Nothing in real estate development creates more confusion or poses the potential for more future problems than the decision of when to terminate a single purpose entity (“SPE”) used with the development of a residential project. Although terminating an SPE should be straightforward, the decision of when to terminate is more complex than one may think. 

Consider the following scenario. A developer creates a residential development SPE, which is nothing more than a limited liability company (“LLC”) formed solely to purchase, construct and sell a real estate property project. After much hard work, the SPE completes its project at a substantial profit and the developer now desires to terminate the SPE. The investors in the project have a separate desire to receive (and keep) their shares of the profit. Both the developer and the investors want to ensure that following the termination of the SPE: creditors cannot cause the investors to return their distribution of the profits; expensive insurance policies and contractor/subcontractor/design professional warranties remain in place; and any entity that undertakes the post-termination obligations of the SPE will not be held to be the “successor” to the SPE. So how is this accomplished? 

Schedules are of the utmost importance to keeping projects on track. Everything must be properly documented so that all moving parts and parties are accounted for, and when deadlines or plans change, schedules should reflect these updates instantaneously. 

Construction project planners should know the details of the schedule inside-out. Most can look at a Gantt chart and easily recognize the relationships between tasks, durations assigned and resources committed, recognizing critical paths and how things are performing, whether they are running behind schedule, on schedule or are at risk for delay.

Unfortunately, few others on the team are able to decipher the Gantt symbols and graphs that planners rely so heavily on. Therefore, as soon as the schedule is designed, astute planners practice the art of relaying vital schedule information to their team members. 

Much is at risk in a large construction project. Huge sums of money, time and effort are invested before the first shovel hits the dirt. Ceremonial groundbreaking gives way to critical timelines and a dangerous mix of rumbling trucks, heavy equipment and busy workers. Traditionally, to help manage and finance the risk of loss, owner and contractor were expected to provide their own insurance. All contractors, each with their own insurance carrier in tow, were expected to answer for any loss. Complicated disputes and resultant insurance coverage litigation became as much a legacy of construction industry activity as the high rises, tract homes and condominiums built.

There had to be a better way. With that impetus, the notion of one all-encompassing insurance plan, known as wrap-up insurance, was developed.  

Contractors, engineering firms, manufacturers and designers alike have been reaping the benefits of sustainable construction since the organization of green building initiatives in the early 1990s.  In addition to conserving natural resources, reducing waste and improving energy efficiency, “green” buildings can reduce operating costs, qualify for tax rebates and appeal to a growing market with specific sustainability expertise. On the jobsite, using non-hazardous materials benefits the health and wellness of employees and increases productivity, according to the EPA. 

The exterior cladding of a structure is a vital component of a sustainable structure because it is the primary barrier between the inside of a building and the elements; therefore, a key factor in energy efficiency. Each exterior material comes with its own set of benefits and concerns, which building professionals should take into consideration before selecting a material.

Congratulations. You’re bidding or negotiating your largest construction contract to date.  You’re confident in your estimate, you’ve assembled your A-team, and you’ve got a good lineup of dependable subs and suppliers for the buyout. But before you ink the contract that elevates your company to the next level, there is work to do and bonds to post. 

In the world of publicly funded construction, and frequently in the private sector, surety bonds are contractually required, and failure to provide them is a deal breaker. Your company’s growth may depend on posting bonds at the seminal moment when work availability, pricing, and award of the contract come together. Neglect to build your bond program in advance and your company could lose the opportunity. 

Liability tends to go hand-in-hand with construction sites. Most construction firm owners and general contractors understand this, and work to minimize their liability issues as much as possible. Subcontractors, too, realize that they need to be properly insured to be considered for a job. Yet too often, the insurance requirements for subcontractors are often unclear or misunderstood. Without a firm grasp of what the insurance requirements are, subcontractors are at greater financial and professional risk.

Either knowingly or unknowingly, some general contractors make the insurance requirements for their subcontractors one-sided in favor of them. In the height of the recent recession, when construction jobs were incredibly hard to come by, it was not uncommon for subcontractors to sign off on an agreement without carefully reading the insurance requirements. Even today, as the construction industry picks up its building pace, some subcontractors continue to sign contracts for services without realizing they may be agreeing to terms that they currently do not carry.  

Although verbal agreements are generally as enforceable as written agreements – with some limited exceptions – parties are better served if their agreements are in writing. Here is a common scenario: A subcontractor receives a call from the project manager of a general contractor asking him to start a new project right away.  

The subcontractor bid the job, but the work was awarded to another subcontractor, who was the lower bidder, but is now unavailable. The project manager agreed to the subcontractor’s pricing and indicated that the work will last three weeks. With such a tight deadline, there is no time to get a written contract signed and the subcontractor starts work immediately.  

The headlines say it: Construction is on its way back, and in some areas of the country, it is completely back. According to the Bureau of Labor Statistics, 290,000 construction jobs were added in 2014 – the best industry performance since 2005. Over the next decade, the U.S. Department of Labor projects the industry will add another 1.6 million jobs. Good news, right? Then why is there still concern in sectors of the construction industry and those that support it?

Ask any construction union or labor group and they will tell you the devastating loss of jobs, which occurred in the Great Recession, has left the industry with a huge void to fill. This void is even more problematic since a good portion of the workers that left are not coming back. The industry is faced with a dual dilemma – how does it entice younger workers to construction, a topic for another time, and how does it train them? Yes, there are apprenticeship programs, but are these programs addressing the impact new employees will have on a company’s total cost of risk?

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