Good afternoon. Welcome to PCI's webinar series. Today's presentation is Contract Clauses. My name is Nicole Clough, Marketing Coordinator at PCI, and I will be your moderator for this session. Before I turn the controls over to your presenters for today, I have a few introductory items to note. Earlier today, we sent an email to all registered attendees with a presentation handout. The handout for this webinar can also be found in the handout section of your webinar pane. If you cannot download the handout, please email PCIMarketing at marketing at pci.org as shown on your screen. All attendee lines are muted. The GoToWebinar Toolbox has an area for you to raise your hand. If you raise your hand, you will receive a private chat message from me. If you have a question, please type it into the questions pane, and I will be keeping track of your questions and will read them to the presenters during the Q&A period. Also, a pop-up survey will appear after the webinar ends. Today's presentation will be recorded and uploaded to the PCI eLearning Center. Questions related to specific products or publications will be addressed at the end of the presentation. PCI is a registered provider of AIA CES, but today's presentation does not contain content that has been endorsed by AIA. Today's presentation is non-CEU. Our presenters for today are Tony Lehman, partner at Hudson Lambert Parrot Walker LLC. Joining Tony is Lenny Salvo, Vice President, Senior Sales Representative, and Sales Manager at CourseLab Structures Orlando. I will now hand the controls over so we can begin our presentation. Thank you, Nicole. This is Tony Lehman, and I'm a partner with Hudson Lambert Parrot Walker in Atlanta, Georgia. And I'm an attorney who's been in construction law for 23 years, and I've been a member of the Florida PCA since 2016. I've worked with Lenny Salvo during that time, and I've gotten to know him, and I'm glad that he's agreed to ask me to speak with you all today. I'm admitted to practice law in the states of Georgia, Florida, and Alabama, and I'm board certified in construction law in Florida. First, a couple of words of caution. None of what we are presenting here today should be construed as legal advice, and we're not creating any kind of attorney-client relationship by giving this presentation. For that to occur, you'd have to give me a call or one of your attorneys a call and talk to us one-on-one as opposed to just listening to a presentation. Second, for antitrust law purposes, you must understand that we are presenting this clauses book as well as this webinar in compliance with federal antitrust law. And as a point of order regarding that, the contract clauses contained in the publication are not intended in any way to be considered as being mandatory or even recommended. They are, however, a great starting point for people to look at and review when they are reviewing and trying to negotiate their own contracts. These clauses were drafted by industry professionals with PCI and come from their years of experience in dealing with the negotiation of contracts with general contractors and owners. However, again, these are guidance, and in that regard, you need to consult with an attorney who is familiar with the laws and the jurisdiction in which the project is being performed to make sure that all of the provisions that you're looking at would be enforceable where you're trying to contract and to understand fully the implications of agreeing to those provisions. As I said, these clauses are meant to be a starting point for negotiations. Some of these clauses may not be enforceable in your state, and in an adjacent state, they might be enforceable. It's very important also to know your own state's business context and legal environment. As an example, here in Georgia, it can be very difficult to get a general contractor to change a payoff paid provision, so your choice then may be simply either living with the risk of not getting paid or not getting the work. Again, these are a starting point. You have to discuss these with your clients and with your lawyer to make sure that you are able to come to an agreement on these clauses. Finally, remember that legal risk is actually greatest in the meat and potatoes of the contract, the scope of work provisions. We'll talk about that some here, but always keep your eyes on what is important when you're negotiating contracts, and that is understanding what you're required to do and how much you're bidding to do it. Now it's my pleasure to introduce one of the industry veterans who did help this publication come to fruition, Mr. Lenny Salvo of Course Lab Structures Orlando. As I mentioned, I've gotten to know Lenny over the past five years through events with the Florida PCA, and I've learned a great deal from him in that time. Yes, even someone who's practiced law for 20 years can learn something from actual industry people who do this on a daily basis. Lenny is, as Nicole mentioned, the Vice President, Senior Sales Representative, and Sales Manager for Course Lab Orlando, and he's worked at Course Lab Orlando since November of 1993. He's been involved in contract negotiations and sales for Course Lab for nearly 20 years, since August of 2001, so his thoughts are very practical and real world for the pre-stressed industry. Lenny, the floor is yours. Wow, thanks Tony. Appreciate that a lot. I don't know about many of you, but I was fortunate enough to start in this field as a very young person, and one of the benefits was working with men and women who were much older and more experienced. Now, not all that I learned is appropriate for this conversation, or indeed for many for that matter, but a lot of what I did pick up proved to be some of the best ideas and ways for handling tough subjects, and that includes negotiating subcontracts. This was a collective blood, sweat, and tears kind of schooling, and personally, I wish I'd had something even close to what we now have in the PCI contract clauses guide publication. This would have been helpful to me personally 20 years ago when I first started editing and negotiating subcontracts. Having the most common pre-vetted commentary and language from the last five or six decades related specifically to precast, prestressed subcontracts in a single source is pretty useful and amazing. Tony gave me quite a bit of credit, but I'll admit that I haven't come in on the tail end of this project and was blown away by how much had been done already and the quality of it when I first saw it. Now, while not a how-to guide or a technical manual like other PCI publications, it is a printed body of knowledge designed to be thumbed through pretty easily. The idea being that much like our well-established industry standards have leveled the playing field for design, production, and erection, producers and erectors can employ some of the same sample clauses to take advantages of lessons learned in the industry at large, some very painfully. Another way to use the clauses guide is as a teaching tool, which I'll touch on briefly at the end. I'm doing that now with a couple of our team members and it's a great way to show that these aren't just my ideas or Tony's ideas, but trade practice. So do any of these scenarios sound familiar to anybody? You're completely or even partially intimidated by subcontracts. You frequently come across clauses that are challenging to understand or have the fear of not understanding some subcontract language and that keeps you up at night. You've battled through a negotiation and at the end wondered if you gave away too much, left something on the table, or wondered about better ways to handle a thorny issue. You struggled with deciding if it's better to mark up a