A typical relationship between a general contractor and an owner begins with the general contractor reviewing a set of plans and specifications that the owner has provided. The general contractor then issues a bid based on those plans and specifications. But on most construction projects the process from that point forward is not always smooth sailing. A common hiccup occurs where the plans and specifications are incomplete or incorrect. In general, a contractor is only required to build what has been drawn but a contractor cannot intentionally build something that he knows, or reasonably should know, is defective or deficient in some way. This issue comes up commonly in implementing the "means and methods" of construction.
For example, structural drawings may show two pieces of steel being connected. They may show the connection method to be used. However, what if the nut and bolt specified in the plans turns out to be incorrect? What if the correct nut and bolt are more expensive? What if it is a thirty (30) story building with hundreds of steel connections and all of the connection details are discovered to be incorrect? Switching to the proper more expensive nut and bolt for each connection could expose the contractor to significant additional charges. The contractor should submit a change order for the more expensive unit and should be paid the higher price. This may seem like the only logical outcome but many owners will try to push the additional charges off on the contractor.
What if the situation is more complex? Take this example: the general conditions of the contract state that the contractor has had a chance to review the plans and specifications and that he agrees to execute the construction in accordance with the applicable building codes, rules and regulations. The plans that the contractor reviewed required the installation of 10,000 linear feet of plastic hand railings in the stairwells. But the building code requires the stairwells to have steel handrails. The steel upgrade could be an extremely expensive upgrade. The owner will argue that the contractor is required to construct according to code and that since code requires steel handrails the bid included steel and there is no upgrade. The contractor will argue that he was entitled to follow the plans and specifications prepared by the architect and the architect's error in specifying the handrails requires a change order for the upgrade. The contractor's argument will be that the building code provision in the general conditions of the contract only applied to means and methods determinations. Where a specific items is called out in the plans, if it is later changed due to an error, the error must result in a change order.
While most courts in New York would agree that the contractor is correct in the scenario above, and award the costs of the upgrade, there is no definitive binding authority on the issue. For contractors the key is to carefully review the plans and specifications before bid. Make sure you are thoroughly familiar with the required work and if you question any item you may want to request a clarification from the architect before bidding. If the contract has already been entered into and you encounter the problem you should retain competent construction counsel to help guide you through this potential hazard area.
Vincent T. Pallaci is a partner at the New York law firm of Kushnick Pallaci, PLLC where his practice focuses primarily on the area of construction law. He can be reached at (631) 752-7100 or vtp@kushnicklaw.com
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ReplyDeleteWhat about the responsibility of the Architect or Engineer for their errors and ommissions?
ReplyDeleteGood question. Architects and Engineers would certainly face potential liability for incorrect details in the plans. Where the plans contain incorrect information the owner would certainly have to determine whether it has a potential claim.
ReplyDeleteTake my example of the steel connection details. If the general contractor catches the deficiency before the steel erector actually connects the steel then there may not be any damages that the owner could pass on to the engineer that designed them. As with any claim, you need to address two questions: First, is there liability for the omission? Second, if there is liability, what are the damages? Here, there is almost certainly liability. Calling out the wrong connection detail would seem to me to be a deviation from the standard of care of a reasonably prudent engineer. However, there may be no damages. If the engineer had designed the connection detail correct the first time then the owner would have had to pay for the more expensive nut and bolt anyway. So there is really no extra costs incurred by the owner that could be passed on to the engineer under his or her errors and omissions policy.
However, if the example is tweaked a bit then the result can change. Let's say that the general contractor didn't catch the error but rather simply followed the specification provided by the engineer. At some point later on the error is noticed (perhaps by a construction manager or consultant or a building inspector). At that point the owner will pay (the general contractor will submit a change order) to remove each old connection and replace with the new connection. The owner now has incurred significant additional costs due to the error and the additional costs can and should be passed on to the project engineer.
So in short, the general contractor can pass the additional charges on to the owner and, if the owner then incurrs additional costs, it can pass them on to the architect and/or engineer.