7 Critical Mistakes that Engineers & Architects Make that Sabotage their Projects

7 critical mistakes engineers & architects makeA lawsuit could cost your company thousands, or hundreds of thousands, of dollars.  You will spend more time with your lawyer than you’d like– time you’d otherwise be able to spend on your business.  Sound fun?  Of course not. 

What can you do to lessen your risks of a lawsuit? 

Take a few minutes right now to download my free 6 page white paper entitled 7 Critical Mistakes that Engineers & Architects make that Sabatoge their Projects & Invite Litigation.  If you know what these critical, yet common, mistakes are, you can take steps to minimize your risk of being sued. 

Check it out by going to the right hand side of the blog’s main page and submitting a request for your free copy today.

Developers Rejoice Over Impact Fees Decision (news note)

Today I’m unveiling a new column here at Construction Law in North Carolina called “News Notes”.  News notes will be postings of current news items relating to the design (and construction) community.  [This means that sometimes I must be a tad drier than my usual festive self.  Consider yourself warned.]  If you have an idea for a News Note, drop me a line.

Much to the delight of developers and realtors across the state, the North Carolina Supreme Court recently affirmed a decision which struck down local school impact fees. The fees had been assessed to fund construction of new schools in the Cary portion of the Wake County schools to help with the Town ofCary’s  rapid growth.

Impact fees are usually enacted by local boards and town councils as Adequate Public Facilities Ordinances (APFO).  In 1999, the Town of Cary began assessing school impact fees on developers in certain portions of the town which faced overcrowding.  The revenue brought in by the fees was earmarked to pay for expansion of existing school facilities.  Notably, the Town of Cary has no separate school system from the rest of Wake County, and did not have the legal authority to control the provision of school facilities within the district. 

Last month, the state Supreme Court, in a tight 3-3 tie decision (with one abstention) left the Court of Appeals decision in place, rejecting the Town’s attempt to collect school facilities fees and declaring the fees illegal.  [As an aside, my firm represented another developer who intervened in the lawsuit; however, the facts were somewhat different and we were not involved in this appeal.]

The Cary case is not the first time the issue has arisen in the state.  Currituck County once proposed a similar APFO to fund school construction during the real estate boom as out-of-state residents from Virginia crossed into North Carolina in an attempt to flee the taxes and dismal school system in Chesapeake,Virginia.

The Currituck proposal was widely criticized by both local and state homebuilder’s associations. Across North Carolina, homebuilders and realtor groups worked together to stop attempts at passing such impact fees. These organizations have run into problems as cash-strapped local governments see impact fees as one method of paying for increasingly expensive public school construction.

The theory is that developers of new homes pass the impact fees along to new home buyers by raising the price of homes or lots. Existing residents are spared the tax increases caused by a rapid influx of new residents with school-aged children. Thus, the people responsible for the increased strain on the school system – the new residents – bear the burden of the tax increase.

school

Over the past decade, Durham, Union County, and Cabarrus County have instituted similar impact fees. All three such attempts were disallowed by various courts. Thus far, virtually all attempts at imposing such fees have been struck down, although there appears to be wiggle room in the case law. For example, impact fees collected for improvements that directly run to the property (such as water or sewer lines) are typically allowed. Additionally, other municipal governments impose fees related to schools that have not (yet) been decided in the state court system, and those may be broad enough to pass judicial scrutiny.

In this case, Cary’s ordinance assessed residential developments a mitigation fee if they did not first obtain a certificate from Wake County certifying classroom availability. Over $4 million was ultimately collected since the ordinance was first passed in 1999. Cary is now faced with the prospect of returning these fees, plus over $300,000 in attorney fees awarded to the developers who filed suit.  Ouch!!!

Comments or questions?  Post in the comment section, below.

Photo (c) Ivy Dawned via Creative Commons license.

Irene Damages Main Roadway on Outer Banks (pictures & data)

Hurricane Irene brought untold damage to much of the Eastern Seaboard over the weekend.

Our own Outer Banks, often a magnet for Hurricanes and nicknamed “Hurricane Harbor”, was hit once again.  Irene opened up two new (temporarily, at least) inlets and will require significant repairs to NC Route 12, the main transportation route on the Outer Banks.  Transportation engineers will be working on Rte 12 for some time.

A picture of one of the new inlets is below:

Hurricane Irene road damage on outer banks of NC

This picture comes from Western Carolina University’s Program for the Study of Developed Shorelines.  You can find much more information about the damages on various portions of the Outer Banks, and see other interesting pictures, by downloading the full report here: Update on Outer Banks after Irene.

PS:  I’m still receiving some great feedback and comments on my “Tell me what to write challenge” so I will extend the challenge through the weekend.  Those that got their suggestions in by the original deadline will get their names in the hat twice, but all ya need is one, as they say!  Keep ’em comin’.

Construction Contract Drafting Webinar– a chance to hear me speak! (Oh boy!)

