Legal Construction Management Risks

Posted on: May 22, 2017 by Huntersure

In our previous post, we discussed some of the major risks that construction management firms face. As legal complications and lawsuits account for the majority of claims, we’re going to take a closer look at what these legal concerns consist of. As we dive deeper, ensure your clients are protected with Construction Management Liability insurance.

Differing site conditions.

According to FWHT Law, most contracts contain a differing site condition clause that allows for an equitable adjustment to the contract price and time under the following two conditions:

• Type I: where actual physical (subsurface or hidden) conditions at the site differ materially from the conditions represented in the contract documents.
• Type II: where the actual physical conditions encountered at the site differ materially from the conditions normally encountered and generally recognized to exist, given the nature and location of the work.

Changes to scope of work.

A change in work or duties requires a “changes” clause to be signed by both parties before moving forward. This covers changes to method, design, and extent of the job. However, if the owner of the project requests a “cardinal” change contractor, this is considered a breach. The difference between a permissible and a “cardinal” change is a matter of degree. A cardinal change is outside the general scope of the project and entitles a contractor to new compensation rates and termination remedies, explains the article.

Claim due to scheduling.

There are four types of claims that can come about due to scheduling conflicts.

• Excusable, but non-compensable – This occurs when there is a delay in scheduling the project through no fault of either party, such as weather or strikes.
• Excusable and compensable – This occurs when the delay is a fault of the owner or the contractor of the project, which permits the other party to collect damages.
• Failure to coordinate – This occurs as a result of a failure to coordinate the project in a timely manner by the owner.
• Disruption – FWHT Law explains that the owner or its agents (the A/E, other prime contractors, C.M.) may adversely impact your planned construction operations and increase your costs but not your time of performance.

About Huntersure

At Huntersure, we understand the legal implications of challenges faced by the construction management industry. We strive to provide comprehensive coverage at competitive rates to safeguard each component of your client’s firm. For more information about our offerings, contact us today at (646) 751-3030.

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