AGC CEO Steve Sandherr Memo: Aftermath of the 2016 Elections

Source: AGC of America

November 18, 2016



After a proper burial of conventional wisdom following last week’s election, we found ourselves optimistically adapting to the prospects of a Republican President and a Republican Congress.  On balance, we have reason to be pleased with the outcome as it presents us the opportunity to move from defense to offense on a number of our priority issues.  Of particular importance is the fact that the continuation of the regulatory onslaught that we expected in a Clinton Administration has been derailed.  Having said that, there are a lot of unknowns of how the new Administration will position itself on many issues and what conflicts may arise with the GOP majority in Congress.

It is, however, apparent that there are some “knowns” that bolster our optimism.  They are a call for infrastructure investment from a Republican President and we will have a President who can, perhaps like Reagan, communicate directly and successfully to the public.

One reason for our uncertainty about where the new Administration will go is that, unlike recent (last 20 years) Presidential campaigns, there was virtually no outreach from the Trump campaign to the Washington trade association community.  In prior elections, the GOP campaign had a liaison to the trade association community that encouraged fundraising, served as a conduit to accept policy recommendations, and provided immediate entrée to the new Administration if the nominee were successful.  Obviously, this method only worked in its entirety in the 2000 and 2004 George W. Bush campaigns.  Following both of those elections, AGC had influence on policy development as well as some Presidential appointments.  We were poised to be in the same position in the 2008 and 2012 elections had the GOP candidate won.

In the current environment, we are seeing some receptivity, despite the lack of contact and relationship building during the campaign, to our input.  We know some folks who are involved in the transition team and they are collecting our policy recommendations, particularly on the infrastructure agenda.  We have made, for now, one recommendation for a Presidential appointment: the attorney who wrote our Davis Bacon handbook to be Wage and Hour Administrator at the Department of Labor.  We will be looking for additional opportunities to send letters of support for qualified candidates for other Administration positions.

One note of caution as the new Administration takes shape.  Trump did not run as a conservative, he ran as a populist.  He positioned himself as the champion of the working man and working woman.  You may recall that he advocated for six weeks of paid maternity leave.  He also favored an increase in the minimum wage to $10 an hour.  These positions suggest that he may not seek any modifications to the new overtime rules that are effective December 1 or the paid sick leave requirements for federal contractors.  He may also look favorably at additional “worker friendly” rules or legislation that will add costs to business.

It was heartening to hear the President-elect mention infrastructure investment as his first policy objective in his acceptance speech.  Prior to the election, AGC led a coalition to bring focus to both Presidential campaigns on offering our assistance in bringing both of their ambitious infrastructure proposals to a successful outcome. We have been communicating with one of the principals on his transition team who was a senior appointee in the Bush Department of Transportation.  Our message is that the proposed ten year horizon for infrastructure improvements not only demonstrates a major effort to reduce the infrastructure deficit but it also provides a higher degree of certainty for agencies to plan, construction firms to predict the market and for construction recruits and workers to have more confidence that there will still be a job when the project they are working is completed.

While there has generally been positive reaction to the concept of increased infrastructure investment from GOP Congressional leaders, we remain less than sanguine that conservative Republicans will be prepared to finance a larger program with borrowed money and they will remain consistent in their opposition to user fee increases.  We continue to make our funding recommendations available and we are counseling the Trump team that this cannot look like Obama’s stimulus plan or it will be dead on arrival.

On the regulatory front, we are blessed with multiple options to attempt to scale back or discard a number of agency rules and executive actions.  The Congressional Review Act permits Congress to effectively veto federal regulations that were finalized in the last months of an Administration.  We have already sent a letter to Congressional leaders reminding them of this authority and suggesting that they act quickly in January to repeal the OSHA e-reporting rule, the “Fair Pay and Safe Workplaces” (blacklisting) rule, the paid sick leave for federal contractors rule, and the requirement that employers provide additional pay information as it relates to race and gender in the EEO-1 form.  Additionally, we will be petitioning the new Administration to reopen other new regulations including the OSHA silica rule and EPA’s “waters of the U.S.” rule.

