How to Reduce Labor Expense Without Sacrificing Quality

Photos: CertainTeed

Labor shortages have been a longstanding issue in the construction industry. With not as many skilled tradespeople as needed to do the work, roofing contractors have to work smart to stay competitive and maintain profits. Roofing manufacturers have adapted to the labor shortage by developing labor-saving products that are easier to master and install.

To help commercial roofing contractors make more informed product decisions, CertainTeed commissioned Trinity|ERD, a well-recognized building envelope consulting firm, to conduct “Factors Impacting Low-Slope Roofing: A National Labor Study,” which quantifies the labor differences between self-adhered modified bitumen, traditional bituminous systems and single-ply roof coverings. This independent, five-year low-slope labor study analyzed the installation of 45 different roofs with six popular roof covers in 18 different configurations in various regions of the country, isolating and timing product and task-level installation data, and observing where efficiencies or inefficiencies occurred. The study also combined observed labor data with national average labor and material costs to allow for a comparison of installed costs across 12 popular modified bitumen and singe-ply roof assemblies.

While the study confirms that product selection impacts labor efficiency and ultimately earnings, a contractor’s ability to turn a profit is multifaceted. In addition to product labor analysis, the study produced a wealth of information on how commercial contractors can improve their efficiency across any roof covering by optimizing their crew management, project management and estimating accuracy.

Here are some observations from the study that can improve the productivity of commercial roofing contractors, regardless of product selection:

Roofing manufacturers have adapted to the labor shortage by developing labor-saving products, including self-adhered modified bitumen roofing. Photos: CertainTeed

· Estimate for Temperature and Environment. Environmental factors associated with a project should always be factored into estimates. Productivity can slow down in both high and low temperatures. Cold weather often creates more work due to heating adhesives being required, longer periods for relaxing rolls, longer welding times of membranes (APP, SBS, TPO, PVC) and the need for cumbersome cold-weather clothing. Heat can often cause fatigue and the need to hydrate often, resulting in more break periods. Also, projects taking place at night are typically slower than daytime projects, as the area of work is constrained to lighted areas and tools are more difficult to find in the darkness.

· Improve Crew Communication. Roof cover installation is optimal when the installing crew works as a coordinated team. Crews that spoke multiple languages or crews with limited understanding of one another tend to have longer installation times.

· Specialize Crew Tasks. Productivity increased when multiple crew members carried out narrowly defined work activities to complete a task as a team, as opposed to a single man completing the full breadth of the task alone. For example, when hand-held screw guns were used, laborers that staged and placed screws/plates as one phase of work — and either dropped back to install or were followed by another crew member to install — were more efficient than a single individual carrying pouches of screws and plates.

· Stage Products With Foresight. Material movement and staging was a critical component in speed at application. Projects that were staged with easy material access for installers resulted in faster installations. Crews that relied on installers to stage their own materials required fewer personnel on the roof, but at the cost of slower overall installation times.

· Employ Strong Management. Rooftop supervision and direction – including effective management of roof loading, managing break times, staging materials for easy access, prefabrication (such as combining screws and plates) and staging materials which have already acclimated to the temperature/environment – played a pivotal role in faster installation times.

Environmental factors associated with a project should always be taken into account during extimates. Extreme weather can slow down productivity. Photos: CertainTeed

· Implement Quality Control. Across the country, the labor study observed a variety of quality control methods ranging from no in-application quality controls to extensive quality controls conducted by both foremen and in-house, third-party quality managers. A lack of in-application quality control reduces upfront labor, but increases the likelihood that a crew will need to return to correct issues found post-inspection. As with many things, an ounce of prevention is worth a pound of cure.

· Use and Manage Tools Wisely. The efficient use of tools and tool accessories has a measurable impact on installation times. For example, the installation of a bituminous cap membrane with a multi-torch cart (a.k.a. “dragon wagon”) was completed in 86 percent of the time required in comparison to a hand-held torch. Automated screw and plate installers provide a measurable time advantage; however, a knowledgeable mechanic or crew member who has rooftop access to spare parts is crucial in case the machine jams or malfunctions. Poorly maintained automatic welders (single-ply TPO/PVC) with inconsistent power and/or damaged parts (nozzles and silicone wheels) slow down productivity and hamper the quality of the application. Blowers used on roofs to clean surfaces and move large sections of membrane on a cushion of air were effective and increased productivity in multiple applications.

Increasing Efficiency

The ability of a crew to quickly and profitably install a low-slope roof system cannot be isolated to the specific type of roof cover being installed. A roofing crew’s efficiency is also impacted by climate, project parameters, tools, safety requirements, quality requirements and crew management. Roofing estimators and managers should clearly identify the factors impacting their crews, optimize productivity whenever possible and adjust their estimates accordingly. While project parameters and management apply a high degree of variability to every job, proper training, project management and crew management can significantly increase efficiency and help contractors extract the most profit from projects.

Understanding the many factors that impact crew efficiency can help contractors produce better results in less time. The labor study can help roofing contractors better understand labor efficiencies by product, more accurately estimate the labor associated with certain tasks and improve installation efficiency across all roof covering types.

For the full 20-page CertainTeed/Trinity|ERD study, including detailed analysis of labor data and installed cost for various roof assemblies, visit www.certainteed.com/laborstudy.

About the author: Abby Feinstein is Product Manager, Commercial Roofing for CertainTeed Corporation. For more information, visit www.certainteed.com.

Business Succession Planning Tips for Roofers

Business succession isn’t as simple as choosing someone who will run your roofing company after you decide to hang your contracting hat up — or an unfortunate event cuts your time as the owner of your business short. Business succession requires you to put into place a plan that will ensure the success of your company after you’ve moved on. Business succession planning is time consuming, complicated, and dependent upon your business’ structure. It is therefore wise to begin thinking of what you want to do with your business long before you will need your plan.

One of the more obvious questions that need to be answered in business succession planning in the roofing industry is who will be the successor. Do you plan on training an employee to take over the company? Is it best to keep the company in the family and to name a family member as the successor? Are there multiple owners and succession will remain within the company? The answer to this question will vary from roofing company to roofing company. For some companies, they may already have a family member who is an employee, making the decision relatively simple. Some newer companies may not have the option to appoint a family member as a successor because the family member is too young or not willing.

Business succession planning is complex, but it can still be broken down into manageable segments to help owners better understand the process. Some of the common components of business succession planning include: buy-sell agreements; gifting; merger and acquisition transactions (M&A); employee stock option plans; key-man life insurance; and management buyouts. A basic understanding of these components will give roofing contractors a good place to begin their business succession planning.

Buy-Sell Agreements

Buy-sell agreements are especially useful in a multi-partner business to ensure there is an agreed upon plan in the event a partner dies or there is a dispute. Also known as buyout agreements, these types of agreements have control over when someone can sell their interest in a business, who can buy that interest, and the amount which is paid for said interest. What triggers a buy-sell agreement varies, but typically an event such as retirement, bankruptcy, disability, or death will be the triggering event that creates an automatic offer to the current owners of the company to buyout the departing members’ interest in the company.

A good example of a buy-sell agreement is the cross-purchase agreement where owners typically purchase insurance policies on one another. Different triggering events (death, incapacitation, age, or something similar) cause the Agreement to go into effect. In a hypothetical cross-purchase agreement arrangement, Owner B, who owns 30 percent of the business, would carry insurance equal to 70 percent of the business value. This allows the remaining partners to continue business as usual without the need to fill the vacant position within the company’s ownership.

Gifting (Family Succession)

Before the recent tax overhaul, if your estate was above the $5.6 million ($11.2 million for couples) estate and gift tax exclusion, then gifting was an incredibly powerful tool. However, in 2018 the IRS announced that the 2018 federal estate and gift tax limit has been elevated to $11,180,000 for individuals and $22,360,000 for couples, which makes gifting helpful for a smaller subset of business owners. It should be noted that there are some 15 states that impose estate taxes at a lower level than the federal government, and a prudent business owner should consult a professional to see if his or her state enforces their taxes in such a manner.

