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Broad–Form Indemnification PowerPoint PPT Presentation


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Broad–Form Indemnification. - Practically all subcontracts contain language whereby making Subcontractors responsible to indemnify and hold harmless Owners and Contractors and others for all claims caused by, arising out of, or occurring in connection with Subcontractor’s Work. .

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Broad–Form Indemnification

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Broad–Form Indemnification

- Practically all subcontracts contain language whereby making Subcontractors responsible to indemnify and hold harmless Owners and Contractors and others for all claims caused by, arising out of, or occurring in connection with Subcontractor’s Work.

Practically all subcontracts contain language whereby making Subcontractors responsible to indemnify and hold harmless Owners and Contractors and others for all claims caused by, arising out of, or occurring in connection with Subcontractor’s work.


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How this could affect you…

Broad–Form Indemnification


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To the fullest extent permitted by law, Subcontractor shall indemnify and hold harmless the Owner and Contractor, their agents and employees from and against claims, damages, losses and expenses, including but not limited to attorney’s fees, arising out of or resulting from performance of the Work, provided that such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property (other than to the Work itself) including loss of use resulting therefrom, but only to the extent caused in whole or in part by negligent acts or omissions of the Subcontractor, a sub-subcontractor, or anyone directly employed by them for the construction of the Work, or anyone for whose acts they may be liable.

Broad–Form Indemnification

Preferred Language:


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Note: Broad-Form Indemnification is also attempted by making Subcontractor’s insurance policies “primary and non-contributory” thereby making Subcontractor’s insurance responsible for paying all claims associated with Subcontractor’s Work without any contribution from Owner’s, Contractor’s, or others’ insurance policies even if Owner, Contractor, or others are at fault.

Broad–Form Indemnification


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 Acceptance of Substrate Conditions  Verifying The Work of Others Field Measurements

Most Subcontracts contain language such as “Subcontractor’s commencement of its work shall constitute acceptance of the related substrate conditions and Subcontractor shall be responsible for all costs arising therefrom, etc…”


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Acceptance of Substrate ConditionsVerifying The Work of OthersField Measurements

Most Subcontracts will state explicitly that Subcontractor shall verify the prior work of others before performing any portion of Subcontractor’s work, etc. This language defeats the purpose of bidding/fabricating work in accordance with the Contract Documents and places an undue burden on Subcontractors whose work depends on the proper preceding work of others and furthermore makes scheduling impractical if not impossible. This acceptance/verifying language usually extends to the Contract Documents whereby making Subcontractor responsible for discovering errors and omissions in the Contract Documents.


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Acceptance of Substrate Conditions  Verifying The Work of Others Field Measurements

Slab Is 2” Out.

In accordance with the contract, precaster must field measure contractor’s structure and react to the problems with the structure by modifying or re-casting panels.


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Field measure and produce precast in accordance with as-built conditions.

Acceptance of Substrate Conditions  Verifying The Work of Others Field Measurements


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Acceptance of Substrate ConditionsVerifying The Work of OthersField Measurements

Preferred Language:Subcontractor’s commencement of its Work, preceded by areasonable inspection of supporting and/or contiguous work shallnot constitute a waiver of Contractor’s obligation to construct its work in accordance with tolerances and quality levels specified in the Contract Documents. Neither Subcontractor nor its Sub-subcontractors shall beresponsible or liable in any way for errors and omissions in the Work of others, including the Contract Documents.

Subcontractor does agree to make a reasonable effort to coordinate its Work with the Work of other trades and report any deficiencies it finds as part of performing its Work.


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Acceptance of Substrate Conditions  Verifying The Work of Others Field Measurements

A more radical version for the preceding slide is:

“Neither Subcontractornor its Sub-subcontractorsshall be responsible or liable in any way for reviewing, reporting, verifying, analyzing, or evaluating the work of others, including the Contract Documents.”


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Protection/Risk of Loss

Most Subcontracts attempt to make Subcontractor responsible for protecting its work in place until final acceptance by Owner.


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Protection/Risk of Loss

A forklift accidentally knocks a panel off of the sixth floor of a parking deck and damages several others beyond repair.

