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Dec 282013
 

David Adelstein

This guest post is by construction attorney David Adelstein (photo). David is a Florida Board Certified Construction Attorney with the law firm of Kirwin Norris, P.A. He maintains the website Florida Construction Legal Updates where he blogs about various legal issues that pertain to the construction industry.

Enter David Adelstein:

Strong project management is critical to prime / general contractors in furtherance of ensuring the successful and profitable completion of a project. Among other things, strong project management involves understanding the scope of work activities that drive the timely completion of the project. Having a good plan at the beginning (that is peer reviewed) as detailed in a baseline schedule will enable project management to best coordinate and sequence trades knowing the total float for the project and the float identified for non-critical path trades. The baseline schedule is not written in stone. If it was, it would never need to be updated. But, construction involves unanticipated and unforeseen issues and risks that make it virtually impossible for the baseline schedule to be followed to the tee. No matter the size or complexity of the project, there are always variables that will require the re-sequencing of activities (and their start and finish dates) that will push different activities on and off the critical path. The more complex the project the more likely there will be variables that a strong project management team will need to address and work through.

One way project management can be proactive is to have a scheduling consultant on the front end. The consultant can be used in numerous roles including preparing the baseline schedule with the input from the contractor’s project management and subcontractors regarding the appropriate duration for activities. The consultant can assist in a peer review capacity to understand the scheduling plan and perform an objective check of the schedule. Or, the consultant can be used to assist in updating the schedule once the project gets going and variables are encountered. As the idiom goes, “An ounce of prevention is worth a pound of cure.” Utilizing the appropriate assistance to ensure (i) a good plan is in place from the get-go, (ii) that the plan is actually implemented and followed, and (iii) that there are plans in place when variables are encountered, is worth it instead of trying to deal with a bad plan after-the-fact or a good plan that is never actually implemented.

When consultants get involved, they will want to know and understand the project’s critical path. If the consultant gets involved on the front-end, they can assist in determining the critical path based on the project management’s plan. If they get involved after-the-fact, they will want to understand the plan by tracking the baseline schedule with updates that reflect as-built conditions. This will help determine where time impacts / delays occurred. The consultant can then take this information as to those activities that impacted the critical path to figure out why. Was there a bad plan from the get-go? Was there a good plan that was never actually implemented and followed? Were there design errors and omissions that resulted in numerous RFIs, supplemental instructions, or revisions to the plans? Were there numerous changes, whether owner-directed or due to design errors and omissions? Did a trade subcontractor simply struggle with quality control or sticking to durations? These are all issues that will be analyzed in connection with the schedules to best determine why time impacts occurred. Now, when the consultant gets involved after-the-fact, there is a little recreating of history (or revisionist history) since the consultant needs to reinterpret events and schedules after they already occurred. However, if the consultant is utilized from the get-go, hopefully, the time schedule impacts and documentation / evidence is being reviewed and organized to best capture the time impacts. This is valuable because it will allow project management to timely notify the owner of the time impacts and the appropriate extension of time and additional compensation to request. (Keep in mind that most contracts provide that a failure to timely notify the owner results in a waiver of the additional time or cost.) This is also valuable, as explained above, to best determine how to update the schedule and potentially re-sequence scope of work activities and coordinate the trades.

The critical path becomes a very important issue when the project is not going to be completed by the original substantial completion date. Because contracts allow the owner to assess liquidated damages due to delays (or actual damages if there is not a liquidated damages provision), the contractor will need to prove that any delays to the critical path are not its fault, not only to offset any assessment of liquidated damages, but also to establish an affirmative entitlement to extended general conditions. This is why the contractor will want to timely submit a claim for time impacts that include an appropriate amount of time to rebound from the impact. Also, in the event time impacts were in fact caused by the contractor, it will want to know which trade subcontractors contributed to the impact in order to flow down liquidated damages and its own extended general conditions.

Typically, contractors have the burden in proving delays attributable to the owner which will require it to establish the critical path. See Daewoo Engineering and Const. Co., Ltd. v. U.S., 73 Fed.Cl. 547 (Fed.Cl. 2006); accord George Sollitt Const. Co. v. U.S., 64 Fed.Cl. 229 (Fed.Cl. 2005); Morrison Knudsen Corp. v. Fireman’s Fund Ins. Co., 175 F.3d 1221 (10th Cir. 1999); U.S. Fidelity & Guar. Co. v. Orlando Utilities Com’n, 564 F.Supp. 962 (M.D.Fla. 1983). This type of proof will require a witness–really, an expert witness–that understands scheduling and the software used to develop the schedules to explain the critical path and the impacts to the critical path of the project. This will require testimony of the baseline schedule or plan along with the as-built conditions. Without this proof, the contractor is not going to be able to specifically prove that the delay(s) to the substantial completion date was caused by the owner and its consultants. The proof should entail the witness proving the time period in which the impact occurred and the issues that caused this impact (i.e., design error or omission, delay in design professional responding to RFI, design revisions, change order work, etc.). The same burden will be required when the contractor tries to flow down liquidated damages or seek its extended general conditions from a subcontractor that caused the time impacts.

