Thoughts on construction law from Christopher G. Hill, Virginia construction lawyer, LEED AP, mediator, and member of the Virginia Legal Elite in Construction Law
While it is impossible to list all of you who have contributed to Guest Post Fridays here at Musings (please use the link above to review all of these posts and see who else has contributed) and to thank you individually, please know that each and every one of your contributions have made Construction Law Musings a more vibrant and interesting place to visit. The opportunity to work with such varied, intelligent, and insightful people over the last year has been wonderful. With each post I learn something new.
Without these contributions to add a layer of color that I could not provide alone, Musings would just be another blog about construction law by a Virginia lawyer. With them, Musings is a fun place to hang out and learn. To those who have posted here in the past, the door is always open for a repeat posting, just give me a buzz with a topic and when you can do it.
In short, thank you to all of you who have contributed since this experiment began and I look forward to hearing what you all have to say in the future.
For this week’s Guest Post Friday, Musings welcomes Ryan Bowers (@ryanbbowers). Ryan is a construction law attorney and business litigator.Ryan’s construction practice draws on his years of hands-on experience in the construction field, which predates his practice of law. He also maintains Law under Construction, a blog built for Indiana construction professionals to monitor legal news and developments. Ryan is an attorney at Kroger, Gardis & Regas, LLP in Indianapolis, Indiana, a full service law firm founded in 1937.
First and foremost, I would like to thank Chris for the opportunity to guest post on Construction Law Musings. Earlier this year, I finally had the opportunity to pursue a blog that combined by two passions: construction and hockey the law. After stumbling across Musings in the wee hours following one too many coke zeros and a half finished fireplace remodel, I was both impressed and inspired. Law under Construction was born. I am honored to take my blog on the road so soon in its rookie season.
I am a construction junkie. Having a father who is a master plumber, licensed builder, and owner of a mechanical construction company will do that to you. Learning to solder at 15 will do that to you. Installing fire suppression systems at 19 will do that to you. Remodeling a 1929 house will…. So, I have found inspiration for my blog posts (many yet unfinished, like my house…) in the practical experiences of my past.
A recent thanksgiving post-turkey, pre-nap, conversation with my brother, the president of the aforementioned contractor, sparked one such idea. When the topic of LEED came up, he said, and I (sort of) quote “man, I am seeing LEED everywhere, should I get LEED accredited?” Honestly, I was a little stumped. Good thing the tryptophan set in.
I have since pondered the question: should contractors and subs seek LEED accreditation for someone on staff (or at least gain a working understating)? Fortunately, in the interim, I also had the opportunity to attend a wonderful event put on by SMPS Indiana, where owners who led green projects gave their post-LEED certification perspectives, which provided some very useful information (referred to herein as the “panelists”). Given the lack of litigation involving LEED issues, there is no clear answer. However, I am hopeful that you (and my bro) will find my insights useful.
The pros…
Obtaining projects: I recently read that the “green movement” is no longer a movement, but rather here to stay. Indeed, one of the panelists confirmed that her university has committed all future new construction or significant renovations to LEED silver certification (or higher). And it’s not just buildings anymore – “green” will encompass other critical infrastructure projects (see here). Thus, in order to obtain work on “green” projects, contractors may need to obtain accreditation or, at least, become knowledgeable. Although this applies more in the context of integrated project delivery, design-build, etc., it will likely only increase as green building increases. The economics of these project structures demand quality and skilled contractors. One of the panelists noted that one of their first steps was to bring in a LEED accredited contractor familiar with the local skill set and local supplies. Another noted getting novice subcontracts to understand the LEED process proved difficult.
Less potential for construction defects: Geothermal heating and cooling. Vegetative roofs. Mini-wind turbines. Hal 9000. Ok, I am kidding about the last one. But these are new, sophisticated, and often unproven technologies (especially with Platinum certification). It takes a careful reading of the spec manual. There is a risk of noncompliance and the need to allocate risk. LEED accreditation, as well as the required continued education that follows, may help a contractor’s understanding of these technologies and avoid future defect claims.
Fewer delays: Working on a LEED project with no prior experience may lead to project delays, such as the inability to follow the site-specific LEED action plan or unfamiliarity with submittals for LEED or the unique materials. One panelist noted that, although the project was publically bid, they were lucky enough to land a LEED contractor, as it was extremely beneficial. On the flipside, another had a demolition contractor with zero prior experience, who had to be constantly educated on LEED. This inevitably led to delays.
