Astonished, amazed, angered – a common trio of emotions expressed by most contractors who find themselves in a “legal” dispute. Three words may help inoculate the contractor against such disputes – communicate, document, anticipate. Engaging in a productive planning process that addresses both the positive and negative aspects of a project with a customer will avoid most disputes. Proper documentation and communication will avoid the rest.
A brief of list of common pitfalls demonstrates that theorem: 1) no written contract; 2) no written change orders before work; 3) no common sense discussions to explain the job; 4) inadequate supervision on the jobsite; 5) inadequate supervision in the home office; 6) inadequate communication by email, letter, diagram, and meetings with customers; 7) failure to define the rules of decisionmakers; 8) failure to identify problem areas early and then address them; 9) failure to take responsibility for problems you cause; 10) failure to establish and maintain a realistic/accurate schedule.
Although each of these problems or pitfalls possess a legal component, the depth of the pitfall is measured by common sense.
- A written contract establishes clearly what is expected of each party. It allows contractors and customers to allocate risk, define essential issues, and provide a working roadmap to the desired end.
- A change order is either a modification of the original contract – an amendment or intended to be a separate contract. Either way, it requires the mutual consent of both parties. As such, consent or agreement can only be effective before work is done. After work related to a change in the scope of work has begun, it can be difficult to reach an agreement on cost as well as what constitutes the extra work.
- Walking through the job with the owner – if only a “hypothetical look” at the project – will allow the contractor to understand the owner’s concerns and the owner to grasp the contractor’s difficulties. It also lays the groundwork for future communications. It is important that this “walkthrough” is with the owner, not the architect.
- Jobsite supervision must be the first line of legal documentation, contract interpretation, delay avoidance, and public relations with the customer.
- Home office supervision, aside from managing the job, should maintain the legal documentation, offer confirmation of contract interpretation, provide other contractors and the owner with all legal notices and provide transparency throughout the process.
- Inadequate communication occurs when even normal communication such as project emails, faxes and meetings are omitted when problems arise, or disputes are present. Effective communication not only fulfills the contractor’s contractual obligations, but it allows for possible mitigation of disputes to occur.
- Failure to define roles – teamwork is important for effective completion of a project, but remember only one captain and one head coach, therefore the parties must define the roles early.
- Problem areas. All jobs have critical components or difficult parts. Let the owner know the good and the possible bad of performing these tasks. Lowering expectations may allow for reality to prevail.
- Take responsibility. No one likes a complainer or a finger pointer. If you break, you fix it – on your dime – be honest and be prompt and be thorough.
- A realistic schedule. Undersell and over deliver. Be accurate, but account for contingencies realistically, and expeditiously correct the schedule when it has been impacted.
These ten commandments will not eliminate legal disputes, but they will provide time tested guidance on minimizing them and allowing the least expensive means of resolving them.
