Navigating Construction Restart: Expensive Mistakes to Avoid

Construction Tech thought leader Jeff Sample from eSUB shares some fresh insights on recent changes in the industry and how to address them to keep business running smoothly. With new costs, requirements, and safety concerns, how are you going to make sure your business doesn’t trip over its shoelaces?

Watch this webinar to:

• Learn what lies ahead for contractors and suppliers
• Develop the right strategies for the new normal
• Take charge of your business to increase productivity and cash flow

Webinar Experts

Jeff Sample

Business Consultant
eSUB
View Jeff’s Expert Profile

Alex Dunn

Construction Payment Expert
Levelset
View Alex’s Expert Profile

Full Transcript

Alex: We’re three minutes in here. I suppose we have, as many folks are going to come and if they join late, they’ll they won’t miss too much. I’ll let’s kick it off again today. The webinar will be recorded. I’m joined by Jeff sample from e-sub. We’re going to talk about navigating the restart and how to avoid expensive mistakes in construction. So this is a little bit of our agenda, but first I want to give Jeff a chance to introduce himself and talk a little bit about e-sub. Jeff, tell us what you got.

Jeff:
Thanks Alex, for having us. My name’s Jeff sample. I’m the director of strategic accounts at e-sub. But I have been in the industry for the past seven or eight years. I’ve been in technology for the past 20 years now. Um I joined e-sub about a year ago because I came from a trade contractor background as a masonry subcontractor here in Colorado. And I learned that it was, you know, critically for me where I could have the most impact and where technology could have the most impact and, you know, e-sub’s mission of power to the trades. So you can see it above my head over here, hashtag power to the trades, follow us on on social media. We try to tag all the information we have out there, but we’re really a consultative, conversational educational group. That’s really trying to move the trades in the industry forward, so I really our our relationship with levelset because we know no one group can really do it and that’s not all…We’re here to advocate for the trades, but I’m a big fan of general contractors, suppliers, owners, everybody getting involved. And, you know, we really do that. So that’s me. That’s what I’m all about. And that’s a little bit about e-sub. So check us out and thanks for having me on, Alex. I really appreciate it.

Alex:
Yeah, definitely. And y’all should definitely check out yourself if you haven’t heard of them. They’re a great company, great people. We’re very happy to have Jeff on these all the time. And for those of you who are joining from the use of side we’ll talk a little bit about what levelset is here to do. We, we line up really well with you. So it’s all about getting rid of the complexity that causes problems and stress in construction. And on the levelset side, that’s mostly focused around payment. Payment is complicated in construction. It always has been. And you know, we’re on a mission to empower everybody in the industry to get what they earn and to make the whole process a little bit better. We have tons of tons of free resources around lien law and payment documentation. We have an expert center where you can come and ask questions and get live answers from lawyers across the country who have helped contractors in similar situations that you’re in.

Alex:
We can connect you with those lawyers. And we have contractor payment profiles to help you get a better understanding of the folks in the industry and how they’re paying. So you don’t end up in a tough spot. So that’s just a little bit on us, but again, check out our website. So you can always learn a little bit more there. Let’s get into the juicy content: today’s agenda. We’ll talk a little bit about where we’re at today. What are some of the complexities and current risks that we need to be aware of Um since the coronavirus started? We had a really great webinar that kicked off the coronavirus party back about three months ago, I think now with e-sub and Jeff and we talked a lot about some things you can do to avoid the risks that are out there.

Alex:
So it was kind of a good part too. And we’re going to talk about how you can mitigate the newer risks that are continuing to pop up and, you know, prepare a little bit more for Q3. So where, where are we today? You know, just briefly, like there’s just so much uncertainty still we’re learning more and more about how the virus is moving and affecting people. We’re seeing initial spikes from Memorial day. We’re not at any sort of normal and we won’t be for some time and things are gonna keep changing and we need to continue to change ourselves like the saying I always liked: “when things change, change things.” so we need to, you know, think about what needs to change. Jeff, would you kind of agree with most of that?

Jeff:
I have to, and what I, what I’ve really been learning throughout this is, is you got to stay vigilant. I think it’s kind of in human nature to make this normalized and, and feel like we might be through it, or, you know, as things reopened, get back to normal, as you said, but we’re really not there. And if you don’t remain vigilant about what’s going on and continue to change yourself and adjust, you could find yourself in some really bad situations. And, you know, I, you know, you said it before we kicked this thing off a long time ago, Alex, and it feels like it. And neither of us knew a lot of what was coming in. We just gave a lot of, as many as much advice as we could, and I’ve learned a ton throughout this process. So I think there’s a ton that you can continue to learn. Whether it be on digitization, whether it be on construction, it’s just really the time.

Alex:
Yeah. And the word vigilant is probably the perfect word for a lot of what we’re going to talk about today. I’m sure I will stumble over it a few times as I, as I talk a little quickly. So, so what actually happened since we last talked there is like a national panic, the stock market, you know, there was economic shutdown. There were stimulus packages. Contractors, I think still construction companies still had a lot of PTSD from the last housing crisis that happened. And well construction, you know, is a little bit more on the sidelines of this economic turmoil we’re in right now. I think a lot of people still reacted the same way they went into that protection mode. They wanted to keep their business alive. They secured loans through the government and other ways they kept their projects alive, the best, the best they could when they weren’t shut down. And they went and they filed a lot of liens. And you know, there’s a construction dive article out there based off of some data that we found in levelset: our mechanics liens just had a 40% spike as coronavirus came in in the early early months. Because of this kind of fear and this this kind of protection mode, people went into. Jeff, what are some of the things you guys saw at e-sub?

