K&L Gates Construction Law Blog : Construction and Engineering Lawyers & Attorneys : K&L Gates Law Firm : Financing, Development, Dispute Resolution, Government Contracting

By Gregory R. Andre, K&L Gates, Chicago

Building Information Modeling (“BIM”) is the use of a digital database to integrate the work of all of the design and construction project team members and generate two-dimensional and three-dimensional models, plans and reports.  Cost and scheduling can be added to create fourth and fifth dimensions. It is a tool that facilitates design collaboration and is intended to avoid conflicts and errors in the plans.  Simply stated, BIM makes design a group effort, and it raises special contract issues as discussed below.  BIM can be used under all of the delivery methods, and is especially encouraged under Integrated Project Delivery (“IPD”).

Instead of each design professional (architect, steel fabricator, HVAC subcontractor, etc.) producing multiple separate and independent plans for one building, BIM allows a team of architects and engineers to all contribute their respective plan and specifications data to one computer model for one building.  BIM provides the technology to not only coordinate various building component designs, but also to understand how design changes will impact the cost and timing of the project.  The design of one building component, say the HVAC ductwork, can be changed, and BIM will automatically change the other building components to accommodate it and present the overall economic effect and schedule impact due to the change.

To read the full article, click here.

Reprinted with Permission. ©2011 CCH Incorporated. All rights reserved.

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By Gregory R. Andre, K&L Gates, Chicago

What is Integrated Project Delivery?

Integrated Project Delivery (“IPD”) is an evolving, bold innovation in construction delivery.  It generally contemplates the owner, the architect or engineer and the contractor all entering into one contract and functioning as a cooperative and collaborative team to design and construct the project with shared risks and rewards in the ultimate cost, schedule and quality of the overall project.

In simple terms, IPD is like a joint venture approach to design and construction.  IPD represents a radical departure from traditional delivery methods that isolate responsibilities, liabilities, communication, risks and rewards with contracts that often lack incentives to cooperate and work toward the common goal of a successful project overall for everyone.  Parties to an IPD team have incentives to do what is best for the project, rather than what is best for themselves.  To motivate the design and construction team and get the best performance out of them, IPD generally favors a “carrot” approach; whereas, traditional delivery methods generally use a “stick” approach.

To read the full article, click here.

Reprinted with Permission. ©2011 CCH Incorporated. All rights reserved.

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As investors target Saudi and Qatar, it is still possible that Kuwait may turn to a hybrid PPP
model involving outsourcing and privatisation, write Paul de Cordova and Patricia Tiller at
K&L Gates.

While western economies blow hot and cold over the merits of PPPs, many Middle East countries are embracing this alternative to conventional government procurement. Kuwait is prominent among the first movers in this emerging sector.  Kuwait introduced its own PPP law in 2008, with guidelines administered by the Partnerships Technical Bureau (PTB) and developed in consultation with the World Bank. Kuwait is taking a professional approach to bringing projects to market.  Unlike some of its neighbours who have announced PPP schemes with little advance planning, Kuwait is endeavoring to approach projects in a methodical manner.  Every project must undergo a feasibility study stage and be approved by a ministerial higher committee under the chairmanship of the Ministry of Finance before entering the procurement stage.  Furthermore, the PTB is required to engage professional advisers to ensure, as far as possible, that projects are structured to attract the international investment community.

To read the full article click here.

This article originally appeared in PPP Bulletin International on September 14, 2011.

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By: Lawrence M. Prosen & Andrew R. McFall, K&L Gates, Washington DC

Over the past several years, the current business conditions have had an impact on all areas and aspects of the economy.  Recent reports indicate that no industry has been harder hit than that of construction, an industry possessing one of the highest national levels of unemployment.  Unemployment in the construction industry has spiked from 7.1 percent in 2000 to around 20 percent in early 2011.  Tied to this issue is the fact that the commercial and private construction and real estate markets substantially dried up as a result of the economy and underlying bank crises.  This, in effect, resulted in government construction and real estate projects being the predominant area in which work was available; forcing contractors to enter the federal market, often for the first time, and ‘‘learn on the fly.’’

