As a
manufacturer/direct, Britco Structures has over the
years been involved in some major building projects.
The usual format was for Britco to serve as a
sub-contractor to a larger general contractor,
although there have been occasions where we
contracted directly with end-users of modular
buildings. Thankfully, most of our projects have
gone smoothly with very few problems. However, if a
potential claim rears its head, manufacturers,
dealers, and their customers would benefit greatly
by following the basics outlined in the following
article by Grant Mayovsky and Douglas Sanders.
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At the outset of any construction
project, when goodwill and trust are usually at their high points, the parties
will often neglect to record in writing many of the key agreements and
understandings reached between them. Later on in the project, when problems
start to arise, trust and goodwill often give way to the financial realities of
potential construction claims. More often than not, it is not until this latter
point in time that the parties will start to thoroughly record events, as well
as any agreements and understandings that may have been reached.
Failure to properly record and document
construction projects can be fatal in a claim. Written agreements and
documentary evidence will almost always outweigh oral evidence and alleged
verbal agreements.
It is crucial to keep in mind the
following items during the course of a project, which will help to support or
defend a claim should one arise:
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Keep all bid documentation and
record any pre-contractual agreements, representations and
understandings in writing and ensure they are in the contract or can be relied
upon at a later stage.
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Ensure that a fully signed written
agreement is in place before commencing work on a project. While
oral agreements are generally enforceable, written ones are easier to prove.
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Read and be familiar with all
contract terms, especially the notice provisions. Failure to
provide notification of a potential claim could preclude a party from bringing
its claim.
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Keep all project correspondence.
It is often helpful to organize project correspondence according to each key
party and whether the correspondence is incoming or outgoing. For example, it
is important to remember that in order to litigate a delay claim, it is
generally necessary to reconstruct the project in detail on a daily basis.
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Record all relevant conversations
and send follow up correspondence. Parties may proceed on a
project for months based on a particular representation or understanding, only
to find out later during litigation that the other party denies everything.
Where there is no response to correspondence, a court may find that a failure
to respond affirms what was said in the letter.
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Take pictures or videos at all
stages of the project. Nothing can help a judge or lawyer more to
understand a problem or deficiency on a project than an illustrative picture of
it.
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Keep all plans and drawings
and ensure that you have accurate records of all amendments or addendums.
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Make sure a project diary is kept
along with diaries for key personnel. Diaries should record: 1) the weather; 2)
manpower, visitors and contractors on site; 3) key deliveries; and 4) any
notable event such as problematic or hidden site conditions or events that may
cause delay or affect productivity. Ensure that entries express facts, rather
than opinions.
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Maintain an as-planned schedule
and regularly update it with an as-built schedule. There are several computer
programs available to schedule and track progress. The end product of a proper
scheduling exercise is a plan that should tell a contactor or owner what
sequence work should be done in, when it should start, what work has to be
completed first, when successor activities should start, and when it should
finish. Having an accurate schedule for a project and regularly updating it
will provide a valuable tool for tracking and recording delay and the impact of
that delay.
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Record all key events,
especially ones that may lead to a claim, and specifically record: 1) when the
event occurred; 2) what it was; 3) who noticed it; 4) the projected impact it
may have on cost and time; 5) whether notice was given and to whom; and 6)
response to notice.
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Record all change orders and claims
for extras and when they were submitted for approval, and separate
those that are approved from those that are not. A contractor who has failed to
get approval for a change order should always diligently express and protest
their ongoing concerns writing. When doing so, the contractor should adhere to
the contractual notice requirements. Parties should also be aware of the
ability to give notice that they are performing under protest.
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Document the additional costs
caused by an event. It is particularly important to keep proper
accounting and employee payroll records pertaining to additional overhead and
employee costs. Accounting records should be able to recreate the costs
associated with particular tasks and problems as well as to create a snap shot
of costs incurred at a particular point in a project.
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Finally, contact
legal counsel as early as possible.
Contractual interpretation and strategic
decisions made early can greatly enhance your
prospects for success in a construction claim.
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