WORKING THROUGH TROUBLED PROJECTS

1. WORKING THROUGH TROUBLED PROJECTS Philip J. Smith The Van Winkle Law Firm Asheville and Hendersonville, NC 828-258-2991 psmith@vwlawfirm.com

2. Assess Project Early for Possible Difficulties A. Contract awarded to GC with extremely low bid (Owner has finite funds), or construction time is ambitious B. Unreasonable Owner expectations/unsophisticated Owners/Pit Bull Construction Manager who has to "earn his fee" C. Owner management by committee

3. D. Project has a lot of unknowns (1) GC and/or subcontractors (2) Renovation of existing structure (3) Soils (4) Weather (5) Fast Track Construction

4. E. Economy is good and reputable subs are too busy F. Public profile of the Project G. Novel construction requirements H. Hostile neighbors

5. Worrisome Signs • Slow work progress or substantial construction errors requiring costly repairs • Slow pay C. Management turnover involving GC and/or Owner

6. D. Disputes increase in number or severity between or among: (1) Owner - Architect (2) Owner - GC (3) Architect - GC (4) GC - Subs

7. E. Aggressive use of RFI Process by Contractor and Subs F. Default by major trade subcontractors G. Design errors and/or omissions

8. H. Resolution of disputes are delayed, deferred or ignored I. Complaints are made in writing J. Attorney involvement on behalf of GC and/or Owner

9. Initial Actions of Design Professional in a Troubled Project A. Identify all reasonably possible claims (be liberal) from any source B. Assemble and review all documents including Owner-GC Agreement, notes, e-mails and correspondence related to all identified claims

10. C. Review Owner-Architect Agreement and assemble and review all documents related to any written or oral agreement (1) Immediately review specific contractual obligations and address same, even if retroactively (2) Immediately address back log of pending issues, RFIs, unexecuted Change Orders, unfinalized meeting reports, etc. to bring project "up to date"

11. D. Review Sub-consultant agreements and assemble and review all documents related thereto including notes, correspondence and c-mails (1) As to any claims related to subconsultant's work: a. Inform subconsultant orally b. Obtain relevant existing documents from subconsultant; require subconsultant to furnish information to defend their work c. Evaluate any explanation d. Consider peer review of work (have counsel employ)

12. E. Consult counsel (1) Review possible claims and applicable insurance (2) Notify insurance carrier a. Pre-claim assistance (i) Limit of liability and deductible may not apply

13. F. Be more attentive to project (you won't want to do so) (1) More inquiries of GC and Owner representatives  (2) Diary your conversations, activities and observations with GC, subcontractors and Owner a. Be honest, but you can be self-serving

14. (3) Confirm understandings and observations with GC , subcontractors and Owner in writing by letter or e-mail  a. Use assistance of counsel in drafting  (4) DO NOT participate in discussions when counsel for GC, Owner, subcontractor, or subconsultant is present without consulting with or having your own counsel present  (5) DO NOT execute any Release or other document related to a claim without consulting with your attorney

15. G. Evaluate personnel associated with Project (1) Involve counsel in review of specific claims with personnel (2) Evaluate each employee as to his/her effectiveness as a witness or advocate for your position

16. (3) Attempt to confirm facts related by personnel (4) Identify any undesirable history of employee

17. H. Exercise discretion in infra-firm communications and in communications with subconsultants regarding possible claims  (1) Likely to become public during discovery, including an employee's or subconsultant's recollection of oral conversations (2) Consider holding discussions regarding details of any prospective claims in presence of your counsel (attorney-client privilege)

18. I. Begin documenting your defense (1) Formal responses and communications with GC. Owner, subconsultants and subcontractors should be reviewed by counsel (2) Consider photographs, inspections, investigations and testing to document your position (3) Consider peer review of your plans and specifications by a design professional retained by your attorney

19. (4) Consider peer review of claims made by GC or subcontractors by professional retained by your attorney (5) Don't admit liability or argue with GC, Owner, subcontractor or subconsultant regarding your defense or attempt to establish your defense during an oral confrontation. Attempt to establish facts that support your defense by timely written communications with their representatives (6) DO NOT stop regular billing of Owner, including reminder notices on late payments (7) Resist the temptation to suspend work

20. Resolution of Claim(s) A. Diligently pursue early resolution of all claims (1) Consider prompt employment of mediator (2) There are battles you can lose, and you can still win the war a. Litigation or arbitration can be an expensive and very time consuming process b. Encourage subconsultant's participation in resolution

21. B. If claims are resolved be certain the terms of the resolution are documented in writing and consult with your attorney