subcontract versus creating an amendment or supplement of your own crafted for your specific operation. Perhaps you've gotten partway or all the way through a project and had a subcontract provision or scope item, as Tony mentioned, come back to bite you. What about if you've been told that you're being unreasonable because a PCI certified competitor will sign an agreement as is? Perhaps you've got folks coming up in your plan that you'd begin to like learning subcontracts, subcontract terms, or negotiation, or some folks that aren't primarily tasked with contract management that you'd like to see expand their basic knowledge. And if you're newly certified and exploring the vast array of resources in PCI, then the contract clauses guide may be for you and I think you probably will find a lot of use out of it. So hopefully no one on the call today is simply signing what's tended to them. Negotiating a subcontract is not only possible, but it should be a best practice. Joint drafting is one way you can describe it and some contracts actually state that they have been joint drafted and that would apply even if you contribute nothing, which is a shame and a wasted opportunity. Tony, I think you want to comment on that. Yeah, looking at these terms and conditions for a moment, something you should also understand too is a lot will depend upon how much responsibility you have on a project. If you're only going to be selling precast materials without any kind of erection responsibility, you end up being within the sale of goods provision of the uniform commercial code. And if you're doing that, you can end up essentially swapping terms and conditions with the people you're selling to. And then if you're swapping these terms and conditions and they don't necessarily line up exactly, whosoever's terms and conditions come last end up being the ones that control. So it makes sense to try to come to an agreement on the terms and conditions before you get too far down the road. You know this is called the battle of forms and I'll tell you, even as a law student, law students hate this particular part of the law of the uniform commercial code because it's confusing and it's unclear a lot of times what will apply. So the more you can come down to hammering out these terms and conditions through, you know, the exchange of proposals and exchange of marked up terms before you ship anything, before you start even pouring anything and casting anything, the better off you are because you won't end up in that situation where you're not even sure what your terms of your contract might be. So you have to keep that in mind and I'm sure Lenny has probably seen some of these issues himself arise in a lot of difference areas as well. Yeah I agree, thanks. So before we dive into the guide itself, kind of piggybacking on what Tony mentioned, I think it's good to bear in mind that for most of us selling precast is indeed primarily a material supply type transaction. We all know why that is but we're often issued a full subcontract like any other trade mostly due to installation and erection but we aren't like every other trade. The bulk of our work often both from a dollar value as well as man hours is done completely off-site and our point of view on any tendered agreement should reflect that. Allowing erection and installation though an important part of our performance in oversized influence on contract terms isn't really wise or helpful. I just wanted to mention that again going along with what Tony said since most of the time during our discussion today we might infer a complete scope of work as opposed to FOB job site or material plus delivery type arrangements. So the guide contains clauses from the personal experience of PCI producers, their actual language that producers use daily and will typically propose as part of their standard practice, the idea being intended to help manage and reduce risk to the greatest chance possible. The first section in the guide is titled precast contract clauses as a standard addendum. Now substantially many contracts are going to require some form of these clauses or similar type language. They're presented in this section, section number one, as a standard addendum a prototype if you will consisting of 13 clauses right to stop work, damages for delay, indemnification, pay when pay, liquidated damages, scope of work, access, payment for stored materials or inventory, acceptance of existing conditions, timely acts acceptance of work, retainage, timely approval of shop drawings, and jurisdiction. The idea behind section number one is to give you a jumping off point somewhere to start, something to build on, to customize, to craft, to use your own experience, and hopefully some terms from the next section. But if you do nothing else in the short term, section number one has the potential to offer some basic protection from more less than friendly contractor drafted agreements which are quite often one-sided. Section number two are the detailed alternative contract clauses. Now this is the biggest section of the guide. It contains 53 subsections organized alphabetically. Each section provides example clauses that have been effective for producers and are given here in a wide range of possible wordings depending upon your specific needs. I'd like to encourage you to read through the entire guide. It's only 40 pages. Highlight sections that you think might be helpful, then maybe start with the text in section number one, cut and paste until you've drafted something that you can use as the basis for subcontract review or better yet as an addendum. Personally, we've tweaked, refined, and adjusted our amendment which we call a supplement in a myriad of ways over the last 20-25 years. Most of that has come from painful experiences like the ones I mentioned earlier, but a lot has to do with evolving subcontract language. As laws and statutes change, so do agreements, and we've seen the need to update our supplement on a pre-regular basis. Our standard plant template right now is about three pages, but that includes terms covering a wide variety of agreements that we might be tendered and we always whittle that down to about a page and a half. So, it doesn't have to be a lengthy document. Even then, I'm often shocked the reaction to those one and a half pages with the strongest objections usually coming from firms with a three dozen page base agreement to say nothing of the 40 pages of attachments. So, what I'd really like to advise you to consider though indeed is economy of words. Include all that you need to and nothing that you don't for each specific amendment that you draft. Avoid repeating terms because if it's contract specific and concise, you're nearly always bound to get more than if you just staple in your couple of pages and send it back out. Tony. Yeah, and that is so important to understand that, you know, you have to come up, coming up with a standard addendum can be useful. You know, just like this booklet, having that type of addendum can be a good starting point for negotiations with a general contractor, but you can't just blindly send that addendum before you read the proposed contract. You know, one size doesn't fit all, so you have to look at what the actual terms are that the contractor is trying to propose and what your proposed terms would be as well. Use an example, pay when paid provisions. Those are so, I mean, those are the most common things that you try to negotiate. You don't want to have to wait to get paid, you know, especially retainage, especially if it's a, if you have a standalone pre-parking garage that's done, you know, six months, eight months, a year before the whole rest of the project's done. You'd prefer