Utah Construction: Navigating the Next Decade

Utah’s construction landscape is undergoing significant transformation, fueled by major projects and a surge in high-tech industries. Babcock Scott & Babcock, P.C., was proud to host a recent industry forum roundtable to discuss the future of construction in the state over the next ten years. From addressing the labor shortage and power constraints to managing supply chain challenges and fostering better collaboration between stakeholders, participants delve into the issues shaping the industry’s trajectory in Utah and offer insights into successfully navigating the decade ahead.

The roundtable was moderated by Bob Babcock and Cody Wilson. They were joined by the following:

• Rick Papworth, General Manager, JT Steel
• Jerry Taylor, President, JT Steel
• Greg Fix, Manager, Forge Contractors
• Eric Stratford, Marketing Director, R&O Construction
• Jeff Cochran, Vice President, WW Clyde
• Donavon Minnis, Owner,Engage Contracting
• Bob Babcock, Attorney, Babcock Scott & Babcock, P.C.
• Scott DeGraffenried, Vice President,Jacobsen Construction
• Tim Conde, Director of Legal Affairs,Okland Construction
• Cody Wilson, Attorney, Babcock Scott & Babcock P.C.
• Ryan Godfrey, Senior Vice President, Sure Steel
• Brett Nielsen, President, Whitaker Construction

Portions of the industry forum roundtable were published in the Engineering News-Record March magazine. A complete transcript of the roundtable is provided below.

CODY WILSON: We are hearing a lot about several large projects that continue to transform Utah. These projects include: The Point in Draper, Smith Entertainment Group’s plans at the Delta Center, and plans for the Major League Baseball stadium. From this group's point of view, what does the future of construction look like in Utah in the next ten years?

JERRY TAYLOR: It's wide open. I've been in meetings with our Governor, and they see a lot of high-tech jobs coming in with a lot of construction needed. And it's slated for The Point in Draper and into Utah County.

TIM CONDE: The projects coming too are big projects. We laugh in our office that a $100 million job used to be a big deal, but now they're a dime a dozen. We're seeing a lot of big projects coming our way. These projects bring more complexity and more demands. The Utah market is changing and we’re becoming more attractive to a lot of bigger developers.

JEFF COCHRAN: At a seminar, the UTA was discussing the upcoming Olympics. The UTA’s discussion was less about what are we doing to prepare for the Olympics and more about what we are doing to be prepared generally. It was about what we're going to do to build our industry and our economy as opposed to building for an upcoming event.

TIM CONDE: Utah is a hub for innovation and technology. In addition to the commercial development that's going on, especially around downtown, these technology industries could bring datacenter or semiconductor mega projects. These mega projects bring different risks and labor force needs that we need to be preparing for. Or else these projects will go to people outside of Utah. And we want to keep everybody here busy.

ERIC STRATFORD: During my career I have never been so comfortable with the future. With these large projects, it's easy to say, in the next ten years, there's going to be a lot of work. There's maybe not even enough labor force to perform all of that work.

CODY WILSON: What are the challenges with all of the work coming in the next ten years? You mentioned risk. You mentioned labor force. Are there challenges other than risk and labor force? And then let's talk about how we deal with those challenges.

RYAN GODFREY: Power needs, especially in the technology sector. Specifically, whether these technology companies can get the power that they need to support their operations. We've seen projects put on hold because of power constraints.

TIM CONDE: We've seen the same power concerns. People who want to create a technology hub, whether it's a datacenter or something else, get down the road and Rocky Mountain Power says, "There's not enough power."

BOB BABCOCK: Are we making headway with our high schoolers?

BRETT NIELSEN: We're making small progress. For the longest time construction was looked at as just swinging a hammer. Now when you look at our businesses there is an ac-counting, engineering, legal field, and many other fields within the construction industry. This takes care of the professional side of construction. The craft side of construction is where there's still a struggle. There’s a little bit of movement towards trade schools versus traditional four-year colleges. And hopefully that's going to start bringing more craft workers into our field.

JERRY TAYLOR: We have a lot of older welders. Now, we need the younger generation that can run the technology, that can run the machines. There are automatic welders that the older welders don't pick up on as much. That's why we need the younger generation to come along.

RYAN GODFREY: Leveraging the technology side of construction is going to help attract people to the industry. From an iron worker’s perspective, it's tough work. It requires long hours, fast schedules, and a tough work-life balance. That becomes a challenge for people wanting to enter the industry. Comparing it to other industries, such as technology, construction isn't as sexy. That's a challenge we have to face.

TIM CONDE: This State is doing a better job at encouraging districts to have programs. Many of us are involved in getting high school students on projects and showing them the different aspects of construction. They're swinging hammers and welding steel, which is important. We have to bring those potential people up through the ranks. But there's also the management side of construction that people just don't understand. This generation hungers for career development. They want to see the path. And if they can buy into the path, then they can buy into the profession. It's up to us to create that career development and then give them the tools and the resources to take each of those steps.

ERIC STRATFORD: Every one of us at some point was introduced to something in construction that enticed us to stay in it. I liked swinging a hammer and I liked learning how to do things. I didn't understand that there were so many different opportunities in construction. Somehow, we've got to, one, help the youth have that ah-ha moment with construction. And then, two, show them what is available to them.

TIM CONDE: That ah-ha moment is brilliant. We've all had those. We must create those for the next generation.

ERIC STRATFORD: I sat on an advisory panel for the state CTE program. Our State and educators care so much about that. They need some advice from us and they need our participation in those programs. They need resources and people, like us, with real world knowledge to come in and be guest speakers and teach them.

CODY WILSON: Let's talk about supply issues. There's been talk of large tariffs now with the new administration coming in. What are some of the challenges that you guys are forecasting for availability of materials to build these large projects coming up considering material shortages or tariffs or other challenges that you're seeing?

GREG FIX: Electrical gear and equipment is a challenge right now to have supplied in a timely fashion. Other materials in the duration of a given project, especially the mega projects, haven't been as difficult. Proper planning and having owners, developers, and the architectural side understanding the nature of their project and some of those long-lead procurement items can help. Either the owner needs to bring on the contractors earlier so that they can help in the procurement of those materials or they need to procure them themselves. Having that thought process ahead of time and proper planning on the front side sure makes that project go easier on the backside.

JEFF COCHRAN: There’re some Buy America clauses that can definitely impact the delivery method, where it is manufactured, and delivery times. We’ve definitely seen that electrical components are a challenge.

