IOSHA and OSHA Delay Full Enforcement for Residential Fall Protection, Again

By: Sean T. Devenney

As previously discussed here and here, residential contractors have new fall protection regulations to be aware of or else be subject to penalties from OSHA or IOSHA.  On February 22, 2012, IOSHA updated, again, the expected date for full enforcement relating to “new” residential fall protection rules.  The new “full” enforcement date is now set for September 15, 2012.  From now until September 15, 2012, IOSHA will continue to monitor fall protection on residential projects.    According to IOSHA:

• Residential construction contractors and sub contractors who are using fall protection that meet the interim guidance will not be cited.  Where the employers program meets the interim guidelines or the employer is making a good faith effort to meet the new guidelines but has fallen short in some area, IOSHA will make a referral to INSafe for consultative services.
• If there is no Fall Protection Program and no effort is underway to comply with the existing guidelines, a citation will be issued to the employer.

Employers are encouraged to move quickly on the acquisition of any required personal protective equipment and development.  Once again, we shall whether the September 15, 2012 date for full enforcement will survive.

A copy of IOSHA’s directive can be found here.

Indiana Supreme Court Finds Project Safety Risks Can Be Minimized by Contract

By: Sean T. Devenney

On March 22, 2012, the Indiana Supreme Court issued its long awaited decision relating to Project safety in the Hunt Construction Group v. Garrett matter. DSV has been closely following this case through the courts because it had the potential to impact so many construction industry participants.  Additionally, it had the potential to help provide significant direction for drafting contracts that allow project participants to respect the importance of safety, but limit liability for tangential parties working on the site.  In this regard, the Indiana Supreme Court decision provides relatively clear guidance on how to accomplish—through contract provisions—a safe working environment while minimizing the liability risk associated with job site safety accidents.

The relevant facts of the Hunt case are these:  (1) Hunt was the CM agency on the Lucas Oil Stadium Project ; (2) Garrett was allegedly injured while working for a subcontractor when a piece of wood struck Garrett in the head and left hand; (3) Hunt’s CM contract specifically stated that Hunt’s duties in relation to the Project ran solely to the Owner and not to any contractors or employees working on the Project;  but (4) Hunt’s contract did contain several very significant and detailed safety related obligations that Hunt agreed to perform relating to the work on the Project.

In essence, the issue before the Supreme Court was as follows: By agreeing to perform safety obligations for the Owner did Hunt assume a duty of safety to all Project participants?  The answer to that question, according to the Indiana Supreme Court, turns on two questions:  (1) Was the contract clear that Hunt did not assume a duty to all Project participants relating to safety?; and (2) In performing the safety related work, did Hunt perform work beyond what it agreed to perform for the Owner such that it assumed a duty to Project participants by its on-site actions?

In analyzing the question before it, the Court started with the contract.  The contract between Hunt and the Owner had some very clear provisions that specifically stated that the work Hunt agreed to perform was for the benefit of the Owner only—including the safety related obligations.  The Court found as a matter of law that Hunt had not contractually assumed a duty to employees of subcontractor’s on the Project for safety.

The Court’s analysis then focused on what safety related activities Hunt actually performed on the construction site to determine whether Hunt, through its actions on site, had assumed a duty of safety to individual employees of subcontractors.  Garrett cited several examples of specific safety activities that Hunt performed on the Project including (1) daily safety inspections; (2) daily safety reports; (3) conducting weekly safety meetings with representatives of contractors and subcontractors;  (4) obligations to notify contractors if Hunt felt the contractor was operating in violation of the agreed upon safety program or the law and order the contractor to remedy the situation; and (5) disciplining contractors that failed to comply with the safety program.  In analyzing how Hunt’s activities impacted its decision, the Court reverted back to the contract between the Owner and Hunt and stated as follows:

We have reviewed with some care each of the specific actions that Garrett identifies as demonstrating Hunt’s assumption of a legal duty of care for her safety and have found each to fall within a contractual obligation established by Hunt’s contract with the Stadium Authority.  We have already established that the contract itself did not impose upon Hunt any legal duty of care for jobsite-employee safety.  Because Hunt did not undertake any jobsite-safety actions beyond those required by contract, it did not assume by its actions any legal duty of care for jobsite-employee safety.

What this means for construction industry participants should not be a surprise – contracts matter.  In this case, Hunt’s contract was crafted in such a way to eliminate liability arising from an injury to an employee of a subcontractor, so long as Hunt followed the contract and did not independently assume a duty of safety beyond what it agreed to perform for the Owner.  Now that we have clear direction from the Indiana Supreme Court on this important issue, it is time for you to review your own contract forms to determine how your contracts address jobsite safety issues.