Jeff:
Well, I mean, I really think you’re right. They went into that protective mode, but I think it was a little bit different because we didn’t really have anything to go to. Like they obviously, and I think rightfully so went to the 2008 economic downturn because it’s the closest thing we had and had any data on, but a pandemic, we hadn’t seen that since, you know, the Spanish flus, we didn’t have a lot of data to go back to. So they went to what they know. And I think what was interesting that we didn’t learn is that there was something new they needed to do. There was new implementation of productivity tracking of, you know, getting an idea of where their jobs really were before. And after things we’re going to talk about here that we didn’t have a chance to seize on last time. And I think in this one, we have an opportunity and a necessity to seize on, learn from and implement in our organizations to really stay profitable and stay successful as we can through this.

Alex:
Definitely couldn’t agree more. We definitely missed some big things when we talked last time, but you know, like I said, there’s still a lot of uncertainty and we don’t know it all. And last time we talked together, you know, we talked about the major challenges that construction businesses have pre coronavirus you know, it was finding that skilled labor, attracting and retraining them and training them, keeping them in, in the, in the pipeline and always having enough people. We had the project management, safety, productivity, documentation getting the payment, having, you know, you’ve done the work now, how do you get paid? It’s a huge problem. And then coronavirus came in and increased the need for more robust action across the board on all these three major challenges. But you know, we focus a lot of our time around documentation. Last time we spoke, I think, and quite a bit around payment and financial protections as well. I think, you know, like at this next slide, yeah. So we talked a little bit, these were some of the checklist items we said, especially around payment. These are the four things you can do as a business. I don’t want to talk forever about what we talked about last time. So, so let’s move into like the new risks. What are some of the things we left out and then we want to talk about this time? Take it away, Jeff.

Jeff:
Well, yeah, I mean, we, I wouldn’t even say left out. I think it’s just more that, you know, we’ve learned, right? And it’s evolved and we’ve seen as things progressed, what happened you know, right now where we are with skilled labor is we really have to pay attention to where people I don’t think we really could quantify what a pandemic was going to do to the mental health and awareness of our, of our labor forces. And that doesn’t matter if you’re a general contractor or a supplier or a trade contractor, everybody has employees and everybody was affected. I don’t want to go too deep and we’re not going to go too deep here today. If you want to check it out, we did a full webinar with Nathan Wood and Cal Beyer over at e-sub. So just go to esub.com/webinar.

Jeff:
And we’ll give that out to you guys afterwards and look at our impact of behavior and impact of mental health and wellness. It’s something you’ve really got to pay attention to, but what we are seeing was this, and we do want to quickly talk about as a fear of returning to work. It’s continuing we’re continuing to see that impact our crews, impact our ability to get restarted. So I think you have to address that fear and you can address that fear through some of the techniques we’re going to talk about in the safety documentation, in the productivity, that kind of thing. So really key. And then we’re going to talk about some quick things you can do with safety. We’re not going to go too deep into that, but productivity is where I really want to spend some time because we’ve learned a lot throughout this process. We have studies to show you we’ve got some really great information that came from levelset as well, that, you know, backs up what we were thinking and what’s occurring and then documentation. That’s something that’s not going to go away. It’s something we stressed before. But I’m hoping that you all did it because it’s going to be the raw material to help us with some of the other things we’ve done.

Alex:
Yeah, definitely, and that documentation role is really a lot into the payment side of things. Obviously the payment process requires a lot of documentation with your pay apps and waivers and your preliminary notices and so forth to make sure that everyone knows you’re on the job and that you’re, and all that stuff kind of fits together in this productivity, documentation you know, efficiency realm that we’re going to talk a little bit about today and a lot has changed. Do the work, get the money. It sounds simple. That’s what construction is all about. And like, you know, it doesn’t happen all that easily. So let’s dig in.

Jeff:
All right, well, we’re going to talk quickly about safety because it is a critical part and a critical component and will continue to be we’ve got to stay safe to stay productive, right? If you have a crew that gets infected, that’s going to impact not only the people who are positive, but it’s going to impact the entire crew due to the ability to have to quarantine them. Right? So stay safe, stay productive. This also goes with everything else we do in construction, just because we have a pandemic going on right now, doesn’t mean we let any of our other safety procedures fall by the wayside. It’s actually more important now because we have distracted employees, our employees are dealing with a ton. You don’t know what they’re dealing with home. I have one right here quarantined right now, myself. So if I’m distracted, I increase my likelihood of getting injured on the job exponentially.

Jeff:
So you’ve got to pay attention to that, and we’ve got to stop looking behind us and start looking ahead of us. We have to use preplanning. We have to use our experiences from the past to look forward to where we’re going, where we’re going to be and what we’re going to do. And we need digital tools to facilitate that safety. If you’ve been harvesting anything, you’ve got to look at where your where your largest safety hazards are and apply a forward, look at them. So that’s really, I want to jump in quickly here to the next slide and talk about like a pre-job plan. This might seem silly, and this is a company called plans for less. I’ve known Brian for a long time. We like to show this because site logistics plans are something that, you know, people do, but you have a lot of access to things and we don’t always take it so seriously.

