By By Owen Pawson, Miller Thompson LLP
A “Perfect” ProjectCompanies & People Engineering
In numerous areas of project delivery, problems can arise. Many involve the project engineer, and in some cases they lead to claims or disputes that require resolution by arbitration or litigation. Following are some strategies and suggestions...
In numerous areas of project delivery, problems can arise. Many involve the project engineer, and in some cases they lead to claims or disputes that require resolution by arbitration or litigation. Following are some strategies and suggestions that may be useful in typical problem areas that arise during the course of a project.
Having a good relationship with your client is fundamental for a successful project. Ideally, you should be selected on the basis of your qualifications through a QBS (qualifications-based selection) process rather than low price. This will help your client accept you as a “trusted advisor.” The appointment of a reasonable and knowledgeable client representative to provide you with instructions and approvals is important to cement this relationship. An even handed client-engineer agreement with a fair allocation of risk (ACEC Document 31, for example) forms the basis for mutual trust and respect. Needless to say, proper remuneration for the scope of services will be part of that agreement. Also, you should ensure you have professional liability insurance coverage appropriate to the scope and complexity of the project. Finally, thorough discussions and analysis with the client will help to establish the best method of procuring and delivering the project (e.g. design-bid-build; design-build; P3; construction management, etc.).
Programming and feasibility
A detailed program of the client’s requirements is necessary to prepare the design and specifications for the project. Either the client must provide that program, or the engineer must undertake that work (with appropriate compensation). If the engineer prepares the program, the client should be involved in the preparation and should approve the program before starting the design work.
The client should also confirm (often with assistance of the engineer) that the project is feasible in terms of planning, design and construction and, most importantly, in terms of budgeting. For the financial feasibility of major projects, the client should consider retaining a quantity surveyor who has a track record and can provide progressively more accurate budgeting information at design milestones.
Planning and design
The engineer should ensure that there is enough time in the schedule not only to develop the detailed design and specifications, but also to ensure the contract documents are complementary. Full and proper design requires the engineer to put together a good team of sub-consultants — selected on the basis of prior good quality design work and with a history of meeting time and budget constraints for similar projects. Amendments made to the design or contract later on typically result in claims for “extras” and delays by the contractor, which increase the cost of the project. Such a situation could adversely impact the engineer-client relationship.
Finally, the client should review the design at key milestones and provide timely approval. This strategy avoids re-design. Continually updating the client’s budget based on such milestone reviews will help ensure there are no budgeting surprises or funding concerns.
Typically, the engineer will be asked by the client to participate in the procurement process to select the best proponent to deliver the project. Caution must be exercised throughout the procurement phase. The tender documents (RFQ, RFP, RFEI, etc.) are legal documents that should be vetted or authored by legal counsel well in advance of their issuance to avoid claims of unfairness during the procurement process.
Other documents in the procurement package besides the drawings and specifications for which the engineer is responsible, such as the contract between the client and contractor (stipulated price, construction management, design-build, concession P3) should be complementary with the engineer-client agreement (e.g. the role and authority of the engineer during construction). Dispute resolution is another area where the contractual matrix for the project should be consistent. This is in order to avoid, for example, a situation where one of the participants has recourse to court, while others must proceed to binding arbitration. Finally, a fair contract between the client and the contractor that has even-handed risk-sharing and liability clauses will encourage bidders to submit bids that otherwise might be inflated because of the unfair transfer of risk.
The role of the engineer, the approval process for claims management (initial findings) and certification of payment and completion should be clearly described in both the client-engineer agreement and the owner-contractor contract. Those contracts should also be clear as to whether the engineer fulfils the role of “payment certifier” under applicable lien legislation.
A smooth project requires all the participants to be reasonable and cooperative — including the engineer’s representative. Proper communication protocols should be followed, and regular site meetings and agreed forms of site instructions, change orders, payment applications, completion certificates etc. are important. Finally, the parties should issue clear and timely written communications for all key decisions, RFIs and responses, claims, disputes and any agreed resolution of significant disagreements.
Claims avoidance and resolution
A successful project requires the proper management of claims (“extras” and delays). There should be a clear process described in the contract documents for submitting and processing claims from inception through to resolution, and that process should be conveyed to all participants. There should be a requirement for prompt written notice of a claim and, if such claims are not quickly resolved through discussion, the engineer should be requested to prepare an initial finding. The finding will be important information in subsequent dispute resolution proceedings. The engineer must render a fair and unbiased finding in accordance with its legal and professional obligations, even though the client may think otherwise.
The key participants on a project should adopt a claims-avoidance and claims-mitigation mind-set and they should keep detailed records of all significant matters. Prompt notification of any claim should be followed by speedy on-site resolution. The quick resolution of issues as they arise will avoid the aggregation of numerous small claims into one large claim at the completion of the project.
It is important that the participants adhere to the dispute resolution procedure and the timing requirements stipulated in the contract documents. Finally, the parties should recognize that middle and senior management are often better able to make “business” decisions to resolve a claim or dispute than representatives “on the ground.” cce
Owen Pawson is a partner with Miller Thomson, LLP in Vancouver, e-mail email@example.com