Womble Carlyle Construction Industry Blog

Following the construction industry and related legal topics in the United States.

Saturday, October 28, 2006

Evaluating the Exposure Level of Your Facility

Returning once again to the ASHRAE draft guideline on risk management for safety in buildings, the Guideline provides examples of categories that building owners and operators should consider in assessing the exposure level of a facility.

Begin with people count --- how many individuals can be in the building at any given time? Also consider building function -- what is the subjective value of the operation within the building to society, other businesses (including competitors), and internal customers? In this connection, take into account any threats received -- have any individuals or organizations communicated threats or ill will toward the building occupants or the business? What is the time required to recover the operation of the building -- the longer it would take to return to normal business operations, the greater the exposure. And finally, what dollar value can be placed on the equipment, services, information and products within and produced by the facility?

Each of these categories, along with others that are important to the building owner and operator, can be assigned an exposure level (low, medium or high) and then within those exposure levels can be assigned a value or range of values. When that is done, a weighing factor should be applied to each category to arrive at an overall exposure level for the facility.

For more detail on evaluating the exposure level of your facility, read Appendix A of the Guideline. A current edition of the Guideline may be obtained by going to
http://www.ashrae.org. (Today's entry was published by Karen Carey of Womble Carlyle's construction and real estate development group.)

Wednesday, October 25, 2006

The Legal Side of Building Green

In the October 2006 issue of Southeast Real Estate Business, Womble Carlyle's Mark Polston, a lawyer in Womble Carlyle's Washington, D.C. office, discusses the green building movement. Once unknown in mainstream industry circles, the notion of green building has leaped from the fringe of the environmental movement to become the latest hot topic among builders and real estate developers across the nation, as energy shortages seem more acute. Mark examines the legal issues involved with this topic. The full article is online here.

Tuesday, October 24, 2006

Spotlight on Occupational Health and Safety

The interest of regulatory agencies tends to gravitate toward employers which have unusual challenges. Since mining operations and highway transportation are governed by other standards enforced by different administrative bodies, it should come as no surprise that the U.S. Department of Labor's Occupational Safety and Health Administration ("OSHA") keeps its attention focused on construction. 1186 of the 5700 workplace fatalities nationwide last year were in the construction industry, with approximately 40% arising from falls, while "struck by" and "caught in between" accidents involving wheeled or tracked equipment were next, followed by electrocutions. Federal OSHA chief Edwin G. Foulke Jr. has called for a meeting with the nation's largest residential contractors to address the problems which create such a disproportionate share of fatalities and to develop strategies to effect significant reductions.

Another reflection of this focus on the construction industry is found in three "standard interpretation letters" recently posted on the OSHA website. The first letter answers that age-old question, "When must protective measures be installed after a hole is created on a construction site?" The answer, while relying on the definition of "hole" as "a gap or void 2 inches (5.1 cm) or more in its least dimension, in a floor, roof, or other walking/working surface," ignores holes in the ground and concentrates on roofs, floors, and the like which are 6 feet or more above lower levels, and says that protective measures must be instituted "immediately," since "brevity of exposure to a hazard is not a defense to a failure to protect against the hazard." The other two letters discuss the need for guardrails on the interior side of two-point suspension scaffolds (they're required except under very narrow circumstances), and the use of fixed ladders constructed prior to the effective date of 29 C.F.R. 1926, Subpart X (January 14, 1991). The question which triggered these letters was not answered by OSHA for a year; it inquired what a painting contractor was to do when the local government which owned the jobsite would not allow the ladders on the supports of water tanks to be modified to bring them up to standard. The OSHA answer was for the contractor to ask for the retrofit and, if the request was refused, to implement both fall protections and training for employees. The moral is that writing letters asking for advice is a very unsatisfactory way of achieving solutions.

An even more troubling aspect of the interpretation letter approach is that the Occupational Safety and Health Review Commission has strongly indicated that interpretation letters will not suffice to inform employers of the requirements of an OSHA standard. The decision in question -- Secretary of Labor v. Beverly Healthcare-Hillview, issued on September 18, 2006 -- suggested that neither interpretation letters nor general language in compliance directives regarding bloodborne pathogens was enough to inform an employer of its obligations to pay for time and travel expenses of employees who were treated for needlestick injuries because of the lack of "ascertainable certainty." While the upshot of this decision (assuming it withstands court review) seems favorable to employers, it can be argued that an interpretation letter which creates a lower threshold than the literal language of a standard may not be a reliable defense or compliance guide.

