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Subcontractors news Serving the Greater New York Metropolitan Area IN THIS ISSUE: November 2007 1 Proper Communication PROPER COMMUNICATION, Grand Central Terminal 1 PLANNING AND ORGANIZATION Tunnel Progress THE KEYS TO A SUCCESSFUL PROJECT President’s Message 2 By Gino Di Ciocco, Vice President, HDA Inc. What’s Happening 2 OVER TWENTY-FIVE YEARS OF EXPERIENCE IN PROVIDING consulting services to the construction industry Legal Log 3 has demonstrated that one of the prime causes of disputes on projects is due to the lack of proper Being an “Additional communication between the main parties. Insured” Provides Invaluable Protection More often than not, disputes can be traced back to for a Contractor 5 inadequately established lines of communication at the start of the project and resultant STA Profiles 7 misunderstandings; or the failure of the parties to clearly communicate the effects and consequences Working Without a of unexpected changes and delays to their respective Signed Contract 9 businesses. FYI 13 Planning and Scheduling Although planning and scheduling are essential STA Launches to the successful completion of a project, proper Get Paid Campaign 14 communication is the sole means through which such planning can be effectively carried out. Here They Go Again 15 We have encountered many situations where the New Members 16 respective parties’ scheduling risks and completion concerns were not clearly expressed at the start of Continued on Page 11 Grand Central Terminal Tunnel Progress ht g tli po Work has commenced on the tS Metropolitan Transportation ec Authority’s $6.3-billion East oj Pr Side Access project that is scheduled for completion in 2010. The Long Island Rail Road’s (LIRR) current Manhattan termination point is at Penn Station on the West Side. The goal for the project is to bring the LIRR’s trains to Manhattan’s Grand Central Terminal, allowing up to 24 trains with 160,000 commuters to access Manhattan’s East Side daily. Continued on page 15 STA Subcontractors News November 2007 November 2007 2 President’s Message: Are You Prepared? Our feature article written by Gino DiCiocco of HAD Inc. stresses the importance of knowing the project you have contracted to do, and organizing it, so that you do not fall victim to hidden pitfalls that will become apparent as the work progresses. Demand to see the construction schedule developed by the Owner and his General Contractor (usu- ally without your input) before it creates a delay or an acceleration (both will prove costly to you). Know your rights if either occur. Fred LeVINSON When claims occur your contract usually will usually limit the time allowed for notification. If you fail to meet this provision you will lose your right to compensation no matter how strong your claim is. Are you prepared? ON ANOTHER NOTE, our meetings continue with the Public Agencies. We are trying to eliminate retainage, no damages for delay, get better plans and specifications, and make them more responsible for their actions. The SCA, the MTA, the City of New York are responding, although too slowly for my satisfaction. The Private Sector is meeting us on the Prompt Pay issue. We are in a unique position where they all need us more than ever before because of the construction boom, so they are finally listening to us rather than paying us lip service. To be continued. What’s Happening Consensus Contract Documents Released will continue to publish its well-known stan- SCA’s FID & QC/QA Unit on November 14, A diverse group of leading construction asso- dard form contract documents. It should be 2007 the meeting was chaired by Vinicius ciations representing owners, contractors, noted that AIA is preparing for the release of Castagnola, AIA, Vice President of Quality subcontractors, designers and sureties has its 2007 version of the A-201 (General Condi- Control/Quality Assurance for the SCA. The unveiled a new catalog of over 70 construc- tions of the Contract) and the A-401 (Subcon- meeting opened a real dialogue between the tion contract documents designed to meet a tract Document). The biggest change in the parties and a better understanding of the wide range of project delivery mechanisms A-201 document is the removal of mandatory problems each party is facing and an agree- as well as to address emerging issues such arbitration, which has been a provision since ment that Vinny & Ron Berger will be meet- as electronic communications and building 1888. Of more concern to contractors is a new ing shortly with Chester Yee, Vice President of information modeling (BMI). standard provision that requires contractors Project Management and Operations for the to name the owners, architect and the archi- SCA to eliminate some of the current proce- The release of ConsensusDOCS represents tect’s consultants as additional insured under dures that cause these problems. Stay tuned the first time that broad industry represen- the contractor’s general liability policy and for the results of our meeting with Chester tation has had an equal voice in collabora- also limits the contractor’s right to request Yee. tively drafting construction contracts. STA’s financial information from the owner after national affiliate, the National Subcontrac- work commences and events arise that cause Last week our committees also met with tors Alliance (NSA), is one of more than 20 worries about the owner’s ability to pay. the Architects & Engineers Unit of the SCA national associations that participated in and on November 15, 2007. This meeting was endorse ConsensusDOCS. ConsensusDOCS Because of our affiliation with NSA and their chaired by E. Bruce Barrett, AIA and Vice is unique because each document was drafted affiliation with the Association of Specialty President of the Architects & Engineer Unit to reflect the project’s best interests rather Contractors (ASC), our members can pur- for the SCA. This meeting also resulted in than a single party interest. These documents chase copies of ConsensusDOCS at members opening a dialogue between both parties and help parties to focus on better project results cost rather than retail. an agreement to meet again after the first of rather than negotiating risk-shifting contract the year to clear up the problems caused by the terms to assess fault. Notably absent from Progress with the SCA bid documents. We will keep you informed of the ConsensusDOCS