#50 The Maryland Construction Network

by Robert Bertazon

in Podcast Episodes

“Construction Subcontracting – Practical and Legal Tips, Part 2″

In this episode of the Maryland Construction Network (Part 2 of a 2 Part Program) we welcome back to the show Joseph Kovars, an attorney with Ober|Kaler. Joe is a co-chair of Ober|Kaler’s Construction Group. His practice is concentrated in construction and public contracts law, representing contractors, subcontractors, sureties and owners in contract formation and construction disputes involving many types of construction projects. Mr. Kovars is a co-editor and co-author of the recently published book – “Construction Subcontracting – A Comprehensive Practical and Legal Guide” – available here.

A Lien Waiver gives up the right to assert a mechanic’s lien.  Typically given with a pay application.

  • partial
  • full
  • conditional

Some subcontracts require that all lien rights be waived in advance, before any work is done.  In MD, these clauses are illegal.

“Scheduling, Delays, and Coordination” section authored by our speaker, Joe Kovars

Time is money on construction jobs. When a job is delayed, usually everyone loses money. Finger pointing often goes in two or more directions. Project delays result in claims, whether for liquidated or actual damages.  Also, they can lead to contract defaults and terminations and performance bond claims.

Scheduling is an important part of the job and plays a critical role in delay claims. Typically, the construction schedule is prepared by the G.C. Subcontractor input into the schedule is recommended.

Most construction projects are scheduled using CPM or Critical Path Method scheduling. A CPM schedule is based on a network of activities that are needed to build the project. The activities are tied together by logic relationships. If one activity is delayed, depending on the relationships set in the schedule, it may or may not delay the end date of the entire project.

If an activity can slide in time, and not affect the end date, then there is “float.” The chain of activities with zero float (or the least float) is the critical path. If there is zero float, then any delay to a critical path activity results in a day for day delay to project completion.

Scheduling traps for subs to watch out for.

  • Restraints that are not typical, such as “lags” or “leads” or “must finish by” dates
  • Work calendars – 5 day or 6 day work week; winter weather.
  • Resource leveling.
  • Schedule that is $ loaded – tied to pay app.

Many primes hand their subs a printed bar chart, which shows just ES & EF dates and no relationships, no restraints, no float. Subcontractors should ask G.C. for the electronic version and get updates. When job is behind schedule the sub should understand why.

Delay events are usually broken down into two types: excusable delay and nonexcusable delay.

  • Excusable delay is usually delay beyond the fault or control of the party. It entitles that party to a time extension. A time extension gives the party more time to perform and that party can’t be charged with delay damages or have its contract terminated for default.
  • A nonexcusable delay, on the other hand, is one where that party caused or is responsible for delays. It may be tagged with the other party’s delay damages or have its contract terminated.

Excusable delays are compensable or noncompensable.

  • Excusable/Noncompensable delays often include unusually severe weather, strikes, Acts of God, Acts of Terrorists, Acts of War. Get time extension only.
  • Excusable/Compensable delays include delays due to changes in work and delays or interferences by the other party. The innocent party can get compensated for its delay damages, unless the contract provides otherwise.

A “no damages for delay” clause shifts the risk of delays back to the innocent party.

A no damages for delay clause in MD is enforceable with 3 exceptions:

  1. delays due to intentional wrongdoing;
  2. delays due to gross negligence, &
  3. delays due to fraud or misrepresentation.

For more information about the book “Construction Subcontracting – A Comprehensive Practical and Legal Guide”, go to www.ober.com.  Under “News,” there is an article about the book and a link to the ABA website, or e-mail Jack Kovars at jckovars@ober.com.

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