The current economic problems have also resulted in Congress increasing or maintaining spending levels for a number of years on construction and related projects to try and bolster the economy.  These expenditures and stimulus efforts have led to an increased curiosity and concern for how government monies are being spent.  Coupled with the inauguration of President Obama in 2009, there has been a significant uptick in the amount of government regulation and oversight regarding government contracting and the construction industry.  As part of that effort, the United States Government Accountability Office and other governmental organizations have conducted investigations and released reports dealing with government expenditures and budgeting.  This article discusses one such report.

On March 22, 2011, GAO released a report (the ‘‘Report’’) raising several issues and concerns with the U.S. Department of Labor’s (‘‘DOL’’) methodology for making Davis-Bacon Act wage determinations.  The Report is noteworthy, in that the Davis-Bacon Act plays a significant role in federal and federally funded construction projects throughout the United States.  This article provides a brief background on the Davis-Bacon Act, a description of the Report and its recommendations, a discussion of the potential implications of the Report on the Service Contract Act, and a list of practical tips that construction contractors should consider in light of the Report.

To read more and to view footnotes, click here.

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By:  Lawrence M. Prosen, Joel S. Rubinstein, Tim L. Peckinpaugh, James T. Walsh, Andrew R. McFall & Christopher M. Smith, K&L Gates, Washington DC

Government shutdowns, while very uncommon, are no longer a completely unknown beast to government contractors (or at least the threats of them are not).  Much has been written about their causes, effects, and the ways contractors can prepare for them.  The current discussions about raising the debt ceiling, however, present a completely different, and unknown, challenge to government contractors.  There is a very real fear that the gridlock in Congress may prevent a raising of the debt ceiling, forcing the government into default on its financial obligations.  This would be a novel occurrence, a first for the U.S. government, with unknown consequences.  The best-prepared contractors, however, will be the ones to weather the storm successfully and come out the other side better positioned in the marketplace, and in all possibility with significantly fewer competitors.

This Legal Insight is intended to make you aware of some of the unique aspects of a U.S. government default and its effects.

To continue reading, click here.

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By: Lawrence M. Prosen, Samson Y. Chen, K&L Gates, Washington DC

On March 22, 2011, the United States Government Accountability Office (“GAO”) released a report (the “Report”) raising several issues with how the U.S. Department of Labor (“DOL”) has been making Davis-Bacon Act wage determinations.  This is a significant report, in that the Davis-Bacon Act plays a substantial role in federal and federally funded construction projects throughout the United States.  The Davis-Bacon Act, located at 40 U.S.C. 3141 et seq., requires contractors on federally funded construction projects in excess of $100,000.00 to pay locally “prevailing wages” to their hourly paid field employees performing work on the project site.  In other words, in order to bid on federal construction projects, construction contractors and subcontractors alike must pay their field employees at least as much as other construction workers in the area earn as determined by the DOL’s Wage-Hour Division.  The Davis-Bacon Act’s stated purpose is to preserve local wage standards and promote local employment.  This alert briefly highlights DOL’s problems in determining wage rates and summarizes GAO’s recommendations for improvement.

To continue reading, click here.

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By:  Lawrence Prosen, Barry Hartman, Nickolas Milonas, K&L Gates, Washington D.C. 

Federal Agencies Issue Interim Rule Promoting Sustainability & Green Building

Sustainability and “green building” have continued to gain momentum and visibility.  Over the past several years, the Federal Government and its various agencies and administrations have increased the extent to which these goals are embodied in government contracting, ranging from green design outlined in the U.S. Green Building Council’s LEED (Leadership in Energy and Environmental Design) requirements to the use of recycled paper for printers and copiers.  This trend has continued to gain prominence through such things as changes in building codes to President Obama’s issuance of Executive Orders on the topic.  See Exec. Order No. 13,423; Exec. Order No. 13,514.

