NECA TransmissionsNotes from the front lines of the electrical contracting industry
  • Dan Walter Sees the Future: BIM on Every Project

    Posted on Aug 02, 2011 by Dan Walter

    NECA Transmissions features posts from CEO John Grau and other NECA staff and leaders about industry projects or issues they are following. Today's post comes from Dan Walter.

    Building Information Modeling has been around for a while, starting with 2D CAD and continually evolving as better software and hardware became available. But, 2011 might be the so-called tipping point -- the point where using BIM on construction projects is the rule, not the exception. Up to now, BIM has been used on big jobs, design-build jobs, or demonstration projects. BIM software and the computers needed to run it is expensive. Not every construction contractor, general or sub, could afford to buy it. The fact that different projects required different software didn’t make it any easier to get into BIM.

    BIM requirements are showing up on more traditional delivery systems like design-bid-build. Clash-detection features inherent in BIM allow for the discovery of problems much sooner than they would have been discovered in the field using traditional layout techniques and field engineering. And the better coordination that results from using BIM can mean shorter schedules and fewer claims. Everyone benefits when projects run more smoothly.

    But as BIM is required on more projects, some new questions arise. Questions like, "how many iterations should an electrical contractor be expected to perform as part of the base bid?" Or, "at what point does solving the interferences identified by clash detection become redesign?"

    The second edition of The National BIM Standard – United States has been released by the buildingSMART alliance for a 30-day public-comment period; it’s scheduled to be published later this year. This version includes best practices and guidelines. NECA is a member of the buildingSMARTalliance, and a NECA member sits on the board.

    The current BIM standard doesn’t address the questions posed here, but NECA is actively working with other industry stakeholder to get answers to these questions. I am active in a coalition that includes members from NECA, the Mechanical Contractors Association of American (MCAA) and the Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA) to determine how contactors might respond to these questions. The enthusiasm expressed by the participants for this effort is clear, our contractors and the industry will benefit from their efforts.

    The industry is just beginning to see the benefits that BIM can provide. And, I believe that when everyone benefits from the advantages provided by BIM, BIM will be used on every project.

  • Setting Aside Set-Asides

    Posted on May 13, 2011 by John M Grau

    We all like to feel that we operate within a parameter of well-defined values and principles.  Establishing these standards is relatively easy.  Living up to them is another thing.  At some point, we tend to justify exceptions to our rules.

    The labor movement in the United States is a strong proponent of “Buy American.” Many NECA-member contractors share that philosophy.  Yet, I often run across the German sports car exception or the French wine exception or other such compromises.

    Small businesses are proponents of “free enterprise,” yet we’re not adverse to business licensing or other restricted access to our trade or profession.

    My point here is not to be critical but to note that statements of principle are not as clear-cut as we would like them to be.

    NECA is currently struggling with its position on business set-asides.  What I’m talking about is federal programs that give special subsidies or preferences to some types of business over others.

    NECA has a position against federal procurement set-asides.  The policy adopted by our Board of Governors states that NECA is in favor of the “elimination so far as is practicable of all federal and federally assisted procurement programs or practices which discriminate on the basis of size, race, sex, or business location.” In other words, we believe in open competition on an equal basis.

    But what about help for small businesses?  The small business set-aside program has helped a number of our members get their businesses established.  We’ve encouraged government to break up large jobs into smaller packages so our average member can compete against large international constructors.

    How about provisions in bid packages that give preferences to local versus traveling contractors?  How do you look at this if you’re one of NECA’s woman-owned enterprises?

    See.  It’s not so easy.

    How do you view this issue?  Should there be exceptions to the rule and what should they be?  Should we strictly adhere to this position, or is it time to set aside our policy on set-asides?

  • Appsolution

    Posted on Apr 18, 2011 by John M Grau

    Forgive me (pun intended) for the title, but I love the apps on my Smartphone.