Jeff:
This is a really low tech version of it. These are just markers that you can put up this little magnets that he creates for you. But right now, when it comes to a job site, we have to control where people are coming and going. If you’re not paying attention to that, you’re already going to add insult to injury. If you don’t know where your employees need to be, when they need to be there, if you’re not marking out where they can go, things like where they could have lunch, take breaks, where their materials can be stacked, so they’re not crossing over with other trades. These things are simple, but they can have a tremendous impact on your productivity and the way that you’re going. So I have to, I can’t stress that one enough. It seems simple, but if you’re not doing it, take the time to do it, think it through and you can really help yourself. So that’s really about the safety. We want to roll into productivity here, and productivity is an enigma, and I think that’s what this slide kind of shows you, what is productivity? I think productivity has a lot to do with your, your view, right? Alex? I mean, productivity is not easy.

Alex:
Yeah. It’s there’s a lot to unpack in that word. And we’re going to attempt to do it a little bit today by, you know, like how do you calculate it? Like, is it really easy to calculate if you’re being productive, productive you know, how does productivity change in the pandemic? And then looking at some numbers that we actually pulled from a pretty big industry survey you know, pre-coronavirus. So like here here’s, you know, example of what someone might say, like, what is productivity? You know, they give you this, you know, silly little you know, equation where you’re like, okay, like, is that really all there is to it?

Jeff:
Yeah. This is the simple Wikipedia. Like, it’s that easy guys go do it. Right. Wait a minute. Labor productivity, output volume over labor input input use. Sure. That’s really easy. If you’re a, you know, we were talking pre show, if you’re pouring a driveway, you know, if you’re, that’s what you’re doing. Great. Yeah. That is pretty easy to do. But it’s where construction becomes really, really complicated that productivity and defining it and tracking, it becomes a really complex piece. And I love this picture because you can see the finished building on the right and it’s two different stages. So I like to look at, say an electrical contractor in this one, you’re going to be far differently productive when you’re working on the bottom floor and during your runs, then as you move up the floor, right? So as the complexity of the project goes up, so does the calculation of what is included in productivity?

Jeff:
Where are the materials stored? How are you getting there? I love the crane in this picture because the crane showing you, that’s lifting materials to each floor, you’re going to have to realize that’s going to take longer for each floor. So, and now when you look at elevator access, based on what’s happening in the pandemic, you have to plan for and understand how now you can’t pack that. I mean, if anybody’s been on a job site, listening y’all know that that lift in the morning is packed with people. Everybody already had trouble getting to where they needed to get when they needed to get there. Now we’ve made that even more difficult. So calculating what’s involved in the productivity. There is not simple. There is no one simple equation to do it, even though it loves to go there. And, you know, Alex, I think you even had some other factors that are going to impact.

Alex:
Oh yeah. I mean, we could probably talk about this for the entire hour, so let’s not, but you know, the idea that Jeff is trying to lay out is it’s not linear. You know, if you add a floor, it’s not going to be, you know, one extra unit of productivity. It has like this exponential impact where every time you add a room to a hotel or a floor to a skyscraper or a sub to the job, or a sub sub to a job, the complexity and the coordination that’s needed to have this like perfect productivity just gets a lot harder. You know, there’s things like whether an unknown or preexisting site conditions that weren’t there or in the case of less than three months, like pandemics, I keep planning for that stuff. And how it throws a wrench in your productivity is tricky. So this, you know, coordination, communication and good documentation can all play a role in, you know, this super over simplified equation that, you know, there, there are just too many factors.

Jeff:
You hit on something good because you gotta be tracking it, right. You hit it there. If you’re not tracking it, or hadn’t been tracking it before, you’re going to be in a far worse position. And if you’re not thinking about tracking productivity from a digital perspective and starting to break it down in such a way with like cost codes, categories, other things phases, if you’re not getting granular, you’re not going to be able to do some of the things we’re going to talk to you about later on. So, and I know Alex has some, some info on where projects were before the payment.

Alex:
Yeah, definitely. So at levelset we were always interested in understanding how payment is working. And one part of payment that, you know, we don’t look at all the time is how does productivity on a job site or the efficiency of getting the work done on a job site affect payment? So we went and we conducted one of our surveys. Earlier in this year we collected all the data and started writing the survey as the pandemic started to sweep the country. So we had about 500 folks answer a series of about 40 questions to collect this data. And this is one of the hero stats from the reports. And it says that basically an entire day of work on every week on average is sapped away from a construction crew. Coordinating these jobs is super hard. It requires communication across a lot of different parties, and it doesn’t happen magically with, you know, writing a memo or paperwork or software or text messages or seeing people on the job site. And it needs to be this confluence of a lot of things. There needs to be the technology and the willingness to communicate and planning from these higher tier parties, as well as, you know, the lower tier parties, the subs and suppliers coordinating with them. And when that stuff doesn’t happen, you end up losing a lot of time and you have people waiting on the job site and productivity goes away. Jeff, do you have anything you want to add here?

Jeff:
Yeah. I mean, I think it’s critical that every chink in the chain, right there goes together. I mean, it’s always the lowest common denominator. It doesn’t matter if it’s, you know, a, a supplier that’s not getting supplies there or didn’t have the supplies available, or if it’s a trade that’s experienced an outbreak or it’s a GC that they can’t be on the job anymore. And they’re really trying to adapt their digital tools to be able to continue those meetings and communications. So, you know, this was there beforehand. I can’t imagine what it really looks like afterwards. I’d love to see what, you know, your studies look like in the future.

Alex:
Yeah, well, we were, we plan to do them you know, pretty quarterly. So we’ll see, we’ll see soon enough it’s another interesting stat because of the inefficiencies that are happening a lot of work isn’t getting done on time. It says, you know, one of the interesting things we found here was that a very small percentage of contractors reported that their jobs go according to budget. And according to the plans that are laid out in the contract. So again, this is all before the impacts of coronavirus. You have a quarter of these contractors that are actually finishing work on time. So, so like, you know, whether we believe that or not like, you know, Jeff was, Jeff was making a joke about this earlier saying that he was worried that bosses were looking over their shoulder when they were taking the survey.

