The Expert Report
The Expert Report covers current news and trends impacting the construction and legal communities. Articles include guest contributions from the industry’s leading experts, as well as insight and expertise shared by Rhodes Group professionals.
- Consequential Consequences: Contractually Excluding Damages for Lost Profits Clauses that exclude or limit the recovery of consequential or indirect damages are common in construction, services and other commercial contracts. These clauses can play an important role in risk allocation. This is particularly so in situations where a small breach of contract by one party can result in very significant consequential damages (such as large losses of profits) to another.
- Differing Site Conditions Produce Differing Challenges The saying “The best laid plans of mice and men often go awry” can too often apply in the construction industry. A contractor may receive a description of site conditions that is ultimately found flawed or misleading. The costs associated with addressing these surprise conditions often fall on the contractor to pay. The following article details proactive steps to avoid costly obstacles that may cause a project’s success to go awry.
- No Damage for Delay – New Spin on Standard Clause? As we’ve all heard, “time is money,” and in the construction contracts, more importantly – “time is of the essence.” Time and money are vitally important to all parties on any construction project, so the ability of one party to force upon another a contract clause that removes the ability to recover money for lost time sets the stage for a constant and usually expensive fight; a fight in which the imposed-upon party may suffer significant financial losses. Owners generally benefit most from a no damage with delay clause, but contractors who negotiate flow-down provisions, or independent no damages for delay clauses, with subcontractors and other lower-tier parties can also use the clause to their benefit. This article is not to debate which party is the best or “right” party to bear that loss, however an interesting case from outside of Texas has shed some possible light on recovery options in the event of a no damages for delay clause fight – whether it be in the negotiation process or the litigation stage.
- Defining the Schedule Expert’s Role, Scope, and Approach. Schedule analysis can be complicated, but working with your schedule expert does not have to be. Taking steps at the outset to set the stage and coordinate key factors can help attorneys and experts alike clarify expectations and achieve successful outcomes. In this article, we will review factors that help define the expert’s role and scope, as well as key points of coordination between attorneys and experts. To do so, we have framed a series of questions on this topic and incorporated responses from both the expert and attorney perspectives.
- Graphic Content: Attorney Advisory. In a culture of .gifs and memes, graphics have become the standard when you want to make a point. This is just as true on social media platforms as it is in the courtroom or at arbitration, and construction attorneys have taken note. Graphics are now a necessity when presenting a myriad of complex issues in construction disputes, from the impact of schedule delays to design defects. While technology has made the creation of graphics easy, creating effective and compelling graphics remains a challenge. An effective graphic simplifies complex issues, educates, and enhances your case. The development of compelling graphics requires thoughtful consideration of your audience and a clear, concise message. The following outlines some considerations when developing graphics for use in various forums.
- What Is “Fair Compensation” Following Termination for Convenience by the Government? The Armed Services Board of Contract Appeals (ASBCA) recently tackled a contractor’s claim for pre-construction costs following termination for convenience by the U.S. Army Corps of Engineers. In Pro-Built Construction Firm (June 1, 2017), the Board addressed a dispute arising out of a 2011 contract to construct a police station in Afghanistan. Eight months after executing the contract, but before issuing the notice to proceed (NTP), the Corps terminated the project over security concerns in the area. Pro-Built sought payment for $1.1 million in pre-construction services, which included subcontractor payments and standby costs for employees and workers for the entire eight-month period. The Corps rejected Pro-Built’s claim arguing, in-part, that it was unreasonable for the contractor to incur costs prior to the issuance of the NTP.
- Project Documentation Can Make or Break Your Claim. Weak project documentation impairs the claimant’s ability to resolve the claim, whether by settlement, arbitration, or trial. The weaknesses generally fall into three categories: (1) failure to follow contractual requirements for notice; (2) failure to completely document daily events, impacts and costs on the project; and (3) failure to raise critical issues as soon as practicable after they are known. Each of these weaknesses can and should be addressed on the project to improve the likelihood of a favorable and timely resolution of claims.
- Improving Capital Projects with Modularization. Modularization and standardization can help improve the delivery and cost performance of capital projects in the oil and gas industry. These terms refer to the practice of using standardized methods and equipment with the aim of reducing redundancy and thereby time and costs across projects. Modularization and standardization are often used in tandem, but are different from each other. Modularization is the practice of using similar components and equipment, often prefabricated at an off-site location, to reduce time and costs. Standardization is the practice of using methods across many different projects.
- Managing In-Project Disputes in Major Construction Projects. What do you do when an unforeseen event threatens to increase the costs or time necessary to complete a major construction project? At first, it may seem easy to “wait and see” if the issue develops into something impactful, or reserve rights and decide the parties can sort it out after the project is complete. This response is especially common when valuable project resources and personnel will be called upon to address the issue, which can be seen as taking them away from their primary focus. However, unforeseen issues are quite normal and should be expected on any major project, as well as the disagreements that often accompany them. Investigating the causes and impacts of such incidents, as well as staking out your company’s position, should be considered an integral part of the project—for both owners and contractors alike.
- Cost-Reimbursable Contracts – Where’s the Risk? Whether you are a contractor or an owner, choosing the right form of contract can be critical to the success of your project. However, in order to manage/maintain the levels of risk accepted through contract negotiation, the parties must align their conduct with the form of the contract. On cost-reimbursable forms of agreement in particular, it is important for both owner and contractor to recognize how certain conduct during the project increases or decreases the potential for disputes and/or the ability to defend its assertions of claims related to time or money.
