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Comparison of Common Law (US) and Civil (EU) Litigation Practice

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To make sense of our research on “A Comparison of Construction Claims Handling Practices in the U.S. and the E.U.” we must understand the litigation processes in both the E.U. and U.S. There are similarities and differences to both approaches.

What is a Lawsuit?

A civil lawsuit or a legal action is a method of dispute resolution. Two or more parties have some kind of dispute which they are unable resolve it amongst themselves. Sometimes parties may have used some kind of alternative dispute resolution process like negotiation, mediation (where a neutral third party tries to help the parties reach a resolution) or arbitration (arbitrators are hired to act as judges in a private version of a trial) instead of a complaint being filed in the appropriate court.

If the parties leave it up to the legal system to work out their differences then to certain extent they give up control of the outcome and are left to advocate for their interests, providing facts, witness testimony, evidence and legal arguments in the hope they’ll prevail.

There’s virtually no limit to the types of parties who could be involved in a civil action, from individuals to multi-national corporations, government entities to non-profit organizations. Courts can handle disputes that are in the hundreds of dollars to potentially limitless amounts of money. The outcome of a civil lawsuit may just impact parties living next to each other or countries in different parts of the globe.

What are the Key steps in a Civil Lawsuit in the U.S.?

Generally, litigation in the U.S. goes through a number of steps or proceedings, which can vary from jurisdiction to jurisdiction, including,

  • Pleadings

  • Discovery

  • Trial

  • Appeal

Pleadings

To start the litigation process the plaintiff files a complaint. It lays out the basic facts of the dispute, states the legal theories for recovery and what’s sought to resolve the matter (which could be a sum of money or specific action by the defendant, the party against whom the complaint is filed). The defendant responds to the allegations with an answer, states possible defenses and may make counter-claims against the plaintiff.

The defendant may ask the court to dismiss the complaint in whole or part, either because what’s being claimed doesn’t amount to breaking the law (a motion to dismiss), or, with the filing of affidavits, claim since there are no material, disputed facts in the case the defendant is entitled to judgment as a matter of law (motion for summary judgment). Normally if a complaint is dismissed, in whole or part, the plaintiff has an opportunity to amend or re-file the complaint.

Discovery

Discovery is a critical part of the civil lawsuit process. Through it both parties should have all the relevant facts of the dispute. With the benefit of these facts the complaint may be amended or could be withdrawn. With newly acquired information a defendant may file a motion for summary judgement. The parties may also have a greater understanding of the strengths and weakness of the case and choose not to risk a negative outcome at trial and negotiate a settlement.

Discovery allows the parties to submit written questions to each other, ask for copies of documents or evidence and ask each other to admit or deny statements of fact. During depositions parties and witnesses are asked questions under oath by attorneys for both sides. Not only can depositions produce facts that the opposing party didn’t know before but both sides see first-hand how well both sides’ witnesses may perform during a trial. How well or poorly a party’s witnesses do may be critical to the decision to proceed to trial or settle the case.

Discovery can be simple and straightforward or drawn out and complex. Parties can object to questions and requests and seek protective orders to limit release of information. One party may seek court help to obtain information, evidence or to depose an individual. Because of the importance of discovery parties may be very aggressive in seeking information or trying to prevent the other party from obtaining it.

Trial – the Third Step

Most civil lawsuits are resolved prior to trial because it can be very expensive, consume a lot of time and energy and depending on the nature of the dispute, emotionally draining or painful. Without a resolution agreed to by the parties it will be decided at trial. Disputed facts and verdicts can be decided by a judge or jury.

Armed with what they learned during discovery the parties tell their stories through documentary evidence, evidence in the form of objects, graphs or charts, testimony of parties and witnesses. Both sides try to simplify the issues and create sympathetic narratives they hope will win the day. Attorneys on both sides try to show the opposing side’s witnesses aren’t credible and their arguments don’t make sense while at the same time bolstering and polishing their version of events.

Trials start with opening arguments and end with closing arguments by the attorneys. Attorneys can ask the judge to rule on evidentiary and legal issues during the trial and object to submission of evidence and of questions to their witnesses. The plaintiff has the burden of showing, in most cases, it’s more likely than not its version of the truth is more credible, the law was broken in some way and the plaintiff is owed an amount of money and/or some action by the defendant for it to be made whole.

The judge or jury makes its decision which may be a dismissal for the defendant or a total or partial victory for the plaintiff. The plaintiff should be awarded the relief sought if the legal claims are successful, though it may get much more or less than it sought.

Appeal

The appeal is a process by which rulings by judges and the outcome of trials may be reviewed by panels of judges. The appeal process isn’t an opportunity to re-try a case, though an appeal can be based on a claim that a verdict wasn’t based on the evidence used at trial. This is a difficult and usually unsuccessful approach. Generally, a party that feels aggrieved by a decision because it violated the law or a rule of procedure can ask the issue go back to the trial court so the decision can be corrected or at least reviewed again by the judge.

After both sides submit briefs containing their arguments why a decision should be overturned or upheld attorneys have an opportunity to make legal arguments before the appellate court judges. They can ask questions of the attorneys and seek additional briefs on particular topics of interest. Eventually the appellate court issues a decision to uphold or overturn the lower court decision. If it’s overturned often lower courts will be issued directions on what to do next. The decision need not be unanimous. The majority opinion is the final decision.

What are the Key steps in a Civil Lawsuit in the EU?

In most E.U. countries the civil lawsuit process is defined by the civil procedures of each of its 28 countries. Generally, the civil lawsuit process in the E.U. breaks down to,

  • Pre-trial pleadings

  • Pleadings

  • Production of Evidence (Discovery)

  • Trial

  • Appeal

Pre-trial Pleadings

In the pre-trial pleadings phase the parties, without the involvement of the court, try to resolve the disputes between them. The parties make various requests, with letters or notices sent between them, where the parties attempt to substantiate their positions on the merits of the case. If the parties fail to reach a resolution the civil lawsuit process continues.

Pleadings

The aggrieved party submits the complaint, with documentary evidence, to first instance court in accordance with the country’s applicable procedural laws, starting the legal action. The party receiving the complaint typically answers the complaint and produces all available evidence to support its arguments that the complaint be dismissed.

Production of Evidence (Discovery)

In E.U. countries the burden of production of evidence (discovery) rests on the claimant/plaintiff, the party seeking the remedy.

Trial

The plaintiff has the burden of proof., however the plaintiff does not have the discovery rights similar to the legal system established in the U.S. To further substantiate then any evidence required has to be requested to the court. The court further assesses the necessity for it and if deemed necessary then requests the opposing party to provide it in accordance with the law. If the dispute wasn’t settled and goes to trial, the judge presumably will have looked over all evidence and paperwork submitted to the court and will guide the parties through the trial. The parties call witnesses and produce more evidence, which is relevant or important to the case at hand. The judge generally acts in an investigatory role, seeking out the truth of the situation then applies the law.

Appeal - the Fifth Step

The appeal is a second stage litigation process, because in almost all cases, the case at hand, an appeal will be submitted to the Court of Appeal (the procedure on how that’s done will vary from country to country). The Court of Appeal consists of two general directions first is an ordinary appeal and second is cassation. An ordinary appeal, when a case is appealed every aspect of it is reconsidered and a new examination of the facts may take place if necessary. However, a court of cassation has limited freedom, especially where the facts are concerned. In cassation it is required by law to base its deliberations on the facts as established by the lower court and cassation would mean quashing a judicial decision on a point of law, including procedural law.

Major Differences Between U.S. and E.U. Civil Litigation Process

Production of Evidence (Discovery)

Discovery is much more limited in the E.U. There are no requests for production of documents, interrogatories or depositions. Documentary evidence is produced by the parties during the course of the litigation.

Pre-trial Pleadings

There are no motions to dismiss or for summary judgement in the E.U., which can be critical tools by defendants in the U.S. system to end a legal claim early in the process or at least narrow its scope. This can greatly reduce the cost for a defendant and the outcome of these motions is an important factor in whether a case will settle and if so, for how much.

Trials

No European civil procedural system uses juries, except the court of Great Britain/United Kingdom. Litigation costs in the E.U. are generally much lower than in the U.S. While in the U.S. the majority of civil cases will settle before a trial verdict, the opposite is true in E.U. where most civil cases are decided by the judge and most of those decisions are appealed.

Roles of Experts/Expert Testimony

This is one of the most important differences. Both regions use expert testimonies differently.

In U.S. civil cases the use of experts is common, especially in more complex cases. In the E.U. it’s rare for a civil case to include use of expert witnesses. If there is such a witness he or she will be named by the judge to help determine the facts, not by a party to help put its case in a favorable light, nevertheless parties may provide their experts as well.

The Roles of Judges and Lawyers

In the U.S. judges are more of a director who must consider court procedure and prior court decisions. The judge is neutral and normally doesn’t intervene in fact-finding except to interpret and enforce rules of evidence.

In the E.U. litigation system a judge is more a referee and the trial is a more investigative process. E.U. judges are also not strictly bound by case precedent, except the courts of Great Britain/United Kingdom, however high authority, even though formally not binding, is possessed for the pronouncements of the Highest or Constitutional Courts. Case law is more informative than dispositive. Greater sources of law for judges and lawyers are legislative statutes and codes.

E.U. lawyers need to demonstrate that statutory law applies in the case for a particular fact so their role is more to advise, inform and point the judge in the right direction, and the procedure largely is in writing. U.S. lawyers engage in more debate, oppose what the other party seeks and are more active, use much more case law, and try to convince the jury and/or judge to believe their client’s side of the story.

In both systems, judges and lawyers interact with each other and depend on each other.

The Scope of the Appellate Process

The difference in this area is at least formally significant. In the civil systems, an appellate court has plenary authority to review an inferior court's judgment, not only as to issues of law but also as to issues of fact.

The underlying theory is that the civil codes determine the substantive basis of the case and the higher court judges have a more authoritative understanding of the code's provisions. The underlying civil-law theory regarding issues of fact traditionally has been that evidence is a legal science and that the strength of an item of evidence is governed by a set of rules. Note

In most civil case appeals in the U.S. the evidence on record is accepted as the fact finder (judge or jury) accepted them. That deference doesn’t happen in the E.U. In common law systems the appellate court reviews for “error” in jury-tried cases and “abuse of discretion” in most judge-tried cases. Note

The E.U. appellate process in civil cases may look more appealing to lawyers and their clients, because they see the first instance courts as a preliminary run or try-out of the case.

Conclusion

It’s worth noting the differences for each type of litigation process: jury trials, the roles of judges and lawyers, the scope of appellate process/review, the role of experts and production of

evidence. These differences significantly impact each litigation processes within each region. They do so by impacting the length and cost of litigation process.

When approaching it from a legal theory point of view, both systems have defined their litigation processes based on their own values concerning justice, fairness and equality.

Articles in This Series

  1. Introducing Our Latvian Interns

  2. Construction Risk & Claims Management in the US vs. EU

  3. Construction Management Process in the US vs. EU

  4. Comparison of Common Law (U.S.) vs. Civil Litigation (E.U.) Practices (THIS ARTICLE)

  5. Top Issues in Construction Projects in US vs. EU (COMING SOON)

  6. Construction Risk Management in the US vs. EU (COMING SOON)

  7. Construction Claims Management in the US vs. EU (COMING SOON)

References

  1. Civil Procedure Rules for European Courts by Geoffrey C. Hazard Jr

  2. Civil Lawsuit – The Civil Litigation Process Explained In Steps by TorHoerman Law, LLC

  3. Major Differences When Litigating Under Common Law or Civil Law by Howard Colman (Partner at Colman Coyle Solicitors )

  4. Common Law And Civil Law: A Brief Comparison by Legal Language Services

Construction Project Management in the US vs. EU

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In this article I am going to review construction project management practices across the Atlantic. The topic is related to the construction management process which is often the main area of concern for successful construction project implementation. The client expects that effective project management will enable the project’s completion, by the time when it is wanted, of a standard and quality that is required, and at a price that is competitive. Our goal in the series of articles is to help the owners minimize adverse impact on their business from failures in project delivery and increasing construction disputes and claims, focusing on the role of risk management as a proactive approach to project planning in order to make timely and informed decisions towards reducing negative effects to project goals.

What is Construction Management and what it is not?

Project management was introduced to construction projects in the late 1950s. Much of the earlier codification of the principles and practices of project management was developed in the United States and in the United Kingdom.

The Construction Management Association of America (CMAA) is the leading professional association serving the construction industry in the US.

CMAA definition: “Construction management is a professional service that uses specialized project management techniques to the planning, design, and construction of a project.”

