By Jennifer Friedman

As the year winds down and you set goals for the upcoming year, expanding your business might be on the horizon. Whether you are a contractor, engineering firm or material supplier, understanding the process of expansion across state lines is essential to your future business success. It is important to note that every state has different laws and regulations when it comes to doing business within its boundaries. If your company accepts contracts, has a physical presence, or employs people in a state, you will most likely be required to be “on record” in that territory.

There are two routes to consider when filing your business in a new state: foreign qualification or incorporation of a new limited liability company (LLC). The first option, foreign qualification, allows a business to legally operate in a state other than where it was originally formed (or incorporated). Foreign qualification is the most common and least troublesome approach when expanding your services or products to new states. Business owners simply register (or qualify) for a Certificate of Authority from the state where they wish to conduct business. States also require that businesses maintain other licenses and adhere to compliance obligations. Another option is to incorporate or form a new LLC in the new states where you will operate. When a corporation or LLC is created in a new state, the new company is domestic in the new state, making it a separate entity. To see which path is best suited to your business, here are a few key takeaways to keep in mind as you plan for expansion.       

Liability separation. Creating a new corporation or LLC in a new state minimizes risk. If one company declares bankruptcy, assets of the company in other states do not have to be used to pay for the bankrupt entity.        

Corporate formalities. When your business incorporates in another state, there are more business procedures that must be put in place such as drafting and implementing bylaws, issuing and recording stock transfers, and holding shareholder meetings. These formalities can take precious time and resources away from the core of your business offerings. (This is true to a lesser extent with a newly formed LLC.)    

 Separate owners and management. Tying into the corporate obligations of incorporating in a new state, each new entity must have its own stock, shareholders, directors and officers. Again, similar requirements apply to an LLC. For example, there must be managers appointed.    

 Tax documentation. Each new entity needs a federal tax employer identification number (EIN) and to file a separate tax return. For businesses with multiple entities across various states, working with a tax professional is recommended to properly structure the companies effectively. Expanding your business to new states is a thrilling prospect, but careful considerations have to be made before you proceed. Failure to investigate the options available, or implementing an ill-suited strategy, can hinder your company instead of propelling it forward. Whether you choose foreign qualification or incorporation for each state, take time to assess the pros and cons to each approach and how they will align with your business goals.

Jennifer Friedman oversees marketing activities for the small business segment of CT, a Wolters Kluwer Company, providing legal compliance solutions to the small-business community. As the CMO of CT small business, Jennifer directs all activities related to digital marketing and advertising to help build the brand through innovation, partnerships and enhancing the customer experience. Visit CT’s website for more information.

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By Sheryl Southwick

The Affordable Care Act (ACA) will be a challenging adjustment for construction companies. Because of the nature of the construction industry including seasonal workers and employees and determining which employees should be eligible for health care benefits can be tricky. For a construction company owner to remain compliant and avoid ACA tax penalties, it’s important to keep on top of the latest ACA developments. Here’s what is coming up next.

The Employer Shared Responsibility (“Pay or Play”) provisions of the ACA take effect for Applicable Large Employers (ALEs) starting in 2015. The ACA requires ALEs to offer health insurance coverage (that meets certain minimum standards) to its full-time employees or potentially pay a tax penalty.

First, a quick recap of the Pay or Play rules. If your company employed an average of 50 or more full-time employees, including Full Time Equivalents (FTEs), during months in the previous calendar year, your company is an ALE. Therefore it must offer medical coverage to full-time employees and their eligible children to avoid potentially paying ACA penalties. In addition, to avoid penalties:

  • The medical coverage must meet the standards for minimum essential coverage (MEC) as defined by the ACA;
  • The MEC must meet “minimum value” thresholds. A health plan meets the “minimum value” standard if it is designed to pay at least 60% of the total cost of medical services for a standard population; and,
  • The MEC meets “affordability" requirements.  Coverage is considered “affordable” if the employee’s required contribution for the lowest cost employee-only medical plan that provides “minimum value” is no more than 9.5 percent of the employee’s wages, based on one of three IRS safe harbor formulas.

