Workplace Wellness Programs for Small Businesses

Workplace Wellness Programs for Small Businesses

Promoting healthy lifestyles in a healthy workplace

By Christina Martinez

For a small business, losing just one employee to frequent sick days (absenteeism) or an extended absence can lead to significant productivity losses. It can also damage morale as the remaining employees are then forced to pick up the slack.

Large businesses are no longer the only ones who are implementing employee wellness programs.  Small businesses are following in their footsteps, realizing that these programs can not only reduce healthcare costs, lessen worker’s compensation claims, decrease absenteeism and prevent employee turnover, but they can also increase productivity, reduce stress and improve the attitudes of employees.

If you are considering a wellness program to save money and have a healthier, happier workforce, consider some of these ideas to get started.

  1. Encourage employees to include healthy activities into their workday. And, make this both practical and possible. For example, organize walking meetings, allow extended lunches for employees to work out or go for a run, or support standing desks.
  1. Ask for employees’ feedback. Ask employees what they feel can be done by the business to help improve employees’ health.
  1. Leadership Buy-In. Start wellness program activities at the leadership level and lead by example. Make your leaders the health promoters for the company.
  1. Make your work environment reflective of a healthy culture. Take a look around your work space. Does the physical environment make it easy for employees to get or stay healthy?
  1. Request employees to share their success. Encourage employees to share health-related efforts and successes with others.
  1. Discuss health and wellness alongside business decisions. For example, if you’re considering relocating or changing working hours, consider employees’ health as an important factor in decision-making.
  1. Provide rewards and incentives. Use a rewards, incentives or recognition program to recognize, award or celebrate health success.
  1. Clean out the kitchen. If you have an open kitchen, cafeteria or vending machines, provide healthy options. Get rid of the junk.
  1. Encourage occasional web surfing. Don’t get me wrong, chronic web surfing is a productivity killer. However, research shows that occasional, passive web surfing really boosts employees’ moods.
  1. “Off the clock”? Encourage employees to disengage from work. The ‘always on’ atmosphere at many small businesses can lead to stress, burn-out and poor employee wellness. Encourage productivity while at the office and encourage employees to disconnect from work during off-hours. Leadership can set the example by leaving at a reasonable time and limiting non-urgent communication outside of business hours.

Whatever you as a company decide, decide to do something to actively promote the health and mental well-being of employees.

Christina Martinez is Triune’s Director of Marketing and Business Development. Christina brings over 10 years of high level marketing experience to Triune. Triune is a leading, integrated, design-build General Contractor founded in 1997. Triune is headquartered in Dallas, TX – www.tmvllc.us

The Punch List is Triune’s proprietary blog for discussing issues and providing insight specific to the commercial construction industry. Copyright 2013 TMV, LLC (Triune). Any and all rights reserved.

 

Preventing Fraud in and on Your Company

Preventing Fraud in and on Your Company

By Mike Crabtree

Fraud is an ongoing concern for practically every industry today. However, construction firms have historically been especially susceptible to an ever evolving number of fraudulent schemes.

While we would all like to believe that our employees are loyal and working for the benefit of the organization (and most of them probably are), there are still many reasons why your employees may commit fraud and several ways in which they might do it.  Even more so, collusion between employees and suppliers and even between owner representatives and subcontractors gives ample reasons to be on guard. Prevention and detection are crucial to reducing these potential types of losses. Every organization should have a plan in place as preventing fraud is much easier than recovering losses after a fraud has been committed.

Types of Fraud

Fraud comes in many forms but can typically be broken down into three categories: asset misappropriation, corruption and financial statement fraud.

Asset misappropriations are schemes in which an employee steals or exploits its organization’s resources. Examples of asset misappropriation are stealing cash before or after it’s been recorded, making a fictitious expense reimbursement claim and/or stealing non-cash assets of the organization.

Corruption schemes happen when employees use their influence in business transactions for their own benefit while violating their duty to the employer. Examples of corruption are bribery, extortion and conflict of interest.

Financial statement frauds are schemes that involve omitting or intentionally misstating information in the company’s financial reports. This can be in the form of fictitious revenues, hidden liabilities or inflated assets.

Fraud Prevention  

It is vital to an organization, large or small, to have a fraud prevention plan in place. The following procedures can help to minimize the potential for fraud in your organization.

