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No Payment, No Lien, No Problem: Securing Payment When Your Contractor Goes Bankrupt & Your Lien Rights Expire

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By QUINN MURPHY

Quinn Murphy

The scenario is all too common. Your construction company provided valuable construction services to a project many months ago, but you still have not been paid. You hear rumors that the upstream contractor is struggling financially, but the contractor assures you payment will be made so you don’t file a mechanics lien.

Then it happens.

The contractor files for bankruptcy and your attorney confirms your mechanics lien rights have expired. With no contractor to pursue for payment, and no legal ability to pursue the project property directly via a mechanics lien foreclosure, your likelihood of getting paid appears slim.

But no matter how slim your prospects may appear, all hope is not lost. To the contrary, three legal tools are readily available to contractors seeking to secure payment, even in the most difficult of economics predicaments.

Stop Notice

The stop notice” is one of the most powerful tools to secure payment from project owners in the event of upstream contractor illiquidity. A stop notice is contractor remedy created by state law, in which the contractor who is owned payment instructs the project owner not to pay the upstream contractor until you have been paid in full. The stop notice attaches to project funds, not property, and is limited to the amount you are owed on the project. Stop notices are such a powerful tool and so effective at securing payment that they have been challenged (and struck down) in several states as unconstitutional. Currently, the stop notice only remains a statutory remedy in Alaska, Arizona, California and Washington, and only California allows stop notices on public projects. In the event your upstream contractor fails to make payment or goes out of business while you are still owed payment on a project located in one of these respective states, contractors should utilize this powerful statutory remedy.

Unjust Enrichment Claim

Unjust enrichment is a litigation cause of action that contractors can file against project owners for overdue payment if the owner has accepted the benefit of contractor’s labor and material without paying the upstream contractor for it. On projects where contractors do not have a contract with the owner and thus no breach of contract claim, contractors can sue the owner for unjust enrichment if the owner has not paid the upstream contractor for your work. If owner payment has been made but that payment has simply not made its way down the chain to you, then the owner has been enriched but the law does not consider it “unjust,” thus precluding you from asserting the claim. But if the owner has not paid but has received and retained the benefit of your work, you may sue the owner directly for the reasonable value of services rendered (usually your contract amount) under the legal theory of unjust enrichment.

Bond Claim

General contractors are required to post payment bonds on almost all public projects throughout the United States. This requirement is intended to form substitute security for the lack of mechanics lien rights on most public project property. Payment bonds may also be required on private projects if the owner contractually requires it. Payment bonds allow downstream contractors to assert their non-payment claim directly against the payment bond. When a claim against the bond is received, the bond surety will evaluate the claim and pay amounts deemed to have merit. It is not atypical for the surety to require strict proof that payment is required, but if the downstream contractor’s claim is proven, payment should be made. In the event of upstream contractor illiquidity, payment bonds are a robust form of security and should be pursued in accordance with their contractual prerequisites and procedures.

Non-payment for work performed has become an unfortunate and increasing reality in the construction industry and bankruptcy claims are projected to increase in the years to come. By understanding all available avenues to secure payment, even when your upstream contractor files for bankruptcy, contractors can secure payment and continue to operate in even the most challenging economic conditions. 

Quinn Murphy heads both the construction and receivable recovery industry teams at Sandberg Phoenix & von Gontard P.C. He represents contractors in non-payment claims in all 50 states and in helping contractors create internal collections policies that maximize net recovery. Murphy can be reached at qmurphy@sandbergphoenix.com.

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Trust Your Gut: 8 Steps to Achieve Effective & Authentic Marketing

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By STEPHANIE WOODCOCK

Stephanie Woodcock

“A brand is a person’s gut feeling about a product or service.” – Marty Neumeier

In a world of increasing imitation, imposters and artificial intelligence, authenticity in your marketing matters.  

The term “marketing” gets a bad connotation because of shady intentions and gimmicks employed under its name. People think they are going to get “tricked” into something.

Marketing should be transparent, not tricky. Words don’t tell the whole story.  

Build your marketing around culture, work and actions.

If we interchange the words “branding” and “marketing” with “reputation building,” we can better understand the goal: building the reputation of a company through the eyes of your customers and their perceptions.

Another uncertainty surrounding “marketing” is that it’s not black and white.  Or all data driven. It requires emotion and intuition. 

Our right and left sides of the brain are involved. Concentrating too much on the data side can come across calculated or not trustworthy. Concentrating too much on the emotional side can come across as dramatic and not professional. 

The right balance portrays the authentic essence of a company. A company is more than facts, data and logic. It is people, culture, values and reputation. 

Build your reputation along with your marketing. 

It’s like meeting a new person. Do our brains assimilate only facts? No. We get a gut feeling of whether we like them or not. Our first instincts are a mix of data and intuition.

So should it be the case in our company’s reputation – a mix of data, facts and intuition. 

Ultimately marketing is the truth of something.  We are trying to portray the essence and truth of our companies. 