Interested in learning about contract drafting strategies?  Make plans now to attend a live webinar entitled “Construction Contract Drafting Strategies: Crafting Enforceable Payment, Performance, Termination and Damages Provisions”.  

I will be one of 3 speakers for the webinar, which will be held Wednesday, September 7th from 1:00 PM-2:30 PM Eastern Time.

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Speaking troll
(This is *not* a realistic rendering, I promise!)

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This CLE webinar will include best practices for counsel to owners, contractors, and design professionals to mitigate risk and resolve contract disputes.

Questions addressesd will include:

  • What are the critical provisions in construction contracts that demand careful attention and negotiation by owners and contractors?
  • What are the most commonly disputed issues during construction contract negotiations and what are some effective strategies for resolving them?
  • What are the best practices for counsel to building owners, contractors, and design professionals to minimize liability for their clients when entering construction contracts?

To register, click here.  Early registration discounts end on August 19th, so don’t delay!

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Photo:  “Public  Speaking” by JASElabs via Creative Commons License.

 

 

 

 

 

Safe Harbors- not just for Sailors anymore (or, why advance planning can prevent claims of defective plans & specs) (law note)

Have you ever considered a “Safe Harbor Provision” for your Owner-Architect or Owner-Engineer contract?  Maybe it is time that you do.

As you are (probably too well) aware, on every construction project there are changes.  Some of these are due to the owner’s change of heart, value engineering concerns, contractor failures, and material substitutions.  Some may be because of a design error, omission, or drawing conflict.  It happens.

safe harbor provisions

A “Safe Harbor Provision” is a provision that establishes an acceptable percentage of increased construction costs (that is, a percentage of the project’s contingency).  The idea is that if the construction changes attributable to the designer is within this percentage, no claim will be made by the Owner for design defects. 

An example provision is provided in the EJCDC documents (Exhibit I, Allocation of Risks, of  Form E-500), which provides

Agreement Not to Claim for Cost of Certain Change Orders: Owner recognizes and expects that certain Change Orders may be required to be issued as the result in whole or part of imprecision, incompleteness, errors, omissions, ambiguities, or inconsistencies in

the Drawings, Specifications, and other design documentation furnished by Engineer or in the other professional services performed or furnished by Engineer under this Agreement (“Covered Change Orders”). Accordingly, Owner agrees not to sue or to make any claim directly or indirectly against Engineer on the basis of professional negligence, breach of contract, or otherwise with respect to the costs of approved Covered Change Orders unless the costs of such approved Covered Change Orders exceed __% of Construction Cost, and then only for an amount in excess of such percentage. Any responsibility of Engineer for the costs of Covered Change Orders in excess of such percentage will be determined on the basis of applicable contractual obligations and professional liability standards. For purposes of this paragraph, the cost of Covered Change Orders will not include any costs that Owner would have incurred if the Covered Change Order work had been included originally without any imprecision, incompleteness, error, omission, ambiguity, or inconsistency in the Contract Documents and without any other error or omission of Engineer related thereto. Nothing in this provision creates a presumption that, or changes the professional liability standard for determining if, Engineer is liable for the cost of Covered Change Orders in excess of the percentage of Construction Cost stated above or for any other Change Order. Wherever used in this paragraph, the term Engineer includes Engineer’s officers, directors, members, partners, agents, employees, and Consultants.

 [NOTE TO USER: The parties may wish to consider the additional limitation contained in the following sentence.]

Owner further agrees not to sue or to make any claim directly or indirectly against Engineer with respect to any Covered Change Order not in excess of such percentage stated above, and Owner agrees to hold Engineer harmless from and against any suit or claim made by the Contractor relating to any such Covered Change Order.

[Emphasis added to key provisions by me].

Essentially, the EJCDC safe harbor provision includes the following:

  • Owner’s acknowledgement that change orders are standard operating procedure on construction projects
  • Owner’s agreement not to sue or bring any claims against the engineer  unless the costs of such exceed a negotiated percentage of the construction cost.
  • Owner’s acknowledgment that not all change orders over the allocated percentage are the designer’s responsibility, as the aggregate amount does not include costs that the project owner would have incurred if the work covered by the change order had been included originally (the “betterment” to the owner).
  • Owner’s acknowledgement that only the overages attributable to the design are compensable — notably, nothing changes the professional liability standard for determining if the engineer is liable in excess of the percentage. 

Again, this is one of those “don’t try this at home” moments.  A poorly written safe harbor provision could do more harm than good.  It may be seen as establishing a warranty, and that would be an uninsurable loss.  If not properly crafted, it may create the expectation that all overages fall on the designer.  Proceed with caution!

When well-drafted, however, a safe harbor provision can provide you with some level of comfort for the inevitable discoveries that happen when the drawings hit the pavement.

 Have you ever used a “safe harbor” provision in your Owner-Designer agreement?  Did it work to your advantage, or did it create unreasonable expectations that change orders were capped at that amount?  Share your experience below.

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Photo: Boats in safe harbor, Roseau, Dominica via teletypeturtle/Creative Commons license.

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