The Chartered Institute of Building (CIOB), UK is the world’s largest and most influential professional body for construction management, with nearly 50,000 members in more than 100 countries.

CIOB definition of project management: “The overall planning, coordination and control of a project from inception to completion aimed at meeting a client’s requirements in order to produce a functionally viable and sustainable project that will be completed safely, on time, within authorized cost and to the required quality standards”

There are four types of construction projects:

  • Residential construction

  • Heavy industrial construction

  • Commercial and institutional construction

  • Civil engineering construction

Essentially, a construction manager is project manager with a specific area of knowledge in built environment. Construction management is compatible with all project delivery systems including design-bid-build, design-build, design-build-operate and construction management at-risk.

For all types and scale of projects (large, small, vertical, horizontal, domestic, or international) a construction manager is the person who ensures the scope of work is skillfully adhered to and the project is successfully delivered. At its core a project involves three main parties, excluding the construction manager,

  • The owner, who commissions and funds the project

  • The architect or primary designer, who designs the project

  • The general contractor, who oversees day-to-day construction operations and manages specialized subcontractors

An owner’s project manager is controlling and monitoring the full scope of project from inception to close-out. A construction manager works as the owner’s representative, and this role often is limited to the construction phase of project. Construction managers involvement in planning, pre-design and hiring of architect, designer, and general contractors can assist owner to make informed decisions at the earlier stages of construction project.

Project management is the professional discipline which separates the management function of a project from the design and execution functions. Professional construction managers are not GC’s nor are they constructors. They typically do not perform the actual construction tasks, but act as advisors, assuring the project progresses according to plan and that it achieves the owner’s business objectives.

Construction Management in the U.S. vs EU

American construction management and leadership thinking historically comes from the United Kingdom (UK), which is the also the home of the European construction management certification system widely validated in the construction industry globally.

There is a great migration of engineers and construction managers in the construction sector due to the different states of economic development of different countries worldwide. For this reason, it is extremely important that construction managers’ qualification and skills are recognized and certified in a comparable way.

Construction has taken on an increasingly global character. US based firms are providing services to international clients just as international firms have become more active in the Americas. Owners in major markets all over the world insist on high performance in every aspect of construction project management: the planning, execution and operation of their capital assets.

In recent years owner priorities are shifting emphasis from initial construction costs to “triple bottom line”, including an asset’s lifecycle performance, environmental and social impacts. Traditional project constrains in terms of cost, time, quality extends for function and sustainability.

Are there differences between the Old World and North America?

The main differences in the approach to construction project management were discovered during this research are in the structure all involved parties and specialists bring their knowledge and experience into the project team and contribute to decision making at every stage of projects.

In construction projects, there are too many specialists involved for it to be practical to bring them all together at every stage.

The different stages of the project lifecycle across the industry in the US and EU have been summarized below. In the UK Code of Practice has defined eight project stages while CMAA have established five phases of main project management activities.

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CMAA Construction Management Standards of Practice define 10 core responsibility areas of a construction managerI:

  • Project management

  • Cost management

  • Time management

  • Quality management

  • Contract administration

  • Safety management

  • Program management

  • Sustainability

  • Risk management

  • Building information modeling

CBOI suggested project managers duties is an extensive list of responsibilities that may be modified depending of client’s needs and nature of project. All duties can be eventually summarized under similar core areas of responsibilities as provided by CMAA.

Key aspects of Success

Success of project can be measured in terms of the actual time, budget and quality of the completed work against the planned goals. The following are key aspects in the CM discipline before and during the project execution that are considered essential by most of construction industry professionals (including developers, owners, GC’s, insurance specialists), both in the US and Europe:

  1. Clearly defined goal and objectives

  2. Defined plan and responsibilities

  3. Informed, timely decision making

  4. Proven risk management system

  5. Effective communication system

  6. Complete and accurate project documentation

  7. Quality control system

Construction management competencies usually are built around these key factors:

  • Competencies = the ability to meet goals by drawing on and mobilizing resources and capabilities on personal and organizational levels

  • Resources = physical assets, human resources, and organizational capital

  • Capabilities = operational activities that are practiced and honed over time until they are mastered, they contribute to the company’s competitive advantage and profit potential

Risk Management As A Core Competency of Project Management

A capability or resource is valuable when it allows the company to capitalize on opportunities or defend against external threats. In theory both opportunities and threats are considered risks. Construction risk management competencies are essential to build and protect competitive advantage in the volatile construction industry, both in the US and EU.

Competitive advantage can be maintained in the construction industry if efficient risk management decisions are made in the earlier phases of construction project management.

Depending on a construction business’ scale, project portfolio risk management competencies vary from entirely informal (ad-hoc) to fully integrated and formal (optimized) risk management systems. More optimized risk management use feedback from the lessons learned for continuous improvement, the advancing and complex global construction industry demands more efficient management systems.

Conclusions

Using proven construction management practices is essential in the inherently risky and volatile construction industry. Many companies still rely on individuals’ expertise and experience when it comes to identification, assessment, mitigation and monitoring construction project risks. Sadly, there are growing number of construction claims and disputes which increase both the costs of the projects, as well as cause headaches for construction professionals. Most of the claims resulting from failures in project delivery can be related to failures in risk management in the earlier phases of construction project management, including making sure there is adequate construction project management expertise among project stakeholders

In my further articles I will offer some findings how construction management processes can benefit using past construction claims and litigation data and improve risk related decision making at each phase of construction project management.

Articles in This Series

  1. Introducing Our Latvian Interns

  2. Construction Risk & Claims Management in the US vs. EU

  3. Construction Management Process in the US vs. EU (THIS ARTICLE)

  4. Comparison of Common Law (US) vs. Civil Litigation (EU) Practices

  5. Top Issues in Construction Projects in US vs. EU (COMING SOON)

  6. Construction Risk Management in the US vs. EU (COMING SOON)

  7. Construction Claims Management in the US vs. EU (COMING SOON)

References

  1. What is Construction Management? by CMAA

  2. Construction Management Evolution of a Profession by CMAA

  3. Construction Management Standards of Practice by CMAA

  4. Code of Practice for Project Management for Construction and Development 5th edition by The Chartered Institute of Building (CIOB)

  5. Redefining Construction Management by CIOB

A Homeowners Association in Trouble

This is another edition in our “How To Save Your Community A Million Bucks” series.

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The Problem

This project was a 132-unit multifamily community in the Pacific Northwest, constructed in 1977 as apartments and converted to condominiums in 1981. There are six 16-unit buildings, one 24-unit building, one 8-unit building, one 4-unit building, and one clubhouse. The 4-unit building and the clubhouse are single story, the remaining are two-story, and all are wood-framed structures on slab foundations. All upper floor units have wood-framed decks and landings with wood stair treads at the entries. All buildings were clad with Masonite siding and painted wood trim. Sliding glass doors and windows were a mix of flanged aluminum and unflanged vinyl (replacement windows). The units are designed in a back-to-back style so the front and back elevations are similar.

The exterior cladding of the project was in terrible condition. In 2014 the HOA and Previous Community Manager hired a building consultant who proposed a design they budgeted at $3.8 to $4.3 million in repair and improvements. In 2015 a second building consultant / engineering firm was hired to refine the scope of work in hope that the bids would be less expensive; but they came in at $3.6 to $5.7 million. For projects like this, based on similar projects in the region, the Owners would need to add for design (10-15%), construction management (5-15%), and change orders (10-25%) for a minimum of 25% over bid price. Up to 55% over the bid price would not be unheard of, and even more if the project did not run smoothly. The 25-55% would take the lowest bid of $3.6 million to a total of $4.5 to $5.6 million in total project cost. But the HOA only had $600,000 in reserve and limited capacity to borrow for the project. At this point, the HOA decided to hire a New Community Manager.

The Solution

In the Fall of 2016 PFCS was contacted by the New Community Manager to (1.) review and reduce existing scope of work, prepare a new budget, oversee the bid process; and (2.) act as Owner's Representative / Construction Manager (CM). By the end PFCS had managed the scope, budget, schedule, and quality for a complete rehabilitation of the exterior building walls for $3.0 million; a savings of $1.5 to $2.6 million, that is savings of at more than 33% in total project cost.

PFCS Work

  • 9/2016 PFCS Proposal

  • 11/2016 Updated PFCS Proposal and attend HOA Meeting

  • 1/2017 Delivered Scope Comparison and Options Summary report with a Project Summary Memo

  • 3/2017 Delivered Bid Analysis and Recommendations

  • 9/2017 Executed a contract between Architect and HOA

  • 11/2017 Architect submitted plans to City and PFCS Delivered RFP to 3 contractors

  • 1/2018 Contract between General Contractor and HOA.

  • 1/2018 Revised Drawings submitted for Permits.

  • 2/2018 Project Kick-Off Meeting and works begins

  • 2/2018 Railing Contract between trade contractor and HOA

  • 3/2018 to 11/2018 Inspections, Change Management and Payment Application Approvals

  • 11/2018 Project Completion and Closeout Memo

Final Project Costs

  • $25,000 Architectural Design

  • $2.6 million Original Contract Price with General Contractor

  • $240,000 Deductive Change with General Contractor

  • $190,000 Contracted Directly with a Subcontractor (saving $50,000)

  • $260,000 Change Orders (+/- 10%) which included improvements not included in the original scope of work

  • $210,000 Construction Consulting & Management (less than 8% of construction cost)

  • $3.0 million Total Cost

  • $1.5 to $2.6 million Total Savings

Construction Risk & Claim Management in the US vs. EU

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Introduction to Our Research Project

So you’ve been introduced to our Latvian Interns Anete and Helmuts. Now it’s time for me to introduce our research project. Since Anete is an engineer and construction manager, Helmuts is a construction lawyer, and PFCS is in the business of building inspection, construction management, and building claims & litigation, it seemed natural to investigate and summarize best construction risk & claim management practices from both sides of the Atlantic.

As I often do at the beginning of an investigative endeavor, I used our "Proving the Obvious Using Google" method to begin this research. I searched the terms "Construction Risk Management" and "Construction Claim Management." The full results are below in the respective sections and at the bottom of this article in the "Research" section. The point is that construction risk & claim management are topics deeply considered by professionals at the top of the construction industry all around the world, and there is a lot to learn and consider for our projects.

A Map of the World

For those new to construction risk management and/or construction claim management, we want to create "a map of the world" so that anyone interested can understand the big picture, and more quickly learn to recognize important landmarks along the trail. One of the many things that makes construction an interesting business is that no two projects are exactly alike. Of course, this also creates difficulty, since construction projects are generally expensive and complex, which creates risks. And sometimes these risks turn into claims.

Construction risk management happens primarily before and during construction, and construction claim management takes place mostly during and after construction. Professional risk and claim management are deeply integrated. In the most sophisticated organizations, claims that arise downstream were considered early in the project, and processes were outlined for what to do, first to avoid them, and second to mitigate the harm they can cause.

The Size of the Global Construction Industry

The global construction industry generated an estimated total revenue of $8.6 trillion in 2016, representing a compound annual growth rate (CAGR) of 7.1% between 2012 and 2016. According a to report by ResearchMoz ("Global Construction Industry Guide 2017…") growth is forecast to accelerate and reach a value of more than $13 trillion by the end of 2021.

In the U.S. the construction industry has more than 650,000 employers with over 6 million employees and creates nearly $1 trillion worth of structures each year. Construction is one of the largest customers for manufacturing, mining and a variety of services. A study performed for AGC by Professor Stephen Fuller of George Mason University found that an extra $1 billion in nonresidential construction spending adds about $3.4 billion to Gross Domestic Product (GDP), about $1.1 billion to personal earnings, and creates or sustains 28,500 jobs.

The European construction industry as a whole is worth more than $1 trillion. With 3 million enterprises and a total direct workforce of 18 million people, the construction sector contributes at around 9% to the GDP of the European Union. 99.9% of the European construction sector is composed of small and medium-sized enterprises (fewer than 250 employee). In the EU, the average size of construction enterprises is of 4 workers (employees or not). Small and medium businesses produce 80% of the construction industry's output. Small enterprises (less than 50 employees) are responsible for 60% of the production and employ 70% of the sector's working population.

Construction Risk Management

When you search "Construction Risk Management" in Google you get "Risk management in construction is designed to plan, monitor and control those measures needed to prevent exposure to risk. To do this it is necessary to identify the hazard, assess the extent of the risk, provide measures to control the risk and manage any residual risks."