collaboration was the Our School Construction Authority (SCA) the action that will be taken to clear up these American Institute of Architects (AIA), which Committee has had a busy week meeting with problems. STA Subcontractors News November 2007 3 LEGAL LOG 2004 Amendment To Lien Law Addresses Unique Problem of Private Improvement on Public Land By Jay Kushner, Esq. STA Legal Counsel “While a subcontractor and sup- plier still cannot file a mechanic’s lien against public lands, the new law has provided an alternative remedy, that is the payment bond, to guarantee and protect the right to payment.” JAY KUSHNer The New York Lien Law Consequently the physi- not by a public entity but The Act took effect on offers distinct and valu- cal private improvement in by the private developer. November 18, 2004, one able remedies to contrac- New York was subject to a Consequently a mechanics hundred twenty days after tors, subcontractors amd mechanics lien, but not so lien failed against the public the law was passed. material men who furnish a public project. Only the land on which the project labor, materials and supplies funds allocated to the public was built since there were no Consequently, while a to both public and private project, e.g. a police station, public funds to which a lien subcontractor and supplier construction projects within a municipal hospital, a pub- could attach. still cannot file a mechanic’s New York State. lic school, were subject to a lien against public lands, mechanic’s lien. Finally, in 2004, the prob- the new law has provided an Nevertheless the Lien Law lem was addressed by an alternative remedy, that is produced various dilemmas So what then was the case amendment to section 5 of the payment bond, to guar- by virtue of the fundamen- of a private improvement the Lien Law. antee and protect the right tal distinctions between developed on public lands? to payment. public and private projects The amendment to section borrowed from the English Some may remember back 5 of the Lien Law reads as This bill was sponsored by common law concept of to various projects at Battery follows: the STA. Sovereign immunity, i.e. the Park where private develop- land of the sovereign (King, ments were constructed on “Where no public fund Queen and yes, even the public lands. As no public has been established for City and State of New York) money was allocated for the the financing of a public was and is immune from the private development of proj- improvement with esti- reach of the laborer or the ects on public lands, neither mated cost in excess of two persons furnishing materials a public or private lien could hundred fifty-thousand Jay Kushner is General Counsel for the project. attach to the private project dollars, the chief financial to the Subcontractor Trade constructed on public land. officer of the public owner Association. He is Of Counsel with So as the Lien Law devel- shall require the private the firm of Alvy & Tablante. oped whereas private lands This created a serious con- entity for whom the pub- He can be reached at 516-328-7181 were subject to the lien of cern for contractors, sub- lic improvement is being the contractor, the sub- contractors, material men made to post, or cause to be contractor, or persons who and laborers. A mechanic’s posted, a bond or other form furnished materials for lien attaching to the public of undertaking guaranteeing the project, public lands land was not permitted. As prompt payment of moneys were not. Only the mon- there were no public funds, due to the contractor, his or eys allocated for the public only private funds allocated her subcontractors and to all improvements became sub- to the project, a mechanic’s persons furnishing labor or ject to such liens but not so lien could not prevail against materials to the contractor the physical public project. public lands. The typical or his or her subcontractors case was a lease hold of a in the prosecution of the private developer on public work on the public improve- land with funds furnished ment.” STA Subcontractors News November 2007 4 STA Subcontractors News November 2007 5 Being an “Additional Insured” Provides Invaluable Protection for a Contractor By Henry L. Goldberg, Esq. Goldberg & Connolly injured worker’s employer valuable. The duty of an insur- required that they acquire com- ance company to defend a per- mercial general liability (CGL) sonal injury action is exceedingly insurance naming you as an ad- broad. The insurance company ditional insured, you will have will be required to provide and significant protection from the pay for an attorney to defend the financial burdens of this situa- action whenever the allegations tion. Indeed, a recent decision of a complaint, “suggest a rea- of the highest court of New York sonable possibility of coverage.” State has held that your subcon- This duty to defend will be trig- tractor’s CGL policy is primary gered even though the insurance to your policy. This means company may ultimately not that your subcontractor’s CGL have to pay any damages for the policy, on which you are named losses claimed by the injured as an additional insured, must worker. pay the legal fees and damages first. It does not matter that you G&C Commentary: have your own policy that cov- Additional insured coverage ers the types of accidents and is quite important and use- damages at issue. Only if your ful in avoiding the types of subcontractor’s policy either legal fees and personal injury does not cover the particular costs associated with job site HeNrY L. GOLdberG occurrence at issue or the legal accidents. The terms of your fees or damages has exceeded subcontract must unquestion- There are several mechanisms tractor/higher tier subcontractor the dollar amount limit of the ably require the type and scope by which a conTracTor or who is named as an additional policy will your CGL policy have of additional insured coverage subcontractor can allocate the insured have essentially the same to pay. Since it is quite possible necessary to protect you from risks of personal and prop- rights and coverage. They are that neither of these events may these costs. The policy contain- erty damage on a job site to its both insureds. ever happen, quite often your ing your additional insured subcontractors. One of the most policy never has to pay anything. coverage and the documentation well-known and effective risk Being an additional