- Untangling Inconsistent Drawings and Specifications: Leave it to the Courts at your Peril. Contractors rely on information conveyed by design drawings and specifications to determine how to build a project. Ideally, the information in drawings and specifications will be consistent and complementary, providing a complete and accurate picture of what the owner and designer expect the contractor to build. Unfortunately, drawings and specifications can be inconsistent or ambiguous, and such design flaws often result in claims.
- Special Section – Practicing Situational Awareness for Personal Security. As the trend of globalization continues, all but the most routine global business transactions require some degree of physical presence. As a result more and more corporate personnel find themselves traveling the globe and often residing in countries or regions with unfamiliar histories, cultures, customs and standards of living. The increasing frequency and disparity between the familiar and the foreign has raised security risks to new levels for business professionals traveling abroad.
- Arbitration Clauses: Careful Drafting Pays. Arbitration can be an efficient means of resolving disputes of any size or complexity. The Federal Arbitration Act (“FAA”) and the American Arbitration Association (“AAA”), among others, each provides a framework that parties to a contractual agreement can use when addressing dispute resolution. However, unless the contractual provisions addressing arbitration are carefully and thoughtfully drafted, what should be an efficient exercise in dispute resolution can become an expensive mess... keep reading.
- Brrrrrr, It’s Cold! How To Best Prepare A Delay Claim For Unusually Severe Weather. This winter marked some of the coldest days on record for several major cities throughout the United States. While local news may focus on road conditions, cold weather not only affects traffic on our highways, it can dramatically affect construction projects.What should a contractor do with such historic conditions and unusually severe weather affecting construction activities?
- Document Everything: How to Ensure a Successful Inefficiency Claim. Inefficiencies, or losses in productivity, are often daily occurrences on a construction project. However, tracing the cause and quantifying the amount of that inefficiency are rarely on the contractor’s mind until the project is complete or even later when a dispute arises over releasing retention. Unfortunately, this is typically too late. While attorneys, claims consultants, and experts can analyze a contractor’s productivity after the fact, this analysis is only as strong as the contractor’s contemporaneous documentation of the project.. . . keep reading.
- Oil & Gas Megaprojects: Challenges in Execution in the US. The multi-billion dollar megaproject is nothing new to the construction industry. Constructed outside of the United States, oil and gas megaprojects are a familiar endeavor. The increased upstream production of U.S. shale gas plays, expanded oil extraction, and Canadian oil sands have energized the market for complex world-scale oil and gas megaprojects. But what would every great opportunity be without its challenges? The United States construction venue will pose unique challenges to the undertaking and completion of these construction marvels. . . keep reading.
- Why Contemporaneous Project Scheduling is Important. A good project schedule may be critical to managing a project. When the project’s progress is impacted, the schedule can be revised to show the changes and their effect on the project. Contemporaneous schedule updates are not only good practice; they may also be mandated by the project’s contract. Often, the contractor is obligated to provide schedule updates at regular intervals during a project. If a schedule is not appropriately revised, its usefulness may be diminished, and the contractor faces not only risks associated with project completion but also challenges in advancing and defending against delay claims. . . keep reading.
- Creating a Legal Roadmap for Dispute Resolution. In the course of a construction project things often go well and smoothly. We don’t hear much about those instances, though. More often we hear about the projects that go south and result in delays and claims for damages. There seem to be certain issues that we as attorneys and experts see pop up as problematic more often than any others. These issues deserve a closer look at the time the contracts are formed. . . keep reading
- Perspectives on Managing Risk on Large-Scale EPC Projects. Andrew Rhodes, President of The Rhodes Group will join Bart Turner of KBR, Stuart Shaw of Black & Veatch and Brian Davidson of DFL Legal to speak on a panel at this year’s Construction SuperConference. This diverse group will discuss the identification and management of risk with a focus on the entire life cycle of large-scale EPC projects. We asked the panelists to discuss their perspectives and experiences on megaprojects and wanted to share the insights of these industry leaders.. . . keep reading
- Recovery Schedules and Constructive Acceleration – Protect Yourself from Pitfalls. On troubled or delayed projects, it is common for an owner to request that a contractor adjust performance in order to achieve an earlier-than-projected completion date. In such circumstances, owners frequently demand that contractors submit a “recovery schedule” depicting the contractor’s plan to meet an accelerated completion date. This article addresses: (i) the foundations for submission of a recovery schedule; (ii) practical advice for the submission of such schedules; and (iii) legal questions of constructive acceleration and subcontractor performance that may impact claims and recovery. . . keep reading
- Digital Exclusive – Report from LNG 17: Three Trends to Watch in the LNG Industry. Last month, Houston hosted LNG 17, the largest global liquefied natural gas industry event of 2013. A record-breaking 5,000 delegates from more than 80 countries attended the conference and exhibition. Some of the key trends highlighted at the conference included. . . keep reading
- Does Your Contract Help You Control Dispute Resolution Costs? In the world of construction projects, disputes happen. Yet, given that reality, why do so many project contracts, subcontracts and purchase orders fail to include terms to better control the costs of dispute resolution procedures? In this short article, we will share with you a few of our ideas for controlling dispute resolution costs, whether you are a project owner, contractor, trade contractor or supplier. . . keep reading
- What to Look for in Your Scheduling Specifications. As the plans for a new construction project start to solidify, much attention is paid to the development and maintenance of a CPM schedule. Unfortunately, the contractual obligations detailed in the specifications are sometimes overlooked in the rush to finalize a plan and move forward with the execution of the project in earnest. For any project, identification of the relevant contract sections or clauses pertaining to CPM scheduling is a key first step on the road to a usable project planning tool. Some of the details to keep an eye out for in a schedule specification are . . . keep reading