Construction and Project Development

Construction and Project Development Industry

The Construction and Project Development Industry can be divided into three subsectors: (1) building construction, (2) heavy and civil engineering construction, and (3) specialty trade contractor. The most common one in the CNMI is the building construction. The majority of building construction jobs are small renovations, such as additional of a room, or renovation of a bathroom. Although building and construction projects consist of common elements such as design, financial, estimating and legal consideration, projects of varying sizes may reach undesirable end results, such as structural collapse, cost overruns, and litigation.

A construction project must fit into the legal framework governing the property. These include governmental regulations on the use of property, and obligations that are created in the process of construction. When applicable, the project must adhere to zoning and building code requirements. Constructing a project that fails to adhere to codes does not benefit the owner. A construction project is a complex net of contracts and other legal obligations, each of which all parties must carefully consider. The time element in construction means that a delay costs money, and in cases of bottlenecks, the delay can be extremely expensive. Thus, the contracts must be designed to ensure that each side is capable of performing the obligations set out.

Contracts that set out clear expectations and clear paths to accomplishing those expectations are far more likely to result in the project flowing smoothly, whereas poorly drafted contracts lead to confusion and collapse. Legal advisors in the beginning of a construction project seek to identify ambiguities and other potential sources of trouble in the contract structure, and to present options for preventing problems. Throughout the process of the project, they work to avoid and resolve conflicts that arise. In each case, the lawyer facilitates an exchange of obligations that matches the reality of the project.

The Construction and Project Development Industry in the CNMI has seen a surge in activity as the Real Estate Industry has taken off. Real estate investors are either refurbishing and enlarging existing properties that they acquire or building from scratch new developments. The Construction and Project Development Industry has been hard pressed to keep up with the demand for their services.

The Construction side of the Construction and Project Development Industry is intuitive: building projects. Major services of Project Development include design, engineering, permitting, and construction management. The responsibilities between Construction and Project Development are specified in contracts between the owners of construction projects and their project team and general contractor. Large-scale construction projects must consider zoning requirements, the environmental impact of the job, the successful scheduling of labor and materials, budgeting, construction-site safety, availability and transportation of building materials, and the inconvenience to the public caused by the interference of the construction project with public roads. Construction on Saipan of large projects can be difficult.

A unique problem facing the Construction and Project Development Industry in the CNMI is the shortage of construction labor. In the past a temporary visa was available from the United States to bring in construction labor from China and other Asian countries into the CNMI (the CW visa). In 2017 the law was changed to prevent the use of the CW visa for construction labor. The H-2B visa is available for construction labor, but not for workers coming from mainland China (Taiwanese construction workers may apply for H-2B visa). The optimistic side is that the CNMI has access to an unlimited number of foreign workers entering with H visas, thanks to Public Law 115-218 on July 24, 2018, which exempts the Marianas from the national cap on H visas through 2019. However, a construction company applying for H-2B visa need to show that it regularly employs permanent workers in the Marianas and needs to temporarily supplement its permanent staff due to short-term demand. The company must also agree that the H-2B additions will not become part of the employer’s regular workforce. The application of H-2B visa can be both time-consuming and detail-oriented. Traditionally, employers will seek professional lawyers to help with the application.

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