Owners on construction projects face unique challenges. Here are ten basic concepts every owner should think about.

1. TEN BASIC CONCEPTS FOR OWNERS
PRESENTER:
CRAIG DIRRIM, PARTNER

2. TEN BASIC CONCEPTS FOR OWNERS
1. Disclose known information to bidders
2. Provide accurate plans
3. Obtain permits and easements in a timely
manner
4. Coordinate access to the site and work of
others
5. Supply equipment and material as scheduled

3. TEN BASIC CONCEPTS FOR OWNERS
6. Respond promptly to change order and time
extension requests
7. Review submittals in a timely manner
8. Make timely, reasonable inspections
9. Provide a safe site environment
10.Deal with the contractor in good faith

4. DISCLOSE KNOWN INFORMATION TO
BIDDERS
An owner’s duty to disclose will start at the issuance of
the RFP and continue through construction.
Includes ground water levels, flood conditions,
subsurface soil conditions, hazardous materials, etc.
Document the method and manner of disclosure (i.e.,
studies, photos, video reports).

5. PROVIDE ACCURATE PLANS
Under the Spearin Doctrine, an owner warrants that its
plans and specifications are accurate, and if a
contractor performs in accordance with the design
documents provided, the contractor will not be
responsible for any inadequacies in the completed
work.
Spearin will also allow a contractor to recover for any
additional costs or extra work which result from defects
or inadequacies in the plans specifications.
See United States v. Spearin, 248 U.S. 132 (1918)

6. PROVIDE ACCURATE PLANS
Defenses to Spearin
 Obvious defect – would a reasonable contractor have
been able to identify the design error during a pre-bid
review.
 The contractor must perform its work in accordance
with the plans and specifications.
 The warranty of design in Spearin does not apply to
performance specifications.
 In certain cases, specific disclaimer language can defeat
the obligation in Spearin, but such language could
increase the cost of the project.

7. PROVIDE ACCURATE PLANS
Practical Tips
 Know your contract terms with your owner. Is there
a limitation of liability?
 Be careful “reusing” design documents

8. OBTAIN EASEMENTS AND PERMITS IN A TIMELY
MANNER
An owner typically needs to have all approvals
required for a contractor to proceed. Manage this
process.
Have all R.O.W.’s been obtained before the
notice to proceed?
Are there conflicts with utility or railroad
easements?
Failure to provide such easements or permits
may be an exception to a “no damages for delay”
clause.

9. PROVIDE ACCESS TO THE SITE AND COORDINATE
THEWORK OF OTHERS
An owner is required to provide uninterrupted
access to the project throughout the course of
construction.
The owner’s duty includes adequate space to
perform the work (cranes, laydown, etc.).

10. PROVIDE ACCESS TO THE SITE AND
COORDINATE THEWORK OF OTHERS
The owner will need to coordinate other work so
it will not interfere with the contractor’s planned
sequence or schedule, particularly in cases where
there are multiple primes.
The owner should adequately disclose or limit
possible interferences from ongoing operations in
existing facilities.

11. SUPPLY OWNER FURNISHED EQUIPMENT AND
MATERIAL IN ACCORDANCE WITH THE SCHEDULE
When an owner chooses to supply material or
equipment, it warrants that the supplied
materials are suitable for its intended purpose.
An owner who chooses to furnish certain
equipment or materials must do so in
accordance with the project schedule. Failure to
do so may result in liability for additional costs or
delay.

12. SUPPLY OWNER FURNISHED EQUIPMENT AND
MATERIAL IN ACCORDANCE WITH THE SCHEDULE
Specification of certain proprietary material or
equipment by an owner implies that the
materials or equipment will be available and
are suitable for the work.

13. RESPOND PROMPTLY TO CHANGE ORDER AND
TIME EXTENSION REQUESTS
An owner has a duty to fairly evaluate and
promptly respond to time extension requests.
 Failure to respond to a time extension request may
result in the finding of “Constructive Acceleration.”
An owner has a duty to fairly evaluate and
promptly respond to change order requests.
 Failure to respond to a change order request may result
in a project stoppage or escalate the matter to a claim
status.

14. REVIEW SUBMITTALS AND RFI’S IN A TIMELY
FASHION
When the contract requires the contractor to submit
shop drawings or other information to the owner for its
review, there is a corresponding duty on the owner to
make such a review in a manner which supports the
project schedule.
 Failure to review submittals in a timely fashion may subject
an owner to a claim of active interference and could render
a “no damage for delay” clause void.
 Failure to respond to RFI’s in a timely manner may provide
a contractor with a basis for an extended duration or delay
claim.

15. MAKE TIMELY, REASONABLE INSPECTIONS
If the contract requires inspections after
particular phases or portions of work, an owner
will have a duty to have sufficient personnel
available to perform such inspections in
accordance with the project schedule.
An owner may be responsible for inconsistent
inspections or “over” inspections of the
contractor’s work.

16. MAKE TIMELY, REASONABLE INSPECTIONS
An owner who has an opportunity to make a
reasonable inspection and fails to make such
inspection or undertakes an inspection, but
fails to notify the contractor of obvious non-conforming
work, the owner may be barred
from seeking damages from the contractor for
such work.

17. PROVIDE A SAFE ENVIRONMENT
Are there site specific conditions or operation
issues that the owner has specific knowledge
of? If so, those should be disclosed.
If the owner is undertaking to manage a
multiple-prime project, the owner may have a
heightened responsibility to ensure the safety
of the project site.

18. DEAL WITH THE CONTRACTOR IN GOOD FAITH
Every contract
contains an implied
covenant of good faith
and fair dealing.
This covenant of
good faith and fair
dealing can cover
numerous owner acts
and/or omissions.

19. THANK YOU!
CRAIG DIRRIM
301 SOUTH 13TH STREET, SUITE 500
LINCOLN, NE 68508
(402) 437-8500
CDIRRIM@WOODSAITKEN.COM