Manufacturer, Dealers Partner With Trade Association to Offer Free Education for Contractors

All serious construction business owners have at least two things in common.  First, continuing education is key to improving their businesses.  Because the business world is constantly changing, to remain successful, construction business owners need to keep up with new ways of doing things as well as advancing their business systems and management skills if they want to stay ahead of their competition.   Second, they need to make sure they surround themselves with the right resources so they can get the education they need from reliable sources at an affordable price.

This fall contractors will be able to get both in the same place thanks to window and door manufacturer Andersen® Windows.   Thanks to the efforts of Dealer Account Representative Don Hamel, Andersen® Windows has pulled together a series of five FREE Contractor Educational Boot Camps that will be held at the Rhode Island Builders Association (RIBA) offices in East Providence RI.   I will be the presenter at each of these events.  In addition to the support from RIBA and Andersen Windows several lumber and building materials dealers and product manufacturers have joined together to sponsor these events.

The five boot camps will include the following dates and topics:

9/26/13: Marketing Boot Camp: Targeting the Right Customers

10/3/13: Estimating Workshop: Know What You’re Selling Before You Sell It.

10/10/13: Small Business Finances and Profit Strategies for Non-Accounts

11/7/13: Sales Workshop-Smart Selling for Tough Times

11/14/13: Production Workshop-You Sold It Now You Need to Build It

Why these topics?

The list of topics above was put together to help give contractors a comprehensive exposure to several important areas in their businesses.  The content of these sessions will include valuable and timely information that will help contractors differentiate themselves in the marketplace and make more money.  Also, each of these sessions has been approved for two continuing education credit hours towards renewal of a Massachusetts Construction Supervisor's License (CSL).   If you are a licensed Massachusetts contractor make sure you let RIBA know you want a certificate of completion for CSL credits when you register.

Who is sponsoring these events?

Here are all the logos of the businesses that are sponsoring these events.  You can click on the logos to go to the web pages for each of these businesses.

	Brought To You By

Don't miss out, register now!

If you would like to attend one or all of these boot camps you need to register for them individually.   Seating will be limited; so make sure you register right away.  Click on the links above for the class or classes you would like to take to see class descriptions and find the registration links.

I hope I’ll see you there!

10 Steps To Building A Successful Construction Company In The New Economy

For the last five years or so many construction business owners were operating their businesses in survival mode. With the economy improving and residential construction activity picking up many contractors will be looking to grow their businesses again.  If you are looking to grow your business here is my list of 10 steps contractors should take to make the switch from surviving to thriving. 

10 Steps to successfully growing your business

1. You can't do it all; no matter how much you try.  Find the right people with the right skills and personalities to be part of your team.
2. Hire and properly train employees before you already need them and their required skills up and running.  
3. You are not the Energizer Bunny!  Make sure you have a plan for recharging your batteries and keeping up the motivation you will need to make your dream business happen.
4. Work on your leadership skills and make sure you understand the difference between leadership and management.   Good employees want to be lead, not supervised.
5. Be careful about and watch your overhead expenses.   Many construction businesses failed during the recession because they could not cover the cost of the overhead they were committed to.
6. Know the costs of doing more business before you do more business so you can use the right markup to price your jobs profitably.
7. Before you actually increase your overhead costs test the marketplace you plan to work in to make sure you can sell at the increased pricing you'll need and can sell enough work at that price.   Consider if you are in the right market to do business but also if you have the right marketing and sales skills in place.
8. Be sure to price your work for the actual costs you will incur at the time you produce it.   Labor and many material costs are expected to go up dramatically before the end of the year.   If you like the idea of an extended backlog of work find a way to protect your planned profits from escalating costs.
9. Know your limits.  Do what you can yourself but get the professional help you need to do things right; to avoid costly mistakes, increase the likelihood of success and maximize the results for your all your efforts.
10. Revisit number one above.   Share your plan and your measurables with someone who can and you will allow to hold you accountable to following your plan and achieving your goals.  Make them part of your team.

