{"id":890660,"date":"2016-08-15T14:06:37","date_gmt":"2016-08-15T20:06:37","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=890660"},"modified":"2016-08-15T14:06:37","modified_gmt":"2016-08-15T20:06:37","slug":"twenty-five-years-in-the-construction-industry-weve-come-a-long-way-baby-or-have-we","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/twenty-five-years-in-the-construction-industry-weve-come-a-long-way-baby-or-have-we\/","title":{"rendered":"Twenty-Five Years in the Construction Industry\u2014We\u2019ve Come a Long Way Baby, or Have We?"},"content":{"rendered":"

Gregory Faulkner | Construction Law Zone<\/a> | July 5, 2016<\/p>\n

\"PearlIn November 1989, I was a second year law student interviewing with firms in Connecticut and New York for a summer associate position.\u00a0 During the Thanksgiving Holiday, I scheduled an interview with a small firm in New Haven.\u00a0 The firm\u2019s primary area of practice was construction litigation<\/a>. I had no idea what \u201cconstruction litigation\u201d entailed, and I knew even less about the construction industry itself.\u00a0 My grandfather was a mason, but he had died long before I was born.\u00a0 Nonetheless, maybe it was a sign.\u00a0 The interview went well and I was sufficiently intrigued to take the offer to serve as a summer associate in the Summer of 1990.<\/p>\n

My Summer went well and I accepted a full time position with that firm in 1991\u201425 years ago.\u00a0 The legal profession and the construction industry<\/a> have changed quite a bit over the past 25 years.\u00a0 Has it all been for the better?\u00a0 My silver anniversary as a construction lawyer gave me the opportunity to look back on how the industry has evolved over the past several years.<\/p>\n

A Pop Culture Frame of Reference<\/strong><\/p>\n

\"BigFirst, I tend to use pop culture and sports to provide context, so I\u2019ll digress a bit to give a frame of reference for how the world looked in 1991.\u00a0 The first Persian Gulf War began and ended.\u00a0 The best-selling book that year was\u00a0The Firm<\/em>, by John Grisham; appropriate, I suppose, for a first year lawyer.\u00a0 Silence of the Lambs<\/em> was the major hit movie, and the top 3 albums were three of my all-time favorites\u2014Nevermind<\/em> by Nirvana, Ten<\/em> from Pearl Jam and Achtung Baby<\/em> from U2. \u00a0Nolan Ryan had just thrown his seventh career no hitter, and Michael Jordan won his first NBA Championship.\u00a0 Law & Order was in its first season.\u00a0 OJ Simpson was an NFL sideline reporter for NBC.\u00a0 It would be another three years before the nation was captivated by the infamous white Bronco chase.<\/p>\n

\"Chunnel\"<\/p>\n

In the construction industry, the Big Dig in Boston began construction, and the Chunnel construction was well under way, ironically connecting England to the rest of Europe.\u00a0 It would be completed three years later.\u00a0 I think the Big Dig is still under construction.<\/p>\n

 <\/p>\n

Practicing Law in 1991<\/strong><\/p>\n

On my first day of work, I was handed a Dictaphone, a box of pens and notepads.\u00a0 I would not receive my first computer desktop until a year or two later.\u00a0 It would be a few more years before I was connected to the internet, right around the same time that I picked up my first cell phone.\u00a0 It was physically attached to the dashboard of my car and it would not <\/em><\/strong>fit in my back pocket.\u00a0 If a pleading had to be filed in court or sent to the opposing party on the same day, a retired gentlemen named Sam hopped in his wagon to make the hand delivery, unless we were cutting it close, in which case those of us who tended to drive a little faster would take care of the delivery ourselves.\u00a0 Document inspections were performed at job trailers, rather than on SharePoint sites.<\/p>\n

The Construction Industry Turns to Partnering and Project Teaming<\/strong><\/p>\n

In the construction industry, the traditional design-bid-build<\/a> method was still being used on most projects.\u00a0 The architect created the design, the owner sent the design out to bid, and the construction team built the project based on what everyone hoped was a complete design for a fixed price.\u00a0 Nonetheless, the industry was starting to turn toward more collaboration among the parties, and the concept of \u201cpartnering,\u201d a method of improving communications by setting common goals and monitoring achievement of those goals, was adopted by the Associated General Contractors and the Army Corps of Engineers in 1991.\u00a0 The idea of \u201cpartnering\u201d would continue to evolve over the next 25 years, as the construction team became involved earlier in the process, especially in the analysis of constructability and estimating, leading to what we now recognize today as \u201cIntegrated Project Delivery.\u201d<\/p>\n

Industry Forms in 1991<\/strong><\/p>\n

The industry was just weaning itself off of the 1976 AIA forms, and adopting the 1987 version.\u00a0 Making edits to the AIA forms in 1991 was a much more time consuming task, so construction professionals and their attorneys held on to their 1976 templates as long as possible.\u00a0 Major changes were to come to the AIA documents and all industry forms, in response to an evolution of the case law and in dispute resolution, but those changes were still a few years away.\u00a0 The 1987 AIA forms required mandatory arbitration (no check boxes for alternative dispute forums).\u00a0 They did not contemplate any waivers or limitations in damages.\u00a0 The parties did not contractually waive subrogation rights on behalf of their insurers, thus providing insurers an opportunity to recover proceeds paid from those whom the carrier believed to be responsible.\u00a0 The AIA Architect Agreements contained no reference to insurance, leaving owners without any ability to confirm what coverages their architects had in place.<\/p>\n

