Dnjcon14 session 1 ppt final

New Jersey Construction Claims

September 16, 2014

The Speakers

Gary WernerSchenck Price Smith & King LLP

Michael SerafinoLend Lease Americas

Mark FlederConnell Foley LLP

Kelly HeuerNavigant Consulting Inc.

Project Delay Damages

Discussion Topics

What are Project Delay Damages? What is the Proper Role of Damages Experts? What are the Difficult “Items” of Delay Damages Claims? What are Other Sources of Information Useful to Proving

Delay Damages Claims? What is “Unabsorbed Home Office Overhead”? Can “Profit” be Recovered as Part of Delay Damages? Against Whom are Contractor’s Delay Damages

Recoverable? What is the “Economic Loss Rule”?

What Are Project Delay Damages? Time-driven costs which increase as the result of project delay

◦ Idle/extended labor and equipment◦ Material/labor escalation◦ Extended storage◦ Extended field office overhead◦ Extended home office overhead

What Are Project Delay Damages?

Inexcusable Delay◦ Caused by contractor, subcontractors, suppliers: no time, no money◦ Contractor pays late completion damages or recovers lost time at

own expense Excusable Delay

◦ Caused by third party or force majeure event – time, no money◦ Owner grants time extension and gives up late completion damages

Compensable Delay◦ Owner-caused or caused by event owner liable for: time and money◦ Provided contract does not have No Damages for Delay or Limitation

on Delay Damages clause

Types of Delay

What Are Project Delay Damages?

Contractor has affirmative obligation to mitigate owner’s damages

Contractor must consider:

◦ Known length of delay/ allow for mitigation◦ Other ongoing jobs that could use resources◦ Cost of redeploying resources◦ Ability to demobilize & remobilize resources◦ Impact to subcontractors & suppliers◦ Cost of mitigation activities

Contractor’s Obligation to Mitigate Delay

What is the Proper Role of Damages Experts?

In Claims Resolution◦ Identification of the Issues◦ Assist Counsel with Discovery/ Document Management◦ Detailed Claim Analyses◦ Assist Counsel with Strategy◦ Assist Client/Counsel with Negotiation, Mediation,

Arbitration or Litigation

What is the Proper Role of Damages Experts? Recommended Practices of Experts

◦ Avoid conflict of interests and appearances of conflict◦ Qualifications - rely on others qualified in areas beyond own

expertise◦ Obtain all information to avoid reliance on assumptions and, if

necessary, be prepared to document/explain◦ Consider other opinions relative to the issues◦ Evaluate reasonable explanations of causes and effects◦ Perform investigations and conduct tests with integrity◦ Maintain custody and control over materials entrusted to care◦ Strive to maintain professional, dispassionate demeanor

What is the Proper Role of Damages Experts? Considerations

◦ Investment

◦ Expense

◦ Timing

◦ Objectives

◦ Strategy


Benefits◦ An organized, cohesive and comprehensive analysis of

the facts◦ An independent, objective viewpoint◦ Both advocacy and critique of the claim◦ True quantification of the value of the claim◦ Strategy for pursuit of the claim


Typical Tasks◦ Site visits◦ Review claim submittal / substantiation documentation◦ Identify claim issues◦ Document organization and control◦ Develop issue files◦ Productivity analysis◦ Damages analysis◦ Interrogatories◦ Deposition and discovery support◦ Responding to opposing party’s experts◦ Testimony and graphics


How to Control Costs◦ Agree on a scope of work◦ Agree on schedule◦ Agree on budget◦ Agree on deliverables◦ Identify tasks client staff can perform

Compile issue files Database development / data entry Deposition support

What is the Proper Role of Damages Experts? Conclusion

◦ Objective is to present a compelling professional opinion based on a credible interpretation of the facts

◦ Make certain the expert follows recommended practices

◦ Make certain the expert has experience with the type of claim

◦ Control/manage costs

Project Delay Damages What are Project Delay Damages? What is the Proper Role of Damages Experts? What are the Difficult “Items” of Delay Damages Claims? What are Other Sources of Information Useful to Proving


Recoverable? What is the “Economic Loss Rule?”

