Many companies are experiencing quite a decrease in their gross income while others are “doing great!” In fact, according to Dodge Construction Potentials, as of June, Non-Residential construction was down 38% in Lake County from the same period a year ago. But the Residential market is UP 4% for the same period. Next month or next year that will turn around. So be patience. Better times will come.

Interest rates have come up slightly. And the stock market has been steadily rising. Maybe this is the “bottom” and the economy will improve from here on out.

The year 2004 is going to be a better year than 2002 or 2003. Now more than ever we need to stay positive and look to the future to assure the construction market is there when the economy improves, and members remain competitive with non-union competition. These are the tasks that your association is best at. So please keep supporting your fellow members and Lake County Contractors.
Top

The cost is just $2,800 per person and may be less depending on the final number of passengers. Typical of LCCA trips, you leave the planning and the headaches to us. Tours are typically in the morning and most afternoons and evening are yours to do as you please. And both Barcelona and Bilbao have lots to do. We will take care of the tourist sites, and leave you time to explore the rest - shopping, gambling, eating, attending plays, sporting events and a host of other exciting offerings.

To get your ticket, call the LCCA office at (847)623-2345 for a reservation form, complete and return it with your check for $500 per person to LCCA. What better way to see Spain than with your LCCA friends. Don’t miss out.
Top

This is the second year for this offer and there will be more. Better luck next time.
Top

Timesavers, Inc. 835 Industrial Drive Elmhurst, IL 60126 Phone: (630) 782-7666 FAX: (630) 782-8288 Supplier Steve Kirk, Vice President & C.O.O. Rental and sales of aerial work platforms and construction forklifts SPONSOR: Illinois Contract Glazing

Monitor Surety Managers, Inc. 2850 W. Golf Road, Suite 800 Rolling Meadows, IL 60008 Phone: (847) 806-9754 FAX: (847) 806-7069 Associate Mark Landes, Underwriter Richard D. Jones, Midwest Regional Manager Rental and sales of aerial work platforms and construction forklifts SPONSOR: Dan Baright, Osmond Insurance Service
Top

You get the job and about half way through, a notice from the IDOL arrives alleging a violation of the State Prevailing Wage Law and looking for $2.34 per hour worked plus penalties! It won’t take long to give back the money SAVED by not checking the rates!

If you think it could not happen to you, think again. Anyone bidding a prevailing wage job in Will or Grundy County beginning next month, and planning to employ Teamsters, face the prospect of this happening.

Unfortunately, MARBA is not the only association that is negotiating agreements with Teamsters and many other trades. In this case, the Contractor’s Association of Will and Grundy County has recently negotiated a new agreement with Teamsters Local 179 that provides base wages beginning at $29.04 and another $8.10 for H&W and Pension. The MARBA agreement with Teamsters District 25 provides $27.50 in wages and $7.30 for H&W and Pension - a $2.34 difference.

So, if you pay the MARBA union rate in Will or Grundy County, you will be $2.34 below the “Prevailing Wage” and in violation of the law. CHECK THE RATES. A few minutes when you are preparing a bid can save a lot of grief later!
Top

• Teamsters Local 301: The rates for Class 1 and 2 drivers are fine, but somehow; the rates for Class 3 and 4 are more than $1.50 higher than the MARBA rate. Obviously an error but, error or not, you are liable if you do not pay the higher Prevailing Wage! P.S. Local 301 has informed us they are correcting the error.
• Sheetmetal Workers Local 73: The current Prevailing Wage for Sheetmetal Workers is $30.73 in wages and $11.59 in H&W, Pension and Training. The current union wages are $33.37 in wages and $12.89 in H&W, Pension and Training. This gives a non-union company about a $4.00 edge in just wages and fringes.
• Laborers, Electricians, Ironworkers, Heat & Frost Insulators – All have not been updated with the new raises effective June 1.
• Pipefitters Local 597 – In addition to no updates for June 1 increases, the Prevailing Wage lists no training fund – $.59 per hour a non-union company will not pay!
• Painters & Bricklayers – Both painters and Bricklayers have errors in the Training fund. The Bricklayer’s Prevailing Wage for training is $.05 too low and the Painters is $.10 too low.

