Instant Hotel Tower, But Is It Safe?
March 28, 2012 —
CDJ STAFFBroad Sustainable Building has leapfrogged in China’s construction boom by building a thirty-story hotel in just fifteen days in the city of Changsha. According to an article in the Los Angeles Times, most of the building was prefabricated, but most prefabricated buildings require a longer time for assembly. Broad claimed that it cut no corners on safety. However, Zhang Li, a Beijing architect, told the Times that “incredible speed also means incredible risk.”
At the completion date, the interior was still partially finished. Some rooms were furnished, while others weren’t quite so ready. The hotel will be used to house clients who are visiting Broad and some of its employees.
Broad called their process “the most profound innovation in human history” and predicted that soon a third of new buildings worldwide would be constructed this way. The company anticipates using the same process to build taller buildings, with hopes of eventually constructing a 150-story building.
China is currently undergoing a building boom which Zhang attributed to a desire to catch up to the developed world. As a result of this boom, he noted that building inspections are often skipped in China to speed up building.
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3 Common Cash Flow Issues That Plague The Construction Industry
August 20, 2019 —
Patrick Hogan, HandleThe construction industry has its fair share of serious cash flow problems. The nature of the industry with long periods between billing and collection, the unpredictability of some business factors, and even the day-to-day decisions of stakeholders have a huge effect on cash reserves.
So how can you protect your business from these cash flow problems? Having a greater awareness of the most common cash flow problems is the key to maintaining your financial stability. Here are some of the top cash flow issues that construction companies need to watch out for.
1. Uncontrolled business growth
The growth of a business as a cash flow problem sounds unintuitive. It is supposed to be a positive thing. So how could it hurt your construction business? When it goes out of control.
During the growth phase, the company will need to expand its operations to meet the increasing demand. This means renting a larger office space, hiring more staff, and buying more inventory, all of which can burn through the company’s cash quickly. The more substantial the level of your growth is, the more your cash flow is affected.
Growth is a good thing, but it is important to be aware of the pitfalls that you could encounter that can lead to cash flow problems. If you are dealing with a volatile growth instead of a stable one, you have to think twice before expanding your operations. A quarter with a large number of construction project deals does not guarantee the same happening in a subsequent quarter.
2. Change of scope or scope creep
The scope, or the statement of work, is the foundation that guides a construction project from start to finish. It specifies all the deliverables needed by the project as agreed by all stakeholders. When the existing requirements are altered, new features are added, or project goals are changed uncontrollably, what happens is scope creep and it can hurt a company’s cash flow.
Construction projects can take a long time before they are finished. A lot of factors can result in changes in the scope. There may be changes in the market strategy, market demand, and other unpredictable variables that make changes in the project requirements a necessity. These changes build up and the project may shift away from what was intended, causing delays, loss of quality, and the rise of planned costs.
One way to prevent scope creep from affecting cash flow significantly is charging a fee for variations of the scope of work. However, having a solid and clear scope baseline is still the best way to combat scope creep. Reminding clients of what you signed up for by referring to the baseline is a good strategy to deal with pushy clients.
3. Payment delays and nonpayment
As previously mentioned, the construction industry tends to have a lengthy period between sending an invoice and collecting payments. And if you are too passive in your collection, clients are more likely to extend pay periods and delay paying you.
Unexpected delays in payment and other payment issues can have a devastating effect on companies that have little to no cash reserves. Without a cash cushion to fall back on, payment issues can threaten the existence of the business itself. If you are unable to manage your receivables, you will not have enough cash to pay the bills, pay employees, and fund your growth.
Payment delays and nonpayment can happen for several reasons. They can be simple like mistakes in the invoicing or the person needed to approve the invoice is unavailable. More serious reasons like a client unsatisfied with your service or, worse, trying to scam you are also possibilities. For these reasons, it is crucial to communicate with clients properly and see if you can agree with a payment structure or pursue legal action.
The construction industry operates slightly differently from other industries. Different projects produce different cash flow issues and require different strategies. By being aware of the top cash flow problems that can hurt your construction business, you will be better equipped in dealing with them in case they happen.
About the Author:
Patrick Hogan is the CEO of Handle, where they build software that helps contractors, subcontractors, and material suppliers secure their lien rights and get paid faster by automating the collection process for unpaid construction invoices. Read the court decisionRead the full story...Reprinted courtesy of
Patrick Hogan, CEO, Handle
Residential Building Sector: Peaking or Soaring?
October 01, 2013 —
CDJ STAFFForbes notes that residential builders and remodelers are one of the fastest-growing groups of privately held companies, but is that growth going to continue? Tim McPeak, an analyst at Sageworks, said, “aside from the strong sales growth, these companies have a relatively healthy 4.6% net profit margin.” Another analyst, Scott Cresswell of The Bonadio Group, said that his “clients who do multifamily are exponentially off the charts with new work.
Cresswell also noted that firms in the Northeast are also experiences labor shortages, particularly with wood-frame construction, since, “there are not a lot of carpenters out there.” As a result of the new construction, some workers are more money from overtime.
A further hike in interest rates may stop this growth. Mr. McPeak noted that “the expectation of everyone is we’re going to see rates rise.”
