CONSTRUCTION LAW CNST 406 Instructions: This is an open-book, open-note examinat

Question

CONSTRUCTION LAW

CNST 406

Instructions:    This is an open-book, open-note examination. Please provide your best answer to the questions below. Your grade will be based upon your ability to “spot issues” and to analyze the situation in order to arrive at a credible answer to the questions posed. Be concise and to the point. Use good grammar, sentence construction and spelling. Brevity is appreciated, but please provide a complete answer.

Fact Situation:

You are still working for Wackinsmack, Inc., a general contractor, as a project manager, on the prime contract for the construction of a new waste water treatment plant for Dimwit County DPW. The Contract Price is $45 million. Wackinsmack’s contract with Dimwit is the ConsensusDOCs Owner/Prime Contractor Form.

You have successfully negotiated the subcontract with Acme Mechanical, Inc. for $25.3 million, for the mechanical work, which does not include dewatering, and provides for Wackinsmack to provide lifting services for Acme at no cost.

Acme’s subcontract consists of Wackinsmack’s standard subcontract form (ConsensusDOC’s Prime Contractor/Subcontract long form): and is “complete, per plans and specifications” except for the exclusions you’ve negotiated, as identified above.

Over the course of construction, a number of events occur, which have caused Wackinsmack and its subcontractors extra cost and time to complete the work.

Dimwit County has issued a number of Change Orders, which have provided for specific cost and time adjustments for specific items of changed work, and upon which Wackinsmack has “signed off.”   The Dimwit Change Orders all contain language to the effect that the Change Order represents a complete and final resolution of all costs and time affects caused by the change, including direct and indirect costs.

Dimwit has refused to issue Change Orders for other work, claimed to be “extra” by Wackinsmack. Included in the pile of refused change orders, are two “Field Directives” issued by Dimwit’s Engineer (Ithinkican Engineering Consultants, Inc.) which the Owner feels are not changes; a claim for Differing Site Conditions, which Dimit says Wackinsmack should have known about; and, the discovery of hazardous “contamination” in the excess excavated soil materials which had to be trucked off the site and disposed of (which Dimwit feels is Wackinsmack’s contractual responsibility).

The accumulation of changes, including those for which Dimwit has not agreed, has resulted in delays to the project. Wackinsmack failed to achieve Substantial Completion of the work by the Contract End Date (as adjusted by approved change orders). As a result Dimwit has assessed liquidated damages against Wackinsmack for late completion. Wackinsmack has, in turn, assessed Acme for 53% of the liquidated damages based on Acme’s proportionate share of the prime contract price.

One of the disputed Work Orders involves the direction by Ithinkican to relocate some of the process piping (work performed by Acme) to avoid conflicts with other aspects of the design. Ithinkican has advised Dimwit that this work was part of the contractor’s “methods and means” responsibility and is not an extra. Acme performed the work and claims $350,000 in extra costs.

The DSC condition involved conflicts with existing underground utility lines (sanitary and storm sewer lines, and the main power feeds to the site, provided by Detroit Edison) which were not shown in their actual locations on the contract drawings. In the case of the Edison lines, they weren’t shown at all on the contract documents. Ithinkican and Dimwit defends against the claim by arguing that Wackinsmack failed in its duty to visit and inspect the site prior to the bid, and if there were irregularities in the drawings then Wackinsmack should have notified the Engineer and Owner of the problems.

As to the hazardous materials contaminating the site soils (the contamination was not disclosed by the contract documents) Ithinkican and Dimwit defend on the basis that ownership of excess materials on the site “is the contractor’s” and that the contractor is obligated remove and dispose of the excess material in a legal manner. Accordingly, Dimwit has refused to issue a change order for disposal of the contaminated soils because Wackinsmack is obligated to remove and dispose of it in a legal manner. Thus, Wackinsmack should have made provisions in its bid price to dispose of the hazardous materials at a Class II landfill as part of its bid. It is noted that the contamination was caused by Dimwit’s disposal, on site, of contaminated ash from the incinerator before construction started. It is further noted that the incinerated ash looks like fine grained brown sand and was intermixed with existing “clean” site soils.

