What type of construction project are you working on? This is an important question for a whole host of legal, safety, and payment-related issues. In fact, determining the project type is an essential part of starting any new job. But it’s not exactly a straightforward question to answer. There are actually several different ways to classify construction projects: by building type, by fire safety, and by the type of owner.
In this article, we’ll look at some of the ways that construction projects are categorized, and why it matters.
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Construction Projects by Sector
For many folks in the construction industry, the “type” of construction project refers to the actual facility being constructed. These are simply:
- Building construction
- Industrial construction
- Heavy civil construction
Building construction includes both residential (single and multi-family houses) and commercial (office buildings and warehouses). Industrial construction refers to energy facilities (oil and gas, solar fields), factories, distilleries, and other large-scale production facilities. Infrastructure construction, also known as civil construction, includes public works projects like roads, bridges, airports, and sewer systems.
However, there isn’t much benefit to classifying projects this way, because it doesn’t really tell you anything about the actual construction. Yes, they require different levels of construction knowledge and equipment, and it might tell you about the function of the facility, but there are more helpful ways to classify projects that help everyone involved in the project understand the requirements, laws, and risks involved.
Construction Projects By Owner Type
Perhaps the most important way to categorize construction is based on who owns the project or property. Why? Because that’s what state and federal laws care about when it comes to contracts, payments, and the amount of risk that contractors and suppliers will carry on the project.
Laws aren’t concerned with the facility you’re working on, and whether it’s industrial or heavy civil. Instead, they set requirements based on who owns the project. Just look at prompt payment laws, mechanics lien and bond claim rights, and pretty much any other law that affects a contractor’s right to payment on a job.
Broadly speaking, construction project are either public or private — but those are further broken down into 4 types:
- Private residential projects
- Private commercial projects
- State construction projects
- Federal construction projects
These categories are determined by who owns the property where the construction project is taking place. This is important because the property owner will determine what type of payment security contractors and suppliers have on the job.
On private projects, a mechanics lien provides construction professionals with a security interest in the property itself. If they are not paid, they can file a lien claim and encumber the property, making it difficult for the owner to sell or refinance until the contractor’s debt is paid.
Public land, whether state or federal, cannot be subjected to a lien claim from a contractor. Instead, payments on these projects are secured by the general contractor’s payment bond. The bond essentially takes the place of the property — if a construction business is not paid, they can file a bond claim with the surety that provided the GC’s bond.
Private construction projects are projects of every type that are owned, controlled or commissioned by a private party. Private parties include individuals, homeowners, corporations, other business entities, non-profit associations, privately funded schools, hospitals, publicly traded companies, etc. Anything, in other words, that is not the government.
Private construction projects come in all different shapes and sizes, and this is when it’s useful to look at the character of the work performed to segment private construction into different subcategories. These subcategories would include:
Whenever construction work is being performed to a single-family residence or a residential facility with (usually) less than 3 or 4 units. If you are working on an apartment complex this would more likely be considered a commercial project instead of a residential project.
Similarly, if you are working at a condominium, the work would be residential if upon a single unit, but work on the entire complex or the common elements would more likely be considered commercial.
Mechanics lien laws tend to give extra protection to individual homeowners. States sometimes require extra notices (or require specific language in them) in order for a contractor to file a lien against their property. In Texas, for example,
Commercial construction is the construction of any buildings or similar structures for commercial purposes. Commercial construction includes a huge variety of projects including building restaurants, grocery stores, skyscrapers, shopping centers, sports facilities, hospitals, private schools and universities, etc.
Industrial construction is a relatively small segment of the construction industry. These projects include power plants, manufacturing plants, solar wind farms, refineries, etc. While termed “industrial construction,” it is pretty interchangeable with “commercial construction,” since, when it comes to payment, they operate in the same category.
State Construction Projects
Some people get confused by the term “state” when talking about state construction projects because the term “state” can refer to projects commissioned by a county, city, municipality, government board, public school board or any other state-funded entity. The term “state construction” means, therefore, any government-funded construction that is not “federal” – which is discussed in the next section.
State construction projects can take a variety of forms.
They can be pretty traditional projects like the construction of a public school or government building (like a court room). These projects can also be pretty sophisticated, such as the construction of a bridge, sewer line, highways, etc.
Federal Construction Projects
Federal construction projects are very similar to state projects. Just like state projects they can take on a variety of forms: very simple and traditional, and very complex. And the stuff being constructed can be pretty similar to the stuff constructed by state authority: courthouses, government buildings, flood control projects, etc.
The difference between state and federal projects simply depends on who owns or controls the underlying project site. The difference is not which entity funds the project, because federal funds are all over state (and even private) projects. The difference is in who owns and controls the project.
If work is done on a state courthouse using federally provided funds, it is a state project. If work is done on a federal courthouse, however, it’s a federal project. Work done on a federally funded interstate is usually a state project because the states control the highways. Work done through the US Army Corps of Engineers, however, even on state land such as the levees, is always a federal project because it is federally controlled.