RYAN GODFREY: What we've seen from some of our clients, in regards to electrical equipment and other mechanical equipment coming from overseas to the United States, is that they are buying the equipment way in advance. They’re trying to get ahead, to make sure that they’ve got the electrical equipment or the mechanical equipment to support their builds. It is important though that we make sure that we're looking at tariffs, the trucking, the port issues or whatever it is so that we can deliver on the commitments that we’ve made.

JERRY TAYLOR: We have a tendency now to jump on and order the steel immediately once we get a project. Then we have to turn around and store it sometimes for several months which if the job goes on hold, it hurts us.

BRETT NIELSEN: The big impact that the industry is going to see because of tariffs are cost escalations. The risk right now is with our current contracts that we may not have bought materials for which could increase in prices . It’s going to take a little bit of time to get through that transitionary period. Moving forward you're going to see the cost of construction going up as those are starting to be incorporated into our estimates.

TIM CONDE: One thing about Utah is that people give each other the benefit of the doubt. There’s been decades of trust built up, that you can cash that chip in a COVID scenario or in an unexpected tariff or escalation scenario, where the owner also says, "I get it. Let's work together. I don't want to be taken advantage of, but I don't want to take advantage of you either. Let's figure it out.” If we can maintain that level of trust and transparency with each other, we can get through it. It’s a unique market in that regard.

BRETT NIELSEN: Some of the long-term relationships are that way. As the market is grow-ing, we are seeing new players. We're seeing new developers, new owners, people that may not have those relationships and the trust that's built there. There’s risk there.

SCOTT DeGRAFFENRIED: There is a long and storied trust here in Utah. But, we do have a lot of new players coming in. And even within our own company, we're having to change paradigms and how we interact. At many levels we've had to up our game and sharpen our tools as these new developers come into town and we're contracting and working through problems with them. I like the challenge because it makes us all better. We can mitigate a lot of these risks with properly constructed contracts and also managing those relation-ships at the same time.

GREG FIX: There's integrity in what we do. It's such a small community of networked people that have worked together and know each other, that that idea of the back east mentality of bid shopping doesn't work here. And it won't work here. It's not well received.

DONAVON MINNIS: As far as contracts are concerned, I think we all suddenly realized what all that jargon in the contract meant when COVID happened and how we had to utilize it. Not only that, but then we had the conversation with our clients as to why certain language is in the contract. It is important to forward think when drafting our contracts and ask, "What do we need to have in here in order to protect ourselves?" And not only protecting ourselves but educating our owners on what these protections mean now and what they could mean. It always goes over easier when it's not a surprise and you already had that conversation. For me I'm trying to educate the owners on the projects on the front side. Ex-plaining what could be coming and how we're going to mitigate our risk.

SCOTT DeGRAFFENRIED: I'd used the phrase "force majeure" for many years prior to COVID. But then, I had to figure out what it actually meant when it all came to fruition. And then, what are escalation clauses? And how do these play out? One thing I learned through that whole process is the importance of properly and narrowly constructed clauses. Obviously, I'm speaking from a general contractor bias but, if some of those clauses are too broadly constructed, an escalation clause could be viewed as an open checkbook. Owners obviously don't view it as an open checkbook. A broadly constructed escalation clause can create contention.

RYAN GODFREY: As a subcontractor, that all gets passed down to us. We don't have a lot of wiggle room. For us, being able to work with contractors that are paying attention to those details, and helping mitigate that on the sub’s behalf, is so important to us. We're put in a very difficult position, especially buying steel. If the contractors aren't forward thinking it becomes a problem for all of the subcontractors. We appreciate those contractors that are out there having those difficult conversations with the owners to make sure that everybody beneath the contractor has some sort of protection to be able to help ensure that we all don't get stuck with something that was foreseeable.

CODY WILSON: Do you foresee some challenges, though, with that given the influx of new development -- or new groups, new owners coming into the state?

JEFF COCHRAN: We can’t specifically deal with it. Each business has the opportunity to function how they will. We, as an organization, are not going to change how we function and do that. And hopefully our clients and owners that we work with see the value in that. But I can't speak for everyone.

GREG FIX: As an owner coming from out of state goes from one contractor to another, hearing the same tune, they’re going to either force a contractor to change or they're going to have to realize they need to change. It’s a factor of how we, as the contractors, carry out our business.

SCOTT DeGRAFFENRIED: We have an obligation to make ourselves better. We have to be more and more astute as these new players come into the market. For example, I was recently negotiating an insurance program with a -- I'll say a back east-based developer. They sent over their OCIP manual to me. It was riddled with new contractual provisions that were not present in the contract that we had just finished negotiating. I marked it all up and I said, "Hey, you can't slip all this in by way of your OCIP manual because that's going to be part of the contract document package and everybody's going to be relying upon that." And I got this gentleman from back east yelling at me, saying, "Well, nobody ever looks at these things. Nobody ever edits these things. Why are you making a big deal of this?" I responded, "Well, I have to make a big deal of this." Don't be afraid of those difficult conversations. A lot of people shy away from those conversations because they don't want to deal with the is-sues. But, on the back end of it, if you get it wrong, it's a bigger price to pay. In the end, I do think they respect you more if you meet them on the field of battle in a very respectful sense.

JEFF COCHRAN: And no one ever looks at the contract until it is time to look at the contract. And then you're splitting hairs. If you're going to have a difficult conversation, up front is the very best time to have the difficult conversation.

BOB BABCOCK: I never had a contentious contract negotiation where in the end we didn't shake hands and walk away. It’s best to have those conversations up front.

JERRY TAYLOR: As a subcontractor, you can call Okland or their attorney or Jacobsen or whoever and negotiate through the contract so that you both understand it.

BRETT NIELSEN: We all have the right to say no to do business with either an owner or a subcontractor. In fact, you can usually tell during the negotiation of the contract if it’s going to be a bad working relationship. We actually have said no but not everybody can afford to say no. They may need the work. But, at the end of the day, I don't like paying for the privilege of building a project. The goal is to make money on it. And oftentimes those negotiations do set a tone for how the project will go.

