Search Results for: construction administration

Construction, er make that CONTRACT, Administration services: a primer (law note)

[Update 12:42 pm ET, 11/3/11– CA is for Construction Contract Administration, or “Contract Administration” for short- thanks Liz O’Sullivan]

 One of the Architect’s responsibilities on a construction project is that of construction contract administration (“CA”).  While not every contract contemplates the architect performing a CA role, most commercial construction projects do.  What, exactly, should be included in the CA role?  The CA role can be whatever the parties agree upon.  In fact, the AIA A201 form contract documents anticipate that the architect’s role will be defined in an exhibit. 

Construction Construction Contract Administration
§ 4.2.10 If the Owner and Architect agree, the Architect will provide one or more project representatives to assist in carrying out the Architect’s responsibilities at the site. The duties, responsibilities and limitations of authority of such project representatives shall be as set forth in an exhibit to be incorporated in the Contract Documents.
What, then, should be included in the CA role assigned to the architect?  The nature of the construction administration role is project specific.  Some projects require a full-time on-site architect, a clerk of the works, or a weekly or bi-weekly site visit.  Because the nature of the CA role cannot be adequately described in a form document, it is especially critical that you take care to describe the specific CA duties assigned to the architectural team in detail.
site observation by architect
 
One of the main CA roles for the design team is that of site observation. Consider:
  • What frequency is contemplated for visits?
  • How long should those visits last? 
  • What is your role during such site visits?
I see many disputes that arise over a misunderstanding as to how often the architect should be on-site, and what his role is in observing the contractor’s work once he is there.  Again, being specific will only help you to avoid misunderstandings, possible litigation, or even extra liability later on.
 
Perhaps the most important concept to remember for your CA role on a construction project: never agree to “inspect” the contractor’s work.  Your role should be observation to see that the work is in general conformance with your design.  You cannot guarantee the contractor’s work (nor would such be insurable).  Therefore, be careful to use the word “observation” and not the word “inspect” in your CA description.
 
What have been your construction observation experiences? Drop me a line and tell me your story.  (And thanks to my many new readers to the blog this week!).
 
 
 
 Photo (c) Mark Hogan via CC.
 
 

 

Understanding the Construction Bond Claims Process in North Carolina (guest post)

craneAs an architect, engineer, or other design professional, you may be called upon to assist the owner when a bond claim has been made, and a new contractor is being brought in to take over the project.    Therefore, it is important to understand how the surety handles bond claims and the bonding process, in general. 

With that in mind, today we have a guest post on the ins and outs of bond claims in North Carolina from a surety bond expert– founder and president of Lance Surety Bond Associates, Vic Lance. Vic is a graduate of Villanova University with a degree in Business Administration and holds an MBA from the University of Michigan’s Ross School of Business.  

Take it away, Vic…! 

As construction specialists in North Carolina are well aware, contract bonds are an indispensable requirement for bidding on public and private projects all across the U.S.   Unfortunately, even the most diligent contractors can get into trouble with construction bond claims. Claims are typically filed when project owners are not satisfied with the quality of the executed work, or if the contractor defaults or breaches contractual obligations.

While avoiding surety bond claims is the best option, sometimes claims are inevitable. Let’s take a look at the basics about surety bond claims and the specificities that North Carolina construction professionals should keep in mind.

The way contract bonds work

Construction contract bonds, including bid bonds, payment bonds and performance bonds, are often a requirement for bidding on public and private projects. Similarly to other surety bonds, they are a three-party agreement between the contractor who needs the bonding, the entity requiring the bond (usually the project owner) and the surety that underwrites the bond. Contractors cover a percentage of the bond amount, which is their actual bond cost, in order to get the backing.

For example, Federal construction projects above $100,000, as well as the majority state and local ones, require contractors to obtain both payment bonds and performance bonds. As for private projects such as commercial and residential buildings, project owners also prefer to include the bond requirement for bidders.

Payment bonds serve an important function in safeguarding subcontractors and suppliers. They guarantee that the main contractor will make all due payments on labor and materials. Performance bonds, on the other hand, directly protect project owners by allowing them to use the safety net of the bonds to hire another contractor to complete the work on time and with good quality.

signingThe basics about surety bond claims

There are different situations that can trigger a bond claim, but the most common ones include (1) defaults, (2) breaches of contractual agreements, and (3) non-payment to subcontractors or suppliers. Naturally, disputes can also occur that might not be directly linked to the actions of the contractor.