Depending upon the vehicle chosen and size of your company, taxes will vary from unaffordable to little or nothing. If family succession is the vehicle chosen, states have varying amounts of money which can be gifted without being subject to a gift tax. Certain trusts also allow you as a business owner to transfer in the neighborhood of $10 million without being subject to a gift tax. The amount of taxes due when succession takes place will depend on you and your company’s finances and your state’s tax laws.

Merger and Acquisition Transaction

A merger or acquisition transaction with a competitor or company or individual is another method of maximizing the value of your company and retirement as you look to transition away from your business. Oftentimes you won’t know if the person that you are handing control of the roofing company over to is going to maximize the value of the company once you leave or if they’re going to run the business into the ground and leave your former employees out of a job in the process. By merging with or selling to a larger, proven roofing company with similar culture to your current business, an owner can assure that his or her business will continue to thrive, albeit with a different name, and continue to serve both employees and clients suitably.

Some professional business owners often encounter issues that force them to make the tough decision to sell his or her roofing company and decide that the time has come to pursue other ventures. A sale would allow him or her the freedom (and cash) to pursue other business opportunities, and if he or she so chooses, he or she could still retain a minority ownership in the business so that if the business measures fail, he or she still has a profitable asset in the form of his or her minority position.

Employee Stock Option Plans

An employee stock option plan is also an excellent method for monetizing your business outside of its traditional cash flow and often gives you time to transition out of the business over the course of several years. An employee stock option plan, also known as an ESOP, is a tool that business owners can create to incentivize current employees, all while planning for a smooth transition once the owner exits the business. In its most basic form, an owner seeking to transition out of his ownership role sells the company to a trust (the ESOP), designating key employees (hard-working managers, promising family members, etc.) as beneficiaries, and receives full payment for the business as a loan from a lender (who now controls the ESOP). Over time, the company can make tax-deductible payments to the principal on the loan, which slowly releases equity control from the ESOP to the employees who are listed as beneficiaries.

Management Buyout

A management buyout occurs when the management group of a business purchases the roofing company directly from the owner or parent company. The management group typically acquires a loan for the full value of the company, which compensates the transitioning owner for full value of the company without having to liquidate the company’s assets. The typical management buyout scenario occurs when an owner is ready to transition control to a group of committed managers, but also wants to ensure that he or she can provide for a spouse or child upon sale of the company. These acquisitions are particularly intriguing for many business owners, as they can be assured that those taking over the company have knowledge of the business and share the departing owner’s vision.

Key-Man Life Insurance

Finally, company paid key-man life insurance can be a good tool to ensure that the company can afford to redeem your share of the company upon your death. This provides cash to your heirs while helping you sleep better at night. Key man life insurance operates in a similar fashion to your run-of-the-mill life insurance policies. The company takes out a life insurance policy on a key member of the business (often an owner) and names itself as the beneficiary. The company pays the premiums on the policy, and when the owner dies, the company receives the applicable monetary disbursement. In a succession-planning context, you often see key-man life insurance policies utilized in situations where an owner is quickly aging or in poor health and wants to ensure that his family is financially stable upon his or her death, but does not necessarily want his family to take control of the company’s operations upon the owner’s death. When packaged with a management buyout, key man life insurance gives the owner the ability to do just that. It ensures a smooth transfer of control to a group of trusted employees and guaranteed compensation for the family upon the owner’s death.

As it should now be clear, business succession is necessary, time consuming, and requires a number of difficult questions to be made. If you do not have a business succession plan in effect, or you’ve come to the realization that your business succession plan isn’t as reliable as you believed, the time is now to start planning for the future of your roofing company.

About the Author: David Kronenfeld is an attorney at Cotney Construction Law who focuses his practice on a broad range of transactional matters. Cotney Construction Law is an advocate for the roofing industry and serves as General Counsel for FRSA, RT3, NWIR, TARC, TRI, WSRCA and several other industry associations. For more information, visit www.cotneycl.com.

Author’s note: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation. Regulations and laws may vary depending on your location. Consult with a licensed attorney in your area if you wish to obtain legal advice and/or counsel for a particular legal issue.

Examining Workplace Policies in the Era of Legalized Marijuana Use

Legalization of marijuana continues to be a topic of great interest and debate throughout the country. For example, Acreage Holdings, a U.S.-based cannabis firm, made a splash in the news when their ad spotlighting the use of medical marijuana for pain relief was denied a commercial slot during this year’s Super Bowl.

The legalization of marijuana, whether it be for recreational or medical use, is an issue our country continues to struggle with as lawmakers weigh the costs and benefits of legalizing the drug. Despite the fact that marijuana remains a Schedule I controlled substance under federal law — the Controlled Substance Act — to date recreational use of marijuana is legal in 10 states and the District of Columbia, and medical marijuana use is legal in 33 states and the District of Columbia.

There appears to be a growing trend of legalizing marijuana use in one form or another. In fact, on December 6, 2018, Forbes reported in its article titled “Marijuana’s Ten Biggest Victories of 2018,” just in the previous year Vermont lawmakers approved a marijuana legalization bill allowing growth and possession of small amounts of cannabis; voters in Missouri, Oklahoma, and Utah approved ballot measures for medical marijuana use; and Michigan voters approved a ballot measure for legal recreational marijuana use.

With this growing trend toward legalizing marijuana, many employers may be left wondering how this will impact their businesses. Ensuring workplace safety should be a primary concern for any employer, particularly in the construction industry where employees may be operating heavy equipment or driving company vehicles. Right now, many companies may be relying on drug-free workplace policies to address those safety concerns. While these policies may be able to handle issues of recreational marijuana use, just as an employer can terminate or otherwise take disciplinary action against an employee who shows up to work intoxicated due to alcohol consumption, when medically prescribed marijuana is involved, this issue gets a little more complicated.

There is nothing inherently wrong with having a drug-free workplace policy. However, some recent cases have indicated that legalization of medical marijuana use could throw a wrench in the way in which an employer is allowed to enforce its drug-free workplace policy. Particularly, this can be an issue for employers in states where the medical marijuana laws include anti-discrimination or other employment provisions.

One example is Connecticut’s medical marijuana legislation, the Palliative Use of Marijuana Act (PUMA). PUMA prescribes qualifying conditions for a person to use marijuana for medicinal purposes. PUMA also contains an anti-discrimination provision that bars an employer from refusing to hire a person or from discharging, penalizing or threatening an employee based on an employee’s status as a qualifying medical marijuana patient. The statute further provides that it does not restrict an employer’s ability to prohibit the use of intoxicating substances during work hours or restrict an employer’s ability to discipline an employee for being under the influence of intoxicating substances during work hours.

In 2017, in Noffsinger v. SSC Niantic Operating Co. LLC, the US District Court for the District of Connecticut denied in part an employer’s motion to dismiss plaintiff’s state discrimination claim when her offer of employment was rescinded after testing positive for cannabis. In Noffsinger, the plaintiff accepted a job offer from the employer which was contingent on drug testing. The plaintiff informed the employer she qualified as a medical marijuana user under PUMA for treatment of PTSD. When the plaintiff’s drug test came back positive for THC, the employer rescinded the offer.

The plaintiff filed a lawsuit against the employer and the employer filed a motion to dismiss her claim. The employer’s primary argument for dismissal of the claim was based on the assertion that PUMA was preempted by federal law. The court disagreed with this assertion and further found that PUMA creates a private right of action.

In 2018, the US District Court for the District of Connecticut heard motions for summary judgement on plaintiff’s discrimination claim and the Court held that the employer violated PUMA by rescinding the plaintiff’s job offer.

The Noffsinger case appears to illustrate the idea that while an employer is not prohibited from having a drug-free workplace policy, Connecticut law prohibits the policy from being used in a decision of hiring or to take action against an employee for their medically prescribed, off-duty marijuana use.

What remains a wildcard is how courts will handle discrimination claims in states where their medical marijuana legislation does not contain any explicit employment protections. A recent Massachusetts case (Barbuto v. Advantage Sales & Mktg., LLC et al.) could prove to be fairly groundbreaking in that regard. Massachusetts’ laws regulating the use of medical marijuana do not contain explicit anti-discrimination or employment provisions. However, in July 2017, the Supreme Judicial Court of Massachusetts reversed the dismissal of an employee’s discrimination claim against her employer when she was terminated from her employment because she tested positive for marijuana as a result of her lawful medical marijuana use.

