May, 2013
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High-Profile: Facilities Development News
Milestone Completes Office Addition What is Subcontractor Default Insurance?
Stratham, NH - Milestone Engineering and Construction, Inc. of Concord recently completed construction of a 40,000sf office addition and 25,000sf of office and cafeteria renovations in Stratham. Design was by Bruce Hamilton, Bruce Ronayne Hamilton Architects of New Ipswich.
Recently completed office renovation Photo by John Gauvin of Studio One
Whitney-Veigas Completes Project
Providence, RI — Whitney-Veigas recently completed a design-build signage and wayfinding project for the new Tockwotton on the Waterfront in East Providence. Whitney Veigas designs, supplies, and installs interior and exterior architectural signage for academic, institutional, and corporate facilities. When the Tockwotton Home decided to become “Tockwotton on the Waterfront” and move to a larger building, they knew that good signs would be a critical element in their new facility. The architect, DiMella Shaffer, referred them to Whitney Veigas Architectural Products, of Needham, Mass., to design, procure, and install signs for the new 156-bed facility. For the interior signs, Whitney Veigas used a standardized sign system, Identia, for economy and for ease of future replacements. Many of the standard sign plaques were enhanced by mounting them on extended cherrywood backers that
Many plaques were mounted on cherrywood backers.
matched the wood paneling used throughout the interiors. These wood backers included laser engraving of a wetlands motif logo that gives the appearance of charred wood. The lettering on the signs was 10% larger than code required, to accommodate senior viewers.
Focus:
Educational Facilities Developments
Agostini Builds Norwood HS
241 Narragansett Park Drive, East Providence, RI 02916 Phone (401) 431-1200 Fax: (401) 431-0049
Compass Project Management CM, Ai3 Architect
w w w. b a c o n c o n s t r u c t i o n . c o m
(above) gymnasium (below) auditorium
Norwood, MA - Agostini Construction Company of East Providence, R.I. along with Compass Project Management, Inc. of Medfield, Mass., the owner’s project manager, teamed up with the Massachusetts School Building Authority (MSBA) and Architectural Involution (Ai3) of Wayland to successfully manage, design, and build the new Norwood High School. The new high school was the first model built under the MSBA’s Model School Program...see story on page 32. (above) athletic field (top and below) Entrance to athletic center and performing arts center.
Norwood High School main entrance
Inside this Issue
September 2011
Windover Construction Completes Three School and College Projects BOND CM for UMass Fitchburg State Project Erland Tops Off New School Center with Robert Olsen + Assoc. LLD Designs, KBE Builds URI’s Hillside Residence Hall Profile: CTA Cements Place as Leading School Builder Cutler Associates’ Design Build Anna Maria College Holds Open House Oldcastle Precast Awarded Liberty Terrace Dormitory Featuring: BC Project Achieves LEED Platinum Tewksbury High School Tops Off UMass Lowell Begins Steel Erection
Library P.O. Box 7, Pembroke, MA 02359 Change Service Requested
Suffolk Construction Builds The Victor Luxury Apartments Pro Con Breaks Ground For Aviv Center for Living, KDA Architect Contracting Specialists Awarded Ground Breaking for Bristol Hotel Construction Starts on New Storrs Center Increasing Natural Gas Demand in NE by Douglas Pope MIT Sloan: Archieving Acoustical, Audiovisual, and Technological Success Colleges Carving out New Space on Existing Campuses by Julie Nugent
plus Connecticut Facilities, Heathcare, Green News, Awards, Multi Residential, Business News, People, Calendar and more...
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by Jessica L. Papazian-Ross, Esq. Zurich North American sells Subcontractor Default Insurance policies under the product name Subguard. When people are referring to such insurance, they often call it a “Subguard policy.” Subguard provides first party insurance coverage to general contractors to provide insurance coverage to indemnify general contractor for direct and indirect costs associated with a default of perforJessica Papazian-Ross mance by subcontractor on a project. Subguard policies cover costs of correcting defective or nonconforming work and payment to third parties as well as delay costs, liquidated damages and extended overhead, and other such expenses associated with the default of performance by a subcontractor on a project. To even qualify for a Subguard policy, a general contractor has to have substantial assets. Subguard policies are generally written on an occurrence basis. With a Subguard policy, the need for subcontractors’ performance and payment bond is eliminated. With a Subguard policy, there is a prequalification process that applies wherein subcontractors’ financial information and project histories are evaluated, and typically a general contractor is going to hire a sub that the general contractor has experience with and has the financial ability to complete the work, which eliminates new subs being hired on such projects. The disadvantage of this is that the owner will typically be paying more for the project because the subcontracts are limited as to the bids as the entity has to pass the prequalification standards. A Subguard insurance policy does not cover third-party claims. It is first-party coverage only, and the insured is the general contractor. The advantages of Subguard are that if there is a default by a subcontractor, the general contractor can step in and perform the work and provide Subguard with a 30day written notice. The general contractor will then present proof of loss, and Subguard will indemnify the general contractor within 30 days of receiving the proof of loss as long as the proper documentation is presented to support the claim. Under a Subguard policy, once the subcontractor is in default, the subcontractor cannot con-
tinue working on the project. This is usually governed by a covenant and warranty stated in the policy. A payment bond typically applies coverage for one year after a project is substantially completed on a private job and under the Subguard policy, it provides coverage for latent defects caused by a defaulting contractor for 10 years after substantial completion. A Subguard policy will pay to remedy liens and to correct defective work of the contractors, subcontractors, and suppliers. Subguard policies do not cover claims for bodily injury or claims related to material breach of warranties. The typical cost of a Subguard policy is 1.33% of the subcontract amounts. The Subcontractor Default Insurance (“SDI”) or Subguard policy is not a substitute for a payment bond if the general contractor becomes insolvent or refuses to pay subcontractors/suppliers on a project. The SDI policy reimburses the general contractor for payments made as a result of subcontractor’s default on the project. Only a general contractor can make a claim under a Subguard policy. Thus, for the SDI policy to apply, the general contractor must perform the subcontractor’s work upon default or pay a sub-subcontractor and/or supplier for monies owed from the defaulting subcontractor. Two scenarios typically govern. The first scenario is when a general contractor needs the services of the supplier who was not paid for work on the project and/or the sub-subcontractor/supplier has filed a lien and the owner is forcing the general contractor to satisfy the lien under an indemnity provision in the contract between the general contractor and the owner. The Subguard policy does not protect the owner from default by the general contractor. If the general contractor defaults in performance of its contract, the indemnity provision between the parties will be in place but no insurance to cover the claim. If the default arose out of workmanship not covered by the general contractor’s general liability policy, there most likely will be a denial of coverage under the CGL policy. Thus, in order for an owner to protect itself against the insolvency of the general contractor, the owner should require the general contractor to obtain a payment and performance bond naming the owner as the obligee. Jessica L. Papazian-Ross, Esq. is an attorney with Visconti, Boren & Campbell Ltd.
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