6/29/16. The Ten Commandments to Prevent Your Next Project from Cratering. Commandment #1:

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1 The Ten Commandments to Prevent Your Next Project from Cratering MARILYN KLINGER, ESQ KEVIN P. GILLARD, ESQ The Ten Commandments to Prevent Your Next Project from Cratering 1st Thou Shalt Not Choose the Wrong Project 2nd Thou Shall Not Make a Bid Mistake 3rd Thou Shall Define and Understand the Baseline Scope of Work 4th Thou Shall Not Conduct an Inadequate Investigation Regarding Existing Condition 5th Thou Shalt Not Accept Bad Contract Clauses or No Contract 6th Thou Shalt Not Fail to Manage and Issue Timely Contract Documentation 7th Shall Not Proceed with Extra/Out-of Scope Work Without Authority 8th Thou Shalt Not Fail to Manage Claims 9th Thou Shalt Not Fail to Monitor, Track, and Account for Impacts and Delays 10th Thou Shalt Not Fail to Perfect Claims Commandment #1: THOU SHALT NOT CHOOSE THE WRONG PROJECT 1

2 Choosing the Wrong Project - #1 We're gonna need a bigger boat. - Jaws Choosing the Wrong Project - #1 Do not do project with substantial increase or change in scope or cost over prior projects. Ensure you have adequate labor and financial resources. Do not stray from familiar geography. Know owner s reputation, liquidity and creditworthiness. Commandment #2: THOU SHALL NOT MAKE A BID MISTAKE 2

3 Making a Bid Mistake - #2 Evaluate and understand project scope. Evaluate and understand construction documents. Use RFI process. Do not assume that change orders will save you. Listen to warning signs if agency asks you to confirm bid. Know your bid relief procedure. Keep complete records. Commandment #3: THOU SHALL DEFINE AND UNDERSTAND THE BASELINE SCOPE OF WORK Failing to Define and Understand the Baseline Scope of Work - #3 Ensure there is clarity in baseline scope. Use pre-bid RFI process. Ensure there is clarity in change orders. 3

4 Commandment #4: THOU SHALL NOT CONDUCT AN INADEQUATE INVESTIGATION REGARDING EXISTING CONDITIONS Conducting an Inadequate Investigation Regarding Existing Conditions - #4 A contractor is obligated to discover those conditions apparent or discoverable through a reasonable investigation. An owner has a duty to disclose information in its possession. Conducting an Inadequate Investigation Regarding Existing Conditions - #4 Review contract documents (plans and specifications, engineering reports, investigations, etc.). Conduct on-site inspection. Use the RFI process. Consider effects of weather. 4

5 Commandment #5: THOU SHALT NOT ACCEPT BAD CONTRACT CLAUSES OR NO CONTRACT Accepting Bad Contract or No Contract - #5 Read, understand, and follow the contract. Identify all incorporated documents, drawings, data, specifications, etc. Identify order of precedence clause. There are often conflicts within the contract documents. Verify flow-down/flow-up provisions. Accepting Bad Contract or No Contract - #5 Key Contract Provisions Payment Indemnity Insurance and bonding Change procedures (timing and pricing) Claim procedures/dispute resolution Termination procedures Compensable delay Liquidated damages 5

6 Accepting Bad Contract or No Contract - #5 Commandment #6: THOU SHALT NOT FAIL TO MANAGE AND ISSUE TIMELY CONTRACT DOCUMENTATION Failing to Manage and Issue Timely Contract Documentation - #6 Train staff re: accurate and timely project documentation. Institute document management policy. Confirm all oral understandings in writing. Maintain detailed daily reports, meeting minutes, weather logs, etc. Live by rule that all communications are discoverable. 6

7 Commandment #7: SHALL NOT PROCEED WITH EXTRA/OUT-OF SCOPE WORK WITHOUT AUTHORITY Proceeding with Extra/Out-of Scope Work Without Authority - #7 Review with owner/gc extra or out-of-scope work. Evaluate price. Evaluate time. Confirm owner/gc directives in writing. To the extent possible, obtain written change order prior to starting work. Commandment #8 THOU SHALT NOT FAIL TO MANAGE CLAIMS 7

8 Failing to Manage Claims - #8 Original Content Failing to Manage Claims - #8 Comply with all contract notice requirements. Manage claims for both money and time, e.g. accounting costs codes. Maintain contract change log. Maintain documentation. Prepare claim summary. Commandment #9: THOU SHALT NOT FAIL TO MONITOR, TRACK, AND ACCOUNT FOR IMPACTS AND DELAYS 8

9 Failing to Monitor, Track, and Account for Impacts and Delays - #9 Obtain approved original baseline schedule prior to start of work. Consistently update schedule. Provide timely notice of impact/delay to owner/gc Manage claims for both money and time, e.g. accounting costs codes. Do not sign unconditional releases with outstanding claims. Commandment #10: THOU SHALT NOT FAIL TO PERFECT CLAIMS Failing to Perfect Claims - #10 Private Works Project Mechanics lien Stop payment notice Payment bond (if any) Contract action 9

10 Failing to Perfect Claims - #10 Public Works Project Stop payment notice Payment bond Contract actions Government claims Failing to Perfect Claims - #10 Preliminary notices Key dates: Completion Cessation of labor Notices of completion Mechanics lien recordation deadline Calendar deadlines Marilyn Klinger, Esq. Sedgwick LLP marilyn.klinger@sedgwicklaw.com Kevin P. Gilliland, Esq. Sedgwick LLP kevin.gilliland@sedgwicklaw.com 10