William Schaal, R.G., Shaw Environmental & Infrastructure, Inc. - - PowerPoint PPT Presentation

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Apr 29, 2023 341 likes •545 views

Achieving Risk Allocation and Achieving Risk Allocation and Sustaining Readiness in E nvironmental Sustaining Readiness in E nvironmental Construction Contracting Construction Contracting William Schaal, R.G., Shaw Environmental &

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Achieving Risk Allocation and Sustaining Readiness in E nvironmental Construction Contracting Achieving Risk Allocation and Sustaining Readiness in E nvironmental Construction Contracting

William Schaal, R.G., Shaw Environmental &

Infrastructure, Inc. and University of Phoenix

Jane Zevely, Esq., Allen Matkins Leck Gamble &

Mallory LLP

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E nvision and Plan for Possible Scenarios E nvision and Plan for Possible Scenarios

Possible Scenarios Preventative Measures Incorporate Preventative

Measures/Redundancies In Contract

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Presentation Overview Presentation Overview

The Contract Previously Negotiated

Contracts

Legal Issues Included in

Supporting Documents

Modifications Insurance and Indemnity Liability Limits Bonds or Surety Insurance Litigation Avoidance Records Retention Flow-Down Provisions Liens Fixed Budgets Ownership of Plans/Reports Attorneys’ Fees

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What’s a contract? What’s a contract?

Meeting of the minds Defines the scope of the

work

Allocates the risks

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Starting Point Starting Point

Start from strongest position appropriate for deal Avoid using previously negotiated contracts as starting

point

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Best place for legal obligations— The contract Best place for legal obligations— The contract

Avoid conflicting language or ambiguities by

– Stating legal obligations in the contract – Reviewing documents attached to the contract and

transferring obligations into contract

– Developing a hierarchy for the contract documents to be

followed in resolving conflicts between documents

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Modifications to the Contract Modifications to the Contract

No handshake deals Require written Change

Orders

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Insurance and Indemnity Insurance and Indemnity

Determine and cover the risks posed by the project

– Provide detailed insurance provisions – Include additional insureds – Pre-negotiate claims process with carriers

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Indemnity Indemnity

Appear, defend, indemnify and hold harmless

– Defense costs may approach or exceed indemnity

Determine who should indemnify and for what

– Exclude indemnitees’ sole negligence/willful misconduct – Contractor liable for acts/omissions of its subcontractors – Should owner indemnify contractor

Insure indemnity

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Consider Owner/ Contractor Controlled Insurance Program Consider Owner/ Contractor Controlled Insurance Program

Avoid lapses or fraud Maintain “tail coverage” Avoid depletion Control Claims Eliminate claims among

carriers

Purchase expanded lines

f coverage

Lower workers’

compensation costs

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Liability limits Liability limits

Avoid limiting liability to relatively low amounts

– Fee – Purchase Price

Pay for quality coverage

– Project-specific coverage – Cover insurable consequential damages – THEN, limit liability to insurance

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Bonds or Surety Insurance Bonds or Surety Insurance

Protect against defaults Bonds versus surety insurance

– Bonds are tried and true – Surety eliminates some of the need for

– Indemnity agreements and – Extensive underwriting. – May provide construction defects coverage

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Litigation Avoidance Litigation Avoidance

Claims resolution strategy

– Partnership – Project neutrals – Executive negotiations – Mediation – Arbitration

Provide fair and final process

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Records Retention Records Retention

Include records retention

requirements in contract

– Insurance policies – Construction

documentation

– Reports

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Flow Down Provisions Flow Down Provisions

Flow down obligations, risks to lower tier subcontractors,

subconsultants and suppliers

– Insurance – Indemnities – Warranties – Dispute resolution process

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Avoid Liens Avoid Liens

Obtain statutory lien releases for each progress

payment

– Suppliers – Subcontractors – Design professionals

Added protection through payment bonds and lien

releases

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Fixed Budgets with Teeth Fixed Budgets with Teeth

Include Fixed Construction

Budget in Contract

Require design professionals

to design within Fixed Budget

– Redesign, at no cost to owner,

if bids exceed fixed budget

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Ownership of Document Ownership of Document

Address reservation of rights to use documents

– Owner

– use of documents for future related expansions, renovations

– Contractor/Designer

– reuse standard design, construction features

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