Make sure you drill down into the bid specification (specifically Divisions 0 and 1) to identify the type of work being performed, the type of insurance you may need, and potential project requirements (attending regular safety meetings beforehand, shared costs such as material disposal or use of the freight elevators, etc.).
Examination of these two Divisions will also help you determine whether the project has to follow the Davis-Bacon Act (which establishes requirements for paying the local prevailing wages on public works projects). If it is a Davis-Bacon project, then you need to figure out exactly which SOC categories your classification falls under. This will help you decide whether your current wages are adequate or if you have to increase your company’s installation rates. NSCA has watched horror stories unfold when members bid a job and are locked in without knowing the rate. At that point, there’s nothing that can be done.
NSCA recommends that each of our member companies puts someone in charge of contract administration on a job – this person will be responsible for knowing whether your company can do progress billing or bill each month based on a percentage of completion, the type of insurance requirements associated with the project, etc.
Why It’s Important
It all starts with actually reading the general requirements at the front end of the project manual. Doing this will help you determine your SOC code,which is crucial – it ultimately determines how overtime will work for the project. We’ve seen NSCA members move their employees to salary pay to avoid overtime. But if the employee’s position doesn’t pass the U.S. Department of Labor’s test for determining salaried positions, you could end up paying hundreds of thousands of dollars in back overtime – along with fines to the Department of Labor – for mis-classifying employees who don’t meet requirements to be salaried.
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At NSCA, we often receive questions from members about regulatory and legislative issues. We often hear the same question or comment from several companies, so we know these challenges are faced by almost every integrator across the country.
Not understanding these business basics can cost you big money if you’re not in compliance. Build your company on a firm foundation by following these contracting basics and understanding these four business issues.
This is the second blog in a four-part blog series that will outline the common business challenges our members face – and how these challenges can be dealt with.
Check back soon for part three of the series, which will talk about product substitutions. Click here to read part one about licensing requirements. -Chuck Wilson, NSCA Executive Director