    I have a Droid phone that features some of the Google-based apps. I especially like the GPS-type ones that are great when I travel. I can find restaurants, coffee shops, ATM machines, gas stations, motels and more with a click of a button. Google Goggles is pretty cool, too. I take a picture of the front of a restaurant, and then its menu, rating, and reservation number will appear.

    Of course, I have a few games like Angry Bird. I also admit that I check news headlines and sports scores while sitting in the audience at meetings. (But never when Rex Ferry is speaking.)

    I wondered what kind of apps we might develop for NECA, and I posed that question to our staff in an e-mail. The responses shot back to me immediately. Apparently, they had been thinking about the subject for a while as well.

    Here are some ideas:

    - Mobile viewer for necanet.org
    - Portal for members, the “NECA” app – a one click source of all things NECA: Receive news, update membership profile, subscribe, purchase pubs, view calendar and register for meetings. It would be a fully customizable app for the membership.
    - EEM, on-site “green” job estimates
    - eSafetyLine
    - MLU, on-site estimating tool
    - Take-Action app, receive text alerts and click-to-send Congress/Senate letters on behalf of NECA’s issues
    - Marketing tool app, easy resource for chapter managers/field staff. This would have updated NECA marketing materials that they could display on an iPad or phone when trying to recruit potential members.
    - ECMag app – similar to NYTimes or Wall Street Journal app to view latest headlines, have text alerts when a topic of interest is referenced.
    - Find a Contractor app – basically a mobile version of necaconnection.org.

    Mike Thompson thinks that contractors might like an app that alerts them whenever one of their trucks pulls into a Hooters parking lot. I believe they make tracking ones like that for teenagers.

    At any rate, I think it’s time we figured out how to develop some NECA apps. Let me know what your favorite apps are and if you have any suggested app solutions.

  • NECA — On the Path of National Leaders

    Posted on Feb 09, 2011 by John M Grau

    I have been watching coverage of the 100th anniversary of Ronald Reagan’s birth. I learned that, between his acting and political careers, Reagan spent time as a spokesman for General Electric. Traveling the country and speaking to large groups, he honed his message and solidified the values that helped make him a great leader.

    NECA was one of the stops on his tour. He not only addressed NECA on his GE tour in the early 1960s, but he came back and spoke to a NECA Convention in 1976 between his time as governor of California and his first term as president of the United States.

    Meeting and listening to national leaders has always been a highlight of the annual NECA Convention for me. I started to think back over who has appeared and at what stage in their careers. I did some research and came up with an amazing list of prominent figures in our nation’s history.

    Reagan wasn’t the only U.S. president to address a NECA crowd. Gerald Ford spoke to NECA gatherings in 1966 as a congressman, and again in 1977 as a former president. Former First Lady Barbara Bush joined us in 1999.

    Four astronauts have addressed NECA audiences: Neil Armstrong (1972), Frank Borman (1978), Wally Schirra (1981) and James Lovell (1996).

    Military Leaders include: General Maxwell Taylor (1967), General Moshe Dayan (1974), and General Colin Powell (1998). General Powell later became Secretary of State, but he was not the only one to speak at a NECA Convention. Dr. Henry Kissinger was at the meeting in 1980. We’ll add a military leader to the group when retired General Stanley McChrystal addresses our convention in San Diego this fall.

    Spiritual Leaders have paid visits to NECA. Dr. Norman Vincent Peale in 1969 and 1985, Robert Schuller in 1979 and 1995, and Archbishop Fulton J. Sheen in 1974.

    Sports figures attending NECA meetings include Bud Wilkinson (1980), Jack Kemp (1994), John Wooden (2004), and Bob Costas (2008). Legendary UCLA coach Wooden was 95 years old when he spoke to our meeting in Los Angeles. That age record will be hard to beat, although the Academy has booked 94-year-old Louis Zemperini (subject of the current New York Times #1 bestselling book Unbroken) to address their meeting in June.

