Legal Implications of 3D Printing in Construction Loom

Aldo E. Ibarra | Engineering News-Record | June 28, 2018

Imagine a printer in the middle of a construction site programmed with a designer’s plans and specifications to build an entire home from scratch. As concrete is fed into the printing device, a technician hits enter on her computer and a 3D printer starts fabricating the structure’s walls and roof.

The final product will be created almost entirely by pre-programmed software and a movable printer injecting concrete, with no need for human construction workers. This isn’t science fiction, it’s a reality on the cutting edge of construction and technology.

The use of 3D printers in the construction industry will have legal implications that will affect owners, contractors, manufacturers and software developers.

The additive manufacturing boom has reached the construction industry and will certainly impact the way construction projects are managed. The rise of 3D printers will translate into fewer workers on construction sites, as printers will be automated and largely autonomous. Projects will be completed faster, as 3D printers will be capable of working at all hours, and will not require overtime.

Current concrete-injection 3D printers developed by WinSun Decoration Design Engineering, in China, have the capacity to print small houses, including walls and roofs, at a pace of up to 10 small houses in 24 hours.

3D printing capabilities go beyond just concrete. The team of MX3D, in Amsterdam, is currently working on delivering the first completely 3D-printed steel bridge. U.S.-based Contour Crafting is developing 3D and autonomous construction technologies that would allow for the construction of tall concrete towers, such as wind turbines, using climbing robots that would “print” the contour of the structure as they move upward.

Developers have positioned 3D printers tailored to the construction industry to work almost like robots. That is, the 3D printer is not just printing a door or a beam that will later be installed by construction workers, although that capability certainly exists, it is effectively installing the printed component in-place.

For example, in the case of steel structures, a 3D printer/robot can print a small section of steel using metallic powders and a “printer” head in a process known as direct metal laser sintering that uses a welding arm that will move along over that portion to create the next one, and so on, until the structure is completed. The result is an entirely new structure constructed wholly by the 3D printer.

Innovation and disruptive technology bring new legal risks and implications. In the context of construction defects claims, 3D printers will expose manufacturers and developers to liability and claims that would normally be attributed to human error.

Instead of human workers building a structure, a 3D printer will additively manufacture it after a pre-generated plan is uploaded to the printer’s software. How will liability be apportioned when the finished structure is found to have cracks, be uneven, improperly thick or have the wrong finish?

Whether the 3D printer is owned by the contractor, is being leased as equipment or is the equipment of a subcontractor will affect who can be found liable.

If the defect is the result of the printer’s malfunction, the contractor will have warranty and indemnity claims against the manufacturer arising out of privity from purchasing or leasing the 3D printer.

If the defect is the result of a software malfunction, that could open the developer to negligence and warranty claims for the value of the defects in the project at issue.

If there is an independent technician, acting as a subcontractor, feeding the plans into the 3D printer could also be open it to liability if the defect was the result of improperly uploading those plans or operating the 3D printer.

In addition to claims against the contractor, the owner could also have claims against the manufacturer or software developer for economic loss, even in the absence of direct privity, if the owner can show the damage to his property caused by the 3D printer was foreseeable.

The case Biakanja v. Irving (1958) 49 Cal. 2d 647, 649 gives courts a roadmap even if they didn’t foresee technology such as additive manufacturing.

When faced with a construction defect caused by a 3D printer used by the contractor or one of its subcontractors, the owner will certainly have, at the very least, an argument that the manufacturer of the printer or developer of the software should have been aware that a malfunction of its hardware or software would, in turn, impact the owner’s property.

Increased prevalence of this emerging technology will also have an impact on material suppliers. If 3D printers will be used in a specific project, designers and contractors should provide proper specifications for material compatible with the specific 3D printer. Material suppliers will also have to certify their materials as compatible with the printers.

Failure to do so could open designers and material suppliers to liability for construction defects resulting from the incompatibility of the material with the specific 3D printer.

The use of 3D printers in construction projects is also likely to conflict with current licensing and permit regulations.

For example, California Code of Regulations, Title 24, Building Standards Code, Section 110 et seq. provides for different types of inspections that are necessary before the government certifies a structure for use and occupancy. The increased speed with which 3D printers can complete projects could be slowed down by current inspection requirements and inspection scheduling procedures.

