Tag Archives: contract review

An Ounce of Claims Prevention Worth a Pound of Cure?

I spent last Thursday and Friday at a continuing legal education program offered by the Fidelity & Surety Law Committee of the American Bar Association’s Tort Trial & Insurance Practice Section (“TIPS”) at the Waldorf-Astoria Hotel in Manhattan.

One of the many highlights of the excellent two-day program was a panel discussion on Thursday featuring general counsel and risk managers from five large general contractors: The Walsh Group, Kiewit Corp., Turner Construction Co., Skanska USA and Granite Construction Inc.

During that panel discussion, Mr. Kenneth M. Smith, Assistant General Counsel of Granite, spoke about a topic near and dear to my heart:  in-project claims prevention.  Mr. Smith spoke about how claims prevention begins with the contract review process, which should feature a thorough identification and analysis of key contract clauses to ensure an appropriate allocation of contract risk between the parties.  Legal counsel should follow that review with training of key project staff to ensure that they understand all key contract terms, such as claim notice provisions.

Mr. Smith then spoke about his company’s implementation of monthly impact reports to and/or conference calls with legal counsel to provide a periodic check-up on the health of a project.  Are an excessive number of change orders creating a risk of cumulative impact damages?  Is the project on budget?  If not, in which cost codes can the cost overruns be found?   Is the project falling behind schedule?  Are there personality conflicts on-site that are preventing effective communication between and among project participants?

The purpose of getting answers to these types of questions on a periodic basis is threefold.

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Filed under Contract Review & Negotiation, Feature story, Project Counseling

Rock the New Year With a Few Resolutions

Image by Idea go via FreeDigitalPhotos.net

A new year is upon us, with decidedly tempered expectations for the national construction industry.  Indeed, a poll of ENR Southeast readers does not disclose much optimism for significantly increased construction activity in the region.

All the more reason to be as vigilant as ever in the coming year.  Here are a few suggested resolutions to assist you in navigating the choppy waters that may await in 2012:

(1)  Do not to treat partial lien waivers lightly.  There are potentially very real consequences in representing that payment in full, less retainage, has been received through a certain date — particularly if at the time the representation is made, claims for extra work or delay damage exist.

(2)  Before you sign, read each line.  Construction contracts are risk allocations that courts and arbitrators are loath to alter once executed.  You need to understand how the participant above you in the contractual chain is seeking to allocate risk before you sign and mobilize.

(3)  Beware the subcontract buyout process.  If a subcontractor’s price appears too good to be true, it probably is.  And the potential legal headaches on the back-end are likely not worth it.  In other words, qualifications matter.

(4)  Report claims that may be covered by an insurance policy in a timely manner.  When things go bump in the night, you don’t want to be left holding the bag when your carrier argues that it was prejudiced by a late notice of claim.

(5)  Tread very carefully before terminating someone for cause.  The law abhors a forfeiture, and courts and arbitrators are likely to ensure that each and every contractual condition precedent to termination has been satisfied before concluding that a termination was proper.

I resolve to making N.C. Construction Law, Policy & News a vital and timely resource for a growing audience of construction industry participants and their counsel here in the Old North State.  I’m still on the blawging learning curve, but the foundation has been laid, and I expect to come “out of the ground” strong in 2012.

Until my next post, Happy New Year!

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Filed under Feature story, Market Trends