Effective Allocation of Damages for Federal Contract Claims
October 25, 2021 —
Dirk D. Haire, Joseph L. Cohen & Jane Han - ConsensusDocsFederal construction contracts law generally recognizes four basic methods for pricing damages: (1) Actual Cost Method (ACM); (2) Total Cost Method (TCM); (3) Modified Total Cost Method (MTCM); and (4) Jury Verdict Recovery Method (JVRM). In practice, it is difficult to obtain significant recoveries on TCM and JVRM claims, and only marginally easier on MTCM claims. That is because the courts and boards that hear federal government contracts cases have developed a clear preference for the ACM. Despite this preference, many contractors do not have systems in place to maximize their opportunity to recover damages under the ACM. This article introduces various strategies for tracking and allocating damages during project performance in a manner that will support an ACM analysis if a federal construction claim is litigated.
Background: Four Basic Methods for Pricing Damages
The four methods for pricing damages are described, below:
1. Actual Cost Method
The actual cost method claims damages based on records of “actual costs” that were documented during the performance of the contract. All additional costs must be separately recorded from the costs incurred in the normal course of contract performance. Because contractors provide the court or board with documented underlying expenses under the actual cost method, courts and boards prefer this method. However, the actual cost method may not always be feasible where a contractor is confronted with drastic changes early and often in a project.
Reprinted courtesy of
Dirk D. Haire, Fox Rothschild LLP,
Joseph L. Cohen, Fox Rothschild LLP and
Jane Han, Fox Rothschild LLP
Mr. Haire may be contacted at dhaire@foxrothschild.com
Mr. Cohen may be contacted at jlcohen@foxrothschild.com
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How Palm Beach Balances Mansion Politics Against Climate Change
July 05, 2021 —
Amanda L. Gordon - BloombergIt feels like a precipice moment for Palm Beach, a Florida town in the throes of a waterfront mansion-building mania just as the impacts of climate change start pushing in.
At the town council’s regular meeting this past week, officials talked about the need to raise the grade of a beloved bike trail—and, at the same time, somehow add height to the privately-owned seawalls running alongside it. Raising both together would help preserve views and accessibility.
But if individual sections of the public bikeway and the mansion-fronting seawalls are raised piecemeal and go out of sync, it would weaken the defense against flooding and make for uneven pedaling. As the town’s director of public works Paul Brazil put it, “We don't want our bike trail to become a mountain bike trail.”
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Amanda L. Gordon, Bloomberg
The Golden State Commits to Going Green – Why Contractors Will be in High Demand to Build the State’s Infrastructure
November 28, 2018 —
Karla Pascarella & Alexa Magrath - Peckar & Abramson, P.C.On September 10, 2018 California’s Governor took an ambitious stance on environmental policy and signed Senate Bill 100 (“SB100”). The bill accelerates several Renewables Portfolio Standards (“RPS”) deadlines previously established by former Governor Arnold Schwarzenegger. The bill’s most notable effect—it requires that 100 percent of California’s electricity come from renewable and zero-carbon sources by 2045. California is the second state in the nation to pass such legislation; Hawaii passed a similar bill in 2015.
The passage of this bill could not be timelier as wildfires, drought, and record high temperatures continue to make national headlines. California, as it often does, has taken a contrarian position as the federal government attempts to reinvigorate the coal mining industry in America. Coal and other fossil fuels used to produce energy increase air pollution and deplete necessary ozone. California has been experimenting and utilizing renewable energy technology since as early as 1997. According to the California Energy Commission, by the end of 2017 California generated approximately 32 percent of its energy from renewable sources.
Reprinted courtesy of
Karla Pascarella, Peckar & Abramson, P.C. and
Alexa Magrath, Peckar & Abramson, P.C.
Ms. Pascarella may be contacted at kpascarella@pecklaw.com
Ms. Magrath may be contacted at amagrath@pecklaw.com
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Construction Litigation Roundup: “That’s Not How I Read It”
June 05, 2023 —
Daniel Lund III - LexologyA general contractor seeking to litigate with its subcontractor concerning a construction project in Indiana found itself fighting in court against assertions by the sub that arbitration of the dispute was required.
The GC was already in litigation in federal court with the project owner. The GC filed a third-party demand against the sub, which was met with a motion to stay and to compel arbitration.
At the crux of the sub’s argument was this clause in its subcontract: “Subcontractor agrees that the dispute resolution provisions of the Prime Contract between [GC] and Owner, if any, are incorporated by reference as part of this Subcontract so as to be binding as to disputes between Subcontractor and [GC] that involve, in whole or in part, questions of fact and/or law that are common to any dispute between [GC] and Owner or others similarly bound to such dispute resolution procedures... ."