As the use of 3D printers becomes more common, government agencies in charge of inspecting construction projects will have to adapt to the faster-paced construction offered. In the ideal scenario, governmental agencies would embrace the new technologies in the construction industry and, for example, invest in automated scanner drones that could inspect an automated 3D printer’s work and, immediately thereafter, send the inspection’s result to the governmental agency for certification.

Such advances, however, may be difficult to achieve unless states, cities and counties make significant investments in infrastructure.

As 3D printers/robots become more commonplace on construction projects, contractors should be mindful of including express warranty clauses in purchase and leasing contracts for 3D printers.

Designers and material suppliers will have to confirm that construction materials under plans and specifications will be compatible with 3D printers; and governmental agencies will have to adapt to the fast production rate of 3D printers.

It’s Just Dirt, or Is It? – What You Don’t Know on an Excavation Site Can Hurt You, or at Least Cost You Money.

Courtney Lynch | Kilpatrick Townsend | June 27, 2018

Underground utilities and pipelines pose potential problems for excavators and other contractors performing work below ground. Whether your business involves the construction of buildings primarily above ground or running pipes or cables below, there are issues to consider if your construction involves excavations.

In most states, an excavator has a duty to request the location of underground utility facilities and underground pipelines through its state’s notification center. There are federal regulations that also touch on excavation best practices, such as OSHA’s (the Occupational Safety and Health Administration) Specific Excavation Requirements found in 29 CFR 1926.651.

There are two primary sources of law that govern excavations around underground utilities and pipelines in Texas. These two sources are the Underground Facility Damage and Prevention Act, and the Underground Pipeline Damage Prevention Rules.

The Texas Underground Facility Damage and Prevention Act, also known as the state’s “One Call Law,” is located in Chapter 251 of the Texas Utility Code. The One Call Law outlines the duties of excavators and utility operators when an excavation is planned in the area of telecommunications and electrical underground facilities, as well as in the vicinity of gas pipelines and other types of underground utilities. As defined in Sec. 251.002, an underground facility includes, among others, those that “produce, store, convey, transmit, or distribute” electrical energy, gas, petroleum, steam, and telecommunications services. Util. § 251.002.

The Underground Pipeline Damage Prevention Rules are located in Chapter 18 of the Texas Administrative Code. Implemented by the Railroad Commission of Texas, the Pipeline Rules apply to those with the intent to excavate near an “underground pipeline containing flammable, toxic, or corrosive gas, a hazardous liquid, or carbon dioxide.” 16 Admin. § 18.3(a).

Excavators and utility operators have distinct responsibilities when it comes to the requirements of the state notification system. Excavators are required to notify the state notification center of an intent to dig with very precise information, such as the exact location of the excavation site, the excavator’s contact information, and the starting date and time of the proposed dig.

Class A utility providers are required by law to respond to the location requests through the state notification center. The One Call Law defines Class A underground facilities as those that “produce, store, convey, transmit, or distribute” electrical energy, gas, petroleum, steam, and telecommunications services. Util. § 251.002. All Class A utility providers doing business in the State of Texas are required to participate in the notification center process. Although the duty is clearly on the utility provider to belong to the notification system and to mark its lines, Texas law does not require water or sewer operators (Class B utility providers) to be members of the Texas Notification System. An excavator should plan to contact those providers directly.

The utility operator is required mark the approximate location of its underground facilities within 48 hours and is required to mark lines with the color coding standards outlined by the American Public Works Association.

An operator who does not comply with the One Call Law shifts liability for damage to the lines from the excavator to the operator. An excavator who fully complies with its duties under the One Call Law will not be liable for damages to underground lines that were not marked by the utility operator. Id. at § 251.157(c). However, even if an underground utility is not marked correctly, the excavator may have partial liability if the excavator did not complywith the One Call Law. See Bechtel Corp v. Citgo Prods. Pipeline Co., 271 S.W.3d 989, 913 (Tex. App.—Austin 2008, no pet.).

Of course, marked lines only indicate the approximate location of underground utilities. Ultimately, the excavator must use care to avoid damaging marked lines and must take all reasonable steps to protect underground facilities, pipelines, and on-site people from harm.

“Was Not” versus “Is So”: Court Clarifies Whether Exceeding Monetary License Limit Affects Contractor’s Recovery

Matthew DeVries | Burr & Forman LLP | June 18, 2018

After a great extended weekend on the beaches of Florida, we embarked upon the drive back to Nashville with six kids. Despite the clearly defined travel rules, the antagonizing kid was putting his feet on the emotional kid. The creative kid was writing on the seat with markers, while the perfect kid screamed foul. The lazy teenagers slept. Mom and dad were triggered for eight hours.

