How to Win Conflicts or Omissions Every Time

June 2018

 

by Anwar Hafeez, SDC & Associates

Typically, construction contract general conditions provide contractors with a built-in system to deal with conflicts and omissions errors in plans and specifications. Construction owners and architects put provisions in the general conditions under the heading of “Order of Precedence of Documents” (or similar language) that communicate which document governs when there is a conflict between them. The hierarchy usually is:

  1. Contract between owner and general contractor.
  2. Special provisions.
  3. General provisions.
  4. Specifications.
  5. Details on drawings.
  6. Plan drawings.

For example, if the plan drawings and details on drawings conflict, then the details on drawings shall prevail. Or, if the drawings and details on drawings conflict with the specifications, then the specifications shall prevail. The higher element in the “Order of Precedence of Documents” governs or prevails.

The “Order of Precedence of Documents” aims to create resolution in cases of conflict without writing an RFI. However, many contractors are not aware of the distinction between conflicts and omissions between documents. An example of a conflict is when the details on drawings show one thing to construct and the plan drawings show something different to construct. An example of an omission is when the details on drawings show one thing to construct and the specifications are silent and do not indicate anything. The difference is critical, as a real-life example illustrates.

Actual Claim Example

Subcontractor encountered a problem on the last day it was waterproofing a hospital. Subcontractor had completed all of its work on the project, which consisted of installing waterproofing membrane on the footing and turning it up the wall (see Figure 1):

Fig. 1

Figure 1

Inspector told the subcontractor that it did not follow the detail shown in the detail. The detail stated that this is a typical termination detail and the small print stated “Powder-Driven Pin and Washer @ 18” O.C. through continuous anchor strip.” The inspector told the subcontractor that its work is not complete until it complied with this detail.

When you review specifications, you should understand how specifications work:

  • Section 1 – States Scope of Work and related Specification Sections.
  • Section 2 – Specifies the materials to be used on this project and submittal requirements.
  • Section 3 – States Installation Procedures. In this case, it states to install the waterproofing membrane in accordance with the manufacturer’s recommendations among the 12 notes.

Subcontractor reviewed the specifications and found no requirement for installing a “Powder-Driven Pin and Washer @ 18” O.C. through continuous anchor strip.” No material was specified for an anchor strip.

Response to RFI was: “The continuous anchor strip shown on the below grade waterproofing details is a 16 ga metal strip. Submit samples.”

The subcontractor went to the membrane manufacturer, who was horrified and said: (a) No! No! No! You cannot follow this detail; (b) You want to do what? Shoot through the waterproofing membrane and damage it; and (c) This will void five-year warranty.

When informed of this, the architect said that the manufacturer’s response was not acceptable—five-year warranty must be in place. Manufacturer devised a method to install a 2nd layer of waterproofing membrane and mastic to cover the holes created by shooting through the waterproofing membrane. The subcontractor installed this additional work.

Subcontractor asked for this compensation for the extra work. The owner and architect rejected the claim, stating that “since anchor strip is shown on contract drawings, it is part of your contract.

Conflict or Omission?

Owner and architect denied the subcontractor’s claim on the basis of other verbiage contained in the “Order of Precedence of Documents” section of the general conditions: “If something is shown on the drawings but is not in the specifications—it is part of your contract.” This language pertained to omissions, not conflicts.

Owner and the architect saw the anchor-strip installation as an omission problem, when in reality it was a conflict problem. The conflict was between the detail on the drawing and the specification:

  • Detail on the drawing showed a typical termination detail and stated “Powder-Driven Pin and Washer @ 18” O.C. through continuous anchor strip.”
  • Specifications Section 3, under Installation Procedures, said to install the waterproofing membrane in accordance with the manufacturer’s recommendations, which also had a typical termination detail, which the subcontractor followed in installing the waterproofing membrane.

Under the “Order of Precedence,” specifications prevail over details on drawings, and so the subcontractor’s claim was valid, since there were two ways of terminating the waterproofing.

Ten months after the subcontractor’s work was performed, SDC explained the conflict to the owner and the architect and won the “Entitlement for Merit” for this case, over the architect’s protests.

Other Scenarios

In the preceding example, the subcontractor ultimately was able to resort to the order of precedence documents to resolve a conflict and defend its claim. But what if there had been a true omission? The general conditions also stated:

“If something is shown on the drawings but is not in the specifications—it is part of your contract.”

Suppose a subcontractor was working on a project for which plans showed wood base in a room—owner said to install wood base per the contract. However, there was no specification for the wood base. The subcontractor should simply state that since there was no specification for the wood base, it did not know the quality of the wood base to be furnished nor were there any installation procedures specified, since the architect was negligent in not providing this information. Subcontractor’s obligation is to install the cheapest wood base available (pine) along with the cheapest installation. It is likely the owner will say that it wants mahogany wood base and it wants it glued to the wall; subcontractor will get a change order for the material price difference between pine and mahogany plus additional labor installation costs.

Other verbiage in the general conditions that deals with omissions says:

“If something is specified in the specifications but is not shown on the drawings—it is part of your contract.”

Suppose the specifications specified oak wood base and the owner said that it wanted the subcontractor to install it. This time, however, the plans did not show the wood base anywhere. The subcontractor needs to argue that it does not have to install the oak wood base. However, in order to prevail in a claim situation, the subcontractor must explain what the purpose of drawings was for:

  • To do take-off of quantities for the bid.
  • To see locations for installation of specified materials.

Subcontractor must explain that the owner’s architect was negligent in not showing the location of the oak wood base on the drawings. Get the owner to acknowledge that if he did the take-off the wood base prior to bid—he would come up with a quantity of ZERO—thus the take-off at the bid time was a quantity of ZERO and you owe the owner a quantify of ZERO. If the owner wants the subcontractor to install the oak wood base, he has to pay for the entire wood base.

On another potential claim, an electrical subcontractor client called us and stated that on his punchlist, the owner stated that they wanted a redundant fuel oil system for the emergency generator, as required by a note in the specifications. The subcontractor stated that this was a $250,000 problem and what should he do? The owner told the subcontractor that they wanted a credit for not installing the redundant fuel oil system.

After examining the contract documents, I wrote a letter to the owner stating the following:

  • The reasons we have contract drawings is for us to do a take-off of the materials and to show the locations of the installation of materials that are specific.
  • There is no specification section for the redundant fuel oil system, thus no material is specified, so we don’t know the type of pipe to buy to be installed and we do not know the diameter of the pipe to be installed. We have no installation procedures.
  • There is no routing shown on the contract drawings as to the location to install the piping and we do not know which emergency generator requires the redundant fuel oil system.

Mr. Owner, if you and I were sitting together and doing a take-off of all the redundant fuel oil system piping (since nothing is shown), the only quantity we could have bid would have been ZERO and therefore, we owe you ZERO quantity of that redundant fuel oil system. We would highly advise you to take if off the punchlist. The owner agreed and the problem was resolved.

Armed with this knowledge, subcontractors can solve drawing and specifications conflicts and win every time!

Anwar Hafeez is president of SDC & Associates, Inc., San Diego, Calif., a construction claims consulting firm that prepares and negotiates change orders/claims with 99.999 percent success rate; CPM scheduling; and teaching seminars on project management and change orders/claims, (www.sdcassociates.com). Hafeez can be reached at (800) 732-3996 or ah@sdcassociates.com. This article originally appeared in the September 2016 edition of The Contractor’s Compass.

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