Construction processes that increase litigation risk

Construction processes that increase litigation risk

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Jeffrey Kozek, principal of Resolution Management Consultants (RMC), a nationally acclaimed construction consulting firm, observes that in the hundreds of cases he’s been involved in over his career, the trigger that often leads to litigation has its roots in the stage of the process even before the shovel hits the ground.
He says, “by better understanding the risks that are being undertaken, including your ability to deliver, given the complexity of the project and the quality of the staff to perform, you are much less likely to see the inside of the courtroom.”
Kozek addresses 5 areas that frequently increase the prospect of litigation:
1. Fostering A Bidding Process That May Be Doomed From The Start
All too often, the design is not consistent with the time or cost that the owner envisions. In most situations, the quality desired is not compatible with the cost willing to be paid. Also, looking for a completed facility in a very tight timeframe is wishful thinking when it comes to construction. Murphy’s Law, more often than not, comes into play. On the contractor’s side, a desire to get work at any cost and worry about making a profit later is also fuel for a contentious project.
2. Understanding Your Responsibilities and Obligations Being Undertaken
With all of the available Project Delivery Systems available to use on a project, participants need to comprehend the risks that are being taken on. Shifting of risk does not come without a price. Go into a project knowing full well what could happen and how that could financially affect your bottom line. Have your attorney look at your contract up front as opposed to looking at it for the first time after the damage is done.
3. Be Comfortable In Knowing That Your Plan To Perform For The Contract Price Is Feasible
Time is money so that once the job is awarded, many just jump into the project without reconfirming the plan and operational assumptions before starting work. It’s OK to talk about what “practice” a doctor is in; it’s not OK to have someone on your staff purchase a scheduling software and “practice” on your project schedule without taking into consideration the resources needed to accomplish the work in a timely and cost effective manner.
4. Overlooking Government As An Impact Player
In construction, government is your partner, whether you like it or not. Often litigation arises because the construction participants fail to account for the effect that laws, permitting, approvals, quasi-governmental organizations and others can have on your project, budget and schedule. Considering that the wheels of government move at its own pace, plan accordingly.
5. Assuming That Your Consultants and Sub-Contractors Are Reliable
Working with subs you can depend on can make or break a job. On the other side of the ledger, depending on the type of contract, an owner should be aware of its reponsibilities with regard to coordination responsibilities and fully understanding the duties undertaken by its design professional and its project or construction manager so that there are no gaps in responsibility.
According to Kozek, “Some owners take the attitude that its professionals will handle everything. Just make sure that the agreements with these entities reflect that. As for contractors, there will be surprises as the work proceeds. Just ensure that you have taken into account those areas that could affect you that are included in your contract. Experience shows that at the start it’s well worth the investment in outside expertise tasked with mitigating future litigation, instead of being compelled to bring them in once the project is at or near completion.”
About Resolution Management Consultants
Resolution Management Consultants, Inc. (RMC) is a nationally recognized consulting firm headquartered in Marlton, NJ. There are two sides to the business: the construction planning and management aspect − helping clients build more successful projects − and the litigation aspect − should matters go to court, providing analysis and testimony as expert witnesses. Founded in 1993 by veterans in the construction, contracting and engineering professions, RMC has assisted numerous private owners, public agencies and contractors in either achieving project goals or resolving cost and time disputes between the contracting parties.

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