One more thing; Make sure you are thinking about retirement

A recent study by the National Institute on Retirement Security found that the median retirement savings of households nearing retirement is just $12,000.   What would you think of a business owner, ready to retire, who only had $12K saved for retirement?  If you sell your work and services on price, consider that you are contributing to your customers' retirement funds at the expense of your own!

Money is made during the sale, not during production!

Guest Blogger:  Jeff Fierstein is the General Manager at Byers LeafGuard Gutter Systems located in Grass Valley California.  Jeff had posted a comment to a discussion I started at the NARI LinkedIn group.  The discussion was about a blog I posted titled: “Why Some Contractors Can Raise Their Prices But Most Others Can’t”.  I decided to use his comment as a guest blog, thanks to Jeff for allowing me to share this with you.

Contractor Gets Sage Advice From A Competitor About Selling At Cheap Prices

When I was a young man a competitor of mine, several years my senior, named Tommy O’Connell pulled me aside. He pulled a $100.00 bill out of his wallet and told me he always kept that bill in his wallet, “Never sell from an empty wagon” he said. I was young and didn’t much care for Tommy so I thought he was full of crap, but he explained that if you’re broke and need a sale too much, you’ll have a tendency to sell too cheap. That was actually sage advice. In this economy, there are many contractors that are living hand to mouth. Without the skills they require to sell their services at the price they deserve, they resort to “selling” a cheap price. They either don’t understand that to stay in business they need to include a profit, or simply cut corners and provide a sub standard job. This may be a good indication why an overwhelming number of home improvement contractors fail within their first two years of business.

“Never sell from an empty wagon”

In our early days, we would bid like crazy, leave bids on the doorstep, and wait for the mailman to come. The only thing that saved us from ourselves was our bid package was detailed enough to outshine the competition who was also waiting for the mailman.

We’ve all heard it, what got us here, isn’t going to get us where we want to go.

Today, the only way we would leave a bid on the doorstep is under duress. Sure there are exceptions to the rule but unless we get a chance to explain our bid in detail and ask for the business, we might as well not bid. We spend a great deal of effort to train our sales force how to build value and ask for the order. We know that there is competition in our field but generally find them easy to outsell at the price we need to be around tomorrow.

For those concerned about selling against contractors that sell too cheaply...

There is an ancient roman proverb that comes to mind; AQVILA NON CAPIT MVSCAS
“An eagle doesn’t hunt flies”

Is He Or She Really A Lead Carpenter?  Probably Not!

I was involved in the creation of the NARI Certified Lead Carpenter Program.  NARI did a great job putting that program together.   When the certification was created it included a definition for what a lead carpenter really is.  Unfortunately even though experts on the system helped define for our industry what a lead carpenter is, many remodelers and construction companies have ignored that definition and have decided to create their own definitions.   Without endorsing and enforcing a common definition across our industry every carpenter can have the title of lead carpenter.  This waters down the title and leads to confusion for employees, employers and, more importantly, consumers.  Also, I don't think it’s fair to true lead carpenters, those who have achieved the skills and experience to be a true lead carpenter, if we allow impostors to receive and use the title.

NARI Definition of Certified Lead Carpenter

“A lead carpenter is involved in tasks and has responsibilities beyond the technical production aspects of a project. He/she is responsible for customer contact and communication, supervision of subcontractors and employees, managing the job site, scheduling, and safety issues. The success of a remodeling project during the production stage is the primary responsibility of the lead carpenter.”

NARI’s Certified Lead Carpenter Training Program lists the following seven basic responsibilities for a Lead Carpenter:

1. Customer Satisfaction
2. Material Take-offs, and Orders
3. Job Site Supervision, Protection, Cleanliness, and Safety
4. Carpentry Labor
5. Supervision and Scheduling of Subcontractors
6. Building Code Inspections
7. Project Paperwork

Job Description for a Lead Carpenter

An Overview of the Lead Carpenter System

Are you misleading your carpenters and your customers?

