Tag Archives: risk avoidance

How to Smartly Handle Project Documents

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mountain of construction paperwork

Paperwork by luxomedia via Flickr

In the Contract Risks Management Group on LinkedIn, L.H. Chin wrote an article about file keeping for contract risk management.  Basically, his premise is that if you cannot keep your Project files orderly, you have exponentially increased your chances of a problem later.   His particular example dealt with originals versus reproduced copies, which is only somewhat germane to North Carolina contracts.  (Here, copies can be used as evidence most of the time—though not always).  His main point, however, about the ability to minimize future risks by having good document control policies in place, is something every project manager should think about.

 Here are a few tips of my own in that regard:

1.   File all communications in one place.  Don’t keep faxes in one file, email in another, and letters in a third.  Don’t keep incoming and outgoing correspondence separated by vendor.  Keep it all in one chronological file.  If you ever find yourself needing legal assistance, this will save many hours and untold stress for everybody.

1.b.  Caveat:  don’t feel like you need to print out every email.  Do, however, maintain a separate email e-folder for the Project, and go ahead and print those really crucial, smoking gun emails.

2.  If you insist on violating Rule 1 (and I know those of you who read this blog would never consider such a thing, right?):  Have all the files, categories, and such you want, but please also make a “master” chronological file of all correspondence.   Just do it.

3.  If you have any communications with your lawyer, an insurance representative (outside of the normal bonding paperwork), or otherwise have documents relating to potential claims, do keep them separate.  Put all such correspondence, in a folder marked “legal,” away from the Project file to prevent inadvertent disclosure to anyone else if there is ever litigation on the matter.

3.b  If in doubt whether something should be in “legal” or “correspondence”, err on the side of “legal.”  Your attorney can always change the classification later, but she can’t put the genie back in the bottle if something that is privileged is mistakenly given to a party suing you.

If you have any questions about these tips, or want to discuss your current procedure for record management, shoot me an email.  My contact information can be found on my Firm bio or at the Footer of the Blog.  Or, you can simply leave me a note in the comments. 
 

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Photo: “Paperwork” by luxomedia via Flickr/CC license.

Green Design—is it for the cache or the environment?

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A building can be designed to meet energy efficiency and sustainability goals, without actually obtaining LEED certification.  However, LEED certification is becoming one of the most recognized ways of demonstrating your commitment to green building.  It does not come, however, without a cost.  In addition to the registration fee to the Green Building Certification Institute, costs depend on the square footage of the building, ranging from $1,750 to $17,500 for GBCI members to $2,250 to $22,500 for non-members.  There are also commissioning fees and the soft costs associated with a green design.

Enter the Town of Cary and the new fire station.  While meeting many green goals, the Town has elected to forego getting it LEED certified because of the estimated $41,000 costs involved in doing so.  Is this the next trend in green building?  If not LEED certified, what is to stop unscrupulous builders from unilaterally declaring their work to be green without actually making it environmentally friendly?  Is the cache of being green worth multiple thousands of dollars in these lean economic times?  Is this a way to avoid risks associated with failing to meet LEED certification?

For more on this issue, check out Matt DeVrie’s article on this same subject, “What are the benefits of Leed Certification?”

How Long Should My Construction Contract Be?

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The answer, as is always the answer when you ask an attorney a question, is “it depends.”  Lawyers don’t say “it depends” just to drive clients mad—really, we don’t.  The thing is, lawyers, by their very nature, are cautious.

Lawyers want to plan for all situations and possibilities.  Likewise, a construction contract can become an unwieldy document that only a lawyer could love, as it provides for all conceivable areas of dispute and all possible contingent situations.  Such a contract does no one much good.

The best contract for you is the contract that is appropriate for your construction project and the players in that project.  If the project is a multi-million dollar, multi-year project, you probably should not skimp on having a well-crafted, attorney-vetted contract specific to your deal.  If, on the other hand, the project is a one-day residential job, you can get by on much less.

Do not assume, however, that just because a contract is small in terms of dollars or man-hours that you do not need a contract. You do. (See my earlier post on the importance of a written contract.) Paradoxically, some of the most hotly contested lawsuits involve homeowners.  After all, their home is their castle.

In fact, a house is usually the single largest investment decision that most people will ever make, often involving a mortgage that may take as many as 30 years to pay off.     It is only natural, therefore, that homeowners will be extra exacting when it comes to issues relating to their home.

To go back to the original question—how much contract you need depends very much on the situation.  A two page, simple contract may be sufficient for your purposes, if it is carefully crafted to account for all common areas of dispute which may arise.  It is vital, however, that you have one, and that it is in writing.

Of Mice and Men: Yes, you need a written construction contract!

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Field mouse

Photo by delphywnd via Flickr*

 

Does a written contract *really* matter?   Yes; yes it does.

While you can get by for years- decades, even- on handshake deals—when something goes wrong you will wish you had a written contract.  Even the best projects, with familiar clients and trusted contractors, can go awry.  (“The best laid plans of mice and men often go awry”).

Many of my clients come to me after having been in business 20, 30 years or more.  They come to me because they have either already been sued, or the handwriting is on the wall and they are about to be brought into litigation.  They tell me they’ve never needed a written contract before now.  That’s well and good.  However, I’d bet dollars to donuts those same folks have fire insurance, and yet very few if any of them have actually experienced a house fire.  What’s different about business contracts?

The goal, of course, is that you will never need to rely on the written provisions in your contract.  But if you ever find yourself facing a lawsuit, you’ll wish you had a written contract.

A written contract spells out expectations, rights, and responsibilities.  It sets standards that may be understood by the parties, but very different from what the common law would allow.  Without a written contract, you are trusting yourself to laws you may not agree with or giving up protections you may otherwise have.  Why chance it?

Get something in writing—a signed proposal, an email which is confirmed—something that spells out basic agreements that might come into dispute later.  A thorough contract written for each project is ideal, though not always practical on smaller, quick-turn deals.  That’s fine.  But get something on paper.  You’ll be glad you did, if and when you ever find yourself on the courthouse steps.

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*Photo: Have you seen the Muffin Mouse by delphwynd via Flickr and made available via Creative Commons license.

Green Design | Legal risks to designing a Construction project for LEED certification (take 2)

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As I noted in an earlier post about risks related to designing buildings for LEED certification, those involved in construction should proceed cautiously in designing to certain LEED standards.

A recent Insurance Journal article discusses insurance and liability risks for a designer or contractor if he guarantees a certain level of “green” performance in his construction contract.

“If you’re an architect, engineer, or contractor, and you’re guaranteeing to your client that the building will be Gold certified by the U.S. Green Building Council, you’re opening up a pretty big can of worms.”

You should never “guarantee” any performance to keep your risks minimized, your insurance in place, and your attorney happy. This article is another reminder to be especially cautious in green construction, and to not make promises that you may not be able to keep.