insured is an Your subcontractor’s policy on evidencing it must also be clear management tools is to require important and highly effective which you are an additional and proper to ensure you have in the subcontract that the sub- tool to ensure that you do not insured pays first. received the coverage required contractor procure insurance for have to pay the legal fees and in your subcontract. Be certain these specific risks and include damages that typically arise from In addition, there is no require- to contact an experienced at- the contractor or higher tier a job site accident. We are all fa- ment that your subcontractor torney and insurance broker to subcontractor as an additional miliar with the typical scenario. must have an obligation to have them review your subcon- insured under the policy. This A subcontractor’s employee is indemnify you for the claimed tract and your subcontractor’s affords the contractor the same hurt on the job. Because he losses of the injured worker be- insurance policy and certificate rights as the policy holder under cannot sue his subcontractor fore your subcontractor’s policy of insurance to make sure your a commercial general liability employer (the injured worker is must cover you for the legal fees subcontract gives you and your policy (CGL). covered by workers compensa- and potential damages. There subcontractor’s insurance cover- tion for the claim he has against is no need to determine the rel- age the “additional insured” Being named as an additional his employer), he instead sues evant faults of the various parties status you need. insured is exactly what it sounds the owner, general contrac- involved. It is simply enough like – the policy is acquired in tor/construction manager and that your subcontract requires the name of the lower tier sub- the higher tier subcontractor your subcontractor to provide To contact Mr. Henry L. Goldberg, contractor, as the insured party, for whom his lower tier subcon- insurance coverage for you as an call (516) 764-2800 or e-mail him and includes an endorsement tractor/employer was working. additional insured. directly at: that names the contractor or You, the higher tier subcontrac- email@example.com higher tier subcontractor as an tor, now are facing legal fees to Even the simple obligation that Mitchell B. Reiter, a senior associate additional insured party for the defend the action and potential your subcontractor’s policy must with Goldberg & Connolly assisted risks covered by the policy. Both damages for the worker’s per- pay the legal fees involved in with preparation of this article. the subcontractor who buys the sonal injuries and lost salary. defending the injured worker’s policy in its name and the con- If your subcontract with the personal injury action is highly STA Subcontractors News November 2007 6 david marino President Allied North America Insurance Brokerage of New York, LLC RESOURCEFUL. we tackle the toughest challenges head-on. We’ve never met a risk we couldn’t manage. No project is too complicated, no challenge too great for the construction insurance specialists at Allied North America. Trusted by our clients, valued by our carriers and respected by our peers, Allied’s talented team is technically-savvy, service-focused and results-driven. Maybe that’s why this industry’s biggest names bring their most complex risk management challenges to our insurance and surety professionals – and why you should, too. Because wherever you are, whatever you’re building, we’ve got you covered. Allied North America: Risk management specialists for the construction industry. 1-866-525-3606 | www.alliedna.com ALLI2007_David_7.5x9.5_SCN_4C.in1 1 10/1/07 3:54:19 PM STA Subcontractors News November 2007 7 Successful Contractors Share Best Business Practices If you have best practices to share, please contact Ron Berger, STA’s Executive Our members are at the heart of the STA. As an ongoing feature in our Director, at 212 398-6220 and we will try to include them in one of our upcoming monthly newsletter, we will introduce you to several of our members each issues. month. OMC, Inc. Aalco Transport and Storage The Secrets of Their Success of operating and maintaining a facil- Jeff believes that Aalco’s success can ity to fabricate most or all of the ma- be attributed to establishing a strong terial installed on the jobsite, rather relationship with the client, “realizing than being able to purchase it from a our customer is part of a team.” He supply house.” also states that attention to prepa- ration, proper execution of servic- However, the STA and its Prompt es—“matching the right equipment Payment Committee is continuing for the project”—and good commu- to work toward implementing bet- nication are also instrumental to the Michael Checchi, president and sole ter payment practices and payment Jeff Krevat is president of Aalco company’s success. owner of OMC, Inc., operates one of terms for the entire industry. “We are Transport and Storage, a third gen- the largest sheet metal fabrication working vigorously to change the way eration master rigger securing New Getting Paid on Time and installation companies in the we get paid on jobs. This continues York, New Jersey and Connecticut. As the issue of timely payment re- New York metropolitan area. to be the hardest and most frustrating Specializing in turn-key engineered mains a paramount concern for sub- aspect of running a construction com- rigging of mechanical and electrical contractors, the Aalco team believes Founded in 1986, the firm designs, pany in the city of New York.” equipment, Aalco brings its expertise the first step in receiving prompt pay- fabricates and installs HVAC duct to the areas of design-build services ment is establishing a strong relation- work in the commercial market, op- The Benefits of Membership and value engineering for the rigging ship with their customers, which pro- erating from a 25,000 sq ft facility in Michael, who is a member of the STA’s of emergency generators, paralleling vides a means of communicating with the Bronx. With a staff that includes Prompt Payment Committee, believes switchgear, switchgear, cooling tow- the client in an open manner. approximately 125 Local #28 sheet that STA membership has been in- ers, chillers, fans and other HVAC metal workers, handlers and #282 credibly beneficial, even though he equipment. Their advice for subcontractors new Teamster drivers, OMC