I have had the pleasure of working with Cordell Parvin, who in his earlier career was a preeminent construction attorney, and now coaches attorneys. Cordell has shared countless construction guides and presentations with me over the years, for which I am extremely grateful. Below is Cordell’s Lesson’s Learned list, that is as true today as when he drafted it years ago.
- Contracts and owners are not all alike. Some are fairer than others. Some create greater risks of making the budget if we encounter changes, delays and impacts. We should appreciate the risks before bidding and not underestimate indirect costs of staff to deal with these situations.
- It is important to have a thorough understanding of the Contract Administration requirements of complex contracts. Identifying specifically what must be done when changes, delays and differing site conditions are encountered is one way to establish the understanding.
- If a project ever ends up in court, every letter, note, e-mail and memo is evidence and will be taken out of context by the opposing lawyer. Recording every mistake, miscalculation, problem or lesson learned during construction of the project will come back to haunt you.
- The owner’s project management and upper management may make promises or representations their lawyers will later not let them keep.
- It is easy to grossly underestimate or forget about the time and cost “impacts” on original contract work caused by design defects and changes made by the owner to correct them. Failing to include these costs in change orders makes it far more difficult to recover the costs later.
- When preparing a complex claim or request for equitable adjustment, it is important to have a clear understanding of legal entitlement, the main themes and what will cause the owner to make a fair settlement. Otherwise, a great deal of time and wasted effort will be expended.
- Many owners on difficult projects do not think as contractors do. Therefore, it is difficult to negotiate with them as we would with another contractor. Time may mean nothing to them; the cost of litigation may mean little to them; the fairness or logic of a situation may mean less. Because contractors are asking for additional money from owners, owners may have more leverage. They may wear contractors down and use liquidated damages or other set-offs to reduce the amount of a fair settlement.
- If the owner is reasonable, it is important to make best efforts at a fair settlement of a claim before filing a lawsuit. At the same time, it is unlikely a settlement will be reached if we appear too anxious or if we negotiate against ourselves. If the owner is unwilling to be reasonable, there is no choice other than filing suit or demanding arbitration. The sooner that action is taken, the sooner the matter will be settled or otherwise resolved because the pressure of trial will promote resolution. Once the lawsuit is filed, be prepared for it to be terribly expensive and to lose some control of the schedule and resolution.
- Jurors see the claim/case far differently than we do. Similar to a television western from the 50s, they will seek to determine who are the good guys and who are the bad guys. Once determined, they will tend to ignore anything inconsistent with their earlier formed opinion. Presentation to jurors is different than the presentation to the owner. It must be made in terms the jurors understand. A detailed description of the project will only serve to confuse them.
- As much as we would prefer to never actually try the case/claim in court, owners fear the trial even more. Most claims that are litigated are settled on the courthouse steps just before trial.
Pursuing construction claims can be difficult, but keeping these lessons in mind from the beginning of the project can make the journey more successful, and avoid that feeling that you are beating your head against the wall.