to be able to get your retainage paid about the time, you know, you're actually done with the project and not have to lien the project or track your dates of completion to make sure you don't lose your rights on retainage and lose your rights on liens or bond claims, etc. You have to know, again, you have to know your state's law on those issues. Just as an example, you know, in certain, in some states, a pay when paid clause is entirely unenforceable if it's, especially if it's pay if paid, or they're strictly construed and they'll be enforced only if the language is exactly correct. And that's what I mean by strictly construed, that if you try to enforce something that says it's an absolute condition proceeding payment that we be paid by the owner before you get paid as a subcontractor, it has to be extremely clear. And sometimes that can work to your benefit, you know, where you have negotiated a part of that down to make it at least somewhat ambiguous. Sometimes that's the best you can do if you want to get the job. I will say that there are some places where, as I mentioned in the opening, you won't get it. You just will not. I mean, Georgia is a great example where contractors simply will not give on that issue. There's actually a decent reason for them not to give in that on private jobs in Georgia, if there's a pay if paid, pay when paid clause, a subcontractor normally has to bring a lawsuit against the general contractor before they can get paid by the owner on the lien. But with a pay if paid provision, they can just sue the owner right away and skip that middle provision because the owner is the one holding the money, not the general contractor. So there's no need to go after the general. In other states, however, such as Louisiana, which I found out dealing with some cases over there, the clauses for pay if paid and pay when paid will even apply for lien filing in that if you're not owed the money at the time you file the lien, you have to be the one to remove the lien. So if the clause says we don't pay you till we get paid and your payment's not due because the general hasn't been paid, you actually don't have lien rights. It's a complete mess. And so that's where you have to understand not one size will not fit all and you have to understand your particular context. And then the second part of this is what you can do with these supplemental provisions is come to an agreement with a GC that you work with on a regular basis. You can make this your standard provisions for that contractor. You reuse the contract for future projects with them. You can see what matters to the GC in terms of what clauses they really care about, what clauses they don't care about, and what they'll be able to negotiate and what they won't. And similarly, they'll find that out about you. You'll have your particular clauses where you're like, we'd love it to say this, but we're willing to give on that much more quickly than we are to give on say indemnification. So once you get that set, that first negotiation sets the tone. And you've probably seen this anywhere. The first negotiation sets the tone. And then after that, you're like, this would work for us last time and it'll work for us this time. Let's go to work. Sure. Yeah. Yeah. Matter of fact, in my office, we've got a filing cabinet with one copy of every contract we've negotiated probably since the mid 90s. And what that allows me to do is not have to go and pull a job file from 15 years ago. I can just open the filing cabinet and find the last contract we negotiated with that GC and just kind of pick up where we left off. And as long as there hasn't been huge changes to their contract, a lot of times there is, but yeah, we'll definitely pick up where we left off last time. And it can save a lot of time and a lot of heartburn, especially if performance wasn't an issue. Sometimes if performance on either party was an issue, either they decided to slow pay or not pay timely or their schedule was amassed and that gives you some reason possibly to re-examine some things. So yeah, it's a great point on reuse. We definitely do that. Okay. Section three is the commentary on the clauses presented in section number two. In my opinion, this is the most important section. And absolutely everything in this part has to be in your head during the verbal negotiations, the hash out part. What I mean by that is that for every person who signs an agreement, including a contract, an agreement, including your amendment or your strikeouts with no questions asked, there's going to be two to three times as many people with a how dare you, what the heck is this kind of attitude. And they're going to call you or ask you to call them or sit down or discuss over the phone. Unless you know every bit of what's in this commentary section, it's going to be a challenge to defend your amendment. Now, not every section in, excuse me, every clause in section number two has commentary. Some of the terms speak for themselves, but the ones that do have commentary will help you a lot, including offering some solid advice that can help when negotiating. Tony. Yeah. And my comments on this portion really is that the more you can understand what your contract language is intended to mean, the better off you'll be if you end up having to fight on what those contract provisions mean. Understanding what your particular, if you're as a company, if you prefer litigation over arbitration because you've had bad luck in arbitration, then you can avoid going down the road and understanding that that's your particular part of what your dispute resolution should be, that you prefer litigation. You want to be in court. You know, when I review these contracts myself, my main goal is to identify risks. Most of the time, it's financial, but also a lot of legal issues. And a lot of these things will come down to understanding what kind of risks the client is willing to live with. You know, and frankly, most risks are OK so long as you go in with your eyes open and understanding what the risk is. Most times, you won't have a problem. The project gets done, and everyone's happy. But if you get into disputes, people like me and the arbitrators and the other side become Monday morning quarterbacks. They want to replay everything. They act like you remember everything you thought from six years prior when you were negotiating the contract. And that's where understanding these commentaries can come in. You'll understand what you were thinking when you changed it to something that was close to the language from one of these provisions to say, you know, the reason I wanted to change this provision on no damages for delay was, you know, we specifically understand that our work is very time sensitive and that we're not like everybody else where you can just throw extra people or extra shifts at a particular project and get the work done more quickly. You know, you have forms, you have schedules for your forms, and you can only cast concrete so quickly, and it will only cure so quickly. You know, you're limited in that. So you can't just go in and say, yeah, fine, OK, we can throw another shift at it. You know, if you're lucky, you might have a sister plant within about 150, 200 miles of the project that might be able to help out and jump in. But even then, you end up with increased costs. So I mean, you know, that's the difference in being a precaster versus being a normal, quote unquote, normal subcontractor. So understanding why you make the changes is exactly why you want to read through these commentaries. And it's likely going to spur some thoughts for yourself, too, you know, as to, oh, yeah, I remember that project we had over there in Pensacola with that GC. Man, that