Power & Communication Contractor
October, 2001

Contents

Tax Relief Or Not?

PCCA News

Safety Watch

Watch IT

Industry Roundup

Advertiser Index

Tax Relief Or Not?

By Fred Y. Geber, CPA

On June 7, President Bush signed the Economic Growth and Tax Relief Reconciliation Act of 2001 into law. The act primarily focuses on individual and estate and gift taxation. While construction companies will not be directly impacted by the act, all construction company owners as well as their employees will feel the effects immediately.

This act creates $1.35 trillion in tax cuts, which are being phased in over the next 10 years. Unfortunately, many of the tax breaks are backloaded, as you will see from the phase-ins described throughout this article. However, the act includes a sunset provision whereby the new law, by its own terms, expires at the end of 2010, thus conceivably leaving taxpayers back where they are now.

Tax Planning
The new law creates many opportunities as well as pitfalls for the average taxpayer. Taxpayers who have above average assets, income, education expense, retirement savings, or estate goals will find planning even more complex. For starters, taxpayers can take immediate advantage of the lower tax rates being phased in over the next ten years. Accelerating deductions to offset taxes at higher rates and deferring income until a later year when rates are lower is good basic planning. Individual rate reductions, coupled with the fact that corporate rates will not change, are a good incentive to consider organizing or changing your business entity to a sole proprietorship, partnership, limited liability company, or S corporation. Planning opportunities may also exist for you to shift income to family members to take advantage of lower rates enjoyed by children at least 14 years old.

Alternative minimum tax has become a difficult area in which to plan. As the regular tax rates drop and other provisions become effective, the interplay of regular tax versus alternative minimum tax becomes more difficult to determine.The act creates incentives to revise your retirement savings plans. The new higher limits could provide you with considerably more tax-sheltered retirement savings.

Estate planning will become considerably more complicated over the next 10 years. For example, a taxpayer dying in 2010 with a multimillion dollar estate will get to pass his/her wealth onto beneficiaries tax free. But if the same taxpayer dies a year later, his/her beneficiaries may receive only $1 million tax free and the rest will be taxed at rates up to 55 percent. In light of the gradual rate drop coupled with the increased exemption, your estate plan should be fine-tuned to take advantage of the rising exemptions while protecting your heirs against steep estate and income tax consequences down the road.

Probably the most publicized provision of the act is the across the board individual tax rate cuts starting with 2001. However, areas affecting a construction business owner the most are in the retirement and estate areas. In addition, due to the change, contractors may also be impacted with the alternative minimum tax.

Individual Rate Reduction
• New Lower Rate Structure—The act added a new 10 percent rate in addition to cutting all other rates between now and 2006. Although the new 10 percent rate is not part of the rate structure for filing 2001 tax returns, it will have an immediate affect on most taxpayers who make advanced payments for 2001 in the form of rebate checks based on their 2000 tax returns. Beginning in July, eligible taxpayers began receiving rebates of up to $600 based on their 2000 taxable income. In addition to the new 10 percent rate, the act phases in a reduction for the current 28, 31, 36, and 39.6 percent rates down to 25, 28, 33, and 35 percent respectively by 2006. For 2001, the rate reduction is 1/2 of 1 percent across the board.

• The Alternative Minimum Tax—The alternative minimum tax (AMT) is a separate tax system designed to ensure that high-income taxpayers still pay federal taxes. The AMT provides these taxpayers with the ability to reduce or even eliminate their regular tax by taking advantage of various tax incentives and preferences. This is a particularly painful tax for contractors because of the huge impact of long-term contract and depreciation adjustments. In computing the AMT, tax rates of 26 and 28 percent are applied to alternative minimum taxable income reduced by an exemption. To reduce the number of individuals who would otherwise be affected by the AMT, the act increased the maximum exemption (before phase-out provisions apply) by $4,000 for married individuals filing jointly and $2,000 for single and married filing separate filers. This increase only applies to tax years 2001 through 2004, and then it reverts back to the old exemption amounts in 2005.

To make matters worse, many contractors will find themselves thrown into the AMT in later years of the act simply because of the reduced regular tax rate structure, coupled with the restoration of full itemized deductions and exemptions. While regular tax rates are decreasing over the 10-year period, the AMT rates remain at the pre-2001 figures of 26 and 28 percent.

Education Planning Opportunities
The new law includes tax relief to help parents save and pay for their children’s education. Tax savings from these provisions are not necessarily restricted to just college. In some cases, the benefits also apply to elementary and secondary school education.