 Here are several things to keep in mind as we approach 2015:

  • FTE Count:  Companies with 50 or more FTEs generally must offer coverage to at least 70% of their full-time employees beginning with the first day of the benefits plan year in 2015. Employers with 50 to 99 FTEs may qualify for transition relief to delay the effective date until the start of the benefits plan year in 2016.
  • 2016 Changes: In 2016, companies generally must offer coverage to at least 95% of their full-time employees.
  • Full-Time Employees:  Full-time employees are employees who are reasonably expected to work, on average, 30 or more hours per week and are generally benefits eligible under ACA rules.
  • Variable Hour Employees: If the company cannot determine whether a newly hired employee is reasonably expected to work at least 30 hours of service per week at the time of hire, because the employee’s hours are variable or otherwise uncertain, the company will need to establish an initial Measurement Period to track variable hour employees’ work hours. This initial measurement period will also apply to new seasonal employees, generally hired into a position for which the customary annual employment is six months or less, and new part-time employees expected to average less than 30 hours per week.

Once the standard or initial measurement period ends, benefits eligibility will apply during a subsequent period of time known as the stability period. The stability period can be as long as the measurement period, but not less than six months. An employee’s benefits eligibility status is locked in during the entire stability period, regardless of actual hours worked.

An employer may also designate an administrative period between the measurement period and the stability period to process data, notify employees of their status and enroll eligible employees.

Once established, Measurement, Administration and Stability Periods can be difficult to change. 
In order to avoid tax penalties, accurately recording, tracking and reporting all employee hours is critical.

Finally, complying with ACA requirements may be more difficult for larger companies with many employees. In order to avoid ACA tax penalties, companies that currently do not offer employee benefits may start offering affordable medical plans in 2015, which will affect the bottom line. However, if managed properly, companies can avoid tax penalties, and therefore help minimize costs to the company.

Sheryl Southwick has more than 15 years of experience in retirement and benefits, helping ensure that companies are in compliance with state and federal laws and regulations. As director of compliance at TriNet, Sheryl helps small business owners navigate the complex issues of compliance.

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By Daniel Nicely

One of the chief selling points for using zinc in construction is its green features. That is not surprising, given that the metal exists naturally in our air, water and soil. It is most commonly found in the latter – in fact, the 24th most abundant natural element in the earth’s crust. Being plentiful does not necessarily translate into being sustainable, of course. Having said that, here are the many reasons zinc is a great green product.

The Advantages

For projects seeking LEED certification, using zinc as a building material often contributes to achieving points in the grading system. This is because the material is fully recyclable from construction scrap to end of use, which lowers the energy required for manufacturing. Indeed, when zinc’s expiration date occurs, it can be easily dismantled, ground up and repurposed for re-use in items ranging from tires to paint and more. The energy used to transform metallic zinc metal into rolled zinc for building applications (2 MJ/kg) is lower compared to that same procedure in comparison with other non-ferrous metals. For example, the energy required to produce zinc from ore is a quarter of that of aluminum and half that of copper and steel. Zinc also possesses a long lifespan and requires low maintenance. Roofs and walls made of zinc have lasted up to 100 years in Europe, where using it for building began in the 1800s. Regarding low maintenance, zinc naturally develops a protective layer over time called a patina that will “self-heal” if scratched or removed. Additionally, zinc rainscreens can create thin air barriers for heating or cooling purposes. This can reduce the use of energy used by HVAC systems.

The Drawback

If zinc is mixed with other materials, it can be more difficult to remove and recover it for recycling than if it is processed by itself into rolled zinc. The extra time and expense involved to secure this mixed zinc for scrap metal may deter from it being recycled. This is the only known non-eco-friendly aspects of zinc. None are related to the building process itself, where zinc has been a leader in securing in LEED Platinum and Gold certifications. Overall, indications are zinc is quite sustainable to use for all building purposes – residential, commercial and more – and deserves greater consideration for future construction in this regard.

Daniel Nicely is the managing director at VMZINC® -US and Umicore Building Projects, where he manages the sales team for the United States and Mexico. He has been with Umicore since 2006, as the director of architectural sales and the director of market development. An architect by training, Nicely worked in architecture for 10 years prior to taking his talents to VMZINC® and Umicore.

He can be contacted at Have an idea for a guest blog for Construction Today? Contact or    

By Rudy Rodriguez

In the construction industry, many clients harbor a distrust of contractors because they’ve been burned by shady and unethical behavior in the past. Unfortunately, even ignoring the outright scammers who pose as contractors, many legitimate construction companies do engage in some practices that they shouldn’t.