Many Tennessee contractor’s have felt the same way with the changes in the licensing laws over the past few years. The rule relating to the effect of a contractor who exceeds its licensing limit is now clear based upon the decision in Clayton Pickens v. John R. Underwood (Tenn. Ct. App. June 12, 2018). In that case, the dispute was whether the “old law” or the “new law” applied. Here’s how it went down:

  • On June 2, 2008, contractor entered into an agreement with owner to construct house for $572,000, but at the time the contract was signed the contractor’s license limit was $350,000.
  • Under the prior version of Tennessee Code Section 62-6-103, an “unlicensed contractor” was limited to recover only the actual documented expenses that could be shown by clear and convincing evidence.
  • The question that often came up was whether a contractor who exceeds its monetary limit was “unlicensed” for purposes of this rule on damages.
  • The Legislature amended Tennessee Code Section 62-6-103(b) effective June 23, 2009, which clarified that: “[a]ny contractor required to be licensed under this part who is in violation of this part or the rules and regulations promulgated by the board shall not be permitted to recover any damages in any court other than actual documented expenses that can be shown by clear and convincing proof.”
  • In Anchor Pipe Company, Inc. v. Sweeney-Bronze Development, LLC (Tenn. Ct. App. Aug. 2, 2012), the court held that a licensed contractor who contracts above his or her monetary limit still is considered “licensed” for application of the rule on damages above. The Anchor Pipe court was interpreting and applying the prior version of Section 103.

In Clayton Pickens, the evidence showed that the parties signed the contract in 2008, which was one year before the statute changed, but filed the lawsuit one month after the statute was amended. The court held the old law applied:

We believe the date of the contract to be more significant here than the date of the filing of the complaint. By the time Pickens filed his complaint, all the operative, underlying events of this case had transpired. The amendment to Tenn. Code Ann. § 62-6-103 was substantive in nature. The effect of the amendment was to expand the limitation of actual documented expenses to any contractor required to be licensed under the statute and rules, whereas before this limitation applied only to unlicensed contractors. When Pickens signed the contract and performed the work for the Underwoods, he was not subject to that limitation as he was not unlicensed. Pickens is not limited retroactively by the provisions of the amended statute.

It appears that all of the loops have been closed. Currently, the law states that if you exceed your licensing limit or otherwise violate some provision of the licensing laws, you cannot file a lien and your damages will be limited to actual documented expenses proven by clear and convincing evidence.

Part I: Key Provisions of School Facility Construction & Design Contracts

David R. Cook | School Construction News | April 25, 2018

We all expect our school construction projects will go smoothly, on time and under budget. But despite our best efforts, some projects will encounter speed bumps, detours or outright roadblocks. While there are many precautions a school facility manager may take, one of the best precautions is to have solid construction and design contracts.

A good contract will account for the known risks and specify an outcome in favor of the school authority. School construction risks can be categorized into a few categories: performance risk, time risk, cost risk and political risk. Some risks are typical to all construction projects, while others are peculiar to the unique needs of school authorities.

At the outset, it should be noted that contracts provide protection only when they are enforceable. As a result, school facility managers must ensure proper formalities are followed for bidding, procurement and contracting. Failure to follow these requirements could render the contract unenforceable, and the school authority may be unable to recover from the other party or its surety.

In Part I of this article, we will discuss the performance risk and time risk categories, and in Part II, we will cover cost risk and political risk.

Performance Risks

Performance risk arises from a contractor or designer’s failure to properly perform their obligations. These risks can include:

  • The designer’s failure to create plans and specifications that incorporate the facility manager’s project concept
  • Faulty, incomplete, uncoordinated or inadequate plans and specifications
  • The designer’s failure to incorporate mandatory requirements of laws, regulations and building codes, including particularly any state or federal administrative requirements for funding and disability laws
  • The designer’s failure to inspect the work for defects
  • The contractor’s failure to follow plans and specifications
  • The contractor’s faulty or negligent work

Certain provisions of construction and design contracts can minimize performance risks. For example, the design contract should clearly express the school authority’s wishes for conceptual design, offer the facility manager multiple opportunities for reviewing the design, expressly require the designer to incorporate all legal requirements and clearly designate the designer’s responsibility for inspecting the work. Due to the importance of these obligations for project success, the design contract should not unduly limit the designer’s liability.