Alex:
But you know, it’s still pretty, pretty heavy hitting stat that so few contractors are able to before the effects of current buyers finish these jobs on time and under budget. One other interesting thing I always like to think about here, when you think about productivity is there’s a lot of social science studies out there that as humans, we have this cognitive bias to be really bad at estimating how long it’s going to take to do something. And it actually turns out that we need about 50% more time to get something done than we thought. So if you think you can go to the grocery store and pick up groceries and cook food for your family you, you think it can take two hours, it’s gonna take you three. And even the worst case scenario that you might expect tends to be overly optimistic. So I’ll link, I’ll link to that at the end of the show and the show notes. So y’all can check it out, but it’s actually pretty interesting. It’s a good thing to keep in mind when you go and bid a job that you can bake in that extra 50% of time you’re going to need or with coronavirus possibly even more.

Jeff:
Yeah, I think that’s critical too, because it’s going to be about facts, not feelings to steal. One of my old mentor, James Bannon’s talk it’s facts, not feeling. So if you have that data to go off of it’s really going to help you drive that. So, because as humans, we are just flawed when it comes to that,

Alex:
Definitely. Last big stat we just want to talk about here is that we found that there’s a way to less correlation between getting the work done effectively and efficiently and actually getting paid on time. So, you know, we thought for, you know, we thought, Hey, you know, if, if a contractor says they’re going to do this job and this amount of time for this much money and they check off all the boxes along the way, they should get paid on time much more often. And we found that that actually wasn’t very true. And like, you know, possibly like Jeff has some things to say on this around, you know, how, how is finishing the work or qualifying the completion of work affected

Jeff:
Well, yeah, I mean, that’s the interesting part here, right? We were joking around about the 28% and I, you know, I challenged Alex before that, that meant about 20% of them were thinking their owners or their bosses were over their shoulder. And so they needed to look good there, but actually I think more realistically, it has to do with how we define completion. Right? If we define completion as when we’re done with the work on site and we’ve handed it over, then I bet you that 28% like even be a little bit higher, but the deal is if we’re chasing down payments, we’re still spending some of that overhead and profit on completing the job. So I think it’s a lot definitional here that you have to, I think you would pay this, you know, put the stake in the ground. That it’s when I received my last payment for the work that I performed and I feel like the job is completely done. So I think a lot of that has to do with the definition.

Alex:
Yeah, definitely. And that’s why contracts are important and, you know, good communication and coordination is so important as well. Another thing just to kind of like tie this up into the current landscape that we’re all living in right now is that these, these GCs, property owners and higher chain parties, you know, are holding their funds and they’re not dispersing draws on the right schedule. And a lot of cases because of the uncertainty. You know, one thing we’re seeing because at levelset, we are very lucky that we have a ton of data on liens and payment problems that are happening across the industry. There’s a lot of stuff about this in the news, but you see these fitness chains and big box stores and hotel chains, movie theaters, all these places of public gathering are like on the verge of bankruptcy. And there’s a lot of work done at these places early in the pandemic or before the pandemic their contractors aren’t getting paid. And we’re seeing this barrage of liens across fitness stores over a week or a barrage of liens across movie theaters. And again, this is all happening pre pandemic, like all these stats are pre pandemics, so they must’ve gotten a lot worse. And I want to turn it over to Jeff to talk a little bit about the Electri report that came out to talk about how things have changed since coronavirus.

Jeff:
Yeah. I think this is critical. I want to thank the Electri is the not-for-profit arm and educational arm of Neca, the national electrical contractors association. They provided this report free because we, somebody had to go out and sort of quantify what’s really happening. So it was, it was really important for them to pick a single trade. And so we love that that Electri went out and did this and that eco went out and supported it. It is free. So there’s a link there and we’ll provide that out to you guys. You can go get this report, the breakdown, the videos that change order calculators, all the things that have done with it. But the key for me in the report was that implementing proper productivity controls is going to be critical. And those contractors that can accurately track their labor and productivity pre and post pandemic are going to be in the best position.

Jeff:
Now, I know some of you, we can’t go back in time, so there are ways to calculate that, but let’s take a look at the deep dive of what’s really occurred because it’s, it’s, it’s mind boggling where it’s at. So they broke this down into two, they’re broken into three separate categories. We’re really wanting to talk about two right now, which is the real hardcore facts here of the pandemic. Mitigation is having as about 7% impact on productivity. What is a pandemic mitigation task? Well, that’s safety trainings, that’s cleaning equipment. That’s all of those things that were not included in the original estimate, the original bid that are having to be done. Now they’re required either by the GC, by the owner, or just look generally good practice for contractors to be doing. So what we’re really talking about here is tracking it and how do you track it?

Jeff:
Well, we use cost codes, right? If you have not already gone out and started to create COVID-19 mitigation tasks, cost codes that you apply to every job so that people can track their time to it. There is no way you’re going to be able to go back and ask for that, recruit that cost. It’s just not possible. So you need data to back you up there because these are averages guys. It’s something I want you to understand. I’m not saying that you should go out right now, add 12.4 to 7, rounded up a little bit to 20 and try and get your money. That’s not how this works. It’s about showing you the impact. So that 12.4% is the overall productivity impact on vertical construction. That’s the impacts that it’s having particularly on different trades. And what I thought was cool. Alex, if you could move to the next slide here, what I thought was really interesting about this tools are on word, I guess, in these, these, this day and age is that you really need to be tracking productivity by the particular task that you’re viewing because different tasks are having different impacts.