Remember, that if you are awarded a Prevailing Wage job, you must pay no less than the Prevailing Wages listed in the contract documents. It does not matter to IDOL if the wages and benefits are wrong. These are the rates you must pay.
Top

You can expect to see a PLA on future state funded projects. The actual PLA that will appear in your bidding documents or contract will vary. A state wide PLA is being developed by the state AFL-CIO and Bob Boller, Boller Construction, and Gary Dowty, LCCA, have attended several meetings leading up to the publishing of the PLA. Generally, LCCA is not opposed to a PLA. In fact it assures a union project that helps level the competition for union contractors. The question is not whether the job will be built union, but which union.

Jurisdictional disputes that get to the NLRB for resolution will be settled on the basis of “industry practice” and “economy of operation.” This considers how you have done the work in the past and rewards lower cost unions for disputed work. Most PLA’s look to the unions to decide the issue and inform the contractor of the result. So what you save by having a “union project”, you may lose because it is the wrong union!
Top

On the Soldier Field project, the project had a PLA that sent jurisdictional disputes to an arbitrator for final decision. A carpentry subcontractor’s contract included the installation of TV brackets throughout the facility. They were not signatory to the electricians contract and chose to install the brackets with carpenters as they had in the past.

The arbitrator chose to consider which union installed the most brackets and other union decisions in reaching his opinion that the electricians should be awarded the work. Since electricians are about $7 more per hour, this is a very expensive decision. And who will ultimately pay for the change of jurisdiction? You may unless your contract clearly states the trade your bid is based on. Of course you should check with competent legal advise before signing any contract.
Top

They also predict construction employment in Lake County to reach almost 25,000 this year, and grow to over 31,000 (a 25% increase) in the next 10 years. I would hope they know where the work is coming from to keep all these people busy. By contrast, the estimated construction employment in the six county region is 261,000 this year, increasing to 291,000 in ten years. This is just an 11% increase.

Several mega projects such as O’Hare expansion, a $4 billion cleanup of Lake Michigan and other projects on various wish lists could swing the curve quite dramatically.

Some other interesting facts (not construction related) include:

• Township High School District 113 (Highland Park) has the highest operating expenditures per pupil in the Chicagoland 6 county region ($17,636 per student).
• Warren Township District 121 ($8,798 per student) and Grayslake High School District 127 ($8,731 per student) are among the 5 lowest spending districts in the Chicago region.
• WGN-AM is the top radio station and WLS (Channel 7) the top TV station.
• The average single-family house in Lake County is now $195,000 – up 8.3% over a year ago.

And finally, of the 1,468 service companies in Lake County, 214 are construction related firms. We still have a few prospective members out there.
Top

The Zero Injury Safety Plan is a program that will assist contractors to meet a goal of zero injuries. It is designed to direct your attention to the most important elements of a safety program. It is NOT a traditional safety manual. It is assumed that the person using this program is well versed in the safety requirements for your type of construction.

But knowing what hazards exist and having a plan to eliminate those hazards are usually two different things. This program is divided into four sections.

• Planning for Safety – Safety issues to consider when preparing a bid for a project.
• Jobsite Safety Management – Managing safety during the construction cycle.
• Safety Orientation & Training – Training requirements.
• Recognition Programs – Suggestions for incentive programs.

Checklists are provided to assist with meeting the goals of each major section. These checklists are not intended to cover all safety hazards to be found on the job. Rather, they are a guide to make sure that potential injury causing activities are identified so protective or corrective actions may be instituted.

The whole program is only 25 pages long and is available free of charge to LCCA members by sending an email requesting LCCA’s Zero Injury Safety Plan to gdowty@lcca-il.org. By return email we will send you a copy in Microsoft Word or Rich Text format (please specify) for your use.
Top

First, OSHA clearly defined the term "immediate operations". In §1926.250(b)(5) the regulation reads, " Materials shall not be stored on scaffolds or runways in excess of supplies needed for immediate operations".