Our top-level framework, we call the ABCs of Risk Management, includes:

  • Avoid potentially dangerous situations

  • Be really good at what you do

  • Cover your assets

In the following articles we will examine sophisticated strategies for identifying risks and the steps professionals take to mitigate them. The point of all this is to identify (inventory) potential risks, then analyze and control them. Common strategies include transferring risks through contracts and insurance, and reducing them through process management and quality control.

Common Construction Project Risk Management Activities Before and During Construction

  • Composing or adopting and customizing a Risk Management Plan

  • Composing or adopting and customizing a Quality Management Plan

  • Making sure all key team members are adequately skilled, experienced, and capitalized

  • Insurance requirements that are appropriate for all applicable team members

  • Contract terms that distribute risks to the appropriate parties

  • Building in quality control check points and verification mechanisms

  • Documenting the quality of the processes and work, sometimes by independent third parties

  • Identification of potential claims and addressing them prior to their becoming a dispute

Construction Claim Management

We have been working on construction claims since the 1990's, and writing and presenting on the subject for almost 20 years now. As with risk management, there is a spectrum of professional practice that runs from "close to criminal incompetence" at one end, to "so much management that you might as well pay your opposition whatever they have asked for." We want to teach people to avoid either of the extremes.

After more than a decade in the business of dealing with claims (in 2010), we outlined our "Claims Management Strategies" continuum:

  1. Head-In-Sand: Delegation outside the organization = Abdication

  2. Hope and Prayer: Hope is a strategy. But a bad one.

  3. Cowboy / Caveman / Swashbuckler: Yee Haw!! Usually O.P.M.

  4. Project “Piles”: Most common.

  5. Force of Genius: Closely related to Project Piles, only better.

  6. Project Files: We’re getting there :-)

  7. Project Level Data Structure & Analysis: Yea Baby!!

  8. Portfolio Level Analysis & Analysis: The Promised Land.

Common Construction Claim Management Activities During and After Construction

  • Understanding the contract documents, especially as they relate to the scope of work, and change management

  • A professional file (document) management process discipline, so that all relevant files can be easily and quickly retrieved (this is WAY harder than it seems like it should be)

  • A mechanism that verifies files and project documentation are being managed consistent with the plan (inspect what we expect)

  • Structured training for construction managers in documenting changes in the scope, budget, and schedule for the purposes of assigning responsibility for these variations from plan (or contract)

  • Third-party verification of conformance with plans and contracts compared to actual scope (including quality), budget, and schedule

  • Regular (monthly) reports to management regarding potential claims or quality problems

  • A team “First Responders” is identified prior to or immediately upon notice of a potential claim: Lawyer(s). Expert(s) (internal and third-party)

  • A written Claim Management Plan

  • A Claim Management Budget (best, probable, and worst case scenarios) that considers the cost of lawyers, experts, expenses, time, and settlement or verdict

  • A structure for regularly updating the Claim Management Plan and Budget to reflect current realities

Our Method

We always make a preliminary review of the existing literature.

Then we have meeting and conduct interviews with the smartest people we know. In this research, this will include:

  • Contractors

  • Risk Managers

  • Insurance Brokers

  • Lawyers

  • Mediators / Arbitrators

From there, we will publish our findings via this blog, eventually more formally in printed articles, and maybe even presentation at a construction risk and claim conference.

Articles in This Series

  1. Introducing Our Latvian Interns

  2. (THIS ARTICLE) Construction Risk & Claims Management in the US vs. EU

  3. Construction Management Process in the US vs. EU

  4. Comparison of Common Law (US) vs. Civil Litigation (EU) Practices

  5. Top Issues in Construction Projects in US vs. EU (COMING SOON)

  6. Construction Risk Management in the US vs. EU (COMING SOON)

  7. Construction Claims Management in the US vs. EU (COMING SOON)

Research

  1. Google "Construction Risk Management"

    1. Construction Risk Management by IRMI

    2. http://constructionexec.com/article/the-basics-of-risk-management-in-construction-contracts

    3. https://blog.capterra.com/the-ultimate-guide-to-construction-risk-management/

    4. https://www.stakeholdermap.com/risk/risk-management-construction.html

    5. https://cdn.intechopen.com/pdfs/38973/InTechRisk_management_in_construction_projects.pdf

    6. https://www.fminet.com/fmi-quarterly/article/2016/06/a-blueprint-for-risk-management-in-construction/

    7. https://www.spireconsultinggroup.com/en/professional-services/risk-management/

    8. https://geniebelt.com/blog/risk-management-plan-in-construction-guide

    9. http://www.cbre.us/real-estate-services/investor/construction-risk-management

    10. https://www.constructconnect.com/blog/operating-insights/identifying-managing-construction-project-risks/

  2. Construction Claim Management

    1. https://www.pmi.org/learning/library/construction-project-claim-management-7582

    2. https://www.sciencedirect.com/science/article/pii/S2212567115003275

    3. http://constructionexec.com/article/claims-management-a-problem-solving-approach

    4. http://constructionexec.com/article/claims-management-a-problem-solving-approach

    5. https://www.hillintl.com/PDFs/How%20to%20avoid%20CC,%20and%20what%20to%20do%20about%20them%20if%20they%20occur-MGriffin.pdf

    6. https://www.researchgate.net/publication/215908277_Contractors'_Construction_Claims_and_Claim_Management_Process

    7. https://www.managementconcepts.com/Course/id/1020

    8. http://www.xperagroup.com/services/construction-claims-management-process

    9. https://www.petefowler.com/construction-claims-management/

    10. https://www.projectcubicle.com/claim-management-in-construction/

A Custom Home in an Upscale Neighborhood with Water Intrusion and Habitability Claims

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The Problem

The project was a 3 bedroom, 5 bath, 4,500 square foot custom single family residence in an expensive neighborhood overlooking downtown Los Angeles. The residence was originally built in 1961 and recently completely redesigned, renovated, and modernized, including a wine cellar, an infinity pool, and a basement gym below the pool.

The Owner of the residence was a single purpose limited liability company (LLC) owned 100% by the Previous Owner of the property, who was the individual that transferred the property into the LLC. The 2015 lease with the Tenant was made with the Previous Owner, prior to the property's transfer in ownership to the LLC.

In mid-2017 the Owner sued the Tenant for back rent and in return the Tenant sued the Owner and Previous Owner for uninhabitable conditions and alleged defective conditions such as flooding, black mold, failing air conditioning, pool, electrical, and AV systems defects. The cross-complaint from the Tenant contained an extensive list of defects and documentation of leakage and mold issues dating to early 2016.

The Solution

PFCS was hired in January 2018 to represent the Owner of the residence (the LLC) and the Previous Owner. Counsel for the Owners asked PFCS to perform a general habitability inspection prior to the Owner starting repairs.

PFCS investigated the allegations using our standard Building Performance Analysis Process that virtually always includes collecting, organizing, indexing, and summarizing key project documents and information, conducting meetings and interviews with key players, organizing key building information into a players list, timeline, and issues list, and preparing to conduct on-site investigation by creating an inspection checklist. We conducted an exhaustive inspection, documenting observations with hundreds of photos, field notes, and diagrams, including sketches of the site, floor plans, and a roof plan so that we could easily compare exterior observations to the interior manifestation of leakage. Repairs were taking place during our inspection, so this documentation was similar to conducting an invasive investigation (testing). At the conclusion of the inspection, we immediately uploaded the photographs and notes to our cloud-based, password protected, Client Access system because our clients, who did not attend the inspection, were anxious to review the documentation.

Then, in the quiet of our office, we analyzed all of the data and developed working hypotheses for each of the discrete issues and presented our thoughts to our clients in a telephone conference. We observed interior damage related to leakage caused by construction defects in 4 locations including from the roof, plumbing, a door, and the swimming pool. We believed that the issues were complex and would have been difficult to diagnose, so some delay in solving the building problems would be reasonable, even for the most professional and competent property manager, but that ultimately the outcome of the case would probably be related to how the Owner handled the issues with the Tenant.

After further document analysis and numerous consultations with the Owner's counsel, they were able to settle the claims equitably. And although no one on the Owner’s side was excited to hear that there were construction defects leading to property damage that could be legitimately used in a Habitability Claim, the Owner’s counsel was pleased to have this information soon after our investigation was conducted.

Project Images

The main image above is not the actual home (although it’s quite similar). The images below are all actual project images.

Sketch of Site and First Floor Plan

Sketch of Site and First Floor Plan

Sketch of Second Floor Plan and Low Roof

Sketch of Second Floor Plan and Low Roof

Remodeled Kitchen

Remodeled Kitchen

Master Bedroom.

Master Bedroom.

Bar Area with Ceiling Leak from Roof

Bar Area with Ceiling Leak from Roof

Bar Area with Ceiling Leak from Roof

Bar Area with Ceiling Leak from Roof

Roof area above leak in Bar with liquid applied waterproofing in failed attempt at repair.

Roof area above leak in Bar with liquid applied waterproofing in failed attempt at repair.

Master Bath with ceiling leak from plumbing above.

Master Bath with ceiling leak from plumbing above.

Master Bath with ceiling leak from plumbing above.

Master Bath with ceiling leak from plumbing above.

Plumbing above Master Bath ceiling with evidence of leakage.

Plumbing above Master Bath ceiling with evidence of leakage.

New infinity swimming pool with numerous leaks below.

New infinity swimming pool with numerous leaks below.

Numerous leaks in living space below new infinity swimming pool.

Numerous leaks in living space below new infinity swimming pool.

Numerous leaks in living space below new infinity swimming pool.

Numerous leaks in living space below new infinity swimming pool.

Laundry Room door with leaks and damage.

Laundry Room door with leaks and damage.

Laundry Room door with leaks and damage.

Laundry Room door with leaks and damage.

Handwritten floor plan drawn by the inspector in the field during the inspection.

Handwritten floor plan drawn by the inspector in the field during the inspection.

A Condominium Conversion with Habitability Claims

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The Problem

The project was a 23 unit multi-family building located in the San Fernando Valley area of Los Angeles county, constructed in 1983. All units were two bedrooms and two bath and were rented to individual tenants as apartments. The project was purchased by our client, the New Owner, in 2006 with the intention of converting the units to condominiums.

Upon initiating the eviction of the tenants, to begin the conversion of the apartments to condos, six tenants filed suit claiming "habitability" issues including building leaks and flooding, unannounced water shut-offs for 3 days, construction that was unannounced and disruptive to the tenants, vermin (rats and cockroaches) caused by poor housekeeping of the construction crews, and parking problems related to safety and handicap access. The tenants were mostly over 65 years of age, the majority of whom are retired, had limited financial resources, and were foreign born. Some tenants were disabled and difficult to relocate due to limited mobility. The initial question from our client included answering whether or not as-built configuration of the building egress conformed with current condominium code?

The Solution

PFCS investigated the allegations using our standard Building Performance Analysis Process:

1. Document & Information Management included collecting a large volume of source documentation including the history of building maintenance and improvements, some of which was the subject of the Tenant's complaints.

2. Meetings and Interviews with Key People included long discussions with the insured's attorneys as well as the insured. We also analyzed more than 10 deposition transcripts.

3. Building Information Management, including making a discrete list of all the known issues (allegations) from their complaint and other sources including sworn declarations. We also made lists of all the units and building areas with issues, project players, timeline of events, and performed a forensic audit of the construction invoices.

4. Inspection occurred over two days where we collected hundreds of photographs, drew diagrams, and filled out checklists. The information collected with detailed enough that it allowed us to map and reference photo documentation for every allegation at every location.

5. Analysis: In sorting through all of the who, what, when, where, how, how much, and how many, we realized that three of the units had real issues that required repair, and three did not. The egress was configured in a way that was acceptable for the time of original construction so no repairs were required.

6. Testing (Only as Necessary): None was required.

7. Estimate: We composed an estimate to repair the problems, using Civil Code §1941.1 and Health and Safety Code §17920.3 as the criteria, for a total of just under $70,000 in three of six units. There were zero repairs in the other three units.

8. Report: We were set to deliver sworn testimony 4 years after we had delivered all of our analytical work, and the matter was finally settled; favorably for the three units where we called for zero repair... less favorably where violations of the standards and repairs were clearly required.

Photographs from the Project

Deck Problems

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Exterior Wall Problems

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Interior Damage from Leaks

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Damaged Interior Finishes

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Professional Construction Contracting Discipline

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Definition

The ability to define precisely a 100% complete scope of work for a construction project, to budget and schedule that work, to professionally contract for that work at the prime level (directly between the Owner and Contractor), to break that 100% scope-budget-schedule into manageable chunks by trade or subcontractor, to contract for each of those individual trade or subcontract scopes of work with a corresponding budget and schedule, to coordinate all of those scope-budget-schedules in executing the construction, to manage changes to the scope-budget-schedule at the prime and sub levels, and to verify with precision that each of those scope-budget-schedule packages is being executed in conformance with the plans, specifications, trade standards, budget, schedule, and contracts. 

