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Volume 5 - Number 09 | February 26, 2007
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EDITOR'S NOTES
When an owner (or prime contractor) jeopardizes a contractor’s ability to bid on projects, can the contractor pursue a claim against the owner for lost profits on prospective work? Among other things, the answer depends on the following:
Does the contract contain a liquidated damages clause that allows for such an event?
1) Can the contractor show an accurate history of uniform earnings?
2) Can the alleged lost profits be accurately speculated?
3) The question and answer play out in one of two issues before a Colorado appeals court in this week’s first case.
Also at issue this week are questions on the obligations of a prime contractor to its subcontractor when the prime alters the scope of work and adjusts the timetable. Is the prime liable for cost and time adjustments to the subcontractor? A Texas appeals court says yes.
When state law fails to define “public work,” a federal district judge looks it up in the dictionary. The definition provides the information the court needs to determine whether a project required a state-mandated payment bond.
Finally, we introduce a new monthly column by experts from CTG Forensics in Irvine, Calif. Each month, they will present a claims-related article relevant to the construction industry. Vice president William Broz provides an excellent review of the role of an expert witness in this series kick-off.
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CONTRACTOR RECOVERS FOR WRONGFUL TERMINATION, BUT IS DENIED LOST PROFIT
Problematic weather and a series of design changes befall a contractor on a public project. When the owner issues a default termination on the substantially completed project, the contractor successfully recovers payments owing. Lost profits on prospective projects, however, are a different matter.
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PROJECT WAS NOT “PUBLIC WORK,” SO NO PAYMENT BOND REQUIRED
Unless a project is specifically classified as a public work, a state agency is not required to obtain a payment bond from the prime contractor, rules a federal district court. The court turned to the dictionary to determine the meaning of “public work.”
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ETHICS AND THE EXPERT WITNESS – WHEN TO HANG UP THE PHONE
By William R. Broz, P.E.
The role of an expert witness is a precarious part to play. On the one hand, the expert must adhere to a code of ethics and impartiality. On the other, he or she needs to be marketable. How do the two coexist? William Broz, vice president at CTG Forensics, offers an informative analysis of the role of the expert witness.
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