At-Risk CM

November 28, 2018

Second lawsuit filed over Charleston airport expansion work

Source: https://www.postandcourier.com, November 20, 2018
By: Warren L. Wise

Two years after Charleston International celebrated completion of its terminal expansion and overhaul, another legal tussle has cropped up.

The airport’s oversight agency is now suing the architect and a subcontractor in state court for at least $1.5 million over the installation of a cable system that controls airport operations.

The Charleston County Aviation Authority alleges Fentress Architects of Colorado and Burns Engineering of Pennsylvania modified drawings to eliminate four telecommunication cable rooms from the second-floor level and relocate them to the ground-floor apron level.

That, according to the lawsuit, required the low-voltage lines to exceed the maximum 295 feet to meet performance requirements. The airport said it identified seven areas where the cables were too long.

The Aviation Authority has already paid for the work, but it says it filed the lawsuit to recoup the cost to redesign the cable installation and construction expenses along with any business interruption expenses.…

November 28, 2018

The cost of allocating design risk to contractors

Source: https://www.constructiondive.com, October 30, 2018
By: Doug Tabeling, Smith, Currie & Hancock LLP on behalf of ConsensusDocs

Design flaws are a constant risk in construction, but the contractual allocation of that risk can sway considerably from project to project. Contract terms can vary from fully expressing an owner’s warranty of the sufficiency of plans and specifications to transferring significant design risk to the contractor. On a traditional design-bid-build project, the default allocation of the risk of design errors is governed by the Spearin doctrine. That principle is derived from a Supreme Court decision holding that the owner bears the risk associated with inadequacies in the design it provides and on which the construction contract is based. But it is only a default principle. The Spearin doctrine is a gap filler, an implied term in a construction contract that can be undermined and limited by express terms to which the owner and contractor agree.

There are several reasons why construction contracts vary in their allocation of the risk of design failures. Some owners prefer to achieve the cost savings associated with limiting the contractor’s risk concerning the design and curtailing the amount of contingency in the contractor’s price. Other owners, however, prefer not to assume the residual risk that is not assumed by the designer under its standard of care.

November 28, 2018

Design-build risk abounds, but can be mitigated

Source: https://www.constructiondive.com, November 26, 2018
By: Joe Beeton

“There is no such thing as risk.” That was the bold message delivered by Grant Holland of Mott MacDonald at last month’s annual Design-Build Institute of America conference in New Orleans. “You cannot quantify, in definitive terms, a particular risk on a project. Every stakeholder has a different view of that risk, they value it differently and they price it differently.”

Instead, the vice president of the United Kingdom-based consultancy’s advisory practice told attendees, “a risk profile is in the eye of the beholder.” In his 25 years of working on U.S. state department of transportation design-build projects, Holland said he’s seen models change from being focused on “risk transfer” to “risk mitigation.”

Common risks embedded in massive design-build and public-private partnerships, for example, tend to be pretty uniform across all projects. “Whether it’s environmental risks, utilities risks, design risks, resources and labor risks — they tend to be constant throughout projects.” At this point in the delivery method’s evolution, he said, it’s less about identifying risks and more about coming up with ways to mitigate them.

One of the more recent methods for doing so, Holland continued, is through allowances. The public sector stakeholder might throw out a number in the early stages of a project that serves as wiggle room. “Whether it’s $2 million or $5 million or whatever number the owner thinks is right” to serve as a ballpark estimation of possible risks, the owner tells the builder to “put it in your bid.” Then it’s on the contractor to spend that amount on risks.…

November 16, 2018

Builder sues over $2 billion San Francisco transit center

Source: https://www.chieftain.com, October 17, 2018

The general contractor that managed San Francisco’s troubled $2 billion transit terminal is suing the agency in charge of the project alleging faulty design and mismanagement.

The joint venture of Webcor Builders and Obayashi Corp. filed the lawsuit Tuesday in San Francisco. It alleges design and planning mistakes sent construction soaring and led to overruns that cost the company $150 million.

The Transbay Joint Powers Authority, which operates the Salesforce Transit Center, denied the allegations in a statement Wednesday and said it would hold the contractor responsible for its commitment to deliver the project.

The contractor said it submitted 12,000 requests for information and 1,603 change order requests to officials during construction of the terminal in downtown San Francisco.

