Caltrans, the bureaucratic agency overseeing the Bay Bridge project, established the Toll Bridge Seismic Safety Peer Review Panel to assist with the construction of the Bay Bridge project.  The Panel is made up of professors and professionals in the industry, and is the very panel that decided that the bolts, which are not breaking, should be galvanized.

As in litigation, other professionals are questioning the legitimacy of the Panel’s decisions.  For example, a University of California, Berkeley professor has stated that he has no confidence in any material-related decisions on the Bridge.  He notes that the same people telling Caltrans that the Bridge is now safe are the same people who made the decisions that caused the problems in the first place.

This situation is closely tracking the battle of the experts often found in construction cases.  Both sides’ experts bring credibility to the table and have apparently examined the same data in reaching their conclusions.  Yet, one says the Bridge is not safe and the other says the Bridge is safe.

The post A Lesson in the Battle of the Experts – San Francisco Bay Bridge appeared first on Construction Contractor Advisor.

• Lueder Construction Company,
• JE Dunn,
• MCL,
• Kiewit,
• Build Omaha,
• Muhle,
• Vantage,
• Weitz Company, and
• the M Group.

This is a tremendous event and the progress is amazing.  Figuring that Habitat for Humanity usually plans for three months to complete a house, the fact theses were completed in less than ten days is impressive.

This event also provided some of the attorneys that I work with an opportunity to get out and lend a hand.  Here, Sarah Macdissi, Sarah Smith and I are working to clean a fence line along one of the existing homes in the project area.

Thanks to all of the local construction companies and Habitat for Humanity for providing such a great benefit to the community.

The post Habitat for Humanity – Builders’ Blitz 2013 appeared first on Construction Contractor Advisor.

Lien waivers usually contain some version of the following:

This waiver constitutes a representation by [Contractor] that the payment referenced above, once received, constitutes full and complete payment for all work performed, and all costs or expenses incurred relating to the work or improvements at the Project as of the date of this waiver, except payment of retainage. [Contractor] specifically waives, quitclaims and releases any claim for damages due to delay, hindrance, interference, acceleration, inefficiencies or extra work, or any other claim of any kind it may have as of the date of this Waiver.

This waiver arguably waives any and all claims that the contractor may have up until the date of the waiver.

But, what about the delay claim that hasn’t matured yet?  What about the “billing” issue that you brought up to the foreman?  Is the contractor waiving these claims when he signs the waiver?

Chances are that the contractor is waiving these other claims.  Sure, arguments can be made that the contractor did not intend to waive certain claims, but that’s an uphill battle.  Instead, a contractor would be well advised to add some language to the waiver that identifies the claims that are not being waived.

Contractors sign waivers regularly. But, how often do you really review the waiver language and know what you are waiving?

The post Are you Waiving Your Rights Good-bye? appeared first on Construction Contractor Advisor.

The Inspector General’s Audit , consisting of 40 single spaced pages, finds failures at every turn with the DBE Program. The Department of Transportation has not issued comprehensive, standardized DBE guidance; the DBE program lacks adequate oversight; and it has had limited success in achieving its program objective of developing DBE firms that can succeed in the marketplace.

Ineffective Program Management

The Department of Transportation (“DOT”) has not issued comprehensive, standardized DBE guidance or provided sufficient training to the recipients responsible for implementing the program.  15 states were surveyed and 14 of them said they lacked clear DBE guidance from the DOT, and 12 said that the DOT did not provide adequate training.  The program also lacks a single line of accountability for the program making it difficult to account for the billions of dollars in annual DBE spending.

Failure in Purpose 

The purpose behind the DBE program was to help firms become established and then compete in the open marketplace.  But, very few firms that ultimately become eligible to participate ever receive work as a subcontractor or prime contractor of a federally funded project.  The audit also revealed that smaller DBE firms have difficulty competing for contracts and larger DBE firms win more contracts because they have developed a relationship with prime contractors after demonstrating that they can perform the work.  In light of the success that some companies are having in the program, there is little incentive for firms to grow beyond the DBE program. Some companies will even limit the amount of new contract dollars they receive in order to stay below the gross receipt cap required for DBE eligibility.

The DBE program appears to be in shambles, but those that work with the program are probably not surprised.  The lack of guidance has been a point of contention of contractors across the country since the program began.  Perhaps this audit will shed some light on the problems and the DOT can start working towards improving the program.

The post The DBE Program is Not Working appeared first on Construction Contractor Advisor.

Among the proposed changes to the sweeping immigration reform bill, known as the Border Security, Economic Opportunity and Immigration Modernization Act (S. 744), is a provision aimed at making more foreign workers available for jobs in several sectors, including the construction industry.  If passed, the bill would create a new “W” visa classification as of April 1, 2015, which would make a limited number of non-immigrant visas available to lesser-skilled workers.

