Monday, January 23, 2017

The Paper Trail

Twenty years ago, a roofer could complete a construction project with a handshake and an invoice. Getting payment from customers has always been an issue, but the need for contracts and written documents was not as important as it is today.
Owners have become litigation and insurance savvy and know how to take advantage of an unprepared contractor. If a problematic project results in litigation, nine times out of 10 the party with the best “paper” will win the day. In other words, the party that has the most detailed and descriptive paper trail supporting its side will more than likely succeed in court.
A contractor, subcontractor, or supplier’s first line of defense to claims on a construction project is always the contract. The contract contains pertinent provisions that a party may use to pursue and defend potential claims. Although it is often difficult to negotiate the terms of a contract, to the extent possible, a contractor, subcontractor, or supplier should be aware of provisions that would help shield it from potential liability from claims. These provisions may include limitations on the types of damages that can be awarded, such as a provision that waives the ability to obtain consequential damages (pain and suffering, lost profits, loss of business reputation, etc.). In addition, contract provisions that require owners to provide written notice to roofers within a certain time period (3 business days) after the discovery of defective workmanship, may create a defense to an owner’s claims if the owner failed to provide sufficient notice.
Anyone involved in the construction industry should also keep accurate written records of all communications involving defective workmanship, delays or other claims on a project. These written communications can include daily reports, e-mail, memoranda, phone messages, and letters. Furthermore, if you notice defective work (that is not your own), make sure to take extensive photographs and/or video of the alleged problems. Visual depictions are especially useful in defending claims where contractors are hired to repair a building that is already suffering from defective conditions, water intrusion or pre-existing mold.
A party should also use common sense when issuing or authoring written communications. Barring any contractual provisions to the contrary, a good rule of thumb is that if it is good for you, meaning that it can assist you with bringing or defending claims, put it in writing. If it’s bad for you, pick up the phone and avoid putting something in writing that can later turn out to be a smoking gun if you are in litigation or arbitration.
Once the roofer has generated documents such as the contract, daily reports and follow-up correspondence, it is important that the roofer retain those documents in an organized file, especially if there is the possibility that the project could result in litigation. By generating and retaining documents which support the roofer’s position, a roofer will be better able to defend itself against litigious owners.

Author’s note: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

By Trent Cotney for RoofersCoffeeShop.com
Trenton H. Cotney
Florida Bar Certified Construction Lawyer
Trent Cotney, P.A. 
407 N. Howard Avenue
Suite 100
Tampa, FL 33606

Monday, January 16, 2017

The Escalating Cost of Construction and Combating Price Increases

How can a roofing contractor protect itself from labor and material price increases on a project? The roofing contractor should first consider the payment method on a project. The ideal way to combat a cost increase is to perform the project on a cost plus basis. In other words, the roofing contractor’s payment is based on the actual cost plus a certain amount for profit and overhead. Although this payment method may be preferable, it is often difficult to obtain cost plus contracts given the desire for owners and prime contractors to have a fixed price.
Accordingly, the roofing contractor should consider adding additional terms to its contract to protect it from labor and material price increases. The roofing contractor’s contract should include a price acceleration clause which consists of the following:
If there is an increase in the actual cost of the labor or materials charged to the Contractor in excess of 5% subsequent to making this Agreement, the price set forth in this Agreement shall be increased without the need for a written change order or amendment to the contract to reflect the price increase and additional direct cost to the Contractor. Contractor will submit written documentation of the increased charges to the Prime Contractor/Owner upon request. As an additional remedy, if the actual cost of any line item increases more than 10% subsequent to the making of this Agreement, Contractor, at its sole discretion, may terminate the contract for convenience.
There are three components to the price acceleration clause. First, the price acceleration clause provides that the roofing contractor may adjust the contract price to reflect the revised actual cost of the labor and materials. Generally, assuming the contractor is using its own labor force, there should not be a significant enough increase in labor costs to warrant an adjustment of the contract. As a result, the price acceleration clause is primarily limited to increases in materials over the course of a project.
The second component of the price acceleration clause is providing the prime contractor or owner with documentation supporting the claim for additional compensation. By doing so, the roofing contractor is providing the prime contractor or owner with evidence of the increase in actual cost.
The third and final component of the price acceleration clause can be a termination for convenience provision if the price of any single item increases by more than 10%. Although disfavored, a termination for convenience clause may allow the roofing contractor to escape a contract if the cost of materials has increased exponentially or the materials themselves have become difficult or impossible to find. Generally, this last component is removed because of the uneasiness prime contractors and owners have with the idea of a termination for convenience.
A roofing subcontractor may find it difficult to include the price acceleration clause in its contract with a prime contractor because both the owner and the prime contractor are looking for fixed prices prior to the start of the construction. In that situation, the roofing subcontractor may buy and store materials prior to the start of construction to avoid increases and may request a deposit to purchase the requested materials depending on the nature of the job.
To the extent that a roofing contractor adds a price acceleration provision to their contract, the roofing contractor should consider requesting that the prime contractor add a similar provision in its contract to allow the prime contractor to seek additional funds from the owner for any labor or price acceleration that occurs. Roofing contractors should also use common sense with regard to providing firm bids for contracts for projects that may not begin construction for more than three months from the time the proposal is submitted. Under those circumstances, the roofing contractor faces additional exposure to the increase in the cost of labor and materials. Therefore, estimating those jobs appropriately can make or break a roofing contractor.

