pronetworknews_201301For design professionals, it’s good business to have a solid, fair contract in place before you begin work on a project. So, what are the three essential rules of putting together a construction contract? Our January 2013 ProNetwork News newsletter has the answer:

In the construction world, the contract rules the parties. It is the blueprint (pun intended) that says what you can be sued for, when you can sue the other party, and what your damages will be. If you do not have any written contract, the law presumes certain things that you may not want it to presume. Therefore, you must treat the contract seriously, and consider these three essential rules.

  1. Put all agreements in writing
  2. Negotiate or strike through unfair or one-sided terms
  3. Deal with discrepancies between the Proposal for Services and the Contract

(1) Put all agreements in writing

Design professionals who rely on “handshake” or “gentlemen’s agreements” are playing a game of Russian roulette. One bad project, and you’ll wish that you had a well-written, reviewed and negotiated contract.

Written contracts are crucial to enforcing binding agreements once the dirt begins to turn. Memories fade, records are lost, and key employees leave. Having all the crucial terms in writing eliminates the need to argue over how changes are handled, how compensation issues are dealt with, and how disputes are decided.

(2) Negotiate or strike through unfair or one-sided terms

While a written contract is important, it is almost better to have no written contract than to have a poorly negotiated, unfair, or unclear written contract. Continue reading “The Construction Contract: 3 Essential Rules”

A steadily improving economy is spurring on construction activity in most regions of the county, and stimulating speculative development.

2012_ABIgraph

The following is an excerpt from the AIArchitect Blog post on the annual Architectural Billings Index report for 2012:

Final ABI for 2012 Caps Strongest Year Since 2007

“Architecture firms continued to report improving business conditions in December, with an Architecture Billings Index (ABI) score of 52.0. (Any score above 50 represents billings growth). While the pace of billings growth slowed slightly from November, it is still the fifth consecutive month of growth, which means eight months of 2012 showed improving business conditions, the most in one calendar year since 2007. Inquiries into new projects remained strong, and firm backlogs for the fourth quarter inched up slightly from the third quarter to an average of 4.5 months.

Business conditions continued to improve at firms in all regions of the country in December with the exception of firms in the West, which continued to struggle to recover from nearly five years of declining billings. Firms located in the Midwest reported particularly strong firm billings last month after suffering a period of softness in the middle of the year. And for the third consecutive month, firms of all specializations reported experiencing increasing firm billings. The pace of growth has slowed significantly from the middle of the year for firms with a residential specialization, but continues to improve for firms with a commercial/industrial specialization.”

You know all this good news makes you want to read on… and you can! Visit the AIArchitect blog for the rest of it.”

Shout-Out Credit: 

Leslie Pancoast, CIC, RPLU
Past President of a/e ProNet
Managing Partner of IOA Insurance Services – Pleasanton, CA
Email: Leslie.Pancoast@ioausa.com / Phone: 925-416-7862

Remember when Architects and Engineers were still pondering the sustainability of the sustainability fad? In 2009, posts like LEED Accreditation – Fad or Necessity? from the Civil Engineering Central Blog and Is LEED a Load? from the Archinect Discussion Forum were popping up all over the place. Four years later, the industry may have a better grasp on what green means, but some of those original fears and worries may also have a right to remain. This week’s installment of Friday Finds by a/e ProNet includes a pair of articles commenting on the current status of LEED and Green Design.

As Important As It Is, LEED Can Be So Embarrassing — via TheAtlanticCities.com

TrentBell_LEEDphoto
The New American Home 2013 by Trent Bell via The Atlantic Cities

“But, man, there are a lot of warts in this system.”

LEED has been criticized for:

Being insufficiently demanding of its applicants. Shoot high enough to seem relevant, but low enough that designers will see the standards as achievable and worth trying for.

USGBC, although a non-profit, needs revenues to keep the system going. “If difficulties in the standards or the process of application are too demanding, fewer potential applicants will be willing to pay the costs of documentation and formal review.”

Has “become pro forma, more about earning points than achieving actual environmental performance.”

“I recount this long-winded intro because my friend Lloyd Alter of the environmental website Treehugger has just written a terrific story about a new, supposedly super-green house being touted as “the new face of efficiency” even though it’s really a gigantic luxury house placed in a location where residents have no choice but to drive long distances to do anything.  This is ultra-green?  Sadly, LEED seems to think so.”

Read more about The New American Home 2013.

