Leave nothing to chance as you plan your next construction project

Construction projects are complex endeavors that require a great deal of planning and organization in order to proceed on schedule. But often it’s the work you do to prepare for unexpected developments that proves to be the most valuable, says Wesley Lambert, a partner in the Litigation Practice Group at Brouse McDowell.

“Construction projects, and by extension, construction disputes can be high-stakes endeavors,” Lambert says. “At every step of the way, you have an opportunity to protect yourself, advance your case, or gain leverage over the other side. This is the case not only in litigation, but if you are in a dispute situation outside of court, or even if you are trying to negotiate a resolution to something in a situation that is not otherwise contentious. If a few basic concepts and rules are not attended to at the appropriate time along the way, your ability to win your dispute or negotiation can be compromised.”

Smart Business connected with Lambert about what project owners and contractors can do to increase their odds of winning a dispute or negotiation.

What are some key documents that should be part of any construction project?

A well-written and comprehensive agreement is essential, and should address things like scope of work, how changes to the project will be accomplished, notification provisions, and payment terms.

Identifying these things the right way on the front end can give you an advantage if a dispute arises, because the first place the parties or the court will look to resolve the issue is the written contract. If the written contract is drafted in your favor, or you are simply seeking to enforce terms you have complied with, you have a head start.

You should also establish a document retention policy. The preservation of electronically stored information, or ESI, is more important than ever. Litigants are expected to have the ability to preserve, collect and produce ESI. Some of the rules governing litigants are starting to reflect this, such as Cuyahoga Local Rule 21.3 and Federal Civil Rule 37, which recently implemented a “good faith” element to preservation. If you retain documents in good faith, you may save yourself from harsher sanctions if a document goes missing and cannot be produced.

Why do employees need to be trained in how they interact with others?

Keep in mind that your employees, particularly those in a managerial role, are generally considered your agents, and what they say can bind you in certain circumstances. You want to make sure that they are well prepared to represent you in a manner that is not going to harm you in the future, such as committing to changes or deadlines that you cannot meet.

Just as importantly, train your employees on who has authority to speak for the other side. Someone without authority to do so may agree to a change or an alteration of the contract in the field that will not be enforceable if there ends up being a dispute.

How do you manage changes that occur during the project?

Failing to correctly document changes to the project is one of the most basic mistakes frequently made in the field, and it becomes impossible to unwind these mistakes in litigation. These include changes to the project scope, changes to the project timeline, or changes in price or payment terms. In almost all instances, the contract will require these changes to be in writing, and to be approved by the appropriate person — such as the project architect or construction manager.

If they are not, and unless an exception applies, you are performing extra work for free, or operating under a mistaken assumption as to what your contractual rights are. Also, on this point, you want to make sure that when you execute a change to your contract, the change covers everything.

Insights Legal Affairs is brought to you by Brouse McDowell