Court Decisions Impact the Industry<\/strong><\/p>\n

During the 1990s, a series of court decisions and industry developments led to an evolution in design and construction contracts<\/a>, and the introduction of legislation throughout the country aimed at increasing protections for the construction industry.\u00a0 As contractors and subcontractors complained that they were not getting paid in a timely manner, legislators started listening, and states enacted prompt pay laws. The penalties imposed on parties for failing to pay pursuant to these prompt pay laws varies a great deal from state to state, and thus the question remains as to how successful these prompt pay statutes have been in reducing the time that contractors and subcontractors must await payment.\u00a0 Retainage on construction projects was also addressed.\u00a0 In the early 1990s, it was typical for owners to hold 10% retainage as security until the very end of the project.\u00a0 States began enacting laws that would reduce retainage to as little as 5% or less, even on private projects.<\/p>\n

Design and construction contracts are complex commercial transactions.\u00a0 In the early 1990s, most in the construction industry probably did not appreciate the effort required to negotiate the agreements fairly, until certain court decisions changed that perspective.\u00a0 Throughout the course of the 1990s, courts enforced clauses that limited or completely eliminated recovery for delay related damages.\u00a0 Lien waivers executed prospectively (in many cases before work even began) were upheld.\u00a0 Courts assessed massive consequential damages and lost profits against delinquent contractors, in some cases leading to bankruptcy or dissolution of the contractor.<\/p>\n

The Industry\u2019s Response<\/strong><\/p>\n

In response to these decisions, the industry modified its contract forms to limit certain exposures, and construction and design professionals<\/a> more aggressively negotiated contractual provisions that otherwise may have gone unnoticed.\u00a0 For instance, the AIA added a sweeping waiver of consequential damages clause to its forms, limiting the construction team\u2019s exposure to owner claims for lost revenues and delay related damages.\u00a0 State legislatures also responded by enacting statutes voiding certain contractual clauses , such as prospective waivers of lien on work for which a contractor or design professional had not been paid.<\/p>\n

More recently, the industry has become creative in its efforts to resolve disputes more efficiently.\u00a0 It is rare to find a contract that does not require non-binding mediation as a precondition to arbitration or litigation.\u00a0 Many contracts also require principals to meet in an effort to resolve disputes before calling in third parties.\u00a0 On particularly large projects, pre-appointed \u201cdispute review boards\u201d may decide disputes as they arise on the project, rather than allowing claims to fester for the duration of the project or longer.<\/p>\n

How Far Have We Come?<\/strong><\/p>\n

So, are we better off now than we were in 1991?\u00a0 Musically, I would argue not.\u00a0 My downloads rarely include songs written after 1991.\u00a0 But as I look back on my 25 (or more) years in the construction industry, it\u2019s hard to argue against the positive developments overall.\u00a0 Contracts tend to be more thoughtful and fair.\u00a0 Massive defaults, while still a part of what remains a risky business, are less prevalent.\u00a0 Parties are more engaged in seeking to prevent disputes before they arise; and when they do, finding solutions to disputes, rather than engaging in costly and contentious court or arbitration<\/a> proceedings that can harm long term relationships.\u00a0 My practice, which was at one time almost exclusively based in litigation, is now more devoted to selection of project delivery, procurement, contractual negotiations and risk management, to avoid such disputes.<\/p>\n

Are contractual negotiations sometimes more tortured than they need to be?\u00a0 Probably.\u00a0 Has the industry become a bit too risk sensitive?\u00a0 Arguably, parties should be more willing to accept responsibility for their actions.\u00a0 But overall, I think we are in a better place.<\/p>\n

Let\u2019s see what the next 25 years bring!\u00a0 Unless I win the lottery, I anticipate being around for most of it!<\/p>\n<\/section>\n","protected":false},"excerpt":{"rendered":"

Gregory Faulkner | Construction Law Zone | July 5, 2016 In November 1989, I was a second year law student interviewing with firms in Connecticut and New York for a summer associate position.\u00a0 During the Thanksgiving Holiday, I scheduled an interview with a small firm in New Haven.\u00a0 The firm\u2019s primary area of practice was… Continue reading Twenty-Five Years in the Construction Industry\u2014We\u2019ve Come a Long Way Baby, or Have We?<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[14],"tags":[12,284],"class_list":["post-890660","post","type-post","status-publish","format-standard","hentry","category-construction-2","tag-construction","tag-design-professionals","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nTwenty-Five Years in the Construction Industry\u2014We\u2019ve Come a Long Way Baby, or Have We? - Advise & Consult, Inc.<\/title>\n<meta name=\"description\" content=\"The legal profession and the construction industry have changed quite a bit over the past 25 years. 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