Notice – When in doubt, write it out!

Jan 24, 2017 | Legal, News, SJCC

Executive Summary: Looking at a recent case in the state of Washington, a contractor attempted to be compensated for additional cost resulting from the project engineer’s direction to perform work different from the contractor’s desired sequence. The Court ruled against the contractor because of his failure to provide notification in accordance with the contract requirements. (See Construction Claims Monthly, Dec. 2016, page 90).

The background. General Construction Company (GCC) was the general contractor on a fish bypass project in Washington. There were three separate slots to be constructed and GCC wanted to build two at once. The project engineer directed that the work proceed sequentially. This change in work sequence resulted in additional cost to GCC.

Notice given by GCC. It seems obvious from reading the case summary that GCC didn’t provide the proper notice and their attorneys knew it. GCC used three arguments in their pursuit of additional compensation, which all failed:

  1. The owner had superior knowledge of dam defects.
  2. GCC did give written notice on a chalkboard.
  3. The owner’s engineer told GCC not to file a claim.

The Court’s decision. No, no, and no.

Item #1 is pretty much accusing the owner of fraud. This is a slippery slope and one which is hard to prove.

The second item, item #2, must have been hard for the attorneys to write, much less say, in a public courtroom. It’s just embarrassing that the contractor didn’t write the necessary letter(s) and that this is the ammunition their attorney had in front of the judge.

Lastly, item #3, is just ignorance and/or naivete on the part of the project management team. I don’t know the dynamics out on the job, but someone should have directed that formal notice be given despite what might have been misdirected by the “rah, rah, we’re all workin’ hard on this job, don’t worry we’ll take care of ya” attitude on site.

My story. Notice is probably the most common failure by contractors on recouping monies for changes to the contract. I’ve fallen victim to this also.

My project (there’s more than one) was a waterline to be installed through several residential streets. We had approval from the traffic division of the local entities, prior to bid, to take the partial road closures and make them full road closures. We even had written approval on each of our traffic control plans after the bid date and prior to construction.

When we arrived on site, the Utility’s inspector prohibited the use of our approved full road closure plans and forced us to utilize traffic control devices and flaggers. It cost us hundreds of thousands of dollars we didn’t have in our bid.

We took it to mediation.

We didn’t provide formal notice; we were only “assured” that we’d be taken care of by the Engineer of Record. The Engineer of Record quit his job at the engineering firm before the project ended and we went to mediation with no formal and proper notice to our Client and the Engineer of Record nowhere to be found.

We got slaughtered in the mediation and rightfully so.

Two pieces of advice. Before your Notice to Proceed (NTP), read up on the notice requirements and follow them to the “T”. Or better yet, hire your attorney before the job starts for $500 to review your contract and draft a memo to you on notice requirements, and whatever else he or she deems important for your project management staff.

Secondly, find out the name of the authorized owner’s representative – his or her name, not just his or her title. Because as you saw in this case, the engineer was not authorized to waive the claim by GCC. And from personal experience, the Owner’s lawyer will say that in his opening statement about all communication: “The Contractor addressed all project documentation to the project Engineer who is not even a recognized party in this Contract; therefore, as an aside, my client [the Owner] actually never received any correspondence from the Contractor on this project. Not a single RFI, submittal, or letter was addressed to the authorized representative.” I’ve been there.

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