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Monthly Archives: April 2014

Cornerstone It’s been a great ride. For three decades, Cornerstone Concilium, Inc. has provided engineering, project management, and technology consulting services in the Bay Area. The San Francisco-based company’s roster includes municipal clients, government agencies, and commercial enterprises.

Since he was a child, CEO Wayne Perry has felt a calling to help build. Twenty-eight years ago, he answered that calling. He was working for the real estate/construction group of a large computer manufacturer when he decided to help non-profits and faith-based groups develop their building projects. Working with these groups, he assisted them with planning, design, and project oversight to get the projects off the ground.

Although he didn’t have any clients and had just bought a house, he decided to quit his high-paying Silicon Valley job to pursue his non-profit work full time. He had faith that the clients would come. Six weeks later, he got his first client, MCI telecommunications. That led to another, and then another, and another. Soon he had a packed client list.

Today, the company continues to work with faith-based organizations, government agencies, and other commercial clients both in the United States and abroad. In its capacity as engineering, planning, project management, it consults with airports, airlines, hospitals, high-tech facilities, and transportation. Clients include SFO, United, BART, Santa Clara Valley Transportation Authority, Washington Metro, Hewlett Packard, and the US Army. “Wherever there are major infrastructure projects, involving buildings, transportation, or a large technology rollout, Cornerstone is usually in the mix providing technological and project management solutions,” says Perry.

The company’s vision statement is to use “our unique, god-given ability to serve and enrich society with wisdom and integrity,” says Perry. To this end, there is a large focus on education.  The company is committed to helping disadvantaged kids enter the field of architecture and construction technology. The Cornerstone Institute offers a 16-week full time program that trains students in several fields in engineering. “We can train people in a short period of time, and we also have 100% placement rate,” says Perry.

On contract with MWIS, the Cornerstone Institute offers a series of workshops that offer training to the small business community in the construction field. These courses are useful for helping small contractors and professional services interested in San Francisco contracting understand how to succeed. Classes, such as “How to Avoid Pitfalls in Getting Paid” and “How to Succeed with The City,” are critical for a business’ success. The workshops, held four times a year, include valuable information such as knowing how to negotiate a contract with the city, understanding how to track and pay for the work that you perform, and how to create a niche position as a company for repeated contracts. The courses also include topics unique to local government, and to the City and County of San Francisco. Through case studies and hands-on training, participants become well-equipped for success.

Perry hopes the classes and seminars will avoid some of the common pitfalls he sees with growing firms. One of these is that small businesses do well on a contract, but don’t understand how to leverage this into other similar contracts so that the business evolves. “Most small businesses live in the moment,” he says. “If the market changes, which is does every 5-7 years, they should be positioned for the future and think strategically. My motto is ‘without vision, people perish’ in my industry. The firms that I’ve seen come and go are the ones that did not prepare for the future.”

Wayne Perry couldn’t be happier with how things have evolved over the past 28 years. “My whole life was geared toward making that step into what I’m doing now,” he says.

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Some things get better with age. The City and County of San Francisco Surety Bond Program has been active since 1997 and became permanent in 2000, when it was under the Human Rights Commission (HRC). “The idea was conceived to take away the barriers for the local contractor community to be able to access bidding opportunities in the city contracting process, and to provide tools and education to be successful,” says Matt Hansen, Director, Risk Management Division. “It’s a pathway to break down the barriers and allow a larger group of contractors to participate in the public process.”

 The responsibility for the Bond Program has recently switched from the HRC to the Risk Management Division. “We were asked to administer the program about a year and a half ago. Given that our office is comprised of insurance subject matter experts, it made more sense for us to work with the bonding piece of the program,” explains Hansen. His office facilitates the approval processes, administration of the program, and approval of the guarantees.

Hansen appreciates the close involvement with MWIS. “It’s been a fantastic relationship,” he says. While he’s been involved with the program for six years, he’s spent the last year and a half working closely with the MWIS team to try and streamline the processes required in order to perfect the program. “Various public processes under the city contracting rules can appear somewhat onerous, and our goal is to ensure that the bonding requirements do not have a negative impact on the contractor community so that everyone can benefit.”

