Plan Sheets + Redlines – May 2019

Design-Building a Lawsuit. Well, Balfour Beatty Construction and HOK are duking it out in U.S. District Court for the Southern District of California. The lawsuit was originally filed in December in superior court in San Diego County, but has since been moved to the current location. Balfour Beatty is seeking at least $2.8 million in additional construction costs it says it incurred when it built a project, designed by HOK, that included a smoke control system allegedly in violation of the California Building Code. Fixing the problem, Balfour Beatty argues, cost it time and money. The project at issue was the Kern County Justice Facility, a $126-million jail that opened last spring in Bakersfield. While Balfour Beatty wants a jury trial, HOK has denied the allegations, has filed a counterclaim seeking $374,00 in retainage being held by Balfour Beatty, and has sued a subcontractor, Jensen Hughes Inc., blaming it for the shoddy smoke control system at the root of the conflict. In the greater scheme of things, and for firms that are so big, $2.8 million might not seem like a lot of money. But that amount, including the contested $374,000, comes out to about $3.1 million, or 67 percent of HOK’s original $4.6 million design fee. For HOK, if it loses the case, this would have to hurt. Both firms are mega-brands with international profiles, so they’re probably going to fight the good fight. No one knows how this will end, but one thing is certain – the lawyers will be busy.

Modern Slavery, Really. Speaking of Balfour Beatty, a pretty interesting document lives on the company’s website. The Modern Slavery Statement, there in bold blue letters, outlines the concerns the firm has, and the stats that fuel that concern. According to the International Labor Organization, there are as many as 24.9 million people in forced labor, 16 million of whom are “exploited in the private sector such as domestic work, construction or agriculture.” According to the Balfour Beatty statement, “The vast majority of these people are in the supply chains of legitimate industries.” Balfour Beatty says that in its risk assessment, it found that the most significant risks for slavery occur in their “material and subcontract procurement.”

With more than 30,000 employees, Balfour Beatty is a leading international contracting company that had 2018 total revenue of £7.8 billion and an order book of £12.6 billion. The company operates principally in the UK, Ireland, the United States and Canada, and has a joint venture in Southeast Asia. The company has a Code of Conduct, and expects subcontractors, suppliers, and factories to comply with the code and other international standards. Kudos to Balfour Beatty, but it makes you wonder how many supply-chain companies don’t comply, and how many international companies don’t even address the issue of modern slavery.

Oil & Crass. The sensationalism and delirium over Colorado’s SB 181, which overhauled the state’s regulation of the oil and gas industry by ceding oversight to cities and counties, got under Jack Hamlin’s skin. As owner and president of Englewood-based Summit Engineering Services, a 105-man firm that specializes in well pad facilities, he had a lot vested in the outcome of the bill, which was passed by the Colorado General Assembly in April. Hamlin was at a lot of public meetings, testified before the House Energy & Environment Committee, and was otherwise ever-present as the debate, framed along bitter party lines, unfolded in Denver. Disappointed by what he saw and heard, however, he penned an open letter to the public, one that was picked up by The Denver Post and that caught fire on LinkedIn.

“Instead of strong-arming and rushing through massive regulation overhauls, perhaps a more pragmatic discussion might be warranted. Let’s all put down our swords and bring people together to discuss the pros and cons of energy development of all kinds and the impacts it would have to all citizens and property owners,” he wrote.

And though his letter was well read, it’s not really what a lot of people wanted to hear. The bill’s supporters, the Democrats, said the world would collapse if the bill wasn’t passed, whereas Republicans, who opposed the bill, said the world would collapse if it did.

“Everyone’s a profit of doom,” Hamlin said during an interview with C+S. “I said, ‘Let’s have an armistice day,’ and it fell on deaf ears.”

Based in Weld County, ground zero for the Colorado oil and gas industry, the bill’s opponents have organized an effort to bring the issue to a vote of the people. Their aim? To repeal SB 181 and revert back to the rules and regs in place during former governor and current 2020 presidential candidate John Hickenlooper. Obviously, they may or may not succeed. Meanwhile, people like Hamlin, who make a living in the oil and gas industry, are worried about the health of their firms. Hamlin says he has already lost one employee due to fears over SB 181, and that he has put the kibosh on the hiring of two new people. He’s also looking harder at opportunities coming out of his Texas office in Midland.