works pri- has been a member of the STA for just to the industry is threefold: Request marily as an airside direct contrac- one year. “In that short time I have Established in 1973, Aalco has devel- payment schedules and purchase tor in the alteration field performing found a group of subcontractors with oped a reputation for completing work order prior to work, submit invoices sheet metal ductwork. the same values and goals that I have: on time or ahead of schedule. Aalco’s promptly, adhere to customer pay- to operate a profitable and success- experienced project management and ment requisition schedules and com- The firm’s current projects include ful business in the greatest city in the generator technical staff has complet- plete projects on time. work for Bank of America at 1111 world—New York.” ed work on a number of projects that Sixth Avenue, the Gucci flagship store have required equipment transport The Benefits of Membership on Fifth Avenue, Dechert LLP at 1096 In addition to the camaraderie that and staging, derrick construction and Aalco strives to be more than just a Sixth Avenue and the Lehman Broth- he finds with his fellow subcontrac- operation, helicopter heavy lifts and member of STA but an active par- ers offices at the Time and Life Build- tors, Michael also values the STA’s crane assembly/disassembly. ticipant in meetings, according to ing. advocacy and support system: “They Charles Cottitta, Aalco’s Director of give a superior effort to help us in all The firm’s current projects include the Business Development. He states that Success Strategies of the most difficult issues with the Queens Midtown Tunnel (MTA B&T) Aalco values the opportunity to en- Michael attributes OMC’s success support needed by all. My only regret infrastructure replacement of the en- gage other members of the industry: to one word: excellence. “You have is that I didn’t join this organization tire tunnel exhaust fan system, 1301 “It provides us a forum to meet and to service your customers and never a lot sooner.” Avenue of the America’s 1000KW network with our peer group, to lobby substitute quality for a lower price,” generators and switchgear via an local government or trade unions is- says Michael. Being a successful busi- Michael graduated from Passaic elevator shaft, 51 Madison Avenue sues that are vital to be heard as our ness requires that customers always School of Drafting with a degree in cooling towers to 35th floor, 375 Park industry changes in response to the receive the contractor’s full attention. Mechanical Drafting. After gradua- Ave 2500KW genset and mechanical current economy.” Michael believes in being a “hands on tion, he became an apprentice with equipment with rooftop derricks. owner.” Local Union #28, Sheet Metal Work- Jeff concurs, believing that STA is ers Union. Michael worked as a lay- Other noteworthy projects were JP instrumental in establishing a stan- Getting Paid On Time out designer and foreman for several Morgan Chase/Bank One N+2 Mis- dard that the rest of the industry will One of the problems that continues shops before deciding to open OMC. sion Critical Data Center’s 1500 follow: “STA provides Aalco and ev- to be a concern for subcontractors is pieces of electrical switchgear and ery other subcontractor a voice to be getting paid on time. Michael believes (12) 2000KW gensets, Atlantic amplified to the local construction the issue is an even more pressing one City Harrah’s two cooling towers to industry. Bottom line, STA provides for sheet metal contractors as they the roof and Yonkers Raceway’s (3) the benchmark for all subcontractors “face a more difficult task of getting 2500KW gensets with medium volt- to be accountable and ethical to our paid as [they] have an enormous cost age switchgear and transformers. customers and the membership.” STA Subcontractors News November 2007 8 STA Subcontractors News November 2007 9 Subcontractors Performing Work Without A Signed Contract In place May Be Without A Claim For Relief (In Contract or Common Law). By Mark Cermele many subconTracTors have sheet that: 1) required Jordan to contract, and no such document been puT in The uncomforTable sign the subcontract; 2) allows had ever been drafted or signed. posiTion of proceeding wiTh Turner a stated period of time Jordan conceded the meaning work aT a general conTracTor’s to execute the subcontract; and of the term sheet, but argued requesT before having a fully 3) excludes Turner from being that Turner’s conduct after issu- execuTed subconTracT. The obligated under the subcontract ing the term sheet (namely the obvious advice from a lawyer or have any liability for work per- oral notification to Jordan that would be to not perform the work formed by Jordan, or for antici- it was awarded the job, the oral until a fully executed contract is pated profits, if Turner does not agreement on price and Turner’s in place. However, the stiff com- sign the subcontract. directive to start work) formed petition for work and the realities a separate oral agreement that of construction make that advice As alleged, the principals of both superseded the term sheet, or impractical. Proceeding without parties met and verbally agreed alternatively waived the term a contract can be extremely risky upon all material terms of the sheet’s limitations and impliedly for the subcontractor, especially subcontract, including price. accepted the subcontract, or MArK CerMeLe if the general contractor explic- Again verbally, Turner advised at the very least put Jordan on itly states at the outset, with plain Jordan that it has been awarded notice that it should expect pay- offer advice on how to best avoid and unequivocal terms, that the the subcontract, and directed ment for the provided work. pitfalls such as this. A carefully subcontractor’s entitlement to Jordan to proceed with its design drafted letter to Turner con- payment is predicated on the development work in order to The trial court granted Turner’s firming the existence of a con- general contractor’s execution of accommodate the project’s “fast motion to dismiss, which was tract would have prompted a the subcontract. track schedule” while the formal affirmed by a majority of the sit- response by Turner that would subcontract gets drawn up. Jor- ting judges in the appellate court. have offered the subcontractor The Supreme Court, Appel- dan, being the quintesential team Jordan, slip op. 06767, 