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Wednesday, October 17, 2007

SUBCONTRACTOR CLAIMS SEMINAR

Why do COs happen?

  1. owner changes his mind
  2. differing site conditions or changed physical conditions
  3. poor designs frequently
  4. owner cut corners on geo-tech or physical site investigation
  5. CM incompetence
  6. Owner supplied material impact
  7. multiple primes interference
  8. shift of responsibility e.g. coordination clauses, etc

The Politics of Claims

  1. understanding who is responsible first
  2. submitting too few claims
  3. submitting too many claims
  4. keep it professional, if possible
  5. don’t fool yourself, every GC and owner expects them, on every job too
  6. strong communicative personalities usually prevail; keep the communications open

The Importance of Procedural Compliance

  1. pure contract language enforcement
  2. it is simply contract driven, though the contracts are frequently not simple at all
  3. Most courts and lawyers do know understand the business
  4. Summary Judgment issue of procedural compliance
  5. common conflicting or ambiguous contract provisions
  6. fixed contracts v. negotiable contracts
  7. industry whores v. fair experiences
  8. contracts are typically one sided; against the sub, in favor of the drafter
  9. everyone is free to make a bad bargain
  10. ‘fairness’ has little to do with anything

What General Contractors Think about Claims

  1. Who is the alleged responsible party? Owner, Architect, GC, sub, other
  2. sometimes a GC really needs a sub to submit their claim
  3. tone = professional
  4. repeat private client of GC
  5. when supportive e.g. shared impact, dependant impact
  6. when not supportive e.g. GC is responsible party, excessive
  7. best subs always submit claims when impacted
  8. sub or owner oriented?
  9. privity of contract
  10. will the GC still love you tomorrow?

Construction Managers and Why we Typically Hate them

  1. add no value to project
  2. need to justify their existence
  3. principle reason to be is to shield owner from claims
  4. more interference and incompetence than project facilitation
  5. paid whores
  6. obstruct communications with owner and problem solvers

What Owners Think about Claims

  1. public v. private work
  2. insufficient funding
  3. hire CMs to defend their interest
  4. big public owners expect them
  5. architects and engineers have become incompetent

Architects Wearing too Many Hats

  1. approving C.O. and pay estimates
  2. design defect C.O.
  3. who drafted the contract documents? And with what main intent?
  4. conflict of interest

Extortion

  1. to claim or get paid
  2. to become the lightening rod for abuse or tuck your tail and tale a beating
  3. when the CO pain leaves you no option but to fight back
  4. he who has the gold, extorts he who has not
  5. document it, even under threat of retaliation

Traps for the Unwary

1. monthly draw lien waivers

2. acceptance of final payment

3. no damage for delay provisions

4. risk shifting contract provisions i.e. weather, subsurface conditions,

5. impacted project and getting no answers; self help, mitigation of your own damages

6. failure to provide timely notice

Federal Fraudulent Claims Act

  1. federal funding
  2. gov’n negotiating leverage
  3. personal liability
  4. reasonableness test

Damages Assessment

  1. direct cost
  2. indirect cost
  3. consequential damages
  4. requirement to submit comprehensive damages v. reservation for future impacts when better known
  5. total cost
  6. modified total cost
  7. measured mile
  8. industry impact studies
  9. audits and open books
  10. multiple supporting proofs

Scheduling Proof

  1. delay damages
  2. LD defense
  3. concurrent delay
  4. critical path accountability
  5. absent control of the schedule maintenance
  6. when maintainer of schedule refuses to recognize schedule impacts
  7. P3 manipulation
  8. the wizard of Oz behind the curtain
  9. war of the experts

Impact proofs

  1. dated project photos
  2. professionally crafted correspondence
  3. project meeting minutes (contemporaneous)
  4. field diaries, watch out
  5. daily work reports

Claims Narrative

  1. professional tone
  2. introduction, as-bid expectation, as-impacted experience, damages and schedule proofs, request for adjustment of time and money

Claims v. Mechanics Liens v. ADR v. litigation

  1. why contractors hate attorneys
  2. why contractors should love their attorney
  3. how to work with an attorney so that the contractor usually wins
  4. an ounce of prevention is worth more than a pound of cure
  5. muscle plays; use the muscle
  6. ADR is preferred over court, any time
  7. sometimes you hit a crook and have no option but to fight

Conclusion

  1. the best subs always file claims
  2. use your attorney for prevention instead of cure
  3. document, document, document it
  4. stay professional at all times even in dispute
  5. fight back if abused; you really have no option

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