Boots on the Ground

Subcontractors, The Heartbeat of Construction

Tag: accountability

Report on National Affiliation

The following report on National Affiliation was delivered my me (Art Rouse) at the NCSA Annual Business Meeting on June 18, 2014:

North Carolina Subcontractors Alliance, Inc.

Annual Meeting – June 18, 2014

Topic: National Affiliation

One year ago, the ASAC Charlotte Chapter changed its name and disaffiliated with the American Subcontractors Association and ASA of the Carolinas. At the Board of Directors meeting about a week later, I was asked as Past President, to investigate the possibilities of national affiliation and make a recommendation.

My first meeting was with ASA. Since my company had already paid for the ASAC Convention and July dues, I attended the convention. During the course of the convention, I was able to have a meeting with Walter Bazan, outgoing ASA president, Jack Austhof, incoming ASA president, Brian Johnson, incoming ASA vice president and Marty Swain, ASAC president. During the course of this meeting, we had a frank discussion of the reasons leading up to our decision to leave ASAC and our intention to affiliate with a national organization after NCSA stabilized its finances. I made it clear that an affiliation with ASA would need to be direct and not with ASAC. Bazan and Austhof asked to have further discussions when that happened to see if a direct membership would be available. Ensuing phone calls with Jack Austhof did not lead to an offer of direct affiliation, only an offer to review the charter with ASAC to see if it could be done in the Carolinas.

My next contact was to the National Subcontractors Alliance. I spoke to Lynne Black, executive director of NSA for several hours over the course of two days and for a couple hours more with Pete Snider, executive director of the Subcontractors Association of the Metroplex (Dallas-Fort Worth.) I got a good feeling for how NSA operates and how it differs from ASA.

The NSA has two meetings per year. One is the Executive Directors Meeting in Chicago in the fall. They invited us to send our ED to the meeting to get to know the other ED’s and how the NSA functions. We sent Margaret to the meeting and she came back with a very favorable report.

The other meeting is the annual Spring Conference. This year it was held in Denver, Colorado. I attended on behalf of the NCSA. There were two excellent seminars, one on building your business’ brand and the other on embracing technology as tools rather than toys. An example would be utilizing video conferencing to broaden the associations’ reach and how easily it can be done with Google Hangouts.

There were also breakout groups. While the lawyers’ council was meeting, the ED’s were having their meetings and the volunteer leaders had a workshop on increasing and retaining membership. There was plenty of time to network with the other chapter leaders as well as a great dinner at a steakhouse overlooking the Denver and an entertaining tour of the ghosts and scandals of Denver. Since the NSA is for the benefit of the members, the NSA only charges the actual cost of the conference to members. It is not a profit making venture like the ASAC convention. The total cost for me, including the airfare, was less that it cost to attend the ASAC convention last year. At the end of the conference, the NSA board held a special meeting and voted to offer membership to the NCSA. After my report and recommendation to the NCSA board, it was voted to affiliate with NSA.

That is really how the NSA works. Rather than a big national organization headquartered in the most exclusive section of the Washington DC area, the NSA staff consists of only the Executive Director and her assistant. They work out of space donated by one of the member companies. What makes them great is the network of business and legal contacts across the country to lean on for advice and guidance. Almost everyone came up to introduce themselves, give me a business card and an offer of help anytime it is needed. I have been able to use those offers twice already to check out general contractors from out-of-town.

All of the NSA member chapters are disassociated ASA chapters. Unlike ASA, you are members of your local organization, not the national association. The NSA is an umbrella organization of member associations. The NSA represents over 3,500 member companies. The local association pays an annual membership fee of $800 to $2500 depending on the size of the association. The rest of the local members’ dues stays with the local association. That means the local association is solidly funded and can spend their efforts on living up to the NSA motto: “Our business is helping you do yours,” and the NCSA pledge of Advocacy, Education and Networking.
The NSA itself is a member organization of ASC, the Associated Specialty Contractors. The ASC is an umbrella organization of 9 national associations with over 25,000 members. So, when we need representation in Washington, we carry the voice of 25,000 companies.

The NSA is a stakeholder and on the governing committee of Consensus Docs. The NSA has a benefit package of negotiated discounts and special rates for UPS, Fedex, Office Max, YRC Freight and other national service vendors and suppliers.

The NSA is the antithesis of ASA. It is locally focused and low overhead. Each local association is independent and self-governing. It is low overhead so the NCSA can have the benefits of a national affiliation without breaking the bank.

Construction Manager at Risk vs.

In my early career, we started to see state projects being handled as Construction Manager Projects. There was a general contractor, but he was effectively just a job superintendent, a quarterback. He managed the jobsite and handled the paperwork, but the power remained at the state. The Contracting Officer was in control, the subcontractor signed a contract directly with the state and the subcontractor’s check came directly from the Department of Revenue. Projects were always late. There was endless confusion with change orders since they had to come from the state. Payments were inconsistent, contracting officers had no incentive to process payments quickly and payments were issued in due course and tended to be held up at the end of the fiscal year when the state was running out of cash and had other priorities.

Enter the Construction Manager at Risk. Now the general contractor is the one who has to deal with the state. The state still approves the subcontractors and makes the rules, but for the subcontractor it is mostly like a normal general contractor agreement. You sign the GC’s contract, you submit the GC’s pay application (along with a lot of government forms) and you receive you check from the GC. You have one boss on the job, the GC. The GC is responsible for getting the job done on time and on spec. There are incentives for the GC to finish on time and penalties if he does not. Having one entity in charge of the project pulls it all together and the Construction Manager at Risk form of contracting has proven successful.

The fact is that on a large and complicated project, there has to be one person or company that is in control and takes responsibility to the successful completion of the project.

A prime example of this is the website. In Congressional hearings, it has been revealed that there were as many as nine contractors working on various modules of this website and with subcontractors, as many as 55 different companies writing code. The nine contractors worked for different contracting officers at the Treasury Department and the Department of Health and Human Services (HHS).  They were writing in different code styles. There was a last minute change order to require people to register and enter their personal data before being able to see their potential subsidy. There was no testing of the entire system until a couple weeks before implementation and when they did test, it crashed with just 200 users. The site was introduced with great fanfare, then total collapse. No one claims responsibility. No one has been held accountable. No one has been fired. They are bringing in “the pros from Dover,” Google, Amazon and Red Hat. But who is in charge? Who is accountable?

Another example was the Salt Lake City Olympics. It was millions of dollars over budget and running late. It seemed like there was no way the Olympics would go off on time and it would be a horrible black eye for the United States. They called on Mitt Romney to take over. He did. He reorganized the effort, brought in strong leaders and got the Olympics off on time and with a budget surplus. 

Politics aside, you need strong leadership to pull off a major project. On, we haven’t seen it yet.