This was a scenario that involved an employee prescribed marijuana for treatment of her Crohn’s disease, and the employee claimed she would use small quantities when at home a couple of times per week to maintain a healthy appetite. The employer was informed of her medical marijuana use and informed the employee that it should not be a problem. The employee ultimately underwent a drug screen that was positive for marijuana and was terminated due to the positive test results. The Barbuto court’s decision provides medical marijuana users the ability to assert claims against their employers for handicap discrimination under the Massachusetts Fair Employment Practices Act.

The Barbutocase, only having gotten past the motion to dismiss phase, still has a long way to go in terms of an ultimate ruling on the matter. Depending on whether a court finds in favor of plaintiff’s discrimination claim in this particular scenario has the potential to impact other state courts’ decisions in this regard.

Unfortunately, because we are only recently starting to see some of these issues rear their head in the state and federal court systems many of these issues are still in preliminary phases, as is the case with Barbuto. However, what that does mean is in the very near future we are likely to see more courts having to render decisions on these issues and hopefully provide more guidance to employees and employers.

Trying to navigate the waters while legalization of marijuana is still in a period of growth can seem like a daunting task for employers, but there are things that all employers can do to better protect themselves from these types of legal disputes. First, employers need to be familiar with their state and local laws regarding marijuana use; they should also stay up to date on pending legislation or issues on the ballot in their state regarding the same. Having clear and precise policies regarding the workplace can be beneficial, but employers must remember that the state laws vary. Therefore, employers with national companies could be opening themselves up to liability if they simply implement a blanket policy for all locations.

About the author: Felicia M. Haigh is an attorney with Raleigh, N.C.-based Anderson Jones PLLC. Questions about this article can be directed to her at fhaigh@andersonandjones.com.

The Future of Construction Projects: Geofencing, BIM and Smart Contracts

The modern-day construction project is quickly moving into the future. Within the next few years, an automated materials delivery truck will deliver an order of lumber to a project site without the need for physical labor, and as the material is incorporated into the project a 3D model will be automatically generated and stored on blockchain. Three technologies that roofing contractors and those involved in the construction industry need to be aware of are geofencing, Building Information Modeling (BIM) and smart contracts. Together, these three technologies will forever alter the modern construction project landscape.

What Is Geofencing?

Geofencing is a virtual perimeter around a single point with predefined boundaries created for a real-world area such as a construction site.1Geofencing uses either Global Positioning System (GPS) or Radio Frequency Identification (RFID) to map the boundaries and track objects traveling in and out of the virtual perimeter. 

GPS is a satellite-based global navigation system that provides geolocation anywhere on Earth where there is an unobstructed line of sight to four or more GPS satellites. Geofencing with GPS works well when applied to construction projects due to its ability to be used anywhere in the world. GPS technology works with geofencing software to track equipment and people, as well as sending real-time alerts and notifications to project managers and contractors. 

RFID uses electromagnetic fields to automatically identify and track tags attached to objects. The most common use of RFID is tracking large retail store product movement and inventory. In fact, RFID technology has replaced the old barcode system because it is more efficient. RFID tags may be attached to heavy equipment and/or on employee’s personal protective equipment (PPE) to track their movements in order to give contractors a deeper understanding of the project workflow and needs. 

Tags or other electronic communication tools (i.e., GPS, iPhone, etc.) placed on/in physical objects communicate instantly with administrators using geofencing software. Geofencing software installed on computers, iPads, and other electronic devices allows the user to receive real-time information on who and what has entered or left the geo-fenced area, as well as other information such as object height and time spent in the area. The devices with geofencing software can receive text messages, email notifications, phone calls, and other forms of communication indicating when an object has left or entered a geo-fenced area. 

Programs that incorporate the geofencing software may be programmed to set up “triggers” that notify the administrators when an object has left the geo-fenced area. For example, heavy equipment can be retrofitted with a RFID tag that is set to trigger when it leaves a geo-fenced area and instantaneously send a notification to a project manager’s phone or tablet, allowing the manager to immediately act upon the information.

How Can Geofencing Technology be Used by Contractors?

Contractors can apply geofencing technology to a number of different aspects related to most construction projects. Fortunately, most contractors already supply project managers and other supervisors with mobile devices capable of using geofence software, making implementation of geofence programs an easy next step. Purchasing RFID tags and GPS equipment is one of the only primary costs associated with this new technology. 

· Security: An obvious and practical application geofencing provides contractors and equipment owners with is security. Heavy equipment, expensive machinery, and other tools can be equipped with RFID tags that, when moved outside the geo-fenced area, will immediately send a notification to a project manager or owner, via text message or other, informing them that the equipment has moved. This gives the party receiving the alert an opportunity to immediately call emergency services and report a theft-in-progress, rather than discovering the theft at a later date and reporting it at that time. Further, with stolen vehicle technology, a contractor, project manager, or equipment owner may also disable the equipment to fully prevent the theft. 

Installing RFID tags on expensive construction equipment provides those with vested interests in construction projects with the ability to lower costs related to theft and theft recovery. Further, preventing construction project theft will lower the high costs associated with project delays caused by replacing equipment. 

· Material Supply: Geofencing software will allow contractors and project managers to have ample electronic data to monitor the progress of construction projects. For one, geofencing software will specify when supplies have been delivered to the project, how long they have been on site before incorporation into the project, and where the materials have been incorporated. This allows contractors and project managers to better allocate materials to reduce the amount of overstock and loss or damage of materials due to non-use. As will be discussed in much greater detail later in the article, combining geofencing technology with smart contracts will heavily reduce costs associated with material delivery and payment problems. 

· Fleet Management: Geofencing can also be used to monitor the arrival and departure of trucks on a project. Placing RFID tags or installing geofencing software on the trucks navigation system will allow for easy monitoring of the truck’s movement. Project managers can receive immediate notification when a fleet truck arrives or departs from the project. This will allow the contractor to save on administrative expenses related to tracking fleet movement. Geofencing will also allow fleet owners to monitor the amount of time trucks take to move from point A to point B in order to better coordinate the fleet in the future. 

· Labor Savings and Monitoring: The data collected from geofencing software can be used to supplement claims for overtime and the amount of labor used during a construction project. Often contractors are forced to litigate issues relating to the number of employees working on a jobsite, the number of hours worked, and when the workers were on site. Geofence technology will allow contractors to store and compile labor information in an easy-to-use format to save on expensive litigation costs. 

Further, project managers will be able to monitor whether employees remain within the authorized project perimeter. This allows contractors to ensure employees remain diligent and focused on their work and reduce labor costs due to inefficient labor. In addition, if/when disputes arise as to whether employees worked a number of hours of overtime, both parties will have the geofencing data to quickly resolve the dispute and return to business as usual. All that is necessary to achieve the aforementioned benefits is placement of RFID tags on PPE or installation of geofencing applications on employees’ smart phones.

· Site Grading: Geofencing software installed on heavy equipment can help track with greater accuracy and increase progress towards proper grade, as opposed to using traditional methods such as survey stakes. A GPS device may also be installed within the heavy equipment’s cabin, allowing the operator to accurately monitor his or her progress. All of this information can be relayed to the project manager to better assist in deciding when to order supplies and labor to move on to the next phase of the construction project. 

· Increased SafetyGeofencing perimeters can be created around hazardous work areas to prevent unauthorized employees from entering the area and risking injury. This can be accomplished by creating the perimeter and setting RFID tags to send an alert to a project manager when unauthorized personnel enters the dangerous area. The project manager can then contact the foreman to ensure that the employee moves to a safer location or trigger an onsite siren. Contractors who utilize geofencing software for all employees, via their smart phones, can even have an alert sent to the specific employee who has entered the unsafe area, warning them to leave immediately. 

Geofencing tags located on mobile equipment can also monitor the speed that the equipment is traveling. If the equipment exceeds the safe speed limit, a foreperson can be notified. 