  1. Know your Employees. Fraud perpetrators often display behavioral traits that can indicate the intention to commit fraud. It is important for management to be involved with their employees and take time to get to know them. Often, an attitude change can clue you in to a risk. For example, if an employee feels a lack of appreciation from the business owner or anger at their boss, this could lead them to commit fraud as a way of revenge. Any attitude change should cause you to pay closer attention to that employee and to look for ways to improve that employee’s experience.
  2. Make Employees Aware/Set Up Reporting System. Awareness affects all employees. Everyone within the organization should be aware of the fraud risk policy including types of fraud and the consequences associated with them. Those who are planning to commit fraud will know that management is watching and will hopefully be deterred by this. Honest employees who are not tempted to commit fraud will also be made aware of possible signs of fraud or theft. These employees are assets in the fight against fraud.
  3. Implement Internal Controls. Internal controls are the plans and/or programs implemented to safeguard your company’s assets, ensure the integrity of its accounting records, and deter and detect fraud and theft. Segregation of duties is an important component of internal control that can reduce fraud from occurring.

Documentation is another control that can help reduce fraud. Make sure all checks, purchase orders and invoices are numbered consecutively. Use “for deposit only” stamps on all incoming checks, require two signatures on checks above a specified dollar amount and avoid using a signature stamp. Also, be alert to new vendors as billing-scheme embezzlers set up and make payments to fictitious vendors, usually mailed to a P.O. Box.

Internal control programs should be monitored and revised on a consistent basis to ensure they are effective and current with technological and other advances.

  1. Monitor Vacation Balances. You might be impressed by the employees who haven’t missed a day of work in years. While these may sound like loyal employees, it could be a sign that these employees have something to hide and are worried that someone will detect their fraud if they were out of the office for a period of time.  Make sure that all employees periodically take paid time off…you may be amazed at what is discovered while others are doing their work.
  2. Consult Experts. Certified Fraud Examiners (CFE), Certified Public Accountants (CPA) and CPAs who are Certified in Financial Forensics (CFF) can help you in establishing anti-fraud policies and procedures. These professionals can provide a wide range of services from complete internal control audits and forensic analysis to general and basic consultations.  In fact, these services might be provided at little to no cost as a part of your regular audit and tax services.
  3. Set the Right Tone at the Top. Finally, the importance of setting the proper tone at the top of your organization cannot be over-emphasized when it comes to deterring fraud schemes. If employees see that upper management plays things “fast and loose” and has little regard for following ethical business and financial practices, they are more likely to feel like they are justified in playing fast and loose with the company’s money and assets themselves.

Instead, try to be above reproach with regard to how you manage your business and deal with your employees and vendors. When you set this kind of example at the top of your organization, it can trickle down to your employees as well.

Mike Crabtree has over 20 years’ experience in the commercial construction industry. He is a lifelong Dallas resident, proud graduate of Southern Methodist University, and Corporate Controller with Triune. Triune is a leading, integrated, design-build General Contractor in the Southwest region of the country.

The Punch List is Triune’s proprietary blog for discussing issues and providing insight specific to the commercial construction industry. Copyright 2013 TMV, LLC (Triune). Any and all rights reserved.

 

How to Declutter Your Office by Digitizing and Storing Your Documents

How to Declutter Your Office by Digitizing and Storing Your Documents

By Christina Martinez

From invoices to receipts to flyers and catalogs, it seems like the stream of documents entering our lives is endless. In the age of online storage, small businesses wrestle with digital clutter as well as paper. For busy entrepreneurs, separating important items from ones that go immediately to the recycling bin–and keeping from getting swept away by a tidal wave of clutter–can seem like a full time job. With all the other demands on your time, clearing out the clutter can be the last thing on your list.

Getting organized and streamlined can also save you money on rent, too. Our company was looking for storage space outside our office because of all the room we needed to store project files. After digitizing our records, we ended up freeing up an entire room that was filled with boxes with no need to get extra storage space.

Here are some tips to help you clear clutter and keep your small business organized.

  1. Digitize your paper documents. To think paperless and minimal can be scary, but you must get acquainted with the idea in this day and age. Most printers nowadays work as scanners, so this can be done easily; however, if you do not have one with this capability, you can purchase a desktop portable scanner at a very inexpensive price. A variety of desktop scanners help you transform your paper documents into high quality digital images that can be easily stored and accessed electronically. In addition, you can bundle it up with a software that provides added functionality such as scanning multi-page documents of different sizes to a specific file format, printer or application. Some scanners also offer the ability to scan directly to a USB drive or smartphone/tablet.
  1. Organize your digital data. Not only can going paperless save time and resources, but in order to reap its full benefits, you will need to create a system for organizing your digital data. Simply saving to your computer’s desktop is not ideal because it can then be difficult to find specific items quickly as your desktop will become cluttered with more and more icons. Electronic files should be categorized and filed in appropriately labeled folders for maximum efficiency.