Author’s note: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

By Trent Cotney for RoofersCoffeeShop.com
Trenton H. Cotney
Florida Bar Certified Construction Lawyer
Trent Cotney, P.A. 
407 N. Howard Avenue
Suite 100
Tampa, FL 33606

Wednesday, January 11, 2017

Liquidated Damages Provisions in a Construction Contract

Liquidated damages are a fact of life in modern construction contracting. However, even if your contract contains a liquidated damages provision and the owner has assessed liquidated damages, that does not mean the assessment is valid or enforceable. There are a number of ways you might be able to prevent an owner from keeping contract proceeds that are rightfully yours. This article will provide the reader with an idea or two that will help keep hard-earned contract proceeds in the contractor’s pocket.
In a breach of contract situation, liquidated damages are designed to provide a means to compensate the non-breaching party when the actual damages are not readily ascertainable. In other words, when the non-breaching party’s actual damages will be difficult to determine in the event of a breach, then the parties are allowed to stipulate in their contract that a set sum of money will be paid in lieu of having to prove up the actual damages.
In construction contracts, the liquidated damages clause is usually tied to timely completion of the work by the contractor and usually allows the project owner to collect liquidated damages upon late completion. For example, for each day that the work is not complete past an agreed upon date, the contractor will have to pay the owner $x per day. Liquidated damages can be agreed to in any type of contract, and not just construction contracts. In a real estate sales contract, the parties might stipulate in their contract that if the buyer reneges and fails to close, then the seller gets to keep the earnest money deposited by the buyer.
A liquidated damages amount is intended to compensate the owner for the other party’s breach of the contract. If the provision seeks to do anything other than provide reasonable compensation, then the clause is really a penalty, and as such, will not be enforced. Merely because the parties title the provision as a “liquidated damages” provision is not determinative of whether it is really a penalty. Whether a provision is a valid liquidated damages clause or an unenforceable penalty depends on the facts of each case.
For example, if a provision that is labeled “liquidated damages” is not intended to compensate the owner, but is really intended to coerce the contractor into completing the work on time, rather than compensating the owner for delay damages, then the clause is a penalty. Similarly, if at the time the parties entered into the contract, the owner’s actual damages are “reasonably ascertainable,” then there is no reason to stipulate to the liquidated damages amount and it will not be enforced.
Another argument that has succeeded in avoiding an otherwise valid liquidated damages clause is where the liquidated damages amount “shocks the conscience” of the court. In other words, if the stipulated sum is simply too great in comparison to the contract value itself, then the liquidated damages will not be enforced. This analysis compares the stipulated sum with the contract value. For example, in Hook v. Bomar, 320 F.2d 536 (5th Cir. 1968), the loss of a $30,000 deposit on a $95,000 contract was found unconscionable, and the liquidated damages provision was not enforced.
Furthermore, liquidated damages also are not enforceable if the non-breaching party contributed to the other party’s default. In a construction contract setting, if the owner contributed to the delay in the completion of the contract, then the owner is not permitted to assess the daily liquidated damages for those delay days caused or contributed to by the owner.
Liquidated damages tied to completion of the work generally cannot be assessed after the project has reached substantial completion. Liquidated damages are intended to compensate the owner for late completion, and by definition at substantial completion the owner has functional use of the project. Thus, at substantial completion, the owner is no longer incurring damages.
By way of illustration, on a construction project an owner may want $1000/day in liquidated damages to compensate the owner for lost rent and extended project administration for each day the work is not complete. However, once the project is substantially completed, the owner can rent the property, so that portion of the owner’s damages included within the stipulated $1000/day is no longer being incurred. If the owner seeks the entire liquidated damages amount for days after substantial completion until final completion, a strong argument can be made that no post-substantial completion liquidated damages are allowed even if the owner is incurring continued administration costs. The better liquidated damages clause would state that upon substantial completion, the liquidated damages will be reduced to $500/day or some other reasonable figure to compensate the owner for the extended project administration required to obtain final completion of the project.
Owners routinely withhold contract proceeds under the argument that the contractor is liable for liquidated damages. However, even if it appears that the liquidated damages are proper, the prudent contractor will not accept the assessment at face value because there are many ways to defeat a liquidated damages clause. Hopefully, this article will provide the reader with a way to recover the withheld funds.

