Industrial construction is poised for continued growth in 2025, especially with the incoming presidential administration and its anticipated emphasis on domestic economic production. Nowhere will this growth be seen more than in Texas with the continued emphasis on business relocation, economic development and population growth. Houston and the surrounding industrial center will likely see capital infusion and construction activity. With any industrial infrastructure project, costs of construction, timeliness of completion and the ability to yield revenue will be paramount.
Time is Money
No industrial construction project kicks off without the Owner having a firm understanding of when the project must be completed. Utilization of a completed project is key to the Owner’s bottom line and the generation of revenue. Additionally, production may relate to more than just revenue as Owners often have contractual obligations related to third party supply agreements. When revenue is non-existent and industrial owner’s obligations related to fulfillment of supply agreements are being breached the consequences can be costly.
The legal issues impacting these concerns are obvious:
(1) defined completion date and maintained schedule
(2) liquidated or consequential damages
(3) requirements for extensions of time
(4) defined excusable and non-excusable delays
(5) limitation of liability
(6) no-damage for delay
(7) acceleration
Careful attention must be given to the inclusion of a reasonably achievable date of completion that is directly connected to a defined and agreed upon schedule prior to commencement of the project. Additionally, during any project Owners must be vigilant in regularly maintaining and updating schedules, as well as communicating with contractors regarding schedule issues. Further, Owners must be thoughtful in properly documenting any extensions of time and ensuring that no extensions of time are granted without being in writing and mutually accepted by the Owner and Contractor.
Stay Tuned
This is the first of a series of blogs related to what industrial owners must consider when protecting their economic interests in the timely completion of critical construction projects. This will address more general concerns whereas the subsequent blogs will focus on specific legal issues and strategies in the contract negotiation and management phases of an industrial construction project. Be sure to look out (or subscribe) for my continued discussion of these issue next month on the Texas Construction Law Blog or contact me in the interim with any immediate questions.