Volume: 18, Issue: 9 - 05/15/2020

 

The impacts of COVID-19 on construction projects have been covered broadly on social media, industry publications, webinars and attorney websites. The various forms of lost productivity have been identified, with the challenges now to measure and price out the costs. In our COVID-19 coverage this week, John McConville of Compass International has provided some estimates on a few of these costs as well as made some calls on the economic impact to the industry over the next 3-12 months.  

 

This Week's Cases

When pricing construction work, a necessary preliminary step is to determine which contract documents are needed and then evaluate their meaning. This sounds fundamental and self-evident. Yet contractors frequently fail to make this assessment and end up arguing reliance on provisions that will not support their position.This occured recently when a contractor relied on CAD drawings obtained prior to bid submittal that were not part of the contract documents. The second case also involved bid documents, this time where a contractor failed to request clarification about an obvious conflict between a drawing note and the bid timeline. The third case this week highlights the importance of following notice provisions in a performance bond. Read more.

 

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The impacts of COVID-19 on construction have been widely discussed across the industry, but little has been said about actual numbers - either cost or schedule. This week, we see some numbers starting to emerge - both for current projects and for estimates of the broader economic impact, as recently researched by John McConville of Compass International. Read more.


 

Owner-generated CAD drawings, obtained by the contractor prior to bid submittal, were not listed among the contract documents and could not reasonably be relied upon for determining quantities of materials. Furthermore, the contractor did not file a timely notice of claim and waived its right to additional compensation.


 

A direct and obvious conflict between a performance period laid out in the body of the contract and a performance period mandated by a drawing note created a patent ambiguity in the contract documents. The contractor’s failure to seek clarification of this conflict precluded the contractor from relying on the drawing note alone. This was fatal to the contractor’s claims based on defective specifications, differing site condition, and mutual mistake.


 

The AIA performance bond form does not stipulate the timing for notice to the surety of a default termination. However, the form stipulates several options the surety may exercise to mitigate its loss under the bond. The obligee of the bond must give the surety notice of default before engaging in self-help remedies. Failure to do so deprived a surety of its contractual rights and discharged the surety from its obligations under the bond.


Volume: 18, Issue: 8 - 04/30/2020

 

In our continuing coverage of COVID-19, we look at the issue of contractors being denied access to the site by government mandate as opposed to an owner order of suspension of work. Or what if government-imposed work restrictions, such as social distancing, affect productivity?  Two cases involving federal contracts may set the precedent for the current COVID-19 situation citing the Sovereign Act. Your input is welcome on this topic as well as your experiences on COVID-19 in general. How are project owners, public and private, treating the inevitable delay and disruption? How is the risk and the cost being apportioned?

 

This Week's Cases

Ultimate responsibility for full compliance with the contract requirements rests with the contractor. Inspections conducted by the project owner are for the protection and benefit of the owner, not the contractor. In the absence of a duly authorized contract modification, even owner approval of work may not be binding on the owner prior to final acceptance of the project. These principles of construction contracting explain some seemingly inequitable results regarding owner inspection and approval of work, as found in this week's first case.  The second case involves a subcontractor's attemp to sue other subs for negligence in a workman's compensation case. Read more.

 

Recent and Upcoming Webinars

 

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Recent events include:

 

Don't forget to use your member discount code for your 20% discount. 


 

In last week's Suspension of Work webinar presented by Jim Zack, an attendee asked "Our projects are located inside a military base. Our contract is with USACE not with the base administration. The base took all our employee passes due to COVID-19 preventing all contractors from entering the base. The base administration sent a letter advisng us about their policy, but USACE did not send any written instructions.

 

Is this a suspension of work? Is this a compensable delay? Read more.


 

The failure of the government’s lower-level quality assurance personnel to object to nonconforming work they had observed did not waive an unambiguous contract requirement. Although the shoddy inspection practices were troubling, only the contracting officer had the authority to alter the contract.


 

Under a state worker’s compensation statute, the injured employee of a subcontractor could not sue other subcontractors on the project. The prime contractor was ultimately responsible for the comp compliance of all its subcontractors. This made the other subs statutory co-employees of the injured worker, immune from liability, even though the subcontractors were LLCs rather than natural persons.


Volume: 18, Issue: 7 - 04/15/2020

 

COVID-19 has had a range of impacts on active construction projects, including decreased productivity due to social distancing, supply chain disruption, and partial or total job shutdown. In our first article this week, as part of our ongoing series of articles on the impact of construction, Jon Hollman takes a look this week at the shutdown situation and the variety of costs and impacts that need to be considered by both owners and contractors.

 

Many standard contract documents, public and private, call for the project architect or project engineer to serve as the initial arbiter of claims and disputes. That decision may be an initial threshold to dispute resolution or it may purport to be a “final” decision. Either way, contractors are advised to be aware of the procedure. Lack of knowledge can lead to some negative consequences. Two cases in this issue deal with archtect's/engineer's decisions, and one is additional instructive on pass-through claims. 

 

The third case in this issue involved a federal agency’s attempt to negotiate contract price after bid opening and exposure of bid prices. Read more.


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