Just because your carpenter is the most experienced at the job site, and or is the highest paid employee at the job site, those characteristics don't make him or her a lead carpenter and does not justify giving him/her the lead carpenter title.  Plus, unless your business setup and systems have been specifically designed to support a lead carpenter system, how could a true lead carpenter actually perform their job duties?  

For example, if your business can't or won't share the job estimate and pricing with a lead carpenter, how could he or she manage a project to meet the budget?  If the project specifications are inadequate, and or the business doesn't have a sales to production handoff process, the lead carpenter will need to be micro managed and or will need to constantly interact with the sales person who sold the job to know what to do and what to do next.  

If you hire a real lead Carpenter will he stay?

I am also aware of true lead carpenters who were hired as lead carpenters only to find out that they couldn't act as lead carpenters at the business that hired them because of the reasons shared above.  When they find these conditions at their new job they quickly realize their opportunities for career and compensation growth are dramatically compromised.   So many left for a different business and opportunity where they could use their skills and continue to advance their careers.

With the economy showing signs of improvement, and as the volume and pace of remodeling and construction increase, there will be high demand for the skills and responsibilities a true lead carpenter can bring to the job site.  Businesses without true lead carpenters in the field will have much higher overheads than those that do.  In a competitive marketplace businesses using a real lead carpenter system with true lead carpenters will definitely have a competitive and a profitability advantage.

When to Implement The Lead Carpenter System?

 The Benefits of Implementing a Lead Carpenter System(2 Videos)

So, is he or she really a lead carpenter? 

Does your business really have a Lead Carpenter System?

Guest Blogger: Melanie Hodgdon is a Certified QuickBooks ProAdvisor who has been providing financial analysis and QuickBooks training for contractors since 1994. She’s the co-author of A Simple Guide to Turning a Profit as a Contractor.  Melanie and Shawn often coordinate their efforts when helping remodelers develop financial systems for their businesses so they serve the contractor, not just their accountant.

Five Ways To Think Like A Business For Business Owners

I work with many companies in transition. The steps from being a “guy and a truck” to having an office and a bookkeeper and field employees are frequently challenging, but the milestones are pretty easy to identify. Ray the Remodeler used to work out of his house, but now he’s got an office. Bill the Builder used to pound nails, but now he does sales and supervises a crew. A less easily-measured but potentially even more important milestone is when the owner is able to recognize and maintain separation between himself (his personality, his idiosyncrasies, his strengths and weaknesses, his preferences, and his habits) from the company for the sake of the business.

Adding the trappings of a business (office, staff) without shifting attitudes about the business has held many owners back and limited the potential growth of their companies. As long as they see themselves as remodelers, rather than owners of businesses that deliver the service of remodeling, they risk seeing their businesses as extensions of themselves, reflecting their own strengths and weaknesses. They also tend to see their companies as being so unique that they can’t be run using best business practices.

Have you ever said anything like this?

• “If I used that kind of markup in my area, I’d lose all  my customers”
• “Yeah, I’d love to job cost my labor but I could never get my guys to fill out timecards accurately.”
• “I’m just too busy to keep up with the paperwork, so I really can’t count on my financials.”
• “Sure I’d love to hang up my toolbelt, but there’s nobody else who can do what I do.”
• “My customers would never stand for me creating change orders for all the little extras we do; I just either eat it or try to make it up somewhere else.”

If you have, this is exactly the kind of self-defeating head talk that will keep your business not only dependent on you, but restricted in scope and sophistication to the limitations of your energy.

