As the Coronavirus spreads across the globe, its impact continues to disrupt many industries, including construction.  Over the last twenty years, the construction industry in the United States has substantially increased its reliance on China as a supplier for all types of construction materials including electrical and lighting equipment, elevators and component parts, plumbing fittings

My last article examined strategies for construction managers facing an owner bankruptcy. Now, looking through the lens of the owner, let’s examine best practices when it is the contractor who has filed for bankruptcy.

Throughout New England and the United States the construction industry continues to thrive with several new projects underway and on the horizon. Last month, Dodge Data & Analytics projected that total U.S. construction will increase in 2017 by five percent. Lenders and sureties continue to aggressively underwrite contractors and subcontractors allowing businesses to grow quickly. But growing too quickly can lead to cash flow and labor allocation issues both of which are ingredients for a project bankruptcy.

Continue Reading Recipe for a Project Bankruptcy: Part 2 The Contractor in Bankruptcy Through the Lens of the Owner

My last article examined strategies for construction managers facing an owner bankruptcy. Now, looking through the lens of the owner, let’s examine best practices when it is the contractor who has filed for bankruptcy.

Throughout New England and the United States the construction industry continues to thrive with several new projects underway and on the horizon. Last month, Dodge Data & Analytics projected that total U.S. construction will increase in 2017 by five percent. Lenders and sureties continue to aggressively underwrite contractors and subcontractors allowing businesses to grow quickly. But growing too quickly can lead to cash flow and labor allocation issues both of which are ingredients for a project bankruptcy.

Continue Reading Recipe for a Project Bankruptcy: Part 2 The Contractor in Bankruptcy Through the Lens of the Owner

This is the third post in the four-part series “Limitations of Liability—The Elephant in the Room.”

Owners often attempt to limit their liability to contractors through what is commonly known in the construction industry as a “no damages for delays” clause.  Much like waivers of consequential damages, a “no damages for delays” clause, which limits damages for construction delays, accelerations and other inefficiencies, can serve a fair purpose, despite the perceived severity to a contractor who falls behind schedule for reasons beyond its control.  These delay-related costs (especially indirect costs such as extended home office overhead or lost bonding capacity) tend to be speculative and difficult to prove.  Proving and defending delay claims is also a very expensive proposition, both as to entitlement and quantum.  Finally, project owners presume that contractors are better prepared to confront project delays, and to carry costs for such a contingency in their pricing.

In many jurisdictions these clauses are fully enforceable, albeit with limited exceptions that courts have restricted in recent years.  Contractors that choose to ignore these clauses do so at their peril.

Nonetheless, no contractor can anticipate every delay or impact, and a protracted delay in a project can have a devastating financial impact on the construction team.  There should be a means by which contracting parties can fairly allocate the cost issues that come with unexpected delays, without leaving the door open for speculative claims.
Continue Reading Limitations of Liability— Scenario Two: No Damages for Delay Clauses

The Common Interest Privilege May Offer More Protection Than You Thought.

Consider for a moment a situation when an Owner and a General Contractor want to exchange confidential communications relating to a potential legal matter. When the Owner and Contractor are not both parties in a suit, what protections might they have?

One possible consideration