Discussion

Pete Fowler Construction does three things: building inspection & testing of many types; construction management, specifically estimating and building maintenance and rehabilitation management for owners; and building claims and litigation consulting related to everything imaginable that could make someone sad about real estate. We have refined processes, technology, and staff who are experts in building performance analysis, building economics, and construction management.

Since so many of our technical staff are "forensic consultants" who testify as expert witnesses, we have to create plain English definitions of what otherwise could have stayed techno-speak in the Nerdville that exists in the engineering and construction management departments of universities. We have to do this so that the non-technical people we work for can make informed and smart decisions, And this exercise has helped us to improve our own construction management practices and processes. As we have written in our internal training documents: (1.) Define what awesome work looks like, and (2.) train to mastery.

Details

Professional Construction Contracting Discipline

Level 1 Work Breakdown Structure (WBS)

  1. The ability to define a 100% complete scope of work for a construction project, 

  2. to budget and 

  3. schedule that work, 

  4. to professionally contract for that work at the prime level (directly between the Owner and Contractor),

  5. to break that 100% scope-budget-schedule into manageable chunks by trade or subcontractor, 

  6. to contract for each of those individual trade or subcontract scopes of work with a corresponding budget and schedule, 

  7. to coordinate all of those scope-budget-schedules in executing the construction, 

  8. to manage changes to the scope-budget-schedule at the prime and sub levels, and 

  9. to verify with precision that each of those scope-budget-schedule packages is being executed in conformance with the plans, specifications, trade standards, budget, schedule, and contracts. 

Professional Construction Contracting Discipline
Level 2 WBS with discussion and key deliverables

1. The ability to define a 100% complete scope of work for a construction project, 

  • A. WBS (Basis of Schedule of Values)

  • B. Estimate Details with trade/sub scopes broken down (No Prices) 

  • C. RFIs / RFI Log

2. to budget and 

  • A. Budget (Worksheet - Basis of Schedule of Values)

  • B. Estimate Details with Labor, Material, Equipment, and Trade Contractor Prices

  • C. Budget to Actual Comparison

3. schedule that work,

  • A. Progress Schedule

  • B. Progress Schedule Updates / Comparison of Plan to Actual

4. to professionally contract for that work at the prime level (directly between the Owner and Contractor),

  • A. Prime Contract

  • B. Insurance Requirements

  • C. RFP

  • D. Other Addenda

5. to break that 100% scope-budget-schedule into manageable chunks by trade or subcontractor, 

  • A. Trade/Sub Scopes of Work

  • B. Trade/Sub Budget

  • C. Trade/Sub Progress Schedule (Integrated with the Project (Master) Progress Schedule)

6. to contract for each of those individual trade or subcontract scopes of work with a corresponding budget and schedule,

  • A. Subcontracts

  • B. RFP

  • C. Contractor Solicitation & Pre-Qualification

7. to coordinate all of those scope-budget-schedules in executing the construction,

  • A. Project Kickoff

  • B. Meeting Management

  • C. Trade/Sub Progress Payment Application Processing

8. to manage changes to the scope-budget-schedule at the prime and sub levels, and

  • A. Prime Contract Change Order Processing

  • B. Trade/Sub Change Order Processing

  • C. Change Order Log

9. to verify with precision that each of those scope-budget-schedule packages is being executed in conformance with the plans, specifications, trade standards, budget, schedule, and contracts. 

  • A. Progress Schedule QC Hold Points

  • B. Inspection Checklist(s)

  • C. Managing Construction Quality

  • D. Inspection

  • E. Issues Management, Followup, and Closure

  • F. Punch List

  • G. Payment Application Approval memos

  • H. Report to Management (As GC this is prior to Payment Application. As CM this is between receipt and approval of payments.)

Project Team

  • Construction Manager

  • Project Coordinator

  • Project Executive(s)

  • Other

Meeting Rhythm

  • Project Kickoff

  • Daily

  • Weekly

  • Monthly

  • Project Close

Habitability Claims

Habitability Claims appear to becoming more and more common, and, although there is no concise, statutory definition of the term, there are LOTS of regulations mandating the minimum performance requirements of residential property being rented by owners to tenants. We’re providing a FREE, one-hour webinar on investigation and evaluating Habitability Claims from the construction expert’s perspective.

Understanding Green Building, LEED Certification… And Their Risks

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Outline

  1. Introduction to Green Building Projects
  2. LEED Certification
  3. Building Systems, Techniques & Strategies
  4. Costs
  5. Risks
  6. Claims & Litigation Case Studies
  7. Deep Thoughts
  8. Codes & Standards
  9. Research & Links

1. Introduction to Green Building Projects

This is a brief introduction to the design, construction, maintenance, and management of Green Building projects, which are sometimes also referred to as “sustainable”, “high-performance”, or “passive.”

“Green Building (also known as green construction or sustainable building) refers to both a structure and the application of processes that are environmentally responsible and resource-efficient throughout a building's life-cycle: from planning to design, construction, operation, maintenance, renovation, and demolition.” (Wikipedia)

The intention of Green Building is to reduce the environmental impact of building projects by:

  • Lowering energy and water use;
  • Using environmentally preferable materials;
  • Increasing durability, which allows buildings to last longer before requiring rehabilitation or replacement, which saves resources over the building lifecycle;
  • Reducing waste during construction and operation & maintenance;
  • Reducing toxins;
  • Improving the indoor environment for occupants, including air quality (IAQ); and
  • Creating neighborhoods designed to lower environmental impact and improve human health.

The point is that buildings consume something like 40% of the energy we use, and making buildings more resource-consumption-efficient in every way, including during constructing, using, repurposing, and even decommissioning, is a good thing.

Green Building is about more than design and construction. Maintenance and management of Green Building projects is, arguably, more important than the design and construction process since the total cost of ownership (TCO) of building projects and facilities over time is always many times the cost of design and construction. The Green Building movement recognizes that facility and property managers require extensive training in making the investments in Green Building design and construction worth any additional expense on the front end.

There are many available Green, Sustainable, High-Performance, or passive building certifications. The most popular in the U.S. is from U.S. Green Building Council (USGBC) called Leadership in Energy and Environmental Design, commonly referred to as LEED.

2. LEED Certification

“Leadership in Energy and Environmental Design (LEED) is a set of rating systems for the design, construction, operation, and maintenance of Green Buildings which was Developed by the U.S. Green Building Council." (Wikipedia)

The LEED rating system is owned by U.S. Green Building Council (USGBC), which began in 1993 and is now an organization with more than $60 million in annual revenue, 200,000 LEED certified individuals, 92,000 total projects, 39,000 certified projects, 1.6 million registered or certified homes, 6,000 certified schools, 2,900 certified local government buildings, and 1,000 certified state government buildings. A division of USGBC is Green Business Certification Inc. (GBCI), which administers LEED, performing third-party technical reviews and verification of LEED-registered projects including technical reviews to ensure the building certification process meets the highest levels of quality and integrity.

LEED Professional Accreditations

  • LEED Green Associate requires the candidate to study and take a test.
  • LEED AP (Accredited Professional) requires the candidate to study and take a harder test. 
  • LEED Fellow requires the candidate to show at least 10 years of exemplary impact with LEED, be nominated by a LEED professional, and have a team of endorsers who will write about the candidate’s contributions.

LEED Certification Levels for Building Projects

  1. Certified: 40-49 points.
  2. Silver: 50-59 points.
  3. Gold: 60-79 points.
  4. Platinum: 80-110

3. Building Systems, Techniques & Strategies

LEED Certification Prerequisites

  1. Sustainable Sites: Construction Activity Pollution Prevention
  2. Water Efficiency
    1. Outdoor Water Use Reduction
    2. Indoor Water Use Reduction
    3. Building-Level Water Metering
  3.  Energy and Atmosphere
    1. Fundamental Commissioning and Verification: USGBC and the LEED certification materials use the term “Commissioning” (Cx) to describe a quality assurance (QA) process, to ensure the plan for mechanical, electrical, plumbing, and renewable energy systems and assemblies that is submitted to USGBC for certification is executed in the field.
    2. Minimum Energy Performance: There are multiple paths to ensuring the energy performance designs will meet current standards from ASHRAE and other specified standards.
    3. Building-Level Energy Metering
    4. Fundamental Refrigerant Management: Don’t use chlorofluorocarbon (CFC)-based refrigerants… Phase-out existing use.
  4.  Materials and Resources
    1. Storage and Collection of Recyclables
    2. Construction and Demolition Waste Management Planning
  5. Indoor Environmental Quality
    1. Minimum Indoor Air Quality Performance: Meet minimum requirements for ventilation and monitoring.
    2. Environmental Tobacco Smoke Control: Prohibit smoking in or within 25 feet of the building.

LEED Certification Points for Building Projects (110 points total)

The outline here is from the LEED v4 Checklist

  1. Integrative Process (1 point) Think hard and analyze the energy and water-related systems from the earliest phase of design, including to inform the owner’s project requirements (OPR) and basis of design (BOD).
  2. Location and Transportation / Neighborhood Development (16 points) “To avoid development on inappropriate sites. To reduce vehicle distance traveled. To enhance livability and improve human health by encouraging daily physical activity.” Points are given for promoting aspects of the objective.
  3. Sustainable Sites (10 points) Assess the site before the design using a structured process and consider strategies including: Protect or Restore Habitat, Open Space, Rainwater Management, Heat Island Reduction (i.e. avoid giant, uncovered asphalt parking lots), and Light Pollution Reduction.
  4. Water Efficiency (11 points) While indoor and outdoor water use reduction and metering are prerequisites, points can be earned for low or zero irrigation designs, calculated savings of indoor water use from 25-50%, and management of cooling tower (HVAC system) water use.
  5. Energy and Atmosphere (33 points)
    1. In addition to having the longest list of prerequisites (see above), this category has the most point-value. The section mixes both energy savings with quality control (“Commissioning”); surely due to haw closely connected the two are.
    2. “Enhanced Commissioning”, a more complete and intensive QA / QC process, must be performed by a third party Commissioning Authority (CxA), and to receive maximum points the building envelope must be part of the commissioning plan and process, in addition to the mechanical, electrical, plumbing, and renewable energy systems and assemblies required in the prerequisites.
    3. Energy related points can be earned for Optimizing Energy Performance even further than the minimum standards, Advanced Energy Metering, Demand Response through load shedding or shifting, Renewable Energy Production (like solar), Enhanced Refrigerant Management and Green Power and Carbon Offsets where 50-100% of energy use comes from a green source.
  6. Materials and Resources (13 points) In addition to the prerequisites, consideration should be given to Building Life-Cycle Impact Reduction (reuse of existing buildings or materials), Building Product Disclosure and Optimization - Environmental Product Declarations including the Sourcing of Raw Materials and Material Ingredients, and Construction and Demolition Waste Management.
  7. Indoor Environmental Quality (16 points) In addition to the prerequisites, design consideration should be given to Enhanced Indoor Air Quality Strategies (like enhanced ventilation and contamination prevention), Low-Emitting Materials, composition and execution of a Construction Indoor Air Quality Management Plan, Indoor Air Quality Assessment, Thermal Comfort considerations, Interior Lighting strategies to promote comfort and well being by offering controls throughout, Daylight, Quality Views, and Acoustic Performance to limit noise.
  8. Innovation (6 points) Points can be earned for Innovation using a strategy not addressed in the LEED system or exemplary measurable performance in a addressed area. There is also one credit available for having at least one LEED Accredited Professional on the team.
  9. Regional Priority (4 points) Specific credit can be earned for issues important to the project’s region as identified by the USGBC regional councils and chapters and articulated in database of Regional Priority credits and their geographic applicability.

4. Costs

So the “accounting” on the costs of LEED Certification are either very high level or fuzzy. And as I mention in the Deep Thoughts section below, the costs are commonly downplayed and the calculable benefits are sometimes exaggerated. The science here appears to remain very soft. And few of the studies I have found appear to be by disinterested professionals with expertise in building economics.

