Category Archives: Forensic Cost and Damages Analysis

Eighth International Society of Construction Law Conference

Construction Law: Local Issues – Global Perspectives

Anamaria Popescu is the chairman of the Society of Construction Law (SCL), North America and a member of the SCL Conference committee. On September 27, she will provide an introduction and welcome, and take part in the roundtable “Are Protocols Poseidon’s Trident or an Achilles Heel?”

On September 27, Andres Alva will take part in a panel on “Legal Aspects That Affect Claims Management.”

On September 28, Janet Rieksts–Alderman and Jean-Marie van der Elstwill discuss “Global Advisory on Capital Projects–How to Help Your Clients Mitigate Risk for a Competitive Advantage.”

John Jerz is a member of the SCL North America board.

BRG is a sponsor.

The Society of Construction Law has led industry discussions at events and conferences around the world for many years, and for the first time North America will host the International Society of Construction Law Conference from September 26–28.

Join us in Chicago, where global legal and construction experts will explore the ins and outs of the two leading delay and disruption guides, the new loss of productivity standard, and their use.

Leading practitioners will guide us through:

  • Differences in contract interpretation
  • Dispute resolution and penalty clauses around the world
  • Practical management tools for mega projects
  • How to embrace uncertainty and think outside the box
  • Increasing risk mitigation opportunities for a competitive advantage
  • Appreciating the application of technology on projects and in arbitration

This is a unique opportunity to join legal and construction industry professionals in discussing these issues and networking with global leaders in these fields.

The conference will provide an interactive dialogue with live polling questions, opportunities for participation, and working sessions. Connect with peers from North America and around the world.

This conference is proudly hosted by the Society of Construction Law North America, American College of Construction Lawyers, Canadian College of Construction Lawyers, and Royal Institution of Chartered Surveyors.

Register for the conference.

Book rooms at the conference hotel: the beautiful and historic Palmer House has provided a special rate of $249 per night.

Time-Extension Requests for Weather-Related Delays

Mother Nature plays an important role in every construction project. Torrential rains, sub-zero temperatures, gale-force winds, and layers of ice and snow are some hallmarks of nature-related construction delays.

The issue, though, is whether these delays impact construction enough for contractors to legitimately and successfully seek a contractual time extension. Weather-induced time extensions typically are not compensable, but grant relief from liquidated damages. Continue reading Time-Extension Requests for Weather-Related Delays

Case Studies in Determining the Contractor’s Allowable Costs and Profit after a Termination of a Construction Contract for Convenience

Determining Responsible Damages Payable to the Contractor

Without a contract termination clause, a contractor that is terminated during the completion of a construction project is due “the benefit of the bargain.” This means that if the contractor’s cost estimate is deemed reasonable, the entire unpaid amount of anticipated project profit, along with incurred costs to produce and terminate the work in process—including project preparation and materials procurement—becomes payable by the owner. The question that must be answered, and which the contractor must be willing to provide complete financial documentation in support of, is: “How much profit did the contractor anticipate to earn from the complete and successful prosecution of the project?”

Before this profit can be determined, the owner should determine an as-accurate-as-possible evaluation of the percent and dollar value of the contractor’s properly completed work at the time of termination. If any work was in need of remediation, the owner should determine the cost of remediation and reduce the amount payable to the terminated contractor.

Notwithstanding potential remediation costs, the contractor must prove the amount of anticipated profits for the project. The most useful source of this evidence is if the contractor has surety bond requirements or a large bank borrowing arrangement, it is likely required to have annual CPA-prepared financial statements—either reviewed or audited. In the construction industry, common practice is to include in the financial statement presentation certain “supplemental schedules”: Operating Expenses, Completed Contracts, and Contracts-In-Process. The Contract-In-Process schedule identifies the estimated cost and profits anticipated by the contractor for each project being completed in the given year. This statement becomes the means by which the CPA can determine the percentage of completion for each of the contractor’s projects and, therefore, the amount of revenue the contractor may recognize for the period. Because it is prepared by an external, independent third party, this statement frequently becomes the most authoritative means for the contractor to support its anticipated profit on the terminated project.

In the event the contractor does not have the supplemental schedules prepared with its annual financial statements, the owner should be provided with the contractor’s bid estimate (tender) to determine the anticipated project profits at bid time, in terms of both dollars and percentage of contract revenue. Regardless, the reasonableness of the bid needs to be verified and proofed against the contractor’s actual performance. A straightforward case study of this anticipated profit calculation includes the reduction for profits that have already been recognized through project progress and the remaining anticipated profits payable to the contractor, as shown below.

Read the full article.