Author Archives: Melissa Dewey Brumback

Will Green Performance Bonds Be a Surety Requirement in 2012? (law note; guest post)

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Today’s Law Note is by Guest Blogger Alex Levin for JW Surety, the largest surety bond agency in the country.  When he’s not explaining the functionalities of surety bonds, he covers a variety of topics from construction-related news to eco-friendly building tips.

Green building design and construction is an attempt to conserve natural resources, reduce energy consumption, and protect the environment through reduction of pollutants. Green buildings are constructed with renewable, managed materials and are typically designed to take full advantage of natural light and passive heating and cooling environments.

In 2006, the District of Columbia enacted a local ordinance specifically designed to promote green buildings. The Green Building Act of 2006 becomes effective in 2012 and requires all new construction projects within the District to meet Leadership in Energy and Environmental Design, or LEED, certification standards.

Developed by the U.S. Green Building Council, LEED certification promotes the design, construction and operation of green buildings. There are four levels of certification, from LEED Certified to Silver LEED certification to Gold LEED certification and, at the highest level, Platinum LEED certification.

The District of Columbia was the first city in the US to require that privately constructed buildings meet LEED standards and already contains 24 buildings that are certified as Silver LEED or higher. An additional 150 projects are LEED registered.

The Green Building Act of 2006 did several desirable things for the District of Columbia. It established high-performance building standards for all new construction in the District. It created a green building incentives program to rewarded green construction projects with an expedited documents review process. It requires that properties with green building standards be given priority when the District leases buildings. Unfortunately, the Act also had an unintended consequence. As it is currently written, no structures can be constructed in compliance with the Act.

In routine construction contracts, performance bonds limit the risk that owners incur by using a particular contractor. The contractor buys the performance bond from a surety company, and the bond is issued to the project owner. If the contractor fails to perform, the owner can draw on the bond to hire another contractor to complete the project according to the design specifications. When the contractor does complete the project according to the design specifications, the bond is released and money is returned to the contractor. Performance verification is a simple matter of construction observation and comparison with the project specifications.

With a Green Performance Bond, however, there are multiple problems. Performance certification must come from a third party, such as the US Green Building Council, who would not be a participant in the surety bond. A delay on the part of the government agency could result in missed construction deadlines. To add to this, green standards are constantly changing. A project designed to meet Silver LEED certification requirements at the time construction starts may fall short of the certification requirements that are actually in effect by the time construction is completed.

The greatest hurdle to the Act is that Green Performance Bonds simply do not exist today. Surety companies will not issue such bonds when there are no clear standards for performance verification. [Editor’s Note: For more on the “unicorn” that is the green surety bond, check out Chris Cheatham’s discussion on the illusory bond way back in 2009].

The legal ramifications of this dilemma remain unclear. Will contractors who have been awarded construction contracts scheduled for 2012 be subject to liquidated damages if they are unable to bond and fail to start construction? If surety companies do issue Green Performance Bonds, will the bond be forfeit if LEED certification standards change during construction and the project is not Silver LEED certified? Will delays in certification be held against the contractor when projects are otherwise completed? There are no definitive answers to any of these questions.

The language of the Act is being re-examined, and a public hearing is scheduled for mid December. There is no alternative plan in place should the language of the Act remain unchanged and surety companies decline to issue these specialized performance bonds.

Thoughts, comments, or questions?  Post in the comment section, below.

Photo: (c) coolshots blog via Creative Commons license.

Improving the relationship between general contractors & architects/engineers (Tues Tip guest post)

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The following is a Tuesday Tip guest post authored by the folks at Tools & Parts Direct, out of the United Kingdom.  The basic take away?  Good communication can save your project!

Disagreements between general contractors and architects are not only detrimental to the productivity of the project but can be costly as well.  As in any relationship, communication is the most important aspect and making sure that everyone is on the same page will go a long way towards the smooth flow of operations. Mutual respect is equally important for getting the job done without costly interruptions and blame shifting. By knowing the roles and responsibilities of each other, the relationship can be strengthened by complementing each other`s strengths and working together on any weaknesses. [Editor’s note: One way of ensuring good communication on the construction project is having a thorough, written scope of services for the designer, and thorough construction documents for the contractor.]

Since both the contractor and architect have their own distinct roles to fulfill in the building process it is important that they work together right from the start. This will prevent any confusion and avoid costly changes to the plans later on in the project. The contractor will also have enough time to point out to the architect what aspects of the plan might turn out to be impractical or impossible to implement.

When both the owner & the general contractor agree to keep the design team involved in the process during construction, this can help get the project built on time and under budget.  For example, instead stopping work to contact the architect over an unexpected site condition, it is often more efficient to simply keep the design team involved so that any field conditions can quickly be tackled together. This will eliminate, or at least minimize, tension where one party blames the other for mistakes; this type of tension often leads to a breakdown in communication, further costs, and even litigation between the parties.

boxing
It’s better if the architect & contractor avoid a boxing match!

