Copyright (c) 2000 Vincent W. King, PA All Rights Reserved

Minnesota Construction Law: What Do You Do When... VINCENT W. KING, P.A. 310 FOURTH AVENUE SOUTH SUITE 500 MINNEAPOLIS MINNESOTA USA TEL FAX

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Agenda Bidding: Bid Protests & Mistakes Defective Plans / Specs Contracts

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Bidding

Bidding Bid Protests Bid Mistakes

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Bidding: Bid Protests

Bidding: Bid Protests Generally applies only to public bidding Lowest responsive/responsible bidder Responsive in all material respects Responsible: experience, financial & other resources, integrity, etc. Subcontractor bids

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Bidding: Bid Protests – What To Do Owner: follow the specified procedures Protesting bidder: immediate notice, with full proof Responding bidder: document Owner: investigate fully Owner: safest course – reject/rebid

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Bidding: Bid Protests -- Relief Court will enjoin award but can’t force award Owner can reject all bids and rebid Owner can award to protesting bidder Successful protestor can get bid prep costs

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Bidding: New Legislation “Best Value” approach Design/Build

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Bidding: Bid Mistakes

Bidding: Bid Mistakes – What Kind Mistakes of fact; not judgment or law Must be material No “gross negligence” Enforcement of bid “unconscionable” No prejudice to other party Discovered before contract award

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Bidding: Bid Mistakes – Nature of Mistake Unilateral: Arithmetic or clerical Owner’s actual or constructive knowledge Mutual mistakes Mistakes induced by owner

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Bidding: Bid Mistakes – What To Do PANIC!!!!!! Call a lawyer Owner: Canvass bids, confirm w/bidders Contractor: Immediate notice Contractor:Proof (worksheets, etc.) Owner: Release if justified

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Bidding: Bid Mistakes – What Kind of Relief? Reformation Recision Release from bid / Return of bid security

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Defective Plans

Defective Plans Owner’s Warranties Contractor’s Duties Damage Recovery

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Defective Plans – Owner’s Warranties Performance vs. Design Spec Scope of implied warranty Accuracy, adequacy Application of warranty: results vs. performance Effect of disclaimers Flow-down of warranty

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Defective Plans – Contractor’s Duties Duty to carefully study & report (A ) Duty to discover Patent vs. Latent

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved 3.2REVIEW OF CONTRACT DOCUMENTS AND FIELD CONDITIONS BY CONTRACTOR Since the Contract Documents are complementary, before starting each portion of the Work, the Contractor shall carefully study and compare the various Drawings and other Contract Documents relative to that portion of the Work, as well as the information furnished by the Owner pursuant to Subparagraph 2.2.3, shall take field measurements of any existing conditions related to that portion of the Work and shall observe any conditions at the site affecting it. These obligations are for the purpose of facilitating construction by the Contractor and are not for the purpose of discovering errors, omissions, or inconsistencies in the Contract Documents; however, any errors, inconsistencies or omissions discovered by the Contractor shall be reported promptly to the Architect as a request for information in such form as the Architect may require Any design errors or omissions noted by the Contractor during this review shall be reported promptly to the Architect, but it is recognized that the Contractor = s review is made in the Contractor = s capacity as a contractor and not as a licensed design professional unless otherwise specifically provided in the Contract Documents. The Contractor is not required to ascertain that the Contract Documents are in accordance with applicable laws, statutes, ordinances, building codes, and rules and regulations, but any nonconformity discovered by or made known to the Contractor shall be reported promptly to the Architect If the Contractor believes that additional cost or time is involved because of clarifications or instructions issued by the Architect in response to the Contractor = s notices or requests for information pursuant to Subparagraph and 3.2.2, the Contractor shall make Claims as provided in Subparagraphs and If the Contractor fails to perform the obligations of Subparagraphs and 3.2.2, the Contractor shall pay such costs and damages to the Owner as would have been avoided if the Contractor had performed such obligations. The Contractor shall not be liable to the Owner or Architect for damages resulting from errors, inconsistencies or omissions in the Contract Documents or for differences between field measurements or conditions and the Contract Documents unless the Contractor recognized such error, inconsistency, omission or differences and knowingly failed to report it to the Architect.

