April 2007 - Associated General Contractors of California

agc.ca.org

April 2007 - Associated General Contractors of California

Several California Members Honored atAGC National ConventionA contingent of members andleadership from AGC of Californiaattended the 88th Annual National AGCconvention in San Antonio, Texas lastmonth. Several member firms withdivisions or headquarters in Californiareceived Partnering, Build America andSafety awards for their projects located inCalifornia as well as other regionsthroughout the United States.Build America AwardsAGC’s 2007 Aon Build America Awardsare among the highest and most soughtafter in the construction industry. Thisyear, 15 projects were selected as winnersand five were selected for merit awards.AGC also recognized one special winner,the Southeast Corridor Constructors(SECC) – a Joint Venture of KiewitWestern Co. and Parsons TransportationGroup, with the first-ever Aon BuildLeft to right Barbara and Steve Blois, AGC ofCalifornia's President and First Lady, are picturedwith Steve and Pam Massie, AGC of America'sPresident and First Lady, during the NationalConvention.America Grand Award. That awardrecognizes the nation’s top project andthose individuals that demonstratedexceptional construction excellence tocomplete the nation’s most outstandingproject for 2006, the TransportationExpansion (T-Rex) project in Denver,Colo. The project also won a BuildAmerica award in the Design-BuildRenovation category.Also in the Build America Category,several AGC of California member companiesheadquartered in California as wellas those with divisions in other statesreceived awards, including:• Harbison, Mahony, Higgins Builders,Inc., Sacramento, received a Build Americaaward in the Building Renovationcategory for the Cathedral of the BlessedSacrament, Sacramento.• Granite Construction Co. received aBuild America award in the Highway Newcategory for ReTRAC in Reno, Nev.• Clark Construction Group, LLCreceived a Build America award in theFederal Heavy New category for the U.S.Department of TransportationHeadquarters in Washington, D.C.• Barnhart, Inc. received a Build Americaaward in the Federal Heavy Renovationcategory for the Barrack Renovations atMCRD San Diego.• McCarthy Building Companies, Inc.received a merit Build America award inthe Building New category for theEmerging Infectious Diseases Laboratory –Building 18 in Atlanta, Ga.• Turner Construction Company receiveda merit Build America award in theConstruction Management New categoryfor the West Side Presbyterian Churchproject in Ridgewood, N.J.Partnering AwardsThe Marvin M. Black Excellence inPartnering Awards honor projects that bestexemplify the spirit of partnering. Amongthose California members whose firmsreceived a Partnering award for projects inother states were:• Watts Constructors, LLC for P-193Waterfront Improvements for K10-K11 inPearl Harbor, Hawaii;• Nova Group, Inc. for CVN DrydocFloor Repairs at the Naval Base Kitsap inBremerton, Wash.;• Hensel Phelps Construction Co. forthe Federal Correctional Institution inButner, North Carolina;• Southeast Corridors Constructors – AJoint Venture of Kiewit Western Co. andParsons Transportation Group for theTransportation Expansion (T-REX) projectin Denver, Colo.; andSafety AwardsThe AGC/Willis Construction SafetyExcellence Awards annually recognizecompanies with a proven safety record andcultural commitment to safety. The awardsGary Rohman, ECCO Equipment, (at left)explains California Air Resources Board's proposedregulations to eliminate equipment emissionswith Tier 0 and Tier 1 engines during a presentationheld at the National Convention. Thepresentation was a follow up to the one conductedin September 2006 during the AGC ofAmerica midyear meetings. Panelists included,left to right, Rohman, Dave Sbaffi of GraniteConstruction Co., Ken Katch, Caterpillar, Inc., andGeorge Malouf, Emissions Technology, Inc.program requires finalists to achieve zerowork site fatalities and examines acontractor’s safety program. Entrantsundergo a thorough screening process toensure that their company has acommitment to a safe work site at everylevel of employment and has a successfulsafety training program, work site hazardidentification and control and safetyprogram innovation. During theconvention, finalists presented their safetyprogram to a panel of safety experts.AGC of California member NovaGroup of Napa, Calif. took first placehonors in the 100,001 – 300,000 workhours Heavy category. Additionalmembers receiving safety awards eitherfor their California operations or divisionsin other states were:• McCarthy Building Companies, Inc.,of St. Louis, Mo. took first place honors inthe Building Division, Over 1 millionwork hours category.• Hensel Phelps Construction Co. ofGreeley, Colo. received second place in theBuilding Division, Over 1 million workhours category.• Rosendin Electric, Inc., of San Jose,Calif., took third place in the SpecialtyContractor category, Over 1 millionwork hours.THE VOICE OF THE CONSTRUCTION INDUSTRYAssociated General Contractors of California 5