As it should be clear, geofencing technology offers contractors an abundance of benefits that will drive down costs and time associated with project completion. While geofencing will have a positive impact on projects, there still will be costs associated with implementing and using the new technology.

The Costs of Geofencing Technology

As previously stated, most contractors already supply project managers and other supervisors with the equipment necessary to implement geofencing (i.e., tablets, smart phones, and laptops). Therefore, one of the largest drawbacks, that being the initial cost of implementation, is already at least partially covered. 

The next step contractors wishing to implement geofencing technology must take is purchasing software compatible with the hardware already in the hands of project managers. The software will need to be implemented by a third party specializing in geofencing. The price of this software will likely pay for itself with the savings associated with geofencing. Further, resources previously allocated towards expensive and time-consuming data analysis will be no longer necessary as geofencing software will automatically compile the data on its own. 

One initial drawback will be training project managers and other employees to use the geofencing software. Contractors and project managers will need to initially educate themselves through third-party geofencing professionals on the ins-and-outs of using the technology. The next step will be educating employees on the intricacies of geofencing technology. If contractors opt to use geofencing software on smart phones, tablets, and other electronic devices, the employees will need to know how to respond and comprehend alerts and notifications sent to their devices. This requires a review and update of the employee manual. 

Any change to the workflow of a construction project will have its obvious costs and adaptation period; however, the future is fast approaching and contractors should prepare to embrace this new technology.

Building Information Modeling (BIM)

In addition to creating a better understanding of material movement and location, RFID and other geofencing tech can be combined with BIM to supplement 3D models of a construction project. According to the U.S. National Building Information Model Standard Project Committee, BIM is “a digital representation of physical and functional characteristics of a facility” that can be used as a “reliable basis for decisions … from earliest conception to demolition.”2For example, RFID tags may be placed on decking material, and as the decking material is placed on the structural components of a building, a real-time 3D model is augmented to reflect the addition.

Before BIM, building design was reliant on computer-aided design (CAD). CAD creates a model of a building using three dimensions (width, height and depth), which are in turn used by roofing contractors to complete roofing projects. BIM uses CAD concepts and adds more dimensions, such as time and cost, to give project managers a more complete understanding of project workflow. 

The entire project can be modeled prior to construction beginning by using BIM, allowing for better preconstruction coordination among roofing contractors and other parties on the project. A roofing contractor can have a better understanding of materials and labor needed, as opposed to using older and simpler CAD technology. Further, project managers can use BIM software in concert with smart contracts to automate most of the project. A more detailed discussion of smart contracts and BIM is included later in the article; however, a better understanding of smart contracts and blockchain is necessary before delving into that discussion. 

Blockchain and Smart Contracts

The advantages offered by geofencing technology are abundantly clear. As previously mentioned this article, two of the technologies that will forever reshape the construction project landscape are geofencing and smart contracts. To better understand what smart contracts are and how they will also help drive the construction industry into the modern era, a basic understanding of blockchain is necessary. 

If you’ve ever used Google Drive or Microsoft OneDrive, then you already have a basic understanding of blockchain. Certain cloud-based programs allow a number of users to access a document at the same time, and as each user edits or adds to the document, all of the other users are able to view these changes and additions in real time. Blockchains work in an analogous manner. They are a database that tracks transactions, in the order they occur, and creates a record of each transaction. 

By combining blockchains with smart contracts, as well as BIM, a new form of project management can be, and already has been, created. In its simplest form, a smart contract is “a computer program that works on the if/thenprinciple.”3For example, ifa roofing contractor has installed decking on a building, then an inspection is requested to ensure the decking has been properly installed. If the roof deck passes inspection, then the roofing contractor is paid for his work and can be given authorization to continue to the next phase of the roofing installation. All of the different smart contract sections, as well as changes made to them, will be permanently recorded on the blockchain, eliminating a number of different issues inherent with typical project management.

Smart contracts work together on what is known as a Decentralized Autonomous Organization (DAO). The DAO is an organization that is run through rules encoded as the smart contracts. The DAO provides the ability of blockchain to deliver a secure record of the different transactions that occur. This enables roofing contractors and other individuals involved on a construction project to view the current status of the project on a fixed record that encompasses all of the transactions that have taken place.

Smart Contracts and Geofencing

Geofencing data, RFID triggers, and notifications can be used as a supplement to smart contracts that govern a construction project. Working together, these two dynamic technologies can increase project efficiency and lower project costs. 

· Materials: One of the biggest geofencing and smart contract applications is through material purchase, delivery, use, and payment. All contractors are familiar with the problems inherent in construction projects regarding payment. Subcontractors who finish their work want to be promptly paid, they want to have regular disbursements of payment if the payment isn’t to be made in full at project end, and they want the retainage held by the general contractor/owner. General contractors want to ensure that the work performed by their subcontractors passes inspection before releasing funds and will hold on to the retainage until such inspection is passed. When disputes arise as to the quality or progress of work performed, late payment issues will inevitably rear their ugly heads. With blockchain, many of these issues can be avoided, or at the very least mitigated, through the use of smart contracts which automatically provide payment when different aspects of a project are completed.

Just as with subcontractors and general contractors, the same issues arise between subs, general contractors, and their material suppliers. Issues arise over the delivery timing, prompt payment, payment amount, and a host of related problems. Combining smart contracts and geofencing, many of these problems can be alleviated. 

Using the if/then principle and site grading example mentioned previously, if the site grading equipment communicates to the project manager that proper grade has been achieved, then materials, such as concrete and steel, can automatically be ordered for delivery to begin the fill process. Once materials arrive on the site, and a project manager verifies that they are as contracted for, a trigger will be sent to the blockchain automatically sending payment to the material supplier. Further, if the materials arrive on time, labor may be directed to complete the site grading and filling process of the construction project. This simple example demonstrates the amount of resources saved and increased project efficiency from use of this new technology. 

· Labor: Another symbiotic effect from combining geofencing technology with smart contracts has to do with paying employees for their labor. As previously stated, geofencing allows contractors to monitor when and for what amount of time employees are on-site. Smart contracts allow employees to be paid automatically for labor performed. 

Employees who wear geofencing RFID tags or have geofencing software applications installed on their smart phones will be able to have their clock-in and clock-out times automatically recorded based on their entering the geofence perimeter. The geofencing software can communicate this information to the smart contract, and release payment according to the specific terms programmed in the contract. This removes the clerical and human error often found in standard time-keeping tools used today.

· Reduced “Paper Trail” Litigation: Owners and suppliers have become well aware of the legalities involved in most construction projects and are often ready to take advantage of the unprepared roofing contractor. When a construction project ends up in litigation, the party with most detailed and descriptive paper trail will typically be the most successful in the courtroom. 

Most contractors know to keep accurate written records of all communications involving disagreements over workmanship, material arrival or other potential information that is involved in claims on a project. These written records can include change orders, emails, text messages, and other correspondence. 

Geofencing and smart contracts will work to remove a number of the costs associated with litigating disputes between contractors and their employees when it comes to overtime and other employment related issues, as the data will be stored on the blockchain. A blockchain is “essentially a distributed database of records, or public ledger of all transactions or digital events that have been executed and shared among participating parties.”4Once a record has been created on the blockchain, it can never be deleted. This allows for instant verification that a transaction has occurred and allows for participants to view the transaction. Blockchain removes uncertainty from the playing field and allows for consensus between parties. All those involved with a construction project will be able to view transactions as they happen, eliminating uncertainty that usually comes with whether an employee was on-site and for what amount of time. 

Smart Contracts, Geofencing and BIM

Smart contracts and geofencing information can be used even further by being embedded within a BIM model that is secured by blockchain. BIM software allows data inputs from multiple sources. These sources can include smart contracts and geofencing data. 

As stated earlier, BIM can incorporate more than just the three standard dimensions of width, height, and depth. BIM can incorporate time and cost. The dimensions of time and cost can be further supplemented with smart contracts within the BIM software so that the entire project is centered on one convenient application. Building on the prior example of placing RFID tags on roof deck materials, once the roof deck has been installed, BIM software can work with the smart contract if/then principle to automatically send payment for completion of a portion of the scope of work, and request the next phase of the project to begin.

