Five Tips on How to Be the Best in Construction
This year will be my 25th year of being a licensed attorney, with much of my career devoted to helping clients in the field of construction and development. Throughout this time and upon starting Bonaventure Law Firm, I have the privilege of working with some of the best contractors, designers and owners in the State of Louisiana, and I also seen my fair share of claims and disputes. Even the best in the field encounter issues, such as accelerated timelines, unforeseen delays, unforeseen site conditions, etc. that can’t be avoided. However, many of the problems I have seen on projects can be avoided (or at least, lessened) without requiring tremendous effort. By implementing the five tips below, you can not only have a successful project, but the results could be long-lasting impacts throughout your business.
1. KNOW THEE CONTRACT
Pete Seeger was a folk singer that had a string of hits in the 1950s but died broke. When asked what happened, to paraphrase, he stated, “Knowledge is what you get when you read contracts, experience is what you get when you don’t.” At bid time or during negotiations, the focus is usually on price and scope. Drawings, specifications, technical details, etc. are the center of your focus, and the non-sexy parts of front-end documents, such as the terms and conditions, are unfortunately put to the side. Here's a few tips when it comes to the construction contract.
- Treat the commercial documents as equally important as the technical documents. Have a senior member of your team not only read the contract documents but also understand them. If you don't have one, call on us. We would be glad to help;
- Read and understand the commercial documents (Terms and Conditions) as integral parts of the whole, not as a separate formality;
- Negotiate terms prior to contract being signed, regardless of the pressure of the moment to get the deal done. It's hard to get things changed after the ink is on the paper;
- Harmonize any modifications or changes with all the contract documents. Otherwise, you may create an ambiguity that could be used against you later. For example, you use a form agreement and the specifications were aligned with the terms and conditions. A modification is made, either before or through negotiations, to the specifications, and in the rush to get the contract out, you sign it without making sure the terms and conditions align with the modification, creating an ambiguity. Ambiguities in contracts are the gunpowder of contract disputes.
- Once the contract is agreed to, always assume the other party will enforce all the requirements. Prior to work beginning, make sure every team member is educated on the parts applicable to their respective duty, especially in reporting and documenting.
2. Begin with the End in Mind
Benjamin Franklin stated, “Failure to plan is planning to fail.” Although most contracts require the submission of a base-line schedule prior to mobilization, a lot of times, they are not even created. And when they are, they are often not given the attention it should by the parties or they are so vague, it is not sufficient to form an executable plan.
- Spend the time prior to mobilization to put together a properly sequenced schedule with carefully calculated durations.
- With the schedule, prepare an execution plan that is based on available resources, manpower, and equipment. Take into account material shortages, especially now.
- Make sure that the party you are contracting with has your schedule and execution plan and you have theirs. (It is probably a requirement of the contract (see section 1)). Harmonize the schedules before you begin and resolve any conflict. This will prevent a lot of headaches if the project experiences delay.
- Spell out how your subcontractors, suppliers, and vendors will be sequenced into the schedule and execution plan by requiring them to also produce schedules and execution plans. Go through your schedule and plan with them and make sure the applicable flow down provisions are in your contract so if someone is a “no-show” or they delay your critical path, you won’t be left holding the bag.
3. Time Keeps on Ticking, Ticking...
A base-schedule and execution plan are essential at the start of a project, but these documents are to be treated as living documents. Here are some things that may help you stay on schedule.
- Update the schedule at a minimum once a month, preferably right before pay apps are due. If you are tracking the activities, the manpower and equipment on site in the daily reports (as discussed in another section), make sure it all ties in with your scheduled activities.
- Analyze the discrepancies and review it against your execution plan. What caused slippage? Will this result in a change in the execution plan, base schedule or budget? Does a change order request need to be created? If project is ahead of schedule, will I need to adjust the schedule with lower tier subs, material suppliers, etc.?
- Allow time for whomever you are sending the updated schedule to respond. If you are receiving and updated schedule, review and respond or else risk tacitly accepting it.
- Train employees concerning scheduling and the execution plan in the field and educate them on the production cost as applicable. A performance-based challenge laid out at the beginning of a job is a huge motivator, even if it is not monetarily based.
- If you need assistance in this area, a few years ago, I partnered with others in the industry to create Next Level, a company founded on the principal of helping others by providing outsourcing for administrative, management, procurement, and logistical servicess.
4. Don't Be Down with O.P.P.
“The project must stay on time and within budget.” Sometimes, this mantra leads to a “get ‘er done” attitude, regardless of whether you are the responsible party for the work. By no means are we suggesting that teamwork and assistance on a project should be set aside. Teamwork is a must for a successful project. While Joe Burrow may be able to catch his own pass for a first down, typically a quarterback is not a receiver.
- Ascertain who owns a problem when it arises, especially before you step out of the scope of your contract.
- Owner or general contractor – You may think stepping in directly to do the work for a lower tiered contractor but check your contract first. If you jump in, you run the risk of being accused of a constructive change directive by the party that should be responsible.
- Contractor or subcontractor - It may be a legitimate business decision to just handle the issue rather than send it up, but if you expect to get paid for it you need to document. Otherwise, you may be just doing volunteer work. Even if you don’t expect to get paid, how have you advanced goodwill if there is nothing communicated that you are handling their problem.
- When the owner of the problem is identified, before going Rambo, call a meeting, make suggestions to the responsible party (not directives), and document the meeting with meeting minutes and sign in sheets.
- Use the notice provisions in the contract (discussed more below).
- If you do get recruited into other people’s problems, track the time and cost separately from the contract time and cost.
5. Notice Provisions in the Contract.
Very few contracts do not have some type of notice provisions. However, this is a part of the contract that is often put to the side (see section 1 above).
- If you are the owner or general contractor, encourage the other party to send in notices and R.F.I,’s. Many times these are dissuaded by the owns and general contractors as they don’t want to see claims or problems put in their court. However, this provision is in the contract for their benefit. It allows you to get timely notice of a potential issue that may cause bigger problems if not reported as soon as practical. Also, by dissuading the contractor from providing notice may open the door for the provision in the contract requiring notice to be unenforceable.
- If you are a Contractors, with a 1000 details to oversee every week, you are often so deep in the weeds, it’s easy to overlook the importance of timely notice or get caught up in the nice-guy-syndrome and not send notice because of fear that you would upset the owner or general contractor or be seen as an aggressive contractor looking to profit off of change orders. However, a “no-notice, no claim provision” can result in you not being compensated for the work. Invoking a notice provision does not mean you should not use diplomacy and good communications to discuss the problems before sending out the notice.
- Regardless of your role, make a list of all the notice requirements in your contract and train the project staff to recognize when an issue requires notice and to timely and professionally comply.
Lastly, if you need any assistance, reach out to legal counsel. While legal cost can be expensive at times, it is far cheaper to have an attorney review matters prior to an issue arising. If you have any questions, feel free to reach out to us.