Thomas Lambert | Pullman & Comley
Municipalities are some of the largest land developers in the state, accounting for building projects that include everything from schools and stadiums, municipal buildings – such as fire departments or public works facilities, to even affordable housing projects. However, along with the anticipation of a new project to improve your municipality’s infrastructure, come the added headaches of a construction industry that is subject to increased costs for materials, problems with contractors, potential state oversight, and waste.
Below are key tips to keep in mind when planning your new municipal construction project:
1. STATE FUNDING? REMEMBER, THE STATE SETS THE RULES.
Thankfully, the state makes grant funding available for municipalities in certain instances to build out projects, such as for new school construction. But be aware, the money oftentimes comes with conditions. While a municipality may have an ordinance that governs its own construction processes, these can be superseded by a state’s requirements. This includes the state’s own rules regarding the RFP/RFQ process, including the requirement to provide notice of same through the state’s own contractor portal, up through the completion of construction, with requirements for notifications and approval along the way. These requirements, if not met, may result in the withholding of payments. Check out this link for more information from the state.
Make sure you know the requirements imposed by the state for projects in which their rules govern, such as the Office of School Construction Grants & Review for school construction projects using state grant money, or engage a professional that can guide you through those requirements. You do not want to get near the completion of your project only to realize there was an oversight, resulting in your funding being withheld and a project deviates materially from the final plans and specifications as approved by state.
2. KEEP AND REVIEW THOSE CERTIFICATES OF INSURANCE.
Any time you rely on the help of a third party to accomplish your projects, you are inviting risk. Insurance helps mitigate those risks, though sometimes your own insurance is not enough. It cannot be stressed the importance of requiring and staying on top of contractors’ certificates of insurance. They are not documents to merely file away for a later date.
While you may require your contractors to carry insurance in your contracts, coverage needs can change quickly, making it necessary to regularly review the policies your contractors have in place. Unfortunately, contractors may not be versed about what risk management strategies they have in place. They may lead you to (wrongfully) assume that you are protected when you are not. And while you may be able to hold a contractor responsible for wrongs through litigation, whether it be a lawsuit or arbitration, the presence of insurance, including the right kind and right amount, can make you more likely to mitigate any risks. If you do not believe you have the expertise to understand this aspect, including the attendant risks, you should make sure you have outside help to stay on top of this for you.
3. SET CLEAR EXPECTATIONS.
Contracts with industry professionals, whether they be owners’ representatives, architects, general contractors, or others, should be abundantly clear. Risk should be specifically allocated for in the project. For example, you may not think that geopolitical problems or machinations would affect the construction of your new facility. However, two of the biggest drivers of costs in the past three years have included the global COVID-19 pandemic, which choked the fabrication and movement of supplies, and the war in the Ukraine, which caused ripple effects in the price of fuel that affected transportation costs or material components for which petroleum was a keep component. These international issues can severely impact risks with your project, so imagine how maneuverings of local groups, environmental changes, and other forces outside of your control may impact your project.
Of course, it is difficult to account for how every local, national, or international action or event might affect your particular project. However, you do not need to. Instead, your contracts should account for any and all risks and specify who will shoulder those burdens. Make sure to specify who will bear the costs for materials, should the price escalate. If a contract fails to contemplate these terms, be ready for a contractor to argue that they should either be excused from performance or, worse, perform and send you a bill for an equitable adjustment for overages in supplies.
4. THINK ABOUT THE FUTURE.
Municipal owners should be intentional about what they plan to build and where, as changing conditions, such as those to our climate, may turn minor issues into bigger ones. Land and space are not always plentiful, so there may be a temptation to make a square peg fit in a round hole so to speak. A site that currently has a minor water issue may, over time, turn into a much bigger one, especially since changes to structures in neighboring areas may redirect or exacerbate waterflow in unanticipated ways. Landscaping decisions or further site development may similarly cause changes not anticipated when a project is originally built out.
And what about space utilization? Is what you are building enough? Is it too much? Oftentimes, these questions are asked by various members of boards or councils that comprise each municipality that may hold the key for approval of bonding to fund a project. Everyone wants a smaller price tag. To avoid a board’s wrath, it may be easier to shortchange a project or set unrealistic expectations for trends in usage of the facility you seek to build. Though the initial cost may be higher initially, a plan for a facility that adequately accounts for projected utilization down the road may be more prudent, especially if a project will be paid for through bonding that will obligate a municipality potentially for decades.
5. DONE BUILDING? NOW MAINTAIN IT.
The worst thing a municipal owner could do after building its new facility is to think it is finished. That could not be further from the truth. The municipality has a brand new asset that likely cost a pretty penny. It should be diligently maintained. Not only may warranties require such diligence maintenance, but there is truth to the idea that spending a dollar now through proactive, preventative maintenance may avoid spending a multiple of that tomorrow. Do not let yourself believe that your project is over once the doors are opened. Rather, that is when the real work begins.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.