It is also wise to create a consistent naming convention for all your files and folders. This will make it easier to sort and organize your documents alphabetically, numerically or chronologically. Below are a few tips for naming your files effectively:

  • Be specific. Rather than naming a Powerpoint file “presentation,” choose something more specific such as “Westside Sales Meeting Presentation.”
  • Add dates at the beginning of your folder and file names for chronological sorts, e.g., “2015 Westside Sales Meeting Presentation.”
  • If you want a file to appear first in an alphabetical list, add an exclamation point (!), a zero (0) or the letters “AA” to the beginning of its name, e.g., 0-2013 Westside Sales Meeting Presentation.”
  • Include the initials of the last person to edit the file if multiple versions are circulated, e.g., “2013 Westside Sales Meeting Presentation-BC.”
  1. Backup and store your digital information. Backing up all of your digital data to another storage component at least once a week is recommended to ensure that important information remains accessible and safe in a separate location. Here are some data backup solutions from which you should consider:
  • USB Flash Drive. While USB flash drives can be small in size, they typically contain from 8GB to 64GB of storage space, making them a highly portable option for storing photos, documents and other files.
  • External Hard Drives. External hard drives are typically about the size of a small book and can offer up to 1TB (1 terabyte = 1,000 gigabytes) or more of storage space. This makes them perfect for storing and transporting large files and image collections, HD videos and more. In addition, many include software that will allow you to back up your data automatically.
  • Network Storage. Network storage provides a central location where computers on a local area network can store, access and share data. Networks are most common in business settings.
  • Cloud Storage. Cloud storage services offer an even more robust option for data storage and retrieval. Data that is located “in the cloud” is stored on a network of public servers accessible via the Internet. Services are available from a host of providers–typically for a monthly fee–and usually include the ability to back up data from all your devices automatically.
  • Personal Cloud Storage. For a powerful storage solution without monthly charges, Western Digital’s My Book Live enables you to build your own cloud storage on a personal network as opposed to a public server. This device will connect to your wireless router to provide shared personal cloud storage and wireless backup for all the computers on the network. In addition, you can access your files remotely via the internet or a specialized mobile app.

As you can see, filing and storing data digitally can help tame information overload and ensure that all your information is safe, accessible and easy to find whenever you need it.

Christina Martinez is Triune’s Director of Marketing and Business Development. Christina brings over 10 years of high level marketing experience to Triune. Triune is a leading, integrated, design-build General Contractor founded in 1997. Triune is headquartered in Dallas, TX – www.tmvllc.us

The Punch List is Triune’s proprietary blog for discussing issues and providing insight specific to the commercial construction industry. Copyright 2013 TMV, LLC (Triune). Any and all rights reserved.

 

The Four Anchors to Improved Productivity

The Four Anchors to Improved Productivity

By Bill Goodman

Maintaining a high level of productivity on the job site is one of the most important activities for any project manager, superintendent or foreman.  When production rates drop on a construction site, money is lost and often cannot be recovered. On the other hand, when production rates are monitored closely and improved upon constantly, profits are earned, and a company will gain a competitive edge or advantage over the competition. How can a construction site’s productivity be enhanced? One way is by utilizing four basic anchors of productivity.

Getting productivity from your subcontractors and your own work force breaks down into four key areas: materials, tools and equipment, information and goals. How well you execute all four of these areas will determine the overall productivity of your work force. The systems you set up in your company to guarantee that these four areas are managed effectively will lead to the success of your business.

Defining the four anchors –

  1. Materials. These are priority number one, but luckily, materials are also relatively easy to manage and set up systems for. If the workers do not have materials, they cannot install anything. Making sure all materials are on the construction site and that they are getting to the work areas for the workers to install in an efficient manner are what should be focused on. Other factors for managing this efficiently include ensuring that the correct quantities of materials are on hand and the protection and securing of them from theft and damage. Have the proper means for protecting and securing materials in place prior to their delivery.
  1. Tools and Equipment. This is a simple enough concept–no tools equal no production. This is not a place any construction professionals want to find themselves at! Therefore, ascertain that the crews will have all the right tools they need and that the tools are easily accessible. Do a quick analysis to see if the higher cost of the tool will offset the savings in labor. Also ensure that the tools are being protected and secured when not in use. Perform daily inspections checking for proper operation, damage and/or missing parts. Replace defective tools immediately and remove from the job site. Also have a plan to have back up tools on hand in the event of a key tool breaking down.
  1. Information. If people have materials and tools, then the only thing they need to get started with installation is the information about what, where and how they will be doing the installation. This is the area where pre-planning is critical. You will never be able to achieve 100 percent efficiency in this area, which is why you need to be constantly working on improving what information you have and how you communicate it to the workers. Often times the general contractor can cause inefficiency due to lack of information; however, make sure you do your part by being productive and confirming that everyone has all current information and/or data.
  1. Goals. If your workers have the proper materials, tools and information, you might wonder what’s left. Adding in goals can improve production by 10 percent or more on a consistent basis, so this anchor should not be overlooked. Do not underestimate the power of setting goals for the job site on a daily and weekly basis. One method of reinforcing this is to establish a communication board (a dry erase marker board) located in the job trailer or in a weather protected display on the job site. The daily or weekly goals should be listed on the dry erase board and updated constantly. If the goals for the week were out-performed, try offering small rewards for exceeding the goals or expectation. Small rewards for the work site could include a catered lunch, movie tickets or gift cards to a nice restaurant.