Equal (and green) footing: Often, the architect on a LEED project is accredited and leads the overall effort. Having equal knowledge of various LEED related processes, designs, technologies, etc. may be helpful. For instance, when you submit a LEED related claim to the architect, LEED knowledge may help you decide how to proceed after a denial. One of the panelists pointed out a situation where engineers on a project had designed to traditional specs, which the contractor caught thanks to LEED knowledge.
Likewise, the cost increases on LEED projects can range from 2-10% (based on various sources). One panelist noted a 3% increase. Knowing and recognizing these differences can help ensure accurate project bids and help maintain already thin profit margins. Furthermore, if you know LEED, you may actually be able to bid lower if you don’t have to add “risk” costs to your bid. Always a good result.
Finally, with guarantees of LEED certification popping up in contracts, new provisions affecting rights and liabilities on green projects may also pop up (i.e. for failure to achieve LEED certification or later decertification). There may also be special warranties for green products. Understanding these concepts prior to executing contract documents (or associating with a qualified attorney) will help minimize unknown risks.
Obtaining project bonds: Although not a current concern, it may be in the future. With the emergence of more green projects (and of greater value), the way sureties handle such projects may change. Since the surety is guaranteeing completion in accordance with plans and specifications, and given the concerns raised above, having a LEED AP on staff may become a prerequisite to qualify for a bond on a green project. Green insurance products are already emerging, this could be next. Remains to be seen. (thanks to my co-blogger, and resident surety expert, Jennifer Watt for the input here).
Safety: As a result of the way debris is handled on a LEED project (reuse, recycling, salvaging, etc.) one panelist noted a 0 accident site. And a healthy employee is a productive employee. On the flipside, I don’t often hear contactors complain about fewer workman’s comp claims.
Goodwill and peace on earth: Just as the panelists remarked that their green projects have resulted in an overall better public image (better recruiting of employees / students), a more eco-friendly image for a contractor can be a positive.
On to the cons…
Competing standards: Although the most widely recognized, LEED is not the only player in the game. Other “green” standards include Green Globes and Energy Star. Further, recently an individual filed a class action against the USGBC attacking LEED. (see here) Ignoring the merits (or lack thereof) to the case, why invest resources into something that may not stand the test of time. For example, one panelist noted that, while they achieved LEED certification with one project, on a subsequent project they were pursuing the LEED elements generally, but not seeking the formal certification due to time and money concerns. Another panelist was now pursing Energy Star on a project. One should also consider the new International Green Construction Code (IGCC). If the code achieves widespread adoption, simply building to the code may alleviate the concerns above, and separate LEED knowledge may become superfluous.
It is hard: As a lawyer studying for the LEED Green Assoc. exam right now, I can attest to this fact. Several of the most skilled plumbers and sharpest mechanical minds I know have had difficulty with the testing aspect of their master’s exam. Putting in the time (and money) may not result in accreditation. Plus, you need to maintain continuing education hours, an additional burden.
Enough actual “green” projects?: I don’t have any real data on this one, but it is worth considering whether you even want to get involved in this area.
Sub it out: There appear to be myriad LEED consultants out there (and likely one is already involved in your LEED project). Get the information from someone else when you need it.
Image: The “green movement” raises red flags in some people’s minds. For anyone with this mindset, I leave you with these thoughts: a hospital represented on the panel stated that it did not seek LEED certification to “save the world;” but rather to “save the sanity” of the staff with a better workspace (via incorporation of daylight). Further, many of the elements of the LEED project (no formaldehyde / no voc) were things that everyone already wanted – so there was no hard sell. Green building may simply be what people already want, but just don’t realize.
For this weeks Guest Post Friday, Musings welcomes Matthew DeVries. Matt is the author of www.bestpracticesconstructionlaw.com, is a construction attorney in Nashville, Tennessee. He is a father of five energetic children and he often uses his family experiences to shed light on the green building, sustainable design, technology and project management issues discussed in his blog. You can reach him at (615) 742-8577, mdevries@smithcashion.com, or on Twitter: @matthewdevries.
You’ve already met my eleven year old Princess. Many months ago, I was teaching my kids about grace … undeserved merit or favor. Well, my daughter was stalling and delaying on eating her meal … by almost an hour. So, naturally, I saw this as a teachable moment.
“Honey, do you remember when we were talking about grace this week? Although you should eat all your food, I am going to show you some grace tonight. Even though you don’t deserve it, I am going to eat the rest of your chili for you.” How nice of me. I proceeded to spoon the rest of her chili into my bowl. Happy tummy!
Without skipping a beat, my inquisitive daughter asked, “Dad . . . You got any grace for my broccoli?” Nice.
