By Don Owen
Donald Owen & Associates, Inc.
Copyright © 2004 Donald Owen & Associates, Inc.
Early on a Tuesday morning the Construction Manager for a local public agency arrived at work. Waiting for him was the latest batch of change order requests from the contractor who was building the agency’s new facility. With this batch of change orders was another letter from the contractor complaining about the large number of changes required on the project due to errors, inconsistencies, and incomplete information, in the plans and specifications. The letter also notified the agency that the contractor would be preparing a claim to recover the cost of delay, inefficiency, and other impacts, resulting from all of the changes.
The Construction Manager for our public agency has a number of choices as to how to respond to the Contractor’s claim for damages. Following are some examples;
One time honored method is for the Construction Manager to deny everything, and to blame the contractor for the problems. After all, the contractor had an opportunity to review the plans prior to bid, and everyone knows that there will be a lot of changes during a pubic works construction contract. The contractor should have anticipated the impact of the changes, and included the impact in his bid. One problem with this approach is that Federal and State Courts have come down squarely on the side of the contractor in these kinds of arguments. From the Federal courts we have the example of the Spearin Doctrine. Closer to home, the Washington State Legislature has gone so far as to void any clause in a contract that waives a contractor’s right to recover costs resulting from owner caused delay.
Another approach is for the Construction Manager to put off dealing with contractor claims as long as possible, usually until after the job is complete. The owner then hires a phalanx of attorneys, scheduling experts, and claims consultants to mount a vigorous defense, on every conceivable ground, against the contractor’s claims. The hope here is that the contractor will give up and go away, or get trapped in procedural issues, before the cost of attorneys, claims consultants, scheduling experts, mediators, and arbitrators, exceeds the amount that is claimed by the contractor. This is the approach favored by many construction attorneys and claims consultants.
Yet another approach is to carefully consider each change request and claim in light of the contract between the owner and the contractor, and to quickly settle issues as they arise during construction. This requires a sound understanding of the contract as it relates to changes, because contractors submit unjustified claims just as often as owners reject justified claims. This approach also requires the willingness and ability on the part of the owner to evaluate and deal with changes as they arise during construction, and to accept responsibility for impact or delay when and if appropriate.
A final alternative that our construction manager might have considered is to avoid issuing large numbers of changes altogether. This seems obvious, but it is surprising how little effort many public owners put into minimizing the number of changes that will occur during their construction projects. Many public owners consider large numbers of changes inevitable. I was once told by the construction manager of a public school renovation that the number of changes on his current project was normal. This was after issuing more than 300 changes for that project.
What owners often misunderstand about change orders and claims is that an owner has a great deal of control, prior to awarding a construction contract, over the number of changes a project will require. That control is greatly diminished after the project is awarded and construction begins. Much of the course of a public works contract, for better or for worse, is written in stone once construction is underway.
How can an owner minimize changes and claims? Some of the tools available to the owner include; hiring architects that produce good quality construction drawings; providing clear direction to the architect during design; finalizing all issues with local building authorities prior to bidding the project; and conducting a constructability review of the contract drawings and specifications before putting the project out to bid.
What is a constructability review? A constructability review is an independent review of the construction plans and specifications. Its purpose is to ensure that the construction drawings and specifications are adequate, from the contractor’s point of view, in order to prepare a bid, and construct the project. Because the constructability review is performed to ensure adequacy of contract documents for the purpose of preparing bids and constructing the project, the review is best performed by construction professionals rather than design professionals.
Many owners fail to see the value of performing a constructability review prior to putting a contract out for bid. However, those same owners would never consider accepting a new facility from a contractor without doing a thorough inspection of the contractor’s work, and preparing a punch list of items that must be corrected prior to acceptance of the facility. Accepting construction drawings without thorough review is the equivalent of an owner accepting a facility without doing a punch list. Owners who skip this important step in the design process fail to understand that they guarantee to the contractor the contract documents they are providing are adequate and complete, and that the contractor can rely on those documents to bid the work, and perform the work. When construction documents fall short of this standard, it is the responsibility of the owner, not the contractor.
Completion of construction drawings is a time of frenzied activity as last minute changes to the scope of the work are made, final problems with permits are resolved, last minute budget checks are performed, and deadlines for publishing request for bids and printing construction documents draw near. Public owners who allow the turbulence of pre-bid activity to prevent them from ensuring their construction documents are adequate and complete, do themselves and the taxpayers whose dollars they are spending, a great disservice.
Don Owen is a construction management consultant who provides construction management services to owners and contractors of public works projects.
Phone: 360-297-3738 Fax: 1-888-436-8475 E-mail: donowen@centurytel.net