SCOTT DeGRAFFENRIED: We should all be risk managers. That's definitionally what a con-tract is. It's risk shifting. I’m entrenched in my position when it comes to these things, but I've had to learn to become sympathetic at some level to a lot of these developers. These are pro forma driven projects and these guys are putting a lot on the line. We can try manage that risk as best we can but, we have to tolerate some of it. And that's been difficult for me to accept. But, there is always risk in business. We have to put ourselves in their shoes to a certain degree to understand where they’re coming from. Because without these projects, none of us have jobs. So, it's that balancing act.

ERIC STRATFORD: But that’s what’s so great about Utah. We have the ability to put our-selves in other people's shoes. You can't just shift risk away the entire time because you have to have some sort of appetite. We get to determine what that appetite is. The front end of negotiations is when you have to put yourself in somebody else's shoes and see it from their perspective. That's how you get deals done.

RYAN GODFREY: I think from a sub’s perspective we have comments during the contract negotiations, typically with the contractors. We’ve found that some contractors don't want to have conversations about understanding the provisions that they're giving to us. Just like you’re collaborative with the owners or developers, the subs are expecting a similar type of relationship where we can actually sit down and have a conversation about the provisions. Some people view that as contentious. But, we're clarifying all this so that we can make sure that we're living up to the expectations that you, as the contractor, are putting on us. I’m curious on how you as contractors view that?

JEFF COCHRAN: Something we can do, and you can do on your end, is having a conversation about terms that change the price ahead of time. Having these conversations during the bidding process, through some type of scope and discussion, seems to help mitigate that challenge in a more significant way.

SCOTT DeGRAFFENRIED: I very much appreciate it when a subcontractor wants to have a very sophisticated conversation on the subcontract. I've had that opportunity many times and built some good relationships. It helps the parties get a sense of both parties' philosophies and attitudes. It’s a beneficial process personally.

RYAN GODFREY: Setting expectations is so important for us, as subs, to make sure we know what is expected. We don’t like surprises just as much as the owners don’t like surprises. Just making sure we're all on the same page is so important.

GREG FIX: An issue that we're dealing with as general contractors, is when owners and developers are holding off on starting a project, and then the market shifts or changes and they decide they got to go. They get the architect on board. Push them to complete a six, seven, eight-month design in four months. And then have the contractor put together esti-mates based off of incomplete documents. Then there's problems during the course of construction, and the owner is wondering, “Why are we having this problem? Why didn’t you catch that, Mr. Contractor?” How do we make a shift in the mentality of the owners to give the proper time needed for good design?

SCOTT DeGRAFFENRIED: From a contractor's perspective, get in as early as possible to help find the flaws.

JERRY TAYLOR: How many times, when you’ve sat down with the architect and engineer, have you heard the comment “Well, that’s not what I had in mind.” Well, what did you have in mind? It’s a real concern as a subcontractor. The job would be faster and way less expensive if the architect had adequate time to put into their drawings.

CODY WILSON: So, I'll flip the question then, Greg, what is Forge doing to try to mitigate that problem?

GREG FIX: I always try and encourage the owners, even before I started at Forge, to give proper time to the architects. Let's give them one more month. If you give them one more month, that will allow us to have better details, better coordinated drawings. The architects focus so much on what they're doing that coordination among their consultants is lacking. What I think the owners don’t quite understand is that a little extra time will save them money in the long run. It might cost them a month or two upfront, but with those details in the design the subcontractors don't have to make assumptions and guesses and inflate their price to cover themselves for potential problems down the road.

ERIC STRATFORD: It’s a big financial risk for developers if they don't push us to go quicker. So, from their standpoint, those change orders down the road are less of a risk than going to market. I would agree wholeheartedly that we are sometimes not giving our architectural community partners enough time to do a good doublecheck.

DONAVON MINNIS: Of all the people in our industry, architects are the best at saying, "No. I am tapped out. We can't take on another project." They're delegating more design off onto the contractor, who then pushes it off onto the sub to shop drawings and design it on the fly because they don’t have time to put it together. These projects are moving so fast that it's just a chain reaction. There is not enough time and resources out there on even the design side to take on the amount of work that we're doing right now. Inherently, change orders happen because our estimators are estimating -- we're only getting two in ten projects that we're bidding. So, the estimators are just ripping through them, they're not evaluating or catching every little detail. It's just this chain reaction of work.

JEFF COCHRAN: Depending on the project, something that you could do is begin working on a part of a project while also allowing time for the rest of the design to be completed. We have found a lot of success in that. Allowing work to start in a meaningful way yet allowing other components of the design to be finished.

SCOTT DeGRAFFENRIED: As the general contractor, you're right in the middle of the rela-tionship between the owner and the architect. When there are deficiencies in design, the contractor unfortunately ends up bearing a lot of the brunt of those design discrepancies. You don't want to create conflict with your owner by saying, "Your architect is not keeping up.” As a contractor, it's learning how to foster that relationship to where you don’t have to atone for all of those sins, so to speak, but still maintain that relationship and allow both parties to carry out their roles. It's a real challenge.

BOB BABCOCK: I've been talking to design professionals for 40 years about pushing back and saying, “We should be paid more so we can do more a comprehensive design. The extra percent you pay us is going to save you so much more in design costs and project time and all kinds of things that can be done if they are able to do a better design.”

GREG FIX: But what happens with that is that risk has now shifted over onto the contractor’s plate. And we've just taken it on.

BOB BABCOCK: My point is you guys can be an advocate for them as well, give them more time, pay them more money. We want a better design. Because it’s going to translate into savings in construction dollars a ton if you do.

ERIC STRATFORD: On the one hand I'm a little grateful because it's made us really good in pre-construction services. On the other hand, I feel like we're taking on design risk that we don’t need to. I want to be careful how I phrase this, but it's almost given the architectural community a way out.

BOB BABCOCK: I know. To say, “Let's design it. Oh, we don't have time to do it. We’ll delegate to the contractor and the sub. They can sort it out. They can figure it out.” And that may or may not be a good decision for the project. I know that's a growing trend, so I’m curious as to what you guys see in delegated design in this marketplace.

TIM CONDE: Delegated design and design-build, those are both approaches that are trend-ing up. Utah doesn't have as much design-build. But I suspect it will go more that way. Our design partners figured out more discipline to say, "We can't do it," but their liability caps are very different from what we all have. They’ve figured out a way to be very strong with owners and cap their liability at their fee. It’s unusual to be able to do that. We are taking on more liability without the benefit of those caps.

ERIC STRATFORD: We’re looking at additional professional liability insurance because we're becoming architects essentially.