became a total disaster because we had those delays, and they said no damages, and we ended up getting in a fight. But we ended up taking it because they were right. They had a sole and exclusive remedy will be the extension of time. And that's what we ended up getting, and that was it. We didn't cover our costs. Right. So, you know, that's where this can help spur those memories and spur those discussions. I mean, it sounds like you have had these discussions yourself, Lenny. Yeah, indeed. No doubt about it. So finally, one way that I happen to be using this guide right now is as a teaching tool at our plant for some team members. The guide offers a fantastic base especially if you have no idea where to start. So what I've done is I've taken it and I've broken it into 10 lessons, grouping related sections together, at least as I see them or as I've seen them in contracts related together. And then I'm kind of referencing each clause to similar or the same ones in our supplement so that those folks can begin to understand the genesis of our language, what the clauses mean, and how they relate to the industry at large and industry practices. It's a great tool for that. It's not comprehensive by any means, as Tony mentioned, nor does it cover all scenarios, but it will get some of the less knowledgeable folks or has the potential to get those folks headed in the right direction, covering all of the big or main areas of concern. Tony. Yeah, I think this is a key portion here to understand as well. It's issue spotting. Being able to train your folks what to look for, to understand how the different provisions of the contracts will refer to one another. This is a kind of an example I'd come up with thinking about this was that for, let's say you have a claim just for a change order for some work that's controversial in some way that the GC thinks you should have had it in your scope. You didn't have it in your scope and you're trying to justify why it wasn't in your scope. And understanding that that's what you're looking for. You then have to look at first, how quickly notice has to be given once you realize that this is an issue. And that often is in the dispute resolution provisions. Next, you have to understand who notices have to be sent to and in what form it might be. You may not be able just to call up the project manager or call up the superintendent and say, this is what's going on. You might have to send a letter to somebody. You might have to send a specific email to a specific person and you'll have to look at your scope of work provisions to see if you might've unwittingly screwed this up and accidentally agreed to do some cast in place work that you normally would have excluded. And even then you might even have to look at your shop drawings to see if maybe that, the shop drawings led people to believe you agreed to design like the structure on which some architectural precast panels are being placed as opposed to that being designed by the structural engineer when you never intended to agree to those things. And that's where your negotiations have to overlap with your project manager training as well because the contracts, the guide for the project and teaching your PMs to issue spot will save you money both on your scope, but also probably on having to call up people like me and fight over it down the road. Yeah, Tony, when you and I were talking a couple of days ago and really a lot of the language that's in the guide is really geared much more towards boilerplate type language but you had mentioned that scope of work are some of the bigger conflicts and maybe more numerous type conflicts that you've seen. Yeah, definitely. Where we see a lot of the problems coming up are the things that, I'll say this, it's a rare day if we end up in a dispute where we're staring at the indemnification agreement and determining whether we have an issue there or not. It's not unthought of, it's not outside the realm of possibility and it's definitely something you have to look at because that's what your insurer is gonna be looking at. They're gonna be the ones who oftentimes cover those issues. And so, most of the time I'll tell people, as long as you can get insurance for an indemnified risk, that's where you wanna be. But the problems we have seen, the problems that arise regularly that we end up in litigation over are things like scope gaps. And it's scope gaps in a number of different places such as if there's topping slabs involved, who's actually doing the topping slab. If there's dewatering required, excluding the dewatering because that's not your scope of work and you don't do it. Making sure there's crane pads around. If your cranes can't get on site to erect the panels that you need to erect in the timely fashion that you need to erect them, you have to be able to say, we don't provide the crane pads, that's again, not something we do. A secondary scope gap is again, who's designing what for the precast application. If it's the, as I said, if you have the architectural precast panels that you're providing, you exclude on your shop drawings that you design the panel only and you assume that the support designed by others is sufficient to bear the weight of those panels. If it's a structural precast product, obviously you're designing the structure, say if it's a parking garage, but you should be disclaiming the interface with other parts of the building, like the cast in place where the columns get erected. And that's as an example, or the diaphragm that all of them have as part of the construction of the garage. Another issue is that you have to have professional liability insurance for your design issues. And having insufficient insurance, I don't care if you say you don't design things, you design things and you need professional liability insurance. As much as you would like to disclaim all those things and say, we don't design things, you're gonna end up with some responsibility for some of the designing issues. And then another part that we've seen a lot is schedule agreement issues. And by that, I mean, talking about making sure that schedule updates and revisions are mutually agreed. I mentioned earlier that understanding that in the precast industry, as Lenny said, the vast majority of your really hard work is done at your plant and then is stored in your yard. And if the schedule gets thrown off for your poor schedules and for your use of the forms, you only have, let's say one form for a particular, for a particular girder, for a bridge or something like that. You only have one form that you can use. That's gonna be a time bottleneck. And if it's gotta be used for other projects, you can't just throw more people at it. You can't solve things by throwing more people at it. You only have one form. And so having a mutually agreed schedule revision clause may not be in this agreement here, but that's where a lot of things will pop up in terms of what gets litigated. Yeah, yeah, I agree. I mean, this is one of those things that I think you and I talked about this, Lenny, that this is a starting point for risk management. It's not the ending point. And you have to take into account the reality of what you see on projects and the reality of what you hear from others in the industry as to what they end up in fights with general contractors and owners about. Correct. And you could probably speak to this a little bit on scope of work issues. What's missing when you have a scope gap, how you deal with it, and how do you try to avoid getting a scope gap up front? Yeah, one of the ways that we do that here at this facility is to tie things very closely to our shop drawings and their approval. And those will be in compliance with the contract