You May Be Able to Dodge a Bullet, But Not a Gatling Gun
November 16, 2020 —
Garret Murai - California Construction Law BlogIn the days before cable, and long before Netflix, I watched my fair share of spaghetti westerns on lazy weekend afternoons. Bullets zinging past cowboys, knocking off hats, and ricocheting off rocks. But while you might get lucky and dodge a bullet, not so with a Gatling gun.*
In the next case, C. W. Johnson & Sons, Inc. v. Carpenter, Case No. B300187 (August 7, 2020), a contractor who was unlicensed during a portion of a project dodged a bullet. However, I’m not so sure that he’s going to be able to dodge the hail of bullets that are coming after.
The C. W. Johnson & Sons Case
As cases go, the C. W. Johnson & Sons case is pretty straightforward. In March 2016, Contractor C. W. Johnson & Sons, a family owned flooring company, was contracted to install flooring at Randall Carpenter’s house for a total contract price of $68,343. Work was performed between March and September 2016 including some warranty, repair and corrective work after September 2016.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Judge Sentences Roofing Contractor Owner in Florida PPP Fraud Case
July 25, 2021 —
Richard Korman - Engineering News-RecordA federal judge in Fort Myers, Fla., sentenced Casey David Crowther, 35, the owner of a successful Florida roofing contracting company, to 37 months in prison for using fictitious employee lists to obtain a $2.7-million federal pandemic-aid loan and then purchasing a $689,000 boat with the funds.
Reprinted courtesy of
Richard Korman, Engineering News-Record
Mr. Korman may be contacted at kormanr@enr.com
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MTA’S New Debarment Powers Pose an Existential Risk
July 15, 2019 —
Steven M. Charney, Gregory H. Chertoff & Paul Monte - Peckar & Abramson, P.C.The normal project and contractual risks faced by contractors, consultants and suppliers to the Metropolitan Transportation Authority are considerable. A new law and regulations mandating that the MTA debar contractors, consultants and suppliers for unexcused schedule and cost overruns creates a new and unfair existential risk.
The new law, Public Authorities Law Section 1279-h, slipped into the New York State budget bill and passed without public comment, was enacted on April 12, 2019. Implementing regulations were issued on June 5, 2019, and mandate that the MTA debar contractors (defined to include consultants, vendors and suppliers) if they: (1) fail to achieve substantial completion of their contractual obligations within 10% of the adjusted contract time; or (2) present claims for additional compensation that are denied in an amount that exceeds the total adjusted contract amount by 10% or more.[1]
To say that your business and your livelihood are at risk is not an overstatement. The MTA umbrella includes the New York City Transit Authority, MTA Capital Construction, Bridges & Tunnels, Long Island Railroad and Metro North, among others. A debarment by one of these authorities will lead to a debarment by all of them, and then to a debarment by all New York State agencies and authorities,[2] and possibly debarment across state lines. Public and major private owners, as part of their RFP and procurement processes, routinely inquire regarding a bidding contractor’s debarment history.
The risk is to new contracts and, because the MTA has decided to give retroactive effect to the law and regulations, to contracts that are already ongoing (even though these risks could not have been considered, priced or agreed to by contractors or their sureties).
Reprinted courtesy of Peckar & Abramson, P.C. attorneys
Steven M. Charney,
Gregory H. Chertoff and
Paul Monte
Mr. Charney may be contacted at scharney@pecklaw.com
Mr. Chertoff may be contacted at gchertoff@pecklaw.com
Mr. Monte may be contacted at pmonte@pecklaw.com
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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
Real Estate & Construction News Roundup (10/23/24) – Construction Backlog Rebounds, Real Estate Sustainability Grows, and Split Incentive Gap Remains Building Decarbonizing Barrier
November 18, 2024 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogIn our latest roundup, construction output decreased, office utilization unchanged, September apartment starts fell 15% from a year ago as developers pulled permits, and more!
- Developers pulled permits for a seasonally adjusted rate of 398,000 apartments in buildings with five units or more, a 17.4% YOY drop and a 10.8% decrease compared to August 2024. (Leslie Shaver, Multifamily Dive)
- Construction input prices decreased 0.9% in September due to dips in two of three energy subcategories, reflecting the trend of overall material price stabilization over the past 12 months. (Sebastian Obando, Construction Dive)
- Thanks in part to the Federal Reserve’s lowering of the interest rate, construction backlog rebounded in September after slumping at the end of the summer. (Joe Bousquin, Construction Dive)
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Pillsbury's Construction & Real Estate Law Team
Virtual Reality for Construction
July 14, 2016 —
Aarni Heiskanen – AEC BusinessParadoxically, Virtual Reality (VR) technologies are still lagging behind the visions that people have for their use. However, VR has already demonstrated its capacity to change the ways we design, make decisions about, and produce built environments.
Is VR finally feasible?
Two AEC Hackathons and meetings with certain startups have made me think that Virtual Reality (VR) might finally break through in construction. There are two reasons for my belief. Firstly, 3D and building information modeling (BIM) are widely adopted in the industry. The idea of virtual buildings and environments is nothing new and has become very natural. Secondly, there’s a growing interest in Gaming and Entertainment VR investments. This will push the technology forward and make it affordable to consumers.
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aarni@aepartners.fi
What I Learned at My First NAWIC National Conference
September 25, 2023 —
Ivette Kincaid - Kahana FeldOn August 9-12, 2023, I attend my first National Association of Women in Construction (“NAWIC”) National Conference in beautiful Portland, Oregon. What is NAWIC, you ask? NAWIC originated as Women in Construction of Fort Worth, Texas and was founded in 1953 by sixteen women in the construction industry. Knowing that back then women only represented a fraction of the construction industry, the founders organized to create a support network for women to work in a male dominated field. The organization has grown by leaps and bounds and now consists of 115 chapters throughout the United States.
NAWIC’s core purpose is to “Strengthen and amplify the success of women in the construction industry.”
I joined this organization in December of 2022 at the suggestion of my law partner Jason Feld. Before Jason’s suggestion I had never heard of NAWIC. I joined the Orange County chapter and attended my first meeting in December and did not look back. In NAWIC I found a group of women kindred spirits in whom a found a commonality of interests, experiences, and goals. This is an organization that provides support, encouragement, education, and advocacy for women in all aspects of the construction industry. It also provides an outlet to share ideas, network and build relationships. I am happy to report that on September 12, 2023, I will be installed as one of the directors of the Orange County Chapter.
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Ivette Kincaid, Kahana FeldMs. Kincaid may be contacted at
ikincaid@kahanafeld.com
Drywall Originator Hopes to Sell in Asia
October 22, 2013 —
CDJ STAFFWith all the talk of problems with drywall coming from China, one company wants to send drywall in the other direction. USG introduced its “Adamant Panel Board” (later Sheetrock) in 1917. But while USG has been a leader in the drywall market in North America, only about 20% of its sales are outside North America.
USG is partnering with Boral Ltd., an Australian building materials manufacturer. Earlier this year, USG sold manufacturing and distribution of certain products to the German company Knauf Verwaltungsgesellschaft. Knauf has sold drywall in the United States that was manufactured in China and found to exit corrosive fumes.
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