Through the use of blockchain technology, smart contracts, BIM and geofencing, construction projects could enter into a new, technology-driven, risk adverse system that reduces disputes and increases the likelihood of prompt payment and project efficiency. Roofing contractors and the rest of the construction industry will need to work together over the coming years to adapt to this new phase of construction projects. Soon all aspects of a construction project will be included in a singular platform that allows all those involved, including contractors, government officials, lawyers, and so on to work dynamically to reach project completion. 

About the author: Trent Cotney, CEO of Cotney Construction Law, is an advocate for the roofing industry and serves as General Counsel for FRSA, RT3, TARC, WSRCA and several other roofing associations. For more information, contact the author at 866-303-5868 or www.cotneycl.com.

Author’s note: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation. 

Sources

Why Do I Need a Marketing Plan?

As marketing professionals who have worked in the roofing industry for more years than we like to admit, we are very aware of the challenge that contractors have in developing and implementing successful marketing programs. With the flurry of lead generation companies popping up seemingly every day, and the SEO companies who promise first page of Google results, how can you decide what to spend money on and how do you know what will work? 

It’s very tempting to fall victim to “spray and pray” marketing, where you throw some money to a bunch of different things, spray some marketing ads or mailers out there and pray that it works and the phone rings. But it doesn’t have to be this way. Success comes from having a plan in place that supports your business goals and provides consistent activities and messaging. 

We know that marketing for roofing contractors can be confusing, frustrating and elusive. Most roofing contractors are craftsmen and women who have started businesses by understanding and excelling at roofing, waterproofing and building envelope technology. They are not marketing professionals, so it is hard to change gears and figure out how to sell or promote their services while also running operations, estimating, sales and the business overall. A good marketing plan helps drive marketing without having to worry all the time.

Taking the time up front to strategize and plan on how to market your business successfully enables you to move on to other challenges of the day, week or month. A good plan can be the template for what needs to happen daily, weekly and monthly to keep marketing on task. It also eliminates daily questions or sales calls for additional marketing initiatives. By creating and sticking to a yearly plan, you are simplifying the day-to-day decisions that can stymie progress.

Fewer approvals and more action reduce the stress put on decision makers and puts the action into the hands of the marketing professionals. Whether it is a person in the office, an agency or a marketing coordinator implementing the marketing plan, by being prepared ahead of time you will reduce the stress of making reactive decisions or, worse, doing nothing due to lack of time and/or planning.

A good marketing plan will also save you money. Without a plan it is easy to say yes to that advertising salesperson from the local media or free coupon website; or that great new advertising concept for ad words or events that is purchased mid-year without planning or research. It can cost the company in lost time, low productivity and extra expense when you do not budget in advance. When you formulate a plan and establish a budget, you can still move money around if necessary, but there is a set allocation to work within.

Timing is important. Look at starting your yearly marketing plan in the fall if possible. It should be a planned exercise to review the past year and look at the upcoming year. Reviewing statistics, campaigns and lead/close ratio is important before starting on the tactical plans for advertising, PR and direct marketing. By organizing budgeting meetings or even off-site working retreats with your leadership team (ideally comprised of leadership from sales, operations, accounting and marketing), you can take the time to review past performance while setting new goals that reflect growth. By being conscious of past performance, you will set the stage for developing strong marketing programs for the next year.

Establish Your Goals

In fact, you should not even start looking at a marketing plan until you have your goals set. What are the company’s plans for growth next year? Will there be new services or products? Will there be any changes in overall company mission? Marketing supports the goals of the company and supports the sales team in attaining the revenue and profitability goals that make a company successful. If you do not have strong goals and plans, then marketing will most likely flounder.

Regarding sales, it is critical that marketing works hand-in-hand with sales. The marketing plan needs to reflect the goals of the sales team so that the marketing activities are nurturing and delivering the right types of leads for sales success. If the goal is to grow metal roofing but marketing is delivering asphalt shingle leads that are not upgradable, both teams will fail. 

By understanding the types of customers the sales team is looking for and the products and services they will be selling, a marketing plan can be created that will result in success for all departments as well as for the company.

By creating a marketing plan for your roofing business, you are taking the time to determine the ideal customer for your business and how you will attract, convert, close and delight that customer. A good marketing plan that is well thought out will address every stage of the sales and marketing process and detail how you will retain the attention of past customers while also gaining ongoing referrals.

So, let’s get back to that original question: how will you know where you should be spending your marketing dollars? Well, it depends. That’s the reason developing your marketing plan is so important. During the process you will have identified your goals and ideal customers. If your business goal is to focus on commercial roof restorations, then you want to invest dollars where your customers can be reached. You might consider joining your local chapter of a building owner or facility manager’s group, or implement an advertising program on LinkedIn that targets specific job titles in your area. 

On the other hand, if your business goal is to focus on residential roof replacements, you might consider a digital advertising program that is geofenced to target neighborhoods with homes that are 20 years or older and will soon need a new roof. The strategies that you use to reach your customers really depend on what you have determined in your marketing plan.

Your marketing plan serves as a guide for your business. It spells out your company’s positioning statement, the markets you will serve, your yearly goals, your brand promise, the tasks and timelines as well as the tools and technology needed to achieve your goals. It will also help you determine budget and resources needed to implement the tasks, campaigns and initiatives detailed in the plan. 

About the authors: Heidi J. Ellsworth and Karen L. Edwards specialize in the roofing industry, helping contractors, manufacturers and associations achieve their marketing, branding and sales goals. They have authored two books: “Sales and Marketing for Roofing Contractors” and “Building a Marketing Plan for Roofing Contractors.” Both are available in the NRCA Bookstore and on Amazon. 

Proper Documentation Can Be the Key to Dispute Resolution

Ever been told to dance like nobody’s watching? 

That advice is great for weddings and end-zone celebrations. But after wrapping up a week-long trial, your exhausted, cynical lawyer probably thinks “write every email like it will one day be a courtroom exhibit” is far better advice than the dancing thing.

This might sound needlessly frightening, but for construction professionals working on challenging projects, documentation can make or break the ability to successfully negotiate — or, if it comes to it, prove the merits of — a dispute with another party. 

Below are some items that, if handled properly, can help companies establish their side of case and that, if handled poorly, can constitute problem areas. 

Contract Documents and Statutory Notices 

Many legal rights on a project come from the parties’ written contract agreement. Basic measures like ensuring the both parties have signed — and not just received — the contract can be crucial to preserving these rights. It is also a good practice to keep a copy of the signed contract and all attachments in a location where it is accessible to project managers and others who have authority to deal directly with the other party. As always, reading the contract in advance, and perhaps consulting with an attorney before signing the contract, is an important practice. 

Having a checklist for every project can also help ensure that good practices are routine, and not just employed for especially difficult projects. If practices are done on every project, no matter the size or complexity, it is easier to ensure that companies will comply with them. 

Potential project checklist items include: 

  • Has a written contract been signed by both parties and saved in the project file? 
  • Are certificates of insurance on file for all subcontractors? 

Checklist items for privately owned projects: 

  • Have any statutorily required project statements, notices of contract, or notices of subcontract been properly filed and served? 
  • Have any statutory prerequisites to filing lien claims been met — such as North Carolina’s requirement to serve a Notice to Lien Agent? 

Checklist items for publicly owned projects:

  • Has the payment bond been obtained?
  • If required by state or federal statute, has the payment bond surety information been sent to all parties?
  • Have statutorily required notices of contract or notices of subcontract been properly served or filed? 

Notices 

Most written prime contracts and subcontracts require parties to give written notice to the other party to communicate various things, like change orders, claims for extra payment, or the other party’s breach or default. Failure to provide notice using the proper means and by the required deadline can prevent contractors from asserting their contractual rights. To ensure compliance with contract provisions, ensure that a copy of the contract is accessible to the project manager and that notices are dated, signed (if applicable), and that copies of the notice are preserved. If notices are sent by email, a good practice is trying to obtain a delivery or read receipt. Notices to cure should state specifically what is expected of the other party in order to cure a default and what will occur if the other party does not cure the default. 

