USA - TEXAS Law and Practice Contributed by: Brad Holdbrook, Mary Mendoza, Michael Coleman and James Barnett, Haynes and Boone, LLP
7.4 Management of Schedule-Related Risk In Texas and elsewhere in the US, schedule- related risks in construction projects are often managed through contract terms. These con - tracts can include provisions for liquidated dam - ages, where the parties agree in advance that the owner will receive a specified amount of money as compensation for delays if the con - tractor fails to meet agreed-upon milestones or completion dates. This arrangement aims to incentivise timely performance and compensate the owner for losses due to delays. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance It is common for owners of Texas real estate to seek additional forms of security to guarantee a contractor’s performance on construction pro - jects. This can include requiring performance bonds, letters of credit, parent guarantees, escrow accounts, or third-party sureties. Typi - cally, both private and public owners will require a general contractor to post a performance bond to guarantee completion of a given project. 7.6 Liens or Encumbrances in the Event of Non-payment Contractors and designers on projects in Texas can place a mechanic’s lien on a property if they have not been paid for their work. To remove a lien, the property owner must ensure the con - tractor is paid the owed amount. The process involves filling out specific forms and meeting statutory requirements, including sending notic - es and possibly court involvement if disputes arise. 7.7 Requirements Before Use or Inhabitation The requirements for a Certificate of Occupancy (CO) (or jurisdictional equivalent) before a com -
viding a clear budget but placing the risk of cost overruns on the contractor. The cost-plus con - tract reimburses the contractor for actual costs plus a fee or percentage of the costs, offering flexibility but potentially leading to higher over - all costs for the owner. Each method has its advantages, depending on the project’s scope and complexity. 7.2 Assigning Responsibility for the Design and Construction of a Project A few of the common methods for assigning responsibility for the design and construction of a project include design-bid-build, design-build, and construction manager at risk approaches. Responsibilities are typically allocated based on the chosen method: design-bid-build involves separate entities for design and construction; design-build assigns both design and construc - tion to a single entity to streamline the process; and construction manager at risk involves a con - struction manager overseeing the project from start to finish, acting as a consultant during the design phase and as the general contractor dur - ing construction. 7.3 Management of Construction Risk Construction contract risk management in Tex - as transactions is influenced by specific anti- indemnity laws. These laws restrict the extent to which parties can transfer risk between each other in commercial construction contracts. The Texas Anti-Indemnity Act particularly limits broad-form and intermediate-form indemnities, except for specific scenarios like action-over claims. This leads to a hybrid form of indemnity, mixing limited and broad forms depending on the situation.
1316 CHAMBERS.COM
Powered by FlippingBook