Best Practices Construction Law

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Matt has written articles and given presentations on all aspects of construction law. Find a resource here.

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Best Practices top posts include claims preparation, contract drafting, and litigation pitfalls. You don’t want to miss these ones.

Matthew DeVries

Matt is a construction & litigation attorney at Burr & Forman LLP and father of seven young kids.

Top 7 Factors Affecting Labor Productivity Losses On A Construction Project

Posted in Best Practices, Legal Trends, Project Management, Scheduling

Construction labor is always in the news. Last month, I wrote an article for the Nashville Business Journal challenging industry leaders on how to respond to the shortage of skilled labor in the area.  Recently, the U.S. Department of Labor issued new overtime regulations, which no doubt will affect your workforce.  When you deal with construction claims, many believe that the largest component of any request for additional compensation is generally labor costs.


In a recent Construction Briefings article by Kathleen Harmon, the author breaks down loss of productivity claims based upon a claim of acceleration to overcome excusable delays, or a claim for cumulative impact of an owner’s changes project.  In general, labor productivity refers to the measurement or unit of work that is accomplished for a designated period of time. A contractor generally bids a scope of work based upon certain assumptions regarding labor costs and labor productivity. A compensable loss in terms of labor productivity happens when the contractor uses more hours to complete a given unit of work than it would have used absent the intervening cause. According to Harmon, the top seven factors affecting labor productivity losses on a construction project include:

  1. Weather. Adverse weather is a significant cause of lost productivity on a construction project. The parties contract generally will address where he contractor is entitled to additional time for “unusually severe weather” and the type of proof that may be required for submitting a claim. The lost productivity may include those days when the contractor experiences adverse weather, but also when delays caused by the owner push the project schedule into weather conditions that impact performance.
  2. Out of sequence work.  The contractor may be entitled to seek additional compensation when its work is impacted by having to change its anticipated method of performance or sequence of work. When a contractor has to modify its work plan due to owner interferences or delays, it can experience lost productivity having to work around the unforeseeable event.
  3. Crowding and stacking of trades. Like out of sequence work, a contractor may be impacted by multiple trade contractors working in an area that was not otherwise anticipated. The crowding and stacking of trades can have a significant impact on labor productivity, and courts have recognized a loss of efficiency experienced by a mechanical subcontractor when the general contractor accelerated the work, causing overcrowding on the project, increased man-hours, and unavailability of materials.
  4. Overtime.  According to Harmon, fatigue and increased absenteeism due to scheduled overtime work can have an adverse impact on productivity. Again, the underlying cause must be compensable for these type of impacts are recoverable.
  5. Restricted site access.  Since the contractor is generally entitled to control its own means and methods of performance, restricted site access can also significantly affect labor productivity.  This may include actual access to the site as well as anticipated use of certain laydown areas.
  6. Unavailability of manpower.  Lack of skilled labor has a direct impact on the schedule, many times causing the contractor to accelerate its work to overcome the delays associated with maintaining a steady workforce.  Given the traditional contract language placing the risk of labor on the contractor, it is difficult to prove and recover additional compensation due to the unavailability of manpower.  But it remains a real problem in some areas.
  7. Cumulative impact.  Contractor may be able to cover for the combined impact of multiple changes on a project. This is sometimes called the “ripple effect” of having multiple changes on the project.

As a construction lawyer, I see the causes of lost productivity after the fact during the claims process or litigation.  As a contractor with the right project management team in place, you can see these causes before the fact.  Your job should be to identify the events and circumstances leading up to a loss of productivity. You should document both the cause and the impact in your daily reports and other key project documents. It will be very important to identify those causes of delay that are beyond the reasonable control as opposed to inefficiencies caused by the owner or other parties.

One Awesome Case Discussing The Difference Between Delay and Disruption Damages!