Jeff:
And if you’re the trade contractor doing one or the other, you’re going to have a different change order that you need to go after and, or at least a request for equitable adjustment. Something that we’re going to talk about a little bit here. And I want to thank before I continue on. It’s great to have Electri behind us, but we also spent a lot of time talking to the MCAA and their team, Sean McGuire, and I have talked and a lot of what you’re going to hear me talk about when it comes to a REA, request for equitable adjustments, that’s all coming from a guy named Paul Stinchcombe. You can go out and check over there that they have a webinar seven in their COVID series really covers this in depth because you can’t get it all from me here. But what’s, what’s interesting here is the, the radical effects that it can have depending on the job that you’re doing.

Jeff:
So if you look at, say in slab work, that’s that yellow line or the green line underground work, very slight impact, not that big, but then you look at overhead rough-in, or wire pulling, in wall, rough in, these things had a dramatic impact. So if you’re able to quantify how it was before, and then look at what it had post pandemic, and then you file under that. You’ve got a really good opportunity to recoup those costs and sit across and, and take your fair share. Another key point is if you don’t file for an equitable adjustment, if you don’t look for those damages and get out there, then you can’t go back in the future and say, I didn’t get my damages. So what I’m saying is documentation. We talked about that before. We’re talking about productivity and tracking productivity. Now we’re talking about documenting it, but you also need to take an account when it comes to productivity. If there’s a 20% impact on productivity, how does that X, you know, affect your construction project management schedule? Because that has an impact as well on your costs. So all of these things need to be adjusted together. There’s not one magic number. I know I said a lot there, Alex know that you want to jump in.

Alex:
I just have a question. You know, like at levelset, we focus a lot on helping people, you know, get what they earn and for the projects they’ve done, if I’m a sub or I’m, you know, I’m working on a project and coronavirus came and kind of stopped me, and now I’m starting back up and I’m starting to realize these costs that are, that are piling up because of, you know, the, the various myriad of things that you’re talking about and job site controls and inefficiency that is a result of this. What are some of the ways you believe you know, these subs should go about asking for that, you know, we’re proving these costs.

Jeff:
That’s a great question. I love it. It’s it’s really about documenting what it was before. So something, if you’re not doing already, you need to go back and review your CPM schedule beforehand, because there also are projects that were going sideways before the pandemic. So we need to be able to identify if it was a pre pandemic issue or a post pandemic issue, that’s going to really help in quantifying what caused the problem. And, but you also have to track the individual mechanisms here. And it’s, it’s funny. Paul Stinchcombe talks a lot about and trains a lot about, and I’m not an expert in what’s called the measured mile, and that’s not only how it was working pre pandemic and what your true productivity numbers, not exactly what was coming out of the books, but exactly what you were able and capable of doing before then, compared to what you’re doing now.

Jeff:
So you’re gonna, you have to have those two metrics and there’s a lot of different ways to do it. There’s good software out there that will do it for you that if you have those low labor productivity reports from the past, you can compare them against now and really create. The reason it’s key to not just take the number I gave you before and go to court, go to court with it, is because unfortunately that’s where a lot of this is going to end up. It’s not where we want it to, but it’s, it’s just the nature of the beast, it’s not going to hold up in court, but the measured mile has held up in court. These other techniques of having data to back you up have. So, you know, a lot of folks were saying, you know, file for those change orders, file for those requests for equitable adjustments, depending on the different types of jobs you’re on.

Jeff:
But whenever you do it, make sure that you put the …, and this goes more to you at here that, you know, make sure that, that you’re saying these are estimates and that you have the right to change them as the data continues to present itself. Because something that people fail to realize is the pandemic that you talked about, Alex has a direct impact, right? There was this period of time where we had to stop. Now we’re back, but Hey, what about how that’s going to affect us? As we try to say, accelerate a schedule to stay on or recruit some of that. So you’re going to have trade stacking. You’re going to have overtime. You’re going to have these things that were involved in your original schedule that are going to create a cost impact. And you’ve got to quantify them and continue to measure them so that you can continue to recoup it. Now, I know that…

Alex:
You also have to, you also have to really make sure you communicate them like getting those change orders approved, having the written paper trail you know, having the data is great, but until you go to the hiring party and you say like, Hey, this is, this is a problem. Like I can’t, you know, keep working on this job. If we can’t get this going, here’s the change order. Here’s the pay app, whatever it is. I’m like, you need me to sign a lien waiver, I’m happy to do it. But to keep things moving, like getting those things approved and making sure that you’re communicating up the chain so important.

Jeff:
Yeah, no, no. I love that because I was just about to go there with it. It’s like, I want to arm trade contractors with the information so they can sit at the table, but ultimately like, everybody’s going to get hit with this. And let’s be honest, not everybody’s going to take some sort of a hit, but if we spread this hit out across this large vertical industry that we have, you know, when it comes to owners, general suppliers, trades everybody, and we all take a small hit. We’re all gonna survive. Ultimately we all want you to survive. You know, we’re all taking our own impacts at home, et cetera. So it’s the same here. And I, I want it to be a conversation, a collaboration if a, if an owner needs that schedule because they can start producing products that generate revenue for them.

