Finance :: Insurance Software Solutions - Build or Buy
Const_documentation_article_XL_2014
1. XL Group
Insurance
Construction Insider
Cheri Hanes, CRIS
Construction Risk Engineer
Strong documentation is one of your
best defenses against construction
defect claims/expenses. It can support
that you built a structure right in the first
place, or sufficiently corrected an issue,
and it can make physically proving this
easier if necessary by allowing you to
access accurate information in the event
something needs to be uncovered.
In order to have the most robust documentation, it is a
strong practice to do it contemporaneously, documenting
and closing out the work as it is performed, and saving the
information in an easy-to-access format that is agreed
upon, consistent, and understood by all team members.
Robust documentation is definitely worth your company’s
time, expense and effort. The question is: Do your policies
and procedures ensure that you are doing all you can to drive
consistency and thoroughness in your documentation?
Compliance documentation
Compliance documentation consists of all the files, photos,
inspection reports, test results, etc. that serve as proof of
the methods used in, and final results of, your construction
practices. Robust documentation may demonstrate that
issues arising post-construction are local rather than
systemic. By capturing and maintaining documentation of
your good construction practices, it is possible to prevent
extrapolation of single issues across an entire project.
Documentation
as Defense
against
Construction
Defect Claims
2. • Documentation as Defense • September 2014 • 2
It is especially important to capture robust documentation
of all conditions that will be hidden within the final structure.
Document items overhead, in the ground or walls with
photography and checklists with sign-offs. Having these
may reduce or eliminate the need to engage in costly and
time-consuming exploration to locate a condition after
construction is complete.
It is also a best practice to coordinate with the design team
to ensure that the final design documents are accurate and
incorporate all of the design changes, presenting an accurate
portrayal of the actual built condition. If an issue arises, no
one will remember all the changes that were made during the
course of construction, and these documents will be the first
place to check.
Non-Compliance Reports and
Documentation of Correction
On all projects, observations of issues requiring correction
may be made by a wide range of entities – including
your team, engineers of record, consultants, authorities
having jurisdiction, etc. In the event of a claim, all such
documentation would be discoverable. Therefore, if a non-
compliant item is documented, there must also be formal,
retrievable documentation of its having been cured. For
every report of an issue, by any party, there needs to be a
closed loop of documentation to prove that the issue was
corrected appropriately and closed out. It is also valuable if
you can demonstrate that definitive actions were taken to
prevent recurrence – a proactive approach to continuous
improvement. This documentation should include the
method and date of correction, with sign off by the involved
parties. Review of these issues should be conducted
before each progress payment (and certainly before final
payment) to ensure that all items for each sub are fully
cleared by project completion. You can further strengthen
the effectiveness of these practices with periodic audits to
ensure all is going to plan.
Photos and Videos
A photo or is worth a thousand words. A video is worth a
thousand photos. Proof doesn’t get much better. Systematic
photos(or better still, videos) of completed work, of testing
conducted or other quality control activities are powerful
tools. They provide incontrovertible visual evidence of the
actual conditions. Whether you use a staff member or a third
party for this function, consider developing a systematic
method of capturing--throughout all of the key stages of
construction--photographs of your good construction
practices and results. It is also important to consider
carefully the effect of taking photos of non-complying work.
More and more, builders take photos of non-compliant
work for communication and clarity with the subs and other
parties. While this is a very useful practice, it is absolutely
critical that if you photograph a non-compliant condition
you also photograph and document the cured condition and
ensure those images are also readily accessible. Imagine
a claim where a photo exists showing something “wrong”
behind the walls or in the ground, but only your team’s word
or an email stating that the problem was corrected. The best
practice is to systematically capture specific photographic
evidence that can be accepted as conclusive proof of the
deficiency being corrected. A photo - especially one with
GPS coordinates, a date, and clear identification - should
meet that standard.
Types of documentation and related strategies
Compliance
documentation consists
of all the files, photos,
inspection reports, test
results, etc. that serve
as proof of the methods
used in, and final results
of, your construction
practices.
3. • Documentation as Defense • September 2014 • 3
As-Builts / BIM Model
An accurate set of construction as-builts - whether paper
or digital - can significantly reduce potential for a claim
by documenting both the as-built condition and proof of
acceptability. Your project team should regularly update
the record set with the goal of capturing all changes as
they are approved and with sufficient detail so that there is
less “remembering” necessary when the final record set is
compiled. Daily updates to these documents are preferred
but weekly can be acceptable, at a minimum. It is also a best
practice to conduct periodic audits of as-builts to ensure
compliance. This is commonly performed as part of the
monthly pay application approval process. And as subs turn
over their as-built sets, check to confirm that there is full
agreement between their documents and yours.
Commissioning
The more detailed your commissioning documentation
is, the easier it will be to prove that the systems were built
as designed and functioning properly at start up and turn
over. This documentation provides powerful proof that you
delivered the systems as promised. Whether using a third
party or in-house commissioning agent, the documentation
they produce can have a large impact in the event of a claim.
Your documentation of the commissioning process should
include checklists with sign-offs, photos, videos, and a
narrative for complete clarity, in addition to other required
inclusions.
Testing
Maintaining all project test records is imperative. Typically,
records that you control from the start are not the biggest
challenge, but rather those coming from subcontractors. If
you cannot prove that the work you are paying for has met
the required standards (which test results enable you to do)
then you run the risk of having to pay for a re-test or worse--
rework. Make sure, to the extent possible, that your subs are
turning over all test records related to the progress on each
pay app as a condition of payment.
Owner training
The training provided to the owner in advance of turnover
enables proper operation and maintenance practices. These,
in turn, reduce the chance of problems down the road which
could lead to a claim. In other words, if your owner has a clear
understanding how things work, there is a better chance that
the systems and equipment will be maintained and operated
properly and, therefore, function correctly. Ensuring
that your staff and subcontractors understand training
requirements early on allows for needed preparation and
execution. This is another area where video is a great idea.
Video gives the owner a resource to share with future O&M
team members and you have proof of what was covered.
Additionally, have training attendees sign off on their
participation and understanding and make sure the owner
knows who to call if there are questions. It is also worthwhile
to conduct training on the O&M documents themselves
especially for owners, to ensure they know exactly what they
have and how to access it. This is especially important if you
are turning over a digital model.
Warranty Documentation
Your Company’s timely response to warranty issues is likely
to result in a satisfied owner who is less likely to escalate a
problem to seek formal remedy. Warranty calls are actually
opportunities in a couple of ways: 1. Your response can
strengthen an important owner relationship, and 2. If an item
can be fixed under warranty, your exposure is reduced. This is
a key item to stress with your teams as their responsiveness
can make a real difference. Does your company offer a 6
month and 11 month post-completion walk-through of your
projects to identify items needing attention? The practice
can provide your team an eyes-on opportunity to check for
potential issues. This is also an opportunity to document
that systems are working properly and to catch any systems
being operated or maintained improperly, which could lead
to problems later. Make sure subs deliver their warranty
Ensuring that your staff
and subcontractors
understand training
requirements early
on allows for needed
preparation and
execution.