Good jobsite productivity really is that simple. There is no reason to make it more complicated. Every project management process in your company and every activity that you do every day should be able to be categorized into one of these four anchors. If they aren’t, you need to ask yourself whether they are really necessary. Remember that good productivity means a competitive edge over the competition, better work, profitability and a satisfied client that will want your company for their next project.

William Goodman, Senior Project Manager for Triune, is a highly accomplished, multi-talented project manager with over 30 years of construction experience. He encompasses excellent skills in preparing schedules and managing job costs, budgeting, contract negotiation, design-build and pre-construction services.

The Punch List is Triune’s proprietary blog for discussing issues and providing insight specific to the commercial construction industry. Copyright 2013 TMV, LLC (Triune). Any and all rights reserved.

 

How Can Small Contractors Develop Successful Strategic Alliances with Larger Ones?  (Part 2)

How Can Small Contractors Develop Successful Strategic Alliances with Larger Ones?  (Part 2)

7 Key Issues Requiring Negotiation in Your Agreement

By Vince Fudzie

This is the second part of a series that discusses what to consider in choosing a partner, what needs to be in your agreement and how the venture will operate.

An alliance has the potential for huge rewards but can conversely result in devastating losses, particularly for the smaller company.  Any significant loss relative to your size may be disproportionally large and damaging. As an example, you’re $150,000,000 municipal joint venture project gives you a profit/loss percentage of 15%. Many small companies enter into such agreements barely giving thought to the fact that if the project goes south by $10,000,000, they could be on the hook for $1,500,000. You may want to think twice about entering an agreement if you are not prepared to deal with such possibilities.

As the smaller company, you will probably not have controlling interest in the venture (unless you are in a formal SBA mentor/protégé program which requires it). Nevertheless, this certainly should not preclude you from negotiating good deal points. The overriding principle in your agreement should be to memorialize key terms in order to minimize potential disputes in the future. Many joint venture agreements will neglect to incorporate specific operational details. This is understandable since, at this point, you are probably still chasing the project. However, once the project is secured, you, as the smaller company, will have to push to make sure the operational details are worked out. While it would be easier for your larger partner to simply run the venture operations the same way they run their separate operations, this may not be in the best interest of your company. In Part 3 of this series, we will discuss the points that should be included in your operational agreement.

While you may not be negotiating with the greatest of strength, the following key provisions should still be vigorously pursued for you benefit:

  1. Consent and Participation. Oftentimes, small contractors are content to be on the team with the potential for a share of the profit. They try to stay out of the way and may even feel they have very little to offer. This is the wrong attitude. Even if you don’t make a cent, you want to secure as much intellectual capital for your company as possible. Therefore, secure your place at the learning table by indentifying what issues require your consent and/or participation – issues such as negotiations, legal/consulting discussions, special project meetings, email distribution lists, etc. Basically, don’t miss out on this learning opportunity.

 

  1. Performance of Work and Employees. Past performance and experience are paramount to the success of any company. In any joint venture, you should seek to gain both real and relevant company-wide experience, while increasing the experiences of individual employees. Structure your agreement to glean as much knowledge from the project as possible. This includes, but is not limited to, daily administrative and operational activities in which your people are actively responsible for certain aspects of the project. For example, if your partner wants to assign the project manager from their staff, you may fight to assign the superintendent and/or quality control representative. The main thing is to have your employees participate in a meaningful way on the project.

 

  1. Joint Bank Accounts. As mentioned earlier, the fact that you could be responsible for a portion of any losses means that it is wise for you to be somewhat actively involved in the financial aspects of the venture. There is no better place to stake a level of control than having an agreement which requires a joint bank account and dual signatures with an authorized signer from each partner on all checks. In addition, you should notify the project owner that all draws should be made to the joint account. Lastly, be sure that you have access to monthly bank statements and internal bank reconciliation. These measures will help you maintain a good feel of what is going in and out of the account.

 

  1. Record Keeping. For a small company, there is a lot you can glean from reviewing the project files and records. Better understanding of contract provisions, improved writing skills through correspondence reviews and valuable project management experience are just a few things available. As a part of your agreement, make sure that you have full access to all project records and familiarize yourself with them. On our joint venture projects, we typically put all project files on a cloud-based storage platform which make them readily available and reduces excess paper.  If you ever need the documentation for other reasons, you will not have to rely on your partner to access them.