Here are a few quick tips for building an authentic marketing plan. 

  1. Ditch your mission statement. No one really believes it. It’s corporate speak for telling people what you think they want to hear. Instead, build your Community and Culture pages (on your website and beyond). This is more difficult than getting executives in a small room and pounding out a few sentences to put on a wall. Instead of “mission statement” or “value proposition,” interweave your culture and “truth” throughout your branding, content marketing, digital presence and every touchpoint with the customer.

2) Show, don’t tell. Words are cheap. Actions are real. Build a plan to show, not tell. What are your values and how will you show them? A bullet list of Core Values on our website doesn’t accurately portray a company’s reputation. Show your company’s culture, work and action in real time. Make it timely and transparent. Invest in more video to show action, work and culture. You can’t hide behind words here. You see the nonverbals, the energy and the essence of a company through video. 

  • Focus on your best assets – your people. Your people are your best reputation builders. If they aren’t happy, it will affect your brand (reputation). Culture at its best is when the brand (reputation) of the company is embodied and believed by the company’s employees. It’s a walking mission statement.
  • Match your company personality with your professional assets, sales materials and marketing strategy. It’s like dressing well for an interview.  Make a good first impression with your marketing materials.  Especially when you don’t have the job yet.  First impressions matter.  But make an impression that is consistent with what you will provide long term for your clients. 
  • Be consistent. The fastest way to build trust and a good reputation is to show up. Be consistent in your marketing. Develop a “brand voice” that portrays your real purpose. It’s helpful to start backwards here. What do you want to accomplish and how you will get there with a step-by-step process. Don’t start a marketing plan that you can’t deliver on. You’ll lose trust and brand reputation. 
  • Think beyond tactical. It’s easy to think of marketing as tactical only. How do we get more leads? What email marketing platform should we use? How do we measure ROI? Intuition and gut feelings about your brand – your reputation – are just as important as tactics, if not more. What does your intuition tell you? Does what you are doing daily in your marketing align with the big picture of your culture and values? Is it genuine and transparent? People will respond to marketing built on transparency and authenticity with a greater purpose than just getting a website click or like on social.  Being authentic is difficult.  It requires being present, listening to your intuition, and clearly stating your purpose without ulterior motives. 
  • Don’t compartmentalize marketing. Authenticity in marketing extends beyond your campaigns and marketing departments. Every touchpoint of the customer throughout the company builds reputation. Being consistently transparent and true to your brand values only deepens customer trust and loyalty.  
  • Keep your promises. A brand promise is like a real promise. It’s not about the words or the fancy new look of a brand. It’s not what you think they want to hear. It’s intentional authenticity. Our brand promise is closely aligned with our culture.  Both should have a purpose that resonates with our clients. Your clients want to trust in both your capabilities and your character. A brand promise is the purpose behind marketing’s message. People know when a company or person is not being true to itself. They spot discrepancies between the brand’s words and actions. 

These things are difficult in marketing and branding, as they are in life. Reputation is everything, but worth the investment. Everything good is. The key to great marketing – as in life – is to be genuine, find your truth and trust your gut.

Stephanie Woodcock is president of Too Creative, a St. Louis-based marketing and creative design firm for businesses in the building industry. Contact her at Stephanie@toocreativestl.com or (314) 753-1148.

No Payment, No Lien, No Problem: Securing Payment When Your Contractor Goes Bankrupt & Your Lien Rights Expire

Published on
/

By QUINN MURPHY

Quinn Murphy

The scenario is all too common. Your construction company provided valuable construction services to a project many months ago, but you still have not been paid. You hear rumors that the upstream contractor is struggling financially, but the contractor assures you payment will be made so you don’t file a mechanics lien.

Then it happens.

The contractor files for bankruptcy and your attorney confirms your mechanics lien rights have expired. With no contractor to pursue for payment, and no legal ability to pursue the project property directly via a mechanics lien foreclosure, your likelihood of getting paid appears slim.

But no matter how slim your prospects may appear, all hope is not lost. To the contrary, three legal tools are readily available to contractors seeking to secure payment, even in the most difficult of economics predicaments.

Stop Notice

The stop notice” is one of the most powerful tools to secure payment from project owners in the event of upstream contractor illiquidity. A stop notice is contractor remedy created by state law, in which the contractor who is owned payment instructs the project owner not to pay the upstream contractor until you have been paid in full. The stop notice attaches to project funds, not property, and is limited to the amount you are owed on the project. Stop notices are such a powerful tool and so effective at securing payment that they have been challenged (and struck down) in several states as unconstitutional. Currently, the stop notice only remains a statutory remedy in Alaska, Arizona, California and Washington, and only California allows stop notices on public projects. In the event your upstream contractor fails to make payment or goes out of business while you are still owed payment on a project located in one of these respective states, contractors should utilize this powerful statutory remedy.