SCOTT DeGRAFFENRIED: One thing I wanted to bring up is the design-build delivery system versus the delegated design. I like the design-build because you're going into it very intentionally. You understand the risk you’re assuming. Oftentimes those can be very fruitful projects. The delegated design aspect of it, where oftentimes it's not even realized until it's slipped in, is a bit more problematic because people start pointing fingers and scrambling.

GREG FIX: For years fire sprinklers were a designated design. And the exterior metal wall assemblies are a delegated design with the engineering on the exterior wall. And I've always wondered, why does the structural engineer not cover that? But, that's now a delegated de-sign.

SCOTT DeGRAFFENRIED: One thing on the design side, switching topics a little bit, but I’m seeing a lot of national architects slipping stringent contractual provisions into the specifications. I don't know if any of you are seeing any of that, but it seemingly is becoming more and more prevalent and can be problematic.

CODY WILSON: It's definitely more prevalent. And the problem with that is you have an estimating department that’s cranking through these and they're not catching those things and those spec provisions or those clouded drawings or just different things where those things are slipped in. And then it's coming back later and that's a real problem.

BOB BABCOCK: I’ve sometimes told contractors “Do you want us to go do a quality control on the design before we do this?” We'll charge you a fee to go through all the design and look for all the inconsistencies and point them out. We’re going to find them all, but you're going to pay us for spending time doing it. Or, you can have your designer do it, who should have been doing it in the first place, because they've been working on it for many months. It's a provision that's not a very good risk.

GREG FIX: I don't think the design side problem is the architects. I think it’s on the owners that are inflicting pressures on them to get the design done faster. Because yes, pro formas are on the line, their profitability, they want to hit it at a time when the market is just right for the project to open up. I think they should have started three months before and they aren’t.

BRETT NIELSEN: I don’t know a lot of how the general contracting community handles alternative delivery. But, from a civil contractor’s perspective, those are some of our most successful projects, when you're able to come together and collaborate. Alternative delivery such as CM/GC, design-build, and the different methods that they're coming up with. And we've been fortunate to be on a number of those projects. And we continue to educate our owners of those contracting methods to be able to help them have better, successful, collaborative projects. I don't understand how it fully works within general contracting. But, for civil contracting, alternative delivery really does help with a lot of those issues that we're talking about.

SCOTT DeGRAFFENRIED: Most of our work is CM/GC. Definitely our preferred approach. Or design-build. You can control and mitigate a lot of these issues that we're talking about here through that process.

JEFF COCHRAN: In the heavy civil industry, that has not been the standard in the past. It's been hard bid for just decades and we're seeing that change. That’s our preferred way to do business—when you can sit down and collaborate with an owner.

ERIC STRATFORD: While these delivery methods are super advantageous for many pro-jects, we've almost seen the pendulum swing so far on some projects that don’t warrant it. I'm talking about the smaller projects that we do. The best thing that our ownership can do is understand the different delivery methods and the pros and cons of each and choose the one that is best suited for the project.

CODY WILSON: So, what can the industry do better in the next ten years? It sounds like working collaboratively will help a lot of different parts of the projects. But, what else can we do to make the industry better?

ERIC STRATFORD: The top one is skilled labor. We need a labor force that can sustain all of the work that's coming. When I say, ‘skilled labor’, I'm really looking at largely the subcontracting community and having the labor to man the projects that we're doing and to get them done in a timely manner.

RYAN GODFREY: Leveraging technology is something that's going to continue to be very important. We're starting to see technology that's going to help us be better from our shops to the field. Leveraging that technology in ways to overcome some of the labor shortages is going to be very important.

CODY WILSON: Do you think that's a way to get more of the younger generation into construction-to help them understand that they don't have to be involved in making video games if they want to be in tech, but they can do construction still. They can make good money doing construction tech type stuff.

RYAN GODFREY: Yeah. I think that's going to be huge.

GREG FIX: The AI world is going to be interesting to see how that works within our construction world. We have estimating tools right now where it will scan the documents and do takeoffs for you. It’s a matter of that leading edge versus the cutting edge in how to utilize that technology for the best use for us.

BOB BABCOCK: How about pre-assembled things? I'm curious what the future looks like for the pre-assembly, modular, or different types of construction to speed up things.

TIM CONDE: Look at the prison. Those cell units were built in Northern Utah, put on trucks, and brought down and craned into place like Legos. From a safety and efficiency perspective, it makes a whole lot of sense. It's just a matter of finding the right way to apply those things.

SCOTT DeGRAFFENRIED: At a presentation on new modular construction there were 15-story buildings being built out of shipping containers. These units come basically fully furnished and were stacked into place like Legos. Speed to market was off the charts when it came to some of these innovations. Technology is key.

CODY WILSON: Posing another question. I’ve sat in many of these roundtables or other things where we've talked about labor issues for five, six, seven years. Are we just talking about it or is it getting better? Are the things we’re trying to do helping with the labor pool? Or has it been just talk, and there's some things we really need to change and do better?

TIM CONDE: One thing that our industry has done better over the last seven, eight years is getting women into the industry. From Okland’s perspective, that's been a priority. Our per-centages have gone up and up and we've grown as a company in positive ways because of it. But that's a huge untapped resource—getting women into trades and into project management. We just hired our first woman executive. Jacobsen is doing a great job in that regard, too. We can do better getting women into the industry. I do think that's where needles have moved in certain regards. It has to continue to be a priority.

SCOTT DeGRAFFENRIED: As these projects become more demanding from a time component and bigger and more complex, we owe it to our trade partners and our employees to be as safe as possible. There are technologies out there that are advancing the cause of safe-ty. We're looking at new philosophies of ‘nothing hits the ground.’ You can suspend all your cords overhead now. I'm sure all of you have been on jobs where there are so many cords on the ground it’s just a hazard waiting to happen. We're working with a joint venture partner back east. They have a ladder last philosophy. You don't use a ladder unless there's no other means of accessing something. I think as we become more innovative from a safety perspective and can demonstrate that to those we're trying to entice to come in our industry, it will have positive effects as well.

GREG FIX: And that's the importance of training and communication. We can get better within our industry of communicating within our own ranks by training and helping educate others to understand the importance of safety. And then communication to our trade partners and how we can work together to accomplish more. The old mentality of a boot-in-your-butt general contractor coming down on the subcontractor just doesn't work. It's not the right approach. It's a team, joint effort, collaboration that really gets a project completed. Another concern that I have is, have we conditioned our children to think that menial labor is beneath them? That entitlement feeling of our youth is real. Have we not properly taught them how to work?