The work with MWIS is an ongoing collaborative effort that directly benefits small and minority contractors. It could be a simple phone call to MWIS that changes the course of a contractor’s bidding process. Once they have more information, says Hansen, they can more easily compete. And after they graduate from the Bond Program, they are much more equipped to move on and compete on their own. “They have a newly learned sophistication,” he says.

Looking toward the future, the Risk Management Division will continue to work both with the internal stakeholder and program administrators to streamline the processes and work to make them even more efficient than they are today. He points to past successes, such as passing legislation that removed the sunset clause, a historical provision that was creating inefficiencies regarding the letter of credit and bond approval processes.

There are even more positive results on the horizon, as the division constantly reviews its processes to make sure they are in compliance with the regulations and laws, while also becoming as efficient as possible. “We will work for years to come, working with internal city departments who utilize the bond program, to better characterize the nature of the program, and invite feed
back on what’s working and what’s not.”

 

JH&S

Construction is so much more than being out in a job site. In fact, the success of a company can hinge on a properly performed construction contract. That’s why it’s important to have experts with a deep and wide knowledge of the construction industry.

Jones, Henle & Schunck (JH&S) started 35 years ago with two partners. One of the two, Kay Jones, was a chief financial officer for a construction company, which created the groundwork for a firm that focused on the construction industry’s accounting, income tax and general business consulting needs.

Tom Henle and Karl Schunck joined very shortly after the firm opened. While Schunck’s years with a “Big 8” firm primarily involved publicly traded companies and SEC compliance oriented work, he was ready for a change. “Although I valued that experience, I wanted to have a closer relationship with my clients, to make a difference,” Schunck says. Most of the privately-owned companies the firm serves do not have CPAs as controllers or CFOs. “This provides the opportunity to have an impact on their operations,” says Schunck. “It’s a very satisfying experience to save large sums of money by properly structuring events or transactions involving their operations.”

Schunck remembers one construction company who was having trouble obtaining surety bonds, because it was having a difficult time “making its case” with the surety bond underwriter and broker. One of the new client’s problems was a failure to understand and thus properly report in their financial statements the concept of “under” and “over” billing.

Schunck and the company president/majority stockholder cleared a conference table and analyzed how every line on their jobs in progress schedule worked, and how it impacted the balance sheet and income statement. After that meeting, the company’s issues with its bonding company and bank vanished, and it went on to be awarded honors in Washington, DC as the National Minority Contractor of the year.

Another key for owners and their financial personnel is understanding what’s in their financial statements and corporate income tax returns. It can be downright embarrassing to not be able to answer a banker’s question, for example, why gross revenues in the financial statement are different from what’s reported in the tax return. The owner needs to understand that one may be based on percentage of completion reporting, and the other on the completed contracts or cash method of reporting revenues.

Owners and their financial personnel also need to understand the impact of accounting transactions and how they “flow” into their balance sheets and income statements. They should be able to visualize how approval of a project change order, for example, affects under or overbillings, the working capital ratio, stockholders’ equity or any of a number of factors used by banks and surety companies in granting credit. Demonstrating such an understanding with a surety bond underwriter or a banker greatly enhances creditability with those business partners.

Almost all of JH&S’s construction clients emerged successfully from the downturn, including those in residential construction such as grading and paving, plumbing, electrical, landscape and the like. Yes, construction volumes generally decreased but the firm’s residential construction clients are poised for expected volume increases.

To assist them in processing their accounting data and construction activities, JH&S’s construction clients utilize a variety of accounting software, which are fully integrated and provide proper cut off and audit trails, work in progress or “bonding company reports” and estimating and construction equipment modules often necessary to contractors.

With its proven expertise in construction, it’s no surprise that JH&S has partnered with Merriwether & Williams for over ten years. Over the years, the firm has given construction accounting classes for their current and prospective clients and participated in MWIS’s contractor networking events. It’s a mutually beneficial partnership that yields great results on both sides.

JH&S serves its clients with over 25 employees, including over 20 professionals, from its Danville, California and Orange, Southern California offices.