QUESTIONS

1.         As to the Work Order issued by Ithinkican to relocate some of the process piping, (15                 Points)

            A.        Does the Work Order constitute an Interim Directed Change (Contract Change                               Directive) under the terms of the Contract? If so, why? (3 Points)

            B.        Under the terms of the Contract, what are the pricing mechanisms for paying for                           changed work in the absence of a price agreement? (3 Points)

            C.        If Wackinsmack feels that the Work Order involves the performance of extra                                  work what obligations does Wackinsmack have to provide notice? (3 Points)

            D.        To whom is Wackinsmack’s notice to be given, and it what form and when? (3                               Points)

            E.         Under the terms of the Subcontract, What obligation does Wackinsmack have to                            “flow down” the Work Order to Acme? (3 Points)

2.         As to the Work Order issued by Ithinkican to relocate some of the process piping, (15      Points)

            A.        Does the Work Order constitute a material change to the work? (3 Points)

            B.        Does the Owner’s Engineer, under the terms of the contract, have the authority to                                     issue an order which affects cost or time without Dimwit’s approval? (3                                      Points)

            C.        Is Dimwit bound by Ithinkican’s Work Order to Wackinsmack? (3 Points)

            D.        As to all of your answers, why or why not? (6 Points)

Explanation / Answer

1.         As to the Work Order issued by Ithinkican to relocate some of the process piping, (15 Points)

yes it is a part of sub contracting

One of the disputed Work Orders involves the direction by Ithinkican to relocate some of the process piping (work performed by Acme) to avoid conflicts with other aspects of the design. Ithinkican has advised Dimwit that this work was part of the contractor’s “methods and means” responsibility and is not an extra. Acme performed the work and claims $350,000 in extra costs.

            A.        Does the Work Order constitute an Interim Directed Change (Contract Change                               Directive) under the terms of the Contract? If so, why? (3 Points)

Yes Work Order constitute an Interim Directed Change (Contract Change Directive) under the terms of the Contract

            B.        Under the terms of the Contract, what are the pricing mechanisms for paying for                           changed work in the absence of a price agreement? (3 Points)

New pricing agreement have to made

            C.        If Wackinsmack feels that the Work Order involves the performance of extra                                  work what obligations does Wackinsmack have to provide notice? (3 Points)

Yes, it is obvious that when we ra eperforming the extra work then there is possibility incurring extra money, foe that wackinsmack have to perform a written extra costs.

            D.        To whom is Wackinsmack’s notice to be given, and it what form and when? (3                               Points)

Dimwit County DPW , at the time of performing the work he have to give him a written notice to him.

            E.         Under the terms of the Subcontract, What obligation does Wackinsmack have to                            “flow down” the Work Order to Acme? (3 Points)

Acme’s subcontract consists of Wackinsmack’s standard subcontract form (ConsensusDOC’s Prime Contractor/Subcontract long form): and is “complete, per plans and specifications” except for the exclusions you’ve negotiated, as identified above.

2.         As to the Work Order issued by Ithinkican to relocate some of the process piping, (15      Points)

            A.        Does the Work Order constitute a material change to the work? (3 Points)

Yes it have to change some piping works

            B.        Does the Owner’s Engineer, under the terms of the contract, have the authority to                                     issue an order which affects cost or time without Dimwit’s approval? (3                                      Points).

Yes , he can issues the order because he have to save time and cost for himself and also for work should complete within time.

            C.        Is Dimwit bound by Ithinkican’s Work Order to Wackinsmack? (3 Points)

No he is not bound, and responsible only whom hwho have given the him order to work.

            D.        As to all of your answers, why or why not? (6 Points)

yes

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