2007 Wl guidance on how to proceed. At late Division, First Department, player, immediately commenced 2701901. In affirming the dis- the very least, with a better read recently affirmed the dismissal design work with its manufactur- missal, the majority reasoned on Turner’s conduct, Jordan may of a subcontractor’s complaint ers and engineers. All seemed that Turner’s conduct after the have chosen to refrain from shar- as a matter of law, because the to be going well – Jordan was issuance of the term sheet did ing its design developments with subcontractor failed to demon- invited to Turner’s headquarters not waive or modify the terms Turner; at least not until Jordan strate the general contractor’s for a kickoff meeting and Jordan therein, nor did they act as an received Turner’s executed sub- intent was to alter, waive or agree shared its designs with Turner implied acceptance of the under- contract or a writing expressly to relax the terms of acceptance while more designing and coor- lying subcontract. Rather, Turn- waiving the term sheet’s require- contained within the written dinating was provided. Then, er’s conduct simply describes ments and promising payment “term sheet” provided to the sub- two days later, Jordan is told by a scenario that falls within the in accordance with the parties contractor by the general con- Turner that it will not be awarded express terms of the term sheet, understanding. tractor. Jordan Panel Systems, the subcontract, a letter is subse- and is one under which Turner Corp. v. Turner Const. Co., Slip quently sent confirming Jordan’s would not become bound and Mark Cermele is an Associate at Welby, op. 06767, 2007 Wl 2701901 termination from the project and reserved the right to terminate Brady & Greenblatt, LLP. (N.Y.A.D. 1 Dept.Sept. 18, 2007) awarding the project to the other Jordan. The appellate court saw (Hereinafter “Jordan”). Subcon- subcontractor. Now, Jordan is out the term sheet as Turner’s pre- He received a Bachelor of Science Degree tractors should be aware of the of pocket for design and potential contractual notice to Jordan of in Mechanical Engineering Natural from Tufts University and a Juris Doc- Jordan decision and the facts it manufacturing costs along with what would constitute Turner’s tor Degree from Cardozo Law School. He was predicated on so that they lost profits. All the while, Turner “manifestation of mutual assent.” is admitted to practice law in the states of may better navigate through a and its new subcontractor have The majority’s decision did New York and Connecticut, and is admit- difficult business decision. gained the benefit of Jordan’s draw the dissent of one justice, ted to the U.S. District Court for the South- ern and Eastern Districts of New York. design without expense. but unless the court of appeals In Jordan, the general contrac- reverses, if application is even Prior to embarking on a career in law, tor, Turner Construction Com- Jordan’s complaint claimed, inter made, or if the appellate division Mark participated as an engineer/drafts- pany (“Turner”) solicited bids alia, breach of contract, promis- reverses itself, subcontractors man with one of the largest mechanical from various subcontractors to sory estoppel and sought recovery must act cautiously if, and when, contractors in the metropolitan area. Mark was also an associate at JP Morgan design and build a hangar at in quasi contract. In response to they face a similar situation. where he was a trader’s assistant partici- JFK International Airport (the Jordan’s complaint, Turner filed a pating in trading bonds and derivatives. “work”). Jordan Panel Systems, motion to dismiss. Turner argued If anything, the appellate court’s Corp. (“Jordan”), submitted a that it was entitled to terminate decision in Jordan demonstrates During law school and prior to joining Welby, Brady & Greenblatt, LLP, Mark competitive bid for the work, Jordan from the project because the importance of having a con- worked on various large complex com- which prompted negotiations it had clearly stated its inten- struction attorney review your mercial litigation matters, including pat- with Turner for the work. Turner tion to become bound only upon contracts and related documents ent, trademark, antitrust, and surety law. provided Jordan with a term signing a written formal sub- from the outset so that they can STA Subcontractors News STA_fullpage:Layout 19/11/07 5:06 PM Page 1 November 2007 10 J O E TO RRE O N T H E A RT O F M A NAG I N G “Team chemistry isn’t conﬁned to the diamond.” J.H. Cohn Welcomes Marden, Harrison & Kreuter to its Construction Industry Practice. An Ideal Teammate. A combination of industry expertise and a dedicated team of 70-plus professionals, enhanced by partner-level involvement, make J.H. Cohn’s Construction Industry Practice an ideal teammate for any construction business. Along with an 88-year track record of technical competency in its own ﬁeld, J.H. Cohn enjoys well-established relationships with the industry’s bonding, banking, surety and legal professionals. As long-standing and proactive supporters of industry associations, J.H. Cohn and Marden, Harrison & Kreuter have earned the conﬁdence and trust of their more than 200 NY/NJ area contractor clients. As the largest regional accounting and consulting ﬁrm headquartered in the Northeast, we have room for more. How Are You Managing? SM Offices in New York, California, Connecticut and throughout New Jersey www.jhcohn.com 1-877-704-3500 STA Subcontractors News November 2007 11 Continued from Cover Page “Overt and comprehensible communication between the parties promotes and encourages team play and increases the likelihood that the project will be successful, both on time and on budget.” the hard costs and not enough on the more The contractual notice requirements are important time related indirect costs, often especially important to ensure that the resulting in major disputes later in the contractor’s rights for recovery are not project. waived. It is imperative that the time frames (and other specific requirements) Through the power of dialogue, the set out in the contract pertaining to parties can timely resolve any important the prompt issuance of written notices scheduling or cost issue without taking for delay, request for time extension or the project. Moreover, when changes or a hard contract stance or resorting to compensation and the timely submittal of