STRUCTURE magazine | Steering Clear Of Trouble

Keeping on Top of Deliverables and Change

Do what you are supposed to do when you are supposed to do it.” The mantra sounds so simple, obvious, and nearly insulting to preach to professionals. Yet, as we all know, the demands and uncertainties in many projects leave grey areas as to who is responsible and what is the reasonable period to act.

Communication among project participants is key to successfully navigating any project to completion. Nearly every construction dispute the author has dealt with is a version of, “I asked AB to perform X by way of email/oral request for information/change order, and the response did not come at all/was late/was inadequate/or was in the form of ‘not my responsibility.’”

A communication gap allows ambiguity to creep in. The consequences of having expectations that differ from your upstream or downstream partners could be increased cost to correct issues and negatively impacted opportunities for future work.

Common themes emerge from those litigations in which design professionals may become embroiled, from which we can detect scenarios that are potential dispute initiators. Here, the author discusses common problem areas and suggests strategies for minimizing or avoiding prolonged and expensive disputes.

Requests for Information (RFIs)

One fertile area for disputes is in the RFI process. A Navigant Construction Forum Report from 2013, Impact & Control of RFIs on Construction Projects (April 2013), notes that in a review of 1,300 major projects, there were an average of 796 RFIs per project with median response times of 9.7 days and an average cost of $1,080.Thus, they consume substantial amounts of time and elevate costs .

As we all know, an RFI is a request seeking clarification of plans, drawings, specifications, agreements, and other matters. By their very nature, RFIs often arise when something is unclear, when additional information is needed, or when there is a need for change due to problems or modifications. The very fact that they are needed makes the circumstances susceptible to disputes.

Not only are they subject to dispute, but they are also subject to abuse. For example, a contractor may use an RFI instead of regular project communication to build a paper trail supporting a claim that others delayed the work to seek additional time in a construction schedule or additional payments. What better excuse for delay or need for additional compensation than the engineer did not respond timely/adequately/or at all to the contractor’s request?

“It is now common to see contractors submitting an unprecedented number of RFIs and then presenting unauthorized change orders which they claim are the result of the design professional’s response to RFIs. The RFI process provides a methodology for the contractor to document a deficiency in the contract documents and, at the same time, establishes a basis for an increase in the contract amount and/or time.” (Navigant, Impact & Control of RFIs on Construction Projects)

How to avoid abuse and confusions in the RFI process ?

There is no magic pill to guarantee the avoidance of disputes or abuse in the RFI process, but there are approaches to help minimize problems.

Have a clearly defined contractual process for RFIs. This includes when RFIs are to be used and how you are compensated for responding to improper RFIs or RFIs resulting from unforeseen circumstances or owner changes, as well as the acceptable timetable for responding. The more precisely the process is defined, the less it is open for interpretation or ambiguity.
Be sure proper and sufficient personnel are assigned to accept and respond to RFIs. If the proper resources are not assigned to the task, no amount of precision in defining the process helps fulfill one’s obligations.
The best way to avoid problems with RFIs is to minimize their use. Maintain effective and regular communication with project partners to minimize confusion and misunderstanding and, when possible, offer appropriate input on selecting qualified contractors. An experienced and well-qualified contractor should have less need for RFIs or will be more adept at making the inquiries focused.
Ensure your own work is properly vetted before submission in compliance with your company’s Quality Control procedures and Quality Assurance processes. This includes anticipating what problems may arise based on your prior experience—finding the ambiguities and conflicts before the contractor saves the project time and expense.
If the RFI raises a legitimate deficiency, resolve it. Ignoring a problem or looking for others to step in only worsens the outcome.

Fulfilling Deliverables

It is critical in any project to have detailed criteria for design deliverables. Not only must the timetable be set, but the level of completeness must be specified. For example, to what level must BIM modeling be developed, are the drawings ready for construction, or is the level of development less? Who is responsible for design coordination?

Failure to adequately define these obligations is a common cause of upstream and downstream problems. Contractors cannot build unless they receive the proper guidance, resulting in delays and cost overruns.

The strategies discussed above apply equally here: define the obligations as to scope and time, ensure adequate resources are assigned to complete the task, and meet the problems head-on with a resolution if it is within your scope. If not within your scope, offer a solution to the owner or project manager. This demonstrates your commitment to the project, showcases your abilities to adapt, and provides an opportunity for further compensation.

Managing Risk Through Contingencies

Cost overruns are real risks to construction projects. Indeed, some cost overrun is found acceptable to ownership. As cited in the McGraw Hill Construction Smart Market Report, Managing Uncertainty and Expectations in Building Design and Construction 2014:

40% of owners find 1-2% of cost excess acceptable
38% of owners find 3-5% of cost excess acceptable
15% of owners find 6-10% of cost excess acceptable

Although there may be tolerance to cost overruns by some owners, no owner wants their project to go over budget. Thus, it is good practice for project budgets to have built in cost contingencies. This aligns the budget with the actual cost of the project and helps avoid negative impact to the owner’s finances.

Similarly, some delay may be built into a project as a contingency in the form of schedule float. The key here is mainting the critical path. The float will allow for some disruption in scheduling without impacting following tasks in order to allow for timely project completion.

The issue often is who owns the float, the project, or the owner. The float may be specifically covered in project documents or left to interpretation, but it acknowledges that there is some room for variance with a schedule.

