TOP 10 CONSIDERATIONS IN A CONSTRUCTION PROJECT

Transcription

1 TOP 10 CONSIDERATIONS IN A CONSTRUCTION PROJECT 10. Obtain Certificates of Insurance naming the Association as an additional insured. 9. Get mechanics lien waivers when the final payment is made. 8. Insist on full indemnification clauses. 7. Stipulate that all extras and change orders must be approved by the Association in writing. 6. Insist on retainage. 5. Don t pay too much up front. 4. Hire a construction professional to draft specs and supervise the work. 3. Make sure that the General Conditions for the job are spelled out. 2. Define the scope of work. 1. Make sure the Board understands the contract. Steven G. Berg, Esq. Frankel & Berg 9 Mott Avenue P.O. Box 909 Norwalk, CT sberg@frankelandberg.com

2 COMMON CONSTRUCTION TERMS Change Order: Consequential Damages: Contract Documents: Cost Plus Contract: Force Majeure: General Conditions: Guaranteed Maximum Cost: A written change to the contract documents, agreed to by the owner, contractor, and architect. It may change the contract sum or contract time, or both. Also called consequential loss. Damages that are not directly caused by damage to property but may result from it. Losses that do not flow directly and immediately, result indirectly from the act. These damages are waived in standard AIA contract documents. The main contract with general conditions, the supplemental conditions contract if any. Contract documents may also include bid documents, side letters and riders. The main contract will normally list all documents included as part of Contract Documents. A contract in which the contractor is entitled to be reimbursed for its costs of time and materials plus a fee. A cause or event beyond the reasonable control of the parties, which could not have been avoided by due diligence and use of reasonable efforts, including but not limited to drought, flood, earthquake, storm, fire, lighting, epidemic, war, riot, civil disturbance, sabotage, explosions, strikes or labor disputes... orders or judgments of any governmental unit, the absence, suspension, termination, interruption, denial or failure of renewal of any governmental approval. Contractual terms will normally address additional delay and costs resulting from a force majeure. Refers to AIA Document A201. This document sets forth the rights, responsibilities and relationships of the parties involved. Since conditions vary by locality and project, supplemental conditions are usually required to amend or supplement portions of the General Conditions, as required by the particular individual project. The amount set forth in the contract documents as the maximum amount of construction cost for the project. Will sometimes be accompanied by provisions regarding shared costs. 1

3 Indemnification: Indirect (Impact) Costs: Letter of Intent: Liquidated Damages: Progress Payments: Prompt Payment Provision: Retention (retainage): Substantial Completion: Termination for Cause: Also called hold harmless agreement. An agreement by which one party agrees to assume the risks of another and pay the costs of the other s defense and legal costs. Increased costs caused by performing change order work. Contractor entitled to make claim for impact of the changes on the rest of the project, such a damages for delay or increased coordination required. A letter that is usually meant to be the prelude to a formal contract. If it contains sufficient information, it may be considered a contract by the courts. Otherwise, it is unenforceable. The amount of damages specified in a contract that will compensate one party for the breach of contract by the other party. This is a pre-determined amount, and has no necessary relation to actual damages suffered. Partial payments made by the owner to the contractor during the court of the project. Contract clause requiring an owner to pay the general or subcontractor within thirty (30) days of any written request for payment from the contractor or subcontractor. C.G.S j(a)(1). The amount withheld from the contractor with each payment, which would otherwise be due, but does not include any sum withheld due to the contractor's or subcontractor's failure to comply with construction plans and specifications. Designed to give owner additional assurance that the project will be complete in case of default by the contractor. Connecticut law limits retainage to 5%. C.G.S k. The stage of a project at which the construction is sufficiently complete so that the owner can occupy the building. Right to terminate a contract because the other party has committed a material breach of the contract. The contract will define what is material and what is not. 2

4 Termination for Convenience: A provision permitting the owner to terminate the contractor without cause. However, AIA contracts provide that under these circumstances the contractor will still have a right to recover lost profit on uncompleted work. Prepared by Barbara G. Hager, Esq. Frankel & Berg 9 Mott Ave., Suite 204 Norwalk, CT bhager@frankelandberg.com October 26,

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