Construction updates

International

New international information management standard
  • International
  • July 24 2017

A new draft international standard providing information management guidance when using building information modelling has been issued for public comment. The standard is split into two parts. The first part deals with concepts and principles and applies to the whole lifecycle of a built asset, while the second deals with the delivery phase of assets and enables the client or appointing organisation to establish its requirements for information during the delivery phase of assets.

Delay liquidated damages and performance liquidated damages: what you should know
  • International
  • May 09 2016

Given the margins with which construction firms operate, the increasing number of claims filed and the growing influence of international organisations, one of the points often raised during construction contract negotiations is the inclusion of clauses limiting financial liability. Liquidated damages provisions for delays and performance provide a much-needed degree of certainty for both parties, although careful drafting is essential.

Limiting financial liability for contractors
  • International
  • March 21 2016

Due to certain restrictions on indemnity insurance cover, contractors cannot simply rely on their insurance to limit risks; they must also actively manage liability through other means. Consequently, contractual caps on liability are common in international projects. The first thing to consider is the basis on which the cap applies and what exclusions should apply.

Liquidated damages in EPC contracts
  • International
  • March 14 2016

Liquidated damages play an important role in ensuring that engineering, procurement and construction contracts are bankable. It is therefore vital to ensure that they are properly drafted so that contractors cannot avoid their liquidated damages liability on a legal technicality. It is also important to distinguish between the different types of performance liquidated damages to protect against allegations that they constitute a penalty.


Ireland

Contributed by Arthur Cox
All change in public and private sector contracting?
  • Ireland
  • June 20 2016

Construction contracting has seen significant change in both the private and public sectors, including the introduction of the long-awaited reform of the Public Works Contracts and a definitive date for the operation of the Construction Contracts Act 2013. The act applies to a wide range of construction contracts, including main contracts, subcontracts and professional team appointments entered into after July 25 2016.

Stepping back from the firing line: understanding limitations on liability
  • Ireland
  • May 16 2016

Limitation of liability is a hotly negotiated issue in most commercial construction contracts. Parties often rely on the standard form clauses as being tried and tested and drafted with the benefit of industry knowledge. Such reliance can prove hazardous, as it may not adequately deal with the commercial risks of a particular project. Exclusion clauses that significantly limit parties' liability by way of financial caps are generally useful.

Building information modelling – bear it in mind
  • Ireland
  • December 21 2015

Support for building information modelling (BIM) is gathering pace. BIM is regarded as a powerful risk and cost management tool, encouraging better collaboration and improved project delivery. Contractors are already utilising BIM to help them to gain competitive advantage in the marketplace. Critics believe that specific BIM clauses and terms should be incorporated into the contract to help avoid potential disputes.

Construction in 2015 and beyond – changes on the horizon
  • Ireland
  • October 19 2015

It has been a busy time for the construction industry as the economy picks up and growth in activity levels across a range of sectors brings new opportunities. This new wave of development is taking place alongside regulations and changes to industry practice. New regulation in the sector is welcome, but the breadth of the changes means that all players must keep up to speed with them.

Public works contracts – where do we go now?
  • Ireland
  • January 19 2015

The Office of Government Procurement has published its Report on the Review of the Performance of the Public Works Contract, setting out its conclusions following the long-awaited review. While the report acknowledges what does not work and what must be addressed in the contracts, it will be the action taken to implement the identified measures that will reveal whether it can change the landscape of public sector contracting.


Malaysia

Contributed by SKRINE
Federal Court decision changes adjudication practice in Malaysia
  • Malaysia
  • December 18 2017

The Federal Court recently dealt with three broad issues under the Construction Industry Payment and Adjudication Act – namely, jurisdictional challenge, the exclusion of defences and the setting aside and staying of decisions. The decision has broad repercussions for the way that adjudications are conducted in Malaysia.

Development of statutory adjudication
  • Malaysia
  • June 26 2017

The Construction Industry Payment and Adjudication Act 2012 came into effect on April 15 2014. Since then, the Malaysian courts have had the opportunity to consider various aspects of the act on numerous occasions. Some significant decisions have been handed down by the courts in the past two-and-a-half years and although statutory adjudication in Malaysia is still in its infancy, it is evident that a body of local decisions is steadily being built up to assist in the interpretation of the act.


