Most construction companies are aware that they need to pursue a payment claim by a certain deadline. But the reality is more complex, as there are many different deadlines that apply, depending on the circumstances. Each instance requires careful consideration of various different statutes, types of claims, and contract clauses.
Ask an Accountant: What Construction Contractors Need to Know About the New Lease Accounting Standard for 2022
After granting a yearlong delay due to COVID-19, non-public companies must adopt the new lease accounting guidelines that greatly expands the financial reporting requirements for leases.
Ask an Attorney: The Construction Industry Economic Forecast & Contractor Agreements: How Economics & Law Fit Hand-to-Glove
Earlier this year, economic forecasters throughout the construction industry weighed in with their assessment, analysis, and even projections for 2022. In February, ABC Keystone hosted Anirban Basu, ABC National’s Chief Economist, and possible secret agent, to give his industry outlook at the annual Economic Breakfast. His presentation not only reviewed and interpreted key metrics, but it also had implications for day-to-day business activities. As economics and law go hand-in-hand, the emerging economic landscape drives how contractors should negotiate their contracts and the types of terms they should include.
If you are reading this article, which indicates you have some interest in labor law, then you are probably relatively up-to-date on legislative developments in Washington D.C. regarding the bill known as the Protecting the Right to Organize (PRO) Act. Since its fate on a straight up and down vote in Congress was uncertain, President Biden and his Democrat allies put many of the PRO Act provisions in the Build Back Better Act. As of this writing, it does not appear that Build Back Better will win Congressional approval in its present form (thanks to Senators Manchin and Sinema!) Unfortunately, this does not mean that merit shop employers don’t have to worry about dramatic changes in labor law that will be designed to make it easier for unions to organize and harder (and potentially far more costly) for employers to oppose any such efforts.
With the impact of COVID-19 wreaking havoc in the supply and demand chain, construction materials have skyrocketed in price, and in some cases, have caused painfully long lead-times for materials. Contractors skilled and experienced in quoting a fixed fee or a guaranteed maximum price (GMP) are leery giving such quotes without some cushion to absorb the risk in these steep price increases. As a result, many contractors have been scrambling to put price escalation clauses in their standard construction contracts. These price escalation clauses give the contractors the cushion they need to move forward with a project.
“The best laid plans of mice and men go oft awry.” – Robert Burns
The above quoted line from Robert Burns’ poem “To A Mouse” is often quoted. A translation of this famous passage for modern day contractors would be: no matter how carefully and thoroughly a project is planned, something may still go wrong. Even in the best planned projects, often unanticipated things go wrong before a project can be completed. Suddenly, the unpredictable occurs. One day your project manager calls you and says that while excavating the site, a fully intact Tyrannosaurus Rex skeleton is uncovered. Or, a pandemic sweeps across the globe forcing your workforce to quarantine and placing the entire project on hold. Undoubtedly, these occurrences, which could not have been predicted, impact a contractor’s bottom line, potentially converting an otherwise profitable project into potential financial disaster. “But surely the owner will agree to pay my company additional compensation for this,” you may say to yourself. But, when you submit your claim notice and/or change order request, the owner says, “Oh, no, no, no.”
When traumatic, disruptive things happen, like the current COVID-19 pandemic, they create many obvious and foreseeable impacts; but they also create many not-so-obvious or foreseeable impacts. When these events occur, they not only cause financial issues but also a host of related legal issues.
Most contractors hope their projects will proceed efficiently, within budget, on time, and, most importantly, without needing to file a claim against any of the other parties working on the job. Unfortunately, the reality often proves otherwise. Claims come in all kinds of forms – delay, extra work, acceleration, inefficiency – but essentially involve recovering any type of entitled cost or time impact. Claims can possibly risk jeopardizing the cooperation and good relationships among project stakeholders necessary to get the job done successfully. Sometimes, however, that necessary cooperation cannot overcome losing money undeservedly, making the claim a business necessity. Also, pursuing a claim under a construction contract often involves a process that can seem overwhelming.
Most contractors and subcontractors use a standard purchase order – or P.O. – form for their limited-scope projects. Attorneys often recommend supplementing the P.O. by attaching a form of general terms and conditions. Although general terms and conditions are designed to incorporate broad legal provisions that protect a contractor’s or subcontractor’s rights during a project, they can be time-consuming to prepare. Consider these five tips for quickly supplementing your P.O. forms in situations where general terms and conditions are unavailable:
It is true that attorneys don’t physically build anything. And we don’t dig, paint, or install any materials (although I did put in a slightly uneven
BBQ patio this summer). Still, we are a career in the construction industry. My goal is the same as any other player on the project — whether it be an engineer, architect, estimator, or project manager — I seek to help the project move smoothly and without conflict. The most satisfying part of my career is when I’m able to help a construction company move forward with their projects and business decisions. Sometimes that involves guiding the company through disputes and litigation, but more often than not, the focus of my job is problem-solving and identifying and addressing risk.
Since March, all contractors and subcontractors have been addressing the impact of COVID-19 on the industry. Contractors/subcontractors have prepared COVID-19 protocols, revised their employment practices to address the Families First Coronavirus Response Act (FFCRA), evaluated financing options under various stimulus and loan packages, and handled multiple issues arising from government orders.
Ask an Attorney By: Michael Metz-Topodas & Jonathan Landesman, Cohen Seglias Pallas Greenhall & Furman PC All too often, construction professionals ask about responsibility for jobsite safety violations under the […]