Diversity/Inclusion Best Practices

As proposed by Ron Unterreiner, PEOPLE of Construction

On projects where diversity and inclusion are required or heavily requested by the owner, the following details a list of BEST PRACTICES to follow to assure that success is achieved by all participants in the process.  All participants to be defined as the owner, the general contractor or construction manager, the trade subcontractor, the minority contractor (MBE/WBE) working as prime or working as second tier, the third-tier minority contractor, and all supervisors and assistant supervisors in the field.  Yes, everyone.

• Owner should make clear in the bid invite to the general contractors the percentage of work they would like to see supplied and/or put in place by minority contractors.  If this request is separated by ethnic categories and women owned firms, this should be made clear as well.  The owners should request of the bidding GC’s that they clarify within their submitted bids the names of the minority and women owned contractors they will be contracting with, the dollar amount of the work and a brief definition of the scope of work that the minority contractor will be performing.  All bidding GC’s will clarify if they and/or their trade contractors have received firm quotes from the minority contractors they are proposing to use or whether they are simply committing to working out an acceptable program and final price later.

• The bidding GC/CM’s should make clear in the bid invite to the trade subcontractors and suppliers the percentage of work they would like to see supplied and/or put in place by minority contractors.  They should require each trade subcontractor to list the names, dollar amounts and defined scope of work of each minority or women owned firms proposed.  The bidding trade subcontractors should also clearly state if they have received firm lump sum bids from the minority contractors or if they plan to work out an acceptable program and contract price later.

• After all bids are reviewed by the owner and a GC or CM is selected, the winning GC/CM will submit a final list of all minority owned and woman owned firms they propose to use for this project.  The list will include the name of the firm, the lump sum and/or estimated contract value, a definition of the scope of work, and whether the firm is working direct for the GC/CM, the Trade subcontractor or as a lower tier firm to the minority contractor.

• On any submitted minority or women owned business name with a contract value more than $50,000 the project manager for the GC/CM and the project representative for the owner will meet directly with the trade contractor and their proposed minority contractors to assure that all parties clearly understand the scope of work to be performed; the estimate of costs as submitted by the minority firm; and the dollar amount to be paid for that work.  The purpose of this meeting will also be to welcome the minority contractor to the project, get to know them and their company, thank them for their proposal and their interest, and to assure that clear lines of communication have been established between all parties.  This would be a good time to assure that the schedule for the work is understood and accepted by all parties.  This meeting should also establish the payment policies and timelines for the work and assure that all parties can accept and abide by these policies and timelines.  This will also include a discussion of any retainage amounts to be withheld, if applicable, and to assure a clear understanding of when retention will be reduced and/or paid in full.  At this meeting, any discussion of the need for prompter payment than the standard contract language contains should take place and a plan of action proposed, considered, and resolved.  This will include the request for a prompter release of retained amounts than the standard contract language may contain.

• If there are to be regularly scheduled job site progress meetings, it is highly recommended that the GC/CM ask their prime trade subcontractor to invite their minority contracting partner to the meetings that may involve discussion of their scope of work.  This will allow the minority contractor to be more meaningfully engaged, learn the process should they ever perform work as a prime sub, and to have an overall better knowledge and understanding for the main players involved in the project as well as status of the work in progress and the project status in general.  When the minority firm is actively working on site, it is recommended that there be a line item listed in the meeting notes to allow for discussion of any issues, clarifying scope, change orders, contract discrepancies, payment or possible working capital issues and any other concern that may interfere with success on this project.  All concerns and issues raised should be discussed and resolved within the meeting or immediately thereafter.  The GC/CM should actively work with the trade contractor in a positive manner to resolve any disputes or misunderstandings.  All discussions should be made a part of the meeting minutes.

• If there are performance issues of the minority sub, the GC/CM will make every effort to discuss these issues quickly with all the appropriate parties.  To the extent possible, the GC/CM will assist the trade contractor in offering business and or field support to the minority sub to help them get on track with their performance.  The prime trade subcontractor will be primarily responsible for the success of the minority owned firm but if assistance is needed from the GC/CM or owner, that assistance will be discussed and resolved as quickly as possible.  The goal will be to help; the minority firm get through this project successfully, even if additional dollars may be spent by additional parties to make that happen.

