December 2012 CSIA News

Following Superstorm Sandy, several CSIA member companies were without power for up to a week. Some engineers worked from home to keep jobs rolling, while others faced challenges with transportation.   

"In the Philadelphia area we were little affected with the northern suburbs without power for several days. I talked with a client today that is a large chemical company and they are having problems getting raw materials released from the port of New York so their plants are running low."

Jim Cummings, TSD an Optimation Company, Exton, Pa.  

 
We have many customers throughout the New York and New Jersey area, some of whom have just resumed operations. We have spent a lot of time in on site and remote service related calls over the past two weeks. Travel to and from the affected areas has been hampered by road closures, gas shortages, and limited hotel availability.
 
We have customers who are still having temporary occasional power outages." 

Ken Merrill, Winchester Industrial Controls, Terryville, Conn.

JP Morgan and CSIA collaborate
to survey the CSI industry

Adding value for our members is a constant effort by CSIA leadership. To that end, CSIA has partnered with JP Morgan to conduct a survey of the control systems integration industry. We are grateful to Alan Beaulieu of ITR for connecting us. The survey mutually benefits JPM's effort to forecast business trends and CSIA's desire to better understand our industry. Our vision is to be the global center of the control system integration universe, and having data about our own industry is vital to achieve that vision.

The survey was sent by JPM last week to the primary contact of our integrator members. We highly encourage those contacts to complete the survey. It was also sent to some nonmembers to increase the number of participants. Upon conclusion, the survey results will be stored in the Connected Community Survey Results library. However, a detailed report by JP Morgan, which will be an excellent business tool for understanding industry trends, will be sent only to survey participants. JP Morgan collaborates with other industry associations, and having seen their reports, participation is advised!

CSIA awards: Nominate colleagues now

Has a CSIA member shared some excellent information that contributed to the success of your business? Perhaps you want to recognize someone for his or her dedication and service to CSIA over the years. Consider nominating these special people for the Charlie Bergman "Remember Me" Award.

Are there employees in your company whom you would like to recognize for exceptional performance in the field? Nominate them for the Rising Star Award.

How about a Partner member who has made a real impact with your company or the association as a whole? Put that industry partner's name in the hat for the Partner Award.

To learn more about the awards and see past winners, see the awards section of the CSIA website. Complete the nomination form and return no later than Thursday, Jan. 31. Winners will be recognized at the 2013 Executive Conference in St. Petersburg, Fla. 

Can you use radio to sell system integration?

The answer is yes. Radio interviews can consistently lead to sales success in the system integration business. How? In a word, relationships. This nuts and bolts CSIA webinar will provide a touch of theory along with a pragmatic, real-world lesson on how to make it all work for you.

Thursday, December 13, 2012 

11 a.m., Eastern Standard Time (New York)
Todd Youngblood, CEO of The YPS Group
Register here.

CSIA webinars are recorded. See the webinar archives to listen in again or find out what you've missed.

by Paul Barnard, insurance program manager

Some of what we hear from our insured about their subcontractors:

"He worked for us for years, knows the job, and we'll simply give him a 1099."

"She's a sole proprietor and can't buy workers' compensation."

"So they don't have insurance; everyone uses a few uninsured subs."

"It's no big deal."

Is it really no big deal or could you be creating a legal mess and blowing a large hole in your balance sheet?

The IRS applies common law rules to determine if an individual is an employee or independent contractor.

1. Behavior: Does the company control or have the right to control when and how the work is performed?
2. Financial: Are business aspects of the job controlled by the payer? This would include how payments are made, how expenses are reimbursed, and who provides supplies and tools.
3. Relationship: Does a written contract exist, are benefits provided, and will the relationship continue when the job is complete?

It comes as no surprise the IRS expects to collect Social Security and Medicare tax from employers on employee earnings. Misclassification could result in responsibility for past taxes, fines, penalties, and greater IRS scrutiny. Check out the IRS website for more information on this important subject.

If you hire a sub without workers' compensation, your policy will respond if injuries occur. Your carrier will pick up the cost of uninsured subs at audit time and charge you an additional premium. A claim from an uninsured subcontractor will increase your experience modification, raise your premiums, and potentially cause the loss of contracts with clients who only work with vendors meeting minimum experience modification requirements.

You could be responsible for paying damages that should be the responsibility of the subcontractor. While the subcontractor may be sued, without insurance, they may not have the resources for a claim settlement or to satisfy a judgment. When claims are paid under your policy that should have been paid by the subcontractor your limits are unnecessarily reduced, your renewal premium is likely to increase, and insurers are less willing to write coverage for your business.

The fact your valued former employee has no insurance coverage will not stop them from being named in lawsuits. Your decision to 1099 that valued employee could provide them an income stream as they continue to contribute to your organization or create a personal financial catastrophe due to legal expenses and judgments.

Only hire insured subcontractors using a written contract. Develop risk transfer requirements and institute effective follow-up procedures to make sure the requirements are followed. Obtain proper certificates of insurance and copies of endorsements providing the required coverage. Maintain organized files and set up a suspense system to keep files accurate and up to date. Bring back the former subcontractors as employees or hire them through a staffing agency where they will be employees of the agency. Finally, always remember: it could be a big deal!

Coming Soon
We are working on a simple and cost effective solution to provide a way for all CSIA members to ensure all their subcontractors are insured. More on this over the next couple of months.

ADM System Engineering Ltd. of New Brunswick, Canada 

paulbarnard@csia-insurance.com or (001) 610-507-6595.

by Tom Droog, American Systems Registrar

The majority of integration owners started their businesses with a few employees they knew and respected. With hard work and diligence their businesses grew and today they are successful operations with many employees.