Unjust Enrichment Claim

Unjust enrichment is a litigation cause of action that contractors can file against project owners for overdue payment if the owner has accepted the benefit of contractor’s labor and material without paying the upstream contractor for it. On projects where contractors do not have a contract with the owner and thus no breach of contract claim, contractors can sue the owner for unjust enrichment if the owner has not paid the upstream contractor for your work. If owner payment has been made but that payment has simply not made its way down the chain to you, then the owner has been enriched but the law does not consider it “unjust,” thus precluding you from asserting the claim. But if the owner has not paid but has received and retained the benefit of your work, you may sue the owner directly for the reasonable value of services rendered (usually your contract amount) under the legal theory of unjust enrichment.

Bond Claim

General contractors are required to post payment bonds on almost all public projects throughout the United States. This requirement is intended to form substitute security for the lack of mechanics lien rights on most public project property. Payment bonds may also be required on private projects if the owner contractually requires it. Payment bonds allow downstream contractors to assert their non-payment claim directly against the payment bond. When a claim against the bond is received, the bond surety will evaluate the claim and pay amounts deemed to have merit. It is not atypical for the surety to require strict proof that payment is required, but if the downstream contractor’s claim is proven, payment should be made. In the event of upstream contractor illiquidity, payment bonds are a robust form of security and should be pursued in accordance with their contractual prerequisites and procedures.

Non-payment for work performed has become an unfortunate and increasing reality in the construction industry and bankruptcy claims are projected to increase in the years to come. By understanding all available avenues to secure payment, even when your upstream contractor files for bankruptcy, contractors can secure payment and continue to operate in even the most challenging economic conditions. 

Quinn Murphy heads both the construction and receivable recovery industry teams at Sandberg Phoenix & von Gontard P.C. He represents contractors in non-payment claims in all 50 states and in helping contractors create internal collections policies that maximize net recovery. Murphy can be reached at qmurphy@sandbergphoenix.com.

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Selling Thru an Economy Shift

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By TOM WOODCOCK

It’s beginning to happen. The effects of higher interest rates and the dwindling of post-pandemic backlog is creating concern in the construction industry.

You may not be feeling it quite yet, but trust me, it’s occurring. Some markets and trades are affected sooner than later, but the slowdown will become more and more prevalent. As I travel all over the country speaking and training construction professionals, I gain more and more insight into how this eventual slowdown will occur. But no need to fear. I have some ways to avoid the impending dip.

The rise in interest rates is beginning to eliminate the window of cheap money we’ve enjoyed. Because of the affordability of construction lending, both investors and project owners have been very active. It’s a simple equation that when rates increase, capital goes elsewhere as opposed to into construction projects. If your business hangs on a couple key customers that bring you recurring work, you could be in quite a bind soon. Another reason I know this downturn has begun is that I see it via the demand for what I do. My speaking and training slate is filling up faster than ever and our marketing company (Too Creative) is getting calls left and right. This always takes place when contractors fear what’s ahead. So what’s the answer? You guessed it…sales.

First and foremost, you must buy into the fact that sales is the most important aspect of your business. It doesn’t matter how well you build, manage your business or spend resources on marketing if your sales effort is weak or not a priority. Without sales, what do you have? The challenge is that many contractors’ sales personnel are people with multiple responsibilities and not purely sales agents. Therefore, they trend toward the more tangible responsibilities such as project management or estimating. They will look for reasons not to engage in the sales effort as it is generally more uncomfortable than these “practical” aspects of construction. Why does this happen and how do you change it?

The baseline is understanding your market size and your level of penetration in that market. It’s the simple concept of pie. How big is the overall market pie and how big is your piece of it? If you need a bigger piece of a shrinking market to just maintain, you’ll need to sell your way there. This will require a structured sales strategy and approach. It will demand more time and attention to the overall sales effort. Finally, the individuals doing the selling will need to be trained and motivated. Lacking in any of these three areas will drastically limit your success. Not doing the necessary sales work will cause some companies to cease to exist. It happens every time the market shifts downward.

Business owners and managers need to take the steps necessary to make sure their sales effort is the primary focus of their companies, and that they have sales personnel who are as dedicated as possible to simply securing profitable business. Just grabbing work to keep the doors open eventually backfires and the results aren’t pretty. Those who are unsure as to how to do this need to get the necessary help. Flying by the seat of your pants or throwing bodies at your sales effort is a recipe for frustration. Set a strategy, get the right people, train them and stick to it. Grab a bigger piece of the market pie and circle the wagons around your current customer base.

I just had a conversation with a contractor in Texas who said he was seeing more and more Midwestern contractors coming into his territory. He wanted to know how to freeze them out. Packing your bags and heading to a saturated market is not the answer. Invest in your local sales effort and grow your business base. Sell to secure projects at a healthy level of profitability and track your sales process. Refusing to do so in the upcoming construction climate may end up being your Achilles heel. Go get a bigger piece of the pie.

Tom Woodcock, president of seal the deal, is a speaker and trainer for the construction industry nationwide. He can be reached via  www.tomwoodcocksealthedeal.com or (314) 775-9217.

