And really, there's this interesting unconscious bias that shows up on how men and women are mentored. And it's different. And I'll explain the difference. So mentorship is really about getting advice. So say you're that, you know, that junior person. You're up and coming. You're like, I want to get to that next level. You go find that mentor.

‍ ‍

05:15
Speaker 2
So that's either a senior person in your company or in the industry. They don't need to be in your company. You meet them, they, you know, will share stories, they'll maybe tell, give you some advice, drop some names of who you should talk to about the thing that you want to learn. And then you go back to your desk or your office or your job site and you're like, okay, I'm all inspired. I'm going to do this. I'm going to invest in myself. And you're like, okay, I read the book, I heard the story. You know what? If I call that person that you mentioned, they're not going to recognize the number. They're going to think it's spam. So they're not going to pick up. You know, same thing with the email.

‍ ‍

05:51
Speaker 2
They're not going to reply because they have no idea who I am. So at the end of the day, it's up to you, the mentee, to implement, you know, what you've learned. The onus to take action is on you, the junior person.

‍ ‍

06:04
Speaker 1
So that's a slow go. I mean, it's, and it's very daunting. And to your point, you are met with a lot of resistance. And, you know, even if you do have the courage to do that outreach, which is by itself a mountain, the amount of obstacles that are thrown in your way, precisely because to your point, it's very difficult to get somebody to pay attention to you when you don't come in with some sort of, you know, some sort of support.

‍ ‍

06:36
Speaker 2
Yeah, exactly. And so sponsorship, on the other hand, is where you're that junior person. You want to learn that thing, you ask the senior person. And I'll give the example of business development, because that's a key skill that people need to learn in the construction industry. You need to understand how does the business of construction work. That's usually a skill that you need to get to that next level of leadership. So I'll give you an example of a sponsorship situation. So you go to that senior person, you're like, I want to learn how to. How the business works. And that senior person is like, you know what? I have a meeting with the VP of Sales and Business development tomorrow. Why don't you come along with me? So you, as that junior person, you get that exposure. You get to meet that vp.

‍ ‍

07:18
Speaker 2
You get to learn about that thing. You need to learn directly from that senior person. Then they get to know you. You start to build that relationship and that person knows. This person wants to, you know, learn this skill. They want to get to the next level, they're motivated. And then typically in a sponsoring relationship, it's like, okay, you know what, in two weeks, I am pitching a new client. Come along, protege. That's what we use to describe that junior person in this relationship. Come along. And you know What? I'm presenting 20 slides. You take the first five. I'll be here. I can step in if you screw it up. But. But we'll do this together. And really, it's that onus to take action is on both people.

‍ ‍

07:59
Speaker 2
And if you think about who's going to progress faster, is it the person that's preparing and reading all the books or the person that's kind of thrown in with that person to guide them and learning it as they go?

‍ ‍

08:12
Speaker 1
Yeah, yeah. Well, I think there's no substitute for experience and Trial by Fire, you know, and all those types. I mean, I think it's a good combination. I'd also recommend reading the books, but I agree that certainly getting the hands on experience is going to advance you faster. And so I want to bring this back to the thought of unconscious bias and how the experience differs between men and women. And you know, these aren't just your opinions. These are. This comes from data. I know that you're a data collector. It's a part of what ambition theory does. So tell me, what's the difference between men's experience and women's experience in this and point to that data.

‍ ‍

09:10
Speaker 2
Yeah, so that's a great question. So typically women are mentored. So women are given advice, prepared to the opport, prepared for that opportunity. And men are typically sponsored. And again, like I want to reiterate, this isn't my opinion. This is based on years of research. And the cool thing is we are. And this happens in every industry. It's not just construction. We're actually gathering more data right now so that we can actually quantify this experience for women specifically working in the construction industry. So we will have that in a couple of weeks. But that's typically how it plays out in the unconscious bias. And it's one thing I do want to say is people never do this on purpose. They don't even realize they're teaching. They're treating men and women differently. And it's actually out of really good intentions.

‍ ‍

09:56
Speaker 2
So for women it's the unconscious bias is I want her to be successful, I want her to do really well. I want to support her and I want to make sure that she's ready for when that opportunity arises so that she knocks it out of the park so that she does a really great job. So that's kind of the intention around it. Whereas for men it's typically about like, you know what, let's throw them in. They can figure it out as they go. And the key to doing that, like it's great to take those risks because you need to take risks to grow. But the benefit of having that sponsor is that they have skin in the game too. So if something goes completely wrong when you're taking that risk, they are in it with you.

‍ ‍

10:39
Speaker 2
So they can guide you to, they can help you pick up the pieces. If something goes wrong, they can help you navigate the politics of it. You have that person with you. Whereas in a mentoring relationship, if you're taking that big risk and it goes really wrong, the mentor is not, they don't have skin in the game. If they gave you that advice, you did. It completely did not go well. Nothing happens to the mentor. And the opposite is also true. If they give you some amazing advice and you follow it and it's a great, like you deliver really well, the mentor is not in it with you, so they don't get the credit either.

‍ ‍

11:16
Speaker 1
Wow, wow, wow. So something just happened in my brain as you were talking through that and that I, something kind of clicked in. Is that it actually through what you said is, you know, it's good intentions. It's this real desire to help this woman to be successful. But maybe this almost treating that woman with kid gloves instead of throwing them right into the, to the mix. Almost like being overprotective of the women that you're trying to help is actually hurting them. You know, you're by trying to protect them from failure, you're keeping them from being. And I can, this all makes sense because I can totally socially. Right. It's, it is ingrained. Speaking as, you know, a middle aged guy. Right.

‍ ‍

12:10
Speaker 1
I, I would say it has been ingrained as a Gen Xer growing up for sure that like, you know, I was definitely to be more deferential toward women. I was taught, I was taught to like open the door for women and be nice to women and you know, women, you have to treat women special and extra nice, you know, and things along those lines. And so psychologically I could totally see how we are. When I say we, I mean people who look like me, people we are failing to challenge or failing to throw people to throw women right in the fire. Like, and again, if I thought of a, of a male, right. Of a guy, my. A younger male, I'd be like, yeah, throw them into the fire. What the hell, See what happens.

‍ ‍

13:03
Speaker 1
And, and that is actually a strategic advantage for that person. That is fascinating. But then it's also sponsoring. So talk about being a good sponsor for a minute. Like, how do I. You talk about having your skin in the game. How do I, how do It in a. In the most supportive way possible where they're really set up for success.

‍ ‍

13:23
Speaker 2
So before I answer that question, I just want to go back to this epiphany that I just watched you have, which is pretty awesome. But when another thing, the. It's not just like men are kind of like being protected above women and preparing the women. It's really, it doesn't matter if you're a man or woman that is sponsoring or it's really. The behavior is on who that junior person is. So women will prepare other women too. And that is something like, I find myself getting stuck in these mentoring conversations and I'm like, you know what? Like, we know. And I'm going to segue this to like, how you actually shift the mindset to that opportunity. So because women do the same thing, it's not men versus women. It's just like you said, how we're socialized, right. And it's just, it's nobody's fault.

‍ ‍

14:10
Speaker 2
It just is. And once you know that is just the society and the culture that we're in, you can move forward. So how to be a good sponsor is. It's really about. The first thing is actually slowing down a little bit because the key about sponsors. Spot the difference between sponsorship and mentorship. You can give advice all day long, but you as that senior person that sponsor or that men, if you're a mentor, you can give advice all day long. But there's no skin in the game, right? Like, nothing's going to happen to you if you give that bad advice. And if you give. If somebody isn't really that. That great because you're aligning your reputation with theirs. So the first step is slow down, get to know the person and ask yourself the question, like, am I comfortable aligning my reputation with theirs?

‍ ‍

14:59
Speaker 2
And so understanding, like, ask a lot of questions like, what are their goals? Almost like, take A step back, do a bird's eye view. Like, what are they good at their job? Like, what are people saying about them? Like, what is their reputation? Because you want to just gather a little bit of information and ask yourself, like, am I comfortable aligning my reputation with theirs? And it doesn't have to take a long time. It can happen really quickly. Like, you just, you want to connect with us, that person and really kind of make that decision. Are we going to go for this together? And you don't explicitly usually ask it. It's like it's kind of this dance of human behavior. You're kind of. So if you're looking for that sponsor, that's what you do.

‍ ‍

15:39
Speaker 2
If you're that protege who's looking for that person, that can open the door for you. It's about pausing for a second and maybe thinking, it's not maybe about me. Actually get curious about them. Think about, like, what are their goals? Try to figure out what they are trying to achieve and think about, like, the kind of value that you can bring to them. And really, you need to actually prove yourself that, like, you know what, I have a good reputation. Like, if you create this opportunity for me, I'm not going to screw it up. Like, I'm going to deliver. Because if you go down in a sponsored relationship, both people go down. But if you're like extremely successful, both people get the credit for that. So slowing down is the first thing.

‍ ‍

16:22
Speaker 2
The second thing is really about shifting, like, not getting caught in the advice trap. Because we as humans, we love talking about ourselves too, right? So yeah, because we're all like, everybody's going to get stuck into this bias, right? So that junior person is going to come and say, please tell me all the advice, tell me all the stories. They're going to ask you for it. So you have to recognize this. Be like, you know what, Like, I could tell you a short story. But then shift your thinking to like, what opportunities do I have access to that I could bring this person along? And it could be as simple as, like, you know what, I'm going to a conference next week. Usually only the senior leaders go to the conference.

‍ ‍

17:05
Speaker 2
I will buy an extra ticket and bring this person along to the conference. And that them getting that exposure to the industry, the connections, you can, they can say hi, they can meet other people. That is going to teach them a lot than any, you know, advice that you're going to get them. So it could be simple. Things like that could be bringing them along to that meeting. It could be Making an introduction, it could be talking about them when they're not there. So if you think about like the decisions of like how people get promoted, like how do companies decide who gets promoted? Those conversations are happening when you, as the person who wants to get promoted are not in the room. And often it's like two levels above you that are making that decision.

‍ ‍

17:53
Speaker 2
So your boss may not necessarily be in that room and might be at that higher level. So having those people that can influence at that level, that's another thing that a sponsor can do. And when one place where people get really stuck is as the junior person, you're like, how do I add value to this senior executives world? Right. It's like how I don't. I'm junior in my career. I don't know a lot. The really interesting thing, especially in construction and especially if you're in a bigger company, if you think about it, executives and senior leaders, they can't know what is going on site at every project or even if you're in the office, they can't have their hands in everything.

‍ ‍

18:35
Speaker 2
But what you can do is you can be there, eyes and ears on the ground, so you can be looking at like what is happening here. And you can kind of tell them the things that are not in the formal reporting, the formal weekly reports, all of the things that get documented. There's all these other stuff going on. Like maybe there's a, you know, the client's a little bit mad, so you can tell, you can share that information and that's really helpful for that executive. So kind of recognizing as that junior person, you do really bring a lot of value. And as that senior person, having relationships with people that are junior to you, it gives you access to so much more information. So it really is a win when this is working properly, it's a win for everybody.

‍ ‍

19:18
Speaker 2
And it doesn't actually take a lot of time.

‍ ‍

19:22
Speaker 1
I really love this concept as a. On both ends of it. Right. I have mentors in my life who, if I think about it through a different lens, I'm sure have sponsored me.

‍ ‍

19:35
Speaker 2
Yeah.

‍ ‍

19:36
Speaker 1
And, and I have people in my life that I have that I've definite. I am like Mr. Advice. So I'm like, oh, no, you know that. But, but I see exactly what you mean. And I, I would really have to kind of, you know, think through each of those relationships. I'm sure I've been sponsoring some and I can think of some instances in particular that I've been sponsoring. But I've always done that thoughtlessly. And I'm sure my biases have been at work.

‍ ‍

20:11
Speaker 1
So I want to bring that back just one last time here with the idea that, you know, when we have to recognize that we have biases, one of the biases that we are likely to have, regardless of who you are, which I thought was really useful to think about as well, is that we've, we may have been socialized to not throw, you know, I don't know, to not. To not challenge women to the extent that they could or should be challenged and to maybe not sponsor and instead just get in the advice trap with these women that we're hoping to help be successful in general. I, I know this was probably a question you've answered a thousand times, and I want to be clear. I'm not, I am the choir here, right? Like, I'm not opposed to that.

‍ ‍

21:05
Speaker 1
But I have to ask the question regardless. Why should we have a vested interest in helping to elevate women in the construction industry? Aside from just in the spirit of equity, in the spirit of, you know, doing the right thing. What, what, why should we really want to do this?

‍ ‍

21:26
Speaker 3
Yeah.

‍ ‍

21:26
Speaker 2
So 100% agree. Because what we, what I found, what I've observed is that the, oh, it's the right thing to do. It's not a strong enough motivation. Right. Because it's going to take resources, it's going to take time and like, is there going to be a return on this?

‍ ‍

21:40
Speaker 1
Exactly. When the chips are down?

‍ ‍

21:43
Speaker 2
Right. And the thing about construction, it is a for profit industry. Right. It's not, it's not nonprofit. So we really need to think about, like, what is the business case for this? And it's a really interesting time in the industry because I think most people here are probably feeling the talent shortage. And the reality is right now, if you think like 10, 20 years down the road, there's going to, we're going to be in cases. And I've heard companies say that they're actually in this situation right now. They're like, we pitch for this job. Like, I kind of hope we don't get it because we actually, I'm not sure if we're going to be able to staff it. Like, there's that kind of tension, that kind of stress happening right now. And if you think about it, there's like, we need to recruit, right?

‍ ‍

22:29
Speaker 2
We need more people to come into this industry to deliver all of this work because it's a great business. The work is there, but there's not Enough people to do the work. And that's the place where some companies are at today. And probably in a couple of years more people are going to feel this pain. So I think if you can think about it that way, as this is a way to actually get more labor into the industry, more people leaning. So that's one piece. The second piece is this unique skill set that women bring to the table.

‍ ‍

23:00
Speaker 2
And this I'll try to, I'll do this really quickly, but there's been research that shows like when men are more transactional leaders, so that transactional is more that top down approach, like I'm the boss and I tell you what to do, I delegate the projects and that men veer more towards that side of the spectrum. Women are more transformational, so they are more collaborative. It's about setting that vision, helping people see their strengths, helping them rise to the challenge. So the research says men are more generally transactional, women more transformational. And we've no and I saw you nod. So in the construction industry, more of the leadership, even training, more of the skills that are rewarded are on that side of the spectrum. Spectrum. But with the younger generation, doesn't matter what gender they are.

‍ ‍

23:45
Speaker 2
Whenever you ask the younger generation, it's like, what do you care about? They're like, I want a sense of purpose, I want to grow, I want to contribute. And if you think about what kind of leader are they going to respond to, as the research says, like they respond better to that transformational leader. So having women in the industry, having women in leadership roles, it's just a great way to inspire that younger generation, help them see that sense of purpose. And women can do that naturally. So having more women, that's another reason why, where women can bring that value because it really helps with retention and getting the most out of your employees. Sold.

‍ ‍

24:20
Speaker 1
I agree, totally agree. So I mean, you don't have to convince. I am 100% there with you. I see it in my work as a consultant. One of my primary goals when there are all male leadership teams is to proactively explore opportunities for creating diversity on that team. Because they get better, they get smarter, and you know, if it's a good leadership team, they learn from each other and they adopt some of those characteristics that they see working. So when that woman who it becomes, you know, an executive in that business demonstrates this totally different, just natural take on leadership, it's contagious and that's a really powerful thing. So all right, I'm Going to pull Stacy into the conversation, get some Q and a going here before we wrap. Fantastic discussion, Andrea.

‍ ‍

25:22
Speaker 1
I'm sure the audience has some questions that you can add value to.

‍ ‍

25:28
Speaker 3
Yeah. First off, did you want to share any specific stories of, you know, advocating for people or. I think there was one. A client that you worked with 10 years ago.

‍ ‍

25:43
Speaker 1
Oh, you're talking to me.

‍ ‍

25:45
Speaker 3
Was, was that your story?

‍ ‍

25:47
Speaker 1
Yeah, yeah, yeah.

‍ ‍

25:49
Speaker 2
For Chad to share this sponsorship story you told me.

‍ ‍

25:53
Speaker 1
I, I, I admitted to Andrew yesterday. I'll do it briefly. I admitted to Andrea yesterday as we did a little prep conversation for this. I was like, you know, I, I, I want to be a sponsor. I enjoy helping people to reach the next rung in their career. I also have to balance that with a bit of a, and I think I'm not alone, but a bit of like a, what I call a hero complex, which is not something that I love about my personality. But, but is there, where there's this sort of desire to, to not just make the impact, but to, you know, just make sure that everybody knows I kind of made the impact, you know, like, that kind of thing. And, and I want to feel really good about myself.

‍ ‍

26:34
Speaker 1
And I think it's important that when we do this stuff that we, that we aren't embarrassed by the fact that. I think Andrea said it beautifully yesterday, was that, you know, I get something from that too. You know, I'm helping to elevate somebody, so it's not just me. Like, look at me being a great helper. You know, I want to publish how much I donated, you know, like, or whatever else. All these, it's all baggage I have in my brain, by the way. It's nobody else's problem but mine. But, but, you know, I think when we help, we, it's okay to win while we help. Right. Because you said it really well today is that we both share in that credit.

‍ ‍

27:15
Speaker 1
So when I sponsor somebody, when I put my social capital on the line and sponsor somebody who wins and becomes wildly successful, we're both winners in that story.

‍ ‍

27:27
Speaker 2
And in your story, Chad, the best part about it is, like, you help this person get into an executive leadership role and just calling you out, you own a consulting business, so having part of my job really benefits you. Just, there was a lot in it for you in this situation. Totally was a true win. Because honestly, if that person did a bad job, like, the whole company is going down. Right?

‍ ‍

27:51
Speaker 1
That's right.

‍ ‍

27:52
Speaker 2
They're like, okay, we did this because.

‍ ‍

27:54
Speaker 1
No, I saw this person and I was like, this person will be fantastic. They happen to be a woman. This is a win, you know? Yeah. So there's risk too.

‍ ‍

28:04
Speaker 2
Yeah. Yeah.

‍ ‍

28:06
Speaker 3
So how often do you think you should be meeting with your sponsor?

‍ ‍

28:12
Speaker 2
Oh, that is a great question. So a lot of companies, a lot of organizations have formal mentorship programs where it's like, we have a contract, we have goals, there's a schedule of how often we meet. And it's very time consuming, especially because a lot of these programs are for women. Like, they pair a junior woman with a senior level woman. And if you think about that woman, there's not that many. Like, she's got to do her job. She's got to, like, overcome all these obstacles. And she's got a me for coffee like, every month with someone, it's a lot of time. The reality of sponsorship, it can be so fast. You actually don't have to meet a lot. And that is the key about, like, really understanding what are their goals, what are my goals, how can I build that trust?

‍ ‍

28:55
Speaker 2
And when you have that trust there, like, it goes really fast. You don't have to meet with them. Like, you don't need to be sitting there talking about advice. It's just kind of like keeping them in the loop a little bit. I'll give you an example, literally, of, like, people sponsor me all the time. So I'll give you an example. I did a speaking engagement a couple months ago, met someone, attended in the audience, they reached out. Later, we had a conversation on Zoom. So I'm thinking about, like, the speaking agent was an hour. We had a 30 minute Zoom call. Then I got an email last week from conference organizer that they are, you know, on the board of this organization asking if I can come and do a talk for them.

‍ ‍

29:38
Speaker 2
And if you think about, like that time, like, that person put their reputation on the line for me when they were making that recommendation. But the amount of time we met was very short. But because we kind of like, in that conversation got to know each other, we built that trust and we realized, like, we're in it together. Right? Like, I have to rise to the challenge and kind of connect with this organization, deliver something to them, and it's that way. So it's really. I love the sponsorship model because it is a lot less time consuming, but it's really about that trust and that mutual relationship and knowing that, like, I can call this person if things are kind of going, you know, this comfort, something's not feeling great.

‍ ‍

30:22
Speaker 2
I can go back and call my person and we're going to figure it out together because there's that mutual benefit. So that's what I love about the relationship.

‍ ‍

30:31
Speaker 3
So leading off of that, like, the comfortability. So I act as a sponsor a lot to younger generations, high school to college level. And I notice, I don't know if they're intimidated or like you were saying, it's early in their career, so they don't know how to open up and ask questions, or maybe they don't even know what to ask. How do you get the younger generation to open up? Because once you know you're building your relationship with your sponsor, obviously 10 years, 15 years into it, you will call the sponsor for help and you have that relationship. Whereas when you're first starting out with your sponsor, you don't have that relationship yet. So you might feel a little uncomfortable. But how do you kind of pull that out?

‍ ‍

31:19
Speaker 2
I think sometimes it's going back to simple things, like, can you connect on another level? Like, oh, do you like their shirt? Like, compliment them on their shirt? And like, just start the conversation that way. Because you'd be amazed by when you can be authentic with someone, when you could kind of, like, take the walls down, how you can connect and how that relationship evolves and where that kind of those things come out. I think it's like sometimes letting go of this, like, here's the five steps, and just being authentic and really building that human connection with them.

‍ ‍

31:52
Speaker 3
So just getting a little bit more personal instead of focusing on the career part of it.

‍ ‍

31:58
Speaker 2
Okay. Yeah.

‍ ‍

32:01
Speaker 3
Okay. And then lastly, question about. I wanted to talk about the survey that you had coming up. I know a lot of women in the industry, or just the industry in general, have issues with competing with other industries and being flexible and offering those type of opportunities. So you had some type of survey to come? That's coming up and feel free to share.

‍ ‍

32:24
Speaker 2
Yeah, we are doing a survey. We partnered with the national center for Construction Education and Research to do a survey. We're going deep on sponsorship. So this is for women only, so please fill it out. If you're here, we'd love to include your opinion. It closes on February 13th. And then the second piece that has come up through a lot of our clients and just engagement with the industry. Is this question about flexibility because of the talent shortage? If you look at the landscape, there's so many flexible work options available, and construction has been a little bit late to the game on figuring that out. And the reality is like you are building something. So a lot of them, you have to physically be there. And I don't know if anyone's cracked that nut yet.

‍ ‍

33:07
Speaker 2
So we have a second piece of the survey where we're getting really curious about flexibility and what could that possibly look like in the construction industry. So, please.

‍ ‍

33:19
Speaker 1
Yeah, I spent a lot of time. So one of the things that I've been doing just in the past year has been really surprising. I spent a lot of time doing these studies inside companies, just inside the business about sort of stress management. And, you know, there are common set of common threads that are constantly the source of high stress. Lack of flexibility in the construction industry is, you know, and some companies are losing relatively substantial people out of the industry because they're just saying, you know, we. And, and again, it's the balance of women doing that to men is much higher. Women. And so we. It is, we've. It would be unbelievable to get to some solution for that works for everybody.

‍ ‍

34:10
Speaker 2
Yeah. And so we will be releasing the results of this in a report. We'll have some live events that will be. That you can come to that are free during Women in Construction Week. So that's the. In March, the week of International Women's Day.

‍ ‍

34:22
Speaker 1
Beautiful, wonderful stuff. Thank you so much. This has been a fantastic conversation. Certainly enlightening for me, which I always love, are I feel like I learn way more from these things than any other learning activity I do. And Andrea, you've been a wealth of information. So thank you so much for coming on and being with us this morning. Anything to say before parting ways?

‍ ‍

34:55
Speaker 2
No, I just want to say thank you for having me. Thank you for everyone in the audience for being curious and open. And I want to just encourage you to lean into that curiosity and keep staying open to new ideas.

‍ ‍

35:07
Speaker 3
And how can people get in contact with you if they.

‍ ‍

35:10
Speaker 2
So they can find us. We have a podcast so you can listen to our podcast. It's called Ambition Theory, Women in Construction. You can go to our website, ambition theory.com you can connect with ambition theory on LinkedIn. You connect with me, Andrea Jansen on LinkedIn. So I'd love to say hi and connect with you.