Designers’ Risk: The Dark Side of Going Green — via The Illinois Construction Law Blog

green_construction“The language and presumptions of sustainable “green” design are changing a significant portion of the landscape for all stakeholders in the construction and building-related industries.  “Green” building impacts everything from the selection of carpeting and window treatments to how far the materials have to be shipped to the project before installation.  And with ever evolving sustainable design standards and building codes (e.g. the International Green Construction Code), it is important that designers understand how “green” projects affect their risk. “

Here’s hoping the continued dialogue on these issues will lead to a better understanding and implementation of LEED.

[youtube http://www.youtube.com/watch?v=Hdpf-MQM9vY&w=560&h=315]

In this video, you can watch the construction of a 30-story apartment building in less than 3 minutes. That’s the beauty of time-lapse technology. But the reality is also super fast. The apartment building, comprised of 30 floors built in sections, “each measuring 15.6 by 3.9 meters, with a depth of 45 centimeters,” was built from the ground up in just 15 days.

“Zhang Yue, founder and chairman of Broad Sustainable Building, is not a particularly humble man,” writes Lauren Hilgers in her recent piece for Wired magazine. “A humble man would not have erected, on his firm’s corporate campus in the Chinese province of Hunan, a classical palace and a 130-foot replica of an Egyptian pyramid. A humble man, for that matter, would not have redirected Broad from its core business—manufacturing industrial air-conditioning units—to invent a new method of building skyscrapers. And a humble man certainly wouldn’t be putting up those skyscrapers at a pace never achieved in history.”

The efficiency made possible by this copy-paste style of construction could change the way whole cities are designed in China, the country with the highest population in the world. But what impact will it have elsewhere? And what are the risks of such speedy construction?

In October 2012, Evan Osnos wrote Boss Rail, an article for the New Yorker magazine which revealed the flaws in China’s recent high-speed rail boom.

“In 2003, China’s Minister of Railways, Liu Zhijun, took charge of plans to build seventy-five hundred miles of high-speed railway—more than could be found in the rest of the world combined… With a total investment of more than two hundred and fifty billion dollars, the undertaking was to be the world’s most expensive public-works project since President Eisenhower’s Interstate Highway System, in the nineteen-fifties. To complete the first route by 2008, Minister Liu, whose ambition and flamboyance earned him the nickname Great Leap Liu, drove his crews and engineers to work in shifts around the clock, laying track, revising blueprints, and boring tunnels… When the first high-speed line débuted with a test run in June, 2008, it was seventy-five per cent over budget and relied heavily on German designs.”

On July 23, 2011, lightning struck a signal box outside the city of Wenzhou, and gave one of the high-speed trains a green light rather than a red on. The resulting crash killed 40 people and injured 192. It was this tragedy that forced China to take a closer look at what turned out to be a highly pressurized process, hobbled by the corruption of government officials, as well as the illegal practices of wealthy citizens.

Sacrificing oversight and transparency for speed is a concern, especially since China is already in the architecture world’s line of fire these days due to frequent accusations of copyright infringement (Creative China, Cutting and Pasting?). In a recent example, the New York Daily News wrote, “Already famed for fake designer bags and pirated DVDs, imitation in China may have reached new heights with a set of towers that strongly resemble ones designed by renowned architect Zaha Hadid.”

But Hadid might be the first to remind her counterparts that the existence of China’s specific market, even taking into account the political structure and shaded history, is beneficial. She has worked extensively in China, crediting the country as a major influence on her evolution and success as an artist. In a November 2012 piece published by Newsweek, author Melinda Liu quotes Hadid as saying, “Every country has its local requirements. In China, the requirement is to be big. Where else can you get this scale? That’s its Chineseness.”

Whether this latest exercise in speed and efficiency will be primarily positive for the world of architects, engineers, and builders remains to be seen.

october_pronetwork_newsThe following is an excerpt of Part 2 in this two-part series. In Part 1, author Eric Singer covered Veni (I went to the site) and Vidi (I observed for general conformance with design intent).

Lis Pendens – I got sued anyway

Sometimes observable deficiencies get missed, or the timing, relative solvency or insured status of the parties and plain old bad luck conspire to force you to defend your compliance with the standard of care. In tort claims (injuries, property damage or other calamities), most states have procedural mechanisms to apportion fault among the parties or to add parties potentially at fault. Contract lawsuits are different and an owner could choose to pursue the A/E and leave the contractor alone or to settle and join forces with the contractor. In contract cases, many jurisdictions make it difficult for an architect to pursue claims against a contractor without a direct contract. You can defend by blaming the contractor’s “empty chair” or try a more aggressive approach. The general conditions may provide you with some ammunition.