Avoiding War: Three Underutilized Dispute Resolution Methods

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By QUINN MURPHY

Alternative dispute resolution has become a popular way to resolve legal disputes without the time and cost of protracted civil litigation.  Among the various dispute resolution methods, mediation and arbitration are by far the most often utilized, gaining traction throughout the construction industry and in many commonly utilized contract forms like AIA. While the two forms of dispute resolution are generally understood and effective, three less utilized variations of these methods can help resolve particularly difficult disputes when normal arbitration and mediation are unsuccessful.     

  1. A Mediator’s Proposal

In typical mediation, the parties voluntarily agree to mediate their dispute with an agreed upon private mediator, who attempts to negotiate settlement through private caucuses with the parties and their counsel. If the mediator is able to reach mutually agreeable settlement terms, the dispute settles. If not, the mediation ends and the parties return to arbitration or litigation where additional legal costs will be incurred.

But what happens when the mediator confidentially knows the parties are very close to settlement but have exhausted their authority to negotiate further? Both sides believe one last effort at resolution could be productive but both have exhausted their “final number,” so to speak? In these instances, a “mediator’s proposal” could be utilized to bridge the gap toward settlement.

For example, if one party is demanding $1 million in exchange for a release of all claims and the most the defendant is willing to pay is $700,000, the mediator could suggest making a “mediator’s proposal” where the mediator suggests a number between the two settlement amounts that he or she believes will resolve the case. Mediators with significant jury trial experience may also inform the parties that he or she believes the mediator’s number reflects the likely jury award at trial. Procedurally the mediator meets separately with the parties to disclose and explain the mediator’s number, then merely asks the parties to respond “yes” or “no.”  If both parties answer “yes,” the matter is settled but if either party responds “no,” the parties are told that the matter did not settle and the mediation is concluded without disclosing either of the party’s respective positions.

A mediator’s proposal can be a remarkably effective way to bridge the gap between parties’ strikingly close settlement numbers. The method also allows strong-willed clients to avoid feeling they “gave in” to the other side in that it is the mediator’s proposal (not the opposition’s offer) that is ultimately being accepted. 

  • Baseball Arbitration

Standard arbitration is a private proceeding where the parties effectively “litigate” their case before a private arbitrator who decides the case and issues an award to the winning party.  Arbitration of construction disputes originally rose to prominence as a result of the delay and inefficiency of the court system and the need for prompt resolution of disputes. The parties to an arbitration typically pay half of the arbitrator’s fee, which leads to concern that commercial arbitrators may lean towards “splitting the difference” in an effort to secure future arbitration work from the parties or their counsel.

To mitigate this risk, many contractors have started submitting their arbitration disputes to a process called “baseball arbitration” as opposed to a more standard arbitration procedure. In baseball arbitration, after the parties have presented their evidence to the arbitrator via witness testimony or legal briefs, each party submits a proposed award to the arbitration for evaluation. After evaluating the proposals, the arbitrator must choose one of the awards or the other. The arbitrator cannot compromise or alter the proposals in any way; one must be chosen.

This unconventional methodology is intended to encourage the parties to submit reasonable offers, thereby making their proposals more appealing to the arbitrator, who must choose one over the other. A party submitted an overly aggressive offer risks the arbitrator choosing the opponent’s more reasonable offer. When baseball arbitration works, the arbitrator often has to choose between two surprisingly reasonable settlement offers, thereby resulting in an end result both parties can live with.

  • Conciliation

Conciliation is like mediation, but with a twist. In standard mediation procedure, the mediator attempts to negotiate an agreed-upon settlement without making a decision of his or her own. The conciliation process is similar to mediation with the exception that at some point in the negotiation process, the conciliator provides the parties with a non-binding settlement proposal that the mediator believes accurately represents a likely outcome at trial and attempts to account for the parties’ related individual interests. The parties are then free to work from the conciliator’s proposal by accepting it, revising it or working from it toward a point of compromise. Conciliation can be a remarkably effective dispute resolution procedure, particularly in cases where the parties are entrenched in their positions and may need a third party’s “opinion” to move off their respective numbers and toward settlement.  

A mediator’s proposal, baseball arbitration and conciliation are still relatively uncommon procedures in today’s construction dispute environment. But by thinking outside the box and utilizing these variations to standard mediation or arbitration, contractors can often resolve disputes and avoid the cost of time-intensive and costly litigation.   

Quinn Murphy heads both the construction and receivable recovery industry teams at Sandberg Phoenix & von Gontard P.C. He represents contractors in non-payment claims in all 50 states and in helping contractors create internal collections policies that maximize net recovery. Murphy can be reached at qmurphy@sandbergphoenix.com.

Going through M&A? Don’t Leave These Four Technology Considerations Out of Your Due Diligence

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By JULIA DEIEN

In 2022, the construction industry experienced a surge in merger and acquisition activity in response to high demand and a shortage of experienced job candidates. When undergoing a merger or acquisition as a construction business, the technology due diligence process may not rank high on the to-do list, but it’s a vital process to strengthen cyber security, reduce redundancies and ensure a smooth transition. Construction companies are ideally positioned to invest in innovative technology, which can provide a competitive edge over others in the industry and add additional value to your business.

