USA – TEXAS Law and Practice Contributed by: Taylor Cooksey, Philip Kinkaid, Serena Kramer and David Brooks, Cokinos | Young
7.2 Assigning Responsibility for the Design and Construction of a Project The different methods for assigning responsibil - ity for the design and construction of a project are as follows. • Design-Bid-Build: this is the most common method for assigning design (architect/engi - neer) and construction (contractor) responsi - bilities, where separate entities are involved for each discipline. • Design-Build: both disciplines of design and construction are assigned to a single entity. • Construction Manager at Risk: a construction manager is engaged to oversee the project from start to finish. The construction manager acts as a consultant during the design phase and as the general contractor during con - struction. • Construction Manager as Agent: the con - struction manager acts as the owner’s agent. The project is managed without the con - struction manager taking on construction risk, as all trades are contracted directly by the project owner. The architect/engineer is responsible for design and the contractor is responsible for construction. 7.3 Management of Construction Risk Indemnity provisions are commonly used in construction contracts to allocate the risk of third-party claims, primarily arising from bodily injury, death or damage to property. Texas has an anti-indemnity statute that prohibits broad- form indemnity (ie, a promise to indemnify a person or entity against their own fault or negli - gence) in most construction contracts, although there are exceptions for certain types of projects or claims. Other types of construction risk on a project are managed by warranties, damage waivers (eg, waivers of consequential damages), limitations of liability, retainage, insurance and
bonds. Legal limitations include the aforemen - tioned anti-indemnity statute and those imposed by contract and public policy constraints. 7.4 Management of Schedule-Related Risk Schedule-related risk of construction projects is managed by contract. The parties may agree that an owner is entitled to compensation if agreed milestone and completion dates are not achieved. In such event, the contract may include a reasonable liquidated damages provi - sion, perhaps allowing extra time for events such as force majeure and weather delays, and may also include detailed scheduling, performance bonds, contingency time, acceleration agree - ments and notice requirements. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance It is typical in Texas for a performance and pay - ment bond to be required in a public project. Performance bonds are also common in private commercial projects. Parent guarantees and letters of credit are less common, but they are used. The use of escrow accounts and stan - dalone third-party sureties is more rare. Unless proper bonding is in place, the Texas Property Code requires 10% retainage for private pro - jects, mitigating the need for additional security in some cases. 7.6 Liens or Encumbrances in the Event of Non-Payment In Texas, architects, engineers and contractors (and subcontractors and suppliers) are permit - ted to file mechanic’s and materialmen’s liens for non-payment, provided that statutory require - ments are followed. Owners can remove filed liens by paying the amount due and recording a release, through
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