Construction Law and Ethics 7.1

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Why is negotiation best for resolving disputes?

Negotiating disputes in construction may serve as an advantage because it encourages all parties who are part of the contract to come together in person to discuss/negotiate the issue or problem at hand. This would be one of the first steps taken before going through extensive means to resolve matters (i.e. legal action, which could result in more money, and often times concluding with no resolution). Often times, disputes could simply be miscommunication between parties, where communication is usually by means of text, e-mail, or short phone calls. This can be extremely vital if the dispute is taking place in the middle of the project, before its completion. Mediation is less expensive than going to court (i.e. accruing attorney and court fees), and it is less time consuming than a lawsuit. Mediation can ensure that the project is completed accordingly; with little room for additional problems to arise in the future.

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What types of special insurance should contractors consider managing risks?

General contractors typically have several moving parts within the construction project from automobiles, personnel, on-site material, storage and building loss requirement type insurances. Therefore, builders risk insurance is always definitely required to safe guard the building under construction or the protection of theft of construction materials. Workers comp is also a definite plus since employees and sub-contractors are more likely to get hurt in a construction environment. Auto policies is always required to protect for any vehicle accidents and or losses on-site. Aside from the standard PP insurance (payment and performance bond insurance) many insurances are required to protect the contractor and help minimize contractor risk. Again, I do not think there is an insurance that will cover all various types of scenarios that will perform a “one size fits all” type of insurance. General Liability, umbrella excess liability and owner protective liability insurance may also be obtained as a standard form of contractor required insurance. Keep in mind that many of these insurances are optional in lieu of being mandatory.

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What types of risks cannot be managed using insurance?

Un-insured risks that involve specific product functions or engineering performance such as HVAC system or plumbing fixtures that cannot warrant design due to environmental conditions or supply needs. Another type of un-insurable risk is the purchase of a large dollar amount coverage for unexpected loss in great amounts that surpass any type of unpreventable incidents

S N

What risks are assumed in doing “green” projects and why can’t such risks be avoided?

Green or sustainable projects are still somewhat new to the construction field. Since plenty of the technology, equipment and construction methods are still not entirely familiar with certain contractors; there are risks that come along with that, that may not be avoidable.

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Why is negotiation best for resolving disputes?

Negotiating disputes can be very helpful for both parties, litigation can mean thousands of dollars invested in lawyers, court fees and evidence not to mention the time wasted attending court and meetings with the lawyers.

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What types of special insurance should contractors consider managing risks?

There are many insurance types such as property insurance, workers compensation, liability coverage, and builders risk insurance. There are other types not mentioned but these all tend to protect damages or losses that have taken place during a project.

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What types of risks cannot be managed using insurance?

Risks that cannot be included in insurance:

-Structural Damage

-Underground Damage

-Collapse

-Glass Breaking

-Earthquakes and floods

-Radiation

-Correcting Defective Work

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What risks are assumed in doing “green” projects and why can’t such risks be avoided?

Green construction is still rising, so established specifications have not been set. Risks in “Green” project can be the type of material being use not meeting project specifications, or the material in need could become too expensive for the contractor.

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What risks are assumed in doing “green” projects and why can’t such risks be avoided?

The risk of not passing the certification and being sue by the owner for not meeting the performance agreed in the contract, a way to reduce this risk is to have a supervisor/ manager with a lead certification, an engineer dedicated to monitoring the progress and test for compliance.