Best Practices Construction Law : Construction Lawyer & Attorney : Matthew DeVries : Stites & Harbison Law Firm : Green Building & LEED Litigation

Last night, I attended a dinner and auction of the Tennessee Road Builders Association Mid-Year Meeting in Nashville, Tennessee.  It is always great to catch up with some many friends ... many of whom I met only six months ago while presenting as a speaker at the Annual Meeting in Kauia, Hawaii.   The food was okay, the dessert was better (...yes, I was smart enough to bring my wife some cake...), but the fellowship was the best.  I chatted with friends like Glenn Chambers of LOJAC.  I broke bread with the Wilson family of Wilson & Associates.  It was a great evening.

Another highlight was the silent and live auctions to benefit the TRBA Political Action Committee.  The evening brought in close to $50,000, which will help the TRBA do its legislative work on behalf of members.  I donated a few items to the mix, including: (1) Lunch with a Lawyer, which included an executive lunch at The Palm and a few hours of advice; (2) a Construction Law Seminar, which included lunch for up to 20 employees on a construction issue of choice; and (3) a company profile and interview on this blog.  Stay tuned for an update on the winners!

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I just received an alert from my friend, Kent Starwalt, Executive Vice President for the Tennessee Road Builders Association, announcing an important hearing on Thursday morning. House Transportation & Infrastructure Committee Chairman John Mica (R-Fla.) has invited ARTBA members to join a webcast and conference call tomorrow where he will provide an overview of his multi-year surface transportation reauthorization proposal.

WHEN: The webcast and call will both begin at 11:00 a.m. (Eastern).

HOW: Please click here (http://transportation.house.gov/) to watch the live webcast. Click on the red “Live Webcasts” button on right-hand side of the page.

Call (877) 229-8493 and enter code 18416 to join by phone (questions will be taken over the phone).

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In a room filled with more than a hundred highway and bridge contractors, yesterday Tennessee Governor Bill Haslam helped kick off the Tennessee Road Builder Association's "Day on the Hill" event.  Haslam's was a welcome voice to this group of business men and women who wanted to hear about ideas for growth, as well as future plans for the transportation industry in Tennessee.

"It matters that you're here," Haslam said to the participants. "It's really about people who make their passions and positions known in a way that the legislators can understand."

Haslam equated the state budgetary process to what businesses need to do: "What we are going to do going forward is take a whole different look at state government. We are going to do the same thing you do in your business."  Haslam then outlined some ideas to get the budget aligned, as well as how to promote growth.  "I don't think the Legislature creates jobs.  I think businesses do."

According to Haslam, the following three issues are key to a job development plan:

• Play offense.   It is important for the Administration to do what it can to attract businesses to Tennessee, whether through incentives or other efforts. 
• Review regulations.  It is also important to review current regulations to identify those that restrict growth.  While there is a need for regulation and oversight in any industry, including construction and transportation, there is a point where over-regulation stifles growth and you simply need to "get out" of their way.
• Analyze risk.  According to Haslam, businesses must be empowered to grow.  This can be done by taking part of the risk out of capital investment, primarily through tort report.  By addressing tort reform, Haslam's plan seeks to make the state more attractive to businesses seeking to relocate to Tennessee. 

You can listen to an audio version of Haslam's talk to the TRBA (.wav file).

Image: Kent Starwalt

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Last week, I spoke at the annual meeting of the Tennessee Road Builders Association.  Fellow speaker and lobbyist,  Dave Bauer of the American Road & Transportation Builders Association, gave a legislative update on the status of Federal transportation funding.  During his talk, Dave suggested that Public Private Partnerships (PPPs) can help, but are not a solution to the economic problems currently facing the industry. 

I previously wrote about whether PPPs could help revive highway and bridge construction.  Whether you are talking about PPPs or some other partnership arrangement between owner/developers and contractors, partnering can work.  But problems often arises in three areas: 

• Partnering often works until there is a dispute about time or money.   While this may be no different than a traditional contracting approach, the partnering relationship becomes strained when project delays arise or cost overruns come into play.  The natural reaction is to start assessing blame.  Used effectively, however, the partnership should be able to find common sense solutions to time and money problems.
• Partnering is often accepted by upper management, but not at the project level.  You can imagine the problems that may arise when there is a disconnect in the family where both the owner and contractor feel they are being taken advantage of.  This feeling can be exacerbated at the project level by those who are involved in the day-to-day construction.  You need to get all levels to "buy in" to the process.
• Partnering often highlights an imbalanced decision-making process.  When disputes arise between partners, it is important that each have equal bargaining in the process.  For example, it can be difficult for the contractor's project manager to be negotiating and attempting to resolve disputes with the owner's representative, who may be at a higher level.