1) Take Inventory of Digital Assets

Technology is an important tool for the construction industry, from collaboration software that keeps communication lines running like a well-oiled machine to the nuts and bolts of physical construction technology that come in a variety of forms such as 3D printing prefabrication, robotics, digital mapping and other highly engineered materials.

Taking inventory of these assets can help an acquiring company understand the true value of the business it has acquired. Once M&A is complete, the newly combined company can then leverage these technologies, materials and equipment to scale up operations, even as disruptions like a skilled labor shortage rage on.

Construction clients are demanding more ease of access so they can be kept up to date about their project’s status. Digitization is one area where construction companies can set themselves apart from their competitors; the technology due diligence process can highlight where certain needs aren’t being addressed and allows companies to take this time to strategize about how to fill that need. While this may not add tangible value during the M&A process, it will increase the company’s overall value in the long term, fiscally and with the clients you serve.

2) Identify Redundant Technology

In the case of a merger with another existing construction company, there may be an overlap between the technologies both entities use. This creates an opportunity to review both companies’ technological assets and compare them against one another.

Perhaps Company A, which is in the process of acquiring Company B for the sake of this example, already has a form of collaboration software to allow communication between work sites, but it has been dissatisfied with it and was already looking into alternatives before any M&A activity began. Company B, on the other hand, has been very pleased with its software, which is far more complex than what Company A currently uses and offers more capabilities.

It’s a no-brainer for Company A to cancel its current communication software account and expand Company B’s to cover both entities. There may be pricing or expansion issues that could change that decision, which is why it’s essential to evaluate both companies’ technological assets to determine which assets will serve the newly merged business’ best interest.

3) Resolve Cybersecurity Vulnerabilities in Platforms and Processes

A rise in the number of cyber-attacks and an increase in the level of sophistication of these attacks has influenced businesses across a variety of industries to take preventative steps to keep their data, software and hardware protected from threats. While optimizing the future state of your company’s tech stack, it’s critical to ensure the platforms and processes that run on it are secured.

Partnering with a third-party technology-managed service provider (MSP) experienced in M&A at this stage in the process can help to identify vulnerabilities and develop solutions aimed at resolving them. For example, have all past employees been properly off-boarded, or is there a possibility that an ex-employee may still have access? The best time to address these security risks is before a merger or acquisition, but the second-best time is immediately after discovering it, even if it’s right in the middle of due diligence.

4) Align on Key Decisions Early

An MSP can also provide guidance on other concerns that often go overlooked during due diligence preparation, such as email domain migrations and whether to use cloud-based or physical servers.

Regarding email domain migrations, determine which company’s domain will ultimately be used after the transition is complete. While it makes sense for the acquiring company’s email domain to be used, there may be instances where the acquired company requires its own distinct email address in order to support branding efforts.

Managing hardware, particularly servers, may not be a priority for most construction companies but determining early on whether to utilize physical servers or use a cloud-based option can help minimize the disturbances a migration will cause. These are important considerations to make before the merger or acquisition is complete to ensure technology can be updated and migrations can start in a timely manner.

Before entering the due diligence process, take the time to examine your organization’s current technology as well as your technological needs to identify where you could encourage more growth by advancing your tech stack. Find a managed service provider with experience in the construction industry and who understands the challenges and opportunities facing the industry today.

Julia Deien, MCTS, is a principal and technology practice leader at Anders CPAs + Advisors. She can be reached at (314) 655-0163 or jdeien@anderscpa.com.

Data is the Key to Getting More from Your Building

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By BRENDON BUCKLEY

Even though it is an amazing thing for building systems to be able to maintain a comfortable, safe and sustainable environment, there is much more we should be expecting out of our buildings. Data is the key.

Building system data can provide owners with limitless potential for not only improving their building’s operational performance but their business outcomes as well. What processes or areas could be improved with a little additional help from the systems within the building? What outcome or result could that drive? Each individual owner needs to brainstorm about what kind of benefits he is not getting that he probably should be getting or want to get.

To better utilize the data for your building, you need to look at it in three basic steps.

First, do a deep dive to look at what data is available. This goes beyond typical facility systems like building automation, security and fire, and should include business-specific and industry-specific technologies as well. There are many systems in place for buildings that, if utilized, can help us better understand occupant status, security threats, operational efficiency and even energy savings. The key is not just making a list of the systems and the data they provide but understanding the meaning and context of the data. What the data is telling you and why it is important is valuable information to have.

