Construction Law Insider
Construction contract strategies for Owners and Developers.
Save time and cost while negotiating CMA's by first agreeing upon a term sheet containing the basic business and legal terms of the CMA.
It is often said--mistakenly--that once a construction contract is signed (here, we’ll consider it a construction management agreement or CMA) it is put on the shelf and forgotten about. There are, however, many contractual obligations which must be carefully followed throughout the life of the project and which require specific reference to the CMA.
Invoicing and Retainage Provisions of the NY Prompt Payment Act are Amended - With Supremacy of a Contract Remaining Unchanged
Governor Kathy Hochul recently signed a bill amending the NY Prompt Payment Act (General Business Law Article 35-E) by (1) allowing a contractor to submit a final invoice for payment in full upon reaching substantial completion (GBL §756-a[a]); and (2) limiting the amount of retainage to be withheld by the owner to no more than 5% of the contract sum (GBL §756-c). Previously, a contractor could submit a final invoice only “upon the performance of all the contractor’s obligations under the contract,” and retainage was limited to “a reasonable amount” mutually agreed to by the parties.
The costs included within a guaranteed maximum price can generally be broken down as: subcontract costs; general conditions and general requirements costs; insurance costs; and the construction manager’s fee or, more broadly, its total compensation. Costs of third parties, such as subcontractors and suppliers, cannot readily be controlled other than through the normal bid and leveling process; however, in the case of the CM’s compensation, there are certain contractual strategies an owner can follow to control that cost. In this blog, we will address those strategies.
This week, in the interest of transparency, the New York City Department of Buildings issued updated guidance detailing those violations that will result in partial or full stop work orders. That document is available here.
A construction manager (CM) is, essentially, a firm of experienced construction professionals (but not necessarily licensed professionals such as architects or engineers) which assists a project owner in executing the design and construction of the project, with the goal of reducing time and cost, but while maintaining the quality of the work. The financial and legal relationship between the owner and the CM, which can vary widely from project to project, allocates these three major risks, that is, time, cost and quality of the work, between the owner and the CM.
New York State enacts wage theft legislation.
It is common in most construction contracts for there to be a mutual waiver of consequential damages. Owners, however, should take caution before agreeing to provide a broad unqualified waiver to contractors.
Contractual provisions dealing with contractor delay damages.
Construction Management Agreements (CMAs) traditionally take the form of a guaranteed maximum price (GMP) or cost plus agreement. There is, however, an alternative form of traditional CMA: the cost plus hybrid, which is the subject of this blog.