Most understand that projects can exceed budget and schedule to some degree. Of course, all project participants should work toward on time and on budget completion in order to avoid the need to apply contingencies. If that is not possible, acting collaboratively to minimize these risks with full knowledge of the allowable contingencies as well as ownership’s expectations beyond contingencies will help the design professional work within those limitations and avoid disputes.

Top Causes Of Uncertainty

Whether it be the RFI process, project deliverables, delays, or cost overruns, there are recurring circumstances in projects that cause confusion and uncertainty. Unfortunately, only some of these are within the designer’s control.

Unforeseen Site or Construction Issues by their very nature, are problems that could not be planned for. Was the preconstruction testing, which met all standards, incapable of predicting subsurface conditions through the project site? Could it have been foreseen that certain equipment or material would not be available three years into a project during an unprecedented global pandemic?
Design Errors
Design errors or Omissions delay the work, require further design to correct errors, and may even require demolition and reconstruction.
Inadequate, incomplete, or confusing design or lack of coordination on the design level – if a contractor can’t work from the design or there is a design conflict, delay, and added cost result.
Contractor caused delays – similarly, the contractor may err in their work, deny responsibility for certain aspects of the work, or not devote sufficient assets to it.
Owner-driven changes – as is often the case, the owner may decide to make changes as it sees the project unfold; any change requires new design, material requirements, and labor.
Construction coordination issues – failure to have the proper pieces in the proper sequence translates into delay and additional cost.
Lack of owner leadership and clear direction – a disengaged owner who lacks focus on the project or is inconsistent in approach breeds confusion and inefficiency. Direction from the top is important.

Be Realistic And Accept The Circumstances
Of All Project Participants

Imperfection is Inevitable. Flawless execution of all aspects of a project is not realistic. Everyone knows this, but when real or feigned issues arise, perfect execution is said to be what was expected.

Owners often report to internal stakeholders, including boards and shareholders (or constituents on public projects). In addition, they are subject to external forces beyond their control (pandemics, changing market conditions, and regulations). Thus, their interests may evolve throughout a project, and competing forces may influence their decisions. These impact budget and project changes, and the design professional should understand these sometimes competing forces.

Being realistic includes relying on experience. Anticipate problems based on that experience. Even with the best efforts, problems arise. Project participants appreciate being notified that an issue may arise. Suppose the design professional has anticipated a problem and has a process to manage and resolve the problem efficiently. In that case, project interruption is minimized, and the design professional’s nimbleness and foresight are positively displayed.

Communication, Communication, Communication

The author believes communication and collaboration are key to any successful endeavor. Working with all participants toward resolving a problem should be the first response. If all are aware, through effective communication, of their responsibilities and the problem at hand, chances of reaching a collaborative result are greater. Open and regular communications build trust and help avoid finger-pointing. This is also essential in building relationships from project to project. Design professionals, or any party, should not abandon their interests in favor of compromise, but a collaboration strategy toward a favorable result may be in one’s best interests. Maintaining regular communication also affirms awareness of one’s responsibilities and limits.

How is this accomplished? It can be as simple as promptly responding to calls and emails. Face-to-face communication presents an opportunity to demonstrate the ability, knowledge, and willingness to talk through issues. RFIs should be responded to promptly, completely, and clearly.

What Can Happen When Things Go Wrong

It is hard to provide details of what may happen through litigation, as most resolved cases carry some confidentiality obligations, and attorneys are reluctant to share details on a client’s matter (nor do design professionals want details of disputes publicized). However, common across the board in litigation is the fact that the process is bad for the business of a design professional. It takes time away from income-producing endeavors, and there will also be substantial out-of-pocket expenses to defend (even if covered by professional liability insurance, a deductible applies). In addition, it is distracting and may impact reputation. Unquestionably, disputes and litigation impact future opportunities with the same parties.

Lawsuits involve a wide range of issues. Primarily, it is alleged that the work in design was defectively performed or not performed at all. This could arise from any of the circumstances discussed above. In addition, the damage is asserted to arise from delay, and many contracts spell out delay damages, which can mount quickly; missed opportunity from a delayed project; added cost in material and labor when changes are needed to correct errors; need to hire additional professionals to review and revise the work; and might include attorneys’ fees to the prevailing party where that is provided for within the contract (attorneys’ fees may be awarded only when a contract so provides or a law provides for such – otherwise each party bears it own legal fees). Not only is litigation costly, but it is also lengthy, as cases may linger several years before coming to trial.

Many contracts provide a means to raise disputes during a project and seek resolution short of litigation. This can effectively de-escalate a dispute early and reach a resolution allowing the parties to continue on the project. If parties have communicated effectively throughout the project and built up a measure of trust, that can be a key element to dispute de-escalation and resolution.

What You Can Do

Disputes may arise from factors outside the design professional’s control, confusing and contradictory project documents, and outright errors, among other causes. Therefore, stay vigilant for the signs of trouble and establish daily practices that optimize the chances of avoiding or minimizing a dispute’s potential disruptions by:

Ensure contracts contain clearly defined obligations, processes, timetables, and a manner to resolve disputes.
Establish protocols to handle the project and deliverables with sufficient staff to complete the project timely under a defined chain of command.
Accept reality; something is likely to arise that is unexpected. Plan for the unexpected and help others through it. Understand the competing interests of the project participants and the different internal forces that could affect these participants.
Do not run from problems but run toward them with a resolution. Problems stay with you and can become your reputation. Litigation is not your friend.
Communicate regularly to build trust and lasting relationships. You should be thinking about the next job and the one after.■