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Top Legal Challenges Faced by Large Commercial Construction Businesses

I have had the honor and privilege of working on some of the largest and highest-profile construction projects and disputes in the State of Michigan. I represented Northwest Airlines in its three-phase $1.6 billion construction of the McNamara Terminal and related facilities at the Detroit Metropolitan Airport, the City of Dearborn’s $400 million plus combined sewer overflow project, and the County of Wayne’s failed consolidated jail project.

Municipalities, authorities, and private owners all play a critical role in building our communities and carrying out visionary plans that impact our environment and cityscapes. So do the construction companies that they hire.  Construction companies are part of a complex and dynamic, multi-trillion global sector, which means they also encounter a number of issues that require expert legal guidance.

Through my career and at August Law, PLLC, I’ve come across and dealt with legal issues and challenges that construction company owners, managers and professionals should be aware of by both litigating against them and in support of them.

The more you know, the more you can protect your company from harm or the stressful process of litigation.

Here are 3 of the top legal challenges these large construction businesses face, and some insight on how to address them:

  • Contract disputes

    This is perhaps the most common legal challenge encountered by construction businesses. This industry experiences issues like disagreements over payment terms, project scope and performance standards, among others. While early intervention through negotiation or alternative dispute resolution (ADR) can help mitigate issues, having comprehensive and well-drafted contracts that outline each party’s obligations clearly should be of utmost priority.

    The goal of every construction lawsuit is simple – blame someone else.  Use of well drafted contracts lets construction companies shift responsibility onto others who are responsible: owners, designers, engineers, subcontractors, material providers, and third-parties.

  • Compliance with regulations

    The construction industry is heavily regulated at both the federal and state levels. Adhering to building codes, safety standards, environmental regulations and zoning laws can be daunting for large construction businesses. Failure to comply with these regulations can result in costly fines, project delays and reputational damage. This is where having a well-seasoned team comes into the picture – to ensure compliance throughout all project phases.

  • Labor & employment issues

    More often than not, large construction businesses employ a diverse workforce which extends to its employees, subcontractors and temporary workers. This setup may give way to challenges like wage and hour disputes, misclassification of workers, or compliance with labor laws. Staying up-to-date with labor regulations can help businesses avoid costly litigation and maintain positive labor relations.

WHERE IT ALL ADDS UP

If there is one recurring theme among the issues mentioned above concerning large construction companies, it’s that having proactive management from top to bottom and legal measures in place is the best practice.

Construction businesses should prioritize early legal consultation, adopt comprehensive risk management strategies, and establish clear and transparent communication with all stakeholders.

SOURCES:

Size of the global construction market from 2020 to 2021, with forecasts from 2022 to 2030. Statista. Retrieved from https://www.statista.com/statistics/1290105/global-construction-market-size-with-forecasts/.

What is August Law. August Law. Retrieved from https://www.august-law.com/what-is-august-law.

Wolfe, S. (2022) 2020 Report: Construction Suffers From Wasted Time & Slow Payment. Levelset. Retrieved from https://www.levelset.com/blog/2020-report-construction-wasted-time-slow-payment/.

Tariq, J. (2023) Study the delays and conflicts for construction projects and their mutual relationship: A review. Ain Shams Engineering Journal. Retrieved from https://www.sciencedirect.com/science/article/pii/S2090447922001265.

Areas of Practice. August Law. https://www.august-law.com/areas-of-practice.

Why Hire August Law. August Law. https://www.august-law.com/why-hire-august-law.

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