Monthly Archives: September 2012

Water factor flows in construction

Handling water and wastewater is becoming more and more important in our everyday lives. Just take a look at the DJC’s Environmental Outlook special section and you will see several articles on the subject.
First up, read about how Ecology is revising Sediment Management Standards to clarify what is needed to clean up contaminated sediment sites and to make the cleanup process more effective. Then read about the 200 West Pump and Treat System at Hanford that is scrubbing contaminated groundwater while saving more than 70 percent in energy costs over its life.
Not all water management is about getting stormwater out of the ground. Arnie Sugar from HWA GeoSciences writes about the benefits of increased infiltration of stormwater using low-impact development methods.
Then there’s wastewater. Tom Paul of Mortenson Construction covers how wastewater plants can be tapped as a renewable energy source.
If all this water talk has your head swimming, you can read about proposed rules that would allow some larger projects to bypass the SEPA process.

Thanks to all who participated in the special section!

Proposed 2013 Workers’ Comp Rates Low

Thanks to safer jobsites and the workers’ comp reforms pushed by AGC and other industry groups, L&I announced it is proposing no increase in the average rate for workers’ compensation insurance. If adopted, this would be the second straight year with no increase in workers’ comp rates.

Note that the average increase is zero, but the proposed increases for individual construction classifications differ, ranging from an 8% decrease for machinery installation, service and repair to a 9% increase for excavation, road construction and land clearing.  For the list of proposed 2013 construction classifications, click here.

After public hearings (see dates below), the final rates will be adopted in early December and go into effect Jan. 1, 2013.

Contractors can see the positive results of the workers’ comp reforms that they helped enact into law last year in these proposed rates. The reforms actually saved about $162 million in the rate calculations, dropping the projected rates downward. This makes possible an even more important effort: the rebuilding of the Fund’s reserves.  There is no question that the reforms are working and giving momentum to additional reforms in the upcoming legislative session.

Savings due to reforms are beating expectations. L&I is now projecting the reforms passed in 2011 will save $1.5 billion over four years, $300 million higher than originally estimated.

While the reforms play an important part in lowering costs, L&I Director Judy Schurke pointed to additional factors responsible for lower costs in 2013, including:

  • Fewer claims in high hazard industries like construction are resulting in fewer long-term disabilities;
  • Overall claim frequency, or the number of claims per 100 workers, has gone down by 6.2 percent;
  • L&I has held medical cost growth below 4 percent over the past five quarters and expects continuing to do so in 2013 with the new provider network and health technology assessments;
  • L&I is resolving claims more quickly as a result of Lean and other improvements.

In the past, the State Auditor issued strong warnings about the consequences of maintaining inadequate reserves. Schurke also acknowledged the reserves are critically low by industry standards due to increased liabilities, investment losses and drawing down the reserves to hold down rates during the recession.

The Workers’ Compensation Advisory Committee worked with the department over the summer to craft a ten-year plan to replenish the shrunken reserves.  The first step takes advantage of the cost savings realized from the reforms by placing about half ($82 million) in the State Fund reserves by the end of 2013, resulting in the 0% projected average rate increase.  The ten year plan will rebuild the Reserves to about 14% of State Fund liabilities, with estimated rate increases of about 4 to 5.5% over the years.  Upon completion of the plan, rate increases are assumed at 3.5%.

Washington is the only state where workers pay a substantial portion of premiums. Workers will pay about 24 percent of the premiums in 2013.

Every year in Washington, about 100,000 claims are filed for medical costs and lost wages due to work-related injuries, illnesses and deaths. Each year, L&I must review premium rates and make adjustments to cover the anticipated costs of claims that occur in the next year.

Public hearings on the proposed rates will be held in:

  • Tukwila, Oct. 23, 10 a.m., L&I office.
  • Bellingham, Oct. 23, 1 p.m., Public Library Lecture Room.
  • Spokane, Oct. 24, 10 a.m., CenterPlace Event Center.
  • Richland, Oct. 25, 10 a.m., Community Center Activity Room.
  • Tumwater, Oct. 26, 10 a.m., L&I Auditorium.
  • Vancouver, Oct. 29, 10 a.m., Red Lion at the Quay, Quayside Portside Room.

More information regarding the rate proposal is available at www.Rates.Lni.wa.gov.

Reading (Contracts) is Fundamental

Ever been to one of those helpful construction law seminars? You know, the ones where a friendly lawyer (like me) keeps saying, “don’t forget: read your contract?” Yep, you know the ones.

I was a contractor for almost 20 years. Did I always read my contract? Actually, yeah, most of ‘em, I did. But, the ones I didn’t read were ones I naively assumed were merely perfunctory, the kinds you saw all the time: concrete sawcutters, crane and other operated equipment rentals, and quite often, credit agreements with suppliers. “I understand,” I would think as I (literally) scawled my John Henry on those agreements. And all that was fine until I discovered one not-so-fine day that a chunk had been taken out of my ample backside by something I missed by not closely reading one of those “routine” agreements.

So was the case for poor old (and now defunct) Arm Construction of Seattle. Division III of the Washington Court of Appeals told this cautionary tale in an unpublished decision released on September 11. When I read the decision, all I kept hearing in the back of my head were all those lawyers I have heard plead to their contractor clients, “Please, please, you gotta read the contract!”

Perhaps like I did (or perhaps more correctly, didn’t) in my contractor days, when Arm Construction’s owner signed its credit application with Gray Lumber in 2003, either it didn’t read the contract closely, or maybe at all. And therefore, the red light disclaimers included in that agreement—the ones that said that Gray wouldn’t be responsible for warranting the materials it sold Arm, and wouldn’t guarantee the fitness of those materials for a particular purpose—got missed. Big mistake.

Therefore, when Arm ordered No.2 Doug Fir 4x4s from Gray in 2006, and got shipped Standard 4x4s, and then failed to notice the error, that’s when the problems arose. Workers using the scaffolding Arm built with the 4x4s were hurt when it collapsed. They sued. Arm’s L&I rating went up, it had to pay its insurance deductible, and it alleged that it incurred other damages.

Four years after its lumber purchase, Arm sued Gray, asserting what were essentially Uniform Commercial Code claims (breaches of warranty, fitness for a particular purpose and contract, and a failure to furnish conforming goods). After discovery, Gray moved for summary judgment, relying on the 2003 credit agreement and the waivers of liability included in it. To attempt to stave off summary judgment Arm asserted, in addition to other factors, the existence of a supplemental oral contract, in which Gray was alleged to have waived the immunities to which it was entitled by written credit agreement.

You won’t be surprised to know that the judge didn’t buy it, and granted Gray’s motion for summary judgment, a ruling the Court of Appeals upheld. Bottom line: almost no agreement by which you obligate yourself is perfunctory. As trite and obvious as it might sound, take your nagging lawyer’s (and Arm Construction’s) advice: signing something you haven’t read or don’t understand is like spitting into the wind. You might get lucky. Then again, if you’re not so lucky, it can be a nasty mess.

State Opens New Procurement Portal

eBid Systems has announced the availability of WashBid, a procurement portal that will be used by Washington state public agencies to post bids, bid documents, and receive electronic bids. As a potential supplier, service provider, or contactor to Washington public agencies, you can visit the WashBid website to view business opportunities from public agencies across the state. There is no charge for supplier access to WashBid to view business opportunities, download bid documents, or submit a bid. Only the supplier that is awarded the bid is charged a modest success fee. Through October 1, 2012, the award fee for posted bids will be waived. Visit WashBid for more information.