All told, this area of the law remains one which deals with narrow distinctions and potentially conflicting applications - an excellent reason to utilize every resource available to you to achieve compliance with the obligation to "ensure, so far as possible, safe and healthful working conditions" for all employees. (This entry was published by Charlie Edwards of Womble Carlyle's labor and employment group.)

Monday, October 23, 2006

Triangle office vacancy rate slows while construction projects grow

The building boom in the Triangle region, due largely to population and employment growth, has impacted the office vacancy rate. Data released in a report by the area's biggest landlord, Highwoods Properties, covers 38.3 million square feet of offices in Orange, Durham and Wake counties. A higher vacancy rate is not good for landlords, who may be caused to respond with lower rent or other lease concessions. "The uptick [in the vacancy rate] was due in part to new construction. Almost 340,000 square feet of offices were finished in the third quarter. That's more than twice the quarterly average of about 150,000 square feet completed during the previous year," according to a story in The News & Observer (Raleigh, NC.) Local lenders, economists and tenant representatives remain positive, however, citing the steady influx of large companies to the region. See more on the report here. (Today's entry was published by Liz Riley of Womble Carlyle's construction and real estate group.)

Thursday, October 19, 2006

Are you an additional insured? Do you want to be?

Are you covered? Make sure to properly require, within the body of your agreements, that you be named as an additional insured on your contractor's policy. Being named in the Certificate of Insurance alone may just not be enough. See St. Paul Fire and Marine Ins. Co. v. Tip Top Builders, Inc., 2006 WL 1234922 (N.D. Ill. May 5, 2006), as noted in the Construction Channel. The requirements noted in the Subcontractor's CGL policy are quite common. Thus, if you want the coverage, it needs to be addressed in the contract. (Today's entry was published by John Springer of Womble Carlyle's construction and real estate group.)

Building Information Modeling (BIM)

As you may recall from Ken Michael's previous post, BIM is a design tool that allows architects to create intelligent 3D models to communicate design ideas, guide construction, avoid waste and inefficieny, and assist in maintaining buildings in the future. BIM is being touted as the next "big thing" in design and construction.

To help contractors who may participate in projects that utilize BIM, the Association of General Contractors (AGC) has released the new Contractors' Guide to BIM. Co-authored by a number of AGC members based on their experiences with BIM, the guide includes a discussion of the BIM process, software and hardware options, responsibilities of team members, training, best practices for contractors, risk management and the potential upside for contractors utilizing BIM. The guide is free to AGC members and available now.

For more information on the new guide, see this article in ENR or visit the AGC website.

Friday, October 13, 2006

Very Confusing Acronyms (VCA)

Two recent articles explore new developments in the evolving world of digital modeling. One in Engineering-News Rocord (ENR), Digital Virtuosos, and the other by the American Institute of Architects (AIA), BIM Update. I read the articles and was awash in acronyms. Here is a quick cheat sheet so you can nod your head intelligently when a computer savvy designer or contractor half your age talks with you about digital modeling.

We'll start off easy - Computer-Aided Design (CAD). A few decades ago, design firms transitioned from paper to CAD. National CAD Standard (NCS) - Here an acronym gets absorbed into another acronym. With the introduction of CAD, there was a need for information standards and support from CAD companies which was slow coming. NCS was born.

Now things get more sophisticated. International Alliance for Interoperability (IAI) is an organization dedicated to the development of a standard universal framework to enable and encourage information sharing and interoperability throughout all phases of the whole building life cycle. IAI developed Industry Foundation Classes (IFCs), which are defined by the design, construction and facility management industry to provide a foundation for the shared project model which specify classes of things in an agreed-upon manner enabling the development of a common language for construction.

While CAD just mimicked drafting, Building Information Modeling (BIM) can harness the power of computers to add real value for designers, contractors, owners, subcontractors and suppliers. According to the new Contractors' Guide to BIM published by the Associated General Contractors of America (AGC), BIM "is a data-rich, object-oriented, intelligent parametric digital representation of the facility, from which views and data appropriate to various user needs can be extracted and analyzed to generate information that can be used to make decisions and improve the process of delivering the facility." Going further, Virtual Design and Construction (VDC) builds upon BIM, incorporating the organization of the project and processes of the design and construction team. Going further still, Program Information Management (PIM) incorporates relative project content into a single relational database.

