Printer
Friendly Version
Editor's Note: Ms. Fowler will be presenting this Sunday, April 6, 2008 at the Hilton Americas Hotel in Houston to the Council of Education Facilities International as part of its 18th Annual Southern Region Conference. If you have not already signed up and you have any interest in school or college construction, you should consider attending. The Fowler Law Firm PC is proud to announce that it serves as official legal counsel to CEFPI Southern. While many of you know Ms. Fowler from her many years of service to public schools and junior college districts, she and her firm also serve the needs of independent businesses, many of whom are contractors, subcontractors, and suppliers when there are no conflicting interests.
Please CLICK HERE to learn more about The Fowler Law Firm PC.
Please CLICK HERE for a brochure describing the firm, its attorneys and its services.
Dear Readers:
Your author knows you're smart. You wouldn't have your job if you weren't! And I know articles on Construction Law can be less engaging than, say, the NCAA basketball final four. But even if you are a brilliant facilities director at a school or college, an ingenious school architect/engineer, or a wildly successful builder of educational institutions, the following simple observations may one day save you a lot of time and heartbreak. These problems are also easy enough to avoid if they are handled early in the project. All of the following are inspired by actual catastrophes that occurred even though skilled and experienced members of multidisciplinary construction teams were involved. Even one person with impure motives can spell disaster for everyone!
1. Construction Contracts are the first thing that ought to be addressed, not the last.
The mindset of people that work with construction contracts is something that is unlikely to change. Building owners and administrators approach these contracts as form documents to be reviewed at the tail end of a long negotiating process . But nothing could be more dangerous, costly, or harder to fix than thinking that way! The invitation to submit a bid or proposal, the insuring agreements, the payment and performance bonds, and indeed the copyrighted documents (that are usually AIA or AGC forms) are the very first thing the building owner ought to address. Someone who is meticulous and organized ought to be assigned to do this, with a do or die mandate to police and review every scrap of paper that forms the contracts. This person does not necessarily need a lot of construction knowledge, but they do need an appreciation of the importance of the process, enough time to get the job done right, and a basic understanding of what they need to do. In your author's humble opinion, no other single thing you do can help a building owner or educational institution more.
2. You must separate the wheat from the chaff.
There are relatively few clauses in these form contracts that really matter. Out of the forty plus page document that forms a typical construction contract totaling many millions of dollars, there really are not many changes that need to be made. Filling in the blanks is important, and knowing what you mean when you fill in the blanks certainly does not hurt, but knowing which few paragraphs to change is absolutely essential. We will discuss them below.
(a) Liquidated Damages Clauses: Let me briefly put aside my editorial etiquette and shoot straight with you for a moment. With nary an exception, you are out of your mind if you don't insist on these. The construction of a multi-million dollar building will rarely fail to attract a considerable number of decent builders. And while builders might threaten to increase their price to account for the damages clauses, they rarely will if they are warned about them ahead of time and are actively competing against one another. If you do not assign these clauses in the proposal or drawings and specifications phase (depending on whatever is the earliest document available for review before the builder is selected), you will lose your leverage completely. Shame on you! No one ever walked away from a bid that included a $1,000.00 a day damages clause assuming the number of days assigned to construction was reasonable.
(b) Punchlist and Finish Out and Retainage: Schools and Colleges are quite different from shopping malls and for-profit hospitals. To begin with, there is typically no tenant income to be had. What's more, it is just about impossible to make anyone understand how sharply employee and student morale plummets when a long awaited school or college building is not ready on time. Equally vexing is the building that, while partially usable, is not truly ready for full use. The entire burden needs to be on the builder to finish the work, get all the warranties and owner/operator manuals delivered and activated, and submit all the certification documents that accompany inspections. If you thought this was the Architect's duty, you'd be right… but guess what? As a practical matter, when the finish out phase approaches, the architect is typically phasing out on-site presence and often assigns these thankless tasks to a junior architect or even an unregistered staff member. Employ some self help skills! Assign a staff member to be in charge of this and insist on a list of items like warranty documents, engineering and other inspections and owner/operator manuals that is met BEFORE retainage is released.
