By Andrew D. Mendelson and Dion N. Cominos | Sunday, January 3, 2021 Legal and practice standards for design and construction professionals are evolving due to climate change. While the cause of…, UPDATE THE ASSESSMENT OF THE PROJECT’S PRESENT CONDITIONS AND LOCATION, The particular types of weather and other natural conditions to which the site or project may be exposed require careful and critical consideration. This includes asking: What are the most recent…, EVALUATE THE SUFFICIENCY OF EXISTING CODES, STANDARDS AND REGULATIONS, Professionals should evaluate and have a clear understanding of each territorial jurisdiction’s codes and regulations—city, county, state and federal. They also need to anticipate the potential…, PROMOTE RESILIENT DESIGN IN DEFINING PROJECT CRITERIA, Resilience is defined as “the capacity to adapt to changing conditions and to maintain or regain functionality and vitality in the face of stress or disturbance.” In applying resilience to the…, STANDARD OF CARE ISSUES, The adoption of comprehensive building codes and amendments addressing extreme weather events will provide a solid foundation for a community working to overcome evolving climatic conditions in the…, RISK MITIGATION STRATEGIES, While risks accompany virtually every project, resilient design is likely to entail its own set of challenges. There are several recommendations for managing the potential exposures. , Anticipate climate change code and practice standard updates and upgrades, For example, if the current code for storm-water management calls for the design of structures to withstand a 100-year flood, it’s probably best to promote design for a 500-year flood. Milestone…, Client recommendations for increased resilient design safety factors, A discussion should take place between design professionals, contractors and project owners pertaining to recommendations about increased factors of safety for resilient design and the owner’s…, Do not allow enhanced design and construction criteria to be compromised during project implementation, Professionals dedicated to the standard of care and its advancement should always resist “value engineering” that may not only diminish the project’s quality and integrity, but also greatly…, About the Authors, Andrew D. Mendelson – Senior Vice President, Chief Risk Management Officer, Berkley Alliance Managers . Contact Info: [email protected] Andrew D. Mendelson, FAIA, is an acknowledged design…, Construction Executive, Reposted from constructionexec.com , Jan. 3, 2021, a publication of Associated Builders and Contractors. © Copyright 2021. All rights reserved. by Walter J. Adams, Jr., Berkley Alliance Managers, a Berkley Company Once again, the American economy is in flux. We’re all now in a wait-and-see game with a virus that is endangering the well-…, It’s all in the details, In order to avoid discrepancies, primes and their subcontractors should consider the standard form contracts published by reputable and credible organizations like the American Institute of…, The Scope of Services, All of the services performed by the subcontractor during the scope of the project should be clearly-defined within the agreement. This includes the basic fees for these activities as well as the…, Scheduling, A detailed schedule of services and deliverables is essential for ensuring positive, mutually-agreed upon outcomes. The ability to flexibly accommodate new circumstances and requests should also be…, Billing and Payment, Billing and payment issues are the sources of major disputes. All agreements should define payment schedules, billing cycles, the invoice approval and payment process, due dates, and interest and…, Dispute Resolution, All agreements should include dispute resolution terms. This includes spelling out how the dispute will be resolved by the parties as well as within the courts. Clauses should also be written…, Indemnities should be mutual and based on comparative fault, In other words, the prime and the subconsultant should agree that each party will reimburse the other party “to the extent that each party is responsible for such damages, liabilities, or costs to…, Legal Action Time Limits, The length of time by which a claim can be filed against the subcontractor should be clearly defined in the contractual agreement. Three-to five-year time periods are typical for most projects.…, SIDEBAR, , Things to Consider Before Entering a Subcontracting Agreement, , Select prime consultants with care, When you contract with a prime contractor, that firm becomes your “client.” And just as primes should prudently select their clients and projects, subcontractors also need to answer some key…, Find out as much as you can about the project and the owner, Your contract may be with the prime, but it’s critical for you to understand key factors that will likely impact you and your ability to be successful: Does the owner have experience with this type…, Billing and payment terms, When should you invoice and how soon can you expect to be paid? Will the prime require a pay-when-paid or even a pay-if-paid arrangement? What happens if the project is delayed? What is your recourse…, Review the related agreements, Obtain and review other contract documents referenced by your subconsulting agreement—the owner-prime agreement in particular. The terms should be unambiguous, consistent and not written to pass…, Communicate and document, Engage in ongoing communication with the prime and other project team members, as appropriate. Seek and give continuous feedback. Have a plan to memorialize in writing anything that pertains to the…, Be a team player, Cultivate good relationships with the prime and other subconsultants. Foster a collaborative, problem-solving approach that facilitates common goals. , Lean into problems, If you run into trouble, if you’re not going to meet a deadline or if you become aware of an issue on the project, advise the prime as soon as possible (and your insurer, if the situation could…, Use a checklist to review subconsultant agreement terms and conditions, Key areas should address the project’s: Flow-down of obligations and rights of the owner-prime agreement BIM, CAD, digital practice protocols, if any Schedule Compensation, payment terms Insurance…, Information provided by Berkley Alliance Managers is for general interest and risk management purposes only and should not be construed as legal advice nor confirmation of insurance coverage. As laws…, Walter J. Adams, Jr., is vice president and assistant claims manager at Berkley Alliance Managers, a Berkley Company. Walter has more than 20 years of professional liability claims experience…, The Contractor’s Compass, Reprinted with permission from the November issue of The Contractor’s Compass. © 2020 The Contractor’s Compass.
