USA – NORTH CAROLINA Law and Practice Contributed by: John Livingston and Brittani Miller, Kilpatrick Townsend & Stockton LLP
deposits may also be applied to unpaid rent or dam - ages, subject to the terms of the lease agreement. Landlords typically hold security deposits in the form of cash, but letters of credit are also common. 7. Construction 7.1 Common Structures Used to Price Construction Projects The most common structures used to price construc - tion projects are the fixed-price (lump sum) structure, where the contractor agrees to complete the project for a predetermined price, covering all labour, materi - als and overhead costs, and the cost-plus structure, where the contractor is reimbursed for the actual costs incurred during the project, including labour, materi - als and subcontractor fees, plus an agreed-upon fee, which may be a percentage of the other construction costs. In a cost-plus contract, the parties may agree to a maximum price. 7.2 Assigning Responsibility for the Design and Construction of a Project Responsibility for the design and construction of a project is typically assigned through various contrac - tual arrangements, which determine how obligations are allocated among the parties involved, such as owners, contractors, architects, engineers and sub - contractors. Below is an overview of the different methods and typical allocation of responsibilities. Design-Bid-Build Overview • The project owner contracts separately with a design professional (architect or engineer) for the design phase and a general contractor for the con - struction phase. • The design is completed before bidding begins, and the contractor is selected through competitive bidding. Responsibility allocation • Owner: Responsible for overseeing the process, hiring the design professional and managing the bidding process.
• Design professional (architect/engineer): Respon - sible for creating the project’s plans and specifica - tions and ensuring compliance with building codes and regulations. • Contractor: Responsible for executing the con - struction work according to the design specifica - tions. The contractor assumes liability for con - struction defects but is not responsible for design errors. Design-Build Overview • The owner hires a single entity (design-build firm) to handle both design and construction under one contract. • This approach streamlines communication and minimises conflicts between design and construc - tion teams. Responsibility allocation • Design-build firm: Responsible for both the design and construction phases. The firm assumes liability for both design errors and construction defects. • Owner: Responsible for providing project require - ments and oversight but relies heavily on the design-build firm for execution. • Subcontractors: Typically hired by the design-build firm to complete specific portions of the work. Construction Manager at Risk Overview • The owner hires a construction manager during the design phase to provide input on costs, scheduling and constructability. • The construction manager acts as the general contractor during construction and guarantees the project will be completed within a specified maxi - mum price. Responsibility allocation • Owner: Responsible for hiring the design profes - sional and construction manager. • Design professional: Responsible for completing the design and ensuring compliance with codes and regulations. • Construction manager: Responsible for pre-con - struction services, managing subcontractors, and
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