Once it is known what data is available and its potential value, it needs to be collected and stored. This is the second step and involves extracting the data from each relevant system, normalizing it and then warehousing it. Data extraction and integration has become much easier over the years. Software communication protocols (BACnet, Modbus, KNX, HL7, etc.) have been around for a while but are still commonly used. Even better than these protocols are APIs (Application Programming Interface), which are essentially “hooks” built into specific applications for the purpose of sharing data. Once the data is collected there is often a need to normalize it. Data modeling and normalization is particularly important to making it useful beyond the source system. A simple example of this would be phone number data stored in the source system as “314-555-1212.” This may need to be stored as “3145551212” to be used by other systems. Normalizing the data and then warehousing it in a database is key to keeping the data as fluid and useful between as many systems as possible.

The last step is to leverage the data. Three recent technological advances have made the large amounts of available building data even more powerful: advanced analytics, digital twin platforms and artificial intelligence (AI).

Advanced analytics tools like Microsoft BI and Tableau are popular and offer a powerful way to acquire good decision support and insight. While they are predominantly used for business analysis, many organizations use these platforms to analyze building data.

The next level and more advanced analysis tool for buildings is the digital twin – a virtual representation of the physical building environment where real-time data is collected from the actual systems operating the building. This allows for building operators to do rapid “what if” scenarios and perform simulations that will accurately model the results without the cost and risk of doing them on live production systems. This allows for the exploration of specific changes in a complex building system environment that can offer positive results to energy and overall operation.

AI goes beyond a digital twin and offers the most promising technology for optimizing the operation of buildings. The main challenge with the large amount of data available from buildings is making it actionable. (AI is very good at this and quite frankly requires large amounts of data to even function.) Most building applications of AI typically have learning, reasoning, and self-correction functionality. The learning function of AI programming focuses on acquiring data and creating rules on how to turn it into actionable information. The rules, or algorithms, provide the required instruction to perform a task. The reasoning function chooses the right algorithm to use to achieve a desired outcome. Lastly, self-correction continually finetunes the algorithms to provide the best results possible with the data provided.

Leveraging building data starts with holistically collecting, analyzing and utilizing it with the many powerful software protocols and applications that are available today. With these tools we can plan, understand and unlock the value of the data within a building and provide owners with limitless potential for not only improving their buildings’ operational performance but their business outcomes as well.

Brendon Buckley is IMEG’s project executive for building intelligence and integration. He is a business and systems process expert and has a deep background in helping clients maximize their technology investments in building intelligence. Buckley can be reached at brendon.f.buckley@imegcorp.com.

Traditional Marketing in a Digital World: How to Market Efficiently in 2023

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By STEPHANIE WOODCOCK

What’s free but priceless, something we want more of but can never get enough?

Time.

We’ve heard the mantras: Time is money. Making up for lost time. Time is a luxury we don’t have.

Time takes on a unique dimension in construction. There are various tangible construction realities that revolve around bid due dates, construction completion dates, limited time constraints in complex environments, labor shortages and time and material. It’s easy to lose sight of the true value of time. 

What priorities in your marketing strategy are you giving your time to?

Because it shows.

So much tangibly relies on operational, backward-facing tasks that take time. We can lose the intangible value of spending time on our forward-facing marketing. 

The key is shifting our focus from spending time to investing it.    

Invest in your marketing. 

Marketing is your very first deliverable to your clients and prospects.  

Customers notice when you invest your time in them. When you invest time in your website, communications, messaging, brand and identity, they take note.

If time is our most precious commodity, why not spend it on something the customer sees first? Why not spend it on retaining existing clients, gaining new ones and appreciating loyal ones?

There are no shortcuts. I have had clients who understandably only had time for operations. Marketing demanded a luxury of time that they did not have. Then business stalled or a significant crossroads of change occurred, and they shifted to spend time on marketing to fix the problem. 

An effective marketing strategy is more difficult to achieve when the focus is on a problem and not on a desired result. We shouldn’t be scrambling for time when it comes to our marketing. We should plan, process and prioritize.

When marketing is not a priority, we can miss important opportunities such as being in front of our client base at events, sponsoring a customer-rich association meeting, posting a milestone or achievement on LinkedIn or writing an article for an industry magazine to position ourselves as a thought leader in our industry.

When we don’t invest in our marketing, we can find ourselves trying to recoup lost business, struggle for market share or simply missing opportunities to connect our marketing with our sales. 

Without an effective marketing strategy, we are out of sight and out of mind. 

Business-to-consumer (B2C) companies are known for making big splashes with first impressions on branding. We can learn a few things from them. First impressions are important. 

Top marketing channels for business-to-business (B2B) companies are websites, video marketing, social media and email marketing.  Seventy percent of business buyers find content directly on the company’s website. In 2022, 35 percent of marketers reported that they planned to use video in their marketing strategy for the first time. Content marketing was the most popular B2B marketing strategy in 2020 and continues to rise. LinkedIn, a popular form of content marketing, is the most effective platform for B2B lead generation (source: Hubspot).

Have a plan for a first impression with each of these channels. 

If you are a St. Louis-based company in the construction industry, you can also benefit from traditional marketing such as engagement with industry events, association involvement, hosting customer events and advertising in an industry magazine.