unforeseen conditions occurred, the effects advocate positions and tactics. claims be strictly adhered to. to the schedule or possible mitigation alternatives were not thoroughly discussed For instance, in the event of a delay, it can Furthermore, when attending job meetings, or adequately addressed in contract change be determined that it would be more cost it is important that the parties be fully orders. effective, and in the interest of both parties, prepared (with appropriate support that the project be accelerated instead of documentation, if necessary), so as to Risk extending the scheduled completion date. timely address and resolve critical issues, The contractor’s (and subtrades’) Such mitigation efforts or other solutions thus avoiding potential impacts to the anticipated risk in performing the can only be advanced through open and project. scope of work and the owner’s business frank dialogue between the owner, A/E, concerns must be explicitly understood construction manager and the subtrades, Conclusion before the start of a project, thus avoiding hence benefiting the project as a whole. It is evident that proper dialogue between any surprises during construction. It is Moreover, should a subcontractor be the parties is vital to the successful often assumed that the other party fully experiencing labor inefficiencies, it is best completion of any project, especially in comprehends the critical nature of selected to promptly notify the project manager, light of the human psyche and its need to work activities and other factors necessary so as to permit an opportunity that any be right or on the winning side. Clearly, in achieving the contractual milestones and disruptive site condition may be quickly overt and comprehensible communication budgeted cost when, in fact, it is not the addressed with the intent of substantially between the parties promotes and case. Leaving such important elements to reducing, or even eliminating, future losses encourages team play and increases chance is essentially ensuring the likelihood of productivity. the likelihood that the project will be of a dispute sometime during the course of successful, both on time and on budget. the job. Organization and Preparation Obviously, organization and preparation Contract Change Orders are essential elements for the successful Gino Di Ciocco and Carl Hepworth are As for unexpected events (such as: design performance of the work to occur on any principals of Hepworth, Di Ciocco and changes, extras, delays and disruptions), construction project. Owner representatives Associates, Inc. (HDA), a construction the consequences and effects to the and project managers (for both the general consulting firm specializing in construction project schedule and cost must be fully contractor and all subtrades) must fully disputes on projects throughout North and clearly articulated by the contractor comprehend the contract provisions and America and abroad. HDA can be reached and subcontractors, such that they can appreciate their respective responsibilities at (514) 634-7636 or firstname.lastname@example.org be explicitly addressed by change order and duties, including those of the design for both time and money, with any consultants. qualification unambiguously delineated. Sometimes the parties focus too much on STA Subcontractors News November 2007 12 STA Subcontractors News November 2007 13 FYI A construction team including Skanska Civil Mayor Michael Bloomberg recently unveiled a “We’re disappointed by the mayor’s USA, Schiavone Construction Co. and J. F. Shea rezoning plan for Coney Island that would create presentations, but are optimistic that a deal can Construction Co. Inc. has been awarded a $1.145 a 15-acre outdoor amusement park and edge out be reached between the city, the landowners and billion contract to build a new 1.5 mile extension property owner Thor Equities, which wants to the community to make Coney Island an even of the Number 7 subway line to the west side of build hotels and timeshares-a $1.5 billion project greater place to live and visit,” Mr. Sitt said in a Manhattan. The contract with the New York that would also require rezoning. statement. Metropolitan Transportation Authority gives the team 57 months to complete the project, which Mr. Bloomberg’s 46-acre rezoning would divide City planners will start a public review process will include boring a 21.5 foot diameter tunnel Coney Island into three development zones next year and anticipate that construction could through mostly hard rock. surrounding KeySpan Park. Coney Island start by mid-year 2009. Construction would North would contain 1,800 residential units take up to 20 years to complete. The New York City Council approved rezoning and 100,000 square feet of retail space, while 206 blocks of Bedford-Stuyvesant, moving to Coney Island West would include 2,700 units of “Just imagine the economic impact on this protect the historic charm of our side streets housing and up to 360,000 square feet of retail. community if a new, revitalized Coney Island, while encouraging economic development and with its exciting new attractions, could hold just the construction of low-cost housing along The real changes lie in Coney Island East, a 21 a fraction of our city’s 44 million annual visitors,” the major arteries. The council also granted acre segment of land owned primarily by Joseph Mr. Bloomberg said during a speech before landmark status to Sunnyside Gardens, a 1920s Sitt’s Thor Equities. The City’s plan would the Brooklyn Chamber of Commerce at Coney housing development in Queens considered a zone Coney East for amusements, hotels and Island’s Gargiulo’s Restaurant. model for innovative urban design. restaurants, potentially thwarting Mr. Sitt’s plans to build hotels that include more than 400 time- Mr. Sitt’s development plans were never without Hotel developer Tyler Hospitality has purchased share units. controversy. An original blueprint that included a development site in Brooklyn, N.Y., for $11.9 a 40-story tower on the boardwalk, as well million and on which it plans to build a 14- But Mr. Bloomberg will have to get approval as hundreds of rental apartments and luxury story, 250 room Holiday Inn. The company is from the state legislature, and acquire land from condominiums, was lambasted by city officials currently building a 300-room hotel in Times Mr. Sitt through a cash or land swap deal. Only and