Indiana Supreme Court Rules on Construction Jobsite Safety Case

By: Sean T. Devenney

The Indiana Supreme Court ruled today in the Hunt Construction Group v. Garrett case that DSV has been tracking for a long while, as noted here.  This is an important safety case because the trial court and Court of Appeals held that Hunt (who was the Construction Manager on the Lucas Oil Stadium Project) could be held liable for injuries to a subcontractor’s employee (Garrett) because of: (1) various provisions in the CM contract with the Owner and (2) the safety related activities Hunt undertook on the Project.  Hunt argued that it could not be held liable because other provisions in its CM contract explicitly provided that Hunt was not responsible for the safety programs to be implemented by the trade contractors.

Today the Indiana Supreme Court reversed the decision of the trial court and Court of Appeals and held that based on Hunt’s contract with the Owner and the underlying facts of the case, that Hunt did not owe a duty of care to the injured employee’s subcontractor.  Thus, the Supreme Court ruled that Hunt was entitled to summary judgment and the case (as to Hunt) could not go to the jury for consideration.  Given the importance of the decision to the construction industry, we will be doing a follow up blog post detailing the implications of the decision, including what this may mean for safety-related contractual provisions in your standard contract forms.  For a copy of the decision click here.

An Introduction to the International Green Construction Code (IgCC)

By: William E. Kelley, Jr., LEED AP BD+C

As has been discussed in several prior blog entries here, the 2012 International Green Construction Code (IgCC) is set to be released this spring.  What is the IgCC, and what impact will it have for the construction industry?  I recently had the opportunity to address these questions during a webinar hosted by the Associated Contractors & Builders (ABC) National Green Building Committee.  The presentation was titled, “What Contractors Need to Know About the International Green Construction Code (IgCC)”.  Although the live version of the webinar was held on March 20, you can access an archived version of the webinar, along with the presentation materials, by clicking here.

At its core, the IgCC can be described in three ways:

• First, it is a “model” code, meaning that it provides a roadmap for jurisdictions interested in implementing a green construction code.  However, as a model code, it is not mandatory or enforceable until a jurisdiction elects to actually adopt it in that particular area.

• Second, it is an “adaptable” code, insofar as jurisdictions have the option of adopting some or all of the code, or even adopting the whole code and then applying jurisdiction-specific amendments.  This gives jurisdictions some flexibility to shape the IgCC to meet their specific needs.

• Third, it is an “overlay” code.  The IgCC cannot serve as a standalone green building code.  Instead, it specifically relies upon the existence of other codes and standards.  For example, the provisions relating to Energy Conservation, Efficiency and Atmospheric Quality make specific reference to the International Energy Conservation Code (IECC).  Because of the interrelation between the IgCC and other codes and standards, adopting jurisdictions will have to undergo a comprehensive review process in order to determine how existing codes will be affected by the IgCC, as well as determining whether any amendments or changes to those existing codes will be necessary in order to fully implement the IgCC.

Will the IgCC find universal acceptance among jurisdictions looking to implement green building legislation?  How will the IgCC affect projects seeking to go “above code” with LEED and other rating systems?  What challenges are there for jurisdictions, owners, contractors, and design professionals in relation to the IgCC and similar green building codes?  Look for future posts here with more details as we delve deeper into the IgCC and its potential effect on the industry.

Local Price Preference Repealed

By: Daniel M. Drewry

During the 2011 session, the Indiana state legislature created uproar in the construction community when it passed a Local Price Preference.  Last summer on this blog we discussed the impacts of the statute and the City of Indianapolis’ reaction to the price preference as an example of how local communities were responding to the price preference.  In theory, the drafters and sponsors of the preference intended the statute to simply give a nudge in the direction of a local contractor in very limited situations.  In practice, the preference was confusing, difficult to implement, contradicted long-standing competitive bidding rules and concepts, and ultimately was unworkable.  As the opposition to the Local Price Preference grew, it quickly became clear that the preference statute needed to be fought, re-written and/or altogether repealed.  The question became not if, but when and how.  During the 2012 session, the Indiana legislature answered those questions – on February 29, 2012 Governor Mitch Daniels signed House Enrolled Act 1154, which repeals the local price preference (save for certain preferences allowed for local agencies purchasing supplies or equipment) effective July 1, 2012.  Whether the legislature will look to re-open the issue of local price preferences for construction projects in the future remains to be seen, but for now, local public projects will be back to business as usual (whatever that new “usual” is in 2012).

Taking (Quick) Measure of the Measured Mile

By: Daniel M. Drewry

Lost productivity directly impacts a contractor’s bottom line and is a common claim component, but it is extremely difficult to measure.  Last week in this blog we looked at learning curves and how they can lead to labor inefficiencies.  This week we will focus on how lost productivity is measured.  While there are a variety of approaches utilized by claimants in an effort to capture lost productivity (each of which would justify a lengthy discussion of its own), the Measured Mile is the most preferred approach of quantifying it, and is particularly useful with construction where productivity is linked to identifiable units of work per day, such as with underground utility work.

