May 31, 2019
by Norman F. Jacobs, Jr., CSI Emeritus, PMI, SAR, ASPE, CPE, AACE, IIE
Documentation is a major factor in prudent project management. Then, too, proper documentation is the critical element of a risk control system. Whether the project manager represents the architect, owner, or contractor, their responsibilities are the same on every construction project.
Today, every construction project requires detailed documentation by project managers. Orderly and conscientious recordkeeping not only provides the information to effectively and efficiently manage a project, but is also essential preparation for contract disputes, delays, and litigation. Such preparation requires a comprehensive documentation system to defend against or prove entitlement to an amount of damages resulting from a compensatory claim.
Adequate documentation may also satisfy a requirement for a logical and supportable demonstration of cause and effect. Documenting the many complicated problems developing during a construction project is burdensome. Nevertheless, since documentation is essential to the success of any delay claim, the importance of creating a paper trail cannot be overemphasized. Since disputes are not often settled until after a project is completed, which may be several years, management policy should recognize committing anything to memory is only as good as the longevity of the professionals involved both physically and corporately. Documentation usually lasts longer than people and their jobs.
Today, an astute project manager should have a comprehensive documentation guideline system to provide valuable resources and ensure success in most types of construction projects.
Documentation analysis is a critique of the project manager’s responsibilities throughout the life of the project. This analysis can define adequate documentation and will exercise the cognitive mind of the project manager.
All project managers must be aware of common types of claims by contractors, including changes in the scope of work, site conditions, and critical path method (CPM) schedule and incomplete documents, as well as lack of drawing coordination and timely responses from design team.
Scope of work
Most construction contracts require a written change order, supplemental agreement, or other contract modification for changed or added work and its corresponding cost impact. A claim the contract has been constructively changed by the owner may arise in absence of a written and signed change order.
The owner is normally responsible for issuing and approving change orders. Problems are often encountered when the owner’s project manager relies on the architect to review and recommend approval or rejection of change orders based on ‘unanticipated conditions’ or some area inadequately covered in the plans and specifications. This may cause a conflict of interest for the architect who, by approving such change orders in a timely manner, may be inappropriately admitting his/her own negligence with faulty omissions.
Many construction contracts contain a differing site conditions clause allowing an equitable contract price adjustment if the physical site or subsurface conditions are either different from those represented in the plans and specifications or materially different from conditions normally inherent in the type of work performed. Prompt notice to the owner’s project manager is required if these differing conditions are found. Proof of anticipated conditions may be established by the following:
The project manager must maintain a daily record of changes to the project schedule, including delays, out-of-sequence, disruptions, suspensions, or acceleration of work. These changes may affect either planned work sequence or duration times. The contract usually contains the overall project starting date, planned duration time, and the anticipated completion date. Milestones or work sequences are normally found in accompanying special conditions. The astute project manager must critique each monthly CPM schedule update and narrative report to know the full status of the project.
Project documentation requirements
Adequate documentation is vitally important to all contract parties. Proper documentation provides the hard data needed to analyze and successfully resolve each construction problem.
With timely documentation, contractors, owners, and architects are able to monitor and manage the project in such a way as to anticipate potential problems, delays, and impacts as they occur and will be in the best position to resolve them successfully.
It is also imperative for owners, architects, and contractors to be problem-oriented while maintaining documentation during construction to be able to identify and react to issues impacting the contract price or performance time such as:
Some of the initiatives that can be implemented to avoid problems include:
There are many types of records that should be maintained during a construction contract period.
The following guidelines are intended to serve as a checklist of the types of construction project information to help establish both entitlement and any damages due.
Documents included in the owner’s bid package, including drawings, specifications, soil and asbestos data, special conditions, and specific instructions, as well as the contractor’s calculations and bid-preparation documents, are generally admissible evidence as to what was intended by a construction contract.
A reasonable contractor prepares his or her bid or proposal to provide what the contract requires—no more and no less. A prudent contractor will seek clarification to ambiguities in the bid documents, particularly if they have any cost impact or risk. However, when disputes develop over such ambiguities or alleged changes in the contract requirements, an examination of the bid documents and the contractor’s backup information may be the only way to resolve these issues. A comparison of the as-bid drawings with the as-built drawings should disclose any changes, variances, or dissimilarities.
Forensic investigation into the reason for these differences may reveal some owner action or inaction (e.g. defective design) for which a contractor may be entitled to recover any related additional cost.
Soil data supplied by the owner, in the owner’s possession, or obtained by the contractor during a site investigation visit prior to contract are important evidence in decisions that regard to differing site conditions. Reliance on this data by a contractor when such information is found to be in error is critical to determining entitlement for this type of claim.
