WE TAKE COMPLEX BUSINESS CASES ON CONTINGENCY

Mitigating Risk in Construction Projects: A Litigation Perspective

Rarely does a movie or television show portray a “normal day” at a construction site. Not including drug empires or mafia meetups (which sometimes happens), there’s bound to be some incident or accident waiting to happen on-site.

In reality, it’s not just another day at the office. Real risks and dangers are everywhere, since construction projects, whether large-scale infrastructure developments or smaller residential builds, are inherently complex endeavors with numerous moving parts – prone to hazards.

There’s a reason you’ll see “Safety First” posters up outside, inside and around the construction site, reminding workers and visitors of the importance of hard hats, steel-toe boots and safety gloves. Safety should be the number one priority.  “Everyone is a safety officer” at a construction site.  If you see something, say something.

From design and planning to execution and completion, mistakes can emerge and accidents can happen, potentially leading to losses, injuries, disputes and lawsuits.

Here’s a litigation perspective on mitigating risk in construction projects:

Clear and comprehensive contracts

Well-drafted contracts are crucial for managing risks in construction. They should clearly spell out the roles, responsibilities and expectations of everyone involved – including contractors, subcontractors, architects and owners. Contracts with unclear language regarding site control, safety responsibilities, OSHA compliance, and means and methods can lead to finger-pointing when there is an injury or accident.  So using precise terms is vital.

Detailed project documentation

Keeping detailed project documentation is essential. This involves maintaining records of all communications, change orders and the project’s progress. Proper records can serve as evidence in case of disputes, and also help establish accountability for any delays or cost overruns.  Every project no matter the size should have daily inspection reports, correspondence logs, and a numeric cataloging system for requests for information (RFIs), change orders, and change directives.  Verbal instructions should be avoided.

Quality control and inspections

Regular quality control and inspections play a significant role in identifying and addressing issues before they become problems or disputes. Ensuring that construction work meets industry standards and complies with contractual requirements and manufacturer’s installation instructions is a key aspect of risk mitigation in construction projects.

REMEMBER, SAFETY FIRST!

Here are additional key considerations that should be addressed:

  1. Aside from insurance, performance bonds, and payment bonds for financial protection, dispute resolution clauses in contracts can streamline conflict resolution.  While an entire article can be written on arbitration vs litigation, at a minimum there has to be clear provisions regarding notices and whether there is a voluntary mediation process prior to litigation or arbitration.
  2. Compliance with building codes, environmental laws, federal OSHA, and state OHSA law regulations is critical to avoid litigation and penalties.
  3. Safety protocols must be rigorous to prevent accidents and liability for injuries.
  4. Maintaining cost control and transparent financial management can prevent billing disputes.
  5. Continuous and open communication among project stakeholders is vital for early issue identification.

Lastly, having legal counsel experienced in construction law can provide proactive guidance on contracts, risk assessment and dispute resolution, reducing the risk of litigation.  Gary August at August Law, PLLC has represented parties on the largest construction projects in the State of Michigan.

By addressing potential issues early and having effective risk management strategies in place, construction professionals can significantly increase the likelihood of a smooth and successful project completion.

Please enable JavaScript in your browser to complete this form.
Inquiring about