Time impacts, however, cannot be perceived in a vacuum. In other words, time impacts are not always so clean that one discrete issue undeniably caused the delay. Because there are many activities taking place at the same time and many balls being juggled during the course of construction, oftentimes multiple issues that occurred around the same time period need to be analyzed. The reason for this is to determine whether there was a concurrent delay where both parties to the dispute (whether owner verses contractor or contractor verses subcontractor) contributed to the same delay time period, and thus, neither should recover from the other. “The doctrine of concurrent delay involves the premise that where both parties to the litigation caused delays then neither party can recover damages for that period of time when both parties were at fault.” Broward County v. Russell, Inc., 589 So.2d 983, 984 (Fla. 4th DCA 1991); accord Blinderman Const. Co., Inc. v. U.S., 695 F.2d 552 (Fed.Cir. 1982). Hence, if there is a concurrent delay, neither party will be able to recover (which, sometimes, this is what a contractor is seeking to simply offset liquidated damages exposure) unless the contractor can apportion the delay attributable to each party during the concurrent delay time period. See George Sollitt Const. Co. v. U.S., 64 Fed.Cl. 229 (Fed.Cl. 2005); accord Smith v. U.S., 34 Fed.Cl. 313 (Fed.Cl. 1995); William F. Klingensmith, Inc. v. U.S., 731 F.2d 805 (Fed.Cir. 1984).

There is much more to critical path scheduling and proving delays then discussed here. The bottom line is having strong project management requires an understanding of scheduling or utilizing the appropriate scheduling consultant to best achieve the successful and profitable completion of a project.

David Adelstein practices construction law throughout Florida. He has represented contractors, subcontractors, design professionals, developers, associations, suppliers, sureties, and owners in a myriad of construction matters including, without limitation, construction / design defect claims, schedule-based claims (including inefficiency, lost productivity, and acceleration claims), bid protests, payment disputes, lien and bond claims, liability and property insurance issues, and a host of other issues that affect the construction industry. He can be reached as follows:

Website: http://www.floridaconstructionlegalupdates.com/

Address: Kirwin Norris, P.A.
110 East Broward Boulevard, Suite 1570
Fort Lauderdale, Florida 33301

Email: dma@kirwinnorris.com

Phone: (954) 759-0026
Fax : (954) 759-0028

Nov 252013
 

documentation2When it comes to claims and disputes, I have often heard the proverbial advice that “you should document everything.” However, in reality this is rarely done and it is often impossible to accomplish. Normally, the folks on a construction project simply don’t have the time to write down everything that’s going on at the site and at every project meeting and then respond to every email and phone call. In fact, I would not advise you to try! Doing so would be frustrating at best and counterproductive at worst. Your management team should be focused on managing the project. This is especially true on a troubled project, where you have to put out one fire after another. Your team’s efforts should be focused on using their time in the office wisely and making sure that the important items are properly documented. So, how are they supposed to know which of the items are the most important to document? This article attempts to answer that question by establishing some rules and by providing an objective framework that can be used when deciding how and what to document.

1. SUPPORT YOUR POSITION

Spend the time to write the letters or emails that support your position and explain why your position is correct. This should be the overall framework from which you are focusing your documentation efforts. Document the issues and events as they occur; take a photo, write an email, or put an extra note in the daily report that explains the event or occurrence from your perspective. Pay particular attention to items that delay or disrupt the critical path work on the project, such as: design errors and omissions, missing information (such as unanswered RFI’s), differing site conditions, changes that disrupt the critical work, critical path delays (inability to start or finish work in the critical areas of the project), loss of productivity (interference or additional mobilizations to complete work in the critical areas) and acceleration (working overtime to make up lost time or compression of work or stacking of trades in a schedule). In general your documentation efforts should be focused on those things occurring on the project that results in a growth of cost and that could not have been anticipated at the time of bid. Make sure there is evidence in the file that supports and explains your position as to why the growth in cost occurred. Connect the dots between the event or issue and the actual growth in cost. You’d be surprised how the resolution of an issue was won or lost based on the existence or absence of a crucial piece of documentation in the file.

2. RESPOND TO EVERY LETTER

When is it necessary to write a letter? When someone writes one to you. It is not necessary to engage in a letter-writing campaign (it is simply not true that the person with the highest stack of letters automatically “wins”). But, for each letter that’s written to you make sure there is a written response in the file. One solid letter for each issue is a good rule of thumb. Get your points documented, keeping in mind tip #1, above.

3. BE PROFESSIONAL

In your written correspondence, always be professional and stick to the facts. Be objective, rational and unemotional. There is no need to tell the owner’s rep that he’s an idiot (even if he is). Many people may be involved in the resolution of the dispute after the project is over and they may never meet you. People are going to form their opinions of you based on what you say and how you say it.