While enabling U.S. employers to bring foreigners here is nothing new, historically many of those positions have been filled by workers with advanced degrees or by employers seeking temporary help with seasonal positions.  The new W visa classification is designed to attract foreign workers with positions requiring less formal education, and specifically excludes occupations requiring a college degree, many computer jobs, and most positions in metropolitan areas with an unemployment rate greater than 8 ½%.

An employer wishing to fill a job under the proposed W visa program would first need to become a registered employer and designate the positions it wants to fill.  The employer would then have to advertise the position for thirty days to ensure there are no American workers for the job.  Provided the worker passes a criminal background check and meets other qualifications, a W visa would be granted for an initial period of three years, with the option to renew for additional three-year periods.  The employer would be required to submit an annual report demonstrating compliance with wage and working condition requirements.

The proposed legislation caps the total number of W visas to 20,000 in the first year, with incremental increases in the second and third years, and a maximum of 75,000 in the fourth year.   The current version of the bill also provides that no more than 1/3 of W visas issued in any given year may be issued to workers in construction jobs, and in no event can the number of construction-related W visas exceed 15,000.

This restriction on the number of W visas issued to the construction industry has been the focus of criticism.  In Amendment to Visa Program Could Improve Immigration Bill for Construction, Kinsey Cooper explains that ABC recently supported an amendment to S. 744 that would allow equal access to visas for temporary construction workers.  According to ABC, the cap contained in the current version of the W visa program is much too small in light of the expected growth of the construction industry, and ABC is concerned that the inherent inflexibility of the visa program will hinder growth.

On May 21, 2013, the bill was moved out of committee, and will go to the full Senate in June 2013.  If passed, the W visa program, and any amendments easing restrictions on the annual cap, would benefit the construction industry by making more visas available and providing the construction industry equal access to the proposed new visa classification.

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Why isn’t a certificate of insurance enough?

A certificate of insurance, which is a document issued by or on behalf of an insurance company, is used to advise a third party of the existence and amount of insurance issued to the named insured.  The certificate usually indicates that certain parties are named as additional insureds under the named insured’s insurance.  But, it also contains a statement that it is issued as a matter of information only and does not provide coverage.  To get coverage, the insured must also obtain endorsements showing additional insured coverage.

What is an endorsement?

Generally speaking, an endorsement is an attachment to an insurance policy that modifies the policy by changing the coverage afforded under the policy.  In order to provide additional insured coverage, the insured must ask for an endorsement to add that coverage.

There are many Additional Insured endorsements. 

Unfortunately, simply asking for an additional insured endorsement does not end the inquiry.  Contractors must review the endorsements that the subcontractor obtains to figure out what coverage they have.

Years ago, the CG 20 10, was the primary additional insured endorsement.  It provided coverage for liability “arising out of the work” of the named insured.  Litigation ensued over the breadth of the “arising out of” language and the CG 20 10 was amended in 1993, 1997, 2001, 2004 and 2013.  In 2004, the “arising out of” language was changed to “caused in whole or in part by [the named insured’s] acts or omissions” in an effort to limit its scope.  In 2013, language was added to limit coverage “to the extent permitted by law”. It is not entirely clear what was intended by this last phrase, but it may be an attempt to make coverage consistent with state anti-indemnity statutes.

Another issue with the CG 20 10 was whether the named insured’s CGL covered the additional insureds for completed operations.  In 2001, language was added to exclude coverage for complete operations.  To address this potential gap in coverage, CG 20 37 was created to provide complete operations coverage for additional insureds.  CG 20 37 was also amended in 2013 to limit coverage to the amount required by the contract.  It appears that this new language was intended to incorporate any express limits on additional insured coverage the parties included in the contract.

In addition to the endorsements mentioned above, there are additional endorsements, such as the  CG 20 01 and CG 24 26, both of which were modified in 2013, seeking  to clarify the coverage provided to an additional endorsement.  Some read these endorsements as attempting to bar or further limit coverage for additional insureds.

Ultimately, contractors need to find out whether their subcontractors have obtained additional insured endorsements and then look at the actual endorsements to make sure that they provide the broadest coverage possible.

The post Being Named as an Additional Insured Is Not Enough appeared first on Construction Contractor Advisor.

An indemnity clause requires one party to pay any sums the other party might otherwise be legally required to pay to a third party.Nebraska has adopted an anti-indemnity statute that sets out the circumstances under which an agreement to indemnify another party for the other’s own negligence is void as against public policy.   In essence, an upstream contractor cannot make a downstream contractor indemnify the upstream contractor for its negligence.  This statute is based on public policy that we want parties to a contract to exercise care and if a party can be indemnified for its negligence, it will have no incentive to act carefully.