The construction contract should require strict compliance with the plans and specifications and should grant the facility manager and others the right to observe the work at any time. The contract should include a warranty that the work will be performed with good workmanship and compliant materials. (However, this warranty should expressly not be the school authority’s sole remedy for defective or non-compliant work.) If defects are suspected, the facility manager should have the authority to suspend the work for further observation. If defects are discovered, the contractor should be required to remedy them without additional compensation. If it fails to do so, the contract should permit the school authority to terminate the contract for cause, direct the performance bond surety to perform and remedy all defaults, and enforce other remedies.

In the event of a faulty design, the contractor may seek additional compensation based on a theory that the school authority implicitly warranted that the design was adequate (known as the Spearin Doctrine). To counteract such a claim, the construction contract should expressly disclaim any warranty concerning the design. Though, it should be noted that some states are reluctant to enforce such clauses, so the design contract should require the designer to indemnify the authority for Spearin claims.

Time Risk

Another important risk is delay in project completion. Because schools must adhere to a pre-set school calendar and they typically have limited alternate space, delays are particularly disruptive. As a result, contracts should expressly set the time for completion and could establish interim milestone deadlines. They should require the contractor to provide an initial schedule with periodic updates, both of which should be based on sound scheduling logic. These updates, if accurate, will alert the school authority of delayed completion and the need to secure alternative facilities.

To encourage timely completion, contracts could impose liquidated damages for delays and provide an incentive payment for early completion. They should address time extensions, but ultimately give the school authority the right to accelerate the work to ensure timely completion before summer ends. Lastly, if the contractor believes it has encountered a delay for any reason, the contract should require timely notice to the school authority so it can address the underlying problem and limit delays.

Part II: Key Provisions of School Facility Construction & Design Contracts

David R. Cook | School Construction News | June 13, 2018

In Part I of this article, published in late April, we discussed the performance risk and time risk involved with construction and design contracts, and in Part II, we will cover cost risk and political risk.

Cost Risk

School budgets are limited for many reasons, and the construction budget is no exception. As a result, contracts should guard against unwarranted cost increases and claims. In the absence of a written change order signed by the appropriate officer, the contract should absolutely prohibit additional compensation for changes in the work. It should forbid claims for all events except those within the school authority’s sole control. Even for permitted claims, the contractor must provide written notice so that the authority might alleviate the problem and control its costs. To encourage the contractor to limit costs and claims, the contract could include a shared-savings clause, which grants an incentive payment for completion within the budget.

Political Risks

School authorities generally are political bodies that must respond to the wishes of voters and taxpayers. So they ignore political risks at their peril. While in all cases, the authority must follow any competitive-solicitation requirements, there are some instances in which they can or must give preference to local bidders. To the extent local bidders are awarded a contract, the bid or proposal and final contract should require affirmative representation that the contractor or designer qualifies for any such preference and will, to the extent permitted or required, use local goods and services.

Constituents also prefer designers and contractors that are good corporate citizens. As such, solicitation documents and contracts could include affirmative representations that they will pay all taxes, comply with all laws, and satisfy all applicable DBE requirements. In some parts of the county, political risk includes the use of undocumented workers on the project. Some public works projects have been doomed by bad press when undocumented workers are discovered working on the site. When applicable, the contract could include provisions regarding undocumented workers, including E-Verify requirements.

Many authorities are able to generate goodwill with their constituents by engaging in energy savings performance contracting (EPSC), which is a method of procurement that is paid for by energy savings or revenue enhancements resulting from the project. These savings and enhancements are guaranteed by the contractor. Constituents appreciate the budget-neutral and environmentally friendly aspect of ESPCs.

Lastly, since there is no way to predict when politics will negatively impact a project, the school authority should have an off ramp — a termination-for-convenience clause. When permitted by law, this clause allows the authority to terminate a contract for any reason or no reason.

Experienced facilities managers know that problems will arise on a construction project. They also know that one of the best defenses is a good contract. But a good contract is not one pulled off the shelf; it is crafted and fine-tuned by experience and a deep understanding of the authority’s goals and its constituents’ wishes. It incorporates all constitutional, statutory, and regulatory mandates applicable to school authorities. It balances the one-sided provisions of many industry form contracts and those proffered by designers and contractors. Finally, it provides just the right amount of incentives and deterrents to promote a timely, cost-efficient and high-quality project.