Here are some suggestions:

1. You are not your business. Don’t allow your personal limitations to hold it back. So you stink at paperwork. That shouldn’t doom your company to have paperwork that stinks. Hire somebody who just loves paperwork to take care of it for you, but only after you have determined what information you want and worked with him/her to make sure their method of data entry is going to get you what you want.
2. Chase profit, not dollars. When owners start talking about how much their sales have increased, I remain unimpressed. Sales are nothing. Profit is where it’s at. Let’s say your volume is $600,000 in year 1 and $900,000 in year 2. A 50% increase, right? Wonderful, right? Maybe yes, and maybe no. If in order to sell and produce 50% more you had to hire a production manager, an estimator, and a salesperson and that caused a significant increase in your overhead, you could wind up with a lower net margin at the end of year 2. You might even end up with fewer actual dollars of profit to say nothing of the added stress of running more or bigger jobs. Know what numbers to watch, how to interpret them, and what to do to improve them.
3. Plan for growth. Contractors who wouldn’t build a dog house without detailed plans all too often “build an addition” on their business without even a napkin scribbling. In other words, they add personnel, equipment, or practices but fail to integrate them into an overall plan. The result can be as disappointing as buying twenty 2x6-8’s when what you really needed was ten 2x6-16’s.
4. Avoid basing business decisions on your gut. Thinking like a company instead of an individual can protect you from making decisions that, deep down, you know are bad. Do an “at cost” project for a friend? Hard for you to turn it down, but a justifiable decision from the standpoint of the business. Hanging on to those dead weight employees because you dislike conflict? It may be hard for you to let them go if you’re thinking like a kind uncle, but much easier if you’re thinking like a business.
5. Stop trying to do everything yourself. If you haven’t already figured this stuff out on your own, hire somebody who has helped hundreds of contractors understand their numbers, replace habits with systems, and achieve a healthier relationship with their business. Comments from my clients reveal that many contractors struggle with the business side of things.  Would you like to move “…from being clueless & frustrated to confident and comfortable….”? Would you find it “…refreshing to speak with someone who actually knew what they were doing, understood what (you were) trying to accomplish, and just made it happen.”? Are you sick of being “…lost in a sea of numbers…”?

If your business had a voice, would it be offering you the very same advice?

Successfully Grow Your Business By Creating a Ladder of Opportunity For Employees

Note: This is the first of a 3 article series on this topic

It has been my observation that the most successful construction businesses are the ones that plan for and achieve consistent growth. This growth is measured in two ways that go hand in hand.  The first, and probably the most obvious, is growth in revenue.  The second, and most important, is the growth of the employees who comprise the team.  These two forms of growth go hand in hand because without employees to manage and complete the work, you cannot increase your revenues. Another important consideration is that growth will be pointless unless you maintain profitability.  Adding quality employees helps you to maintain and boost your financial success.

You can jeopardize consistent growth by constantly replacing employees or forcing new hires into management positions. The fact is that as a business expands, you will need additional employees and skills to maintain the growth. Employee retention and improving upon their skills are easier and quicker ways to grow. Creating a ladder of professional and career opportunities for your employees helps facilitate a long-term design strategy for your business.  The ladder of opportunity is created by moving employees forward into new positions and bringing on new team members to fill the positions they leave vacant.  You maintain the ladder of opportunity by helping new hires to grow in this same way.

Reasons for using a "Ladder of Opportunity"

Evolution Vs. Revolution?

It’s not easy to replace employees as they leave your team or to bring on new hires that possess the necessary skills to ensure your business grows. Doing so also delays the rate at which you your construction business can grow.  You need to also consider whether you feel it is really fair to existing employees if you don’t give them the opportunity to move up within the company. If you are not developing employees as the company grows, you will eventually face a revolution, rather than an evolution.  If this happens, you may be forced to replace these employees with others who already have the skills the growing business needs.  This approach can be very risky and expensive.

Offering a ladder of opportunity helps keep good employees. 

I always found that great employees are far more motivated by opportunity, responsibility, accomplishment and a sense of personal fulfillment than by the use of short-term incentives, such as cost of living wage increases, one-time bonuses, or an occasional pep rally. The right strategy, as long as it is sensitive and relative to the career path of your employees, will help keep those employees on the team.  It can also steer your company in the direction of recognizing who can move up the ladder and how to train them to ensure that your business evolves. The effects of such strategies are longer lasting and often permanent for the business and its employees.  Additionally, this strategy works well because existing employees are familiar with your company’s systems. They already fit into the culture and know how and why you do business the way you do.  It will take longer for new employees to learn about your culture, adapt, adjust and become productive dedicated members of your team.  Having employees start their career paths at the bottom of the ladder affords the business owner the advantage of limiting the expense and risks if the employees do not fit in or decide to leave the business.

