by Mark A Cobb, Cobb Law Group

The success of a construction claim is almost always based upon the quality of the documentation provided. Documentation, in this sense, is generally written, photographic, or recorded evidence that supports a subcontractor’s claim. Conversely, proper documentation may be very successful in defeating a claim against another project participant. Given the dollar amounts at stake on a typical construction project and the fact that upper tier contractors are pushing risks down to the lower tiers, it is vital that subcontractors continually document their work in order to protect themselves.

Although there is a great deal of overlap in the way that documentation protects subcontractors, this article discusses documentation in two broad categories:  First, we are going to consider the best practices for a subcontractor to document its claim against a prime contractor or owner.  Second, we are going to look at ways in which a subcontractor’s documentation can be used to defeat a claim from a contractor or owner.

Tips For Subcontractors when Documenting their Claim 

As a project moves forward, Subcontractors will inevitably have claims that arise. Some of these claims are quickly addressed such as a properly authorized, signed change order request. Other claims may not be remedied as quickly. Common claims include change orders but there are many other potential claims such as requests for an extension of time, third-party interference, material delays, and weather-related issues. Most of the requirements for succeeding on such a claim are found in the contracts–the subcontract agreement is the first place to look for this process, but many subcontract agreements incorporate by reference the prime contractor so it may be important to consult both contracts to fully understand a subcontractor’s rights. Key elements contained in the contract will likely include the following:

    a. requirement of a written notice;

    b. a deadline in which to make the notice; 

    c. information or a plan to alleviate the problem; and

    d. an appeals process.

Use Letterhead:  In order to be successful, a subcontractor must comply with each and every requirement contained in the contract. In addition, it is good-measure to exceed the requirements.  

Thus, for example, a contract may require written notice. Do not rely upon a verbal promise; equally important, do not rely upon a text authorization which may, technically, be sufficient as written notice. It cannot be overstated that a written letter, on the subcontractor’s letterhead, should be used in every circumstance in which written notice is required. Letters are inherently more formal; they more often include all of the information to prove a claim; furthermore, letters are the first opportunity that a subcontractor has to begin presenting its perspective on the issue. In addition, a letter allows a potential claimant to explain why there is a claim, who or what is responsible, and when and how it will be corrected. More importantly, if the claim goes to a fact-finder such as a judge or an arbitrator, a letter is easy to submit to the fact-finder as proof that the claim was made properly. Paying an attorney to understand and then convince a judge that an email string or a text string is sufficient notice is very expensive, very time-consuming, and less likely to prove that adequate notice was given.  Frankly, a written notice is the subcontractor’s first opportunity to professionally, succinctly and accurately present its case, and that builds a successful case for recovery.

Meet the Deadline: Although it may take some time to write the letter, it must be written, and it must be sent within the deadlines required by contract. Although we do not advise using an email string to give notice, it is usually a good idea to send the letter via email as well as sending it overnight delivery. Being one day late may make the difference between succeeding or failing on a claim. Courts frequently calculate the date when the deadline ends upon when the claimant “knew or should have known” that the claim might occur; thus, is it always better to send a written notice as early as possible.

Send Notice to Multiple Parties: The contract may specify to whom written notices are to be sent, but it can be a good idea to send them to other parties as well. For example, if there is an issue with the prime contractor’s project manager, consider sending the notice letter to the contractually required parties as well as those higher in the organization.

Solve the Problem: Most people are good at pointing out the problems. The most successful contractors, however, are problem-solvers. Thus, in the notice include why you are making the request along with the plan you intend to implement to mitigate the costs and time to the project. This may later serve as a warning that might have prevented additional costs if the prime contractor does not accept your rededication plan.

Tips for Subcontractors for Using to Documentation to Prevent Claims from Others

Documenting is a non–stop process for construction professionals. There are many applications and software which help subcontractors organize and maintain this documentation. But, since a subcontractor may not learn about claims against them until they have fully performed, subcontractors need to prepare for the unknown.  Examples of these claims include back-charges, liquidated damages, and claims of work-interference from other subcontractors.

Thorough documentation takes many forms, but some of the most common include daily logs, photographs, jobsite meeting minutes, written notices, and manpower time-sheets. A subcontractor needs to document every incident which could lead to a problem down the road. Thus, for example, a poorly-timed thunderstorm can impact the critical schedule. If so, this is an obvious time for documentation. On the other hand, a late afternoon shower might not have a similar impact; but, then again, it might, if materials are not properly stored or drainage is an issue at the jobsite. Thus, weather should always be documented.  

Daily Reports:  As attorneys we see a great deal of complaints about manpower. This is easily documented along with the actual hours an employee worked, as well as where on the project the employee worked. Thus, a subcontractor who keeps sloppy daily reports will find it difficult to defeat a claim against it. However, a meticulously kept daily reporting system will pay-off in the long run. Such types of information include the following: (i) information related to the workforce, the location of the work, and the type of work performed each day, (ii) information about the equipment rented or used, (iii) the amount of materials received and/or used on a given day (or unavailable), (iv) any issues which may have arisen such as owner-interference, nearby road-closures, weather, and supply-chain issues, (v) safety issues and training, (vi) details about inspections and other visitors to the jobsite, and (vi) the name/signature of the person responsible for the accuracy of the daily report.

Photographic Evidence: With the plethora of phone cameras and drones, documenting work through photographs has become much easier; on the other hand, it is worth developing a company policy and investing in training regarding how to take better photos, when to take the photos, and how to manage and store the photos. Many projects include surveillance videos, they can be useful when pursuing or defending a claim so understand the access, the storage, and the limitations of these videos. It may be wise to photograph the work of adjacent subcontractors as well to protect. If there is reason to believe that a particular video may be useful, send a written request to the owner of the video to (i) send you a copy and (ii) preserve the video.

Blueprints, Specs, Schedules, Etc.  Documents that are actually used to construct the project are invaluable if a claim arises. Thus, it is obvious that they should all be kept. Many of these documents go through multiple revisions. We have seen, however, that general contractors may have multiple incarnations of an important document, and, consequently, they accidentally fail to give the subcontractor the final revisions. Thus, it is important to note when and how each document is received in case the prime contractor claims that its plans dictate a particular detail when the subcontractor’s copy of the plan does not include it. Of course, if a subcontractor knows (or should have known) that they did not have the final edition, then the subcontractor may be at fault unless the subcontractor gave proper notice

Documentation is the on-going record of the role of each party working on a project. Thus, it likely begins with site-visits, review of plans and bid documents, but it results in tangible building. Photographs provide evidence of what is hidden behind a wall and daily reports show you who built a particular aspect. Keeping up with this documentation may be daunting, but it is vital to prosecute and defend claims.

About the Author

For over 25 years, Mark has been practicing construction law throughout the State of Georgia. He remains active in many professional organizations, and he speaks and lectures extensively on Georgia’s Mechanics and Materialmen’s Law, payment bonds (Miller Act and Little Miller Act claims), construction contracting and risk-allocation & damage mitigation. In addition, he publishes on similar topics regularly. In fact, Mark recently finished co-editing a 50-State Lien Law publication for the American Bar Association’s Forum on the Construction Industry and has contributed to several other books and industry publications. More information on Cobb Law Group and Mark Cobb can be found here.