Thursday, November 7, 2013

Thoughts on the DBIA National Convention


The DBIA National Convention has concluded, and once again, Lisa Washington and her incredible staff at DBIA put on a fabulous program.  I’m always a little concerned about the keynote speakers, particularly when they are sports players.  I don’t ever assume that just because one is proficient at a sport, that person can provide something worthwhile in a speech, but this year, the two keynote speakers were outstanding.  Cal Ripken, Jr., started the conference off with wit and grace.  His baseball career would have been remarkable even if he didn’t play 2,632 games in a row.  The man racked up 3,184 hits and 431 home runs.  (Yes, I had to get the stats off the internet.)  Mr. Ripken was clearly a talented player, but the lesson I received from his talk had to do with teamwork.  I had no idea that when he was on the field, he not only covered that sweet spot between second and third base, he also provided guidance and coaching to his fellow players, helping rookie pitchers and catchers call pitches and providing support for the rest of the team.  Even when he wasn’t playing his best and critics opined that he should step out of a game and sacrifice his streak for the good of the team, the hole that would have been left through his absence would have been much larger than a glove and few at bats.  He went above and beyond to become invaluable to his team in ways that just couldn’t be measured.  In addition, I got the opportunity to meet and talk with him, and he is not only much taller that I would have imagined (6’4”), he is a very nice person and surprisingly easy to talk to. 

Sugar Ray Leonard was also an amazing speaker and a genuinely nice person.  I have to say I’m not a boxing fan, but I vividly remember watching his Olympic win in 1976 and cheering him on.  I had no idea that  in his professional career, he won world championships in 5 different weight categories.  Mr. Leonard talked to us about the value of preparation, training and going the extra mile to become extraordinary.  He noted that anyone can be average, but to be extraordinary, you have to go above and beyond.  After his speech, I had the opportunity to talk to him about his mental state during a match.  I explained that law, like boxing, is an adversarial occupation.   Like him, part of my job was to “throw punches” at my opponent.  I asked about his ability to let go of the aggression that naturally accompanies such pursuits.  He explained that it’s essential to let go of that aggression because when boxers can’t let go, they don’t box with clear heads and often end up losing as a result.  I really wish some of my colleagues in the construction bar could grasp that message. 
 


 
Another highlight of the convention was the presentation to Michael Loulakis of the DBIA Brunelleschi Lifetime Achievement Award.  Mike is a good friend, and I was honored to have the opportunity to place the medal over his head at the ceremony.  I can’t think of another person who has given more of his time, energy and intelligence to the organization.  Like Mr. Ripken and Mr. Leonard, Mike has gone above and beyond to achieve a level of expertise that is unmatched in the industry and become invaluable to DBIA.   We all owe him a huge debt of gratitude.


The entertainers at the Awards Dinner were extremely gracious in posing with me and Mike after the show.
As a follow up to my last post, here is the link to the ENR Webinar next week:  http://video.webcasts.com/events/pmny001/viewer/index.jsp?eventid=47265  The webinar is titled:  The Five Risks You Never Saw Coming That Could Badly Damage Your Business and occurs on November 14 from 2:00-3:00 Eastern/11:00-12:00 Pacific.

Don’t forget about the DBIA Webinar on November 12 and the DBIA Northwest Region Owner’s Forum on November 13.  Links to those events are on my last post.

One more cool pic from the convention.  Ehrlich Architects outdid themselves on the creativity of their booth.  Love the cardboard screen.  

 

Wednesday, October 30, 2013

The Covenant of Good Faith and Fair Dealing: Dead or Undead?

Just when you thought the blog was dead, it comes back like the plethora of zombie movies that are now in vogue, except not the zombies that run.  That’s just wrong, and I am on record as not a fan of running zombies.  Our only real advantage over zombies is that they are super slow.  Speaking of zombies, it appears that the covenant of good faith and fair dealing is becoming something of a legal zombie, meaning that although it is discussed in the courts as if it is alive, the original concept of the covenant, that the government is required to act in good faith and in a commercially reasonable fashion, appears to be quite dead.  In addition to the Metcalf and Fluor decisions that I have previously mentioned in my blog, there is a dispute brewing in the Civilian Board of Contract Appeals over the construction of the VA hospital in Denver.  ENR published a terrific article on the dispute.  http://enr.construction.com/policy/legal/2013/0827-Is-Project-Delivery-Soup-Sinking-KiewitTurners-Veterans-Hospital-Job.asp