According to the OSHA explanation, "immediate operations" means work that will be done in the shift. That means no overnight storage as well as no multiple day storage.

OSHA also connected the clarification to the scaffold standard that specifies "Scaffolds and scaffold components shall be inspected for visible defects by a competent person before each work shift, and after any occurrence which could affect a scaffold's structural integrity". Any materials stored on a scaffold at the beginning of a shift would obstruct this required inspection.

In addition, if the scaffold or its components are constructed of wood, the standard prohibiting covering wood platforms in a way that obscures either the top or the bottom of the platform would also be violated.
Top

When a safety professional responds to an accident call, he or she faces several important decisions which can create serious liability years down the road. Therefore, an initial assessment must be made to determine the possible outcomes of that investigation. Consider these guidelines:

PRINCIPAL #1: TRUTH WILL WIN OUT - The purpose of a good safety investigation is to protect all parties and prevent loss. This is a “tall order”. While you are filling that “tall order” much of your investigation will become discoverable in a future court of law. A professional seeks to take the truth and deliver it as proof. Careful documentation creates the baseline for how that truth will be played out.

Before you begin, you should seriously consider establishing an attorney client privilege. This is necessary for all fatality investigations, serious accidents involving the general public, and any occurrence that could lead to tort action such as a product liability lawsuit. Call your company attorney before beginning the investigation!

Statements taken must be recorded in the “I said - He/She said” format. Otherwise you may find your opinion, and other documented expert witness opinion, damaging to how the truth is interpreted.

All photographs, statements, diagrams, and ‘chain of custody’ evidence must be sent and controlled by the attorney of record and best stamped “For Attorney Use”. Some day you may need to be able to state truthfully in court that “Under advise of council, my opinions are protected under the attorney client privilege.”

PRINCIPLE #2: INSURANCE COVERS IT, RIGHT? - Learn about the types of insurance coverage your company possesses for both your protection and that of the company. Workers compensation generally works as sole remedy-no fault coverage in most states. But in some states, such as Texas, employers are allowed to opt out of that coverage. There are ways for plaintiffs to create class action lawsuits, third party actions, sole negligence scenarios, and even laws such as the Structural Work Act that subvert the principle of sole remedy. If you work as an independent contractor not covered as an employee of a given company, you may be personally exposed to tort actions. Some states, such as Illinois, have ‘Good Samaritan’ laws that protect would be first responders. Check out your state and ask about the limits of coverage.

PRINCIPAL #3: NEVER STAND ALONE - Follow company policies. This means your company should have them. Crisis or Emergency management policies are important to a successful company.

• Be prepared to aid the injured. Many events and legal issues will stop here if the injured receive good immediate care.
• Secure and protect the scene. We all know how fast an accident scene can be changed. In transportation, the pictures and statements you take today will likely be impossible to get tomorrow. Construction sites are designed to change minute by minute. Be quick to identify and control all pertinent issues.
• Get all witness statements, in particular those who saw nothing. If you do not document the truth, you have unfortunately made it irrelevant. Resurrected memories anyone?
• Limit your opinions, summary judgments, preliminary conclusions, etc. My favorite phrase is “Unknown, still investigating” which is true!
• Separate the corrective action stage from the accident investigation stage. Do what needs to be done for the immediate safety of yourself and others. Be careful how you document those actions.
  Top

Overview - The Jobs and Growth Act contains two key provisions meant to encourage businesses to buy more machinery and equipment and thereby stimulate the economy:

• It quadruples the maximum amount of equipment purchases that a business can expense (deduct entirely) in the year the assets are placed in service; and,
• It grants a bonus 50% first-year depreciation deduction for businesses that buy more than the maximum amount that can be expensed (or are ineligible for expensing or choose not to use it).

Expanded expensing election - A business that buys machinery and equipment generally deducts its cost over a number of years via depreciation. The expensing election permits a business to expense (that is, deduct immediately rather than depreciate over several years) a certain amount of the cost of tangible depreciable personal property purchased and placed in service during the year.