General Conditions frequently contain a warranty in favor of both the owner and the architect. The AIA A201 (2007), for example, provides “The Contractor warrants to the Owner and Architect that materials and equipment furnished under the Contract will be of good quality and new unless the Contract Documents require or permit otherwise. The Contractor further warrants that the Work will conform to the requirements of the Contract Documents and will be free from defects, except for those inherent in the quality of the Work the Contract Documents require or permit.” (A201 – 2007, §3.5). Interpretation of this provision and rights of the architect in these circumstances varies greatly state to state. If viable in your state, a warranty claim against the contractor may prevent the owner and contractor from settling cheap or joining forces against the design team.

To read about Vici, I conquered, visit our website where you may download the full PDF version of this October 2012 issue (and all previous issues) of our ProNetwork Newsletters.

About the Author: Eric Singer is a partner at Ice Miller, LLP. He concentrates his practice in construction law, with emphasis on the representation of architects, engineers, contractors, owners, and lenders as well as other professionals, in litigation and alternative dispute resolution of design and construction issues. Mr. Singer, who was awarded his J.D by the University of Chicago Law School, is a former Professional Affiliate Director of the American Institute of Architects of Chicago and is a member of multiple bar associations and design professional groups. Recently ranked as AV Preeminent by Martindale-Hubbell and listed in The Best Lawyers of America, Construction Law, by those peer-review organizations, Eric is an active speaker and prolific author on the subject of construction litigation and the liability of the design professional. Contact Eric Singer at: eric.singer@icemiller.com

Don’t forget to contact your local a/e ProNet broker if you have any questions!

As the world rings in 2013, The ProNet Blog is celebrating its one year anniversary. We had high hopes for the blog at the start of 2012, but those expectations have been exceeded in every way. In the last 12 months, we’ve posted 68 articles on architecture and architects, engineering and engineers, and the insurance industry that backs them up. This has allowed several thousand visitors to find the information they wanted and needed.

Burj Khalifa 2012 Fireworks. Photo via arabianbusiness.com.
Burj Khalifa 2012 Fireworks. Photo via arabianbusiness.com.

In the spirit of hopefulness that should belie the eve of any new year, we turn now to what got us off to such a great start last year, Burj Khalifa, the tallest building in the world, and one which is dominating headlines this New Year’s Eve.

For starters, tonight’s fireworks display is highly anticipated. One Lebanese businessman is reported to have shelled out almost $20,000 to spend New Year’s Eve in a 7,000 sq-ft penthouse apartment in downtown Dubai with an excellent view of Burj Khalifa. He’s just one of the more than one million people expected to party-in the new year Dubai-style. Good news! For those of us who can’t quite make it downtown by midnight, we can watch the Burj Khalifa fireworks live on YouTube!

Besides, squeezing in close to the overwhelming structure might be better in theory than in fact, especially given Kate Ascher’s recent  interview with NPR’s Terry Gross. The author of The Heights: Anatomy of a Skyscraper revealed that, as Gather.com put it, “Yes, the tallest structure built by man could also be considered to be the smelliest.”

GROSS: Well, it really illustrates one of the paradoxes of modern life, that we have these just incredible structures that reach, you know, that seem to reach to the sky and then in a place like Dubai you have a 24 hour long line of trucks waiting to dispose of the waste from those buildings.

ASCHER: Right. Well, you know, you have to remember that a place like Dubai really emerged in the last 50 years. It was a sleepy, you know, Bedouin town half a century ago. And what you do is when you bring in the world’s, you know, most sophisticated architects and engineers, you can literally build anything, including a building of 140 or 150 stories. But designing a municipal network of sewage treatment is in some ways more complex.

Supermodel & Superskyscraper. Photo via Emirates 24/7.
Supermodel & Superskyscraper. Photo via Emirates 24/7.

Maybe the smell explains why, earlier this month, supermodel Heidi Klum tweeted a picture of herself with the superskyscraper far, far, far off in the distance. “If you can see past my loud outfit….that is the worlds tallest building!”

Some people remain undeterred, however. An Emirati mountaineer, Saeed Al Memari, has been given the green light to climb the side of Burj Khalifa and perform a base jump from the top on January 1. Al Memari had originally wanted to make the jump on New Year’s Eve, but the fireworks spectacular would, apparently, have made the stunt “too dangerous.” Once the fireworks are done, it should be no problem. Call me crazy, but this sounds… crazy.