Kiewit-Turner is the joint venture on the project, which the VA describes as an "Integrated Design and Construct" delivery model.  Who knows what that actually means, but what it appears to mean to the VA is that Kiewit-Turner was essentially a CM at Risk and obligated to do a deep dive into the design process and integrate with the designer to provide constructability reviews, innovation, early cost estimates, essentially the full meal deal of what is available under the CM at Risk model.  However, (at least according to the pleading filed by Kiewit-Turner) the VA and the designer would not accept Kiewit-Turner's suggestions or provide a design that would maintain the cost within the anticipated budget.  Indeed, ENR published a copy of a hand written memorandum that the parties signed acknowledging the obligation to keep the design within the budget.  The memo contained the following sentence, "VA shall cause JVT to produce a design that meets their ECCA (Estimated Cost of Construction at Award) with use of alternates and other methods as a safety net."  Kiewit-Turner argues that to hold them to the ECCA, the VA and the designer should have accepted their suggestions and modifications.  The VA argues that in an "Integrated Design and Construct" model, the contractor is ultimately and completely responsible for the cost because of their extensive involvement in the design.  

The answer is actually probably somewhere in the middle but closer to Kiewit-Turner's version that the VA's.  The VA has essentially tried to hijack the Integrated Project Delivery model without any of the essential limitations of liability that protect the constructor and the process under that model.   For any integrated delivery model to work, the integration has to be a two way street.  If an owner is not willing to work as a partner with all of the major players, then that owner should not attempt to deliver a project using one of those models.  Further, the complete disregard of signed written (albeit hand written) memorandum is the essence of a violation of the covenant of good faith and fair dealing.  Perhaps it is this case where the courts will put a bullet in the zombie's brain once and for all and stop pretending that the doctrine exists altogether.  Note that I LIKE the covenant of good faith and fair dealing, and I mourn its passing.  I fully believe that if the government wants to contract with private entities, those private entities should be entitled to rely on the government to act in a commercially fair manner, but if this and the Metcalf decision are decided in favor of the government, the covenant is indeed dead.  The Kiewit-Turner case will certainly be an interesting one to watch.

There are a bunch of opportunities to hear me speak over the next few months.  Here is my schedule:

Society for College and University Planning 2013 Pacific Symposium: “Trends in Project Delivery – Methods to Maximize Value”  Nov. 1, 2013, Portland State University, Portland, OR  8:00 am – 4:30 pm.  http://www.scup.org/page/regions/pa/2013/one-day/20131101  Note that registration for this seminar are almost sold out.

DBIA Webinar:  “DBIA Contracts Focus --  The Prime Relationship:  Communication Between the Owner and Design-Builder.  November 12 at 10:30 am Pacific/1:30 pm Eastern.  http://www.prolibraries.com/dbia/?select=session&sessionID=103

DBIA NW Region Owner’s Forum:  "Progessive Design-Build and the Washington Statutes"  November 13 at the Harbor Club in Seattle, 7:00 am – 11:30 am.  http://www.dbianwc.org/index.php?option=com_mc&view=mc&mcid=72&eventId=403269&orgId=dbianr

ENR Webinar: “The Five Risks You Never Saw Coming that Could Badly Damage Your Business”, November 14 from 2:00  – 3:00 pm Eastern, 10:00 to 11:00 am Pacific.  Web link to follow.
DBIA Certification Workshop, Seattle, WA December 2-6.  I’m teaching the Contracts and Risk class on Thursday and the DBIA Certification Exam Prep class on Friday.  http://www.dbia.org/education/core-corriculum/Pages/default.aspx

In addition, you can catch my previous webinars for both ENR and the American Arbitration Association online.  The AAA webinar is titled:  “Scope of the Arbitrator’s Authority:  Granting Interim and Final Relief” and originally aired on October 24.


Finally, although I’m not speaking, I will be at the DBIA National Convention in Las Vegas November 4-6.  Hope to see you there.

Friday, June 21, 2013

Upcoming Events

ENR Webinar on Joint Ventures:  June 26

ABA Forum on the Construction Industry Webinar:  July 23
  • I will be discussing the Metcalf Decision at this webinar on July 23.  Details and registration information will follow.  We are, by the way, still waiting to get the government's brief on that case.  The Court of Appeals for the Federal Circuit has just granted a second extension of time to the Justice Department, with a total number of days extended to 68, on top of the 40 days that Justice had to answer the brief under the rules.  Apparently, the days when one has to submit briefing according to a deadline have past. 

