February 18, 2008

Construction law attorney offers tips for keeping contractors out of disputes

Brian Martin

correspondent

To hear Derek Brindle talk you have to wonder why contractors would ever wind up in disputes. It all sounds like such common sense.

The fact is, of course, that real life in the real world is never quite that simple.

Brindle, who is with the Vancouver law firm of Singleton Urquhart has been practicing since 1975 and is a respected construction law attorney in British Columbia.

Ask him to explain the most common causes of legal woes for a contractor and he has no hesitation.

“The biggest reason is a failure to appreciate the contractual transfer of risk and responsibilities on a project,” he said. “And the second related most significant factor is a failure to properly communicate in a timely, efficient and comprehensive way with other project participants.”

It is vital, he explained, that contractors read and fully understand the contracts they are signing.

Having done that, once the project has begun, project meetings are normally held weekly. During those meetings any contractor with a problem that might impact his ability to perform on time should raise the issue immediately. He should also make sure that it is recorded in the minutes of the project meeting.

Make sure you read the minutes, he advised. If your problem has been missed, get it added.

For example, you may be a drywall contractor on a high rise condo project. If the project was slow getting started because of problems with the concrete pour, that slow start is something that will come back to haunt your drywall schedule months later.

It may mean you can’t put your hands on the workforce you had planned on using.

It may mean your men are tripping over other trades as they jostle for work space.

All these things, although not your fault, can cost you money.

“Understand your contract and use it”, Brindle said. “For example if something is impacting you seek change orders. Seek change directives when appropriate. Document your position. Communicate your position in writing to the relevant consultant for the owner. Make sure you keep a project record of all the things that ultimately will be used by you to support a claim for additional compensation. You want to make sure your diaries are neutral and factual and up to date.”

Should a contractor wind up in court four or five years down the road, Brindle pointed out that a judge will put much more weight on written records than on someone’s memory.

Always make sure, he said, that the contract represents a common understanding of the scope of work.

“For example, make sure the design documents are complete to the extent they can be. And if they’re incomplete understand what that may mean to your costs and responsibilities so you can properly resource and budget for the project.”

Brindle also advised contractors to do a lot of work before even entering into a contract and make sure their firms have the resources to do the job.

If possible, get committed prices on some of the raw materials and supplies.

The contract should spell out who is responsible for the cost if the project is delayed by the slow delivery of supplies.

“You may have anticipated that and shared a portion of the risk with the owner through a properly drafted contract,” he said.

He pointed out that the majority of projects do not wind up in the courts – but there are always disputes.

Ideally, it will be dealt with by good faith negotiations and discussions between the parties involved. Contracts normally outline various configurations of dispute resolutions.

The absolute last thing anyone wants to use is litigation as it has become tremendously expensive.

In fact, Brindle said, over the past 15 years litigation has become so costly it is now very rare.

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