McInerney & Dillon, P.C.Attorneys serving the construction industrysince 19521999 Harrison Street, Suite 1700Oakland, CA 94612-4700(510) 465-7100 Fax: (510) 465-8556mdpc@mcinerney-dillon.comPublic and Private Construction Law, Federal, State andLocal Public Contract Law, Administrative Law,Corporate and Partnership, Environmental Issues,OSHA, Real Estate, Business and Corporate Mattersincluding Mergers and Acquisitions, Litigation, Probateand Trust Litigation, Tax Planning and Tax Litigation.THE VOICE OF THE CONSTRUCTION INDUSTRYAssociated General Contractors of California 7


continued from page 13the business to your co-owners, but theydon't have the money to buy it outright, andpaying for it over a period of time could puta strain on the business's cash flow.The bottom line? The value of yourbusiness could be significantly diminished.Further, the money your heirs were countingon to support them – to pay for theirretirement and perhaps for college – maynot exist. It will be even more painful ifyou had been planning to keep your businessrunning until one of your childrenwas old enough to take over.What You Can DoThe solution to all of these scenariosmay be a binding buy-sell agreement thatsays if you die, someone else is obligated tobuy your interest. That someone can be anactual person or people, such as currentco-owners or even competitors. It could bethe company itself.With a buy-sell agreement in place,upon your death your estate can sell thebusiness and receive the cash, the businesswon't go down the tubes, and you mayhave saved the livelihood of your partnersor co-shareholders.A key point to setting up the transactioncorrectly is to make the buy-sell agreementbinding for all parties, so the buyers don'thave the option of backing out after yourdeath. Also, if done correctly, the IRS has toaccept the value of the business interestthat has been stated in the agreement.The costs involved in a buy-sellagreement include professional fees andinsurance premiums (premiums willdepend on your health rating andinsurability). After all, the alternativecould be that nothing will go to yourfamily; not only would they lack themoney they were counting on, theywould wonder why you did not "take careof business" while you were alive. In theend, if all is done properly, the lifeinsurance proceeds will go to your estate,your new buyers will receive your interestand the business will carry on without acash drain for years to come.Your heirs and business partners willthank you.Jim McCloskey is a financial advisor with Tax& Financial Group. For more informationplease contact Jim or Matt Wheeler at800-373-2177 or via email atjim.mccloskey@tfgroup.com ormatt.wheeler@tfgroup.com.14 VOLUME 37, NUMBER 4 — APRIL 2007THE VOICE OF THE CONSTRUCTION INDUSTRY


Lawyer Advises Owners to ConsiderCost of Risk Early in JobBy ENR StaffEditor’s Note: This story first appearedin Engineering News-Record on March12, 2007.There's lots of room for improvementin how project owners approach risk,says Gregg Bundschuh, a lawyer withinsurance broker and risk consultantAmes & Gough, Atlanta. He says thecost of an uninsured adverse event,such as an accident or a failure,typically adds 10 to 50% to the hardcost of the project."Risk has a cost thatdoesn't reveal itself until one to threeyears after substantial completion," yetthe discussion of cost typically stopswith the estimated cost or guaranteedmaximum price, Bundschuh toldthose attending a March 1 launch ofthe second edition of the "New YorkConstruction Law Manual," in New YorkCity. Bundschuh helped update the insurancechapter of the book by lawyersRobert A. Rubin, Sarah B. Biser andCatherine Kettle Brown (2007, ThomsonWest).From Day 1, owners should considerthe ultimate project cost, which includesthe cost of risk, rather than only the estimatedcost or GMP, advised Bundschuh.For each project over $70 million, theowner should also evaluate whetherthere is adequate professional liabilityinsurance and whether an owner-controlledinsurance program is more appropriatethan traditional insurance.Bundschuh says owners should considerwhether there are system performancerequirements that need to be managedor insured.Some costs of risk are built into theproject budget, through participant'sinsurance coverage. More money shouldbe spent on designers' professional liabilityinsurance, he maintains.Environmental insurance, whichhistorically has been for cleanup ofcontaminated sites, is now beingincreasingly used for "continuingpollution events," such as fuel spills, saidBundschuh. He also warned thatlitigation over silica promises to rivalthat of mold, an increasing problem inbuildings.THE VOICE OF THE CONSTRUCTION INDUSTRYAssociated General Contractors of California 15


