ConstructionAdvisorToday

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Commentary from Construction Claims Advisor Editor Bruce Jervis will resume next week in a new online newsletter that WPL Publishing will launch Monday, July 16. ConstructionPro Week not only will feature Bruce’s expert coverage of construction law issues and cases, but also exclusive news and insight relating to developments involving green buildings, building information modeling, and project controls. WPL will publish ConstructionPro Week through its new ConstructionPro Network website (www.ConstructionProNet.com), which will provide expert training, education, and development resources for the construction industry. Among the many features of a premium subscription to the membership website are a webinar download library; past editorial content from Construction Claims Advisor, Construction Advisor Today, and other WPL publications; plus WPL’s new online bookstore offering webinar CDs, books, and special reports.

WPL Publishing will stop publishing new editorial content on the Construction Advisor Today website next week. To be sure that you receive a free version of ConstructionPro Week, click on the red “Free Email Updates” button in the upper-right corner of the Construction Advisor Today homepage (www.constructionadvisortoday.com) and provide the requested information.

We’re confident you will enjoy the new service and benefit from what it has to offer.

For additional information, visit www.ConstructionProNet.com or call WPL Publishing at (301) 765-9525.

Featured in Next Week’s Construction Claims Advisor

• Engineer’s Limitation of Liability Clause Enforced
• Conditional Proposal Rejected Without Negotiation
• Contractor Not Excluded from Work by Affirmative Action Program

DOE Awards Nearly $14 Million to 22 States for Improving Building Energy Efficiency

The U.S. Department of Energy (DOE) recently awarded roughly $14 million to 22 states and territories to conduct energy-efficiency upgrades in public facilities and develop local policies and programs to help reduce energy waste. These State Energy Program grants will support whole-building energy-efficiency upgrades "across hundreds of public buildings, saving millions for state and local governments and creating new local jobs for energy auditors, architects, engineers, and construction workers," according to the federal agency.

Worldwide Market for CAD in the Civil and Construction Industry Expected to Reach $578 Million by 2015

The global market for computer-aided design (CAD) in the civil and construction industry will total $578 million by 2015, representatives of London-based TechNavio told Construction Project Controls and BIM Report (CPC/BIM) via an email interview. The company foresees a compound annual growth rate (CAGR) of 7.05 percent between 2011 and 2015 with vendors Autodesk Inc., Bentley Systems Inc., Dassault Systemes S.A., and Intergraph Corp. dominating the market.

One of the key factors contributing to this market growth is the need for modular infrastructure development, according to TechNavio. “The global CAD market in the civil and construction industry has also been witnessing the development of cloud-based CAD solutions. However, the emerging threat from open-source and pirated CAD software solutions could pose a challenge to the growth of this market.”

Limitation of Liability Clauses: Are They Fair?

Bruce Jervis, Editor
Construction Claims Advisor

Limitation of liability clauses have gained wide use in professional service agreements, particularly among design professionals and construction managers. These clauses state that the consultant’s total potential liability to the client is limited to the greater of a stipulated amount, frequently $50,000, or the fee that was paid by the client.

The rationale for these clauses is that the liability exposure created by involvement in a construction project is disproportionate to the limited role of the consultant and the compensation it receives. Some contractual allocation of risk is in order.

These clauses have been repeatedly challenged in court, to little avail. The general rule is that they are enforceable if they were openly negotiated and not surreptitiously or unilaterally imposed. Artful scriveners have responded by placing the clauses in bold print and including a statement that the client may negotiate a higher limitation of liability amount for an additional fee.

That was the situation in a recent case out of Mississippi. The client, a general contractor, argued that the consultant, a testing laboratory, imposed the limitation as a precondition for doing business. How could that be, asked a federal court, when the clause itself invited negotiation of a higher limitation amount?

But are these clauses truly arm’s length transactions between commercial equals? Or are they imposed as a precondition to receiving specialized service? And are these clauses a rational allocation of risk or an attempt by professional service providers to avoid responsibility for their own work product? I welcome your comments.

Featured in Next Week’s Construction Claims Advisor:

• Prime Sanctioned for Violating Subcontracting Limitation
• Prime and Sub Never Agreed on Evolving Scope of Work
• Late Payment by Prime Contractor Not Justified by Lien Waiver Confusion

Building Owners with Green Workspaces Have Something New to Smile About

The results of a recent survey should put smiles on the faces of building owners who are thinking about charging hefty premiums for the use of their green workspaces. Overall, tenants responding to Kingsley Associates’ survey expressed more satisfaction being in buildings with a BOMA (Building Owners and Managers Association) 360 designation -- which includes standards for indoor air quality, building management, and other environmentally impactful factors -- than traditional buildings.

Worldwide Market for BIM Software, Services Expected to Boom over the Next Eight Years

Expect the global market for building information modeling (BIM) software and services to soar over the next eight years, more than tripling over that period, according to a report that Pike Research recently released. The Boulder, Colo.-based research firm believes that annual worldwide revenue for BIM products and services solutions will rise from about $1.8 billion this year to nearly $6.5 billion in 2020.

Relatively strong growth is expected for the next several years in those regions of the world where BIM adoption has taken hold, including North America, Western Europe, and the Asia Pacific. Although North America and Western Europe are leading the market, Pike foresees a higher rate of growth in the Asia Pacific region. “Much of this is due to the fact that the Asia Pacific region has a large building stock as well as a significant amount of building and construction taking place.

Are Limitations on Subcontracting Advisable and Enforceable?

Public works contracts frequently include clauses limiting the subcontracting of the work. The prime contractor is required to perform a stipulated minimum percentage of the work, typically 50 percent, with its own forces. The policy behind these limitations is to award public contracts to companies that will actually construct the projects, not just bid, bond and broker out the work.

Energy-Saving Performance Contracts Reportedly Gaining ‘Renewed Interest’

Washington, D.C. -- Energy-saving performance contracts (ESPCs) “are getting a lot of renewed interest right now” for helping the federal government achieve its energy-efficiency goals, Federal Performance Contracting Coalition Executive Director Jennifer Schafer told attendees of the 15th Annual Congressional Renewable Energy & Energy Efficiency Expo + Forum last week. In addition to a resurgence in ESPC popularity, other news coming out of the conference involves the progress of two federal facilities that are expected to serve as models for green design and operation, a prediction concerning Building Performance Institute Inc.’s (BPI) certification program for home performance, and the market outlook for energy-efficient light-emitting-diode (LED) technology. Here is a summary of each development:

Researchers See No Quick-and-Easy Fix for Improving Construction Craft Productivity

There is no quick-and-easy solution for improving construction craft productivity, but a series of steps can make significant headway toward this end, according a 368-page report that the Construction Industry Institute (CII) published earlier this month. The report focuses on the second phase of a six-year research project for finding the best ways to improve construction craft productivity.

Are Subcontractor Pass-Through Claims a Sound Administrative Practice?

A prime contractor’s sponsorship of a subcontractor’s claim is an expeditious way to resolve disputes involving significant subcontractor costs. Under these arrangements, frequently referred to as pass-through agreements, the prime asserts a claim against the project owner which includes the costs incurred by the sub. The prime passes through to the sub the money recovered from the owner, if any, attributable to the sub’s work. The subcontractor in turn waives any other claim against the prime contractor.