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Case Studies

A Homeowners Association in Trouble

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

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.

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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

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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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. 

Slip & Fall Outside of a Nightclub

The Problem

A man was attending a comedy show at a shopping center in California. After the show ended, he stepped out onto the patio and slipped on a wet metal strip that was the transition between the wood and concrete walking surfaces of the patio, and suffered serious injuries. He alleged that several patrons had slipped and fallen on this metal strip before, also resulting in injuries, and that the Owners of the building had been made aware of this prior to his incident. He also alleged that the Owners and their Property Managers were negligent in their use and maintenance of the building, in that they knew the metal strip on the decking caused an unreasonable risk of harm and despite this knowledge, took no steps to repair, protect against harm, or give adequate warning of the condition.

The Solution

PFCS was hired by the Owners on a tight schedule with depositions coming within two months of retention, so we put our limited time to good use. We conducted a forensic inspection, documenting site conditions with photographs, field notes and diagrams; analyzed the available documents including plans, leases, incident reports, and deposition testimony from various parties; researched and analyzed applicable building codes and standards; and collected climate data for the day of the incident. Based on the totality of our analysis, we drew our conclusions and presented them at deposition:

  1. The pedestrian walkway was not a dangerous condition.

  2. The deck assembly complied with the applicable building code.

  3. The deck assembly was constructed of quality materials, in a workman-like manner, and remained in good condition after almost a decade in service.

  4. The metal transition between the wood and concrete walking surfaces was not a defective condition.

  5. Light rain was recorded on the afternoon and evening of the incident. Dry concrete and dry wood would absorb the precipitation immediately, within a few minutes. There were gaps within the dissimilar material which would facilitate drainage from the flat surface of the metal channel. Capillary action will cause water to run off the edges into the gap.

  6. There was no evidence that the Owners had been informed prior to this litigation that the metal transition between the wood and concrete walking surfaces was the cause of a fall leading to injury.

  7. There was no evidence that the Owners were negligent in their use or maintenance of the exterior walking surfaces generally, nor specifically related to the metal transition between wood and concrete walking surfaces.

  8. The exterior walkway was the location of regular public events with many people safely using the walking surface without incident, and the deck assembly was in service as is for nearly a decade without a similar incident related to the metal transition between the wood and concrete walking surfaces.

  9. The Owners had standard operating procedures in place to warn users of the walking surface that it was slippery when wet.

Ultimately, the case went to trial, and based on our testimony, the Owners received a verdict in their favor.

Construction Cost Estimate for Water Damage in Condo

The Problem

This project concerned water-related damages to a unit in a low-rise condominium building in Encino, CA. One morning, a second-floor resident, the Plaintiff, heard noises from upstairs that sounded like someone was working on the plumbing system. That evening, the downstairs neighbor, informed the Plaintiff that water was coming through the ceiling and dripping down the chandelier in the lower unit. The Plaintiff then noticed water gushing from her own sink and spreading into the kitchen, dining and living rooms. The resident on the third floor (Defendant) in the apartment directly above the Plaintiff’s had hired a plumber to clear a clog in the pipes. The plumber used a device that forced highly pressurized water through the pipe which, in turn, caused the Plaintiff’s pipe to burst. After the incident, the Plaintiff hired an “Expert” who estimated the cost of repair for the damages at over $170,000.

The Solution

PFCS was hired by the Defendant to conduct a site inspection at the Plaintiff’s apartment and deliver our own cost-of-repair estimate for the damages observed. During our inspection, we learned that the Plaintiff’s Expert had considerably overestimated the cost of certain items, including cabinets, flooring and content storage. We delivered an inspection summary of the damages caused by the water event and a corresponding estimate totaling around $45,000. The case went to trial and due to our Expert witness testimony, the Plaintiff was only awarded about $46,000 for construction-related damages and another $14,000 for non-construction-related issues. The Plaintiff was awarded a total of $60,000; Over $100,000 less than what was originally proposed. The jury found that our estimate reflected what the Plaintiff had already been paid and would be a sufficient amount to address the damages.

