Alabama Construction News

OCT-DEC 2017

Alabama Construction News is the states only bimonthly magazine dedicated to the commercial construction industry.

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51 OCT-DEC 2017 AL CONSTRUCTION NEWS THE NUMBER ONE REASON YOU WILL LOSE YOUR NEXT CONSTRUCTION DISPUTE IS THIS: YOU DIDN'T DOCUMENT THE PROJECT. YOU CAN'T PROVE WHAT HAPPENED. over something not specifically addressed in the written contract. It becomes the de facto record of events. Properly organizing and maintaining the documents specifically called for by the contract is another critical item. Keep records of all change orders, including requests and approvals. Be sure to follow up with the owner, architect or general contractor (as the case may be) if there is a delayed response over change order requests. The easiest defense to a claim for payment based on a change order is that the request was never submitted or never approved. Project plans, shop drawings, requests for information and other submissions also should be kept in separate files and organized chronologically, and by category if possible. Email. Undoubtedly, there will be countless emails over the course of the project. Create separate files for communications concerning the different parts of the project. This allows for easy retrieval when a dispute or need arises. Err on the side of over-storage and over-organization. It is much easier to tell the story of the compulsively organized project manager than it is to explain away missing emails, change orders, and contract notices. If you suspect a dispute early in the project, save "hot" documents in a separate folder for easy access and a detailed record. Finances are the most important part of documentation. The goal of the project is to complete the work on time (and under budget if possible) to get paid. Proper record keeping for pay applications submitted and payments made is essential to proving the case in a dispute. But more often than not, additional support for the pay application is required. Keep records of actual versus estimated costs for various parts of the project. Keep employee payroll records. These help prove how much labor was required for the job and when. Record dates of last work and materials for any subcontractors, vendors or materialmen on the job. This information is essential when evaluating lien claims and threats. Much of the above documentation serves primarily to help manage the project. Contractors can also create their claim or defense by supplementing these practices with critical correspondence. A contractor should know the contract provisions backwards and forwards. Know when contract obligations are triggered and deadlines expire. Create and send correspondence to other parties consistent with these obligations and deadlines – including delays, changed conditions and interference. Send objectively phrased letters or emails detailing non- compliance by other parties. Send objectively phrased letters or emails recording your compliance with the contract's obligations and deadlines. If formal notice is required by law or contract, calendar that notice ahead of time and submit it in advance. Almost all of the above has been in the context of "offensive documentation." "Defensive documentation" also is critical. There are two sides of "defensive documentation." The first is responsive documentation. Where another party sends correspondence misrepresenting, twisting, or omitting facts and circumstances, a timely, thorough, accurate, and record-supported response is essential. If a dispute arises over an issue months later and the only record of the issue is the opposing party's convoluted misrepresentation, that correspondence becomes the best evidence. It is best practice to respond to another party's correspondence quickly and accurately to protect both sides of the story and preserve arguments and claims that might not be asserted until later in the project. The flip side of "defensive documentation" is knowing what NOT to document. Be careful about what is put in writing. Do not write or send anything you would not want a judge or jury to read. Do not respond in kind to terse, angry or rude communications from other parties. Do not create a record of your negotiating strategy or subjective criticisms of others on the project. Do not air dirty laundry; refrain from unflattering admissions and internal matters best kept in house. In a lawsuit, all internal emails about a project must be provided to the opposing party. Every contractor should assume every email and item of correspondence will be read by someone with authority to decide a dispute. Cast yourself in the best light possible to preserve credibility. Finally, position yourself well before the project starts. If you are in a position to propose the contract, get organized about your requirements and goals. Get a lawyer to prepare a solid, enforceable contract that balances risk and protects your business and your role in the project. Prepare template change order forms, lien waivers and other necessary documents that incorporate the terms of the contract. Build a contractual relationship and structure that affords you the best possible chance of success. If you are not in a position to propose the contractual relationship, take time to properly review the proposed terms and provisions received from your counterparty. Ensure there are no unreasonable or even, impossible, obligations. Thoroughly review the project drawings and specifications. Know what is and is not called for (and what could potentially be called for) before starting the work. Negotiate for a more favorable contract where feasible. In both cases, consult a lawyer before signing the contract. A lawyer can quickly decipher confusing legalese and provide context before the job starts. Then, calendar your deadlines and obligations before starting the work and document your progress along the way. Remember, it's not what you know. It's only what you can prove. Joe Leavens is an attorney in Balch & Bingham LLP's Construction Litigation Practice. He has years of experience representing all levels of parties in construction projects including drafting and negotiating contracts for small residential landscape contractors and homebuilders, filing and removing mechanic's liens all over the state of Alabama, litigation over construction defect and delay claims asserted against hotel and university housing general contractors, and representing a major electric utility as the owner in arguably the largest ongoing construction project in the country.

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