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Any changes suggested by contractor or the architect/engineer should be discussed first, and only after both the pros and cons have been weighted should a final decision be made. This will avoid situations where contractors feel like the architect is running the show or vice versa. Too much ego from either side will quickly sour the relationship and must be avoided at all costs.

Scheduling regular meetings on the site ensures that the owner can be sure that both parties are working in harmony. By having an open discussion with both the contractor and architect present, neither party will feel like anyone has gone behind their back and mutual solutions to problems can be discussed. Whether the argument is about unforeseen conditions, or site access, (almost) everything can be resolved with efficient communication.

Do you have a good story about a positive or negative relationship with a contractor?  Share your lessons learned in the comments section below.

Photo (c) The Cosmopolitan of Las Vegas via Creative Commons.

The post you’ve been waiting for: Construction Law’s Official Policy on Guest Posts!

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It had to happen sooner or later, I guess.  Folks have been coming out of the wood-work (yes, that’s a pun) to ask if I accept guest posts to my blog.  The short answer is yes, I do.  However, there are rules & considerations for such a post:

Wanted: a few good guest bloggers

1. The post must actually have a point.  Seriously, I’ve seen some pretty lame, SEO-based tripe.  If the article doesn’t have any meat on it, don’t bother sending it along.  [The post must also have no more than 2 requested hyperlinks, preferably in your introduction and not the article itself.]

2. The point of the post (see Rule 1) should benefit the construction community.  Bonus points if it actually speaks directly to architects and/or engineers.

3.  While you can ask me ahead of time if a certain topic would be appropriate, I reserve the right to not post your article if it doesn’t live up to 1 and 2, above.

4.  I may edit your post for grammar, spelling, punctuation, brevity, or content reasons.  By submitting an article to me for consideration, you expressly agree in advance to such editorial changes necessary to your work.

5.  If (and only if) you have a relevant & germane website of your own, a reciprocal link is appreciated.

6.  I attempt to use Creative Commons licensed photos for every post.  It’s helpful, although not a requirement, to submit a Creative Commons image with the article.  If you submit a suggested image (with appropriate link and credit info on the copyright holder), you make it much easier on me.  Easier on me = much more likely to post the article for you.  Got it?

7.  Believe it or not, in addition to being your blog editor/writer/bottle-washer-in-chief, I also have a law practice.  Sometimes it will take me a few days, or in some rare cases, even a week, before I can reply to your email.  Don’t take it personally, and feel free to remind me if you haven’t heard back.  I answer all non-spam email, but it may take awhile if I’m working out of town, in trial, or in depositions.  I’m not at all offended if you remind me of your pending request.

8.  Having no doubt scared off all wanna-be-guest writers with this post, I do actually welcome and appreciate well-written, helpful articles.  I will happily share my blog as a platform for those who have something meaningful to say.  In particular, folks in the industry– lawyers, architects, engineers, contractors, insurance reps– are almost always welcome to submit guest posts.

Any other questions?  Contact me and we can talk.  THANKS!

PS:  I’ll be placing this post on a separate blog page for easy reference after the original publication date.

 Photo: adapted from Vanagon Blog thru Creative Commons license.

 

A note of Thanks to my blog readers

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turkey imageHappy Thanksgiving Everyone!  This Thanksgiving I am thankful for many things.  Among them: my loyal blog readers.  I hope that I continue to provide you each with timely, relevant information to make your practice just a little bit easier.

I’ll leave you with a link to the original debate over America’s national symbol, and how Benjamin Franklin thought the Turkey would have made a better choice over the American Bald Eagle.  What, then, would we eat on Thanksgiving?

 

Photo:  (c) Briar Press via Creative Commons license.

New NC Laws for Engineers, Architects, & other Construction Professionals (Tue Tip)

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NC flag

Today’s Tip is a big one….. a turkey-sized offering in advance of Thanksgiving.   At least 19 new North Carolina laws that effect construction professionals were passed this legislative season.  They run the gamut, including public project bidding requirements, building permits, code issues, and the use of design-build building methods.  For a complete listing of each bill that may effect your practice, check out this Legislative Spreadsheet prepared by Harry Lancaster of Lancaster, Craig & Associates, a North Carolina-based government relations firm based in Raleigh.

Of particular note to Design Professionals:

Senate Bill 708/Session Law 2011-269 reconciles certain rules adopted by the Building Council relating to the January 1, 2012 effective date of certain portions of the 2012 Energy Conservation Code and the 2012 NC Residential Code.

House Bill 616/Session Law 2011-304, which modifies regulations for Engineers and Land Surveyors, including general requirements for licensure.

Check out the spreadsheet for the other construction laws.  You can go directly to the language of the laws from links on the spreadsheet.  Happy reading!

Photo:  Mr. T in DC via Flicker/CC.