‍ ‍

35:28
Speaker 3
Great. Thank you so much.

‍ ‍

35:30
Speaker 1
Yeah, Andrea, thank you. All right, Stacy, let's wrap up and talk a little bit about next week. So first things first, I just like to remind people that we stream live on LinkedIn, YouTube and Facebook on Tuesdays at 9am Eastern. But be sure to check us out on recorded shows if those times that time doesn't work for you. If you want to go back and binge on all the previous episodes, the easiest places to do that are Apple Podcast, Spotify and then YouTube. Also email us to be added to our weekly mailing list. Stacy h.steeltoe com.com Stacy will get you hooked up so that way you're not reliant on just that LinkedIn invite. But you can expect an email every week that comes across with some cool content recording from last week and a link to sign up for the next one live.

‍ ‍

36:22
Speaker 1
If that's something you'd like to do next week, we have a friend of mine, Trey Farmer, who is an architect down in Texas and has a fantastic conversation planned around passive house design, which is really the latest in, you know, design standards to meet net zero and even net positive buildings. That'll be a really technical discussion but also one that anybody can follow along with. He's, he really has a great way of bringing concepts down to earth. So with all of that in terms of preparation, Stacy, is there anything I've missed? Is there anything you want to hit on? Do you have a tip for us? Do you have a, do you have a steel toe communication?

‍ ‍

37:05
Speaker 3
I completely do not have a tip today.

‍ ‍

37:09
Speaker 1
Tip number one, have a tip. It's, it's all good.

‍ ‍

37:14
Speaker 3
Yeah, I'll be sure next week.

‍ ‍

37:16
Speaker 1
Is there anything that I've missed, Stacy?

‍ ‍

37:20
Speaker 3
No, I think that's it. It's just like you said. If you're not on the email list, please send me an email and we'll get that out to you. We do a recap too so we try to keep our shows short and sweet. We know you guys are busy so if you can't watch the show we at least do a little write up recap in the email.

‍ ‍

37:39
Speaker 1
So awesome. Which we so we will see you all next week 9am and we'll do so for the next 11 weeks hereafter. We look forward to seeing you soon. Thanks everybody.

‍ ‍

When most small to midsized construction companies think about Human Resources, they think of employee handbooks, PTO policies, and managing employee files. When people like Kathy Humm think of HR, they think about how investing in human capital becomes a strategic advantage for a business.

In this episode, we hear about how leading construction companies leverage their HR departments to become better places to work, minimize legal exposure, and increase productivity. Kathy has valuable experience from her time as the HR Director for Harkins Builders for 9 years before starting her new business, NTP HR.

Transcript:

‍ ‍

00:01
Speaker 1
All right, it's morning huddle time. Good morning. I'm not saying it works. I wish you Godspeed with all of that. I think that's really nice. You know, I'm not sure what kind of success you're gonna have with that today because the world, my friend, has changed. Right. A lot of American construction workers, they have different needs.

‍ ‍

00:21
Speaker 2
They have completely different needs.

‍ ‍

00:23
Speaker 3
These awards have a huge, like, criteria that you have to fill out and they usually have a community service portion, you know, the most productive with a high performance value. And you know, sometimes it's 11 o' clock at night.

‍ ‍

00:41
Speaker 1
Funny, isn't that? Yeah, not for me.

‍ ‍

00:44
Speaker 2
Not for me.

‍ ‍

00:45
Speaker 1
At 11 o' clock, I am guaranteed to be snoring.

‍ ‍

00:48
Speaker 3
So.

‍ ‍

00:48
Speaker 1
So. Good morning. It's morning huddle time. I'm Chad Prinke alongside my co host and producer, Stacey Holzinger. Stacey, how are you this morning?

‍ ‍

01:06
Speaker 3
I'm doing great. How are you guys doing?

‍ ‍

01:10
Speaker 2
Doing great.

‍ ‍

01:12
Speaker 1
For me, it's all good. Yeah, we made it through a Thanksgiving. Like everybody, oh my God, I shouldn't even say this out loud. Everybody was sick and I somehow dodged it. Everybody's better and I'm not sick and I don't know, but I'm pretty sure I'm invincible. Folks, I think I made it. I believe it. Yeah. Though I don't know, Thursday to Tuesday, the incubation period is probably not totally over. There's probably, you know, there's some, you know, doctor somewhere like, oh no, he's got symptoms, I can see it. But anyway, so we have our guest and both of our friends, Stacy, Kathy Hum, here with us today. Kathy, thank you so much for joining us this morning. Kathy owns Notice to Proceed hr.

‍ ‍

01:59
Speaker 1
She just started that business literally months ago after spending years and years in the construction industry working for a wonderful, well respected general contractor in the D.C. baltimore area. And, and I was just noticing like recognizing as were getting started, Kathy, Stacy and myself, all three of us have started our own businesses just in the past couple of years. Go us. That's exciting. So congratulations Kathy. How so far, how's it going?

‍ ‍

02:36
Speaker 2
It's going fantastic. As you mentioned, I've spent over 15 years in the HR space. Nine of the last years that I spend in HR were with Harkins Builders. So built their HR department and decided to break off and start my own consulting. And my goal is to transform the construction space HR from transactional to strategic. So it's been great. I have a tremendous network through Associated Builders and Contractors and from Greater Baltimore to Washington, D.C. and. And it's been fantastic.

‍ ‍

03:21
Speaker 1
Well, you're doing work for me, with me right now for a client, for a shared client, where we're working together and doing a fantastic job so far. So thank you for. For the work that you're doing there. And, you know, I think as a new business owner, it is the scariest thing is, am I going to have any clients? And you've been able to solve that problem very quickly through your network, and I'm very excited for you. So that's. It's a nice place to start from, Kathy.

‍ ‍

03:53
Speaker 2
Yeah. Yeah, for sure.

‍ ‍

03:56
Speaker 3
So many small subs, you know, need your help, too. We were just talking about, you know, same thing with marketing and hr. A lot of people are multitasking in smaller organizations when there's a level of expertise that's really needed. So you'll be able to help a lot of people.

‍ ‍

04:17
Speaker 2
Yeah. And what I found is that as companies grow, you know, they're just getting by with the transactional HR component, which is, you know, payroll and benefits administration, and then they grow even larger and they realize, okay, I need to recruit top talent, but my retention is low, you know, so you have to come up with some sort of strategy on how are you going to recruit those people and how are you going to retain them, and what does that look like?

‍ ‍

04:50
Speaker 1
Yeah. So. So let's. Let's make this transition into today's topic, clearly, which is we're going to talk about what the mission of your organization, what the mission of your company exists to. To accomplish, which is making that transformation from H in HR from transactional to strategic. Stacy, I'm gonna, you know, obviously put you in the spot that you're. That you're always in each week, which is creating great conversation with all of our audience members who are joining us live. We'll bring you back here with a few minutes left to. To cover the audience questions. Good.

‍ ‍

05:30
Speaker 3
Yep.

‍ ‍

05:30
Speaker 1
See, in a bit, Kathy, you started down that path of describing what transactional HR looks like. And what I picked up from that was sort of. I don't. Maybe compliance items, payroll items, things. Things that are really keeping the ship afloat. Give us, if you wouldn't mind, just sort of the comprehensive list or the best off the top of your head of what transactional HR is. What do you mean exactly when you say transactional hr?

‍ ‍

06:02
Speaker 2
So you're absolutely right. It includes payroll, it includes benefits, administration, any type of, you know, new hire termination, all of those critical transactional duties that a company needs to do. And I mean really the list goes on employee relations, if somebody has an issue or if they have a question and the employees are our customers. So we have to, you know, spend a lot of time and respond promptly to what their needs are, which is important. That's absolutely important.

‍ ‍

06:41
Speaker 1
Well, and that's exactly what I was going to say. What I don't hear you advocating for in any way is saying let's get rid of that stuff. Right. It's now have to occur. It's just that there needs to be a level of HR thinking that's happening at a different level than the day to day critical functions that need to occur to keep the, you know, the ship afloat. Let's now put some definition around what strategic HR looks like. What are some of the things that fall into that bucket? What strategic hr.

‍ ‍

07:15
Speaker 2
So strategic HR is being more forward thinking, not just putting out the fires today, but focusing on what is my 1-3-5-year plan. And you have to have buy in from the executive team. The HR business goals have to align with the strategic goal. So for example, if a business wants to double in size in the next three years, we what's the recruiting strategy to do that? Where are you going to get those candidates? You know, do you have a, you know, a diversity goal that you want to achieve? So how does that tie into your recruiting strategy as well? And I, it's all about being forward thinking and having that buy in from the executive team to be able to think outside of the box and really help that organization grow.

‍ ‍

08:11
Speaker 1
So, so if I can just solidify this recruiting can fall into either a transactional or a strategic bucket. But transactional recruiting looks like post the ad, call the headhunter. It's, it's reaction to we need a pm. We need to bring in somebody in this key position and our HR department reacts. Posts the ad calls a headhunter or any other number of just in time things designed to create a result. Not bad things, but things that are less effective perhaps than they would be if they were a part of a broader plan. So talk to me about what strategic recruiting just as an example might look like in comparison to the two, you know, to the, you know, post the ad, call the headhunter.

‍ ‍

09:14
Speaker 2
Sure. And those things like you mentioned Chad, are really important. But let's break this down a little bit. Is your job description from the 1920s or do you even have a job description?

‍ ‍

09:26
Speaker 1
Are we scrapping together a job description Last minute. I can't just, I can't tell you how I've seen people who are like, I don't know, Chad, do you have a job description? Something that we can help me with that? Yeah, totally.

‍ ‍

09:38
Speaker 2
But, but more specifically about the job description, are you talking about the challenges that this position will focus on? Are you speaking to the candidate? Are you talking about your culture when you write that job description and what it's like a day in the life at X Company? Then you take that a step further and do you have an employee referral plan within your organization? And have you coached your employees with an elevator pitch on how to recruit top talent? You know, you could be at a.

‍ ‍

10:12
Speaker 1
One thing to say, hey, we'll give you 500 bucks if you bring somebody in. It's another thing to give the tools to be successful in doing that.

‍ ‍

10:20
Speaker 2
You could be at a wedding, you could be in the grocery store and you get exceptional service from the, the person at the register and you think, wow, they have the skill sets, the essential skill sets that might be able to fit in our company. We can teach them the technical skills. Then you have to take it even a step further. And where are you going to find these candidates? Are you just parking your posting on LinkedIn and that's it. You have to build some sort of strategy around where we got most of our candidates. Do you typically hire from universities, community colleges, trade schools in construction? The Votech programs at high school are a great, you know, starting point to hire entry level people within the construction space.

‍ ‍

11:13
Speaker 2
And is your company the go to company in those programs that when they think about okay, we want to start placing our students, are they calling you? Are you the first one they're calling? Which means your recruiting strategy is you have to get in the classroom and you have to be present and you have to, you know, do the upfront work to get on that list and be the first go to caller.

‍ ‍

11:36
Speaker 1
Like so many things in life and business, what I'm hearing you say is it's all about making the investments in these areas that have long term benefits. That if I start laying down lines, if I start creating funnels at vocational schools, if I start laying down funnels in community college programs, I'm not going to have a bunch of candidates tomorrow. But what I will have done is help to Solidify my pipeline 3 years, 5 years, 10 years down the line. And that's strategic. And that's, that's exactly what you're talking about is, you know, hey, if you're today, if you're transactional, so be it. You might need to post that ad, you might need to call that headhunter. But today I want you to also make investments that will help you to be more strategic in the future.

‍ ‍

12:32
Speaker 1
It will help you in the future to have a much more effective strategy. And we're just talking about recruiting, not to mention all the other things that could fit into the hr which I look forward to potentially getting to with you today though time is so limited and there's so much to. So I want to ask what are some of the biggest mistakes that contractors are making as it relates to their HR departments? Whether it's general contractors or specialty contractors, what are the biggest mistakes they're making in relation to their HR department?

‍ ‍

13:10
Speaker 2
I would say the investment in hr. You have to invest in HR for it to be successful. So that's number one. And what I mean by that is you have to put the right person in the seat on the bus or develop that team that has both a transactional mindset as well as a strategic mindset. Because the duties are still the duties but you need to be forward thinking in an HR department and an HR role. So I would say the investment in hr. I would also say that HR needs to have a seat at the table. And what I mean by that is the executive team needs to include HR because let's face it, our most valuable asset in the construction space anywhere are our people.

‍ ‍

14:07
Speaker 2
And if we don't have good talent, satisfied employees, we're not going to be the best that we can be in whatever we do. So who has the better pulse, the best pulse on our people? It's the HR department. They, they absolutely have a pulse on the people. And so HR needs to have a seat at the table.

‍ ‍

14:31
Speaker 1
Yeah, that's so the first, the foundational aspect of that I'm hearing from you is really treating HR not as an afterthought, treating hr. Making the appropriate investment in HR leadership is maybe what I'm, is what I'm hearing you say. Does that sound right?

‍ ‍

14:57
Speaker 2
100%. But here's also something about that HR.

‍ ‍

15:05
Speaker 1
People.

‍ ‍

15:07
Speaker 2
That, that lead the department, that work in the department, they have to be able to speak the executive language. They have to be able to sit in those executive meetings. And the two biggest things that executives are focused on are the cost and the risk. And if you can't speak in business language and take the empathy and the touchy feely part of hr, which is important out of that discussion, that's where HR people tend to have trouble in those meetings. You have to be brief, you have to be concise, you have to be prepared, you have to have solutions. Don't come to them with a problem, come to them with solutions. And you have to know your data analytics and be able to present that information so that you're touching on the cost and the risk. That's what they want to hear.

‍ ‍

16:14
Speaker 1
Yeah, it's a two way street. You can't. First, first things first. The executive team has to welcome the HR leadership as an equal, as an equal voice at the table, as somebody that's really going to have impact, that they're going to consider their perspectives. Yeah. The other portion of that equation is HR people need to speak exact. They need to, they need to actually be prepared at that level. And playing at that level requires, you know, bridging the gap between these touchy feely topics like employee satisfaction and tying it to metrics, tying it to measurables, tying those touchy feely topics to real. Measurable business outcomes, costs, risks, returns on investment.

‍ ‍

17:12
Speaker 2
So even speaking about employee satisfaction, you can go into an executive meeting and say, our employees aren't satisfied. What does that mean? Right. What is tell me more? Or you can go in and after you've done, you know, year after year employee satisfaction surveys using the G12, the Gallup 12 questions, which are very simple, you can go in and say, I just want to let you know, this year our Gallup 12 survey, Employee Satisfaction Survey, dipped from 4.8 out of 5 to 4.3. And here are the categories that they dipped in. And here are those scores. And so we really need to focus and unravel this. And I've done a little research and this is what I've discovered. Two very different. You know, you go in and you say, we've got problems. Well, there's no solution there.

‍ ‍

18:14
Speaker 1
Right. Give me hard data and tell me why I should care.

‍ ‍

18:18
Speaker 2
Yeah, yeah.

‍ ‍

18:19
Speaker 1
It's, it's a, you know, if somebody comes in and has the ability to say, this is a leading indicator that statistically, if we're not above this threshold, we're going to have retention rate issues, we're going to experience attrition. The cost per new hire is X. Right. Here's what it costs when we have a fail within our first three years. If we have to replace somebody, I mean. Yeah. And I can think about the differences. I spend a lot of time in my work with the HR professionals within my Clients, businesses. And there's a massive difference between the quality of conversation that we're able to have in one instance and the other. And without question, there's a connection on who's invited to the table. Yeah. Now at the same time I'm sitting here like, I'm sorry, I'm like thinking about chicken or the egg.

‍ ‍

19:17
Speaker 1
Like, am I a part of this problem? Do I need to make sure that. And I'm sure I am to some extent. And that's, and so it's a valuable discussion to be having with you.

‍ ‍

19:28
Speaker 2
So, but to be honest, where you excel is the strategic plan and the vision of organizations. And that's where it starts. And time and time again, when I ask companies, do you have a strategic plan? Well, kind of sorta or not really. Because the reason I ask that is because when I'm looking at hr, from soup to nuts, the recruiting business plan has to align with the strategic plan. It gives us direction as an HR team.

‍ ‍

20:06
Speaker 1
Yeah, I totally agree. Without one, you can't really have the other. And I can only imagine how frustrating it must be to be a very strategic and capable HR professional operating inside a business that doesn't know where the hell it's going. That's got to be excruciating. So you can't have one without the other. I think that's an interesting thought. So let's talk straight talk here for a minute about something that I, I can't help. I, I, I'm really, I'm trying to solve this problem in my mind for the average or sort of typical sized contractor out there that does not have unlimited budget. This is an overhead hire. Right. We can't job cost this higher. If we're, if we're going to hire HR people, we've got to be able to really justify what we're doing here.

‍ ‍

21:04
Speaker 1
At what point do we need to make sure we have an HR person in place? Is there an employee count? Is there a revenue size? Is there, are there any rules of thumb for the point at which I need to be fully prepared to be past the transactional HR and have really HR leadership inside my business?

‍ ‍

21:23
Speaker 2
From my perspective, because I'm very strategic, that has to be out of the gate when you're considering starting a business. You know, think proactively. Okay. I may not need somebody right this minute, but who is that person going to be that's going to handle all the transactional and help me grow? Because you want them as a partner, but if you don't have that person in play. By the time you have 50 employees, it's time.

‍ ‍

21:59
Speaker 1
Okay, that's fair. And I, and now I'm, I can get that perspective. When you first started, I was like, oh, man. So, so it's going to be, I'm going to have, my first hire is going to be an HR person. We have to install metals or, you know, whatever our job is. What you're saying isn't that it's from the start you need to have this seed mindset. Yes. Which is I need to be. And perhaps, man, I don't know if you'll like what I'm about to say, but perhaps you can be strategic about HR in your business without having an HR professional leading that.

‍ ‍

22:38
Speaker 1
In other words, my job can be business owner or I can have vice president of operations, but if they have at least for some period of time in the business the ability to think strategically about HR issues, that could be sufficient. I don't necessarily have to go out and hire an HR professional, but what I'm hearing you say is once you reach maybe that 50 employee mark, it's a, it's time for you to have an HR professional.

‍ ‍

23:03
Speaker 2
Well, and Chad, I would argue, I would counter your point there with, you know, there comes a time where the HR responsibilities pull that CEO, that president, vice president, away from what they do best and helping develop and grow the organization. So there is a point that you need to offload those duties and find somebody who is equally as strategic to be a partner to be able to help the organization grow.

‍ ‍

23:49
Speaker 1
That's a really great point. I love that. And I can't agree with you more that there does reach almost in every business that I've ever come across a point, whether it's HR or sales or marketing or operations for that matter, where there's, there are people who are really in this lane who are carrying this added responsibility that it reaches a certain point where this responsibility isn't getting as much of their attention as it needs. This responsibility isn't getting as much responsive attention as it needs. And ultimately it's time to hand one off. And this is your primary responsibility. So it's time to hand this one off. That makes a lot of sense. That's helpful. And if you're an audience member, you're watching this. Consider, are you there? Have you reached that point where you have been handling the recruiting? Because, man, you love it.

‍ ‍

24:48
Speaker 1
You really enjoy being out in the Field with people. And you're the vice president of operations for a 75 employee company and you're heading up the internship program and you're heading up the employee, all these different types of things. But you're also the vice president of operations.

‍ ‍

25:05
Speaker 2
Right, Right.

‍ ‍

25:06
Speaker 1
It's a lot.

‍ ‍

25:07
Speaker 2
And there's a lot of nuances to all of the HR functionalities. There's just so much involved that, I mean, you take recruiting, we talked about that earlier. You know, from scheduling the interview to ordering the background check to this, that the other. There's all of that behind the scenes. That certainly needs to happen.

‍ ‍

25:29
Speaker 1
And it's time consuming. It's got to happen. So. All right, I'm going to bring Stacy back. There's one thing while I bring Stacy back that I want to just toss on the table with you is that I personally have always felt that one of the most essential functions of a strong human resources department is enabling employee development and training throughout the organization. And I'd like for you to describe, well, first off, if you agree, and second off, what an organization that wants to be a great employee development organization, they want to be awesome at training and developing their people. What role should HR be playing in that environment and what role should others be playing? Because I'll tell you, one of the things I hear a lot is like, well, I don't know, training hr. Are you on that?

‍ ‍

26:22
Speaker 1
And I always, I'm like, that's not fair. That's not quite right. You can't just lay training at HR's feet and walk out. So what's your take? Am I, am I wrong or.

‍ ‍

26:34
Speaker 2
Training is a part of an HR function. And I would say that anything from leadership development, management, essential skills, those kinds of things are led by the HR team. Now when you get into technical skill sets in the construction space, HR people don't know the technical, you know, how to's part of the job. What HR's role in that particular situation would be that they're facilitating the training. They're finding the technical trainer, whether it's in house or outside of the organization to have those training sessions. And they're making it. So HR absolutely plays a role in training. I would also say that companies need to have career paths. They need to spell that out because the younger generation coming into the workforce, they want to know, if I get hired here, what's my next step and what's my next step?

‍ ‍

27:45
Speaker 2
And you know, I want to see the three to five year plan for me. So it's really important for companies not only to have a really good job description but also paint the picture of if you start here, and these are the training things and certifications that you need to acquire over the next X months year, what have you. This is your projection and that's super important.

‍ ‍

28:13
Speaker 1
I love it. I love it. That seems fair to me. And it seems like there's an internal customer that obviously that HR is serving. But there also needs to be an investment from department leadership alongside HR to make this be successful. So HR not only needs to service its internal customer, but it also needs people to be bought into servicing the internal customer that's inside their department sense. In other words, it needs to have the buy in and support of everyone else so that everyone isn't just pointing the finger at HR and saying, I don't know, we're supposed to have a training program, hr, are you on that? But instead they're building it together. We are already up on time. I'm the worst. But we're going to go a little late. Stacy, what do we have in terms of questions?

‍ ‍

29:18
Speaker 3
We have a great question from Ralph. So how do you make training and employee growth a priority throughout your organization? Allow time away from projects for employee growth? I think that's a big concern for a lot of companies because they don't want to take people off the projects because they have to meet these deadlines and these schedules. But it is important for employee growth.

‍ ‍

29:43
Speaker 2
So.

‍ ‍

29:43
Speaker 3
So what are your thoughts on that?

‍ ‍

29:47
Speaker 2
Well, with any function of HR and this particular question relates to training, there has to be accountability from the top and there has to be buy in from the top. So how do they treat learning and development? And if they have buy into it, then you can formulate as an HR team what that looks like. Dollars to spend for your department for each of your, you know, team members for training, going away to conferences, taking time away from the job, maybe recruiting and hiring more people so that you have that backfill for you to take that time off. A lot of companies are also moving to sabbaticals in construction. It's a very challenging industry and it's high stress, high energy.

‍ ‍

30:45
Speaker 2
So a lot of companies are going to take some sabbatical time after a three, five year period so that they can recharge and train and develop.

‍ ‍

30:57
Speaker 3
Definitely when you were talking earlier about training and things like that, I, when I worked with Shapiro and Duncan, I worked very closely with the HR department and I think marketing also usually ties in as a support system to HR and trying to simplify the message, trying to get forms return that you need, whether it's health benefit forms, meeting deadlines, event planning, employee morale type things. So if you do have marketing support, include them into the HR conversation because they can help you out a lot when it comes to communicating these crucial messages, whether it's safety or HR or health benefits or anything like that, to get that information out and get it returned. It was always kind of a struggle, but we worked together pretty good doing that.

‍ ‍

31:59
Speaker 2
I would 100% agree both for your internal messaging and your external messaging, because you have to paint the story of the culture externally to attract candidates, but internally, all of that messaging around open enrollment, recruiting, employee referral program training and development, compliance. Why we have to do things that we have to do because the federal government and state legislation, you know, are putting, you know, bills in place that we have to comply with.