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Daniel Lund III, PhelpsMr. Lund may be contacted at
daniel.lund@phelps.com
60-Mile-Long Drone Inspection Flight Points to the Future
January 15, 2019 —
Tom Sawyer - Engineering News-RecordBlack & Veatch announced in December the successful conclusion of a 60-mile-log, non-stop, proof-of-concept drone-based inspection flight conducted by a remote pilot in a command center miles away in rural Illinois.
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Tom Sawyer, ENRMr. Sawyer may be contacted at
sawyert@enr.com
Construction Lien Waiver Provisions Contractors Should Be Using
January 06, 2020 —
Jason Lambert - Construction ExecutiveIt is common in construction for a subcontractor or material supplier of any tier to be required to provide a lien waiver when receiving payment. But not all lien waivers are created equal. While at a minimum, a lien waiver, by definition, needs to include a release of liens, it can also include many other terms that can tie up loose ends or resolve potential problems before they begin.
Additional Releases
A typical lien release is going to release any liens and right to claim liens on the subject property. But a lien waiver can also include releases of any claims against surety bonds, other statutory rights or claims, and at its broadest, claims against the paying party. One example of a provision that could help accomplish this is a release of “any right arising from a payment bond that complies with a state or federal statute, any common law payment bond right, any claim for payment, and any rights under any similar ordinance, rule, or statute related to claim or payment rights.” Broad release language can also be used to effectively preclude any claims arising prior to the date of the release.
Payment Representations and Warranties
A typical lien release has no representations or warranties about payment to subcontractors or material suppliers of a lower tier. But contractors can include language requiring the company receiving payment to represent and warrant that all subcontractors of a lower tier have been paid or will be paid within a certain timeframe using the funds provided and that these are material representations and inducements into providing payment. On a related note, if the contract requires subcontractors to provide lien releases from lower tier subcontractors in addition to their own release when seeking payment, contractors can require the sub-subcontractor releases to include representations that they have been paid by the subcontractor to try and tie up payment loose ends all around.
Reprinted courtesy of
Jason Lambert, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Lambert may be contacted at
jason.lambert@nelsonmullins.com
Sweat the Small Stuff – Don’t Overlook These Three (3) Clauses When Negotiating Your Construction Contract
April 08, 2024 —
Bill Shaughnessy - ConsensusDocsReviewing and understanding the terms of your construction contract before signing on the dotted line (ideally with counsel involved) is an obvious best practice – whether you are owner, general contractor, design-professional or down-tier subcontractor or supplier. Typically, during this review process, parties pay closest attention to terms relating to price, scope, schedule, insurance, indemnification, and damages. And rightfully so, as these are just some of the most fundamental and important clauses of any construction contract.
But during this review and understanding process, parties often overlook and fail to fully review and understand several notably important contract provisions (other than the examples above) which can have just as significant an impact on the project and even unintended consequences once construction starts. This article discusses three (3) of these often-overlooked provisions which should also be carefully reviewed to ensure the project runs smoothly and to avoid unintended consequences or even disputes (and litigation) during construction:
- Incorporation by reference clause;
- Order of precedence or higher standard clause; and
- Choice of law clause.
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Bill Shaughnessy, Jones Walker LLP (ConsensusDocs)Mr. Shaughnessy may be contacted at
bshaughnessy@joneswalker.com
How is Negotiating a Construction Contract Like Buying a Car?
January 04, 2018 —
Christopher G. Hill - Construction Law MusingsOriginally Published by CDJ on March 1, 2017
I know, you’re probably looking for a punchline, and likely thinking something along the lines of “only a construction attorney would be sitting in his office and come up with such an analogy,” but I really do think it’s a good one.
When you are buying a car, you look for priorities. Is the color what you want? Is the motor a hybrid or a v-6? Does it have Android Auto? What is the fuel mileage? All of these things may be more or less important to you. If you can get your priorities for a price that is attractive, you will likely let some other less important items, e. g. trunk space or rear seat leg room, slide and purchase the car anyway. Furthermore, you may use these minor items as negotiating points to either get one of the priorities or a lower price. Of course the dealership will want to get its priorities, likely a sale and a profit, when negotiating and will have certain items that it won’t move on just as you have terms that you won’t move on.
Much like when you walk onto the car lot, and particularly as a subcontractor looking at a contract from a general contractor, or a GC looking at the contract from the owner of a project, a construction contract presented to you is the starting point. When looking at the contract, be sure to have some non-negotiable items in mind when taking a critical eye to the terms of that contract. Some of these terms may be more or less negotiable depending on your experience with the other party to the construction contract. For instance, striking a pay if paid clause may be less important with a paying party with whom you have a 10 year history without payment problems. On the other hand, if it is your first contract with the other party, a stricter list may be required. So, much like a dealer that you know will stand behind its cars, you may be more willing to take more “risk” in entering a construction contract with a trusted/known owner or GC.
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Christopher G. Hill, The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
