Giving Power to the Arbitrator: Permissible and Impermissible Delegations of Power

The construction industry has long been a leader in the use of arbitration. An arbitration clause was first included in the AIA standard form contract in 1915. The Federal Arbitration Act (FAA) was first enacted in 1925 and the American Arbitration Association was created in 1926. Although initially hostile, courts throughout the United States and the world have come to generally favor arbitration and the enforcement of arbitration agreements. But not all arbitration clauses are equally enforceable. As arbitration provisions have become more widely used, contracting parties have continued to test the limits of enforceability. This article discusses a generally permissible practice—incorporating by reference arbitration rules granting the arbitrator the power to determine the arbitrability of a dispute—and a potentially impermissible provision—prohibiting the parties from challenging the validity of the arbitration award. Read More ›

Where Does the Duty of Care Flow? Limiting the Potentially Broad Liability of Construction Managers

Construction managers are often in an unenviable position. With expansive contracts, construction managers perform multiple tasks that may impact many different people. With the general charge of managing a construction project comes the potential of broad liability to those involved with the project.  Read More ›

Challenging Negative Performance Evaluations

In the course of evaluating the past performance of offerors competing for the award of a federal contract, agencies routinely examine performance evaluations contained in the government’s Past Performance Information Retrieval System (“PPIRS”).  Information is available through the PPIRS for three years after a company completes a service or supply contract, and for six years after the completion of a construction or architect-engineer contract.  Given the weight that agencies give past performance, negative information in PPIRS can have a significantly negative impact on a company’s ability to obtain future government contracts. Read More ›

Special Considerations for Subcontractors and Suppliers on P3 Projects

Public Private Partnerships, or P3s, are aptly named because they truly mix aspects of public and private construction. But does that mean they are like public projects and subject to state or federal bonding requirement and prompt payment obligations? Or are they like private projects with lien rights? Read More ›

Are Public-Private Partnerships Subject to Prevailing Wage Laws?

Public-Private Partnerships, often referred to as P3s or PPPs, are experiencing a growing popularity in construction.  One reason for this is quite straightforward: as public entities, whether they be cities, states or public agencies, continue to experience tightening budgets, creative means of financing necessary projects leads them to explore using some form of P3.  P3s allow public owners to obtain financing for projects that do not have adequate traditional funding sources.  While P3s may provide additional opportunities and work for many contractors, P3s raise as many questions as they answer.  Notably, given the “public” element of a P3, contractors at all tiers should ask whether the P3 requires payment of prevailing wages to workers on a project.  Two recent decisions have shed some light on when prevailing wages may be required by law on a P3 project.    Read More ›

P3s: Opportunities for Green

The public infrastructure of the United States is crumbling. While state and local governments face budgetary restrictions, they are also requiring more costly repairs through increasing mandates for green building. The United States Environmental Protection Agency describes green building as the practice of creating structures that are environmentally responsible and resource efficient throughout the building’s lifecycle, from design to maintenance operations. Not surprisingly, such lofty requirements often challenge a government entity’s ability to meet these obligations due to a lack of the necessary experience to efficiently develop the desired green infrastructure. Fortunately, Public Private Partnerships (P3s) offer new financing opportunities which facilitate meeting the often competing realities of limited public resources and experience with the demand for costly green building.  This goal is achieved through the P3 model by identifying entities best situated to assume risk – whether public or private.  Read More ›

Risk Allocation in P3s

The success or failure of many construction projects depends on accurate risk evaluation.  How well a party can evaluate, shift, or price risk can be a determining factor in the project’s overall success and the party’s financial well-being.  Under traditional project delivery methods, an owner provided the necessary site and design to the contractor for construction and took the keys upon project completion. Owners, both public and private, bore the risk of providing an accessible site, adequate design, necessary governmental approvals, and ultimate operation and maintenance.  In the past decade, many owners have sought to move away from this traditional risk allocation. The popularity of the design-build method is in part a result of owners seeking to shift the risk of project design. Other project delivery methods such as CM at Risk and Integrated Project Delivery also change traditional project delivery risk allocation. For contractors, one of the most challenging new developments is the increased use of Public-Private Partnerships, commonly referred to as P3s or PPP’s.  P3s have become a valuable tool for public owners to overcome the financing burdens for large education, transportation, or utility projects. By adding responsibility not only for design but also for financing and operation, P3s have significantly complicated project risk evaluation.    Read More ›

Play It Safe: Public Bidding Laws and P3s

Public-Private Partnerships (“P3”) are a popular project delivery method for many state and local agencies across the nation.  A key question that private parties interested in pursuing a P3 project should answer before diving in is whether the P3 procurement is subject to, and in compliance with, the public bidding laws.  Where a state’s statutes and regulations are not perfectly clear on whether public bidding laws apply, the question becomes whether the contract is a “public” or “private” contract.  As a matter of course, parties interested in participating in P3s should assume that the state’s competition requirements apply unless the state has enacted legislation expressly exempting a P3 project from such requirements.  In circumstances where agencies may be attempting to bypass competition requirements by utilizing a P3-type delivery method, courts have indicated their willingness to void contracts and possibly assess additional costs and damages. Read More ›

Understanding Unsolicited P3 Proposals

The popularity of public-private partnerships (P3s) as a procurement delivery method continues to increase as more and more states encourage the private sector to finance, deliver, or maintain facilities, infrastructure, or services for public use.  Many states allowing for the use of P3s are now also accepting unsolicited proposals for P3 projects.  Read More ›

Contractual Considerations for Melding BIM with Integrated Project Delivery

Building Information Modeling (“BIM”) is increasingly used within the construction industry by design professionals, contractors, construction managers, and owners.  BIM is particularly well suited to Integrated Project Delivery (“IPD”), a project delivery method where project participants strive to work collaboratively to realize mutually beneficial rewards.  To properly achieve the synergies from the BIM/IPD union, project participants need to carefully allocate risks and rewards and document their roles and responsibilities in connection with the project. This article provides an overview of BIM and IPD as well as some of the contractual considerations which project participants should keep in mind when documenting their deal. Read More ›