Northwestern University Management for Design and

Construction and Risk Management PROJ_MGT 463

Course Objective: The objective of this course is to take an advanced look at the legal principles of construction law and how it applies to and project management and to explore best practices of as it relates to project management.

Topics will include: • General principles of construction law including completion, defects, retention, certification, licensing and provisions • Practical focus upon legal concepts applicable to the construction industry • Relevant provisions of standard form building • Contractual relationships in the engineering and construction industry and the actions that result in disputes. Major emphasis is on the principal contractual relationships (owner-contractor, owner-/, contractor- subcontractor, and architect/engineer-consultant) • Contractual relationships, contract performance, liability and , bonds, insurance, mechanics' , bidding and procurement rules and change orders • Legal issues and business issues that impact project management • Emphasis on techniques for preventing disputes and techniques for resolving them (negotiating, , , and litigation the steps required for rapid, • cost-effective resolution) • Claims avoidance & analysis procedure

Students will also explore in-depth the relevant and statutory information pertaining to the leading construction and impacting project management along with practical insights with group analysis and discussion.

Week-by-week description of the course:

Week 1 Introduction/Historical Perspective of Construction Law Players in the Construction Process The Contract o Owner o Design Agreement (Owner – A/E) o Design Team o Contract Documents (Owner – o Construction Team Contractor) Owner’s role/Spearin Doctrine o Integration Clause Project Delivery Systems o Incorporation by reference vs. o Overview enumeration of documents o Evolution of different approaches o Conflicts o Design – bid – build Contract Interpretation o Rules of construction contract Agency o o interpretation At-risk construction management o Parol Design-Build o o Ambiguity and intent of parties Contracting for Construction Projects o Reasonable and logical interpretation Contract formation o o of entire contract Selecting contract form o Interpretation against drafter Overview of Standard Industry o o Course of performance and prior forms o dealings . AIA Custom and usage . AGC o . EJCDC Parties to the Construction Contract o Owner – Engineer o Owner – Contractor o Third Party Beneficiaries

o Other Parties

Week 2 Design Undertakings and Contractors Design Undertakings Pricing Construction Contracts o Overview of contractual o General pricing mechanisms relationship among parties: o Stipulated – sum Owner/Engineer/Contractor/ o Cost – Plus Subs o Guaranteed Maximum Price o Statutory and o Unit – Price Licensure of Design Professionals o Specific price related terms Building Codes and Design o o Contract terms related to pricing professional . Material price escalation clause o Standard of Care Applicable to . Interim payment clause Design Services Subcontractors & Suppliers Implementation of the Design o o Difference of sub vs. supplier through Contractors Selection of subs and suppliers . Value – engineering o o Subcontract bidding – who is bound by . bid . Contractual Standard of o Flow-down obligations and rights Care Coordination of subcontractor work . o Implied Warranties o Subcontractor obligations Contractor Selection o Payment to subcontractors and o Private procurement suppliers o Public procurement o Subcontractor claims

Week 3 Construction Safety, Payment, Contract Time/Completion, Construction Scheduling Construction Safety Payment cont. o Accident Prevention o Specific Payment issues . State . Paid if Paid . OSHA . Pay when Paid . Contractual responsibility . Prompt Payment Act o Recovery of Compensation for . False Claims Construction Accidents . Lender Liabilities . Workers compensation Contract Time & Completion . o Significance of Time for Performance o Risk Allocation and Transfer of o Critical Path Method Schedules Risk o Legal Significance of Construction . Insurance Schedules . Indemnity o Time of Commencement and Time for . Assumption of risk Completion . Workers compensation o Waiver of Time for Completion Payment o Compensable & Excusable Delays • Basis of Payment o Substantial completion • Payment Process o for Late Completion • Substantial o Liquidated Damages Completion/Substantial o No Damage for Delay Clause Performance Construction Scheduling • Final Completion/Final o Types of Schedules payment . Chart . Critical path Method o Standard Schedule Specifications o Baseline Schedule

o Schedule Updates

o CPM of Delay Claim

Week 4 Changes and Differing Site Conditions Changes Differing Site Conditions o Purposes of change order clause o Common Law o Change order process o Regulatory and other standard o Authority to issue changes frameworks o Notice requirements for claims for o Elements of a federal differing site changes condition claim o Adjustments to contract price and . Type 1 completion date . Type 2 o Constructive changes o Limitations on claims for a differing o Duty to perform changed work site condition claim o Cardinal changes o How states handle differing site o Administration of changes condition claims o Release – Accord & Satisfaction

Week 5 Mechanics Liens and Termination & Default Mechanics Liens o Requirements for a Termination & Default o What is lienable o Contractual termination provisions o Interest subject to a lien o Material breach o Perfecting the lien o Termination by Agreement o Priorities o Notice & Opportunity to cure o Public Projects o Wrongful termination o Waiver & Release o Termination & the Surety o Bankruptcy o Statutory framework o Lien categories o History

Week 6 Defective Construction and Insurance & Bonds Defective Construction Insurance & Bonds o Overview o Role of Insurance o Owner claims against the o Contractual Insurance Contractor Requirements o Claims against the Design o Workers Compensation Insurance Professional o General Liability Insurance Policies o Spearin Doctrine & conflicting o Builders Risk warranties o Waivers of Subrogation o Time based defenses to liability o Professional Liability Insurance o Surety Bonds

o Performance Bonds

o Payment Bonds

Week 7 Damages and Economic Loss Rule in Construction Law Damages Economic Loss Rule in Construction Law o Introduction o Economic loss rule o General measures of o Scope and purpose damages o Application where parties are in o Entitlement/quantification privity of contract of damages o Application where parties are o Calculation and proof of not in privity of contract compensatory damages o Economic loss as applied in o Mitigation of damages o Contractual and other limitations of liability

Week 8 Dispute Resolution Process Week 9 Dispute Resolution Process o History of ADR in & Review construction o Conclusion of Dispute o Spectrum of dispute Resolution Process prevention o Review of Course for Final o Application of ADR in construction settings Week 10 Final Exam

o Multiple Choice

o Essay/Written

Grade Determination: Software: Final Exam ...... 75% None Homework/Paper...... 15% Class and Study Participation .10% NOTE: This course description explains the essence of the material covered. Canvas is the best source Text: for the most up-to-date information about specific details for any given offering of the course. Construction Law by William Russell

Allensworth, Ross J. Altman, Allen L.

Overcash, Carol J. Patterson; ABA, 2009

Legal Aspects of Architecture, Engineering and the Construction Process by Justin Sweet, Wadsworth Inc. Publisher, 8th Edition, 2009