A flawed Texas bridge construction project may end up costing Houston’s Harris County close to $300 million more than the original budget.
Although much of the blame has been directed at the Beltway 8 bridge’s designer, FIGG Bridge Group, the design errors have the potential to impact parties all the way down the payment chain.
Following the discovery of 21 separate “serious” design flaws in FIGG’s original plans that “would have led to failure of the bridge,” the Harris County board of commissioners voted late last month to demolish and rebuild certain segments of the bridge.
In total, the corrections will cost $291 million — including $50 million for demolition — and will push the bridge’s completion date back to 2027.
Design flaws aren’t just the designer’s problem
In situations like this, design flaws can significantly impact parties other than those that are directly responsible for them. FIGG has since been fired from the project, but the bridge’s issues have introduced significant risk to the project’s general contractor and various subcontractors.
FIGG’s designs for the Houston bridge drew new scrutiny following the tragic 2018 collapse of the Miami Florida International University footbridge, also designed by FIGG, that resulted in the death of six people and the injury of 10.
Prior to the Miami bridge collapse, FIGG appears to have been well-regarded, having won over four hundred design awards for its substantial portfolio of bridge projects.
Yet although FIGG sustained the most severe punishment for the incident, receiving a suspension and a potential 10-year disbarment, other businesses were seriously affected by their partnership with FIGG.
The general contractor for the Miami bridge project, Magnum Construction Management, was decertified by the Florida Department of Transportation and filed for bankruptcy after its insurance companies paid out $42 million to victims of the collapse.
Although the flaws in the Houston bridge project were discovered before its completion, it’s not yet clear how the fallout with affect the project’s other participants.
Payment bond claims may not help the project’s general contractor
While payment bonds, which are required on public projects, would typically provide some security for construction firms in the event of non-payment or project delays, this scenario is tricky.
Prior to the discovery of the project’s design flaws, a significant amount of work had already been completed.
Harris County’s decision to demolish certain portions of the Houston bridge project has forced the general contractor, Zachry Construction, to essentially “start from scratch on the bridge” — but they likely won’t be able to make a claim against their own bond.
The designer, FIGG, probably won’t be able to either. After all, payment bonds protect payments to contractors down the payment chain. If there are payments outstanding to either FIGG or Zachry Construction, it’s not clear how they’ll get their money back.
Subcontractors should be protected for past work — but their future remains uncertain
The payment situation for the project’s subcontractors is certainly complicated — the bridge’s delays are not from the GC’s mismanagement of funds, for instance, but rather structural design flaws.
Fortunately, unpaid subcontractors should have the right to make a bond claim for unpaid work, but it will ultimately come down to how the bond is written.
The challenge for subcontractors in this situation is that the scope of the project’s original design is changing. Many subs will need to renegotiate their agreements or rebid on the project, and some will be left out entirely.
For instance, the Houston bridge’s new design calls for primarily steel construction, as opposed to the allegedly faulty design’s concrete build. Concrete firms counting on a payout may simply be out of luck if they’re not able to renegotiate their agreement or provide the required services.
The design flaws discovered in FIGG’s original plans for the Houston Beltway 8 bridge project have been disastrous for almost everyone involved.
Harris County is out nearly an extra $300 million, the GC may be stuck with costs for work already complete, and subcontractors may be scrambling to secure future contracts.
FIGG, who has already been suspended from other projects, is facing a potential 10-year disbarment. What’s worse, even if they’re able to appeal the suspension, it seems unlikely that subcontractors would be willing to take on any future projects designed by FIGG given their history.
Workmanship issues are common in the construction industry. Fortunately, in most situations where money is withheld from a contractor, a mechanics lien (or payment bond claim for public projects) can be an incredibly useful way for contractors to get paid.
Protect & speed up every payment
Learn how Levelset can help you easily manage your lien rights on every project to ensure your payments are always protected.