 

  1. Job Costs Pre-Defined. Unfortunately, some partners will see the venture as an opportunity to expense every cost imaginable to the project. These costs will typically fall in the category of preconstruction and general conditions. Every dollar of cost that a partner can transfer to the project goes directly to the bottom line and is shared by you. Expenses such as lavish meals, excessively manned preconstruction and parking at the corporate office are just a few of the questionable costs we have seen. While these costs may not be wrong in and of themselves, why should you pay for your partner’s employees to park at their own building? As such, all parties need to be in agreement as to what costs are acceptably charged to the project. Otherwise, there is no way to determine if the project is as profitable as it should have been.

 

  1. Standing Meeting/Open Communication. As with any relationship, open communication is key. If trust is to be developed, all parties must openly share and own issues negatively affecting the project. Recognizing that issues are inevitable and can be resolved, it is more important to find a solution than to point fingers. Make it a requirement of the joint venture that there be periodic, dedicated times to meet and discuss such topics as busts in the estimate, underperforming personnel and administration of the venture. Again, these meetings are of paramount importance, so don’t allow yourself or partners to disregard them.

 

  1. Dispute Resolution/Exit Strategy. Unless one of the parties to the venture doesn’t like saying “no” very often, there are going to be disputes. And, at some point in the venture, one or all parties may feel the need to separate. When conflicts arise or someone simply wants out, it is vital to have a formal dispute and/or exit mechanism in place. This avoids potentially costly and distracting litigation. After all, even if you and your partners have a total falling out, you will probably still be required to complete the project together. Having a predetermined means of solving disputes will work to make the completion of projects and ultimate dissolution more pleasant.

Obviously, any legal document created by lawyers is going to include a number of other types of provisions that are needed in your agreement, but you should pay particularly close attention to the ones listed above. As always, check with competent legal counsel before entering into any legally binding agreement.

Vince Fudzie MBA, CPA, CIRA, is the Managing Member of Triune. Founded in 1997 with headquarters in Dallas, Triune is a leading, integrated, design-build general contractor in the Southwest region of the country.

The Punch List is Triune’s proprietary blog for discussing issues and providing insights specific to the commercial construction industry. Copyright 2013 TMV, LLC (Triune). Any and all rights reserved.

 

How Can Small Contractors Develop Successful Strategic Alliances with Larger Ones (Part 1)

How Can Small Contractors Develop Successful Strategic Alliances with Larger Ones (Part 1)

6 Things to look for in a partner

By Vince Fudzie

This is the first part of a series that discusses what to consider in choosing a partner, what needs to be in your agreement and how the venture will operate.

Wikipedia defines a strategic alliance as an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations. For our purposes, an alliance between a small company and a larger one can take many forms from a teaming agreement to a 50:50 joint venture.

A simple Google search reveals tons of information discussing the topic of strategic alliances. However, it is a challenge to find one cogent article on how to successfully develop alliances between small and large contractors. In practice, alliances are difficult to manage under the best of circumstances, let alone in a situation that may have been born solely out of socio-political influences.

Because choosing the wrong partner can have disastrous financial consequences for smaller contractors with limited resources, this decision is crucial.  I am amazed by how many companies haphazardly form ventures without first thoroughly vetting one another’s cultures, ethics and business philosophies. Before entering into an agreement, as is the case with any relationship, it is wise to get to know your partner first.

If the following character traits sound like advice from a marriage counselor, then you’re absolutely correct. An alliance is very much like a marriage, so make sure that your partner has a good number of these traits:

  1. Commitment. Without both companies’ wholehearted commitment from the top to the lowest levels of their organizations, the venture is destined to fail. In general, this commitment needs to focus on the overall success of the joint venture which is the only way to assure an equitable relationship. If this commitment does not exist, you should seriously reconsider entering into an agreement.
  1. Respect. A lack of respect can stem from a number of reasons, but it is often due to the perception by one of the parties that the other is receiving unequal rewards for the level of risk they are incurring. When this perception and resulting lack of respect permeate throughout your partner’s organization, it makes for a very contentious relationship. You need to talk with your partner early on to address such issues. If your company offered no value, then there would probably be no need to discuss partnering.
  1. Humility. Sometimes the nature of large businesses can breed a level of egotism that flourishes throughout the organization, even for newer, inexperienced employees. Having this type of partner can be disastrous, especially if this characteristic extends to interaction with project owners. Once an owner catches wind of an egotistical contractor, your project success is prone to disaster.
  1. Trust. Any viable relationship begins with trust between the parties, and, prior to inking any agreement, you must begin to develop it. Just as in personal relationships, trust can be developed in many ways. Behaviors such as developing rapport outside the office, following through on commitments, being well-versed in what you bring to the venture, standing up and taking responsibility for missteps, and being considerate of others’ time – these are the types of actions that create trust in business and in life.
  1. Shared Values. Good partners should possess shared values. For example, both firms should have similar values of integrity, collaboration, service and excellence. Alignment of core values will be critical for successfully working together. If one of the partners is short sided in any core value, it may lead to disappointing results for the project and discord between the parties.
  1. Vision. Too often, companies form alliances in a “just in time” fashion – just in time to turn the proposal in. They may even spend time developing a rapport. And, if they don’t win the proposal, there is a likelihood they may not speak again unless another opportune project presents itself. This is not how committed partners act. Partners with vision are committed, not only to the project, but to the relationship being built. They find a partner with the right traits and build upon their mutual bond. Otherwise, you are playing the game alone and never really creating a team with the best possibility of winning.