BOB BABCOCK: We have a very challenging philosophy. We want the trade guys but not our kids. But, the industry has changed in ways, especially in terms of technology and the things that can be done. So many more things can be done by robots and you need sophisticated people to operate all those things. There’s a lot of great opportunities. It’ll take us awhile to get there. I hope that our people will be a voice of reason and not be quiet. There are too many loud voices that are looking for unreasonable solutions. They don't under-stand the economic reality and what it all means.

CODY WILSON: We had a good discussion. I appreciate all of you participating and being willing to come and sit down and have these conversations. I think they're important. I think it helps the industry as a whole to have those. I think it's good that we have you all here as leaders of that industry to put those points out there in front of everybody else. So, appreciate it.

JERRY TAYLOR: Our industry has great jobs, great opportunities for young and old alike. And if people want a future, get involved. Come help us build America. Come help us build Utah.

Your Guide to the Utah State Construction Registry

The Utah State Construction Registry (USCR) is an online system designed to facilitate the filing and tracking of construction-related documents. The USCR is intended to streamline communication among property owners, contractors, subcontractors, suppliers, and other stakeholders involved in construction projects in Utah. One of the main goals of the platform is to improve transparency and ensure that all parties are aware of the important notices and filings involved in construction projects.

Who Can Use It?

The SCR is designed for use by:

• Property owners
• General contractors
• Subcontractors
• Material suppliers
• Lenders
• Design professionals

What Problems Does the Utah State Construction Registry Solve?

The SCR addresses several common issues in construction projects:

• Lack of transparency: Ensures all parties are informed of key project milestones and filings.
• Payment disputes: Helps track preliminary notices to prevent disputes over payments.
• Legal compliance: Ensures compliance with Utah state laws regarding construction notices and liens.

Anyone with a utah.gov login can access the registry, visit the Utah State Construction Registry website, and hit login. Or if you do not know if you have a login, you can hit get started to learn more.

Guides for Contractors and Other Users

The SCR website provides guides for contractors and other users, including step-by-step instructions on how to file various notices and liens.

What Notices Can Be Filed  on the Utah State Construction Registry?

Notice of Commencement

• This notice is filed by the owner of a public project or general contractor to signify the commencement of a public construction project. A notice of commencement is only filed for public projects.

Preliminary Notice

• This notice is filed by general contractors (on private projects), subcontractors, and material suppliers, and other stakeholders to inform the property owner or and general contractor of their involvement in the project. It helps preserves protect their right to file a lien if they are not paid.

Notice of Preconstruction Services

• This notice is used by professionals providing preconstruction services, such as design and planning, to ensure they are recognized as part of the project and preserves their right to file a lien if they are not paid.

Notice of Construction Loan

• This notice is filed by lenders to inform all parties that a construction loan has been secured for the project. It helps ensure that everyone is aware of the financing involved.

Notice of Completion

• This notice is filed by the property owner or general contractor to officially declare that the construction project is complete. It marks the end of the project and establishes a deadline for parties to file a lien.

Filing a Preliminary Notice in the Utah State Construction Registry

Filing a preliminary notice is an important step to secure your right to payment. Here’s a brief summary of the process:

1. Log in to the USCR: Access the USCR website and log in with your credentials.
2. Enter Notice Information: Fill in the required details about your involvement in the project, including your role, the type of work or materials provided, and information regarding the person with whom you have a contract.
3. Submit the Notice: Review the information for accuracy, pay the required filing fee, and submit the notice. You will receive a confirmation email once it is filed.

Filing a Construction Lien in Utah

If you have not been paid for your work or materials, you may need to file a construction lien. Here’s how to do it:

1. Prepare the Lien Document: Gather all necessary information, including the project details, amount owed, and your contact information.
2. Record the Lien: Record the lien with the county recorder’s office in the county where the project is located.
3. Notify the Parties: Ensure that all relevant parties, including the property owner and general contractor, are notified of the lien filing.

By following these steps, you can use the SRC to ensure all parties fulfill responsibilities outlined in the initial construction contract.

Babcock Scott & Scott, P.C. Advantage:

Navigating the Utah Construction Registry platform can be complicated and you want to ensure that you are filing and submitting the correct information and forms. The attorneys at Babcock Scott & Babcock, P.C. are here to help ensure that you get paid for the hard work that you have put into a job!

Filing Construction Liens in Utah

Introduction to Construction Liens

Construction liens, often referred to as mechanic's liens, serve as a crucial legal tool for contractors, subcontractors, and suppliers to secure payment for labor, services, materials, or equipment furnished in the construction industry. These liens provide a form of security by attaching a claim to the property where the work was performed, ensuring that payment disputes can be resolved with legal backing.

A construction lien is a legal claim against a property that has been improved by the efforts of construction professionals but where the full payment for services has not been made. This claim ensures that contractors and suppliers have a way to enforce payment through seeking to foreclose on the property itself if necessary.

Importance in the Construction Industry

In the construction industry, liens are important to contractors, subcontractors, and suppliers as they protect their financial interests. They ensure that those who provide labor, materials, equipment, or services to enhance the value of a property, have an avenue to seek compensation for their contributions, even when project owners face financial difficulties.

Legal Basis and Functionality for a Construction Lien

Construction liens are based on state laws that recognize the unique nature of construction contributions to real estate. In Utah, these laws outline specific procedures and legal standards that must be met for a lien to be validly filed and enforced.

Impact of Construction Liens on Property Titles

Once recorded, a construction lien attaches to the property title, making it difficult for owners to sell or refinance without first addressing the lien. This provides leverage to lienholders seeking payment.

Rules and Processes for Filing Construction Liens

General Procedures

In Utah, like in many other states, the process of pursuing a construction lien involves the following three several key steps: (1), preserving your ability to file a lien by filing a preliminary notice, (2) perfecting your lien by recording a formal lien with the county recorder's office; and (3) enforcing your lien by filing a lawsuit to foreclose on the property.

Documentation and Contract Requirements

Documentation such as contracts, invoices, and proof of service are typically required to support the claim. These documents must be meticulously maintained to successfully file a lien.