• Education Savings Accounts —An education IRA is a trust created for the purpose of paying education expenses of a named beneficiary. Current law allows annual contributions up to $500 per designated beneficiary, subject to modified adjusted gross income phase-outs between $95,000 and $110,000 for single taxpayers and $150,000 and $160,000 for joint filers. Beginning in 2002, the annual contribution dollar limit per individual is increased to $2,000, and the phase-out for married taxpayers filing joint occurs at the new higher levels of between $190,000 and $220,000, or double the single phase-out rates.
Distributions from those accounts are no longer restricted to use for higher education. They can now be used to fund education-related expenses for kindergarten through 12th grade, in public or private schools. And, of course, distributions used for qualified education expenses are tax free.

• College Tuition Deduction—The new law also provides much needed relief for parents of college-age children and self-supporting students paying their way through college. In 2002 and 2003, taxpayers with adjusted gross income not exceeding $65,000 ($130,000 for married couples filing a joint return) are entitled to deduct up to $3,000 of qualified education expenses whether or not they itemize. In 2004 and 2005, the maximum deduction increases to $4,000. However, if adjusted gross income does exceed the $65,000/$130,000 range in 2004 and 2005, a reduced deduction up to $2,000 is available those years, as long as adjusted gross income does not exceed $80,000 for single taxpayers and $160,000 for joint filers.
The one restriction on this deduction worth mentioning is that it cannot be taken in the same year that the Hope Credit or Lifetime Learning Credit is taken with respect to the student. For tax years beginning after December 31, 2005, the higher education expense deduction will not be available.

• Student Loan Interest—The new law expands the availability of the deduction for student loan interest starting in 2002. The act repeals the restriction that this deduction could only be taken with respect to the first 60 months during which student loan interest payments are required. The law also increases the adjusted gross income phase-out limits to make this benefit available to more taxpayers. The new phase-out limit of the deduction for individual taxpayers will increase from $50,000 to $65,000. The amounts double for joint filers to a phase-out limit of $100,000 to $130,000.

• Qualified Tuition Program—The act has expanded the scope and tax treatment for qualified tuition plans. Under prior law, states and their agencies or instrumentalities could establish qualified state tuition programs, known as 529 plans. These plans allowed a taxpayer to prepay for higher education for a designated beneficiary. Under the act, contributions are no longer restricted to state-sponsored qualified tuition plans, but they can also be made to privately sponsored plans. Eligible distributions from state sponsored plans are excludable for tax years beginning in 2002, while eligible distributions from privately sponsored plans can be excluded from income beginning in 2004.

Pension and Individual Retirement Account Provisions
The act phases in increases to the allowable contribution limits to traditional and Roth IRAs beginning in 2002. The allowable 2002 contribution will increase from the current $2,000 maximum to $3,000. By 2008, taxpayers will be able to contribute up to $5,000 to these plans. In addition, taxpayers older than 50 can contribute “catch-ups” to their IRA plans. Between 2002 and 2005, the permissible additional annual contribution is $500. This amount increases to $1,000 in 2006 and thereafter.

New limits also apply to salary reduction IRC Sec. 401(k) type plans. The current maximum will increase from $10,500 to $15,000 by 2006, with the first scheduled increase to $11,000 in 2002. The limits on annual elective deferrals to a SIMPLE plan will increase to $10,000 by 2005, with the first scheduled increase to $7,000 in 2002. Both of these plans also will permit taxpayers over 50 years old to make additional elective “catch-up” deferrals in excess of the otherwise applicable limits beginning in 2002.Starting in 2002, the annual limits on contributions to defined contribution plans increase to $40,000. The defined benefit limits rise from $140,000 to $160,000.

Estate Tax Relief
One area with which just about all contractors will have to contend is estate tax planning. The new law, given the protracted schedule of changes to the estate area, has made planning more difficult. The act, in essence, slowly phases out the estate tax over the next nine years and completely repeals the tax in 2010. However, the sunset provision associated with this tax act could reinstate the tax going back to 2001 rates. What will happen is too far away to predict because the determining factors of what Congress will do in 2010 will be dictated by the federal budget and political climate at that time.

In 2002, the exemption amount increases from $675,000 to $1 million of property, while the top rate drops from 55 percent down to 50 percent. By 2009, the exemption will be $3.5 million with a top rate of 45 percent. The tax is completely repealed in 2010. Because of the sunset provision, many estate planners are jokingly telling their clients that the best estate planning associated with these provisions is to die in 2010. As stated earlier, the tax could be back in full force in 2011.