Jeff:
So it’s worth them to spend the money up front, if they can communicate that to you and you can communicate the costs related to overtime and stacking, et cetera. And they’re willing to accept that because the offsets better for them, then great, we’re on the same page. Let’s go ahead and do it, but let’s not do it without having a collaborative discussion around the impact. Some might say, well, listen, I have a, I have a place for people to gather. And I don’t know when they’re going to be able to gather there. So don’t bust your butt to get it done on time. I’m willing to push that out a little bit further. I’m willing to leave you and be more, a less impact on my overall costs. This is this is something neither you, nor I, Alex can can really quantify or really tell them what to do. It’s, it’s all about discussion.

Alex:
Yeah, indeed. The complexity of the industry, the complexity of any given project or any given role on the project you know, requires delicate handling and thoughtfulness. And like when people are having good conversations, when they’re documenting things and they’re sharing information good things happen. And like, we always love to say, nobody wants to file a lien. Nobody likes liens. Even the people that are filing, you know, you don’t want these bad outcomes to happen and you can document everything. You can, you know, do whatever you want. But at the end of the day, managing that relationship, managing expectations, having that good communication, and you know, these four little tiles on the screen here are going to be tools you can use to manage those conversations. Hey, I have new cost codes because of X, Y, and Z on the job. Hey, here are the delays that happened because of X, Y, and Z, and the pandemic and rules that are dictated by the state is, you know, referring to your forest measure clauses in your contracts, quantifying those lost hours. These are all of these elements you can use. In, in these conversations to help you get to a, an equitable point that avoids those situations where, like I said, nobody wants to file a lien. Nobody likes liens.

Jeff:
Note that’s coming from a lien company. Right. So, yeah. So, but it’s critical. It’s part of the process. If we ignore it, then, then we’re not really helping ourselves along. And, and so it’s a, this tile here is so that you guys, when you, when you download it later, you can check those four things off and make sure you’re going to them on the change order side of things. It’s more of a, a request for equitable adjustment, those kinds of things. So that’s what I had for you. I know it’s a mouthful, but feel free to reach out if you need me.

Alex:
Yeah, definitely. And like, you know, we are in some ways thought of as a as a lien company, but really, you know, our, our worldview is that we want to create an industry without liens. We, we don’t want to have those things going on, but the best way to avoid liens is to just manage your lien rights. This was one, you know, documents, someone in the chat was asking, what are some good documents use sending these preliminary notices which help you protect your lien rights? Always a good idea, making sure that you’re just crossing your T’s, dotting your eyes on your lien process makes you look a little bit more professional, opens up those lines of communication and ultimately, you know, speeds up your payment and avoid those lien situations. You know, these elements going back to these tiles can all be used in conjunction with these notices and these informational documents that are sent throughout the course of a project.

Alex:
And really this is just here to wrap it up with a bow. Like you have these tools at your disposal. These are old tools that have always existed to help you with payment. These are new ones. You need to keep in your back pocket and understand how to use effectively today. And there’s other new tools at levelset. We have contractor profiles that allow you to see the, the actual payment problems that are happening either on a job or with a contractor that’s maybe trying to hire you, making sure you’re not, you know, getting embed with a contractor that has 10 liens on their projects and having cashflow issues. You want to work with people that have a clean bill of health that are receiving awards for fairness and construction payment that are they’re there because, you know, nobody likes liens and they just want to help get things built, they want it, they want you to do the work so you can get paid. And that’s really, you know, I think how we’re going to end it for today as we come up on our 45 minute block time. We can definitely hang out a little bit and answer some questions. Jeff, do you have any further remarks as we see if any questions roll in?

Jeff:
Well, yeah, I mean, I want you guys to lean on everybody in the industry and I want to offer this up as myself, Jeff s@esub.som. I have a lot of experience with trade contractors, but also with general contractors across the board and owners, I’ve spoken at all conferences for all of them. So if you have a question, if you need something, reach out, I mean, we have a large network and now more than ever, we all need to come together. We’re trying to fill you with this information as much as we can. And from my end, I really appreciate levelset having me here. And I also wanted to thank Electri and Mika for letting me talk about their studies for doing those studies. And I wanted to thank MCAA for offering up as well and reaching out and being an educator for the industry. So I appreciate all of that.

Alex:
Great. Well, we have one question in here from Ryan says have you all seen a spike in the requests for unconditional lien waivers from large major contractors for progress payments? So good question, Ryan, thank you for it. Few things I’ll say is like, just for everyone, you know, who, you know, maybe doesn’t use lien waivers very frequently. They’re basically a receipt for payment. You know, you, you do a certain amount of work and a contractor will pay you or pay your sub sub or, you know, you basically have this waiver that says, yes, I’ve been paid and I’m waiving my right to file a lien on the amount paid. Since they’re not a filed document, like a lien, they don’t go to a County recorder. They’re not public record. And we don’t have as much data on them as a, you know, if we look at the whole industry, our company can’t necessarily see the trends of lien waivers.

Alex:
Like we can have liens and other real payment problem documents. So I can’t speak to exactly what’s happening with lien waivers in the industry, but I can say like, without a doubt, signing an unconditional lien waiver without actually receiving payment is almost never a good idea. It might seem like a good one to protect a relationship. But at the end of the day, you need to get paid if you haven’t been paid or if the check is in the mail, um we almost always advise, do not sign an unconditional lien waiver, um especially if it’s a final one for progress payment. So we have a lot of learning and stuff like that around lien waivers on our websites, definitely check it out and feel free to come to the expert center. If you are confused about lien waivers in your state. There are varying laws on them. I have another question. Maybe Jeff can take this one. What’s the one most important item to document that will make the most difference?

