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3 things you need to know about…Every Construction Project

 Whether you are an owner, contractor, engineer, design professional or consultant, every party to a construction project should do at least the following three things to enhance the chances of a successful project, and to avoid, or be well prepared for, possible litigation.

1. Thoroughly review the bid specification and contract requirements
Typically, every construction contract incorporates by reference the terms of the bid specifications, project drawings, engineering reports, and other documents in the project file. Therefore, each party should obtain possession and review all contract documents incorporated by the reference in the contract. At the outset of the job, the parties should compare the scope of the work and the bid specifications to make sure the scope of the work is the same as actually specified in the contract and related documents.

When a party discovers a bid error, he should promptly give written notice to the other parties to the contract. The parties should convene a meeting to explain and explore the mistake. Equity and contract principals may allow for timely correction.

It is important that all parties review and analyze their respective responsibilities and duties under the contract. Examples of issues that should be reviewed include:  Who is to be responsible for unforeseen conditions?  Are delay damages recoverable?  Is the owner entitled to liquidated damages?  When and how are progress payments to be made?

The parties should also determine whether the contract includes a right to stop work clause to protect against nonpayment or lack of cooperation by a party.

You should be aware that standard form construction contracts are available from recognized associations such as the Associated General Contractors of America (known as the “AGC”) and the American Institute of Architects (known as the “AIA”).  The advantages of such contracts are that they are convenient, construction professionals are familiar with the terms of the contracts, and the interpretation of such contracts by the courts and the parties is somewhat predictable.  A disadvantage is that form contracts may not address unique aspects of specific projects.  Use the forms as a guideline, but adopt them to your particular project.

2. Calendar all time deadlines
Every construction project is time sensitive.  With the involvement of numerous parties, it is essential that all parties keep a calendar of their respective duties and deadlines.  It is equally important that you put on your calendar all notice requirements so you do not inadvertently waive your rights.  For example, critical calendar notice requirements usually apply to time extensions, claims for additional costs, concealed conditions, demand for architect decisions, deviations in specifications and drawings, stopping work, termination, and default.

You should note on your calendar any applicable deadlines for filing a lien in the event a contractor is not paid, and you should note on your calendar any notice deadlines for seeking mediation, arbitration or court release.


3. Keep detailed records
It is imperative, from the outset of the job, that you create an organized recordkeeping system and make sure that all current records are circulated to necessary parties to avoid mistakes and oversights.  Also, be aware that if a dispute arises the records will likely become the primary source for determining who has taken the correct position.

Keep records of damages and costs that you incur as a result of delay in the project.  In calculating a delay claim, you may be entitled to recover additional direct costs, overhead, administrative and office overhead, and increased financing costs caused by the delay.  If you do not keep detailed records of such costs, the courts will not allow you to recover speculative amounts.

In keeping your records, make sure that you document change order requests, time extensions, notices, and that you keep copies of progress meeting notes, correspondence, and contract changes.

Following these three guidelines will go a long way in promoting a successful construction project.

To learn more about J. Mark Grundy and his practice, please visit his profile.

  • Partner

    Mark is the Co-Chair of the Litigation Department, and he concentrates his practice in business litigation and dispute resolution. He has broad experience in contract, commercial, estate, real estate, trade secret, employee ...

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