Sources claim a range of additional costs for LEED Certification between 0-30%. The claim of zero additional cost seems, at first blush entirely absurd; the cost of registration and compliance alone is well above zero. The more common figures suggest a range between 2.5-8.5%, depending on the level of certification. I remain skeptical. In one of my case studies, the “additional cost” of the project over a reasonable square foot cost made the project 80% more expensive than a more common facility of identical size. And if you include the cost to make the repairs, then the project cost was 155% above the cost of a common facility (not +55%, +155%!). Granted, this was also a more beautiful building project than a more common facility; and much of the cost for a building that looked the same, would have been incurred even if the Green Building design & construction techniques and requirements were removed.

I acknowledge that the rigorous process that LEED Certification imposes, to think the project through at a painstaking level of detail, can lead to innovative design that could contribute to a net savings. I look forward to additional research into the economics of Green Building. Check back for more in the months and years to come.

5. Risks

A TIGHT, "GREEN" BUILDING ENVELOPE

Energy efficiency is great! But it has its risks. The tighter building envelopes required by Green Building standards remind me of the "Sauna Exercise Suit" I remember my grandmother wearing around the house when I was a small child. She would vacuum and dust and sweat like crazy, thinking it was helping her to get more fit. She lived a long happy life, so it appears to have done her no harm, but buildings constructed of moisture sensitive materials, like engineered wood (including oriented strand board or OSB) often don't fare as well. 

The risks of building problems increases for Green Construction projects due to:

  • More complex building envelope
  • Use of new material technologies
  • High performance and more complex mechanical systems
  • Additional warranty requirements
  • Increased performance targets

Problems That Could Be Caused by LEED Certification

  • LEED standards can end up forcing a dramatic increase in building system complexity.
  • These standards are being built as we go along and they are changing the built environment faster than our understanding.
  • In some cases these requirements are adding costs, which causes stress to the economic viability of projects.
  • These LEED Certification requirements do not address the costs compared to the potential benefits.

From a Zurich document outlining the risks of Green Building, 5 categories of risk include…

  1. Financial risks: The additional costs of Green Buildings may affect completing projects on time and on budget, but must be weighed against the cost of not going green.
  2. Standard of Care/Legal: Mandates regarding LEED certification bring an increased risk of legal liability for Green Building design and construction professionals.
  3. Performance: Project owners/developers are starting to require additional contract provisions and warranties regarding the energy efficiency of Green Buildings, causing increased exposure to potential liability for breach of contract or warranty.
  4. Consultants/Subconsultants and Subcontractors: Lack of experience by these parties in green construction can lead to problems obtaining LEED certification, delays and improper material specifications.
  5. Regulatory: New building codes and mandates associated with green construction can mean an increased liability to everyone involved in the green construction process.

The Construction Defect Litigation Business Model

It seems to me that “the construction defect litigation business model” came about because (1.) construction is complex, (2.) no construction project is perfect, (3.) most construction contracts have indemnity agreements, (4.) common commercial general liability (CGL) insurance policies have a duty to defend the insured when sued, and (5.) plaintiff attorneys are very clever and assertive. So considering this, I have said things similar to the following, many times, related to new advances in technology: If I were unscrupulous and did not love the construction industry, I would put together a team of plaintiff-oriented attorneys and experts, I would comb through the LEED Certification Database, I would plan and execute a marketing campaign to find every project that had even the most mildly disgruntled LEED project Owners, and I would encourage them to get involved in construction defect litigation using our team. It seems to me that the LEED certification database is the best marketing list possible for sophisticated plaintiff construction defect lawyers. 

Also see The Good, The Bad, and The Ugly in the Deep Thoughts section below.

6. Claims & Litigation Case Studies

PFCS Projects

  1. A “Net Zero” Educational Facility Gets A Big Repair: Defects introduced during construction, plus operational problems lead to repairs totaling more than 40% of construction cost.
  2. Leak Investigation Involving Solar Panel Installation: A national solar system manufacturer / installer litigated with a homeowner who had multiple leak sources.
  3. A Hygrothermal Study Leads to Pre-Litigation Resolution: An elegant solution to a divisive and expensive issue, allegedly related to condensation, is resolved using building science, which then leads to resolution of all remaining construction defect allegations, prior to filing of a lawsuit.

Litigation From Around the Country

  1. Chesapeake Bay Foundation, Inc. et al. v. Weyerhaeuser Company:
  2. Southern Builders v. Shaw Development:
  3. Gidumal v. Site 16/17 Development LLC:
  4. Flincto Pacific Inc. v. City of Palo Alto (2014)
  5. Burchick Construction Company, Inc. v. Pennsylvania State System of Higher Education
  6. Hampton Technologies, Inc. v. Department of General Services (2011)

7. Deep Thoughts

My experience and research lead me to the following conclusions.

The Good

  • 1. The hard-thinking that is forced by Green Building principles generally, and LEED certification specifically, during the design phase, is wonderful in many ways: Environmental protection, lower energy use, human health and well-being, and on and on.
  • 2. The potential for the process to transform the built environment through the integrative approach, rather than the more traditional focus primarily on esthetics and economics or return-on-investment (ROI), is exciting.
  • 3. The requirement for “Fundamental Commissioning” is something that every building owner should require as a minimum quality control function.
  • 4. Enhanced Commissioning should be a model for a superior level of quality control throughout the building industry.

The Bad

  • 5. LEED certification can cause an explosion of building system complexity during design & construction as well as operation & maintenance.
  • 6. Increased complexity in building systems increases costs.
  • 7. Increased complexity in building systems increases risk of building system failure.
  • 8. There is no built-in cost-benefit analysis mechanism, and surely no requirement therefore, built into most of the Green Building standards, including LEED.

The Ugly

  • 9. The costs of Green Building and LEED are commonly down-played.
  • 10. The quantifiable benefits of Green Building and LEED are commonly exaggerated.
  • 11. Case studies of Green Building project failures are limited.
  • 12. Costs for operation & maintenance (O&M) for the more complex mechanical systems appear to not have been closely studied.
  • 13. Ultimately, additional costs of Green Building and LEED Certification are being passed to the people who can least afford it (low-income individuals and families).

8. Codes & Standards

  1. IBC International Building Code
  2. IgBC International Green Building Code
  3. CBC California Building Code
  4. LEED / USGBC
  5. ASHRAE Guideline 0–2005
  6. ASHRAE Guideline 1.1–2007
  7. CA 2008 Long Term Energy Efficiency Strategic Plan
  8. CA 2019 Building Energy Efficiency Standards
  9. CA Green Building Code: 2013 edition went into effect 1/1/2014. 2016 edition went into effect 1/1/2017. PDF Copy of CA Green Building Code 2013 edition.
  10. U.S. Department of Energy

9. Research & Links

We have a not-so-scientific research method that generally yields some amazing results. It's called PFCS Proving The Obvious Using Google Method. I began by searching "Green Building Summary" and received these results

Search Results "Green Building Summary"

  1. Green Building From Wikipedia, the free encyclopedia
  2. Summary of Green Building Programs by National Association of Home Builders (NAHB) Research Center, Inc
  3. EPA's Web Archive on Green Building
  4. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations (2013)
  5. A Green Building Overview by HGTV
  6. ASSESSING GREEN BUILDINGS FOR SUSTAINABLE CITIES from The 2005 World Sustainable Building Conference, Tokyo, 2005  
  7. What is a Green Building? by Sunpower
  8. GREEN BUILDING STANDARDS AND CERTIFICATION SYSTEMS from Whole Building Design Guide
  9. LEED Cost Analysis Summary by Green Building Solutions
  10. WHAT IS A “GREEN” BUILDING ACCORDING TO DIFFERENT ASSESSMENT TOOLS? from Department of Technology and Built Environment, University of Gävle, Sweden

Search Results "Costs of LEED Certification"

Coming Soon

OTHER INTERESTING RESOURCES

  • PFCS Case Study: Plumbing Leaks in High-Rise Condo. Complex investigations require development and testing of hypotheses. This is an example.  
  • Green Building: What are the Risks? 2011 document by Zurich Insurance 
  • California Becomes First State to Order Solar on New Homes (Bloomberg): In May 2018 the California Energy Commission decided that most new homes and and multifamily units under 4-stories built after 2019 will be required to include solar systems. They estimated the systems and complying with energy-efficiency measures will add $9,500 to the cost of a new home, which would be offset by $19,000 in energy and maintenance savings over 30 years. California is already the nation’s largest solar market and Governor Jerry Brown’s has an effort underway to slash carbon emissions by 40 percent by 2030. This will exacerbate the issue of high housing costs, seen as a drag on the economy and contributes to rising social tensions. The state only adds about 80,000 new homes a year, and the state issued permits for fewer than 480,000 new residential units in the last 5 years, yet California’s economy added 2.3 million jobs over the same period, which is about one home for every five additional workers.
  • Hidden Risks of Green Buildings from RCI's Interface Magazine 

A “Net Zero” Educational Facility Gets a Big Repair

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The Project

The project was a 13,500 square foot educational facility in the Pacific Northwest designed as a "Net Zero" building, meaning it generates as much energy as it consumes. It was certified LEED Platinum (the highest level) and won numerous design awards. The walls and roof were built using structural insulated panels (SIPs), which consist of an insulating foam core sandwiched between two structural facings, typically (and in this case) oriented strand board (OSB). The exterior envelope was dominated by storefront windows and doors, metal panels, aluminum curtain wall, brick, built-up roofing, and standing seam metal roof. The original project cost $7.2 million ($533/SF which is about double the national average) and was completed in 2011.

The Problem

Due to excessive moisture in, and damage to, the SIP system at the roof, the Owner, replaced the entire assembly in 2015 at a cost of $3 million (another $222/SF). Unfortunately for all involved, the operation and maintenance personnel warned everyone involved that they believed use of the SIPs was going to end in a tragedy similar to what ultimately came to be.

The Solution

PFCS represented the trade contractor who installed the membrane roofing system in the area that was damaged and being replaced. PFCS prepared a preliminary report in January 2017 and a final report in May 2017. We concluded that the damage was caused by a handful of primary failures including:

(1.) The SIPs were mishandled during construction, allowing them to get wet during storage on-site and during the wet winter installation. In addition to other materials in the assembly, the SIPs then had peel & stick membrane applied over the top surface, which inhibited drying potential of the engineered and sawn wood material, that was wet from construction. This combination alone may have been enough to cause the damage that ultimately manifest.

(2.) The installation of the SIPs was defective and did not allow the joints to be properly sealed, as required by the manufacturer. These joints became a location of damage on the top side of the SIPs, where warm moist air from the conditioned space below was able to migrate from the interior through the system and condense on the underside of the cold membrane roof system, installed by our client.

(3.) The relative humidity inside the facility was too high, contributing to the volume of moisture in the warm, wet air that migrated through the roof system and condensed on the underside of the cold, membrane roof system. PFCS argued successfully that none of the causes and none of the damage was, in any way related to the membrane roofing installer, and they were dismissed from the litigation. 

End of (Service) Life Care: Evaluating Aging Building Infrastructure

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Introduction

Evaluating the performance of aging building elements is not one of the hard sciences; and in the case of electrical, HVAC, plumbing, foundations, below grade waterproofing, and more, it is complicated by the fact they are partially or entirely hidden. This program is for those tasked with helping people make long-term decisions about their building systems and Pete Fowler Construction Services’ approach to applying the scientific method to building rehabilitation decisions.

End of (Service) Life Care: Evaluating Aging Building Infrastructure" begins with a discussion of the importance of this subject, because most people spend 20-50% of their income on housing. Then we get into the details of who should be on the team and exactly what should be done to professionally evaluate the discrete building elements and apply professional judgement about what work should be done and when. We will have a high-level discussion about professional construction contracting discipline and how a broad lack of this in the building rehabilitation industry is causing harm to the most fragile property owners. Finally, we will wrap with a discussion of how to plan for the inevitable future.

Outline

  1. Introduction
  2. End of Life Care
  3. "Don’t ask the barber whether you need a haircut."
  4. Playing Doctor
  5. Operation
  6. Retirement Planning
  7. Conclusion

Learning Objectives

  1. There is an alternative to the terrible way that aging properties are typically assessed and rehabilitated.
  2. Who is on the team in evaluating aging infrastructure is VERY important.
  3. Building performance analysis is about 80% science that should be performed according to industry standards, and 20% art or professional judgement.
  4. Professional construction contracting discipline is 95% science.

Backup Materials

  1. Managing Property Maintenance & Repair by Peter D. Fowler
  2. The DBSKCV Construction Management Method by Peter D. Fowler
  3. Overview of ASTM E2128 by Haughton & Murphy – Interface Magazine
  4. Managing Construction Quality by Peter D. Fowler
  5. AIA A201 2017 General Conditions of the Contract for Construction

Contents

1. Introduction

  • We Know Buildings
  • Team
  • Projects
  • Clients
  • Program Outline
  • Program Introduction
  • Learning Objectives
  • This Might Sound Salesey

2. End of Life Care

3. "Don’t ask the barber whether you need a haircut."

