The Construction Advantage – Issue 16

Welcome to the sixteenth edition of The Construction Advantage! In our latest issue, we thought we would throw a curve ball, in honor of the beginning of baseball season. Construction Law Group Chair Michael Bosse highlights some interesting takeaways from a recent American Bar Association seminar held in Florida in April that he attended.

Musings from Boca Raton

About two weeks ago, I had the pleasure of attending the American Bar Association Construction Forum meeting in April in Boca Raton. With about 500 hundred construction lawyers from around the country in attendance, the meeting gave me some insights into national happenings in the construction industry, most of which will reach New England at some point (and some of which already have). We thought it would be worthwhile to share with our clients, friends and colleagues some of the takeaways from the various seminars that I attended. So without further ado, here are my musings from Boca Raton!

Use of Drones on Construction Projects

Yes, you heard me right. There was an hour-long seminar devoted to the use of drones on construction projects. Drones, also known as Unmanned Aerial Systems, are fairly complex mechanical contraptions that, despite being operated from an iPhone or remote console, are able to interact in real time with the elements. We have already heard about their use militarily, and with companies such as Amazon. They also can and will be used on construction projects to assist in project documentation, to perform site inspections, and to establish evidence to be used as part of a claim or in litigation. As you may have read in the April 24th issue of MEbiz, the engineering firm of Sevee and Mahar was granted an exemption by federal regulators to use a drone in connection with its engineering services. However, most shouldn’t try this at home just yet. There are evolving regulatory concerns from the Federal Aviation Administration that are and will be applicable to commercial drone use. Right now, unless you have a commercial aviation license, it is illegal to operate a drone commercially, unless you receive an exemption as Sevee and Mahar did. There will also be a host of other issues for discussion, including securing appropriate insurance coverage (yes, they are going to fall from the sky), dealing with privacy related issues (yes, people will use them wrongfully), and there will surely be state and local laws that overlay the federal regulations just to make your life more complicated. Rest assured, though, drones are coming to ME; the only question is how fast and how widespread the trend will be.

Cloud Based Collaboration Platforms

Most of us have heard about cloud computing. Cloud computing involves the capacity to store data in the cloud on remote servers, sometimes without us really knowing. Most of us use cloud computing, either at work, home or both. Nationally, there has been an entry of cloud-based collaboration platforms for project management on construction projects. These systems can offer one place where different project participants can view submittals, RFIs, field reports and the like. You can access it from different locations, and there are obvious benefits in terms of saving time and increasing accountability on construction projects. However, it doesn’t take much time to consider the possible downsides as well, including arguments over ownership of the data and confidentiality concerns. I can’t think of many projects where all of the participants have access to all data on that project, but the point was brought home that we are going to see more on the cloud computing front in the future of the construction industry.

Response to a Construction Crisis

Crises happen on construction projects, even though we wish they never did. Injuries and accidents happen, people request that OSHA pay a visit, natural disasters and fires happen, and some litigants use a strategy of “trying the case in the press.” A lot of what I heard in a seminar on this topic made common sense, and some of it I have employed in client situations during my career, but it was nice to see it presented as a comprehensive topic. The takeaway that I leave for readers is that once the crisis is identified, I encourage you to think about how to deal with it from several different angles: legally, internally at your company, from a public relations perspective, from a governmental perspective, and with the possible use of consultants, vendors and experts. And of course, you also have to think about timing and who is going to execute the plan at your company. It is useful to think about recent events and view the panoply of ways that people or groups have responded to a crisis and whether it was done effectively or haphazardly. Compare ”Deflate-gate” to  the Yankees treatment of their A-rod problem, then compare a company that filed for bankruptcy reorganization after thoughtful planning to one that did so without a real plan in place. You get the idea. You should do as much advance planning as possible, because you don’t want the planning to start after the crisis has landed on your doorstep. You can’t identify every crisis though, so when it does happen, think about it from all sides to develop the appropriate multi-faceted response. You have spent a lot of time branding your company, so you need to do everything you can to protect that brand when crisis hits.

Extraordinary Measures on a Construction Project

One interesting session I attended dealt with extraordinary measures being taken on a construction project and a few questions were raised. For instance, under what circumstances can you go to the project site and repossess your unpaid-for materials? The answer is that you can, in certain situations. Under what circumstances can you run into court to get a temporary restraining order, prohibiting another participant on a construction project from doing some act that will hurt your company? The answer is sometimes yes and sometimes no. Are projects being done with letters of credit as security instead of a performance bond, and do you know how easy it can be to collect on a letter of credit? The answer is that drawing on a letter of credit can be done quite easily, often to the dismay of the entity that posted the letter. Will a pre-judgment attachment, ex parte or not, be of benefit to your claim or collection of amounts owed?

We have all seen extraordinary behavior and events on construction projects, ranging from the plainly incompetent, to the insolvent actor, to the downright fraudulent bad person. The advice here is to do as much due diligence as you can at the contract negotiation and drafting stage, to see if you can put in place some contractual remedies that you can execute if the risk that you are worried about rears its ugly head. If you are past that stage, think about the other options you may have at your disposal, including repossession and litigation, that you may need to resort to in order to project your economic or other interests.

I hope each of you gets to do something like this in 2015…

Yes, it was Boca Raton for a couple of days in April, when I could have been looking at the last piles of snow in my backyard, reminding me of the brutal winter we all endured. But what I liked best was meeting and talking to other construction lawyers who like being in the construction industry as much as I and my colleagues do, and talking to them about cutting edge issues in construction and construction happening in other areas of the country. I hope that each of you gets to travel to some other region this year where you can be reminded of some things you already know about construction, and learn some interesting new things about the industry as well.

We hope that you have found this article in the sixteenth issue of The Construction Advantage helpful to you in your daily business. Each of the attorneys in our Construction Law Practice Group is available to answer the day to day questions of your business as you work on projects. As always, we would like to hear from you on the topics in this issue, or any of our other issues, and what you would like us to write about in the future.