While we continue to joke about that evening, I am reminded that too many times we fail to get something because we fail to “ask” for it. And when we ask for it, we sometimes fail to ask for it properly. Having litigated construction disputes for many years, the issue of entitlement often turns on whether the contractor properly submitted its claims in accordance with the terms of the parties’ contract. Whether the dispute involves a change order, delay damages, or time extension, I have litigated too many claims for additional compensation or time where: (a) the request was never made; (b) the request was not timely made; or (c) the request was not properly made.
As an attorney, I try to teach all my clients that proper documentation primarily serves as a claim preservation method—whether to provide notice of the claim or to document the claim impact. No matter the size of the project, proper documentation will eliminate a number of disputes. For example, consider the following claim provision: “Any claim for additional time must be given within seven days of the event given rise to the delay.” Best Practices would teach you to outline and highlight these types of provisions in your contract documents before you start contract performance. Make a spreadsheet with key provisions. And when one of those “events” arise, you should immediately send your letter “asking” for additional time or, at a minimum, “preserving” your right to later seek additional time and money. Don’t wait until the lawsuit or demand for arbitration before giving notice of your claim.
In other words, if you want someone else to eat your broccoli … you have to ask for it!
As always, please join the conversation and subscribe if you want to keep up with this and other Guest Post Friday posts.
For this week’s Guest Post Friday here at Construction Law Musings, we welcome Vickie Lane. Vickie is the primary point of contact for Business Development with HAZMAT Plans & Programs, a consulting and training firm that also works under the name of HP&P Safety. Vickie’s functions with HP&P include extensive pre-project research and support though estimating, planning and cost administration. Vickie attended Ohio State University and now enjoys her role as a first time grandmother and spending free time up in the Colorado Rocky Mountains. Vickie can be reached at vlane@hppsafety.com or on Twitter @HAZMATPlans and @hpandpsafety.
Most of us perceive hazards on a construction site to be those that can be readily visualized or perhaps easily imagined, like trench cave-ins or falls from heights. These are the obvious, but what about the nocuous, microscopic hazards that can’t be seen by the human eye, but can destroy the health of your workers? Welcome to the world of hazardous materials.
The inherent danger associated with hazardous substances is workers might not be not aware of exposure. Think of a snake in the dark scenario. If it is a rattlesnake, you have warning before the bite. A cobra on the other hand gives no such warning and the bite can be fatal. So it can be with hazardous and toxic substances.
A few things to know:
1. OSHA does not use the term HAZMAT. OSHA refers to hazard materials as “hazardous and toxic substances”. HAZMAT is the term used by the DOT to refer to hazardous materials in transport.
2. Standards that can apply to hazardous substance include OSHA, EPA, RCRA, your state’s Department of Health and Environment, and if in transport to or from locations, large quantities fall under DOT and PHMSA. NIOSH has a wealth of health and safety information on work around toxic and hazardous substances.
NIOSH also provides studies of workplaces if workers or employers feel there has been exposure to hazardous and toxic substances. This work is done under their Health Hazard Evaluation Program. More information on the HHE program can be found at http://www.cdc.gov/niosh/hhe/HHEprogram.html.
3. Hazardous substances can be found in many shapes and forms including particulate, gas, vapor, mist, liquid, and dust. Workers’ exposure to toxic substances can come from inhalation, skin contact, ingestion or eye contact. This is where it is extremely important for contractor adherence to OSHA’s standards for Personal Protective Equipment. The right gloves and respirators can be life savers.
4. Identify the hazardous substances in your workplace. Lead, Asbestos, Silica, Isocynates are a few of the most common forms of toxic substances found on a construction site. Excessive exposure to any of these can result in respiratory problems, lung damage, nervous system damage and future respiratory arrest……also, don’t forget the dust on your work clothes can endanger your family’s health too.
5. Once again, remember multiple regulatory standards may apply. OSHA standards apply with a current National Emphasis Program on Asbestos, Lead and Silica. The EPA and “Your State” Department of Health also have regulations with an emphasis on Lead and Asbestos in construction. Disregards regulations on work around on any of these hazardous substances and you could be looking at fines and penalties from OSHA, EPA and “Your State” – Not to mention the potential of lawsuits from workers and possible public exposure!
6. Earthwork may involve soil contaminated with heavy metals or minerals. OSHA requires HAZWOPER training for any workers who may be exposed to hazardous substances. 24 Hour training is required for the Occasional Site Worker such as project managers or truck drivers. 40 Hour HAZWOPER training is required for those who actually have the potential to exposure while working in the contaminated soil…..when calling for training, remember HAZWOPER not HAZMAT training. We consultants can be easily confused!