Unethical Practices

In the roofing industry, many clients come to believe that leaks cannot be permanently fixed because they’ve never had contractors who actually do the job right. This isn’t necessarily because of incompetence. There are roofers who won’t make a permanent repair on a leak, as that makes it easy to secure guaranteed repeat business. Other contractors will use a change order to bill more during a project in order to cover mistakes they made, or simply to pad the bill because they want more money for a job. These are the kinds of practices that give the construction industry a less-than-savory reputation.

Why Ethics Matter

Without getting too much into high school philosophy, ethics are a fundamental aspect of a successful company. Without ethics as a value, your business is at risk of a bad reputation, and you may have difficulty retaining good people. As soon as prospective clients stop believing that your company will do a good, honest job at a fair price, the future of your company is in serious jeopardy.

Making It Right

In being an ethical company, your biggest obstacle is the potential disconnect between the owners and workers. Simply put, management can’t monitor every employee 24/7 to make sure they’re doing the right thing. However, you can – and should – still build your company on a foundation of ethics. Start by emphasizing the Golden Rule: treat others the way you would want to be treated. Encourage workers to ask themselves if what they’re about to do would hurt the clients. If so, they shouldn’t do it.


Company culture plays an important role in operating by a core value like ethics or integrity. Simply stating that you’re an ethical company won’t go very far if the workers are cutting corners, overcharging, or lying to clients. Make it clear that your company takes ethics very seriously, and then follow through on that promise. This also extends to management. Don’t work with unscrupulous vendors or suppliers, be ethical in your personal life, and serve as an example to be emulated. It’s not always easy, but it’s the right thing to do--and that makes it worth the effort!

Rudy Rodriguez is the owner of Castro Roofing, a leading commercial roofing company serving the Dallas-Fort Worth Metroplex. 

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This is the second of a two-part series.

By Mike Karlskind

In my previous post, I spoke some about the benefits of mobile technology for a dispersed workforce. Now, let’s consider the “device” part of the equation. 

Selecting the Right Device

To be able to leverage mobile apps and the efficiencies thereof, employees will need to be equipped with either a smartphone or a tablet; these generally carry the same user experience, the main difference being the size of the device. Form factor is an extremely important consideration in the construction industry, where it will likely be treated like another job-site tool. In that case, a tablet is probably too large for journeymen workers. The smartphone, however, is ideal clocking in and out of assignments, tracking mileage, getting details on a new job and completing forms when out in the field. Tablets provide greater flexibility to handle paper-based processes, and can handle more complex apps; they may be an option for your foremen. Also, if voice calling is not necessary for your workers, a tablet could be the better choice because you can avoid paying for a voice and data package through your wireless carrier. Interestingly, for many companies, tablets are replacing the clipboard; they can share up-to-the-minute data as well as manage paperwork. Construction firms could take a lesson from their peers in this regard. Another aspect to consider is durability. There are many smartphones that are built for rugged use, while tablets for harsh environments are not as common. There are a variety of cases available ensure that the smartphone or tablet will not be damaged, but those will add to the bottom-line cost of the device.

Service Plans: The Long-Term Cost Consideration

Many employers may only factor in the cost of a device when they think about equipping mobile workers, and often lean toward Smartphones because they cost considerably less than a tablet. But what businesses don’t always consider is the long-term, recurring costs related to using each device. While a smartphone may be less expensive than a tablet, the service plan, which would have to include voice and data, could cost $40 or more per person each month. On the other hand, many carriers offer tablet-only data plans for $10 to $15 a month, which give the workers the ability to be connected anywhere and everywhere and use the enterprise apps. If your employees already have their own mobile phone, it may be more cost-effective over the long-term for them to use their personal device for voice communications and for the company to provide a tablet with its lower-cost, data-only monthly service plan. Before making a decision on which device is best for your mobile employees, you will want to calculate the total cost of ownership, which is the price of the device and the monthly fees associated with the wireless service plan to support that device. As part of that calculation, do not forget to factor in the estimated savings you expect to achieve from leveraging a mobile application. In many cases, saving an employee a few hours per month through improved efficiency – such as requiring less time doing paperwork or eliminating the need to drive to the main office – will more than cover the cost of supplying a smartphone or tablet and the associated voice and data plans.