For North Carolina construction professionals, the most important thing to remember is that your surety is your best partner in such situations. It can provide legal and logistical help at all stages of the claim process. It’s up to the surety to carefully consider all facts about the case and to assess whether it stands a solid ground.

The typical resolution is to seek a settlement between the claimant and the contractor. Often this is the least problematic way to tackle the case, and sureties help their bonded clients in going through this process. As for the completion of the work, in the case of a performance bond claim, the surety either selects a contractor to finalize the project, or the project owner organizes a tender to choose a new contractor.  [Editor’s note: This is often also the time when the surety requests architect/engineer assistance in evaluating the project status and bringing a new contractor up to speed.]  For any compensation that the surety has given to affected parties, the contractor is fully responsible to reimburse it.

How construction bond claims are handled in North Carolina

While bond claims are generally handled in similar ways across the U.S., there are some specificities that North Carolina contractors should keep in mind. The legal basis for claims in the state are the Federal Miller Act, as well as the North Carolina Model Payment and Performance Bond Act. They set the rules for handling payment and performance bonds on public projects, but are not applicable to private ones.

These acts set the timeframe and notices requirements for payment bonds on public projects, but not for performance bonds on such projects. That’s why handling performance bond claims on both public and private projects is done via the language of the bond, the contract in question and the general legislation.

It’s important to note that on state projects, the bond protection covers only prime contractors, and the rules do not apply to subcontractors. The requirement for posting bonds in North Carolina public projects is for those projects above $300,000. As for payment claims, the North Carolina Act sets a 120-day notice requirement for subcontractors and suppliers to assert a claim against a contractor. Further details about the specifics can be found in the Surety’s Defenses to Construction Contract Termination document (pdf).

While surety bond claims are unpleasant for all parties involved, they are sometimes a fact in the construction industry. However, knowing the legal background is important for contractors, so that such cases can be minimized and solved in the best possible way.

What is your experience with construction bond claims? Please share your insights in the comments below.

Changes to your Scope of Services on the Construction Project (law note)

change!Our office is in the middle of a large renovation.  It’s been several months of drilling, sawing, painting, carpeting– you name it.  I’m proud to say that we have had not one change to the scope of work during that time.  <insert maniacal laughter here>.  Okay, that’s simply not true.  Change–like death, taxes, and bodily functions–happens.

In the same way that incoming wave will soon destroy that sand-written “change” sign in the picture that accompanies this post, change will happen in all parts of a construction project.

As the architect or engineer of record, you undoubtedly have a thoughtful, well-written contract or proposal.  Ideally, your contract states exactly what is, and is not, included.  But inevitably, something will slip through the cracks.  A likely scenario: the owner asks for “just a small change over here,” “one more quick site visit” over there, and hey, what’s a few extra months of contract administration among friends, right?

Whenever you experience such “scope creep”, document it.  Ask how compensation will be handled up front.  Even a quick email to the owner, stating that you’d be happy to make that extra site visit and will invoice per the contract, will make the owner aware that you expect compensation.   Have the discussion before the work is done.  When they are likely to say “great- how soon can you do it?”.  Or, if they don’t expect to pay you for your extra services, they’ll tell you that.  Either way, you’ll know what the expectations are for payment.  And, should you not get the payment later on, you have a nice piece of written evidence to show a judge or jury.

Your turn.  Have you experienced “scope creep” on a project?  How did you handle it?  Comment below, or drop me a line.  New readers: Check out the white paper on 7 Critical Mistakes that Design Professionals Make, available for free download on the right hand side of the page.

 

Photo “Change in the Sand” (c) Melissa Brumback. Creative Commons License

Learn from SONY: Don’t use trash talk in your construction project emails!

Bears hibernating

A hibernating bear and her cubs

Lessons in construction administration come from everywhere — including the SONY scandal.

