Communications are Critical

Good communications are essential if you are to avoid and manage claims while delivering a project.

Let’s start with a case that may be instructive. In Online Constructors Ltd. v. Speers Construction Ltd. the consultant got into difficulty with communications at the site — although ultimately it was the subcontractor who paid the price.

The project was the construction of a dam to feed an irrigation line to a golf course. The consultant on site was an engineer-in-training who was inexperienced and perhaps a little brash. He gave orders to a subcontractor on how to pour concrete slabs and insisted on a specific method. Not surprisingly, ordering the subcontractor to perform the work in a specific way resulted in strained relations.

As it happened, it was at that same time that the concrete was being delivered and the subcontractor did not have time to assert their right to control how the work was performed. Ultimately, there were defects in the concrete and a lawsuit was started. The subcontractor sued for payment and the golf course counterclaimed that the work was defective. The subcontractor blamed the consultant’s interference for the defects. The court determined that, because the consultant was an agent of the golf course, the golf course was liable for the consultant’s actions. Yet the golf course — and the consultant — escaped liability because the subcontractor could not prove the defects were caused by the interference.

Though on this occasion it was the subcontractor who suffered (they may have prevailed if they had clearly documented at the time that they would not take responsibility for the slab quality based on the method required by the consultant), the case shows that all parties to a project, including engineers, should be cautious in how they communicate, what they say, and to whom they say it.

In most cases, communications should be in writing to ensure there is evidence to prove an event or omission. Communications can be express or implied, and they can either help or harm your position. Professional, courteous and timely communications combined with diligent record-keeping are invaluable in avoiding and resolving disputes.

The following is an overview of the importance of proper communications and documentation.

Identify the Risks

A clear description in the contract documentation of the commitments of each party reduces the chance of later misunderstandings and disputes.

It is also important for each party to a contract to make only those commitments it can keep and not accept any risk in matters over which it has no control. Engineers should not assume that a contract is “standard” or that it “cannot be changed anyway.” They should read a proposed agreement carefully to avoid being surprised later. It is necessary to have a full understanding of the contractual risks to determine whether you should even submit a proposal for a project or whether a premium should be included for the risks you have identified.

Standard form agreements such as those prepared by the Association of Consulting Engineering Companies-Canada (ACEC), or the Canadian Construction Documents Committee (CCDC) are generally seen to allocate the risks fairly between the parties. Legal advisors can help to amend these standard forms for specific project constraints.

Comprehensive Drawings

An engineer should allow sufficient time in the schedule for developing a comprehensive set of drawings and specifications in order to minimize design errors and avoid claims. Complete drawings and specifications will also enable the client to prepare a complete set of tender documents and minimize addenda during the procurement process. The selected contractor is required to build the project in accordance with those plans and specifications and will not assume any liability caused by design errors or omissions. Although construction documents are the responsibility of the owner, the owner will rely on the expertise of the design professionals who retain ultimate design responsibility.

Communicating at the Job Site

Each party in the design and construction delivery process should comply with the lines of communication identified in its contracts — even though those contractual lines do not always recognize the reality of the jobsite. For example, although there are no agreements directly between engineering sub-consultants and subcontractors, these parties still have to communicate in order to resolve ambiguities or problems. Any communication should be in writing and routed through the contractual lines of contact.

At site meetings, however, representatives of the owner, contractor, engineers, architects and subcontractors can directly discuss with each other their difficulties with the project. Disputes can often be resolved that way. Still, the decisions reached at such meetings must be properly documented. In this regard, the parties should carefully review the minutes and provide written amendments within the time indicated in the minutes.

Job site communications should be neutral, clear and firm. Avoid finger pointing, derogatory terms and unprofessional comments. All important communications should be confirmed in writing. Whether a communication is important will depend on the amount at stake, any potential delay (impact on the critical path) and the implications to other aspects of the work. Because of the multiplicity of players in a typical construction project it is important to understand and follow the established lines of communication so that the parties can meet their key objectives, especially schedule and price.

The Importance of Paperwork

Paperwork is a necessary evil. Accurate and comprehensive records must be kept for all important decisions, and supervisors and staff should be sensitized to the importance of paperwork in avoiding disputes.

A fact is a true description of an experience. It can be either an event or a nonoccurrence of an event. Evidence is the material or documents necessary to establish the truth or a fact. Proper record-keeping will ensure that there is evidence to support the facts. Disputes are usually resolved based on the facts, whether at the initial stages or later in front of an arbitrator or judge.

Written evidence, not surprisingly, is much preferred over oral evidence if you get to court, so in the case of oral evidence you should take a written statement from the key personnel while the event is within recent memory and the person is still available. Do not wait until there is a dispute before trying to track down key people — the goal is to avoid claims. Note that much evidence in a major dispute is likely to be culled from journals, diaries, incident reports and personal notes of site meetings, etc. In this regard, photographs can be worth more than the proverbial 1,000 words.

There is an advantage to having a lawyer involved early if there is a major dispute, not only to ensure that significant events are supported by proper evidence, but also because communications with a lawyer in anticipation of litigation can be protected by privilege and disclosure of such communications can be restricted.

Specific forms of communication may be required or referenced in the contract — for example, a notice of a claim is typically required to be in writing. Failing to give proper notice of a claim may be a significant issue if it can be categorized as a breach of the contract terms.

A waiver is the intentional giving up of a right, so any waiver of contractual rights should be clear, unambiguous and in writing. Courts can find that there has been a waiver by way of conduct, or words, or a combination of both. If a party to a contract conducts itself in a certain way with regard to a contract term and there is no paperwork to counter that conduct, a court may find that the party has waived its right to insist on strict adherence to that term.

It is risky to overlook a situation
where the conduct of another party appears to contradict the contract provisions. The best defence is to send a notice indicating that even if there was a delay in asserting a right, that right is now being asserted.

Personalities

Personalities can make the difference in avoiding claims. A professional, neutral and well reasoned response will help you deal with a difficult personality. All parties should recognize any problems within their own ranks and ensure that senior staff have the right attitude for a successful, claims-free project. If senior managers demonstrate a positive mindset, the rank and file employees will be encouraged to act similarly. A problem-solving attitude is important and all managers, supervisors and key staff should be aware that one of their job functions is to communicate well.

In summary, while the design and construction industry is fraught with pitfalls and the potential for claims on a project is high, if you can anticipate problems before they occur and always communicate clearly and effectively, you may be able to defuse many potential disputes before costly mediation, arbitration or litigation proceedings commence.

And if all parties adopt the attitude of looking for solutions, not problems, the chances of a successful project will be significantly increased!cce

Owen Pawson is a partner with Miller Thomson, LLP in Vancouver, e-mail opawson@millerthomson.com