‍ ‍

32:30
Speaker 3
Yeah. And how can companies better enable a shift to becoming more strategic if they don't have unlimited overhead budgets?

‍ ‍

32:42
Speaker 2
It starts with investing in automation. We have tremendous systems that can do a lot of the transactional duties and it starts there and it will free up that one person team, two person team to be able to spend time planning and being more strategic.

‍ ‍

33:07
Speaker 3
Nice.

‍ ‍

33:08
Speaker 1
That's awesome. I think there's a real hesitance for companies to purchase software that they don't know that. How do I put this? Contractors don't love, don't like purchasing software that doesn't specifically tie into operations or the technical aspect of the work. Right. And I mean with automation, can you give us a sense of the return on investment that you would get for, you know, I don't know. That may be difficult for you to come up with out of thin air, but for X dollars invested, what are we, what are we saving when we bring in the right hr? Automation.

‍ ‍

33:56
Speaker 2
So on the front end you'd have an applicant tracking system which can give you those, the data analytics. As far as the candidates that are applying, who you're hiring, all of that data is critical to the ROI and understanding. You know, is this worth the investment? And then, you know, certainly you have your benefits tracking in there. You have your open enrollment and you have capabilities depending on the system with learning and development and then compliance. I can give you an example of the Affordable Care act requires at a certain number of employees requires you to do reporting. And at my previous employer, we paid over four thousand dollars for that reporting. If you have an app, if you have a, an HR system and you're automated, you can Pull that data out of the system and it saves you.

‍ ‍

34:56
Speaker 2
In that case, it would have saved us $4,000.

‍ ‍

35:00
Speaker 1
Yeah. Yeah. Okay. Got it. I see where you're going with it. And I, you know, I'm assuming that if I were an audience member and I had questions about even any aspect of what we've talked about today, that these are all things you'd be, you know, totally comfortable having a conversation with somebody about if they wanted to reach out.

‍ ‍

35:21
Speaker 2
Absolutely.

‍ ‍

35:22
Speaker 1
If they wanted to reach out to you, where would they get you? Should they reach out via LinkedIn?

‍ ‍

35:27
Speaker 2
Ntphr.com cool. And my email is Kathy Humtphr, LinkedIn. Be happy to talk through any of your HR needs. I do an assessment from soup to nuts, no cost to the company to give you an idea of where you are and where you'd like to be. And then we go from there.

‍ ‍

35:54
Speaker 1
Awesome. Nice.

‍ ‍

35:56
Speaker 3
Thanks for joining us.

‍ ‍

35:57
Speaker 2
Yeah, thank you.

‍ ‍

36:00
Speaker 1
I really enjoy this conversation. Kathy and I have been particularly recently talking a lot, and I still feel like I have a lot to say to you. So. And I love listening to your perspectives on things. You're, you're a great, fun educator. I don't know if that's something you're aware of, but you are, you're very good at it.

‍ ‍

36:21
Speaker 2
Well, thank you.

‍ ‍

36:22
Speaker 1
Yeah, thank you. Very good. So. All right, Kathy, thanks again. Stacy, let's do a little housekeeping to wrap up the last show of three.

‍ ‍

36:34
Speaker 3
Yep.

‍ ‍

36:37
Speaker 1
So, so we are up in the air on exactly when we're coming back, the exact day I. Oh, wait, no, that's not true. We nailed it.

‍ ‍

36:46
Speaker 3
January 31st.

‍ ‍

36:48
Speaker 1
January 31st. This literally just happened over the past week. So we are, our first show back will be January 31st. We'll be running for 12 weeks, pretty much consecutively. Consecutively thereafter, unless there's some holiday that we haven't accounted for and we are looking for guests. So please reach out to Stacy if you or somebody you know should be on our show. And the best way to do that, to reach out to Stacy is right here. Stacey H. Steeltoe.com.com. You can reach out to me as well, but I'll just forward it to Stacy. He handles all the, she handles all the booking. So I'm not qualified to handle that particular aspect of what we do. Stacy, do you have a steel toe? Communications tip of the week.

‍ ‍

37:34
Speaker 3
I just want to remind everybody today that it is giving Tuesday. Make sure that you're supporting your local construction nonprofits that are doing all the hard work to recruit people into this industry to help get people or help get you employees. If you're not donating with money, try donating with your time or just spread the word by sharing the organizations and their messages and what they represent. Please do that today.

‍ ‍

38:08
Speaker 1
Awesome. Thank you, Stacy. So I'll take one moment and just say this, which is the past few years have been extremely busy for most people in the construction industry. Now, depending on if you've been doing commercial interiors exclusively, you might be angry to hear me say that. Or if you've been doing hotels exclusively, there was a pretty tough time during that period, but by and large the industry has been really thriving. There are some very valid indicators that we are heading into a less vibrant time. We're heading into a time where business will be less plentiful and your strategy for your business is going to be that much more important. I've been speaking with a lot of people recently about designing their strategic plan so that their business is more recession resilient or recession proof.

‍ ‍

39:14
Speaker 1
If that's a conversation that you want to have with me, you can reach out to me directly through LinkedIn or via that email. I've been giving a lot of talks on it. I've been giving lots of keynotes on it. So if there's anybody that wants to have that discussion, please do reach out. Best of luck everybody as we enter into the New Year. Happy holidays and all the best from us at the Morning Huddle. Stacy, any final words?

‍ ‍

39:40
Speaker 3
Happy holidays and I look forward to the break, recharging and bringing some new awesome topics and guests for next season.

‍ ‍

39:50
Speaker 1
Same here. We'll see you in 2023.

‍ ‍

39:52
Speaker 3
See ya.

‍ ‍

39:53
Speaker 1
Bye. Bye.

‍ ‍

Lean stands for reducing inefficiencies and removing waste wherever Lean principles are applied. Lean has been a buzzword around the construction industry for decades, and while some segments of the industry have fully embraced it, others have only a vague sense of what Lean is all about. Regardless of where you fall on that spectrum, this episode will invite you into the discussion in an approachable way.

Tom Hughes is a Lean practitioner who came up as a mechanical contractor, and his experience with Lean practices has led to outstanding results. He'll share stories to help us see how and why we can use Lean principles in practical ways to create better project outcomes.

Many construction companies develop meaningful innovations that create strategic advantages in their market in a crowded field of competitors. Perhaps they develop a tool, a fabrication method, or an operational process that gives them the upper hand only to have an employee leave and bring that information to the competition, diminishing a hard-won advantage.

When you think of Intellectual Property (IP), the industries that come to mind immediately are manufacturing and software, not construction! Greg Stone, IP Attorney with Whiteford, Taylor & Preston, joins us to see how construction companies can protect and monetize their IP.

Transcript:

‍ ‍

00:00
Speaker 1
Good morning. I'm not saying it works.

‍ ‍

00:01
Speaker 2
I wish you God speed.

‍ ‍

00:03
Speaker 1
Godspeed with all of that. I think that's really nice. You know, I'm not sure what kind of success you're gonna have with that today because the world, my friend, has changed. Right?

‍ ‍

00:14
Speaker 2
Latin American construction workers, they have different needs. They have completely different.

‍ ‍

00:20
Speaker 3
These awards have a huge, like, criteria that you have to fill out. And they usually have a community service or community relations portion, you know, the most with a high performance value. And, you know, sometimes it's 11 o' clock at night.

‍ ‍

00:38
Speaker 1
Funny, isn't that? Yeah, not for me. Not for me. At 11 o', clock, I am guaranteed to be snoring.

‍ ‍

00:45
Speaker 3
So.

‍ ‍

00:45
Speaker 2
So.

‍ ‍

00:55
Speaker 1
Hey, it's morning huddle time. For those of us, those of you who are joining us live, thank you for hanging in there. We the joys of live production. We are starting 11 minutes late and that is on. Really? Nobody? Just. It's on technology. I, I literally just had to do like, coding to get this. I, I had three panic attacks. But we're here and thank you, everybody. Thank you, Greg, for having such a. Being such a good sport about. Greg was like, so is this normal? Like, no, this is normal. I've had. I haven't had to deal with this in 30 meetings.

‍ ‍

01:31
Speaker 2
Not a problem. Not a problem.

‍ ‍

01:33
Speaker 1
You were very calm. Your calm brought a lot to the table. All right, Stacy. Greg. Thank you so much, Greg, for being here. Stacy, how are you today? What's going on in your world?

‍ ‍

01:45
Speaker 3
I'm doing good. It's fall. The leaves are looking beautiful. Maryland.

‍ ‍

01:51
Speaker 1
That it is. Yeah, it's, it's looking great. Greg, how about you? What's new in your world?

‍ ‍

01:57
Speaker 2
Same sunny, nice day for now. Cool day in Baltimore city.

‍ ‍

02:03
Speaker 1
So, yeah, we'll take it.

‍ ‍

02:04
Speaker 2
All good?

‍ ‍

02:05
Speaker 1
Yeah. So were getting like, as were killing time during the panic attack, one of the things that Greg and I were talking about was that Greg is in kind of has been a lifelong musician and has been playing out for a while. Greg, just give us the. What are you into and where are you playing?

‍ ‍

02:27
Speaker 2
Yeah, sure. So I actually played out in a cover band from an 80s cover band. From 2006 to 2014, I was the keyboard player for Voodoo Economics. It's a nice 80s themed name there. And just after we stopped playing, I got the bug to go out on stage. So for about the past year, I've been doing a monthly gig, just me, my keyboards, microphone at an Irish pub in Severna Park. So you Catch me there one Saturday a month in the afternoon, just playing stuff that I like to play.

‍ ‍

03:00
Speaker 1
That's awesome, man.

‍ ‍

03:01
Speaker 3
Name of the pub?

‍ ‍

03:02
Speaker 1
Yeah, I was just gonna say. Which club? Which pub?

‍ ‍

03:04
Speaker 2
Yeah, it's called Brian Baru. So, yeah, giving them a quick shout out. But one, usually one Saturday a month, you'll find me in there playing music.

‍ ‍

03:14
Speaker 1
Excellent. So if Greg says anything today that you either want to confront him about or you don't want to find the dude, once a month, you'll have an opportunity. Well, excellent. So Greg is an attorney at White for Taylor and Preston, is that right?

‍ ‍

03:35
Speaker 2
Yep.

‍ ‍

03:36
Speaker 1
He focuses specifically on intellectual property law. And Greg and I got into a conversation several months back just, you know, getting to know each other in a breakfast environment. And in that conversation, it came out that, like, you know, I said, well, yeah, there's no IP in construction. Right. Which naturally led Greg to be like, not so fast. That's right. Yeah, not so fast. And I started learning a ton in that conversation. Said, hey, this is a conversation we need to be having in the huddle, a conversation that the audience that we. That we work with every day, or, I'm sorry, every week would really benefit from. So we're going to get into intellectual property in the construction industry. And Stacy, assuming anybody did hang around live, please engage with those folks, you know, on the, you know, live chat.

‍ ‍

04:29
Speaker 1
We'll pull you back and see if we have any audience questions to, you know, approach here. With about 10 minutes to go, so I have to, like, recalibrate my brain to make sure that we land that time correctly, but we'll see you soon. So, Greg, let's start off by talking just a little bit about what intellectual property means in a legal sense. What is ip, which we, you know, intellectual property, or ip, as we call it.

‍ ‍

05:01
Speaker 2
Yeah, yeah. So when we're talking about intellectual property, generally that's a body of law, but fundamentally, we're talking about four different areas. Patents, trademarks, copyrights, and trade secrets. That's kind of the universe of categories of intellectual property. So patents protect new inventions, and particularly inventions that are embodied in a product, a process, a machine or a composition, some type of chemical composition. Right. And I can give examples, if you like, Chad, of how they relate.

‍ ‍

05:44
Speaker 1
Yeah. So what's an example of a patent in, like, what. What's something that. That we think of that. That all of us would know immediately as a patent and then maybe give us, like, the construction example.

‍ ‍

05:57
Speaker 2
So. So, I mean, you know, the. The first automobile engine, you Know the, the for the, an assembly line for making an automobile. I mean, you know that there are what, 12 million almost the issued patents now, you know that have issued over the last two centuries in the U.S. you know, so there are many, many and many different categories of invention, but particularly in the construction industry, it would be things like, you know, different machines. I mean Caterpillar for instance, has loads of patents for bulldozers and different machinery. You've got, you know, some of the stuff that we've done are concrete repair methods and apparatus. You've got, you've got monitoring drugs.

‍ ‍

06:56
Speaker 1
Yeah, I can patent a method.

‍ ‍

06:59
Speaker 2
Absolutely.

‍ ‍

07:00
Speaker 1
Okay, so that's, you're going to talk about the difference between a patent and a trade secret because in my brain I'm going wait, isn't a method kind of a trade secret? But, but I'm sure you'll, you'll paint that picture. But okay, so we got it for patents. I think I can picture that's usually it's associated with what I get inventions. That term that you said we invented this new product or new way of doing something that we are then putting a patent on and saying nobody can do that but us or nobody can use that but us.

‍ ‍

07:33
Speaker 2
Yeah, exactly. Yeah. And so importantly, fundamentally, the patent gives a right to block others from making, using, selling or offering for sale that new product, that new process, that new composition. But in exchange for that, you have to file a patent application that is a detailed technical description of exactly what the invention is. So you're telling the world exactly what it is that you've developed, how to go out and make it, how to go out and use it. And that's the trade off.

‍ ‍

08:07
Speaker 1
Yeah, the trade off is the moment that patent expires, which is how long?

‍ ‍

08:12
Speaker 2
It's 20 years from the time you first file the application.

‍ ‍

08:15
Speaker 1
The moment it expires, everybody knows how to go out and replicate your.

‍ ‍

08:20
Speaker 2
And the public is encouraged to why we make those documents public so that once it expires the world can use it.

‍ ‍

08:27
Speaker 1
Furthermore, I can, I'm publishing my patent which says, you know, use a little from column A, column B and column C. And this is exactly how you do it. If somebody's really creative and they may be able to say actually we're going to use column D and it's going to be different and we're not going to be infringing on the patent. But you know, they actually by being able to see their recipe, they just Educated me on how to do something better.

‍ ‍

08:50
Speaker 2
Yep. And there's a whole body of law how close you have to be infringing. You know, can you do D or can you maybe do C prime and come that close? Right. And, and still avoid the scope of the patent. And that's where you get into the big, heavy, nasty litigation.

‍ ‍

09:07
Speaker 1
Interesting. Fascinating. All right, so then we got trademarks. Talk to me about trademarks.

‍ ‍

09:11
Speaker 2
Well, if I may though, just to contrast, before we get to trademarks, I'd like to contrast patents from trade secrets. Trade secrets are really at the opposite end of the spectrum from patents.

‍ ‍

09:24
Speaker 3
Right.

‍ ‍

09:25
Speaker 2
Patents again become a public document, but they let you block anybody else from going out and making, using and selling the thing that you've invented. Right. Regardless of whether or not they know about your patent. A trade secret protects any type of information that has independent commercial value that you take reasonable measures to keep it locked up, to keep it secret. If you take those protections and you don't let the cat out of the bag, you protect the information by non disclosure agreements. You have a legal trade secret interest in that information so that if a former employee runs away with it to a competitor, if a competitor wrongfully gets access to that information, they're able to go out and use it.

‍ ‍

10:13
Speaker 2
If they go out and start using it, you can assert trade secret protections against them and sue them for misappropriation of the trade secret. But the key difference between trade secrets and patents are the trade secret. You, you keep it secret, you keep that information locked up and that's great. But somebody out there that independently develops whatever the thing is, that is subject to that trade secret. So let's say you've got a, an installation process that talks about how you are coding a wall to make some multi level surface on a wall. And the way that you're doing that is really a secret process. If somebody else comes in after the fact and looks at the wall and is somehow able to figure that out, reverse engineer it, you know that's fair game.

‍ ‍

11:06
Speaker 2
They're able to do that because it's not patented because you relied on trade secret. If somebody can reverse engineer it, that's fair game. If they wrongfully got access to your information, you can go after them for trade secret misappropriation. But if they didn't and they just figure it out, then that's fair game.

‍ ‍

11:24
Speaker 1
So you have to make a decision. Do I want to go for a patent? Publish how exactly I'm doing this, make that a part of the public Record and then have 20 years of making hay before everybody can come and replicate, you know, duplicate my stuff or do I want to go down the trade secret route, just, you know, put together non disclosure information, put together, you know, agreements, that is, and put together a sort of a way to make sure that if somebody does on illegitimately get their hands on this information that I have recourse.

‍ ‍

12:00
Speaker 2
Right.

‍ ‍

12:02
Speaker 1
But I'm not going to go through the whole patent process and publishing and all that type of stuff. You have to make that decision which makes more sense for my business.

‍ ‍

12:10
Speaker 2
Right, exactly. And people weigh it. Depending on how difficult it's going to be for somebody who has proper access to be able to reverse engineer. If it's going to be tough for them to reverse engineer, then trade secrets might be more appropriate. If it's really going to be easy for them to figure it out once they see it, patent route probably makes more sense.

‍ ‍

12:30
Speaker 1
Excellent. All right, that's great. So, so trademarks and then copyrights real quick.

‍ ‍

12:35
Speaker 2
Yep. Yeah. So trademarks protect branding that are associated with any product, any service. So that branding might be in the name of a company, it might be in a unique logo. You know, for lots of repair companies they have different logos that might have a building silhouette or a house silhouette. There's a gazillion different registrations for trademarks for logos that have those house emblems in them. But any unique design element that you use to identify as a source or identify as a brand of a product or service or any name that you associate with that product or service can serve as a trademark. And you can protect that by getting a federal trademark registration at the US Patent and Trademark.

‍ ‍

13:26
Speaker 1
This is, this is easy. This is the big McDonald's M. This is the Nike Swoosh. This is the right, those different types of things. And I have to make sure that I'm not putting my Nike a Nike Swoosh on my product and trying to do business off of their good name.

‍ ‍

13:43
Speaker 2
And the ones that you just gave examples of, Chad, are really great examples. The McDonald's M, the Golden arches. Right. When, when people see that, they immediately associate that with McDonald's burgers. The Nike Swoosh. When, when somebody sees the swoosh mark, they immediately associate it with shoes, with sneakers. Those are really fanciful original marks. Very strong brands.

‍ ‍

14:07
Speaker 1
Yep.

‍ ‍

14:07
Speaker 2
That versus Chad Prinky construction. Right, that's very, very descriptive. You can't get any trademark protection for the term construction. Your own name is a descriptive term. For you. So there's not much protection that attaches there. So when you're coming up with a name that you want to have distinction wrap around from a branding perspective, the more original you get. You know, again, that Nike Swoosh is really original. The, the golden arches are really original. So the more original or fanciful you can be in your branding, the stronger the trademark rights are going to be that attached to it.

‍ ‍

14:47
Speaker 1
Excellent. Okay. And in construction, we would just see that associated with construction brands. Right. We would see that with the logos that we've come to know. You can probably picture some in your mind right away as you start to think of the construction brands that you're most familiar with. And then. And so now into copyright.

‍ ‍

15:05
Speaker 2
And so copyrights are a really active field intellectual property field, particularly as it relates to construction. So you see lots and lots of disputes over what can different parties do with, for example, blueprints, architectural drawings, all the way from drawing phase up to a finished building, photographs of buildings, any technical design documents that get wrapped up in the. And ultimately in the finished blueprints or building information modeling models. Right. You know, any of this stuff can be protected by copyright. Copyright protects any original work of authorship that's fixed in a tangible form. So that's why I'm giving these examples of things like architectural drawings of photos of different types of software. All of these are protectable by way of copyright. And to get the strongest protection, you file an application to copyright office for copyright registration.

‍ ‍

16:16
Speaker 2
But really important issue is that the copyright only protects the literal expression itself. So for instance, with a blueprint, a copyright in the blueprint protects you against somebody else making copies of the blueprint and then maybe going out and holding that copy that they've made and constructing a building from that copy. It does not protect against somebody rightfully using the blueprint, building and then somebody else going in and scanning through the building, figuring out exactly how it's put together, and then building their own exactly identical building. The copyright in a blueprint only protects against making a copy or substantially similar copy of the blueprint itself, not of the building that results.

‍ ‍

17:11
Speaker 1
Yeah, so if I'm able to go in and sort of make my own drawings as I'm doing it, putting it into my own model, and, you know, replicate exactly what you built, that's no copyright protection there. But if I get my hands on your plans and then I build something substantially similar, now we got a problem.

‍ ‍

17:33
Speaker 2
Well, yeah, particularly if you've gotten my plans now, you're making copies and you're giving it to your architect and you're giving it to your construction team and that kind of stuff. And the only exception there is where it's possible that you come up with a final building design that's so incredibly, amazingly unique. Like it's a building that's shaped like a queue, like the letter Q or something like that, you know, something that's so original that the building itself is essentially a sculpture, then you could have a copyright interest in the building itself. But just, you know, a rectangular office building now it's going to be really hard to assert a copyright interest in a traditional new tower.

‍ ‍

18:14
Speaker 1
And what are the most common. You say this is a pretty active space. What are the most common disputes that are arising here? Well, let me pose one. You tell me if I'm off base. The picture I have in my mind is, you know, I, as the architect designed something, the, you know, who owns that design? Does the owner own it or is the architect owner?

‍ ‍

18:37
Speaker 2
Yeah, and it really depends ultimately. And you know, what is the original document? What's the agreement between the architect and the, and the project owner. Right. You know, if the, you know, if that doesn't spell out that the owner is going to own the copyright interest in those plans and absolutely the architect is going to own those plans. So up front in the agreement, when you're bringing in the architect, those issues have to be fully vetted. Right. And documented in that agreement to spell out, okay, I'm going to own these plans. And presumably then an architect who's jumping into that type of venture is going to price in the fact that I'm doing this development work entirely for you and I'm going to assign over my interest in the copyright. I'm doing this work, creating this work for you to own.

‍ ‍

19:32
Speaker 2
But absent that agreement spelled out up front, you know that with some exceptions, the architect is going to own it. And, and the owner is going to be, you know, out in the cold if he wants to go and take that to the, to his next development.

‍ ‍

19:48
Speaker 1
Right. That's what I was just thinking is, you know, why can't I just use these plans to do 10 more developments just like it in different cities across the country and just hire you, the architect, to be my ca. You know, you can just be my. Right. You can just do the CA work on that stuff.

‍ ‍

20:03
Speaker 2
But just quickly, I, I do want to do. Want to clarify that there are certain exceptions, you know, for outside Contractors like an architect, if they're specially commissioned, which is a term of art under the copyright laws to do this particular work, then there could be automatic assignment. If they're an employee of the company for copyright purposes. The, the ownership could automatically go from employee to owner. Just for copyrights doesn't relate to patents or inventions. But, but there are certain circumstances where you could have that automatic transfer. But fundamentally, because those are exceptions to the basic rule, it really dictates you deal with the issue upfront in the agreement spelling out who owns what in the end.

‍ ‍

20:50
Speaker 1
I love this. Okay, so thank you very much. I think that was, so we've got these four different areas of intellectual property, how they relate specifically to construction, where we can see these things actively. And I hope that the audience is starting to process through, you know, probably some light bulbs, because again, you know, I've been working with construction companies for 15 years in a consulting capacity. I've never once ended up in an IP discussion. And so, you know what I mean? So I, I, this leads down this path of like, what's the biggest issues or the biggest mistake that you're seeing made in the construction industry regarding intellectual property?

‍ ‍

21:30
Speaker 2
Yeah, well, I kind of alluded to it a bit so far. One of the biggest challenges, one of the biggest problems is just a lack of understanding of what I as an owner own by way of developments that are, that pop up, right? So if I have an employee, if I'm a company that's doing construction projects, but every now and then I'm coming up with a new novel improvement for, for forming patios on concrete buildings, right? Invention comes out of that process.

