Best Practices on Construction Projects

1. Best Practices on Construction Projects Providing Open Project CommunicationStrategies for RFIs January 16, 2009Presented by the Claims Avoidance & Resolution Committee

2. Best Practices Panel Claims Avoidance and Resolution Committee Subcommittee for Project Management Procedures • Stephen A. Hess, PE • Lawrence M. Lenahan, PE • William Scott, PE • John Ciccarelli, PE, CCE, PSP Construction Institute Claims Avoidance and Resolution Committee

3. Communications Plan • Partnering • Regular Meetings and Agendas • Project Document Management and Control • Document Policies • Decision Matrix • Strategies for RFI Construction Institute Claims Avoidance and Resolution Committee

4. Project Document Management and Control • Submittal logs • Change order logs • Correspondence logs • Email • RFI log • Project management software • Conformed documents Construction Institute Claims Avoidance and Resolution Committee

5. Documentation • Verbal directions • Field directives • Daily reports • Record photos • Retention policy • Litigation hold • Privacy of confidential information (i.e. SS #) Construction Institute Claims Avoidance and Resolution Committee

6. Decision Matrix • Define Authority Levels • Establish relationships • Define communication routes Construction Institute Claims Avoidance and Resolution Committee

7. RFI – Background RFI is a communication tool to facilitate resolution of or to clarify design document issues • Typically contractor submits and designer responds • Clarify a legitimate question concerning the design documents • Keep the project moving forward and build the job • Can lead to Change Orders • Process will vary from project to project • Effectively coordinate and manage RFIs • Assist documenting the history of the project Construction Institute Claims Avoidance and Resolution Committee

8. RFI Background (continued) • Reason - design documents are allegedly: • Faulty • Ambiguous • Inadequate • Incomplete • Conflicting, etc… • Claim submitted for acts or omissions of the Design Professional – based on RFIs • Perceived as providing a methodology to document deficiencies in the contract documents and establish a basis for additional costs and time Construction Institute Claims Avoidance and Resolution Committee

9. RFI – When Used as Basis for Claims(Abuses and Pitfalls) • Submitted for a clearly identifiable item that should have been addressed pre-bid • Submitted significant number to establish support for claim • Submitted numerous and excessive RFIs (at the same time) and overwhelm the designer • Designer / Owner hinders the process and does not provide a decision or respond • Insufficient response frustrates the Contractor and does not progress the work • Use RFI to propose alternative construction methods or substitute items (or-equal) Construction Institute Claims Avoidance and Resolution Committee

10. Claims based on RFIs • Response to RFI will be the basis for the claim • Extreme position that the first RFI indicates incomplete design • Contractor claims for: • Work performed based on response to RFI as a Change Order • Additional construction costs • Delay damage and off-setting of liquidated damages • Owner claims for: • Cost for delayed project completion • Increased interest and expenses Construction Institute Claims Avoidance and Resolution Committee

11. Best Practices • Develop an RFI protocol/procedure to address: • The items that will and will not be accepted as an RFI • Information which is on the contract documents will not be addressed in a response • Define the documentation and supporting data required • Time frame for response • Qualify that the response is not a Change Order • Does not address construction means and methods or site safety • Will not review requests for substitute items as an RFI • Discuss the procedure at pre-construction meeting or include as part of the bid documents • Discuss RFI issues prior to formal submittal • “Confirming RFI” to confirm previous agreement Construction Institute Claims Avoidance and Resolution Committee

12. Best Practices (continued) • Proactively develop RFIs prior to construction or work in an area • Develop an RFI form and require project participants to use it. Form should require: • Concise statement of the issue (limit to one issue) • Identify the specific plans or specification in question • Develop internal procedure for receiving, handling and responding to RFI in a timely manner • Single source responsibility • Procedure to forward to specialty consultants • Communicate when the RFI will be completed • Maintain log and track status (monitored by individual in company, but not involved with the project) Construction Institute Claims Avoidance and Resolution Committee

13. Best Practices (continued) • During construction must reply timely and appropriately • Inform the Owner if an RFI results in a design change, additional costs or delay and document the reason • “Dislodge” complex issues from the RFI process • Use subcommittee approach for more complex issues • “Dislodge” resolved RFIs from the process • RFI response then moves to Change Order or other Contractual process • Prioritize RFIs • Need response in: days, weeks, or months Construction Institute Claims Avoidance and Resolution Committee