idge for the small, medium and evensome large contractor fleets, to get themfrom non-compliance to compliancewithout the terrible expense that couldcost them their business. Rather thantreating the symptoms, we’re addressingthe core problem."This isn’t going to happen bycontractors replacing engines, one at atime," Bohlke adds. "For the average contractor,with maybe 30 or 40 vehicles, it’sjust not practical. We have to accomplishthis in a way that’s fast, and helps theeconomy at the same time."Of the partnership with Recat, Bohlkesays, "It’s one of the most rewardingrelationships because we share the samephilosophy. We synergize our efforts.Recat is all about ‘win-win.’ We couldn’thave made a better connection with acompany that can pave the way for successin California."For further information, contact:Tom Yeager and Michael Avery at Recat at(951) 657-3228 or email attomyeager@recat.com ormavery@recat.com; Ray Kapahi atAir Permitting Specialists at(916) 687-8352 or email atray.kapahi@gmail.com; or Troy Bohlke atEmissions Technologies, Inc. at(602) 288-0111 or email attroy@emissiontech.comPilot Building Industry Technology Academy OffersAlternatives for Students in Orange CountyBy Adrienne MonroeThe Building Industry TechnologyAcademy (BITA) is a pilot program thatprovides students with practical skillswhile bringing relevance to high schoolacademic studies and exposes students todiverse careers that are available in theconstruction industry.The BITA curriculum is beingdeveloped by Building IndustryAssociation/ Orange County (BIA/OC)members including home builders, tradecontractors, manufacturers, andprofessional services with the assistance andsupport of Orange County educationalleaders. Its integrated curriculumincorporates basic academic skills such asreading, math, science and history. Studentsare also gaining valuable skills in estimating,blue print reading, site preparation,framing (wood and steel), electrical,plumbing, HVAC, painting,finish carpentry, and roofing. The forwardthinking curriculum also incorporates thenew state required California CareerTechnical Education Standards.The Orange County constructionworkforce will increase by 63,800 jobs(30.9%) between 2002 and 2012, asreported by the California EmploymentDevelopment Department. The USBureau of Labor Statistics projects thebuilding industry will need 250,000 newcraft professionals annually over the nextdecade to replace a retiring workforce.They project the shortage of skilled tradeworkers will worsen nationally with anestimated 2.3 million unfilled jobs by2010.THE VOICE OF THE CONSTRUCTION INDUSTRYInstructor John Puckett, Katella High School (left), with Adrienne Monroe and Lawrence Jones of theBuilding Industry Association/Orange County and Katella students of the BITA program explore aplayhouse designed and constructed by the students.In the summer of 2003, more than 50trades came together and completed a$250,000 remodel of the facility at KatellaHigh School in the Anaheim, home to thefirst all-girls team to take the title ofDesign-Build Competition champions.The enhancement at Katella converted anunderutilized facility into a premiereconstruction program that offers studentsin-depth construction knowledge andskills training. By 2006, BIA/OC’s membershipalong with education communityleaders developed a second site at WesternHigh School, at twice the cost. In 2007 theBITA curriculum expanded to a third siteat Valencia High School in Placentia. SinceBITA began, the program has experiencedtremendous success and reachedmaximum capacity at all three locations.A partnership with the local communitycolleges and apprenticeship programsprovides students with a continuation oflearning about the construction industryand the many different career directionsthey can explore. Educational supportersinclude the Orange County Department ofEducation, North Orange County ROP,Anaheim Union High School District,Fullerton Community College, andOrange Coast Community College.The BITA program, which offersliterature about the program in Englishand Spanish, has touched more than 2,000young people that have taken someportion of the four year program. Formore information, contact LawrenceJones, BIA/OC, at (949) 553-9500 x125 ore-mail ljoes@biaoc.com or AdrienneMonroe at monroea@agc-ca.org.Adrienne Monroe is Executive Director of theCalifornia Construction Education &Research Foundation.Associated General Contractors of California 17