Posted in Case Law, Claims and Disputes, Legal Trends, Scheduling, Texas, Transportation

Rarely do you find a case that succinctly addresses a construction law issue.  Today, one of my legal alerts pointed me to one such case dealing with delay damages and disruption damages. This is a must read!

must read

In County of Galveston v. Triple B Services, LLP, decided on May 26, 2016, the Court of Appeals of Texas reviewed a contractor’s claim for damages on a road expansion project.  While the legal issue focused on the County’s right rely on the defense of sovereign immunity, the Contractor’s (and it expert’s) characterization of the damages was critical to the outcome of the case.  Since the applicable statute waives a county’s sovereign immunity for breach-of-contract damages that are “a direct result of owner-caused delays,” the Court had to decide whether disruption damages—as opposed to delay damages—were recoverable.

The Contract.  The County entered into an agreement with the Contractor to expand a three-mile stretch of road. Under the contract, the County was responsible for moving gas, water, and fiber-optic utilities.  According to the Contractor’s expert, the contract established a “baseline schedule … created by the County’s engineer,” which showed a starting date with unhindered access along the area of the road where the utilities were located. The contract allowed for “delay damages” if the Contractor’s request for those damages “is determined to be compensable.”

Owner-Related Delays.  Although the Contractor’s plans for the construction project anticipated that the County would move the utilities by a particular date, those utilities were moved almost one year later.  Nevertheless, the Contractor completed its work within the contract time.  According to the Contractor, it incurred additional costs to hand-form manholes, set and reset barricades, extended field office overhead, as well as additional labor, equipment, street cleaning, flagging, and traffic control—all of which resulted from the County’s delays in moving the utilities.

Sovereign Immunity Argument.  The County argued that Section 262.007 of the Local Government Code waives a county’s sovereign immunity for construction contracts involving claims for delay damages.  Here, the County relied heavily on the testimony of the Contractor’s expert witness who testified about the Contractor’s damages resulting from the County’s delays. Since the County did not timely move the utilities as anticipated in the original construction plan, that schedule of work was “disrupted.”  By seeking disruption damages, the County argued, the Contractor sought damages that were excluded from recovery under the statute.

So, are these delay damages or disruption damages?

On appeal, the Contractor agreed that its “disruption damages” do not meet the definition of “delay damages” as traditionally understood in the construction law arena. However, it argued that the statutory waiver of sovereign immunity for damages that are “a direct result of owner-caused delays or acceleration” includes more than “delay damages” as defined under construction law: “Disruption and lost productivity costs are … recoverable damages under the clear meaning of the words of the statute.”

The Court turned to the construction law bible written by Phillip Bruner and Patrick O’Connor to address the inquiry, noting that delay damages have a technical definition distinct from disruption damages:

 Delay damages refer to damages “arising out of delayed completion, suspension, acceleration or disrupted performance”; these damages compensate the contracting party that is injured when a project takes longer than the construction contract specified. . . .

Disruption damages, on the other hand, are for a project that may be timely completed but nevertheless includes disruption to the contractor and compensates it for “a reduction in the expected productivity of labor and equipment—a loss of efficiency measured in reduced production of units of work within a given period of time.” . . . Disruption damages can also be caused by an “event [that] both disrupts and delays a critical path activity….” A project that finishes on time but at greater expense because of disruptive events or scheduling errors presents a claim for disruption damages.

The Court’s Decision.  Based upon a plain reading of the statute, the Court concluded that Section 262.007 allows a claim for disruption damages against a county “if the disruption damages directly result from the county’s delay in performance of its contractual obligations….” Significantly, the statute did not distinguish between “delay damages” and “disruption damages” that are directly caused by the breaching party’s delay.

Lesson Learned.   According to the expert in this case, the Contractor incurred significant increased costs to finish the work on time. The Court’s opinion provides an excellent roadmap of the type of expert proof required to establish the damages sought by the Contractor, including the following:

  • The expert examined the “daily summaries” of work and “the manner [the project] was intended to be executed … [and] the manner by which the project was actually executed and some of the specific things that caused that deviation.”
  • Using this information, the expert testified that the Contractor had to adjust its approach to accommodate the County’s delay by “segmenting the work into smaller segments of the roadway, waiting on the utilities … just a various sundry of impacts that caused them to not be as productive from a direct labor standpoint.”
  • The “waiting on the utilities” caused the Contractor to waste “man-hours trying to deal with working around utilities and bouncing around back and forth and dealing with not being able to set barricades and … progress the roadway [in the way] that they thought they would be able to in an unhindered manner.”
  • The expert also testified that the Contractor had to add “a number of crews because they were working in so many different areas to try and progress the work….”
  • Finally, the expert opined that the Contractor’s clean-up crew also had to perform additional work because “whenever you slow down that progression and create situations where you’re excavating and you’re staging materials in one location[,] … you wind up with … more debris than if you were just moving in a steady progressive manner.”