To further complicate the situation, once estate taxes are fully repealed in 2010, modified carryover basis rules go into effect. Under these provisions, the current fair market value at date of death rules go away in favor of the decedent’s beneficiaries getting the decedent’s carryover basis in the property at the time of death. This is obviously another well thought out provision of the tax act. Executors of estates will be facing a virtual nightmare determining decedent’s basis in property for the beneficiaries. However, limited relief is available for eligible property. The estate will be allowed a step-up basis of $1.3 million. There will be an extra $3 million step-up in basis on property left to a spouse. There will also be an additional allowance for certain losses that could not be used during the person’s lifetime.

While the estate tax is repealed, a partial gift tax remains. Starting in 2010, gifts in excess of a lifetime $1 million exclusion would be subject to a gift tax equal to the top individual income tax rate at that time.

In light of the complexities and far reaching effects over the next ten years, we recommend meeting with your accountant at your earliest convenience to determine how this tax act impacts your situation.

This article was provided by Aronson, Fetridge & Weigle. AF&W provides a full range of management, tax, financial, and accounting services to all size businesses in the construction and real estate industries.

PCCA News

Excitement Building For PCCA 2002 In Dana Point
Not wanting to miss out on one of the industry’s premier events or one of the world’s premier resorts, PCCA members have already begun registering for the 2002 PCCA Convention, March 7-12, and reserving rooms at the magnificent Ritz-Carlton Laguna Niguel in Dana Point, Calif.

The PCCA Convention features industry-related educational sessions, unbeatable social events, and the PCCA Exhibit featuring the latest machines, materials, and services in the power, communications, and directional drilling industries. Broadcaster/entertainer Roy Firestone will headline the convention’s Opening Session, and Olympic champion Peter Vidmar delivers the keynote speech at the Closing Session.

The Ritz-Carlton Laguna Niguel rests atop a 150-foot bluff overlooking the Pacific Ocean and an amazingly beautiful 2-mile stretch of beach. The resort was named the number-one hotel in the continental U.S. and Canada by Travel & Leisure magazine and the most romantic resort in the world by Gourmet magazine. It also received AAA’s Five-Diamond ranking and Mobil’s Five-Star honor.

Attractions within 10 miles of Laguna Niguel include picturesque Dana Point, historic Mission San Juan Capistrano, and the renowned Laguna Beach arts colony.

As host of ESPN’s Up Close Prime Time, Roy Firestone earned the label “best interviewer in the business” from Sports Illustrated. Recognized for his abilities as a journalist and commentator, he is also a critically acclaimed comic impressionist. The winner of six Emmy Awards and two CableAce awards, Firestone has interviewed more than 3,000 public figures. The consummate entertainer, he presents an inspirational multimedia review that salutes the greatest achievements from the world of sports and entertainment.

Vidmar’s presentation explores the question, “What separates the best from the rest?” He shows audiences how to go that extra mile and to give the extra push that will place them ahead of the competition and earn them the gold. As the premier male gymnast and U.S. Olympic team captain in 1984, Vidmar led the men’s gymnastics team to its first-ever team gold medal in an upset over China. Along the way he became the highest scoring U.S. gymnast in Olympic history. His presentation includes a breathtaking pommel horse demonstration.
For more information, call PCCA at (800) 542-PCCA.

PCCA 2002 Preliminary Schedule
Thursday March 7
• Board of Directors Meeting
• First-Timers Reception
• President’s Reception

Friday March 8
• Associates Breakfast Meeting
• Industry Roundtables
• PCCA Golf Tournament
• Opening Session w/ Roy Firestone
• Opening Reception

Saturday March 9
• Associates Exhibit & Breakfast
• Spouse Outing
• Educational Sessions
• Optional Tours

Sunday March 10
• Prayer Breakfast
• Educational Sessions
• Optional Tours
• Final Banquet

Monday March 11
• Closing Session w/ Peter Vidmar
• Changing of the Guard

PCCA Wants You!
Always looking for new volunteers to bring fresh ideas and enthusiasm to the association, the PCCA Board of Directors seeks members to represent the association on task forces of the HDD Consortium and to help revamp the format of PCCA’s Power and Communication Councils and develop an agenda for new Construction Industry Roundtables.

The HDD Consortium is a broad-based group of organizations involved in the horizontal directional drilling industry. PCCA is a founding member of the consortium and the largest financial supporter among the contractor associations involved. PCCA President Guy Fugal will appoint members to serve on each of the consortium’s three task forces: Marketing, Technical Review, and Education.

“All of the Consortium’s activities and its dealings with federal, state, and local governments greatly impact our businesses and the future of our industry,” Fugal said. “I urge every PCCA member to realize the importance of this undertaking and to consider sharing some of your time and expertise for its benefit.”

