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Friday
Dec162011

Construction Schedules & Delay Claims -- Schedule Uses, Schedule Importance & Schedule Updates

This is the first in a series of articles on Construction Schedules and Delay Claims.  This article addresses (1) schedule uses; (2) schedule importance; and (3) schedule updates.

I.  Schedule Uses.

The Schedule has several uses.  The Baseline Schedule explains how the contractor is going to build the project.  The Schedule also aids in subcontractor management.  It is an important tool for both general contractors and subcontractors for coordination of activities.  Schedule Updates allows the parties to graphically determine progress when compared to the Baseline Schedule.  A proper Schedule also depicts changes in scope and the effect on the Schedule.  Schedules are obviously used for claim prosecution and claim defense.

II.  Why is the Schedule Important.

All construction contracts should have two basic elements in the scope of work.  The first element of the scope of work is the labor and materials to construct the building.  The second element of the scope of work is to construct the building within a stated amount of time.  A delay in the schedule is a breach of the contract -- for the Owner, for the contractor, for the subcontractors.

Delay claims are difficult to prove because there are so many variables, so many different entities involved, a lot of educated guesses, and great expense (lawyers and experts).  However, these claims serve practical purposes, aside from litigation and arbitration of these claims:         

  • Negotiation at project close-out with owner.  Often, the final payment is the most difficult payment to receive.  At that time, general contractors may receive numerous backcharges from the owner against the final contract balance.  Even if some of those claims are legitimate, a well documented and noticed delay claim can be used to negotiate a final close-out that is acceptable, even if the general contractor does not receive delay damages.
  • Negotiation at project close-out with subcontractors.  Some subcontractors routinely submit delay or inefficiency claims, using so-called industry data to support the claim.  Using the subcontract and the schedule during the project to notice the subcontractor of its schedule delays will assist in a timely project close-out.  Additionally, when faced with a troubled project from a schedule standpoint, the contractor must, during the project, be able to document specific delaying events and impacts for each subcontractor.

III.  Schedule Updates.

Periodic Schedule Updates serve several uses:

  • They keep all parties (owner, contractor, subcontractor) up to date on the progress and what needs to occur to remain on schedule (or to catch up on the schedule)
  • They serve as a control for the contractor.  The Schedule Update shows the contractor where it is on the schedule, where it can pick up time, where and who is falling behind schedule. 
  • Schedule Updates can also serve as a cost control mechanism.  If the project is falling behind schedule and that is depicted on the schedule updates, the contractor knows that it will incur additional expense either (1) through extended general conditions; or (2) acceleration payments to subcontractors.  Often, without proper updating, the contractor will fall behind schedule, start paying subcontractors for overtime to accelerate, but not know (1) who is responsible; or (2) how much it will cost.  More often than not, it is too late when the costs are realized.                    

Schedule Updates generally show one of three things:  (1) on schedule; (2) behind schedule; or (3) ahead of schedule.  As a result, distribution of schedule updates can be a sensitive issue.  As an initial matter, the general contractor must review the contract requirements.  Many contracts require that periodic schedule updates be published to the owner.  In these instances, the schedule updates must be drafted with care.  It is never wise to ignore bad facts or bad news regarding the schedule until the end of the project.  However, it is also not good practice to overload the owner with information that consists mostly of projections.  A reasonable way to approach schedule updates that are distributed to the owner is to provide summary schedule updates (if allowed by the contract).  If the summary shows a delay, then the general contractor should be prepared to discuss (1) the reasons for the delay; and (2) possible solutions to mitigate the delay.

For additional information, please contact Jack DiNicola at DSU.

 

Wednesday
Nov162011

DiNicola Addresses BC Law Students on Construction Law Careers

On November 14, 2011, Jack DiNicola, partner at DSU, and Jim Tierney of the Boston Redevelopment Authority presented a lunch discussion concerning legal careers in construction law and development law to students at Boston College Law School. 

Mr. Tierney discussed his career path and a typical day working for the BRA in evaluating construction and development projects.  Mr. DiNicola discussed his career path and a typical day working on behalf of general contractors and other participants in the construction industry.

Wednesday
Oct052011

Practical Tips for Local Permitting

Andrew Upton authored an article in the Fall 2011 Boston Bar Journal on practical tips for local permitting.  Here is the link to the article:    http://www.bostonbar.org/pub/bbj/bbj_online/bbj1112/fall2011/PracticeTips1.pdf.

Thursday
Sep292011

Non-Compete Agreement Cannot Be Extended By Employer

By Damon M. Seligson, Esq.

In the case of EMC Corporation v. Arturi, et al., the United States Court of Appeals for the First Circuit ruled that an employer could not equitably extend a non-competition agreement with a former employee beyond the agreed-upon duration of the agreement, and instead is left with a damages remedy only.  

            In the underlying case filed in the United States District Court for the District of Massachusetts on the basis of diversity, the plaintiff, EMC Corp., sought, among other things, a preliminary injunction against its former employee, Christopher Blotto, forbidding violation of his employment agreement.  Specifically, EMC sought to enforce the agreement to enjoin Blotto from competing with EMC; from soliciting EMC’s customers and remaining employees; and from possessing and using confidential information gained while employed.  District Court Judge, Frank D. Saylor, IV granted a preliminary injunction as to the confidential information, but not as to competition or solicitation, declining on the ground that the contractual restrictions on these activities limited Blotto’s efforts for one year only, a period that had passed before any injunction could be issued. 

            EMC Corp. appealed to the U.S. Court of Appeals for the First Circuit.  Associate Justice David H. Souter (Ret.) of the Supreme Court of the United States, sitting by designation, wrote the decision.  

            In short, the First Circuit Court of Appeals agreed with Judge Saylor’s decision below.  Judge Souter noted that because the case was venued in federal court of the basis of diversity of jurisdiction, the law of Massachusetts governs.  In All Stainless, Inc. v. Colby, 364 Mass. 773, 308 N.E.2d 481, 485 (1974), the Supreme Judicial Court of Massachusetts stated that, after a non-compete expired, the only relief available to an employer for an employee’s contract breaches is monetary damages.  Accordingly, the First Circuit Court of Appeals denied EMC Corp.’s appeal. 

            Both Justices Saylor and Souter, however, expressly noted that an employer such as EMC Corp., which typically stands in a superior bargaining position relative to an employee, could have “contracted” around the issue.  In Arturi, however, EMC Corp. did not.  Thus, the request to extend the restriction period beyond the agreed-upon twelve months was denied.  

Going forward, the impact of Arturi will likely be that employers will contract around this issue by including a tolling of the term of restriction during litigation, or for a period of restriction to commence upon preliminary finding of breach.     

            A copy of the opinion can be accessed at: http://www.ca1.uscourts.gov/pdf.opinions/11-1001P-01A.pdf

   

Friday
Sep232011

New Alcoholic Beverages Control Commission Member Named

Kathleen McNally to be Associate Commissioner of Massachusetts ABCC


Kathleen McNally was named this week to the three-member state Alcoholic Beverages Control Commission, which oversees liquor licensing activity in Massachusetts. She joins ABCC Chair Kim Gainsboro and Associate Commissioner Susan Corcoran. McNally worked as executive secretary and general counsel for the Licensing Board for the City of Boston from 1997 to 2002. Our brief canvas of professionals who have worked with McNally in the past revealed praise for her expertise, experience and calm demeanor.

September 23, 2011