Although the project in this case was finished on time and the Contractor never completely “stopped” its work, the Court readily found that the Contractor was “hindered” because of the County’s actions.  Since the type of recoverable damages include those that are “a direct result of owner-caused delays,” the Contractor could recover its disruption damages.

Between A Rock and A Hard Place: How the Severin Doctrine May Relate to Your Statute of Limitations Period

Posted in Bid Protest, Case Law, Claims, Federal Construction, Legal Trends

I previously blogged about the rules relating to pass-through claims, where a prime contractor’s recovery from an owner for damages suffered by its subcontractor is limited in certain circumstances.  In the post, I talked about a “past-through-plus” claim based upon the Severin doctrine, which provides a prime contractor cannot sue an owner on behalf of one of its subcontractors to recover monies due to the subcontractor unless the prime contractor is itself liable to the subcontractor.  Those rules can have an important effect on the time limits of when you pursue a claim against the government, often putting yourself between a rock and a hard place.


In Kellogg Brown & Root Servs., Inc. v. Murphy, (May 18, 2016), the Federal Circuit recently held that, for purposes of the six-year limitations period of the Contract Disputes Act (CDA), a contractor’s claim did not accrue when a terminated subcontractor stopped its work.  Nor did the period begin to accrue when the prime contractor and subcontractor agreed to cooperate in preparing invoices to submit to the Army.  Instead, the Court held, the prime contractor’s claim accrued only once it had resolved subcontractor costs, allowing the prime contractor to request a sum certain from the government. While the facts of the case are complex, here’s the skinny:

  1. Army and KBR enter cost-plus fee contract construct dining facilities and to provide meal and related services for troops in Iraq;
  2. KBR subcontracts certain work to KCPC;
  3. KBR terminates for default KCPC, which disputes the termination;
  4. KCPC continued performance at the request of KBR until a replacement subcontractor could be found;
  5. KCPC files suit against KBR for certain costs, and following settlement, KBR pays a “settlement amount” of $17.4 million;
  6. the parties agree to cooperate on submitting to the Army the subcontractor’s claim for costs and profits relating to the master agreement and the termination;
  7. KCPC submits its certified claim to KBR, and KBR submits a claim to the Army, but refuses to certify it or comment on its validity;
  8. the Army refuses to consider the claim and instructs KBR to “settle a claim by sub with its sub, then bill the government”;
  9. KBR finally “sponsors” the claim, only to withdraw it a few years later, citing to the government that it is a “business dispute” between it and its subcontractor;
  10. KCPC later files suit against KBR for failing to pursue the subcontractor’s claim and for inexplicable withdrawing the claim;
  11. the parties settle the second lawsuit and KBR pays KCPC an additional $10.4 million;  and
  12. KBR submits a certified claim with the Army for $10.4 million.

The Army moved to dismiss KBR’s claim, arguing that the six-year statute of limitations under the CDA had run.  The Board of Contract Appeals granted the motion, finding that the claim had accrued either on September 12, 2003 when KCPC ended its work or, alternatively, on January 24, 2005 when KBR and KCPC agreed to cooperate and present the cost to the Army.

The Federal Circuit reversed, holding that KBR’s claim was not time barred.  The Court concluded that the claim did not accrue when KCPC ended its work on September 12, 203.  The Federal Acquisition Regulation (FAR) defines “accrual” as:

the date when all events, that fix the alleged liability of either the Government or the contractor and permit assertion of the claim, were known or should have been known. For liability to be fixed, some injury must have occurred. However, monetary damages need not have been incurred.

