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The construction industry is a bit of an enigma. On one end of the spectrum, there are groundbreaking technologies being utilized, such as drones, 3D printing and augmented reality. At the same time, construction has proven to be one of the industry’s most resistant to change and new technology.

In a similar way, legal issues in construction can be slow moving, yet big changes can seemingly burst out of nowhere. Here are some of the most impactful trends from the first half of 2018.

Expanding Lower Tier Protection

California’s AB 1701 (now “Labor Code 218.7”) was actually passed in 2017, but it didn’t go into effect until January 1, 2018. Essentially, 218.7 makes California contractors jointly liable for the unpaid wages, benefits or other contributions of a subcontractor, regardless of whether they’re under direct contract with the contractor. 

Maryland passed legislation similar to AB 1701 recently. Beginning October 1, Maryland general contractors will also be liable for a subcontractor’s failure to pay employees. While California contractors must create an indemnification structure via contract, Maryland built it right into the legislation. 

Sub-tier protection under retainage laws has also been strengthened. In United Riggers and Erectors, Inc. v. Coast Iron & Steel Co., the Supreme Court of California closed a loophole in the state’s retainage laws under a “good faith” exception. Following the ruling, the exception was reeled in to apply only to good faith disputes over retained amounts (rather than any dispute at all). In Louisiana, the state’s Fourth Circuit Court of Appeals found that a public owner cannot withhold retainage amounts simply because other claims, such as liquidated damages, exist.

Progressive Methods of Project Delivery

Discussions regarding public-private partnership projects (P3) seem to multiply every day. There are valid arguments to be made for or against this project delivery method. On one hand, including private partners can lower project costs greatly and shed some liability from a public authority. On the other hand, these projects can be seen as privatizing public works. Regardless, it appears that P3’s, in some form or fashion are here to stay. Many states have some form of P3 legislation on the books, and with every legislative session the number seems to grow.

Other trends in project delivery are also budding and show some promise. Lean Construction creates more efficient projects by taking a holistic approach to building. Construction projects require the cooperation of a number of separate entities that must cooperate to create a common product. By aligning the goals of these different groups, avoiding project waste (time, material and potential) and using pull planning, lean construction aims to create more efficient - and more profitable - projects.

Another project delivery method that seems to be picking up steam is Progressive Design-Build. Like Lean Construction and P3 projects, Progressive Design-Build projects aim to create a more cohesive project by combining some of the aspects of traditional project delivery. Whereas Design-Bid-Build projects can have very real (and very problematic) communication disconnects, Progressive Design-Build jobs bring all parties together at the beginning of the project and plan together to conform to preset, relatively loose specifications.

Keeping an Eye Forward

While reflecting on the past few months, it’s also important to keep an eye looking forward. The biggest impact on the construction industry in 2018 is likely yet to come, and it will probably incorporate a substantial amount of P3 work: What will happen with infrastructure?

The state of American infrastructure isn’t pretty. Based on the American Society of Civil Engineers’ 2017 report card, America scored a disappointing D+ in infrastructure. That’s a problem, one that President Trump has vowed to fix.

In early 2017, the Trump Administration released a list of its top 50 infrastructure projects. Earlier this year, a draft of the Trump Administration’s Infrastructure plan was leaked. Still, no official plan for infrastructure has been laid out, though the magic number appears to be $1.5 trillion in investment. While the infrastructure plan likely won’t come out until after midterm elections, one thing is for certain: There will be a lot of construction work to go around. Considering Trump has expressed his love for P3’s in the past (granted, he’s also expressed some doubt in P3 projects, too), there will likely be even more opportunity than with standard procurement processes.

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