Best Practices: Project Documentation and Construction Management

Construction Documentation and Record Management: Get it Right to Prevail in Disputes Presented by Matthew J. DeVries Smith Cashion & Orr PLC

Possible Titles 2

Baseball Gone Wild! 3

Tour de France Gone Wild! 4

“Teenage Son” Gone Wild! 5

“Adult Son” Gone Wild! 6

“Ferdinand the Bull” Gone Wild! 7

“Construction Projects” … 8

… Gone Wild! 9

The End • Questions? 10

Who Are You? • Coast to Coast … Toronto … Vancouver • Presidents, VPs, PMs, OMs, PEs, COO – Public and Private Owners/Developers – Architects/Engineers – General contractors – Specialty subcontractors/suppliers – Insurance carriers – Consultants (PM and Forensic) – Bottom Feeders 11

Who Am I? • Construction Attorney, LEED ® AP, Husband, Father of 5, Blogger, Author 12

1. Project Management Procedures 13

1. Project Management Procedures 2. Project Documentation 14

1. Project Management Procedures 2. Project Documentation 3. Critical / Non-Critical Documentation 15

1. Project Management Procedures 2. Project Documentation 3. Critical / Non-Critical Documentation 4. Legal Issues / Litigation Concerns 16

1. Project Management Procedures 2. Project Documentation 3. Critical / Non-Critical Documentation 4. Legal Issues / Litigation Concerns 5. Examples of Projects Gone Wild 17

The Conclusion • To promote effective project management procedures 18

The Conclusion • To promote effective project management procedures • Claim preservation – Notice of claim – Proof of liability – Document claim impact 19

The Conclusion • To promote effective project management procedures • Claim preservation – Notice of claim – Proof of liability – Document claim impact • If you end up in court … – Minimize exposure – Prevail in your disputes 20

Project Management Procedures • Establish standard management procedures – Processing of COs & extra work – Purchasing and receiving – Project documentation – Costs and accounting system – Scheduling 21

Project Management Procedures • Establish lines of communication – Regular job meetings – Field coordination meetings – Design coordination meetings • Address changes • Address progress • Address quality 22

Project Management Procedures • Establish procedures to manage, monitor and document work and progress – Ensures regular flow of information for project control and coordination – Contemporaneous, accurate and complete record of job conditions and problems including their impact to the project 23

Project Documentation • Purpose – For proper planning and management – Notice and reservation of rights – Aiding in resolving claims and disputes • Can be overwhelming but is essential • Must be organized – Standardized with written procedures – Major classifications – Chronological filing 24

Project Documentation • Why are proper records so essential for claims and disputes? (1) To establish causal connection to event (2) To establish reservation of rights/non-waiver (3) To properly identify actual costs and delays 25

Critical Project Documentation • Correspondence – Establish responsibility for responding to/acting on – Used to comply with notice requirements – Used to confirm discussions in writing • Will help to clarify any misunderstandings 26

Critical Project Documentation • Meeting minutes/notes – List participants – Subjects covered – Nature of discussions – Future action – Distribute to all participants or those affected – Use previous minutes as agenda for next meeting 27

Critical Project Documentation • Daily reports/logs – Routine, contemporaneous description of work progress and problems – Create standard form for easier use by field personnel – Can be used to build as-built schedule 28

Critical Project Documentation • Daily reports/logs (cont’d) – Information recorded briefly and concisely • Manpower by subcontractors • Equipment used or idle • Major work activities • Any delays or problems • Areas of work not available • Safety issues and accidents • Oral instructions and informal meetings • Weather summary 29

Critical Project Documentation • Personal daily diaries – Prepared by foreman, superintendents, project engineers, project managers • Record site conditions • Record labor and equipment usage • Record impediments to work – Consistency is important for trustworthiness 30

Critical Project Documentation • Time sheets – Document manpower • Number of manhours worked • Work performed • Accounting records – Must prove damages with reasonable certainty – Invoices 31

Critical Project Documentation • Photographs – Monitor, depict and preserve conditions – Pictorial diary of project (weekly or monthly) – Document defective work or problem conditions Note pertinent information on back • Date, time, location, condition depicted, photographer • Create photo log 32

Critical Project Documentation • Status/submittal logs – Shop drawings, field orders, change requests, change orders, authorizations to proceed, requests for information, drawing revisions, transmittals • CPM schedule – Realistic baseline • Input from subs for buy-in – Regular periodic updates 33

Non-Critical Documentation Personal emails, IMs, or blog trails 34

Non-Critical Documentation Personal emails, IMs, or blog trails Inappropriate copies 35