November 2020 Exploring the hidden issues sinking your profits Consistently achieving acceptable profit margins is difficult during the best of times. The slightest challenge can derail a project…, 1. Bid Wisely on Projects That Make Sense, During slow times, the temptation is always present to bid on projects that do not match the contractor’s expertise. This error is often compounded with bids that fail to provide comfortable profit…, 2. Evaluate the Cost of Materials in Your Bid, Proposals should address the potential increase in the cost of materials due to the pandemic. Production and manufacturing delays have affected the availability and cost of products. A prudent step…, 3. Factor Site Safety into Your Bid, Jobsite safety is always an important concern on every project. However, additional steps may need to be taken to address pandemic-specific governmental requirements. The additional costs…, 4. Choose Your Business Partners Wisely, How well do you know the project owners? Have their other projects been successful or plagued with problems, change orders and delays? These are important questions to consider before entering into…, 5. Do Your Due Diligence, Never enter an agreement without a clear understanding of the project demands and the potential for unforeseen challenges and changes. This extends from the conceptual design and preconstruction…, 6. Avoid Bad Contracts, Every word matters. Never enter an agreement without documenting the scope of services and the role of every partner involved in the delivery process. This includes the associated risks and…, Limitation of Liability, —This clause can balance risk/reward considerations, particularly when the agreed-upon services are limited in scope., Waiver of Consequential Damages, —This clause can help control the potential of liability., Waiver of Subrogation, —This clause can help minimize lawsuits and the claims related to property loss. Failure to plan for the unexpected can be problematic. This was apparent just a few months ago, when thousands of…, Construction Business Owner, Reprinted with permission from the November issue of Construction Business Owner. © 2020 Copyright Cahaba Media Group, Inc. All Rights Reserved.
By Edward L. Sheiffele, Jr. | October 19, 2020 , Today's contractors must thoroughly understand all of their exposures., Construction Firms increasingly offer both design and building capabilities. This trend has created a number of fresh liability questions for construction insurance underwriters. Historically,, professional liability insurance policies related to construction, have been created for specific individual risks: architects and engineers, contractors, developers, environmental consultants and other miscellaneous related professionals. There were also policies…, exposure for the design, , manufacture and installation of products. As a result, the technical expertise of underwriters has developed rapidly with almost all of the supporting talent pools seldom straying from their…, Industry shift, With respect to contractors’ professional liability, the growth of design/build as a project delivery method hastened this evolution, especially during the past 15 years. According to the Design-…, a DBIA market study, . Although design-build is purported to deliver projects faster, lower costs and streamline processes from design to construction with one single-point-of-contact for an owner, it also creates, significant additional professional liability exposures for contractors, . Under the traditional design-bid-build project delivery method, contractors and designers have clearly defined the roles and the risks associated with their respective services. In contrast, design…, reduce the liability associated with the errors and omissions of outside design firms, , many contractors responded by expanding their businesses with in-house design services. They essentially became construction firms that offered clients both design and construction capabilities. , Expanded services, liabilities, This vertical integration concept is gaining momentum industrywide. If it worked for contractors, why couldn’t design professionals embrace the same approach by expanding their services with a…, Policy language matters, At the heart of all of these changes to professional liability insurance policies is the definition of professional services. To support the entirety of the firm’s services, this definition should…, The broker’s critical role, Given the potential complexity of ensuring adequate coverage for a contractor that performs a multitude of professional services, it is critical that contractors work with knowledgeable insurance…, Contractor Pollution Liability (for both design and construction exposures), , Protective Indemnity, Cyber Liability and Media & Personal Injury Liability. Most recently, the market evolved once again with the introduction of a genuine Faulty Workmanship Liability…, Edward L. Sheiffele, Jr. (, [email protected], ) is executive vice president at Berkley Construction Professional, a Berkley Company. Sheiffele has more than two decades of insurance industry experience acquired within the construction and…, These opinions are the author’s own., Read article in, PropertyCasualty360, Reprinted with permission from the October issue of National Underwriter PropertyCasualty360. © 2020 ALM Media Properties, LLC. Albany, N.Y. (September 15, 2020) –, Andrew D. Mendelson, FAIA, senior vice president, chief risk management officer at Berkley Alliance Managers, a Berkley Company, will participate in the panel discussion, “Weathering the Storm:…, About Berkley Alliance Managers, Berkley Alliance Managers is an alliance of specialty professional liability insurance underwriters and is a member company of Berkley, whose rated insurance company members are assigned A+ (…