7. Keep a copy of MSDS sheets at the jobsite and in the main office. Also, be sure to have a Hazard Communication Program and if need be, Respirator Program in place. Employees who require respirators for work will also need to be trained and Fit-Tested. A medical evaluation is required prior to fit-testing for all employees whose work will involve mandatory use of respirators and is suggested for those who voluntarily use elastomeric face pieces.
8. Ensure that your Emergency Action Plan is up-to-date and in place. Think BP. Need I say more? An EAP not only can protect your workers but our environment.
Work around hazardous and toxic substances can be complex and complicated. Proper planning, education and PPE will help to protect your workers from that “snake in the dark”. For more information, OSHA 29 CFR 1926 Subpart Z, Toxic and Hazardous Substances and OSHA 29 CFR 1926.65, Gases, vapors, fumes, dusts and mists.
As always Vickie and I welcome your comments below.Please subscribe to keep up with this and other Guest Post Fridays at Construction Law Musings.
For this week’s Guest Post Friday, Musings is privileged to have a good friend Rick Provost weigh in. Rick has over 20 years of experience helping to build the country’s largest design/build franchise network specializing in exterior home improvement. Formerly the President and CEO of Archadeck®, Rick now provides his franchising expertise through The Consultancy, a consulting firm specializing in business systems development for contractors. Rick also is a facilitator, coach, and consultant for Business Networks, a peer-review network for remodelers and insurance restoration contractors, and a columnist for Remodeling Magazine Online.
While at a recent conference of the Restoration Industry Association (RIA), I heard several contractors complain about remodelers and home builders attempting to get into the insurance restoration business. With head-shaking disdain, they remarked that the restoration business isn’t as simple as builders think. And they’re right.
But that’s not what some would have us believe. Shortly after the conference, I found a Website advertising a book that would teach contractors the Six Easy Steps to becoming an insurance restoration contractor, including how to achieve a remarkably precise 87.62% bid success rate, with HUGE PROFITS. BIG, FAT, WONDERFUL 20% to 40% PROFITS!
A few of these “easy steps” remind me of the first half of comedian Steve Martin’s joke about how to become a millionaire and never pay taxes: “First…get a million dollars.”
Easy Step 1 is to “Establish a relationship with the proper insurance company ‘insider’, known as an adjuster.” Go ahead and establish that relationship. However it helps to have knowledge of the special procedures unique to restoration work. Easy Steps 2 through 6 are to analyze the damage, perform the repair cost analysis, obtain an agreed scope and price from the insurance adjuster, set up the contractual relationship, and then proceed with the repairs. Bingo!
Let’s isolate just one of those “easy” steps. An insurance estimate is scoped and priced differently than a remodeling job, usually using the Xactimate software program, which requires special training. If you’re a participant in an insurer’s program, they will pay your cost based on Xactimate’s pre-set values plus 10% markup — not margin — for your overhead, plus 10% for profit. (Pause for laughter.) Money is made in this business, to be sure. But could you make money in your business if you used that formula, literally?
Now, perhaps I’m being cynical. Maybe it is easy to dive into 24-hour emergency response and restoration of water, smoke, and fire damage. Maybe you have the equipment to perform content inventory and pack-out, fire damage demolition, smoke mitigation, mold remediation, gray and black water mitigation, and even (shudder) trauma scene cleanup. But I’ve made my point. Restoration work is a completely different animal than remodeling.
Different, that is, until you get to the “put-back” or rebuilding step. This is where the remodeling industry intersects with the restoration industry. Put-back means what it implies–replacing the structure and finishes to their original state: framing, insulation, drywall, trim, flooring, painting, and so on. Margins are typically lower than for mitigation work because put-back requires management and technical skills that cost more in the marketplace. This would obviously dilute a restoration contractor’s blended margin if he carried the fixed costs necessary to perform that kind of work. Therefore, many choose not to pursue it. But it’s also the type of work that matches a remodeler’s skills and resources.
Given the state of the remodeling industry right now and for the foreseeable future, this may present an opportunity for you to subcontract for a local restoration firm that does not currently perform the put-back portion of insurance claims work. The difficulty will be in convincing them that their company’s good name will not be tarnished by your failure to perform acceptably. That’s a hot-button issue, as their business relies on maintaining a satisfactory reputation among the insurance adjusters who feed them work. One bad job could undo years of goodwill.
So if you can demonstrate why there would be no risk in subbing to your company; or if you’re willing to become an employee, there might be an opportunity for steady work through this protracted slowdown. After all, fires and burst pipes don’t care about the economy.
(P.S. The second half of Martin’s joke is “Then say… ‘I forgot!’”)
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