What Is Constructonomics?

I will often get asked, “What is Constructonomics?”.

Actually, that’s a lie. I very rarely, if ever, get asked that question. I’m not sure why I lied about that, but most likely because that’s how a post like this would typically start.

Nevertheless, I do think about the question a lot – and that is not a lie. I started thinking about it a little bit more when I lost my job during the Great Recession and I will admit that the reasons were very self-interested. The construction industry was railroaded by the financial collapse in this country and I was reviewing every bit of economic news to try to find some glimmer of hope in a world that was crumbling around us. So what did I do then? Well, the same thing anybody would do who has a laptop, a high speed internet connection, and some serious time on their hands. I started writing a blog called Constructonomics.

At the time, I defined Constructonomics as the study of the effect of the overall economy on the construction industry and how the industry reacts to economic stimulus, growth, and decay. And this is truly what it is.  At the time, the US government was pouring money into public construction projects through the American Recovery and Reinvestment Act of 2009, so it was also a bit of an observation at how the economy reacts to increases in construction spending.

So really, it was like economics but for construction – Constructonomics. Got it?  I guess you could have other industry specific economic studies like healthonomics, or autonomics, but those don’t exactly roll of the tongue as well.  There are a few other cool words created by the infusion of economics like Reaganomics, Obamanomics, and how could we forget, Freakonomics.  I guess if the words Bush or Clinton fused better with the word economics there would be at least three more nifty words for us to throw around.

But Constructonomics is also a phenomenon.  So when you invest in construction work, you get a building or piece of infrastructure, but you also put people to work while improving the world in which we live.  So now we have an improved world (either by adding infrastructure or a new/renovated building) and also some improved pocket books of construction trades people, superintendents, and project managers.  Now, when the construction work is sustainable in nature, you’ve now got a building that is using less energy which saves money along with all the environmental benefits.  There is now a ripple effect going on where economic and environmental benefits stretch beyond the product that was produced for the owner that paid for it.  That’s Constructonomics.

So basically, Constructonomics is much more of an area of study and phenomenon than a…..I don’t know, a cool name for a blog or construction services company or something.  Well, it is a cool name.  But really it’s academic – and that’s no lie.

Building A Better Tomorrow

The UK construction industry employs over 2 billion people in roles as varied as contracting and building to the manufacturer ofproducts and components. It’s no secret that the UK construction industry has suffered throughout the recession, in 2012 output from the industry was around 15% lower than pre-recession Britain, but as our economy once again begins to rise, so does investment in construction. The construction industry isn’t simply vital because it is responsible for over 6% of the country’s GDP (Gross Domestic Product), it is also an industry that has a hugely positive financial effect on the wider economy with every £1 spent on construction generating almost £3 of wider spending.

A Key Component Of Economic Growth

Construction has always been a pivotal factor of the UK’s economy, with it making up a larger share of the country’s GDP than either the USA or the wider EU. The national industry had a hugely positive global reputation before the economic downturn in 2007, and since the success of the 2012 London Olympics government and international confidence has once again been restored in British construction, helping to build a strong foundation for the future. Our engineering, architecture and consultancy fields frequently top world rankings which is a sure sign of rapid industrial growth on our shores in years to come.

The 5 Mega-Trends Of The Economy

So what do government plans look like for the industry over the course of the next decade? There are 5 trends that are set to shape the business landscape of the UK over the next 10 years, and construction is at their heart:

  1. Infrastructure – The government is calling for over £300billion worth of investment from the public and the private sector so they can fulfil their infrastructure plan, of which construction is the backbone.
  2. Emerging Markets – With emerging overseas markets mixed with the European free trade agreements the construction industry is set to seize new opportunities for exporting skills, knowledge and products.
  3. The Digital Age – Technology is transforming the face of every industry, not least construction. BIM (Building Information Modelling) is helping the construction industry to evolve by creating detailed digital representations of a building which can streamline decision making processes regarding building project from the earliest possible stages.
  4. Demographic Shift – The population of Britain is changing and our built landscape is changing with it. Growth in urban areas is continuing to increase and we are gearing up to see a boom in the elderly population, with the number of individuals aged over 65 set to increase by almost 40% by 2025. This means there is going to be a greater demand for housing than ever before and our urban areas will need new construction solutions to combat density.
  5. Changing Climate – Energy efficiency, green solutions, sustainability; these have been the buzzwords of the last decade and it’s not set to change. The coming few years will have an increased demand for energy efficient buildings to help the UK meet green targets, which means more opportunities for fresh thinking minds and dedicated individuals.