Face-to-face marketing works well because we are a tight-knit community, word travels fast and we all care about St. Louis construction and growth. If you are lucky enough to find yourself in the rich pool of the St. Louis building community, maximize your marketing by using a mix of digital and traditional. Find the pools where your customers live and make a big splash. 

I see an important trend for 2023. Event participation and taking the time to network will become even more important than ever before in marketing awareness. 

Online content is becoming oversaturated. Especially in an industry where everyone knows everyone, word-of-mouth marketing holds extra value. This does not replace digital marketing. A good website and strong messaging through digital platforms is necessary, if not mandatory. But information is abundant and cheap. Time is expensive. People are overwhelmed with research, data and facts. First impressions are even more important. Word-of-mouth and networking become vital to a marketing plan.

Time is becoming an even more valuable and rare commodity for people who are good at what they do. Taking the time to attend a networking event and meeting with clients face-to-face is even more vital. 

It’s a first impression and a lasting impression. 

For a lasting impression, invest in consistent marketing for the long haul – such as regular press releases and industry news posted to LinkedIn – rather than a quick hit lead generation grab like pay-for-click advertising to get clicks on your website. 

Long-term marketing strategies such as content writing, blogs, website updates, LinkedIn updates, event promotions and a consistent presence in associations work best. 

Don’t spend your time. Invest it. In this rich, unique St. Louis building community, it pays dividends. It’s a smaller pool with a well-educated audience that is paying attention to St. Louis news, development projects, industry news, new hires, promotions, association events, awards and to you.

Marketing as old as time is new again. Traditional marketing in a digital world. Do you spend your time or invest it?

Time will tell.  

Stephanie Woodcock is president of Too Creative, a St. Louis-based marketing and creative design firm for businesses in the building industry. Contact her at Stephanie@toocreativestl.com or (314) 753-1148.

Avoiding War: Three Underutilized Dispute Resolution Methods

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By QUINN MURPHY

Alternative dispute resolution has become a popular way to resolve legal disputes without the time and cost of protracted civil litigation.  Among the various dispute resolution methods, mediation and arbitration are by far the most often utilized, gaining traction throughout the construction industry and in many commonly utilized contract forms like AIA. While the two forms of dispute resolution are generally understood and effective, three less utilized variations of these methods can help resolve particularly difficult disputes when normal arbitration and mediation are unsuccessful.  

  1. A Mediator’s Proposal

In typical mediation, the parties voluntarily agree to mediate their dispute with an agreed upon private mediator, who attempts to negotiate settlement through private caucuses with the parties and their counsel. If the mediator is able to reach mutually agreeable settlement terms, the dispute settles. If not, the mediation ends and the parties return to arbitration or litigation where additional legal costs will be incurred.

But what happens when the mediator confidentially knows the parties are very close to settlement but have exhausted their authority to negotiate further? Both sides believe one last effort at resolution could be productive but both have exhausted their “final number,” so to speak? In these instances, a “mediator’s proposal” could be utilized to bridge the gap toward settlement.

For example, if one party is demanding $1 million in exchange for a release of all claims and the most the defendant is willing to pay is $700,000, the mediator could suggest making a “mediator’s proposal” where the mediator suggests a number between the two settlement amounts that he or she believes will resolve the case. Mediators with significant jury trial experience may also inform the parties that he or she believes the mediator’s number reflects the likely jury award at trial. Procedurally the mediator meets separately with the parties to disclose and explain the mediator’s number, then merely asks the parties to respond “yes” or “no.”  If both parties answer “yes,” the matter is settled but if either party responds “no,” the parties are told that the matter did not settle and the mediation is concluded without disclosing either of the party’s respective positions.

A mediator’s proposal can be a remarkably effective way to bridge the gap between parties’ strikingly close settlement numbers. The method also allows strong-willed clients to avoid feeling they “gave in” to the other side in that it is the mediator’s proposal (not the opposition’s offer) that is ultimately being accepted. 

  • Baseball Arbitration

Standard arbitration is a private proceeding where the parties effectively “litigate” their case before a private arbitrator who decides the case and issues an award to the winning party.  Arbitration of construction disputes originally rose to prominence as a result of the delay and inefficiency of the court system and the need for prompt resolution of disputes. The parties to an arbitration typically pay half of the arbitrator’s fee, which leads to concern that commercial arbitrators may lean towards “splitting the difference” in an effort to secure future arbitration work from the parties or their counsel.

To mitigate this risk, many contractors have started submitting their arbitration disputes to a process called “baseball arbitration” as opposed to a more standard arbitration procedure. In baseball arbitration, after the parties have presented their evidence to the arbitrator via witness testimony or legal briefs, each party submits a proposed award to the arbitration for evaluation. After evaluating the proposals, the arbitrator must choose one of the awards or the other. The arbitrator cannot compromise or alter the proposals in any way; one must be chosen.