‍ ‍

22:16
Speaker 1
Right?

‍ ‍

22:16
Speaker 2
And the way our patent laws work and protect inventions, an employee owns that invention. With very rare exceptions, an employee owns that invention unless again, there's an agreement that assigns it over to the employer. So employer is thinking, I pay this person's salary. I have them, I've assigned them to this team to work on coming up with a solution for how we're installing a patio on an existing flat planar concrete building surface. And they come up with this great concept. So if I've paid for that effort, surely I must own it. And that's simply not the case. And so the problem is, you know, owner who thinks he owns it has gone through the patent process. If he's never gotten an assignment of the inventor's ownership interest over to the company, he simply doesn't own it.

‍ ‍

23:11
Speaker 2
And so he's invested all this time, money and effort in trying to obtain patent protection. And because he never went through the process of getting an assignment, you know, he's now out in the cold. His former employees, a lot of the times now own that invention, and there's nothing that he can do unless he can go chase down and give him $1,000 to now assign the vention, or more likely, you know, $100,000.

‍ ‍

23:41
Speaker 1
So it goes back to what I kind of alluded to now a couple of times during the. During the show, which is that, you know, the biggest issue is that they're not thinking about it. And then once they are thinking about it, they. It's too late. You know, there are. There are a series of issues that you really have to be proactive about. One of the issues in particular that you get just gave an example of is if you're an employer considering putting together some sort of, you know, statute that your employee doesn't own the invention, but the employer owns the inventions that the employee develops while there. So exactly this overall, you know, and you know me, I'm. I'm like, I just like a fight. I just like a fight. So I. I'll pick one with you here for a moment and just.

‍ ‍

24:34
Speaker 1
And just say, you know, all of this. I'm having a hard time squaring all of this protecting of. Of our stuff and preventing other people from using our stuff and keeping employees from being able to own their own stuff. And like, I'm having a hard time squaring all of that with this idea of, like, actually making positive strides in the building industry. You know, Stacy and I built this platform of the morning huddle, really, to showcase people who are helping to push positive change in the construction industry. So, you know, when. When I come up with some fanciful invention that changes the game for the construction industry, man, it pisses me off to think about that, you know, being something that now only I can do, nobody else can do. Right. Help me to square that in my own mind or, you know.

‍ ‍

25:28
Speaker 2
Yeah.

‍ ‍

25:29
Speaker 1
How would you respond to that?

‍ ‍

25:30
Speaker 2
Yeah. And so that, Chad, is a debate that is no way exclusive to the construction and really hear it a lot in the pharmaceutical industry. But look, fundamentally, our patent system is an incentive system. It incentivizes innovation. And in exchange for you going out and innovating and teaching the world about your innovation, by way of coming in and filing a patent application that becomes public, the government will give you a monopoly for a limited amount of time over that invention. But benefiting the public by giving them that knowledge, the knowledge of how to make and use your innovation once your patent expires.

‍ ‍

26:15
Speaker 2
And if we didn't have that, that drive that driver for people to innovate in the first place, then why is any company going to go through the blood, sweat and tears that has to be invested in the innovative process, you know, if there's not gravy for you at the end by way of a patent. So if we're going, if we want to see new innovation coming up, really in any industry, we want to be able to reward that innovation. And that's the whole goal of the patent system, reward innovation so that people are going out and they're developing new things that are going to benefit the public. And the benefit that innovator gets is this monopoly by way of a patent for a limited amount of time.

‍ ‍

27:06
Speaker 1
So what you're saying is that, you know, fundamentally the protections system has competition built in, but it has monopoly built in as the incentive for a period of time. And I would also, I will concede that, you know, if we aren't that every time somebody pushes the envelope and does something amazing and is changing the way that things work, while I might not be able to replicate it will inspire similar advancements elsewhere. And, and so overall, as long as somebody is innovating the innovations, even though they may be licensed, protected, will inspire, motivate and create market demand for additional motivate or for additional innovation. Yeah, absolutely.

‍ ‍

28:06
Speaker 2
And that's one of the fundamental philosophies of the patent system. It's, you know, not only am I teaching the public about my great new thing, but I'm planting the seeds for everybody else to come after me and build onto it and further improve it.

‍ ‍

28:22
Speaker 1
1, 1 comment. I wonder how you would respond to this. As I'm reflecting on everything that we've talked about is, you know, as we talk about incentivizing innovation, you know, if it's going to be the employees themselves that you're leaning into to create, to innovate, to do something special, wouldn't it be wise to have some sort of maybe mutual incentive that says, you know, an employee is entitled to 50% of any, you know, whatever rent of revenues generated as a result of monetizing said patent or said trade secret or fill in the blank?

‍ ‍

29:03
Speaker 2
Absolutely. And many companies will do that. They'll actually have an internal incentive system and they vary in Structure and let's say reward level, you know, from company to company. I mean, you know, some might get a nice pen, others might get a 10% royalty, you know, ongoing for the life of the patent. I mean, it really varies, but I think generally it's a good business practice. It's smart business practice to incentivize your employees, to reward them for that innovation. It's just improving your product on the marketplace.

‍ ‍

29:42
Speaker 1
Yeah, I feel the same. I think, you know, as we talk about incentivizing innovation, you know, you're. You can't. You can't say, hey, anything you do here belongs to me and not you, so go be creative.

‍ ‍

29:55
Speaker 2
Right, right. Exactly.

‍ ‍

29:57
Speaker 1
Exactly. Yeah, I think. I think. All right, awesome. I want to bring Stacy back. I think we have some questions, comments, and, you know, I want to make sure that we get an opportunity to hit on some of those. Stacy, what do we got?

‍ ‍

30:13
Speaker 3
All right, we have two questions on copyright. So I can go through the. I can go through with a digital scanner and replicate the model and not violate a copyright question mark.

‍ ‍

30:29
Speaker 2
And so again, it depends. It's going to depend on the specific building. And is there really something super original about the building? But, you know, a, you know, let's say a colonial house. Somebody could absolutely go in with a digital scanner, walk through the house, take very precise dimensions, and go and build an exact replica without. And again, this is assuming it's a standard colonial house. Right. But assuming that's the case, absolutely somebody would be able to go and create an exact duplicate of that house in another neighborhood. What they would not be able to do is go to the source plans, the source blueprints, or the prints that they got originally from the builder, make copies of those and hand them to an architect or a builder to go out. And because. And that's just the way the copyright interest works.

‍ ‍

31:34
Speaker 3
Okay. And I think the next question probably answers it similarly, but. So school system hires architect to design an elementary school, pay for the design, decide that I want to now build six identical elementary schools with one set of drawings that I bought. Copyright.

‍ ‍

31:55
Speaker 2
So a copyright interest absolutely exists in those plans. And who owns it depends on what that agreement said outright between the school system and the architect. And so if it was the school's plans, to be able to take that out and use it to build a bunch of other schools, it would be wise in that scenario to up front, say that, spell it out in the agreement. The architect then has the benefit of knowing that up front they can build that into the basket of rights that they're giving the school system and say, you know, you can go out and build seven more units. You can go out and build 10 more units, whatever cap they want to put on it. Because originally the architect presumably owns those rights in those plans.

‍ ‍

32:43
Speaker 2
But really depend, again, it dictates dealing with this issue up front in the initial agreements between any third party and owner developer who's working a project. Awesome.

‍ ‍

32:59
Speaker 1
Awesome. I have one question, Greg, which is how do I know when I should be taking steps to protect ip?

‍ ‍

33:12
Speaker 2
Anytime that you're doing, anytime that you're being creative, you should be going. It doesn't necessarily mean you have to run out to an IP attorney, but anytime that you're doing something new, you have a new branding that you're associating with this process for installing X, right? You installed X and found that in doing it, I can improve my reinforcement by adding these elements to it. Anytime that you're doing something new, inherently there is intellectual property that's associated with that new thing. And so you need to go through, go through the mental process of, you know, does this really give me some type of economic advantage, some type of benefit that my competitors might want to use if they found out about it?

‍ ‍

34:04
Speaker 2
And if that's the case, then you should be looking at, okay, well, if that's the case, what kind of protections can I wrap around it? Is it a new branding that my competitors are going to want to adopt? If so, I want to go seek trademark protection. Is it, is it some type of functional improvement? If so, I want to consider the possibility of patent protection or have a strategy where I'm going to maintain trade secrecy over that information. But fundamentally, anytime you're coming up with anything new, that's giving you some benefit out in the marketplace that your competitors are interested in, there's IP there and that should be vetted.

‍ ‍

34:37
Speaker 1
Excellent. That's really useful. So, so, you know, you talk about financial value, it's the, the motivation to do it. What's, what's the financial incentive to do this? One of the biggest issues that I see with construction companies from my seed as a consultant, helping companies to figure out where they're trying to go over the next three years, five years, 10 years, those types of conversations, all the time I'm having lots of conversations about exits, right? About what are we planning to do when it comes to selling the business, when it comes to whether it's, you Know, creating an esop or whether it's, you know, trying to find a way to keep it in the family. But more often right now, a lot of the conversations that I'm having really do revolve around how do we get the most possible valuation for the business?

‍ ‍

35:25
Speaker 1
Do you see intellectual property having these types of protections in place, mattering in any meaningful way to construction company valuation?

‍ ‍

35:37
Speaker 2
Yeah, absolutely. And again, it's an issue that's not unique to the construction industry. It's, you know, anytime a company is looking at an exit, obviously you're looking to maximize the valuation. And so hopefully you're doing that early on, long before, five years before you're getting to a negotiation table for some type of exit, some type of MA transaction.

‍ ‍

36:04
Speaker 1
Right.

‍ ‍

36:04
Speaker 2
And so to the extent we talked about different examples of ips, they relate to construction industries. So it would really behoove somebody that's looking at an exit five years down the road to go through and say, okay, do I have some things that are sitting on a shelf that I've maybe not jumped through the hoops of seeking protection for the brands that I have out in the marketplace? Have I secured trademark registrations for them? If there are. Are issues that I've kept secret and that, you know, we've been working on and tinkering inside, can I wrap some patent protection around them? If, if you get the negotiation table and you.

‍ ‍

36:49
Speaker 2
And there you find that you've got these things that have been sitting on the shelf that you haven't taken the steps to protect, now your valuation's down here, whereas five years before, you've secured all this protection, you know, for the stuff and have federal protections that now attached to it, boom, your valuations way up here. So it's really a useful exercise to go through, you know, an itemization, if you will. Well, before you get to that negotiation table to see what things are. Do we have in process, what things do we have sitting on the shelf that we just haven't really acted on that could just add value to our basket of intellectual property that we can wrap protections around just to boost our valuation. And we see that a lot. And the folks that are doing it early are benefiting.

‍ ‍

37:40
Speaker 2
The folks that are waiting until they get to the negotiation table are realizing, oh, man, I wish I would have done that.

‍ ‍

37:48
Speaker 1
When I think of some of the most pervasive challenges, you know, or, you know, yeah. Challenges the business owners face in the construction industry, this is one of them, is Just, you know, exiting from the business is oftentimes just so unappetizing. It's just, you know, yay. I get 2x profit, you know, or, you know, 3x profit. It depends on the world that you're operating in. But I think getting a comprehensive IP strategy in place and really taking a look at what protections you can bring to the table, that's going to make a huge difference, particularly to a strategic purchaser rate. Somebody who's going to buy your company and be strategic with that. I mean, imagine a private equity firm that owns 18 different mechanical contractors.

‍ ‍

38:29
Speaker 1
You own protections on four different patentable techniques and processes that I now, not only am I going to be able to buy this company and get the value out of, but I'm actually going to be able to take this and apply it to the 18 other companies that all. Now all 19 of my companies are going to be enjoying federal protection for the next, whatever, 15 years on this very unique way of doing things. It's going to give a strategic advantage in the market.

‍ ‍

38:54
Speaker 2
Exactly.

‍ ‍

38:55
Speaker 1
Definitely worth doing. Last question. What's it cost? How do I protect all this stuff? Right. Like how much?

‍ ‍

39:00
Speaker 2
How much?

‍ ‍

39:01
Speaker 1
So, so all there might be some people who are listening and watching saying like, I gotta do this, but wait a minute, I don't want to get sucked down the rabbit hole with, you know, a bazillion dollars with attorney's fees.

‍ ‍

39:14
Speaker 2
Yeah. And costs are really all over the place for the different types of protections that we talked about for trade secret protection. That's all, that's all client based. It's building the systems internally to literally keep information locked up. Right. And having data password protected. So that's just whatever your internal infrastructure costs are.

‍ ‍

39:35
Speaker 1
So internally that's, in the scheme of things, the most affordable protections you can have are trade secret protections.

‍ ‍

39:42
Speaker 2
Right? Right. Copyrights are pretty simple process. It's a registration fee that's under $100. And attorneys, if you work with an attorney to do a copyright application, probably under $500 to do a registration. It's really a pretty simple process. Trademarks are, I say, usually between $3,500 and $4,500 from start of the process through the, through to registration, assuming there are no tremendous headaches that come out in the process. And there are headaches that could come up during the process, but Generally in that $3,500, $4,500 range is appropriate. Budget patents are oftentimes very valuable. But likewise the most pricey type of protection that you can get. So for a very simplistic application going through the entire examination, you might spend $15,000 for something that's incredibly complex. You know, maybe a new piece of software or really complex electrical control systems.

‍ ‍

40:59
Speaker 2
You know, that could be 25, 35, $40,000. It really depends on the specific technology. And there I'm talking about from the start of the process, through the multi year examination process, all the way to ultimately an issued patent.

‍ ‍

41:16
Speaker 1
Wow, that's, I mean, go ahead, Stacey. Sorry, please.

‍ ‍

41:19
Speaker 3
Oh, I just have a quick question. So is there a way to like, you think you have something unique and innovative and then you go through the process and pay for everything. What are the chances you're going to get denied for something? Like maybe you weren't aware that something like this is already out there.

‍ ‍

41:39
Speaker 2
Yeah. And so that does happen where you're going through the process. You filed your application 99 times out of 100. We expect we're going to get an initial rejection from the patent office and then we get into argument with the examiner to explain why we're different from what the examiner cited against us. And so, I mean, but that's really where the game is. That's the back and forth, that's the negotiation that takes place during the patent examination process. And again, that's pricey. That's part of that 15 to $40,000 budget. You know, if it sails through, it's only a little bit of interaction that's back and forth with the examiner and you get to an issued patent. However, if there's lots of back and forth, lots of fight, sometimes the examiner digs his heels in.

‍ ‍

42:34
Speaker 2
You feel that he's wrong in citing against you what he cited against you. You have to appeal. And the appellate process gets pricey. So it really varies. Sometimes the examiner is very well grounded in the rejection that, that he or she makes, and sometimes they're not. But if they're not, you have to keep fighting, you know, which just adds cost to the process.

‍ ‍

43:01
Speaker 3
Thanks.

‍ ‍

43:02
Speaker 1
Awesome. This has been a really useful conversation. It's got, it's definitely got my wheels turning and I have nothing to protect. But, but you know, I, I, I can picture having some different conversations with my clients as a result of this. So I appreciate your time just even personally and I know that our audience, you know, has probably got their creativity peaked and going to be having some interesting discussions this week and afterward as a result. So thank you so much for joining us and having the discussion, Greg.

‍ ‍

43:35
Speaker 2
Absolutely. My Pleasure. Thanks for having me.

‍ ‍

43:37
Speaker 1
Yeah, it's our pleasure. So anything that you want to say? Parting words?

‍ ‍

43:45
Speaker 2
Just the one morsel that I'll leave everyone with is you hear horror stories about people leaving value on the table. The earlier you address these issues, the better. Do it internally. Just have a sit down and brainstorm about what do we have on the shelf that we think gives us that competitive edge and is there some protection that we can wrap around it? The earlier that you do that, the better. If you wait too long, your competitors could beat you to the process.

‍ ‍

44:12
Speaker 1
Wonderful. Great advice. Thanks, Greg. Stacy, we got some housekeeping to do. Let's, let's walk people through some of the stuff that's coming up so you can see across the bottom here. Join us next week at the same time for episode 33. Amy Marks, the queen of free prefab. Freepab. Free prefab joins us to talk about all things prefab. I can't wait for that discussion. That'll be a lot of fun. She's extremely dynamic and I'm sure people will, you know, have a great time as well as learn a ton during that episode. Stacy, do we have the Steeltoe Communications marketing tip of the week?

‍ ‍

44:49
Speaker 3
Yes. Just a quick reminder to protect your digital footprint. Just do a scan online of your company to make sure you're managing your reputation and not waiting for a crisis to happen. So that could be looking at your reviews, making sure you're active in the community, applying for awards. You want to make sure there's positive feedback about your company and you're keeping that up to date. Don't wait for something bad to happen. And that's all people see when it comes to your digital footprint online.

‍ ‍

45:25
Speaker 1
Great advice. Love it. I want to just plug for a moment. I will be. I'm running a presentation tomorrow in conjunction sponsored by HMS Insurance down at the BWI Marriott. If that's something anybody would like to learn more about, please reach out the focus of the conversation. I'm going to be splitting time with an economist and we will be talking about economic conditions in the construction industry in 2023 and what you can be doing today to prepare your company to deal with whatever may come and capitalize on the opportunities that you show up. So if anybody again would like to hear more about that, just shoot me a message right here on LinkedIn. Stacy, I look forward to seeing you again next week. Anything you want to say before we wrap?

‍ ‍

46:12
Speaker 3
Nope. I'm looking forward to next week, too.

‍ ‍

46:14
Speaker 2
All right.

‍ ‍

46:15
Speaker 1
See you guys.

‍ ‍

Join The Morning Huddle for a timely discussion about laws governing how we hire and pay our construction workforce.

Workers are misclassified as 1099 when they should be legally W-2. Subcontractors are hiring labor subs to augment their workforce or, in some cases, to replace them altogether. These labor subs have a varying level of commitment to following the law, and now their prime subs and GCs are on the hook for their mismanagement.

Millions of dollars of penalties have been paid by contractors in the Metro DC region. Attorney General Karl Racine's office appears to be committed to pursuing more wage theft infractions in the city.

No matter where you live, take the time to hear from Hillary Ghent about how Davis Construction has reacted to the heightened focus on this issue and the recommendations they have for the entire subcontracting community to achieve compliance in a manageable way.

Transcript:

‍ ‍

00:01
Speaker 1
All right, it's morning huddle time. Good morning. I'm not saying it works. I wish you God speed, Godspeed with all of that. I think that's really nice. You know, I'm not sure what kind of success you're gonna have with that today because the world, my friend, has changed. Right. A lot of American construction workers, they have different needs. They have completely different needs.

‍ ‍

00:22
Speaker 2
These awards have a huge, like, criteria that you have to fill out and they usually have a community service or community.

‍ ‍

00:32
Speaker 3
You know, the most productive with a high performance value. And, you know, sometimes it's 11 o' clock at night.

‍ ‍

00:41
Speaker 1
Funny, isn't it? Yeah, not for me.

‍ ‍

00:44
Speaker 3
Not for me.

‍ ‍

00:44
Speaker 1
At 11 o' clock, I am guaranteed to be snoring.

‍ ‍

00:47
Speaker 2
So.

‍ ‍

00:57
Speaker 1
It's morning huddle time. Good morning. I'm Chad Frinke. I'm here with Stacy Holzinger, as always, and our guest, Hillary Gent. Stacy, how are you this morning?

‍ ‍

01:06
Speaker 2
I'm doing good. How are you guys?

‍ ‍

01:09
Speaker 1
Doing good, Doing well.

‍ ‍

01:10
Speaker 3
Thanks for having me.

‍ ‍

01:12
Speaker 1
Thank you so much for joining us, Hillary. So Hillary is in house counsel with Davis Construction, James G. Davis Construction here in the D.C. metro area. Hillary, tell us just a little bit about Davis, terms of like location, size, yada. Give us a little bit of background on the company that you work with.

‍ ‍

01:36
Speaker 3
Sure. So Davis is a general contractor. We're based mainly in the D.C. metro area. Our office is in Rockville and we do work in the Northern Virginia, D.C. maryland area. We also have a Philadelphia office. We're about 400 or so employees and we've been around for more than 50 years. And yeah, awesome.

‍ ‍

02:00
Speaker 1
Certainly in this area, known for doing some of the best looking and highest quality award winning projects. And so kudos to, you know, James G. Davis and all the work that you guys do. I think, you know, also lots of my friends and clients, you know, in the specialty contracting community have really positive relationships with Davis by and large. So you're doing something right overall when you can have a whole bunch of work and subcontractors like you.

‍ ‍

02:31
Speaker 3
Well, that's great to hear and certainly value our partnerships with subcontractors.

‍ ‍

02:36
Speaker 1
And we are going to get into some subcontractor chat today in terms of some of the stuff that we're dealing with. But before we do, I just give a little bit of background. Hillary, how long have you been with James G. Davis and exactly what is your role in that environment?

‍ ‍

02:55
Speaker 3
Sure. So I've been with Davis eight years. I am in house counsel. So one of two attorneys that we have at Davis. Before coming to Davis, I worked at a small construction litigation firm. I worked on a big case for Davis, so got to know our general counsel, my boss now and some of the people at Davis and had an opportunity to come work in house at the end of that case about eight years ago. So in my role, one of the main things I do is contract related. I negotiate and deal with all of our prime contracts so with the owner and then manage subcontractor issues. I work on compliance like for example, wage theft that we're talking about today and just try to hold Davis's hand through all of our various legal issues that come up.

‍ ‍

03:44
Speaker 1
Awesome. So, so let's start to pivot toward our topic today. So wage theft, which is something that you have been kind of, I don't know how willingly I'll be interested in that, but thrust into the public eye here in the past few months, I've certainly gotten a chance to actually see you speak about this and hear you speak and see you speak about this and it's part of what really, you know, Drew, Stacy and I to having you on here because it's, it sounds like just like a, I don't know, ho hum legal issue. It's not, it's big and multifaceted and complicated and so Stacy, you know, I'm going to put you in your role as per usual engaging with the audience here on chat.

‍ ‍

04:39
Speaker 1
But let's make sure that we take some specific questions from, from our audience on, you know, ways to navigate some of these changes. And I should also make sure that I'm giving Hillary the space to provide a legal disclaimer which is yes, Hillary is an attorney, yes, she is an attorney specifically for Davis. But Hillary use the specific language that should be used in this situation to.

‍ ‍

05:09
Speaker 3
Make sure ye just basically I'm not an expert employment lawyer. So you know, I know enough to be dangerous and probably put my foot in my mouth a little bit here. But you know, anyone that has specific questions related to your company and your employment issues, you should really seek out a expert employment lawyer, which I am not.

‍ ‍

05:30
Speaker 1
So very good. All right, good. So there's the legal disclaimer. With that said, we're going to have the opportunity, I think, to talk about, you know, if you have specific questions, we should talk about them. Just understand they're not legal advice and that you should seek legal advice specifically from your attorney. All right, good. Let's, let's get rolling, Stacy. We'll see you in a bit.

‍ ‍

05:51
Speaker 3
See ya.

‍ ‍

05:53
Speaker 1
So, Hillary, I think one of the things that drew me so much into this topic was the fact that the way this law is being, I don't know if there's been a, you know, fundamentally a change in the law or really just an enforcement of a law that's been in place for quite some time, but that the change that it would really kind of force or that it is forcing in the industry is, it's pretty seismic. So take a moment, if we can, and just describe a little bit what is wage theft as it relates to, you know, the construction industry and maybe answer that question about is this a new set of laws or these laws that have existed, you know, how, what's happening right now?