14. Claim Avoidance - Mitigation Delays caused by incomplete or faulty design • Know the Project schedule • Manage the RFI process; do not just accept each as valid and necessary • RFIs must conform with the intent to clarify contracts and design documents/specifications. • Track the receipt and return of RFI submittals – take notice immediately of dramatic increases in RFI count and/or response time Construction Institute Claims Avoidance and Resolution Committee

15. Claim Avoidance - Mitigation Delays caused by late or lack of response • Establish procedures, including the RFI submission format, within the Contract or prior to construction • Track receipt and return of all RFIs during the project and act to detect trends • Know the schedule and prioritize • Designer understand the importance of response • Contractor pre-planning work and identify conflicts early • Do not “sit” on RFIs - accept and address or reject promptly • Ensure that RFIs are complete and do not accept RFIs that fail to conform to submission requirements • Clarification of Contract or design documents only Construction Institute Claims Avoidance and Resolution Committee

16. Recommended Project Management Procedure - RFIs • Clearly define and use the RFI process with the designer to seek clarification or interpretation of conflicts, errors, discrepancies or ambiguities in the Contract Documents – limit to clarification only • Define and document the response time at the project (kick-off) pre-construction meeting. • Sample Contract language: Construction Institute Claims Avoidance and Resolution Committee

17. Recommended Project Management Procedure - RFIs • Define the number of copies required (no oral or incomplete RFIs accepted) • Review and response to RFIs shall not constitute approval, direction, or procedures for means and methods. • Limit each RFI to a single issue • Information discernable from the existing documents, or addressing construction means and methods or site safety will not be addressed • Designer should designate a specific representative to manage the process Construction Institute Claims Avoidance and Resolution Committee

18. Recommended Project Management Procedure - RFIs • RFI Form should include • Chronological number for the RFI (Tracking Mechanism) • Date issued • Name of person and contractor requesting information • Applicable Specification section and page number • Applicable drawing number and title • Clear statement of the request • Remark for any increase in cost or time • Designer should review RFI for compliance with protocol and return any non-complying RFIs Construction Institute Claims Avoidance and Resolution Committee

19. Recommended Project Management Procedure – RFIs • Upon receipt of RFI, responsible party should • Calculate response due date • Notify Contractor of date received and when response should be expected • Review for compliance with protocol and return any non-complying RFIs • Enter RFI into log Construction Institute Claims Avoidance and Resolution Committee

20. Recommended Project Management Procedure - RFIs • RFI log – manual or electronic, should include: • RFI Number • Name of requester and contractor • Date of receipt • Original response due date • Name of RFI reviewer • Date forwarded for review • Date returned to Contractor • Any extension information (date, etc) • Summary of response • Does response necessitate a change, extra or time extension • Other (trade or discipline involved,…) Construction Institute Claims Avoidance and Resolution Committee

21. Recommended Project Management Procedure - RFIs • Forward response to Contractor and copy appropriate parties (Owner, CM, Resident Engineer) • Contractor can disagree with response and initiate meeting and resolution in another forum – RFI is closed Construction Institute Claims Avoidance and Resolution Committee

22. Recommended Best Practices • Designer – understand your Contract and the Contractor’s Contract provisions with the Owner • Use RFIs with owner during design phase • Required response time for RFIs and communicate expected response time to contractor • Know Contract roles and responsibilities • Understand the Project Schedule • Does the Contractor’s schedule need to or include shop drawing review and other A/E related activities? • Monitor and manage RFIs and utilize an RFI log • Be prompt with response and/or document why not • Don’t let paperwork languish! Construction Institute Claims Avoidance and Resolution Committee

23. Benefits of Implementing Procedures • Facilitates communication • Streamlines the RFI process • Maintains progress on the project • Documents project history • Helps mitigate and avoids claims Construction Institute Claims Avoidance and Resolution Committee

24. Questions? Construction Institute Claims Avoidance and Resolution Committee

25. Sample RFI Form Construction Institute Claims Avoidance and Resolution Committee

26. Sample RFI Form(from Timberline Software) Company Address Company Address Construction Institute Claims Avoidance and Resolution Committee