The contractor also alleged that tardy responses added to the rising costs.

The project has been mired in litigation.

In May, the engineering firm Skanska USA sued Webcor, saying the contractor’s alleged shoddy instructions led to cost overruns. In addition, the owners of a nearby high-rise apartment building that is sinking and tilting sued the agency. The owners of the Millennium Tower blame the transit center construction project for the building’s tilt.

The terminal opened in Aug. 12 after ten years of planning and construction. It closed a month later after cracks were found in two steel support beams. Agency officials said they don’t when the new terminal will be re-opened.

November 16, 2018

Columbia Gas engineer’s failures at root of gas explosions, NTSB says

“Source: https://www.bostonglobe.com, November 15, 2018
By: Milton J. Valencia

Federal investigators Thursday singled out a Columbia Gas engineer with “limited knowledge” for errors in drafting work plans for a Lawrence construction site, setting in motion a chain of events that led to the Sept. 13 natural gas explosions that killed one man and left thousands without heat and hot water.

In the most detailed accounting to date of the catastrophe, the National Transportation Safety Board identified a series of missteps by the utility at the planning stages for a gas main replacement project in South Lawrence. The agency recommended “urgent” steps to increase oversight within the company and at the state level.

The NTSB investigators have focused on the replacement project and the failure of the engineer planning that job to account for a critical sensor in a line that was being replaced. Once the line was disconnected, the sensor detected a loss in gas pressure that caused the system to pump a huge amount of gas into live lines, leading to more than 120 fires and explosions across Lawrence, North Andover, and Andover, the report found.

“The Columbia Gas field engineer who developed the engineering plans told NTSB investigators that he developed them without reviewing engineering drawings that documented the regulator-sensing lines,” the NTSB said in its report.…

November 16, 2018

Design errors revealed in Miami bridge that collapsed

Source: http://www.globalconstructionreview.com, November 16, 2018

A federal US body investigating the fatal collapse of a bridge in Miami has concluded that there were design errors which could have caused concrete cracking observed before the bridge fell.

Engineers overestimated the load capacity of a critical section, its interim report said.

The report released yesterday by the National Transportation Safety Board (NTSB) avoided saying these errors caused the collapse.

Six people in cars died when the brand new pedestrian bridge over a busy road at Florida International University fell on 15 March.

In response to the update, bridge engineers FIGG issued a statement to The Miami Herald saying “the investigative update is just that, an update,” adding that the report “underscores that no probable cause conclusion should be drawn from the update.”

For the NTSB investigation, experts from the Federal Highway Administration evaluated the available design calculations and construction plans for the bridge, and found design errors.…

November 7, 2018

Contractors face tough time covering construction delays

Source: https://www.businessinsurance.com, November 6, 2018
By: Gaven Souter

Delays in construction projects can cause huge increases in costs, but identifying insurance policies to cover the costs is complex and varies significantly depending on policy wordings, construction insurance experts say.

While traditional construction insurance coverages may apply or specific delay in startup insurance may be triggered, there’s rarely a straightforward solution to covering the construction delays, they say.

Most construction projects run late, and a significant proportion of projects run over budget, said Tony Rastall, divisional director, energy, at Ed Broking Group Ltd. in London.…

October 31, 2018

The cost of allocating design risk to contractors

Source: https://www.constructiondive.com, October 30, 2018
By: Doug Tabeling of Smith, Currie & Hancock LLP on behalf of Consesus Docs

Design flaws are a constant risk in construction, but the contractual allocation of that risk can sway considerably from project to project. Contract terms can vary from fully expressing an owner’s warranty of the sufficiency of plans and specifications to transferring significant design risk to the contractor. On a traditional design-bid-build project, the default allocation of the risk of design errors is governed by the Spearin doctrine. That principle is derived from a Supreme Court decision holding that the owner bears the risk associated with inadequacies in the design it provides and on which the construction contract is based. But it is only a default principle. The Spearin doctrine is a gap filler, an implied term in a construction contract that can be undermined and limited by express terms to which the owner and contractor agree.

