Case Study: Advance Planning Critical to Construction Mediation Success
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Traditionally an owner approaches a construction project believing that the lowest price is obtained by maximizing competition. Unfortunately, the method typically used to achieve this goal has a significant shortcoming. It requires competitive bidding based on completed drawings, which greatly limits the project team's ability to communicate.
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The benefits of Building Information Modeling (BIM) are widely touted: Higher quality of work; better coordination among architect, engineers, and trades; cost savings; and faster production. It is fundamentally different than preceding models in that it is a “shared knowledge resource.” And it is the collaborative aspect of this model which gives rise to significant legal concerns.
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According to the owners’ wishes, contracts frequently require contractors to put changes to the work in writing in order to be compensated. However, throughout the construction project, owners often become lackadaisical with contract requirements and verbally agree to or pay for additional work without requiring a written change order. An owner may have no problem compensating the contractor for certain work that the owner knew about or specifically ordered. However, what the owner may not realize is that waiving the written requirement in one situation may waive the requirement in others.
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The Louisville and Southern Indiana Ohio River Bridges Project is currently one of the largest public infrastructure projects in America and continues to move toward construction. However, one of the major issues that must be decided before construction can commence is determining what delivery method will be used on the project. On September 13, 2011, the Louisville and Southern Indiana Bridges Authority issued a Request for Information (“RFI”) to aid in its selection of a delivery model and financial plan for the project.
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The Kentucky Court of Appeals issued a decision this summer reinforcing the strict burden placed on contractors to comply with safety regulations. Specifically, the decision requires employers to take personal responsibility to ensure that their employees on the work site follow those safety regulations. To issue a monetary penalty for a safety violation, the Kentucky Occupational Safety and Health Review Commission (KOSHRC) must find that the employer had knowledge of the violation. However, the knowledge requirement includes either “actual” or “constructive” knowledge. With that in mind, contractors need to understand that KOSHRC and the Kentucky Courts interpret “constructive knowledge” very broadly.
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Recently passed House Bill 153 provides public authorities with significantly expanded construction contracting options. Prior to this Bill, Ohio public authorities used a multiple prime method of contracting. Now, they may utilize a number of construction contracting options.
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Schinnerer & Company, a major insurance firm, is now offering a new insurance policy for integrated project delivery. It provides one project-specific policy, which covers the exposure of designers, construction managers, contractors, and subcontractors with design responsibilities.
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After years of ambiguous cases, the Kentucky Supreme Court recently clarified Kentucky’s position on the economic loss doctrine in Giddings & Lewis, Inc. v. Industrial Risk Insurers, Nos. 2009-SC-000485-DG, 2009-SC-000825-DG, 2011 WL 2436154 (Ky. June 16, 2011). When a defective product damages only itself, the economic loss doctrine bars tort claims, limiting recovery to contractual remedies. Economic losses primarily “deprive the purchaser of the benefit of his bargain,” and thus contract law is the appropriate remedy for such losses. Economic losses often include costs for repair or replacement of the product itself, lost profits, and other similar losses. On the other hand, when a defective product injures people or other property, tort claims remain appropriate remedies.
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Whispering Farms is a sprawling, upscale, residential development in suburban Cincinnati. The neighborhood boasts spectacular views of the Great Miami River, wooded lots and large homes. What Whispering Farms doesn’t have, however, might surprise you: Roads
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