• On any major changes in the work that will result in a substantial dollar amount (more than 10% of contract amount of minority owned firm) or scope change to the minority firm, every effort will be made to assist the minority firm with the required estimates of costs or other required paperwork if such assistance is needed.  In addition, change orders involving significant dollars will be processed immediately and paid on a timely basis to the minority firms, even if the amounts are not fully processed through all the necessary channels and payment made from the owner to the GC/CM and prime subcontractors.  The GC/CM, owner and the prime subcontractor will work out an acceptable payment plan between themselves to assure the minority firm is paid in time to meet their weekly and monthly obligations.

• At the conclusion of the project, the owner, GC/CM and the prime subcontractor will meet with the minority owned firm to critique their performance as well as the overall financial success of the project.  This discussion and critique will be made a part of the meeting minutes and/or kept in the job records as may be defined.  This report will include a recommendation for future work with the company and/or discussion of the reasons why a recommendation will not be made; and a discussion of the type of business support this minority firm should receive to compete on future projects successfully in this industry.

In establishing these policies, the owner and the GC/CM acknowledge the following:

• It would be a huge plus for the success of the project if the minority firm was more inclusive in the process.  We have invited them to the table, let us make that a welcoming and inclusive table where all are served.  The minority firm does not know all the players involved in the project and they never will know the players by operating on a second-tier status under a prime subcontractor.  When the project ends, the goal would be for the owner, GC/CM and prime trade contractor and other participating trade contractors to know the minority firm on a personal basis to where they can welcome the minority firm at future networking events and recommend the firm to others for future work.  That typically does not happen today.

• The minority firm has limited access to conventional working capital and thus does not have a working Line of Credit to rely on for payment applications not processed on time.  The importance of payment takes on a different meaning for firms that do not have adequate working capital.  This weekly or daily stress leads to performance issues that can be avoided with active discussion and sound payment policies.

• The minority firm probably does not have the type of administrative, estimating, cost-control and accounting help required for participation on the major projects in town.  Help may be required to assure that payment applications are prepared accurately and include all required documents.  The owner, GC/CM and prime trade contractor will set up help centers to provide consultation and/or direct assistance.  This help will be offered upfront and made available in a welcoming and no-cost manner.

• The minority firm may well be new to the many enhanced job-site policies of a major project.  Let us help them understand the reasons for such policies and let us assist them in compliance with these policies.  Just as many projects may have a safety director, it would be a preferred situation if there was an individual designated as the “diversity director” for this specific project.  That person should be readily available for in-person meetings and active discussions.  This person may well be the project manager or assistant project manager.

• The minority firm needs additional help and assistance, not because they are incapable of learning or do not care but because they simply have not been exposed to major work on major projects in an all-inclusive way.  To assist them in a welcoming and caring way through a project will pay huge dividends, not only for the project at hand but for future projects.

This is diversity and inclusion at its best.

Eight-point BEST PRACTICES diversity, equity inclusion program–condensed version

As proposed by Ron Unterreiner of PEOPLE of Construction

1.  Owner to clearly define rules of engagement for providing minority participation on their projects.

• GC’s and CM’s to clearly define rules of engagement to the trade contractors and minority contractors bidding their projects.

• Successful GC/CM will be required to clearly list names, amounts and scopes of work for all minority firms to be used.

• A pre-award meeting will be required between owner, GC/CM and successful trade contractor and their minority contracting partner before contracts are finalized.

• Major minority subcontractors to be invited to participate in monthly scheduled job site meetings when applicable for their scope of work.

• Performance issues to be discussed immediately and plans of action to assist minority firm put in place immediately.

• Changes in scope of the minority firm’s contract work to be addressed immediately and all dollar amounts processed and paid promptly.

• Critique of performance will take place at conclusion of the work on all major minority subcontractors and suppliers.