Betterment on the Construction Project (law note)

betterToday’s post is thanks to a discussion with an engineer following a talk I gave for the ASCE of North Carolina.  He asked about owners trying to recover for obvious mistakes, for which they’d have to pay anyhow.

That brought me to the topic of betterment.  What is betterment, and why is it important in the construction world?

Betterment is a legal concept that says, even if your plan is missing something, if the owner would have had to pay for that missing item anyhow, they cannot get money from you.

A real life example:  A designer’s set of plans showed sanitary sewer extending out 8 feet from the building footprint.  It did not show the sewer connecting to the city sewer line.  The owner later complained because it had to pay the contractor for a change order for the connection.  However, since the owner would have had to pay for the connection regardless, the owner could not recover from the designer for the missing sewer connection.  [Had the owner paid a premium due to the fact that the missing connection was discovered during construction, that premium over and above normal costs could have been recoverable.]

Betterment, then, is a defense to a claim of defective plans, because even if the plans are defective, the defect did not cost the owner any additional money.

It can be a tricky concept to explain–even some plaintiff’s lawyers that I’ve dealt with fail to understand the concept.  However, it is an important part of many defenses.

Questions?  Comments?  Ever experienced a “betterment” situation yourself?  Share in the comments section, below.

 

With Construction, Compromise is Always an Option (guest post)

Chris Hill, attorney, construction law.

Chris Hill, attorney, construction law.

Today, we have a guest post from one of our favorite  Virginia lawyers- Chris Hill. 

As always, he knocks it out of the park with another worthy post explaining why biting the bullet and settling your claim sometimes is the way to go. 

Here is Chris’s official bio:  Christopher G. Hill, LEED AP is Virginia Supreme Court certified mediator, construction lawyer and owner of the Richmond, VA firm, The Law Office of Christopher G. Hill, PC.  Chris authors the Construction Law Musings blog where he discusses legal and policy issues relevant to construction professionals.  His practice concentrates on mechanic’s liens, contract review and consulting, occupational safety issues (VOSH and OSHA), and risk management for construction professionals. 

Without further adieu, take it away Chris!

As always, thanks to Melissa for letting a Blue Devil invade her blog. I always enjoy the opportunity. Now, on with the post.

I know, you read a title like this and your first thought is “I’ll never have to compromise, if I get into trouble, I’ll be in the right!” You followed your friendly construction attorney’s advice, drafted a great contract (using a “belt and suspenders” approach) and do good work! What could possibly go wrong?

Well, among other things: 1. An owner may not pay the general contractor that you subcontracted to, 2. Weather could cause delays beyond your control, or 3. (yes, I’ll say it here) the architect may not like your work and what you did with his or her masterpiece of design. [Editor’s note: architectural plans exist for a reason, people!]. These three were just off the top of my head. Given that “Murphy was an optimist,” there are many other things totally beyond your control as a construction pro that can and likely will go wrong. The question is how to make the best of that bad situation.

Lets skip the easy points and head straight for the title of the post. You’ve already done all you can to “fix” the situation: increased manpower, shuffled your workforce, and gotten the work done as soon as possible. The party that should be paying you has decided not to do so. You decide that you need to do something besides beg for your money.

At this point you have a couple of options (not mutually exclusive): Mediation or Litigation/Arbitration. The second option is the “nuclear” option and to be used as a last resort. Remember, this is a zero sum game with no winners once the lawyers start filing papers. You will spend money that you didn’t plan to spend and take focus away from your business.

The first option is where you compromise. While you may not get the result that you may get by going to the mat in litigation, namely a judgment for everything that you would have gotten had you been paid in full, mediation has its advantages.

What are they? 1. The big one is control. With litigation or arbitration, you are turning your fate (and possibly the fate of your business) over to a third party. In mediation, you get some control and get to creatively determine the best way to solve the problem. 2. After anywhere from a few hours to a day, the dispute is resolved. Compare this to the several months to several years of litigation and you see where this would help. 3. It cuts off the attorney fee spigot much sooner than the alternative. While I as a construction attorney don’t mind being paid, you can’t run a business profitably with a monthly legal bill.