What Does This Mean For You?

UK construction is going from strength to strength, so now is the time to get involved. If you’re looking to jumpstart your career or climb the ladder in the construction industry then PSR Solutions can help, they are a leading London recruitment agency who specialise in helping you build your construction career from the ground up. Embrace the changing tide of UK construction today and be a part of the building revolution.

Seven Things to Do When an Owner Doesn’t Pay

The past six months for me and my company have been the most difficult to date.  And this is including the first two or three years where we basically made just enough money to survive (that actually wasn’t that bad, surprisingly, and actually kind of fun).  But this time around, we were expecting to get paid at the end of a job when, basically, the rug was ripped out from under us.  Of course we fronted large amounts of money for labor and materials that we were now looking to finance because payment was not being made.  We pretty much had every asset in the company thrown into the project so there was nothing left.  I kinda felt like I came home from work one day and my house was burnt to the ground.  Seriously, I think it is the same feeling.

Now, six months after finishing the project, we still have not received the first of four pay applications that was due six months ago.  So even though things are not resolved, I am confident that we will eventually get paid.  This is mainly because I kept very accurate records and documentation throughout the project and made sure to get approvals in writing.  This attention to detail is paramount when trying to collect money because people tend to have amnesia when it involves payment and especially when it involves change orders.

So while we are still not resolved, I have learned a few things about dealing with non-payment and I figured I’d share a few of them so maybe you can do a little better then next time your figurative house burns down.

1.  Figure out what you’re dealing with

Situations are very different among different types of organizations.  My particular situation was a public entity, specifically a school district.  I know, it’s a shocker that a school district was difficult when it came time to make payment.  However, knowing how to deal with each particular type of organization is a huge bonus in figuring out how to navigate the situation.  Even though public entities are tough, they typically pay their bills – eventually.  Investment in municipalities (such as municipal bonds) are some of the safest investments out there because these organizations will rarely default (I guess Detroit is an outlier).

In the public world I had the luxury of going to board meetings and pleading my case – albeit on to deaf ears.  However, it at least gets you in front of the people who will eventually have to approve your payment.  I also know that the school district won’t dissolve all of a sudden or declare bankruptcy.

The private sector is much different where companies can go “poof” much more easily.  So, again, you need to know who you’re dealing with.  Is it a public entity, private entity, public-private partnership,  or one of those nebulous quasi-public outfits?  All of these organizations have quirks and avenues toward payment that will work best.

2.  Consider a Lawyer – But only consider

These situations get complicated at times, but at other times, they are very simple.  In my case, it was a clear cut situation of an owner not wanting to make a payment and coming up with erroneous reasons to do it.  Hiring a lawyer can totally blow your entire profit margin, to which you are entitled.  And don’t think you’ll get legal fees in a settlement – it just won’t happen.

Sometimes a lawyer will take a percentage of the money instead of an hourly fee, but this percentage will often be upwards of 30%.  So if an owner owes you 50% of a contract value, you probably owe about 80% of that money to subs and suppliers (if you’re a GC of course), so now you’re left with no money after you pay the lawyer.  In my case, the owner owed me 70% of the contract value, so paying a lawyer 30% would put me under water on the project.

You also have to realize that lawyers will make more money for dragging the process out longer.  I’m a believer that people in this country are so obsessed with money and short term profit that they will unintentionally and perhaps subconsciously steer the situation in a direction that makes them the most money.  So don’t be afraid to ask the lawyer what they are doing, why they are doing it, as well as suggesting alternatives.  Sometimes there is a much simpler solution and getting bogged down with all the legal mumbo jumbo can cause you to lose site of other less expensive alternatives.