DBIA NW Region Annual Meeting and Summer Social:  July 25

DBIA Federal Project Delivery Symposium:  August 20-22

  • The DBIA National Federal Project Delivery Symposium will be held in Washington DC at the Gaylord Hotel in National Harbor, MD over my birthday.  If I see you there, I (like every other woman in her late 40's) expect you to lie through your teeth about my appearance.  Remember, the key phrase is "There is no way you can be that old."  Also acceptable:  "You must have graduated from law school when you were a mere child."  More information at http://www.dbia.org/conferences/federal/2013/default

Tuesday, April 30, 2013

Two Opportunities To Hear Me Speak

On May 7 at 11am Pacific/2pm Eastern, I will be speaking on the American Bar Association Forum on the Construction Industry "Hot Topic" conference call about the potential ramifications on the Metcalf Construction decision and the Amicus brief submitted in that case by DBIA and AIA.  I will be joined by Mike Kennedy, general counsel for AGC, who will be discussing the issues in the Amicus brief submitted by AGC in the same case.  I will post the link when I get it.

Closer to home, on May 8, I am on a panel with Eric Smith (University of Washington), Dan Absher (Absher Construction), and Bob Maruska (Port of Seattle) at the DBIA Northwest Region breakfast meeting.  We will be discussing the newly revised Washington State alternative procurement legislation.  The link to that meeting is here.  http://www.dbianwc.org/index.php?option=com_mc&view=mc&mcid=72&eventId=384965&orgId=dbianr

Hope you can join me at one of these!

Monday, April 22, 2013

On Earth Day, A Salute to Building Green

To celebrate Earth Day, I want to acknowledge the Seattle firm the Miller Hull Partnership who are the architects for The Bullitt Foundation office building, the greenest office building in the world.  http://bullittcenter.org/building  It's an absolutely amazing building, and I love that it is located in my adopted home town. 

Thursday, April 4, 2013

Update on the Metcalf Construction v. U.S. Case

Those who have been following my blog might recall a terrible, horrible case that I thoroughly trashed last year, Metcalf Construction Co., v. U.S.  For a synopsis of the facts of the case, check the February 22, 2012 post to this blog. The Metcalf decision is finally on appeal to the United States Court of Appeals for the Federal Circuit, and no less than four major industry organizations submitted amicus curiae or "friend of the court" briefs explaining why the Court of Federal Claims' ("CFC") decision was truly horrible.  Along with Michael Loulakis, I drafted the brief for the Design-Build Institute of America and the American Institute of Architects.  Our brief focused on the issue of differing site conditions ("DSC") claims.   The Associated General Contractors ("AGC") and the Associated Builders and Contractors ("ABC") submitted briefs that discussed the issue of the breach of the covenant of good faith and fair dealing.  The briefs are available in the case file on PACER.gov, or you can (hopefully) link to them on my firm's website here:  rtp-law.com

The lower court royally screwed up the analysis of DSC claims, created an unprecedented standard that makes it nearly impossible for design-builders to recover either DSC or any changed condition claim.  Previous case law established four requirements to recover on a DSC claim:  1) the government must make a representation with respect to the condition; 2) the actual conditions were not reasonably foreseeable; 3) the design-builder was entitled to rely on the representation; and 4) there is an actual changed condition.  The CFC judge found that the design-builder could rely on several representations regarding site conditions for the purposes of bidding the project.  However, the contract required that, for the purposes of performance of the contract, the design-builder conduct an independent investigation regarding these conditions.  The court (wrongly) reasoned that the requirement to conduct an independent investigation negated the representation and reliance factors, and the design-builder was not entitled to recover for its DSC claim. 

The problem with the court's reasoning is that all design-build contracts should require the design-builder to perform an independent investigation of the information provided by the owner.  A design-builder cannot warrant the performance of the building without the independent review.  That independent review of the project and the higher warranty are a few of the chief benefits of the design-build delivery method.  The court essentially transformed the requirement of the independent review into the design-builder's warranty of all potential conditions on the project.  The problem is that if the owner wants a price for the project, there must be some parameters on which the design-builder can rely.  Shifting all risk to the design-builder is simply not economically feasible or sustainable.

The lower court also heightened the standard for recovery for a claim of the breach of the covenant of good faith and fair dealing. The CFC's decision essentially sanctioned punitive and incompetent behavior on the part of the government. The AGC and ABC both submitted excellent briefs that explained that the heightened standard required by the court would make recovery under these claims virtually impossible and dramatically increase the cost of contracting with the government.  Their briefs explained that the government must act in good faith when procuring services and cannot deprive the parties with whom it contracts of the benefit of their bargain. 

Hopefully, the Court of Appeals will overturn this truly horrible decision.  I'll keep you updated.

