USA – NORTH CAROLINA Law and Practice Contributed by: John Livingston and Brittani Miller, Kilpatrick Townsend & Stockton LLP
delivering the project within the guaranteed maxi - mum price. • Subcontractors: Perform the actual construction work under the construction manager’s supervi - sion. Integrated Project Delivery (IPD) Overview • This collaborative method integrates all parties – owner, architect, contractor and other stakeholders – into a single contract. • IPD emphasises shared responsibility, risk and reward to achieve project goals efficiently. Responsibility allocation • Owner: Responsible for assembling the IPD team and approving major decisions. • Design professional: Collaborates with the team to ensure design aligns with project goals and con - struction feasibility. • Contractor: Works closely with the design team to optimise construction methods and manage execution. • Subcontractors: Actively participate in the collabo - rative process. The allocation of responsibilities generally depends on the chosen method and contract terms, but common divisions include the following. • Owner: Provides project requirements, funding and oversight. Ensures compliance with legal and regulatory frameworks. • Design professional: Develops plans and specifica - tions and ensures the design complies with codes and standards. Can be liable for design errors under certain methods (eg, Design-Bid-Build). • Contractor: Executes construction work according to design specifications. Liable for construction defects and delays. • Subcontractors: Perform specialised portions of the work (eg, plumbing, electrical) under contractor supervision. • Construction manager (if applicable): Provides cost estimates and scheduling and manages construc - tion risks.
• Design-build firm (if applicable): Assumes com - bined responsibility for both design and construc - tion phases. 7.3 Management of Construction Risk Construction risk is managed through indemnifica - tions, warranties, limitations of liability, waivers of damages, insurance requirements, performance and payment bonds, and force majeure clauses, each tai - lored to allocate and mitigate risks effectively. Indem - nification clauses transfer liability, but state law pro - hibits broad indemnity for an owner’s sole negligence, ensuring such provisions are narrowly drafted. Con - tractors generally warrant that work will be completed in a good and workmanlike manner and consistent with applicable laws and agree to a period within which they must cure any defect (between one and three years). 7.4 Management of Schedule-Related Risk Schedule-related risk on construction projects is managed through various contract mechanisms, including liquidated damages clauses, no-damage- for-delay provisions, force majeure clauses, milestone payments, incentive clauses and extension of time provisions. Liquidated damages clauses allow own - ers to receive monetary compensation for delays if milestone or completion dates are not achieved, often expressed as a daily penalty, provided the amounts are reasonable and not punitive, as excessive penal - ties are unenforceable. No-damage-for-delay clauses, which limit contractors to time extensions rather than monetary compensation for delays, are generally enforceable unless delays result from owner interfer - ence, bad faith or unforeseen events. Force majeure provisions offer relief for delays caused by uncontrol - lable events, typically in the form of schedule exten - sions. Milestone payments and incentive clauses tie contractor compensation to timely progress or early completion. Parties are allowed to agree that an owner is enti - tled to monetary compensation if certain milestone and completion dates are not achieved, provided the amounts are reasonable and not punitive.
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