Non-Traditional Insurance Risks for Non-Traditional Project Delivery Methods

Non-traditional project delivery methods are being increasingly used in construction projects, and these delivery methods can bring non-traditional insurance risks. Non-traditional project delivery methods may require project participants, such as designers, contractors and owners, to hold additional types of insurance to guard against risks that their typical insurance does not cover.  Read More ›

Not Your Average Bond - Design Services in Alternative Project Delivery Methods

The rise in popularity of alternative project delivery methods that combine design services complicates the already opaque world of surety bonds. As a general matter, for any project type, a bond is a tripartite transaction in which the contractor pays a percent of the penal sum of the bond to the surety, who undertakes to pay the owner or upstream contractor if the contractor fails to perform its bonded obligation. When the dust settles, the contractor is ultimately on the hook for 100% of the risk that it will fail to perform its obligations. At the time of bonding, though, the contractor only pays a percentage of the bond’s penal sum to secure the surety’s guarantee of payment or performance to the owner or upstream contractor. In many cases, a bond is preferred by all parties as opposed to a letter of credit or other guarantee products. The contractor preserves cash flow, the owner prefers the surety’s financial stability and backing, and the surety makes money while keeping the risk on the contractor.  Read More ›

Collecting Judgments Across State Lines

In recent years, many in the construction industry have found themselves in the situation of having obtained a judgment against an owner, general contractor, or subcontractor in one state only to find out that the debtor has moved its operations or assets to another state to avoid its creditors.  While this is an unavoidable challenge when working in different states, there are four basic steps a business can take to help ensure that its foreign judgment can be collected across state lines.  Read More ›

First Things First: Registration and Licensing Requirements for Contractors Working in Foreign Jurisdictions

Construction companies’ increasing opportunities to perform work across state lines poses unique challenges and requirements, not the least of which are general business registrations and licensing requirements.  While the exact requirements will vary from state-to-state, virtually every state requires some type of business registration and licensure.  And while these requirements may seem like the proverbial “busywork” mandated by the controlling jurisdiction, severe penalties exist for contractors that fail to satisfy these requirements.   Read More ›

Licensing Challenges for Multi-State Design Practices

Architects and engineers typically contract to provide professional design services in a number of states and are, therefore, subject to each state’s licensure laws. It is important for design professionals to be aware of state-specific differences in licensing before entering into contracts in new jurisdictions. Penalties for non-compliance are severe and can reduce or eliminate a design professional’s right to payment under a contract.   Read More ›

Different States Impose Different Limitations on Indemnity and Additional Insured Provisions

Indemnity provisions, also known as hold harmless agreements, are frequently included in construction contracts to transfer the risk of third-party claims. Indemnity agreements involve a promise by which one party (the indemnitor) makes another party (the indemnitee) whole for a loss that the other party has incurred as a result of a third-party claim. Indemnity provisions offer the parties an opportunity to transfer the risk of loss to the party best-suited to bear the risk. In the same way, additional insured requirements can be used to transfer risk from a negligent party to another party’s insurance carrier. While these concept appear simple, the treatment of such provisions varies from state to state based on applicable statutes and court decisions. Read More ›

No Harm, No Foul? - Penalties for Noncompliance When Performing Construction in a Foreign Jurisdiction

An avoidable disaster: A well-respected, hard-working engineer designs and installs a system that meets and exceeds an owner’s contractual requirements. The project was located out-of-state for the engineer, but the promised fee justified the effort. In a rush to meet the project requirements, the engineer failed to confirm and follow the state registration and licensing requirements. After completion, the owner refuses to pay, arguing that the contract is illegal and void due to the engineer’s failure to obtain and maintain a license in this foreign state. The engineer is baffled and asserts that the system is better than the owner asked for – no harm, no foul, right? Unfortunately for the engineer, the owner has a viable argument. Penalties for noncompliance with a state’s registration and licensing requirements can be harsh and must be considered prior to performing work in a foreign state.   Read More ›

Bidding and Performing Public Works Contracts in Other States

Working in a new state can present many new opportunities, but it also comes with many challenges. You cannot assume that the new state’s laws will be identical to your own. Some issues that might come up include: registration and licensing requirements, anti-indemnity statutes, bonding and lien requirements, and public policy limitations on contract clauses such as pay-if-paid clauses, liquidated damages clauses, or no-damages-for-delay clauses. It is critical to be aware of any differences because you may be exposed to penalties or lose rights and remedies you are used to having. Read More ›

Who is and Who is Not Covered by a Public Project Miller Act Payment Bond?

The Miller Act, codified at 40 U.S.C. §§ 3131–3134, represents a Congressional effort to protect those supplying labor and material for the construction of federal public buildings or public works in lieu of the protections they might otherwise receive under state statutes if engaged in the construction of nonfederal buildings.  A Miller Act payment bond guarantees payment to certain parties supplying labor and materials to contractors or subcontractors engaged in the construction, alteration, or repair of any public building or public work of the federal government.  Absent the protection of a Miller Act payment bond, unpaid subcontractors and suppliers could find themselves without a viable remedy (other than a suit against a viable contractor or subcontractor) because there are no lien rights against public property. Read More ›

Executive Order 13658 - Implements Regulations Establishing a Minimum Wage for Federal Contractors

On February 12, 2014, President Obama signed a 5 page Executive Order (EO) that, among other things, will affect the minimum wages that must be paid under a number of agreements with the federal government that have previously not been subject to special rules on minimum wages.

The Department of Labor just issued 337 pages of explanation and regulations on it.   Here are the important take aways… Read More ›