Category Archives: Damages

Why Misery Loves Company (aka Concurrent delay on the Construction Project) (law note)

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You know the old saying, “Misery loves company?”  It’s true.  Even in the construction world.

misery license tag

What happens if, while the design team is asleep at the switch, the contractor is also delaying the project, or the owner is dithering about a materials selection?  Since there was more than one cause of the project delay, does that let you off the hook?  Maybe so.

The above scenario is, in its bare-bones basics, an example of concurrent delay.

What is concurrent delay?  Concurrent delay is delay to the critical path of construction, caused at the same time by multiple events not exclusively within the control of one party.  In other words, it is when two or more parties both contribute to the delay of the project.

In such a case, neither may recover damage from each other, unless there is proof of clear apportionment of the delay and expenses.  See Biemann & Rowell Co. v. Donohoe Cos.,147 N.C. App. 239, 245, 556 S.E.2d 1, 5 (2001).

Where both parties contribute to the delay, neither can recover damages, unless there is proof of clear apportionment of the delay and the expense attributable to each party.  In such an instance, the only remedy for both parties may be an extension of time to the contract.

Have you experienced a case where concurrent delays existed on a Project?  Were you able to apportion the delay damages, or did all the culpable parties pay the price?  Share below. 

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Photo: Misery by Molly Helzschlag via Creative Commons license.

Surety Bonds & Baseball (Guest Post)

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ballpark construction surety issuesIn lieu of a Tuesday Tip, today we have another Guest Post, this time by JW Surety Bonds, an A+ BBB-rated surety agency outside Philadelphia that sells surety bonds nationwide.

Take Me Out to the Surety Bond Game

Nothing says summer like heading to the ballpark for nine innings of cheering, athleticism and hotdogs. While the excitement of professional sporting events may not immediately bring to mind the less-thrilling (yet highly important) world of surety bonds, the two are intricately tied together.

Most obviously, multi-million contract bonds start the process of any new stadium building project. As stadiums get more and more complex, each trying to outdo the previous contender, the financial strain put on contractors becomes more acute. Thorough research is needed by surety companies to weed out wanna-be firms from those with the actual resources and know-how to erect a high definition, 4-D, interactive scoreboard the size of theChryslerBuilding. Team owners need to know their pampered players will have a locker room to call home by the time opening day rolls around, or risk the ire of sports-deprived fans.

Beyond the general infrastructure, bonds are also required to secure everyone’s favorite part of a sporting event: the beer vendors. Corporate catering services or individual vendors hired to work in a stadium may be required to obtain liquor tax bonds as a promise to the government that they will truthfully report and pay all applicable taxes on alcohol sales.

Stadium owners can also require that food vendors of all kinds secure a performance bond to cover the length of the season. While the details of such a performance bond vary widely, they essentially serve to guarantee that the vendor will provide enough soft pretzels, hot dog buns and roasted peanuts to last through playoffs. Should a vendor default on their bond, the stadium owners could file a claim to receive funds to hire someone else to feed the masses for the remainder of the season.

About the only thing in a stadium that can’t be bonded is the players, but not for lack of trying. In 1983, the coach of aUSOlympic volleyball team admitted to requiring his star player to post a performance bond. The player had previously quit, and the coach demanded a cash deposit to guarantee the player would stick around through the 1984 Olympics if he was allowed back on the team. While creating a contractual and financial obligation for a pitcher to complete a no-hitter or a pinch hitter to steal a given number of bases would be appealing to team managers, it’s neither practical nor beneficial.

With the average cost of a new stadium at just below half a billion dollars, and annual sports revenue well into the millions, it makes good business sense for owners to carefully vet and bond all parties involved, ensuring a homerun success.

Questions or comments about surety bonds, and your experiences dealing with bonding companies?  Share in the comment section below. 

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 Photo by  vivoandando via Flickr/Creative Commons license.

Planning Ahead for Additional Compensation

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money for additional services for construction administration

Does your designer contract have provisions in it for additional compensation in the event the construction project takes longer than the parties anticipate?  If you use the AIA 201 (2007) general conditions for the Contractor, it may.  The AIA provisions include:

 

 § 1.1.2 THE CONTRACT

The Contract Documents form the Contract for Construction. The Contract represents the entire and integrated agreement between the parties hereto and supersedes prior negotiations, representations or agreements, either written or oral. The Contract may be amended or modified only by a Modification. The Contract Documents shall not be construed to create a contractual relationship of any kind (1) between the Contractor and the Architect or the Architect’s consultants, (2) between the Owner and a Subcontractor or a Sub-subcontractor, (3) between the Owner and the Architect or the Architect’s consultants or (4) between any persons or entities other than the Owner and the Contractor. The Architect shall, however, be entitled to performance and enforcement of obligations under the Contract intended to facilitate performance of the Architect’s duties.