Author’s note: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

By Trent Cotney for RoofersCoffeeShop.com
Trenton H. Cotney
Florida Bar Certified Construction Lawyer
Trent Cotney, P.A. 
407 N. Howard Avenue
Suite 100
Tampa, FL 33606

Friday, December 30, 2016

Famous American Buildings made out of Limeston

Limestone has been utilised throughout the ages and is a popular material within building and construction. We take a look at famous American buildings made out of limestone which still remain today and are iconic within America.
The Pentagon, United States
At 6,500,000 square feet, the Pentagon in Arlington County, Virginia is the world’s largest office building and serves as the headquarters for the United States Department of Defense.

Designed by American architect George Bergstrom and constructed by contractor John McShain, reinforced concrete was implemented alongside Indiana limestone for the building’s exterior as a result of the lack of steel from the Second World War. 
Rebuilt after September 11 2001, the building now houses over 23,000 employees and is one of the most famous buildings within America.

The Lincoln Memorial, United States

Constructed to honour Abraham Lincoln, 16th President of the United States, the Lincoln Memorial was built between 1914 and 1922. Designed by architect Henry Bacon and incorporating classical features, the build also has a statue of Lincoln within the interior, constructed by Daniel Chester French.
Interior walls and columns are made from Indiana limestone, beside marble and granite which have been utilized to represent different areas within the United States.
The area is still a tourist attraction and has become listed on the National Register of Historic Places since 1966.

The Empire State Building, New York

The iconic Empire State Building, situated in Manhattan, New York is the fifth tallest skyscraper in America and has been a National Historic Landmark since 1986. Completed in 1931, it has become the tallest building to obtain the Leadership in Energy and Environmental Design after an extensive $550 million renovation in 2010.
Designed by William F. Lamb from Shreve Lamb and Harmon, Indiana limestone has been incorporated into the build, in addition to art deco influences.
Reaching a height of 443.092 metres, the building incorporates over 1,000 businesses and over 21,000 employees, alongside 73 elevators and observation decks. The construction is now the second largest single office space within America.

Washington National Cathedral, United States

Built from Indiana limestone, the Washington National Cathedral took over 80 years to build, but is now the sixth largest cathedral in the world. Completed in 1990, the cathedral incorporates Gothic architectural styles, with over 400 gargoyles, stained glass windows, ornate carvings and pointed arches within its design.
The cathedral is also the burial place for Helen Keller, Woodrow Wilson and Architects Henry Vaughan and Philip Frohman.
From Global Construction
Trenton H. Cotney
Florida Bar Certified Construction Lawyer
Trent Cotney, P.A. 
407 N. Howard Avenue
Suite 100
Tampa, FL 33606

