MBEX Has the Scoop

Full MBEX Calendar Ahead

We’re halfway through summer; how did that happen so quickly?!

As hot summer days continue, we're looking ahead to a slew of MBEX events that offer networking opportunities with fellow members and professional across the industry, entertaining ways to spend a day, and connection with the organization.

After a successful Twin Cities Golf Tournament in June (check out the recap here), we’re keeping the momentum going with a packed events calendar over the next couple of months. Here’s what’s coming up, and we sure hope you can make it:

DULUTH HARBOR SUNDEW CRUISE
July 20, 2022
Set sail on Lake Superior aboard the retired Coast Guard Cutter, Sundew. Enjoy an evening cruise around the Duluth-Superior harbor, dinner, and drinks while aboard connecting with members and experiencing the lake shore in a brand-new way. Registration is now open at www.mbex.org/sundew.

EXECUTIVE DIRECTOR, TOM GETZKE’S, LAST DAY
July 22, 2022
Join us in wishing Tom, our Executive Director, a fond farewell as he closes out his time with the Minnesota Builders Exchange and heads into full-time retirement. Send a note and well wishes by emailing tg@mbex.org. Our next Executive Director, David Siegel, officially started on July 5, 2022. Read the full press release here.

SPORTING CLAYS SCHOLARSHIP FUNDRAISER
August 18, 2022
Aim, pull, and shoot in support of raising funds for the MBEX Scholarship Fund at Game Unlimited. Enjoy an afternoon of clay shooting with members and other construction pros, and afterward, sit down to a steak dinner with all the fixings. Awards will be handed out for team achievements as well as door prizes and raffle winners will be drawn. Register at www.mbex.org/clays.

GOLF TOURNAMENT NORTH
August 24, 2022
We FORE-see a great event on the greens of the Ridgeview Country Club! Gather your foursome, tee up more than a few golf balls, and enjoy a beautiful day out on the course with fellow members, MBEX board and staff, and make connections throughout the industry. Register now at www.mbex.org/golf-north.

We look forward to seeing many members are these noted events! Have questions? Please email Tom at tg@mbex.org or Don (for either the Sundew or Golf Tournament North) at don@mbex.org.

Don't miss an event; download our 2022 Events Calendar.

MBEX Announces New Executive Director

The Minnesota Builders Exchange (MBEX) Board of Directors has named David Siegel as the new executive director of MBEX. Siegel will begin his duties on July 5, 2022. Current MBEX executive director, Tom Getzke, has announced his retirement set for July 22, 2022.

“We are delighted to have someone with David’s management, nonprofit expertise, and construction industry experience as our new executive director,” said Randy LaFaive, president of MBEX. “Under David’s leadership, MBEX will continue to be a regional leader in the digital construction plan distribution service market,” he added.

Siegel brings over 28 years of experience in the residential construction, hospitality, education, and media industries, serving as executive director of Housing First Minnesota (former Builders Association of the Twin Cities) from 2010 to 2022, and executive director of Hospitality Minnesota from 2003 to 2010. He is the immediate past chairman of Associations North, the trade association for association executives. He has earned a CAE designation (Certified Association Executive) from the American Society of Association Executives and is a graduate of the University of Minnesota.

“I strongly feel that MBEX is healthy and poised for growth,” said Siegel. “I am anxious to collaborate with a talented staff, a dedicated Board, and highly-motivated volunteers working together to meet the needs of the 1,375 MBEX members,” he added.

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Download Press Release

For questions, please contact Ashlee Hartwig, MBEX Communications + Membership Manager, at ah@mbex.org or (612) 381-2631.

How to Make the Construction Industry Eco-Friendlier

Happy Earth Day, construction workers!

Today, April 22, is the much-celebrated annual holiday known as Earth Day. As an industry, we should strive to make construction more efficient and eco-friendlier. What choices can we make across all parts of the industry that fill our need for infrastructure while keeping an eye on the future and protecting our world at the same time?

Start with Your Equipment
New technology and equipment investments can help improve the ROI on a project. Technology, which might feel scary at first, helps contractors get jobs done faster, reducing fuel consumption and allows contractors to move on to more jobs faster. Not to mention the carbon emission being saved by completing jobs faster and more efficiently.

Recycle, Recycle, Recycle
Seems like a no-brainer, doesn’t it? However, many construction companies do not recycle materials on their jobsites. Estimates show that if all concrete and asphalt pavement generated annual in the U.S. were recycled, the energy equivalent of 1 billion gallons of gasoline, or 1 the removal of 1 million cars from the road, would be saved.

It’s not just good for the environment. Recycling can have economic benefits for your business, too! Some recyclers charge less to accept materials that can be recucled, especially if they are separated from other materials. Recycling or using material onsite can also reduce material hauling and disposal costs.

Research and Try New Materials
The industry also needs to look to more sustainable building materials to help preserve finite resources. For example, asphalt pavements are the number one recycled material in the U.S., using reclaimed asphalt pavement materials from old roads and parking lots and recycled asphalt roofing shingles. These reused materials are used in new asphalt pavement mixtures.

Other sustainable materials making waves inside the industry are composite roofing shingles, smart glass windows, bamboo floors, insulated concrete framing, solar panels, and eco-friendly hemp-based insulation.

