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•• Cost of employee benefits and taxes (Workers’ Compensation, Unemployment Compensation, Social Security, etc.); •• Reasonable transportation, travel, hotel and moving expenses of the Contractor’s personnel; •• Cost of materials, utilities, supplies and equipment; •• Contractor’s payments to Subcontractors; •• Rental charges of all necessary machinery and equipment; •• Costs of liability insurance and bonds; •• Permits, fees, licenses; •• Costs associated with equipping, operating, maintaining, and mobilizing the Field Office; •• Demobilizing the Field Office; •• Reproduction costs (photocopying), telephone costs; •• Water, power and fuel costs; •• Costs of removing non-hazardous materials; •• Costs incurred due to an emergency affecting the safety of persons and/or property; •• Legal (including mediation and arbitration costs) other than those arising from disputes between Owner and Contractor; •• Additional costs incurred from laws or ordinances, rules and regulations enacted post-Contract; and •• A safety net – all costs reasonably incurred in the performance of the work, or in any way connected with the project and not included in the contractor’s fee, that are reasonably inferable from the contract documents. 5. Minimize Retainage Minimize retainage and/or provide for reduction of retainage when achieving certain milestones (i.e. when Contractor achieves 50 percent completion, retainage shall be reduced from 10 percent to 5 percent).

Dangers/Protections (Depending on Where You Sit) The following items are key when it comes to payment and assessing related liability.

1. Pay if Paid Which of the following constitutes a valid and enforceable pay if paid provision? a. Each project payment will be distributed to the Subcontractor within three (3) working days after the Contractor receives payment from the Owner. b. The Contractor shall promptly pay the Subcontractor upon receipt of payment from the Owner, out of the amount paid to the Contractor on account of such Subcontractor’s portion of the work, the amount to which said Subcontractor is entitled. c. Payment to the Contractor by the Owner is a condition precedent to payment being due to the Subcontractor from the Contractor. Payment to Subcontractor is directly contingent upon the receipt by the General Contractor of payment from the Owner. According to the Appeals Court in Framingham Heavy Equipment Company v. John T. Callahan & Sons Inc., 6 Mass. App. Ct 171 (2004), it is likely that only the last provision constitutes an enforceable pay-ifpaid provision. The others serve only to postpone payment for a reasonable time after requisition, “so as to afford the general contractor an opportunity to obtain funds from the Owner.” Id. Further, even if the pay-if-paid language otherwise is enforceable, assess whether the Prompt Pay law applies. If so, follow-up with your counsel. The language may not be enforceable. 2. Beware of Lien Waivers Signing partial lien waivers is okay, but not if it requires you to waive or release claims. Be careful not to waive lien claims for disputed amounts due. For instance, be careful not to waive all claims such as the following, unless that is what you intend: Contractor acknowledges and agrees that it has been paid all sums due on the project and, therefore, waives and releases any and all claims for payment as of this date, including without limitation all liens and rights of lien on such real prop-

erty for labor and materials... and for any other services performed or furnished through this date which Contractor ever had, now has, or may herein ever have through this date against …. 3. Beware of Lien Bond Requirements Lien bond requirements are common. Nonetheless, some such provisions really attempt to squeeze the Contractor. The emphasized language below is such an example (standard general contract language that also gets incorporated into the subcontract). If any Subcontractor or lower tier Sub-subcontractor or material supplier, records a Notice of Contract or otherwise encumbers the project property, the Contractor shall immediately record a lien bond pursuant to applicable statute at its own cost. It shall not be a defense to this requirement that the Contractor claims non-payment by the Owner. Pursuant to this language, the Contractor potentially owns bonding off the lien even if it was recorded because of Owner nonpayment (for instance, when a lien is recorded because of an Owner disputed, subcontractor-proposed change order). 4. Beware of the Claims Process Most contracts contain a claims process and, in such instances, the claims process must be followed, or claims can be waived. The Supreme Judicial Court has stated, [a] Contractor seeking to recover payment in excess of the Contract price must follow the procedures set out in the Contract.” Sutton Corp. v. MDC, 423 Mass. 200, 207 (1996); Chiappisi, et al. v. Granger Construction Co. Inc., et al., 352 Mass. 174 (1967). There are potential defenses to enforcement but rather than create risk, follow the process. 5. Set-offs to Payment The following contract provisions often are used as set-offs to payments due the Contractor, thereby minimizing the payment due: •• the value of defective work; •• third-party claims; •• lien claims; •• evidence that the work cannot continued on page 22 The Professional Contractor

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The Professional Contractor - Spring 2018  

In this issue, get to know ASM’s 2018 president; Cannistraro moves into bigger digs; and ways to save money with your ASM membership.

The Professional Contractor - Spring 2018  

In this issue, get to know ASM’s 2018 president; Cannistraro moves into bigger digs; and ways to save money with your ASM membership.