Choosing the right partner is simply the beginning of a potentially fruitful relationship. However, a successful venture will require not only the right partners, but well-thought-out and well-implemented agreements with the right heart and spirit by those involved.

Vince Fudzie MBA, CPA, CIRA, is the Managing Member of Triune. Founded in 1997 with headquarters in Dallas, Triune is a leading, integrated, design-build general contractor in the Southwest region of the country.

The Punch List is Triune’s proprietary blog for discussing issues and providing insights specific to the commercial construction industry. Copyright 2013 TMV, LLC (Triune). Any and all rights reserved.

 

Ways to Reduce the Cost of Bidding

Ways to Reduce the Cost of Bidding

By Ed Krum

In today’s competitive market, everyone is looking for ways to reduce overhead in every aspect of their operation. This includes the basic costs associated with estimating projects.

The old adage, “it takes money to make money,” has gone out the window. The opportunities to connect with your clients, subcontractors and suppliers via the internet has changed the way most companies look at estimating.

In the past, procurement of the plans and specifications by means of either a deposit or direct purchasing was both costly and cumbersome. With the advent of electronically distributing the bidding documents either via disk, FTP site or electronic plan room, you can reduce the cost to only printing the plans you need and, in most cases, a reduced size set (11×17). This now allows the general contractor more access to many more subcontractors in various trades to ensure a quotation is received. This makes things much easier, since sorting through pages of documents is no longer necessary.

While electronic document management may seem very obvious, it takes a dedicated person to contact each and every subcontractor and supplier to remind them of the proposal required from them.

Owners, developers and other entities that bid out work are slowly catching on to benefits of electronic submissions and are now letting contractors submit their bid/proposals electronically. This change in attitude by owners has now allowed contractors to take advantage of the “late” arriving subcontractor bid, thus reducing the overall cost of the proposal to the owner among other benefits.

Although there is no sure-fire way to reduce bidding cost, prudent general contractors only peruse the bid jobs that have the best advantage in their favor of winning. While larger projects are tempting, they also draw the most bidders and, therefore, are harder to compete. This type of bidding is like throwing money away. Ardent contractors will try to find those projects where the amount of bidders is limited in order to increase their chances of being successful.

Whatever type of project you choose to bid on, electronic bidding allows you to streamline communications, check on bidding subcontractors and suppliers, and use the system for document management.

Ed Krum, Senior Estimator for Triune, is a highly accomplished, multi-talented project manager with over 25 years of commercial construction experience. He is skillful and highly regarded in value engineered, conceptual, competitive, negotiated and design-build estimates.

The Punch List is Triune’s proprietary blog for discussing issues and providing insights specific to the commercial construction industry. Copyright 2013 TMV, LLC (Triune). Any and all rights reserved.

 

The Liquidated Damages Clause—When is it just a Penalty?

The Liquidated Damages Clause—When is it just a Penalty?

By Sarita Smithee

Construction contracts often contain a liquidated damage clause that provides for payment a stipulated amount in the event that work is not completed within a specified period. Owners often impose these clauses against contractors to ensure the timely performance by penalizing the contractor if the work is not completed on time.

Purpose of Liquidated Damages Clauses

Construction contracts include liquidated damages clauses for project delays because damages caused by delays are often difficult to foresee. Liquidated damages may be assessed by owners for failure to timely complete a project, or, less commonly, they may be claimed by contractors when owner delays increase the costs of project completion.

Typically, a liquidated damages clause specifies an amount per day that the owner is entitled to recover in damages if the contractor fails to complete the project by the contracted completion date. The term “liquidated” is used to signify the agreed amount of damages an owner will recover in the event of a delay, and eliminates what can be a lengthy and expensive process of proving the actual damages.

However, the inclusion of a liquidated damages clause does not always mean that provision is enforceable. Although competent parties generally have the right to make their own bargains, this right is not unlimited.

The enforceability of a liquidated damages clause depends on multiple factors

Generally, a liquidated damages clause will be be upheld if it was created by the parties in an attempt to estimate, in advance, the actual damages that would be suffered in the event of a material breach. However, if the only rationale for enforcement of the clause is that the project was not completed on time, the Court will likely view the clause as a penalty and unenforceable if it is challenged, absent some other evidence that late completion caused actual damages.