(c) Define 'Cost of the Work' : Your author is routinely astonished to find that even the most experienced building owners and architects sometimes do not understand what they have agreed to pay. For instance, there is no rule about what Risk Managers are entitled to; indeed, there is no such thing in Texas as a customary fee. There is no real general agreement regarding whether certain high dollar items that require little real effort for the builder to provide, such as pre-construction phase services or insurance (which, in the case of a big builder, is just added or dropped as the construction phases progress) should be a basis of a multiplier. In other words, for every element of cost provided by the construction manager or its subcontractors and suppliers, there ought to be a proposal in exacting detail that details exactly what the building owner is going to treat as a cost of the work rather than as a pass-through expense. Then and only then does the building owner know what he is paying the construction managers whose proposals he is considering.
(d) Insist that all or most design services fall under the responsibility of the lead design firm, and that every design firm or licensed professional have adequate liability insurance: If the building owner allows civil engineering independence from the lead designer, they deserve a stern slap on the wrist. This is a terrible situation to create and it wreaks havoc with the insuring agreements. Pay more money if you have to, but don't let this happen if you want to have any ability to hold the design team liable in the event of a serious design mistake. And rest assured that the most costly design mistakes often are ones involving a combination of civil and structural engineering; almost all slab issues are. Competent engineers and architects are able to obtain decent liability insurance written on sound insurers. This is a real change in the market from five years ago!
3. Check and double check every important provider of goods, professional services or labor for your site: The new laws on fingerprinting are the least of it. The Texas School Safety Act amended the Texas Education Code to require fingerprinting and criminal background checks for all contract employees hired after January 1, 2008 , if the employee has or will have continuing duties related to the contract service as well as direct contact with students:
Texas School Safety Act
Regardless of whether this new law will, in time, be one that school districts can comply with, the really important thing to know now is who and what is at your job site. Checking vendors carefully regarding whether they are registered to do business in Texas , whether they are paying their taxes, and whether who they claim to be matches what the records of the Texas Secretary of State and the Texas Comptroller say they are, are all just as important as the fingerprints of the workers on site. Ensuring that you are on top of this frequently missed point will save you a truckload of potential problems. You just need to assign the task of checking out subcontractors, suppliers and general contractors to someone who can be relied on to tenaciously check them out each and every time. And if these individuals are required to produce insurance, this would include checking out the issuers of their insurance too!
Texas Secretary of State
Texas Comptroller
Texas Attorney General
Texas Department of Public Safety
These are just a few things that don't really take a lot of time to do, especially when compared to the colossal problems that can surprise you later if you don't do them.
In your every construction adventure, we wish you the very best.
If you would like to read the Printer Friendly version of this article, please CLICK HERE.
Laura Fowler and THE FOWLER LAW FIRM P.C . are so grateful to so many of you who have helped to make our firm a success. The Fowler Law Firm P.C. is a full service law firm whose attorneys have many years of experience in the handling of education institution issues, both public and private, non-profit associations, real estate, family law, probate and estate, business formation and taxation and all aspects of copyright, trademarks and patents. We never charge a client a fee or incur any expense until the client understands and agrees. In addition, we often counsel with your clients and friends and give them the information they need at no charge when we cannot truly be of service. For more information or to refer a matter to us please contact us at (512) 441-1411 or visit our website at www.thefowlerlawfirm.com .
This information is
provided by Laura S. Fowler, Attorney at Law with
The Fowler Law Firm PC. It is not intended as a
substitute for careful review by legal counsel of
your choosing. We would be most honored to assist
you in your every real legal need.
Contact Laura
Fowler at lfowler@thefowlerlawfirm.com
or
call (512) 441-1411.
As with any legal
issues, please consult your attorney with
questions.