This unconventional methodology is intended to encourage the parties to submit reasonable offers, thereby making their proposals more appealing to the arbitrator, who must choose one over the other. A party submitted an overly aggressive offer risks the arbitrator choosing the opponent’s more reasonable offer. When baseball arbitration works, the arbitrator often has to choose between two surprisingly reasonable settlement offers, thereby resulting in an end result both parties can live with.

  • Conciliation

Conciliation is like mediation, but with a twist. In standard mediation procedure, the mediator attempts to negotiate an agreed-upon settlement without making a decision of his or her own. The conciliation process is similar to mediation with the exception that at some point in the negotiation process, the conciliator provides the parties with a non-binding settlement proposal that the mediator believes accurately represents a likely outcome at trial and attempts to account for the parties’ related individual interests. The parties are then free to work from the conciliator’s proposal by accepting it, revising it or working from it toward a point of compromise. Conciliation can be a remarkably effective dispute resolution procedure, particularly in cases where the parties are entrenched in their positions and may need a third party’s “opinion” to move off their respective numbers and toward settlement.  

A mediator’s proposal, baseball arbitration and conciliation are still relatively uncommon procedures in today’s construction dispute environment. But by thinking outside the box and utilizing these variations to standard mediation or arbitration, contractors can often resolve disputes and avoid the cost of time-intensive and costly litigation.   

Quinn Murphy heads both the construction and receivable recovery industry teams at Sandberg Phoenix & von Gontard P.C. He represents contractors in non-payment claims in all 50 states and in helping contractors create internal collections policies that maximize net recovery. Murphy can be reached at qmurphy@sandbergphoenix.com.

Are You an Effective Presenter? Connect with Your Audience, Not with Your PowerPoint

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By TOM WOODCOCK

Tom Woodcock

Many contractors look for the opportunity to present to potential customers. They strive to get lunch and learns, happy hour presentations or morning coffees. When they finally attain the meeting, panic sets in as they realize they have to have a presentation that fits the customer type they’re approaching. The usual response is to focus on a PowerPoint and how much information they can drive into the customer’s head in the short amount of time allotted. The issue is that the focus shifts to the presentation. In reality, there are many other factors that will determine whether the core message is received or rejected.

The point many people miss when they are determining what they’re going to present is that connecting with the presenter is just as important as delivering the information. Trust is the number-one buying motive, and we tend to trust people before we receive the information they’re disseminating. The person doing the presenting needs to establish a level of trust right out of the gate. Putting as much time into accomplishing this as well as your PowerPoint presentation is crucial. As a matter of fact, your PowerPoint should be minimal and image-heavy. No one wants to “read” a live presentation. You may be wondering how this connection and trust is established when many times you’re only given a brief segment of the meeting to present. Here is some insight.

First, prepare by managing the environment. If it is a meeting such as a lunch and learn, elements such as food, furniture and audio/visual can affect the mood of the event. If you’re supplying food or refreshments, go top drawer. Cutting corners to save $50 to $100 immediately tells the attendees you don’t value their time. I cannot stand the cheap box lunch mentality. It’s just lazy. Also, forgetting an assortment of drinks, utensils and napkins is borderline inconsiderate. Gaining the “wow” factor right away with the food selection begins to move the clients to your side.

Second, greet everyone upon arrival as opposed to standing off to the side waiting to begin. Get names and roles while thanking them for taking time out of their busy schedules for you. This is the beginning of establishing personal trust. Also, recognize the individual who set the meeting up for you and restate your appreciation.

Next up, be there early enough to make sure there are no A/V issues. There’s nothing worse than starting a presentation and your remote doesn’t work or the projector isn’t reading your laptop. This can delay the presentation and cause unneeded stress for both you and the attendees.

Now we’re moving into the actual presentation. Before you dive into your meaty presentation, tell the audience a little about yourself – how you came into this career, your family’s support and why you chose the company you’re about to present. This will personalize you and make it more enticing to hear what you have to say. Then let them know you have knowledge of their business and market approach. People love to hear about themselves. Let them know you educated yourself on who they are and what they do.

Now the meat. Tailor the message as closely to their business as possible. If it’s a new innovation or service they haven’t used before, be sure to outline the benefit in their usage of that product or service. Make sure your points are clear and concise. Stories and metaphors need to be used to reinforce the message. People love a good story, especially if they can relate to it. So many people focus too much on pounding their information through. A reason for this is the fact that public speaking is now the number-one fear in the USA, more than death.

You’ll always be nervous regardless of your presentation experience level. But as you accomplish more and more presentations, you’ll learn how to calm those nerves. Close the meeting by thanking the audience again for taking so much time out of their day. Offer to answer any questions then close the presentation with a next course of action. Be sure to walk the room and let people ask questions in a non-group setting. Thank the individual who booked you once again and offer to send a recap. You’ll leave as a trusted expert and potentially a viable option.

Tom Woodcock, president of seal the deal, is a speaker and trainer for the construction industry nationwide. He can be reached via  www.tomwoodcocksealthedeal.com or (314) 775-9217.

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