I may be alone in this respect but I believe Trump’s victory may provide an opportunity for favorable immigration reform. Trump’s “build the wall” campaign rhetoric provides him with significant credibility with immigration hardliners.  Unlike past immigration proposals supported by AGC in the past two Administrations that, among other things, called for border security, hardliners were skeptical that enhanced border security would actually occur while millions of illegal aliens would be provided amnesty.  Now we have a President who will require border security to be the primary objective of immigration reform.  Proposals that focus only on the “wall” while ignoring the significant question of what we do with the millions that are working and obeying the law may be considered incomplete.  This presents the business community with an opportunity to push for legal status in the form of temporary but renewable work permits for illegals who have a job, pay taxes, who have no criminal record and pay a fine for falsifying documents.

As a final note, we should expect the unexpected.  The victorious nontraditional Republican candidate my very well have voted for the first time for a Republican for President.  He threw out the playbook on modern campaign strategy by raising relatively little money, not investing in campaign staff or field operations, and offering an extremely thin and vague policy agenda.  He won his way.  What does that suggest for how he will attempt to govern?

Prior to your January meeting, we will be compiling our list of policy priorities for the 115th Congress.  You will be getting a briefing on those issues as well as our ongoing activities with regard to the new Administration.  Please contact me if I can provide additional information.

Membership Meeting Roundtable Discussion Key Points

One of the favorite components of recent ICI membership meetings has been the afternoon roundtable discussions. A table moderator leads small groups in exploring various industry topics. Feedback on these sessions indicates that many people would like to sit in on more than two discussions. To address that feedback in the short term, we’ve compiled a list of key ideas each table shared at the 2016 ICI Membership Meeting on November 2.

Employee Performance Management – What Are Your Growth Strategies?

Amy Wright, Milestone Contractors, L.P.

  • A majority of participants said performance management was a challenge in their organization.
  • Many use an annual performance review, but it’s not necessarily considered to be effective.
  • A one-size-fits-all approach to performance management does not fit the diverse nature of the workforce today (four generations, gender, race, national origin, geographic).
  • Employees want an individualized, customized employment experience.
  • Most employees, especially millennials, want regular performance feedback.
  • There is a strong need to link employee development and knowledge transfer to individual and organizational performance through performance management.


Leadership – Best Practices for the Future

Terry L. Morgan, Sr., HIS Constructors, Inc.

  • Leadership is dynamic.
  • Leaders must be flexible and be able to coach employees according to their needs and motivators.
  • One size doesn’t fit all.
  • Some leadership qualities like stability, consistency and patience are timeless.
  • Leaders must provide the necessary support to create an environment where employees feel they can succeed.


Construction Trends – Best Practices for Managing Projects From Cradle to Grave

Jason Yeager, Weddle Bros. Construction Companies

  • Consensus is that communication is the most important aspect of project management from beginning to end. Most of our discussion centered on improving communication and how it would improve project management.
  • No matter how good your planning (estimates, schedules, budgeting, etc.) you must correctly communicate your plans to your team, or your project will suffer.
  • A big help to any communication is clear and concise visual aids (charts, graphs, schedules, drawings, etc.).
  • The ease of sending/forwarding emails along with the amount of material that we can attach often leads team members to stop regarding them as important communication.
  • Never assume that someone read your email just because you sent it.
  • Never assume someone understands what you have tried to communicate (especially written) unless you verify their understanding.
  • Project handoff meetings are very important to keep from losing important details when any part of the project management passes from one person/group to another.


P3s – Who? What? When? How?

Junell Richert, Walsh Construction Company II, LLC

  • Both groups agreed that there have been a lot of hard lessons with P3 and DB Best Value projects in Indiana.Specifically, too many levels of inspecting, which causes undo cost and schedule burden on contractors. Quality management needs to be streamlined.
  • Group agrees that alternative delivery is here to stay due to funding needs and state of the country’s infrastructure.
  • Risk allocation needs to be looked at more closely. Unavoidable project issues (geotech, utility, hazardous material, etc.) are often impossible to predict without preliminary design. Contracts should allow relief events for all such instances.
  • Bonding requirements need to be evaluated specific to each project, rather than simply pulling contract language over from previous pursuits.
  • Suggestion was 100% performance and payment bond – much higher level of protection for the same cost as lower requirements.
  • Bonding requirements vary throughout the country.
  • General contractors can help subcontractors by packaging relevant information, including contract language.
  • Current non-reliance on Reference Information Documents results in contingency in bids and unnecessary rework by proposers. This needs to change.
  • Changes to language in the PPA should carry forward from one project to the next, so that proposers are not fighting the same battles with each new pursuit.
  • Stipends are not covering the cost for preliminary design and proposal preparation. Pursuing projects is now costing teams hundreds of thousands of dollars above the stipend amount on relatively small projects – just for a shot at being successful. This is not sustainable. Either stipends need to go up, or the RFP requirements need to be scaled back.
  • Overall, PPA contract language and RFP process need improvement in many areas.


