Construction Law

Legal issues, news, and regulations concerning the construction industry

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Presentation Available: The Role of Insurance and Cost Reduction in EPC Contracts
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K&L Gates Presents at the 3rd Annual Global EPC Contract & Risk Management Conference
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Webinar: Subcontractor Default Insurance: Best Practices for Claim Preparation and Coverage Strategy to Streamline the Claim Process
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Third party funding of arbitration in Hong Kong is given the green light
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Please Join Us: NEC4 – The Next Generation
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Return of arbitration to road construction disputes in Poland
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What is the thinking behind zero subsidy bids in the first auction for offshore wind farms in Germany?
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Insurance Policy Did Not Prevent Association Recovery from Subcontractors for Defective Work
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Techniques to Maximize SDI Coverage and Streamline the Claim Process
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Pennsylvania’s New “State Construction Notices Directory” and the Implementation of Significant Changes to Pennsylvania’s Mechanics’ Lien Law

Presentation Available: The Role of Insurance and Cost Reduction in EPC Contracts

London partner, Matthew E. Smith spoke on the role of insurance and cost reduction in EPC contracts at the recent Global EPC Contract & Risk Management Conference on October 12-13, 2017 in London.

To view a copy of Matthew’s presentation titled “The Role of Insurance and Cost Reduction in EPC Contracts,” please click here.

K&L Gates Presents at the 3rd Annual Global EPC Contract & Risk Management Conference

Please Join Us at the Conference and use our Sponsor Discount Code for 20% Savings

We will be sponsoring and presenting at this year’s Global EPC Contract & Risk Management Conference on October 12-13, 2017 at the Millennium Gloucester Hotel in London. We have negotiated a special discount for our clients and contacts on the conference fee.

London partner, Matthew E. Smith will be speaking on the role of insurance and cost reduction in EPC contracts and also moderating the panel on Understanding Contract Compliance with Procurement Strategies and Policies.

Seattle partner, David P. Hattery will be speaking at the panel on Ensuring Subcontractor Buy-In When Preparing and Entering Contracts.

Click here to access the conference brochure. When registering, please enter VIP code: EPC2017

 

Webinar: Subcontractor Default Insurance: Best Practices for Claim Preparation and Coverage Strategy to Streamline the Claim Process

The number one cause of subcontractor default is overextension of financial and operational resources. As the economy grows, subcontractor defaults are on the rise. While SDI provides improved coverage terms with claim payment provisions that are intended to streamline the process, many insured’s have experienced difficulties working through the SDI claim process that includes extensive RFI’s, cost allocation documentation and coverage interpretations that can materially impact the outcome.

Please join us on September 19, 2017 from 10:00 a.m. to 11:00 a.m. for our Subcontractor Default Insurance Webinar which will provide the latest coverage developments and claims handling strategies to improve the outcomes for CM’s, GC’s, Owners and Lenders that are relying on the coverage provided by the SDI policy.

Who would benefit from this seminar? General Counsels, Risk Managers, CEO’s, CFO’s, COO’s and Project Management Professionals working for CM’s or GC’s that have purchased an SDI policy as well as lenders, owners and other professionals serving the construction industry.

Speakers:
Christopher Barbarisi, Partner, K&L Gates LLP (Newark)
Jim Bly, Managing Director, Alliant Construction Services Group
Rick Fultineer, Managing Director, Berkeley Research Group 
Frank Calvaruso, Director, Berkeley Research Group

Click here to RSVP.

CLE credit for this program is currently pending.

Third party funding of arbitration in Hong Kong is given the green light

By Christopher Tung, Sacha Cheong and Dominic Lau, K&L Gates, Hong Kong

On 14 June 2017, the Legislative Council of Hong Kong passed the Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill 2016.

The Bill comes on the heels of the consultation paper issued in October 2015 by the Law Reform Commission’s Third Party Funding for Arbitration Sub-committee and closely follows the recommendations made by the Law Reform Commission in its Report dated 12 October 2016 to clarify the law concerning third party funding of arbitration and associated proceedings under the Arbitration Ordinance. (For more information about the report and the LRC’s recommendations, see our article in the May 2017 issue of Arbitration World.

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Please Join Us: NEC4 – The Next Generation

NEC4, the next generation of the NEC suite of contracts, was released on 22 June 2017. It includes significant developments and reflects current best practice throughout the construction industry.

Please join us at our London office for a breakfast briefing on the key changes and what they will mean for you. Even if you are not changing to NEC4 imminently, it may be useful to consider any NEC4 changes you might want to take advantage of now in your current negotiations on the NEC3 forms.

Topics for discussion will include:

  • Overview of NEC4 changes – the “big picture”
  • Practical implications of programming and time-related changes
  • Changes to the payment provisions and the Main Options
  • Other key changes and implications of NEC4 going forward

Speakers:
Matthew Smith (Partner, K&L Gates)
Paul Greenwell (Director, Turner & Townsend)
Nicola Ellis (Special Counsel, K&L Gates)
Inga Hall (Special Counsel, K&L Gates)

To RSVP, click here.