L E G A L N E W SThe False Claims Act and the Construction IndustryBy Gordon HuntThe Federal False Claims Act (FCA)was enacted in 1863 to prevent fraudulentclaims against the United Statesgovernment. California enacted its falseclaims act in 1987.Public agencies are well versed onthe FCA, and therefore contractorsmust be aware of its provisions in orderto avoid potential exposure to liabilityunder the act.The federal FCA lists seven false claims;California adds an eighth. They include:■ Knowingly presents or causes to bepresented to an officer or an employee ofthe state, or any political subdivision thereof,a false claim for payment or approval;■ Knowingly makes, uses, or causes to bemade a false record or statement to get afalse claim paid or approved by the state orby any political subdivision;■ Conspires to defraud the state;■ Delivers less property than the amountfor which the person receives a receipt;■ Delivers a false receipt;■ Buys public property from any personwho lawfully may not sell the property;■ Uses a false record to decrease anobligation to pay to the state or to anypolitical subdivision; and■ California only: Is a beneficiary of aninadvertent submission of a false claim tothe state or a political subdivision,subsequently discovers the falsity of theclaim, and fails to disclose the false claimto the state or the political subdivisionwithin a reasonable time after discovery ofthe false claim. If a general contractorpasses through the claim of a subcontractorand later discovers that it is false, thegeneral contractor must notify the agencyand withdraw the claim.It is a violation of the California FCA ifthe person making the claim has actualknowledge of the falsity of the claim, actsin deliberate ignorance of its truth or falsity,or acts in reckless disregard of its truth.The Ninth Circuit in United States exrel Hagood v. Sonoma County WaterAgency, 929 F.2d 1416 (9th Cir. 1991),stated that a defendant does not act“knowingly” when that person made an“innocent mistake” or was merely “negligent.” The statutory definition of“knowingly” requires at least “deliberateignorance” or “reckless disregard” and “therequisite intent is the knowingpresentation of what is known to be false.”In American Contract Services v. AlliedMold and Die, Inc., 94 Cal.App.4th854 (2001), the court defined “knowing”and “knowingly” to mean “that a person,with respect to information, does any ofthe following:(A) Has actual knowledge of theinformation.(B) Acts in deliberate ignorance of thetruth of falsity of the information.(C) Acts in reckless disregard of thetruth of falsity of the information. Proof ofspecific intent to defraud is not required.”(§12650, subd. (b)(2).)A contractor can be liable for a civilpenalty of up to $10,000 for each falseclaim knowingly presented to an officer oremployee of the state or political subdivision.The contractor can also be subjectedto “treble damages.”FCA violations may arise at any timeduring a construction project, includingduring bidding, performance of the contract,the submission of requests forchange orders, the submission of claimsand project closeout. Some potential FCAviolations: (1) falsification of hours intimecards; (2) overstating wage rates; (3)submitting billings for costs or services notactually incurred or performed.In United States of America et.al. v. SequelContractors, Inc., 402 F.Supp. 2d1142, a Court held that the submittingbillings for 350 cubic yards of concretewhen only 73 cubic yards were usedconstitutes a false claim.The following are some examples ofwhere the courts have applied the FCA:In Riley Construction Company v.United States of America, 65 Fed.Cl. 264(2005), the contractor filed a claim for additionalarchitectural and engineering feesincurred by the design consultant hired bythe design-build contractor. Evidenceshowed that the design consultant had, infact, spent 3,277 hours on the project buthad budgeted only 2,840 hours. The designconsultant did not bill the design-buildcontractor for the extra work and had noknowledge that the design-build contractorwas making a claim. The court held thatthe evidence supported allegations of afalse claim.In Al Munford, Inc. v. United States, 34Fed.Cl. 62, vacated on other grounds at86 F.3d 1178, the contractor submitted aclaim for an amount already paid by thegovernment. Submitting a claim for anamount already paid by the governmentconstitutes recklessness, as every personfiling a claim has a duty to examine hisrecords to determine what the governmenthas already paid. A failure to makethis