Get to Know Green Rating Systems
If your company isn’t familiar with rating systems like Leadership in Energy and Environmental Design (LEED), Envision: Institute for Sustainable Infrastructure, Green Globes, Greenroads, Greenlites, etc., this is your sign to get to know them.

Learning about these programs can help put your company ahead of the competition.

Let’s work together toward a greener, healthier planet, and make everyday Earth Day.

Construction Bond Claims - Part 3

So far, we have covered Bid Bonds and Payment Bonds. For our third and final exploration of bonds claims, we will take a look at Performance Bonds.

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Performance Bonds, a common type of surety bond, are issued either by a bank or surety company and provide a guarantee that a contractor will finish a project on time while meeting the agreed-upon specifications. Should a contractor fail to deliver on a project, either by not completing it or otherwise failing to meet their obligations, the developer of the project can attempt to recover their losses by demanding payment equal to the bond's value. This is known as "calling the bond."

It's been said that handling a performance bond claim is like driving an ambulance and not a hearse. Every claim has varying levels of urgency, cooperation/agreement among the participants, and unique challenges. 

When a bond obligee, the project owner, decides to call a performance bond, the claims process is set into motion. When a call is made on the performance bond, the first thing the surety company will do is launch an investigation.

The typical process is as follows:

- Acknowledge receipt of the claim and send an intial request to the project owner for information and documents;
- Send an intial request to the principal for documented position;
- Review the underwriting file, which is comprised of a credit file and a bond-specific file;
- Review the contract documents and bond form;
- Perform an accounting of remaining bonded contract funds;
- If appropriate, assemble an investigative team, which can include outside legal counsel, a construction consultant, and sometimes an accountant; and
- Attend a site visit and in-person meetings.

If the surety company determines that conditions have been met when the performance bond is called, they will then move on to one of four different options for handling the situation:

1.) Help finance the principal,
2.) Find a new contractor,
3.) Complete the project, or
4.) Do nothing.

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The right surety partners will work with contractors to avoid claims, and if the situation is unavoidable, to mitigate the severity of it. Choosing the right surety with a track record of resolving claims while minimizing legal fees is important for any contractor to consider. 

Construction Bond Claims - Part 2

Everyone appreciates getting paid for the work that they do, but rarely do employers have to take out a special type of bond just to guarantee that they’ll pay their employees, subcontractors, and suppliers. This is where a Payment Bond steps in, the second type of construction bond we are exploring this week. 

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To start, what is a Payment Bond? A payment bond is a type of surety bond issued to contractors that guarantees all entities involved with the project will be paid. A payment surety bond is a legal contract, a type of bond, that guarantees certain employees, subcontractors, and suppliers are protected against non-payment. Other common names for these include "construction", and "labor and material". In government contracting, these bonds are sometimes referred to as "Miller Act Bonds".

A payment bond is one type of surety bond that most government projects require of all contractors bidding on their projects. Surety bonds are also becoming more popular on commercial projects.

A payment bond claim arises when the principal (known also as the contractor) fails to pay subcontractors, laborers, and/or suppliers. Generally the surety has the right to assert all of the principal's defenses as well as its own surety defenses --- which commonly include notice and time limitations. Notably, the bond provides recourse for only proper "claimants," so the principal and surety need to confirm the claimant has standing to pursue the claim. The project owner, or person hiring the contractor, will indemnify themselves through this type of surety bond in-case they become liable for unpaid employees, subcontractor or suppliers.

When might you need a payment bond? Payment bonds are typically used in conjunction with performance bonds and are oftentimes even on the same bond form. Contractors purchase payment bonds when negotiating a construction contract to reassure those working with them that they will be paid appropriately and on time.

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In short, as long as a contractor has clear means to pay their employees, subcontractors, and suppliers, they should be able to qualify for a payment bond. This will allow the contractor to bid on a much wider range of construction projects.

Construction Bond Claims - Part 1

Contractors always work to avoid claims situations, but should also be proactive about understanding the process. There are 3 main types of construction bonds: bid bonds, payment bonds, and performance bonds. Contractors should be familiar with the claims that can arise from each. This week, we take a look at Bid Bonds.

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First, what is a bid bond? A bid bond is issued as part of a supply bidding process by the contractor to the project owner, to provide guarantee, that the winning bidder will undertake the contract under the terms at which they bid. 

The cash deposit is subject to full or partial forfeiture if the winning contractor fails to either execute the contract or provide the required performance and/or payment bonds. The bid bond assures and guarantees that should the bidder be successful, the bidder will execute the contract and provide the required surety bonds.

A bid bond claim arises when the contractor, also known as the "supplier" or "principal," is the successful bidder but fails to enter into the contract and provide final bonds.

Generally, the principal and surety are bound to pay a stated sum (for example, 5-10% of the contract price) to the owner (or general contractor), also known as the"obligee". The principal and surety should make sure the bond form caps liability at a defined amout --- typically the difference between the principal's bid and the bid of the next highest bidder, not to exceed the penal sum of the bid bond.

Contractors prefer the use of bid bonds because they are a less expensive option and they do not tie up cash or bank credit lines during the bidding process. Owners and general contractors also use bid bonds because they establish and confirm that the bidding contractor or supplier is qualified to undertake the project.

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Leveraging one's relationship with the right surety gives a contractor the knowledge and experience of their claims team. Knowing the basics is the first step for any contractor who wants to take on bonded jobs.