CEE_595_RISK_MANAGEMENT_FOR_THE_CONTRACTOR

CEE_595_RISK_MANAGEMENT_FOR_THE_CONTRACTOR - RISK...

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RISK MANAGEMENT FOR THE CONTRACTOR Unforeseen Conditions Clauses often found state (a) the owner accepts no responsibility for subsurface conditions, or, worse, (b) the contractor assumes all liability for all conditions found at the site whether or not they could have been reasonably anticipated. Such clauses ask the contractor to bear responsibility for a condition which both owner and designer [and sometimes CM] in all their preparations did not discover. Those clauses are patently unfair! If the condition is truly unanticipated, then proper compensation should be made. Contractors should be able to bid on reality rather than contingency. Had the condition been discovered prior to bidding the project and had that information been imparted to bidders, the price for that would have been included in the bids and the owner would have paid for the work. Why then should the owner not pay if it was not discovered until after bid opening? To do less would, in fact, entitle the owner to be unjustly enriched. One of the topics covered in the document Contract Risk Allocation and Cost Effectiveness is the issue of differing conditions. It is important to note that in this study of both owners and contractors, conclusive evidence was found that inequitable clauses in this regard tend to "increase prices, decrease quality, restrict bid competition, create an adversarial relationship and a situation contractors cannot bear or control and has a negative overall impact on overall project performance." Delay Damages Clauses that ask the contractor to bear responsibility for delay damages not anticipated nor under the control of the contractor are equally unfair and potentially detrimental to the project. As stated in the CII study, even "An unenforceable clause not investigated before bidding will negatively influence the working relationship if enforceability comes into question during the project." As relates to delay damages, clauses should not only grant an extension of time but should allow for reasonable compensation where caused by unforeseeable situations or by the negligent acts of the owner or his agents. (Note: Given public work and the multiple contracts, in the eyes of one prime, another prime is but an agent to the owner.) As a legal matter, the case of Civetta v. the City of New York states that broadly worded exculpatory clauses only cover those delays that could have been reasonably foreseen and those that were not caused by the negligence of the owner. Specifically, it listed four types of delays for which damages would be due and owing no matter the clause. They are "(1) delays caused by the contractee’s bad faith or its willful, malicious, or grossly negligent conduct, (2) uncontemplated delays, (3) delays so unreasonable that they constitute an intentional abandonment of the contract by the contractee and (4) delay resulting from the contractee’s breach of a fundamental obligation of the contract." Design Delegation
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CEE_595_RISK_MANAGEMENT_FOR_THE_CONTRACTOR - RISK...

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