3.  File a Mechanic’s Lien (if you can)

In Pennsylvania, the law states that you cannot file a lien on a purely public entity.  However, when there is private sector and for profit activity going on at the facility, like weddings, night classes, motorcycle training, etc, the laws become very grey.    I’ve seen municipalities renovate apartments through a public grant and then rent them out on the private market.  These situations are difficult to understand, so my suggestion would be to file the lien and state why you think this is within the law to do so.  They will most likely file an objection and then a court will ultimately decide what the contractor is entitled to do, but in the meantime, you’ve shown them that you mean business.  Also, there is a timeline to file a mechanic’s lien.  In PA it’s six months from the last day you are on the project, and if this time expires, your lien rights are gone.

You could also make an argument, in the case of a public project, that they’re never going to sell the building (especially the school), so it doesn’t matter if you file a lien.  However, they don’t want a lien on their building.  It affects the credit worthiness of the organization and is just an overall annoyance, so if you can do it, do it.  But I would suggest having a lawyer for this.  There are ways to file a lien on your own, but you will have much more credibility if it’s filed by a lawyer.

4.  Consider Mediation – but again, only consider

I have not gone to mediation in my project (yet).  However, I have heard stories with varying degrees of success.  The contract will typically state if mediation is mandatory prior to filing a lawsuit or if the situation should go to binding arbitration or something like that.  But just because you are in mediation, doesn’t mean the owner needs to make any kind of reasonable effort at making a settlement.

Also keep in mind that you are going to have to pay your lawyer to sit through this excruciating debate and/or argument.  So my suggestion is to do an analysis of how much this whole thing will help.  I realize that it is impossible to know prior to doing it, but coming out of a mediation with no resolution but still owing a lawyer eight hours of fees is probably the worst case scenario.

5.  Charge Interest on outstanding balances

They may be able to argue that interest on outstanding payment must be put in writing prior to the agreement being signed, and perhaps the contract even relieves both parties from finance charges on amount owed.  However, in my opinion, if the contract is breached by one party, then that should at a minimum relieve the other party from clauses such as this.  You may not end up getting the interest in the end, but it will at least throw a little gas on the fire and raise their eyebrows a bit.  If you show that you have the wherewithal to calculate the finance charges on outstanding balances, it could go a long way.  There is a good chance that you won’t get awarded the finance money at the end of the whole thing, but it will at least go into the pot of outstanding money and perhaps get you a higher settlement.

6.  File a Lawsuit (If You Have To)

I honestly think this should be a last resort.  Once you file a lawsuit the owner will just wall up and hold on to the money for even longer which will ultimately benefit them in the short term and just keep you financing the project for longer.  Plus, the cost of preparing a case and going to court is tremendous.  It is important to know exactly how long you have to file a lawsuit in your particular situation.  This is probably the most critical piece of information that a lawyer will give you.  Obviously, having that time expire is the worst case scenario.  I think Pennsylvania says that I have two years from the time I filed the mechanic’s lien to make a complaint in a court.  But there is also a statute of limitations on the project of about 7-10 years, so really, I don’t know which one applies.  But it is very important to have this information confirmed by a lawyer.

7.  Don’t Freak Out

We have to remember that organizations behave in strange ways, especially large ones, and public entities are even more difficult to deal with.  The job I am referring to is a public project so I had to weave my way through the bureaucracy of that whole situation before I could get anywhere.  And trust me, it is tremendously frustrating.  They block you out of every possible route to authority and yes, I wanted to freak out.  I kind of did freak out, but not to anybody on the side of the ownership.  You have to be careful of doing things that could be considered slander, libel, or some other kind of malicious behavior.  Things like this are only going to make the situation worse and could put you in legal trouble as well.  Every time I’ve mouthed off to an owner that was pushing me around, it didn’t work out well and just created increased animosity and tension for the rest of the project.

