Play Nicely in the Sandbox (or, Why GC’s and Subs Should Get Along) (guest post)

Chris HillToday’s guest post is from Christopher G. Hill, lawyer, Virginia Supreme Court certified General District Court mediator and owner of the Richmond, VA firm, The Law Office of Christopher G. Hill, PC, a LEED AP. Chris authors the Construction Law Musings blog where he discusses legal and policy issues relevant to construction professionals. Additionally, Chris is active in the Associated General Contractors of Virginia and a member of the Board of Governors for the Construction Law and Public Contracts Section of the Virginia State Bar.

First off, thanks to Melissa for this opportunity to post here at Construction Law in North Carolina. Having co-presented with her and discussed construction contracting from all perspectives, I can safely say she’s good at what she does and shares great insight here at her blog.

Now that the formalities are out of the way, I thought I’d share my thoughts as one who represents many subcontractors and general contractors on the topic of good relationships meaning good business. I am always a bit surprised at the failure of either side of the GC/Sub dynamic to act in a businesslike manner.

Remember, the General Contractor and the subs are in the boat together in many ways. They both have a job to do and, ultimately, an owner at the top of the payment food chain that is looking to get a project done on time. Ultimately, they both have an architect/engineer representing the owner that may or may not be up on the job (sorry Melissa) and may not be trained in project management. If the general and its subs aren’t “playing well in the sandbox” together, the relationships up and down the project chain get all out of whack and cause delays in completion and importantly in payment.

Another phenomenon that happens more frequently than I would like is the general contractor “burning” good subcontractors in an area through making payment (particularly final payment) difficult to receive. While this type of activity occurs on what I am sure is the minority of projects (and fully acknowledging that my practice makes me think that Murphy was an optimist) I am always flabbergasted by this sort of treatment given to a subcontractor that should be helping pull the boat.

While it is obvious that subs need to play nice with GC’s because they have the money, it may seem less obvious how the above can hurt a general contractor. The short answer (and don’t worry I won’t be going into the long one) is that burning good subs eventually means that good subs won’t work with you. Subs talk to each other. Your reputation will precede you. Eventually the economy will improve and you won’t be the only game in town. Not to mention that such actions are the stuff of which claims are made.

In short, getting along costs your local construction lawyer money because he or she doesn’t get to go to court for you. It is almost always less expensive to get along, finish the job and work out payment than to get we attorneys involved in the construction claims process.

To make a long story somewhat less long, GC’s work with the subs and subs, play nice with the GC’s. It’s the best way to a lower stress project and a higher monetary payoff.

Thanks, Chris, for your insights from the contractor’s side of things.  Even if you did (politely) slam the hard-working design professionals.  Reader, now it’s your turn.  Share your thoughts, comments, or questions with Chris or me in the comment section, below.

Architects & Engineers – Are you committing a Class 2 misdemeanor without realizing it? (Tue Tip; law note)

handcuffsBuried within the general contractor provisions of the North Carolina General Statutes is a little-known provision that can get architects and engineers in hot water.  If you recommend to a project owner anyone who is not properly licensed under the general contractor statute, you have committed a Class 2 misdemeanor.  Really!  Here is the pertinent language:

§ 87-13. Unauthorized practice of contracting; impersonating contractor; false certificate; giving false evidence to Board; penalties

Any person, firm, or corporation not being duly authorized who shall contract for or bid upon the construction of any of the projects or works enumerated in G.S. 87-1, without having first complied with the provisions hereof, or who shall attempt to practice general contracting in the State, except as provided for in this Article, and any person, firm, or corporation presenting or attempting to file as his own the licensed certificate of another or who shall give false or forged evidence of any kind to the Board or to any member thereof in maintaining a certificate of license or who falsely shall impersonate another or who shall use an expired or revoked certificate of license, and any architect or engineer who recommends to any project owner the award of a contract to anyone not properly licensed under this Article, shall be deemed guilty of a Class 2 misdemeanor. And the Board may, in its discretion, use its funds to defray the expense, legal or otherwise, in the prosecution of any violations of this Article.