Switzerland

Contributed by LALIVE
Regulatory changes and force majeure – impact on lump-sum and build-operate contracts
  • Switzerland
  • November 13 2017

Swiss courts and arbitrators have addressed the interface between force majeure clauses and regulatory changes, and how they impact on the contractor's entitlements. Clauses addressing unforeseen circumstances will be construed in line with the parties' actual intentions. If they cannot be established from the text and surrounding circumstances and evidence, the tribunal will construe the clause objectively, regarding how it can be understood in good faith.

No contractor liability for defects visible at final inspection except concealed defects
  • Switzerland
  • October 09 2017

Employers should keep a watchful eye on contractor variations and ensure that they do not modify any important quality or original requirements specified in the contract. Whatever the length of the contract, the employer is duty bound to notify any deviation from the contract on final inspection. However, the courts will not protect a contractor which has fraudulently concealed a defect or prevented the employer from discovering a defect.

Valid change orders can amount to breaches of employer's ancillary obligations
  • Switzerland
  • April 10 2017

Employers typically have the power to vary works, including by making changes to the sequence or timing of their execution. Sometimes, these variations do not entitle the contractor to additional remuneration. However, as confirmed by a recent Federal Supreme Court decision, even a change order that is permitted under a contract could result in a breach of the employer's ancillary obligations and therefore give rise to a right to compensation.

Implicit employer approval of progress reports
  • Switzerland
  • February 13 2017

Many construction contracts provide that the contractor must submit daily, weekly or monthly progress reports, which then serve as a basis for invoices or applications for payment certificates. In some cases, the contract provides that these progress reports must first be approved by the employer. A recent case before the Supreme Court demonstrates that, in certain circumstances, such approval may be implied through the employer's silence.

The consequence of skipping a mandatory pre-arbitral step
  • Switzerland
  • December 05 2016

In mid-2014 the Supreme Court ruled that the requirement in the International Federation of Consulting Engineers Conditions to submit a dispute to a dispute adjudication board was a mandatory precondition for arbitration, but avoided the question of what the consequence for failing to comply should be. In a recent decision that is particularly important for international construction contracts, the court provided welcome guidance on a question that often arises in construction disputes.


USA

Batten down the hatches: tips for owners and contractors affected by Hurricanes Harvey and Irma
  • USA
  • September 25 2017

Anyone watching what has happened recently in Houston and Florida will immediately think about the safety and wellbeing of those affected by Hurricanes Harvey and Irma. Once the aftermath of destruction is assessed, both areas and their residents will be looking at a long road to recovery. Among the many coming challenges, owners and contractors of existing projects must take steps to assess the effects and identify their contractual rights and obligations.

New York's scaffold law may not impose strict liability
  • USA
  • June 26 2017

The construction industry has long accepted that the New York scaffold law imposes strict liability on construction contractors and property owners for injuries suffered by workers who fall or are hit by a falling object as a result of inadequate scaffolding or similar construction structures. A recent decision by the New York Court of Appeals indicates that this common understanding is wrong.

Third Circuit holds post-petition filing of New Jersey construction lien violates automatic stay
  • USA
  • June 19 2017

The Third Circuit Court of Appeals recently filed an opinion regarding whether the filing of a mechanic's lien after the commencement of a bankruptcy case violated the automatic stay. Given the frequent involvement of many companies in Delaware bankruptcy cases, the Third Circuit's ruling is important.

Why understanding economic loss doctrine is critical for construction professionals
  • USA
  • May 01 2017

The economic loss doctrine is widely misunderstood and often misapplied. At its most basic, the premise of the doctrine is that a party cannot recover purely economic losses in a tort action. While simple in theory, the economic loss doctrine has suffered from wide variations in application – for example, states are split about whether the economic loss doctrine bars third-party claims against design professionals.

Construction project documentation: explaining business records exception to the rule against hearsay
  • USA
  • January 30 2017

Given the critical role of written documentation in resolving construction claims – whether inside or outside of the courtroom – it is essential that companies adequately train the individuals who create written documentation. Companies should also be aware of the best practices for generating and preserving construction records to avoid evidentiary challenges to company records if a construction claim is litigated.