Mike Karlskind has more than 15 years of experience streamlining processes and optimizing decisions for service organizations in a wide variety of industries including computer services, utilities, telecommunications, capital equipment, home services, retail services, construction, insurance and medical equipment.

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This is the first of a two-part series.

By Mike Karlskind

The consumerization of field service offers a tremendous opportunity for any business that consists of a dispersed workforce, chief among them construction firms. The use of mobile devices and applications to streamline operations, reduce costs and enhance productivity of workers in the field is more than incremental.

Although these applications are helping individuals do their job better no matter where they are, they also require some thought from company management about which device is the best to meet employee needs in the field. Considerations about durability, efficiency and associated costs all factor into the decision. There are a lot of devices on the market to choose from (Notebook? Smartphone? Rugged PDA? Tablet? Some combination of all of the above?).

The Savings Associated with Going Mobile Whether you choose to equip your employees with a smartphone or a tablet, the proven savings come in the mobile apps. For example, let’s look at a scenario featuring a plumbing company with 50 employees in the field, who each earn an average of $20 per hour.

With a mobile app that automates employee time tracking, provides documents in the field and allows instant customer signatures for completed jobs, thus reducing the paperwork and associated time components of these tasks, the company will eliminate 2 hours of overtime per employee each week, for an estimated savings of $37,500 annually. By not having to constantly come back to the home office to file paperwork or pick up assignments, the company is able to reduce mileage each week by 100 miles, saving about $21,000 a year. Simplifying the back office tasks of processing payroll and managing paper could save another $22,500 a year. And these productivity increases may also allow workers to complete more jobs per day, which could add revenue of $62,500. Under this scenario, when calculating the impact of these various improvements associated with equipping your employees with mobile devices and apps, this company achieves a positive impact to their bottom line of more than $143,000 annually. Not too shabby. Because the productivity and financial benefits of mobile apps can be material, the investment in upgrading to smartphones and tablets is fairly easy to justify. However, as you put a plan in place, it is important to make sure that this investment can grow with your business. Once employees see the benefits of the first app they use, they will want to use their mobile devices for other daily business activities. For this reason, it is vital to “futureproof” devices and service plans to handle the current and future needs of your employees and your customers. In my next installment, I’ll dig a little more into the nuances between smartphone and tablet computers.

Mike Karlskind has more than 15 years of experience streamlining processes and optimizing decisions for service organizations in a wide variety of industries including computer services, utilities, telecommunications, capital equipment, home services, retail services, construction, insurance and medical equipment.

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By Ryne Landers

A series of new reports released by TalentClick, a Vancouver, British Columbia, employee assessment and safety management training company, and prepared by the late Dr. Rick Iverson and Rand Gottschalk, MA, Industrial Psychology, explore the relationship between common employee personality types and risk of incidents in industrial work environments. The reports’ findings distinguish between individual and crew incidents and provide a reliable figure for the average number of incidents and cost to companies that could be reduced through more careful screening of employee selections during hiring and through the use of coaching to improve on-the-job safety records.

What’s The Data Based On?

The study is primarily comprised of two sets of data. One is comprised of employee personality assessment results, called the Safety Quotient™ employee assessment, which was performed on over 645 company employees. The other data set used in the research were existing safety incident reports provided by the industrial mining company in the study. A link to the report, with full definitions, takeaways, and notes about the collection of the data, can be found at the TalentClick website. The study was based upon personality risk assessments, which measure 5 personality traits, collected on 645 employees; 71 personal incident reports; and 197 crew incident reports.

Findings of the Research

The results of the study provide information that can be acted upon by nearly any company in industrial fields, showing statistically significant correlations between several common personality traits that many of us can identify with in our work life, from one time or another. Using the standard Safety Quotient™ employee assessment, Dr. Iverson and Mr. Gottschalk found that personality traits play a large role in on-the-job safety. Among front-line industrial workers who are employed in the field (those whose day-to-day job involves the actual building, engineering, and working on industrial projects) four personality types were shown to be more likely to have accidents on the job, causing injury to themselves or others, as well as causing property damage to equipment or premises. Those personality types are thrill seeker, impulsive, reactive and resistant. Here are some highlights: Key Takeaways

Based on the research, the following takeaways could be applied at the studied mining company:

  • Screening employee hires for “impulsive” personalities could result in 10 fewer personal injuries.
  • Screening foremen and supervisors for “resistant” traits could result in 19 fewer crew injuries.
  • A 25 to 50 percent reduction in annual personal injury rate.
  • A $76,000 average savings for 100 hires.