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Defective Plans – Contractor’s Remedies vs. Owner Warranty may apply even in absence of A/E negligence Contractor gets increased cost of performance (but see changed conditions clause)

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Defective Plans – Contractor’s Remedies vs. A/E Liable only if negligent Foreseeability of contractor’s reliance Contractor must follow plans & specs

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Defective Plans – What To Do (Contractor) Study plans carefully pre-bid Notify regarding any concerns – BEFORE doing any work! Keep scrupulous documentation Involve the subs Avoid belligerent attitude

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Defective Plans – What To Do (Owner) Include pre-construction services among contractor’s duties Allocate risk fairly If a claim, become proactive Involve the A/E and contractor Avoid belligerent attitude

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Defective Plans – What To Do (A/E) Careful QC – have a contractor review docs Finish docs on time – avoid addenda Avoid the RFI game Require full documentation Avoid belligerent attitude

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Case Study Original mechanical spec, which had been "value-engineered" several times (including the removal of heat exchangers from the design concept) until it was more or less a performance spec, called for a boiler capable of delivering 138-foot water column to the project. ME's design intent apparently was to obtain a pressure of 80 lbs./sq. inch, but under actual building conditions the specified performance criteria would only yield about 60 psi. In a proposed addendum issued just a day or two prior to bid submission deadline, the ME submitted to the Architect a recommendation to specify a boiler capable of delivering 125 psi, but the Architect allegedly failed to include this recommendation in the addendum. Boiler supplier, through MEP Sub, submitted shop drawings for a boiler which would only deliver 30 psi-- clearly in violation of the original performance criteria. No one among the MEP Sub, prime contractor, ME, or Architect caught this discrepancy during the shop drawing review process. The 30 psi boiler was delivered to the site and sat unpacked in its crate for several months.One week before the project's Fall "soft opening" date, the MEP Sub unpacked the boiler and finally discovered the discrepancy. Owner directed contractor to install temporary boiler in hotel. This lasted six weeks, necessitating a round-the- clock boiler watch, while design and construction team tried to figure out what to do. Ultimate resolution was to add heat exchangers to the 30 psi boiler. hOwner's ultimate claim for this item topped $650, What are the relative rights and responsibilities of the parties in this situation? 2.Who had the "last clear chance" to correct the problem? 3. How could the Owner's alleged damages have been mitigated? What role could the Architect have played?

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Case Study Precast spec stated as follows: C. Anchorage and support: 1. Design the anchorage and support members for this work to accommodate all loads and thermal, seismic and building movements without harmful effect to the precast members, or transferring torsional effect to the structural steel framing, and to permit the noiseless movement of the precast concrete members caused by an external temperature variation between 20 o F and 180 o F. 2.Fasteners and connections are schematically shown on the Drawings. Final types and sizes shall be designed by a California-registered structural engineer employed by the Contractor, and are subject to review by the Construction Inspector. In no case shall the fasteners or connections conflict with or require revision of the finish profiles of the precast concrete members.

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Contracts

What Is A Contract? Elements of a contract Offer Acceptance Consideration Oral contracts Implied contracts (quantum meruit) Promissory estoppel

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Contracts -- Written Contracts Price, quantity, time Can be varied/altered by conduct Standard forms for construction AIA EJCDC AGC

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Contracts – Delivery Schemes Design/Bid/Build CM -- Agent CM – At risk Design/Build Turnkey

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Contracts – Pricing Schemes Fixed Lump Sum Unit Price Cost – Plus GMP Open

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Contracts – Key Clauses Incorporation by reference Scope of work Liquidated damages Payment Owner’s finances Pay-when-paid Progress payments

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Contracts – Key Clauses ct’d Right to stop work Indemnity Notice No damages for delay Dispute resolution

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved Contracts – Subcontractors Design responsibility Indemnification Claims Scope of work Flow-down Timing of notices

Copyright (c) 2000 Vincent W. King, PA All Rights Reserved VINCENT W. KING, P.A. 310 FOURTH AVENUE SOUTH SUITE 500 MINNEAPOLIS MINNESOTA USA TEL FAX