Where Notices are concerned, do the following:

  • Keep a copy of the signed, written contract in a place where project managers can easily access it.
  • Send requests for change orders and additional time or money in writing.
  • Send notices to the right person. The written contract usually dictates to whom notices should be sent, and sending notices to a person with managerial authority is generally recommended. 
  • Consult with an attorney and send a written notice before invoking contractual remedies like self-correcting defective work, supplementing a subcontractor’s workforce, or terminating a subcontractor. 
  • Maintain copies of any letters, correspondence, or notices sent to another party, including copies of proofs of service like Certified Mail cards, email read receipts, or fax confirmation sheets. 

Confirming Emails 

Emails and text messages constitute the bulk of the written communication on most construction projects today. Both emails and text messages — whether they are sent from work or personal devices — are discoverable in legal cases, meaning that companies will be required to provide them to other parties in the case during the litigation process. This may be true whether or not the company or sender believes they are relevant. The implication is twofold: contractors should send emails and text messages with care and should assume that they could one day be seen by an opponent, judge or jury. On the other hand, when used effectively, emails and text messages can be used to accurately document parties’ agreements and understandings about what will occur on the project. 

With all communications, but particularly email, attorney-client privilege is an additional concern. The attorney-client privilege protects communications between an attorney and his or her client. The client has the right to keep these communications confidential in nearly all situations. However, the attorney-client privilege can be waived if communications are shared with third parties. The ease with which people can forward and share emails makes waiving the privilege dangerously easy. In some situations, waiving the privilege once can mean waiving it in future situations. 

Below are some do’s and don’ts that can result in helpful, not harmful, emails.

DO

  • Send emails to document conditions on a project. 
  • Send emails to confirm important conversations, especially ones about dates of mobilization or that contain notices. 
  • Respond to any emails that accuse you or your company of failing to fulfill any contractual obligation. 
  • Ensure you have access to the emails of any employees who leave the company. 

DON’T

  • Don’t forward your correspondence with your attorney to others. This could waive the attorney-client privilege. 
  • Don’t copy people outside of your company on emails to your attorney. This could waive the attorney-client privilege. 
  • In a dispute over fulfilling contractual obligations, don’tlet the other party have the last word. If you are sent an email accusing you of wrongdoing, not responding to an email can make it appear that you agree with it. 
  • Don’t send emails from your personal account. If you ever need to pull and produce all of the emails related to a project, it will be much easier to do if you are only pulling from one account per employee. 
  • Don’t use profanity or offensive language or phrases. If there is anything you would be ashamed of a judge or jury seeing you say, think twice before typing it. 

Daily Reports and Photographs

Daily job reports, if done well, can serve as a diary of what occurred on a project. While emails can be helpful, too, photographs do not lie, and daily reports with objective information like number of workers, hours worked, and weather conditions can effectively corroborate a company’s narrative of a story or dispute another side’s version. 

These types of documents typically have to be authenticated in court in order for them to be admissible as evidence, so if possible, it is best for the person who wrote a report or took a photograph to be able to testify about the origin of the document itself. 

Recommended procedures include: 

  • Have competent, trusted employees, such as project managers, take photographs and complete daily reports. 
  • Have a system in place for uploading photographs and saving them in the construction file so that they are centrally located, not just stored on employees’ individual phones or tablets. 
  • Ensure all photographs are dated or otherwise stored so that dates and identities of the people who took the photographs can be accessed. 
  • Complete daily reports documenting conditions like date, weather, number of workers, and anything pertinent occurring on the project site.  

About the author: Caroline Trautman is an attorney with Raleigh, N.C.-based Anderson Jones PLLC. Questions about this article can be directed to her at ctrautman@andersonandjones.com.

Author’s note: The above article is not, and should not be construed as, legal advice. For specific advice, consult with an attorney licensed in your state.

Your Organization Works Best When the Right People Are in the Right Positions

Have you ever watched a football game and thought about your business? I did that the other day. It struck me that there is great value in considering your business as if it were a football team. The basic structure is set. What matters is who occupies each position — and that includes the staff.

When we look at a football organization, we see specific positions that require certain skills. It’s pretty clear. There can be crossover where a player has skills that fit more than one position. This makes the team more flexible.

We can use the football org chart for a company as a whole, or for a department within a company. The hierarchy works just as well in either. While the structure is important, the behavior of the people in the various positions has tremendous value.

What does it take to become a Super Bowl-worthy football team? The right people have to be in each position. The leadership has to be skilled at coaching the players. Everyone has to appreciate their role as part of the whole and contribute consistently. 

The degree to which the leadership directs the team is directly related to how seasoned the team is. A young team — one that hasn’t worked together before — requires more direction and management. The more seasoned, experienced team can work with less direction and more autonomy. 

Let’s use the New England Patriots as our example. We can easily argue that the right people are in the right positions from the head coach to the assistants to the entire player roster. There is a respect throughout the organization — everyone respects everyone else’s ability to do their jobs. This respect is translated into expectations. There is consistent conversation about what is going on during a game. Ideas are discussed, plays are attempted, and adjustments are made as needed.

Sometimes the quarterback calls an audible, changing the play in the moment. Members of the defense are often communicating with their teammates about what they see on the other side of the line. Players change positions prior to the snap. 

Why does this matter to business leaders? How we successfully lead determines whether we have a Super Bowl team or not. And that is directly related to how successful our company continues to be.

There are four things that we can take from a Super Bowl football team to lead our businesses more effectively. They are referred to by the acronym PECK:

  • People
  • Empowerment
  • Communication
  • Kudos

People

Every organization works best when the right people are in the right positions. It’s about skillset and attitude. Each role has specific functions that must be completed accurately, effectively, and in a quality fashion. It’s critical for the leadership to look first at someone’s attitude, second their skill set, and third, their accomplishments. Too often, leaders promote people beyond their ability. Or they put someone in a job because they need the position filled. Those are inadequate reasons and lead to failure. 

Start from the job description. What skills does the person need to possess in order to do the job well? Match them and you are far ahead. The attitude you are looking for is one of team player, commitment, can-do; the person should be able to work independently and with little direction. To ensure you are hiring someone who really is suited to the position, consider their past performance in a similar position.

Remember — a good salesperson won’t necessarily be a good sales manager. The positions require different skills.

Empowerment

Want to get a lot out of your staff? Empower them to take ownership of their job. Many leaders think they have to micromanage every action of every employee. The truth is this — micromanaging signals a lack of trust. When you don’t trust that your employees know what to do, or will go ahead and do their jobs, you hover, monitor, and micromanage. It’s disrespectful and only causes low morale. You don’t get what you are hoping for; quite the opposite.

When you have the right people in the right positions, it’s easy to empower them to perform at their best. The right people have the right skills and know what to do. They are able to analyze a situation and adjust if necessary. They are able to work together toward a common goal. And they understand how their participation impacts the organization as a whole. 

Empowerment is a show of respect. It makes everyone’s job easier.

Communication

Communication is the key to success in any organization. The more we share information, and solicit input/feedback, the more cohesive our team will be. Everyone on the team should know and understand the goals of the organization as well as the reasons behind any initiatives. Things can change, and those changes can have an impact on how the employees do their jobs and live their lives. Sharing the “why” behind all decisions mitigates any concerns or challenges moving forward.

Along with sharing these details, seeking information, ideas, and feedback is one of the best ways to involve staff members in the actual operation of the business. It may be limited to their role in the company. The point is that open, honest, and reciprocal communication builds camaraderie and increases buy-in.

The opposite is also true and deserves mentioning. Withholding information and failing to seek input tells your people you don’t value them. After all, if you respect and care about people you communicate with them. 

Kudos

Celebrate successes, no matter how small. Acknowledge individual accomplishments. Positive feedback and reinforcement work wonders for continued commitment to the team. Considering our Super Bowl team, there’s a variety of celebration activity, from end zone celebrating to coaches patting players on the head or the back. Accomplishments are celebrated. When people feel appreciated, they excel.

Take a look at your company and ask yourself, “Is this a Super Bowl team?” If you’re not sure, it’s worth a deeper dive. Consider whether you have a PECK system in place. The good news is you can make adjustments and institute changes at any time. You can turn things around and create an environment where everyone performs at their best.