minimum examination is deliberateignorance.In Armenta ex rel. City of Burbank v.Mueller Co., 142 Cal.App.4th 636, thedefendant circulated catalogs to publicagencies that the pipes and other waterworks parts that it offered for sale conformedto the American Water Worksstandards, which require 85% copper. Infact, the parts were only 81% copper,which corrodes faster. The court held thedefendant liable for each invoice submittedand paid. The parent company of theseller might also be subject to liability asa passive beneficiary.In Southern California Rapid TransitDistrict v. Superior Court, 30 Cal.App.4th713 (1994), two employees of the plaintiffwere fired for reporting that a contractorhad falsely certified that the company wasa “disadvantaged business enterprise.” Theemployees relied on Government Code§§12652(b) and 12653, which protectwhistleblowers from termination fordisclosing possible false claims. The courtheld that the case involved a “false claim”within the meaning of Government Code§12653. The contractor provided false documentationin order to become certified asa DBE. This was a “false claim.”Contractors routinely “pass through”claims of their subcontractors. Thefederal courts have held that when asubcontractor prepares a false recordwhich causes the contractor to requestpayment from the government, that is afalse claim. In United States ex rel Koch v.Koch Inds., Inc., 57 F.Supp.2d 1122, acontractor caused lessees to submit false18 VOLUME 37, NUMBER 4 — APRIL 2007THE VOICE OF THE CONSTRUCTION INDUSTRY


ecords to the government to reduce thecontractor’s obligation to pay money tothe government to purchase oil. Thecourt stated: “The classic example of anindirect false claims is when asubcontractor prepares a false recordwhich causes a government primecontractor to submit a false request forreimbursement to the government,”citing Tanner v. United States 483 U.S.107, 129, 97 L. Ed. 2d 90, 107 S. Ct. 2739(1987). If a contractor discovers that asubcontractor has submitted a falseclaim, the contractor should report it tothe government and withdraw the claim.Most construction contracts specify thematerials to be used and that they must benew. If a contractor misbrands or substitutesmaterials without the government’sapproval, it is a false claim. In UnitedStates v. National Wholesalers, 236 F.2d944 (9th Cir.) Cert. denied 953 U.S. 930,the defendant manufactured substitutematerials and attached false labels to them.Although the substitute materials didperform in accordance with thespecifications, the court found a “falseclaim.” See also United States v. Aerodex,Inc., 469 F.2d 1003 (defendant deliveredparts that did not meet specifications).In United States ex rel Plumbers andSteamfitters Local Union No. 38 v. C.W.Roen Construction Co., 183 F.3d 1088 (9thCir. 1999), a contractor did notcarefully review its records beforecertifying that it was paying theprevailing wage rate. The Court held thatthe contractor’s conduct amounted to“deliberate ignorance” or “recklessdisregard.” Whenever a claim for extracompensation is made, the governmentwill seek to discover the contractor’s bidestimate records to verify what thecontractor had in its estimate for the workin question and what the contractor wasable to “buy out” for that scope of work.The government can assure accurate bidestimates by requiring the escrow of biddocuments in the contract documents.Contractors must diligently report anyfalse claim that they detect andimmediately retract it. Contractors mustdiligently review and document everyrequest for payment to insure that it isaccurate and supportable.Gordon Hunt, Esq. is with Hunt OrtmannBlasco Palffy & Rossell, Inc.,Pasadena, CA.THE VOICE OF THE CONSTRUCTION INDUSTRYPast PresentFutureFor over 75 years,REED & GRAHAM INC.has served Contractors &Developers throughout the area.We recently upgraded our facilities in San Jose toensure quality production, convenient to the entireBay Area from one location. At Reed & Graham, we arecommitted to providing the right products at the rightprice...now and in the future.Asphalt & Emulsion 800-446-2560✔Base Rock ✔Emulsions-mfg & spread ✔Hot Mix ✔Cold MixOverKote 800-446-2560✔Asphalt Pavement Coating ✔Crack Filler ✔Oil Spot Seal✔Bumper Adhesive ✔Loop FillerGeosynthetics 888-381-0800Statewide✔Geosynthetic Fabrics ✔Geogrids ✔Erosion Control✔Drainage Composites ✔Water Proofing ✔Sediment Control✔Root & Vegetation Control ✔Pipe ✔Containment LinersveroteSusan Lohwasser’s PhotographyCentral & Southern California209-966-5402Northern California415-567-7818REED &GRAHAMINC.Divisions of Reed & Graham, Inc.408-287-1400For more information email:sales@rginc.comwww.rginc.comSTATE CONTR. LIC. #158410Geosyntheticsw ww.thebuildersart.comAssociated General Contractors of California 19