On May 31, 2011, the Department of Defense, General Services Administration, and National Aeronautics and Space Administration issued a joint interim rule (the “Rule”) that for the first time directly and specifically incorporates sustainability requirements into the Federal Acquisition Regulation (located at Title 48 of the Code of Federal Regulations).  76 Fed. Reg. 31,395 (May 31, 2011).  The Rule took effect immediately and implemented the aforementioned Executive Orders that require Federal agencies to lead by example in conservation and energy efficiency.

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By:  Richard F. Paciaroni, K&L Gates, Pittsburgh

Background

Pre-1980 Brazil could rightly be said to have been hostile towards arbitration, clinging to the “Calvo doctrine” which did not permit foreigners any different treatment than Latin American nationals.  In the late 1980’s, however, Brazil began to emerge from its shell and take its first steps towards a more modern approach in respect of international arbitration.

The first movement towards modernization was Brazil’s ratification of the Panama Convention in 1995, closely followed by: (1) the adoption, in 1996, of its own national arbitration law, Law No. 9.307, 23 September 1996 (the “Arbitration Act”) and (2) the adoption of the Mercosur Protocol in 1998, all of which set the stage for modern arbitration practice in Brazil.  While the new Arbitration Act was enacted in 1996, it took another five years to come into full force due to a constitutional challenge lodged in the Brazilian Supreme Court, which ultimately decided, in December 2001, that the Arbitration Act was constitutional.  After 2001, the Brazilian courts have routinely enforced arbitration clauses in commercial contracts, thus bringing Brazil in line with internationally accepted standards.  With the ratification of the New York Convention in July 2002, Brazil joined the family of nations who offer a viable legislative and enforcement framework for international arbitration proceedings.

Further adding to the acceptance and visibility of the arbitration practice in Brazil are the actions of the Brazilian Arbitration Committee (“CBAr”) which has taken steps in recent years to promote international arbitration in Brazil by forming relationships with international institutions like the ICC, LCIA and ICDR and by holding major conferences in Brazilian cities, such as the ICCA bi-annual convention which was held in Rio de Janeiro in 2010.  What follows is a brief summary of the key points of the Arbitration Act and various court decisions that provide support for international commercial arbitration in Brazil.

To continue reading, click here.

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By: Jason L. Richey, Amy Ream, K&L Gates, Pittsburgh

Following the Supreme Court’s decision in Hall Street Associates, LLC v. Mattel, courts across the country have divided as to whether an arbitrator’s “manifest disregard of the law” remains a proper basis for judicial review of arbitration awards.  For construction disputes taken to arbitration, this unsettled question could impact the final outcome of the dispute.

Whether “manifest disregard of the law” is an acceptable ground for judicial review of an arbitration award concerns the application of the Federal Arbitration Act (FAA).  The FAA provides expedited judicial review for confirming, vacating, or modifying an arbitration award.  Under the FAA’s expedited review process, a reviewing court must confirm an arbitration award unless a specific ground for judicial review exists.  The primary grounds for judicial review appear in the statute itself, under sections 10 and 11 of the FAA.  These sections set forth specific grounds, such as an arbitrator’s material miscalculation of an award, that trigger a court’s power to vacate or modify an award.

To read the full article, click here.

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By:  Lawrence M. Prosen, Andrew R. McFall, K&L Gates, Washington, D.C.

The United States Small Business Administration’s (“SBA”) 8(a) Small Business Development Program plays a significant role in federal procurement.  The 8(a) program was developed by the SBA, from enabling legislation known as the Small Business Act, to assist small disadvantaged businesses (“SDBs”) owned by socially and economically disadvantaged individuals.

In recent years, the United States Congress and the United States Government Accountability Office (“GAO”), as well as various Offices of Inspector General and “watchdog groups,” have increasingly monitored and investigated the 8(a) program.  As a result of these investigations and oversight, the GAO released a report on March 2010, which identified a number of contracts that had been awarded to businesses that were not eligible for the 8(a) program.  Concurrent with various investigations, the SBA began the process of updating the regulations that govern the 8(a) program.  On February 11, 2011, the SBA published its final revised 8(a) program regulations, which are the first significant changes to the program in a decade or longer.  This white paper focuses on a few key provisions in the new 8(a) regulations that affect not only the SDBs themselves, but often large businesses as well.