Jurisdictional Differences​​​

An understanding of the jurisdictional differences within state laws is crucial. In Utah, specific rules about the timing, documentation, and enforcement of liens can determine the success of a lien claim.

Preventing Construction Liens

Choosing the Right Contractor

To avoid potential liens, it’s important for property owners to vet general contractors thoroughly, ensuring they have a strong track record of fulfilling contractual obligations and managing their subcontractor payments.

Similarly, it is important for general contractors to vet potential clients thoroughly, in order to mitigate any potential risk of needing to file a lien later in the project. 

Contract Specifications

Clear contract terms regarding payment terms, schedules, and obligations can help in preventing misunderstandings that might lead to liens.

Payment Strategies with Joint Checks​​​

Using joint checks can be an effective strategy to ensure that payments reach all parties involved, thereby reducing the risk of unpaid subcontractors or suppliers placing liens on the property.

Preserving a Lien Claim

Time Limits and Deadlines

In Utah, in order to preserve their ability to record a lien, contractors and suppliers must timely file a preliminary notice. Failure to timely file a preliminary notice may result in a contractor, subcontractor, or supplier from being able to pursue a lien.

Required Information for Filing

A preliminary notice must include information regarding:

• The real property where the labor, materials, equipment, or services are being furnished.
• The owner of the real property.
• The general contractor for the project.
• The party with whom the person filing the preliminary notice has a contract.
• The party filing the preliminary notice.

Process of Filing a Preliminary Notice

Contractors, subcontractors, and suppliers who want to preserve their ability to record a lien at some point in the future, if necessary, must file a preliminary notice on the SCR within 20 days after beginning their work. A preliminary notice must be filed on Utah’s State Construction Registry (SCR) database. This database is available at scr.utah.gov. 

Perfecting a Lien Claim

Time Limits and Deadlines

In Utah, contractors, subcontractors, and suppliers have specific time frames within which they must perfect. typically within 90 days of last providing labor or materials.

Required Information for Filing

A recorded lien must include accurate details about the claimant, the property owner, the property itself, and the principal amount due. Accuracy is crucial to prevent the lien from being invalidated.

Process of Recording in County Recorder’s Office​​​

The actual filing is done at the county recorder’s office where the property is located. This includes submitting all required documents and paying applicable fees.

Enforcing a Lien

Legal Process of Enforcing Perfecting a Lien

Enforcing a lien involves taking the necessary legal steps after recording a lien filing to enforce your lien ensures it is enforceable.

Timeframe for Filing a Lawsuit

If payment is not made after recording a lien, the next step is to file a lawsuit to enforce the lien. In Utah, this must be done within 180 days after recording the lien.

Possible Outcomes and Court Judgments​​​

The outcome of such lawsuits can vary, but they may result in the forced sale of the property to satisfy the lien, or removal of the lien upon payment.

Remedies and Resolutions

Paying Off the Lien

Property owners can resolve a lien by paying the full amount claimed. This immediately releases the lien from the property title.

Legal Challenges against Liens

Property owners can dispute construction liens through legal challenges that question the validity of the lien or the accuracy of the amounts claimed. These challenges often involve proving that payments were made, services or materials were not provided as contracted, or that procedural mistakes were made during the lien filing.

Consulting Construction Attorneys for Guidance​​​

Navigating the complexities of construction lien laws can be daunting, which is why consulting with experienced construction attorneys is essential. These professionals can provide strategic advice, help in proper documentation and procedure adherence, and represent parties in disputes or negotiations related to liens.

Babcock Scott Advantage:

Working through filing a construction lien in Utah can be complicated. The attorneys at Babcock Scott and Babcock are here to help ensure that you and your crew get paid for the hard work that you have put into a job!

Navigating Cost Overruns in Construction: Legal Insights and Strategies

Understanding Cost Overruns

In the construction industry, cost overruns are a common yet challenging issue. These unexpected expenses can significantly impact the financial stability and overall success of a project. Understanding the legal aspects of cost overruns is crucial for construction professionals to manage and mitigate these risks effectively. This article explores the legal landscape surrounding construction cost overruns, providing valuable insights and strategies for navigating these complex issues.

Cost overruns occur when the actual costs of a construction project exceed the original budget. These overruns can stem from a variety of sources, such as unpredictable weather, regulatory changes, or inefficiencies in project management. While there are many causes for cost overruns, here are three of the primary causes of cost overruns in construction:

• Material Price Fluctuations: The cost of construction materials can be highly volatile, influenced by global supply chain issues, changes in tariffs, or natural disasters. Such fluctuations can significantly impact the overall budget of a construction project.

• Labor Shortages: The construction industry often faces challenges in finding skilled labor, which can lead to delays and increased wages due to high demand. This scarcity of skilled workers can escalate project costs unexpectedly.

• Design Changes: Modifications to the design or scope of the project during construction can lead to increased costs. These changes often require additional materials and labor, and can extend the timeline of the project, further increasing expenses.

Best Practices to Avoid Cost Overruns as a Construction Project Manager

Effective management of cost overruns begins with robust budgeting and accurate cost estimation. Incorporating contingencies for unexpected expenses, thorough project planning, and stringent risk management can preempt many issues. Additionally, maintaining clear communication and detailed documentation throughout the construction process helps ensure that all parties are aligned and informed, reducing the likelihood of disputes.

Navigating Legal Disputes over Cost Overruns

When disputes over cost overruns arise, there are many tactics you and your legal team can take including negotiation, mediation, arbitration, or litigation. Each method offers different advantages and should be chosen based on the specifics of the situation. Successful case studies demonstrate that early intervention and professional mediation can prevent minor disagreements from escalating into more significant legal battles.

The legal framework for handling cost overruns revolves around contractual provisions. These provisions determine how additional costs are managed and who is responsible for absorbing them. So the best way to minimize these types of disputes is to ensure that provisions are in place before engaging with contractors.

Of course, there are always unforeseeable circumstances that come up in any construction project. For these situations, change orders are a critical component, allowing project specifications to be altered legally and the associated costs to be addressed. 

Pro Tip: Clarifying the responsibilities of all parties involved through executing clear, comprehensive contracts are vital in minimizing disputes over cost overruns.

The Role of Legal Professionals in Managing Cost Overruns

Construction law firms play a crucial role in managing cost overruns by assisting with contract drafting, negotiation, and enforcement. Legal professionals also provide essential support in dispute resolution and claim management, ensuring that all actions comply with relevant regulations and minimize financial risks. Legal advice is incredibly important in navigating the complex landscape of construction cost disputes, and with the help of a qualified construction law legal team, many times you will be able to recover unexpected costs that occur with cost overruns.