Non-Critical Documentation Personal emails, IMs, or blog trails Inappropriate copies Website traffic logs 36

Non-Critical Documentation Personal emails, IMs, or blog trails Inappropriate copies Website traffic logs 37

Project Management Software • Different software packages • Types of information track • Web based capabilities • Project management uses • Executive uses • Other project team member uses • Why do we need to know this? 38

Software Packages • Prolog Manager/Proliance • Expedition • Plans and Specs • Bentley Systems Inc. • Microsoft Project – Self hosted – Application service provider environment 39

Web Based Capabilities • Project team accesses same web based database • Access to design drawings, job site photos, schedules, and +400 reports • Document control is enhanced by tracking revisions, storing master files, streamlining review process • Compliance with corporate procedures 40

Project Mgt. and Exec. Uses • Procurement control • Daily reports • Cost control • Contracts • Document • Integration with management SureTrak and • Field administration Primavera • Reports • Change orders • Correspondence • Purchase orders documents 41

Why do we need to know this? • Step towards paperless project • Excellent audit trial – check in/out, IP address, version control • Consolidate project documentation • Integration problems with accounting software 42

Legal Issues What is the “put it in writing” rule? What is hearsay? Non-hearsay? Exceptions? Email versus Letter versus Change Order? Can we shred documents at the end? What about paperless project? 43

“Put it in Writing” Rule • What should you record? • For whom are you documenting? – General contractors/subcontractors – Business/legal purposes • Hearsay – What is the hearsay rule? – Exceptions 44

Exceptions to “Hearsay” Rule – Business record exception – Author actually observed conditions – The records were prepared in the normal course of business – The records were prepared at the time of the event(s) or reasonably soon thereafter – There is no suggestion that the records were prepared for the specific purpose of use in litigation –“A less-guarded time.” 45

The Paperless Project • Who owns the license to the program? • How much access do the parties have to the documents created in the program? • Who controls the server? • Will the parties be granted access to project documents during the project? • Is less formal communication (email) good or bad for the parties? 46

Paperless Project (cont’d) • Would you still use letters? • Could emails to attorneys be retrieved by other parties? • Is a written instruction via email the same as a change order? • What type of information would you want protected? 47

Duty to Preserve 48

Duty to Preserve 49

Duty to Preserve 50

Duty to Preserve 51

Sample Documents 52

Sample Documents 53

Sample Documents 54

Sample Documents 55

Sample Documents 56

Sample Documents 57

The Real World • “One look is worth a thousand words.” – Fred Barnard (Dec. 8, 1921 advertisement) • 畫意能達萬言 – The Home Book of Proverbs, Maxims and Familiar Phrases (Mar. 10, 1927) • "Un bon croquis vaut mieux qu'un long discours" – Napoloean Bonaparte • “As the Chinese say, 1001 words is worth more than a picture.” – John McCarthy, computer scientist 58

E-mail: Not-So-Good To: John From: Paul Re: Project Delays John, I am going to have Drew send you some progress curve comparisons for us to start the delay status analysis. I think we need to begin the discussion with our management that we are late and tell them that we are analyzing how late. We also need to consult the claims team as how we tell our management that we are late. The schedule needs some serious work to be used as a float tool and everyone is going to be looking to get answers. 59

E-Mail: Bad From: Contracts Manager about Upper Management People did not listen and act on previous recommendations in a timely manner and I am annoyed that those delays significantly impact the cost and schedule to this project. COMMITMENT from management means listening to the people who have to make things happen … Yes, I am annoyed, but more importantly I am concerned where we are going with this project if people do not listen and act quickly. How can we be successful with the schedule and cost if we do not have the resources to execute the job proactively and/or project management does not respond when we make recommendations? WE NEED HELP!!!! 60

E-Mail: Worse From: Upper Management about Contracts Manager Guys, let’s get real. I have three simple questions: Is Bob the right person to be Contracts Manager on this project? If there is any hesitation, then take the necessary action to get the right person in place. Is there adequate support for the Contracts Manager at the site and/or back-up available? Are there any other projects in this deadlocked condition? 61

E-Mail: The Worst From: Upper Management to Contracts Manager Bob, I understand your frustration about lack of support from back in the East. We are attempting to get the additional resources and assistance that you have requested. In the meantime, you need to continue with the team in place. If we are going to make the contractor look like they cannot do their job, we MUST look and act like we are doing ours!!! Rob 62

E-Mail: Dirty Words Internal Correspondence Great! What the hell are we supposed to do now?!?! This invoice will now have to be made known to ABC Co., but not before our sailaway date of May 15th ******* I am sure that Mr. Smith and Mr. Jones will be involved here, but I would much rather have ABC Co. see this after our equipment has left the port and is on the High Seas on their vessels. 63

