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On March 25, 2020, Washington Governor Jay Inslee issued a memorandum that provided members of the construction industry with additional guidance regarding the Stay Home, Stay Healthy Proclamation (20-25) issued on March 23, 2020 in response to the COVID-19 pandemic. The Proclamation raised a number of questions in the industry, including whether all residential construction was deemed an essential service. The Proclamation seemed to indicate in a parenthetical that “housing construction” was permitted but then went on to limit “residential construction” to “emergency repairs and projects that ensure structural integrity.” Because of the resulting confusion, some residential projects began shutting down, while many did not, with the trades on those projects expecting to continue with work.

Yesterday’s memorandum confirms that there is no blanket treatment of residential construction under the Proclamation, and not all residential construction is an essential service. Just as with commercial construction, for a residential construction project to proceed, it must fit into one or more of the following:

  1. Construction related to essential activities as described in the order;
  2. To further a public purpose related to a public entity or governmental function or facility, including but not limited to publicly financed low-income housing; or
  3. To prevent spoliation and avoid damage or unsafe conditions, and address emergency repairs at both non-essential businesses and residential structures.

If you are involved in the construction industry, like it or not risk management is part of your job. From home office executives to workers in the field, each person is expected to manage schedule, cost, and safety risks. While these risks are common, the recent prolonged period of economic growth has created new challenges,…

For most in the industry, when we think about a standard construction contract, we envision the construction documents being drafted by the architect and other design consultants.  We tend to view the project as design-price-build, unless an alternative procurement mechanism has been selected such as design-build.  Consistent with this design-price-build model, the contractor’s review of…

The biggest construction project in Seattle in recent years has been the replacement of a seismically compromised waterfront viaduct with a tunnel carrying State Route 99 under downtown. The project was delayed for about two years while the contractor repaired damage to its tunnel boring machine. The contractor claimed that the damage was caused by…

Worker hammering a nail on construction site.
Construction worker.

In the event of a near-term slowdown in the U.S. economy, analysts forecast that any resulting decline in construction starts will nevertheless leave the level of activity in that industry sector “close to recent highs.” As a result, project owners and general contractors already facing a strong demand for…

In a recent article in the ABA’s “Under Construction” publication (link here) the author describes a trend among some major contractors, including SNC-Lavalin, Fluor Corporation and Granite Construction, to leave the DB and EPC space.  Other large contractors have announced similar intentions.  The problem appears to be that the DB and EPC delivery methods…

Scammers are always seeking new ways to target victims for Business Email Compromise (BEC) scams, where they leverage email to try to convince you to give them credentials, send them confidential information like W2s, send them money by changing things like direct deposit instructions, or give any other data that can help them profit from committing fraud.  They are getting more and more sophisticated in their deceptions, and targeting those areas they see as ‘weak links.’

Construction companies however face a particular threat, as there are a number of services and private and government web sites to which companies can subscribe to learn about construction projects that are open to bid. Often, the winning bidder ends up becoming public knowledge – either because that information is posted publicly, or because the contract company advertises they were awarded the project. And of course, these contracts always carry a price tag that is attractive to scammers.

Fraudsters can use information from these same web sites along with other research to learn which construction companies have applied for and ultimately won bids. The higher the price tag, the bigger the target. Once the scammers get their fake web site set up (they can use tools to copy the real contractor’s web site almost exactly), they’ll then send an email to the victim posing as the contractor, including a direct deposit form (likely doctored with the contractor’s logo) and instructions to change payment information to a new account controlled by the scammers.  They might even try to play this trick on the construction company and pose as a vendor the construction company regularly pays. Once the money is transferred, it can be difficult – and often impossible – to recover.  Even if the victim has cyber insurance, whether or not any losses are covered depends on the policy.  Any access and information they obtain can also compromise the construction company’s information security, potentially increasing the likelihood of privacy breaches, ransomware attacks, or other serious security risks.