There are several reasons why construction contracts vary in their allocation of the risk of design failures. Some owners prefer to achieve the cost savings associated with limiting the contractor’s risk concerning the design and curtailing the amount of contingency in the contractor’s price. Other owners, however, prefer not to assume the residual risk that is not assumed by the designer under its standard of care.…

October 15, 2018

Ohio Supreme Court: Contractor Not Covered for Subcontractor’s Faulty Work Due to Lack of Occurrence

Source: https://www.jdsupra.com, October 13, 2018
By: Teri Mae Rutledge & Samuel Stalker, Cozen O’Connor

In a decision that the court itself characterized as bucking a modern trend, the Ohio Supreme Court found no coverage for a general contractor under a standard commercial general liability policy’s “occurrence” requirement for property damage caused by its subcontractor’s faulty work. Ohio Northern University v. Charles Construction Services, Inc., 2018 Ohio LEXIS 2375 (Ohio, Oct. 9, 2018) expanded the scope of the court’s prior holding in Westfield Insurance Co. v. Custom Agricultural Systems, Inc., 133 Ohio St. 3d 476 (2012), in which it held that property damage caused by an insured contractor’s own faulty workmanship did not involve an occurrence such that its CGL policy would provide coverage for the loss.

Factual and Procedural Background

Ohio Northern University (ONU) contracted with Charles Construction Services, Inc. (Charles Construction) to build The University Inn and Conference Center. Cincinnati Insurance Company (CIC) issued a standard CGL policy to Charles Construction that contained a products-completed operations-hazard (PCOH) clause and an exception to the “Damage to Your Work” exclusion related to subcontractors.…

August 10, 2018

Contractor fights faulty Portsmouth housing construction claims

Source: http://www.seacoastonline.com, August 3, 2018
By: Elizabeth Dinan

A contractor accused in a federal lawsuit of faulty construction at the 100-unit Wamesit Place housing complex filed a court motion denying liability, while reporting if it is found liable, so too should five other contractors who worked there.

The lawsuit was filed by Portsmouth attorney John Bosen, on behalf of the Wamesit Place Family Housing Limited Partnership, and claims poor construction caused mold to grow in apartments, that firewalls “are inadequate and/or nonexistent throughout the apartments” and remediation will require a “massive” amount of work and the temporary relocation of some residents.

One of the defendants, Portland Builders, filed a July 30 notice with the U.S. District Court of New Hampshire stating it was contract manager in 2011 and 2012 for renovations that included roofs, windows, doors and siding at homes throughout the neighborhood. The contractor reiterates Wamesit’s claim that defects were discovered, beginning in 2015, that led to mold and the discovery of code violations.

Portland Builders, in its new court filing, states it performed its work according to the scope of its agreement with Wamesit, but if a jury finds it liable for damages, it will ask a jury to share responsibility with Goduti-Thomas Architects, Veteran’s Construction, Eastern Mechanical, Corey Electric, Bio Environments and an unknown cable company.

The contractor alleges the Portland, Maine, architect designed the plans and specifications it followed and the construction company was contracted to “perform services related to the firewalls.” The mechanical company performed plumbing and ventilation work at Wamesit, the electric company installed bathroom ventilation fans and the environmental company conducted mold testing and remediation. The unknown cable (or security) company did work at the housing complex after Portland Builders was done, which “damaged firewalls,” the contractor’s court motion claims.

Based on those allegations, Portland Builders reports to the court that it “is entitled to have the jury apportion liability during the trial of this matter.”

Wamesit’s amended suit filed in April reports that between 2015 and 2017, mold was found in apartments, “that is growing due to the condensation of humid exhaust air accumulating and saturating insulation in ceilings and attics.” Mold remediation was conducted by third parties and before insulation could be replaced, it would have to remove all insulation, including in building overhangs, and clean all surfaces in ceilings and attics. All ceiling drywall will also have to be replaced and proper re-insulation will be needed, in addition to new bathroom fans and duct work to roof vents, it’s alleged.

Tenants in the apartments will need to be temporarily relocated during the repairs and Wamesit seeks an unspecified monetary award to cover related costs. Wamesit is alleging breach of contract and negligence in the federal suit.

Portland Builders previously countered that change orders eliminated attic insulation, ventilation “and other work that was part of the original contract.”

The Portsmouth Housing Authority manages the Wamesit Place apartments on Greenleaf Avenue and its director, Craig Welch, previously told the Portsmouth Herald he can’t discuss the pending litigation and he assured no residents’ health is at risk.…