ARE YOU AT RISK BECAUSE CONTRACTOR DOESN’T HAVE SAFETY CABLES?


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Protection/Risk of Loss


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Protection/Risk of Loss

Preferred Language:“Subcontractor agrees to exercise reasonable care in protecting the existing construction and improvements from damage during the performance of its Work. Protection of Subcontractor’s Work once installed on the structure is excluded. Furthermore, the Risk of Loss of Subcontractor’s Work passes to the Owner and/or Contractor once installed on the structure, but only to the extent such loss or damage is not caused by acts or omissions of Subcontractor. Subcontractor is not responsible for the repair of damage to its Work caused by others.”


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No Compensation for Delays

Most Subcontracts contain language that basically states that if Subcontractor is delayed in the performance of its work, Subcontractor’s “sole and exclusive” remedy shall be an extension of time; hence, Subcontractor shall not receive any compensation except to the extent caused by and paid by Owner if allowed by the Owner contract.


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Adjusted Precast Erection Schedule: 500 Pieces20 pieces erected per day for 25 days

PRECASTERECTION

NOV.

DEC.

JAN.

Requires 2 Crews: (1 day/1 night)

No Compensation for Delays

Original Precast Erection Schedule: 500 Pieces10 pieces erected per day for 50 days/10 Weeks

Scenario:P.I.P. Concrete Subcontractor Is Behind Schedule.


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No Compensation for Delays

Preferred Language:In the event Subcontractor is delayed by or has any other claim for damages and/or an extension of time caused by Contractor or other Subcontractors, Subcontractor will negotiate its compensation and/or extension of time with Contractor. An extension of time may not be Subcontractor’s sole remedy for such delays. Subcontractor may, but shall not be required to, make up time for delays not directly caused by Subcontractor (including but not limited to delays caused by inclement weather).


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Mutual Schedule

Contractor and Subcontractor start with a Bid Schedule. It is not reasonable for Contractor’s schedule to be materially modified from the original Bid Schedule while maintaining that Subcontractor “begin Subcontractor’s Work as soon as instructed by Contractor” and “furnish additional shifts of labor, work overtime, pay premium costs” as stated in most Subcontracts.


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Convention Ctr.

Office Tower

Garage

3 Schools

Mixed Use Tower

Courthouse

JANUARY

FEBRUARY

MARCH

APRIL

MAY

JUNE

Convention Ctr.

Office Tower

Garage

3 Schools

Mixed Use Tower

Courthouse

JULY

JANUARY

AUGUST

FEBRUARY

MARCH

APRIL

MAY

Problem: Two jobs’ delivery dates slide to positions where production and delivery schedules are to capacity.

JUNE

JULY

AUGUST

Mutual Schedule

Delivery Schedule for Plant


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Mutual Schedule

Preferred Language: All project schedules for the Work (including schedules for submittals) and any revisions thereto, shall be mutually agreed upon by Contractor and Subcontractor. Subcontractor agrees to use every means available to comply with Contractor’s reasonable schedule revisions for compensation, if any, mutually agreed upon by Contractor and Subcontractor. If Subcontractor cannot comply, Subcontractor shall not be penalized in any way for its noncompliance.


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Represents a “Business Risk,” not an “Insurable Risk.”

Pay When Paid/Pay If Paid


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Pay When Paid/Pay If Paid

If Subcontractor is not comfortable with Owner’s ability to pay, Subcontractor may ask for language such as the following: “Acceptance of the conditional payment terms is conditioned on the understanding that those terms apply solely to monies withheld by Owner due to some deficiency of Subcontractor. If Owner fails to pay Contractor for reasons unrelated to the Work of Subcontractor, Contractor shall have a reasonable time to make payment to Subcontractor following the time when such payment would normally be due. If Contractor is not paid by Owner for any reason, Subcontractor agrees to cooperate and assist Contractor in obtaining such payment. Subcontractor does not assume the risk of non-payment by Owner to Contractor.


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Grouting

Schedule Duration

Erection Sequence

Crane Issues

Extensive Mockups

Mobilizations

Cleaning

Layout/Control Lines

Avoiding Contract Problems

Clarify Scope Related Issues: Don’t get hooked into extra scope items that you did not estimate or intend to do. Items include:


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