‍ ‍

06:47
Speaker 3
Sure. So wage theft is really just a failure of an employer to pay amounts that are legally due to their employees. So that could be, you know, if minimum wage is $15 an hour and you're paying a worker $10 an hour, you're stealing $5 an hour, you know, from that worker that they're legally due. Failure to pay overtime is another common example. And then another area of focus, I think by the jurisdictions is failure to provide paid sick leave. So I think in the construction industry, one of the main ways that this becomes an issue is in the context of worker misclassification. So for an independent contractor, so the things I just mentioned, you know, overtime, minimum wage, sick pay, that all implies applies to employees.

‍ ‍

07:45
Speaker 3
So the workers working for an employer that are classified as employees, an employer does not have to provide those same things to an independent contractor. So, and the other big difference is withholding taxes. So for an employee, the employer is required to withhold and pay taxes for their employees. Not so for independent contractors. Independent contractors are obligated to file and pay their own tax returns. So the issue really comes up in the construction industry where a company hires somebody as an independent contractor, but that worker works legally, qualifies as an employee, and so should be paid minimum wage over time, sick pay, have their taxes withheld, et cetera.

‍ ‍

08:35
Speaker 1
Yep.

‍ ‍

08:36
Speaker 3
So in the construction industry, long standing industry practice has been to classify workers as independent contractors when legally under, you know, long standing legal principles, they should be properly classified as employees. So that hasn't changed. I think what has changed more recently in the wage theft context is the enforcement of the issue and the roll up of liability from the company that itself is misclassifying its workers to a higher tier subcontractor all the way up to the general contractor. So in. This is recent, in the last couple of years. This exists in D.C. maryland, Virginia and not every state across the country, but it's, you know, continuing to roll out in jurisdictions across the country. So states or jurisdictions themselves are creating laws flowing up that liability and then also giving the workers themselves.

‍ ‍

09:45
Speaker 3
It's not just enforcement by the government agency, they're also giving workers them that ability to seek remuneration up the chain, not just from the company that hired them as well.

‍ ‍

10:00
Speaker 1
Excellent. So that was a phenomenal description. I think. You know, I've been around this now for at least six months where I've been doing lots and lots of research and reading about. I think you just put it so extremely succinctly and I think. Can I just repeat back to you in simple terms how I understand it and then you make any corrections?

‍ ‍

10:23
Speaker 2
Sure.

‍ ‍

10:23
Speaker 1
I think what you're saying is that there. So the first question perhaps is am I actually hiring an independent contractor or is this person qualified, legally qualified to be a W2 employee? And the answer to that I think in most cases now is if that person is out on your job site. Right. If that person, if that person is working for. If that person is working for a company on a job site that they are in most cases legally classified, you know, qualify to be W2 at this point. Not.

‍ ‍

11:06
Speaker 3
Yeah, generally if they're doing the work of your business. So like for example, if you're a painting company and you've got your own employees that are out there painting and you need some additional labor and you go to a, you know, a lower tier and you say, I need some additional labor and they come out and they're painting, then those people, generally speaking should be qualified as employees, not as independent contractors.

‍ ‍

11:32
Speaker 1
If they come out to, if they come out to fix the painting company's trucks, then that would be a subcontractor. Right. That. Or sorry, that would be an independent contractor. That would qualify as that. But if they come out the paint, they're doing the work of the company. Okay. So that's one classification. And, and I think that has been, you know, a hard fought discussion, but one that's largely settled law at this point. Yeah, it's.

‍ ‍

11:59
Speaker 3
Yeah. And I mean it's not that you can't ever have somebody legally qualify as an independent contractor. I think just in the industry, the reality is that generally speaking, if you have somebody out there doing the same work that your company is doing, they should be classified as an Employee.

‍ ‍

12:19
Speaker 1
Yeah, I heard in one of the forums that I sat in on, I heard the speaker who's an employment lawyer say, say guys, if there's somebody working out on the job site doing the work of your company, they really need to not be an independent contractor at this point. That's just something you need to be, you know, as a general rule be thinking about. So then the next piece of this is the as you said, long standing norms. And I think I found in different market sectors it's more, you know, common than in others. So in wood frame multifamily as example, it's really common that, that the vast majority of the subcontracting community is using very few of their own in house labor, if any. And they're really leveraging third party, right.

‍ ‍

13:13
Speaker 1
A lower tier subcontractor that was really there to provide the laboratory on that job. And so that's been their business model. You know, that's been, it's really been the way that they've been running things for a long time. So all of a sudden the ability to not just punish the lower tier subcontractor for violating wage theft by, you know, and again, how does that happen? Paying people a piecework that maybe doesn't ultimately add up to minimum wage. Whoops, that person worked slow. So it didn't add up to minimum wage. Paying people piece work and they are putting in 12 hour days and it doesn't add up to minimum wage plus at least overtime. There's another opportunity. Right. So, so exactly as you described it.

‍ ‍

14:03
Speaker 1
But now these companies, these entire companies who, you know, this electrical contractor who has very few actual electricians on their team, but mostly just kind of employs, you know, management level folks, project managers, estimators, and then you know, maybe foreman and superintendents, they, how are they supposed to get these people out on their project? You know, how are they supposed to staff their projects when they don't actually have internal staff? So you as Davis, why did you make the decision to start, you know, kind of requiring that your subcontractors do this? And, and I'll say you're pretty early on in that, right? Like it's, they're not every GC is, has embraced this idea. Why did, why did Davis say guys we're not just going to let the law handle this, we're going to handle this, we're going to write it into our contract?

‍ ‍

15:01
Speaker 3
Well let me just clarify one thing. You said it's not that you can't use labor subcontractor. You don't have to. You know, we're not saying that, you know, a company has to have everyone on their payroll. If you use a labor subcontractor, their workers need to be properly classified.

‍ ‍

15:23
Speaker 1
Thank you. And that's something that I should have said that I'll take 20 seconds and clarify that for me. What I'm, what I'm specifically talking about is a norm that has been created where those labor subcontractors tend to pay their employees as independent contractors, and that the prime subcontractor who hires that subcontractor is doing nothing wrong by hiring that subcontract. By hiring that labor sub. But now that prime subcontractor, as well as the general are liable for that. For that labor subcontractors, wage theft violations, if they should occur, which they probably are like, occurring. Just, just based on the fact that they're misclassified.

‍ ‍

16:11
Speaker 3
Yeah. Yeah. So why did David, you know, why is Davis doing this? I think several reasons. One, you know, the flow up of liability. It's, it's added risk to Davis. So there's that. There's the fact that not only is there added liability, but it's massive added liability. So it's not just the amount of the wages that weren't paid, it's three times the amount of the wages that weren't paid, plus other penalties and things like that. Then there's the fact that this is continuing to be enforced. You've seen, you know, other general contractors have been targeted by the D.C. attorney General. Davis and every other general contractor in the area has been sued civilly for this issue. And if you haven't yet, you will. So, you know, there's a lot of legal focus, legal reason for this.

‍ ‍

17:14
Speaker 3
And then there's also, you know, we've been hearing clients asking about it. We've had clients say, you know, we're hearing about this wage theft issue. We want all the workers on our job sites to be paid correctly. You know, what are you doing, Davis, to ensure that they're being paid correctly? And there's the, you know, the moral aspect on our end as well. You know, you're working on a Davis job. The workers that are working hard should be paid appropriately. So, you know, there was a lot of different factors. This issue has been, you know, kind of bubbling for a couple of years, and we've made a push in the last year to really make this an area of focus for us corporately.

‍ ‍

17:58
Speaker 3
We've, you know, we rolled out a new subcontract exhibit that doesn't really say anything different than what our subcontract has already said. Yeah, I mean what it says is you have to comply with employment laws which you know, you're already legally obligated to do that regardless of whether Davis or any general contractor tells you and you need to maintain records to show compliance. And then if there's not compliance and you know, Davis gets tagged for something that was caused by you or your lower tier, then you're, you are responsible to Davis for that. So you know, that's what the rider says, which is pretty much what the subcontractor already says. Just expand it a little bit. And then, you know, like I said, it's been an area of focus for our company.

‍ ‍

18:44
Speaker 3
So we've updated our pre qualification form to you know, ask some questions about how do you, as a subcontractor that's going to work on a Davis project, how do you hire people, what do you do subcontractor to look at your lower tiers and how they're classifying their workers. So you know, we can, that gets factored into pre qualification for working on Davis jobs. And this is really a top down issue at Davis. You know, we, this is coming from, you know, the very top at Davis that this is an important issue for us. We've rolled out company wide education as well.

‍ ‍

19:26
Speaker 1
So I, I, I, you know, like it or not, the stepped up enforcement and this rollup clause, right, that they're, that, I mean it's really creating change and I applaud you guys for not waiting to be, you know, not waiting for this to be a problem but instead, you know, working to get out in front of it. You're not alone, but you are leading in that area. So what does this mean fundamentally to the industry and to your subcontractors? What, what do you imagine happening and what are you already hearing? This is, you know, it's relatively new, but you have been doing it. What, what's, what's the feedback so far?

‍ ‍

20:15
Speaker 3
So through abc has held a couple of seminars on this issue. One kind of, you know, targeted to general contractors, another to subcontractors. And then we had sort of a joint session, you know, for everyone to sort of talk about. I think the hope, the goal is that the whole industry, you know, moves in a new way to no longer misclassifying workers on the job sites, having the workers be paid the legally due, you know, benefits and payment that they're entitled to. But I think it's a difficult issue. It's been long standing industry practice, as you said, you know, people built their business model and you know, in a different way. And so it's a big ship to turn. But we are trying, I think, you know, sort of step one is education.

‍ ‍

21:12
Speaker 3
I think not, you know, mal intent or not, I think there's a lot of people out there doing things that this is the way it's always been done and they, you know, they think that it's normal and they don't necessarily know that there's anything wrong with the way that they have been doing business. Certainly, you know, there are bad actors out there, but there's probably a lot that didn't appreciate the issue. So trying to get the education piece out there and hope that as more people understand the issue, you know, there's change.

‍ ‍

21:48
Speaker 1
I think, you know, it bears calling out the elephant in the room with the whole why people have been 1099. Right. Like overall and certainly not, you know, hard and fast rule. Right. But overall, isn't it fair to say that the majority of the labor subcontractors who are 1099 ING people and who are the potential root cause. Not, you know, I'm not saying they have been doing things wrong.

‍ ‍

22:20
Speaker 3
Right.

‍ ‍

22:21
Speaker 1
But they're the potential root cause of these wage theft issues. The reason these people are 1099 is because they can't be W2 that in fact they're an undocumented worker class. That the entire construction industry, certainly in our region and I can only imagine in other regions across the country has become completely dependent on to perform the work in the field, which is again, it's an undocumented, primarily Latin American workforce that is 1099 because they don't have legal status in the US when you think about that, what is, you know, what are companies actually able to do to get into compliance here? What, what are you know, how do you navigate that? Hey, everybody now has to be W2. You know, all these people throw up their heads and say, like, how do I w to somebody that isn't documented? What do I do?

‍ ‍

23:28
Speaker 3
Yeah, well, there's two pieces to it. One is, you know, by law, a, you have to, you can only hire people that are legally authorized to work in the U.S. so that's one way to put people on W2. You know, obviously, I think it's known, as you said, in the industry, there's undocumented workers. And that's just not going to happen, that everybody is going to be legally authorized to work in the industry. So the other way that I understand that, you know, companies have worked towards the W2 compliance, not necessarily legally authorized to work in the US compliance, but is that the workers can get an ITIN, which is an individual Tax Identification Number, and that issued, that can be issued to an undocumented worker.

‍ ‍

24:25
Speaker 3
And that allows the employer to withhold taxes for that and pay taxes for that worker and also gives the workers themselves certain benefits. Like, for example, in many states having an. It allows you to get a driver's license and open a bank account and send your kids to the local schools and things like that. So what we are seeing, some of the companies that are working to solve this wage theft issue, they have converted to ensuring that all of their workers have these itins. They are all paid W2 and, you know, taxes withheld and paid. And so, you know, that is one way towards dealing with the misclassification and wage theft issue.

‍ ‍

25:23
Speaker 1
Yeah, man, this, the labor force, that takes a leap of faith for the, for that worker, right. For that worker to have the guts to put themselves on the radar if they're currently undocumented. I, I, you know, I don't, I know you're, I'm, now I'm putting you in a situation, you don't have answer to this question. But my, you know, this is as I start to imagine what this is going to look like at scale, so that, not only does Davis do it, but that, you know, and the handful that have already done it, you know, made the same kind of move to say, hey, this is how we're doing it moving forward, folks. And if you're not in compliance with this, then you're out of compliance with us. There's going to have to be a sea change with those employees.

‍ ‍

26:18
Speaker 1
Now, do you think that there's a strategic advantage for the subcontractors who don't comply, you know, on projects, obviously they're not going to win work with Davis, but in other environments, you know, where somebody isn't. So let's say subcontractor A is working really hard to get all of their, you know, labor subs on W2 and make sure that everybody is doing things in this really official and legal capacity. Subcontractor B is gambling. Do you think there's a strategic advantage for subcontractor B in the short term. Oh, did I. Sorry.

‍ ‍

27:00
Speaker 3
So from what we've. You were a little delayed chat.

‍ ‍

27:06
Speaker 1
Oh, my fault.

‍ ‍

27:07
Speaker 2
We can hear you. You're good.

‍ ‍

27:11
Speaker 3
Okay, good. From what I have heard from the subcontractors that we work with that are putting measures in place to ensure their lower tiers are complying, some of the challenges that they have faced are having the workers say, you're going to make me get an ITIN and withhold my taxes. And I don't want to deal with that. I'm going to go, you know, work for another company that isn't going to do that. And so the hope is that the more part of the change here is that if everyone is requiring the ITIN process or making sure that everyone is paid W2 as opposed to independent contractor, that there's not going to be the other company to go to that's not doing it. You know, that's not requiring that.

‍ ‍

28:06
Speaker 3
That everyone will require that, you know, level the playing as far as, you know, an advantage for the people that are doing it right from. Again, what I've heard from our subcontractors is, you know, yes, there's an aspect of it that is more expensive and that, you know, the worker who was making $20 an hour without taxes withheld, they still want to get their, you know, at the end of the day, net $20 an hour if you're going to withhold taxes. So you're having to increase their what they were paid hourly. But, you know, they have seen some efficiencies in, you know, now I'm paying attention to when everyone clocked in and when everyone clocked out.

‍ ‍

28:50
Speaker 3
And you know, I'm seeing the actual hours worked on the job site and maybe I was overpaying before, you know, for paying for hours that weren't actually worked. But now, you know, I know you were there from, you know, seven to three or you know, whatever it is. And, and that's what your paycheck is for. So, you know, we. That benefit.

‍ ‍

29:15
Speaker 1
So. So one thought that I have on this is that, you know, maybe the, the subs that continue to kind of be on the wrong side of the law here will have a strategic advantage once until that general contractor ends up getting nailed for a lawsuit because they hired that subcontractor and that subcontractor was using labor brokers that hadn't gone through the process of securing ITINs vetting their employees, yada, yada. And, and so, you know, it's, they might be lower this time, but once that, you know, once the treble damages and the fines come in and, you know, everybody's, you know, written a seven figure fine, you know, check what you thought you saved went away really fast.

‍ ‍

30:08
Speaker 1
And, and so it speaks to what you're saying, Hillary, about the whole idea that we're, we're trying to, it needs to be kind of a movement and people do need to get on board with this. And it's happening, it's absolutely happening, particularly in the district. I imagine that it's going to be happening outside the district. I already know I have clients that are in the southwest and that are in the south, where it's starting to happen in those markets. This is going to be more than just a localized issue. And I know it already is a localized issue. You know, you look at New York City, you look at, you know, down in Florida, I know that they're enforcing this in Miami. So anyway, we have a couple of questions here.

‍ ‍

30:52
Speaker 1
And I know, Stacy, you're a trooper, you, but you're super under the weather today, so I don't want to make you overdo it. So I'll. All right, you got, you want to take a shot at Ike's?

‍ ‍

31:06
Speaker 2
Well, you can take a shot at Ikes. I think that's more in your. And then I'll get to Josh.

‍ ‍

31:11
Speaker 1
All right, very good. So, so Hillary, Ike Casey, who is the president of the associate, the ASA, right. The American Subcontractor association in D.C. he asked a question where he said, I understand someone Maybe in the D.C. aG's office has hired 40 Spanish speaking people to visit construction job sites to entice workers to file claims. Do you know if this is true and if so, what do you recommend to your subs to address this? And I'll maybe just add like a couple of seconds of clarity for the audience on this.

‍ ‍

31:49
Speaker 1
The idea would be that if you can, as Hillary mentioned, if the individual on the job site actually has the ability to go and file claims themselves and you're able to identify somebody that, who says, yes, I'm not being paid appropriately, then that person can, you know, go to the boss or, I'm sorry, can literally go to a lawyer. Right. Or in file suit against the people who've hired them, thus, you know, starting to snowball this situation. So that would be theoretically the motivation of the DCAG's office, if in fact they're Hiring Spanish speaking people to go out, visit job sites and say, hey, how you being paid? And hey, you know, that's illegal and you can file a suit. So there's a little bit of detail for the audience on it. But Hillary, back to the question. I've not heard this.

‍ ‍

32:43
Speaker 1
Have you heard this?

‍ ‍

32:45
Speaker 3
I have not heard that either. Yeah, I haven't heard that. I wouldn't be surprised if that was true, but I haven't heard that. And I think at least from the civil service civil lawsuit side, where the workers themselves are filing lawsuits, putting aside the ag, it's really a plaintiff lawyer's dream because just need to convince someone you're going to get what you weren't paid times three. And you can sue your direct employer, you can sue the person above them and all of them are jointly and severally liable and they have to pay your attorney's fees. So it's a plaintiff's lawyer's dream. And I'm surprised that there haven't been more lawsuits than there already are on this topic. But I guess as far as what do we recommend that subcontractors do?

‍ ‍

33:41
Speaker 3
I mean, I think if the, you know, if the jurisdiction is entitled to send people to the job sites, there's not a whole lot that can be done about that. So I guess my recommendation would be make sure everyone's being paid correctly and then you don't have a problem.

‍ ‍

33:58
Speaker 1
Yeah, I was just going to say I think that the way that they're setting this up is that the only way to do this is to get in compliance. You've got to get in compliance. And, and so if you're not, you're, you are going to be a target, particularly inside Washington, D.C. but definitely, you know, also in Maryland and also in Virginia. But, you know, for sure, you know, if, as if we needed more reasons, as if subcontractors needed more reasons to be afraid of working in D.C. there's another. So. All right, Stacey, I think we have one or two other questions.

‍ ‍

34:39
Speaker 2
Josh was curious. How are contractors vetting the labor brokers?

‍ ‍

34:47
Speaker 1
That's a good question.

‍ ‍

34:48
Speaker 3
So I don't know. Yeah, I don't know what, I don't know personally what, you know, many different subcontractors are doing. I know, you know, some of the ones that we've talked to, they sort of have trusted brokers that they work with that they've, you know, put them through training and sat down and said, you know, this is what we are going to require of you know, if you want to work with us. And so it's really kind of establishing that relationship and having that education and those discussions. I've also heard this is one thing that Gilbane, I believe is doing is they have expanded their pre qualification process beyond just their first tier subcontractors. They've started pre qualifying the next tier down.

‍ ‍

35:34
Speaker 3
So I'm not sure what that process looks like, but that is something that another general contractor is doing as far as looking at this issue.

‍ ‍

35:44
Speaker 1
I love that. That's great. That's. And that's a really interesting thought that the general contractor is taking on that extra step. I wonder what that looks like in terms of actual overhead and enforcement and how plausible that's going to be to, you know, how sustainable that'll be at scale and whether, you know, I'm sure Davis is looking at it saying how's it going? Should we be doing something similar?

‍ ‍

36:10
Speaker 1
But you know, I think frankly in the short term, while the violations would, I mean again, this is anecdotal, I don't have hard stats, but I just know, I just know that it's a staggering number of companies that are currently out of compliance on this that I would say if, you know, in the short term it probably does pay to be hyperventilated, vigilant and just, you know, really not in a putative way, but really in kind of like. And I know this is a part of what you talked about as well, right? It's about helping your subcontractors to figure this out. And it's about the subcontractors helping their labor subcontractors to figure this out. And it's about everybody kind of pulling together and doing it, you know, in lock step.

‍ ‍

37:01
Speaker 1
Ike said something in response which I thought he said, you know, but the employer spends a ton of money defending him or herself. Right? So he said, good answer. But, but the, you know, back to this thought of the AG having 40 Spanish speaking people out there trying to drum up lawsuits. I'll just say that one of the things that's on my mind is if I were a labor subcontractor or if I were a subcontractor, prime sub, I might, you know, proactively brand on and message on how we are solving this problem, you know, kind of, you know, putting it out there in the public sphere, being really proactive about like branding and marketing my business on. We are, you know, super proactive about making sure that our subcontractors are this and that, our employees are that and we never, you know, misclassify.

‍ ‍

37:51
Speaker 1
It's not going to be, it's not going to be like a, you know, a defense against all. But I think, you know, if you can brand your company in a way where the AG's office or whoever. Right. Looks at you as one of the good guys, you maybe do deflect some of the pressure, you know, that way. So anyway, good guys, I think we're, we're over on time and I, I knew that would happen, but you know, fascinating conversation. Stacy, do you have any other follow on questions?

‍ ‍

38:26
Speaker 2
I don't know if we could sneak this in real quick, but just to follow up with Joshua, he was also curious what happens if one of the non compliant employees gets injured on the job?

‍ ‍

38:38
Speaker 3
Well, I'm well in my wheelhouse there. I mean, I would think workers compensation would kick in, but I'm not sure how that works. If you've got somebody misclassified, if that's another hole there, I, I don't know the answer to that question.

‍ ‍

38:58
Speaker 1
We had a guest, we had a guest last year, Oscar Garcia. Who is he? He owns a consulting firm that really helps companies to, helps contractors to make it a more Latin American friendly environment. You know, inside the, in one of the things that he said without hesitation, he said, you know, a lot of it gets swept under the rug. A lot of it is, it's, you know, vastly underreported the number of incidents that happen to undocumented misclassified workers. And it's a part of what, you know, people need to be vigilant about and look out for, is that, you know, the safety of that community is really tied into all of this. Right.

‍ ‍

39:51
Speaker 1
So, so without question, Josh, you know, solving this problem, while it's a huge pain in the butt and a very legitimate one for the people who are trying to say, like, man, this totally changes my business model and I don't know how to navigate this. I think short term pain, long term, it's going to be a big win for the industry. I really do think that through this process we become a more humane, better place to be for employees, regardless of their background. And I'm again, you know, kudos to Davis, kudos to you, Hillary, for, you know, fearlessly participating in the public square here and trying to, you know, help people through what is a very painful process.

‍ ‍

40:45
Speaker 1
But, but you know, hopefully one that creates positive change in the industry, which is, you know, Again, I don't know if that's the motivation from the AG's office. I think the motivation might be tax revenue. But there's a, but there's a. You know, the side benefit is maybe it becomes, like I say, a happier, more humane place for people to work.

‍ ‍

41:06
Speaker 3
So, yeah, certainly the hope.

‍ ‍

41:09
Speaker 1
All right, awesome. Hillary, any final words before we part?

‍ ‍

41:14
Speaker 3
I don't think so. Thank you all for having me and giving us a platform to continue the conversation. You know, as you said, Chad, I think it's a really important issue. And Davis is certainly not perfect. You know, we haven't, we don't have the silver bullet. We're, you know, we're still trying to figure it out too, but you know that we appreciate the opportunity to continue to spread the message and hope that catches on.

‍ ‍

41:36
Speaker 1
So, yeah, keep making those honest, good faith efforts. That's, that's all anybody can do. That's all anybody can do. So good for you. Thank you so much. And, and you do officially win the award for the most beautiful actual background. Well done. Here, here. Oh, Hillary, if people wanted to reach out to you, how would be the best way to do it?

