Graph courtesy of FMI Corp.

Incentive Plans: What Works and What Doesn't

While Many contractors now have employee incentive plans and offer them to half of their staffers, on average most rely on "discretionary" plans that do not note the level of bonuses in advance or what it takes to earn them, says a June survey of 224 contractor executives by industry consultant FMI. "Three out of four contractors pay discretionary incentives after the fact, which is least motivating to the employees," says study author and FMI consultant Radek Knesl. Only 21% of respondents say plans were "very effective," says FMI. The survey also says incentive plans may work for employee retention but not so much to improve company productivity or attract new talent. Nearly one-third of respondents say their biggest challenge is setting the right incentive amounts. Contractors "may be overpaying marginal performers and unable to attract higher performers," says FMI. "It is apparent that doing nothing or paying discretionary bonuses is least effective for moving your company forward," adds Knesl.

Movers and shakers

Bechtel National Inc. has named Margaret "Peggy" McCullough as project director for the $12.2-billion waste vitrification project at the U.S. Energy Dept.'s Hanford site in Washington state. She is a principal vice president. Russell Conda is now president of Brinderson LP after its July 1 acquisition by pipeline firm Aegion Corp. Railworks Corp. has appointed Mark Patterson and Nuno Pereira unit presidents. Michael J. Kotubey, former president of MMC Contractors, has joined TD Industries as president. Foster Wheeler AG has named Dave Lawson president and global leader of metals and mining, a newly created role.

Pushing public-private partnerships

Industry firms have formed a new advocacy group for public-private partnerships (P3s) and other alternative methods of project finance and delivery in construction. The Association for the Improvement of American Infrastructure, New York City, says the P3 push is not just to fill funding gaps but also to speed schedules, manage life-cycle costs and foster industry and private-sector investment. AIAI will track legislation and hopes to address why the U.S. is behind other nations in construction P3s. Founding board members include Kiewit, Fluor, ACS Infrastructure and Cintra US. Dues are based on company revenue.

Jobsite research

The cost of arguments and feuds on construction projects is significant, says the Center for Construction Research and Training. It studied 41 incidents of project conflicts and each of them cost, on average, about $11,000 and 161 hours of work time. They mostly involved redoing work, safety, lack of equipment and organization problems. Research was based on interviews with 74 Michigan construction managers and workers.

Street view

A Second-Quarter survey by Baird Equity Research and publication Rental Equipment Register "demonstrated mixed construction rental equipment demand, consistent with steady recovery but not wholesale gains," says Andrew Wittman, Baird E&C sector analyst. While he sees improvement ahead, "end-market trends are decidedly mixed, with residential construction broadly positive, government-power negative and other verticals mixed (including oil & gas)." Wittman says Q2 rental revenue growth declined from the previous quarter.

Disaster response

Today's Highly Engineered environment requires first-responder teams with engineering and construction expertise who also are essential to rebuilding after the initial response, says Robert Prieto, Fluor Corp. senior vice president, in the July issue of the Project Management Institute's PM World publication. In suggesting ways to improve first-response management, he notes challenges that include destroyed logistical facilities, competition with post-disaster aid flows and disrupted supply chains.