Monday, December 26, 2016

Bechtel Rolls out Virtual Reality Safety Training

Dive Brief:
  • Global construction firm Bechtel partnered with New York City-based construction safety technology company Human Condition Safety to offer the latter's new virtual reality (VR) immersion safety training.
  • VR technology will be piloted in conjunction with training modules for workforce education at the Bechtel Innovation Center in Houston. HCS's SafeScan program allows users to repeatedly simulate dangerous or intensive procedures.
  • Usage data from training can be collected and combined with geographic information, safety histories and regulatory requirements to optimize future training and real-world safety programs and practices.
Dive Insight:
Just behind the design and development set in employing VR are construction safety teams, who have experienced an upshot in leveraging realistic simulations to train workers in dealing with hazardous environments or intensive maneuvers — including high-risk tasks like crane operations — without actually exposing them or their surroundings to danger.
“We’re seeing greater use of VR simulators to get more management involved in crane safety at trade shows in particular,” said Hank Dutton, a crane safety specialist for Travelers Insurance, who spoke with Construction Dive this week about how construction firms are using new technology to improve safety on the job site. His company is developing a mobile training application that uses VR to teach best practices for mitigating accidents in warehouses and manufacturing facilities. He notes that VR training is also incorporated at some of the larger construction-workforce training centers
In addition to training, VR offers construction safety professionals the ability to visually communicate job site hazards to management and design teams throughout the construction cycle. Tools from tablets and mobile phones to wearable visors provide a 3-D, 360-degree view of work environments to members of the project team regardless of their location.
From Construction Dive
Trenton H. Cotney
Florida Bar Certified Construction Lawyer
Trent Cotney, P.A. 
407 N. Howard Avenue
Suite 100
Tampa, FL 33606

Wednesday, December 21, 2016

Working Under the Threat of Zika: How Construction Firms can Protect Employees From the Virus

Health threats like Ebola, swine flu (H1N1), SARS (severe acute respiratory syndrome) and bird flu have all taken a turn at terrifying the world's population, each pushing those likely to be exposed to establish unique safety measures. Now, the newest health scare has emerged in the mosquito-borne Zika virus.
The spread of Zika in South and Central America collided with the summer media blitz for the recent Olympic Games in Rio de Janeiro, turning an outbreak into a full-fledged panic. Once medical workers began to suspect a connection between the virus and babies born with microcephaly, a neurological disorder, women were cautioned about traveling to Brazil, and a group of 150 health professionals even called for the Olympics to be postponed. Additionally, outdoor workers were determined to be exceptionally vulnerable to mosquitos carrying the disease and were also encouraged to take preventative measures.
Both the Occupational Safety and Health Administration and the Centers for Disease Control and Prevention have outlined procedures to protect construction workers from Zika exposure while on the job, as well as to clear up misconceptions about the virus. Construction firms in Zika-prone areas are taking those steps and additional precautions to ensure their workers are educated about the virus and protected from contracting it.
The facts of the Zika virus and steps to protect employees
Zika, which is carried by the Aedes aegypti or Aedes albopictus mosquito, is neither a worldwide threat nor is it something with which most Americans need to concern themselves. So far, the virus has only been detected in South and Central America, Mexico, the Caribbean, some Pacific islands and two areas in South Florida. Just this week, authorities downgraded the Zika threat for one of those locations in Florida when no new cases were reported after three mosquito incubation cycles.
However, Miami-based construction company IBT Group is keeping its guard up regarding the virus threat. "Mosquitoes don't carry a passport," said Daniel Toledano, IBT managing director. He said the company makes sure that workers in any area with a risk of exposure are taking the proper measures as recommended by the CDC and OSHA. Those recommendations include:
  • Eliminating any sources of standing water on the site, as this is where mosquitoes breed
  • Implementing a weekly cleaning of anything that holds water
  • Wearing long pants, long-sleeved shirts and socks in an effort to minimize exposed skin
  • Applying an EPA-registered insect repellent daily
  • Spraying outdoor areas with insect spray
  • Treating clothing with permethrin or buying pre-treated clothing
When employees suspect they have contracted Zika, the CDC recommends they take a blood or urine test. The virus often presents itself with mild symptoms of fever, rash, joint and muscle pain, conjunctivitis (pink eye) and headache. No vaccine for the virus has been released yet.
A familiar threat for workers in the field
The CDC recommendations are common-sense measures, according to Toledano, who also oversees large infrastructure projects in Central and South America, where the Zika threat can be so severe that the company takes the temperature of employees at certain job sites twice a day. However, he said, workers are no different whether they are in Brazil or in Florida in that they need to be reminded daily of required protection procedures.
In addition, Toledano said mosquitoes can also carry dengue and chikungunya, diseases that construction crews in Latin America have been fighting for decades. "They understand the risk associated with it because they have been exposed to mosquito bites their whole lives," he said. "That's why we have strong security officers to make sure recommendations are enforced." Safety procedures are particularly important, he said, on remote construction sites where workers share sharing sleeping quarters.
How to educate employees about potential risks
Eddie Martinez, director of safety for Munilla Construction Management in Miami, said the company employs 300 workers in the South Florida region, so preventing Zika exposure is a full-time task. Although the company is not currently working in any locations that have been identified by the CDC as a Zika risk, Martinez said the firm has ongoing work in the Everglades and other mosquito-prone areas.
As a result, the company has initiated a proactive Zika prevention program. The company holds morning safety "toolbox talks" once a week to update and educate employees on the virus, which Martinez calls a "Zika recap." MCM also issues mosquito repellent to all employees and requires them to use it.
Martinez said that if an MCM  employee suspects he or she has been infected with Zika, the company would simply follow OSHA and CDC guidelines, just as it would for any other safety or health issue. Similar to IBT, Martinez said MCM has a strict safety policy, and all employees must comply. "We're taking precautions because we can't just wait for an outbreak," he said.
It's critical that the Zika information pipeline is dependable. "Most of the people get their information from social media," Martinez said. "Those people are not experts. We go directly to the CDC to educate our employees."
There's also another motive for IBT to keep its employees Zika-free: the goal of creating a safe workplace. "For us, security in construction is security for our workers. If workers feel protected, then we attract the best employees," Martinez said.
From Construction Dive
Trenton H. Cotney
Florida Bar Certified Construction Lawyer
Trent Cotney, P.A. 
407 N. Howard Avenue
Suite 100
Tampa, FL 33606