What are the Difficult “Items” of Delay Damages Claims?

Extended Field Overhead Escalation Costs Idle Labor and Equipment Storage Costs Additional Material Storage Costs Unabsorbed Home Office Overhead Liquidated Damages

Extended Field Office Overhead Field Office Rental Field Office Vehicles Salaries of Field Office Staff Utility Charges for Field Office Other Expenses (consumables) that Support

The Field Office

Liquidated Damages

Financing Costs Costs for Lost Beneficial Occupancy Costs for Facilities Maintenance Costs for Equipment Rentals Costs for Staff Personnel Costs for Project Inspection Storage Costs Potential Moving Expenses Additional Design Services Escalation Costs

What are Others Sources of Information Useful to Proving Delay Damages Claims?

All Contractual Documents Internal Financial/Expense Records Utility Charges Certified Payrolls Project Correspondence, Emails, Text Messages, etc… Meeting Minutes Personnel Logbooks, Notes, etc… Photographs Video Record of the Project Weather Reports


Delay Damages Claims? What Is “Unabsorbed Home Office Overhead”? Can “Profit” be Recovered as Part of Delay Damages? Against Whom are Contractor’s Delay Damages


What is “Unabsorbed Home Office Overhead”?

Costs Incurred to Support the Work on the Project

Costs Not Directly Chargeable to a Specific Project but rather Apportioned to each of the Contractor’s Projects

Examples of Home Office Overhead Costs

Salaries of Home Office Personnel Home Office Utilities (telephone, cable, etc.) Home Office Equipment Home Office Rental Expenses Insurance Costs that Cannot be Specifically Assigned to a

Specific Project Taxes


Delay Damages Claims? What is “Unabsorbed Home Office Overhead”? Can “Profit” Be Recovered as Part of Delay Damages? Against Whom are Contractor’s Delay Damages


Can “Profit” be Recovered as Part of Delay Damages?

What is “profit” in the construction contractor’s world Is “profit” (different from “mark-up”) recoverable on top of

actual costs for claims? Can a contractor properly assert and collect “lost profits”

on work/projects not undertaken because of a claim situation?



Delay Damages Claims? What Is “Unabsorbed Home Office Overhead”? Can “Profit” be Recovered as Part of Delay Damages? Against Whom are Contractor’s Delay Damages


Against Whom are Contractor’s Delay Damages Recoverable?

Owners in privity of contract with the general contractor Construction managers hired by owner and in privity with one

or more trade contractors or a general contractor. Property owners where legal liability is created by filing

mechanics/construction liens. Subject to being barred by the “economic loss rule”, other

parties (such as design professionals) may well be exposed to contractors’ claims.


Delay Damages Claims? What Is “Unabsorbed Home Office Overhead”? Can “Profit” Be Recovered as Part of Delay Damages? Against Whom are Contractor’s Delay Damages


What is the “Economic Loss Rule?”

Against whom can a contractor recover construction claim damages (NOT personal injury or property damages)?

Does the “lack of privity” defense still hold up as good law to block contractors’ “economic losses” claimed against a party where there is no “privity of contract”?

Is the “economic loss rule” gaining popularity in jurisdictions by way of court decisions.

Questions

Michael Serafino Lend Lease Americas 212.592.6733; [email protected]

Gary Werner Schenck Price Smith & King LLP 973.631.7841; [email protected]

Mark Fleder Connell Foley LLP 973.535.0500; [email protected]

Kelly Heuer Navigant Consulting Inc. 646.227.4218; [email protected]

Speaker Contact Info

Dnjcon14 session 1 ppt final

Education

Transcript of Dnjcon14 session 1 ppt final