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Impacts of Legislation on Construction Companies: A Study of Workers’ Compensation

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2015 ASEE Annual Conference & Exposition


Seattle, Washington

Publication Date

June 14, 2015

Start Date

June 14, 2015

End Date

June 17, 2015





Conference Session

Teaching the Business Side of Construction

Tagged Division


Page Count


Page Numbers

26.895.1 - 26.895.14



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Paper Authors


Mehmet Egemen Ozbek Colorado State University

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Dr. Mehmet E. Ozbek is an associate professor and the graduate program coordinator in the Department of Construction Management at Colorado State University. He holds a Ph.D. in Civil Engineering with a focus on Construction Engineering and Management. Since the beginning of his graduate studies at Virginia Tech’s Center for Highway Asset Management Programs, he has been performing research related to road infrastructure asset management, performance and productivity measurement-improvement-benchmarking, performance-based contracting and specifications, traffic safety, warranties in contracts, public-private partnerships, condition assessment, road maintenance performance measurement/improvement, optimization models, sustainable infrastructure, project delivery, and construction contracts. He has been very active in state and federally funded projects related to transportation. His work has been published in the American Society of Civil Engineers (ASCE) Journal of Construction Engineering and Management, ASCE Practice Periodical on Structural Design and Construction, ASCE Journal of Infrastructure Systems, ASCE Journal of Transportation Engineering, Transportation Research Record Journal, International Journal of Construction Education and Research, Construction Management and Economics, an ASCE special publication on Alternative Project Delivery, Procurement, and Contracting Methods for Highways, and Handbook of Research on Pedagogical Innovations for Sustainable Development. In addition to being an active reviewer for and serving in the editorial board of ASCE Journal of Construction Engineering and Management, Dr. Ozbek is a reviewer for many other journals and conference proceedings. He serves in four national committees related to construction and infrastructure: (i) Transportation Research Board Maintenance and Operations Management Committee, (ii) ASCE Construction Institute Management Practices in Construction Committee, (iii) ASCE Transportation and Development Institute Infrastructure Systems Committee, and (iv) Construction Industry Institute Academic Committee. Dr. Ozbek teaches the courses entitled “Construction Contracts and Project Administration”, “Issues and Trends in Construction Management”, and a service-learning course entitled “Applied Sustainable Project Delivery” and advises graduate and undergraduate students at Colorado State University. He also taught construction engineering and management courses as a visiting faculty for the summer sessions within the Civil, Environmental, and Architectural Engineering Department in the University of Colorado at Boulder. He is serving as the faculty advisor for the Construction Management Association of America Student Chapter at Colorado State University.

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Scott Glick Colorado State University

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Scott Glick is an Associate Professor in the Department of Construction Management at Colorado State University. With over 30 years in the industry he has expertise in residential construction, land development, real estate, and public administration relative to construction and development. He holds a Ph.D. in Education, Human Resource Development, an MS in Construction Management; an MPA, and a BS in Accounting and Finance. He is a licensed Real Estate Broker, and LEED™ Accredited Professional. His research interests are in sustainable infrastructure which includes: residential construction, land development, water use, Life cycle assessment and life cycle cost. He is also interested in construction education and how to improve information dissemination to users.

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Impacts of Legislation on Construction Companies’ Profitability: A Workers’ Compensation ExampleIn the last two decades, several states have assessed possible alternatives to their state-charteredworkers’ compensation funds, specifically with respect to privatizing those funds. Such adecision in a state is critical for the construction industry (which typically employs a significantportion of the work force) in that state as privatization may have implications on the premiumsthat the companies pay, on the level-of-service they receive, and even on their ability to secureinsurance. Within this context, the overall purpose of this study is to gather, synthesize, andpresent information with respect to the privatization of state-chartered workers’ compensationfunds to educate the members of the construction industry on this topic. As such, this paperpresents: (i) a general discussion on the state-chartered workers’ compensation fund concept, (ii)a detailed discussion on the privatization experiences of three states, and (iiii) overall findings ofthis study with respect to the issues that need to be considered when contemplating theprivatization of a state-chartered workers’ compensation fund. A qualitative researchmethodology was used which included an in-depth review of published documents and follow-upinterviews with the stakeholders. The study is exploratory in nature and the limited results areused only to provide a case study reference, supporting the assertion that the constructionindustry needs to pay more attention to legislative issues. In the three states investigated in thisresearch, a one-time cash infusion to the state general fund, risk management for state run funds,and lower premiums for insured companies doing business in other states were identified asreasons as to why privatization was done.Concerns are currently being raised in the workers compensation industry about the impacts oflegislation such as the Patient Protection Affordable Care Act (PPACA), specifically the medicalloss provision requirements, and what future impact that may have on workers compensationcosts. The National Council on Compensation Insurance has also proposed changes to theExperience Modification Rating (EMR) guidelines. Additional concerns include how states viewemployers and exemptions to those required to carry workers compensation insurance. Sincemost of the cost drivers and requirements for workers compensation are controlled by sourcesoutside the corporate umbrella, it is suggested that construction industry as a whole increases itsinvolvement in the legislative process to ensure that the potential impacts of pending legislationon profitability is understood by the construction companies.    

Ozbek, M. E., & Glick, S. (2015, June), Impacts of Legislation on Construction Companies: A Study of Workers’ Compensation Paper presented at 2015 ASEE Annual Conference & Exposition, Seattle, Washington. 10.18260/p.24232

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