In August, the PCCA Board voted to combine the Power Council and Communication Council into one Construction Industry Roundtable at next March’s PCCA Convention in Dana Point, Calif. To date, these meetings have been loose discussions of industry trends and association activities. For the roundtables, the Board would like to develop an agenda ahead of time based on discussions with member contractors and perhaps prepare informational packets for participants. Any members with ideas about how the roundtables could be run or topics for the agenda are urged to call the PCCA office. For more information or to become involved with the HDD Consortium or the Construction Industry Roundtables, call the PCCA office at (800) 542-PCCA.

PCCA Financial Statistical Survey Now Available
PCCA, in conjunction with the National Utility Contractors Association, recently released the PCCA/ NUCA 2000 Financial Statistical Survey. The study of PCCA and NUCA contractor members examines the overall financial position of utility, power, and communications construction and service businesses, as well as the compensation levels and benefits provided for 30 positions in these industries.

PCCA members can purchase the survey results for $345, and the nonmember price is $695.

The survey data is presented in five categories based on the respondents’ annual revenue: all respondents, less than $5 million, $5-10 million, $10-20 million, and more than $20 million. The 30 positions examined by the survey are classified by Construction Management, Estimating/ Engineering, Equipment Management, Administrative, Safety/Human Resources, Marketing/Sales, and Clerical.

The Financial Statistical Survey makes construction executives more aware of the changing market in which they operate. Measuring one’s business against other comparable businesses is a good indicator of how the company is performing and what it may require to become more profitable.

Following are some of the questions the survey report explores:
• What was the most recent average salary increase?
• Who receives company-provided vehicles?
• What is the average retirement benefit plan?
• What medical benefits are provided and to which employees?
• What percentage of various benefits are paid by the company?
• How do companies determine incentive compensation?
• When do companies determine/pay bonuses?
• How much experience do their employees have in various positions?
• What type of year-end financial statements are prepared, and what type of accounting method is used?
• What financial and operational issues most concern these contractors?
• What are their annual revenues?
To order the PCCA/NUCA Financial Statistical Survey, call (800) 542-PCCA.

Mark Your Calendars!
2002 PCCA Convention
March 7-12, 2002
Ritz-Carlton Laguna Niguel
Dana Point, California

2002 PCCA Mid-Year Meeting
July 24-26, 2002
Westin Alyeska Prince Hotel
Mt. Alyeska, Alaska

2003 PCCA Convention
February 28-March 5
Disney’s Grand Floridian Resort & Spa
Orlando, Florida

2003 PCCA Mid-Year Meeting
September 11-13
Carmel Valley Ranch
Carmel, California

2004 PCCA Convention
February 13-17, 2004
Wyndham El Conquistador
Las Croabas, Puerto Rico

Safety Watch

Henshaw Addresses National Safety Congress
Following is the speech delivered by OSHA administrator John Henshaw to the National Safety Congress, September 25, in Atlanta, Ga.

I’m pleased to be able to join so many of my colleagues in the safety and health community. I know you share my commitment to make a positive difference in our nation’s workplaces.

There is no greater honor, no greater responsibility, and no greater opportunity for an occupational safety and health professional like me than to head the Occupational Safety and Health Administration. I am honored to serve you in this capacity.

We have been through a challenging and difficult time during the last six weeks’ since the Senate confirmed my appointment. Most recently, Labor Secretary Elaine L. Chao asked me to go to New York two days after the terrorist strike to join our staff already on the ground. We wanted to show our support. And we wanted to make clear that the Department of Labor and OSHA cared about the well being of those engaged in the rescue work and those ready to return to work in lower Manhattan.

OSHA, together with other federal agencies including EPA and FEMA, is continuing to work with the City of New York as it deals with this disaster. We are doing everything we can to assist. This means working with employees on the site at “ground zero,” providing advice and information about personal protective equipment and other concerns. As part of our assistance effort, OSHA is handing out thousands of respirators directly to search and rescue workers.

We have also called on the private sector to step forward to contribute equipment and supplies. I asked ASSE, AIHA, and the National Safety Council to offer voluntary assistance to employers who have concerns about working conditions in their buildings related to recovery. And each of these organizations has set up a hotline to provide pro bono advice to those seeking to recover from this tragedy.