Plumbing Leaks in High-Rise Condo

The Problem

This project involved a mixed-use 12-story art building that was built in the early 2000's. The first four levels of the building are a combination of retail and parking, and the upper eight levels are residential units. Beginning in January 2008 and continuing for the next year and a half, leaks from burst pipes in the CPVC plumbing system were discovered in the fourth-floor garage, residential and commercial units. The Owner spent $575,000 repairing the damage, so the subcontractor that installed the CPVC plumbing system in the building was served a "notice of defect". The Owner then retained an Expert who recommended a full water distribution system replacement.

The Solution

PFCS was hired by the plumbing installation company, and applied our Building Performance Analysis (BPA) Process to the problem:

  1. Document & Information Management

  2. Meetings & Interviews with Key People

  3. Building Information Management

  4. Inspection

  5. Analysis

  6. Testing

  7. Estimate

  8. Report / Repair Recommendations

PFCS reviewed the original design documents, product installation manuals, product testing, and required code compliance. Conflicts between drawings, project manuals, product manufacturer literature and code were discovered and then resolved through numerous expert meetings. PFCS also attended testing by a 3rd-party forensics company, and surveyed and mapped out the building plumbing system, with isolated issues noted throughout. A favorable resolution was negotiated between the original subcontractor repair scope and the full system replacement as recommended by the Owner's Expert, with the value of the negotiated repair scope being less than 10% of the system replacement! PFCS was notified afterwards that, "The case has settled, in no small part because of your help."

Nightclub Construction Audit

The Problem

A historic 1921 downtown Los Angeles building was converted into a 4-level, above and below-grade nightclub. The repairs and retrofitting of the above-grade structure, as well as the build-out of the nightclub, were paid for by the Tenant. A dispute arose between the Tenant and Owner related to the $3 million cost of the work claimed by the Tenant, who was in bankruptcy, for the retrofit/repair (Owner responsibility) versus the nightclub build-out (Tenant responsibility).

The Solution

PFCS was hired by the Owner to review the project documents and to prepare a report regarding the costs and expenses that could reasonably be attributed to the retrofit of the structure compared to the costs associated with the build-out of the club. PFCS carefully reviewed all of the documents subpoenaed from an accountancy firm, consisting mostly of checks and invoices related to the retrofit process and expenses incurred in updating and refurbishing the nightclub. Following this detailed review, PFCS clearly outlined the costs that were relevant to the nightclub build-out versus the costs associated with the building envelope and structural repairs. PFCS presented the financial analysis in a deposition, which ultimately resulted in a favorable settlement for the Owner.

 

Leak Investigation Involving Solar Panel Installation

The Problem

This project was a 3,900 square-foot, single-family residence in Beverly Hills, CA that was built in 1961. The Owner of the house contracted with our client for the purchase and installation of solar panels. Our client hired subcontractors to install the panels and re-roof under them. Within a month there were leaks.

The Owner’s alleged that the solar panel system was defectively installed and caused water intrusion. Their cost of repair exceeded $80,000. Our client did not believe the leaks were related to their work. The Owners alleged that the roof was sagging under the solar panels which allowed standing water to collect, that there were cracks in the cold-applied roofing cement at the flashing, and that the new area of roofing had not been properly integrated with the older section of the roof. 

PFCS conducting water testing.

PFCS conducting water testing.

Cracking around the cold cement.

Cracking around the cold cement.

The Solution

PFCS was hired by the solar panel company to investigate whether or not the leaks were caused by the installation of their panels. In addition to the leak below the new panels, there were several other leaks that were not below the client's work. PFCS conducted water testing to determine if our client was liable for any of the damages. We found that the leaks below the new panels were caused by our client's subcontractors, but we proved that the leaks in the other areas of the house were unrelated.

We composed and delivered a scope of work (repair) and cost estimate that totaled approximately $25,000 to execute the repairs related to our client's work. PFCS then composed a request for proposal (RFP) and solicited bids from local contractors, which were the same price as our estimate. Because we now had real bids, the owner and our client were able to reach a sensible settlement. The result was a significant savings to our client.

Resources

Click here for a PDF version of this case study.

Trip & Fall: Injury on Stairs in a Historic Hotel

The Problem

This case involved a woman who fell on a small stair in the lobby of a historic hotel. The complaint asked for $700,000 for both medical compensation and lost wages. Specific claims included:

  • The stairs did not comply with IBC and City Codes

  • The stair treads and risers exceeded code limitations

  • The handrail height and location was insufficient

  • The stairs were damaged and chipped

  • There was insufficient traction at the top of the stairs

  • There was insufficient lighting at the black stairs

The building was originally constructed at the turn of the 20th century. The staircase was comprised of two marble steps with three risers located at the main foyer of the hotel lobby. The staircase was remodeled in 1992.