Stated succinctly, the Measured Mile approach compares the productivity of the same activity during un-impacted and impacted periods of the project to determine the productivity loss caused by the impacted period.  One advantage of this method is that it utilizes only actual productivity as opposed to the estimated productivity heading into the job, avoiding disputes over the accuracy of the contractor’s original estimate or bid.  However, the impacted and un-impacted periods must be substantially similar and the quantity of the work, weather and other factors can all impact the similarity analysis.  For the contractor, the daily report is an essential tool for tracking daily unit installation of material, job conditions, labor and equipment for use in a Measured Mile.

Loss of Productivity & Learning Curves

By: Daniel M. Drewry

Although there are numerous causes of project labor inefficiencies, one culprit not often discussed is the “learning curve” of an employee or crew.  In the construction industry, the time required for a worker to perform a repetitive activity decreases with each repetition performed by that worker.  This is referred to as the “learning curve.”

There are essentially two types of learning curves.  The “basic curve” is the learning curve necessary for an untrained worker to acquire training, knowledge and skills fundamental to a particular trade.  This curve is necessary in order for the worker to achieve an average level of proficiency.  In contrast, the “experience curve” is the worker’s attainment of the specialized skill set required to perform a specific repetitive activity.  Experience curves for repetitive tasks apply to both individual workers as well as to crews.  The “experience curve” is the curve most likely to have an impact on productivity because it is more project specific.

In short, work accelerations, extended overtime, delays, crew turnover and even missing or additional crew members can directly impact labor productivity by reducing the number of repetitions of a given task and the timing between those repetitions – both of which reduce the planned level of labor efficiency, and increase costs.  While tying decreased productivity claim components to learning curves involves a more thorough discussion and analysis, even mere familiarity with learning curves will better enable a contractor to identify and document problems as they arise, thereby increasing the likelihood of recovery of productivity claim components.

Three Green Building Developments to Watch in 2012

By: William E. Kelley, Jr., LEED AP BD+C

In the Indiana General Assembly, it was not an overly productive year for sustainability legislation, as efforts to enact laws for PACE bonds and mass transit both failed to gain traction.  Regardless, from a broader perspective, we are not even two full months into 2012, and already this year appears to be shaping up to be a big year for green building and sustainability—at least in some respects.  Consider the following developments on the horizon in the green building industry:

On March 1, the third public comment period will open for the next iteration of the LEED rating system, dubbed LEED 2012.  What will LEED 2012 bring in terms of changes?  For starters, we may be looking at new credits for “Integrative Process”, “Location and Transportation”, and “Performance”, not to mention a rebalancing of existing credits.   Time will tell what changes make the final cut for LEED 2012.  For more information check out the USGBC’s website on the LEED 2012 Development process.

• Also sometime in March, the International Code Council (ICC) is expected to publish its 2012 International Green Construction Code (IgCC).  Will the IgCC become the model green building code for states and local jurisdictions?  Will the IgCC, and green building codes in general, have any negative impact on the number of projects utilizing voluntary green building rating systems, such as LEED?  Check out the ICC’s website for more information, and keep a look out on this blog for more updates on the IgCC in the coming weeks.

• After releasing its Guide for Sustainable Projects in 2011, the American Institute of Architects (AIA) is expected to release updated versions of some of its contract forms to include processes and provisions for sustainable project goals.  This is a significant development, especially given the large number of owners, contractors and design professionals who still do not adequately address sustainable project goals in their project contracts.  The AIA indicates that the contract documents will be available in the first quarter of 2012.

 

The impact of these developments will depend, in no small part, on how fast the construction industry can turn things around as it emerges from a prolonged period of economic difficulty.  In addition, it will be interesting to see whether (and how quickly) states and local jurisdictions are willing to adopt the IgCC, and how these jurisdictions may use and adapt the IgCC to suit their needs.  Further, questions remain as to whether the states and corporations who have thus far been “slow adopters” finally make this the year to initiate broader sustainability policies for design, construction, purchasing, maintenance, and operation of their properties and facilities, or whether they continue to take a “wait and see” approach due to economic conditions.

So will 2012 be a big year for the green building industry?  We will “wait and see” ourselves, and continue to update you on these developments.