    Humorists have enlivened some NECA meetings. Lil’ Abner cartoonist Al Capp (1969) and Dilbert cartoonist Scott Adams (2006) were hits, as well as political humorists Mark Russell (1983, 1988, 1992), Dave Barry (1997), Jay Leno (2004), and “Kids Say the Darnedest Things” creator Art Linkletter (1970).

    The nation’s most preeminent television journalists have braced NECA’s stage. Howard K. Smith (1972), Harry Reasoner (1975), David Brinkley (1982, 1990), and my all time favorite convention speaker, Walter Cronkite (2000).

    Of course, some of the nation’s top print columnists have visited NECA’s conventions including: Drew Pearson (1968), William F. Buckley (1975), James Kilpatrick (1977), William Safire (1984), Claire Booth Luce (1984), Jack Anderson (1987), and Bob Woodward (2003). Radio personality Paul Harvey appeared at both the 1970 and 1989 conventions.

    NECA has featured two historians: Doris Kearns Goodwin (2001) and David McCollough (2006), one poet: Maya Angelo (2001), and one Nobel Prize Economist: Milton Friedman (1983).

    NECA members have also heard from noted authors, adventurers, business leaders, ambassadors, and cabinet officials. All have addressed NECA Convention as: One of the stops on the path of our nation’s leaders.

  • The Foundation for Success

    Posted on Jan 24, 2011 by John M Grau

    One of the more satisfying things in life is to create something. Sometimes that’s in the form of taking an idea and turning it into reality. Seeing others accept and even embrace what you helped create is most satisfying of all.

    I just returned from a meeting of the ELECTRI Council in Scottsdale, Arizona, where our 21-year-old foundation went about its work of selecting research projects for the coming year. I’m proud of what the foundation is accomplishing, and I can’t help but think back to how it all started.

    In 1986, then NECA Director of Services Bob Wilkinson came to me with the idea of starting a foundation to fund research for NECA. I was in my first year as CEO and I realized this had the potential for a big impact on NECA. Bob convinced me of both the need for research conducted specifically for our industry and of using the foundation structure to assure a steady source of funding. The next step was to get buy-in from NECA members.

    Since Bob was a member of the Academy of Electrical Contractor and the staff person assigned to one of their committees looking at the future, I suggested that he run the idea by them. If the Academy, made up of our industry’s best and brightest, endorsed the concept, we might leverage that into overall support from the Executive Committee and Board of Governors.

    Wilkinson sold the idea and we put the basic foundation structure together. Then the challenge was how to fund it. My idea was that NECA would contribute one million dollars from its reserves, and we would raise another million from members. To show donors what we could do, we produced some early research reports that NECA paid for but we labeled as foundation studies. We put NECA Marketing Director Lew Tagliaferre in charge of the foundation and these first research efforts.

    To raise funds, Lew thought we needed professional fundraising help. I was concerned about the cost of hiring a consultant, but Lew was persistent. At the NECA convention that year, he brought in fundraiser Charlie Fazio to meet me. Charlie had visions of a bigger endowment than I had ever imagined. He presented a strategy of how it could be done.

    We hired Charlie and, a couple months later, he and I flew to Jacksonville, Florida, to meet with former NECA President Buck Autrey. We left that meeting with our first $100,000 pledge. The Electrical Contracting Foundation was born.

    The endowment that I originally envisioned as $2 million, and Charlie saw as $7 million, now stands at $13 million. Electrical manufacturers, NECA chapters, and individual members have contributed to the endowment’s growth. Extraordinary gifts where provided by Square D/Schneider, Al Wendt, Dick McBride, and Buzz Allison.

    In addition to the seed money to start the operation, NECA itself continues to be the foundation’s biggest supporter. Since its founding, ELECTRI has spent over $24 million on programs and operations. Over $ 9 million of that amount has come directly from NECA’s coffers. In 1990, NECA provided 93% of ELECTRI’s budget. This year it’s around 37%.