Screening out risky employees and screening in safe ones provides a safer workplace for everyone and provides measurable cost savings. Proper safety training of current employees can help reduce risks and their associated costs by as much as 25 to 50 percent Isn’t it time we took safety seriously?

Ryne Landers ( works with clients across a variety of industries. He lives near Dallas,  writes for eBay, and would eat Torchy’s Tacos every day if he could.  In his spare time, he’s a technology enthusiast, idealist, and sometimes traveler. Find him on LinkedIn or email him.

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By Kent Goetjen and Mike Sobolewski

A significant increase in required disclosures is among the key changes resulting from the long-anticipated new converged standard on revenue recognition released earlier this year by the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB). Engineering and construction (E&C) firms subject to US GAAP or IFRS financial accounting standards have long followed industry guidance for construction contracts to account for revenue.

The new standard is principles based — a big shift from today’s industry-specific guidance. Changes resulting from the new standard will vary by industry and certain areas will likely create significant challenges for E&C companies. The new standard will require a five-step approach:

  • Identify the contract: When it comes to whether contracts should be combined, major changes aren’t expected. Construction companies that segment contracts might not be significantly affected because of the requirement to account for separate performance obligations. There is an expected increase in significant judgments on  how organizations determine when to include unpriced change orders and other contract modifications in contract revenue.
  • Identify performance obligations: Contractors often account for each contract at the contract level. Under the new standard, contract promises must be for distinct goods or services to be a performance obligation that requires separate accounting. Some construction contracts may have only one performance obligation.
  • Determine transaction price: Under the new standard, revenue related to variables including awards and incentive payments might be recognized earlier. A significant change in practice as it relates to claims, liquidated damages, and the time value of money isn’t expected.
  • Allocate transaction price: Transaction price is allocated to the performance obligations in a contract that requires separate accounting. Of interest will be the allocation of variable consideration (awards, incentive payments) associated with only one performance obligation, rather than the contract as a whole. An entity can allocate transaction price entirely to one (or more) performance obligation when certain conditions are met.
  • Recognize revenue when/as performance obligation(s) satisfied: Under existing guidance, revenue recognition is based on contractor activities; provided reasonable estimates are available, revenue can be recognized as the contractor performs. Under the new standard, revenue is recognized when a performance obligation is satisfied, which occurs when control of a good or service transfers to the customer. The standard is also expected to impact:
  • Warranties – Warranties are currently accounted for within contract accounting or outside contract accounting in accordance with existing loss contingency guidance. Change may occur for some businesses that use a cost-to-cost input method for measuring progress and don’t include warranty as a contract cost.
  • Contract costs – Direct costs of fulfilling a contract are capitalized under the new standard if not within the scope of other standards and if they relate directly to a contract/future performance, and are expected to be recovered under the contract.  Incremental direct costs of obtaining a contract are recognized as an asset if expected to be recovered. There could be a significant change for contractors currently using the gross profit method for calculating revenue/cost of revenue.
  • Contract assets and liabilities – Cost in excess of billings and billings in excess of cost initially recognized on the balance sheet under current GAAP should be similar to the contract asset and contract liability recognized under the new standard. However, the transfer from a contract asset to an account’s receivable balance (when the contractor has a right to payment) may not coincide with timing of the invoice as is required under existing guidance.

E&C companies should continue to evaluate the new standard’s impact on business activities, including contract negotiations, key metrics, taxes, budgeting, controls and processes, information technology requirements and accounting.

About the Authors: Kent Goetjen ( is PwC’s U.S. Engineering & Construction industry sector leader. He has more than 30 years of experience providing service to clients in the engineering and construction industry. Michael Sobolewski ( is a partner at PwC US and an engineering & construction industry specialist. He has extensive industry experience, including work with private companies that have operations locally, nationally and globally.