Only those documents in existence at the time the contract
is awarded are part of the agreement. There is, however, one exception. Special conditions may state the CPM schedule prepared by the contractor and approved by the owner and architect after the issuance of the contract will be an integral part of the documents. Anything else prepared at a later date, except for formal change orders, is not part of the contract. It is essential to keep a clean, unchanged set of original contract drawings and specifications for future reference to prove changes occurring during the project. It is also important to note drawings and/or specifications issued at the contract-award stage may be different from those in the bid, and the contractor should verify such changes before accepting the contract.
The notice to proceed is also a significant contract-related item in that its date may unexpectedly follow contract award by several weeks or more and could delay the project from the beginning.
Correspondence faxes and e-mails
All correspondence of any kind on a project should be preserved in a chronological master file with each letter, fax, and e-mail numbered and cataloged for convenient reference. Coordination meetings should cover items such as:
Oral directives versus written documentation
In the daily routine of conducting business at a construction site, many directives are conveyed orally. There are several dangers in instructing activities orally—one being that the directive may not be clearly understood and, therefore, not carried out accurately. To guard against such errors, all oral directives must be substantiated in writing to help clarify the information conveyed.
In addition to the order of precedence of the contract document for a construction project, there is also an order of precedence for the forms in any contract based on general legal principles. This order from the least to the most important is as follows:
Contemporaneous written expressions of work progress, CPM schedule updates, site conditions, and damages entered into a job log, or daily report can provide a valuable and factual evidentiary foundation, particularly if it is done by a punctilious project manager in the form of a regular business record.
Design professionals who are providing field observation reports should be encouraged to take photographs of site conditions and the work in progress on a routine and systematic basis, concentrating on problem areas critical to the procedures and scheduling. A picture is worth a thousand words, or a thousand dollars, especially in matters involving impacts or delays on construction projects. Changes and additions to the work often cause delays. Although the reason for the change or addition usually cannot be photographed, the resulting delay, such as idle equipment or lack of daily progress, can be documented visually.
Documentation with schedule information is vital for proving impact, delay, or acceleration claims. As mentioned, any out-of-sequence activities must be documented at every update. Depending on the contract requirements or the complexity of a construction project, various types or combinations of ‘schedules’ may be utilized to not only plan the work, but also to graphically illustrate with great effectiveness at a trial the impact of delays, out-of-sequence work, and disruptions on a project. The astute project manager must manage the risk associated with not keeping the CPM schedule documentation up to date.
CPM schedules are not only useful in managing a complex project, but also are valuable tools in analyzing the ‘impact’ of concurrent or unrelated changes, delays, or acceleration on the project schedule. Fragnets, histograms, and short interval schedules are also useful evidence to demonstrate ‘impacts’ on a project, as well as the prudence of management planning.
Any meeting minutes with schedule-related discussions should be indexed for future reference. This gives the project manager historic documentation. Manpower-loading distributions directly related to schedules are important documents to show impacts of out-of-sequence activities, changes, delays, or acceleration claims.
The sapient project manager must require monthly CPM updates with adequate and timely input data by all team members to properly manage and document the actual start and completion dates of each and every activity in a given time period. A narrative report written by the project manager must accompany every schedule update. The CPM schedule monthly narrative report should be employed to document the exact status of the project progress, define the critical path, list parameters of any delays, outline problem areas, and forecast the completion date. The monthly CPM schedule updates will be very useful documentation when the project manager must perform a forensic analysis of the project.
Philosophy and CPM communications
Communication is vital in project management. One of the project manager’s critical responsibilities is to maintain communication links both within and outside of the project. All project managers must be aware of scheduling philosophy, and how it relates to communications. It is an overview of a number of common-sense principles developed through experience rather than a scholarly approach based on extensive research. The goal is to create interest and raise the level of consciousness in establishing and maintaining a positive scheduling philosophy within an organization.
The continued increase in the size and complexity of construction projects today has placed an even greater emphasis on proper planning and scheduling. Organizations that are involved in large projects have separate groups for the planning, scheduling, and controlling function. Personnel in these groups do not exercise actual control since that is vested with the project manager. However, the planning, scheduling, and control specialists must assimilate all information from different sources and communicate and apply an array of techniques and methods aimed at helping the project manager understand a situation, diagnose it, and then take action.
In this author’s experience, there is a mutual dependency between a trusting relationship and effective communication performance. A trusting organizational climate is required for effective communications, as well as the project manager’s daily use of CPM schedules. It is easy to recognize if the ‘scheduling philosophy’ promotes a trusting and supportive climate because communication practice would be good in the area of project time and documentation control. Conversely, if the climate surrounding project scheduling is hostile and threatening, communication suffers.