Read the follow up to this blog (article 2 of 3) titled “How To Create A Ladder Of Opportunity For Your Employees”

Related articles:

Government to Contractors: Start Hiring Convicted Felons!

Mentor Me, Please - Gen Y Business Owner Offers Peers Advise

Contractors: How To Work With Generation Y From One Of Them

Gen Y Member's Advice To Peers: How To Develop A Good Work Ethic

How To Have A Rockin 2013!

A new economy and a new marketplace are both here now, and they are what they are; for now.   Old ways of doing business or just waiting for something good to happen for you in the New Year are strategies that are probably not going to help grow your business and or your profitability.  Here’s my list of three things remodeling business owners can do to make sure 2013 will be the year they set their businesses on a new path towards success in a constantly evolving marketplace.  Don’t miss the video treat at the end!

#1: Choose your niches: You can’t serve everyone or anyone

When you serve anyone and are willing to build anything your business misses an opportunity to really stand out.  Lots of businesses already follow that model.   If you follow it too you will be just another one in the crowd.  Instead, by choosing specifically who you will work for and what work type or types you will concentrate on, you can then create and build a brand that attracts your targeted niche.  Make sure the niche market you choose to serve can support the required margins your business needs to do so and make sure to consider the skills required to sell to that niche.  Remember, the economy will be soft for at least several more years, so choose niches and work types that will be in demand in your market.   As Mick Jagger of the Rolling Stones sings: ““You can't always get what you want. But if you try sometime, you just might find, you get what you need”

#2: Identify how you’re unique

Don’t be different in the same ways other remodelers are different.  Sounds stupid but why copy another business and call that being different.  Besides, when you’re just like all the other companies the only differentiator in the eyes of the consumer might be price.   Instead, be unique.  Find ways to really stand out from the crowd in the way you do things and or the things you do.   For example maybe you only hire female field staff to build your projects.  Maybe you and your employees always wear company uniforms and name badges with your picture on it whenever you and or they show up for a sales call, service call or the first day at a new project.  Or, maybe you will only install American made products (assume that is really possible these days!).   As Jerry Garcia of the Grateful Dead once said: “You do not merely want to be the best of the best, you want to be considered the only one who does what you do”

#3: Build the right team 

You can’t do it all on your own and still have a life.  As the legendary Canadian Rock Band Bachman-Turner Overdrive sang: “I've been taking care of business, it's all mine. Taking care of business and working overtime”.   If running your business requires too much time away from the things you actually work to have or enjoy, you need to change how you do business.

Building the right team requires some engineering.   First, identify the organizational chart of job positions and the number of employees needed; today and at other predetermined milestones as your business grows and evolves.  Then, find employees who complement your and current employees’ strengths and weaknesses.   When filling job positions consider whether the assigned employees should be global or linear thinkers.   If you want employees who think like owners, hire the right ones and then give them the same experiences an owner has so they can actually think like an owner thinks.  If you want to use a lead carpenter system then hire true lead carpenters, but first make sure your other business systems are already in place and designed to support a true lead carpenter system.

I hope you enjoyed the “rockin” theme of this blog post.  

What inspired this approach you might ask.  I recently went on the Rock Legends Cruise II and had a blast.  Here’s a video I shot on the cruise of the Lynyrd Skynyrd tune “Give Me Three Steps” performed by the Artimus Pyle Band.   Artimus is one of two drummers who played for Lynyrd Skynyrd.   What’s special about this recording is that Bob Burns, the other drummer for Lynyrd Skynyrd, is on stage and both Bob and Artimus are playing drums at the same time!  I’m not sure that has ever happened before.  I hope you enjoy this recording as much as I enjoyed it live!  Artimus really pulled together the “right team” for this tune!

Artimus Pyle Band with Bob Burns and Artimus playing drums at the same time!