To view the complete white paper, click here.

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By: Josh M. Leavitt, John C. McIlwee, K&L Gates

For Presentation to Practising Law Institute Symposium
Building Better Construction Contracts: Tailoring Incentives, Creating Collaboration and Developing Effective Risk Allocation

Panel Discussion: Creating a Better Design/Build Agreement

April, 2011, New York City

Those attending this symposium no doubt are familiar with the touted benefits of the design build delivery method: (1) single point of responsibility to owner; (2) shortening certain project times; (3) fewer change orders and more cost-certainty; (4) fostering higher quality work-product; (5) reduced finger-pointing in the event of claims; and (6) minimizing certain owner’s risks.  While design build is widely used on suitable projects in the private sector, the story has been different in the public sector, particularly at the state level.

 

To view the entire article, click here.

 

To learn more about this event and to register, click here.

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Presented by K&L Gates Partners Timothy L. Pierce, Jason L. Richey, and Lawrence M. Prosen at the 25th Annual Construction SuperConference in San Francisco, CA on December 16, 2010, this presentation explores how typical construction claims on the same project may vary depending on venue of the project.

Click here to view the presentation.

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By: Carleton O. Strouss, C. G. Bowman & George A. Bibikos, K&L Gates, Harrisburg

The United States Court of Appeals for the Third Circuit recently vacated a $1 million award to a contractor for extra work it performed on a moving services contract because the award would have exceeded the funding authorization of the project owner, Wayne Moving & Storage of New Jersey, Inc. v. The School District of Philadelphia. [1]  The case is a cautionary tale for contractors and subcontractors.  In it, a subcontractor asserted that it should be paid extra costs that exceeded the project funding authorization.  It asserted that representations by the government should estop it from being able to rely on the statutory defense that the funding was not authorized.  The Third Circuit concluded that the doctrine of equitable estoppel may be asserted against governmental entities in Pennsylvania.  However, in applying the doctrine to the case before it, the Third Circuit found that the contractor seeking compensation from the governmental entity had failed to meet the elements of an estoppel claim.  Therefore, it reversed the District Court which had granted the claim and vacated an award in excess of $1 million.

To continue reading, click here.

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Global Law firm K&L Gates LLP has earned more first-tier rankings than any other law firm in the inaugural edition of the U.S. News & World Report – Best Lawyers rankings of the “Best Law Firms,” available online at www.usnews.com/bestlawfirms and on newsstands in the coming weeks.  Based on surveys of Nearly 9,000 lawyers and more than 9,500 clients throughout the United States, including representatives of every Fortune 100 and more than half of Fortune 1000 companies, the report includes ranking of law firms in almost 40 practice areas and approximately 175 metropolitan and state areas.

Along with its first-tier rankings in surveyed metropolitan and state areas, K&L Gates was also recognized with national first-tier rankings in the Corporate Law, Securities/Capital Markets Law, Mutual Funds Law, Antitrust Law, Employment Law – Management, Private Funds/Hedge Funds Law, and Construction Law categories.

To read the full press release, click here.

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By:  Larry Eiben, K&L Gates, Chicago

The State of Illinois is part of the nationwide trend to codify new construction standards for energy efficient buildings and sustainable development.  Illinois has adopted the Illinois Energy Conservation Code, which became effective January 29, 2010 and the Green Buildings Act, which became effective on July 24, 2009.  The goals of these laws are to reduce energy consumption, protect the environment, cut pollution and promote sustainable development. 