However, liability was not fixed as of the date KCPC ended its work, and a claim (or written demand) as that term is defined by the CDA had not yet come into existence as of that date.

The Court also rejected the Army’s argument that the Severin doctrine requires a finding that the claim accrued on the September 12, 203 date.  As you probably know, Severin v. United States held that “if plaintiffs had proved that they, in the performance of their contract with the Government[,] became liable to their subcontractor for the damages which the latter suffered, that liability, though not yet satisfied by payment, might well constitute actual damages to plaintiffs, and sustain their suit.”

Just as in Severin, the Army argued that KBR became liable to its KCPC for the subcontractor’s damages due to KBR’s termination decision, and KBR’s claim accrued when KCPC’s claim accrued.  The Federal Circuit disagreed: “Severin does not so hold.”  Under the FAR, accrual does not occur until the contractor requests, or reasonably could have requested, a sum certain from the government.  In other words,  Contract Disputes Act does not require a general contractor to file “protective claims” while it resolves claims with a subcontractor.

In the end, KBR v. Murphy provides a good overview of the intricacies of pass-through claims and applicable statute of limitation periods.  Given the amount of money involved (settling for almost $30 million), it was certainly reasonable for the back-and-forth litigation between the prime contractor and subcontractor.  But how those discussions resolved themselves at each stage of the dispute had an effect on the way the government treated the claim.  It is important to understand when a claim is ripe, how the claim must be presented to the government, and whether it is properly asserted.

Who Assumes the Risk of Material Cost Increases? As Always, It Depends!

Posted in Best Practices, Claims, Federal Construction

When a client asks me about a particular contract provision and why it is “unfair” or “uneven”, we began a discussion about risk allocation. You see, the contract is used to shift the various risks on the project to the party most appropriate to handle it.  In other words, you are negotiating about who takes the risk on a particular issue.  For instance, the risk of performance is traditionally placed on the contractor, while the risk of payment is traditionally placed on the owner. That is why subcontractors feel that a “pay if paid” clause is unfair because it places the risk of payment entirely on the subcontractor who cannot control the payment process. What about the risk of escalation in material costs?


The United States Court of Appeals for the Federal Circuit Contract recently addressed this issue in a government contract dispute where the parties’ agreement required the contractor to pay for fuel at the prevailing rate.  According to the court, this put the risk of rate increases on the contractor.

The Case. In DG21, LLC v. Mabus (pdf), the Navy solicited proposals for a firm-fixed-price contract to provide support services for a Navy facility in the Indian Ocean. The contractor was also required to implement a fuel conservation program, there being two types of fuel: (1) Government-furnished fuel that was provided to the contractor by the Navy without charge; and (2) contractor-furnished fuel that was also provided by the Navy, but the contractor was required to pay for that fuel “at the prevailing [Department of Defense] rate.”  The solicitation also provided historical fuel prices and usage rates for contractors to use in crafting their bids.

The Back-and-Forth. When the contractor submitted its proposal, it said that it would submit a request for an equitable adjustment if the fuel rates varied by more than 10% from the historical rates.  The Navy responded that the historical fuel consumption and rates were “provided for informational purposes only.” The Navy also said that the solicitation was firm-fixed-price and that the contractor assumed the full risk of consumption and/or rate changes.  Notably, the Navy also questioned the contractor’s decision not to include an escalation clause in its proposal.

The contractor did not change its estimate of fuel costs, and the Navy ultimately awarded the contract to the contractor.  During performance, fuel prices doubled!  Ultimately, the contractor requested an equitable adjustment of $1.17 million, which reflected the amount it spent on fuel above the pre-contract average price of $1.75 per gallon.  The contracting officer denied the request and the board of contract appeals affirmed.

The Decision. On appeal, the Federal Circuit concluded that the contractor was not entitled to an equitable adjustment based upon fuel cost increases.  The general rule under a firm-fixed-price contract is that contractor assumes the risk of unexpected costs.  Likewise, the “prevailing DOD rate” provision in this contract allocated the risk of fluctuating fuel prices to the contractor.  The contractor could have bargained for protection from price increases by including a price escalation clause in its proposal…but it did not. Accordingly, the Federal Circuit held, the contractor assumed the full risk of consumption and rate changes.