Cost overruns in construction require careful management and a deep understanding of the legal context of the original contracts. By employing the strategies discussed and engaging with legal professionals, construction managers and firms can mitigate these risks and maintain project viability.

If you're facing challenges with construction project management or cost overrun disputes, don't hesitate to contact the experts at Babcock Scott and Babcock. Our team of experienced construction law professionals is ready to assist you with effective legal solutions tailored to your project's needs.

Legal Tools for Getting Paid in Wyoming

Jason H. Robinson will be presenting for the National Association of Credit Management on August 30, 2020, from 3:00 to 4:00 pm EDT / 1:00 to 2:00 pm MDT. The title of his presentation is "Legal Tools for Getting Paid in Wyoming." Information about his presentation as well a link to sign up is available here.

Navigating your Construction Project through COVID-19

The relaxation of COVID-19 restrictions and reopening of the economy has become a delicate balance. As the return to everyday activity progresses, it is important to prepare in advance for this “return to normalcy,” which will almost certainly come in stages, especially as it relates to construction activity. As it happens, there will be numerous considerations depending on the stage of your project in the construction lifecycle, the status of the project stakeholders, and the implementation of revised or new safety requirements. 

Productivity Impacts

Projects that have been allowed to continue operations during COVID-19 restrictions should not expect normal work activity to be achieved as the stay-at-home restrictions are relaxed. Current social distancing and personal hygiene requirements will likely remain in place and continue to impact site access and worker productivity until a vaccine is developed or the severity of the virus wanes.

Careful consideration of social distancing and personal hygiene requirements should be applied to projects resuming operations following a shutdown as well as those starting from day one. The construction industry’s emergence from COVID-19 will be a slow, methodical process that will result in reduced productivity levels. Losses in productive time will come in many forms.

For projects that were suspended or restricted, a reforecasting of costs will be in order as many contractual Notice provisions require an estimated cost of the anticipated impacts to be provided to Owners. For new project starts, the same steps will be needed to justify changes in bid price.

Projects that have been shut down or slowed will need to account for demobilization and remobilization impacts. The pre-shutdown conditions and worker productivity must be thoroughly documented and communicated to all project stakeholders. This baseline condition will be critical to establishing the additional effort expended to remobilize and resume operations on site.

Schedule Impacts

On projects that have been shuttered, scheduling impacts will need to be addressed before work can resume and some of those steps may be significant.

Validation of your project schedule will be necessary regardless of what stage your project was in when it was shuttered or otherwise impacted by COVID-19 restrictions. Some projects will require a recovery schedule to make up for delays and account for changes resulting from COVID-19. This schedule should memorialize the schedule scenario that was in effect before the project was impacted by the virus and it should clearly show what changes were made to recover from any resultant delays.

Notice of COVID-19 impacts submitted earlier should be amended to reflect current conditions, and the amended notices should accompany submissions of recovery schedules in order to: (1) strengthen contractors’ arguments for relief, and (2) allow the owner to evaluate the financial implications of following the recovery schedule. Regardless of whether a recovery schedule is submitted and/or accepted, regular monthly schedule updates should be prepared and submitted to document progress as well as any additional COVID-19 related impacts that may arise.

Supply Chain Impacts

Procurement is another serious consideration because, although construction may be allowed to resume in your area, there may be supply chain impacts.

Contractors should consult with their subcontractors and suppliers when they resume work. Overlooking these parties can give rise to unnecessary delays and claims. Clear communication on changes to the project and collaboration on recovery actions are some steps that can be taken to involve subcontractors and suppliers.

Conclusion

We will emerge from COVID-19, but it will take a concerted effort by all of us. It will be no different for the construction industry. Taking time now to consider and address impacts will set the stage for successful recovery that will benefit all stakeholders.

Bad Faith Termination for Convenience

Many construction contracts include a clause that allows an owner to terminate a contractor’s remaining work on a project at the owner’s convenience. And during a global pandemic and these turbulent economic times, termination for convenience clauses are receiving renewed attention, including under what circumstances an owner may not terminate for convenience.

At the outset, some courts have at times viewed termination for convenience clauses suspiciously because such clauses typically confer an unfettered right to terminate only upon the owner. To some courts, this lack of mutuality appears to constitute an “illusory promise” lacking consideration, and thus, a provision some courts may not enforce. To remedy this issue, some courts have required an owner to have good faith reasons when exercising the termination for convenience clause. If an owner acts in bad faith when terminating for convenience, the owner will have violated the implied duty of good faith and fair dealing. See generally 5 Bruner & O’Connor Construction Law § 18:47.

But when does an owner act in bad faith when terminating for convenience? Few Utah courts have analyzed termination for convenience clauses, let alone explained the limitations on exercising such provisions.

Beyond Utah, other courts have held that a party acts in bad faith when it terminates a contract for convenience simply to acquire a better bargain from another source. See, e.g., Krygoski Constr. Co. v. United States, 94 F.3d 1537, 1541 (Fed. Cl. 1996).

Although few Utah courts have explored the limitations on termination for convenience clauses, precedent from federal appellate courts indicate that an owner acts in bad faith when it terminates for convenience simply because the owner got a better deal. To avoid potential allegations of bad faith, an owner may want to confer with counsel before deciding to exercise its termination for convenience rights simply because the owner found a better bargain elsewhere.

How Will Today’s Pandemic Impact Tomorrow’s Construction Contracts?

The emergence of COVID-19 has created a new set of challenges in the already complex world of negotiating construction contracts.  In the pre-COVID-19 era, general contractors, construction managers and those negotiating on their behalf, needed to balance a variety of fairly well-established legal risks and exposures and commercial realities with the need to maintain a positive relationship with their counterparty.  While many are rightfully concerned with addressing the impacts of COVID-19 to their on-going projects, those negotiating new contracts now are undoubtedly cognizant that they are negotiating in the midst of an unpredictable future that is tipping the historical negotiating balance.  The following presents some crucial areas to focus on when negotiating and drafting your contracts in this new era.

Contract Terms Impacted by COVID-19

Contractors should examine proposed new contracts carefully to identify rights that afford COVID-19 protections and identify contractual obligations that create COVID-19 commercial risks.

