The very thought of being involved in a lawsuit sends a chill
down the spine of most.
Unfortunately, if you are involved in construction, you are
likely to eventually find yourself in a lawsuit no matter how
careful or reasonable you may be.
Recognizing that claims are a reality, the question is then
– what should you do to prepare yourself?
First, read and understand your contract documents. Both parties
and their project personnel should know the important terms of the
contracts so that deviations can be detected early on and
investigated at once.
Second, keep your bid documents. This should include materials
and calculations that support the assumptions the bid is based on.
Many claim situations will involve comparisons between the
conditions expected at the time of bid and what was actually
encountered on site. The failure to preserve bid documents and the
assumptions upon which a bid was based can be fatal to a claim.
Third, document the construction as you go. Accurate and
thorough documentation of construction is critical. Project diaries
are probably one of the most important documents in this regard.
Parties that have instituted procedures to document project
conditions, costs, and problem areas will be able to address what
specific costs were encountered due to what specific conditions.
The absence of such information leads to vulnerability in the
prosecution or the defence of a claim. Daily logs recording
information such as progress on site, equipment and labour usage,
extra work and unusual problems; are also essential.
Photographs provide excellent documentation when properly
maintained. To be truly useful however, photographs and videos
should be accompanied by a brief narrative documenting who took the
photo, when, where and why.
Project participants should also document important notices,
project developments, and claims in letters and memorandum. Those
documents should be maintained in a sensible and accessible filing
Cost accounting records are also critical. Contractors in
presenting claims are required to prove the material, labour and
equipment costs arising from a claim. Accordingly, an accurate
accounting of all costs incurred will more often than not support a
Conversely, owners are well advised to monitor a
contractor's activities, labour, equipment and materials when a
claim is on the horizon. An owner who fails to take this step
leaves himself vulnerable to inflated claims.
Finally, maintaining scheduling information is crucial. Keep
accurate, thorough and regularly updated schedules as to the
progress of construction. Analyzing what actually happened during
the project is almost always the first step in a claim.
Reconstructing the schedule after the fact is an extremely
difficult, expensive, time consuming and occasionally fanciful
process in the absence of detailed scheduling information that was
accurately maintained during construction.
Your chances of success in such a claim will increase
dramatically if you ensure that accurate record keeping and
document management strategies are adopted at all levels of your
This article by Christopher Hirst and Norm Streu first
appeared in Business in Vancouver on 9th July 2013.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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