Friday, December 16, 2016

Nonresidential Construction Spending Down in September, but August Data Upwardly Revised

WASHINGTON, D.C., Nov. 1—Nonresidential construction spending fell 0.9 percent from August to September 2016, according to analysis of U.S. Census Bureau data released today by Associated Builders and Contractors (ABC). Nonresidential spending totaled $690.5 billion on a seasonally adjusted, annualized basis for the month, 0.7 percent below September 2015’s figure.

The government revised the August nonresidential construction spending estimate from $686.6 billion to $696.6 billion; otherwise September spending would have risen on a month-over-month basis.  Eleven of 16 nonresidential construction subsectors experienced monthly declines.

“Since late 2015, the level of nonresidential construction spending in America has been effectively flat,” said ABC Chief Economist Anirban Basu. “Undoubtedly, soft U.S. economic growth has had an impact on nonresidential construction spending growth. For several quarters prior to the third quarter of 2016, U.S. economic growth hovered around 1 percent.

“However, public policy has also played a large part in shaping trends in nonresidential construction,” said Basu. “A number of primarily publicly financed construction segments have experienced declines in spending over the past year, including sewage and waste disposal (-18.8%), water supply (-13.7%), public safety (-13%) and transportation (-11.3%). Meanwhile, the level of construction spending in office, lodging and commercial segments is up on a year-over-year basis, though spending in the office and commercial categories was down on a month-over-month basis and lodging-related construction was roughly flat.

“It is conceivable that uncertainty regarding federal, state and local elections is negatively impacting state and local government infrastructure spending,” said Basu. “That uncertainty causes projects to be shelved.  However, it is also possible that governments are shifting resources away from capital spending and toward other priorities, including surging Medicaid expenditures, rising compensation costs and underfunded pensions.

“Private spending growth in a number of categories softened a bit in September, perhaps because commercial real estate lenders have become increasingly concerned about potential overbuilding in certain segments and geographies,” warned Basu. “The implication is that nonresidential construction spending growth may not accelerate anytime soon, though there is some hope that the period following the elections will usher forth a period of renewed spending growth.”

From ABC

Trenton H. Cotney
Florida Bar Certified Construction Lawyer
Trent Cotney, P.A. 
407 N. Howard Avenue
Suite 100
Tampa, FL 33606