Rebuilding Your Construction Business On Purpose in 2013

Most remodeling and construction business owners didn’t start with a plan for where their business would end up; they just ended up where their businesses took them.   As they did business the employees and subs who worked for them, the clients who bought from them and the project types they bought are often the factors that eventually defined the business and therefore defined who their target customer type and job types are today.  If you’re not happy with where your business ended up, and you had to downsize during the recession, your current position might just provide an opportunity to rethink how you move forward before the economy and your business picks up.  Here’s a path to consider if you want a different business going forward.  Reflect back on and take advantage of lessons learned in the past as you map out your plan.

First establish goals for your business.  

Make sure the goals support both your professional and personal ambitions.   If you want to work to live, rather than live to work, now is your opportunity to make the change happen.

Your goals must be measurable

Next, establish metrics by which you will measure whether your business is on the right track and is achieving those goals.   In your metrics include ways to measure things like financial health, quality of service, quality of work, company culture, when you will be ready for the next stage of growth and the related employee growth or advancement that needs to be achieved. 

Decide who you will need for employees

Now that you have a clear idea of your goals and have defined objective ways to measure whether you’re achieving them or not, you can develop organizational charts for each stage of growth as well as job descriptions and candidate profiles for the people you will need to hire and advance.   Rather than let who you hire define your business and the job descriptions for those people, you will this time be able to proactively define, seek out and better qualify the right employees for each job position you will need to fill as the business grows. 

Here are a few examples. 

If you want to use a lead carpenter system, hire field staff with both trade and management skills.  If you can’t find real lead carpenters with management skills (because in reality very few exist) find good carpenters with the cognitive abilities and desire to learn and use those skills.  Then, train them yourself or find someone else to properly train them.  Your lead carpenter job description will help define the training you will need to provide.   If you want managers who will lead employees rather than supervise them, make sure you include that consideration in the employee profiles you will use to complement your job descriptions and hiring decisions. 

Putting the pieces together

If you hire the wrong managers you will be compromising your ability to hire and keep the right employees to do the work.   If you have to compromise on who you hire to do the work they will not be able to live up to your metrics or you will have to lower the standards by which you measure their performance.   If you drop the bar on your metrics you will either have to accept that you will never achieve your business and personal goals, or you will have to drop the bar on those too.

One definition of insanity is to keep doing the same things but expect different results.  If you want 2013 to be the year you changed the direction and performance of your business, you would probably be insane not to consider the path described above.

Thinking about figuring all this out on your own? 

If you and your business have the ability, the time and the money to learn all this stuff on your own check out this list of Five Great Books for Remodeling Business Owners.

Rather work one-on-one with a coach to help you?

Contact Shawn to find out how he helps remodelers and other construction related businesses all over the country achieve the business and personal results they desire.  If you're not earning and keeping enough money for your retirement yet he can help you change things.

To Be Successful In 2013 Create a Business Plan And Do An Estimate

For me, when I still owned my remodeling business, getting ready for business growth meant I would first need to do two things; make a plan and create a budget. 

Create your plan

First was to create a plan for what I wanted to do and how I would do it.  I considered what projects I would specialize in, who I would work for, where I wanted to work, and how I would market my business so the right people would find me.  I determined how many employees I would need as the business grew and what skills they would need now and later so I could delegate some of my current responsibilities and include the money needed to do so in my selling prices.  After determining the how, I needed to predict how much.

A business budget is kind of like a project estimate

The first budget I created was very simple.  By looking at the end of year profit and loss report, the financial history of my business from the previous year, I was able to list the majority of the expense categories I would need to consider to predict the costs of my new plan.  For anything I wasn’t sure about, I would call my accountant or another remodeler I knew at my NARI Chapter for advice.  Just like a remodeling project estimate, I listed the related expenses and then got current prices for each of them.

The Numbers Game

Creating that first budget for my plan to grow the business seemed very overwhelming.  After all, I had never done one before.  Looking back, the hardest part about doing it was actually sitting down to do it.  