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By:  Josh M. Leavitt, K&L Gates, Chicago

Introduction

While there are those who debate whether green building is effective from an environmental impact point of view, no one seriously debates that it is big business.  One researcher reports green expenditures were approximately $10 billion in 2005 and between $36 billion and $49 billion in 2008.  Hupp, Recent Trend in Green Buildings Laws: Potential Preemption of Green Building and Whether Retrofitting Existing Buildings Will Reduce Greenhouse Gases and Save the Economy, The Urban Lawyer Vol. 41, No. 3 (Summer 2009).  Paul Primavera, Senior Vice President of the Lockton Companies predicts that “within the next three to five years certified green buildings will account for 25 percent of all new construction in the United States.  Green Buildings: New Construction Concepts and Risks, (Fall 2009) available at http://www.lockton.com/Insights-And-Publications/White-Papers

Certainly political forces and public awareness are at work, but there is no doubt that the green building explosion has been driven by the belief that it is profitable.  The work product of researchers and consultants projecting benefits from green building improvements, the sales representations of green building product manufacturers and public and private incentive programs have fed those expectations.  Project owners expect to receive specific and often quantifiable benefits from their investments, including energy savings, reduced overhead and maintenance, more tenant interest, increased lease income, and government incentives (such as tax credits, low-interest loans, density bonuses, zoning waivers, fast-track permitting, and reduced permit fees), and other financial incentives.  They also expect less quantifiable benefits such as energized work forces, general goodwill, and marketing benefits.

To read more, click here.
 

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Chicago Partner Gregory Andre, with the help of Associate Michael Roth, made a significant contribution to a recently published resource on construction law by co-authoring a lengthy chapter about negotiating construction contracts.  The chapter, aptly entitled “Negotiating Construction Contracts”, provides a detailed discussion of the topic and addresses a myriad of underlying issues, including information to be provided by the owner and the contractor, changes in the work and change orders, delay, claims disputes, default, and many others.

Available from the Illinois Institute of Continuing Legal Education, the 2010 edition of Construction Law: Transactional Considerations can be purchased by clicking here.
 

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By Neal R. Brendel, Amy L. Barrette, & Wadih El-Riachi, K&L Gates, Dubai

This article was originally published in Arab Law Quarterly.

Abstract
While much attention has been devoted to curbing the rise of lawsuits surrounding Dubai’s struggling construction industry, surprisingly little attention has been focused on another option available to contractors who seek payment for failed or troubled projects.  Contractors, architects, and engineers may find relief under a seldom-reported UAE federal law that establishes qualified rights for contractors to secure payment for work under non-governmental contracts by filing a priority lien against the project itself.  This article discusses the remedy, know in many common-law jurisdictions as ‘mechanic’s liens’ or ‘builder’s liens’, and why it is important for contractors to be familiar with the applicable Civil Code and Civil Procedure Code provisions.  Those who first exercise their lien rights and seek to register liens with the Land Department will be treading new ground and will want to be well-prepared and educated on their rights provided under existing law.

To read the full article, click here.

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By Michael Schrier and Joel Rubinstein

The State of Maryland is cracking down on what it perceives to be a problem with construction or landscaping contractors and subcontractors misclassifying workers as “independent contractors” instead of as “employees.” Maryland’s new enforcement mechanisms have the potential to impose significant penalties for misclassification. As a result of these new enforcement schemes, all construction companies with workers located in Maryland and who are classified as “independent contractors” should carefully review such classifications for compliance with new statutory and enforcement regimes to make sure such workers have not been inadvertently misclassified.

To read the full article, click here.

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By Peter Dzakula, K&L Gates

1. What is the risk?

Since the end of April 2009, when swine flu (Influenza A(H1N1)) was first reported in Mexico and the United States , swine flu has spread globally. It has been reported that there are now almost 36,000 cases in 76 countries (with over 6,000 cases in the UK ).  As a result, the World Health Organisation has raised the swine flu alert to "Phase 6" and referred to it as a "global pandemic".  At this stage, it has been reported that the symptoms of swine flu have been mild and the number of deaths, globally, have been in line with seasonal flu averages.  However, it has been said that if the virus mutates and becomes more virulent it will pose a greater threat, particularly in the winter months.  The consequences under construction contracts used for major projects in such a scenario are examined below.