So what?  The decision in Mabus provides a few lessons.  First, contractors who regularly do business with the government should be aware of the world of public procurement decisions.  There are literally hundreds of thousands of claims filed against federal agencies every year, and many of those cases make it through agency and court system.  It is very likely that your current problem has been addressed before and you will find some guidance on the issue.

Second, your proposal is where you address contingencies, exclusions and other areas of concern.  For the contractor in Mabus, fuel cost increase was raised by the contractor in its proposal, and the government responded accordingly.  As a business decision, the contractor chose to remove certain language from its proposal that may have allowed it to file a request for equitable adjustment at a later date.  In addition, the contractor could have included an escalation provision in its property, but it did not.

Finally, the Mabus decision reminds contractors that the parties’ written agreement is about risk allocation.  If you take more risk, then your price should increase.  If you have more reliability in the final cost of performance, then your fee should reflect the lower risk.  But make sure you are reading the general conditions of a proposed contract and assessing the risks involved before you submit your final bid.

Public Owner Recovers Liquidated Damages Even After Terminating Contractor for Convenience

Posted in Case Law, Claims and Disputes, Legal Trends

You can’t have your cake and eat it too.  That’s no fun!  Why even get the cake if you are not allowed to eat it?  Recently, a court held that a public owner could have both a termination for convenience, as well as liquidated damages.


In Old Colony Construction, LLC v. Southington, 316 Conn. 202 (2015), the Connecticut Supreme Court concluded that a contractor was liable for liquidated damages for project delays after being terminated for convenience, even where the project owner was partially responsible for the delays.

Since the contract expressly provided that the town could terminate the contract without cause and without prejudice to any of its other rights or remedies, the court held that the town’s termination of the contractor for convenience did not preclude recovery of liquidated damages.  The modern legal trend favors apportionment of liquidated damages where there is owner-caused delay, in particular where the liquidated damages clause provides a mechanism to extend the contract completion date, thereby reducing potential liquidated damages for delays not attributable to the contractor.

There is a lot more to this story, and you should read the court’s opinion for a lengthy discussion about waiver of liquidated damage provisions, entitlement to equitable adjustments, and remedies available with a termination for convenience.  However, if you are a contractor that regularly works with public owners, you should make sure to do the following:

  1. Read your contract.  While public owners rarely allow for any type of negotiation, you are well advised to read your contract in its entirety before you submit a bid, as you begin construction, throughout performance, and as soon as dispute arise.
  2. Document your claims.  One of the reasons the contractor failed on its claim for additional time was the lack of contractually required notice.  If you don’t follow the written notice requirements, you will likely lose on those claims.
  3. Expect the unexpected.  While the result in Old Colony may seem like a double recovery, it appears fully consistent with the law in Connecticut that allows pursuit of numerous remedies in the event of a default.  Again, the contract expressly stated that a termination for convenience would not affect the town’s other rights.

Proceed Wisely, Ninja Contractor, Because Suing Your DOT May Have Limitations

Posted in Case Law, Claims, Claims and Disputes, Federal Construction, Legal Trends, Transportation

No self-respecting Ninja goes into battle without a plan, right? You need to know your environment, your opponent and the rules of the battle.  For you Ninja contractors, it’s a good thing to fully understand your potential recovery before you spend countless months and thousands of dollars pursuing a claim against your state DOT for breach of contract, misrepresentation or other cause of action.


Recently, in Victor Virgin Construction Co. v. N.H. Department of Transportation, 75 A.3d 1136 (N.H. 2013) (pdf), the New Hampshire Supreme Court held that a contractor’s claim for negligent misrepresentation against the DOT was statutorily capped at $475,000. The Contractor filed a breach of contract claim, as well as a negligent misrepresentation claim, against the DOT for its alleged failure to adjust the contract price after changes by the DOT increased the scope of work and caused almost a year of construction delays.  (Remember my earlier post about “no damages for delay” clauses?)