‍ ‍

41:59
Speaker 3
Sure, It's H G H E N t@davis construction.com.

‍ ‍

42:06
Speaker 1
All right, great. H LinkedIn. Yeah, or on LinkedIn. Okay, good. So either place@davis construction.com or on LinkedIn. So h gent@davisconstruction.com or LinkedIn. Thank you, Hillary. We appreciate you. We'll see you soon, I'm sure.

‍ ‍

42:23
Speaker 2
All right.

‍ ‍

42:24
Speaker 1
All right, Stacy, let's talk a little bit about next week and what we have coming up. Before we do, I wondered if you have a steel toe Communication marketing tip of the week.

‍ ‍

42:37
Speaker 2
Sure. I wanted to talk a little bit about repurposing content. I get a lot of questions. People run out of ideas on what to post about. Think about, you know, any webinars that you did throughout the year. That's a great place to find little nuggets of information or go to your YouTube channel, really review any of your analytics to see what key points people are, you know, looking at your videos and cut them down into little clips. Same with any other channels that you're working on. Review your content every three to six months and repurpose, repost things that people already find popular. Just, you know, work smarter.

‍ ‍

43:24
Speaker 1
Stacy, that tip is so smart, but it also stresses me out and makes me realize that I probably need to hire you. You okay? It's like I don't have the time to do that, but it's great. And I. I totally agree. So next week we have Greg Stone, who is another attorney, actually, funny enough, not planned, but Greg's actually going to be on talking about something that I didn't know was even a thing, which is intellectual property. Right. Intellectual property in the construction industry. And. And, you know, there are so many things that we haven't even, you know, considered as contractors and, you know, that are means and methods and specific strategies that we've been using to create efficiencies and things like that in our business.

‍ ‍

44:09
Speaker 1
Some of that stuff actually might be protectable intellectual property information that you can keep employees from leaving and taking and bringing to your competitor and things along those lines. And yet it is one of the spaces where the fewest intellectual property support is in place. So Greg is going to talk about some of the things that you can legitimately do. So first off, how to identify what intellectual property you have, and then second, what you can legitimately do to protect that intellectual property as a construction business. It should be, at the very least, a conversation where you learn a ton and I'm sure, very interesting as. I'm sorry, entertaining as well, because Greg is hysterical and he's a really great guy. So I look forward to. To that discussion. Stacey, anything else before we wrap up?

‍ ‍

45:02
Speaker 2
Yes, I did want to announce that we got Amy Marks, the queen of prefab, to our show, and she'll be joining us October 25th. So excited for that.

‍ ‍

45:13
Speaker 1
That is going to be awesome. Yeah, that was like. It was like a negotiation between our people and her people. It was.

‍ ‍

45:20
Speaker 2
They all just went to the big auto desk conference, which I heard was great.

‍ ‍

45:25
Speaker 1
So that. That will be fantastic. So that's in a couple of weeks, so keep tuning in, folks. Be live, check us out. If you can't check us out live, catch us wherever you catch your podcast. And you know what, do us a favor and tell somebody this week about the morning huddle. Help to spread the word and, you know, help us to. To try to create this, you know, maintain this platform where. Where people can talk about positive change that they're bringing to the industry. We'd really appreciate it.

‍ ‍

45:54
Speaker 2
Thank you.

‍ ‍

45:55
Speaker 1
See you.

‍ ‍

45:56
Speaker 3
Have a great morning.

‍ ‍

45:57
Speaker 2
See you.

‍

Demand for qualified workers in the construction industry is high, and supply is low. That's no surprise, but rather than accepting such a disappointing reality, people like Jennifer Sproul are working hard to solve the problem.

She is the President of the Maryland Center for Construction Education and Innovation, whose mission is to develop, promote, and connect career opportunities in the built environment.

Join us as we talk about the workforce development puzzle and the proactive steps we can take to solve it for the industry.

What is the difference between BD and Marketing, and how should they complement one another? Many construction companies get it wrong, and some don't even incorporate these efforts into their business.

Ronnie Brouillard and Taylor Tobin might have it figured out better than any tandem in the construction industry. These two have been a tandem with the general contractor, Chesapeake Contracting Group for five years, setting a high standard for professionalism in their crafts. Ronnie (BD) and Taylor (Marketing) are in lock-step with their efforts and will show us how to learn from their model.

We welcome them to The Morning Huddle to share their strategies with our audience in a fun and educational discussion.

Transcript:

‍ ‍

00:00
Speaker 1
All right, it's morning huddle time.

‍ ‍

00:01
Speaker 2
Good morning.

‍ ‍

00:02
Speaker 1
I'm not saying it works. I wish you God speed. Godspeed with all of that. I think that's really nice. You know, I'm not sure what kind.

‍ ‍

00:11
Speaker 3
Of success you're gonna have with that.

‍ ‍

00:12
Speaker 1
Today, because the world, my friend, has changed. Right.

‍ ‍

00:16
Speaker 2
A lot of American construction workers, they have different needs. They have completely different needs.

‍ ‍

00:21
Speaker 4
These awards have a huge, like, criteria that you have to fill out. And they usually have a community service or community.

‍ ‍

00:32
Speaker 1
You know, the most productive with a high performance value. And, you know, sometimes it's 11 o' clock at night. Funny, isn't that? Yeah, not. Not for me. Not for me. At 11 o', clock, I am guaranteed to be snoring. So. So. It's morning huddle time. Welcome, welcome. Chad Prinke here.

‍ ‍

01:00
Speaker 2
Welcome.

‍ ‍

01:00
Speaker 1
With Seth Farger standing in for my very good friend Stacy Holzinger, who's in London. Seth, thank you so much for joining us.

‍ ‍

01:07
Speaker 3
Glad to be here. Thanks for clarifying because everyone was going to be surprised to see me and go, whoa, Stacy, you're bald and hairy.

‍ ‍

01:13
Speaker 1
So things have changed. Yes, Just amazing what a week can do. And we've got two of my very dear friends and just absolutely dynamic people who are joining us this morning. Ronnie Bruyard and Taylor Tobin from Chesapeake Contracting Group. Ronnie and Taylor, thank you so much for being here. I feel like this is long overdue.

‍ ‍

01:35
Speaker 2
Oh, thanks for having us. We appreciate it very much.

‍ ‍

01:41
Speaker 1
So. So let's just do a quick check in on what's going on in your life real quick. Seth, you mentioned at the outset of this thing that you're still operating on a different time zone.

‍ ‍

01:55
Speaker 2
What's.

‍ ‍

01:55
Speaker 1
What's new in your world?

‍ ‍

01:57
Speaker 3
I just returned from Alaska. My father and brother a year ago said, hey, we want to go fishing in Alaska. And I have three kids and one more on the way. So planning things a year in advance is hypothetical, but thankfully it worked out. So I just spent five days salmon fishing and UTV driving in Alaska with my dad and my brother. So he's 68, and once in a lifetime opportunity. Highly recommend it get up there if you can. So it was great.

‍ ‍

02:25
Speaker 1
Where did you go?

‍ ‍

02:28
Speaker 3
Which, if you look at a map, is barely Alaska. It's like way, way south and just across from British Columbia. So it's not as, like, way up there. But I mean, from the moment I landed, it is. It is Alaska through and through, mountainous, just peaks covered in trees. There was a salmon run going. So every stream you looked at had was literally moving with fish like it was crazy. Didn't. I saw a bear from about, I don't know, 500 yards away. I would love to have seen one a little closer.

‍ ‍

02:58
Speaker 1
Perfect distance. That's the perfect distance. You don't want to see a bear from a whole heck of a lot closer. I speak from personal experience on that. Awesome. What about you, Taylor? What's going on in your world?

‍ ‍

03:09
Speaker 4
Not much. Celebrating my dad's birthday this week. Yeah, that's about it.

‍ ‍

03:15
Speaker 1
Gonna be a big party or just.

‍ ‍

03:17
Speaker 4
No. If you know my dad, he does not like a big party, so it'll be probably a crab feast in the backyar, right?

‍ ‍

03:24
Speaker 1
That sounds actually perfect.

‍ ‍

03:26
Speaker 3
Yeah.

‍ ‍

03:27
Speaker 1
Well. Well, Ronnie, you and I have something in common. We just checked in. We're going to be at the same party this weekend.

‍ ‍

03:32
Speaker 2
Oh, yeah. That's going to be a shindig for sure.

‍ ‍

03:35
Speaker 1
It's gonna be a good time. Going up to the. Going up to the. To the canyon. Keller Brothers pig roast.

‍ ‍

03:40
Speaker 2
Yeah. You're in my neck of the woods now.

‍ ‍

03:42
Speaker 1
You're gonna have to be my guide.

‍ ‍

03:46
Speaker 2
No problem.

‍ ‍

03:47
Speaker 1
All right, well, good. So. And I have nothing going on. I'm just sick. So let's dive into today's topic. So we, when were preparing for this conversation, was like, I personally think that there's so much confusion about the difference between marketing and business development and sales in the construction industry. Maybe across industries, quite frankly, but in the construction industry, I see so much. You know, so many companies kind of get this wrong, and it's. And it's rare that a company gets it as right as you guys have. And I think that has a lot to do with the way that the two of you work together and the way that you've communicated about roles and responsibilities. And so today I really want to talk about best practices with business development. Ronnie and marketing. Taylor.

‍ ‍

04:46
Speaker 1
And then, you know, talk about how you delineate how you divide and conquer and how that whole effort is impacting the organization. So with that, Seth, I'm going to ask you to monitor, jump on the LinkedIn feed and monitor the. The comments via LinkedIn and, you know, communicate with the group and make sure that we're capturing great questions that we can bring back here in the last 10 minutes. And I'm gonna just start rolling, talking to Ronnie and Taylor about what they do and how they do it. So, Seth, we'll see you with about 10 to go. Is that cool? Yeah, Very good. See you in a bit. All right, so like I said, so much confusion surrounding these roles. I think there's this trap where marketing is just viewed as kind of like social media.

‍ ‍

05:38
Speaker 1
I don't know what that is, but, like, somebody's gotta update our Twitter feed.

‍ ‍

05:41
Speaker 2
Right.

‍ ‍

05:42
Speaker 1
And business development is just kind of golfing all day and. Right. And so, you know, I think that, you know, it's a wild oversimplification. How do the two of you describe your individual functions and how do you distinguish between them? I'll start with. I'll start with you, Taylor. How do you describe your. Your role in marketing?

‍ ‍

06:05
Speaker 4
Sure. I think for my purposes, the way I differentiate what Ronnie and I do is I communicate the brand globally, and Ronnie really communicates it personally. So he's more the boots on the ground of what we do, whereas I'm more up in the air, I guess you could say. What I love about marketing, and you're spot on when everyone thinks I just do social media, which is a big part of my job. But what I love is I really work across every single department within the company. So from. I work really closely with human resources on recruitment and on internal culture. I work with Ronnie for business development, marketing, collateral presentations. I work with pre construction for proposal development. On the technical side, trade, partner relations. I work with leadership on vision and goals, philanthropic activities.

‍ ‍

07:02
Speaker 4
And then I guess the only one I really don't work with would be accounting. But I just spent a lot of money, so I work with them in that way. Yeah, sure, yeah. But Ronnie and I work probably the.

‍ ‍

07:13
Speaker 1
Closest of the two, so that's such a fantastic description and something that I think I would just. I have to underline for. For the people, for the audience, as you're, you know, paying attention, maybe driving in this morning or what have you. One of the things that I really want to amplify that Taylor said is working across every department in the organization and doing so kind of in connection with, as you understand, the broader organizational goals. So you're integral to the conversation. Not just a department that people are sort of, you know, handing things to and saying, hey, can you punch up a proposal?

‍ ‍

07:58
Speaker 3
Right?

‍ ‍

07:58
Speaker 1
Though I'm sure that happens. It's. It's. There's a. There's an aspect of this. It's really strategic where you are working across and connecting with every department. I think that's fantastic.

‍ ‍

08:07
Speaker 2
And I.

‍ ‍

08:08
Speaker 1
And I bet you the percentage of marketing people out there who are getting that kind of engagement from the rest of their company is probably. They're probably marketing people watching this, right? Now, like, record, send to boss, like, immediately. You know, I would be so. I know. I know just the feeling. Okay, so, Ronnie, describe. Describe your. Describe business development to us and kind of how it differentiates from what.

‍ ‍

08:35
Speaker 2
And I'm glad that we're using this opportunity to differentiate the two, because I think it's important because I think it. I think it kind of gets confusing and muddled. First of all, I'm tremendously blessed to have a wing person like Taylor. You know, I mean, it's a great dynamic. It was a revelation when I started working here and. But my focus is obviously, I'm probably going to be the first person that people meet from Chesapeake. So it's up to me to really kind of focus on building strong relationships and just kind of promoting that company brand core values, which you'll see behind me here. You know, everybody at Chesapeake, I think, lives and breathes those core values, but it's also the interface with the client and the building of those relationships. But Taylor is instrumental in helping me promote that brand on.

‍ ‍

09:29
Speaker 2
On a global level. As she mentioned before. It's that taking that relationship from an introductory level and just kind of following up and building on it until it turns into some opportunities and then kind of lifts us up from a revenue standpoint. And it's just a. It's a fun. It's a fun job to do if you're extreme introvert like myself.

‍ ‍

09:52
Speaker 1
Introvert. Yeah. So. So the. What I took away from that, Ronnie, is two big things. One is that you are often the. The tip of the spear, if you will, as it relates to boots on the ground. Yeah. Aerodynamic.

‍ ‍

10:15
Speaker 3
Right.

‍ ‍

10:16
Speaker 1
As it relates to boots on the ground and making new relationships really out there, meeting strangers and spreading the word and being a good representation of the brand. So that's one. And then the second is care and nurturing of the relationships and the opportunities that can come out of those. So that the. All of those efforts from marketing and business development, whether it's the two of you or other people inside the company. Right. Because they're doing it too, on some level, gets con. You know, converted into revenue that ultimately that we see a return on investment for that effort.

‍ ‍

11:00
Speaker 2
Right. And you can do all the networking you want. And I highly recommend, I mean, if you're going to be a business developer and you're going to be serious about it, you have to get in that mindset that you have to do the work, the legwork, and that means identifying those organizations that are going to support the markets that you're trying to penetrate and you have to just go over and over again. So where a familiar face turns into a friendly face, which leads to a conversation, which leads to maybe a meeting off site. But there has to be a follow up there. And I'm glad you. Again, I'm glad we're talking about this because we recently did internally at Chesapeake Contracting Group.

‍ ‍

11:42
Speaker 2
We did an introduction to business development and how to build your professional brand with the intent on making everybody in the company, regardless of their position, a business developer. And get in that mindset to promote the company, ask the questions of the client and really just get invested in the success of the yourself and get access. Get invested in the success of the company as a whole. And I think we're on the right track. I mean, we always, there's always room for improvement. My gosh, I know I'm learning new things every day and I've been doing this for close to 40 years. But then you start working with people with Taylor in the company, and Taylor's just one person in Chesapeake that's an amazing professional at what they do. I mean, the company's chock full of them.

‍ ‍

12:26
Speaker 2
And yeah, it takes us forever to hire, but I'm glad it does. It pays off.

‍ ‍

12:31
Speaker 1
You guys are kind of happy where you are. I can tell. That's enough of that. All right, everybody. Not everybody's so damn happy.

‍ ‍

12:40
Speaker 3
Sorry.

‍ ‍

12:41
Speaker 1
I respect the heck out of it. I'm really, I'm proud of you and I'm proud of the company for that. I. So, you know, one of the things that I, I try to put myself in everybody's shoes. I've certainly been a business developer, you know, on some level myself. Ronnie, what do you. I think the hardest part, I think the hardest part of the job for somebody who is really good at being out there shaking hands, kissing babies, meeting strangers, you know, that part of it is the follow up, the organization, the structure side of things. I don't know if you had two or three pieces of advice for somebody who is maybe wired like you, likes to be an extrovert, likes to be out there pressing the flesh.

‍ ‍

13:33
Speaker 1
What, what secrets are there to staying in control of the follow up and the data management?

‍ ‍

13:41
Speaker 2
Wash your hands often, right.

‍ ‍

13:47
Speaker 3
Fail.

‍ ‍

13:48
Speaker 2
Don't never be afraid to ask the client what it looks like for follow up. And instead of, you know, I like to say, you know, how do I stay in front of you without being a pain in the rear and.

‍ ‍

14:00
Speaker 1
Or being a pest rather than guessing, you're literally just getting the test don't be afraid.

‍ ‍

14:06
Speaker 2
Everybody's adults. Don't be afraid to call it out and establish those boundaries. Ask them if does that look like six months, six weeks? Does it, Is it eight weeks? What is an appropriate time to stay in front of you and let you know that I'm still interested in your business? Another one is just, you know, understand the value of the relationship and what it means and don't be afraid of rejection. I always tell people and I like to, I really like to connect with up and coming developers and because I know the obstacles into getting a project built can be insurmountable at times. And the important thing is tenacity. Stay with it. What can I do to be a resource? How can I, you know, just tell me how I can help you and this it.

‍ ‍

14:55
Speaker 2
And I always like to tell people this and they probably are tired of hearing me, but this is a karma business and I like to give without the expectation of return and I always try to instill that in our employees, man, go the extra mile but, and just do it because it's the right thing to do and because it's kind and you know, I am one of those people that hopefully, you know, I'm going to put myself out there. And you know what, there may come a time when you need a hand or you need a good word and that person is going to be there for you. And that's my mantra, I guess.

‍ ‍

15:31
Speaker 1
I just got an email this morning, funny enough, I just got an email this morning from somebody who is working at a client of mine as a result of, you know, they ended up finding themselves out of work and a couple of, you know, a couple of weeks later I ended up finding out about it. I ended up making a connection and it's a year later and they're working and he just, he sent me a note, he said, hey, a year in, I just wanted you to, I almost want to like read it verbatim. But he said, you know, life is timing and relationships, you know, and that was exact. I mean that's the quote as I look at it, you know, warmed up my morning for sure. And, and it's. Here's what I love Ronnie, about what you just said.

‍ ‍

16:13
Speaker 1
That, that I totally expected you to give me some like really technical BD style, like go pro BD style answer where you were like, you know, set aside two hours a week to do X write number this number of emails a week and then send out handwritten notes to this number. All that stuff is happening. I know it is because I know you're a machine. But. But what. What I love is that the emphasis isn't on some sort of, like, metrics, and. And the. The emphasis is on relationships. And it's like, I just do what I think is appropriate for all those relationships. And if you care enough, you're.

‍ ‍

16:52
Speaker 3
You're.

‍ ‍

16:52
Speaker 1
It will bother you if you're not staying in contact with these people. And I know that is such a more sustainable and genuine way to go about business development. Follow up. That was awesome. I'm like, I don't know if you saw. I'm sitting over here scribbling notes for myself. Like, that is. That's wonderful, Ronnie. That's fantastic.

‍ ‍

17:11
Speaker 2
So.

‍ ‍

17:12
Speaker 1
So I. I want to hear about Taylor, how you support. How. How does marketing and business development. How do marketing and business development play together? How. How does. And. And then I know you actually do get involved a little bit in. In some of the networking activities and things along those lines. I'd like to just sort of hear about why you do that and pluses and minuses, things like that.

‍ ‍

17:34
Speaker 4
Yeah. So I view marketing as a support role to Ronnie. Any of the materials, any of the presentations that he needs, I'm the one who does that. What I think works so well with Ronnie and me and why we have such a great relationship is he really respects the amount of time it takes to do that. I think the quickest way to make a marketing professional mad is to say, like, oh, it'll just take you two seconds. The goal is really effortless, but it's not always effortless, and it takes time. And so that's something I always appreciate with Ronnie is he always says, is this enough time for you to get this back to me? So that's really the way that Ronnie and I work together. I. Ronnie loves to tell the story that when he first started, I hated going to networking events.

‍ ‍

18:25
Speaker 4
It was not my thing. I just really enjoyed my little marketing bubble. And while that's still the case, I don't hate networking like I do, especially with Ronnie as your wingman. Everyone knows you in the room. But now I really like to go. It's the one time, other than individual meetings, where I can speak with owners and clients and consultants and trade partners and learn directly from them what's important to them. And as a marketer, you're always wanting to communicate what matters to your audience. And so going to those networking events and having those conversations has been really vital for the way that we communicate what we do and what matters to an owner, what matters to a trade partner, what matters to an architect, that's really important. And I appreciate those conversations at networking events to give me that insight.

‍ ‍

19:25
Speaker 1
The difference between marketing content that is clearly designed by somebody who understands what the customer care about, who understands their world, who's really talked to them, and beyond just getting to know them, but really talk to them about their business and. And marketing content that is a guess at what they think matters is noticeable. And I think what you're doing there, that it's. I. It's funny. I think you're mostly doing it because Ronnie makes you. But. But the joke. No, I don't mean makes you. I mean, maybe makes you feel guilty if you don't. But I. But I think that investment in really learning about the industry, I mean, how long have you been with Chesapeake?

‍ ‍

20:18
Speaker 4
5 and a half years, right?

‍ ‍

20:19
Speaker 1
You. You can talk about the construction industry like somebody who's been in it for 10 plus. And the. The. For a marketing person, that's craziness. Like that tends not to happen. So anyway, kudos on that. I think that's exactly why that your. Your marketing is so on point, is that it's. It's. It is tailored pun not intended to your audience. So, you know, there was a little bit of reference to this earlier. How does the rest of the organization contribute to your success in your role? Because I gotta tell you, I mean, I got story after story where I'm like, I see, you know, fill in the blank with AEC firm, right? And they're like, well, we need new business. So we hired a business developer. We ran out of the need for new business. We fired the business developer.

‍ ‍

21:13
Speaker 1
We hired a business developer, the marketing person, because they were supposed to bring in business and they didn't bring in business, so we fired them. And I'm like, it really sounds like you're putting them out there on an island where that's just their job. I don't know. The rest of our company has no responsibility for actually winning work. It's just the two of you. Go figure it out. I know that's not how it works at Chesapeake, but I'm interested in how it feels to each of you.

‍ ‍

21:35
Speaker 2
What is.

‍ ‍

21:35
Speaker 1
What is it like? You know, how does the rest of the organization support your success in your roles?

‍ ‍

21:44
Speaker 4
Johnny, Ronnie, I'll jump in, and then you can go after me. I think something that Chesapeake really says all the time is we don't chase projects, we chase relationships. And so everyone having that mentality at the company makes you want to do what's right for the relationship and not for the project. So Ronnie and I don't feel this, oh, we have to bring in all this work and we have to go get all these projects. It' that's not where our headspace is at all. And that is really beneficial in the long run. But what I will say is I always think that our superintendents, our operations team, they are so vital to the success of the relationships that we have. I can say how wonderful we'll build your project and how great our team is and how awesome our culture is.

‍ ‍

22:38
Speaker 4
And then you go on the job site and it's not that. And so how quickly you can lose trust when you're marketing one thing and your team is doing another. So our operations teams, our accounting team, everyone is so important in making sure that the relationship maintains is great throughout the course of the entire project.

‍ ‍

23:02
Speaker 1
And important key, yeah, you're out there making promises to your customer. But, but what you're saying is, you know, sure, everybody gets involved. We do have this over development mindset, yada. But, but more than all of that, it's like everybody truly is cash in the, you know, they're acting in the way that we're promising we're going to act. And so fundamentally there's nothing that anybody can do more than actually be consistent with what we say we are.

‍ ‍

23:30
Speaker 2
And it goes back to our core values and you know, to build on what Taylor was saying. First of all, working with ccg, we have leadership that really understands what building a relationship means and how long it could take six months, it could take two years. But the important thing is it's everybody's role. From what I do, I think it's great because I don't have to do any talking in presentations. I'll do an introduction and I just sit back and let our ops be. Our operations people do the talking because they're so good at what they do and I have so much respect for them. You just, you let them just give them all the rope and they're gonna run with it.