In case you are a bear hibernating in a cave (in which case, go back to sleep!), you’ve heard about the SONY hacking that was apparently, but not definitively, done by North Korea due to their displeasure over the movie The Interview.  And, you may have found it amusing to read of the inner bickering at SONY, at lease until the threat of a national incident and the (at least temporary) yanking of the movie from its planned Christmas release.

Lost in all of the discussion about taste, censorship, security, and First Amendment rights, however, was a simple lesson for each of us.  Never put anything in writing that you wouldn’t want to see on the TMZ report, the Wall Street Journal, or the New York Times.  For example, don’t call one of the biggest stars in your studio (Angelina Jolie) a “minimally talented spoiled brat.”

I’ve written about this before, but this is a fine time to remind you that someday, someone will read your emails.  And that someone will not be privy to your internal jokes, quirky sense of humor, or understand that you just had a bad day.  If you have to have those awkward conversations– have them in person, or at least on the phone.  Don’t play around with written communications.  Every email, text, tweet, Facebook post, letter, note, or diary entry can be discoverable in a lawsuit.

We’ve all done it.  Sent inappropriate emails.  Vents.  Laments.  Stop.  Endeavor to be boring rather than funny in all of your online accounts.  You may be only laughing on the inside, but you’ll still have a job, respect, and knowledge that there are no hidden documents waiting to shame you at the stroke of a hacker’s keyboard.  And, tell your employees to do the same.

Do you have an example of getting an inadvertent email or text?  Something that could have been embarrassing if it leaked beyond your firm?  Share in the comments below.

Photo courtesy Wikimedia.

 

 

 

 

 

 

4 Federal Labor Laws Every Construction Manager Needs to Know (guest post)

construction hard hat on postToday, a guest post from Kristie Lewis, freelance writer for Construction Management Degree.  Kristie has written numerous articles on both construction training and education as well as industry news and trends. In her spare time, Kristie enjoys cooking in her newly remodeled kitchen and reading science fiction novels. You can reach out to her at Kristie.Lewis81@gmail.com.  Thanks for sharing, Kristie.

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In an effort to protect the rights of employers in all industries, the federal government has enacted several labor laws. Some of the laws apply to all business sectors, and some apply to specific industries, such as construction.

Although those who earn a degree from an accredited construction management program will be required to learn about a variety of laws that apply to the construction industry, it is never a bad idea to review the details of them. Here are four labor laws that every construction manager should know like the back of their hand.

The Fair Labor Standards Act (FLSA)

This act sets the standards for wages and overtime pay. In general, it requires employers to pay covered employees who are not otherwise exempt at least the federal minimum wage and pay 1.5 times the regular rate for overtime hours. The Fair Labor Standards Act is administered by the Wage and Hour Division. More information on this law can be found at the division’s official website.

Davis-Bacon and Related Acts

These policies apply to contractors and subcontractors that are working on public buildings or public works projects that are federally funded and will cost more than $2,000 to construct, alter or repair. According to the act, contractors and subcontractors must pay their laborers and mechanics employed under the contract no less than the locally prevailing wages and fringe benefits for corresponding work on similar projects in the area. There are additional details that can also be found on the Wage and Hour Division’s official website.

The Occupational Safety and Health Act (OSHA)

This act is administered by the Occupational Safety and Health Administration and includes an array of industry-specific regulations that are enforced through regular workplace inspections and investigations. Compliance assistance and other cooperative programs are available for employers who request help. Although there seems to be an endless amount of rules to comply with, most of them are common sense rules that smart construction managers already abide by. Still, it is wise to make sure your project is congruent with the federal law, because any infractions can be found through inspection or reported by a worker.

The Labor-Management Reporting and Disclosure Act (LMRDA) of 1959

This law deals with the relationship between a union and its members. Also known as the Landrum-Griffin Act, it protects union funds and promotes union democracy by requiring labor organizations to file annual financial reports. Employers are also required to file reports regarding certain labor practices. It is administered by the Office of Labor-Management Standards. You can read the details of the law here.

Knowing the details of the above laws will not only keep your construction business safe from legal trouble, it will also allow you to provide your employers with the best working environment possible.

Questions on these laws, or comments?  Drop Kristie and me a note in the comment section, below.

Photo: (c) Anna Strumillo.

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