No doubt a number of you have already been involved, or will be, in this effort. I thank you, and the nation thanks you, for your generous gifts of time, expertise, and supplies.That includes companies like MSA whose president called me from Mexico while I was in New York City and volunteered to send respirators. Magic Gloves sent 7 skids of work gloves. Julius Kraft Company provided thousands of respirators plus tyvec suits and other protective equipment. And there are many others. I’m sure each NSC, ASSE, and AIHA can provide lists of their members and what they’re doing to help out in New York City and at the Pentagon. We deeply appreciate the willingness of safety and health professionals to take this on. The help is truly needed. The devastation at the site of the World Trade Center defies description. But the dedication of public servants and private individuals determined to help however they can, speaks volumes about the resilience of our nation’s citizens. The challenges of the past two weeks have made clear how important it is that we all stand together as Americans and work with one another to achieve our common good. This is especially true for the safety and health community.

One of my goals as head of OSHA is to draw on the expertise and resources of other safety and health professionals, like the thousands gathered in this room. OSHA needs to take advantage of the creative ideas and the synergy of partnership with those who share our vision and our commitment.

I believe OSHA must do more then just assure compliance with standards. We must use all the tools in our tool bag to prevent injury, illness, and death in the workplace. That means we must join forces with our colleagues in the safety and health community to achieve this goal.

I’ve taken on this job because I believe OSHA should be the champion of workplace safety and health. Like many of you, I’ve been championing the value of safety and health for the past quarter century. I know, as you know, that safety and health add value.

That value may have a direct impact on the bottom line, like fewer injuries and illnesses, lower medical costs, and less downtime. Or it may be subtle and difficult to measure.

Safety and health add value in hidden ways by increasing performance, productivity, innovation, and creativity. Then there’s the value inherent in employee ownership of safety and health improvements and higher employee morale. Or as Greg Swienton of Ryder Truck said yesterday, safety and health delivers on all business goals--financial performance, customer service, quality, asset management, and more.

These values for some may be difficult to put your finger on. But as Greg Swienton knows, they are real.

The value-added message is one that many of you have already shared with your organizations. But OSHA also needs to communicate that safety and health add value. That must be our message to all our stakeholders, especially small businesses and others who are less likely to appreciate the value of safety and health. We will need your help to deliver this message. I welcome your creative ideas for ways we can work together to ensure that every employer and every employee in the U.S. fully understands that safety and health add value.

As we begin the odyssey of a new century, OSHA will focus on four priorities. Number one is leadership. Together with professional groups, trade associations, unions, and other stakeholders, we need to lead the national dialogue on safety and health. We want to be on the frontlines of this conversation not the sidelines.

Together we must identify the priorities and set the agenda. Then we must face the challenges and work with stakeholders to produce the results we all want--fewer injuries and illnesses on the job. We have the expertise to do it. But we need to align ourselves with others like yourselves who are committed to workplace safety and health to marshal our resources and maximize our impact.

Number two. I believe in strong, effective, and fair enforcement. So does Secretary Chao. And that’s reflected in this year’s enforcement statistics. OSHA inspections and violations issued thus far in 2001 are about the same as last year.

While these measures may need some refinement, the numbers of inspections are about the same this year as last and the number of serious violations are up. Average penalties have increased. The bottom line is that this year’s enforcement profile is very similar to last year’s.

The true effectiveness of enforcement depends upon the skills, training, and expertise of OSHA inspectors. They must be prepared to do more than interpret standards and issue citations. They need to emerge as experts with the credibility and authority to make a difference in the workplace.

This will help reduce the adversarial perception of the agency and increase our effectiveness. I’ve asked a group of OSHA staffers, headed by Hank Payne from the OSHA Training Institute, to review requirements and costs to get professional certifications for OSHA inspectors and other agency employees. They’ll be looking at both long-term and short-term options available to us to achieve this goal.

Many employers have indicated they want to work with us to improve our inspection process. We need to find ways to engage them, along with workers, in eliminating hazards and improving safety and health in the workplace.

When we speak with our stakeholders, we need to do so in terms they understand. That may call for some changes in preparing our inspectors for the job. Perhaps we’ll want to draw more of our inspectors from the private sector or have OSHA inspectors complete internships with companies before becoming an inspector. By experiencing business and using business terminology in future work, we might get our point across more effectively.

We will use the enforcement hammer when needed. But when other tools, such as compliance assistance and partnership, will produce better, longer-lasting results, then we will use them.

Number three. We must expand our outreach, education, and compliance assistance efforts. I believe these strategies offer the greatest opportunities for improving compliance and reducing injuries and illnesses.

We’re beginning a major outreach effort on our new recordkeeping rule. It will involve user-friendly materials and easy-to-understand presentations and training. Watch our website at www.osha.gov for details.

But OSHA cannot do the job of education and training alone. We need to leverage the resources of others in the safety and health community. We will need to work more closely with all of you to help deliver the education and training to achieve our common goals.