docs, but where those deviate, we're the delegated designer. The engineer record is saying, hey, we're assigning this portion of the design to the pre-caster, and therefore, by nature, it should take precedent over what's in the contract docs, and to a large extent, it does. So that's one of the ways that we're doing it. And another way is, frankly, by having an amendment that we have expanded, contracted, whittled, refined over the last 20, 25 years, as I mentioned, is huge. I don't wanna say every possible way that you could envision to get burned has happened, but probably a lot of them by now have. And so we've fashioned it to try to be a firewall against those things. Yeah, and I'll throw in there, you're lucky in Florida in that you have specific regulations that require the identification of delegated design issues. Most states aren't like that. Most states, it kind of comes up almost as a surprise, where you end up ending up as the designer without even knowing, usually you know, but it's not always clear, and there can be scope gaps that that creates as well. So that's one thing that I know a lot of, a lot of industry entities, like for example, consensus docs, they try to have provisions specifically for delegated design scenarios, but you have to be careful. You have to look at your, to your specs, just make sure that you understand what you're taking on. Right, right, right. I agree. So when I personally agreed to do this webinar for this guide, I thought, man, this is really a pretty common sense document. I mean, most of us that are doing contract review at our plants, contract management, you know, can read this and understand it pretty well. But then I thought, you know, there's probably, you know, some folks at each facility that aren't to that level. And there are certainly some folks that probably need a little bit of help in this area. So really more than anything, I really want to encourage you, you know, if this is in your wheelhouse or part of your task or your job description, man, I just would encourage you to read the guide, you know, read through it, think through it. You know, there are usually other people at PCI, PCI producers that you could reach out to that might be able to help you, you know, sister plants, other people in your local chapters that might be able to help you as well. Tony and I never envisioned being able to cover, you know, this guide page by page, line by line, word by word more than anything. We just wanted to give everybody an overview that it exists and how it can potentially be used. Agreed? Yeah, yeah, I think that's exactly the case. I think, you know, especially from a legal perspective, I can't possibly, first of all, I don't know the law in every state because I'm only licensed in three and I have friends who help me through and help me muddle through and several others. But, you know, I can't possibly understand all the different issues you're gonna deal with, let's say in California versus, you know, where I am here in Georgia and being licensed in Florida and Alabama. So we couldn't possibly opine on whether anything would be good or enforceable where you are. And, you know, and I think it is important to understand your own particular context. It's important to understand what the market, you know, what, you know, you hear that as Lenny said, well, your competitors will sign it. And sometimes that's true. And sometimes they'll lose their shirts. And other times it's totally not true. And it's just, it's an effort to kind of, you know, try to get you to agree to something that you might not otherwise want to agree to. And it never hurts to even to at least ask. Sure. You know, obviously in certain scenarios, it won't apply. You know, you won't be able to negotiate on a public bid most of the time because those contracts get, you know, put out there as part of the actual requests for proposals or requests for invitations to bid. So those scenarios, you just have to kind of accept it. But a lot of times because it's the government, you have a lot more protection than you do on a public job. So, I mean, in the end, you have to read through this stuff because otherwise you just, it's not possible to go through everything line by line in the space of one hour as opposed to two days. Sure, sure. So I think we both welcome any questions that anybody would have if the, if our folks from PCI have seen any questions come up. Nicole or Royce. Yep. Thank you, Tony and Lenny for a great and informative presentation. We do have a few questions that came in. So we will start the Q&A portion. The first question is, how do you convince general contractors and owners to add criteria to acceptance of work-related to PCI standards? Could you repeat that one? Of course. How do you convince general contractors and owners to add criteria to acceptance of work-related to PCI standards? Yeah, so as Tony and I were just talking about, using the delegated design criteria is one way that we do it and as Tony mentioned in Florida, it seems to be a little bit different environment than perhaps some other states. But PCI design criteria has been around for quite some time and it's been recognized by the ACI and there are very, very few specifications that we come across that don't already reference PCI. Here where we're located, that's actually a pretty easy sell. It's kind of like pointing towards the code book and saying, we're gonna do it that way. And then as PCI moves into their joint project with the ACI and development of the 319 precast spec, I think that's only going to be easier. So Tony, you might be able to talk about how that could happen in states that are less friendly to PCI standards or to industry standards than Florida is. Yeah, I mean, I think from a general perspective, performing the work to PCI standards, I mean, correct me if I'm wrong, Lenny, but I mean, it generally doesn't, it doesn't divert from industry. I mean, when you're talking industry standards, as long as it's within the code, I mean, it's going to be okay to do it that way. And then the only thing you might run into is whether the owner or the design professional of record has decided that their specs should have a higher level of quality or finish or less tolerances or things like that than industry standards. And that's, I think, where you would use your exclusions to, you know, when you're negotiating your contract and providing your exceptions and exclusions to the contract to say, yep, we're doing the work for the specs, but this spec calls for tolerances that are much stricter than industry standards and without any reason or purpose for it. So therefore we're going to meet industry standards. And if they balk, then you have a discussion about it. Yeah. So one final thing on this, Nicole, that I might say, and Tony just kind of touched on it a little bit there, is that getting contractors, designers, and owners to recognize PCI and industry standards starts way before you are tendered a subcontract. That needs to start with your marketing to specifiers, calling on architects and engineers, educating them what PCI standards are, why they're important. I really think that that's where that needs to start. Once you do that and you get it into the specs, we almost never argue about PCI standards in subcontracts anymore, almost never. Sounds good. Thank you for answering that question. Our next question is, what verbiage have you seen that successfully provides payment prior to overall project completion? Well, here we stipulate that in the state of Florida, you have 90 days. And it's my understanding that 90 days is a pretty popular kind of line of demarcation in a lot of states, although how that mechanism goes into place, Tony