About the author: Diane Helbig is a leadership and business development advisor helping business owners around the world. She is the author of Lemonade Stand Sellingand Expert Insights,as well as the host of the “Accelerate Your Business Growth” podcast. For more information, visit www.seizethisday.co.

What Can Visiting a Car Dealership Teach You About Closing Quotes After Roof Inspections?

Assessing a roof is easy. Assuming you have the basic technical skills, which are not difficult to learn, analyzing a roof and determining what deficiencies are present, what needs to be done, what can wait, all of that, really isn’t that hard to do.

So, why do so many roofing contractors have trouble selling the repairs their reports recommend? (And when they don’t sell the repairs they often think the problem is with their report format). Let’s see if we can bring some clarity to this.

Years ago, in my role as roofing consultant, I had a client give me a copy of an assessment report performed by a roofing contractor with a quote for about $36,000 of recommended repairs to correct deficiencies they found on a shopping center. I had also inspected the roofs and I agreed that everything they presented was a legitimate deficiency. So, what did I recommend to my client? I recommended we do none of it!

Let me give you a bit more information about the roof. In the three years that my client had owned the 84,000-square-foot shopping center, they have never had single roof leak and the well-installed gravel surfaced built up roofs were about eight years old. Do you really think a building owner is going to spend $36,000 on an 84,000-sqare-foot shopping center that had never leaked?

When you drop your car off at the body shop to have them fix a scratch on the right rear quarter panel on your car, you don’t expect them to fix the scratch, repaint the whole car, install new rims and tires, tint the windshield and upgrade the radio.

Tip 1: Most roofing contractors doing assessments produce reports and quotes “recommending” way too much work.  Just because something on a roof isn’t perfect doesn’t mean you have to fix it, at least right away. For instance, just because that EPDM wall flashing is starting to bridge, you and I both know it isn’t going to rip open for at least another three or four years and perhaps longer. (And there are exceptions, sure, but if you are on the roof regularly, monitoring it, there is no chance you won’t see it coming.) When you quote the repair of those flashings, it is the same as getting a quote to “install new tires and rims, tint your windshield and upgrade the radio” when you took your car in for that scratch on that right rear quarter panel.

There is another factor that comes in to play. When you dropped your car off at the body shop and when you see a quote to do all that unrequested work, you know you don’t need it. That isn’t the case with the typical building owner and his roofs.

The typical building owner, property manager, facility manager, building engineer, asset manager knows less about roofs than your receptionist. Think about that for a minute. While there are exceptions to this rule, they are few and far between. Do you know what that means? It means that they are not going to understand the report you produce. You can tell them what a flashing is and they will nod their head up and down. That doesn’t mean they understand. If you, instead, asked them to explain to you what a flashing is and you listen to their answer you will quickly discover that they have no real idea what a flashing is. But here is what they do know: They don’t need to spend $36,000 on a shopping center that doesn’t leak. Since they can’t understand your report, they just do none of it.

Tip 2: If you give them a laundry list of things to choose from, they will often choose “none of the above. ”So, make sure you explain why each of these things is necessary and the possible consequences of not doing them.

Tip 3: “Sell” your assessments as a way to manage an aging roof. While we can all agree that roofs should be inspected regularly, let’s also agree that the roofs that most need to be inspected regularly are aging (or problematic) roofs. Especially when you are trying to start work with a potential new client, point out that it is often possible to cost effectively extend the life of an aging roof, and the best way to figure out exactly if that might be possible and how to do it is with a formal assessment. Importantly, this also gives you a context for understanding what they are after and makes it much easier to avoid the issues mentioned in both Tips 1 and 2.

Let’s say you decide to buy a new car. You walk into the dealership and lady behind the desk says, “Just a minute, I’ll get somebody for you.” Shortly, a mechanic in greasy coveralls comes walking out the service area, wiping the grease off his hands with a rag. He walks you over to a car on the show floor and says, “You should buy this one. It is a real good car.” That isn’t how it works? Really? (And, do you think that mechanic should be surprised when you don’t buy that car? Then why are you surprised when your estimators only sell one in five estimates they put out for repairs?)

Does the professional salesman you actually buy your new car from know as much about how that car works as the mechanic? Probably not. Then why do you suppose auto dealers use salespeople to sell cars rather than mechanics or others with excellent technical expertise? Because salespeople know how to sell. In our industry, we routinely see commercial roofing service salespeople closing over 60 percent of their sales. Once you made the adjustments recommended in the first three tips, if you are not closing 60 percent or more of your service estimates coming off assessment reports, you need to follow the advice in Tip 4.

Tip 4: Hire a true sales professional to sell. When your payroll clerk and bookkeeper are both off work due to maternity leave and an auto accident, would you grab two guys from a tear-off crew and have them do the bookkeeping and payroll? If a couple of guys don’t show up on a Monday at the start of a large tear-off, do you send your payroll clerk and bookkeeper out to help with the tear-off? Then don’t expect the guy who you have assessing your customers’ roofs to also sell them the work you are quoting. Hire true sales professionals and watch your revenue grow.

By following these tips, the quality of your assessments will go up and so will your closing ratios.

Lien Pre-Notice Requirements Can Have a Drastic Impact on Lien Claims

For contractors or subcontractors seeking past-due payment, mechanics’ liens are often a necessary part of the collection process. The ability to encumber title to a property — and potentially foreclose on the land to satisfy debt — is a uniquely powerful tool claimants can utilize to collect final payment or favorably settle an account, allowing contractors to close out their project files and move on. Each state’s requirements differ, and precision and accuracy are typically imperative to success. For example, missing the state statutory deadline or inaccurately describing the subject property will usually invalidate the lien. Satisfying all of the requirements is very important, as the mechanics’ lien is often the only way to give real teeth to a contractor’s claim for past-due payment.

Accordingly, most subcontractors and suppliers frown upon anything that would make it more burdensome to successfully make a lien claim. For this reason, the emerging trend of “pre-notice” or “pre-lien” requirements — and their potential deterrent effect on lien claims — deserves attention. Twenty-five states require lien claimants to provide the project owner (or the owner’s agent) with a “pre-notice,” which is a written notice in which the claimant identifies itself, the party with whom it contracted, and what labor or materials it will be furnishing on the project. (States requiring a pre-notice in at least some circumstances include Arizona, Arkansas, California, Florida, Georgia, Indiana, Maine, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, Ohio, Oregon, Tennessee, Utah, Virginia, Washington, Wisconsin, and Wyoming.)

A key characteristic of the pre-notice is that it is a prerequisite to the later filing of a mechanics’ lien under at least some circumstances. Pre-notice requirements usually require contractors and subcontractors to take action at the beginning of a project to secure their future right to file a mechanics’ lien — even if at this stage they are owed no money or have no reason to believe they would ever need to file a lien. In nearly every state with such a requirement, failing to file the pre-notice is a complete bar to ever filing a mechanics’ lien on the project in question. The pre-notice step is typically in addition to the other steps claimants already have to take to successfully make a lien claim. These other steps usually include filing and serving the lien and filing a lawsuit to enforce the lien by the required deadlines.

Proponents of pre-notice requirements often point to the positive consequences they can have for both claimants and project owners. Often, the purpose of these requirements is to place the project owner or its title insurer on notice of all parties who are furnishing labor or materials on the property. Notice of potential lien claimants helps owners avoid liens from emerging retroactively through the doctrine of “relation back,” which makes mechanics’ lien effective as of the date of the contractor’s first date of furnishing of labor or materials, even if the lien is not filed until later. Theoretically, if an owner knows who all of the subcontractors and suppliers are beforea closing or refinance occurs, the owner will have an incentive to pay any unpaid parties who could later file liens that would relate back to the parties’ first date of work on a project and cloud the title afterthe sale or refinance. Also, in many states the pre-notice will validate the lien even when the pre-notice is served after the statutory deadline as long as it is served before the property refinances or conveys to a new owner.

