1. Construction: Legal Issues

2. Legal Issues In the Bidding Process Timing of various activities has legal implications. During the bidding process: –A bid box is established for bid submittal –Late bids are disqualified –Changes to bids may be made prior to opening –Bids may be withdrawn without penalty prior to opening WHAT IF THE BIDS HAVE BEEN OPENED AND THE LOWEST BIDDER DECLARES HE HAS MADE A MISTAKE?

3. After Bid Opening: Acceptance Period & Withdrawal The Acceptance Period is a specified period of time wherein the proposals are to remain in force. If owner does not act to accept a bid, contractors may adjust or withdraw bids after Acceptance Period has passed. THIS ACTUALLY PROTECTS BIDDERS!

4. The Bidding Process: Award of Contract Notification of award is made in writing by Notice To Proceed: –Establishes contractual relationship –Implies site is ready to begin work –Indicates work shall begin with specified period (ie,10 days) –Legal start date of the project. WHAT IF THE SITE IS NOT AVAILABLE FOR WORK TO BEGIN AT TIME BID IS SELECTED?

5. Owner Will Issue “Letter of Intent” –Explains delay –Indicates award of project –Expresses owner’s intent to enter contract as soon as site is available.

6. End of Bidding Process: The Contract Agreement Binds parties and fully describes work. Pulls together into one package: –Drawings –General Conditions –Supplementary Conditions –Technical Specifications –Addenda The Form of Agreement may vary

8. Time Related Legal Issues: Date of Substantial Completion of Work This is the date certified by owner or owner’s representative: –Work sufficiently complete –Owner can occupy –Project can be utilized for intended purpose Often referred to as Beneficial Occupancy Date (BOD) After inspection & punch list items are corrected

9. Time Related Legal Issues: Time Extensions Time extensions legally increase the contractual duration of the project Requests for time extensions are usually based on: –Delays caused by Owner or Owner’s Agent –Encountering unforeseen conditions –Acts of God

10. Change Orders Contract documents are legally binding: –Changes must be handled as contract alterations Alterations to drawings or technical specifications constitute an alteration of the contract Method for handling Change Orders is defined in General Conditions Normally: –Owner specifies desired change –Contractor responds with offer –Owner can accept, decline or negotiate

11. Claim For Changed Conditions Design based on “perception” of the site conditions Conditions affecting superstructure are fairly predictable Conditions affecting substructure (foundations) are often approximated SOIL REPORTS CAN GIVE AN ERRONEOUS PICTURE OF SUBSURFACE CONDITIONS !

12. Time Penalty: Liquidated Damages If job is not finished on time, owner may incur financial loss. Contract provides owner recourse = liquidated damages

13. Penalty vs. Liquidated Damages Excessively large “unsupported” amount of money is considered a “penalty” Legal precedent has been established that Owner cannot apply “penalty” without “bonus” (to contractor)

14. Progress Payments & Retainage USUALLY PROGRESS PAYMENTS ARE MADE AS FOLLOWS: Monthly: Owner’s rep & contractor estimate % complete Contractor submits request for progress payment Retainage held back as an “insurance” that contractor will finish job

15. Progress Reporting Project schedule must be submitted to owner at beginning of job Modifications must be reported Actual progress must be indicated “weekly or at such intervals as directed by the owner’s representative”

16. Acceptance and Final Payment Final inspection = punch list Items completed = final acceptance Final payment with retainage