  • Case Study: Soil Subsidence Repair
  • Who? The Most Important Q
  • The Building Doctor
  • Who Is In Charge of What?
  • Who is on the Team?
  • Fee for Service
  • Hiring Discipline
  • RFP Sample for Hiring Professionals
  • Firing an Engineer
  • An Army of Sheep

4. Playing Doctor

  • Case Study: Plumbing in a High-Rise
  • Building Performance Analysis
  • Document & File Management
  • Meetings/Interviews with Key People
  • Building Information Management
  • Inspection
  • Analysis
  • Testing
  • Estimate
  • Property Condition Assessment
  • Element Analysis

5. Operation

  • Case Study: CM with Major Savings by Minimizing COs Using Estimating Skill
  • The Traditional Approach
  • Common Pitfalls
  • Professional Construction Contracting Discipline
  • The DBSKCV Construction Management Method
  • Prescribe: RFP Contents
  • The Golden Rule
  • Don't Sign That contract!
  • Start with One Building or a Small Sample

6. Retirement Planning

  • Case Study: Elevator Closet
  • Comparison of Plan to Actual: Construction Costs & Schedule
  • BLM Matrix
  • As-Builts or PCA Update
  • Standardized Maintenance & Repair Scopes of Work, and RFPs
  • Reserve Study
  • The Most Powerful Force in the Universe
  • Comparison of Plan to Actual: Reserve Study

7. Conclusion

  • Program Outline
  • Learning Objectives
  • Program Introduction Revisited

Presentations

This program was originally presented at the Reserve Analysts (APRA) Symposium 2018 in Nashville, TN.

Here is a link to the complete presentation and backup materials

PFCS Building Rehabilitation Process

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Investigative Expertise + Contracting Discipline = Savings

Pete Fowler Construction Services, Inc. (PFCS) is unique. It's rare that a single firm has both deep technical expertise in building performance analysis AND professional construction estimating, contracting and management discipline. This combination of expertise in both inspection & testing and construction management was created by our being named as expert witnesses thousands of times over the last 20 years. And this building claims & litigation work profoundly informed our understanding of building performance and building economics.

So after spending a lifetime developing professional contracting, construction management, and estimating discipline, we then were blessed with 20 years as expert witnesses paid to investigate construction defects and create the most cost effective solutions. We got paid to refine a science-based investigation framework, and we proved time and again that it worked to figure out what needed to be fixed, what did not, and how to do it. Now we combine (1.) the investigation framework and (2.) the professional contracting discipline for building owners, managers, and receiverships to save money and get the closest thing to a guarantee of quality possible. Our Building Rehabilitation Process help clients make intelligent, fact-based decisions about building design, construction, maintenance, repair, and improvement, while considering the entire service-life and lifetime-costs of the property.

These services generally cost 5-15% of construction cost and they ALWAYS save more than they cost. Sometimes as much as 90% (Really… We have case studies to prove it.). 

How this saves

  • Only do necessary work
  • Competition
  • Accountability (The Golden Rule)
  • Change Management
  • Good construction specifications, executed competently, last longer
  • High quality construction lasts longer
  • Dramatic reduction of risks
  • Leverages the time value of money
  • Less drama

Phase 1. Evaluate Property

1A. Before Inspection

  • First 10 Things
  • Plans
    • Site Plan (From public records if possible, transferred to 11x17)
    • Roof Plan (Buy it online and transfer to 11x17)
    • Floor Plans (Footprint from having purchased the roof plan, transferred to 11x17)  
  • Room Schedule (Printed 11x17)
  • Window & Door Schedule (Printed 11x17)
  • Budget Form (v. 1) (Printed 11x17)

1B. During Inspection

  • Photos & Notes
  • Interviews
  • Update Plans, Schedules & Budget

1C. After Inspection

  • Property Condition Assessment (PCA) / Property Condition Report (PCR)
  • Update all above from inspection documentation
  • Site Plan
  • Roof Plan
  • Floor Plans
  • Room Schedule
  • Window & Door Schedule
  • Budget Form (v. 2)

Phase 2. Define, Budget & Specify

2A. Scope - Budget - Schedule

  • Scope of Work
  • Budget (v. 3)
  • Progress Schedule (v. 1) Form

2B. Making Smart Decisions

  • Project Status Memo
  • Project Status Meeting

2C. Specifications Update, including

  • Plans
  • Schedules

Phase 3. Pre-Construction

3A. Package RFP

  • Invitation to Bid (memo)
  • Plans
  • Schedules
  • Scope & Specifications
  • Schedule of Values / Bid Form
  • Progress Schedule
  • Payment Application Form
  • Contract (form) 
  • Quality Control Hold-Points
  • Subcontract Agreement Form and Requirements

3B. Tendering

  • Identify All Possible Qualified Bidders
  • Receive and Analyze Bids
  • Recommendations Memo
  • Budget (v. 4) Update

3C. Preparing for Takeoff

  • Project Status Memo
  • Project Status Meeting

3D. Contracting, including

  • Plans
  • Schedules
  • Scope & Specifications
  • Schedule of Values
  • Progress Schedule
  • Payment Application Forms
  • Compose and execute prime contract between Owner (or Receiver) and Contractor
  • Quality Control Hold-Points
  • Subcontract Agreement Form and Requirements

Phase 4. Construction & Project Close

4A. Project Kickoff

  • Coordinate Work
  • Project Meetings
  • Project Correspondence

4B. Verify Quality. Compare work to: 

  • Plans
  • Schedules
  • Scope of Work & Specifications
  • Industry & Trade Standards

4C. Construction Management

  • Change Management: 
    • RFI and RFI Log
    • COs and CO Log
  • Payment Processing
    • Schedule of Values
    • Progress Schedule
    • Payment Application
  • Project Status Memos

4D. Project Close

  • Budget (v. 5) vs. Actual
  • Project Close Memo

PFCS is Helping a Neighbor Keep His Home

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A Sad Story

Unfortunately not everyone who needs the unique experience and expertise that Pete Fowler Construction Services, Inc. (PFCS) has can afford it. Wayne Faulk is a 74 year old developmentally disabled man and the lifetime beneficiary of a trust, set up by his father after his mother died, that was intended to allow Wayne to live in his childhood home for the remainder of his life. Sadly, the trust assets were a tempting target and they were depleted over the years through waste and mismanagement. The Oregonian published the sad story in January 2017, on December 7, 2017 and on December 22, 2017. The property is in Oregon City, OR and has 41 acres of farmland, a 3,000 square foot 1901 farmhouse, a two car garage, a shed and a dilapidated barn.

There Is Hope

Mr. Faulk could stay in the home if the trust could obtain a reverse mortgage against the value of the property. Unfortunately the home and property are not in good enough condition to qualify for a mortgage. Without the reverse mortgage, Wayne Faulk will be moved out of his home. Thankfully for Mr. Faulk, lots of neighbors and caring local professionals have stepped in to help. Mike Maples of PFCS was approached in February 2018 by one of our clients, attorney Steven Cade of Williams Kastner, who asked if we could lend a hand on a case he had taken. Both Mike and Paul Viau jumped in to help, applying our Building Rehabilitation Process, free of charge. 

On Saturday, March 17, 2018 Paul Viau and Mike Maples lead the first community volunteer work day, and made great progress! 

Awesome Neighbors

Please contact Anete Kalnina (T: (503) 660-8670 E: anete.kalnina@petefowler.com) if you are interested in volunteering or donating services or materials. No construction experience necessary! But if you DO have construction experience, we really NEED your help!! 

We need a licensed contractor to demolish the barn, remove the debris, and repair the grade so it's safe. And we need it cheap (not free, but cheap). If you know someone, please refer us right away. It's a great opportunity to a good deed.

We need a licensed contractor to demolish the barn, remove the debris, and repair the grade so it's safe. And we need it cheap (not free, but cheap). If you know someone, please refer us right away. It's a great opportunity to a good deed.

Success is a team sport. And no one helped more than PDX Paint Solutions on this project.

Success is a team sport. And no one helped more than PDX Paint Solutions on this project.

The Property

The barn needs to be demolished and removed from the property. 

The barn needs to be demolished and removed from the property. 

As you can see, the exterior of the residence needs repairs and new paint. 

As you can see, the exterior of the residence needs repairs and new paint. 

As you can see, the exterior of the residence needs repairs and new paint. 

As you can see, the exterior of the residence needs repairs and new paint. 

The interior is generally in fair condition, but requires minor maintenance and repairs to allow the trust, that Mr. Faulk is the beneficiary of, to procure a reverse mortgage, so that he can remain in the home, as his parents had intended. 

The interior is generally in fair condition, but requires minor maintenance and repairs to allow the trust, that Mr. Faulk is the beneficiary of, to procure a reverse mortgage, so that he can remain in the home, as his parents had intended. 

The interior is generally in fair condition, but requires minor maintenance and repairs to allow the trust, that Mr. Faulk is the beneficiary of, to procure a reverse mortgage, so that he can remain in the home, as his parents had intended. 

The interior is generally in fair condition, but requires minor maintenance and repairs to allow the trust, that Mr. Faulk is the beneficiary of, to procure a reverse mortgage, so that he can remain in the home, as his parents had intended. 

PFCS Holiday Party 2017

Introduction

Over the weekend, Pete Fowler Construction held its 2017 Holiday Party! After a lovely reception held at the new office in San Clemente, the team moseyed their way down to the harbor to participate in the 43rd Annual Dana Point Harbor Boat Parade of Lights.

We had a wonderful night filled with food, fun, and more glow sticks than you can imagine. Happy Holidays from the PFCS team!

Photos

The PFCS gang!

The PFCS gang!

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2018 Webinar Topics

"You guys without a doubt are the best in the biz with these webinars. Truly professional presentations that I can apply what I learn." - Senior Claims Technical Specialist for a Major Insurance Company

Introduction

Once a month, PFCS experts present a FREE webinar on a topic in the construction defect field. We have finalized the topics for 2018 and we are excited to share them with you!

2018 Webinar Calendar

Key Learning

  1. Building Performance Evaluation & Budgeting 101 - Analyzing and Monetizing Defects 
  2. Building Inspection & Evaluation (Property Condition Assessment w- E2018) 
  3. Project Planning & Management
  4. Building Leakage Evaluation (Evaluating Water Leakage of Buildings ASTM E2128) 
  5. Analyzing Construction Defects 
  6. Budgeting & Estimating Building Maintenance, Repairs & Improvements
  7. Managing Construction, Building and Property Maintenance, Repair & Improvements 
  8. Contracting 101
  9. Critical Path Method (CPM) Scheduling
  10. Allocation of Responsibility of Construction Defects 
  11. Building Lifecycle Management
  12. Construction Document Literacy
  13. SB800 - CA Builders Right to Repair
  14. Random Selection & Extrapolation 
  15. Expert Witness Success

The PFCS Weekly Planning Method

Who, What, and Why

Getting the right things done is hard. I have never met a professional who does not struggle with it. The pace of modern life and business has quickened, the margin for error is smaller, and the pressure to produce results has increased.

I have studied the subject of personal productivity extensively. Mostly because being focused and productive do not come naturally for me. I've joked since the 90s that "If it weren't for spell-check and my day-planner, I would have to push the hamburger buttons at McDonald's." FranklinCovey company has a great system for Daily Time & Task Management, and we have been sending our employees through their programs for almost two decades. But I have yet to find a fully "engineered" system for translating "big-picture" goals, project management milestones, and individual action steps, into a reliable system for getting the right things done in our business; so I created my own.

Living in a way that integrates our values, big picture goals, plans and projects with your daily time and task management system is hard. I hope this helps. It's the best I have come up with so far. 

Everyone should agree that it is better to do the right thing slowly rather than doing the wrong thing fast, but how do we know if we are “digging in the right place” or not? The answer is Weekly Planning and daily focus on that plan. I have found that the best time for me to do this is the weekend before the upcoming week (except for Sunday night right before bed, which is a terrible idea if you're really busy), but any regularly scheduled time is probably OK.

All PFCS staff are obliged to come to our Weekly Staff Meeting with the following information:

  1. What you are doing during business hours for the following week
  2. What you have due (Deliverables) during the next week or in the near future
  3. How much time do you have available during the next week

How: Summary

Let's be clear: This is "a" system, not "THE" system. It is one way that works for some people. If it does not work for you, then this system should at least be some help in developing your own system that allows you to exercise dominion over your schedule, rather than being a victim to the million little pieces of our work lives that can enslave us. For PFCS, the measure of success is simple: Can you consistently show up to our Weekly Staff Meeting with a plan for the next week that includes a schedule of where you are going to be, a list of what you have due, and an estimate of your available time.