In Victor Virgin, a jury awarded the Contractor approximately $1.5 million on its negligent misrepresentation claim.  Following the verdict, the trial court held that no reasonable jury could have awarded more than $779,078, concluding that any more than that amount was purely speculative. Inexplicably, the trial court did not enter a finding on the breach of contract claim. Both parties appealed.

On appeal, the New Hampshire Supreme Court concluded that the damages against the DOT were statutorily capped.  Section 541-B:14, I (Supp. 2012) of the New Hampshire Code provides as follows:

All claims arising out of any single incident against any agency for damages in tort actions shall be limited to an award not to exceed $475,000 per claimant and $3,750,000 per any single incident.

Applying the statute, the appellate court held that the Contractor’s damages were limited to $475,000, despite the jury award of $1.5 million. The Supreme Court sent the case back to the trial court on the breach of contract claim—so the Contractor will get another chance.

So, when you have a claim, what does it mean to Be Wise Ninja Contractor?  I have previously talked about 10 things to do when pursuing a claim, but I think its important to go back to the basics.  These include:

  • Read, read, read your contract.  This sets the basis for the types of claims that are available, how disputes will be handled, and whether you will be limited in your recovery of damages.
  • Understand the law in your jurisdiction.  Each state is different and what may be recoverable in one state may be barred in another state. What one state says about economic losses or indemnification provisions, may be dramatically different in another state.
  • Don’t go it alone.  Depending on the size of the claim, you are wise to get professional assistance, whether talking about a claims consultant for preparing damage calculations, a scheduling expert for proving entitlement to delays, or a construction lawyer for advising you through the initial evaluation and advocating for you through the claims process.

Many times, inexperienced Ninja contractors race straight into battle without having a plan or strategy. But you should not…you should be wise.

Can Active Interference by Owner Invalidate A No Damages for Delay Clause? Sometimes.

Posted in Best Practices, Case Law, Legal Trends

Some will say that a “no damages for delay” clause is harsh.  Well, it depends on which hat you wear. If you are a contractor, you have a reasonable expectation that you will be paid for the extra work to overcome a delay beyond your control, especially if the owner causes or contributes to the delay. If you are an owner, you may have an expectation that the contractor is not going to get extra compensation when there are delays to the project. Who’s right?


In C and H Electric, Inc. v. Town of Bethel, 312 Conn. 843 (2014), the Connecticut Supreme Court held that a Contractor’s claims against a Town for delay damages could not overcome the “no damages for delay” clause because the Town’s conduct did not constitute “active interference” within the meaning of the contract.  The Contractor was hired by the Town to perform electrical work on a high school renovation project. The project also involved asbestos abatement work performed by another contractor, whose work was supposed to have been complete prior to the start of all other renovation work. While only 70% of the asbestos work had been completed, the Town instructed the Contractor to commence its work, which was interrupted numerous times by the ongoing asbestos abatement work. The Contractor incurred additional costs for relocating and re-sequencing its work.  The Town rejected the Contractor’s request for additional compensation.

At trial, the Contractor argued that the contractual “active interference” exception to the “no damages for delay” clause provided relief. Since the Town knew the asbestos work had not been complete, the Contractor argued that the Town should not have ordered it to begin the work.  The trial court agreed with the Town’s argument that the notice to proceed was not in bad faith or malicious and, therefore, was not an active interference.

On appeal, the Connecticut Supreme Court agreed with the Contractor’s proposed interpretation that an “active interference” required a showing of an affirmative willful act that unreasonably interferes with the contractor’s work. However, the Court affirmed the trial court’s conclusion that the Town’s conduct was not willful or unreasonable because there was no showing that the Town actually knew the asbestos work would cause interference.