I N D U S T R I A L R E L A T I O N SThe “Just Cause” Standard in Discharge GrievancesBy Mark ReynosaIn the adjudication of discharge grievances, the burden ofproof always lies solely on the employer. Both labor agreementsand public policy apply similar standards with these grievances.By far the most prevalent standard is “just cause.” Understandingthis standard is essential in determining your defensible positionand minimizing the risk associated with an adverse decision bythe arbitrator. As a practical matter, when deciding a dischargegrievance, arbitrators use six separate tests to determine if the“just cause” standard had been satisfied.The first test of the “just cause” standard is written notice. Anemployer must give a discharged employee written notice thathe/she has been discharged as required by most labor agreements.Written notices are often lost because project managers/ superintendentsare not aware of the requirements; therefore, policies areoften erratically or selectively enforced. In addition, fromthe date of hire, an employee is entitled to have knowledgeof what standards are expected and what the punishmentswill be if these expectations are not satisfied. Updatedemployment policies and procedures, complete with a list ofconsequences for non-performance, and a signature page willassist your defensible position and establish preliminary notice.The second test is relatively self-explanatory: a rule must bereasonable. In other words, does a direct linkage exist betweenthe rule and the effective operation of the business? As a rule,policies and procedures driven by health and safety concerns,industry standards or a business necessity are reasonable, andtherefore defensible.Because employment decisions should be based on fact,arbitrators tend to examine the third and fourth testscollectively. The third test is that investigations must bethorough and timely. A case may easily be lost because aninvestigator missed a relevant fact entirely, or the facts theypresented were dated (i.e. disciplining an employee for aproblem a month after the incident). The fourth test is thatinvestigations must be fair and impartial. Both sides of theissue need investigation; always allow the accused to presenttheir side. To create a defensible position, the investigationprocess, and subsequently any decisions made, must be freefrom bias or pretext, and consideration must be given tomitigating circumstances.Passing the fifth test mandates that the proof presentedmeets specific criteria. Proof must be adequate, pertinent,recent, and relevant. Witnesses must be reliable, credible,and able to provide first hand accounts of the facts, nothearsay evidence/testimony. Any documents presented mustbe current, dated and signed. Circumstantial evidence isinadequate. Here, our level of success will be determined byour ability to present multiple forms of irrefutable evidencethat validates our positions.Finally, the sixth test for the “just cause” standard is anemployer’s even policy of treatment and punishment. Historically,arbitrators in the construction industry will evaluate the employer’spast application of policies and punishment to determine if theyare consistent. Any punishment imposed must suit the offenseand cannot be arbitrary or capricious. With this in mind,arbitrators view harsh and disparate treatment as a serious issueand are more willing to rule against an employer in a case wherethey believe the discharge was unjustified.In conclusion, a failure to meet any one of the aforementioned“just cause” standards may constitute sufficient grounds for anarbitrator to rule against an employer in a discharged grievance.With all grievances not being equal, it is recommended thatmembers with any grievance, including discharged grievances,contact the Industrial Relations Department, North at(925) 827-2422 or South at (626) 608-5800, to clarify the issueand the remedies sought, to prepare a case to support yourinterests, to anticipate arguments by the Union/grievant andprepare responses, to evaluate prospects (strength andweaknesses) of success, and to review options.Mark Reynosa is Field Services Manager, Industrial RelationsDepartment, Northern California.20 VOLUME 37, NUMBER 4 — APRIL 2007THE VOICE OF THE CONSTRUCTION INDUSTRY