Definitions for Key Terms

  • Milestone: An event that marks the completion of a Deliverable, a Hold-Point on a schedule, or a flag in the Project Plan to highlight completed work; often used to ensure project progress. 10.
  • Deliverable: A measurable, tangible item produced during project execution. Some are external and subject to approval, but some are internal only.
  • Big Rocks: The most important things you have to accomplish. If you have not watched the Big Rocks Video by Franklin Covey, do so. It's awesome and 10-minutes very well spent. See the link in Awesome Resources at the bottom of this article. 

To use this weekly planning system, first set aside time to plan the week ahead, print the Weekly Planning form, and either print a Weekly Calendar or use your normal calendar. Quickly review and summarize your (1.) Values, (2.) Mission and big-picture (3.) Goals. (4.) Compile and review your previous Weekly Plan, calculate the percentage of success for the last period, Project Plans and (5.) Master Task List (MTL), adding critical activities, Deliverables and Milestones to your Weekly Planning form as you go. Make sure all your (6.) "Hard Calendar" appointments are blocked-out on your Weekly Calendar and calculate the amount of (7.) "Discretionary Time" available for completing your critical Deliverable and Milestone activities. (8.) Estimate the duration of time required to complete each of the Deliverables and Milestones identified on the Weekly Planning form, and prioritize each, first by categorizing with an A, B or C, and then sequentially numbering within each category. (9.) "Soft Calendar" (apply) each of the activities required to accomplish the Deliverables and Milestones identified on the Weekly Planning form, to the Weekly Calendar. Finally, exercise discipline on a daily basis to in taking (10.) action in working toward accomplishing what is most important.

How: More Details

  1. Values: Same every week. Write Values as a weekly reminder.
  2. Mission: Same every week. Write Mission as a weekly reminder.
  3. Goals: Annual and Quarterly goals.
  4. Plans: Project Plans and Goals / Plans with many Actions. Review the previous week's Weekly Plan. Calculate your percentage of successes based on completion of Milestones / Deliverables. Forward incomplete items to the Master Task List (MTL) for re-prioritization. As an example, you should have a Project Plan for every PFCS project under management. In addition, you might have a plan to get a certification or degree that has many incremental steps. You might have a Fitness Plan that has many steps. Any multi-step project that is worth doing is worth having a written plan. In order to make sure you decide well which tasks you will get accomplished, you need to collect all of your plans and review them from "above the game". Get perspective on where you can and should spend your valuable time.
  5. Master Task List (MTL): Keep a separate list of all the tasks you need to complete. This is not the same as your Daily Tasks or the Weekly Plan.
  6. Hard Calendar: Hard Calendar items are those which are set and would be considered unacceptable to miss. For us, hard calendar items are the Weekly Staff Meeting, a Quarterly Review, Inspections, Meetings, Testimony, etc...
  7. Discretionary Time: Calculate the number of work hours you have available, subtracting Hard Calendar items. For example, if Monday of next week is a holiday (40-8=32), you have an inspection all day Tuesday (32-8=24), a half-day meeting on Wednesday (24-4=20) and the Weekly Staff Meeting (20-1=19), you only have 19 hours of discretionary time.
  8. Milestones: Milestones, Deliverables or "Big Rocks" as Stephen Covey says: Add them to the Weekly Planning sheet. Include an estimate of how much time this task will take. Once you have all of the items you think you might be able to accomplish in the week, during your discretionary time, prioritize them; first with letters A, B or C. A is critical and you should not do any thing else until this is complete. B is a really important milestone or deliverable and should be completed but the world would not stop spinning if you did not. C would be really great to do, but not until all of the A and B items are complete.
  9. Soft Calendar: Put blocks of time (in pencil) on the Weekly Calendar to complete the activities from your Weekly Plan list of Milestones / Deliverables / Big Rocks.
  10. Action: Exercise the discipline to return often, at least once daily, to the Weekly Plan. Stay focused on the tasks as you prioritized them.

Weekly Planning Forms

Milestones/Deliverables/Big Rocks & Planning Steps

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Weekly Calendar View & Daily Tasks

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Sample Milestones/Deliverables/Big Rocks

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Weekly Calendar View

These tools operate as both sides of a valuable coin. The Weekly Planning Form is a simple task list with columns for prioritizing Milestones or Deliverables and a place to estimate the time needed to accomplish the desired end. The Weekly Calendar View is for blocking out time so that we avoid the dreaded “over promise and under deliver” syndrome that so many of us suffer from today. The Weekly Calendar View is best for Weekly Planning but if you have a planner with a calendar, then respect the fundamental planning rule of “use only one calendar.”

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Practice

The 10 Weekly Planning Steps

These steps are repeated weekly and daily.

  1. Values
  2. Mission
  3. Goals
  4. Plans
  5. Master Task List (MTL)
  6. Hard Calendar
  7. Discretionary Time
  8. Milestones
  9. Soft Calendar
  10. Action

How: Deeper Thoughts on the Planning Steps

Remember: The Weekly Planning process is iterative.

1. Values

  • If you have been through the Franklin Covey Focus course, then this will be easy; just review your list of personal values.
  • Everyone will come face-to-face with difficult situations. Sometimes we have to tell people no. Values help us to make hard decisions. Making explicit our values makes the decision making a little easier. We all have values that we will not violate for money or career advancement. What are yours? The funny thing is, we earn more respect in the end for making hard decisions that are consistent with our values.
  • Consider reviewing PFCS Core Values.

2. Mission

  • Why are you here (both in general and here at PFCS)? This is the question that is answered with your mission and purpose.
  • If you have been through the Franklin Covey Focus (or similar) course, then this will be easy; just review your Personal Mission.
  • Naturally, almost every person and business will have to spend some significant amount of time doing the work that “pays the bills.” For some, this is directly “on-mission” but for most, we have to squeeze in the work of moving closer to the fulfillment of our mission. When we have a written mission, we can look at our Weekly Plan and decide if we are dedicating enough time to the fulfilling our mission. We are more apt to take the many steps in our 1,000 mile journey toward fulfillment of our mission if we revisit that mission every week.

3. Goals

  • If you have been through the Franklin Covey Focus (or similar) course, then this will be easy; just review your Personal Goals.
  • Some of your Professional Goals with PFCS have been identified already in your Job Description and KPIs: Project Planning and Management, shipment of Deliverables, Billable Hours, Training Milestones, etc… Keep this list handy and review it every week during your planning time.

4. Plans

  • For each Goal or PFCS Project you should have a Project Plan that identifies the Objective, Method, Deliverables / Milestones / Big Rocks, and Actions required to achieve it (see PFCS Project Planning for a step-by-step method).
  • Review and prioritize your Plans.
  • Add Deliverables / Milestones / Big Rocks to the PFCS Weekly Planning Form

5. Master Task List (MTL)

  • You will or should have a Master Task List (MTL) in your planner for things that you need to do which are not on a Project Plan.
  • Review and prioritize your MTL.
  • Add items from your MTL to the PFCS Weekly Planning Form.

6. Hard Calendar

  • Hard Calendar items are items blocked out on your calendar for things like meetings with clients or other activities with firm dates and times (also see Soft Calendar items below).
  • Review your Hard Calendar items and confirm them.
  • This includes standing meetings.
  • These items are time specific and relatively inflexible.
  • Include travel time in your calendar. 

7. Discretionary Time

  • Discretionary Time is working hours that are not consumed with Hard Calendar items.
  • Calculate Discretionary Time by adding up your working hours that are not consumed with Hard Calendar items.
  • This is time you have available to work on Deliverables / Milestones / Big Rocks.

8. Milestones

  • The milestones should come from the Deliverables section of your Project Plans, Life Plan, Annual Plan, Quarterly Plan, and from your Master Task List (MTL).
  • Deliverables / Milestones / Big Rocks are what you need to accomplish this week.
  • When you see house movers load a truck, they always put the big stuff in first (i.e Big Rocks) and then fill in the truck with the smaller items. If done in reverse, the big stuff simply won't fit very well, if at all. Don’t put the small stuff in first. That is how life and success works too.
    • A = Critical and Must Be Completed
    • B = Really Important
    • C = It Would Be Great
  • Within each category (ABC), assign a number corresponding to the chronological order things need to happen in.

9. Soft Calendar

  • Soft Calendar items are time you block out of Discretionary Time to work on Deliverables / Milestones / Big Rocks that you need to accomplish this week. This is in contrast to Hard Calendar items, discussed above.
  • If something critical comes up, it is easy to re-shuffle Soft Calendar items, as long as the deadline is not too close for that that Deliverable / Milestone / Big Rock.
  • These are items that are time-flexible; that is, they don't need to be done at the time set on the calendar.

10. Action

  • Exercise discipline in keeping to the plan.
  • Refer to and revisit the Weekly Plan and Daily Task List many times per day and throughout the week to help you stay focused.
  • If something comes up that makes you vary from plan, then change the plan.
  • Document what you spend your time on.
  • This is really hard.

Schedule Crashing

"Crashing is the technique to use when fast tracking has not saved enough time on the schedule. It is a technique in which resources are added to the project for the least cost possible. Cost and schedule tradeoffs are analyzed to determine how to obtain the greatest amount of compression for the least incremental cost."

So what if we plan our week, but we realize that we don't have enough Discretionary Time to accomplish what needs to get done? Do we just use "The Prayer Method"? I had a great mentor who used to say to me "Pete: Hope is not a strategy." My smart aleck retort was always that "hope" IS a strategy; it's just a terrible one! So our choices are limited if we realize we don't have enough Discretionary Time to accomplish what we need to get done:

  • We can decide to just lower our expectations;
  • we can work overtime;
  • we can renegotiate our way out of other "Hard Calendar" obligations to free up Discretionary Time; or
  • we might "add resources" (a project management term and strategy) by delegating some of the work to others. 

What ever you decide, neither The Hope Method or The Prayer Method are acceptable. 

Planning and Managing a Life 

Components of A Life Planning & Management System

  1. Life Plan: A document that memorializes your Values, Mission & Life's Goals
  2. Annual Plan
  3. Quarterly Plan (Optional for personal, MUST have for business) 
  4. Individual Project Plans with SMART (Specific, Measurable, Assertive, Realistic, and Timed) Milestones
  5. Master Task List (MTL)
  6. Calendar
  7. Weekly Plan: Without this, you can get lost in the forest of daily planning. 
  8. Daily Task List: This is on our Weekly Planning Form, but if you don't use it, you'll need a permanent place that you look to often throughout your day to keep focused (or in my case, to constantly re-direct myself back to the plan). 
  9. Journal (Permanent record that's carried with you virtually everywhere you go)

How I Do This Now

This material was originally written and published as an internal company training back in 2007, or maybe even before. So of course there are changes in technology. Also, my role has been evolving from individual contributor, with a BUNCH of little tasks that needed to be accomplished, to the leader of a larger group. As the leader of a larger group, it's become more important that I accomplish a small number of critical things, compared to my role as an individual worker. 