In evaluating whether a liquidated damages clause is enforceable, Texas courts have generally looked to the following factors:

  • Whether the amount stipulated in the contract was a reasonable forecast, at the time the parties contracted, of just compensation for the harm that is caused by the breach;
  • Whether the harm that was caused by the breach is one that is incapable or very difficult of accurately estimating;
  • Whether the amount of liquidated damages to be assessed was disproportionate to the amount of actual damages incurred;
  • Whether the liquidated damage provision applies equally to both material and minor breaches; and
  • Whether the liquidated damage provision was not intended to provide fair compensation for the breach but instead to secure timely performance of the contract.

Drafting considerations

Owners may attempt to address these factors by specifically drafting the liquidated damage clause to state that it is not intended to be a penalty. If the clause was negotiated by the parties, as opposed to boilerplate language inserted by the owner, this language can help the owner prove the parties’ intent.

If an owner uses the same amount for liquidated damages in all of its contracts, courts will often find that the provision was intended as a penalty and, therefore, unenforceable. The liquidated damage provision therefore should be tailored to the particular contract.  Similarly, if the same amount of liquidated damages will be triggered by either a material or minor breach, courts have held that the liquidated damage provision is unenforceable even if there has been a material breach.

A party who is seeking to craft a liquidated damage provision that would be upheld by the Texas courts should consider a pre-contract analysis as to what the potential damages could be if the work were not completed on time, and should  document it in the file.

Provisions should be crafted so that they do not apply equally to both a minor and material breach. A liquidated damage provision that applies equally to “the failure to perform any obligation required by the contract” should be avoided.

As noted above, the inclusion of liquidated damages clauses is commonplace in construction contracts. Knowing what is required for those clauses to be enforced is useful information for either party to a construction contract, whether attempting to enforce a liquidated damages clause or trying to defeat its enforcement.

Sarita Smithee is an associate with The Beckham Group in Dallas, Texas.  The Beckham Group has extensive experience with, and specializes in, business litigation both as a Plaintiff and a Defendant.  The firm drafts and prosecutes/defends civil cases involving numerous types of contracts, and has just about seen it all.

The Punch List is Triune’s proprietary blog for discussing issues and providing insights specific to the commercial construction industry. Copyright 2013 TMV, LLC (Triune). Any and all rights reserved.

 

How to Reduce Marketing Costs While Still Increasing Business Growth

How to Reduce Marketing Costs While Still Increasing Business Growth

5 Ways to immediately reduce your costs

By Christina Martinez

Many so-called traditional marketing methods such as advertising, trade shows and print literature are huge cost-drivers in any marketing budget. The good news is that it is possible to reduce these marketing costs and still be highly effective. Here are 5 ideas to immediately reduce your costs while still maximizing marketing results.

  1. Know the Customer. Marketing is expensive, and mistakes can crush a marketing budget. Avoid mistakes by getting acquainted with the customer. Know the segments, needs, decision makers and more by collecting and using data. House all of your customer data in a database or by using marketing automation software that can be updated easily.

Conduct research. One of the easiest ways to do this is by regularly surveying your customers and their needs. Surveys are inexpensive, and they will give you valuable information that can be used as a foundation for guiding marketing decisions. If you have trouble getting your customers to take your surveys, then provide incentives.

  1. Establish On-line Presence. Advertising is often the most costly component of any marketing budget. Gear your budget to invest more into search engine optimization (SEO) and content marketing through blogging and social media.

Your website ranking can also make or break your marketing efforts. Chikita, an ad network, has continuously monitored search results to find that the top result on Google sees a 32.5% click-through rate, with continuous drop-offs from there (91.5% of clicks occur on the first page). So what exactly does this mean? Unless your website is ranked in the top few search result positions, all of the advertising in the world will not help you. Establish a quality website that is comparable to your leading competitors. And don’t forget to make sure that your site is mobile-friendly.

  1. Print Brochures are so 2005. Print may not be dead, but it could use some help. Whether seeing decreasing success in direct mail or increasing costs in brochure printing, it may be time to put more resources towards digital branding. Actively provide PDF versions of your advertising, and reduce print runs. You can always keep brochures ready to be printed on a single-run, as opposed to wasting the money and space to store thousands of brochures. Furthermore, you can upload all of your PDF’s to a cloud storage provider like Dropbox, allowing potential customers to view your material more easily!
  1. Shape your Brand with Publicity. A saying that you need to take to heart: “Advertising and marketing is about saying how great you are. PR is getting others to do it for you.” PR or publicity placements are free by definition, with awareness building that rivals advertising! One such way to utilize publicity is through the issuances of new worthy press releases.