To continue reading, click here.

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By Ian Meredith, K&L Gates

This chapter was first published in the PLC Cross-border Dispute Resolution Handbook 2009/09 Volume 2: Arbitration Handbook and is posted here with permission.

All too often the dispute resolution clause is the clause that receives the least attention. Pre-existing clauses are cut and pasted from existing agreements with little or no assessment made of the suitability of specific provisions, often late in the life of the drafting process. While any form of dispute resolution clause is rarely high on a party’s list of priorities when the contract is drawn up, the terms of that clause may well be crucial in the event of a dispute.

This chapter considers:

• The essential requirements of a valid agreement to arbitrate.
• Core provisions of an arbitration clause.
• Further optional provisions to address specific requirements.
• The interaction with other forms of dispute resolution.

To read the rest of this chapter, click here.

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Fort Worth Business Press, March 9, 2009
By K&L Gates Partner,  David Coale

A critical component is shipped from Asia, sent across Texas by a distributor, and used on a Fort Worth construction project before it breaks and causes weeks of delay. Who in this “stream of commerce” may be responsible?

The owners of a corporation are generally protected from liability for the acts of the company.  Even so, under the “single business enterprise” doctrine, Texas law once held that a company could be responsible for the liability of another if they shared a name or operations such as accounting, employees, offices, and finances.

Read the entire article here.

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By K&L Gates partner, Ian Meredith, and published in The Metropolitan Corporate Counsel.

As many businesses experience declining growth in their domestic and traditional markets, they are looking increasingly towards the "BRIC" countries (Brazil, Russia, India and China) and other high growth economies outside their traditional trading areas.  The report of the International Monetary Fund entitled the "World Economic Outlook" which was released on 9 April 9, 2008 downgraded projections for growth in 2008 and 2009 across the major Advanced Economies including those of the US, Canada and Western Europe whilst continuing to project relatively higher rates of growth across certain Emerging and Developing Economies including China and India.  It seems likely that the move by many US businesses to target Emerging and Developing Economies will gather pace.

This article will assess the extent to which international arbitration can play a role in assisting US businesses in managing commercial risk when seeking to invest and/or trade in higher risk overseas markets and it will provide a number of suggestions on ways to limit risk[1].

Read the full article here.

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Pittsburgh partner Jason Richey recently teamed up with associate Bill Wickard to write “Consequential Damages in Today’s Construction Industry,” which appears in the May 5, 2008 issue of Constructioneer.

In the article, Jason and Bill stress the importance of project-specific consequential damages waivers, noting that f ailure to include such a waiver can leave construction managers open to costly lawsuits.  Waivers should be both "project-specific" (anticipating the potential types of damages that could arise with a certain project) and mutual (the list of damages should be the same for the owner and contractor).

Jason and Bill point to Perini Corp. v. Greater Bay Hotel & Casino to illustrate the importance of these waivers.  In the Perini case, the construction manager responsible for the renovation of the Sands, an Atlantic City, N.J. hotel and casino, produced his façade for the building four months late.  The original contract did not include a damages waiver and the Sands argued that their lost profits were due to the lateness of the façade.  An arbitration panel awarded the Sands $14.5 million in damages, nearly 24 times the contract fee.

To read the full article, please click here (posted with permission).

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New legal implications arise from building environmentally friendly

By K&L Gates attorneys Patrick J. Perrone and Loly Garcia Tor, and David Crump Jr., Director of Legal Research for the National Association of Homebuilders

Appearing in the March 24, 2008 issue of the New Jersey Law Journal, this article explores the potential risks builders may face when building and marketing “green” homes and buildings.

View the full article here.