Tuesday, April 2, 2013

Why I No Longer Work at a Big Firm . . .

I've often been asked why I don't work for a large law firm.  I started out life as a large firm lawyer, but the linked article provides a perfect example of why I am no longer with a firm.  http://www.nytimes.com/2013/03/29/opinion/the-case-against-the-law-firm-billable-hour.html?smid=pl-share&_r=1&

Huge law firms and even some smaller firms require their partners and associates to work crazy hours and have outrageous billable rates to maintain the overhead to which they have become accustomed.  Personally, I prefer hanging with my kids than looking at a Picasso in the lobby.  Don't get me wrong.  The Picasso is cool, but I can always visit one at the museum. 

Also, even smaller law firms don't usually allow for alternative billing arrangements.  I have the flexibility to bill my clients however they would like, by the hour, by the project, etc.  Technology allows me to be available and ubiquitous.    Partner level lawyers around the country are opting out of the big firm grind and migrating to a leaner more efficient model.  Soon, those large law firms will be as outdated as "casual Friday."

Wednesday, March 13, 2013

WSDOT Examines SR 520 Bridge Project, and it's not pretty

The Washington State Department of Transportation recently published a report on the SR 520 bridge pontoon project, and the results of the report show a project that has the hallmarks of a poorly executed approach.  The facts noted in this post are from the report.  Simply because I live on an island in the Seattle area and rely on a floating bridge on a daily basis doesn't make me an expert on the topic, although I do feel the repercussions every time the other (520) bridge is closed and the traffic on my side dramatically increases.  ENR just published a very helpful article about the report.  http://enr.construction.com/business_management/project_delivery/2013/0312-report-finds-confusion-ensued-after-state-decided-to-design-pontoons.asp?elq=70a1a3a7d0c54c4b85528a1d7bd41655

SR 520 is one of two floating bridges across Lake Washington, connecting the highly populated east and west sides of the area.  It is a vital transportation through way.   The bridge is scheduled to be completely replaced; however, WSDOT recognized the need to produce pontoons that could be used in the eventual replacement as quickly as possible so that when the bridge fails (note I said "when", not "if"), it can be replaced immediately.  Note to self:  avoid driving on the SR 520 bridge.   According to the report, WSDOT didn't seem to be able to make up its mind regarding the actual delivery method it wanted.  Because the critical factor was timing, WSDOT engineers provided two possible options for the proposers on this design-build project:  The first option was to propose on the project using the 70-80% completed drawings by WSDOT.  The second option was to completely design and build the pontoons. 

Not surprisingly, the proposal prices for the first option were substantially lower and the schedule for producing the pontoons was substantially faster.  Therefore, WSDOT contracted with the design-builder on drawings that were almost complete.  Because they were almost complete, WSDOT wasresponsible for any problems associated with those drawings.  I'm not an engineer, but it seems to me that the last 20 to 30% of any drawing production is when the all those pesky faults are found.  Again, not surprisingly, there were a number of problems found with WSDOT's design.  However, the report notes that the parties made two huge mistakes.  First, they didn't clearly understand which party was responsible for the problems in the drawings.  Second, they didn't appear to have collaborative communication regarding the problems.  Reviews and approvals of changes by WSDOT were lagging.  Change orders were not issued when they needed to be.  Therefore, not only was the front end procurement odd, the implementation of the project was extremely problematic.

What can we learn from this report? 

1.  Owners are responsible for design/prescriptive specs.  It may be tempting to fully design a project and then expect someone else to take responsibility for the design, but it is usually the most costly way to procure a project.  Risk equals money.  The initial proposals for the project will be lower, but unless the owner is very sure its prescriptive designs are rock solid, the owner should expect to see a number of RFIs and change order. 

2.  Prescriptive designs that are 70 to 80% complete are always going to have substantial holes.  I'm going to estimate those holes in the range of 20 to 30%.  Yes, the design-builders have a better idea of what they are pricing, but the owners are on the hook for problems with an incomplete design, and there are ALWAYS problems with an incomplete design.

3.  If circumstances require substantial prescriptive specifications, manage the project closely.   Projects with substantial bridging documents require more, not less management from the owner.  The owner needs to be quickly responsive to RFIs and the design-builder needs to provide more information regarding the pricing and schedule implications of those changes.

4.  Quit being in such an all fired hurry.  OK, I get that a bridge may fall down, but don't let time pressure dictate an unfortunate procurement.http://www.wsdot.wa.gov/NR/rdonlyres/1F8F3AB5-0E04-46B5-A04D-C097AAACDE54/0/2013_0226_InternalReport.pdf