Components of MY Life Planning & Management System

  1. Life Plan
    • I have a written Life Plan in Google Docs that gets updated every few years (It's 3 years old right now. 
    • I have done this many times throughout my life.
    • The more I plan and the more I revisit my plans the more successful I am. During the times in my life that I have not looked at or updated my Life Plan, I have been less successful. 
    • I highly recommend using Keith Ferrazzi's 6 Steps to Set Your Goals for Success.  
  2. Annual Plan
    • I have a Daily Meditation that I review often, although not daily. When I find myself off-track, reviewing this every day is a great way to get me focused.
    • I used to spend some time between Christmas and New Year's to review the previous year's plan and update the plan for the year to come. I am going to get back to doing this. 
  3. Quarterly Plan
    • I have sometimes done this for my personal planning, but I get too busy to update them every quarter. 
    • For business, we create Quarterly Plans for the Business, Marketing & Sales, and Information Technology, each with a list of the 3-9 Big Rocks from the previous quarter on a single PowerPoint slide and how we performed compared to those goals, then we list 3-9 SMART Big Rocks for the current quarter on a single PowerPoint slide, then each of the Big Rocks gets it's own individual presentation slide with sub-items, actions or milestones that will lead or contribute to accomplishing that objective. 
    • In 2018 we will have quarterly plans for each of the following: Business (over-all), Marketing, Finance, Operations Management, Technical Management, Information Technology. 
  4. Individual Project Plans with SMART Milestones
  5. Master Task List (MTL)
    • I am using SimpleNote (simplenote.com). See notes in Weekly Plan below. 
    • I am seriously considering going back to a paper journal 
  6. Calendar
    • I now use a shared Google Calendar. 
    • For many years I used a paper calendar, and if I were working alone and the calendar did not need to be shared, I would return to it.
    • I have gone back and forth from electronic to paper planning and back many times. I don't know that I will ever stop going back and forth. I think I might just be a person who needs something new from time to time.  
    • When I  am using a paper journal, I screen shot and print the weekly view of my Google Calendar and tape it into the paper journal on the page opposite my Milestones/Deliverables/Big Rocks page.
  7. Weekly Plan
    • Right this minute I am using SimpleNote (simplenote.com). It synchronizes with cloud so I can open it as a tab on my desktop or laptop, as well use it from any hand-held device (I use an iPhone). It's like a really slimmed-down version of Evernote. It's text only, and I like it that way. I have had a couple instances where I lost some data due to synchronization problems, but I think those qualified as "Operator Errors." The point is that it, like any other system, is not foolproof. 
    • My Weekly Plans and Daily Task Lists are in the same page or file in SimpleNote. 
    • This is not ideal for me, and I am seriously considering going back to a paper journal, because paper is more visual and my learning style is to write things out and look at them. 
    • When I was last using a paper journal, I would purchase various hard-bound journals with lined pages. I draw the Milestones/Deliverables/Big Rocks & Planning Steps on a full page and I screen shot and print the weekly view of my Google Calendar and tape it into the paper journal on the page opposite my Milestones/Deliverables/Big Rocks page. 
  8. Daily Task List
    • I am using SimpleNote (simplenote.com). See notes in Weekly Plan above. 
    • I am seriously considering going back to a paper journal.
  9. Journal
    • I am using SimpleNote (simplenote.com). See notes in Weekly Plan above.
    • Each month gets it's own Journal page/file/document in SimpleNote. 
    • I number each note I take throughout each day. The second note I take on the 15th day of each month would be numbered "15 b." So if I write down thoughts about a new blog post, and I want to make a note in my MTL for easy reference I would write "Blog Notes: See 2017-10-15 b." And I would know to go to the second journal note from 10/15/2017. 
    • I am seriously considering going back to a paper journal.

Awesome Resources

This is in no particular order (which is SO unlike me!). 

  1. Weekly Planning and Weekly Calendar Forms (Blank)
  2. How to Plan Your Week video from Art of Manliness (This is REALLY good)
  3. Getting Things Done from Ivy Lee via Mary Kay
  4. Dr. Stephen Covey's Big Rocks Video. (FranklinCovey keeps having this video removed so if the link does not work just search YouTube)
  5. Big Rocks Video from Art of Manliness
  6. The Effective Executive by Peter Drucker. Drucker is the Godfather of management theory, and this book is his seminal work. If you're a manager or trying to be more effective as an individual, and you have not ready it, then you're not trying hard enough. Here is an interesting 7-minute summary video.
  7. The Seven Habits of Highly Effective People by Covey
  8. The Ten Natural Laws of Time and Life Management by Smith
  9. First Things First by Covey
  10. What Matters Most by Smith
  11. Time Management from the Inside Out, Second Edition: The Foolproof System for Taking Control of Your Schedule -- and Your Life by Julie Morgenstern
  12. Getting Things Done by David Allen
  13. The ONE Thing by Gary Keller 
  14. Keith Ferrazzi's 6 Steps to Set Your Goals for Success
  15. Goldman Sachs 10,000 Small Businesses: If you're a business owner, I HIGHLY recommend this program. I have done lots of executive education and it's the best so far; and it's FREE! The conclusion of the 4-month program is that you compose a business plan focused on growth that they call your "Growth Plan."
  16. One-Page Personal Plan (OPPP) from Scaling Up and Verne Harnish. 
  17. To Do Doing Done by G. Lynne Snead and Joyce Wycoff. I love this book and think it's awesome. 

How To Write by Meyer & Meyer

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I have been inspired significantly by this book called How To Write by Meyer & Meyer. It’s excellent and the paperback can be purchased for as little as $1.99 or downloaded to your Kindle for $5.49 on Amazon. I assure you: This is the very best ROI on an investment in yourself in human history. Buy the book. Read the book. Do what the book says to do.

The Meyer & Meyer Writing Process

1.0 Preparation & Organization

1.1 Choose your format

1.2 Identify your points

1.3 Collect data regarding the points

2.0 First Draft

2.1 Compose your theme (Introduction)

2.2 Draft your outline (from the points identified in 1.2)

2.3 Write first draft

3.0 Polishing (make multiple passes to improve the previous draft)

3.1 Be accurate

3.2 Be precise

3.3 Be consistent

3.4 Be brief

3.5 Be Fair

3.6 Keep a steady depth

3.7 Keep a steady tone

3.8 Use an established layout (corporate look & feel)

3.9 Use good grammar

Here is My Book Summary

Writing is critical. Writing is a process. The writing process is always the same 3 steps (organize, draft, polish). Don’t try to do step 2 until you have completed step 1. Some of the steps in writing involve not writing. Figuring out the theme (in a few short sentences) is a critical step and might require some time. Writing takes tenacity. We are entitled to our own opinions but not our own facts. Be clear and concise and cut unnecessary stuff. Use an established layout. Read the work out loud to check for grammar. If there is time, always review the work one more time. Communicating your intended meaning to the reader is the most important thing.

Recommendation

Buy this book. Read it. Use this process as a checklist when you write. Literally: Print out the list and tape it to the wall at your desk. 

Contracting 101

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Explain It Simply

"If you can't explain it simply, you don't understand it well enough." - Albert Einstein

The building industry is terrible at explaining how it does what it does. And this is coming from a guy who has a Bachelor of Science in Construction Management! It’s so bad that I was once working on a construction litigation matter and needed the most basic of organizational charts to explain to a jury the most common roles, relationships, and responsibilities of the various parties involved in a typical construction project; but there was none to be found. I would have loved to have had a reliable source like American Institute of Constructors, The Construction Specifications Institute, the American Institute of Architects, or some similar organization to rely on, to tell my story to the jury. I searched and searched and there was just nothing simple enough to use for a group of people with no construction experience. Everything was overly complex, attempting to account for every possibility. So I locked myself in my office alone one weekend with a pile of flip-chart paper and made iteration after iteration, and finally I nailed it. That was more than a decade ago. Since that time almost every trial or arbitration I have testified in has included some version of this org chart to explain the roles of the parties to one another and to the physical work.

The Contracting 101 Framework

  1. An Owner wants a project, similar to anyone who wants to buy something, such as a car, but with a construction project the product being purchased is not something that is already built.
  2. The Owner goes to an Architect (or in some cases a non-architect designer) to translate his/her desires into a set of documents. This process is intended to “define” what the Owner wants to buy (often from a General Contractor).
  3. The Architect works with Specialty (Sub) Designers such as structural engineers, mechanical engineers and interior designers to further detail the Plans and Specifications (also referred to as Construction Documents) because buildings are so complex that many specialized professionals are required.
  4. The Plans and Specifications are sent to qualified and interested General Contractors, who submit proposals to the Owner. Ultimately the Owner and a General Contractor compose an Agreement (or Contract).
  5. An Agreement for construction is simply a promise by the Contractor to deliver what is described in the Plans, Specifications, and other contract documents, and a promise by the Owner to pay for it.
  6. The Agreement refers to the Plans & Specifications and should include clear definition of the Scope, Budget, and Schedule, including at Scope of Work document that includes: Inclusions and Exclusions, Allowances, a provision for handling Change Orders. The Agreement should include a Schedule of Values and Payment Milestones (for management of the Budget). And finally, the Agreement should include a Progress Schedule. 
  7. GCs usually hire specialty trade contractors, commonly referred to as Subcontractors when they are working for a prime (or general) contractor, who are specialists in their respective trades, to help deliver what has been promised in the Agreement. This is, again, because buildings are so complex that many specialized professionals are required.
  8. There is nothing in this scheme that prohibits the Owner from directly hiring Specialty/Trade Contractors (that are called Subcontractors if they are working for a General Contractor) for work that is not in the Scope of Work in the Agreement with the GC. In this situation they are Prime Trade Contractors.
  9. Most of the Subcontractors, and Prime Trade Contractors, have their own suppliers and subcontractors: these are called Sub-Subcontractors. (See diagram below)
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Using the Contracting 101 Framework

So the point of the Contracting 101 Framework is to foster understanding of the project at hand. Begin by printing the diagrams above and writing the names of the project players over the generic descriptions. Virtually every project will be different than the Contracting 101 Framework, so you might have to compose multiple iterations, moving the boxes around to fit the peculiarities of your project. I often do this in my office where we have multiple whiteboards and I move back and forth from one to the next until I get my organizational chart to accurately reflect the complexity of the roles and relationships of the current situation. The "compare and contrast," from the simple "Contracting 101 Framework," to the complexity of the real world, is often incredibly instructive. 

Sample Project: Custom Single Family Residence

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This project was a train wreck. 

The Architecture firm and the General Contracting firm were both owned by the same person, but the Owner did not know that (which is unethical and illegal without following strict consent laws). By the time the Owner tried to get control of the project, the two firms had taken $3.5 million dollars to turn a $2.9 million home (initial purchase cost) into a lumber pile. The contract called for distinct design phases but the design was never finished, and it called for the Architect to serve as the Construction Administrator (Owner Representative), but that was a sham since the entities are so closely related and have employees who work for both businesses. The construction work, based on an incomplete design, was executed negligently at inflated prices. The construction work onsite should have been halted long before it was. When the Owners finally asked for a legitimate halt to the construction work, to sort our a plan to go forward, both entities terminated the agreements (using the same lawyer) and engaged in a scorched-earth litigation policy that ensured the maximum economic damage possible from this terrible situation.

Sample Project: Construction Site Accident

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Above is a slide from a 2010 trial presentation. This case came precariously close to trial. 

The project was a four story 445-unit apartment community. The property Owner was also the developer. The General Contractor entered into a cost-plus prime contract with Owner. The General Contractor entered into an agreement with the Plastering Contractor for $6.5 million. When asked by the General Contractor to perform scaffolding work outside their scope, the Plastering Contractor contracted with a specialty Scaffolding Contractor to furnish a system to access the interior walls of the air shafts at the project. So the key parties included the Owner, General Contractor, Subcontractor (plaster), Sub-Subcontractor (scaffolding), and all of their respective staff. 

The injured individual was the crew lead for the Sub-Subcontractor. That day he was part of a three-man crew setting up scaffolding in an air shaft of one of the buildings. The crew was removing the temporary wood flooring previously installed by another subcontractor and the injured employee fell approximately 35 feet to the concrete floor below. 

Sample Project: Claim for Nonpayment / Counter Claims for Defects & Delays

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This project was the complete renovation of a commercial retail center. The Owner entered into a direct contract with our client, a Paving Company, as well as many other contracts with prime and trade contractors. The Owner had an independent contractor, who was a formerly licensed general contractor, on-site as a supervisor. Our client's initial complaint and mechanics lien were filed to collect $282,400 in work performed. The Owner cross-complained that the work was not completed in the 30-day agreed time limit, that some items were not completed ever, that some work was performed that was outside the contract scope of work (all of which had very sensible explanations).

The primary argument the Owner / Developer was trying to make was that they were NOT playing the role traditionally played by a general contractor or construction manager (which was RIDICULOUS). The Contracting 101 / Roles & Responsibilities Analysis PFCS performed in this matter, particularly the organizational chart above, made their argument seem silly (because it was). 

Sample Project: Condominium Conversion

This project arose from construction defect allegations related to the conversion of a 32 unit apartment complex originally built in 1975 into condominiums. The Developer/Converter purchased the 32 unit apartment complex and almost immediately began the conversion to a condominium complex utilizing a Specialty General Contractor (our client) and many other other contractors. Plaintiff alleged that the Specialty General Contractor's scope included defective work. Our client was a general contractor who, according to invoices, performed property maintenance, repair and improvement work related to the conversion including demolition, work in garages, on balconies, stucco, fences/gates, finish carpentry, doors, and electrical totalling $186,165.00.

One of the key allegations was that our client was THE General Contractor, which was not the case. You will see from reading two and a half pages from the 56 page report that our Roles & Responsibilities analysis made clear that the Owner/Developer was in the drivers seat for all important decisions on this project. 

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