by Ron Unterreiner, Founder, PEOPLE
After the first year of running the PEOPLE meetings, I decided to write what I called The State of the Union of PEOPLE. It was a listing of our accomplishments and a statement of where we planned to go in the coming years. I thought it was a pretty stirring piece actually and like most STATE OF THE UNION messages probably made us look better than we really were.
Now after three full years of PEOPLE meetings of all sorts, maybe it is time to once again assess our accomplishments with this PEOPLE thing. I think anytime you sit down and really think through what you are doing currently and why you are doing it; it helps bring you back to the real reasons you started the non- organization in the first place.
For those just tuning in, PEOPLE is a very simple concept. Our sole purpose in life is to provide a meeting venue where the diverse PEOPLE of construction can get together with the majority contractors and meet each other, talk It up and laugh it up with each other, maybe share some food and drink together and quite simply, get to know each other better. General contractors like to work with subs they know and love and trust and subs like to work with GC’s they know and love and trust—end of story. Now obviously, the ultimate goal of PEOPLE was to take all this talking and laughing and eating and drinking together and turn i t into working together on meaningful jobs on meaningful construction sites.
Life can be somewhat simple at times. You meet a guy or gal at a meeting, he or she gives you a business card and says they would like to do some work with you, you converse back and forth a bit and a week or two goes by and you give the person a call---and bang, a relationship is formed. It starts small and it grows if the relationship is compatible and if each side of that relationship fulfills all of their commitments. PEOPLE plays a role in that initial conversation and by having seven or eight meetings a year, PEOPLE allows relationships to slowly build and nurture and blossom. If you keep running into the same person meeting after meeting and suddenly you have five or six of his or her business cards, all of a sudden you feel connected and well, maybe you are starting to KNOW this person. Once you know a person or firm, the fear of teaming up or subcontracting with each other is diminished and life is as it should be ever after.
That is PEOPLE, no more, no less. I must admit I have tried to carry PEOPLE a bit further over the last three years and have lobbied for better working conditions for minority subs; more mentoring and teaming relationships; faster pay from owners; maybe a better way to truly help the minority community get engaged and for owners and cities to quit counting as we seem to like to do and just listen and react in a different, more positive way. Part of what I do at PEOPLE meetings is try to listen to the issues that minorities face and then use my relationships in the industry and my positions with other organizations to make better things happen. That I suppose, is an offshoot of the basic principle of PEOPLE.
Through it all, I feel we have been most successful. People have met; relationships have been formed; certain minority subs are growing and becoming more visible in our industry; and newly formed minority enterprises are attending PEOPLE meetings starting the whole process over again. As in all initiatives such as PEOPLE, not all benefit as well as others and not all changes get made as quickly as everyone would like and jobs sometimes come much slower than they should—but all in all, I feel we have made a difference together and that makes me feel good and gives me the push I need to continue for another year.
If there is one goal that I feel I have failed—for minority contractors--in moving the needle over the past three years, it would be quicker pay from owners. This is not a minority or majority issue but it is becoming a real show stopper for smaller firms to get meaningful engaged on the larger stages in town. I have never been one to lobby for quicker pay just for minority contractors, in that this then becomes an “exception” and my overall goal with PEOPLE is to get minorities on the same level as the majority contractors in town.
When I talk about quicker pay, I want to return to the old days in construction where a general contractors submits his invoice by the 25th of the month, fully approved by the architect and the owner’s representative, and the owner then processes and pays that bill by the tenth of the month after—holding ten percent retention to cover the inherent risk in estimating progress. Personally, I have never understood why owners do not real ize the value to their project by paying for work completed on a timely basis. Timely being defined as reimbursing the generals for their work so they can reimburse their subcontractors so they can reimburse their suppliers and keep current their union benefits, their payrolls and their tax obligations—and to where the contractors do not have to go out in the financial market place and obtain huge lines of credit and incur interest costs to boot.
What happens in the construction world of today is that so many of the larger owners in town have come to believe that forty-five days is really quick pay and should be considered at the top of the pay cycle with many major owners actually taking up to 120 days to pay for their construction. Even with paying in 120 days, the owners still withhold ten percent retention, when if you really think about it does not even begin to make sense. Often times, the project is totally complete and all risk is mitigated and no payments have been made and then when a payment is finally made, retention is held.
Quite frankly put, the payment practices in commercial construction today does not work for smaller contractors. The “pay when paid” clauses, when strictly enforced by generals—as they should be—do not allow for smaller contractors certainly including the smaller but growing minority contractors, to get involved in major projects. Yet we keep pushing for higher minority percentages on these major projects, knowing full well that the system is broke and the smaller sub is jumping into a well with a bottom so deep, they probably will never recover. What happens when a smaller sub does not get paid for 45, 60, 90 or 120 days they struggle to meet weekly payrolls; they do not pay their union benefits on a current basis (how can they?); and they fall behind with the IRS, the state of Missouri and any other authority that may not scream loudly for their money. I am not sure why or how this process made it to this level and I question why anyone really thinks it is worki ng for smaller subs—or any sub for that matter? But yet, we continue.
And so, should PEOPLE get involved in something as controversial as payments from owners? Probably not, seems to be a departure from the true meaning of PEOPLE as described above. But, I am not sure how to continue to do my part in developing minority contractors and improving their abilities to perform and building the capacity of their firms within an industry that does not pay for services in a manner timely enough to allow that to happen?
I would hope to have some very serious discussions about this subject in the 2017 year as I see this issue as a huge obstacle to any sort of progress for minority contractors. We can all meet and talk and get to know each other but if we cannot afford to work with each other, I question why I continue with PEOPLE.
Am I wrong? I am against quick pay programs specifically for minority contractors; they are too messy and too complicated for the owner and the GC and often times, they simply do not work in the manner intended. I am for quicker pay to GC’s, plain and simple. There is a large chain of events that has to happen once the GC gets paid and if this chain does not start its run within ten or fifteen days from the end of the month, every month, things go from bad to worse quickly and quite predictably.
We have made a lot of progress in the past three years with PEOPLE meetings and PEOPLE discussions but I see too many failures and too many non-starts due to the generally accepted payment cycles from owners. I am not sure how we ever succeed if we do not make some serious changes relative to how money flows on commercial construction projects.
When I started PEOPLE, I set out what Michael Kennedy called my Ten Commandments of Diversity and smack dab in the middle of those commandments were prompt payment by owners. As I said in the beginning, all ten commandments must be followed for success to be realized in the diversity movement but without timely payments flowing every single month, really nothing works well.
But nonetheless, PEOPLE will continue to meet for yet one more year; maybe we will find some answers along the way.
Come join us in these discussions this Tuesday, February 21, at Hillsdale Fabricators, 2150 Kienlen from 4:00 to 5:30—we would love to fill the room and talk about every conceivable issue you feel is standing in your way of success. Hopefully this meeting you will find that one relationship that will be endearing and long lasting.
PEOPLE is an unstructured organization, founded by industry veteran Ron Unterreiner for the sole purpose of building working relationships between MBE/WBE contractors and majority-owned firms. Over three years its efforts have resulted in significant progress in forging those connections. Construction Forum STL recognized Unterreiner for his efforts in 2015. The St. Louis Council of Construction Consumers recognized Unterreiner and PEOPLE in 2014 and 2015.