Jeff:
Well, that is a that’s a loaded one right now, but I don’t know that there is one thing. I would have to say it’s really for us in the trades. You know, I think it depends on your, you know I’ll go to a Nathan Wood here, wiifm: what’s in it for me. I think it really depends on where you are in the, in the chain for trade contractors. For me, it’s that productivity, it’s tracking because labor is such a critical component of trade contractors and their financial health. I think it’s the number one thing that you should be tracking in documenting to give you the most impact to sit across and, and have educated conversations. And in the event that you are in legal disputes, it gives you something to stand on other than those feelings. Interestingly enough, if I was on the general contractor side, I’d say that the most important thing to be documenting would be that CPM schedule and schedule impacts and where different trade contractors are in that and where different suppliers are in that.

Jeff:
If I was an owner, overall, I’d actually be looking at my suppliers. I feel like suppliers are the Canary in the coal mine for how a, project’s going to go. Suppliers interesting enough, and I’m, I’m spitballing on this one, but I would be looking at those owners that still have a positive financial market ahead of them. And I would be focusing my efforts on receiving payment and providing supplies to those maybe over others that might be slowing down, stopping or experiencing, you know, complete stoppages of their projects. So I hope that kinda covers it because I think it really is a wiifm. Alex, you might even have some input on that one.

Alex:
Yeah, no, I totally agree with pretty much everything you said. And I’d say like the, you know, the, those are really good specific examples and like the general, you know, response to that question is, you know, look for where your biggest costs typically are or your biggest places where risks might be, or your biggest upsides and whatever that is, depending if you’re the supplier, you know, like making sure your cashflow is good. Suppliers have like inventory and cashflow issues because they’re so far down the payment chain, they want to make sure that people at the very top are making sure those payments get all the way down to the bottom. So like they have a specific thing that is most risky or most important for them to watch on labor is a huge expense for a lot of different contractors. And like when we were looking at this one chart, I forget which one it was.

Alex:
Let’s see if I can shoot back to it real quick. You know, when you look at this rough in overhead and you see this huge you know, loss of productivity in this, it’s likely because labor can’t be working all the same time on the job. There’s less people on the job. So like that is something, you know, you need to be thinking about in each of these different subcontractor roles or different positions that you hold on the pay chain itself, like, think about where your risks are and then go and measure those areas of risk. A little bit more vigilantly than other ones.

Jeff:
I think that’s why we work. I think that’s why we work well together there, Alex, I hit it and you actually, it was a beautiful way to explain the value, the biggest value.

Alex:
I think it’s good. I think it’s good to look at specific examples like you and then kind of pull back to the general and think about it more holistically. But I hopefully that helped Yvette hopefully. And another question from a different Ryan this time, who said, can you provide an example related to the discussion on new cost codes regarding COVID related items? I don’t know if he means like items, like things you have to buy, like for it, like doing that or if it’s just cost codes in general for…

Jeff:
No. Okay. So yeah, this is, I got this one, this one, this one, I, Ryan, great question. And I think it’s important to understand it too. So let’s say you’re required by a general contractor to have a specific COVID training, like a health screening training. So everybody who attends that training, you want to document their time and what they were doing. If you’ve created a cost code that you can track around COVID specific duties. And then you can give a little bit of a comment on what it was you were doing there. So, you know, I had four people in my crew. We spent an hour on the required health screening and new procedures that we have to do like safety. Like we need to not share equipment. We needed to have lunch here. You know, this is where you can go to the bathroom.

Jeff:
This is where the hand sanitizing is, et cetera. You know, you’re gonna want to qualify that you had four people there for an hour and this is what you were talking about. And it goes to that cost code. What that means is it breaks out that labor burden from say something else you were like doing like a rough-in or demo. So it really helps out with that. There’s specific things around, you know, when you’re, when you’re employees are out working and they’re doing those rough-ins, they’re doing that work, they’re charging to it. But at the end of the day, when they have to stop early and take an hour to clean all of that equipment or do the things that they’ve been required to do per the safety trainings to achieve it, you want to actually say, okay, we worked seven hours doing rough-in. And then we did an say a half hour for everybody on the crew to clean all of their equipment, to leave it behind or clean the areas that they were in to leave it behind. So again, it separates the two out and gives you a visibility. So Alex, that I really think I got that one there. And Ryan, you can, you can,

Alex:
Yeah. Feel free to ask a followup question, Brian, if you, if you are still there I would say like, I would have a followup question to that Jeff, which would be, you know, who pays for what? So if you start like, cost-cutting these things and you know, Oh, I have to train my folks to do this and I have to make sure that I do this and I have to sanitize and you go with your change order or your, you know, costs costing increases to the hiring party. How like, and they just say like, Oh, sorry, that’s the cost of doing business? You know, maybe we’ll pay for this much, but you have to pay for the rest. Like how, how does that get divided? How it should it get divided? What’s fair in your opinion. And lots more questions related to that. And I’m curious what you think.

Jeff:
Well, it really does depend on the contract type. You know, if you’re in a hard bid these are items that were outside of that bid. So it’s, it’s not easy, but it’s, it’s pretty cut and dry. If you can document that these are the things that you were required to do that weren’t known previously existing before the bid went in, they’re separate from the bid. So they’re allowed to be in as a change order and you have the right to go ahead and track those down. If you’re in a different, like say a design build, et cetera, where things are a little bit more fluid, a little less hard, then you’re really gonna have to sit across from your general contractors and have a conversation. But the good news is, is when you’re in those design builds, or if you’re in an IPD type situation, that’s part of how the collaborative processes is supposed to work.