Technology in Construction – Are You Up to Date?

Jerry Howard, Irving Materials, Inc. Group of Companies

Members discussed the different systems that they run in their offices as well as in the field. It gave the group opportunities to compare and contrast what works and challenges that they meet. There was also a focus on security and ways to protect their data.


Labor Shortages – Is the Solution Workforce Development?

Kevin Kruckeberg, E & B Paving, Inc.

  • Participants addressed high school-age students through Build Your Future Indiana program with Ali Brown as an industry supporter.
  • We discussed working through union labor negotiations to allow high school-age students to work in our industry without having to join union. This will allow for exposure to what we do.
  • States are legalizing marijuana, and we talked about possible industry adjustments needed for the future.
  • How are we engaging with two-year universities to teach new technologies in their equipment-type courses?
  • Some members are creating training opportunities for high school credits.


Union Relations – Looking Ahead to the Future

Mark Andrews, Milestone Contractors, L.P.

  • Many believe that opportunities to provide input on union relations doesn’t exist. They think that the deals are made, and that’s it.
  • Training seems to be the biggest issue that contractors face when craft workers report to the job.
  • Some subcontractors felt that it would be quite helpful to attend pre-job meetings to participate in dialog between the union reps and the prime contractor.
  • It would be nice for business agents to visit jobs more to allow for more communication.
  • Since Right to Work legislation was passed in 2012 there really hasn’t been any noticeable change. Participants thought RTW would change the landscape of the union industry.


Management Level Workers – Strategies for Retaining, Recruiting and Developing

Jason Richmond, Irving Materials, Inc. Group of Companies

Compensation – What Are the Drivers to Employee Satisfaction?

Gene Yarkie, Rieth-Riley Construction Co., Inc.

  • Employees want feedback and communication with their supervisor.
  • They want to be challenged in their assignment and feel they have opportunities to grow.
  • They want to be able to trust the leadership of their company.
  • They want to be part of the strategy/planning and to understand the processes of the company.
  • No one thing works for every employee.  It’s up to the employer to figure out what employees need from leadership.
  • A company that values family life is important.  Time off to get to sporting events for kids, for example, is a big deal. This creates a sense of family at work and will tend to yield long-term employees.


Work Zone Safety – The Effects of Preservation v. New Construction

Mark Thompson, Milestone Contractors, L.P.

  • As we transition from new construction-type of work to preservation projects, the challenges to keep workers safe changes drastically. The groups agreed that the traveling public presents a bigger hazard in the construction zone when contractors are performing preservation projects as opposed to new projects.
  • A big focus should be on speed of the traveling public with the possible solutions:More police officers in zones with defined roles. Do the police write speeding tickets, or are they simply visible? Or should they help manage the backup area which may be out of the immediate construction zone. This needs to be defined.
    • Use more speed buggies showing drivers their speed.
    • Go to photo enforcement. This would require change in legislation.
  • Use more technology to elevate safety in the construction zone such as:
    • Have broadcast come over cell phones or radio stations that remind motorist to slow down and give advanced warnings about backups or construction trucks entering into the construction lanes etc.
    • Develop GPS signal technology  to automatically slow down motorists to the  posted speed limit.
  • We shouldn’t forget to address isolated construction work that is outside the construction zone (e.g., geotechs taking borings core samples on shoulders and in medians, signal and lighting work, surveying or stakeout work, etc.)  These zones need to be made safer as well.


Political Front – How Will/Can Construction in Indiana Be Affected?

Dennis E. Faulkenberg, APPIAN

  • Folks are incredibly interested in politics, especially this year, and we might be able to capitalize on that interest to get members involved politically to our industry’s advantage.
  • Very few (nearly none) of the members who participated in the discussions have ever talked to, mailed, emailed or met with their legislators about construction and highway issues. We surely can do more to make that happen.
  • More needs to be done to get our members to realize the impact that contact with elected officials can have on being successful in pushing our positions.