The Solution

PFCS was hired to:

  1. Perform a forensic inspection, documenting the conditions with diagrams, notes and many photographs showing the current layout of the stairs, handrails and lighting

  2. Perform analysis of all available information including building codes and standards

  3. Draw conclusions

  4. Deliver our findings in a report

Unfortunately, the allegations against our client were partially correct and the configuration of the stairs could have contributed to the fall. From our report:

Since the stairs were remodeled in 1992, they should have been in conformance with the current codes and requirements at the time... At the time of the accident, there were several code violations. While the handrails were up to code, both the stair treads and risers violated code requirements.

Regarding the plaintiff’s allegations,

  1. The stairs did not comply with IBC and City of Portland Codes: We Agree

  2. The stair treads and risers exceeded code limitations: We Agree

  3. The handrail height and location was insufficient: We Disagree

  4. The stairs were damaged and chipped: Agree (Somewhat)

  5. There was insufficient traction at the top of the stairs: Disagree

  6. There was insufficient lighting at the black stairs: Disagree

The client was grateful to receive this candid analysis early in the case, and they were able to settle the matter fairly, with minimal further litigation expenses. 

Resources

IRC 2006 Stair Building Code

Click here for a PDF version of this Case Study.

Construction Site Injury: Fall in An Elevator Shaft

The Problem

The project was a new construction of a four-story, 450-unit apartment complex. A workman was removing scaffolding in an elevator shaft and fell three floors. He sustained a traumatic injury and permanent disabilities, so the claim was large. The workman was an employee of a Scaffolding Specialty Contractor. He was working as a Sub-Subcontractor to the Plastering Contractor who had a contract with the General Contractor. The General Contractor had a contract with the Developer/Owner.

PFCS was hired by the attorneys for the General Contractor as a consultant and expert witness to analyze all available project information and to testify regarding the standard of care for a general contractor on a multi-employer work site.

The Solution

PFCS analyzed the construction site incident using contemporary written documentation as well as a testimony from numerous witnesses. We analyzed the contract documents and the applicable standards for safety on multi-employer construction worksites.

We composed a report which included:

  1. A response to each of the allegations in the complaint

  2. Five top-level conclusions that were each backed by 5-20 supporting points drawn from the underlying project data and industry standards

  3. A 61-slide trial presentation of our analysis and findings that contained a step-by-step detailed contract and OSHA standards analysis, including what we call a “Contracting 101 - Roles & Responsibilities Analysis.”
This is a diagram from our trial presentation that was part of our "Contracting 101 - Roles & Responsibilities Analysis." 

This is a diagram from our trial presentation that was part of our "Contracting 101 - Roles & Responsibilities Analysis." 

Our Conclusions

  1. The Injured Party, a “Competent Person” and Foreman who was trained in safety and fall protection, negligently executed the work in an unsafe manner. 
  2. The Injured Party’s supervisor, negligently directed him to proceed with unsafe work.
  3. The General Contractor performed within the standard of care for a “Controlling Employer.”
  4. The General Contractor did not specifically direct or request the Scaffolding Sub-Sub Contractor to [perform the work that led to the fall].
  5. The Scaffolding Sub-Sub Contractor is ultimately responsible for ensuring safe execution of their own work.  

After our work was delivered in sworn deposition testimony, the matter was settled favorably. 

Resources

Click here for a PDF version of this case study.

General Liability Claim: Fall From A Third Floor Balcony

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The Problem

A young woman was attending a party on the third floor of an apartment complex built in 1991 under the Uniform Building Code. She was sitting on top of the balcony guardrail drinking with friends when she fell to the ground and broke her pelvis. She recovered, thankfully, but the insurance company wanted to better understand their exposure to risks associated with the guardrails at the project.

The Solution

PFCS inspected the guardrail at the location of the fall and many other guardrails on the property. We took detailed measurements and documented our professional, forensic investigation with detailed field notes, diagrams and many photographs. Then, we collected project information and analyzed the building code requirements at the time of construction.