can talk on. But here in Florida, if anything, you're not paid within 90 days, your lien rights expire. So you have to file a lien within 90 days. So we typically trigger all of our subcontract provisions for which we allow retainage, and we don't on every job that we will be paid that within about 60 days. We will negotiate that somewhat, but it never exceeds the 90 days. And if it means filing a lien against the job, that's sometimes what we have to do. So that we use in Florida, we use the statute to our benefit. We didn't create the law. We're just trying to operate within the law. Tony, maybe you can speak a little bit more on how it happens in Georgia, because I think they also have a 90-day provision, but the mechanism is a little bit different for triggering your access to liening, correct? It's actually, it is very similar to Florida in terms of it being the last day of work on a project. And what I've seen in other states around the, you know, where I've seen, you know, Texas has weird laws. Louisiana has strange laws, which you'd probably expect because it's Louisiana and goes by the code as opposed to a common law state. But Mississippi is more like Georgia. Alabama's got really strange different deadlines and different methods for perfecting a lien than anybody else has. Virginia is kind of the same way. North Carolina's got really strange laws. I mean, it's tough to generalize simply because of that. My generalization is making clear to your client that you will enforce your lien rights because you're not going to give up on your retainage. And the only way you might not enforce your lien rights is if it's an amount of money you're okay with not having lien rights to. Say it's like they pay you down all but, you know, on a, let's say it's a $15 million contract for a parking garage, and they pay you down to like $50,000. If it's a good client of yours, maybe you make the business decision to maintain that relationship and not file a lien. But if it's, you know, if it's a situation where it's the first time you've worked at the GC, they're holding, you know, they're still holding 10% of your 15 million. So they got a 1.5 million. That lien's getting filed on the 60th or the 80th day, and there's no question about it, and we're not going to give up the rights, period. That's just the way it is. You know, that's just the way you have to be, is being firm, being fair but firm, saying, you know, we're happy to work with you, but we can only work with you for so long before we have to enforce our legal right to make sure that we get paid. I mean, there is obviously a business component in that, but, you know, just in speak, I will say, I'm very involved with the American Bar Association for my construction law, and I have a presentation coming up with several in-house counsel of companies of various sizes. And for that presentation, I talked to about 20 different in-house counsel in-house lawyers for construction companies about the types of issues they will go to the mat for. And to a person, every single one of them said, we don't really care too much about past relationships with entities if the issue comes down to preventing the loss of our five to 10% retainers at the end of a project. If we're not sure timely fashion, we will enforce our rights period. Sure. Yeah. Making a claim, you know, maybe it's, you know, making a delay claim. Maybe there's some discussion then that goes on about it, but when it comes to payment, that's a no-go. That's every one of them says, unless it's something really small that we're willing to live without, that doesn't happen often. They'll just enforce it. Anything else, Nicole? Yes, we do have a few more questions that came through. How do you handle a contractor who states your changes cannot be incorporated because there's states it is in their contract with the owner? If someone emphatically states that they're not going to entertain any changes, you don't have much choice but to walk. As soon as you give up your right to walk away, you've already lost. That's been my opinion. They would have to have a very even-handed, favorably written subcontract agreement, which are very, very few and far between before we would ever entertain that. And, you know, almost exclusively folks that have that kind of language are forcing subcontractors to an AGC-style subcontract when they've signed an AIA-style subcontract with the owner. And I'm sure Tony will agree, an AIA-style or a consensus stock-style contract is far more even-handed than an AGC-style contract. Wouldn't you agree, Tony? Yeah, I think there was an effort by the consensus stocks AGC to be fair to everybody. But when the contract is essentially written by the AGC, it's going to be skewed a little bit towards the general contractor. You know, the architects wrote it so that way they wouldn't have any liability. So they really don't care so much about the form of the subcontract. I will say, I think before you can definitively decide one way or the other, you know, that has to be the, if you're going to tell me that I can't make any changes because this is what the owner, that the owner doesn't allow you to change a subcontract, okay, let me see the owner contract. Let me see that provision that says that, you know, call their bluff a little bit and say, look, we're willing to work with you, but we have to see the contract. We have to see the provision you says means that we can't change this provision in our subcontract. You know, so if you want to go there, great. But, you know, we'll just raise that flag. You know, if you want to claim that we can't do what we say we want to do, well then show it to us. You know, if you want to hold us to those terms, let's see them. I mean, that's the general answer to a lot of these things. And frankly, if you're having the prime contract incorporated by reference into your subcontract, you shouldn't sign that subcontract without seeing the prime contract and frankly having a copy of it. They can redact the money, the overall total contract price, but they have to show you the stuff you're going to be held to. Anything else, Nicole? Yeah. Yeah, Beau, we have a few. Do you add your standard addendum to your proposal or bid documents? We do not. However, the terms and conditions portion of our proposal shares a lot of the same language. So, because we're a Holocore only producer, you know, there's a pretty good portion of the jobs that we sign that are, you know, $50,000 or under $100,000 or under in a lot of cases, our proposal is the form of subcontract. So, you know, our proposal is the form of subcontract. So, the terms and conditions on that will include the largest majority of that. But no, I almost never submit supplement or any terms and conditions as part of a bid unless they're the ones that are already part of our proposal. Sounds good. We've had a few questions of this one come through. Where can we find the PCI contracts clauses publication? Wow, that sounds like a question for staff. I'm pretty sure it's on our members only section, but I'll wait to get a verification. Yeah, I believe it is. I believe it is too. I believe that it's on our members only section. I believe it is too. I believe that it's under member resources. When you go to that first login screen and it's got several different colored blocks there, I believe that it's under one of those ones on the right hand side. That's correct. Yes. It's under our business resources. Business resources. You're right. Awesome. Another question. How do you ensure to get paid for finished goods produced and stored at a plant if an owner goes bankrupt and cancels a project when they are pay-when-paid terms? Tony, you want to handle that one first? Well, there