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construction companies

Construction Companies Can Be Exposed To Lawsuits When Assisting The Government During An Emergency

Imagine that you own a construction company and one of your employees comes in and tells you that the two largest buildings in town have collapsed. You receive a phone call a few days later from a government official who informs you that the police and fire department need your construction company to send heavy equipment and demolition crews to the site of the collapsed buildings to help remove large pieces of debris in order to save people’s lives.

Some large construction companies in New York were faced with that exact situation after the Sept. 11 attacks. The construction companies that helped clean up the World Trade Center disaster site were responsible for removing one-and-a-half-million tons of debris that covered many city blocks. Before long, the workers who were removing the debris started getting sick, as did police officers and firefighters who were stationed at the disaster site. Many of them have filed lawsuits against numerous entities, including the construction companies that were called upon to help with the debris removal effort.

The construction companies failed in a recent attempt to dismiss the lawsuits on grounds that they were immune from liability because they responded to an emergency situation.

Any business that decides to help in an emergency must protect itself, or face the legal consequences of the almost inevitable mistakes and accidents that will happen. With careful planning and prudent oversight, you can protect your business from lawsuits related to its help in an emergency or disaster situation in the state of Arizona.
Arizona’s immunity statute

The statute A.R.S. § 26-314(A) provides immunity for the state of Arizona and its political subdivisions (i.e., counties, cities and other local governments) for the actions or inactions of its “emergency workers.” The statute states that “emergency workers” shall have the same immunities as agents of the state of Arizona and its political subdivisions performing similar work. The term “emergency worker” is defined in part as “any person who is … an officer, agent, or employee of this state or a political subdivision of this state and who is called on to perform or support emergency management activities or perform emergency management functions.” Therefore, the only way to be sure your business is immune from lawsuits related to its assistance to the state or city government in a disaster or emergency situation is to wait until the government “calls on” your business to provide help.

Your business must always operate as an “agent” of the government to be considered an “emergency worker” and maintain its immunity. Your business will be considered an agent of the government if the government has the right to control the conduct of your business as it performs its work. Thus, you should determine who is in charge of the emergency site, and you should offer assistance to that person. You should seek detailed instructions from the person in charge and make sure it is clear that your business is operating under that person’s authority.

Should your business enter into a contract with the government to perform emergency services, then the rules change significantly. The provisions of the statute would still apply; however, a business that enters into a contract with the government would be considered an independent contractor. An independent contractor is an “agent” only if the government instructs the independent contractor on “what to do, not how to do it.” Therefore, when your business enters into a contract to help the government in an emergency situation, you must make sure the contract provides your business with control over the process and/or methods that it uses to do its work.

Of course, the Arizona Legislature can amend the statute to include immunity for any business entity that renders assistance during an emergency. If businesses were provided with clear protection under the statute, there would be no need for them to worry about being an “agent” of the government, and it would persuade more businesses to render assistance to the government in an emergency.

Stimulus Effect

Infrastructure Companies Are Big Winners Under Plan To Jumpstart Economy

Construction companies, big and small, figure to be the primary beneficiaries of some $4.2 billion in federal stimulus money that will flow into Arizona in the months ahead. But economists and industry officials say businesses across the board will share in what could be a spending bonanza.

Clearly not everyone is in construction. Yet, as major projects move from drawing boards to construction sites, laborers and management teams are in a better position to perhaps buy a car or get an old one repaired, purchase a needed washer or dryer, go out to dinner, or shop for clothes for their kids. That’s what many see happening as the money flows downstream.

Industry experts say estimates of the multiplier effect range from 3.5 to 5.5, meaning that for every dollar spent on construction, the impact on the rest of the economy is $3.50 to $5.50. Others say that every $1 billion spent on construction results in 35,000 to 40,000 jobs.

Other businesses in line to benefit include those related to health care, energy efficiency and home improvement. And it will help if a business is savvy about coping with government bureaucracy.

There are debates about whether the Obama administration’s $787 billion stimulus package involves too much government or not enough government, but everyone seems to agree that government has to do something to pull the nation out of the worse economic downfall in decades.

Economics Professor Dennis Hoffman, director of the L. William Seidman Research Institute at Arizona State University’s W. P. Carey School of Business, is among those who expect stimulus money targeted for indigent health care to have a ripple effect, impacting hospitals and health professionals. But, says Hoffman, who has done projects for Del Webb Construction, the Arizona Department of Transportation, the Arizona Department of Environmental Quality and APS, there is more.

“Any private sector business that supports K-12 and to some degree higher education, will benefit,” Hoffman says.

He includes suppliers, and maintenance and construction firms that serve the education field. Above all, construction companies involved in infrastructure and road building will receive what Hoffman calls “a needed shot in the arm.”

“The general contractors have been begging for this,” Hoffman says. “They were absolutely on the front lines working for this injection, because their businesses were dead in the water.”

Of the $4.2 billion in stimulus money, $522 million is allocated for transportation.

David Martin, executive director of the Associated General Contractors, Arizona Chapter, echoes Hoffman’s assessment. “All highway and heavy construction firms will be beneficiaries,” Martin says.

Additionally, contractors who work on education facilities, particularly in lower-income areas, and those that build water-treatment facilities, emergency shelters, and public infrastructure projects, such as streets and sidewalks, should benefit. Martin calls it “neighborhood stabilization.”

David Jones, president and CEO of the Arizona Contractors Association, says companies with experience in public works projects will benefit, especially those that “historically understand red tape and the bureaucratic levels of federal contracting.”

Utility companies should be able to take on energy-related projects, and work should be available for companies that retrofit residential, schools and government buildings to solar energy, Jones says. Women, minority and disadvantaged business enterprises, plus businesses run by war veterans “will have a place at the table,” he adds.

Homebuilders could benefit from projects on military bases, such as single-family units or replacing aging barracks.

Doug Pruitt, president and CEO of Sundt Corp., says contractors such as Sundt are positioned to do well in the stimulus world because of the company’s broad market diversification.

“We do highway work, industrial, water and sewage treatment, university work, K-12 — a whole host of building work,” Pruitt says.

He doesn’t expect much school construction, however, because nationally only 8.3 percent of the $143 billion allocated for construction is set aside for schools. Most of the money will go for highways, bridges and water-related projects, with funds funneled through such federal agencies as the General Services Administration and the Army Corps of Engineers.

Pruitt says Sundt is focusing on its federal divisions and moving personnel from other units that have suffered because of the economy.

At Sunstate Equipment in Phoenix, which rents a full line of hand tools to heavy equipment, CEO Benno Jurgemeyer says it all comes down to “job creation and getting consumers back in a spending mode.” He says his company would benefit directly from highway or vertical construction, and indirectly if the stimulus package keeps office buildings and retail centers rented and full of employees and customers, thus accelerating the development process.

Jeff Whiteman, president and CEO of Empire Southwest, an authorized Caterpillar dealer for heavy equipment including off-highway tractors and trucks, says his firm should see some benefits, but adds: “I think it falls far short of being a true stimulus package and truly creating jobs. What we have is better than nothing. It will help us as construction picks up and hopefully some highways are built.”

Typically, businesses such as Empire Southwest are the first in and the first out of a recession. When housing construction stops, site preparation and development stops, and when housing is ready to resume, site preparation resumes. But in today’s economy, so many improved lots are ready for building that Whiteman says his industry’s recovery will be tied to heavy and highway construction.