August 24, 2020, , ENR: Why offer a new policy? What market niche or need are you looking to fill?, It, ’, s an innovation created by market forces. Whenever we talked to contractors and the brokers who represent them, one of the most common complaints was that there hasn’t been an insurance solution for…, What about the risk involved? Haven’t insurance companies been cautious about offering this faulty workmanship coverage because of the potential for significant losses?, The insurance business is about taking risks, but at the same time prudent risk selection is paramount. You have to be very careful in your deployment of the product and the exposure you accept. …, Who is your target market? What types of contractors are you working with, ?, Our focus, our appetite, has been insuring contractors in the nonstructural trades, mechanical, plumbing, painting, interior finishes. We are targeting firms in the nonstructural trades generating…, What are some of the scenarios under which your new faulty workmanship policy might provide coverage?, Say a painting contractor has been hired to paint the entire interior of a building. On all the concrete surfaces, the painting contractor failed to use the correct primer, or didn’t apply the…, What has been the response so far to your new product and how competitive is the market for faulty workmanship coverage?, The response has been very positive. There have been a couple of outlets announcing the coverage’s existence. We have also issued announcements targeting our brokerage community. Overall, however,…, What does the policy cost and how does it compare with the price of the standard ISO GCL policy?, Each insurance applicant has its own risk profile and we will offer a policy at a premium based upon that risk profile. As example, the premium for the faulty workmanship coverage, for a $1 million…, In what cases would the policy cover defective materials and products?, The responsiveness of the policy would depend on the specific facts and circumstances but, as an example, let’s take an electrical contractor who is hired to install the electrical system in a…, What’s the deal with the breach of warranty and breach of contract coverage angle in connection with this new policy?, Generally every contractor’s work is subject to certain warranties: those can be either express warranties commonly written into their contracts (for example, that work on the project will be…, What are the limits and sublimits of the policy?, The maximum outlay we are looking to initially deploy on a particular policy is $2 million. After binding an account for several years, we could potentially move to a higher maximum. I have no…, Final thoughts about the future?, One thing I have heard from brokerage partners and contractors is that this type of insurance is still relatively new compared to most other lines of insurance a contractor would buy. We have not…, ENR, Reprinted with permission from the August, 2020 issue of ENR. © 2020 Engineering News Record. All Rights Reserved.
April 21, 2020 According to the Design-Build Institute of America, design-build methodologies now represent 40% of the nonresidential construction marketplace and are likely to support more than $1…, How Does a Protective Policy Work?, A protective policy leaves the professional liability insurance policy of the architect alone and provides first-party indemnity to the contractor for damages incurred as a result of negligence by…, How Much Protective Insurance Is Enough?, Architects usually purchase $1 million or $2 million limits of liability on their professional liability insurance policies. When deciding on the limits of liability for a protective policy, the…, Not All Protective Policies Are the Same, Terms and conditions for protective policies vary widely. Each insurance carrier creates their own policy with unique coverages customized for each construction project. Therefore, it is important…, Insuring Construction Business Owners from Catastrophic Loss, A catastrophic event is always unexpected and unwelcome. Therefore, construction business owners should carefully assess their insurance protection and indemnity obligations before executing…, Construction Business Owner, Reprinted with permission from the April issue of Construction Business Owner. © 2020 Copyright Cahaba Media Group, Inc. All Rights Reserved.