The top of the guard rail was 36 ¼ inches above the deck. The applicable building code was 1988. The project is classified Group R (residential), Division 1 (multi-family). The 1988 code Section 1711 calls for a 42-inch minimum height. Section 1711 has a list of “Exceptions: (including) 1. The top of guardrails for Group R, Division 3 and Group M, Division 1 Occupancies and interior guardrails within individual units and guest rooms of Group R, Division 1 Occupancies may be 36-inches in height.” The current code exception applied only to locations “…whose top rail also serves as a handrail…” Although the language of the applicable (older) code section is ambiguous, we were able to find numerous references at the time which indicated the prevailing interpretation at the time did apply to this condition.

Although the guardrail did not meet the minimum requirements of the current code, it was obvious that the building official interpreted the 36-inch guardrail height exception to apply to this condition, so it met the code requirements at the time of construction. In addition, there was no information to indicate an event had occurred since the time of construction that would have triggered a code upgrade requirement. Our client was able to use this information to avoid litigation altogether. 

Resources

Click here for a PDF version of this case study.

Prioritizing Maintenance & Repairs: How to Save Your Community a Million Bucks

The Problem

A 52 unit, 11 building condominium project in the Pacific Northwest had some window and building wall leaks. The project was built in the 1970s as apartments and had been converted to condos 13 years ago. They hired two different building consultants to evaluate the leakage and make recommendations and both told the owners that they needed to remove and replace all the siding and to re-flash 100% of the windows and that it would cost $1 million. The problem was... they didn't have a million bucks. 

The Solution

PFCS collected and analyzed the data from the previous consultants, mapped all data, composed an alternative scope of repair and repair map, composed and tendered a Request for Proposal (RFP), analyzed bids and awarded the work and composed contracts with the appropriate contractual protections for the owners. Finally, we managed the construction and verified the quality of the work. So instead of a million bucks, the owners paid about $50,000, including our fees. They didn't get new siding, but they got another 10 years out of the siding they had, and the savings was tremendous. 

This is the repair map we created after analyzing the work of two other consultants. This scope of repair cost less than 1/10 of their recommendations and saved the Owners $1 million. 

This is the repair map we created after analyzing the work of two other consultants. This scope of repair cost less than 1/10 of their recommendations and saved the Owners $1 million. 

Landlord-Tenant Dispute Arbitration Testimony

Project Overview

Late in 2014, PFCS was hired by the lawyer for a grocery store (the tenant) involved in a landlord-tenant dispute. The tenant decided to not renew the lease after occupying the property for 20 years. The owner (landlord), who had purchased the property 10 years before, wanted $200,000 from the tenant for differed maintenance costs he claimed the store was responsible for, according to the terms of the lease. The tenant claimed that they only needed to pay the landlord $20,000. 

By the time of the arbitration in 2015, the owners estimated repair costs and the claim had ballooned to $600,000, but PFCS estimated only $40,000 in work was required.

Our Approach

PFCS Construction Claims Analysis Method 

  1. Collect: We organized and analyzed all applicable documents and information. 
  2. Plan and budget our work.
  3. Issues/Allegations: We made a Sensible List that served as an outline of the analysis. 
  4. Investigation: We applied PFCS Building Performance Analysis (BPA) Process.
  5. Analysis: We executed an issue-by-issue inquiry of all available information and composed a construction cost estimate.
  6. Conclusions: We documented our conclusions for each issue in a comprehensive report.
  7. Present: We delivered expert deposition testimony and arbitration testimony.

Pete Fowler's Testimony

From Report Section 6: Conclusions

XXX CONSULTING GROUP 12/1/2014 PRELIMINARY COST OF REPAIR ESTIMATE: 

  • Most or all of the estimated costs should have already been incurred, or they were not necessary. Therefore, generally the estimated figures should be considered superfluous. 
  • For the items in sections 1 and 3 where XXX estimated the costs (rather than gathered invoices for expenses incurred as was the case for the section 2 items), these costs should be considered a rough and conservative budget. That is, when the scope is vague, XXX's assumed costs are generally high. 
  • The document lacks adequate scope definition to be considered a reliable construction cost estimate. The document typically does not include specific reference to location, quantity or method of performing the work being estimated. This is another reason the estimated costs in section 1 and 3 should be considered budgetary. 
  • On page 21 of the estimate where items 2.1-2.12 are summarized, they do NOT have the 44% burden added. But on page 1 the burden IS added taking the direct costs paid by the owner of $124,773.35 up to a fictional $179,657.53. This is inappropriate or an error. 