Why Owner Type matters
Why do you need to know who owns your project? The differences are very important because the laws governing your construction project are significantly different depending on the owner.
First of all, the type of payment security available to contractors and suppliers on a project is different. On private projects (residential or commercial), unpaid construction businesses can file a mechanics lien.
But on public projects, the federal or state government that owns it doesn’t allow contractors to lien their property. Instead, the Miller Act (at the federal level) or Little Miller Acts (at the state level) typically require the general contractor to put up a payment bond to provide payment security to those working on it. If they’re unpaid, they can make a bond claim to recover the money.
But payment laws are not the only laws that are different. Labor laws and contracting rules are different depending on your project type, and more.
These legal differences are why the traditional classification system – based on the building type – are largely irrelevant. While the character of the underlying work is important to some degree, the big legal differences hinge on the private or public nature of the work.
Construction Projects by Building Occupancy
Construction projects are often categorized by their occupancy, which refers both to their use and the number of people allowed to occupy the facility.
While local jurisdictions set their own building codes, they often choose to adopt a standard set of accepted codes. The most common in the US is The International Building Code (IBC), which has 10 broad classifications for buildings:
- Assembly (Group A): Facilities where people gather in large groups. Includes churches, restaurants, theaters, stadiums, etc.
- Business (Group B): Facilities where commercial services (not retail products) are provided. Includes government buildings, universities, hair salons, doctors’ offices, banks, etc.
- Educational (Group E): Facilities for youth education. Includes elementary schools, high schools, day care centers, etc.
- Factory (Group F): Facilities designed for manufacture, assembly, fabrication, or repair of goods. Includes cabinetmakers, furniture shops, paper mills, auto mechanics, etc.
- High-Hazard (Group H): Facilities for production or storage of flammable or toxic materials, like fireworks, explosives, combustible liquids, etc.
- Institutional (Group I): Facilities where occupants require physical assistance or are detained. Includes nursing homes, hospitals, prisons, etc.
- Mercantile (Group M): Facilities for display or retail of goods. Includes grocery stores, department stores, drug stores, gas stations, etc.
- Residential (Group R): Facilities for overnight stay. Includes houses, apartment buildings, hotels, motels, etc.
- Storage (Group S): Facilities where non-hazardous items are stored. Includes warehouses, parking garages, etc.
- Utility and Miscellaneous (Group U): Facilities for other uses not included in other categories. Includes water towers, carports, barns, greenhouses, sheds, etc.
Why building occupancy type matters
Occupancy is important for architects, contractors, and property owners when it comes to both zoning and building codes. Failure to comply with zoning and code requirements will cause problems during the building inspection, which can push back project closeout, cause a breach of contract, and delay payments to contractors on the job.
Construction Projects by Fire Resistance
Buildings are often classified by their fire resistance rating, which is a safety measure used to calculate the structure’s ability to withstand a fire. These standards are found in the Building Construction and Safety Code produced by the National Fire Protection Association (NFPA). Fire resistance rating can be applied to specific materials or building elements, or to buildings as a whole based on the materials used.
The fire resistance ratings apply to structural building materials — those used on exterior and interior bearing walls, columns, beams, girders, trusses, and arches, as well as floor, ceiling, and roof assemblies.
Type I: Fire resistive
All building materials are non-combustible, providing 3-4 hours of resistance to fire. This type of construction is typically found in high-rise buildings, commercial projects, and hospitals.
Type II: Non-Combustible
All building materials are non-combustible, providing 1-2 hours of fire resistance. This construction is used in mid-rise office buildings, hotels, and schools.
Type III: Ordinary
Ordinary construction provides 0-2 hours of resistance to fire. Exterior walls are constructed of non-combustible materials, like brick, while the interior structural elements may be combustible. This is typically found in warehouses and some residential homes.
Type IV: Heavy Timber
Heavy timber construction requires exterior walls are non-combustible, providing 2 hours of fire resistance, with interior is made of solid or laminated wood without concealed spaces. This is often used in churches, small commercial buildings, and warehouses.
Type V: Wood Framed
Wood framed buildings have walls, floors, and roofs made of wood, providing little to no fire resistance. This is commonly used in residential homes.
Why fire resistance matters
Apart from the obvious safety concern for public officials, property owners, and occupants of the building, compliance with fire resistance codes will also affect the construction companies actually creating the structure.
In a building project, the material fire resistance requirements will typically be found in the construction specifications provided in the contract documents. As a result, these classifications are important for contractors and suppliers to understand and follow to ensure they meet the contract requirements. If a contractor substitutes unapproved materials, whether for cost savings or ease of use, they could end up breaching their contract, having to correct their work, and even paying damages.
Know thy project type
The type of project you’re working on will often determine the type of contract, materials, and specifications required. If any construction participant fails to follow the code and safety requirements required for that building type, it can cause a building inspector to issue a correction or rejection that drags out the project completion and delays payment to everyone on the project.
But no matter what type of building you’re constructing, it’s critical to know the type of project owner — whether the project is a private, state, or federal project. This will determine the rules for getting paid, including the actions that contractors and suppliers must take if payment doesn’t come through.