    That’s not money that NECA’s giving away. Like the other major contributors to the foundation, NECA sees its contribution as an investment. The fate of our industry – members, suppliers, chapters, the NECA organization, and the foundation – are intertwined and inseparable.

    The foundation for our success was conceived 25 years ago. Today we can’t imagine it any other way.

  • Feeling Better?

    Posted on Dec 23, 2010 by John M Grau

    It’s year’s end, and I’m reading a lot of financial and economic reports. They tell us how we did in 2010 and make predictions about what 2011 will be like.

    The consensus is that, economically, the worst is over, and we are recovering. But it is a very slow recovery.

    It all sounds to me like how we characterize being sick with a bad cold or the flu.

    First, we had the warning signs in 2008. We partied a little too hard, picked up some inflated asset germs, and then — wham! — we feel it in the gut. Next thing we know, it’s 2009, we’re fevered, anxious, lying in bed, and believing death might be a viable option.

    We stayed in bed into 2010. We took our medicine, we were cautious about what we ate, and things started to turn around. Now, we’re on the mend, but not completely well. We want to feel better more quickly, so overall we’re a bit cranky.

    As far as economic recovery goes, we’re in the cranky phase. So watch out. The November elections are evidence of what we do when we’re cranky.

    It’s going to improve. My prediction is, we’ll still be pretty cranky in the first part of 2011. Later we’ll just be annoyed, and by the end of the year we’ll definitely be feeling better. We’ll probably even be appreciative of the weight we lost while sick.

    2012 might be time to start partying again. But we won’t stay out too late.

  • Thank You for the Gratitude

    Posted on Nov 23, 2010 by John M Grau

    In past years around this time, I have asked the NECA staff to reveal their Christmas wish lists or New Year’s resolutions. This year I decided to ask them what they are thankful for. I did this after reading a newspaper article that claims giving thanks is good for you.

    It stated that a growing body of research suggests that maintaining an attitude of gratitude can improve psychological, emotional, and physical well-being. Adults who frequently feel gratitude have more energy, more optimism, and more social connections and are less likely to be depressed, envious, greedy or alcoholics. They earn more money, exercise more regularly, and sleep more soundly.

    So here are some thoughts from our energetic, emotionally stable staff. (Mike Thompson, Dan Walter and Geary Higgins didn’t offer anything, which makes me wonder if they’re sleeping okay.)

    Government Affairs Executive Director Lake Coulson is thankful for a wife and three daughters, health that affords him the benefit of running marathons, temporary relief from FASB, and those who put their life on the line by protecting our great country. (Many of us have similar thoughts except for the marathon part.)

    Convention Director Beth Ellis is thankful for her convention team and the successful meeting in Boston this year.

    PR Director Beth Margulies is grateful for the enthusiasm of the NECA Women’s Peer Group and for leaders Tricia Ferry and Rachel Barber who convinced dad, Rex, to support this initiative. (And all along I thought it was Rex’s idea.)

    Western Region Executive Director Bill Kuhr is thankful for the diligent and intrepid people in our organization. (I looked up the definition of intrepid. It’s, “characterized by resolute fearlessness, fortitude and endurance.”)

    Midwestern Region Executive Director Drew Gibson appreciates the challenge of integrating 75 market recovery plans in his region into two plans that assure the viability of NECA members recovering lost markets. (Good luck, Drew.)

    Mike Johnston, Executive Director for Codes and Standards, is glad the 2011 NEC was approved and published this year. Mike said that persons and property can now rest easier with these new and revised safety requirements.

    Recovering Southern Region Executive Director David Roberts offers a bit of advice with his gratitude. He says he’s thankful for flu shots but suggests that it is much smarter to take the shot before a bout with the flu.

    I’ll jump in by expressing my gratitude for family, friends, co-workers, and NECA members. Most of all, I’m thankful for the future. American is a forward-looking nation, and NECA is a forward-looking organization. Knowing that we can do better, and certain that the future will be even better than today, is what makes us great. And grateful.