Clearly in this administration, we will have a renewed emphasis on compliance assistance. Secretary Chao has stressed the importance of prevention and compliance assistance. This is a very exciting area to me, one where we have seen a lot of gains already. I personally believe we will see greater returns on our investments in injury and illnesses reductions, with compliance assistance, than in any other thing we do.

Of course, some of our clients speak another language entirely. We need to reach them as well.

We know that over 10 million Americans speak little or no English at all. Many are in the workforce. This language barrier has serious consequences in many areas, not the least of which is safety and health practice. In fact, we know that construction fatalities among Hispanic workers have risen significantly. This is a group that needs more of OSHA’s attention and more of your attention.

OSHA has many local efforts to reach Hispanic workers such as the CARE program in South Florida to reduce construction deaths, the 10-hour construction classes given in Spanish in Texas and other states efforts. We also hold small business seminars for Hispanic businesses.

Our compliance assistance specialists are actively working with immigrant groups and business owners. And we have bilingual inspectors in many areas to assist with translations where needed. But we must do a lot more.

I am very pleased to tell you that this week we are announcing new awards for our Susan Harwood training grants. Included among them is a grant to the National Safety Council to translate training materials on highway work-zone hazards into Spanish for hard-to-reach immigrant Hispanic workers. NSC will be working with the Alice Hamilton Occupational Health Center to pilot the materials and deliver the training.

We look forward to working with the National Safety Council on other Hispanic outreach projects in the near future.

In addition, I’ve asked John Miles, our Dallas Regional Administrator, to head a task force to help us coordinate and extend our outreach efforts to Spanish-speaking workers and businesses. We need to do more to reach these workers, and we’ll be looking for ways to work with a variety of groups to improve safety among immigrant workers.

Number four. OSHA must expand its partnership and voluntary programs at the local, regional, and national level. We need to involve union, trade, and professional groups at the macro and micro levels. Every one of these groups is an opportunity for partnership, and every group has the ability to voluntarily improve their safety and health programs.

Through partnerships we can encourage companies to begin moving up the ladder of safety and health performance, the top of which might be VPP STAR. Envision a world where trade associations spending more money on helping their companies improve safety and health and therefore adding value to the bottom line--than in fighting regulations.

I’d like to see OSHA establish partnerships with graduate education programs at business schools. Business schools should be articulating the value of the American worker and how protecting workers through strong workplace safety and health efforts adds value to companies.

The goal is simple. We need to get every workplace on the ladder of success in reducing injuries and illnesses. When they see that safety and health add value, American workplaces will want to move up the ladder.

There are many good people trying to do the right thing. We can, and should, do more to help them succeed. Partnerships give us a vehicle to deliver that.

As head of the Occupational Safety and Health Administration, I am here to serve you--the American worker, the businesses of this great country, and the professionals of this great society.

I want to make a difference, and we want OSHA to make a difference, and together we will make the difference. We need each other to succeed and I look forward to working with you as we make the largest gains in injury and illness prevention then ever before realized.

Thank You.

WatchIT

How Much Should All This Stuff Cost?
Looking at the company IT budget to see how we've done this year is a chance for me to wish, once again, that “20-20 hindsight” were a virtue! In other words, no matter how much we plan, that unexpected happenstance always seems to bite you in the, well, rear. In our case, some new projects from the XXX department (name changed to protect the planning-impaired!) busted our IT budget, and we're only three-quarters of the way through the year.

How do you plan for your information technology systems? If you use the numbers commonly floated throughout industry by such consulting firms like the Gartner Group, your annual cost-per-IT-user can be upwards of $25,000!

Realistically, your company cost-per-user will/may be considerably less, depending on how your systems are managed. And several months ago I wrote about Total Cost of Ownership (TCO) as one method of budget planning. (Go to www.pccaweb.com, click on “Back Issues,” then on February 2001, then go to page 32.) TCO, and this is only my opinion, is one of the nicer terms used by IT departments that don’t exist in many real-world environments...like yours, I suspect.

Instead, our attempts at planning get derailed by well-meaning people who must have their projects in place immediately at the expense of all other work that you need to get done. These are the biggest budget-busters.

So here’s what I’ve done. I try to figure a per-seat cost for each user in the company and then adjust that per-seat cost once or twice a year to cover the expenses.

The surprise in doing this is that I really don’t need to consider equipment cost anymore. Read that last line carefully!

Most of our IT expense is in the people-power used to install, update, and configure computers or to train users on their IT equipment. Fortunately, the cost of the box has dwindled to the point that we barely factor it into the equation. Why? Because the cost of good, network-ready PCs has dropped to ridiculously low levels.