‍ ‍

24:15
Speaker 2
And they're the ones that impress upon the client or prospective client what our approach is, what our core values, what our value add is, particularly from a pre construction standpoint. And I think a lot of our clients and people that I interact with, I think they're going to tell you that we qualify our clients as much as they're Qualifying us. I mean, look, everybody on this broadcast is probably crazy busy right now and they understand the human capital is the most critical thing in our workplace today, in our industry. I don't know so much from other industries. I know in the construction industry, not just people, but the right people that are going to fit into your company culture are going to understand and live those core values. I mean, that's kind of what it's all about for me.

‍ ‍

25:07
Speaker 2
But I get to be the, like we said earlier, I get to be the front, the tip of the spear, so to speak, and bringing those people and developing it and developing an interest in Chesapeake and what we do and more importantly, how we do it, that really is the difference maker in my world. And when we go to a project, like the biggest marketing or busy business development tool I have is project tours. We go on a project tour, we give the team the heads up. You go on there. It's crazy. It's how workmanship, like the quality, the safety that everything is tight and there's a pride of ownership there and a pride of workmanship that transcends, you know, and it just, it's an awesome thing to see.

‍ ‍

25:52
Speaker 1
So, awesome thing to be a part of. I will, I, I, I wish we had more time. So Seth has been engaging with the audience and I'm sure has some comments and questions and things to bring to the surface. Before he does that, I just want to summarize two key thoughts that I'm having coming away from this. One is obviously there's a mutual respect and a chemistry between the two people who are the front lines in the go get and the create a new opportunity side of your organization. And that's key. But the organization, every question that we just answered, that you just answered around how does the team best contribute?

‍ ‍

26:45
Speaker 1
I really, I think the greatest answer of all is to be an organization that we can be proud of and that we can have a thousand percent confidence that when we make a promise, when we bring in a new person, that when we highlight or showcase what we're doing, we're going to be proud. And so it's not much more complicated than that, but it really does require everybody to uphold the standard. So with that, Seth, what do we have from the group? What do you feel like these two.

‍ ‍

27:24
Speaker 3
Should be hearing and answering specific questions? But something that I think people touch, he touched on Ronnie, that I'd love you to follow up on is you said your response was going from meeting someone, being familiar to friendly to having a Conversation and then a follow up and sort of that flow. Give some practical advice to business development managers or BD folks that handling the rejection, the things that come in that whole process from being fielded because it's easy to get hung up on or to get discouraged and just I'm not calling back. And someone rightly pointed out that timing is everything and don't count a no as no for good. It might just not be the right time. So anything that you can practically give to people along those lines.

‍ ‍

28:13
Speaker 2
So if I, I guess the most important thing is for from my perspectives and that of Chesapeakes is that it's about a fit. And a lot of people that's an easy word, but it's the most important word. Just determine if you're a fit and if you're not a fit, be adult enough to say and put that agreement up front that if we're not a fit, I give you permission to tell me that you don't think we're a fit. And I would like your permission to tell you that we're not a fit.

‍ ‍

28:46
Speaker 2
Because at the end of the day you can do all the follow up all you want, but if your companies aren't in alignment from a core value standpoint, from a marketing, from a market approach standpoint, if it's not a fit, it's just, it's going to be, you know, it's going to be wasted time. That said, you can still be a resource for that person because who knows, they might go work somewhere else for another company and they're going to remember how you were with them. They're going to remember and the company they go work for might be that fit for you. So it's important to really nurture those relationships.

‍ ‍

29:25
Speaker 1
So maybe the recipe for dealing with rejection in a business development seat has more to do with not thinking about, how about this, with not wanting the sale as much as you just want whatever should happen to happen. And if the, and if the answer is that we shouldn't work together, that's okay. You know, it becomes really easy if we set it up that way. Hey, it's not a fit, that's okay. We identified it's not a fit. Let's do this other thing. But that in your mind, that's not rejection. If you. If we discover that it's not a fit.

‍ ‍

29:59
Speaker 2
That's exactly right. And another point I would like to. Another point I want to illustrate is if you're going to send if you're a business developer or you're a marketer or, and you, or you're sending your people to a networking event. Coach them, set them up for success. Don't just send them among the wolves to fend for themselves. Get an attendees list from the organization, whoever that organization is and they should be, you know, glad to give you that attendees list because why are they there? They're a networking organization. Pick three to five people in it, write their names down, write their companies down and put them on a little piece of paper. That's your hit list.

‍ ‍

30:41
Speaker 2
You're going to go into that networking function and you're going to be you have a targeted strategic approach and then ask whoever you've sent into the wolf den to just kind of give you a summary back about what their experience was at that particular event. Did it have value? Who did you meet and follow up? Regardless of what they do follow up because they person they're strategic partners which we call, you know, a strategic partner could be anybody, but it's people that are going to provide you or provide an introduction perhaps, or perhaps you can provide an introduction for them. That's kind of the point of the whole networking thing.

‍ ‍

31:23
Speaker 1
Taylor, what your look like you're about to say something.

‍ ‍

31:26
Speaker 4
Well, Ronnie never touched on this, but I never met another person who like lives and breathes their CRM system the way that Ronnie does. He is in there tracking everything. And especially when you have other people involved in business development, in our case leadership all being on the same understanding and playing field is so important and I think tactically that's something you can take away is that if you're not utiliz CRM, it's been so vital, I think to the success of the way that we build relationships, knowing who has who and Ronnie's really good about that and he didn't touch on that.

‍ ‍

32:08
Speaker 2
So I was.

‍ ‍

32:10
Speaker 1
How many hours a week should I be planning to mess around with my CRM, Ronnie? How many hours a week do I need to budget?

‍ ‍

32:16
Speaker 2
How many hours a week, how much content do you have to put in there?

‍ ‍

32:20
Speaker 1
If I'm working, if I'm working like you're working, how many hours I live in it.

‍ ‍

32:26
Speaker 2
That's the first thing I turn in all every day I turn on the CRM and you know, I just constantly making sure the updates are being done. I'm doing my updates as I should be doing them and just keeping it tight.

‍ ‍

32:40
Speaker 1
But if you're taking notes on a.

‍ ‍

32:42
Speaker 2
Call, I'm Three hours a week in it. At least I got it. At least.

‍ ‍

32:45
Speaker 1
Yeah, I was just gonna say it's like if. If there's the. There's the. If you're taking notes on a call, you got your CRM up. If you're making phone calls and you're following up with people, you got your CRM up. If you're sending emails, you're doing it through your CRM. And then there may be some, you know, typing in notes of other things that happened at networking event. This, that, the other thing.

‍ ‍

33:02
Speaker 2
If there's a new article, say if there's a newspaper article that has attracted me to a certain client, I'll. I'll copy and paste that article into the CRM under that client. But also if I go to a conference and I got, you know, 40 business cards, but I've got 10 of those that are really potential.

‍ ‍

33:22
Speaker 1
Yeah.

‍ ‍

33:23
Speaker 2
For us, then I have to put all that information in there. And of course, it's the research involved, you know, to determine if that client is a fit, at least superficially, until you get to the nuts and bolts.

‍ ‍

33:34
Speaker 1
Of what they're about. And I'll reiterate something that you said earlier, which is, as long as you're in the mindset of building relationships with the humans on the other end of that and you recognize the CRM as a tool that's going to help you to do that, it's not some death march where you got to open up your CRM and do it. It's. It's something that you.

‍ ‍

33:52
Speaker 2
It's.

‍ ‍

33:52
Speaker 1
It's your friend. It's your tool. What do you use for CRM? What's your tool?

‍ ‍

33:55
Speaker 2
Insightly.

‍ ‍

33:57
Speaker 1
Insightly.

‍ ‍

33:58
Speaker 4
Yeah.

‍ ‍

33:58
Speaker 2
And slightly. And, Taylor, thank you for the. Thanks for the kudos, but Taylor's like the guru of insightly. Everything I know about slightly, I've learned.

‍ ‍

34:08
Speaker 4
From Taylor because I'm young.

‍ ‍

34:12
Speaker 1
You should have seen Ronnie trying to log on today. I just want the record to show it was, you know, what kind of show it was.

‍ ‍

34:23
Speaker 2
Taylor literally got me on FaceTime and walked me through it. Thank you.

‍ ‍

34:26
Speaker 4
We figured it out. We're here.

‍ ‍

34:30
Speaker 1
All right. So, Seth. Yeah, I was just going to say. What else? We probably have time for one more here.

‍ ‍

34:35
Speaker 3
One more quick question, Taylor, for the marketing people in the room. You said you referenced that, like overseeing. Give us a quick rundown of the things that fall in your wheelhouse. Because people think, oh, marketing is just social media or branded T shirts to make sure people in the field have stuff. Give us a quick rundown of all the areas that you oversee as the director of all things marketing.

‍ ‍

35:02
Speaker 4
How much time do we have? I know I kind of touched on it earlier, but I really am across all departments. I do a lot. I don't think people realize how involved marketing and human relationship work together from a culture standpoint. All of our internal events, all of our internal marketing recruitment that all we collaborate so closely with human resources externally, all of our groundbreaking, all of our topping out ceremonies, all of our trade partner events, our external newsletter, our social media, our branding that all falls under the external marketing wing. I work pretty closely with business development and pre construction. I say them together because usually when I'm working with Ronnie to build a presentation or to create marketing collateral that then hopefully leads into a proposal.

‍ ‍

35:57
Speaker 4
And I'm working on team resumes, I'm working on our brochures and our packages for the work that we do. So I really do go everywhere and I work with everyone and that's what I love the most about my job. But it also gives me a really amazing insight into all that we have going on so that I can market it and I can talk about it and I love that. So that's probably a really high level overview of what I do, but I think it sums it up.

‍ ‍

36:27
Speaker 3
Yeah, that's great.

‍ ‍

36:29
Speaker 1
Awesome. All right, guys, I'm going to bring the discussion to a close. As much as I'd love to continue, Taylor and Ronnie, you two are superstars. Thank you so much for coming on, sharing how things really work in your world. And I think, you know, if the whole environment in the construction industry can learn to have more professionalism and you know, a more unified company approach to business development and marketing. I think, I don't know. Chesapeake's experienced a little bit of growth over the past few years. Right? Like it's turned out okay.

‍ ‍

37:06
Speaker 4
Just a little.

‍ ‍

37:09
Speaker 1
I know it has made an impact and you know, not just on the go get work side, but on the go get amazing people side, which you.

‍ ‍

37:19
Speaker 2
Want to work for an amazing company. Reach out to Taylor. I had to go there.

‍ ‍

37:28
Speaker 1
Like, yeah, I don't blame, look, I, you can never fault Ronnie for not having the guts to ask for what he wants. And I, I respect the heck out of it. And I'll just say, you know, you guys are a great product of a great organization. So thank you so much for joining and I will Seth, you and I want to just wrap up a couple of things before we jump off. Taylor and Ronnie. Any final words?

‍ ‍

37:54
Speaker 4
No, thank you.

‍ ‍

37:54
Speaker 2
Thank you so much for having us on. Give us a platform. Chad. Seth, it was a pleasure to meet you.

‍ ‍

38:00
Speaker 3
Likewise.

‍ ‍

38:01
Speaker 2
Taylor will meet for beers later today. And then.

‍ ‍

38:08
Speaker 1
At the end of the day as a business developer, it was good. All right, guys, thank you.

‍ ‍

38:15
Speaker 2
Take care.

‍ ‍

38:16
Speaker 1
Yep. Seth, thank you so much. You did a fantastic job today. I think, you know, engaging with the group on LinkedIn. I think I even saw that Stacy was on the LinkedIn chat from Jolly old England. Stacy, we miss you, but thank you so much for teeing us up with Seth. I just wanted to say a brief word, Seth, if you would tell us 30 seconds about your business.

‍ ‍

38:40
Speaker 3
So, yeah, my business is essentially marketing for construction companies. I've branded as construction video pros, though. I'll kind of do everything from web design to social media management. But content is my specialty. The storytelling, photography, videography. Far too many companies. A lot of what Taylor discussed is in recruitment, just sharing the company story, the branding, and so using video and great imagery to share a company story. And that's used for internal videos to help train their people and showcase external videos to recruit, tell people stories. Why do you like to work here? What do we do different? And then also build authority. The worst four words you can hear from someone that looks at your company is I had no idea. Meaning when they finally saw who you are and what you do. Like, wow, I thought you were just a paper.

‍ ‍

39:34
Speaker 1
I didn't know you did that.

‍ ‍

39:35
Speaker 3
I didn't know you did that. Goodness. Because that means their perception is wrong. And I guess I'd say I'm in the business of perception management and I want to help make sure that people get the right perception of your company, other companies.

‍ ‍

39:51
Speaker 1
I know that you and Stacy work hand in hand together on some projects where, you know, Stacy is the guide and consultant for her client on their overall marketing strategy and just speaks incredibly highly of your ability when it comes to understanding how to do the storytelling aspect. So I just wanted a moment for you to tell that story because I think it's something that our audience ought to be aware of. Next week, guys, we are going to be on again live on the 27th, 9am Eastern, where we're going to have Mike Wisnevsky, who is the CEO of Materials Exchange, which is a raw materials digital marketplace. And we're going to be talking about the Amazonification of the, you know, building materials and perhaps beyond in the building industry. I can't wait to get into it with Mike.

‍ ‍

40:45
Speaker 1
He's got some big ideas and I look forward to some spirited argument and discussion between, you know, he and myself and also our audience. So please join us. And then finally, as always, if anybody that you know or you are trying to create positive change in the building industry and you have a story to share, the morning huddle is a platform. So please be in touch with us. We're full for this season, but we are building, you know, our game plan for the winter, which will be season four. And look forward to having people, you know, wonderful new introductions. So please pass those along. Seth, thanks again. Have a great one. Any final words?

‍ ‍

41:25
Speaker 3
No, this was good. Thanks for the opportunity. Thanks, everyone for tuning in. I think, I think the format's great. It's quick, it's short, it's in the morning and tons of value for people in a myriad of roles and industries.

‍ ‍

41:37
Speaker 1
We hope. We hope. All right. Thanks, Seth. Have a great one. Thanks, audience. Appreciate it. See you next time.

‍ ‍

Guest: Ayo Idowu

Topic: Change Order Management

Transcript:
‍ ‍

00:00
Speaker 1
The morning huddle. We're warming up here, giving everybody a little chance to show up. IO were just talking family. IO you say you have a. How many kids you have?

‍ ‍

00:10
Speaker 2
Yeah, I've got two. I'm a lucky and blessed guy to have two healthy kids. I've got a 10 year old and who loves soccer so much and a six. A six year old who rules our home, if you know what I mean. She's the dipper in the house. Yeah. But you know, we're blessed, we're lucky. Thankful, you know, thankful through them. They keep us busy.

‍ ‍

00:35
Speaker 1
Yeah, kids are awesome. Stacy, how old's yours?

‍ ‍

00:38
Speaker 3
Three and a half. Little boy.

‍ ‍

00:41
Speaker 1
Oh my gosh.

‍ ‍

00:43
Speaker 3
Yeah, but soon, this summer, I want to get them into something and I. It's probably going to be soccer. I don't know what else you can get that, you know, age into so early.

‍ ‍

00:53
Speaker 1
You'd be amazed.

‍ ‍

00:54
Speaker 3
Really?

‍ ‍

00:55
Speaker 1
Oh yeah, he'd be amazed.

‍ ‍

00:57
Speaker 2
That's. That's a good choice, by the way. Good sport, Good choice. Keeps them busy, keeps. Wears them out so when they get right on, you can easily put them to bed. You know what I mean?

‍ ‍

01:10
Speaker 1
In the pantheon of sports, in terms of like parental commitment, it's a great place to start both time wise and financially. You know, my oldest son is nine and he is a very serious hockey goalie. And hockey goalie is a serious financial commitment.

‍ ‍

01:37
Speaker 2
Yeah, yeah, yeah, I hear that. So, you know, it's the same with, I hear it's the same with the baseball as well. Right?

‍ ‍

01:45
Speaker 1
Those bats are like $500 these days. It's crazy.

‍ ‍

01:48
Speaker 2
Yeah. So. So I think my wife and I picked the right sport then.

‍ ‍

01:51
Speaker 3
Yeah.

‍ ‍

01:52
Speaker 1
Yeah.

‍ ‍

01:53
Speaker 2
All you need is just a second cleats and a pair of, you know, shin guards and that's it.

‍ ‍

01:59
Speaker 1
Yep, that's it. And so, and then if they end up loving it, then you end up getting the expensive cleats. But it's at least not an insane initial commitment. All right, it's morning huddle time. Let's get this thing going. It is the morning of January 20th, whatever day it is.

‍ ‍

02:16
Speaker 2
Geez.

‍ ‍

02:17
Speaker 1
25Th, 25th, 2022. This marks our last episode of season one. Stacy and I didn't, for the record, didn't know there would be a season one. We thought there would be six episodes and not really episodes, but just like a six part series. And here we are. I mean, you know, the demand spiked. We heard from such incredible people who have stories to tell and, and ways to help to create positive change in the building industry. And so this platform not only expanded from 6 episodes to 14 episodes for this initial run, but we're coming back in April after a two month break for at least 12 to 14 additional episodes for season two. And we're gonna keep doing it as long as people keep asking to do it and as long as the message is still out there.

‍ ‍

03:06
Speaker 1
We really appreciate everybody who's gone along with us for the journey here in season one. And today is going to be an awesome conversation. Stacy, I always ask you something that takes you off your plan.

‍ ‍

03:22
Speaker 2
Don't do it.

‍ ‍

03:24
Speaker 1
All right, so I want to come to you at the end of today's episode and have you talk about some of the things that we're going to be doing in between in the next two months. And yeah, I think we have some ways that we're engaging and communicating with the audience and things like that in between. Yeah.

‍ ‍

03:41
Speaker 3
Yes.

‍ ‍

03:42
Speaker 1
Awesome. So as always, audience, please communicate with Stacy. We've got this LinkedIn Live opportunity. I know you're listening, so it's balancing act. But the more we can create an interesting dialogue in that chat and the more that we get interesting questions that we can pose at the end, Stacy can jump on in that last 10 minutes or so and channel your questions directly to our guest, which will help to create, I think, a more custom experience for those of you who got up bright and early, grabbed a cup of coffee and joined us for this morning. So Stacy, we'll see you in a bit.

‍ ‍

04:17
Speaker 2
Thank you, Stacy.

‍ ‍

04:18
Speaker 3
All right, thanks guys.

‍ ‍

04:20
Speaker 1
All right, today's guest is IO Idowu. IO is an expert in change order management and he works for a company called Axios IO. Thanks for joining us. Maybe give us a little bit of your background.

‍ ‍

04:37
Speaker 2
Good morning. Good morning to your audience. Chad, thanks again for, you know, inviting me over. We've had a good conversation. So our firm Axios is primarily a cost service provider and our services range from budgeting and benchmarking to procurement advice, construction port project management services to pre construction estimating. We also have. One of the services we also render is project scheduling and valley engineering services. So it's pretty much a broad across a broad cost services that we provide. We have.

‍ ‍

05:19
Speaker 1
Who are your customers?

‍ ‍

05:21
Speaker 2
Architects, engineers, owners, developers, contractors, subcontractors. So really? Yeah, yeah, it's a wide spectrum. We totally cover the entire aspect of construction cost services including auditing as well as facilities conditions assessments, damage assessments, etc. So it's pretty broad and we have five offices across the United States. Four in the East Coast. Our head office, our corporate office is in Alexander, Virginia. We have an office in Tampa, Florida. We have an office in Colorado. We have an office as well in Atlanta and as well an office in New York. And yeah, it's, we're. We're lucky enough to spread out tentacles around the east coast and hoping to expand.

‍ ‍

06:13
Speaker 1
So what's your role in the, in the whole game? Like what do you spend your time doing? What's your. I mean, yeah, I know, but tell the audience what you're.

‍ ‍

06:21
Speaker 2
So I have the privilege of managing the construction. I am the director of cost management services and I also run the cost support services. So talking about auditing change order management to other aspects in valor engineering. You know, so I'm lucky enough to have a team of, you know, really good professionals. A lot of, A lot of us are. A lot of them is certified quantity surveyor. So in other words, understanding construction lore, you know, how contracts are written, how contracts are, you know, I guess executed as well as, you know, certified cost estimators. So looking at budgeting from conceptuals phase all through to the end of the, you know, project cycle. So it's a really fun, fun to be a fun group, an exciting group, really experienced group.

‍ ‍

07:22
Speaker 2
And part of the benefits of having the core group that we have is a lot of our staff are had experience in consulting world as well as construction world. So we kind of get both aspects of it. You get what I mean? On a personal level, I'm a trained civil engineer, a structural engineer. So I started out in the design office, you know, design bridges, tunnels, buildings etc then you know, progressed and moved into project management, construction, hard construction, heavy construction, have a civil construction, building hospitals etc. Then you know, it was really fascinated with costs and the impact of it. You know, it's something you can't get away with. So it's, you know, it's a really exciting, exciting part of the construction phase I guess. Design construction phase. Yeah.

‍ ‍

08:12
Speaker 1
So, so I, I love if you are able to use, you use the term fun and exciting several different things. And I love that you can find the fun. There's certainly plenty of excitement in, in dealing with the, you know, the change order world. And so for our conversation today, I want to zoom. I know you could, we could talk about any number of different things with your background and your team's experience, all the different kinds of stories that you've come across. But I want to really zoom in to the topic of change orders. My. And what I see, I don't think there is any issue that is at the root of more conflict arguments and broken relationships than change orders.

‍ ‍

09:03
Speaker 1
And I see it and I work with developers, I'm like you, I work with that whole gamut of folks who I've got the opportunity to see this from all different ends. But where I've had some of the more in depth conversations are with the trade contracting community. And when I'm speaking with, you know, these subcontractors, it's one of the things I know is that when they feel that they have not been treated fairly on change order, what it starts to create a cold war of sorts on the project where, you know, it may not be a hot war where they're actively, you know, fighting, but you're not gonna get their help anymore right there. You're gonna get the minimum of what they can get away with and all the work is going to be performed with kind of a chip on their shoulder.

‍ ‍

09:59
Speaker 1
And you could say that's cutting off your nose despite your face. But I would argue the same thing when it comes to, you know, creating some of these rifts in the first place. But so here's, here's what I want to get to with your experiences, what are the most con, what the most common conflicts you're seeing with change orders? What's, you know, what's the situation you've borne more witness to than any other.

‍ ‍

10:22
Speaker 2
So a lot of, so like you and I know it's almost impossible to, well, almost impossible to avoid the issue of change orders in a construction contract.

‍ ‍

10:34
Speaker 1
Right.

‍ ‍

10:35
Speaker 2
That's. There are construction clauses that relates to change orders in every construction contract. So part of some of the errors, some of the, I guess, challenges we see or the conflicts we see arise from, you know, either contract omissions, contract errors, unclear and undefined scopes. Right. So for example, the contractor expects, you know, the contract documents spell out so much and the owner, you know, expectation is different. So unclear expectations, undefined expectations. A lot of times then errors and claims. Right. It brings me to a situation or one of the, an instance where we're reviewing a change order and part of the claims the, you know, the contractor or subcontractor was requesting for was a delay claim. I mean, I know we'll get to that in the future, but some of it was avoidable.

‍ ‍

11:29
Speaker 2
Was more of an issue that had to do with constructability and you know, coordination, etc, so that obviously, I mean issues like that cause issues. Right, right. Failure to comply to the contract, you know, different site conditions. So it's a whole peripheral list that potentially could affect or create conflicts in a contract or in a construction contract.

‍ ‍

11:54
Speaker 1
Yeah, so the, the nature of, you know, the, of building in an uncontrolled environment is change.

