The 104-Year-Old Law that Impacts Your Construction Contracts

The 104-Year-Old Law that Impacts Your Construction Contracts

May 26, 2017

Sometimes the law struggles to keep pace with the ever-changing needs and demands of the people. As a result, some very old and very puzzling laws are still technically in effect. Dozens of top-ten lists have been written on the most humorous of these laws—like a law in Florida about what parking fees apply to an elephant tethered to a parking meter—but in Pennsylvania one particular law can have a big impact on your next construction project.

The Separations Act of 1913 dictates that public construction projects of $4,000 or more must use separate contracts for services like plumbing or electrical work. Pennsylvania is one of only three states with a law like this, and since the contract requirements for public projects do not extend to private projects, The Separations Act of 1913 has generated quite a bit of controversy.

Speaking with John Baer of Philly.com, our very own David Scotti argued that this law increases project costs, saying, “If this was economically smart, you’d see the private sector doing it.”

And according to Baer, other industry insiders support this analysis, suggesting that public construction costs 10 percent more because of the law.

Read the full article »to learn more about the Separations Act of 1913.

Civil Works Contractor Wins $1.5 Million Recovery from Bonding Company

August 29, 2016
Scotti Law Group recently recovered $1.5 Million for McK Construction, LLC (“McK”), a civil works construction company. McK had performed construction work on a 70-mile long, 30-inch diameter natural gas pipeline that traversed three counties in eastern Ohio. The prime contractor was unable to pay its creditors, including McK. Scotti Law Group promptly prepared and filed a detailed payment bond claim on behalf of McK against the prime contractor’s bonding company.

The bonding company began to review the bond claim and asserted that it had 60 days to respond to McK. With the time limits for mechanics’ liens due to expire within a few weeks, Scotti Law Group filed mechanics’ liens against the pipeline easements and the underlying fee simple property interests at seven locations along the pipeline where McK had performed. All property owners, the pipeline owner, the prime contractor and the bonding company were notified of the mechanics’ lien filings.

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Pennsylvania’s Separations Act

July 20, 2016
In Pennsylvania, when public Owners want to build, the Separations Act, 71 P.S. 1618, requires them to use a multiple-prime project delivery system and each of these prime construction contracts must be competitively bid. This paper will not focus on whether Pennsylvania’s Separation Act should be changed; just like Geico Insurance commercial, “Everyone knows that.” Instead, this paper will assume that for the immediate future this law will remain in place, just as it has for the past one hundred years. Consequently, Public Owners need to manage their multiple prime construction projects the best way possible. This paper will address how this required project delivery system works, its limitations and will identify some key considerations in trying to improve project performance on a multiple-prime project.

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Risk Assessment and Risk Management

Risk Assessment and Risk Management

November 9, 2015
Companies must become more risk aware. Companies need to assess a project’s potential risk and to be decisive in either avoiding or managing that risk.

As the economy worsens, there is less work available and the competition for that work is increased. This combination of less available work and heightened competition reduces both a company’s volume of work and the profit margins for that work. In order to compete for available work, companies are forced to accept more risk for less potential profit, i.e, companies are forced to risk their financial well being by taking on more risk.

Companies are taking jobs with less profit in them from the start. This leaves companies with a much smaller margin of error for each project. What makes it worse is that there is less potential to make up for a loss on the next job. Also, companies have limited credit available to cover shortfalls. The safety net is shrinking. There is less lubricant in the machine. People are losing their sense of humor.

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How to Avoid Contract Drafting Mistakes

How to Avoid Contract Drafting Mistakes

November 4, 2015

The contract documents establish the rules and framework for the design and construction of the project. Based on previous projects and conflicts, experienced construction practitioners have their own forms and, as importantly, opinions on what should typically be included in Owner-Contractor, Owner-Architect and Contractor-Subcontractor agreements.

Even skilled practitioners, however, must alter or modify the contract documents to meet the needs of the specific project in order to avoid omissions or conflicts that could adversely affect both the client and the project. This presentation will focus on the principal issues a practitioner should address in tailoring design and construction contracts to a project and, specifically, the needs of the client.

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Contract Review — What is Critical?

Contract Review — What is Critical?

October 30, 2015
Critical components of a contract include: indemnification, scope of work, warranty, payment terms, pay if paid/pay when paid. schedule of values, liquidated damages, damages waiver(s), financial wherewithal of owner, schedule, construction change directives, and more. The following article lists each section and gives details.

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