Construction litigation is on the rise, and there are many types of claims from project delays, non-disclosure of information, site conditions, injuries and more. Some strategies will minimize the risk of legal action, and in this article, we provide an overview of what you can do to keep your construction and development projects on the right track.
There are many parties involved in a construction project, including investors, developers, architects, engineers, contractors, and suppliers, all of whom are contracted to do their job. Therefore project success depends on how well all parties coordinate and communicate with each other from the signing of the contract through to project completion. Often it’s the independence of different parties that can cause errors, rifts and projects prone to litigation.
With construction claims more prevalent now it’s worthwhile knowing in advance who to engage should you yourself dealing with a claim. Expert witnesses are often needed in legal action and firms such as the Knowles Group can help your lawyer with an expert witness in areas of construction and large scale projects.
Here are some of the more common construction claims.
Construction Defect Claims
A construction defect is when poor design, workmanship or material lead to a failure of a component of the building. The defect can be in any part of the building, be it the foundation, plumbing or other factors, and a claim can be made against it. If the builder or developer is proven responsible for the defect, they can be held accountable for the defect against which the claim has been filed.
Some construction project owners require surety bonds to ensure that all parties involved in the project live up to their terms of the agreement. There are different bonds in construction which protect different parties. A claim can be made and pursued if a party breaches the terms of the contract.
Construction is a high-risk occupation. A construction site is dangerous where construction workers can be injured or get in an accident if safety measures aren’t followed. A claim can be filed if an accident occurs on the construction site due to safety standards not being followed. A construction worker or bystanders can file the claim. Another scenario where a claim can be filed is when someone is injured due to either falling or slipping or due to a construction defect.
Construction Delay Claims
Construction delay claims are common in the construction industry. These claims usually relate to unexpected circumstances that extend the deadline or prevent the work from progressing. A delay can be due to financial issues, permits, weather conditions, poor management and other reasons. The delay needs to affect a critical path of the project for a claim to be filed and pursued.
Failure to Disclose
In many states, real estate professionals and sellers are required by law to disclose all information about a property, including anything that might lower a property’s value, to a potential buyer. Real estate agents might use tricks to get you to buy a property fast. Failure to disclose can be considered a breach of their duties. If a buyer can demonstrate harm due to the failure to disclose, they can file a claim.
These are a few of the claims that can be made in the construction industry. Since many parties are usually involved in a project, each party can file a claim to protect themselves.
Avoidance is the preferred action, it’s less costly and time-consuming, so how can you mitigate construction project claims? With thorough due diligence and best practices.
Preparation can make a world of difference to the outcome of any project. The planning stage is crucial. Use project management software that will make light work of capturing, storing and accessing the plans, and documentation.
Err on the side of caution and capture daily reports on progress from all key parties. You’ll learn of delays that could push out delivery timeframes soon and be in a position migrate risks to contract breaches.
A lack of communication is usually the tipping point that motivates a claim. You can avoid a lot of potential issues with clear and concise written and verbal interaction. Make sure to include all the key stakeholders when there are changes to the project and schedule.
Once again document everything in your project management software, including all verbal, written communication: update schedules and plan for extended timeframes.
Design revision is one area that can push back completion, especially when meeting regulations and contracts are required. Rely on your legal team to make sure the interaction with key stakeholders is not damaging to your business. For example, you don’t want to be admitting liability in any shape or form through naive comms.
Not all construction claims will proceed to court. Mediation should be the first action with any dispute and reaching a satisfactory compromise.