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By K&L Gates attorneys Richard F. Paciaroni and Janet M. Serafin

Limitation of liability clauses are frequently relied upon in design and/or construction contracts to manage risk by limiting the damages recoverable from contractors and design professionals.  Historically, these clauses have generally been upheld, particularly when the contracting parties are both sophisticated entities.  However, a growing concern over the trend of design professionals requiring contracting partners to indemnify them, despite the former’s own negligence, caused most states to adopt anti-indemnity statutes.  What remains somewhat uncertain is how these anti-indemnity laws affect the enforceability of limitation of liability clauses.  Two recent cases have invalidated a limitation of liability clause under the relevant anti-indemnity statute.  While these cases still represent the minority view, they beg the question of the prudence of continued reliance on such clauses, particularly in jurisdictions which have not yet ruled on the issue.

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By K&L Gates attorneys John R. Dingess and Kari M. Horner

In December 2006, the Connecticut Department of Transportation (“ConnDOT”) was surprised by the lack of contractor response to its request for proposals for a $400-million plus, seven-year project to build a ten-lane bridge replacement for the Pearl Harbor Memorial Bridge on Interstate 95.  Not a single contractor bid on the project.

Contractors were likely hesitant to build on the Pearl Harbor Memorial Bridge project because of uncertainties and difficulties in predicting labor and material costs for a seven-year project.  One surety commented that the length of the project also contributed to the "risk profile" of the project.  Another deterrent was the fact that the contract terms placed most of the risk on contractors, while also imposing high liquidated damages for failing to meet milestones.  In response to the lack of bids, ConnDOT may break up the project or re-allocate the risk to lessen the risk burden on the contractors.

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By K&L Gates partner Jason L. Richey

Imagine a contractor who has done an outstanding job of building a magnificent skyscraper in the heart of one of the world’s largest cities.  The skyscraper is 65% complete, expected to be finished on time and within budget.  The contractor has not defaulted, and proudly touts that this construction project will be the centerpiece of the company’s accomplishments.  Suddenly, the owner of the project notifies the contractor that it has been terminated from the job for the owner’s convenience.  To complete the skyscraper, the owner replaces the contractor with one of its competitors.  Can the owner unilaterally terminate the contractor even though the contractor was not in default?  If so, what compensation is the contractor entitled to recover?  The answer to these questions lies within the termination for convenience provision which has become increasingly common in private construction contracts.

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By K&L Gates attorneys Jason L. Richey and William D. Wickard

Contractual provisions that mutually waive the rights of the owner and contractor to recover consequential damages have become common-place in today’s construction contracts.  Effective waivers will expressly define the type of consequential damages the provision is intended to bar.  Such a provision will allow courts and arbitration panels to dismiss all or part of a construction case at an early stage if the waiver clearly bars a demand for certain types of consequential damages.  However, a broad consequential damages waiver that is improperly drafted may cause contractors and owners to expend significant time and money defending claims that seek damages for delay, lost profits or other damages commonly thought to only be “consequential.” 

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By K&L Gates attorneys Timothy L. Pierce and R. Michael Viayra, Jr.

Express indemnity clauses are a common component in virtually all construction contracts, yet they are routinely included in such contracts without a full understanding of the risk transfer objectives of the parties or whether the indemnity clause fulfills those objectives.  Indemnity clauses are risk transfer provisions whereby one party seeks to shift the risks of claims on a construction project down the line to the entity closer to the actual work.  Typically such clauses transfer risk from the owner to the general contractor and subsequently to the subcontractors.  This article examines the forms of indemnity clauses, issues often not specifically addressed in such clauses, jurisdictional limitations on indemnity provisions and the influence such clauses may have on additional insured coverage.  Finally guidance is provided on ways to negotiate more effective indemnity clauses.

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By K&L Gates attorneys Joseph L. Luciana, III and Thomas C. Ryan

Proper risk allocation is critical to the ultimate success of a construction project.  And, the cornerstone of proper risk allocation for any construction project is a well-conceived and appropriately tailored insurance program.  Too often, the concept of insurance remains an afterthought because contracting parties blindly rely on standard language in form agreements prepared earlier without fully investigating and understanding the current insurance market conditions.  Moreover, most contractors do not want to consider the possibility of a disaster or another party’s failure to perform that may have project-wide implications.