4. GIVE NOTICE

Notice provisions are written into contracts for a reason. Their purpose is to give the other party time to investigate, mitigate expenses, and track costs. Read your contract and make sure you are complying with the notice requirements. To make giving notice easier, we recommend that our clients develop form notices. At a minimum, we suggest having form notices available for each of the following situations: (a) Excusable Delay / Request for Time Extension, (b) Differing Site Condition, (c) Conflicting Specifications, (d) Acceleration (Directed or Constructive), (e) Disruption of Work Force, and (f) A/E Change. Have your lawyer review the notices before using them in the field.

5. RESERVE YOUR RIGHTS

I have been involved in several lawsuits in which the judge upheld signed releases on payment applications and change orders, and barred recovery for delay / disruption damages. Have your lawyer review the release language on any document before you sign it. At a minimum, cross out the offending language, or simply write that you are reserving your right to additional money or time for the impact encountered on the project or as a result of the change.

Knowing how and what to document will keep your team focused on managing the project and put your company in a much better position when it comes to resolving disputes when they arise.

Jul 162013
 

At a recent industry event, someone asked me about the statute of limitation in Florida for a construction defect claim. My answer was “I’m not a lawyer but I’m pretty sure it’s four years.” The question prompted me to look it up and make sure I was right.

Construction Defect Moisture Intrusion

According to the International Risk Management Institute, Inc. (IRMI) a construction defect is defined as:

“A deficiency in the design or construction of a building or structure resulting from a failure to design or construct in a reasonably workmanlike manner, and/or in accordance with a buyer’s reasonable expectation.” The most dangerous defects have the capacity to fail, resulting in physical injury or damage to people or property.

Some examples of a potentially dangerous construction defect include things that can cause physical injury or damage to the property, things like:

  • Structural issues related to hold downs (the brackets that tie the concrete to the framing)
  • Improper design details of roof, curtain wall, or window assemblies
  • Foundational cracks in concrete
  • Moisture or water intrusion resulting in mold and mildew

According to IRMI, many defects aren’t dangerous but can cause harm in the form of deprecation in the value of the property and extra expenses. For example:

  • Sloping floor substrates
  • Cracks in walls or even mechanical or plumbing systems caused by overloading the structure

Turns out, it is four years. The statute of limitations for construction defect disputes in Florida is defined in Florida Statute §95.11(3)(c). Under the law an owner has four years to initiate a lawsuit, with the clock starting on the latest of the following four dates:

  1. The date the owner took possession of the property
  2. The date the certificate of occupancy was issued by the building department
  3. If the project was not completed, the date the project was abandoned by the contractor, or
  4. The date the contractor’s contract was terminated by the owner.

However, if the construction defect is latent (not readily visible or obvious), the statute of limitations commences on the date the latent defect was discovered. But, according to the statute, under no circumstances can an owner initiate a lawsuit more than ten years after the dates/factors identified above. This 10-year cap is referred to as the Statute of Repose.

If you are considering filing a construct defect claim or if you are a contractor, subcontractor or supplier facing a defect claim, give us a call. Florida Consultants’ thorough and expert knowledge of handling a construction defect claim in Florida can help you along the way.

Apr 262013
 

Gov Scott Approves Design Professional Limitation of Liability Act

Governor Scott signed into law the “Design Professional Limitation of Liability Act.” This new law gives design professionals immunity from tort damages as long as the services are being rendered as part of a professional services contract that has specific waiver language written into the contract. The design professionals affected are licensed engineers, interior designers, surveyors, architects, landscape architects, and geologists. The act takes effect on July 1, 2013.

Required Waiver in Florida Professional Services Contracts

Needless to say, any licensed design professionals who practice in the state of Florida should familiarize themselves with the act and its specific requirements. For example, in order to be able to enforce the protections of the new act, your professional services contract must “include a prominent statement, in uppercase font that is at least 5 point sizes larger than the rest of the text, that, pursuant to this section, an individual employee or agent may not be held individually liable for negligence.” It’s unlikely that the new law will be applied to professional service contracts entered into before the law takes affect because they do not contain this required waiver.

Bill Summary – SB 286

Design Professional Limitation of Liability Act

The following is the Bill Summary from the Florida Senate web site:

The bill permits a design professional employed by a business entity, or an agent of the entity, to be immune from tort liability for damages occurring within the course and scope of the performance of a professional services contract if:

The contract is made between the business entity and a claimant or another entity for the provision of services to the claimant;
The contract does not name an individual employee or agent as a party to the contract;
The contract prominently states that an individual employee or agent may not be held individually liable for negligence;
The business entity maintains any professional liability insurance required under the contract; and
Any damages are solely economic in nature and do not extend to persons or property not subject to the contract.