Potential Pitfalls

Because they add steps to the administrative and legal procedure for lien filing and potentially deter claimants from being successful, pre-notice requirements are generally unpopular among lien claimants. A less obvious, but significant, consequence of pre-notice requirements is the negative impact they can have on customer relationships. For many general contractors, pre-notices going from their subcontractors or suppliers to an owner feel overly aggressive because they come at the beginning of a project, when no money is likely to be owed yet. General contractors do not want their customers — the owners — to think that their subcontractors are worried about being paid promptly. General contractors also don’t enjoy the idea that a subcontractor or supplier is litigious or intends to one day file a lien on a project, and some of them make this known to their subcontractors. The result? Many potential lien claimants will refrain from filing or serving a pre-notice in an effort to satisfy the general contractors. But if the general contractor or owner encounters financial trouble or fails to make contract payments down the road, these would-be claimants will have jeopardized or eliminated their ability to assert a lien claim.

North Carolina’s statute is an example. The statute has long required that lien claimants file and serve their liens within 120 days of the last date of furnishing on a project and perfect their lien claims with a lawsuit within 180 days of the last date of furnishing. In 2013, North Carolina’s legislature added a pre-notice requirement that lien claimants file and serve a “Notice to Lien Agent” within 15 days of commencement or before a sale or refinance takes place. A Lien Agent is the title insurance company assigned to the project. The Notice to Lien Agent is typically served using an approved statewide electronic filing system that transmits notice not only to the Lien Agent but also to the general contractor. In addition to North Carolina, another 10 of the other states with pre-notice requirements also require the notice to be sent to the prime contractor. (These states include California, Georgia, Michigan, Minnesota, New Mexico, Ohio, Utah, Wyoming, and Virginia.)

For many general contractors, this sends a message that subcontractors or suppliers either don’t trust them to make timely payments, or, worse, that they intend to file a lien on the project. One North Carolina concrete supplier reported that as a regular practice, his company files and serves a Notice to Lien Agent on every project where it furnishes material, but that “we’ve lost customers over it.” He said that he understands why some suppliers don’t file the Notice to Lien Agent but said that for his company, protecting prospective lien rights and the right to full payment outweighs appeasing customers who are offended.

An impending change to the North Carolina statute may complicate the pre-notice procedure further. Beginning October 1, duly filed and served Notices to Lien Agent will expire after five years and will have to be renewed at that time. Furthermore, lien claimants will be required to “cancel” their Notice to Lien Agent “a reasonable time after the potential lien claimant has confirmed its receipt of final payment.”

Because North Carolina’s only approved electronic filing system for Notices to Lien Agent, www.liensnc.com, currently has no mechanism for canceling a Notice to Lien Agent, under the current system if a lien claimant has served the Notice, there is no official way to un-serve it. When the new law is passed and the electronic system is changed accordingly, general contractors who make their displeasure known to their subcontractors could potentially influence their subcontractors to cancel the pre-notice prematurely — thereby potentially eliminating their ability to file a mechanics’ lien, even if non-payment occurs.

Whether subcontractors and suppliers want to make a regular practice of filing and serving mechanics’ lien pre-notices is a judgment call for them. But in an increasing number of states, this could mean effectively waiving any lien rights they have.

Psychology-Based Strategies Can Help You Close More Deals

Getting potential customers to choose your roofing company rather than the competition comes down to more than just a name or reputation. Because consumer buying decisions are based in human psychology and emotion, you need to know how the brain interprets information so you can adjust your sales strategy accordingly.

To help close your next big roofing job, try incorporating some of the following psychology-based strategies into your advertising and sales pitch.

Use the Framing Effect

Consumers hate to miss out on opportunities.

For example, consider these two statements:

  1. Book an appointment online and receive a discount!
  2. Book an appointment online before August 1 and receive 10 percent off a new roof installation!

Both offer essentially the same proposition — book online to save some money. Put the first one on your website and you would get a few responses. Use the second appeal, however, and you could expect a considerably higher conversion rate.

Adding a deadline triggers a psychological technique known as the framing effect in your customers’ minds.

According to the framing effect, people react differently based on how options are presented. The thought of being left out — a condition known as loss aversion, or FOMO (fear of missing out) — causes a stronger, more immediate response than a simple discount or reward does.

Marketingland.com used college students to document how the framing effect works. Researchers sent emails reminding Ph.D. students to register for an economics conference. Some emails offered a discount for registering early, others mentioned a penalty for registering late. The penalty email had a much bigger impact, spurring 93 percent of the recipients to sign up early. By contrast, only 67 percent registered early when presented with the discount option.

Understanding the framing effect helps you position your value more effectively to customers. Combine that knowledge with some local market research and you have a good chance of outmaneuvering your competitors.

You Get What You Pay For

In addition to urgency and gain, consumers generally feel better when paying more for things that have tangible value versus paying less on a purchase with suspect quality or little value. To most consumers, price is a reflection of the quality of your work. Furthermore, your willingness to price match is a reflection of how much value they should place in you.

Consider the psychology of “we match all competitive quotes,” “lowest prices in town” or “free roof inspections.” You have set an expectation that your time has no value and your brand is built around a willingness to be cheap. When you take the time to defend your price with a well-developed sales pitch and refuse to compromise on quality, your customer will view your bid as a benchmark for all the rest.

Just keep in mind that you won’t win them all — because there will always be a segment of the market looking for the lowest cost and a company willing to offer it.

Avoid Analysis Paralysis

Always give customers fewer options. This strategy may sound counterintuitive, but if you give consumers too many alternatives, they are likely to avoid choosing any — a result known as “analysis paralysis.”

Instead of overwhelming buyers with every shingle type and color, group your products into a handful of categories from which they can choose, or perform a needs analysis to condition the sale before presenting product options.

Provide Social Proof

People like to fit in with the crowd and follow their peers. If one person approves of your services and products, his/her friends and family are likely to approve too. It’s a technique called social proof.

You can use digital media platforms to provide social proof and showcase how your current customers are benefitting from your roofing expertise.

For instance, always ask recent customers to write reviews on Facebook, Google and the Better Business Bureau (BBB). And don’t forget Yelp and other review sites. You can also encourage your customers to share your social content on their own Facebook pages, which they are more likely to do if you post transformative before-and-after photos and/or videos of their home.

Apply the Theory of Reciprocity

Giving people something helps create a bond between them and your company — even if it’s something as simple as a “like” on Facebook, a helpful video you share or an EagleView Report showing aerial images of their home.

Creating a feeling of loyalty can inspire customers to remember you when they are ready to tackle their next big project.

Let Your Body Talk

When meeting with prospects in person, use nonverbal cues in your body language to help make a good first impression and establish trust.

For instance:

  • Open your arms. Crossing your arms signals a closed-off or defensive attitude. Keeping your arms open and relaxed shows that you’re fully involved and interested in the discussion.
  • Lean forward. Leaning forward and in toward customers illustrates that you’re engaged in the conversation and paying attention.
  • Mirror. Try to match and mirror the body language of prospective buyers. Reflecting back the same posture, gestures and movements as your customers helps them to relax and feel comfortable during the sales pitch.

Tap Into The Reptilian Brain

Consumers continuously evaluate whether products and services are worth the cost. This decision-making process takes place in the reptilian brain — the oldest evolutionary layer of the brain. The reptilian brain is made up of the brain stem and cerebellum, which not only control the body’s vital functions, such as breathing and heart rate, but also instinctual actions and decisions.

Grab the attention of a customer’s reptilian brain with your company’s website or advertising and you’ll have a much better chance of guiding them toward a sale. This strategy is known as neuromarketing.

For example, the reptilian brain easily understands contrast. Show customers why your business is better than your competitor’s and why what you have to say is important. To stand out, use phrases such as “We are the only …” and “We are the best.”

The reptilian brain is geared to respond to visuals, so images can be far more persuasive than words. Be creative in your communications. Use short, simple sentences and include images that demonstrate the value of your claims. Incorporate customer testimonials as proof and share quick demonstrations of your products that will grab a consumer’s attention.

Incorporating psychology into your sales pitch and advertising is not about trying to trick customers. It’s about understanding how people’s brains interpret information so you can make decisions and focus your messaging accordingly.

Using these strategies to understand people’s minds can help you be more confident in your dealings with prospective customers and ultimately help you land more jobs.