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By Justine Diaz
January 23, 2017
Deadlines mean different things to different stakeholders. A practical project manager knows that schedules are always in flux. Meanwhile, owners have their eyes on the bottom line at all times. If substantial completion isn’t met according to the contract you’ve signed, you could be at risk for a lawsuit.
When there’s a chance for delay on every project, it’s not a matter of if, but when your owner will send you an invite to meet them in court. Most contractors, to their misfortune, have first-hand experience with this.
Missed deadlines and project delays are one of the most common reasons for arbitration, second to only cost overruns.
Between 2010 and 2011, the percentage of engineering and construction companies with lawsuits in excess of $20 million increased from 17% to 37%. And the most egregious part of it is, like all litigation cases, there is rarely a true “winner” in these disputes. Missed deadlines and project delays are one of the most common reasons for arbitration, second to only cost overruns.
While lawsuits can undoubtedly hurt your business, there are ways for contractors to prevent them from happening. Your first line of defense is having a well negotiated contract that provides your company with the flexibility of adjusting the schedule when necessary. Your next priority is to develop a well planned and documented schedule. This will be your most valuable tool for for proving your due diligence to a court.
In 1991, a small general contractor, the Wilner Construction Company, was awarded a contract by the United States Department of the Navy to construct an Operational Trainer Facility at Camp Pendleton in California. Although the contract called for a completion date of October 1986, the project experienced setbacks which postponed its completion day by over 14 months.
During a lengthy trial, the Wilner company presented their case with detailed scheduling records. Ultimately, the United States claims court stated that Melvin Wilner’s company was not at fault for the untimely closeout. Instead, the delivery date was extended for reasons out of Wilner’s control – mainly the political actions and restrictions imposed by Camp Pendleton.
So how can you ensure that your project schedule provides sufficient documentation in the case of litigation? Your schedule records must be able to prove that delays are:
Excusable due to unforeseen circumstances that go beyond the contractor’s control
Compensable issues caused by the owner’s actions or inactions that lead to time extensions
Critical and non-concurrent deadline extensions that arose when a preceding task by another party was delayed and affected the start date of your task
The two most popular forms of visual schedules are Gantt Charts and Critical Path Method. Both of which have their own set of pros and cons, but which of the two is best suited to help support your case during litigation or in a court of law?
Gantt Charts are the most widely used scheduling method in the construction industry. Their simplicity and ability to visually represent multiple projects at a glance, makes it easy to detect the amount of resources, man-hours and equipment needed for one particular project. For these reasons, Gantt Charts are favored by Project Managers and Superintendents who need quick updates on the status of a project at any given time.
The basic procedure must be followed to build a Gantt chart.
Identify the steps or activities needed to complete the project.
Identify milestones within the project.
Identify the expected time required to complete each task.
Identify the sequence of tasks and the order of precedence of tasks.
Select a proper time scale to represent the length of tasks.
Although bar charts are helpful for gaining a high level view of a project, there are some limitations due to their oversimplification. Gantt charts alone are not recommended to define work breakdowns as they display limited information. A bar chart does not indicate the interrelationship between different activities nor does it indicate that the commencement of one activity is dependent on the completion of a predecessor’s activity.
This process is more complex and detailed than the previous one. But, it allows for lists of activities to be linked in order of dependency. For example, you can’t pour cement until rebar has been set and you can’t build the second floor of a building before you’ve built the first. For these reasons, the Critical Path Method is great for proving due diligence in the unfortunate case of a delay dispute.
The basics of CPM are cause and effect. Start with the following:
Break down everything you need to do with a vertical list of all the different activities required in the construction project.
Next, specify the time needed to complete that activity.
Identify dependencies between activities. For instance, painting and decorating needing to come after plastering has been done.
The Critical Path Method is only as powerful as the data that you enter into it. If estimates are off, or man-hours aren’t calculated correctly, you may end up with delays and cost overruns. So don’t automatically consider a CPM chart to be the ultimate truth. Unfortunately, it overcomplicates the view of daily tasks and progression timelines for those in the field who need to take a quick glance at the status of a project.
A properly thought out schedule allows a contractor and owner to coordinate the work and resources that are needed to complete projects in a timely manner. If your team doesn’t have proper documentation of this schedule, you are opening up your jobsite to litigation and liabilities regarding scheduling and delay issues.
The foundation for a strong argument in court is proper documentation. When you use it properly, and review it regularly, you stand the best chance of ensuring you have the right documents at the right time, whether it’s for litigation and arbitration or everyday business processes.
Timely, informative, communicative, and accurate record keeping is not only desirable, but essential to the success of today’s construction project. To avoid lengthy and unorganized litigation, a proper document retention plan combined with both Gantt Charts and the Critical Path Method are necessary.
construction law suit
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