Jeff:
In my opinion, this is where we get back to that. These weren’t in our bids, these are things that are impacting us, but they’re impacting everybody. So at least if we can quantify it then we can get our fair share of that back. I think that’s the key, but if you don’t have the quantification of it, there’s no way you’re going to be. And you know, if I’m speaking directly to my trade contractors out there, if you’re the one that didn’t document, you’re going to be the one left holding the bag. And if you’re holding the bag of all the things that have hit all of us, because you’re the last one in the line, or you didn’t do what you’re supposed to do, you’re not going to be with us anymore. And that’s a really real fact you know, I didn’t go over this and that cost area that, but a 20% hit on a trade contractor, we say 10% equals zero, 20% means you’re absorbing a 10% hit to your bottom line, which means you probably won’t have the cashflow to be with us. And I had a talk with another contractor and some venture capitalist out there that wants you to know they’re going to buy you up. If you’re not here, you’re going to, and we don’t want that to happen. We want you to protect yourself and continue on. But if you’re, if you don’t, it’s not going to be a good outcome.

Alex:
Yeah. That is very true in the, in progress, you know, stuff we’re talking about. And these cost codes extremely true and even more so true when it comes to the overall payment, you know, all of this cost code stuff aside and increases in costs like payment is going to be hard to come by more so than ever in the coming months. Like I mentioned earlier, there are massive amounts of liens being filed against large box stores, large places of public gathering that are the verge of bankruptcy and potentially going to get bought by another country company. And when you have lien rights and are in a project and you have protected your right to get paid and you have that ownership in the property and that bankruptcy happens, you’ll most likely be the ones that get paid and the other people will not.

Alex:
You know, the relationships are important here. Obviously nobody wants to be in a position where they’re not getting paid, but making sure that you have those protections during the job related to these, these increased costs and into general on the contract value of the project just making sure you’re protected, sending all the right documents to keep yourself protected on your, on your lien rights and your right to get paid. It’s really important. We got another question here. Take one more, maybe two we have a little bit more time. Tara asked us if you’re, if you’re out on a work site implementing social distancing, are the masks a requirement on the work site or just for certain instances. I don’t know the answer to this. Maybe Jeff has some ideas, like, you know, safety first ,masks are definitely not going to be bad. If you’re wearing them, you know, it’s only gonna help. And I I’d imagine like I’m in New York right now. Jefferson in Colorado I typically live in Louisiana and I know that regulations on when, where and why you have to wear masks are extremely varying state to state, municipalities, municipality, even city to city, new Orleans versus Lafayette or New York city versus where I am right now, Dutchess County, like there’s too many variations, but maybe Jeff has some ideas here.

Jeff:
I’ve had a couple of these come up over time. So the first and foremost thing on Tara, refer to OSHA and refer to the general contractor because they are creating,uand the owners are driving the,urequirements for their job sites. So it’s going to be job sites specific as much as it is location specific and jurisdiction,uspecific. It’s going to roll down, but what I want to take a step back from, and, and kind of communicate here that I think is important is a lot of this goes to communication and understanding the people that you’re talking to,uwearing masks is important because it prevents, it keeps you safe, but it also is more important that it keeps your family safe. It keeps your fellow coworkers safe. It’s a very different,uexperience when you’re told to wear a mask just to wear a mask.

Jeff:
But when you articulated in a way that it’s creating a safe environment for your coworkers, for your family, for those frontline workers, it feels a lot different. So I want to encourage you to talk to OSHA, but I also want you to encourage people to take those steps, to protect themselves and protect the people around them and keep us all safe. We’re gonna only get through this. Like we get through everything together and it’s more important now than ever. And so I, I’m a proponent of wearing masks as much as possible when in public and when, and even in the social distanced world, but refer to OSHA and refer to the job site.

Alex:
Yeah. I like that one little point you made there, Jeff, especially around, like, we talked about it very briefly in the very beginning of the day, it’s like people are afraid to come back to work and being cognizant how others feel on the job site or, you know, being distracted because some guys near you without a mask on, or some, some other worker is, is like coughing in the corner and doesn’t have a mask on, like, you don’t feel safe there you’re distracted other safety issues compound when that happens. So it’s really important, like just fostering that that feeling of safety and that, you know, everyone’s just trying to do their best to make sure everyone stays safe on the job site, a mask or not. I mean, if you’re, if you’re painting a house by yourself outside, like I, you know, you maybe don’t need a mask unless you’re chipping lead paint, which I did for an entire summer once, it’s not fun or a full body suit and a mask for five days and 90 degree and clean the entire side of a building.

Alex:
So I’m used to masks at this point, but I know they’re not fun. And like, you know, try and foster that idea of safety and togetherness on the job site. You know, it’s all good. Yes. Alright. We’re finishing a few minutes early. I think that’s it for questions and Jeff, I want to take a moment to say thank you again, love collaborating with you on this stuff. I love talking about efficiency and payment and helping contractors get better at what they do. So thank you so much for being here. We appreciate it.

Jeff:
I appreciate being here as much and the, the sentiment is mutual for us individually and then the companies as well. So I think it’s a great partnership for the industry and for us. And you know, I learned from you every time we do these. So I appreciate all your insight as well.

Alex:
Same here, same here. And thank you to peers who were in the technical stuff and to all the attendees and all the folks who registered everybody registered and showing up these makes it so we can do a whole lot more. And we love to do these things. So keep showing up and keep enjoying the content and drop us a line. Our emails are still up here. If you guys want specific content, if you want to hear more from us about X, Y, Z A, B, or C, let us know and we’ll make it happen.