local leaders. Although Mr. Sitt dressed Square and another close to JFK airport. then could the city issue its request to developers down the development plan in June, eliminating for proposals to build the amusement park. If the tower and the apartments, community Debate on renewing the terrorism insurance Mr. Sitt doesn’t cooperate, he would be entitled leaders have still said his design for an enclosed bill and issues related to homeowners insurance to rebuild his lots according to present zoning amusement park seemed more like a shopping demonstrate the muscle of New York’s rules, which prohibit condo or time-share mall, and claim there is little difference between Congressional delegation. The large delegation developments. residential apartments and the proposed time- key insurance oversight positions in both the shares. House and Senate. STA Subcontractors Continued from Cover Page News November 2007 14 AN OLD PROBLEM, NEW SOLUTIONS STA LAUNCHES GET PAID CAMPAIGN TO PUBLIC AND PRIVATE OWNERS IT’S NOT ONLY OUR PROBLEM, IT’S THE OWNERS’ PROBLEM TOO! Controlling the cost of construction is on everyone’s mind today. STA maintains that prompt payment practices is the key to increasing competition and reducing construction costs. Late payments today have resulted in subcontractors adding in the cost of the risk they take when they work for owners or builders who do not pay on time. To address the issue, STA, under the leadership of Robert Samela, STA’s vice president and chair of its Prompt Pay Committee, has embarked on an aggressive communication program to get the STA’s message out to the industry about the crippling ramifications of low and delayed payment. “The problem is rampant”, says Samela. “STA’s program of position papers, public relations and strategic meetings will ensure that our message is heard. It is our first step in the process of achieving what is due to subcontractors – timely payment for our work.” STA’s program is aptly titled, “GET PAID” and includes a series of position papers, white papers, forums and strategic meetings that will boldly communicate the message that must be sent to improve the economic conditions of hundreds of subcontractors that must maintain their financial health if they are to complete the aggressive construction agenda projected for New York over the next decade. Select position papers and white papers are available from STA (Contact ron berger at 212.398.6220 or via email at email@example.com) 7 Best Practices for How Can You Really Control Can You Really Get Prompt Payment Construction Costs? Your Projects Built This guide overviews Best Practices for This publication is directed to Owners This Publication is directed to Public Subcontractors. and Builder-Developers of Real Estate. Sector Owners with Capital Budgets. A PUBLICATION OF THE SUBCONTRACTORS TRADE ASSOCIATION A PUBLICATION OF THE SUBCONTRACTORS TRADE ASSOCIATION A PUBLICATION OF THE SUBCONTRACTORS TRADE ASSOCIATION F o r O w n e r s A n d B u i l d e r- D e v e l o p e r s O f R e a l E s t a t e For Public Sector Owners with Capital Budgets BEST PRACTICES FOR PROMPT PAYMENT If you’re happy with today’s If you’re happy with today’s high construction bids and high construction bids and If you’re getting paid on time you have enough bidders, you have enough bidders, and if no one owes you money for a change order, read no further. read no further. read no further. If not, read on… If not, read on… If not, read on… STA Subcontractors Continued from Cover Page News November 2007 15 Continued from Cover Page A 640-Ton Colossus Begins Its Earth- According to the MTA, the East Side Access Work began last month at the East 63rd Eating Journey project will reduce Penn Station train Street and Second Avenue tunnel. The bi- Pieces of the tunnel boring machine were arrivals while increasing LIRR Manhattan level tunnel was built in 1969 as a subway transported to a “launch box” under 63rd arrivals by 41 percent, improve the link to Manhattan to alleviate congestion Street and 2nd Avenue in June; workers reliability of train service and reduce daily on the Queens Boulevard line. However completed assembling the machine in vehicle miles of travel in the region and funding issues prevented the route from October. Referred to as the “earth eating” improve air quality. being completed on the Queens side. machine by MTA Capital Construction President Mysore L. Nagaraja, the 640-ton Often referred to as the “tunnel to nowhere” Italian-made machine crossed the Atlantic because it terminated one stop into Queens, in May, making landfall at the port in STA SUBCONTRACTOR according to The New York Times. The Newark later that month. POWERS THE PROJECT tunnel’s top level remained unused until Five Star Electric Feeds Power for 1989. At that point, F trains were routed With 45 steel blades, the machine will Tunnel Project through the tunnel’s upper level to 63rd burrow into the granite with the force Street and Lexington Avenue. However, of 70,000 pounds, moving southwest to According to Lou Grady, Five Star’s Project ridership in Queens was small given its Park Avenue and then south to Grand Executive for the job, Five Star provided five limited connection. Central Terminal. The 360-foot long 15 KVA substations which fed 3750 KVA boring machine is imposing, containing a transformers. These transformers fed 15 It was not until 2001 that a connector was lunchroom for the 14 workers who operate KVA switchgear which provided the power built to link the tunnel to subway lines it. A second machine will begin boring later for the two tunnel boring machines. Grady that run along Queens Boulevard. The this month, digging a parallel tunnel under added “we dropped high voltage feeds down tunnel’s lower portion, built to carry LIRR Manhattan. to the tunnel level which fed tunnel boring trains to Manhattan’s East Side, was never machines, one by Seli from Italy and the connected to anything, remaining a literal Grinding through the rock at an average of other manufactured by Robins of Cleveland, and financial dead end. 50 feet per day, the $428-million phase of Ohio” . Five Star also provided all light the $6.3-billion East Side Access project & power, auxiliary equipment, fire alarm The new route will run via new soft has a projected completion date of 2010. and communication systems as well as the ground tunnels in Queens below Northern Train service is expected to be