Nov 18, 2014
Insights to Ensure Economic Sustainability of Mitigation Projects
Authors: Coalition for the Upper South Platte
Written by: Jon Bruno
The mission of the Coalition for the Upper South Platte (CUSP) is to “protect the water quality and ecological health of the Upper South Platte Watershed, through the cooperative efforts of watershed stakeholders, with emphasis placed on community values and economic sustainability.” This mission has been the guiding principle that I have used over the years for CUSP’s work and endeavors. This blog will explore economic sustainability as it relates to working with forest contractors.
Over the years, CUSP has engaged many forest contractors. Without our numerous, diverse and varied contractors, CUSP would never complete the 2000 annual acres of management within our high-risk areas. This year alone we have provided over two million dollars in funding to contractors undertaking forest management projects within the watershed. We depend upon each other to complete our important work. It is a symbiotic relationship at it’s most basic form – without acres getting completed, CUSP would not be competitive in our efforts to seek grant funding; without CUSP, contractors would not have the work that has often propelled them into the next realm of operations. Throughout this process, I have learned some important lessons:
1) Planning is key to successful projects.
Mapping & Marking: Know your project and property boundaries.
We have had far too many close calls related to ownership due to poor spatial data. Often owners mistakenly think they own property that they do not, and even more common is faulty assessors data. When in doubt, contact adjacent owners, and mutually walk and agree upon the lines before beginning the work. Always re-walk the boundaries to ensure your ribbon or paint is still visible. We flag property lines with ribbon on the lines hanging in a single streamer from a tree, and two horizontal ribbons wrapped on a tree to connote a corner. For some reason squirrels and hikers love to pull the flags!
On large projects we use the management by prescription approach, but will provide a sample marking on an acre or two. For this approach, and with smaller lots, we paint trees identified for removal with a high quality tree paint. Be sure to mark on the same side of each tree – there is nothing worse than having to make a contractor re-enter because you were not paying attention and marked on different sides and from different angles. Also mark with a bright color – CUSP uses orange or blue. Those white dots are far too hard to see! CUSP often will re-mark an area after the first pass. Make sure the contractor understands that this may occur. With that said, some of our partners have, in the past, re-marked areas over ten times. This is unacceptable and very costly for an operator. If you do not have your prescription dialed in, then the project is not ready for contracting.
Request for Proposals (RFP).
Consider your RFP documents as some of the most important elements in the planning phase of your work. In this document be clear about the goals, timelines, equipment needs and if there is a bond, specific insurance, or a damage deposit required. Always discuss the prescription in detail and know up front what the correct equipment is for the job – A 100 hp skidsteer, masticator might not be the best of equipment for a 200 acre Ponderosa whole tree removal project. Provide the contractors ample time to bid and review the project. CUSP requires all bidders to participate in a “show-me-tour” or site walk prior to bidding. By doing this we give everyone a chance to price the work correctly. When responding to contractor questions, make sure that all potential bidders also see the question and answer. I often take notes at the “show-me tour” and then send out an e-mail to everyone.
2) Selection criteria is more than one number.
CUSP does not select contractors based only on their bid amount. We consider past work history, references, assumed ability to complete within budget and on time, and known customer service. Contractors often have more interaction with our clients than we do, so make sure they will represent you well. As I view the economic sustainability of our region, I also rank those contractors that have a local presence higher than those from out of the region or the state. This is vital to strong local forest economies. For every dollar I give them our region feels the benefits, from the forest employees to the coffee shops and the fuel stations.
3) Contracts are your guidebook for operations.
The more detail you put within your contracts with regard to the project prescriptions, the more likely that you and the contractor will achieve real results with limited challenges. Always carry a contract copy with you when meeting with contractors – refer to this document when discussing requirements and outcomes. It usually takes me a week to draft a contract with all of the pertinent information for the project.
4) Budgeting project payments requires planning.
The worst part of my job is telling the contractor that their payment for completed work is not yet ready. Because our funding is often post-project reimbursement, we have within our agreements a 60-days net term. While contractors often scoff at this, it is necessary to allow us enough time to send requests to funders and receive the cash to cover the project costs. CUSP has limited cash reserves, and this process has still proven to get tricky. Recently, we had to hold payments to the dire end and this caused a great deal of stress for our contractors and for us. With this challenge in mind, here are a few ideas to help:
- When using cost share dollars, where the property owners or other funding sources are used to pay for a part of the work, consider entering into agreements whereas the owner pays the contractor directly part or all of the cost at the end of completion. I have several owners that can pay and are more able to “float” the project cost than CUSP. When a contractor receives even half at completion of the invoice they are happy.
- Consider applying for a line of credit with a local lender to cover the costs during those thin times.
- Plan your reimbursements and project timelines well. CUSP has several grants that allow for quarterly billing. When I have a $250,000 project, I make sure that they will not finish the work in the middle of the quarter, but rather that they will finish closer to my reporting periods.
- Be honest with your contractors and consider what options are available to help them make ends meet. Forest work is expensive and many of our contractors have significant loans on their equipment.
5. Know your responsibility in ensuring safe and legal work environments.
As a contract manager, it is my responsibility to ensure crew, client, and staff safety. If I see something that is contrary to that, I will stop the project immediately. Know your local laws, OSHA regulations, Department of Public Health and Environment rules, and have all of these contact numbers available. We recently had a
non-reportable petroleum spill on a site and were able to respond rapidly and correctly to the problem. It was essential to understand the rules related to accidental spills and was even more important that our contractor had a spill response plan and kit with him at the time (a requirement within our contracts).
If working with crew members from out of the country, make sure that they are eligible to work in the US (I-9’s). Only hire contractors that provide their staff with the required workers compensation, proper equipment and PPE, and who treat their people well.
6. Keep good records.
When reviewing work and certifying it as complete, always do this with your contractor and the funder, if required. In our case, the Colorado State Forest Service must certify the work as complete before we can request reimbursement for the work. Take notes and provide these notes to the contractor for review. In some cases I will even make all parties present sign the notes, acknowledging that they are aware of the items to be wrapped up.
Some of my strongest relationships and friendships are with my local contractors. While the relationships can be heated at times, it is important to understand that we are dependent upon each other for success. I rely on them to give me insight on operations and challenges and they depend upon CUSP to keep them up-to-date on the funding news, new scientific developments and the future of forest management. It is my responsibility to give them the tools to succeed and I am honored and humbled when I see a small outfit purchase their first skidder or hire new employees. Just this year CUSP provided a $150,000 dollar contract to a small outfit that has only worked on small lots. Now it is our responsibility to ensure that they succeed in reducing the fire risk, increasing forest resilience and in growing their company. It is our duty to work with and manage our contractors in a way that makes us all shine.