Agreements to insure another party are, however, specifically excluded from Nebraska’ anti-indemnity statute.  So, an upstream contractor can require a downstream contractor to name the upstream contractor as an additional insured under the downstream contractor’s insurance policy.  By doing so, the insurance the downstream contractor purchases may very well provide coverage for the upstream contractor’s negligence.

As the Nebraska Supreme Court has acknowledged:

It is common practice in construction contracts for owners and general contractors to shift the risk of liability for injuries sustained by a subordinate party’s employees to the subordinate party’s insurer.  They usually accomplish this by contractually requiring the subordinate party to make the owner or general contractor an additional insured on the subordinate party’s CGL coverage.

Federated Service Ins. Co. v. Alliance Const., LLC, 282 Neb. 638 (2011).

The main reason for including additional insured language in a construction contract is so that the upstream contractor, now named as an additional insured, will not be limited to the coverage that the insurer owes for the downstream contractor’s liability under an indemnity agreement in the construction contract.  If the indemnity agreement is declared invalid under an anti-indemnity statute, then the downstream contractor’s insurer will not be liable for the downstream contractor’s liability under the indemnity agreement. But, with the additional insured language, even if the indemnity agreement is invalid, its invalidity does not impact the coverage extended under an additional insured endorsement.

Indemnity and being named as an additional insured are not the same thing.  Indemnity clauses are subject to challenges that they may not be enforceable under a state’s anti-indemnity statute.  Being named as an additional insured avoids this problem and provides more certainty that the downstream contractor’s insurer will provide coverage for a claim.

The post Additional Insured versus Indemnity—What’s the Difference? appeared first on Construction Contractor Advisor.

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OSHA’s opinion concludes that non-union employees can select a person who is affiliated with a union or a community organization to act as their “personal representative” to act on the employee’s behalf as a walk-around representative.  The difficulty with this interpretation is that 29 C.F.R. § 1903.8 provides that a representative must be an employee of the employer.  There is an exception to this rule if the OSHA investigator believes that the presence of a third-party is necessary to conduct an effective and thorough investigation of the workplace.  These “exceptions” often times include experts like industrial hygienists and safety engineers.  There is certainly no indication that one’s membership with a union somehow aids in an effective and thorough inspection of the workplace.

             Aside from OSHA’s apparent inconsistencies with its regulations, this interpretation raises a number of other concerns.

• How is the employee representative selected?
• Can other employees object to the selected representative?
• Can employers object to the employee representative?
• Do objecting employees have the opportunity to select their own representative?
• Does this allow for multiple employee representatives?
• Can the employee representative collect evidence?
• Does the employer have any protection from the release of trade secrets or other confidential information viewed by the employee representative?

OSHA’s latest interpretation letter raises more questions than it answers.  Certainly, non-union employers should be concerned about this new policy, and unions may be encouraged to use OSHA investigations as an organizing tool.

The post Union Rep May Accompany OSHA Investigator During Safety Inspections appeared first on Construction Contractor Advisor.

Walter Wells writes in his editorial that the American construction industry is being run by lawyers.  He compares projects like the Pentagon, which took two years to build, to the Four World Trade Center, which was one third the size and took 12 years to build.  He concludes that the threat of litigation and construction lawyers are the reason the Four World Trade Center took so long to build.

But, I think this places too much blame on attorneys and fails to consider the substantially different construction marketplace. Sure, the Pentagon was built in two years, but that project is not an apples to apples comparison to the Four World Trade Center, which took 144 months.  I don’t think the Pentagon contractors were dealing with the vast number of interest groups involved in the Four World Trade Center project or the multi-layer bureaucracy involved.  Nor do I think the Pentagon had to address the impact the structure would have on endangered plant and animal species that today’s laws require contractors to consider.

Similarly, construction attorneys are not solely to blame for the increase in construction litigation.  As the saying goes, it takes two to tango.  Contractors are having to defend against construction process related claims as well as post-construction claims.  Our society has become substantially more litigious and contractors are often caught in the middle, but have to defend the claim.

I agree that attorneys do occasionally slow down the process and the threat of litigation looms large in every project.  But our purpose is to ensure our clients are addressing the multitude of laws impacting the project, the multiple levels of insurance required, and the shifting of each party’s responsibilities set forth in the contract.   Today’s market place is substantially different than in the 1940’s and we serve our clients’ interest in preparing construction contracts that acknowledge the changed marketplace and in defending contractors in a litigious environment.

Ultimately, is the construction industry better off having counsel engaged in the project?  I think that it is because competent counsel at the beginning of a project can often times help the contractor avoid the claims and litigation that arise during and after the project.

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