are some states that allow liens for- specifically for manufactured custom work for a particular project. And in bankruptcy, the liens don't attach to the owner. They're not personal to the owner. They attach to the property. So, in that regard, you might still have lien rights if you're within the time frame for your state's liens. That's not always the case. There are many states that you can't lien for stored materials. In those instances, frankly, you have- you might have an issue. You have to talk to someone in your- in your state who might have a better feel for whether, you know, if there's a bond on the project, you might be able to get paid for it. And if you don't, whether- you know, if there's a bond on the project, you might be able to get paid on the bond because a bonding company is, again, separate from the owner. So, it comes down to kind of the way you would normally get paid on a project where the owner doesn't- isn't paying, whether it's in bankruptcy or not. It's looking at your lien rights, looking at your bond rights. You get dragged into bankruptcy more than you want to anyway in this industry. I know that. And, you know, if you can avoid it by filing a lien, that's the best thing to do. I will- I will caution you to say that if you have to go down that road, unless you're like within your last three or four days of lien rights, if there's any way to possibly ask the court for what's called relief from the automatic stay to file the lien so that way you don't get in trouble with the bankruptcy court for filing the lien, you should definitely do it because it's just something that if you violate the automatic stay in bankruptcy, they love to sanction you like crazy. They will just, nope, you don't get paid. In fact, you have to pay money to the court because you're in contempt, things like that. It's really not something to mess with. Yeah, and we do put language in our supplement that if the project is terminated or suspended and that payment for stored material and engineering will revert back to the contractor. Now, whether that will stick and might we have to litigate it, probably, but, you know, we have been of the mind that, hey, if it's in the agreement and if you get a judge that says, hey, you guys both signed this, then, you know, we might be able to make it stick. But when it gets into bankruptcy, yeah, you're right, that opens up a whole different kettle of fish. Yeah, that's one, you know, you call, you need to call in the bankruptcy expert, you know. I don't even, I don't like the, that's, it's boldly go where angels fear to tread, so to speak. Absolutely. Nicole? Sounds good. So regarding site safety responsibility, when we bring the product to the site, would you include that in the contract? Well, most GC contracts already have some provision for site safety. And where we're subcontracting, and a lot of us do, some of us self-perform erection installation, but a lot of us subcontract it out, that's going to fall a little bit on to your subcontract erector. But that is usually spelled out. One of the things that we do is we try to tie it as most as possible to OSHA standard. There are some GCs that have safety programs of their own that exceed OSHA standards. And those can be a little bit of a moving target if you don't know exactly what's in there. But yeah, that's, it's not uncommon to see that. Sounds good. Our next question is, have you ever had anyone refuse to provide the prime contract, even though the subcontract references the prime throughout? Yeah, and as Tony mentioned, you know, they will redact the contract that they're Yeah, and as Tony mentioned, you know, they will redact the contract amount. In some cases, they'll redact the payment provisions entirely, which, you know, honestly, that's usually what you want to get at anyway, so that's not super helpful. We really have not pushed getting an owner GC contract, because in most cases, there isn't much we can do about it. It's already been negotiated and signed, and we're not going to have any influence over it. What we try to do is, if our contract is predicated on that, we say that it is relevant as it applies directly to our scope of work. So therefore, things that are in the contract that don't apply directly to the precast don't really have much of an influence on us. That's one of the things that we've tried. But I don't know that we've had anyone that refused to provide that. But then again, we don't push getting it. I don't know about what you think, Tony. Yeah, I'd view that as a red flag, frankly, if they outright refuse. You know, that indicates not really, they want to hold you to the standards of the prime contract without letting you at least see it. Yeah, that doesn't really strike me as someone that's really on the up and up at that point. I mean, not that there's going to be something really strange or, you know, exotic in it, but it just seems like someone not acting in good faith. I agree. I agree. Anything else, Nicole? We do have a few more questions that came through. Would you like me to keep asking you them, keep going, or would you prefer that I email them to you? Well, I'm okay on time. I don't know about Tony or about how much time we have on the webinar left. We're good on time on this end, depending on how you and Tony are. Yeah, I can stick around for a few more minutes here. Sure. Sounds good. So, we did get a request in. Would both of you be able to speak on the flow down to subcontractors, for example, erector grouting and cleaning? That's kind of an open question. I wonder what they mean by flow down, because there can be a lot of flow down provisions, you know, with regard to, you know, safety, insurance, and a number of different things. So, I think I'd need a little bit more of a specific question than that. Wouldn't you agree, Tony? Yeah, I think that's true. I mean, obviously, a lot of times your subcontractor's going to say, if you employ a general, your own subcontractors, that you have to essentially incorporate your subcontract into their contract. And that's, you know, for site cleanliness issues. I mean, sometimes it's not possible to deal with, like, if you're grouting particular areas when they're doing the erection, it might be difficult to keep it clean. But they want to keep it. I'm assuming the question is something along those lines that, you know, how do you deal with the flow down provisions if your erector doesn't necessarily want to deal with it, or if they cause problems with cleaning on site when, you know, you know, and frankly, that might be an indemnity issue within your subcontract with the erector to say that if you get dinged for anything for cleaning, it's on them, which would be on them anyway. So, I guess that's kind of a nebulous issue. But I would say that it's almost, you're almost certainly going to have something in your subcontract that requires the erector to, you know, understand that they have the cleaning provisions that you have, and they have to live up to the same levels of cleanliness that you have to live up to. Perfect. Can you comment on understanding the termination for convenience clause that's common in contracts? I love termination for convenience clauses because people get wrapped around the the poll on these things so frequently. And I've seen us just a rash of them lately, to be fair. But I think it's important to understand the termination for convenience clause. I've seen us just a rash of them lately, to be fair. I think it was that there were a lot of terminations for convenience that arose out of the pandemic around this time last year when people were like, especially in the hotel industry, they're like, crap, nobody's going to be traveling for