Specific attention should be paid to those sections relating to force majeure/excusable delay, emergencies, changes (including changes in law), contingency, suspension and termination, site investigation as well as all representations and warranties.  The paramount concern in examining these provisions is to ensure that they not only entitle the contractor to relief for those unknown events, emergencies and changes, but that they also contain sufficient entitlement for the contractor to obtain both time extensions  and financial compensation for unknown impacts of a known event – the COVID-19 pandemic.

Price and Schedule

Construction contracts often entitle the contractor to extensions of time for excusable delays, but not an equitable adjustment of the contract price.[1]  Contractors should look to adjust excusable delay provisions or include new specific language to provide for entitlement to additional time and compensation associated with COVID-19 impacts.  If compensation terms cannot be negotiated into the contract, this risk will need to be priced, which, as discussed above, may be a difficult task.

Contractors need to take appropriate steps to ensure that their contracts are clear, and to the largest extent possible, cover impacts flowing-out of the present pandemic and any future resurgences of COVID-19 or similar outbreaks.

Contractors may consider categorizing COVID-19 related impacts into two buckets – the known and the unknown and factoring those presently known impacts of COVID-19 into their price and schedule. For example, such known items may include social distancing requirements, workforce limitations, temperature screening, personal protection equipment, as well as performance delays and costs that arise out of the cumulative impact of these new measures. Next, the contractor needs a mechanism to obtain price and schedule relief for the presently unknown impacts of COVID-19.

Contractor Representations

In many construction contracts, the contractor provides broad and unqualified representations that it will be able to furnish the materials and labor required to the complete the work, often within the defined contract time.  This can be a difficult representation to make in the current market and should be appropriately qualified to consider the uncertainty that exists in current labor markets and the potential for supply chain disruptions that are outside the contractor’s control.  Additionally, ensuring that the contract provides for entitlement to equitable adjustments of time and contract price for COVID-19 related impacts will assist with mitigating this risk.

Indemnities and Waivers of Consequential Damages

No discussion of construction contracts would be complete without a nod to indemnities and waivers of consequential damages.  Indemnity issues affected by risks related to COVID-19 should be treated with special consideration. As coverage and policies varies from company-to-company and at times from project to project for the same company, contractors should consult with legal and insurance professionals to assess these provisions.

Consequential damages waivers are always critical protections for contractors; and should now be tailored to ensure they address COVID-19 related risks.  A failure to secure an effective consequential damages waiver creates significant exposure on any construction project, exposure that is made exponentially greater by the long list of potential damages that may arise from COVID-19. 

Conclusion

As this pandemic continues to impact the construction industry, we expect new strategies to be developed as contractors and owners work together to address and apportion the risks of tomorrow’s construction projects.  As part of that effort, contractors will be best served to bear in mind potential impacts to cost and schedule, the scope of their representations and obligations, and ensuring that all such clauses throughout the contract are properly harmonized.   

COVID-19 Impacts on Construction

COVID-19's impact on construction projects and parties have been
varied. Some owners have been forced to defer capital projects, adjust project completion expectations or shut down construction sites altogether. Owners of other ongoing construction projects have been largely unaffected due to the nature of their construction project or the regulations at their location.

Whether a project is significantly impacted or largely unaffected, parties to a construction project should review their contracts for guidance on how to address the impacts associated with COVID-19. Certain contractual provisions regarding delay, disruption, changes, damages and force majeure may be relevant.

Ideally, documentation of the project status has been created on a regular
basis, including at the outset of the impacting event. Impacts should be tracked and recorded in as much detail as possible, including steps taken to mitigate the associated delay or cost increases. This can be done through project schedules, daily logs, weekly COVID-19-specific reports, photographs or other means. Whatever the means of documentation, it will likely be helpful in a dispute situation to have supporting records with as much detail and specificity as possible.

We're challenging clients to do more than simply create a list of possible impacts. Circulate the list among the entire project team, and document as much as possible in the schedule or separate tracking log. Tie impacts to specific schedule activities or items in the job cost report so that there's a good record established linking impacts to delays or cost growth.

Communication and documentation are critical to managing issues related to COVID-19. Schedule impact and cost overrun information should be sought from subcontractors, suppliers, owners and other project stakeholders. It takes a collaborative effort to get as much quality information as possible.

Documentation: A Key to Preventing and Winning Construction Claims

Both practically and legally, a picture is worth a thousand words. In both the construction and legal industries, attempting to resolve issues based on oral conversations can be a recipe for further conflict. This is because it is inherently difficult to determine the truth in a “he said, she said” situation.

A judge, jury, or owner will need to determine who seems most trustworthy. Therefore, in preventing and prevailing on construction claims, it is essential that contractors create and retain the proper documentation.

One of the most important aspects of documentation is that it is kept on a consistent and contemporaneous basis. To properly utilize construction documentation, it must be kept as a general business practice at the time an event occurs.

One of the most important construction documents is the daily log. While a poorly kept daily log may be a waste of time, a properly kept daily log can be the key to avoiding liability. To do it right, a company should document the who, what, when, where, and why of the day. By recording these items, the contractor is preserving a reliable source of information.

A dispute over payment is common in construction litigation. One of the best ways to resolve or prevent such disputes is to properly record and keep invoices and pay applications. Proper record keeping maintains the trust relationship. Although it is tempting to hide cost overruns in different items within a schedule of values, such practices can and do result in a loss of the owner’s trust and can push a project into litigation.

To resolve a dispute over delays, contractors need to be keeping and updating proper schedules.

Even if a contractor starts out with a true CPM schedule, failure to preserve the baseline schedule and periodic updates as separate files negates any benefit there would have been.

Photographs and video records provide excellent evidence. No matter the type of claim, photographs and videos provide concrete proof of the status of the job at the time the photograph or video was taken.

When it comes to change orders, the Supreme Court of Utah has required strict conformance to contractual written notice requirements. See Meadow Valley Contractors, Inc. v. UDOT, 2011 UT 35. A good practice is to follow up conversations with an email summarizing the conversation. This gives you the ability to frame the conversation how you would like, and the recipient still has the ability to correct it if necessary.

Lastly, a contractor should not over document a job. Such notices hold little weight, and impacts the credibility of the party who is guilty of over documentation. A contractor should be cautious when making broad assertions of damages or default without specifics, and should limit such notices to when an actual default is affecting the project.