There are many other problems that can exist with partnering.  However, the goal is to avoid the frustration that is often felt by those who want the relationship to work.  The best way to avoid these problems is to: (1) have a balanced partnering agreement that properly allocates risk between and among the partners; (2) get all players together at the inception of the project, both within your own organization and with the other partner, to foster team-building in the relationship; and (3) incorporate an alternative dispute resolution process that allows for effective and efficient resolution of internal disputes.

Image: Metro Transportation Library and Archive

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This must be the week for transportation.  Yesterday, I received an update from the Tennessee Road Builder's Association about the acquisition of right of ways on Federal funded projects.  According to a memo from TDOT's Chief Engineer Paul Degges, the Federal Highway Administration (FHWA) will be enforcing its policy that all property must be acquired under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (Uniform Act). 

What is the Uniform Act? Passed by Congress in 1970, the Uniform Act is a federal law that establishes minimum standards for federally funded programs and projects that require the acquisition of real property (real estate) or displace persons from their homes, businesses, or farms. The Uniform Act's protections and assistance apply to the acquisition, rehabilitation, or demolition of real property for federal or federally funded projects.

What is the FHWA policy? According to the TDOT memo, FHWA has advised that the roadway contractor cannot acquire the land that is to be incorporated into the right of way during the construction phase.  The contractor is required to strictly adhere to the Uniform Act's requirements.  Any variance from the policy could jeopardize the Federal funding on the project.  If you need to find the correct contact information for your state, check out the FWHA's Right of Way Office Roster.  You can also check out the FHWA's page on Frequently Asked Questions. 

What should contractors learn?  The events leading to the TDOT memo suggest that a roadway contractor acquired some land during the construction phase of a project that was to be incorporated into the right of way.  The FHWA confirmed that the Right of Way Division should be responsible for "the acquisition of any additional property when this type of situation occurs..."  Thus, if additional right of way is needed because plans are incorrect or a value engineering change proposal recommends it, a plans revision should be issued and the Right of Way Division needs to acquire the property ... not the contractor.  According to TRBA, this will not affect waste and borrow areas that the contractor is responsible for acquiring.

Image:gwarcita

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This morning I read Brad Heath's article in USA Today, suggesting that the stimulus funding for road repairs has detoured and by-passed large metro areas with significant road problems.

According to the USA Today study, half of the nation’s worst roads will receive only about 20% of the stimulus money allocated for street repairs. The reason—the roads were not shovel ready and were in too bad shape:

“The problem is a byproduct of a stimulus package designed to spend as fast as possible to revive the economy. Many roads are in such bad shape that repairs would take too long and cost too much to qualify for funds, says John Barton, head of engineering for Texas' Department of Transportation.

The result is that counties with the worst roads won't get much more repair money than counties with better roads. The 74 counties with half of the nation's bad roads will split $1.9 billion, records show; counties with no major roads in bad shape will split about $1.5 billion.”

Data compiled and reviewed by USA Today showed that many of the roughest roads needing repair were … let’s say … not ready for repair.  For example, state officials acknowledged that “Detroit's roads are in dire need of work, but say they didn't have enough ready-to-go projects there.”

According to Kent Starwalt, Executive Vice-President of the Tennessee Road Builders Association, the important question is not whether transportation projects are shovel ready, but rather, why weren’t these projects shovel ready?

“It would seem that if a jurisdiction’s roads are in really poor condition, they would have the necessary steps done to be able to move on projects when and if they did receive money. [Tennessee Department of Transportation] and many other state DOTs were well prepared for such a scenario. The cities were even given more time than the states in the stimulus bill to obligate any money they were to receive.”

This is more than just an issue of timing and money. One measure of the House transportation re-authorization bill includes the transfer of control from state departments to city and metropolitan planning organizations. However, Starwalt warns: “It should be obvious to everyone involved that the cities are not as efficient in getting projects out the door as state DOTs.”

This debate is interesting to those of us who follow the federal stimulus funds with the hopes that the funds actually impact the construction industry, the workers and employees involved in the projects and the local economies.

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