like two years now. What are we going to do with this hotel we're building? So, you know, termination for convenience is what it sounds like in that it is essentially the subcontractor has decided to pull the plug in the project, will pay you for the work in place, and everybody goes on their merry way. You have to understand a few things with respect to your contract with the sub, with the general, if you're working as a sub. The first is ensuring that it was actually a termination for convenience. I've had some issues with some contractors who were only to learn that the owner had a different view on things. And whether that was a general who wasn't being honest or if it was an owner who was being less than forthcoming, it's neither here nor there. It's a matter of, you know, it's one of those jokes of trust but verify. You have to get, you know, if the general says we've been terminated for convenience, tell them, okay, could you please give me a copy of the letter that terminates your contract for convenience so we can see the date it was issued and understand what our rights and responsibilities are. Second thing is to ask for their contract clause on termination for convenience. What kind of payments does that general contractor get to have if they get terminated for convenience? You know, so if you're worried about that on a particular project or on any project and you have a T4C clause in your contract, you need to understand what the general can get paid for so that way you can get paid for the same. If they have a termination fee over and above the amount that might be, you know, like the standard AIA form allows for saying that, okay, owner, if you want to terminate this general contract for convenience, we'll pay you the amount of money that you have spent through your subcontractors for the work that you've performed to date. In addition, we'll give you some lost profits on the rest of your contract. In addition, we might have, you might be able to negotiate an additional fee to terminate the contract for convenience. Let's say it's a $10 million project, you might get a $500,000 fee if it's terminated for convenience prior to 50% complete. Maybe it's $250,000 then, you know, they can scale it down as the project gets closer to complete because the work is closer to done. If that's what's going on, you know, your structure for your T4C, your termination for convenience clause that the contractor wants to put into your contract should be very similar. It should account for all of the material that you've cast and that you have on your yard at the time of the termination. Just because it's stored materials doesn't mean it's not something you should not be paid for. You should get paid for that work. Even if you've just done engineering, you should get paid for that work. I agree, Tony, and that's what we do and that's what we tie it to. But I have to tell you, I don't think I've ever seen a subcontract agreement that offers or has any provision in it. Matter of fact, they usually have exactly the opposite of a provision for lost profit or any fees regarding termination. They usually exclude that with specific language. Right, no question, and that's because the general contractor wants to make sure they don't get killed if they don't get as much in from the owner that they think they should get. Okay, gotcha. You know, that's that's where it comes down to is effectively you have to, if you end up in a situation where you have a termination for convenience, you quickly need to understand who's on your side and who's not. Is the general on your side? Are they the ones who are really looking out for your best interests? Have they gotten over their skis a bit and they've gotten terminated because they haven't passed all your payments down? I've seen it both ways recently. I've got one project that's actually just had a lawsuit filed where the general did not pass through all the payments for the invoices that had been made for the work. Just did not do it, and the owner was very good to my client and paid them everything remaining for their subcontract that the owner believed had not been billed to them. Now that still leaves about a $250,000 hole on the project for the client, and that's why we're that's why we're going to court. Because a $250,000 hole is something that you can't live with. Yeah, but they were a lot closer to being made whole than they would have been otherwise. Right, they didn't they didn't have a million dollar hole, they had just a $250,000 hole as a result. Correct. So it is it is about reaching out, like if you have a good owner client that happens to be employing a general you haven't worked with in the past, you know, if it's a, you know, hospitality project, you know, you have a serial hotel builder, you go to them directly and say, look, I know what's going on here. What what do you have left for our contract? What have you been billed just so we know where we are, so we know what the story is and who the story, where the story is coming from that we're getting told. Nicole, maybe we can just take one more and then we'll handle the rest by a message if that's okay. Perfect. I spoke too much, so I, you know. No worries at all. I will make my one caveat, and it's the joke I made before we were talking earlier, which is don't forget free legal advice is worth every penny you pay for it. So our last question will be, is the subcontractor entitled to demand a copy of builder's risk policy certificate? I guess that would depend on how the subcontract is worded. I don't know about individual law from state to state. I would be more concerned about that if there was pretty onerous looking flow down language or pretty onerous builder's risk language in the agreement itself, where they were trying to exempt themselves and make your insurance, you know, excessively primary and non-contributory and were trying to exempt you in some way with some language to access the builder's risk if that happened. I think that would make me a lot more nervous. I don't know, what do you think, Tony? Yeah, I do think that you're, I don't know that there's any legal remedy to get those policy provisions. I think a lot of it depends on how the insurance is structured. If it's, you know, if you have a controlled insurance policy, whether owner or contractor, you know, it's a different scenario where you're being asked to contribute overall and things like that. That's a different scenario than if it's just a straight up owner has builder's risk insurance and, you know, you have, you cover X, Y, and Z. I'd be curious as to, you know, the context we're in. Are we talking about going into a project in the middle of hurricane season in Florida, you know, or, you know, that kind of issue or what, you know? Yeah, I agree and I think that's probably the best answer for this is that it would really depend on the context because you just mentioned one and I mentioned one before that. So, I think that one's going to kind of be condition specific. Yeah, it's a typical joke among lawyers that the correct answer to every legal question is, it depends. It depends, yeah. Thanks, Nicole, for being the facilitator. Of course, thank you both for presenting them. Any remaining questions will be forwarded to Tony and Lenny along with your contact information so they can reach out. On behalf of PCI, I'd like to thank Tony and Lenny for a great presentation. If you have any further questions that you didn't already submit about today's webinar, please email marketing at pci.org.

Contract Clauses

Webinar Series

Nicole Clough

Tony Lehman

Lenny Salvo

Construction Law

Project Negotiations

State Laws

Contract Provisions

PCI Contract Clauses Guide

Risk Management