  • Having Our Cake and Eating It Too

    Posted on Oct 11, 2010 by John M Grau

    The neighborhood where I live has a community listserv. We can all post notices of items for sale or enter into discussions on whether we need more sidewalks. One interesting group of postings asks for recommendations on service providers. A couple examples:

    • “Looking for a roofer who does good work at a reasonable price”

    • “I need a low-cost handyman that does excellent work”

    There’s a consistent theme. Most people want top-quality work at the lowest rate possible. What’s considered good work and low cost are subjective standards, of course. But as one marketing professional once told me, “We want what we want, and we expect to get it.”

    Electrical contractors performing service work are often on the selling side of this equation. It’s a situation that can easily lead to dissatisfaction and disappointment for both the buyer and the service provider. But it doesn’t have to.

    NECA contractors justifiably promote themselves as being the best but often struggle with the question of whether the customer really wants quality or just a cheap price. The answer is, they want both.

    While a few buyers may only be satisfied with a deal that drives the vendor into bankruptcy, most just want to know that they haven’t been taken for a ride. And most will be happy to repeat business with a service provider who gives them a good return on investment – also known as a “bargain.” They might even recommend that provider on the neighborhood listserv.

    It’s incumbent upon the seller to fully explain the value proposition behind what he or she does. That’s why energy audits start with a thorough examination of the customer’s electric bill; a qualified electrical contractor can show the customer how a proposed energy retrofit can slash their power costs. That’s why savvy contractors sell lighting upgrades on the basis of energy-cost savings, increased security and safety, improved productivity in offices and factories, and a whole host of other benefits. The concept extends to just about every electrical contracting service imaginable.

    You’re not just selling the time and material involved in installing a piece of equipment. You’re performing a service that will provide long-term benefits and make the customer’s life better. It’s hard to put a precise price tag on that in some cases, but you should be able to explain the benefits and value of your services in every case.

    I’m often tempted to start a discussion on the neighborhood listserv about why people think they can get quality work without paying for it. On the other hand, I never saw the value in keeping the cake. I’d rather just eat it. But a smart, qualified cake contractor with good communication skills might just convince me otherwise.

  • A Labor Day Missive

    Posted on Aug 30, 2010 by John M Grau

    When I started this blog, my intended audience was NECA-member electrical contractors. But as the readership grew and the posting were reprinted on my Facebook page, I’ve found that quite a few IBEW local unions and members are regular readers. So with Labor Day approaching, I thought I would write this posting with them in mind. And while most Labor Day messages are usually a salute to the workforce, this one is about a challenge.

    It’s not news that the construction industry is struggling. And even considering the loss of work due to economic conditions, the union portion of the electrical contracting industry continues to lose market share. So, we know instinctively that we have to change what we’re doing in order to survive. But change is hard, and we often hope that if we close our eyes and wait long enough, when we reopen them things will be back to the way they were.

    IBEW members think about how hard they worked to gain the wage rates, benefits, and working conditions they enjoy. And NECA contractors think about all the money they invested in building their business and the expertise they developed in going after certain types of work. But as much as we’d like to hold our ground, we can’t when that very ground has moved out from under us.

    The thing is, there’s plenty of opportunity for work. It’s the electrical work that’s being done by other electrical contractors and electrical workers.

    So why aren’t NECA electrical contractors going after that work aggressively?

    It takes time and money to prepare a bid or sales proposal. While a contractor doesn’t expect to get every job he goes after, he wants to have a reasonable chance of success. If there’s little or no chance of submitting a competitive price, it makes sense to not even bid the work.

    So what’s needed to be competitive?

    Good management in terms of scheduling, purchasing, material handling, and all the things a contractor is responsible for is a big part of it. But as one of the most significant costs, labor has a part as well. On a typical job, the cost of direct labor makes up over a third of the price, often more than the cost of the materials installed. The employer’s profit is around 3%

    Pure labor cost (wages and benefits) isn’t really the issue. It’s how that labor cost is applied to the job. Some types of electrical work or parts of an electrical project require highly skilled, technically competent electrical workers. Other parts require less skill. If the technical portions of the job are performed by high-skilled workers and non-technical by low-skilled workers, and each is paid accordingly, labor costs will be competitive.