So play it cool.  This country is supposed to be relatively fair with a legal system that at least tries to keep it that way.  If you’re owed the money, you’ll probably get it….probably.

Construction Industry From The LT

Terry Segerberg knows when the construction industry is about to slow down or take off — before the builders do.

She knew it six months before the housing bubble popped and the industry laid off a couple of million workers, when she sensed builders moving from new projects to remodeling ones — a sign that activity was ebbing.

And she knows the opposite is happening now, she’s sure of it, has known it for a while: Activity is picking up. Folks are building new things — offices and prisons other non-residential things, mostly — and jobs are almost certain to follow. “We’ve spent the last 18 months prepping for significant growth,” she said last week.

Segerberg is the CEO of Mesa Industries Inc., which sells materials and equipment to construction firms across the country and around the world. She gauges the industry’s health through the orders coming in her door in Cincinnati. In that sense, Segerberg is a critical barometer for the U.S. labor market, which rose (such as it was) and fell over the past 15 years with the fortunes of the construction industry.

The Great Recession took a huge bite out of construction employment, but looking ahead, the industry remains critical to the job market, especially for workers without college degrees. For the foreseeable future, one big reason you’d hire an American worker is to build something here.

The 2000s were a terrible decade for job growth, but they were great for builders. Between 2000 and 2006, at the height of the housing bubble, the country added 900,000 construction jobs; that amounted to one-fifth of all the net jobs created in that time across the economy. But those jobs all vanished during the recession, and then some. The construction industry shed 2.1 million jobs from 2007 to 2010, the equivalent of one-fourth of the nation’s net job losses.

Recently the industry has begun to rebound. The economy has added 500,000 construction jobs in the past four years, and construction spending has increased overall. Private residential and nonresidential building is up from 2010, by more than enough to offset a decline in government construction spending.

5 Secrets to Painting Perfection

Whatever home improvements you’re making, the secret to brilliant results is good attention to detail. Whilst painting your property may appear to be one of the simpler DIY tasks, great results take patience and care.

Here are our top five secrets to paint perfection when decorating your home:

1. Sand away any flaws

To get the best paint finish around your home, you need to ensure you have a smooth and perfect canvas – whether that’s on the walls or the woodwork. While sandpaper is fine for the smaller rough spots and burrs, it’s recommended to invest in (or hire) a sander or sanding pole to make removing all the flaws on your ceiling and walls as easy as possible. Sand woodwork using a sanding sponge to get into any small nooks and crannies.

2. Prime your walls

Sanding helps get rid of any elevated imperfections on your walls, but you may come across holes and nicks that can be just as detrimental to your paint finish. When this is the case, use a primer. To ensure that these patched spots will not be seen under your top coat, choose a tinted primer that matches your choice of wall covering.
Before the primer stage, make sure that your walls are not greasy. Paint won’t bond to grimy kitchen surfaces or grubby hallways. Use a specialist degreasing formula to completely cut through any filth to give your walls the best chance of good paint adhesion.

3. Use a putty knife on your tape

Removing your masking film after painting and finding that your color has still bled through can be extremely infuriating. To avoid this, make sure you are doing a thorough job of affixing your film or masking tape from the start. You can do this by using a simple putty knife and running it over the top of the tape to ensure a firm seal. Use professional masking tape or film as opposed to everyday masking tape, this often leaves a sticky residue behind, which can be hard to clean off.

4. Keep to one wall at a time

You may be tempted to do all the trims and corners of a room first and go back to fill in the larger expanses of wall afterwards. Don’t! Professional painters will always finish one wall at a time so that brushed and rolled paint is easier to blend together. To keep your paint and rollers from drying out whilst switching between the two styles of painting, simply cover your tray or bucket with a damp towel when not being used.

5. Load then go

Professional painters always started with a loaded brush. This means loading the bottom 1.5 inches of their paint brush with paint, tapping each side of the brush on the paint bucket to remove any heavy drips. What other style of loading is there? Well, most amateur painters load their brush and then drag it along the side of the container to wipe the majority of it off again!