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This article, by K&L Gates attorneys David R. Cohen and Kari M. Horner, appears in the April 2007 edition of Construction Law International, the magazine of the IBA International Construction Projects Committee. 

Important amendments to the US Federal Rules of Civil Procedure (the Rules) relating to electronic discovery in litigation became effective on 1 December 2006.  Every party involved in litigation in US federal courts should become familiar with these Rules.  This article provides an overview of the key provisions of the new Rules.

View the full article here.

This article was first published in the Construction Law International Vol 2 No 1, April 2007, and is reproduced by kind permission of the International Bar Association, London, UK.  © International Bar Association 2006.

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This article, by K&L Gates London partner Christopher G. Causer, appears in the April 2007 edition of RICS Construction Journal.  It explains the "ins and outs" associated with PFIs and presents arguments for making the whole process easier, and more accessible, for all parties.

PFI has its detractors and it is sometimes difficult to draw out any clear principles from the mass of claims, counterclaims and innuendo appearing in the press – and even in academic journals.  But there is one undeniable fact:  as a procurement method, PFI is complex and requires a high level of intervention from external legal advisors.  It is hard to envisage a PFI project reaching contractual close without at least three sets of lawyers working on it.

So how has the nature of the lawyers’ work changed since PFI started in the early 1990s?  What changes are likely in the next few years, and are there any obvious ways in which the delivery of services can be improved?

View the full article here.  Posted with permission.

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This article by Preston Gates & Ellis Anchorage partner Paul L. Davis appears in the May 2006 edition of Alaska Business Monthly.  It discusses how the search for front-end efficiencies can derail construction project agreements:

In all but the smallest construction projects, written project agreements are a necessity and, depending on the complexity of the project and number of parties involved, can evolve from a few pages to many.  When anticipating construction projects, parties often spend more time visualizing the project itself, overlooking the time or money necessary to fully develop a new project agreement.  The result is the frequent use of standard form agreements that are modified, many times by the parties themselves, to fit the circumstances of the new project’s specifications.  While this may create efficiencies, project owners may find themselves more disadvantaged by the use of standard forms than contractors and designers.

View the full article here.

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By Michael R. Gordon, Ruvym D. Gilman, Kathryn Plunkett and contribution by John R. Nolon, professor at the Pace University  School of Law and counsel to its Land Use Law Center.

This article appeared in the New York Law Journal on January 17, 2006.

Lawyers practicing in the design and construction fields cannot ignore emerging trends, and “green construction”— the use of environmentally conscious design, construction, and operation methods to create sustainable commercial and residential buildings—is an emerging trend.  For New York construction lawyers, it is an important trend because New York is leading the nation in green construction.  The number of green buildings and green construction projects underway in New York is steadily increasing.  Completed green buildings in New York City include the Solaire residential buildings in Battery Park City and Four Times Square.  Still to be completed are the Hearst Magazine Building and the Bank of America Tower near Bryant Park, to name a few.

Why the focus?  There are a number of reasons, including a concern for energy efficiency and a growing environmental consciousness, but the most notable cause is no doubt the adoption of mandatory green construction laws and guidelines and the creation of financial incentives on municipal, state and federal levels. . . . 

Read the full article here.

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The building boom could hit many parties in the head.

By K&LNG attorneys Michael R. Gordon and Daniel J. Doron

New York Law Journal:  Trends in Real Estate and Title Insurance
April 11, 2005

We are in the midst of one of the great construction booms in recent history.  There are over 75 high-rise buildings under construction in New York City, with dozens of others being renovated or reconstructed.  The Freedom Tower, the Hearst Magazine Building, the Atlantic Yards Project in Brooklyn, and 505 Fifth Avenue are all underway.  An overhaul of the Hudson Rail Yards on the Lower West Side is imminent, as the New York Sports and Convention Center or as another major redevelopment project.  In such an environment, buyers and sellers of construction services must be mindful of recent developments in construction law.  This article highlights a few of those developments.

View the full article here.
Posted with permission.

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