Published on September 29, 2014
TEN BASIC CONCEPTS FOR OWNERS PRESENTER: CRAIG DIRRIM, PARTNER
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
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 View slide
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). View slide
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)
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.
PROVIDE ACCURATE PLANS Practical Tips Know your contract terms with your owner. Is there a limitation of liability? Be careful “reusing” design documents
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.
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.).
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.
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.
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.
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.
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.
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.
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.
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.
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.
THANK YOU! CRAIG DIRRIM 301 SOUTH 13TH STREET, SUITE 500 LINCOLN, NE 68508 (402) 437-8500 CDIRRIM@WOODSAITKEN.COM
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