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By Jennifer Friedman 

In a heavily regulated industry like construction, there are a wide range of compliance issues business owners need to follow. In many instances, companies overlook the importance of remaining in “good standing” after initially incorporating or forming an LLC. Ensuring that the company is staying compliant within state guidelines is essential to continue operating the business effectively and being able to bid on contracts. The benefits of being in good standing coupled with the consequences of failing to comply are compelling reasons why you should know where your company stands.

Most Common Ways to Fall Out of Good Standing

There are many ways that a company can jeopardize its compliance. The easiest way a business can lose its good standing is by failing to file an annual report or make franchise tax payments. It is also important to update an entity’s status whenever the business completes actions such as mergers, acquisitions or expansions because these changes may require filling out a new annual report and tax forms. States also change compliance requirements periodically so business owners have to be aware of new deadlines, forms and fees. While they may seem inconvenient, routine checks to ensure all materials are submitted ahead of time save time and money in the long run.

Consequences of Failing to Remain in Good Standing

The most concerning effect of falling out of good standing is that a business can be suspended and lose permission to continue work. A business in poor standing also appears as an increased risk so lenders are less likely to provide funding. A non-compliant company may have to surrender the company name so competitors can scoop up valuable, established branding. Business owners can be personally liable for failure to comply and can be penalized by the state.

Good Standing Sets The Business Up for Growth

Remaining in good standing brings a wealth of benefits that makes other processes smoother. When a business properly completes the report and tax forms that must be filed in order to maintain compliance, it will receive a Certificate of Good Standing that entitles the company to do business legally. This lends credibility to the organization and secures the benefits of incorporation. When the time comes for the company to expand, the Certificate of Good Standing is a prerequisite to gaining permission to operate in additional states, also known as “foreign qualification.”

How to Prioritize Good Standing

Businesses need to take compliance seriously from the start and invest in relationships with compliance lawyers, accountants and registered agents. To stay up to date on regulation requirements, business owners should take advantage of online tools that make legal issues easier to understand. Getting into the habit of routinely reviewing compliance issues with professionals will help the business avoid unnecessary trouble while keeping it on track for future achievement. In summation, making good standing a priority from the outset and thoroughly understanding the ways in which to keep your business in good standing, is imperative for establishing credibility and maintaining sustainable long-term success.

Jennifer Friedman oversees marketing activities for the small business segment of CT, a Wolters Kluwer Company, providing legal compliance solutions to the small-business community. As the CMO of CT small business, Jennifer directs all activities related to digital marketing and advertising to help build the brand through innovation, partnerships and enhancing the customer experience. Visit for more information.

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By Riggs Kubiak

Ten years ago, contractors or construction executives relied solely on referrals to expand their business. However in today’s world of Angie’s List, LinkedIn and Yelp, word-of-mouth isn’t the only way to secure new business leads. With technology on the rise in commercial real estate, new business prospects are just a click away. As with everything else in today’s world, if you’re not using the latest technology to move your business forward, then you run the risk of falling behind on the opportunities that your competitors are capitalizing on. Here are three reasons why technology is here to stay:

  • Easy Sharing – It is crucial that new mobile apps help building professionals easily store and share their projects on their tablets, as opposed to having to always carry piles of glossy and outdated brochures.
  • Seamless Updates – One of the best things about today’s connected world is that everything that you have is constantly being updated to provide up-to-the-second information. This is true for the real estate industry as well, as for too long professionals have spent a great deal of money on printing out glossy brochures that become outdated within a month of printing. This constant wasting of money is prevented by apps that allow real estate professionals to store their portfolio and constantly update it.
  • Analytics – Technology allows people to access a great deal of information that they were never able to access. For a long time, architects, engineers, contractors and construction executives wouldn’t know who was looking at their portfolios and what projects got more traction when displayed. That is all changing now, as technology allows for an incredible analytical analysis of who is looking at your portfolio, what projects look the best, how long people are looking through your portfolio, etc. The bottom line is this: mobile and web-based platform are turnkey solutions for construction executives who are looking to expand their networks and win new business. If you’re not latching on to this trend, then you are truly missing out on incredible opportunities.

Riggs Kubiak is the CEO and founder of Honest Buildings (HB), the world’s leading connection engine for real estate projects. From architects to engineers, contractors to technology experts, HB helps professionals find and meet the perfect people for their real estate projects, fast. With an innovative suite of products and more than $300 million in deal flow to date, HB is changing the way real estate connections are forged.

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