Project Partnering – What Are the Benefits?

Dan Rogers, NCIS, LLC

  • Participants thought that they could hopefully expect a more cooperative attitude from the owner in a partnering project.
  • We agreed that a well-performed partnering effort could save at least some costs, possibly A LOT of costs.
  • Up-front agreement and cooperation would be much less stressful for crews and could lead to increased production rates.
  • Several more sets of eyes looking for mistakes, so you can fix them before they get to the point that they will be expensive to repair, would be good for the bottom line and project quality.
  • Participants agreed that partnering is an effective tool, and many INDOT construction personnel who have been exposed to partnering employ some aspects of it informally to provide better projects.


Success – Is It Only Measured by Your Balance Sheet?

Clayton Force, Force Construction Company, Inc.

  • We can measure company success in our industry by: profitability, assets, cash, visibility, win percentage, company size, project size, revenue, repeat clients, safety statistics, employee turnover and culture.
  • We measure our employee success by: job profitability, owner satisfaction/happiness, subcontractor/vendor satisfaction/happiness, schedule, win percentage, solving problems, developing problem-solving strategies or new solutions.
  • How should success be rewarded by a company? The new generation wants time out of the office, work flexibility, telecommuting and defined hours. Employees are also looking for recognition of individual successes and particular achievements to the rest of the company.
  • A fixed formula for rewarding employees can cause strife within an organization, if one person is handed a project and works excessively hard to make the project a success, while another manager may be given an easier job with lots of built-in profit. This can cause employees to sacrifice company values in search of better profit margins
  • Culture is the most deciding aspect of the long-term success of a company. Often times the image of success, or of being part of a successful organization, causes others to strive for success in the work they do.


Communication – Its Importance and How It’s Accomplished These Days

Keith Mullens, II, The Hoosier Company, Inc.

  • It is obvious that texting is fast becoming a quick tool to communicate.  Companies should have policies in place (like those for email correspondence) so as not to put a company at risk.
  • Most companies are becoming paperless, and it’s important to keep all documents on a local server or cloud, so employees have access to them.
  • Video and web conferencing applications (like FaceTime or Go To Meeting) are ways to get everyone included in a meeting without being in the conference room.
  • The way we communicate information varies depending on the chain of command.  For example, texting and emails work best in foreman-to-foreman communications, but phone conversations followed up with written correspondence works better for messages going to the top.
  • We discussed the generation gap between Baby Boomers, Gen X and Millennials, and it seemed that this gap was nonexistent. Most are adapting to whatever the next step is.
  • Everyone agrees that the advent of technology makes us more efficient.  Sending a text or a quick email is more efficient than a 15-to-20-minute phone conversation. We all wished that the receiver of the text or email would always acknowledge back, this does not always happen.
  • Even with all this technology available to communicate, we are sometimes very poor in communication. Technology, as good as it is, lacks the personality of face-to-face conversations, but overall we can agree it’s helping in the communication world.


Safety Training for Craft Workers – What Should They Know?

Sheryl Wiser, Fox Contractors, L.P.

  • New employees are trained on safety handbook, hazcom and issued the required PPE (excluding shoes).
  • If an employee leaves but comes back to the company in a year, they do not have to go through the orientation again.  If it is over a year, they are treated as a completely new employee and start the training process over.
  • Contractors pay for and rely on the unions to train the employees that they receive, but participants agreed that the craft workers are generally not prepared. What are unions teaching them about safety and hazard recognition?
  • One contractor described how a young laborer try to pick up a hydrant with a pipe attached, weighed 500 pounds. Why would he think he could pick that up?
  • It’s important to train, so they learn to recognize not only the hazards they face from their own tasks but from other trades they are working around.
  • Contractors may try to reach craft persons on their own. Ideas included:
    • Put together a short training module with discussion questions for the superintendent/foreman to review with crew. The type of crew – bridge crew, pipe crew, etc. – will determine the type of training.
    • Incentivize the training for the superintendent/foreman and crew.
    • Shoot a short video – less than a minute – and have a discussion around it.
    • Could have an injured employee talk about his injury and the things to do to prevent it from happening again – lessons learned.
    • Create a culture of sharing – have foreman and another craft person show how to operate a tool safely.