Contractors Center Point

Webinar Recap of “Construction Industry Technical Update 2013”

We continued our Celebrating 40 Years of Excellence! Webinar Series with a webinar focusing on giving a Construction Industry Technical Update, presented by David Blain (Principal), Lisa White (Senior Manager), and Michael Hoffner (Partner) with McKonly & Asbury.

We focused on recent accounting and tax changes impacting the construction industry and also covered upcoming accounting guidance changes with revenue recognition and other related topics. We then provided guidance to new federal and state tax legislation that will impact contractors.

    

Check out our Upcoming Events page for news and updates on our future seminars and webinars.

For more information on this topic or to submit a question for our presenters, use our contact page at www.macpas.com/contact.

 

Source article: http://www.macpas.com/mckonly-asburys-free-construction-industry-technical-update-webinar/ 

SBA Proposes Rule to Strengthen Surety Bond Guarantee Program

On Aug. 1, the U.S. Small Business Administration proposed a rule to further strengthen its Surety Bond Guarantee Program, which encourages surety companies to bond small businesses that have difficulty obtaining bonding through the traditional bonding process on their own. The proposed rule would implement provisions in the National Defense Authorization Act for Fiscal Year 2013 by:

• Increasing the maximum contract amount for which SBA can guarantee a bond from $2 million to $6.5 million (which will be adjusted for inflation).
• Increasing the maximum contract amount for which SBA can guarantee a bond to $10 million if a federal contracting officer certifies that the guarantee is necessary for the small business to obtain bonding.

The proposed rule would also revise SBA’s Quick Bond Application and Agreement (SBA Form 990a) to allow it to be used on contracts with liquidated damages up to $1,000 per day (currently $250 per day) and on contracts that include a warranty/maintenance period of up to two years or longer if approved in advance by SBA. In addition, the proposed rule would clarify the agency’s rule on guaranteeing bonds for prime contractors that are merely “fronts,” by requiring a prime contractor receiving a guaranteed bond to “retain full responsibility for the oversight and management of the contract, including any work performed by a subcontractor, and may not subcontract the full scope of the statement of work.” “SBA’s Surety Bond Guarantee Program not only helps small business ontractors obtain bonding, it also assures that such contractors provide payment assurances to
their subcontractors and suppliers,” said ASA Chief Advocacy Officer E. Colette Nelson. Public comments on the proposed rule are due by Sept. 30, 2013.

Use of BIM Dramatically Increases

The use of building information modeling by architects, engineers, contractors, subcontractors and owners in North America is rapidly advancing, according to new research by McGraw-Hill Construction. The research, which will be published at the end of November in The Business Value of BIM in North America SmartMarket Report, compared results from similar research in 2007 and 2009.

Highlights include:

• The percentage of companies using BIM jumped from 17 percent in 2007, to 49 percent in 2009, to 71 percent in 2012.
• For the first time, more contractors (74 percent) are using BIM than architects (70 percent).
• All users report increased business benefits from BIM including better profits, more accurate documentation, less rework, reduced project duration, fewer claims and the ability to offer new services.
• Almost 40 percent of BIM users are heavily committed to it, doing over 60 percent of their work in BIM. This group has surged by 44 percent since 2009.
• As a sign of its increasing acceptance and maturity, almost half (49 percent) of BIM users have five or more years experience using it.

“This unique multi-year trend data demonstrates clearly that BIM is taking hold in the design and construction industry because it has proven business value,” said Stephen Jones, senior director at McGraw-Hill Construction and lead author of the research. In August, ASA encouraged its members to participate in MHC’s BIM survey. ASA will make a copy of the report available to ASA members when it is published. McGraw-Hill Construction partnered with ASA and 13 other construction associations in the United States to conduct the survey.

To learn more about BIM or other construction related matters, please contact the construction professionals of McKonly and Asbury, LLP.

The Fundamentals – Bid and Estimation

In today’s economic environment many people and businesses are evaluating and re-evaluating how they are budgeting and spending their hard earned money.  Payrolls have been cut, costs have been minimized but have you thought about the fundamentals that helped you reach your previous successes?  

Spring training is about to begin for baseball and with some certainty its safe to assume that teams across baseball will practice and practice, the fundamentals of the game.  You often hear that the best teams play solid fundamental baseball.   Those teams practice things that it’s players have been doing since they were 5 years old when they first learned the fundamentals of the game.  The bottom line is that as long as baseball is played, fundamentals will be the core to any good organization.  Is running a business really that different?  The construction professionals of McKonly and Asbury, LLP say, no.    

Whether you are a business owner that has watched your business grow from the very beginning or a finance executive that has recently come on board to help a business reach its potential, we would ask if you have considered the fundamentals of the business.  At this point in the economic recovery you may be scratching your head as to what other costs you could possibly cut.  Everything has been cut in your mind; you can’t possibly cut any more costs.  This may be true from the surface, but simply cutting payroll may not be a permanent solution for your success.  