In fact, we’ve been paying about $640 for each PC, including the network card, 128 megabytes of ram, the operating system, and a 10 gigabyte hard drive. To make the deal even sweeter, the manufacturer has included three years of onsite service. Dell, HP, Compaq are all offering great deals in part due to the dot-com debacle and also as a result of the horrific events of September 11.

(As an aside, we’ve harped on the need for disaster planning, protecting your data, etc., over the past several months. Please review your business data protection plans now.)

The major upside to this drop in equipment costs is that we IT-types can devote more time to helping the end-users—the folks who need to make these beasts work for you spitting out spreadsheets and presentations.

Our value lies in putting the tools to good use and showing others how to put them to good use, not in fixing broken disk drives and replacing printer toner cartridges!

Greg Smela is the information systems manager at John J. Kirlin, Inc., a mechanical contracting firm in Rockville, Md. He can be reached at gsmela@johnjkirlin-inc.com.

Industry Roundup

Virginia Supreme Court Shields Subcontractor From Liability
In September, the Virginia Supreme Court upheld a trial court ruling that a deceased employee’s estate is precluded from bringing a wrongful death action against a subcontractor.

The high court upheld a circuit court ruling that said the employee’s estate could not maintain an action against Safway Steel Products Inc. as the subcontractor because the company was not a stranger to the trade, occupation, or business in which the employee was engaged when he was injured.

In 1997, an employee of White Construction Co. was killed when he fell from the scaffolding on which he was working. His estate filed for and received workers’ compensation benefits from White Construction.

White Construction was the general contractor on a project to repair and replace brick masonry on the exterior of a building. White subcontracted with Safway Steel Products to supply and install scaffolding for the project. Along with providing labor, materials, tools, and supervision, Safway was to furnish, engineer, and erect all scaffolding as required.

According to the opinion, the size and height of the scaffolding system required Safway to tie the scaffolding to the building by drilling into the brick walls and installing anchors. However, as the scaffolding system could only support two working deck levels at one time, “All deck moves were performed at White Construction’s direction, and Safway provided all labor for the moves.”

The deceased worker’s estate filed a wrongful death action against Safway alleging that his death was proximately caused by Safway’s negligence and breach of warranties. It also argued that Safway was an “other party” subject to suit because it was not engaged in the trade of the general contractor.

Safway argued that the estate’s action was precluded by the exclusive remedy under the state’s workers’ compensation act. The trial court ruled in Safway’s favor and dismissed the action.

Gulf Of Mexico Pipeline Planned
An El Paso Energy Partners subsidiary announced in October that it has signed a letter of intent to build a 37-mile pipeline to deliver natural gas from the deep waters of the U.S. Gulf of Mexico to markets in the Midwest and Northeast.

Under the plan VK Deepwater Gathering Company would build a 12-inch-diameter pipeline capable of shipping 160 million cubic feet a day, the company said in a statement.

The gas volumes would be about enough to drive a 1,000 megawatt gas-fired power plant. Construction of the pipeline is scheduled to begin in the spring of 2002, with first production from Medusa expected in the fourth quarter of the same year.

Gas from the proposed pipeline would be delivered into El Paso Energy Partners’ Viosca Knoll Gathering System in the Gulf of Mexico and El Paso Corp’s Tennessee Gas Pipeline system (TGP).

The 15,000-mile TGP system delivers gas to markets in the Midwest and East Coast, including New York City and Chicago.

Verizon Hits 1 Million DSL Customers
Announcing that it has hit the 1 million-subscriber mark, Verizon Communications in October said it is posturing aggressively to hit its 2001 targets for DSL rollout. The company also said that more than 32 million of its access lines are now primed for DSL service.

“The pace of deployment and customer growth rates have both been very aggressive,” said Keiko Harvey, senior vice president for Verizon Advanced Services.

Keiko said the DSL milestones were noteworthy “especially when you consider the cost to us for deployment, which has been $1 billion to date and the fact that the regulatory environment actually discourages a company like ours from deploying DSL aggressively.”

Verizon earlier set for itself a goal of having 1.2 million to 1.3 million DSL lines in service by year’s end. In working toward that goal, however, the company hit a setback following the September 11 terrorist attacks. “When the tragedy happened, we pulled back and stopped our marketing, as did everybody else. So we did see a slowdown during that period,” Harvey said.

Still, Verizon expects to pick up the pace on DSL installation, infusing efforts with a new residential subscription rate of $29.95 per month for the first three months of service.