During a CSIA audit when we ask about the plan for ownership and management transition it often causes eye brows to wrinkle. Why?

Many integrators are owned by entrepreneurs who started the business and worked in multiple areas of the business, including executive management of the company. Today these same businesses have teams that handle the many activities and departments of a growing company. The owners may still be hands on in many aspects of the day-to-day operations, however, they now have an entity that must be managed for the future. This future planning is often pushed aside by the present realities of the business.

Attending the annual conference each year, it is evident to me that our population is aging. My gray hair is multiplying along with others in our crowd. A few of the integrators that we have audited have developed good succession plans. These plans will assure the business continues to be a successful operation well into the future. The majority of integrators have done very little in regard to planning for ownership and management transitions. We all have had or still have a sense of invincibility and think nothing will cause a problem in the future. Unfortunately life happens! I urge you to make succession planning a priority and to take a serious look at your future business viability with a solid transition plan.

Remember, as an auditing firm, ASR wants you to succeed now as well as in the future. Don't delay this critical decision process and start formulating a solid transition plan. When you are sitting on the beach soaking in the sun after retirement you will be able to rest assured that what you left behind will remain vibrant into the future. 

by Brian P. Clifford, CSIA Attorney

Nearly every integration project contract includes a long paragraph (or 10) of insurance requirements. While your primary resource in addressing your insurance needs should be your insurance representative (Paul Barnard and First Niagara are excellent resources provided through the CSIA), here is a very basic look from the perspective of an attorney regarding some of the commonly required policies:  

1. General liability: At its most basic level, this insurance protects you against claims for bodily injury and property damage that result from your negligent activities. If one of your employees carelessly leaves coils of wiring in a high-traffic area of your client's facility, and someone trips over them, your insurance company would defend you against the resulting personal injury lawsuit (and any damages, up to the coverage limits, that you owe to the injured visitor). Similarly, if you negligently perform wiring work on a client's project that results in a fire that damages the client's products, this insurance will respond to the claim that your client would likely file against you for this loss. One important standard "carve-out" of this coverage, however, is damage to your own work on the project. Insurance is not a warranty - it often will not protect you against claims resulting from your own poor workmanship.

2. Auto liability: In the same way that your personal car insurance protects you against the risk of a lawsuit from a driver that you negligently rear-ended at a traffic light, this insurance responds to damages you owe arising from the operation of company-owned vehicles. You should work with your insurance broker to make sure you are appropriately protected in the event your employees are using their own cars (or rental cars) while they are "on the clock."

3. Worker's compensation/employer's liability: Legally required in many circumstances, this insurance protects you against payments you may owe resulting from occupational injuries and diseases suffered by your employees. Since each state has different requirements (and employer protections), providing accurate information to your insurance agent about the location of your company's projects is vital to ensure that you are complying with local laws and are protected against these types of claims.

4. Professional liability/errors and omissions: If your work includes providing professional services (such as engineering), this insurance should be a key part of your risk management system. It covers claims that result from rendering professional services that do not meet the applicable standard of care for that profession. Stated another way, if your engineering work on a project was deficient (where other local, reasonable engineers' work would not have been), this insurance will pay for the resulting damage (up to the coverage limits). Most often, these claims will come from a client that is unhappy with the results of your design work on a project.

5. Property insurance: Typically carried by the project's owner, "builder's risk" insurance policies insure "the work itself" during performance up until the owner accepts the completed project. Thus, if a natural disaster (Hurricane Sandy, for example, or a fire) destroys your in-progress work, this insurance would provide money for you to re-perform it in the rebuilt facility. If the owner is not carrying the appropriate coverage, you may have to re-do all of your work at your own expense.

6. Other coverages: Many other specialty policies exist that may be an important part of your risk management strategy, including environmental clean-up coverage and insurance for your tools and equipment stored at a client's facility during the course of a project. Any insurance agent can sell you a policy - but the great ones partner with you in structuring a risk management system that meets your company's needs.   

Proper insurance coverage can make project contract negotiations easier (and you more competitive) by allowing you to take on (reasonable) risks knowing that you have an insurance "backstop" against catastrophic damages. You pay a lot in insurance premiums each year - so consult with your insurance representative, including those made available through the CSIA, to make sure that your policies are working for you. 

All of our member surveys have indicated that human resource issues are important. Here is a simple way to improve employee retention and performance. Managers can motivate employees and show their appreciation even if they don't have a dime to spend.

Share this list of 20 motivating phrases with all your managers and encourage them to start using them to express their appreciation to employees today. You must remember to do the same!

Add this list of 20 motivating phrases to your memory bank:

• "I am proud to have you on my team."
• "Congratulations on a terrific job."
• "You are so helpful. Thank you."
• "You keep improving. Well done."
• "Thanks so much for your consistent effort."
• "I really admire your dedication."
• "You are a champion."
• "What an incredible accomplishment."
• "Great effort. You make us all look good."
• "You have fully repaid our confidence in you."
• "You grasped a difficult challenge and then mastered it."
• "Your work on this was sensational."
• "Your results were outstanding."
• "You are a valuable part of this organization."
• "Your efforts really make a difference."
• "You are a real plus for us."
• "You continue to be one of our top performers."
• "You make our founder's vision come alive."
• "Your accomplishments inspire us all."
• "Everyone is talking about your effort, commitment and results."

Source: Essentials of Effective Teamwork, Workplacetrainingcenter.com