Under the Jobs and Growth Act, effective for tax years beginning in 2003 through 2005, the maximum annual expensing amount is $100,000. That is four times the prior law’s $25,000 ceiling. Additionally, the maximum annual expensing amount begins to phase out dollar-for-dollar only where the business places in service during the tax year eligible property in excess of $400,000. Under prior law, the expensing amount phase out began at $200,000. The $100,000 annual expensing limit and the $400,000 phase out limit will be indexed for inflation for tax years beginning in 2004 and 2005.

These major expensing liberalizations mean that most small businesses, and even moderate-sized businesses with modest capital equipment needs, will be able to claim a full deduction for the cost of their business machinery and equipment, thereby reducing their effective cost for the assets.

The Jobs and Growth Act did not change the rule limiting the amount of the expensing deduction (after application of the phaseout rule) to the amount of taxable income from any of the taxpayer’s active trades or businesses. However, an amount that cannot be deducted because of the taxable income limit may be carried over indefinitely until it can be deducted.

One important factor that is weighed in the decision of whether to buy or lease business equipment is the recovery period of purchased property under the depreciation rules. The ability to currently deduct the entire cost of qualifying property makes purchasing a more attractive option than it was under prior law.

Property eligible to be expensed now includes off-the-shelf software placed in service in a tax year beginning in 2003, 2004, and 2005. (It was ineligible for expensing under prior law.) Additionally, for those same tax years, the expensing election can now be revoked without the IRS’s consent. (Under prior law, IRS consent was necessary.)

Increased bonus first-year depreciation allowance - The Jobs and Growth Act gives businesses a 50% bonus first-year depreciation deduction for most capital assets (other than buildings) acquired new after May 5, 2003 and before 2005. (There can’t be a written binding contract for the asset’s acquisition in effect before May 6, 2003.) Qualifying new capital assets generally must be placed in service by the taxpayer before 2005 (before 2006 for certain longer-lived property). Under prior law, extra first-year depreciation took the form of a 30% bonus write-off for most new capital assets acquired after September 10, 2001 and before September 11, 2004, and placed in service before 2005 (before 2006 for certain property).

What qualifies for bonus first-year depreciation:

• Most types of new, non-realty assets, such as business machines, computers, most types of computer software, many types of production and construction equipment, trucks, trailers, and business furniture; and
• Qualified leasehold improvements which, in general, are interior improvements made under a lease to commercial property (such as an office building or warehouse), and placed in service more than three years after the building was first placed in service. Certain structural improvements do not qualify, and neither do expansions.

New business autos - The so-called "luxury auto" dollar caps limit the combined regular depreciation and expensing deduction that may be claimed for a business auto. Under the Jobs and Growth Act, the luxury auto dollar cap for the year a new business auto is placed in service is increased by $7,650 for a passenger auto that is otherwise eligible for bonus 50% first-year depreciation. For 2003, this will result in an allowable first-year write-off of about $10,710. The passenger auto must be used more than 50% for business. The extra first-year allowance is reduced for autos treated as used for personal as well as business driving.

Other new rules - Under the Jobs and Growth Act, a business may elect, on a property-class-by-property class basis, to claim 30% instead of 50% bonus first-year depreciation for qualifying property, or elect not to claim bonus first-year depreciation at all. A property class consists of all property placed in service during the year that is depreciable over the same period.

Two situations in which a business would likely consider making an election to claim smaller bonus first-year depreciation (or to elect out of it entirely) are where it has about-to-expire net operating losses or anticipates being in a higher tax bracket in future years.

Under the Jobs and Growth Act, as under prior law, there is no alternative minimum tax (AMT) depreciation adjustment for the entire recovery period of qualified property recovered under the bonus first-year depreciation rules (50% or 30%).

This tax information is necessarily general in nature and should not be relied upon without first consulting with your tax advisor regarding your specific situation.

Dennis Butterfass is President of Butterfass & Associates, LTD.
Top