‍ ‍

12:03
Speaker 2
Right.

‍ ‍

12:04
Speaker 1
So, so what we're not going to be able to control for is every potential change. It's. But, but what you're saying is that there are conflict situations that arise that are totally on, that are totally avoidable, you know, that are. Yes, we couldn't have seen the change coming, but the conflict we could have. The conflict we could have seen coming and we could have done things to prevent. Talk to us about some of the things that you would be recommending for. If my goal was to run a project with, you know, great, I want to minimize change orders, but let's leave that off to the side. Let's. I want to run a project where we have no change order conflict, how would we pull that off?

‍ ‍

12:47
Speaker 2
So the first thing is to establish a good process. So one of the things we've noticed or experienced or personally I've experienced is that there is very, there's a very limited definition or description in every construction contract clause for changes. So a lot of clauses limited to, well, this is what the percentage of markups that the subcontractor or the prime contractor and the subcontractors are entitled to. But if there is no clear definition in the process as to how it's been submitted, the amount of markups that contractors are entitled to. So just as an example, we always advise our clients to kind of establish a rules of engagement. In other words, what does that really mean? Every trade is unique on its own. Right.

‍ ‍

13:42
Speaker 2
So rules of engagement, part of the things in that and the rules of engagement that we recommend to our clients as the same as a point of negotiation, at least before say a GMP is signed or is to establish, for example, how do you deal with your labor hours? Right. How do you deal with your labor hours for specialty trade like electrical, mechanical. Those trades are, you know, there's what we call the Nika National. Like a lot of them are union or mcaa. So establishing the parameters of which labor hours are established.

‍ ‍

14:15
Speaker 1
This is the, this is the standard we're all agreeing we're going to work from. And just as a quick aside, I don't mean to take you too. Don't Go down this rabbit hole. Just answer as quick as we can. Who would that conversation happen between? Would that between the subcontractor and the gc?

‍ ‍

14:32
Speaker 2
All parties. So it's all parties. So typically the owner inserts this clause or disclaimer, definition or process into the contract with the gc. So part of the challenges that we see is sometimes the GC doesn't necessarily pass that on to the subs.

‍ ‍

14:51
Speaker 1
So when you say sometimes. My experience is almost all the time they do that in any nefarious way. I just think it's not. It's not a part of the common practice to say, oh, hey, by the way, here's our contract with the owner.

‍ ‍

15:07
Speaker 2
Correct. So it's imperative that. That whatever. There's a. Whatever contract that the general contractor is tied to with the owner that affects the subcontractors, that information needs to be passed on to the subcontractor. You know, you know, markups, you know, things like. Is as simple as warranty on material, a symbol of how you deal with equipment cost, labor cost, material costs, Right. Sometimes change orders. There's a particular contract I'm. I mean, I'm involved in now, and most of the change orders are potentially just on proposals. Right. Most owners don't pay proposals. They should be based on invoices when it comes to material costs. Right. So there's the, you know, you see them arms in the air, saying, well, well, this is what the proposal we're getting. But really, in reality, to be fair to the owner as well as the GC or the sub.

‍ ‍

16:02
Speaker 2
I beg your pardon, Subcontractor. Most material costs should be based on invoices. Right. So it's a whole list, you know, also talking about what they're entitled to with regards to safety. Right. So each trade has its uniqueness. So our recommendation is always to negotiate or at least negotiate with the prime contractor and the subcontractor what would be allowed for each of these markups or each of these issues that. Or items that you typically will see in a change order.

‍ ‍

16:34
Speaker 1
Yeah.

‍ ‍

16:34
Speaker 2
Right. So again, like I said, bad process or no process. Right, Right.

‍ ‍

16:39
Speaker 1
Bad process, no process.

‍ ‍

16:41
Speaker 2
Yeah.

‍ ‍

16:43
Speaker 1
And that I think a part of what I'm taking away from this is that is also born from, you know, either lack of conversation or, you know, insufficient conversation or lack of conversation or no conversation whatsoever. So. So the process, you know, one of the. And you tell me what you think of this. One of the things I've said to my subcontractor clients over the years is I'VE said to them, you need to establish your own internal standard for how you're going to submit change orders that is at a level of backup and claire and clarity that is beyond the level that anybody would ever say is insufficient. In other words, it's more than most people would ask for and it's as much as the most demanding customer would ask for.

‍ ‍

17:31
Speaker 2
And that's really difficult for sub, for subcontractors because it's almost sharing their trade secrets. You know what I mean? But, you know, for a successful, I guess, change negotiations, openness and fairness is the ideal. Right. Building relationships based on trust and openness. I mean, may I even add that part of the things that we always recommend to negotiate specifically for change orders is labor rates. Right. Discuss fringes, discuss benefits. Right. Make, make it know as clear and fair and open as possible. What happens is in the long run, it reduces conflicts. It reduces, you know, issues in the future. Right. Because it's inevitable. Like we all said you mentioned, you know, that conflict. I mean changes would arise. But once those things are ironed out, it makes the other, you know, I guess negotiations easier.

‍ ‍

18:29
Speaker 1
Yeah. I'm sitting here thinking about all of the reasons that different players in this, you know, different parties involved in a project may use as an excuse to not do what you're suggesting. I, my gut says the number one excuse would be we don't have time.

‍ ‍

18:51
Speaker 2
Correct. Which is always the temptation. But it's, we, it's smart and wise to invest the time early than dealing with issues. Part of the complaints we get from subcontractors or the general contractors aspect is delay in responding to change requests. Right. So the negotiation process takes so long. Right. And owners are getting wiser now. Right. They're, they're more experienced and getting into the weeds of it. Right. Especially, you know, I have a client who would look into the wage rate. Right. Make sure it's comparable, actually dictate in their contract clause. Right. Whether it's a union. Union. Whether it's a union contractor and negotiate a blended rate for, you know, for their labor rates, which in fairness is, you know, it's really, in our opinion, it's fair. Right.

‍ ‍

19:48
Speaker 2
Because most, for example, the specialty trades use, you know, use softwares and tools that automatically break them out and you know, break them out into whether it's a journeyman, just provision, apprentice, etc. Right. On the owner's side, that seems like compounding on the cost. It's a really tough, it's really tough, you know, part. But I think once that conversation is at Leon, it makes it easy. It makes the process easier.

‍ ‍

20:16
Speaker 1
Yeah. Before we're actually talking about real hard costs on a real hard situation where everybody's kind of figure you're playing some defense. Let's talk about things before there's any actual money on the line.

‍ ‍

20:27
Speaker 2
Correct.

‍ ‍

20:27
Speaker 1
Take some time, be transparent, do some education of one another and. And get a mutual agreement in place that we can all say that is fair. And. And what we're doing is eliminating the future fight. I think that's what we're. I think that's the overall player. There's one key takeaway for everybody to this point.

‍ ‍

20:45
Speaker 2
Yes. Again. Again, I'm hoping that you're. I mean, not just your audience, realize that these are points of negotiations. There's really no hard way into it. I mean, a hard role. So these are things that, you know, obviously should be part of the conversation to ease some of the challenges that potentially would arise in the future. Yeah.

‍ ‍

21:05
Speaker 1
And what I would recommend is that each entity does some thinking about the standards that they would naturally want to bring to the table entering into that negotiation so that they don't go into negotiation, you know, walking out feeling like they were, you know, forced to do something they didn't want to do.

‍ ‍

21:26
Speaker 2
Yeah. And you should also understand that the GCs, a lot of times, every responsible GC would always fight for their subs anyway. Right. So it's important for the GC to carry their subcontractors along and to maintain that relationship, you know, and maintain an easier process. Another key point is to, you know, I would say is invest in a good quality. I mean, a good. I mean, I beg your pardon. Quality document control tool. Right. You know, that simplifies a process. Right. You know, I mean, I'm not marketing for any of these, but, you know, think tools like Pro Core, you know, the likes of those, invest in a good quality control tool. It helps the process actually a little bit smoother.

‍ ‍

22:07
Speaker 1
Yeah. So in addition to having the thorough discussion up front be, you know, top notch on your documentation and controls as a. As a discipline, and go ahead and make the investment in some sort of supporting technology to make that something that's easier to manage. Love it. Good stuff. So. So you and I, we had a brief discussion leading into this. That. That is acknowledge. We both know this could be a massive can of worms. But I do want to enter into this briefly, which is just to ask you, what is the. The impact of contract methodology on Change order strategy on the way change order should be handled.

‍ ‍

22:57
Speaker 2
Huge question. That's a really great question because one of the things we're finding now is a lot of owners are leaning to obviously we all know the different kinds of contracts GMP or lump sum bid contract. So one of the things we notice or observe is a lot of owners find the GMP contract delivery method very enticing. Right. One, because it gives them shifts most of the risks to the contractor. Right. It benefits the owner because the project could come in at a cost lower than the guaranteed maximum price and there's opportunity for cost savings, etc. Shared savings with the contractor, unlike the lump sum cost which is just a fixed cost. Right. And there's very little flexibility there. So the reason I bring that up is first of all, it's important to identify the differences in these types of construction. Right?

‍ ‍

23:53
Speaker 2
There's a flat fee for the owner based on percentage or whether it's a dollar value. Right. That's on the GMPS portion. Right. So. So with the gmp, the schedule of values that are each item in each schedule of values are either negotiated or. Or the GMP is negotiated based on a total cost. Right. And with a gmp, part of the additional cost or a total package for is actual cost. Direct cost plus the direct actual direct cost plus the indirects plus contingency. Right?

‍ ‍

24:28
Speaker 1
Right.

‍ ‍

24:29
Speaker 2
One of the things where the issues arise with change orders and the GMP is I guess the misconstrued understanding of what the contingency is used for as well as what the change orders, or rather change orders are and what allowances are. Right. So a lot of times what we see is the contractor. Right. Picks you with is very easy to issue a change order and what really what that means is a change to the construction cost or schedule, Right? Right. Total budget, which ultimately affects either adds to the cost of the GMP or adds to the time delivery. Right. So in other words, with a GMP type of construction contract. Right. Part of the challenges, some of the things we see is just a misunderstanding between what really the use of contingency and the use of allowances. Right.

‍ ‍

25:24
Speaker 2
And another key factor in this whole picture, I know we've been talking about the owner, the subcontractor and the GC itself. But one key member that we haven't mentioned is the designers. In a GMP type of contract, which is ame in this case, there needs to be clear understanding a definition of missing gaps. Yeah, right. Missing gaps in the contract or in the. You Know, a lot of GMPs are either based on documents that are designed to a certain point and the contractor picks it up from there, tries to fill in the blanks. The contingency is used for the, is controlled by the contractor. Right. However, is used for supposedly missing blanks or missing items within the gmp.

‍ ‍

26:11
Speaker 2
So in other words, the contractor, or rather the owner and the contractor could decide, well, we're going to have a 10% or 5% whatever percentage it is for missing items within the scope. Change orders are a little bit different. Right. Because it could be, I mean, change orders either arise from unforeseen, you know, circumstances only requested changes that are not necessarily clearly defined. Right. The contractor, I mean, the owner could decide, okay, by the way, I would like to have, you know, rather than four story, I wanted a five story. That's not part of the contract.

‍ ‍

26:45
Speaker 1
Right? Clearly.

‍ ‍

26:46
Speaker 2
Yeah, clearly. Right. So that is just the dynamics between that understanding the use of each of these specific contract clauses. Items that would help eliminate the issues that typically will face in a GMP versus a lump sum. A lump sum is easier. The fixed cost, anything that is added as a change order. Allowances are different. Allowances are set together alongside the A and E. Right. For missing scope. I think I gave an example the other day to one of my clients saying, say, for example, you know, there's a, you know, in the design, say schematic or D, the bid documents that were the basis of the gmp, there is a room or there are a bunch of rooms that, you know, they're supposed to be lit. Right.

‍ ‍

27:35
Speaker 2
If those things are not necessarily shown on the documents, there needs to be a clear definition of those things by the D and E to say, look, by the way, this is missing. And the constructor's responsibility to also either exclude it from their GMP or include it Right. In their contract. Right. So it's a fine dynamic kind of understanding all of that, you know, so.

‍ ‍

27:56
Speaker 1
So I, and we're, we need to be transitioning. But I, I have to. This is such an interesting topic.

‍ ‍

28:03
Speaker 2
It really is for me.

‍ ‍

28:04
Speaker 1
And I. What I see so often is that I'm a big fan of the GMP model delivery contract method for a bunch of different reasons. I think that it gives the owner good transparency. I think that it does have the benefit of the shifting of risk, which I think is actually probably appropriate in most cases. But where I see it go wrong is where owners want to have their cake and eat it too.

‍ ‍

28:36
Speaker 2
Yeah, yeah.

‍ ‍

28:37
Speaker 1
And, and they. Right. And so they conduct this really fast paced, you know, going from design to construction in a real fast paced fashion. And then on top of it, they do a competitive GMP where general contractors aren't selected based on general conditions and fees and qualifications, but instead they're selected off of who can come back to them with the lowest price, which is just begging for massive gaps.

‍ ‍

29:04
Speaker 2
Y. Yeah.

‍ ‍

29:04
Speaker 3
In, in.

‍ ‍

29:05
Speaker 1
In the budget. And so for me, and I wonder what your opinion is on this, but for me, the gmp, the appropriate usage of a GMP should be really limited to those situations where it's gen. General conditions plus fee and qualifications. We select our construction manager general contractor and we work with, we allow them and you know, in conjunction with the design team to close gaps with the subcontractors and arrive at a really responsible gmp. What's your thought?

‍ ‍

29:37
Speaker 2
Yeah, that is a great comment because part of the, you know, like I mentioned earlier, owners lean towards the GMP because of the benefit they appear to get for themselves. They perceive a little bit selfish, which is a little bit selfish. I, I hate to say that, but it's a vehicle that grants them the opportunity to do that. So which, you know, our recommendation is always to be fair. Right. It's never always the lowest bidder. Right. It's. I mean, it's never always the lowest bidder.

‍ ‍

30:07
Speaker 1
Right.

‍ ‍

30:07
Speaker 2
In most cases, you know, in some cases it is. So it should be based on qualification. It should be based on the things you mentioned, the negotiated general conditions, negotiated fee, as well as understanding of the project, the contract, construction contract. Right. So, you know, I see Stacy just joined us back.

‍ ‍

30:28
Speaker 1
Yeah, that's right. Yeah. That's where the bells ring and their bells ring. And IO you and I could go on this for another hour. And you know what? We probably should, you know, have you back on at some point in the future and dive deeper into, you know, all of the different, you know, most responsible best practices for creating an environment that is, you know, low on change orders and low on change order drama. Yeah, I think you have a lot to add there. And you know, thank you so much for, you know, adding all that. So, Stacy, I want to, you know, look, we're going to go over today. It just is what it is. So it's our last episode of the season. We're throwing all the rules out. Stacy, what are some of the questions that we have here?

‍ ‍

31:17
Speaker 3
We just got a lot of great comments. Matt and Dennis brought up workflow efficiency and trying to get your customer to value that and the supply chain constraints. I don't know if you have any comments that can contribute to that on how to get the customer to put more value on all the supply chain demands now.

‍ ‍

31:44
Speaker 2
Yeah, so that is actually quite key. So the comments. You know, I remember when we began this discussion, part of our recommendations was to establish some kind of process for things like material. So like everyone knows no one could have predicted the past two years. Right. So it's a unique situation. So our recommendation always to owners is to be fair, right. To be fair to the contractor and their subs. Especially in this unique situation that we have with, you know, delayed delivery. I mean there's a particular contract that or a project that we're aware of that the progress schedule had to be bumped up one because of the delays and you know, the, I guess supply chain issues now. So it's a fine, it's a balance. The owners are. Recommendation or advice owners need to be flexible and realize that things arise. Right.

‍ ‍

32:45
Speaker 2
And also everything is based on relationship and openness. Right. It's important that parties, all parties in the, involved from the designers to the subcontractors to the, you know, contractor and owners be fair, open and have a good relationship. That makes the, I guess the process a little bit smoother.

‍ ‍

33:11
Speaker 1
I think, I think the importance of being fair minded.

‍ ‍

33:18
Speaker 2
Yeah, fairness.

‍ ‍

33:21
Speaker 1
And, and that is not always the thing that makes you the most money.

‍ ‍

33:27
Speaker 2
Right.

‍ ‍

33:29
Speaker 1
But there's a term that I love which is, you know, long term greedy. And what long term greedy means is that you're doing the things that will make you more successful in the long run. And I think, you know, being fair today is a long term greedy move. That the long term value of being fair today far outweighs the short term benefit of the money you stand to put on this project.

‍ ‍

34:03
Speaker 2
Correct?

‍ ‍

34:05
Speaker 1
Yeah. Any other questions that you have Stacy, or anything else from the group Mark Jury?

‍ ‍

34:12
Speaker 3
If change order pricing is based on receipts, then submission of pricing is after the fact as far as execution, which makes them all proceed with pricing to follow. Does that in turn mean if material prices escalate from the pricing at bid time, the owner will issue change orders for escalation and pay additional costs based on invoices.

‍ ‍

34:37
Speaker 2
So that's a good question Mark. And the simple answer to that is yes. If the pricing for. I mean it's, it all depends on the, I guess when the change was Issued to when, you know, it's the duty of the contractor, once the changes process and agreed to by the team, you know, that they proceed to making any kind of procurement. Right. And not wait on it. I'm not sure if that's really Mark's question. You know, however, if there is a. As an example, price of steel went up the past. What. It's crazy now. Right. So the subcontractor is entitled to, in some cases or most cases, entitled to request from the owner. Right. What would I call it? Additional cost to cover that. That's what.

‍ ‍

35:40
Speaker 1
Right, the escalation.

‍ ‍

35:41
Speaker 2
Yeah, yeah, the escalation for that. So, you know, it's. Those are part of construction. The construction. The construction issues that rarely happen, but we've seen them happen. So. Yes, Mark. So the owner should pay for it. And there are ways to I guess kind of go around that.

‍ ‍

36:01
Speaker 1
I, I think this is, it's. It's a question that so many people are afraid to ask. Yeah. And you know, a lot of assumptions are made that they won't be, you know, in any way sort of supported or made whole. And, and I. I found, as you've said, IO, that. That, you know, just an open conversation about it typically leads to some problem solving together.

‍ ‍

36:29
Speaker 2
Yeah. The caveat there is it also the. The contractor is also needs to be responsible. Right. Enough to make sure that they, you know, do the due diligence. Right. Not waiting to the last minute to order things, you know, and you know, waiting to, you know. You understand what I mean? Yeah. Yeah.

‍ ‍

36:50
Speaker 1
All right, good. Anything else, Daisy?

‍ ‍

36:54
Speaker 3
Just a lot of great comments on here. So when you get a chance, you know, feel free to connect with IO and we can talk about what we have in store for our second season and what we're looking for.

‍ ‍

37:07
Speaker 1
Yeah, that sounds awesome. So though, I just have to call out that, you know, Mark, who. Who's clearly one of the smartest people that joins us every week. But Mark just posted, he's basically a walking billboard for ipd and I'd love to have a discussion. I'd love to have a discussion with you, IO, about the feasibility of more and more design, build and taking that extra step of IPD in terms of project delivery and the impact that might have from your perspective, if you've ever been involved in a project like that, all those types of things. So. But, but different topic, different day, my friend. Thank you so much for joining. I think Stacy and I are going to spend a few minutes here just kind of teeing up, you know, next season and setting some expectations with the group.

‍ ‍

37:57
Speaker 1
So I'll let you go. But before we do, is there anything you'd like to say? IO.

‍ ‍

38:02
Speaker 2
Again, it's. It's a pleasure to be a part of this platform. I have listened to a few of them and really benefited from it. And, and thanks again for the opportunity and hope to talk to you soon.

‍ ‍

38:15
Speaker 1
It's a pleasure. Thank you so much for giving back.

‍ ‍

38:17
Speaker 2
All right.

‍ ‍

38:19
Speaker 1
It's, you know, giving of your time and your knowledge is. I mean, that's what this platform's here for. So thank you for your generosity in that way.

‍ ‍

38:28
Speaker 2
All right, Cheers.

‍ ‍

38:29
Speaker 3
Thank you.

‍ ‍

38:32
Speaker 1
So, Stacy, let's talk a little bit about what's coming up. I think first things first, just expectation wise, we are, we're going to be taking off all of February, all of March in terms of this show. It's not gone away. So please, you know, don't let your habit go away. Take the whole time over the past two months to re watch every episode and send me clips of when we look like idiots. So you're like, don't miss an opportunity to make fun of us is I guess all I'm trying to say. And so during that time, Stacy and I are going to be doing some things to reload, including making some modifications to how we're doing our marketing. We're hoping to drive even more people to join us every week.

‍ ‍

39:15
Speaker 1
Even though that's been, you know, steadily increasing, we believe that there's more room to go and we want to spread the word further. So we're going to be doing some of that stuff. Stacy, we talked about doing some polls. Can you kind of prepare the group for what's coming on that front?

‍ ‍

39:31
Speaker 3
Yeah, I'm going to post a poll just to make sure that we're, you know, looking in the right mindset of the people that actually come on and want to join us live to make sure the time is right for you. Obviously, we can't accommodate everyone, but we would like to accommodate the majority of you. So we will do a poll whether we're going to keep it at 8 or move it up a little bit so we can include our west coast people that wanted to join. So look out for that and please participate. And then we also have a ton of great topics and guest speakers lined up for season two. But I just wanted to. Can we throw some of those topics?

‍ ‍

40:13
Speaker 1
Yeah, yeah. I'm particularly excited about topics about safety, culture, and we're going to be talking about how companies are establishing healthy and not toxic safety cultures and what they're doing there. I can't wait to talk about more technological advances like 3D printing and virtual training and cybersecurity and things along those lines. What else do we have, Stacy?

‍ ‍

40:43
Speaker 3
We're looking for someone who's a modular guru. We want to have discussions on inclusion generations in the workplace, something by developers.

‍ ‍

40:55
Speaker 1
Yeah, we want to have a developer on and probably talk about the biggest shifts over the past two years and how their world has changed. And we just believe that the more we understand everybody's perspective, the better we're all able to serve each other. So we want to bring on a developer to talk about that. Along those lines, we also want to bring someone on from the design community to discuss the quality of construction documents right now and, you know, sort of the impacts on, you know, what's driving the quality of construction documents. So some of these topics. We have speakers lined up for some of these topics. We don't. We're considering putting together some panels so that we may have some shows with multiple guests.

‍ ‍

41:46
Speaker 1
So I think what Stacy and I are saying is, please reach out to us if you or anyone you know, would be somebody who could add value and who would be interested and willing to give back on our platform.

‍ ‍

42:01
Speaker 3
Yep.

‍ ‍

42:02
Speaker 1
Awesome. All right, Stacy, I'm going to miss you. Wait, no, I know.

‍ ‍

42:06
Speaker 3
Two months now. We'll be talking all the time.

‍ ‍

42:09
Speaker 2
Yeah, that.

‍ ‍

42:09
Speaker 1
That'll be happening. All right, awesome. Thank you so much, Stacy, for. For, you know, making this happen.

‍ ‍

42:17
Speaker 2
Right.

‍ ‍

42:17
Speaker 1
Really, I do all the work. Well, the hard part, it doesn't feel that way to me. This is the fun part. This is the part I love. But your. If it weren't for your suggestion and then your eventual insistence, there's no way. There's no way I'd have done this. And it has been an extremely rewarding, you know, process and something that I look forward to continuing with you. You. So thank you.

‍ ‍

42:43
Speaker 2
Awesome.

‍ ‍

42:44
Speaker 3
You're welcome.

‍ ‍

42:45
Speaker 1
All right, see everybody soon.

‍ ‍

42:48
Speaker 3
See ya.

‍ ‍

42:48
Speaker 1
Bye.

‍ ‍

42:49
Speaker 2
Bye.

‍