So what? Based upon the laws of other states, the Court in C and H Electric determined that there could not be an “active interference” without proof that the Town directed the Contractor to commence its work despite actually knowing that the Contractor’s
work would be delayed. There are a few lessons from this case:

  1. As a contractor, you need to first review your contracts for a “no damages for delay” clause. If one is present, then you will want to negotiate an “active interference” clause that defines what constitutes an active interference.
  2. An “active interference” could mean that the owner knows about the delay and still proceeds; or it could mean that the owner conceals or actively interferes by affirmative conduct.
  3. During performance, you should document the impact of the owner’s actions, including whether the owner failed in coordinating other trade contractors for which it alone is responsible.
  4. Even if your contract does not have an “active interference” exception, there may be a common law remedy of bad faith or negligence on the owner’s part, which causes the delays.  That would depend on your particular state.

In the end, the dispute will be decided on the express contract language and the offending conduct giving rise to the additional damages and delays.

Opening Up the Doors (Roads) for Design-Build Contracts on Highway Projects

Posted in Best Practices, Contract Docs, Federal Construction, Transportation

The Department of Transportation in my home state of New Mexico is the latest to allow the design-build delivery method for highway projects. Although design-build had been approved in New Mexico on limited public projects, road and highway construction had been previously excluded.  That changed on March 9, 2016, when Governor Susana Martinez signed into law the bill authorizing use of design-build on certain, large critical highway projects of more than $50 million.


What’s the big deal?  This is more than an academic exercise for lawyers—there’s a very practical reason to track the legislation opening the roads to design-build contracts. Under the traditional approach, a state Department of Transportation has a design created, it then bids out that design, and the contractor builds the project (…thus, design-bid-build…).  Projects can now be accelerated through the alternative approach of design-build, where the team selected for the construction project has both design and construction responsibilities. The design-build method can lead to significant cost and time savings. The Federal Highway Administration has a good fact sheet on the process.

What does your state say?  To see whether your particular state authorizes the design-build delivery method for highway projects, the Design-Build Institute of America has issued its 2015 State Statute Report (“Report”) that outlines the various states’ laws that provide owners, lawmakers, and industry professionals with the statutory information to guide them on their project delivery processes. The Report summarizes the statutes, laws, and limitations for design-build industry and is not limited to highway projects. You need to check your particular state to determine whether the state legislature has authorized such a method.

What next?  If you are a contractor that works in the highway construction industry, then you will want to know and understand whether design-build presents an opportunity for you and your company. First, you need to determine whether there are any limitations on the project size or amount. Second, you will want to begin exploring potential teaming relationships with design firm who has significant highway experience. Finally, after you have selected your design partner and proceed on the road toward submitting a proposal or bid to the state DOT, you will want to enter a formal joint venture or other teaming agreement for the work. ConsensusDocs has a catalog of teaming and joint venture agreements, including No. 498—Teaming Agreement for Design-Build Projects.

Image: Tim Kuzdrowski

Contractors: Do You Have a Cell Phone Policy? Is It Time for an Upgrade?

Posted in Best Practices, Project Management

Smart phones and tablets are now commonplace on the construction job site.  Are your cell phone policies as outdated as the original the flip phones that you issued to your employees? Do you even have a cell phone policy?


Given the legal risks involved with your superintendents, project managers and other employees, you should should be adequately prepared. If you haven’t revisited your cell phone and computer use policies recently—or don’t have any—below are some major issues to consider:

  1. Claims, claims, claims.  No longer are construction disputes limited to the written documents between the parties.  More and more litigation (or arbitration) involves discovery of texts, emails and photographs for proving or disproving your claims.  Any written policy should address use of cell phones and tablets with an eye for document preservation.  Are change orders being discussed by text?  What photos of an accident?  And did you think about use of personal email accounts by your project members?  All of these issues need to be addressed.
  2. Let’s Talk about Sex(ting). Cell phones cameras, video and audio recorder capabilities, and text functions can be an employer’s worst nightmare when it comes to harassment and discrimination claims. They can be used discretely, anywhere, anytime, and leave an undisputable record. Thus, revise your harassment policies if they do not address electronic devices and activities outside of work, including those on social media.
  3. Keep Your Secrets Secret. Cell phones are often used by departing or disgruntled employees to transfer your company’s confidential information. Moreover, lost cell phones can expose your company’s business, customer and employee information to third parties. Make sure you have protocols identifying and protecting confidential information, require the return of an employee’s equipment at the end of his or her employment, and implement internal procedures for locking the employee out of your computer network.
  4. The Always Connected Employees. Time spent responding to emails, texting, and handling phone calls outside of normal work hours can be compensable for non-exempt employees. Review your practices and policies to address these issues and, just as importantly, train your employees and supervisors on the best practices.
  5. Don’t Text and Drive. Employers can be liable for employee accidents that occur while they are distracted by texting or on the phone. Employees must be prohibited—and disciplined as appropriate—from texting while operating vehicles or using heavy machinery, or engaging in other behavior that would distract their attention. Thus, evaluate your employees’ job responsibilities and address risk areas.
  6. Don’t Forget about the NLRB. Did you think the National Labor Relations Board would not have an opinion on cell phones at work? The NLRB seemingly contends that, under many circumstances, non-supervisor employees have a right to use their cell phones at work to record video and take pictures. The NLRB has not drawn clear lines on what is and is not permitted, but review your policies and consult with legal counsel for the best practices.

Ignoring the realities of cell phones in the workplace is no longer an option. All employers must draft policies addressing the varied legal risks and monitor this ever changing legal environment. While this post addresses key issues with cell phones on the project site, employers should consult with legal counsel to determine what practices best fit your workplace and where legal lines can be drawn.

[Thanks to fellow labor and employment attorney, Matthew Scully, for contributing to this post!]

Image: Scott Lewis

If You Settle Your Construction Dispute, Have You Really Settled It?

Posted in Best Practices, Case Law, Legal Trends

Just this weekend, after breaking up a Minecraft dispute among four my young children, I sent them back to the world of digital building. Within minutes, they were fighting again. Makes you wonder about whether you have really settled the dispute after you have settled the dispute?

The Court of Appeals of Tennessee recently addressed this issue in McNeese v. Williams, No. 2014-CV-30, which involved two adjoining landowners who had a dispute over an easement.  Right before trial, the parties reached an agreement and notified the court that the trial was unnecessary. The attorney for the Williams drafted a short letter agreement and sent it to opposing counsel.  An agreed order of dismissal was also submitted to the attorney for McNeese. When Williams was “unable to obtain” a signature on the agreed order from opposing counsel, they filed a motion to enforce the settlement agreement.

construction hand

Following the hearing, the trial court found that the parties, through their attorneys, had entered into an agreement to resolve all matters of controversy between the parties. The trial court found that the agreement was fair and equitable, and that it would be enforced, despite the fact that Mr. McNeese no longer consented to the agreement.

On appeal, the Court of Appeals found that the trial judge lacked the power to enter the agreed order when he knew that Mr. McNeese had withdrawn his consent to the oral settlement agreement reached by the parties’ attorneys.   In other words, Mr. McNeese may have “had” a settlement agreement with the other party, but he repudiated that agreement prior to the hearing on the motion to enforce the settlement agreement.  Accordingly, the appellate court ruled that the trial judge should have granted the motion to set aside the agreed order.

So what?  While the issue in this case generally is one for attorneys, it also provides guidance to businesses about how to treat their settlement discussions via email.  Whether you are talking about a change order, outstanding payment application, or claim for delay damages, your agreement on a dispute may be binding depending on the circumstances. First, your written contract may have a provision that requires all changes and modifications to be in writing. Therefore, an oral agreement to resolve the dispute may not be sufficient. Second, even if you agree to resolve the dispute in writing, the outcome may be dependent on whether you have timely repudiated the agreement.

In the McNeese case, it was a matter of whether the attorney for McNeese had the authority to approve the settlement agreement and whether he had provided the final agreement by his client. Mr. McNeese ultimately repudiated the agreement, which the court found important in its decision. In this situation, the best way to confirm an agreement on a dispute is to make sure you add appropriate language at the end of your communication such as, “This agreement is final and binding until a formal change order (or settlement) is signed by the parties.”  That way, the other side will have an opportunity to object. If they do not object, you will have evidence of their agreement.