Labor Department Amends Regs On Employment Reporting For Protected Veterans
On October 11, the Department of Labor published a final rule that will amend regulations requiring all federal contractors and subcontractors, including those who employ skilled and semi-skilled building trades workers, painters and coaters, and unskilled laborers, to report the hiring and promotion of certain veterans.

The final rule, effective November 9, implements provisions of the Veterans Employment Opportunity Act of 1998, which expanded veterans’ preference in the federal Under the DOL rule, the threshold for federal contractors and subcontractors to determine if they must file a form that details their hiring of veterans, the VETS-100, will rise from those with contracts higher than $10,000 to those with contracts higher than $25,000.

The rule will require contractors and subcontractors who file VETS-100 forms to report their maximum and minimum number of regular employees during the period covered by the report.

Additionally, the rule will add a third category of veterans to be reported, as mandated by the statute. Previously, contractors only had to report the hiring and promotion of disabled veterans and Vietnam-era veterans. The rule will add “any other veteran who served on active duty in the U.S. military, ground, naval, or air service during a war or in a campaign or expedition for which a campaign badge has been authorized.” This definition would include Gulf War veterans.

Contractor Not Liable For Contributions
A U.S. District Court found that a construction company owner who signed a collective bargaining agreement on behalf of the company should not be held personally liable for the company’s delinquent employee benefit plan contributions.

In signing the bargaining agreement obligating Thomasen Construction Co. to make contributions to the Mason Tenders District Council Welfare Fund, Stephen Thomasen neglected to read a clause right above the signature line on the agreement that made him personally liable, the court said. The court noted that the provision calling for Thomasen’s personal liability was not negotiated prior to the signing of the agreement.

In addition, the court noted that Thomasen, “although involved in the construction business for some time, had never negotiated collective bargaining agreements” and did not have an attorney review the agreement before he signed it.

GMP Names Parry Director Of Manufacturing
PCCA member General Machine Products Co., Trevose, Pa., recently announced the appointment of Tom Parry as Director of Manufacturing, effective July 1 of this year. Calling on 25 years of extensive experience in manufacturing, he will be responsible for day-to-day administration and production of GMP’s entire line of construction tools and equipment for the telecommunications, power utility, and cable television industries.

“Tom brings with him an impressive career history in production administration and management,” said GMP President William Pfundt. “I am confident Tom will make a valuable contribution to GMP’s continued success.”

Of his appointment, Parry said, “I was impressed not only with the well-respected history of GMP products and the size of its operation, but the professional yet personable manner taken by all of the people in this organization.”

Parry comes to GMP from Hutchinson Industries, Trenton, N.J., where he planned and directed the daily operations of the company’s wheel division. He also served in manufacturing management positions for Langston Corp. and J.E. Longergan.

Georgia Underground Expands Sales Staff
Georgia Underground, a PCCA member based in Forest Park, Ga., recently hired industry expert Randy Benhart as an outside sales representative. He joined the company in September, bringing with him more than a decade of utility industry experience.

Company owner David Bartosh said the decision to hire Benhart was based on his dedication to customer service and extensive industry experience. “We recruited Randy as part of our strategy to further grow our existing markets and expand into new regional and national markets,” Bartosh said. “His knowledge of the national utility market will help us determine our next areas of geographic expansion.”

For the past 18 years, Benhart has worked for Condux International, Mankato, Minn., in a variety of management positions involving regional sales, credit, customer service, warehousing, and national sales.

UCT Plans Set For January 2002
Initial preparations are nearly complete for the 8th annual Underground Construction Technology International Conference & Exhibition, January 15-17, 2002, at the George R. Brown Convention Hall, Houston, Tex. Show planners are boasting a trendsetting educational program, a host of association and private business meetings, and two exhibit halls with more than 670 exhibits.

“This year’s educational program will be superior, specifically geared to conference attendees’ needs and goals,” said UCT Program Director Robert Carpenter. “With so many unique dynamics occurring in the underground industry right now, it is especially important for us to present not just the best program of the year, but the most beneficial program as well.”

For more information, go to www.uctonline.com, email slangford@uctonline.com, or call (281) 558-6930.

Altec Industries
American Pipe & Plastics, Inc.
Astec Underground
ARNCO Corporation
Baker Equipment Engineering
Bethea Tool & Equipment Co.
Cable Placing Equipment
Clifford of Vermont, Inc.
Compass Equipment Leasing
Hogg & Davis
Jackmoon, Inc.
Lewis Manufacturing
MTI Telsta
NESCO
Osburn Associates
Roland Machinery
Sherman & Reilly
Terra Tape
TT Technologies
Trencor
Utility Equipment Leasing Company
Vac-Tron
Vermeer Manufacturing
Wagner-Smith Equipment Co.