By Bruce Jervis
Construction contracts sometimes establish one party to the agreement as the sole arbiter of all claims or disputes under the contract. In other words, one party plays judge and jury on matters involving that party’s financial self-interest. The unfairness and conflict of interest could not be more apparent.
It is common for an employee or agent of one party, usually the project owner, to serve as the initial gatekeeper of claims. The role of the project architect under the American Institute of Architects contract documents would be one example. Project engineers on public projects play a similar role. But these individuals are not sole arbiters, or final decision makers, on claims. Further review by independent arbitrators, administrative boards, or judicial bodies is stipulated. ... Read more.
Featured in this Week’s Construction Claims Advisor:
- Contractor as Sole Arbiter of Disputes Ruled Unenforceable
- Specification Did Not Quantify Aggregates for Entire Project
- Surety’s Fraudulent Inducement Claim Subject to Arbitration
By Scott Turner
The Supreme Court of Georgia recently issued its decision in Taylor Morrison Services, Inc. v. HDI-Gerling America Ins. Co., --- S.E.2d --- , 2013 WL 3481555 (Ga. 2013) and joined a rapidly snowballing national trend by holding that defective construction work can be covered under the standard commercial general liability (CGL) policy as an “occurrence.”
Taylor Morrison is a homebuilder that was sued in California by 16 homeowners who sought to represent a class of more than 400 homeowners, all of whom owned homes built by Taylor Morrison in three California subdivisions. The homeowners alleged that the concrete foundations of their homes were improperly constructed. They alleged that the foundations were failing and that the defects in the foundations caused “tangible physical damage” to the homes built atop them. The homeowners asserted both breach of warranty and fraud theories of recover. ... Read more.
By Steve Rizer
During a webinar that WPL Publishing held last month, Navigant Construction Forum Executive Director James Zack reported that the average cost of rework in construction projects ranges from about 7.3 percent to almost 11.0 percent. The organization’s review of existing literature on the topic also indicated that the median cost of rework runs about 9.0 percent and that the typical amount of delay caused by rework totals roughly 10 percent.
“Those percentages are unacceptable,” Zack told a target audience of architects, engineers, public and private owners, construction managers, contractors, subcontractors, and others. “Money is too tight. Projects are too critical. We don’t have time for delay in many areas.” Click here to read the steps he suggested for remedying the situation.