Meanwhile, last week, a 32-year-old Commando in the Royal Navy, fueled more by charity than by adrenaline, climbed more than 3,000 feet of rope to raise money for the Children’s Happy Hospital Fund. Sergeant Rob Garthland began the Burj Khalifa Rope Climb Challenge at 7:00 a.m. and “completed 110 climbs of a 30 foot rope in HMS Raleigh’s gymnasium” by 4:00 p.m. He hopes to raise about 1,000 GBP for the charity. Help him reach his goal by donating today!

We wish all of our readers a safe, celebratory New Year! And we hope you’ll visit us for more design industry resources, updates, and information in 2013.

100 Years of Zurich

zurich100years_adA treat for Architects, Engineers, and roller coaster enthusiasts alike.

In 2012, Zurich Insurance celebrated their 100th anniversary. A century spent insuring people, places, and things has given the company a fascinating historical perspective, from covering one of the rides at the Chicago World’s Fair to utilizing special training to help employees handle the first computers.

Visit 100 Years Insuring America, Zurich’s special anniversary web feature, to explore the last century through the eyes of one of the country’s leading insurance companies. Check out cool black and white photos, old advertisements, and a timeline organized by decade.

“Zurich first brought its knowledge and experience in workers’ compensation insurance from Switzerland to America in 1912 to help its customers take intelligent risks.” Today, “Zurich employs about 60,000 people serving customers in more than 170 countries.” Read more about Zurich at their website.

Learn more about Zurich’s insurance program for Design Professionals here. And if you have any questions or if you’re interested in obtaining a quote from Zurich, contact your local a/e ProNet broker today!

Excerpted from the September 2012 issue of ProNetwork News, part one of a two-part series:

pronetworknews_sept2012What if Caesar had written “I came to the project site, I observed for general conformance with the Contract Documents but not for means or methods or work covered since my last visit” and then wrote a three word report? Caesar was a master of understatement and understatement leads to misunderstandings and, well, understatement. Architects have always faced liability for undiscovered construction defects but current economic times have forced many contractors out of business. With the typical lack of contractor insurance for defective work, A/E’s are the only solvent or insured pocket, leaving design professionals more vulnerable to construction defect claims than in the past.

Veni – I went to the site

Those preaching risk reduction used to urge that architects and engineers leave construction administration to construction managers and contractors. This approach allowed or even encouraged contractors, CMs, program managers and owner’s representatives to take market share for services formerly performed by A/E’s. It also missed the point. Design professionals do not seek to eliminate liability, but to manage the reasonable risks of design practice. Reasonable risks are those placed with the party able to control them.

If an owner wants an A/E to ensure perfect construction, the project is doomed to fail for two reasons. First, there hasn’t been perfect construction since the Pyramids (and they had different labor and insurance agreements in those days). Second, the A/E does not control all of the variables that go into a construction project. There are elements of construction installed and concealed by the time the A/E arrives for a weekly or monthly meeting and site tour and even the most gifted A/E is powerless to see through walls. Continue reading “Veni, Vidi, Vici, Lis Pendens: I came, I saw, I got sued – Part 1 of 2”

Construction observation is a powerful weapon for architects and engineers (A/E) in their risk management arsenal. Certain clients understand the benefits when A/E firms offer construction phase services. However, driven by slow economic conditions, many clients are asking firms to do more, with less, including reducing or eliminating construction phase services. Other clients decide they will administer the construction contract themselves or decide to use a third party instead of the A/E firm.

Clients have also held the A/E to a higher standard of care when providing construction observation services. How do these actions affect A/E firms? It significantly increases the A/E’s risk and liability exposures.

Construction Phase Risks

Details in design documents cannot anticipate every contingency that may occur during the construction phase. If the A/E firm of record is not retained to provide clarification of the plans and specifications the risk of misinterpretation of the contract documents increases.  Bad decisions can lead to project confusion, delays, increased costs, disputes and claims between the owner and the A/E.

The exposure of the A/E is increased due to certain owners and contractors asserting that the designer has a similar responsibility of the contractor for discovering all defects on the project. Based on this distortion and unrealistic expectation of construction observation services, owners and contractors have stated the A/E should be a guarantor of the contractor’s work. These expectations dramatically increase the A/E’s standard of care and risks associated with construction phase services. Court decisions have ruled in Owners’ favor holding that the A/E has a duty to guard the owner against all non-conforming work on the project, although much of that work was completed when the firm was not present on-site. Members of the plaintiff’s bar continue efforts to hold the A/E accountable for this higher standard of care for construction phase services. Continue reading “Construction Observation: Important Risk Management Service”