Spotlight: Agency Construction Management Professionals
The agency construction management (ACM) role may offer guidance on management techniques applied throughout a construction project to effectively control schedule, costs, and quality. More specifically, he/she may handle issues including decisions on project timeline, ideal use of available funds, scope of work management, construction quality, procurement, etc., without providing any actual construction services.
The ACM is part of a system that involves the construction manager, general contractor, design professionals, and owner. Communication issues can happen within this group that can lead to problems with design, impacts to the schedule, budgetary arguments, and conflicting interests. These team members must agree on the overall timeline, scope of project, materials handling and disposal, and also who is responsible for broader site environmental concerns such as Spill Prevention, Countermeasure and Control (SPCC) plan implementation, and ensuring that fuel transfer requirements are met, among other concerns. When problems occur, pollution and professional claims on a construction project can impact operational and leadership roles and result in significant lawsuits.
Pollution & Professional Coverage for ACMs
Contractors face professional liability issues from construction management services, job site modifications, and other daily activities. Additionally, E&O exposures for contractors are generally excluded from General Liability and monoline Contractors Pollution Liability policies.
The Contractors Pollution Liability/Professional policy is a combined Pollution and Professional coverage form. It provides coverage to general contractors, construction managers, and various trade contractors who could potentially have both pollution and professional claims; CPL/Professional provides coverage for E&O exposures for contractors.
Premiums start at $5,000 and limits are available from $1,000,000.
Claims involving agency construction management
- An ACM for a bridge replacement project was responsible for scheduling the procurement and delivery of steel beams necessary for the project. Due to a communication error, the delivery of the beams was going to be delayed for 4 weeks. Rather than have the steel subcontractor sit idle on the jobsite, the ACM procured steel beams from another vendor with minimal delay, although at a higher cost. The owner made a claim against the ACM for professional negligence alleging mismanagement of the project and sought payment for associated cost overruns in excess of $200,000.
- An ACM was sued after construction was completed in an elementary school. According to the lawsuit, design and construction defects subsequently caused mold and water damage which had cost the school over $4 million to repair. Although the school had been built 10 years prior, the statute of limitations did not apply in this case and the professionals involved in the job, including the ACM, reached a settlement of over $2 million with the school.
- Charges were brought against an agency construction manager by his state’s department of justice, because of alleged state water pollution violations. According to the complaint, the contractor had not maintained adequate erosion control measures while working on a bridge project. Because of this, it was alleged that sediment was discharged into a local key waterway. The ACM settled with the department of justice and agreed to pay $100,000 to resolve the claim.
- During construction of a shopping center, a paving contractor dislodged sediment in the area of the construction site which ran off-site and contaminated water on private property. The owners of the private property made a claim against the paving contractor and the ACM to obtain coverage under their General Liability policy. Because of the pollution exclusion in the General Liability policy, the carrier denied coverage and the courts upheld the decision. If the insured had had a pollution policy, it is likely that there would have been coverage for this incident.
- A construction team, including an ACM, worked with a heavy highway and bridge contractor to build an elevated highway. The team designed the temporary support structures used to support the permanent structure until the highway was completed. A design flaw in these supports caused a partial collapse of the highway, resulting in property damage to a subcontractor’s equipment and project delays. The costs to repair the highway and pay the associated property damage and delay costs were over $550,000.
For more information about coverage for agency construction managers or to discuss an account, please contact us.
Type: Blog
Topic: construction