While a compromise is never the ideal, it is in most cases far better than the alternative.

Thanks, Chris!  It is a tough message to hear when you are in the thick of battle, proving that you are right, but the economic realities should always be considered before starting down the long path toward a court trial. 

Now it is your turn.  Have you settled or mediated a claim purely to put the economic pain of litigation to rest?  Do you regret that decision, or feel it was for the best?  Share in the comment section below.

PS:  Final reminder to VOTE for this blog in the “Best Legal Blog” competition. TODAY IS THE LAST DAY!  It takes, literally, about 1 second, and does not require your name, email, or anything else.  (It tracks IP numbers only).  THANK YOU for your vote!!!!!

 

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.

 

 

 

 

 

 

Wake County Justice Center- a LEED Silver Project done right!

Justice Center

The atrium

Yesterday evening, I had the privilege of attending the Triangle USGBC’s  “Talk & Walk” at the Wake County Justice Center.  The 576,996 square foot Justice Center was completed 6 months early and over 30 million under budget.  (The final cost, including soft costs, came in at ~$141,000,000).  Now that’s what I call a LEED project done right!

Interestingly, the County did not endeavor for a LEED Silver rating– the plan was to aim for a Certification.  However, as the process unfolded, the Team kept meeting the goals and points for a Silver certification without any appreciable additional costs.

The end result?  An “iconic but energy efficient building,” according to Tim Ashby, current Wake County Facilities Project Manager.  Tim was initially involved in the Project while working at O’Brien Atkins, which served as the architecture firm for the Project under the direction of Architect Andrew Zwiacher.

The Project was a Construction Manager at Risk project, involving a joint venture between Balfour Beatty Construction and Barnhill Contracting Company.   Did the contract type contribute to the success of the Project?  According to Project representatives, it likely was responsible for the 6 month early completion due to the high level of coordination.

Energy efficiency in the Building comes from the low flow plumbing (total water savings of 45%, 15% more than LEED requires), programmable and natural daylighting, and almost 98% construction waste diversion.

Jury Room

The large & relaxing Jury waiting room

Another interesting legal factoid: BIM (Building Information Modeling) was utilized.  Through BIM, a conflict was discovered in the space allocated for the air handling units versus the planned size of those units.  This discovery enabled a change to the AHU units (to make them wider and shorter) prior to manufacturer, saving untold delays in time and increases in cost.  We’ll talk more later about the pros (and cons) of BIM, but suffice it to say it worked very well on this Project.

If you haven’t been by to see the Justice Center yet, please do.  It’s a great design (17 elevators!), and a great change from the old Courthouse across the street.

Have you seen the Justice Center yet?  Thoughts on the design?  Share in the comments below.

Photos (c) Melissa Brumback. .Creative Commons License

 

 

Consequential Damages: What are they? Should I waive them? (law note)

A client asked me about a contract he was asked to sign in which consequential damages were being waived.  Consequential damages are those things that cost money which arise indirectly out of a failure of a party on a construction project.   dollar signsThey can include:

  • loss of use
  • loss of rent
  • loss of profit
  • loss of bonding capacity
  • extended overhead
  • extended equipment rental fees
  • increased material costs
  • interest

Note that this is not an exhaustive list, and other consequential damages may be applicable depending on the project.

Often, like my client, you may be asked to waive consequential damages.  This is a double edged sword.  If the waiver is mutual (something on which you should insist), then the provision may save you money in the event your design or services delay the project.  The Owner has agreed that it cannot seek to recover indirect, consequential damages.  On the other hand, if you are the one suing the Owner, it means that there may be costs that you cannot be compensated for if a project goes awry.

The standard industry contracts all have at least some waiver of consequential damages, as noted in this chart.

waiver in form contractsBottom line: waiver of consequentials can be a good thing or a bad thing, but you will not know which when you are signing on the dotted line.

Just make sure that if there is a waiver, that it is mutual on both sides.  Good luck, and “be safe out there

Your turn.  Have you ever waived your right to consequentials?  Horror story to share about paying someone else’s costs?  Share in the comment section.

Dollar Photo (c) sivlen001.
Chart (c) Melissa Brumback Creative Commons License

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