A few examples of how you can use PR to your advantage:

  • Release Products using Free or Paid PR Wire Services
  • Free: Check out this list of Free PR Submission Sites
  • Paid: Great sites include PRWeb, BusinessWire, and PRNewswire
  • Build Relationships with Reporters and Journalists
  • Find Public Speaking Opportunities

A few good ideas for what to share:

  • Participating in a philanthropic event
  • New, significant customer
  • Receiving an award
  • Partnership and strategic relationships
  • Names of significant new hires and/or promotions

Become familiar with the many facets of PR and make it a fundamental piece to your integrated marketing communications strategy.

  1. Repurpose Your Content. Content is king, but it doesn’t have to take up a huge portion of your marketing budget. Create content that will interest your current and potential customers, suppliers and subcontractors. Use the same content in different formats. Blog about your projects, post about the projects on social media, create a corresponding video, introduce yourself to customers and prospects via email, develop surveys, host a webcast or podcast and much more.

In addition to this, generating evergreen content will allow you to stretch your money. Evergreen content is quality, useful content that is relevant to readers over a long period of time. The fundamental key with evergreen content is that it is relevant to readers whenever they may run across it. It has (virtually) no expiration date and ideally will retain its value over the long-term.

Reducing marketing expenses for your business can be simple. Just be sure that you have a plan and follow through. It’s worth the savings!

Christina Martinez is Triune’s Director of Marketing and Business Development.  Christina brings over 10 years of high level marketing experience to Triune. Triune is a leading, integrated, design-build General Contractor founded in 1997. Triune is headquartered in Dallas, TX – www.tmvllc.us

The Punch List is Triune’s proprietary blog for discussing issues and providing insight specific to the commercial construction industry. Copyright 2013 TMV, LLC (Triune). Any and all rights reserved.

 

How to Improve Your Odds of Winning

How to Improve Your Odds of Winning

Increasing your bid-hit ratio

By Ed Krum

Competition in business is often fierce. In order for a company to thrive, it must achieve reasonable growth by means such as increasing profitability, jobs and sales volume. With contracting businesses, one of the primary means to obtaining jobs is through bidding.

The bid-hit ratio shows the percentage of jobs bid on in relation to jobs/contracts secured. A ratio of 5-to-1 would indicate that a company is averaging one contract for every five jobs being bid upon. In a perfect world, a low bid-hit ratio, like 2-to-1, would be ideal. A company that typically negotiates their jobs creates a false bid-hit ratio because they count all work under contract vs. work that they actually bid. Contractors that get most of their jobs from bidding public works or from bidding against a long list of competitors have a higher bid-hit ratio.

Once a contractor has identified the specific customer types that he wants to pursue, there are some simple strategies for increasing the bid-hit ratio and maybe improving overall profit margins.

  1. Limit the Competition. Typically all contractors want to bid on projects that have only 3 or 4 contractors selected to bid. Look for opportunities where the owner procures work through a short list of bidders. Pursue potential customers where you can compete on value and qualifications. Find those owners who recognize that the services that you offer are not simply commodities meant for the lowest bidder.  Such opportunities exist, but you will have to cultivate them. This strategy will definitely increase your chance of a greater bid-hit chance. Obviously, less competition equates to a higher probability for success.
  1. Try Something Different. Getting stuck in chasing after the same types of projects and customers over and over hurts your bid-hit ratio greatly and reduces the efficiency of your estimating staff. Be more selective, eliminate jobs with long bidder lists and pursue only the jobs where you have some type of competitive advantage. Having a strong relationship with someone on the selection committee is one example. Making this a top priority and working hard to get pre-qualified for the targeted projects greatly increases your bid-hit ratio.
  1. Let yourself be Known. Try not to bid projects without first getting a chance to meet the decision maker. Your goal should be to find owners that are concerned with more than just price. When you meet the decision maker, ask questions such as:  a) How many are bidding? b) Who are they? c) Who won your last project? d) How will the bids be opened and evaluated? e) What is the most important factor in selection of the contractor? f) Will they negotiate?
  1. Limit your Affinities to Others. As a subcontractor, why not send your proposal to every contractor bidding on that project? Oftentimes trades have an affinity to one or a few general contractors and will bid only to them.  While loyalty is important, you should not utilize this practice if it negatively affects your bid-hit ratio and, ultimately, your business.

In closing, these simple guidelines may prove to substantially help your company win bids, stay competitive and increase profitability, and, in an ever-increasing market, not much could be more valuable.

Ed Krum, Senior Estimator for Triune, is a highly-accomplished, multi-talented project manager with over 25 years of commercial construction experience.  He is skillful and highly regarded in value-engineered, conceptual, competitive, negotiated and design-build estimates.

The Punch List is Triune’s proprietary blog for discussing issues and providing insight specific to the commercial construction industry. Copyright 2013 TMV, LLC (Triune). Any and all rights reserved.