Use of video gaming tools for construction has applications from clash detection to construction site accident prevention or reconstruction.

An article appearing in the March 3, 2016 issue of ENR contains a fascinating summary of new 3-D and Virtual Reality applications that can be built onto gaming platforms at relatively low cost. In addition to enhancing some uses of BIM such as clash detection and early visualization of design concepts, it also has safety applicability which would allow tailgate reenactments of construction site accident scenarios to allow workers to discuss how to avoid risks on a particular job site. It will also undoubtedly be used for more realistic courtroom graphics at perhaps reduced cost.

Bill in Response to Berkeley Balcony Collapse Dies in Committee

Legislation written in response to last month’s deadly balcony collapse in Berkeley failed to advance July 14th in the Assembly Business and Professions Committee and is therefore stalled until next year. It fell one vote short of passage. Senate Bill 465 would have required contractors, and their insurers, to report to the Contractors State License Board settlements in excess of $50,000, or a binding arbitration resulting in an award of more than $25,000 involving cases of defects, fraud, negligence or incompetence. The bill would have made the provisions operative only if the Legislature appropriated money and granted hiring authority to the board for the purpose of acting on the information. The bill was opposed by the California Building Industry Association.

FAA Playing Catch up on Regulating Commercial Use of Drones

4-24At the recent conferences of the ABA Forum on Construction and ACEC, the use of drones and potential liability relating to their use was a hot topic of conversation. Engineers, surveyors, contractors and others have been using drones for aerial photography of potential project sites, bridge inspections, and to document progress on ongoing projects amongst other applications. These activities have been ongoing in many cases without compliance with applicable regulatory requirements.

The Federal Aviation Administration, which has authority for regulating aircraft, has issued a Notice of Proposed Rulemaking for which the public comment period closed April 24, 2015 although there have been numerous requests to extend the comment period. The proposed rule will apply to small commercial aircraft carrying a payload of less than 55 pounds and would limit their use to daylight and visual line of site operations. The proposed rule also contains height restrictions, operator certifications and registration requirements. It is not clear how the FAA proposes to enforce any regulations as it will not apply to noncommercial model aircraft.

A link to the Federal Register citation for the proposed rule, docket ID FAA-2-15-0150 is here.


Image courtesy of Flickr by Don McCullough

SEC Fines Company for Stifling Whistleblowers by Confidentiality Agreement Limiting Communication about Internal Investigations

April 1, 2015 the SEC and KBR each issued press releases about a negotiated settlement wherein KBR paid a $130,000 fine based on an allegation that a KBR internal policy violated SEC Rule 21F-17 which prohibits actions that impede individuals from communicating with the SEC about a possible securities law violation. The policy in question precluded KBR current and former employees from communicating with others about KBR internal investigations without prior permission from the KBR law department. Although the SEC admitted it was not aware of any instances in which a KBR employee was prevented from communicating directly with the SEC it found that the confidentiality provision had the potential to impeded such communications because of the threat of discipline by KBR for a violation. The SEC order quotes the KBR provision and the KBR fix negotiated with the SEC.

The KBR confidentiality provision seems pretty standard as a direction to employees to treat internal investigations confidentially, and indeed seems necessary to secure attorney client or work product privilege protection for the interview and protect the integrity of the investigation process. The confidentiality provision arguably also prevents the disclosure of material non-public information to the public which might itself violate security laws.

The fix is relatively innocuous for most circumstances, simply adding language making it clear that the provision does not prevent communications reporting possible violations of federal law or disclosures that are protected by whistleblower provisions of federal law. Where appropriate it seems the clause should also reference state whistleblower laws.

School District Cannot Withhold Retention When the Only Dispute Is Whether Contractor Is Entitled to More Money for Change Orders

In a decision that should be self-evident to most readers, the California Second District Court of Appeals held that a school district could not avoid prompt payment act penalties when the “dispute” it relied upon to hold retention longer than 60 days after project completion was a dispute over the contract price owed to the contractor for change orders and delay and disruption. In East West Bank v Rio School District (April 1, 2015) 2015 DJDAR 3677, the District at the end of the project withheld $676,436 in retention after project completion and after all stop notices were released. It was still holding the retention 10 years after project completion when the trial court issued its decision.

The only dispute after project completion was whether the contractor was entitled to more money for 150 proposed change orders. Pointing out that the purpose of the statute was to prevent public entities from wrongfully delaying the payment of retention, the Court noted that once the withholding was no longer necessary to provide security against mechanic liens and deficiencies in the contractor’s performance the funds should be released.  The District had no business holding the retention hostage as leverage to resolve the other disputed issues. The Court upheld the trial court assessment of the statutory 2% per month penalty.

Beacon Expanded Beyond Prime Architect to Geotechnical Engineer

In a recent trial court decision (Flaherty v Dolan, Case No. CGC-12-522648), a San Francisco judge found as a matter of law that a geotechnical engineer responsible for providing geotechnical services, including ongoing services during construction, owed a duty to future purchasers of lots in a residential subdivision.

The court found the engineer, who was under direct contract with the developer, “had a key role in the development of the project.” In support of this conclusion, the court found significant fairly standard scoping language for geotechnical engineers and many design professionals. “The purpose of our services is to (1) work with the design team and contractor and (2) observe the construction/installation of the geotechnical related elements of the project to check they are constructed in accordance with the intent of our recommendation.”

The geotechnical engineer also had written to the developer outlining the risk of potential landslides that should be disclosed to future homeowners, which the court found implicated the engineer in the disclosure process.  Finally, the court pointed out that the geotechnical engineer had been paid several hundred thousand dollars in fees.

From this court’s interpretation of Beacon Res. Comm. Ass’n v Skidmore, Owings & Merrill LLP, (2014) S208173 it seems that where the design professional has a meaningful role during construction and is paid for the project what the court views as a sizeable fee, there is a significant risk of owing a direct duty to future residential purchasers.

Contractor Without California Contractor’s License Can Pursue Miller Act Claim for Unpaid Fees on Federal Project

The Ninth U.S. Circuit Court of Appeals held on April 29, 2014, that a contractor need not hold a valid California contractor’s license to pursue a Miller Act claim for unpaid fees on a federal project.

In Technica LLC v. Carolina Casualty and Candelaria Corp., the court held that state laws that restrict the rights of noncomplying parties would not be enforced by federal courts in Miller Act cases.  This carve-out for payment bond claims on federal projects represents one of the few exceptions to the otherwise broad prohibition on unlicensed contractors using the courts to seek unpaid contract balances.

As many federal projects involve work in more than one state, some of which may not require a contractor’s license at all, this should permit more uniform application of the Miller Act nationally.