Extending payment terms is not without consequence and we must be informed on these risks in order to make a sound decision.
Category: Project Management
Market Watch – How Procurement Can Become a Strategic Partner and Mitigate Supply Chain Disruptions
As we continue our recovery from the impacts of the pandemic, inflation rates across the globe are on the rise.
Industry Watch – Pay-When-Paid – A Common but Illegal Term that Exists In Most Construction Contracts.
General Contractor should not rely on the Owner’s contract to define the terms and obligations between the Contractor and his subcontractors. Rather, the GC should specifically state any and all of their sub-contractor terms (including payment obligations) independently of the Owner’s obligations to the GC. The Contractor should adhere to those terms independent of what may or may not be happening between the Contractor and the Owner.
Market Watch – The CoronaVirus – What Will the New Normal Look Like For Construction? How COVID-19 Has Changed Worksites and How Changes Could Impact Cost.
In an article posted on Lexology by the law firm of Gordon Rees Scully Mansukhani, Brenda Radmacher a partner and construction law expert writes about the new jobsite safety measures that Companies will have to observe in light of COVID-19.
Radmacher does a great job of identifying the new norms, both on and off the jobsite, Workers will need to observe in order to avoid spreading the disease.
Some of these new norms are common widespread recommendations such as washing hands and observing social distancing, but some are very specific to construction and some are likely to impact costs and schedules.
I recommend reading Radmacher’s article, but I wanted to address a few specific recommendations.
Market Watch – The CoronaVirus – When is a Global Pandemic a Force Majeure Event?
A couple of weeks ago, I published an article discussing some of the additional costs Owners might see in the wake of the global CoronaVirus outbreak and government ordered quarantine.
In that article, I made the statement, “Contractually, this event falls under the Force Majeure clause…”
While I still believe that the COVID-19 epidemic meets the definition and the intention of a Force Majeure clause, I recently read several articles that further refine my understanding of Force Majeure and how it can be applied.
As with any article where I address legal terms, such as Force Majeure, I defer 100% to professional legal advice and recommend you contact an attorney to discuss your specific circumstances before you take any action.
That advice notwithstanding, I did want to share with you some interesting points of view.
Market Watch – The CoronaVirus – Is Construction an Essential Business?
Ever since the CoronaVirus landed on the United States it’s impact has been uncertain. Having witnessed the impact it had in China, we collectively braced for impact, but I don’t think anyone thought it would have the effect that it has.
Two week’s ago, I reported that New York, New Jersey, and Pennsylvania had been placed under lock-down by the Governor’s of each state. Since then several states have followed suit.
According to Business Insider.com 36 states plus Washington DC and Puerto Rico are under stay-at-home orders.
A federal directive has yet to be issued as the number of infected persons in the US reaches over 300,000 cases.
Each of the 36 states have generally ordered everyone to stay home and avoid physical contact by observing social distancing of 6 feet or more. All gatherings of 50 or more have been cancelled and areas where people typically congregate like beaches and state parks have been closed. I have heard some anecdotal stories of police breaking up “Corona Parties” of 50 or more people defying the order.
For the most part, businesses have been shuttered and over 3 Million people have filed for unemployment, but some businesses have been allowed to continue operations.
Businesses that can operate remotely and businesses deemed “essential” have been allowed to remain open, but determining whether a business is “essential” has proven to be more difficult than expected.
The construction sector has had an especially difficult time determining how to proceed. This is due in part because of the disparity from state to state and a lack of a federal mandate.
Industry watch – Collaborative Delivery – Case Studies Of Collaborative Delivery – What They Tell Us and Why Standard Forms of Agreement May not be Right For You.
Over the last two weeks we have been exploring collaborative agreements.
Two weeks ago, I gave you a brief overview of the difference between the AIA’s two collaborative delivery contract models. Last week, I shared some of the most pivotal clauses that shift the relationship of the parties from adversaries to collaborators.
This week, I want to share some of the case studies I have read from projects that used some form of collaborative agreements and share some of the anecdotal comments I have received from friends and colleagues that have worked under one of these models.
Best Practices – Time and Material Contracts – Why Time and Material Contracts Might Not Be A Viable Contracting Method in the State of California.
AR5 establishes stricter criteria for classifying workers as Independent Contractors. In order to qualify as an Independent Contractor AR5 requires the employee to pass the “ABC test”.
The test states that the hiring organizations must prove the worker; (A) is free from the control typically exercised
Industry Watch – Payment Protection – Why the US and Other Leading Nations Need Payment Protection Legislation and What Procurement Can Do in the Meantime.
Throughout the world legislative actions are transforming the way the construction industry behaves. These legislations are not only protecting trade contractors from unfair practices, they are protecting Owners too.
Surprisingly, some of the world’s most sophisticated markets have yet to enact similar protections. In those parts of the world, certain common and persistent practices continue to put the supply chain and Owners at risk.
Best Practice – Design Drawings – Why You Should Never Accept Drawings unless they are labelled, “Issued for Construction”.
Why an Architect might consider releasing drawings that are not complete to be a “good practice”?
Best Practices – Construction Documents – What You Should Look For Before Releasing Drawings for Bid.
Most simply take it for granted that the drawings are as they should be or they simply don’t know where to start.
Industry Watch – Uncertainty – What Are the Main Causes of Uncertainty in Construction?
The top 7 things that cause uncertainty in construction and recommendations for how to mitigate their impact.