Friday / May 27 , 2022
Documents Are The Key To Win Legal Disputes
Whether in court or in arbitration, you want to be in a position of strength in the bargaining process. You will be asking for more money, while the other side will be trying to give you less money, or vice versa. You’ll be in a strong position for the dispute resolution process if you are in habits of documenting the entire process of the project which requires proper administration.
These are the categories of documents of strong adversaries in the construction field:
- Construction Contract and Purchase Orders
Good contracts don’t prevent delays but they will tell you about entitlement.
- Bid Documents
In this author’s experience, it is not uncommon for missing and incomplete bid documentation to undermine the whole claim. The lack of such documentation calls into question both the contractor’s professionalism and the veracity of the purported as‐ planned costs. In order to prove that the additional project costs incurred were reasonable, it is necessary to establish that the underlying contract amount was appropriate. The bid documentation should include the following: takeoffs, unit pricing, subcontractor and supplier bids, calculations setting forth expected production, overhead and profit mark‐ups, and mark‐ups for labor burdens.
- Schedule Data and Devices
In order to prevail on a delay claim, the party asserting the claim must prove that the delay was excusable, compensable and critical. To prove those three elements it is necessary to establish the anticipated project scheduling which was the basis for project bid. A comparison is then made with the as‐built scheduling. Therefore, the contractor must have an as‐planned and have regularly updated as‐built schedules. Ideally, the schedules should be based on a critical path method. In addition, any weekly “look ahead” schedules should be retained. If any third parties had input into the scheduling, the related documentation should be maintained.
- Project Diaries
Project superintendents should maintain a diary that contains daily entries that, at a minimum, set forth: (1) each day’s weather conditions, (2) on‐site subcontractors and
employees, (3) deliveries of critical materials, (4) on‐site visits by third parties (e.g. project architect, owner or engineer), (5) discovery of hidden site conditions, discrepancies in plans and/or conflicts, (6) important conversations, and (7) any other noteworthy event. If a delay, hidden condition or project conflict is encountered, the project superintendent should start a separate report that tracks the discovery and resolution of that particular problem.
- Change Orders and Change Order Logs
Almost every project will have one or more change orders. The delay in responding to change orders can impact the completion the project. Thus, it is important to retain a record when the change order was submitted and when it was approved or rejected.
- Plans, Specifications, Shop Drawings, Requests For Information and Submittals
The design documents and related correspondence concerning the design of the project should be retained. A sound practice is to create a request for information log, a shop drawing log and submittal log that includes the date that the document was tendered and the date a response was received, along with any germane comments. Such logs simplify a review of delays in the completion of the project.
- Project Correspondence
Any correspondence concerning the project should be retained. Typically, separate correspondence files are established for each party to the construction project. Ideally, the correspondence should be docketed (i.e. a chronological list that is maintained at the front of the file that states the subject matter for each letter, including who the letter is from and to whom it is written). If a critical delay is identified, a separate folder should be maintained for that issue. Copies of the key correspondence should be placed in that separate issue file, as well as in the regular correspondence file.
- Job Cost Reports and Estimates
For larger projects, it is a common cost‐ accounting practice to produce a report of the actual cost of each line item on the bid for comparison to the estimated costs for that line item.
Once again, these records are a key element of the as‐planned and as‐built analysis. In addition, a review of those reports will help identify cost overruns that may be created by changed job site conditions.
- Financial Statements
A component of every delay claim is home office overhead. The home office overhead calculation is based on the general administrative expenses for the delay years as well as prior years. In addition, more elaborate computer‐based accounting systems allow for detailed accounting reports for each project.
- Employee Payroll Records
On many projects manpower can be the largest expense. The ability to establish, through payroll reports, that the manpower loading for a particular project was not as anticipated when the project was bid is a key part of any disruption and/or delay claim. Typically, the manpower loading is depicted on a graph, with one side for hours and the other side for the date the labor was provided. For example, spikes in the labor loading graph can depict disruption.
- Photographs and Videos
Dated photographs and videos are useful in determining percentages of completion. They can also be useful in establishing that the work was performed in accordance with the plans and specifications.
- Miscellaneous documents
If it becomes necessary to pursue a mechanic’s lien, stop notice and/or bond claim, additional project documentation may be critical. For example, documentation that evidences the start and completion of the project (i.e. punchlists) will be useful in determining the time for recording a mechanic’s lien. Additional documentation should include preliminary lien notices and lien releases.