Construction & Design Law

Risk Management – How to Avoid the Construction Wheel of Misfortune

Roulette Wheel seen from space

Risk management is everywhere. The principles, definitions, and plans involving risk management can be applied to almost any industry or endeavor. Depending on the industry, the sources of risk and the consequences of a particular risk, the approach to risk management will vary. Some risk management is mandatory. For instance, the EPA requires facilities that use extremely hazardous substances to submit a risk management plan (RMP) every five years to be in compliance with Sec. 112(r) of the 1990 Clean Air Act Amendments. On the national level, the Department of Homeland Security developed a National Infrastructure Protection Plan outlining, “how government and private sector participants in the critical infrastructure community work together to manage risks and achieve security and resilience outcomes.” Some risk management plans are recommended by government agencies as industry standards. The US DOT Federal Highway Administration published a guidebook, Risk Assessment and Allocation for Highway Construction Management, concluding that, “(t)he business case for including risk assessment and allocation as a standard project management component of major capital projects is unambiguous: The ability to better understand potential risks and how to manage them yields benefits far in excess of the costs of adopting risk management practices.” CalTrans has …

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Create a Legally Defensible Document Retention / Destruction Policy

My February 2015 NARI Legal Corner guest blog titled Build a Record You’ll Be Proud Of, addressed the importance of recordkeeping for contractors and provided practical guidelines for creating project records.  It showed that the successful management of construction projects requires proper management of a company’s records and other “information assets.”  Information asset management should be viewed as a key component of every contractor’s overall risk management program. The article concluded by recommending that organizations develop and implement a document retention policy and legal retention schedule, which together allow old records to be destroyed in a legally defensible manner. This article describes an approach to managing and retiring (destroying) information assets that is based on industry standards and best practices. A document retention policy is really a document destruction policy Information as Assets Broadly defined, information assets include not only project records, accounting records and official documents but all other information holding any value or representing any risk to the organization.  Information assets include anything that is recorded or stored such as email, instant messaging, voicemail, databases, digital photos or any type of document, whether printed out or not.  Assets in the form of Electronically Stored Information (ESI) also include …

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Build a Record That You’ll Be Proud Of

Coliseum

The management of construction projects involves the management of information. Frequently, decisions need to be made on-the-fly, before the written information necessary to document the decision is available.  Under time pressure and with no reliable systems in place, project documentation (building a record) is regularly neglected. Unfortunately, a poorly built record can have serious negative legal, and financial consequences. Why Build a Record? One good measure of the success of a construction project is whether the completed building meets the needs and vision of the owner. Even small projects require a written proposal containing references to plans and specifications.  Without good documentation, there is a greatly increased risk that the customer’s vision may not be converted to reality, leading to a dispute.  A key attribute of project documentation is the extent to which it enables any given stakeholder (general contractor, subcontractor, designer, supplier, owner, lender, insurer) to protect its own legal and financial interests during the course of, and after the project. A poorly built record can have serious negative, legal, and financial consequences. If a dispute arises for any reason (payment, workmanship, change orders, etc.) the first thing that lawyers need to see is the record – for the …

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Smile – Caught on RRP Camera

Still photo of contractors sanding residence

EPA Crowdsourcing lead paint enforcement in New England Crowdsourcing The practice of outsourcing a job or task that is traditionally performed by employees or a contracted company to a non-organized, usually large group of people, generally in the form of an open call or competition. Note to self: Don’t break law in plain sight of your competition Late last year, I found a long version of a YouTube video showing two men dry-sanding a residence in Rockland, Maine. The video was shaky and amateurish but had a series of captions describing a fairly complete list of alleged violations of the EPA’s new RRP Rule, which mandates lead-safe paint removal practices on pre-1978 housing. I was searching for photos while updating a PowerPoint presentation on the Legal Aspects of the EPA Lead-Based Paint Renovation, Repair & Painting (RRP) Rule. I showed it to a group of contractors at my next seminar and heard some gasps. I warned: “Be careful, these days everybody has a video camera.” The seminar was one of my many efforts teach contractors about legal risk mitigation strategies. Lead paint dust is poisonous, especially for children. At the time of the video, the EPA had not yet enforced any …

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BIM Coordination Dispute

Building Information Modeling Litigation Architectural Record reports that XL Insurance recently settled a messy case arising out of the use of Building Information Modeling (BIM) to design and construct a life sciences building at a major university.  XL representatives would not name the parties involved but commented on the dispute to make people aware of the risks of BIM. The dispute centers on the lack of communication between the designers of the BIM model and the subcontractors actually responsible for performing the work – in this case the MEP contractor.  The BIM model’s tolerances for spacing in the plenum were very tight but the nature of the restriction was not communicated properly to the MEP contractor.  After the mechanicals were about 70% complete  using normal sequencing, it dawned on everyone that they were out of space.  Apparently, the design team did not communicate to the contractor that the very tight tolerances could only be achieved through a specific sequencing. The contractor sued the owner, the owner sued the architect, XL provides insurance to the design industry and so it brought in the MEP contractor. BIM Too Complicated for a Jury? The article reports that the resolution of the dispute was expensive …

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Roofing Snow Jobs – Contractor Door-to-Door Sales

  Door-to-Door Sales and the FTC Home Solicitation Sales Act So a contractor gets a call from a frantic homeowner in Massachusetts.  She pleads with the contractor to come out right away and fix something.  She says it is an emergency!  The CNN “Severe Weather Forecast” predicted more heavy snow and warned that some roofs may need to be shoveled off. The contractor arrives to check out the situation; there is no real emergency but the owner is plainly motivated to hire the contractor to do building maintenance tasks right away.  On the spot, the contractor sees an opportunity to make an easy buck, writes out a contract for $999, the owner happily signs (after all, she thinks it is an emergency), and the contractor gets started right away. Either not thinking about it or thinking that a) because the cost of the job was under $1,000; or b) because the services were technically not construction services; or c) because the owner said it was an emergency, the contractor did not provide the homeowner with the statutory 3-Day Notice of Cancellation Form.  Big Mistake! Later that day the homeowner pays the $999 in cash and is given a receipt for the work. She …

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