Construction Law Blog
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Readers of this blog are aware that we have been tracking and ranting about the poor condition of our national infrastructure since the blog’s inception. In May 2013, a truck carrying an oversize load collided with the “fracture/critical” I-5 bridge over the Skagit River near Mount Vernon and brought home to everyone the dismal condition of bridges, highways, power, water, and sewer infrastructure.
In a recent case, the Washington State Supreme Court examined the question of whether a city or town’s zoning regulations can take precedence over activities that are permitted under state law. The issue arose from the City of Kent’s efforts to prohibit collective gardens that were authorized by the pre-2015 version of RCW Chapter 69.51A, the Medical Use of Cannabis Act (MUCA).
There were a few developments this month in the federal government procurement arena that are likely of interest to our readers:
The Alaskan Way Tunnel Project remains front and center in the news. Hardly a day goes by when we are not bombarded with an article about the status of the tunnel project. As it sits now, tunneling is to resume in November of 2015, pushing the completion of the project back until March of 2018. In May, the contractor, Seattle Tunnel Partners (STP), received a favorable recommendation from the Dispute Review Board (DRB) that the eight-inch steel well casing, which STP claimed shut down the Tunnel Boring Machine (TBM), was a differing site condition. Recently KCPQ-TV’s Brandi Kruse interviewed Gov. Inslee concerning the tunnel to replace Seattle’s aging Alaskan Way Viaduct. The interview was interesting because it provided a subtle preview as to Washington State’s stance as to its defenses against the tunnel contractor’s potential differing site conditions claim.
For eight years now, we have posted over 600 articles analyzing legal issues of interest to the construction industry. We strive to choose topics that are pertinent to and inform our readers, including topics such as delay, lien and bond claims, differing site conditions, alternative dispute resolution, government contracts, construction defects, legislative updates, and more. We are proud of the content we have posted and our readership. We look forward to many more posts for years to come.
There are many economic advantages to the acceleration and early completion of a project. By completing a project earlier than the contract completion date, a contractor is able to reduce the project overhead costs, and therefore maximize revenue. The owner, in turn, benefits from the contractor's ability to bid the project at a reduced price, which reflects the reduced overhead anticipated by early completion. Thus, the economic advantages of a contractor's early completion are generally experienced by all parties. An early completion schedule, however, also reduces the amount of float available to the project.[i]
In the traditional design-bid-build context, the owner provides a contractor with a set of design specifications that “set forth in precise detail the materials to be employed and the manner in which the work is to be performed … provid[ing] no discretion to the contractor….” The owner contracts with a separate design professional for the designs. Thus, the liabilities for the success of the project are spread between the contractor and designer. However, over the last twenty-five years, a new project delivery method has emerged that centralizes liability in one entity and is rapidly increasing in popularity: Design-Build.
There are many state and local tax implications on Washington State construction projects. Two areas of particular importance for construction contractors are sales taxes due on work performed, and business and occupation taxes (“B&O”) due on a contractor’s gross receipts. While the two types of taxes seem simple in theory, they can get complicated in practice.
Our readers are likely acquainted with business’ “Golden Rule”: “The party who holds the ‘gold’ (money) makes the rules.” When parties to a contract know that their dispute is headed to litigation or arbitration, an “upstream” party is often tempted to use whatever leverage it has, including withholding of funds, to force resolution of the claim. For example, holding funds otherwise due to a subcontractor when a claim arises, the general contractor may believe it can leverage the subcontractor into a more expeditious settlement position by “starving” the subcontractor of funds otherwise due and owing. This type of heavy-handed dealing does not generally sit well with arbitrators, judges, or juries, and can result in large damage awards, or “homeruns” against the party exercising this undue leverage. An example of the Golden Rule backfiring occurred in the East West Bank v. Rio School District. 235 Cal. App. 4th 742, 185 Cal. Rptr. 3d 676 (2015).