Cost data and documentation
Providing the actual dollars lost is critical to a construction claim. Use and maintenance of effective accounting methods can provide the proof of damages necessary to support additional compensation. All project managers must study current accounting systems tied to a time impact analysis (TIA) of the project CPM schedule.
Since delay, acceleration, and impact claims frequently involve inefficiency claims and loss of productivity factors, which are difficult to segregate under traditional accounting systems, a method of isolating cost not covered by the contract is especially needed.
A system allowing for concurrent segregation of unanticipated costs is not only easier and less expensive than the after-the-fact breakdown, but also more convincing in the courtroom.
Reports are often prepared to study costs or production units as the project progresses. Analysis of such cost reports may show where the contractor’s estimating department was incorrect or when inefficiencies were the direct result of contractor mismanagement.
Although cost records on each project and between contractors vary, the following list is a typical spectrum of cost data that should be preserved by the project manager for potential use in proving damages:
Time impact analysis
TIA supports acceleration claims as well as impacts or delays. Today, the use of CPM techniques to determine and evaluate time-related cost claims on construction projects is widely accepted. At the onset, the contract parties must look at the contract and the scheduling specifications in participation for guidance and direction on the presentation and evaluation of time-related claims. It is recommended to study the different scenarios required to prove any impact or delay on the project.
Network schedule techniques have great utility in evaluation delay and impact on a project. These techniques permit simultaneous proof of both the fact and cause of delay. Accordingly, a TIA can be effective in determining whether or not certain work was delayed and if it had an impact on the overall project. The key advantages of networking techniques and the use of TIA procedures are as follows.
Early involvement of experts
The project manager’s cognitive thinking abilities and the analysis of all documents is required before meeting with the company attorney. Construction disputes generally require the involvement of experts to help solve problems and provide litigation support.
Experts and consultants may also be necessary at trial to give opinions based on assumed hypothetical facts or actual knowledge of the circumstances of the case.
Provisions in the contract documents and applicable law can generally be found, within certain limitations, to support the position of both parties. Ultimately, the facts most often determine the success of the claim. Therefore, the key to successful analysis and resolution of a claim is the contract dispute expert who excels in the persuasive presentation of facts obtained via a comprehensive documentation process.
It is prudent to involve experts during actual construction when a claim is probable. The expert may be able to recommend ways to mitigate damages or reduce the impact of a problem. They can also suggest methods of preserving or creating demonstrative evidence through CPM schedule graphs for use during negotiation, arbitration, or trial. Most importantly, involvement by the expert during actual construction allows their testimony to be based on first-hand data and knowledge rather than on facts learned from others.
Involvement of the construction attorney is also desirable when problems develop. His or her knowledge of the legal aspects of contract compliance and claim preparation provides reassurance to proceed on a sound legal basis. There is no method for management of a construction project that will guarantee the absence of change orders, impacts, delays, or claims.
Both the legal counsel and an experienced claims consultant should be involved in the structuring of the project documentation requirements as well as in the preparation, negotiation, and settlement of a claim.
The following excerpt from a construction case highlights the importance of a properly developed and monitored schedule.
Except in the middle of a battlefield, nowhere must men coordinate the movement of other men and materials – in the midst of such chaos and with such limited certainty of present facts and future occurrences as in a construction project ….. Even the most painstaking planning frequently turns out to be mere conjecture, and accommodation to changes must necessarily be of the rough, quick, and ad hoc analogous to ever changing commands on the battlefield.
The project manager has the responsibility and obligation to monitor and document project daily reports, weather, change orders, CPM schedule updates, meeting minutes, delay claims, monthly billings, RFIs, insurance requirements, testing, submittals, warranties, progress photos, and forensic schedule analysis (FSA) studies.
Proper documentation by the assiduous project manager could mean the survival of the company.
Norman F. Jacobs, Jr., CSI Emeritus, PMI, SAR, ASPE, CPE, AACE, IIE, formed Jacobs Consultant Services in 1981 to provide a variety of construction services including cost and project management, schedule control assistance, and claims preparation and negotiation. Prior to this, Jacobs provided design-build, construction management, and general contracting services for more than 30 years in a variety of capacities, ranging from estimator to president and board member. He has chaired Virginia’s Associated General Contractors (AGC) Documents Committee, has presented seminars on construction legal subjects with the Virginia Bar Legal Committee, and is past president of the CSI Richmond Chapter. Jacobs can be reached at firstname.lastname@example.org.
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