Construction contract delay claims are among the most time-consuming, costly and complicated claims in the construction industry.
So said Audrey Warner, a lawyer with McLauchlin and Associates and a panellist at a Construct Canada webinar recently on Forensic Delay Analysis: What Contractors Need to Know.
Warner, who has practised construction law for 25 years, said many contractors need to do a better job of keeping owners advised of scheduling delays and cost issues during the project, not just at the tail end.
Their documentation, she added, must be complete “so that strangers to the contract — your lawyers, your experts, your consultants — can make sense of what you have written.”
The lawyer advised contractors to create a separate document with a checklist of timelines, dates for when notices and other documentation is required, as framed in CCDC standard form contracts.
After 25 years of experience with construction claims, Andrew Illingworth, a senior director with Altus Group, and the moderator of the panel, said contractors too-often come up with the same responses for delays, including a lack of time, resources and limited site records.
Owners, too, can be culpable when things go wrong, pointed out panellist Will Smith, CEO of Knightsbridge Development Corporation.
“Contractors need to become better communicators, but owners need to be better listeners.
“Without working together there is no way to avoid a claim,” he told the webinar’s viewers.
Smith said more building owners today “walk the sites” to see how work is progressing. In the past, showing up to biweekly architect/builder meetings was considered ample involvement.
He said owners would rather have bad news early because it gives them an opportunity to deal with a problem in a cost-effective and professional manner.
A proper time and impact analysis is expected on documents, he added.
“The contract is our road map. We need to follow it and work together to resolve the issues.”
More often, however, Smith pointed out the documentation he gets from contractors is vague about the claim and its cause.
“It doesn’t follow a timeline…and often it is not even reflective of the terms of the contract,” he said.
The owner said while contractors need to create a monthly report that includes changes, response times and critical items, it is equally important that owners read it through.
Daniel Klitzke, a director with Altus Group, said on at least 50 per cent of the claims he deals with parties argue over what constitutes the construction schedule.
“Don’t let perfect be the enemy of the good,” the forensic analyst said. “Even if you are not 100 per cent happy with the schedule, it is better to have a starting point agreed between the parties than to leave it ambiguous.”
Klitzke added contractors can cloud the schedule by including numerous RFIs and change orders, some of which might not impact the schedule.
In his experience most delays come down to half a dozen issues, not the 30 to 40 that contractors sometimes document.
Warner pointed out that it is impossible to get away from documentation, even during discoveries or for trial evidence.
Accuracy is the key, whether it is a note recorded on a napkin or in a dozen binders.
She said from the outset of reading the contract, contractors should pull out “trigger dates” and review with them with a lawyer.
“When you are dealing with construction lien litigation, timelines and deadlines make or break your claim.”
Don’t wait until the last minute to make a claim, she said, adding in her experience some contractors call her as late as the 44th or 45th day that a lien is required to be preserved. That leaves a lawyer little time to prepare documentation to proceed.