The language that I bolded is very important language.  It may provide a mechanism to recoup additional service fees for extended construction administration services.  Note, however, that I said “may.”

If your fees are based on a set number of construction days, what happens if the project gets extended?  Do you simply go without pay for extra months of CA services?  Do you re-negotiate with the Owner at that time?   You should consider this issue in advance to avoid disputes later on. 

Best practice?  A clause in the Owner-Designer contract that states that additional services compensation will kick in after a certain date,  at a set value per month.  

If you wait until the issue comes up during the final phase of construction, you have much less bargaining power.  You also run the risk of the Owner claiming errors and omissions against you when you present a bill for extra services.  Deal with the issue up front, in much the same way that unit prices for rock overages are provided for upfront in the contractor’s contract. 

Do you have experience with getting additional compensation after construction delays?  What worked best for your company?  Share below. 

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 Photo (c) Freefoto.com via Creative Commons license.

 

A Building Code Engineer’s perspective on the Earthquake

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Imad Naffa

Imad Naffa

After my post on the Japan Earthquake last week, I heard from Civil Engineer Imad Naffa.  Imad is a self-described “atypical Civil Engineer with passion for providing Building, Fire, Accessibility, ADA, LEED, Green and AEC related info. and resources”  and the President and Founder  of Naffa International, Inc., a Building Code Consulting Firm based in Fresno, California.

Imad has written about the Earthquake and Tsunami from the Building Code perspective in an article for his Blog entitled “Japan’s Earthquake and Tsunami My take as a Building Codes Engineer.”   Check it out, as well as his interactive, curated Earthquake site.     Editor’s Note:  Since this was first posted, Imad has passed away.  His blog was apparently taken down by his family, who have my deepest sympathies.  Imad was a creative, knowledgeable, and kind man.  He is missed.

Do you agree with Imad that  it is imperative that the U.S. improve and update design, construction  methods and building codes?  Let Imad and me know your thoughts in the Comment section, below.    And, if you are interested in Building Code resources, be sure to check out his comprehensive list of Technical Links, which I am adding to this Blog’s Resources page.

Engineering flaws cited in Oil Spill Report

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Horizon explosion

The Chief Counsel’s Report on the BP Deepwater Horizon Oil Spill and Offshore Drilling has been released.  Following on the heals of the January National  Commission report to the President, the Chief Counsel’s report “provides damning evidence that preventable engineering and management mistakes—rather than mechanical failings—were the primary cause of the Deepwater Horizon rig explosion last spring,” notes ENR’s Pam Hunter.

Among the Technical Findings, the Report states that the root cause of the failure was that the cement that BP and Halliburton pumped to the bottom of the well did not seal off hydrocarbons in the formation.  The report acknowledges several factors which may have increased the risk of cement failure, including:

  • drilling complications forced engineers to plan a finesse  cement job that called for, among other things, a low overall volume of cement.
  • the cement slurry itself was poorly designed—some of Halliburton‘s own internal tests showed that the design was unstable, and subsequent testing by the Chief Counsel‘s team raised further concerns.
  • BP‘s temporary abandonment procedures—finalized only at the last minute—called for rig personnel to severely underbalance the well before installing any additional barriers to back up the cement job.

Among the Management Findings, the Report states:

  • BP did not adequately identify or address risks created by last-minute changes to well design and procedures. BP changed its plans repeatedly and up to the very last minute, sometimes causing confusion and frustration among BP employees and rig personnel.
  • Halliburton appears to have done little to supervise the work of its key cementing personnel and does not appear to have meaningfully reviewed data that should have prompted it to redesign the Macondo cement slurry.
  • Transocean did not adequately train its employees in emergency procedures and kick detection, and did not inform them of crucial lessons learned from a similar and recent near-miss drilling incident.

Legal Status?  The lawsuits that will be flowing (pardon the pun) from this disaster will be extreme.  Expect to see possible class action certifications requested for some of those that were suffered damages.  In any lawsuit related to the spill, the report by the Chief Counsel will, undoubtedly, be Exhibit A.

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Photo credit:  Richard Sullivan, via Wikimedia/Creative Commons license.