Once I had become clear on the financial definitions and formulas used, the budget actually went together fairly easily.   I admit it was very time consuming that first time.  However, because I kept notes on how I had determined certain expenses and where I got the information, the second budget I did was a breeze.  I did not have to completely recreate or try to remember the entire thought process.

Planning and budgeting assumptions

As a result of living through the experience, I developed four simple assumptions, in addition to keeping notes, which helped organize the way I looked at the process.  They should be completed in the following order as well.

1. Commit to making a real profit, establish how much, and think of it as an expense that must be paid.  You only need a budget if you plan to make a profit.  
2. Be clear on how you will define and separate direct and indirect costs.   Once you identify which is which, recast your current accounting software's account list.   This requires moving misplaced accounts and costs to their proper locations as either cost of goods sold or overhead expenses.
3. Look at the big picture.  Consider your annual budget as just one project, like a whole house project that takes a year to complete.  Use your profit and loss report for the previous year as a start to estimate the coming year’s budget. Then start making adjustments for each account to reflect any price changes and or your new plans for the coming year.
4. Be sure all of your direct costs will somehow show up in your individual project estimates.   Pay particular attention to labor costs, equipment purchases and repair, and general miscellaneous supplies.  Make sure the hourly labor cost you use is burdened over and above the wage you pay employees to include all labor-related expenses and benefits.  If you own and repair your equipment, and or you use assorted hardware and supplies that do not end up as line items in your estimate, establish a percentage to add to your estimated direct costs so you will cover and include these costs before you add your markup.

Using this simple process year after year, I came to learn how important it was to my business’ success that I planned ahead for what I wanted to accomplish.  With a plan in hand, and a budget for what it would cost, I had the confidence and motivation I needed to make success a planned reality.  I also had full confidence in asking for the real price I needed to sell each project.

Guest Blogger: Thomas Messier, CIC.  Tom is Vice President of Construction Industry Services at Mason and Mason Insurance Agency, Inc. in Whitman MA.  He speaks frequently to construction industry groups about insurance related topics. Tom is a Certified Insurance Counselor, and is a graduate of St. Michael’s College.

Note: To help better understand this article you might want to first read Tom’s previous post titled: Does Your Liability Policy Have the Right ‘Coverage Trigger’?

What’s a “Triple Trigger” — Can You Or Your Insurance Agent Answer That Question?

The Set Up

Let’s say five years ago you completed work on a commercial construction project. Then last month you received notice that part of the structure collapsed and that your client is filing a claim against your firm for the needed repairs, plus loss of use of the structure during the rebuilding. Their complaint is that your original work was done improperly and the stress cracks had been noticed soon after completion. “It was only a matter of time,” alleges the complaint, “before this collapse happened.”

Now What?

Ignoring for the moment the fine points of litigation, which Liability insurance company should you notify? Your current carrier? The one who had your policy at the time of the construction? Or both of those, plus every policy you’ve had during the past five years?

Although the correct answer will depend on the nature of the claim and the exact cause of the collapse, the best response at this point would be “all of the above.”

Policy Details Are Very Important

Because Liability policies usually state specifically that they cover damage occurring during the policy period only, you’ll need to ask when the damage actually “occurred.” At the time of original construction — during the time the cracks allegedly appeared and continued to worsen — or on the day the actual collapse took place?

Many courts, when faced with similar situations, have ruled that all three apply.  This is what’s called the “Triple Trigger”.  The courts held that because the damage had been occurring continuously since the first day of construction, every policy since then should provide a defense.   And, if you’re found liable, you’ll have to pay a part of the claim as well.

The Good News

If you’ve been dealing with reputable and skilled insurance providers and your policy has been continuous and reviewed regularly in a constantly changing marketplace, the coverage will be there for you regardless of the “trigger” applied by the courts.

Bottom Line

If you have an experienced and recognized construction insurance specialist helping you, you’ll sleep better at night knowing an expert is watching out for you, even if you’re not fully sure of what you have to watch out for!