By Steve Rizer
One of the most common administrative mistakes contractors make that give rise to claims and disputes is failing to give their contracts a thorough read through, Navigant Construction Forum Executive Director James Zack told a group of professionals attending a webinar that WPL Publishing held last week. During the 90-minute event, Zack and Navigant Consulting Director Philip Spinelli summarized 20 of the most frequent administrative mistakes among contractors and owners and then offered their advice for avoiding each of those problems.
“During bidding, [contractors are] focusing on drawings, specs, and technical details, and they often fail to read the entire contract,” Zack said. “A lot of times when I’ve represented a contractor and found out they didn’t … read the contract during the bidding process, their [excuse was], ‘Well, it’s a standard city contract, man. We’ve done a dozen of these before.’ As a result, they don’t see the changes that have been made to previous standard language, or they don’t recognize new, special provisions that have been imposed. They don’t understand the implications and the impacts of this new language. The result is they may not plan or budget for compliance with these new contract requirements.”
And what claims and disputes may arise when contractors do not read their contracts in full? “The contractor may simply not have enough budget to comply with the new requirements, so [it is] going to try [to] argue that these [requirements] are really unnecessary [and convince the owner to] just ignore [them]," Zack said. "Some [contractors] may actually refuse to comply, and what we’ve started seeing recently is … a series of claims for additional field staffing -- not extended field staff, but additional field staff -- because of all the new requirements that the owner had added that the contractors hadn’t recognized during the process of bidding the project.”
Zack then offered the following advice for contractors to avoid problems in this area: “Well, number one, do not ever assume that [a given] contract is like any other contract. Even when you’re working with a state highway agency, it’s amazing how many unique, special provisions seem to get put into every contract you bid. Our recommendation is you take a senior individual [and] task [that person] to sit down during the bid process and read the entire contract – boring, though, as that may be – note all of the changes and all of the additions or subtractions from the contract language that you’re used to seeing, and advise the project team about all of these changes.”
Zack further urged contractors to “always assume that owners are going to enforce all of those contract requirements they’ve just put in and budget for that assumption. Don’t ever assume that you can talk them into changing their mind. Once they’ve gone to the hassle of putting all of this stuff in, it’s unlikely they’re just going to walk away from it because you ask them to.”
Among the common owner mistakes that Zack and Spinelli discussed are objecting to written notices, failing to monitor progress and manage documentation, refusing to address delays in a timely manner, and failing to plan for disputes. Some of the other common contractor mistakes include failing to track time and cost of changes separately, performing changed work before change orders are issued, failing to understand recoverable costs, and signing documents without understanding them.
A recording of the webinar, entitled “20 Common Mistakes Owners & Contractors Make that Cause Claims & Disputes,” can be purchased via the following link: http://constructionpronet.com/Products/1053.aspx.