By JACOB ZAHNISER
BridgeTower Media Newswires
Productivity is essential for a construction project to be profitable.
Changes to scope, site conditions and the manner in which work must be performed all affect productivity in real time and reduce profits. To be compensated for lost productivity, you have to have proper documentation.
During a project’s bidding phase, the means and methods to be used, including resource scheduling and sequencing, are set. Depending on whatever means, methods, resources and sequencing will be relied on, a contractor will estimate the amount of time various activities will take. This information is used to establish not only a schedule but also the basic expectations for productivity. Unless a contractor can defensibly state its expected productivity on any given task, it will have hard time defending itself if things don’t come out as planned. If a contractor, for instance, falls short of meeting its schedule, it won’t be able to prove that the delay was the result of forces beyond its control.
Once an expected productivity rate is established, and construction is underway, countless circumstances can derail the efficient execution of work. Bad weather, changes in crew size, poorly trained or supervised workers, shortages of workers, erratic workflow, work in small spaces, trade stacking, a lack of needed materials, design modifications, access restrictions and excessive change orders are just some of the countless ways productivity can be hampered. The result often is that additional time and therefore additional labor hours are needed to accomplish the work; unit costs increase and profitability decreases. Some of these circumstances are internal and controlled by contractors, and some of them are external and controlled by owners.
If a contractor suffers a loss of productivity caused by a circumstance beyond its control, the first step is to document from start the cause-and-effect relationship. Accurate documentation is indispensable for various reasons. First, a contract likely requires that documentation be drawn up and notice given contemporaneous with whatever event has given rise to a particular claim. Contract compliance is essential to securing a lost-productivity claim.
Second, contemporaneous documents have much more credibility with a fact finder than after-the-fact re-creations. They will feel more authentic and accurate to any decision-maker.
Third, contemporaneous documents can show a cause-and-effect relationship between an event and a claimed delay. For example, proper documentation can show that time was lost on a project because of bad weather.
However, it is rare on a complex construction project for there to be only one cause of delay. Rather, there is often a combination of events occurring over a period of time and giving rise to various overlapping delays. Proper documentation allows parties to unravel the Gordian knot of overlapping delays.
Finally, owners and contractors alike should bring in experienced counsel as soon as there is any chance there might be a delay claim. Experienced counsel can make sure events are described accurately and contemporaneously. Experienced counsel can help parties reach a resolution, whenever possible, before litigation battle lines are drawn. Even if parties disagree, experienced counsel can make sure an owner’s and contractor’s rights are preserved.
Disruption undermines profits. Owner-caused disruptions are compensable when properly documented. Proper documentation starts from the beginning of a project, during its estimating phase, and continues through to the end. Proving a delay claim is difficult without having accurate contemporaneous documents.
Jacob Zahniser is a shareholder at the Lake Oswego, Oregon-based law firm Jordan Ramis. He specializes in construction and real estate litigation.