    But won’t a contractor just use the lowest-paid workers?

    Not if he wants to stay in business! Asking someone without the proper knowledge to do a highly skilled job is a sure recipe for disaster. But as we’ve discovered by our market share numbers, it’s just as competitively disastrous to have a highly paid worker doing a low-skilled job.

    Besides pay and skills, the other big component of labor competitiveness is productivity. You know, getting eight hours work for eight hours pay. But another aspect of productivity is developing expertise on certain types of jobs.

    For instance a contractor may do a lot of data center jobs. He’s learned how to do them quickly and well. His management staff and work crews are better than anyone else at getting the job done on time and under budget.

    That’s great, but what if the next job is in the jurisdiction of another local union? Can he bring his expert crews in to do the work, or is he prohibited from doing so under portability restrictions? Many jobs end up in non-union hands for just that reason.

    Meeting customer’s needs is another competitive issue. Can the contractor perform work after hours at straight-time pay? Can makeup work be done on a Saturday? The more times we tell a customer “no,” the more often that customer will look for someone else who says, “yes.” And we know there are lots of people who will say yes.

    I’ve had many union leaders say that if they only knew about the customer requirements they would bend the rules for that customer on that job. That can work for big jobs with big lead times. But for smaller jobs that need quick decisions, it doesn’t. You can’t build a business or go after new markets and customers if you have to ask permission every time you bid a job.

    These aren’t the only impediments to competitiveness and market growth, but they are the ones most often noted by NECA members.

    Most electrical contractors are in business to make a profit and to grow their business. It’s what gets them fired up every morning when they go to work. They want to have a shot at all the work that the non-union contractors are getting. It pains them to walk away from bidding a job. And it’s frustrating for them to know that with a few changes or a bit of flexibility they could get those jobs. And by getting those jobs they would hire more people and make everyone’s life in our industry better.

    Just some of my Labor Day thoughts. I would appreciate comments or thoughts from IBEW members or others on what changes they think are needed to grow our industry once again.

  • Keeping America Safe from Pickled Dead Frogs

    Posted on Jul 28, 2010 by John M Grau

    A few weeks ago, a bill sailed through the House and the Senate with little fanfare. The President signed it into law on July 7. It creates a national standard for formaldehyde use based on an existing California standard. It was supported by industries that are subject to its regulations.

    So what? Why do I bring this to your attention?

    The reason is that it highlights some interesting trends going on in our country.

    One is that California and Europe set our national standards for consumer protection and environmental issues. The European Union loves these kinds of regulations and is the leader in creating them. It’s said that California would join the European Union if it could. The next best step is to adopt their regulations. Soon the East Coast states fall in line and, the next thing you know, they apply in Iowa and Oklahoma as well.

    The second point is that Congress is now into setting national standards, and businesses are supporting and encouraging it. Not long ago, states rights advocates and most industries fought the adoption of national standards. They thought they were better off with the states. But state laws starting getting crazy, and it made it difficult to produce products for a national market. So businesses would rather have one standard than 50 different ones. And if you sell internationally, a global standard makes sense, too.

    The third point is that the public appears to be in favor of national regulation as well. While many people think Congress over-reached in some of its current legislation, they did want some kind of health care reform, financial regulation, and environmental oversight. The fall elections may change the leadership of Congress next year, but you can bet that national regulations will keep coming.

    So while most of us haven’t messed with formaldehyde since high school biology class, the new national standard for its use gives us some insight into the way of regulation in the future.

About NECA Transmissions

NECA Transmissions is a collaborative effort from CEO John Grau and NECA staff to provide insight and feedback on key issues from the front lines of the electrical contracting industry.

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