A Brief Primer on Acceleration Claims

By: Daniel M. Drewry

When faced with an excusable and compensable delay claim, a contractor is entitled to recover not only the increased costs incurred as a result of that delay, but also is entitled to an extension of time in which to perform its work under the contract.  Often times, however, an owner may not fully recognize the delay due to a lack of expertise or experience in project scheduling or may dispute whether the delay was in fact excusable.  The result is the contractor’s request for an extension of time is denied and the contractor is then forced to accelerate its performance of the work in order to meet the original, but now delayed, contract completion date.  This article provides a brief overview of the elements of and circumstances under which constructive acceleration claims can arise, in the hope that owners and contractors alike will be able to recognize and proactively resolve an acceleration claim.

Elements of an Acceleration Claim.  A constructive acceleration occurs when an owner denies a legitimate claim to a time extension to a contractor and instead forces the contractor to incur additional expenses by requiring it to bring the project in by the original completion date.  All acceleration claims share the following elements:  (a) the occurrence of an excusable delay; (b) timely notice of the delay to the owner and request for a time extension; (c) the time extension is denied and the owner requires the contractor to complete the project by the original project completion date; (d) notice from the contractor to the owner that the directive is considered to be a constructive change; and (e) the contractor incurs additional costs in order to meet the now accelerated schedule.  The contractor bears the burden of proof to establish these elements.

Potential Pitfalls. First and foremost, in order for the acceleration claim to succeed the contractor must first establish that the delay allegedly giving rise to the owner’s acceleration was in fact excusable. See Fraser Construction v. United States, 384 F.3d 1354 (C.A.Fed. 2004).  Did the contractor cause the delay (in whole or in part)?  Was the delay concurrent?  Does the contract contain a valid no damages for delay clause?  Additionally, did the contractor comply with the time extension and notice provisions of the contract?  The situation often arises in which contractors notify the owner of the occurrence of a delay, but neglect to formally request a time extension under the contract, or fail to timely notify the owner but do request a time extension (albeit late).  The failure to comply with the time extension provisions of the contract can provide a defense to an acceleration claim.  See Stelko Electric, Inc. v. Taylor Community School Building Corp., 826 N.E.2d 152 (Ind.App. 2005); Murdock & Sons Construction, Inc. v. Goheen General Construction Inc., 2002 WL 243576 (S.D. Ind. 2002).

Types of Recoverable Damages.  If the contractor establishes a valid acceleration claim, it is entitled to recover the costs incurred in meeting the owner’s accelerated schedule.  These costs may include increased mobilization and demobilization costs due to the need to commit additional resources in terms of labor, equipment and supervision at the project than originally contemplated by the original schedule; specifically, direct labor costs include such items as increased wage costs for additional workers, overtime pay and rental costs for additional equipment.  Further, the contractor may incur additional costs for inefficiencies in labor and material costs, due to inherent difficulties in purchasing both on a “hurry” basis.  These inefficiencies may include trade stacking, congestion or fatigue from extensive overtime work.  Labor inefficiencies are a hidden but very expensive cost of an acceleration.  All of these types of damages may be recoverable in an acceleration claim.  Nevertheless, while labor inefficiencies are a very real part of an acceleration claim, they are extremely difficult to quantify.

Conclusion. Construction project are becoming increasingly complex, involving and requiring more interaction amongst trades and with the owner.  With this growing complexity and interaction come the increased likelihood of delays and a resulting acceleration claim.  By understanding the elements and recoverable damages of an acceleration claim, as well as the potential defenses to such a claim, both owners and contractors can better recognize, and move to quickly resolve, these disputes to avoid protracted and expensive claims procedures.

Additional References:

Drewry, Michael F., “New Developments and Trends on Delay & Impact Claims”, Indiana State Bar Association, Construction & Surety Law Section, Annual Meeting, October 2004.

Wickwire, Jon M., et al., Construction Scheduling: Preparation, Liability, and Claims, §§ 5.02, 7.10 (2^nd ed. Aspen Publishers 2003).

 

ABA Forum Article on Claim Preclusion Clauses

By: Daniel M. Drewry

Claim preclusion clauses, such as notice requirements that govern when and how a claim can be brought or clauses that limit the types of damages that can be claimed (or whether any damages can be claimed), vary wildly in content and enforcement from state to state, but they all share a common trait: they can quickly land a party in dangerous and unknown waters.  I recently had the opportunity to work with two excellent construction attorneys, Julia Davis, with Bankston Gronning O’Hara out of Alaska, and Julie Muller, with Wyatt, Tarrant & Combs, LLP in Mississippi, on a presentation and article addressing the changing world of claim preclusion clauses.  The article discusses the different approaches to notice requirements, the enforcement of, and exceptions to, no damage for delay clauses, and recommendations for addressing these (and other claim preclusion issues) in your contract.  The article was just published in the February 2012 edition of Under Construction, the quarterly newsletter for the ABA Forum on the Construction Industry.  Although written for a construction attorney audience, the article still provides helpful insight for owners, designers and contractors in approaching and dealing with claim preclusion clauses.  To read the article, click here.