HOW TO GET PAID
A Partnering Approach to Claims
Selecting Experts and Training Staff
Preparing A Preliminary Analysis
Obtaining and Organizing Documents
Determining the Facts and Analyzing Entitlement
Negotiating an Equitable Adjustment
If you’re a contractor’s project manager on a doomed project that’s careening towards the brink with a poor set of plans and specs, an unrealistic schedule or bid, a ‘by-the-book’ inspector, and flakey subcontractors – don’t give up.
First, alert company management to the scope of the problems and get reassurance that you’ll get the resources you need to avoid a disaster – even if you have to blow the general conditions budget. That’s a lot cheaper than major delays or cost over-runs from inefficient operations, delays, or undocumented changes.
Second, dig into the plans and specifications to uncover as many problems and opportunities as possible before the crews encounter them in the field. Discuss the problems with your field supervisors and anyone else who can help. Then, insist on a meeting with the owner and designer, and get paid (if possible) for a constructability review, or submit a change order request.
Give Timely, Contract-Compliant Notice
Document your position, and don’t fail to provide notice as required in the contract, even if it creates some resentment.
Maintain Good Records
The next important record is the Superintendent’s Daily Report. Verify your field supervisors are recording progress and problems every day with a clear description of problems and delays.
Verify that the project schedule is accurate, sufficiently detailed, and is updated monthly with actual start and finish dates, percent complete, and revised logic as needed.
Verify that your project superintendent is preparing a weekly short-interval/look-ahead schedule and that it is adequately detailed, includes critical subcontractorwork, relates to the master CPM schedule, and is being followed. To ensure it’s being followed, have the superintendent mark the previous week’s plan on the new schedule in order to compare plan versus actual.
Take photos of all significant operations and all problems. Be certain to date stamp all photos. If helpful, video inefficient operations. Make brief, clear notes of all significant telephone calls, including any agreements, and keep them on file.
Keep the RFIs up-to-date and maintain an accurate RFI log. Classify and prioritize each RFI to ensure that the most critical are handled first, and share the RFI log with the owner to point out slow reviews or other problems. Also check your submittal log to ensure that subcontractors and vendors are submitting when needed and that the owner and architect/engineer are timely in responding. Notify the delinquent party before it’s too late.
Either maintain the weekly/monthly owner progress meeting minutes yourself or notify the owner of any discrepancies or missing information to ensure that they are complete and accurate regarding all issues of importance to you.
If All Else Fails, File a Claim
Don’t wait to submit your change order request until the end of the project — when you’re short of cash, the owner doesn’t need your cooperation, and you have failed to give timely notice or have waived your rights.
Contractors, Architect/Engineers (A/Es), and Project Owners are all at risk from construction defect problems and the ensuing remediation and litigation. Here, we offer some advice on how to avoid defects, remediate those that do occur, and resolve any disputes before they become a claim or lead to litigation.
2. Design Phase – Owner, Architect/Engineer and Building Envelope Specialist
Project Owners control the project scope, select the project team, and require the team to control cost, time, and quality.
Start with a clearly defined scope of work – an ‘architectural program’ for building construction or ‘design criteria’ for engineering works. Then, verify that your budget is based on the scope and that the schedule is reasonable (don’t try to fast track without expert advice).
Next, hire the right Architect/Engineer. Consider their reputation for defect-free design, in addition to project performance, meeting budgets, timely completion, and good project management.
In addition, require your Architect to hire a Building Envelope Specialist to ensure against water intrusion, mold, and costly remediation – that can cost nearly as much as the original construction and often results in costly litigation. The A/E or Specialist should know local environmental conditions – heavy rains, wind and corrosive salt spray at the coast; extreme cold in Alaska and Montana; and moisture problems throughout the Pacific Northwest.
A Building Envelope Specialist is a person, often an architect or professional engineer, who advises on design (or purchase of an existing building), and investigates building envelope defects, identifies solutions, and oversees remediation. They also testify in court or arbitration on means and methods, costs, and who was responsible for the defect.
Architects may need assistance with current Best Practices for building envelope design, in addition to LEEDS, sustainability and other special services – for which the Owner is expected to pay, since they are the primary beneficiary.
3. Construction Phase
Regardless of whether you are using Design-Bid-Build, Agency CM, CM/GC-GMP, or Design/Build,Owners without ongoing construction programs should hire an Owner’s Representative with the expertise to manage the construction process and avoid defects. You also need a Building Envelope Specialist to ensure that envelope construction complies with the design and the workmanship is satisfactory.
Mockups have traditionally been used for aesthetic issues (color, texture, etc.) which are difficult to specify. Now, contracts are requiring mockups of windows, roofing, and other critical building systems to help avoid defects.Owners and A/Es, or their Building Envelope Specialist, need to identify critical building systems that require preparation and testing of mockups. Manufacturers can often assist with mockups.
4. Maintenance and Operation Phase
Contractors should prepare a Building Owner’s Maintenance Guide and require the Owner to acknowledge receipt and agree to follow the guide. This reduces the risk of system failure due to lack of maintenance, which is often blamed on the A/E or Contractor. The Guide and one-year warranty inspections help identify incipient failures, which avoids continued deterioration and collateral damage, and can head off claims.
5. Litigation Phase
If all else fails, be ready for litigation.
Building Owners should determine the statute of repose in their state, and in addition to their regular inspection program, conduct an in-depth inspection before that date, with a focus on the building envelope and other systems that are prone to failure.
If problems are found, hire an attorney familiar with construction defect disputes. You or your attorney should retain an expert to determine the extent of the problem, whether emergency repairs are required, the needed scope of remediation, the probable cost, duration, and the impact on building use.
Contractors or A/Es contacted by an Owner regarding a potential claim, should first (after calling their attorney) get the details and determine whether the problem can be resolved and serious conflict avoided by working with the Owner to fix it. If the Owner is reasonable and if your firm or subs are probably at fault, it is usually best to fix the problem – as long as there are no insurance problems and your Attorney approves.
Attorneys need the most qualified Expert Witness and field investigation team for successful resolution of a construction defect claim. The ideal building envelope expert is a licensed architect (or engineer for engineering projects and building system failures) with experience as a building contractor and in investigating and remediating construction defects. The expert must also have a reputation for credible testimony on the witness stand and the ability to provide solid, direct evidence that gives an attorney the winning edge.
6. Visualizing the Message
Regardless of the project phase, the visual display of information can be your most powerful tool for creating understandable and clear communication.
Good graphics can tell a complex story with little or no supporting explanation. A graphic image can summarize hundreds of change orders, piles of certified payroll, boxes of files, and the consequence of change, delay, impact and bad weather – all on a single sheet of paper.
When presenting graphics, start with the details to ‘build a foundation’ and then summarize it for understanding with a chain of logic from your source documents to your summary charts.
Patrick Melvin, our Graphics Consultant, works with our clients and our Claims, Construction Management, and Construction Defects divisions to communicate complex, data-intensive stories of what happened and why.