Since I think you have had enough, I will save further discussion on International Alliance for Interoperability (IAI), National Institute of Building Sciences (NIBS), and the Industry Standards Organization (ISO) for another blog entry...

Thursday, October 12, 2006

Controlled Insurance Programs - Changing the Emphasis from Cost-Saving to Control

CIPs, OCIPs, CCIPs, wrap-ups - these are all acronyms or abbreviations for insurance programs that have been applied in large construction contexts. Defined generally, they include CGL, worker's compensation, and umbrella coverages for all parties on a construction site. An OCIP is an "Owner" controlled program, while a CCIP is contractor controlled. Initially, these programs were marketed as a mechanism to cut overall insurance premium costs to enhance a project's bottom line. Now the industry is taking a different tack.

Leading up to its Annual Construction Insurance Conference held this week in San Diego, the International Risk Management Institute ("IRMI") performed a survey of contractors and subcontractors to assess satisfaction with Controlled Insurance Programs or "CIPs." Six-hundred parties responded to the informal survey. IRMI reported that among general contractors, 60% like CIPS; 35% tolerate them; and 5% hate them. Among subcontractors, 20% like CIPs, 50% tolerate them and 30% hate them. For those generals and subs who like CIPs, the satisfaction usually stems from their ability to control a project's insurance and risk management. Owner controlled programs are less favored, since the contractors believe that they are better qualified to manage risk on the project.

There are no known industry studies as to whether CIPs actually yield any cost savings to any participants - the benefits are difficult to quantify; so, cost does not seem to the key driver for whether to employ a CIP. Experts tend to agree that CIPs or wrap programs may only be cost-effective on projects with values exceeding $150MM, but if "control" is the driver, maybe they should be considered on smaller sites. They do expand the availability of coverage for subs who might otherwise have difficulty getting contractually required coverages.

In the end, CIPs seem to make sense when the party who is in the best position to acquire the coverage, manage and administer the program - not usually an owner - controls the CIP with an eye toward effective risk management and breadth of coverage. For more information on this topic, visit IRMI's website. (Today's entry was published by Laura Luger of Womble Carlyle's construction and real estate group, with the assistance of Garth Gersten.)

Thursday, October 5, 2006

E-Mail Gaffes --- and Worse

The risk of careless language in e-mails goes beyond the potential for embarrassment when e-mails must be produced for some investigative purpose. Frequently, the "smoking gun" in a lawsuit will be in e-mails (as everyone who has listened to the news this week will know).

While ordinary business e-mails are much more mundane than those we've been hearing about this week, still, the use of thoughtless but seemingly innocuous words can be a potent weapon in an adversary's hands. For example, words like "troublesome", "concerning", "inadequate", "substandard" and the like are lightning rods for potential vulnerability. Worse, the careless use of legal terms like "negligent" or "false" or "malicious" can easily be taken for an admission.

As this writer has experienced, a million-dollar award in a construction arbitration rested in large part on a single email --- reinforcing what should be main rule of e-mail: "Never send an e-mail you wouldn't want a jury to see." (Today's entry was published by Karen Carey of Womble Carlyle's construction and real estate development group).

Sunday, October 1, 2006

The Economics of Being Environmentally Conscious

This month UNC Public Television is reairing design:e-squared, a six-part television series, narrated by Brad Pitt and produced by kontentreal, that explores global efforts to build structures through sustainable architecture and design. The program originally aired in June.

The first episode, "The Green Apple," demonstrates how the ubiquitous skyscraper can surprisingly be a model of environmental responsibility. In the second episode, architect and activist Sergio Palleroni continues his mission to provide design solutions to humanitarian crisis regions. "The Green Machine" follows Mayor Richard M. Daley as he strives to make Chicago "the greenest city in America." The fourth episode takes the notion of the three R's (reduce, reuse, recycle) to grand proportions by turning Boston's "Big Dig" waste into spectacular residential design. China: from Red to Green?" depicts a country at its tipping point and finds a sustainable solution in Steven Holl’s Beijing project. The final episode, "Deeper Shades of Green," presents some of the most remarkable visionaries who are changing the face of architecture and environmentalism: Ken Yeang, Werner Sobek and William McDonough.

See the related website http://www.design-e2.com/. AutoDesk is sponsoring the
program, and its website dedicated to sustainable design may be found