speeding maintenance for the duration of the project. Boulevard, through the bottom two cells through the tunnels by 2013, one tunnel for of the existing four-celled 63rd Street Manhattan-bound trains and the other for “It was imperative,” said Gary Segal, immersed tube tunnel and into Grand trains headed to Long Island. Connecting President of Five Star Electric “to get these Central Terminal through new rock tunnels tunnels will be completed in Queens to link substations energized and on-line with Con built beneath the existing rail tunnels the tunnel to LIRR’s main line and Port Edison in the aggressive six-month time under Park Avenue. Washington branch. frame so the TBM’s could start boring… and I’m proud to say we did”. Here They Go Again: Contractors Attempt to Shift Risk of Non-Payment to Subcontractors Terence J. Burke, Legal Counsel Empire State Subcontrators Association thus returning the risk of an owner’s non- statutory lien rights against the contractor payment under such clauses from the and the surety under Section 24 and 41. subcontractor to the contractor, contractors As a practical matter, the time it takes to have sought new contract provisions to exhaust lien remedies will exceed the one shift the risk back to the subcontractor. year statute of limitations for commencing Such a contract provision is the conditional an action on the surety’s payment bond, thus provision, which requires the subcontractor releasing the surety and the contractor on to exhaust its lien remedies and all other legal the surety bond from liability for the owner’s remedies as a condition to bringing an action non-payment and shifting the liability to the against the contractor and its surety company. subcontractor. This is exactly the contractor and Surety Company’s intended purpose for While such a provision may not be violative this conditional provision, and it is exactly of the West Fair case, it is clearly against this intended shift of non-payment liability public policy in that it is violative of Section which the courts have held to be against TereNCe J. bUrKe 24 and 41 of the Lien Law which sections public policy. Hopefully, the courts and/or grant a subcontractor the right to enforce a the New York State Legislature will have an ever since The new york sTaTe courT of mechanics lien against property and against opportunity in the near future to address this appeals decision in West Fair Electrical any person (such as the contractor or surety) issue and declare such provisions as void and Contractors vs. Aetna Casualty and Surety liable for the debt upon which the lien is unenforceable. Co.,N.Y. 2d. 148, holding contingent payment founded. Certainly, this conditional provision or pay if paid clauses void and unenforceable, constitutes a wavier of the subcontractor’s STA Subcontractors News November 2007 16 GET iNVoLVED STA commiTTEES Business Practice Interchange Public Agencies robert Samela 201-939-6866 Larry roman 914-776-8000 Insurance & Bonding Program & Education William Hass 914-769-2220 Monet Milad 917-767-8057 Dinner Dance & Journal School Construction Authority SPECIALIZING IN CONSTRUCTION LAW FOR OVER 40 YEARS Fred Levinson 718-961-9600 Fred Levinson 718-961-9600 Membership Committee Architects & Engineers Greg Fricke 212-244-8878 ron berger 718-398-6220 Legislative Business Development Arthur rubinstein 718-417-0600 Jerry Liss 718-728-0600 STA’s New members Matthew Clarke David Burgos Dolores Laganas Knightsbridge Security Excel Electric Co., Inc. ABLE Equipment Rental, Inc. 111 John Street, 16th Floor 207 W 25th Street, 9th Fl 21 Dixon Avenue New York, NY 10038 New York, NY 10001 Copiague, NY 11726 Tel: 212-227-7700 Tel: 718-701-0417 Tel: 631-841-3333 Fax: 212-227-7795 Fax: 718-701-3442 Fax: 631-841-3089 firstname.lastname@example.org email@example.com firstname.lastname@example.org Bonding/Insurance (BON) Electrical (ELE) Supplier (SUP) www.kbsurety.com www.excelectric.net www.ableequipment.com STA Subcontractors News November 2007 17 COST FOR PERFORMING WORK AT: - 87 Schools - 8 Different DEP sites - Time Warner - Mayflower - Goldman Sachs - NY Hospital - Einstein Hospital - 1 Hanson Place - Bellevue Hospital - John Jay College - 325 5 th Street - East River Repowering - 7 WTC - Ravenswood Reheat - Bronx Zoo - Corona Shops - Building “O” : $1,000,000,000 Able to COMPLETE Plumbing & Heating projects ON TIME, SAFELY and with INTEGRITY. STA Subcontractors News November 2007 18 STA Subcontractors News November 2007 19 STA Launches New Website STA has redesigned its website. For more information, please visit the site that now includes several special features: • A searchable Members Directory • Archived STA Newsletter • Current Calendar Events • Monthly Updated Homepage Vist and ﬁnd out more at http://www.stanyc.com STA Subcontractors News November 2007 20 GRASSI & CO - CPA’S & SUCCESS CONSULTANTS CREATIVITY “You can never solve a problem on the level on which it was created.” ALBERT EINSTEIN Creativity...Grassi & Co. GRASSI & CO. HEADQUARTERS: OTHER OFFICES: LAKE SUCCESS MANHATTAN, WESTCHESTER, CPAs & SUCCESS CONSULTANTSTM 516-256-3500 OTHER OFFICES: NC CHARLOTTE, MANHATTAN, WESTCH- WWW.GRASSICPAS.COM AN INDEPENDENT MEMBER FIRM OF MOORE STEPHENS INTERNATIONAL LIMITED WITH OFFICES IN PRINCIPAL CITIES WORLDWIDE SUBCONTRACTORS NEWS Board of Directors: 1430 Broadway • Suite 1600 - NEWSLETTER - CREATIVITY- E=MC- NOV-07 STA ROBERT ANSBRO New York, NY 10018 7.5X4.5 The New York Roofing Company T: 212.398.6220 JOSEPH AZARA F: 212.398.6224 C.D.E. Air Conditioning e-mail: email@example.com MICHAEL D. CHAFETZ website: www.stanyc.com MDC Construction Management Officers JOHN A. FINAMORE Jordan Panel Systems Corp. Fred Levinson, President BENEDETTO GIAMBRONE Robert Samela, Vice President B.G. National Plumbing & Heating, Inc. Gary Segal, Vice President W. Scott Rives, Treasurer CRAIG GILSTON Jerry Liss, Secretary Gilston Electrical Contracting Ronald S. Berger, Executive Director HENRY L. GOLDBERG Goldberg & Connolly Upcoming Events DAVID HARRON Executive Committee Meeting A/C Electric Thursday, December 6, 2007 – 8:00 AM MITCHELL MERDINGER C.D.E. Air Conditioning Board of Directors Meeting Tuesday, December 11, 2007 – 5:30 PM MONET MILAD Milad Contracting Corp. RANDY RIFELLI United Iron GUY VANDEVAARST Empire System Solutions JOHN VILLAFANE Eldor Electric, LLC ROBERT WEISS A.J. McNulty & Co., Inc.
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