By Derek E. Steffen | Tuesday, March 24, 2020 Businesses often look for ways to protect against the risks they confront on virtually every project from design and construction through completion.…, Professional Liability, By definition, a PL policy protects against the damages arising from negligent professional service acts, errors or omissions performed by or on behalf of the PL policy holder. Since an owner,…, Proper Risk Management, Every project no matter the size has its twists and turns. Even the best due diligence can obscure this fact. But there are steps businesses can and should take to prepare against the unknown. This…, About the Author, Derek E. Steffen – Assistant Vice President, Senior Claims Examiner, Berkley Alliance Managers, a Berkley Company Contact Info: [email protected] Derek has more than 20 years of diverse…, Construction Executive, Reposted from constructionexec.com, March 24, 2020, a publication of Associated Builders and Contractors. © Copyright 2020. All rights reserved By Will Jones | March 2, 2020 , PRODUCT:, Faulty Workmanship Liability , COMPANIES:, Berkley Construction Professional (Berkley CP), a Berkley Company , BEST RATING:, A+ (Superior) , AVAILABILITY:, Coverage is available on an open-brokerage basis. , FOCUS:, Until relatively recently, insurance solutions for the costs contractors incur to repair or replace defects found within their physical construction work have been virtually non-existent. Berkley CP’…, COVERAGE DETAILS:, Berkley CP’s Faulty Workmanship Liability solution is offered as a separate insuring agreement, subject to its own set of insurable limits, attached via an endorsement to their broad professional…, UNDERWRITING:, Berkley CP requests applicants seeking coverage to submit a supplemental faulty workmanship liability application and other documentation, such as general liability loss runs and a list of completed…, MINIMUM PREMIUM:, $5,000 , TARGET:, Contractors with total annual revenue up to $250 million and total annual revenues of up to $50 million derived from self-performed physical construction work. Types of work include electrical,…, COVERAGE AVAILABILITY:, All U.S. states , COVERAGE TERRITORY:, Worldwide while also complying with all trade or economic sanctions, laws or regulations of the United States including, but not limited to those administered by the U.S. Treasury Office of Foreign…, CONTACT:, Edward L. Sheiffele, Jr. , executive vice president, Berkley Construction Professional; 973-775-7492. , Will Jones, is IA managing editor., DOWNLOAD PDF Read article in , Independent Agent
December 12, 2019 , Protect your company from a variety of project challenges through detail & careful planning, Design-build is quickly becoming the mainstay project delivery method for the United States commercial construction industry. According to the Design-Build Institute of America (DBIA), nearly…, Agreements Should Be Fair & Consistent Among All Parties, Every project consists of varying levels of responsibilities and risks. This extends from the professional services contracts negotiated with subconsultants to the prime agreements created with…, Scope of services, —It is imperative to make sure the scope of services defined in each agreement are clear and unambiguous. This includes the services performed for a basic fee, those that explicitly will not be…, Scheduling of services and deliverables, —Scheduling should be consistent throughout the project parameters and among all the parties involved. Subcontractor agreements should also reflect the requirements stated in the owner agreement,…, Billing and payment, —Billing and payment issues are often a major source of disputes. Each agreement should define the payment schedule and billing cycles, invoice approval and payment process, due dates, and interest…, Dispute resolution, —Dispute resolution terms must also be coordinated with the prime agreement. This is critical. Contractors need to know that if they are drawn into a claim, the entire design-build team will work as…, Indemnities, —Every contract should contain language stipulating the circumstances and amounts surrounding the reimbursement of funds to the extent that each party is responsible for such damages, liabilities or…, Time limits for legal action, —These should be consistent with the prime agreement. For instance, contractors should not give owners 5 years to file a claim while offering subcontractors 3 years. Be aware, too, that if the owner…, Ownership of instruments of service, —The copyright and ownership of plans and specifications are a matter of negotiation and should be defined within the prime agreement., Confidentiality requirements/nondisclosure agreements (NDAs), —NDAs should be consistent with the owner-prime agreement. Owners have become increasingly protective regarding the access to confidential and proprietary information. Make sure that any restrictions…, Construction Business Owner, Reprinted with permission from the December issue of Construction Business Owner. © 2019 Copyright Cahaba Media Group, Inc. All Rights Reserved.
