USA - NEW JERSEY Law and Practice Contributed by: Steven Fleissig, David Freylikhman, Cory Mitchell Gray and David Jensen, Greenberg Traurig LLP
7.2 Assigning Responsibility for the Design and Construction of a Project The responsibility for design is generally assigned to licensed professional architects or and/or engineers. These disciplines may either be sep - arately engaged or engaged under the respon - sibility of the designated architect, developer, design-builder, or EPC contractor. Regardless of the approach, there are also commonly other professional disciplines that will be engaged separately, such as those providing geotechni - cal or environmental site services to assist in the design and engineering considerations for the intended project, among other things. For construction, management of the project is often assigned to a construction manager who is either “at risk”, holding all the contracts for sub - contractors, or “not at risk”, meaning the owner holds all the trade contracts for the work, with the construction manager administering those contracts as the owner’s agent. The responsi - bilities may also be expanded in the context of a design-build contract or EPC approach; fur - ther responsibilities of the construction manager often include certain delegated design-assist and/or limited design-build scope responsibili - ties, notwithstanding the separate engagement of the architect or other professional disciplines. Owners that elect to use a general contractor may also elect to engage a project manager or other owner’s representative to assist the owner with project oversight and management. 7.3 Management of Construction Risk Construction risk in this jurisdiction is often man - aged by, among other things, indemnification, warranties, limitations of liability, delay damage limitations and other waivers of damages, pro - visions relating to insurance, bonding and sub - contractor default insurance, subcontract pass-
through provisions, contingency (in the case of a guaranteed maximum price contract) and other economic provisions and controls (such as shared savings or other incentives), as well as liquidated damages. New Jersey law prohibits an owner or other party from requiring contrac - tual indemnity for damages arising out of bodily injury to persons or damage to property caused by, or resulting from, the sole negligence of the owner or such other proposed indemnitees. Parties should, therefore, be mindful to tailor indemnity clauses appropriately so as not to risk having the provision deemed unenforcea - ble. Owners should be mindful to properly review and tailor insurance programmes to minimise potential uninsured exposures and require, by contract, that the contractor’s commercial gen - eral liability and excess/umbrella coverage be endorsed to include the owner as an additional insured, assuming the intended primary cover - age is provided by the contractor and not an owner’s project policy. There are continued concerns about supply chain disruptions and pricing volatility and, as a result, contractors and suppliers are qualify - ing pricing and scheduling commitments more so than historically had been the case. Owners should be mindful of such qualifications and consider appropriate contract contingencies. Relatedly, consideration should be given to practical remedies versus contractual remedies since it is not uncommon to have a contractual recourse or remedy that does not, in practical terms, actually resolve the issue at hand (namely allowing for the construction of the project to maintain pace and/or recover from such events).
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