However, there is also some relief in the same statute, which provides that:

No architect or engineer shall be guilty of a violation of this section if his recommendation to award a contract is made in reliance upon current written information received by him from the appropriate Contractor Licensing Board of this State which information erroneously indicates that the contractor being recommended for contract award is properly licensed.

Has this issue ever really been litigated?  Yes, it has.  While I cannot point to reported cases, I will tell you that I have had this become an issue – more than once – in my practice.  Each time, the design professional knew that the entity involved had been a licensed general contractor, but the entity had lost its contractor’s license before the particular project at issue.

Take-away:  Even if the general contractor is the largest and most well-known in the state, always, always, always check with the Licensing Board to confirm that a general contractor is in good standing before making any recommendation to a project owner.  Just in case.  Since Consider it two minutes well spent.

Questions, comments, experiences with this statute?  Share in the comments section of the blog.

Photo (c) Riki Maltese via CC




LEED for Schools Webinar (free AIA learning unit)–(Today’s Tip)

Interested in LEED as it is applied to schools?

Need to get some AIA learning units?

Then you might want to check out this upcoming, free webinar, “LEED for Schools: Overcoming the Challenges.”

When:  Wednesday, March 21st, 2012 at 2pm EDT

Register for the Webinar Here.

seminar banner




 From the website:  This intermediate seminar will look at the Center of Lifelong Learning in Sayerville, New Jersey, a Platinum level project certified under the LEED for Schools rating system as a case study. The webinar will look at the perspectives of the different team members, including the architect, the construction manager, the owner, and the commissioning agent. Each of these panelists will provide examples of the challenges the project incurred and how the team overcame those hurdles for the project to earn Platinum level certification. The intent of the webinar is meant to provide the attendees with actual strategies specific to the LEED for Schools rating system focusing on the importance of integration and communication.

Upon completion of the seminar, a participant will be able to:

  • Identify proactive measures when pursuing a LEED project during design and construction under the LEED for Schools rating system
  • Assess the challenges of pursuing certain LEED strategies, as related to local building codes
  • Identify the benefits of communicating, education, and training of the entire project team
  • Compare the advantages of the commissioning process

Editor’s Note:  there are certain requirements to getting the LU credit, involving obtaining a passing score on a 10 question quiz following the webinar.  (See site for particulars).

Day Laborers & NC’s Lowest Responsible Bidder law (News Note)

blue jean contractorsTriangle Grading and Paving is a Triad-area company with multiple public contracts, 18 since 2000 from the NC Department of Transportation alone. Frequently the low bidder, Triangle Grading has a long history of performing work for the state. However, a recent high profile controversy has threatened to remove the company from the bid lists for public construction work.  In this past year, the company was fined $400,000 by U.S. Immigration and Customs Enforcement (ICE). The Burlington-based company has the highest fine in North Carolina dating back as far as 2009.  

As you undoubtedly are well aware, North Carolina law requires that any public construction project requiring an estimated total expenditure of greater than $500,000 (or an estimated expenditure on supplies and materials greater than $90,000) be subject to formal bidding procedures. Further, the state or municipality soliciting the bids is required to accept “the lowest responsible bidder.” Some of the factors taken into consideration when determining what a responsible bid is includes performance, quality, and time to completion as specified in the bid.

Knowing that the contract must go to the lowest responsible bidder, contractors may be tempted to cut corners by hiring undocumented workers, who work for less pay than their documented counterparts. By hiring such workers, contractors can lower labor costs significantly, making them much more likely to be the bidder who wins the lucrative project.

Immigration fines may not cause Triangle Grading to lose all potential public clients. The DOT has stated that, when conducting the yearly review of its list of contractors, that while “safety records will be considered […] immigration fines would not be a factor.” However, Winston-Salem is investigating whether these immigration violations should merit a removal from the bid list.

What are your experiences with the requirement of “lowest responsible bidder” on state projects?  Are there changes that need to be made to the program?  Can the system be gamed? Post in the comment section, below.

And, if you have not already signed up for email delivery of these posts, please do so on the right hand side of the blog’s main page.  You’ll not only never miss another post, but you’ll also get a copy of my free white paper on the 7 critical mistakes that engineers and architects make on construction projects.

Photo: (c)   )

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.


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.