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Court Retained Jurisdiction to Enforce Settlement Under Code of Civil Procedure Section 664.6 Despite Dismissal of Complaint
October 21, 2024 —
Garret Murai - California Construction Law BlogAttorneys will commonly add a Code of Civil Procedure section 664.6 provision in their settlement agreements to ensure that courts have continuing jurisdiction to enforce the terms of a settlement, as opposed to having to file a new complaint in the event of a breach of a settlement agreement.
Oral settlements before a trial court are also enforceable under Section 664.6, but as discussed in Eagle Fire and Water Restoration, Inc. v. City of Danuba, Case No. F086052 (May 30, 2024), in cases involving a complaint and multiple cross-complaints, questions can arise as to whether a trial court has in fact retained jurisdiction under Section 664.6 to enforce an oral settlement and even what the terms of the settlement were.
The Eagle Fire Case
Eagle Fire and Water Restoration, Inc. was hired by the City of Dinuba to reroof the City’s police station and courthouse building. The contract was for approximately $500,000. Before completion of the project, a rainstorm caused significant water damage to the interior of the building. The City incurred over $330,000 in clean-up and repair costs and withheld approximately $319,000 from Eagle as an offset.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Congratulations to Haight’s 2019 Northern California Super Lawyers
August 06, 2019 —
Steven M. Cvitanovic - Haight Brown & Bonesteel LLPHaight congratulates San Francisco Partner Steven M. Cvitanovic who has been selected to the 2019 Northern California Super Lawyers list. Each year, no more than five percent of the lawyers in the state are selected by the research team at Super Lawyers to receive this honor.
Super Lawyers, a Thomson Reuters business, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates and peer reviews by practice area.
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Steven M. Cvitanovic, Haight Brown & Bonesteel LLPMr. Cvitanovic may be contacted at
scvitanovic@hbblaw.com
Illinois Appellate Court Address the Scope of the Term “Resident” in Homeowners Policy
April 11, 2022 —
James M. Eastham - Traub LiebermanIn Farmers Ins. Exch. v. Cheekati, 2022 IL App (4th) 210023, the 4th District Court of Appeals for the State of Illinois addressed whether the term “resident” in a homeowners policy included a tenant leasing the insured premises. The Insureds owned property which was insured through Farmers under a homeowner’s policy. Unable to sell the property, the Insureds entered into a two-year lease agreement with a tenant. Several months after entering into the lease agreement, the tenant allegedly sustained physical injuries inside of the rented premises when a staircase collapsed. The tenant sued the Insureds and the matter was tendered to Farmers. Thereafter, Farmers denied coverage based on an exclusionary provision in the homeowner’s policy. Specifically, the policy contained a "Liability Exclusions" section, which provided:
"Coverage E (Personal Liability) *** and personal injury coverage, if covered under this policy, do not apply to: Any insured or other residents of the residence premises. We do not cover bodily injury or personal injury to: (a) any insured; or (b) any resident of the residence premises, whether resident in the dwelling or a separate structure." (Emphases in original.)
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James M. Eastham, Traub LiebermanMr. Eastham may be contacted at
jeastham@tlsslaw.com
Matthew Graham Named to Best Lawyers in America
September 10, 2018 —
Garret Murai - California Construction Law BlogWendel Rosen’s very own
Matt Graham has been selected for inclusion in The Best Lawyers in America© 2019 in the area of Construction Law. First published in 1983, Best Lawyers is the oldest and most respected peer-review publication in the legal profession.
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Garret Murai, Wendel, Rosen, Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
SCOTUS Opens Up Federal Courts to Land Owners
July 15, 2019 —
Wally Zimolong - Supplemental ConditionsFor nearly 36 years, the United States Supreme Court’s decision in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985) severely frustrated, if not all but foreclosed, a property owner’s right to bring a claim in federal court based on a regulatory taking. Under the Fifth Amendment, a property owner whose land has been “taken” by the government is entitled to just compensation. There are two types of takings direct or “inverse” or regulatory takings. A direct taking is where the government declares that it needs your land for public use and offers to pay you compensation. You might disagree with the amount offered – and that often is the case. But, a mechanism exists whereby a neutral third party – a condemnation board – will arrive at the compensation that is owed. On the other hand, an inverse condemnation or regulatory taking occurs when the government takes some action that restricts the use of the land in such a way as to severely impact it beneficial economic use. For example, if you own a strip of commercial property and intend to develop it and then the municipality comes along and suddenly changes the zoning classification of the parcel such that you can no longer develop it in a beneficial way, then you might have a regulatory takings case.
Under the Court’s Williamson County decision, property owners falling within the later category were required to exhaust state remedies before proceeding to federal court under a claim that their Fifth Amendment rights were violated. The problem with this is that, as the Supreme Court explained, it creates a Catch-22. If property owners exhaust their state remedies and the state remedies result in an unfavorable outcome, the federal court is powerless to overturn that decision under the doctrines of res judicata and the full faith and credit clause of the Constitution.
Well, yesterday, the Court overturned Williamson County, in Knick v. Township of Scott, 588 U.S. _____ (2019). There the Court held unequivocally a “property owner has suffered a violation of his Fifth Amendment rights when the government takes his property without just compensation, and therefore may bring his claim in federal court under Section 1983 at that time.”
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Wally Zimolong, Zimolong LLCMr. Zimolong may be contacted at
wally@zimolonglaw.com