S A F E T Y C O R N E RWhat Should You Expect From YourWorkers’ Comp/General Liability Loss Control?By Bo BradleyLet’s start with looking at youraccident records over the last fewyears. Are the accidents and costsassociated with those accidentsactually decreasing each year (notartificially through reducedrevenues or a decrease inworker-hours)? If they are aboutthe same or have increased, whyhaven’t the loss control servicesyou are receiving made adifference? What can you do tomake a difference? A workingrelationship with your broker and your carriers is vital!When it comes to loss control, a working relationship betweenthe client and the broker is crucial in ensuring yourneeds are fully met by your workers’ compensation and generalliability carriers. Be sure that your broker and insurance carriersclearly understand your needs as they pertain to the specificlines of insurance they are providing. Your firm is paying apremium that includes moneys set aside for risk controlservices. Be sure to fully utilize these services.There are several services that should be available to youfrom your insurance loss control departments. Your brokershould serve as your informational resource for items such as:• Best Management Practices• Legal• Liability• Risk Control• Safety Engineering• Quality Assurance• Industry Activities/impact issues• Regulatory mandate updatesYour broker should provide you with executive coachingand/or consultative services to your owners, senior managers,risk managers, safety directors and human resource directors.They should assist you in identifying or coordinatingprofessional development activities or personal strategicplans for safety personnel.From your carriers you should decide from the onset thefrequency of loss control visits, schedule an IIPP review, trainingneeded, etc. Once a policy is written, AB 110 makes it illegal forcarriers to charge extra for loss control services.Find out which loss control person is assigned to your firm.What are his or her credentials? Is he or she a constructionspecialist? If not, do you really believe this person will be able tounderstand your field operations and the risks involved? It isrecommended that your safety professional accompany the losscontrol representative at least on the initial visits until he or sheis comfortable with the qualifications of that loss controlrepresentative. Be sure to get a written report for each visit.You should also know what office will be handling the claims. Dothey have claim representatives that have construction background?This is important so that the claim representative can understandthe nature of the work, what is required of the worker and how theycan get them back to work quicker.It is recommended that the team (team consisting of loss controlrepresentatives, the safety personnel, claims representative, etc.)meet at least quarterly and communicate and track the site visits,results, claims, etc. If you find that you have so few claims (kudos toyou!) that it’s not necessary to meet so frequently, you can reduce itto twice a year. It is not recommended that you meet less than that.Bo Bradley is AGC of California’s Director of Safety, Health &Regulatory Services. Also contributing to this article were:Bruce Beardsley, Arthur J. Gallagher & Co.; Donovan Jackson, Willis;and Rick Church, AON Risk Services.THE VOICE OF THE CONSTRUCTION INDUSTRYAssociated General Contractors of California 21


More on the Cover PhotographPhotographer Susan Lohwasser captured the actionunderway by Mitchell Engineering last fall at the Narrows IIPowerhouse, downstream of Englebright Dam on the YubaRiver. A 78" diameter fixed cone valve is shown being hoistedinto position in the new bypass structure (partiallycomplete in photo). The valve was manufactured by AdamsSchweiz AG in Germany for Mitchell Engineering as thegeneral contractor and the Yuba County Water Agency asthe final owner of the valve. In the background a 78" gatevalve can also be seen, which was manufactured by Hilton Valve in Washington State.This work was performed as part of the Narrows II Powerhouse Flow Bypass project,which was undertaken to allow minimum flow requirements to be met in the YubaRiver during powerhouse maintenance periods.A bond is nota piece of paper . . .It is a valuedrelationship witha constructionindustry professional.SERVING ALL OF CALIFORNIA(951) 788-858122 VOLUME 37, NUMBER 4 — APRIL 2007 THE VOICE OF THE CONSTRUCTION INDUSTRY


