By Steve Rizer
“Don’t wait to give time extensions; give them when they’re due.” That was a key piece of advice -- “a basic rule for contract administration” -- an expert in construction claims avoidance and resolution offered last week during a WPL Publishing webinar. “[I]f you don’t make a practice of resolving issues [such as those involving time extensions] as they arise on a project, they [accumulate], and at the end of the project you have a pile of unresolved issues, and those unresolved issues become the foundation for a claim document.”
Waiting to grant a time extension is one of six “problematic,” claim-prone practices/contract provisions that Trauner Consulting Services Inc. Principal Scott Lowe discussed during the 90-minute program, whose target audience consisted of contractors, subcontractors, public and private owners, construction managers, owners’ representatives, architects, other design professionals writing contracts or providing project-oversight services, and construction attorneys representing these parties in disputes.
“Do not wait until the end of project to determine whether or not to grant a time extension,” Lowe said. “In order to put yourself in that position, for every change, determine whether or not a time extension is due before you execute the change order. No change order should be executed bilaterally by the parties without some agreement as to the time associated with the change. And most change-order forms these days have a place to indicate the time extension due for the issue. Many times it’s zero, and sometimes there’s a reservation-of-rights language that comes along from the contractor basically saying, ‘Hey, you know, I really haven’t had time to evaluate this point. Let’s get the direct costs behind us, and we’ll resolve the issues of time at the end.’ I think that’s bad practice. It’s a bad practice for the contractor to wait. It’s a bad practice for the owner to wait. Address time with each change. Usually this means that we have to address the process for determining time extensions, and it’s best to address things like this in the contract. In other words, we should envision that we’re going to need to evaluate time as the project progresses, and measure and identify time extensions throughout the course of the project, and the best way to ensure that happens is to make sure that it is addressed in the contract.”
Other problematic practices and contract provisions include the following, according to Lowe: Poorly written time-and-materials or force-account provisions; a misunderstanding of overhead; poorly developed claims provisions; dysfunctional administrative appeals processes; and misunderstood suspension-of-work provisions.
A recording of the webinar, entitled “Avoiding Contract Provisions and Construction Management Practices that Generate Claims,” can be purchased via the following link: http://constructionpronet.com/Products/1018.aspx.