With the onset of the summer construction season in the Rocky Mountains, contractors should be mindful of some unique issues with mountain projects that can become contentious between property owners and contractors. Owners and contractors should thoroughly discuss their expectations before starting work to maximize the chances of a successful project and minimize the risks of a dispute. Those issues include:
1. Site Access. Portions of the Rockies received near-record snowfall last winter. Delays in obtaining access to the work site can hinder contractors’ and consultants’ ability to investigate soil and other conditions that may be concealed by the snow. Owners and contractors should discuss the scope and timing for investigation of those conditions. If investigations will be limited or forgone altogether, the parties should agree on their assumptions about the state of concealed conditions and how they relate to cost and schedule. Owners and contractors should also discuss how personnel will access the site and who will be responsible for removing existing and any new precipitation. Contractors should make clear that the contract time should not begin until their personnel have full access to the site.
2. Staggered Construction. It is not uncommon for larger construction projects in areas that cannot be accessed easily over the winter to be staggered across two summer construction seasons with a period of little or no activity during the intervening months. In these situations, owners and contractors should agree on any milestones that must be reached before the end of the first construction season and the deadline for those milestones. Contractors should make clear what impact the staggered project schedule will have on warranties, and that contractors are not responsible for the security of the work site while the work is halted, except for perhaps maintaining a builder’s risk insurance policy. Contractors should also consider asking for a release of at least part of retainage for work completed before the winter.
3. Completion Date. As with all projects, owners and contractors should agree on the date by which work must be substantially complete. It should be clear what constitutes “substantial completion” and, if the agreed upon completion date is in the fall, the parties should discuss what impact, if any, early season snowfall will have on that date. Experienced contractors can anticipate and work around normally occurring fall weather, but they should make sure they are not held to the substantial completion date if unanticipated weather occurs. When working toward a fall completion, the parties should extend their discussion about site access and maintenance to include next season’s snowfall and its impact on their respective responsibilities.
4. Contingencies and Incentives. Because of the above issues, contractors may need to establish additional cost contingencies that allow them to address things such as unusual weather, concealed conditions and cost escalations for projects of a longer duration. Contractors will want to make sure that they have thought through and budgeted for these contingences. Moreover, contractors may want to request a completion bonus if the project is delivered early, and a portion of any savings if the project is delivered under budget. An owner may be willing to provide a bonus and savings-split given the benefits of having a project completed before winter. Because of those benefits, however, owners will often insist on a strict completion date and liquidated damages if that date is not met. While those requirements may be fair as long as the parties have thoroughly discussed their expectations and planned accordingly, contractors should insist on any liquidated damages being capped to a percentage of their fee.
5. Decisionmakers. Even parties who have carefully discussed and planned their construction projects will sometimes disagree. Using reliable standard contracts such as AIA forms or ConsensusDOCS is always advised, but in some cases, consulting an impartial but knowledgeable third party can help to arbitrate foreseeable disputes. That person or company should be experienced with similar projects and have a proven track record for maintaining good working relationships with both owners and contractors.
These are just a few of the issues that can arise from summer construction in the mountains. Careful consideration, discussion and documentation of these issues and any others that may be unique to your project will help minimize disputes as well as the unfair placement of responsibility for complications that will undoubtedly arise while working in a challenging and time-constrained environment.