E-Mail: Dirty Words Internal Correspondence Great! What the hell are we supposed to do now?!?! This invoice will now have to be made known to ABC Co., but not before our sailaway date of May 15th ******* I am sure that Mr. Smith and Mr. Jones will be involved here, but I would much rather have ABC Co. see this after our equipment has left the port and is on the High Seas on their vessels. Lesson Learned: Watch out for the four-letter words. 64

Daily Report 4) MISLABLED PARTS STILL ONGOING. LOST TIME IS MOUNTING UP. LAYDOWN AREA HAVING A HARD TIME DUE TO MISLABELING. 65

Deviation Report Description: Labor Availability Root Cause: Missed in the original estimate. 66

Change Order Log No. Item Date Amount Pending Notes 1 Rebar masonry 3/14 $114,450 0 Missed quantity 2 Rebar 3/14 $92,896 0 Missed quantity 3 Curb 3/14 $58,905 0 Missed quantity 4 Additional pumps 5/7 $105,990 0 Engineer 5 Additional filters 5/7 $12,450 0 Engineer 6 Electrical 5/7 $311,412 $311,412 Engineer 67

Project Photos: Organization 68

Photos: Assist in Project Administration Location: Nashville, TN User: Owner (out‐of‐town) Feature: Progression photos used by project members during construction Source: Multivista Construction Documentation 69

Photos: Proof of Installed Quantities Location: Memphis, TN User: General Contractor Feature: Aerial photos used to establish entitlement to installed quantities 70

Photos: Impeachment of Witness Location: Memphis, TN User: General Contractor Feature: Aerial photos used to contradict witness testimony on scope of completion 71

Photos: Proof of Responsibility Location: Nashville, TN User: General Contractor Feature: Date of photos used to establish insurance coverage dispute 72

Photos: Defective Work Location: Atlanta, GA User: Owner & General Contractor Feature: Walk‐through photos used to show defect and standard Source: Multivista Construction Documentation 73

Photos: Incomplete Work Location: Atlanta, GA User: General Contractor Feature: Interior MEP photos used to defend claim by sub for additional $$ Source: Multivista Construction Documentation 74

Photos: Recover Regulatory Fines Location: Raleigh, NC User: Owner Feature: Pre‐construction site‐ survey photos used to identify responsible party for local fines Not actual project photo Source: Multivista Construction Documentation 75

Photos: Proof of Delays Location: Pittsburg, PA User: Steel Contractor Feature: Aerial photos show staging area used by other trades and impacted schedule Source: Duggan Rhodes Group 5/30/00 76

Photos: The Smoking Gun (Bad photo if you are the blasting contractor!) 77

The Legal World • Higgins Dev. Partners v. Skanska USA (Mont. 2009) – Email sufficient to support a finding of increased costs for change order • Inland Construction Co. v. Cameron Park (N.C. Ct. App. 2007) – Email promising additional work not a “contract” – Lack of executed change order found to be without merit 78

The Legal World • A-1 General Contracting v. River Market Communications (N.Y. 1995) – Handwritten notations on contract “should be ignored” – No agreement about payment schedule • Klein Development v. Ellis K. Phelps & Co. (Fl. Ct. App. 2000) – Faxed release of lien binding? – Letter requesting original signature was contradictory evidence 79

The Legal World • Bethlehem Area Sch. Dist. v. White Bros. Construction (Pa. Com. Pl. 2004) – Letter constituted a limited admission of damages (tiles and carpet, not mold) • Raymond’s Building Supply v. Mattson (Conn. Super. 2007) – Photographs established that problems “were or should have been” evident at the time of termination 80

Future Issues • Green Construction – LEED ® credit templates, worksheets and back-up documentation – Documentation of energy performance • Social Media 2.0 – Twitter – LinkedIn – Facebook 81

Questions? Matt DeVries Smith Cashion & Orr PLC 231 Third Avenue North Nashville, TN 37201 (615) 742-8577 direct (615) 354-3681 cell mdevries@smithcashion.com 82

What to Do When the Project Goes Bad? • Review all contracts to determine rights • Notify the proper persons • Document the impact • Reserve rights and proceed under protest • Prove the monetary loss due to impact • Negotiate resolution 83

Invoke Dispute Resolution If Necessary 84

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Best Practices: Project Documentation and Construction Management

by Smith Cashion & Orr PLC on Oct 29, 2009

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Best Practices: Project Documentation and Construction Management — Presentation Transcript