CONSTRUCTION LAW AND RISK MANAGEMENT
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1 Course Objective: CONSTRUCTION LAW AND RISK MANAGEMENT The objective of this course is to take an advanced look at the legal principles of construction law and how it applies to engineering and project management and to explore best practices of dispute resolution as it relates to project management. Topics will include: General principles of construction law including completion, defects, retention, certification, licensing and contract provisions Practical focus upon legal concepts applicable to the construction industry Relevant provisions of standard form building contracts Contractual relationships in the engineering and construction industry and the actions that result in disputes. Major emphasis is on the principal contractual relationships (owner-contractor, owner-architect/engineer, contractorsubcontractor, and architect/engineer-consultant) Contractual relationships, contract performance, liability and negligence, surety bonds, insurance, mechanics' liens, bidding and procurement rules and change orders Legal issues and business issues that impact project management Emphasis on techniques for preventing disputes and techniques for resolving them (negotiating, mediation, arbitration, and litigation the steps required for rapid, cost-effective resolution) Claims avoidance & analysis procedure Students will also explore in-depth the relevant case law and statutory information pertaining to the leading construction and engineering law impacting project management along with practical insights with group analysis and discussion. Provided below is a class by class description of the course: Class 1: Introduction/Historical Perspective of Construction Law Players in the Construction Process o Owner o Design Team o Construction Team Owner s role/spearin Doctrine Project Delivery Systems o Overview o Evolution of different approaches o Design bid build o Construction management o Agency
2 o At-risk construction management o Design-Build Contracting for Construction Projects o Contract formation o Selecting contract form o Overview of Standard Industry forms AIA AGC EJCDC The Contract o Design Agreement (Owner A/E) o Contract Documents (Owner Contractor) o Integration Clause o Incorporation by reference vs. enumeration of documents o Conflicts Contract Interpretation o Rules of construction contract interpretation o Parol evidence o Ambiguity and intent of parties o Reasonable and logical interpretation of entire contract o Interpretation against drafter o Course of performance and prior dealings o Custom and usage Parties to the Construction Contract o Owner Engineer o Owner Contractor o Third Party Beneficiaries o Other Parties Class 2: Design Undertakings o Overview of contractual relationship among parties: Owner/Engineer/Contractor/Subs o Statutory Regulations and Licensure of Design Professionals o Building Codes and Design professional o Standard of Care Applicable to Design Services o Implementation of the Design through Contractors Value engineering Common Law Contractual Standard of Care Implied Warranties Contractor Selection o Private procurement o Public procurement Pricing Construction Contracts o General pricing mechanisms
3 o Stipulated sum o Cost Plus o Guaranteed Maximum Price o Unit Price o Specific price related terms o Contract terms related to pricing Material price escalation clause Interim payment clause Subcontractors & Suppliers o Difference between a sub and a supplier o Selection of subs and suppliers o Subcontractor bidding who is bound by bid o Flow-down obligations and rights o Coordination of subcontractor work o Subcontractor indemnity obligations o Payment to subcontractors and suppliers o Subcontractor claims Class 3: Construction Safety o Accident Prevention State legislation OSHA Contractual responsibility o Recovery of Compensation for Construction Accidents Workers compensation Tort o Risk Allocation and Transfer of Risk Insurance Indemnity Assumption of risk Workers compensation Payment o Basis of Payment o Payment Process o Substantial Completion/Substantial Performance o Final Completion/Final payment o Specific Payment issues Paid if Paid Pay when Paid Prompt Payment Act False Claims Lender Liabilities
4 Contract Time & Completion o Significance of Time for Performance o Critical Path Method Schedules o Legal Significance of Construction Schedules o Time of Commencement and Time for Completion o Waiver of Time for Completion o Compensable & Excusable Delays o Substantial completion o Damages for Late Completion o Liquidated Damages o No Damage for Delay Clause Construction Scheduling o Types of Schedules Bar Chart Critical path Method o Standard Schedule Specifications o Baseline Schedule o Schedule Updates o CPM Proof of Delay Claims Class 4: Changes o Purposes of a change order clause o Change order process o Authority to issue changes o Notice requirements for claims for changes o Adjustments to contract price and completion date o Constructive changes o Duty to perform changed work o Cardinal changes o Administration of changes o Release Accord & Satisfaction Differing Site Conditions o Common Law o Regulatory and other standard frameworks o Elements of a federal differing site condition claim Type 1 Type 2 o Limitations on claims for a differing site condition claim o How states handle differing site condition claims Class 5: Mechanics Liens o History o Statutory framework o Lien categories
5 o Requirements for a lien o What is lienable o Interest subject to a lien o Perfecting the lien o Priorities o Public Projects o Waiver & Release o Bankruptcy Termination & Default o Contractual termination provisions o Material breach o Termination by Agreement o Notice & Opportunity to cure o Wrongful termination o Termination & the Surety Class 6: Defective Construction o Overview o Owner claims against the Contractor o Claims against the Design Professional o Spearin Doctrine & conflicting warranties o Time based defenses to liability Insurance & Bonds o Role of Insurance o Contractual Insurance Requirements o Workers Compensation Insurance o General Liability Insurance Policies o Builders Risk o Waivers of Subrogation o Professional Liability Insurance o Surety Bonds o Performance Bonds o Payment Bonds Class 7: Damages o Introduction o General measures of damages o Entitlement/quantification of damages o Calculation and proof of compensatory damages o Mitigation of damages o Contractual and other limitations of liability Economic Loss Rule in Construction Law o Economic loss rule o Scope and purpose
6 o Application where parties are in privity of contract o Application where parties are not in privity of contract o Economic loss as applied in Torts Class 8: Dispute Resolution Process o History of ADR in construction o Spectrum of dispute prevention o Application of ADR in construction settings Class 9: Dispute Resolution Process o Conclusion of Dispute Resolution Process Review of Course for Final Class 10: Final Exam o Multiple Choice o Essay/Written Text: Construction Law by William Russell Allensworth, Ross J. Altman, Allen L. Overcash, Carol J. Patterson; ABA, 2009 Legal Aspects of Architecture, Engineering and the Construction Process by Justin Sweet, Wadsworth Inc. Publisher, 8 th Edition, 2009 Software: None Grade Determination: Class and Study Participation 10% Homework/Paper 15% Final Exam 75%
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