IN GENERAL, THE BUILDING ELEMENTS, ASSOCIATED EXPENSES, AND ESTIMATED COSTS FALL INTO THE FOLLOWING CATEGORIES:

  • The building element was the responsibility of the Tenant and requires repair (This is the only one that should be paid for by the tenant). 
  • The building element was the responsibility of the Owner (Common Area Maintenance) and should have been addressed during the life of the lease. 
  • The building element is exhibiting normal wear and tear and it is not the tenant's responsibility to upgrade. 
  • The building element is past it's useful service life. 
  • The building element is likely to be removed and replaced in the context of improvements for subsequent tenants. 

GENERAL PROJECT OPINIONS: 

  • The costs owed to the Landlord by the Tenant for the move out are less than $50,000.
  • Some of the expenses and estimated costs in the 12/1/2014 XXX Preliminary Cost of Repair Estimate are absurd to suggest that they are building maintenance requirements. 
  • The Landlord's 5/16/2012 estimate for repairs of approximately $100,000 was only twice what was reasonable, and the closest to reasonable and correct analysis and figures from the Owners. 
  • Substantial reconfiguration and upgrades to the project were executed after the termination of the lease and the turnover of the property, which rendered inapplicable some of the arguments over maintenance versus repair.

The Result

In the end, the award by the arbitrator was for the $40,000; which was what PFCS had estimated and testified to during expert deposition.

Construction Claim: PFCS Trial Testimony Saves Contractor $500,000 in Damage Claims

The verdict is in; and a trial victory is sweet! In a recent trial, our client received a 100% defense verdict, with Pete Fowler testifying as the only defense expert. The plaintiff expert claimed more than $500,000 in damages and were awarded $0.

Project Overview

This project concerned a Southern CA theme park ride based on a big-budget action movie. The Owner employed an Owner-Builder project delivery method and contracted directly with a construction manager, Architect/Engineer, and 25 or so trade contractors. Our Client (the Defendant) was a steel fabricator who entered into an agreement as one of the trade contractors in 2010 to provide all labor and materials to furnish and install the Miscellaneous Metals (including cat walks, guardrails, etc...) for $1.8 million. Our Client subcontracted with the Plaintiff, a steel rigging & erection contractor, for almost $800,000 to perform all of the installation, per the subcontract between our Client and the Owner-Builder. Approved change orders to the Plaintiff totaled almost $800,000 which brought the subcontract total to $1.5 million. At the conclusion of the project, after our Client had released the Owner of any further claims, the Plaintiff submitted a claim letter to our Client, demanding more than $500,000 in damages.

Our Approach

PFCS collected, organized and analyzed a tremendous volume of project information, including course of construction documents, deposition and trial testimony, and opposing expert witness analysis. We concluded that the claim was without merit, and all of the claims were either not supported, could have been legitimately changed conditions but not for the plaintiff's own contracting negligence, or just plain kooky! Our client was a bit worried when the plaintiff's expert did an excellent job of packaging the claim professionally and, with a straight face, testified compellingly to the judge that the legitimate damages exceeded $500,000.

Pete Fowler's Testimony

  1. The project did not get so complex that the contract should be thrown out.
  2. Most of the claim is for change orders that should have been addressed using the contract specified means.
  3. Most of the claims (that should have been change orders) are poorly substantiated.
  4. Our Client (the Defendant) was not negligent.
  5. The Plaintiff was negligent.
  6. Pete Fowler disagreed with the Plaintiff's expert on MANY of her findings, particularly her opinion that the contract terms for pricing should be thrown out and a "Modified Total Cost Method" should be applied.

The Court's Order Included Findings

  1. The claim was made late.
  2. The contract should have been followed for change orders.
  3. Plaintiff's claims were not proven.
  4. Some of the claims were already the subject of approved change orders.
  5. Although "exceptionally well qualified in project management, the analysis of job performance and cost estimating" the plaintiff's expert witness did not make her case on numerous grounds (including those also articulated by Pete during testimony). The court found that the burden of proof was upon the plaintiff and they failed to do so.

Resources

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