Improving Your Construction Design Process Through Building Information Modeling

Building Information Modeling (BIM) is a design process change that is taking the place of the old design build processes of the 20^th century. Gone are the days of two dimension blueprints that contain confusing lines, circles, and text to describe the design of a building. This old design process is being taken over by much clearer 3D, and even 4D and 5D, design models that show everything in a design from exact quantities of materials to geometric depth of designs and functions.

  

The process of BIM is much more than sophisticated modeling, high tech graphics, and architectural analysis. The key concept of BIM is based upon communication and coordination of efforts between all parties involved within the design and build process. Those process owners include the owner, architect, general contractor, subcontractors, engineers, and any other stakeholder involved in the building design and completion.

 

BIM can be accomplished in three different stages. Each stage builds upon the previous stage. The stages of BIM are:

 

 

1. Lonely BIM – This stage of BIM is for organizations that are just beginning to use the BIM techniques. This is more of a learning process stage allowing project owners to incorporate BIM concepts on one part of a project.
2. Social BIM – This second stage of BIM allows for sharing of model information between members of different project areas. This allows for better communication of key facets and functions of a building design to better improve efficiency in cost as well as work completion.
3. Intimate BIM – This third stage of BIM is the sharing of one single source model between all shareholders of a project.

 

While all of this sounds great, how does a project team and an owner implement BIM?

 

 

Step 1 – Identify a BIM Champion – As with any project, someone needs to be dedicated and responsible for the completion and the implementation of BIM. Like with LEAN management, unless there is a tone from the top and all senior leadership buys into the process change, change will be hard to come by. Having a champion for the process will provide the support that the process needs in order to ensure its success.

 

 

Step 2 - Schedule and Timeline – A schedule and timeline is critical to timely completion of the project. The schedule and timeline should be coordinated with both the process implementation and project level personnel.

 

 

Step 3 – How will BIM be Used for the Project – Remember, if you have never used BIM before, you might want to start small with one or two segments of a project. Return on Investment (ROI) should always be a consideration when determining the extent of BIM’s use on a project. Always consider ways to leverage partnerships between different project shareholders (engineers and designers, designers and subcontractors) in order to maximize the use of BIM on current and future projects.

 

 

Step 4 – Software (Hardware) – Determine the extent of software or hardware needs in order to complete the BIM project. Consider software and hardware for design, coordination, detailing and estimating, scheduling, and design rendering.

 

 

Step 5 – Consider Software Standards – All software has different terminology and file standards. Ensure that these standards meet the need of the project. The different standards in most software are:

 

· General Standards – Traditional file nomenclature.

· Revit – Specific standards to identify worksheets, phasing, and standard parameters.

· Discipline – Specific standards to identify material nomenclature and other more specific design build items.

 

 

Step 6 – Model Access – Who in the company or design team will need access to what areas of the model? Will access include estimating, project management, accounting, and external parties? Identifying who has access to what parts of the model is important to transparent communication and design build methodologies.

 

 

Step 7 – Level of Detail – How much to do to the model? This will determine the depth of the modeling. An example would be wall design and dimensions. Do you design for nominal dimensions, actual dimensions by defining layers and fire ratings, or to detailed dimensions where you may look at a wall by the layers of brick and mortar.

 

 

Step 8 – Workflow – Ensure that all parties and stakeholders involved in the project agree to the modeling and overall scheduling and workflow for timely and complete job performance.

 

 

In short, BIM is a new way of thinking and modeling for building and design projects. If this is your first time down the BIM path, remember the following tips:

 

1. Make a plan and keep it simple.
2. Start with a pilot project.
3. Don’t oversell BIM to staff and project personnel. BIM will require significant effort by all parties involved to make the project a success.
4. Enable your BIM champion.

 

For more information on BIM, please contact David B. Blain at dblain@macpas.com.

Be Careful Calculating Wage and Fringe Benefit Costs When Bidding Government Contracts

Contractors handle wages and fringe benefits for their employees in a number of different ways. Traditionally, contractors have paid the “base” amount of wages in cash but have then chosen different ways to pay fringe benefits. As federal government compliance increases, ensuring that wages are paid in accordance with federal and state laws, such as the Davis-Bacon Act, are critical when bidding on federal contracts. By evaluating payment of fringe benefits, contractors may also identify more accurate labor costs resulting in more competitive bids.

With residential and commercial backlog low, government provided opportunities have provided contractors with additional avenues of diversification of their business models. However, competition for this work is fierce. Just within the last 12 months there are 50,000 new registrants who have filed with the federal government to bid on federal project work (see http://www.contractorscenterpoint.com/2009/11/accessing-federal-stimulus-projects-where-to-go-and-what-to-do.html for further details on bidding federal stimulus projects). This new focus on federal work has increased compliance regulations and overall enforcement of federal stimulus work. 

One of the biggest challenges facing contractors is how to satisfy the wage obligation. Many contractors will pay the “base” amount of wages in cash and then choose how to pay the “fringe” portion. Some examples of how the “fringe” portion may be paid is 

• For vacation and holidays,
• Into approved apprenticeship programs,
• “Bona fide” fringe benefits, or
• As cash, and have it treated as wages