Return of arbitration to road construction disputes in Poland

By Łukasz Gembiś, K&L Gates, Warsaw

In February 2017, the Ministry of Infrastructure and Construction announced the introduction of the “New standards in road construction” aimed primarily at regulating the balanced division of risks in roads construction contracts. Among many changes that have been made to the new model of public procurement contracts in road construction, special attention should be paid to returning – after many years of absence – arbitration as the preferred method of settling disputes between public investors and general contractors in Poland.

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What is the thinking behind zero subsidy bids in the first auction for offshore wind farms in Germany?

By Christoph Mank, K&L Gates, Berlin

As announced last year in our blog post of 6 June 2016, Germany passed an amendment to the German Renewable Energy Act (Erneuerbare-Energien-Gesetz) to implement bidding processes for determining the amount of funding for the generation of electricity from renewable energies.

As mentioned in our earlier post, the German government saw the transition to bidding processes as being a central instrument for attaining two goals: (a) on the one hand, to develop a certain share of renewable energies in the production of electricity as laid down in policy guidelines; and (b) on the other hand, to limit the funding to a level that is economically essential.

The new law came into effect the beginning of 2017, and the new era started with an auction of 1.55 GW. Only very advanced projects that have already been granted approval or received planning permission, and whose commissioning is planned for the period from 2021 to 2024, were qualified to participate in that auction.

The result of the auction was surprising for many market observers: Four bids were able to be accepted, totalling 1,490 megawatts. All successful projects are located in the North Sea. Three of the four successful bids were awarded for zero subsidies, and the highest accepted subsidy by the regulatory authority was 6 ct/kWh, which is 50% below the highest possible maximum subsidy. There were only two large energy companies that were successful in the auction: a German utility with one project and a Danish energy group with three projects.

The thinking behind subsidy-free bids is mainly economy of scale and further development of the technology-in-use on the one hand and expectation of higher market prices for electricity on the other hand.

According to the regulatory authority, the result of the first auction has proven that the decision for a system change was the right one. Furthermore, it has also proven the competitiveness of offshore wind energy, which now claims to raise the regulated capacity for the development of offshore wind farms.

The German Federal Association for Wind Energy (Bundesverband WindEnergie – BWE), an interest group of the entire wind industry, which also includes the organized interests of the onshore wind industry, is more reluctant. According to their statement, it is not clear if state subsidies are just exchanged with group internal subsidies of offshore projects, a strategy which more medium-sized corporations with no public stakeholders may not be able to follow.s the objective of cost efficiency; however, it still remains to be seen whether the system will actually guarantee a further continuous development of wind energy — both offshore and onshore.

Insurance Policy Did Not Prevent Association Recovery from Subcontractors for Defective Work

By Justin L. Weisberg, K&L Gates, Chicago              

On February 17, the First District Appellate Court issued an opinion regarding the Implied Warranty of Habitability in the case of Sienna Court Condominium Association v. Champion Aluminum Court et al.  The opinion involved three separate appeals: the first relating to claims by Sienna Court Condominium Association (“Sienna”) against an insolvent developer and an insolvent general contractor; the second involving the dismissal of Sienna’s claims against the architect, the engineers, and suppliers; and the third involving the dismissal of the general contractor’s claims against its subcontractors.

To read the full alert on K&L Gates HUB, click here.

Techniques to Maximize SDI Coverage and Streamline the Claim Process

Newark partner Christopher Barbarisi was published by Construction Executive magazine on the topic of “Techniques to Maximize SDI Coverage and Streamline the Claim Process.”

Design-builders, general contractors and “at risk” construction managers are all vulnerable to the risk of a subcontractor default. Aside from contract-related safeguards, such as increased retention, joint checks and letters of credit, subcontractor surety bonds have been the traditional mechanism for third-party risk transfer.

First introduced in the mid-1990s, subcontractor default insurance (SDI) provides a viable “first-party” insurance alternative to traditional surety bonds. To compete with surety bonds, SDI policies are heavily marketed as having a more efficient claim processes. In practice, the SDI claim process is not without its challenges. Effective techniques can be employed to streamline the process and keep the project funded and on track.

To read the full article on Construction Executive, click here.

Pennsylvania’s New “State Construction Notices Directory” and the Implementation of Significant Changes to Pennsylvania’s Mechanics’ Lien Law

By William D. Wickard, Erin D. Fleury

Important changes to Pennsylvania’s Mechanics’ Lien Law recently took effect on December 31, 2016, with the launch of an online State Construction Notices Directory. These amendments to the Mechanics’ Lien Law (which were passed by the Pennsylvania legislature in 2014) modify the process and deadlines applicable to subcontractors, contractors and owners with respect to mechanics’ liens on projects costing over $1.5 million.  In short, these amendments require subcontractors to comply with an earlier lien notice requirement by providing a “Notice of Furnishing” within 45 days of beginning work or providing materials if the owner has filed a “Notice of Commencement” to the online directory with respect to a “searchable project” prior to commencement of work on the project.
To read the full alert on K&L Gates HUB, click here.

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