27. Sample RFI Form Construction Institute Claims Avoidance and Resolution Committee

28. Sample RFI From ConstructWare Software Construction Institute Claims Avoidance and Resolution Committee

29. SampleRFI Log Construction Institute Claims Avoidance and Resolution Committee

30. Sample RFI Log From ConstructWare Software Construction Institute Claims Avoidance and Resolution Committee

31. Sample RFI Log Transit Project Construction Institute Claims Avoidance and Resolution Committee Transit Project

32. Litigation / Legal Considerations • United States v. Spearin, 248 U.S. at 136-37 (1918) • United States Supreme Court: "if the contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans and specifications." • Implied warranty • Cumulative effect of changes recognized that inefficiency claim based on disruptive effect of individual compensable changes: • Jackson Constr. Co., Inc. v. United States, 62 Fed. CI. 84, 103-04 (2004) (citing J.A. Jones Constr. Co., ENGBCA Nos. 6348, 6386-6391, 2000-2 B.C.A. (CCH) P31,000, at 153, 107, 2000 WL 1014011 (2000); • McMillin Bros. Constr., Inc., EBCA No. 328-10-84,91-1 BCA P 23,351, at 117,102-05, 1990 WL 140900 (1990), aff'd, 949 F.2d 403 (Fed. Cir. 1991); • Bechtel Nat'l, Inc., NASA BCA No. 1186-7, 90-1 BCA P 22,549, at 113,177-78, 1989 WL 160470 (1989)

33. Litigation / Legal Considerations • Duty • The government has a duty not to act in a way that will hinder or delay the contractor's performance (“refrain from willfully or negligently interfering with a contractor's performance.”). • Malone v. United States, 849 F.2d 1441, 1445 (Fed. Cir. 1988), modified, 857 F.2d 787 (1988); • SMS Data Prods. Group, Inc. v. United States, 17 Cl. Ct. 1, 6 (1989). • For the government to be found liable for delay a plaintiff must demonstrate that the government caused the plaintiff a compensable injury. The government, therefore, is not liable for breach of contract, or causes of action that rely upon "severe defects" in contract drawings, or government hindrance of performance, unless SCBI proves that the alleged defects, changes, or hindrances negatively impacted costs and performance of the contract. • Servidone Constr. Corp. v. United States, 931 F.2d 860, 861 (1991); • Boyajian v. United States, 191 Ct. Cl. 233, 239-47, 423 F.2d 1231, 1235 (1970).

34. Litigation / Legal Considerations • SOUTHERN COMFORT BUILDERS, INC., Plaintiff, v. UNITED STATES, Defendant. No. 00-542C; UNITED STATES COURT OF FEDERAL CLAIMS 67 Fed. Cl. 124; 2005 U.S. Claims LEXIS 225; July 29, 2005 • “SCBI alleges that many of the disruptions caused by the government resulted from NASA's failure to respond to plaintiff's RFIs in a timely manner, which addressed interferences or obstructions encountered by SCBI. In the documents provided to the court, SCBI submitted an RFI log indicating the times within which NASA responded to SCBI's RFIs. Of the RFIs submitted by SCBI, many were answered in about a week's time. Others were responded to more slowly by NASA, including those which resulted in contract change orders.” • Ruled in favor of the Defendant (two contract modifications had to be paid by defendant, all other claims dismissed. Defendant awarded counter claim).

35. Litigation / Legal Considerations • CADDELL CONSTRUCTION CO., INC., Plaintiff, v. THE UNITED STATES, Defendant. No. 04-461C; UNITED STATES COURT OF FEDERAL CLAIMS; 78 Fed. Cl. 406; 2007 U.S; Claims LEXIS 285; September 7, 2007 • Defective design resulted in plaintiff issuing large number of RFIs and government failed to promptly and fully answer and as a result plaintiff missed steel fabrication “window”. • Defendant contended RFI process was obstructed as Defendant held onto RFIs from subcontractors and submitted in large batches and that Plaintiff did not demonstrate delay caused by allegedly slow response • Ruled in favor of the Defendant based on “contractor’s duty to coordinate” and that the Defendant answered more than one third of the RFIs in less than 30 days and more than 90% in less than 45 days • Third party beneficiary status of contractors, Privity, Economic Loss Doctrine, Accepted Work Doctrine

36. Additional References • Defending Claims by Owners & Contractors for Damages Arising from RFIs and Approved and Unapproved Change Orders, Seamen, Drew F. and Waggoner, Thomas F., at The 40th Annual Meeting of Invited Attorneys, 2002. • EJCDC Standard General Conditions • AIA A201 General Conditions • American Institute of Steel Construction Code of Standard Practice, Articles 4.4.2 and 4.6 Construction Institute Claims Avoidance and Resolution Committee