C H I E F E X E C U T I V E O F F I C E RManaging Your RisksContractors today are aware that one of themost significant cost/benefit factors in doingbusiness is risk management. Risk managementaffects your bottom line as a business owner.Risk management is defined as the practice ofevaluating varying and transient levels of risk toyour company and employees, then minimizingyour exposure and planning for the unlikelyuncontrolled risks. Effective risk managementenables a company to minimize hazards andexposures with both risk control and insurance.A well rounded program must include ananalysis of safety and regulatory exposures andworking to effect change, as well as optimizingyour insurance coverage and implementing aneffective employee safety program.What can you do to reduce and control risks to your company, and how canAGC help? A comprehensive, effectively communicated and professionallydeveloped safety program is an absolute must. AGC produces materials to assistyou and your company safety professional in developing an effective safetyprogram and protecting your employees. Some of the resources available to youas an AGC member include the California Contractors Safety ProgramDevelopment Guide, easy to read Cal/OSHA regulations, toolbox safety topicsand a comprehensive safety video lending library. More significantly, to keep onestep ahead in the regulatory arena, the AGC Safety & Health Council effectivelyrepresents the construction industry in all Cal/OSHA regulatory and legislativeefforts that have, or may have, an impact on the construction industry. Theeffectiveness of your safety program impacts the bottom line of your workers’compensation premiums. The fewer and less severe your injury experience is, thelower your experience modification; that is a direct factor in determining yourworkers’ compensation insurance premiums.Another aspect that affects your bottom line is whether or not you have a thrivingsafety culture. One of the easiest and best ways to develop and/or maintain a thrivingsafety culture is to be an active participant in the AGC Safety & Health Council. Thesafety arena is one of the most significant areas of service that AGC provides. Overthe course of the past 20+ years, AGC has provided construction companies withsafety services and resources to assist them in complying with state and federal laws,in educating them on how to establish risk management programs, and even assistingwith their implementation of such programs. AGC is fortunate to have the Safety& Health Council, whose sole responsibility is to provide construction companiesthroughout California with guidance and support in their safety and risk managementefforts. For more information on the Safety & Health Council, contact BoBradley, at (916) 371-2422 or bradleyb@agc-ca.org.To further enhance your risk management efforts, AGC’s group workers’compensation insurance program can provide significant savings on your insurancepremiums. Now entering its second year with SeaBright Insurance Company, thisprogram has grown to more than $12 million in premiums and provides the highquality of services for which SeaBright has been recognized in the industry. Througheffective and aggressive management of claims and loss control, group members canrealize long term savings. For more information about this program, contact ourDirector of Industrial Relations – South, Mike Rodriquez, at (626) 608-5800 orrodriquezm@agc-ca.org.THE VOICE OF THE CONSTRUCTION INDUSTRY- Thomas T. HolsmanCALENDARApril 12Eureka District's Public Officials Night at O-H's TownHouse, Eureka.April 13Riverside San Bernardino Grassroots Luncheon at theDoubletree Ontario.April 14Constructor Awards Banquet at the Hyatt RegencyHuntington Beach.April 18Bay Region/Win the Fight Seminar at Two CorporateCenter, Concord.April 19Bay Region Public Works Night at the CorinthianEvent Center, San Jose.April 20Industrial Relations-North Seminar: “PrevailingWage/Forms/Compliance,” at the Radisson Hotel,Sacramento.Construction Career Awareness Day at Granite Construction,Sacramento.Orange County District Presents Politically PowerfulLunch at The Clubhouse – Board in Costa Mesa.April 23Riverside/San Bernardino District Golf Classic at ArrowheadCountry Club, San Bernardino.North Bay Annual Golf Tournament at Windsor GolfClub, Windsor.April 25Safety & Health Awards Luncheon at the Sutter Club,Sacramento.April 26Prevailing Wage Compliance Seminar at the SheratonHotel, Cerritos.April 27Shasta District Golf Tournament at Gold Hills,Redding.Delta Sierra District Annual Golf Tournament at theCastle Oaks Golf Club.Monterey Bay Golf Tournament at Laguna Seca GolfClub, MontereyMay 15-17Division & State Board Meetings at the MontereyPlaza Hotel and Spa, Monterey.May 17-18AGC Spring Conference at the Monterey Plaza Hoteland Spa, Monterey.May 24Tri-Counties District Membership Meeting at theWedgewood, Ventura.May 25San Joaquin District Seminar: “DOT Safety Training,”by Don Cantieri at Granite Construction, Fresno.June 1San Joaquin District Barbecue. Call (559) 252-6262for location.June 4Orange County District Golf Classic. Call (949) 453-1480 for location.Register Now for AGC's SpringConferencewww.agc-ca.orgAssociated General Contractors of California 23

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